Asche v. Hartford Ins. Co.
United States District Court for the District of Connecticut
September 28, 2006, Filed
Case No: 3:03cv416 (PCD)
RULING ON MOTION FOR SUMMARY JUDGMENT
Plaintiffs, former directors and officers of the Connecticut Bank of Commerce ("CBC"), allege that Defendant, the Hartford Insurance Company of Illinois ("Hartford"), breached the terms of an insurance policy it issued to CBC and seek a declaratory judgment finding that the policy covers certain claims that have been, "or may be," asserted against Plaintiffs by third parties. Defendant moves for summary judgment on Plaintiffs' Complaint. For the reasons set forth herein, Defendant's Motion for Summary Judgment [Doc. No. 21] is granted.
Plaintiffs are individual directors and officers [*2] of CBC, and are insured by Defendant's Directors, Officers and Company Liability Policy ("Policy"). The coverage period for the Policy extended from 12:01 a.m. on July 1, 2001 through 12:01 a.m. on July 1, 2002. (See Policy, Ex. A to Def.'s Mot. Summ. J.)
On June 25, 2002, the FDIC issued a seven-page order entitled "Prompt Corrective Action Directive Ordering Dismissal" (the "Dismissal Order") in an action entitled In the Matter of Connecticut Bank of Commerce Stamford, Connecticut (FDIC-02-101 PCAD). The Dismissal Order notes weaknesses in CBC loan management practices, specifically attributable to the leadership of Randolph Lenz, Chairman of CBC's Board, and J. Donald Weand, Jr., CBC's President and Chief Executive Officer, and orders the prompt dismissal of Lenz and Weand. Specifically cited in the Dismissal Order are a prior criticism of Lenz in 2001 for causing or permitting CBC to engage in lax, preferential and hazardous lending practices and administrative weaknesses resulting in a FDIC Cease-and-Desist order dated November 30, 2001, an ill-advised $ 3,795,000 credit line referred to CBC by Lenz extended to a gaming operation in Panama, an apparently fraudulent scheme [*3] of unlawful and unsound lending necessary to obtain the $ 20 million required to purchase another lending institution using CBC's own funds, and Weands' demonstrated failure and/or inability to exhibit the management necessary to stop the above practices. (See Dismissal Order, Ex. 6 to Palermini Aff.)
By letter dated June 26, 2002, CBC Chief Operating Officer Darren Schulman, notified Defendant of the Dismissal Order and attached a copy of the same. The letter indicates that CBC's "directors and officers, including but not limited to its Chairman Randolph W. Lenz and its President and CEO J. Donald Weand, Jr., may be subject to claims for wrongful acts." (Schulman Letter, Ex. 6 to Palermini Aff.)Read The Full CaseNot a Lexis Advance subscriber? Try it out for free.
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2006 U.S. Dist. LEXIS 70192 *; 2006 WL 2792881
MARSHALL ASCHE, STEVEN B. LEVINE, TIMOTHY S. REED, MARCIAL CUEVAS and JACK WILLIAM DUNLAP, Plaintiffs, vs. HARTFORD INSURANCE COMPANY OF ILLINOIS, Defendant.
insured, notice, policy period, wrongful act, coverage, summary judgment, claims-made, policies, occurrence, nonmoving, directors and officers, potential claim, stockholders, genuine, depositions, parties, reasons