COURT DECISIONS

Rough Notes, Jul 2007

On appeal, Sellers asserted that the three-year statute of limitations began to run on the date of the "actual injury." According to Sellers, the "actual injury" occurred when the Tennessee Court of Appeals declared him to be liable for his son's actions. That date was February 16, 2001, less than three years from the date he filed the lawsuit. The defendants argued that the statute of limitations began to run on the date that American States denied Sellers' claim: August 26, 1997.

The Supreme Court of Mississippi found that the trial court erred by finding in favor of Sellers. In reaching its decision, the court noted that it was clear that the insurance policies were for business insurance only. Even if Sellers had never received copies of the actual policies, his knowledge of their contents was to be assumed, especially in light of the fact that he had renewed them. The court also emphasized that Sellers knew in August 1997 that his claim had been denied, and at that point he was put on notice that there could be a problem. Sellers was aware of his potential liability on the date American States denied the claim, not the date the Tennessee court found him liable. Thus, the statute of limitations began to run on August 26, 1997, the date Sellers received notice of denial of his claim. More than five years had passed from the date Sellers filed his lawsuit against the defendants, so the lawsuit was barred by the statute of limitations.

The decision of the lower court was reversed, and the court was directed to dismiss Sellers' claims against the Oaks and DeSoto Insurance.

Oaks vs. Sellers-No. 2006-IA00005-SCT-Supreme Court of Mississippi-April 12, 2007-953 Southern Reporter 2d 1077.

Business fraud defendant seeks personal umbrella cover

Jon Amato was a defendant in a securities fraud lawsuit filed by Lea Goldblatt and the estate of Noel Goldblatt. The lawsuit alleged that Amato and other officers, directors, and affiliates of Goldblatt's Bargain Stores, Inc., had wrongfully induced Lea and Noel Goldblatt to pay $1.2 million in exchange for certain ownership interests in organizations they controlled. The complaint alleged that the Goldblatts had never received anything in return for their payments, that Amato had fraudulently induced them to invest $375,000 by making intentional false statements and misrepresentations, that he had breached his contract with and his fiduciary duty to the Goldblatts, that he had violated certain Illinois securities laws, and that he had committed common law fraud.

Amato had a personal umbrella policy with Allstate Insurance Company. The policy provided: "Allstate will pay damages which an insured person becomes legally obligated to pay because of bodily injury, personal injury or property damage, subject to the terms, conditions and limits of this policy. Bodily injury, personal injury and property damage must arise from a covered occurrence. We will not pay any punitive or exemplary damages, fines and penalties." In addition, the policy provided that Allstate would defend "an insured person sued as the result of an occurrence covered by this policy." Occurrence was defined as "an accident during the policy period, including continuous and repeated exposure to substantially the same general harmful conditions during the policy period, resulting in bodily injury, personal injury, or property damage. "