SAN JUAN, Puerto Rico — The First Circuit Court of Appeals upheld a district court’s ruling granting the advancement of defense costs for directors and officers of Westernbank Puerto Rico, despite AIG Insurance Co.’s argument of an “Insured v. Insured” exclusion.
Rivero Mestre represents six former directors and officers in FDIC v. Stipes, the FDIC’s lawsuit arising from its takeover of Westernbank Puerto Rico. The lawsuit, measured by the alleged loss, is the third largest brought by the FDIC in the current financial crisis. When AIG, formerly known as Chartis, denied coverage to the D&Os based on the “Insured v. Insured” exclusion, Rivero Mestre obtained an order requiring AIG to advance defense costs—the first such order in this banking crisis.
AIG appealed the district court’s order, but the First Circuit Court of Appeals affirmed the decision today based on Puerto Rico’s law which holds that an insurance company must advance defense costs if there is even a “remote possibility” of coverage.
“What we have is a classic battle of dueling caselaw. But such a state of affairs hurts Chartis,” states the First Circuit order. “Chartis’s suggestion that there is zero likelihood of a remote possibility of coverage falls flat.”
About Rivero Mestre LLP
Rivero Mestre, from its offices in Miami and New York, represents clients from investigation to verdict and appeal in complex business disputes in U.S. federal courts, state courts, and domestic and international arbitration proceedings. The firm’s practice focuses primarily on representing corporate and institutional clients in a broad range of complex commercial disputes including financial institution matters, intellectual property disputes, and litigation and arbitration relating to Latin American trade and investment. For more information, visit www.riveromestre.com.