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Showing posts with label for attorneys. Show all posts
Showing posts with label for attorneys. Show all posts
Friday, December 25, 2015
U.S. District Court holds that language of policy endorsement trumps reason endorsement was written
In my last post I started discussing Whittaker Corp. v. Am. Nuclear Insurers, __ F.2d __, 2009 WL 4342512 (D. Mass.).
Whittaker and Textron were former owners and operators of property that was declared a superfund site because of nuclear waste. They sought coverage for associated costs from American Nuclear Insurers, or ANI. At issue was an endorsement called a Facility Form in which ANI promised to pay "all sums which the insured shall become legally obligated to pay as damages because of . . . property damage arsing from the nuclear energy hazard."
ANI argued that there was no coverage for the loss. It argued that the Facility Form must be viewed in the context in which it was drafted. It contended that the Facility Form is a "creature of statute," intended to carry out the legislative goals of the Price Anderson Act, which was conceived in response to "the risk of potentially vast liability in the event of a nuclear accident of sizable magnitude." The Act required nuclear power licensees to purchase primary insurance of $60 million. The government agreed to act as an excess insurer, providing licensees with $500 million of indemnity over the primary policy. Licensees were relieved of any additional liability regardless of fault or causation.
ANI claimed that it developed the Facility Form to meet the primary policy requirement of the Price Anderson Act. It argued that if the Facility Form is interpreted to provide coverage for the "conventional" environmental cleanup, its ability to provide coverage for third-party claims in the event of nuclear catastrophe would be severely and possible fatally jeopardized.
The court rejected that argument. It noted that the Price Anderson Act is not a "nanny" act, in that it does not prohibit insurers from undertaking to provide coverage to nuclear plant operators for "conventional" environmental harm should they choose to do so. It did not dictate the terms of the Facility Form.
The court held that coverage under the Facility Form is determined by its terms, and that pursuant to those terms coverage was initially triggered.
As I will discuss in my next post, however, there was no coverage because the loss came within an exclusion.
Wednesday, December 23, 2015
United States District Court holds that uncertainty over insurance policy terms does not create duty to defend
My next several posts will discuss Whittaker Corp. v. Am. Nuclear Insurers, __ F.2d __ (D. Mass. 2009), 2009 WL 4342512, in which historical owners of property sought insurance coverage for their costs associated with the property being declared a superfund site.
One of the issues was whether Endorsement 112, which would have excluded coverage, was properly added to the insurance policy. In a previous decision the court had held that pending the resolution of that factual question, the insurer, ANI, had a duty to defend. On a motion to reconsider, to his credit Judge Stearns reversed that ruling:
This ruling put the cart before the horse by conflating the duty to defend with the existence of coverage in the first place. Before a court can determine whether a policy imparts a duty to defend, an applicable policy must be identified.
Friday, December 18, 2015
Superior Court allows adjustment of premiums over insured's argument of mistake
In Nat'l Fire & Marine Ins. Co. v. AT Equipment, Inc., 2009 WL 3086233 (Mass. Super.), AT was insured by National. AT's insurance broker filled out and delivered to AT an insurance application when it was time to renew the policy. The broker had filled in gross sales figures from previous years despite a recent substantial increase in gross sales. AT's managers did not read the entire application, but signed it on behalf of AT.
National issued a new policy which gave National the right to audit AT's records and charge additional premiums if the audit determined that such payments were appropriate. An audit revealed that an additional $102,405 was due in premiums. It sued AT for those premiums and moved for summary judgment.
The Superior Court rejected AT's argument that the policy should be reformed (apparently by removing the clause allowing adjustment of premiums) or voided on the grounds of fraud or mistake. It rejected the fraud argument because no facts indicated actual or constructive knowledge of the falsity of the application on the part of National.
It held that the policy could not be reformed on the grounds of mutual mistake because the parties were not mistaken as to the same matters. AT was mistaken about the accuracy of the contents of its application, and National was mistaken about the appropriate premium.
The court held, finally, that the contract could not be reformed on the grounds of unilateral mistake because National had the right to conduct an audit and correct the premium. Therefore AT, the party seeking to void the contract, bore the risk of the mistake.
Friday, December 11, 2015
First Circuit holds that D and O policy does not provide coverage where directors and officers are not defendants
In Medical Mut. Ins. Co. v. Indian Harbor Ins. Co., 583 F.3d 57 (1st Cir. 2009) the United States Court of Appeals held that under Maine law a Director and Officer ("D & O") liability policy did not provide coverage where only a company, and not its officers and directors, was the defendant--even though the allegations included wrongful conduct on the part of the officers and directors.
Judge Selya held:
D & 0 polices exist to fund indemnification covenants that protect corporate directors and officers from personal liability, not to protect the corporation by which they are employed. The position advanced by the company in this case - extending coverage to situations in which the directors and officers are not themselves the actual targets of the claims made - would if accepted transmogrify D & 0 policies into comprehensive corporate general liability policies. Because such a tansmogrification is contrary to both the letter and the spirit of the D & O policy at issue here, we affirm the district court's entry of summary judgment in favor of the insurer.
Wednesday, December 9, 2015
Massachusetts Appellate Division overturns summary judgment to PIP insurer for failure to show decision-making process
In N.E. Physical Therapy Plus, Inc. v. Commerce Ins. Co., 2009 WL 3381750 (Mass. App. Div.), physical therapist NEPT sued Commerce pursuant to Mass. Gen. Laws ch. 90 § 34M (the PIP statute) and ch. 93A § 11 (the consumer protection statute) for failing to pay physical therapy bills on behalf of Commerce's insured, who was entitled to PIP benefits.
After suit was filed Commerce paid the disputed bill, which extinguished the ch. 90 § 34 M claim. Commerce then moved for summary judgement on the 93A claim. In support of its motion Commerce submitted only an affidavit of a Commerce employee.
The court denied Commerce's motion for summary judgment, holding:
The Affidavit is composed almost entirely of the affiant's facile and conclusory characterizations of Commerce's claims records. Even if the Affidavit were admissible in its entirety, a question we do not reach here, Commerce's summary judgment materials provide no insight into Commerce's strategy for handling NEPT's claims; into the particulars of Commerce's decision-making process with respect to those claims; into the results of any expert review of the claims; or, in fact, into any of the subjective questions on which G.L. c. 93A claims generally rise and fall.
Friday, December 4, 2015
Judge Fremont-Smith of the Superior Court holds that damages both did and may not have arisen out of use of a vehicle
In Leone v. Schwartz, 2009 WL 3416398, the plaintiff, Leone, was a police officer who responded to an accident in which Schwartz's car had crashed through a fence and some small trees. Leone alleged that as he approached the car on foot, he lost his balance and fell in an area that was covered with debris from the fence, broken tree limbs, and snow and ice.
Leone sued Schwartz's homeowner's insurer, Great Northern, and automobile insurer, Arbella. Judge Fremont-Smith held on summary judgment that there was no coverage under the homeowner's policy because the policy excludes "damages arising out of the . . . use . . . of any motorized land vehicle." He wrote:
The allegations are that Schwartz negligently drove his motor vehicle off a road and into a lawn, causing the plaintiff to investigate the accident scene and suffer a "slip and fall" injury. The only theory on which Schwartz could be held liable, then, is as a result of his allegedly negligent operation of a motor vehicle, for which the policy excludes coverage.
Judge Fremont-Smith then turned to the automobile policy, which provided coverage for "damage to people injured or killed in accidents if you or a household member is legally responsible for the accident." "Accident" is defined in the policy as "an unexpected, unintended event that caused bodily injury or property damages arising out of the ownership, maintenance or use of an auto."
Although two paragraphs earlier Judge Fremont Smith had held that as a matter of law the accident arose out of the use of the car, he now wrote:
The fact that Schwartz's operation of a motor vehicle provides the only possible basis for his liability, so that Great Northern's motion must be allowed, does not necessarily mean that Arbella's motor vehicle policy provides coverage. It is true that, but for Scwartz's vehicle having gone off the road and onto a lawn, Leone would not even have been there. But this does not necessarily mean that Leone's injury arose out of Schwartz's operation of a vehicle. The vehicle was stationary when Leone arrived at the scene, and he has admitted that the yard in which he fell was covered by debris, snow, and ice. Even if the undisputed facts were to indicate that Schwartz was negligent in his operation of his vehicle, it is a disputed question of fact whether Leone's injuries arose out of Schwartz's use of his motor vehicle.
Judge Fremont-Smith concluded that if Leone fell on pieces of broken fence or other debris caused by the accident there would be coverage under the policy, but that if he slipped only on snow and ice or other debris that was not caused by the accident there would be no coverage.
I'm all for splitting hairs in interpreting insurance policies. I make my living doing it. But I do not see how the same opinion can hold as a matter of law that the damages arose out of the use of a vehicle and also hold that whether the injury arose out of the ownership, maintenance or use of the auto is a question of fact. In my opinion the judge can't have it both ways.
Wednesday, December 2, 2015
Appellate Division holds that insurer does not need to show prejudice from violation of duty to cooperate
In Trinidad v. Pilgrim Insurance Company, 2009 WL 3844469 (Mass. App. Div.), the insured sought PIP coverage. He skipped two medical examinations scheduled by the insurer. The insurer denied coverage on the grounds that the insured failed to cooperate.
The insured argued that the insurer failed to prove that it had been prejudiced by his failure to cooperate. The Massachusetts Appellate Division held that a showing of prejudice is not required. It noted that both the PIP statue and the policy required the insured to submit to medical exams by physicians selected by the insurer. The court held:
Neither the policy, nor the statute, requires an insurer to show prejudice before invoking the defense of noncooperation by the claimant as a condition precedent to denying a claim.
Monday, November 30, 2015
Superior Court declines to interpret against insurer policy language that was not part of preprinted form
In Dulac v. Chicago Title Ins. Co., 2009 WL 3838999 (Mass. Super.), the owner of a two-family home sued his title insurer for declining coverage when a prospective buyer backed out of the sale because of a perceived defect in the title.
The policy included an exclusion with an exception that stated:
Exception for Notice of Land Court Petition recorded with the Worcester Registry of Deeds at Book 13029, Page 124. Note: This policy affirmatively insures against loss or damage as a result of the attempted assertion of paramount title due to any matter set forth in said petition.
The insured attached to the complaint an opinion by a land court examiner which identified a likely defect in the title. At issue was whether that opinion came within the exception.
Judge Kaplan held that the exclusion was ambiguous. However, he declined to interpret it against the insurer and held that a question of fact existed as to what the parties understood the exclusion to mean at the time the policy issued. He wrote:
Although an ambiguity is generally construed against an insurer, this exclusion is not part of a preprinted form and it is possible that Dulac [the insured] understood the exclusion in the manner that Chicago Title now explains it
Tuesday, November 24, 2015
Superior Court holds that Massachusetts Insurance Insolvency Fund must apply separate caps to loss of consortium claims
In Massachusetts Insurers Insolvency Fund v. Smith, 2009 WL 3199209 (Mass. Super.), Judge Fabricant of the Superior Court held that separate limits apply to a main claimant and claimants seeking coverage for loss of consortium from the Massachusetts Insurers Insolvency Fund.
The Fund is an entity created by statute that pays claims on behalf of insolvent insurance companies; but by statute it pays "only that amount of each covered claim which . . . is less than three hundred thousand dollars."
Mason was a medical provider who had malpractice insurance with an insurer that is now insolvent. His policy had a coverage limit of $1,000,000.
Mason was sued by a patient for physical injury and by the patient's family members for loss of consortium. The Fund argued that the aggregate amount it could pay to all of the claimants--the patient and the family members--was $300,000. The claimants argued that the $300,000 cap applied to each of their claims individually.
Judge Fabricant noted that no Massachusetts appellate decision has addressed this question and that the Superior Court and extra-jurisdictional decisions are split. She held, based on the language of the original policy and the statute enabling the fund, that the fund must pay up to $299,999 on each separate claim.
Saturday, November 21, 2015
How to read an insurance policy: the known loss doctrine, part 2
I am making time to post again at the inspiration of Michael Aylward, a partner at Morrison Mahoney specializing in insurance coverage issues. I met Michael years ago when we represented codefendants in a rather silly copyright violation case. Since then I have relied on his excellent articles on allocation issues; been riveted (no, I'm not kidding) by his talks at seminars on insurance coverage; and imposed upon him for advice both legal and practical which he has always graciously given.
In my last post I discussed the known loss doctrine. One question that frequently comes up with respect to that doctrine is whether there is coverage when the insured knew of the facts that created tort liability before the policy period, but did not subjectively know that such facts could actually lead to liability.
The United States Court of Appeals for the First Circuit explored this issue under Massachusetts law in United States Liab. Ins. Co. v. Selman, 70 F.3d 684 (1995). In that case the insured was a landlord who was informed prior to the policy period that his apartment had lead paint in it and his tenant's child had lead paint poisoning. The court held that the lead paint injury was not a known loss because discovery had shown that the insured had not made a subjective connection between the lead paint in his building and the underlying plaintiff's future medical risks.
In my next post I'll discuss how the known loss doctrine should affect an insured's decision about reporting to its insurer a potential claim.
Thursday, November 19, 2015
Superior Court holds that insurance on antique car is subject to provisions of another policy with respect to underinsured motorist benefits
In Boulette v. Safety Ins. Co., plaintiff Scott Boulette was involved in an accident while driving a car owned by his employer and insured by Safety Insurance Company. The other driver was insured by Premier Insurance Company. When the damages exceeded the Premier policy limits, Boulette applied for underinsurance benefits from Safety.
Boulette owned an antique Chevrolet Corvair on which he had insurance from Metropolitan. Boulette purchased the Metropolitan coverage solely so that the Corvair could be registered as an antique and towed to his new residence. He included in his coverage optional bodily injury and medpay benefits, but not optional underinsurance coverage.
Safety denied Boulette's claim for underinsurance benefits because of a policy provision stating, "We will not pay damages to or for anyone else who has a Massaschusetts auto policy of his or her own . . . "
Boulette contended that he could not reasonably be expected to look for underinsurance benefits from a policy covering an inoperable antique car, although he apparently did have the option of purchasing underinsurance benefits from that policy and chose not to do so.
Judge Lemire of the Superior Court agreed with Safety, holding that the plain language of its policy precluded Boulette from recovering underinsurance benefits from it.
Monday, November 16, 2015
A case only insurance coverage attorneys could love
In Mass. Care Self-Ins. Group, Inc. v. Mass. Insurers Insolvency Fund the Superior Court ruled on the interplay between Mass. Gen. Laws ch. 152 § 25A, which allows employers to form worker's compensation self-insurance groups, and Mass. Gen. Laws ch. 175D, which creates a fund which provides insurance benefits when an insurer that would otherwise provide coverage has become insolvent.
A worker's compensation self-insurance group provided coverage up to a self-insured retention limit to an injured employee of one of its members. The group had an excess carrier over the SIR that had become insolvent. When the damages paid to the injured employee exceeded the SIR, the group sought coverage from the fund.
At issue was whether the worker's compensation self-insurance group was an insurer, in which case pursuant to ch. 175D there would be no coverage from the fund because the fund does cover any claim due to an insurer.
After a thorough review of both statutes and relevant case law, the court concluded that the self-insurance group is an insurer, so that the fund did not provide coverage.
Thursday, November 12, 2015
Massachusetts federal district court holds that physical damage is required for coverage for "direct physical loss"
In Tocci Bldg. Corp. v. Zurch Am. Ins. Co., 2009 WL 3182858 (D. Mass.), Tocci was the general contractor on a hotel construction job that included a large retaining wall. A small part of the retaining wall was damaged during a heavy rainstorm.
On June 9, 2000 the town in which the project was located issued a stop work order and declared the wall unsafe as a result of the damage from the storm. In early August the town gave Tocci permission to repair the damaged section of the wall. The repairs took less than a week.
In the meantime the town concluded that the wall had not been built in accordance with the approved plans and notified Tocci that the wall need to be demolished and reconstructed. Tocci disagreed. In November, 2000, the town agreed to permit the hotel to open if Tocci would grout the entire wall. Tocci agreed only in order to prevent further delays. Tocci then sought coverage from a builders risk policy for the cost of grouting.
The policy provided coverage for "RISKS OF DIRECT PHYSICAL 'LOSS'". "Loss" was defined as "accidental loss or damage."
The United States District Court for the District of Massachusetts held that the grouting was not a covered loss because the need for it did not stem from "direct physical loss or damage" to the wall.
The insureds argued that the storm was "covered cause of loss" because it created a "risk of direct physical loss," and that physical damage was not otherwise required by the policy. The court disagreed:
It is true that the only express reference to "physical" damage is found in the definition of "Covered Causes of Loss" which, as quoted above, "means RISK OF DIRECT PHYSICAL 'LOSS'. . ." However, it would make no sense to cover an event which creates a risk of physical damage if physical damage was not a triggering event for coverage. Moreover, "loss" is expressly defined as "accidental loss or damage." It is impossible to read the insurance policy as providing coverage for "risk" in the absence of a "damage." Since it is undisputed that the grouting was not required due to damage to the retaining wall, there was no loss and hence no coverage.
Tuesday, November 10, 2015
Massachusetts Appeals Court interprets insurance requirement in construction subcontract
In RCS Group, Inc. v. Lamonica Constr., Inc., 75 Mass. App. Ct. 613 (2009), the Massachusetts Appeals Court interpreted an insurance requirement in a construction contract between general contractor RCS and subcontractor Lamonica. The contract required that
[Lamonica] shall maintain, at its own cost, such insurance as will protect it and [RCS] from . . . any claim for bodily injury, including death, and whether such [w]ork or performance are by [Lamonica] or any of [its] subcontractors or any one directly or indirectly employed by [it] . . .
Lamonica obtained insurance but did not include RCS Group as an additional insured on its policy. When an employee of Lamonica's was injured and sued RCS, RCS sued Lamonica for breach of contract.
The court held that the insurance provision did not require that Lamonica name RCS as an additional insured on its insurance policy, on the grounds that the provision was ambiguous and must be interpreted against RCS as the drafter of the contract.
The court noted that the insurance clause followed an indemnity provision in the subcontract that the court had previously ruled unenforceable. The court stated:
Had the indemnification provision been valid, as the parties intended, then liability insurance purchased in Lamonica's own name would have "protected" RCS Group fully so long as it covered Lamonica's indemnification obligations (as the insurance contract purchased by Lamonica in fact did). When examined in this context, the parties easily could have viewed the insurance policy that Lamonica purchased as one that would "protect" RCS Group, even though the policy did not include RCS Group as an additional insured.
Friday, November 6, 2015
U.S. District Court dodges question of whether insured can cure breach of duty to cooperate
In Miles v. Great Northern Ins. Co., 2009 WL 2998529 (D. Mass.), the insureds sought first-person coverage for fire damage. The insurer denied the claim on the ground the insureds had breached their duty to cooperate.
In a motion for summary judgment the insureds argued that although they initially did breach that duty, they cured the breach by later providing the requested documents.
The United States District Court for the District of Massachusetts noted that there is no controlling Massachusetts caselaw on whether a breach of the duty to cooperate can be cured prior to a court ruling that the insureds breached the duty (when it is clearly to late to cure).
The court chose not to rule on that question of law, holding instead that whether the insurer had suffered prejudice as a result of the insureds' initial breach was a question of fact.
Wednesday, October 28, 2015
Appellate Division holds no right to PIP benefits where medical bills have been paid by Medicare and Medicaid
In Chery v. Metro. Prop. and Cas. Ins. Co., 2009 WL 3381597, an insured sought PIP payments for a medical bill of $360.63. The bill had been paid by Medicare and Medicaid prior to the insured submitting it to the PIP carrier.
The court held that the PIP carrier had no obligation to pay the bill because the PIP statute:
mandates only that PIP payments “shall be due and payable as loss accrues, upon receipt of reasonable proof of the fact and amount of expenses and loss incurred.” As the $360.63 Caritas bill had been paid in full in April, 2008, it was not even “due and payable” when submitted to Metropolitan in June 23, 2008 . . . . Further, Chery's concern about future action by Medicare or Medicaid to seek reimbursement out of any potential tort recovery by her against the tortfeasor in no way suggested any obligation by Metropolitan to provide PIP benefits for the paid bill. “The PIP ‘benefit’ to an injured person, in substance, is the right, inter alia, to be held harmless by the insurer from claims of providers who provided treatment to the injured person.” Ny v. Metropolitan Prop. & Cas. Ins. Co., 51 Mass.App.Ct. 471, 476 (2001). Chery was in no danger of any claim against her by Caritas, whose bill had been paid in full.
Monday, October 26, 2015
U.S. District court holds that there is no coverage to indemnify officers and directors where there is no coverage elsewhere in the policy
In my last few posts I've been discussing Genzyme Corp. v. Fed. Ins. Co., 2009 WL 3101025.
The court held that, because there was no coverage elsewhere in the policy, there was also no coverage under a clause covering all loss for which the insured granted indemnification to its officers and directors. The ruling was based on the public policy that allowing coverage in such circumstances would lead to fraud and chicanery:
[I]t makes little sense to allow a corporation to sidestep coverage limitations in its insurance policy through the simple expedient of claiming that a settlement payment was made to indemnify its directors and officers. Since a corporation can only act through its corporate agents, it will often be the case that when a shareholder can bring a claim against the corporation, she can also bring one against its directors and officers. As the court concluded in the New York case of Reliance Group Holdings, Inc. v. National Union Fire Insurance Co., 188 A.D.2d 47, 54, 594 N.Y.S.2d 20 (N.Y.App.Div.1993), the approach supported by Genzyme would encourage fraud by insured corporations:
Under the construction urged by [the insured corporation and its officer], if an officer or director was sued together with the corporation, the corporation could make full or partial restitution of the embezzled or fraudulently obtained funds purportedly on behalf of its officer, adopt a resolution indemnifying the officer, and then successfully make claim against its D & O insurer for the full amount of the settlement.
The Court refuses to construe the Executive Protection Policy in a manner that would encourage such chicanery.
Thursday, October 22, 2015
U.S. District Court discusses meaning of "purchase"
In my last couple of posts I have been discussing Genzyme v. Fed. Ins. Co., 2009 WL 3101025 (D. Mass.).
The court held that a separate, sufficient ground to find no coverage for the stock-trade transaction was a "bump-up provision" of the policy, which stated that the insurer would not be liable for a loss "based upon, arising from, or in consequence of the actual or proposed payment by any Insured Organization of allegedly inadequate . . . consideration in connection with its purchased of securities issued by any Insured Organization." (Italics added.)
The insured admitted that it gave one class of shares, which are the equivalent of money, to holders of another class of shares in exchange for their relinquishment of those shares. The insured argued that it did not obtain anything in return. The court disagreed, holding that the insured "acquired an intangible right that it did not possess before - the right to cancel the outstanding Biosurgery Division tracking stock shares, which Genzyme wanted to do in order to reorganize its capital structure." The court held that the share exchange was "unambiguously a 'purchase' within the natural and ordinary meaning of the word."
Friday, October 16, 2015
Why thieves can't get insurance
In my last post I discussed Genzyme Corp. v. Fed. Ins. Co., 2009 WL 3101025 (D. Mass.).
In that decision Judge Gertner included an interesting discussion of a fundamental tenet of insurance law: a "loss" does not include restoration of an ill-gotten gain.
A thief should not be able to claim the return of stolen property as an insurable loss. Similarly, an individual who breaches her contract and then is forced to pay damages should not be able to seek indemnification under an insurance policy. [This is an overstatement; there are circumstances when insurance covers damages flowing from a breach of contract.] If I pay only $100 for an item for which I promised to pay $200, and I am later ordered by a court to pay the additional $100, I should not be able to claim the additional $100 as an insurable loss. Had I paid the full $200 due up front, then clearly no part of the $200 would constitute loss covered by insurance. The dilatory nature of my obligatory payment should not transform it into an insurable event.
Wednesday, October 14, 2015
U.S. District Court holds that settlement of shareholder claim for unfair stock redistribution is not an insured loss
In Genzyme v. Federal Ins. Co., 2009 WL 3101025 (D. Mass.) Judge Gertner held that a settlement of a claim of unfair stock redistribution is not an insurable loss pursuant to the commonly understood meaning of the word "loss" or under public policy.
The underlying plaintiffs alleged that Genzyme's directors and officers conspired to benefit holders of one type of Genzyme stock at the expense of holders of another type of Genzyme stock. Genzyme agreed to settle the claim by making a payment of $64 million to the plaintiff class, owners of the disadvantaged stock. Genzyme then sought reimbursement from a Directors and Officers ("D & O") insurance policy. Judge Gertner held that the payment was not a "loss" covered by the policy:
Genzyme may not have benefitted in the Share Exchange, but the existing General Division's shareholders surely did. And the Settlement Payment was meant to redress that imbalance. The question then is: When a corporation pays a settlement to resolve a claim that it benefitted one group of shareholders at the expense of another group of shareholders, is this settlement payment an insurable loss? The answer to this question must undoubtedly be "no."
Judge Gertner explained this answer with an analogy to dividing a milkshake between two sons, apparently a reference to the movie There Will Be Blood. While I'm sure her analogy would make sense if I pondered it, or perhaps watched the movie during my copious free time, luckily she also wrote plainly:
Genzyme should not be able to divide the benefits of equity ownership among its shareholders one way, redistribute those benefits, and then demand indemnification from its insurer for the redivision. If Genzyme's interpretation of the Settlement Payment as a "loss" were correct, one could imagine how insured companies could transform insurance policies into profit centers for their businesses. A corporation merely need issue several classes of shares, cancel one class of shares in an arguably unfair way, and then demand that its insurer pick up the tab for the resulting judgment or settlement. The shareholders whose shares were "cancelled" would be compensated through judgment or settlement, and the corporation's other shareholders would obtain the benefits flowing from the share cancellation while shifting a portion of its costs to the corporation's insurer. Everyone would win, except for the insurance company forced to bear the loss of paying off the disgruntled shareholders.