Court Finds Insurance Broker Liable To Insured For Breach Of Contract, Negligence

NEW YORK - An insurance broker breached its contract and acted negligently in failing to notify an insured that no policy existed for a certain period during which allegations that it solicited employees were made, a New York trial court ruled April 12, finding the broker liable to the insured for an underlying settlement (The IDW Group LLC v. Levine Insurance Risk Management Services Inc., et al., No. 603892/2009, N.Y. Sup., New York Co.; 2013 N.Y. Misc. LEXIS 1502).

Kaye Scholer: $1.5M Deal With GSC Group Trustee Should Be Affirmed

NEW YORK - The law firm representing bankrupt GSC Group Inc. on April 15 filed a brief in the U.S. Bankruptcy Court for the Southern District of New York arguing that objections to the $1.5 million settlement reached between it and the U.S. trustee should be denied (In Re: GSC Group Inc., No. 10-14653, Chapter 11, S.D .N.Y. Bkcy.).

New York Justice Refuses To Dismiss Building Owners' Water Damage Claims

NEW YORK - A New York justice on April 12 refused to dismiss a case filed by the owners of a building who allege that alterations to an adjoining property caused water damage and mold but found that they lacked standing to amend their complaint to include certain fraud and damage claims (Lei Chen Fan, et al. v. New York SMSA Limited Partnership, d/b/a Verizon Wireless, et al., No. 110483/06, N.Y. Sup.; 2013 N.Y. Misc. LEXIS 1506).

AMR Examiner Seeks $749,271 Reduction Of Fees, Expenses By Counsel, Other Firms

NEW YORK - The fee examiner in the Chapter 11 bankruptcy proceeding of AMR Corp., the parent company of American Airlines Inc., on April 16 filed a report proposing to reduce the fees and expenses for six firms involved in the litigation by a total of $749,271.81 (In Re: AMR Corporation, No. 11-15463, Chapter 11, S.D. N.Y. Bkcy.).

Bankruptcy Judge: ResCap's $7.8M In Bonuses For Key Employees Approved

NEW YORK - The federal bankruptcy judge presiding over the Chapter 11 case of Residential Capital LLC (ResCap) on April 16 approved the payment of $7.8 million in bonuses (In Re: Residential Capital LLC, No. 12-12020, Chapter 11, S.D. N.Y. Bkcy.).

Magistrate Judge Recommends Dismissal Of Counterclaims In Lago Agrio Judgment Suit

NEW YORK - A magistrate judge recommended in a report issued April 15 that counterclaims filed by a plaintiffs' attorney sued by Chevron Corp. in the U.S. District Court for the Southern District of New York to prevent the enforcement of an $18.2 billion personal injury and environmental contamination judgment entered in Lago Agrio, Ecuador, be dismissed for failing to state a claim (Chevron Corp. v. Steven R. Donziger, et al., No. 11-691, S.D. N.Y.).

Shareholder: N.Y. Federal Court Holds Jurisdiction Over Director And Officer

NEW YORK - An investor told a New York federal court on April 10 that numerous reasons exist as to why the New York federal court has jurisdiction over a bank, one of its directors and one of its officers regarding a shareholder lawsuit (SBAV LP v. Porter Bancorp, Inc., et al., No. 13-cv-00372, S.D. N.Y.).

Bankruptcy Judge Denies $20M Bonus For AMR CEO, Says Bankruptcy Code Prohibits It

NEW YORK - The federal bankruptcy judge presiding over the Chapter 11 proceeding of AMR Corp., the parent company of American Airlines Inc., on April 11 denied a $20 million bonus to AMR's CEO Thomas Horton, saying that the Bankruptcy Code "curtails payment of retention incentives or severance to insiders of a debtor" (In Re: AMR Corp., No. 11-15463, Chapter 11, S.D. N.Y. Bkcy.).

SEC's Actions Investigating Madoff Shielded By Statute Exception, Panel Rules

NEW YORK - A federal district court judge did not err in dismissing a lawsuit filed by victims of Bernard L. Madoff's massive Ponzi scheme against the federal government because the Securities and Exchange Commission's conduct in investigating Madoff is shielded by the discretionary function exception of the Federal Tort Claims Act (FTCA), a Second Circuit U.S. Court of Appeals panel ruled April 10 (Phyllis Molchatsky, et al. v. United States of America, Nos. 11-2510, 11-2532, 11-3142, 11-3304, 11-3306, 11-3310, 12-472, 12-476, 12-502, 12-511, 12-518 and 12-533, 2nd Cir.; 2013 U.S. App. LEXIS 7284).

U.S. Trustee Says Tribune Indenture Trustees Not Entitled To Fees

WILMINGTON, Del. - The U.S. trustee in the Chapter 11 bankruptcy of Tribune Co. on April 11 filed two briefs amending her objection to the Law Debenture Trust Company of New York (LDTCNY) and Wilmington Trust Co.'s applications for allowance of claims for fees valued at a combined total of more than $13.25 million, arguing that the fees are "unreasonable"(In Re: Tribune Company, No. 08-13141, Chapter 11, D. Del. Bkcy.).

Reader's Digest Amends Plan, Restructures More Than $513.62M In Secured Debt

NEW YORK - Bankrupt RDA Holding Co., the parent company of Reader's Digest, on April 11 filed an amended plan of reorganization that calls for the restructuring of more than $513.62 million in secured debt (In Re: RDA Holding Co., No. 13-22233, Chapter 11, S.D. N.Y. Bkcy.).

ResCap: Plan To Pay $7.8M In Bonuses To Key Employees Complies With Code

NEW YORK - Bankrupt financial group Residential Capital LLC (ResCap) on April 9 filed a brief in the U.S. Bankruptcy Court for the Southern District of New York defending its plan to pay $7.8 million in bonuses to key employees on grounds that it complies with the Bankruptcy Code (In Re: Residential Capital LLC, No. 12-12020, Chapter 11, S.D. N.Y. Bkcy.).

Hostess Sells Remaining Bread Assets To Mountain States For $28.85 Million

NEW YORK - The federal bankruptcy judge presiding over the Chapter 11 bankruptcy of Hostess Brands Inc. on April 9 approved the sale of the company's bread assets to Mountain States Bakeries LLC, which paid a deposit of $1.5 million in anticipation of the full purchase price of $28.85 million pursuant to the asset sale agreement (In Re: Hostess Brands Inc., No. 12-22052, Chapter 11, S.D. N.Y. Bkcy.).

Judge Grants Reinsurer's Motion To Compel Discovery Against Reinsured

NEW HAVEN, Conn. - A federal judge in Connecticut on April 8 granted a reinsurer's motion to compel discovery of certain materials, holding that the reinsurer's contentions are in accord with controlling New York law (Travelers Indemnity Company v. Excalibur Reinsurance Corporation, No. 11-cv-01209, D. Conn.; 2013 U.S. Dist. LEXIS 50134).

Federal Circuit Affirms Noninfringement Findings In Book Holder Patent Case

WASHINGTON, D.C. - A New York federal judge did not err in granting summary judgment of noninfringement in favor of Verifone Systems Inc., the Federal Circuit U.S. Court of Appeals ruled April 8 (Chikezie Ottah v. Verifone Systems Inc., No. 13-1106, Fed. Cir.).

AmBac Financial Seeks Approval Of $101.9M Settlement Payment To Resolve IRS Claims

NEW YORK - Bankrupt AmBac Financial Group Inc. on April 8 moved in the U.S. Bankruptcy Court for the Southern District of New York for approval of a settlement with the Internal Revenue Service under which AmBac will pay $101.9 million to the U.S. government (In Re: AmBac Financial Group Inc., No. 10-15973, Chapter 11, S.D. N.Y. Bkcy.).

New York Federal Judge Awards Attorney Fees To Third-Party Defendant

NEW YORK - A New York federal judge on April 5 adopted a magistrate judge's recommendation that the successor of a company sued for silica and asbestos bodily injury claims is entitled to recover the attorney fees it incurred to win a duty-to-defend ruling (Danaher Corp. v. Travelers Indemnity Co., et al., No. 10-0121, S.D. N.Y.; 2013 U.S. Dist. LEXIS 49692).

Mirena IUD Perforation Cases Centralized In MDL Before Judge Seibel In New York

WASHINGTON, D.C. - More than 40 federal cases alleging that the Mirena hormonal intrauterine device (IUD) can migrate and perforate the uterus were centralized April 8 before U.S. Judge Cathy Seibel of the Southern District of New York (In Re: Mirena IUD Products Liability Litigation, MDL Docket No. 2434, JPMDL).

Failure To Exhaust Administrative Remedies Is Not Excused, 2nd Circuit Rules

NEW YORK - Participants who challenged the amount of benefits due under a top-hat plan were not excused from exhausting administrative remedies before filing a lawsuit under the Employee Retirement Income Security Act, the Second Circuit U.S. Court of Appeals affirmed April 3 in an unpublished summary order (Daniel C. Quigley, et al. v. Citigroup Supplemental Plan for Shearson Transfers, et al., No. 12-613-cv, 2nd Cir.; 2013 U.S. App. LEXIS 6659).

Bayer Combination Aspirin Refund Class OKd, But Judge Denies 1 Cy Pres Recipient

BROOKLYN, N.Y. - A New York federal judge on April 8 certified a $15 million refund class settlement for consumers who purchased Bayer Aspirin with Heart Advantage and Bayer Women's Low Dose Aspirin + Calcium but denied approval of a cy pres distribution of any unused funds to the American Association of Retired Persons (AARP) Foundation and ordered the plaintiffs to come up with a new recipient in two days (In Re: Bayer Combination Aspirin Products Marketing and Sales Practices Litigation, No. 09-md-2023, E.D. N.Y.).

Amicus Counsel Survives Motion To Dismiss In Appeal Of WTC Disaster Payment Order

NEW YORK - A motion to disqualify pro bono counsel appointed to represent the U.S. District Court for the Southern District of New York judge presiding over the World Trade Center Disaster Site Litigation in an appeal before the Second Circuit U.S. Court of Appeals was denied April 8; the appeal is scheduled for oral argument on April 11 (In re: World Trade Center Disaster Site Litigation, No. 11-4021 $(consolidated$), 2nd Cir.).

Judge: Gupta Not A 'Beneficial Owner' Of Goldman Stock Under Securities Law

NEW YORK - Ruling that former Goldman Sachs Group Inc. director Rajat Gupta was not a "beneficial owner" of Goldman Sachs shares under federal securities laws, a Second Circuit U.S. Court of Appeals panel in a per curiam opinion on April 5 affirmed a federal judge's dismissal of a shareholder derivative lawsuit (James Mercer v. Rajat K. Gupta, No. 12-3393, 2nd Cir.).

Panel: Agency Had Standing To Sue Over Fannie Mae, Freddie Mac Losses

NEW YORK - A federal district court did not err in partially denying a motion to dismiss filed by UBS Americas Inc. and various affiliated entities and individuals (collectively, UBS entities) because the Federal Housing Finance Agency's (FHFA) filing of its complaint against the UBS entities was timely and because it had standing to bring the claims, a Second Circuit U.S. Court of Appeals panel ruled April 5 (Federal Housing Finance Agency v. UBS Americas Inc., et al., No. 12-3207, 2nd Cir.).

Judge Says Ethical Wall Allows Silver Point To Trade MF Global Securities

NEW YORK - The federal bankruptcy judge presiding over the Chapter 11 bankruptcy of MF Global Holdings Ltd. (MFGH) on April 8 approved the motion of Silver Point Capital for an order permitting securities trading upon the establishment of an ethical wall (In Re: MF Global Holdings Ltd., No. 11-15059, Chapter 11, S.D. N.Y. Bkcy.).

Divided 2nd Circuit Holds Fiduciary Did Not Breach Duty Of Prudence

NEW YORK - The Second Circuit U.S. Court of Appeals affirmed 2-1 on April 2 that a pension plan failed to demonstrate that the plan administrator breached its fiduciary duties under the Employee Retirement Income Security Act by purchasing and continuing to hold mortgage-backed securities as plan assets, concluding that a decline in the market price of mortgage-backed securities generally does not give rise to a reasonable inference that it was imprudent to purchase or hold them (Pension Benefit Guaranty Corporation, et al. v. Morgan Stanley Investment Management Inc., No. 10-4497, 2nd Cir.; 2012 U.S. App. LEXIS 6710).