Ron Schiller, Bonnie Hoffman and Michael Masciandaro obtained a summary judgment decision for Liberty Insurance Underwriters Inc. in the Connecticut Superior Court in Hartford.
The plaintiffs, investors in a golf lifestyle channel, had sued Liberty’s insureds, the channel’s directors and officers, claiming (among other things) fraud in the sale of securities. Liberty paid for the defense of that underlying action, which ended when the plaintiffs and the insureds, without Liberty’s consent or knowledge, agreed to a stipulated judgment containing a large monetary award. The stipulated judgment also included an assignment of the insureds’ rights to the plaintiffs, who then sought to obtain the award from Liberty. The plaintiffs also asserted a claim for bad faith. Liberty argued that the award represented restitution, a return of the investors’ money, and was therefore uninsurable as a matter of law and not included within the policy’s definition of “loss.” Liberty also invoked a policy exclusion that barred coverage for personal profit, remuneration, or advantage.
The court held that the stipulated judgment’s award constituted restitution, and, in a matter of first impression in Connecticut, found that restitution is uninsurable under Connecticut law. The court also held in the alternative that the policy exclusion applied, and it dismissed the plaintiffs’ bad faith claim.
