AMERICAN CASUALTY COMPANY OF READING, P.A. plf-ap, v. MORRIS GELB def-res

15335. AMERICAN CASUALTY COMPANY OF READING, P.A. plf-ap, v. MORRIS GELB def-res — DLA Piper (US) LLP, New York (Joseph G. Finnerty III of counsel), for ap — Dickstein Shapiro LLP, New York (James R. Murray of counsel), for res — Order, Supreme Court, New York County (Melvin L. Schweitzer, J.), entered June 23, 2014, which denied plaintiffs' motion for summary judgment declaring that they have no duty to defend defendants in an adversary proceeding in a bankruptcy action, and granted defendants cross motion for the contrary declaration, unanimously modified, on the law, to declare that plaintiffs have a duty to defend defendants in the adversary proceeding, and otherwise affirmed, without costs.

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15335. AMERICAN CASUALTY COMPANY OF READING, P.A. plf-ap, v. MORRIS GELB def-res — DLA Piper (US) LLP, New York (Joseph G. Finnerty III of counsel), for ap — Dickstein Shapiro LLP, New York (James R. Murray of counsel), for res — Order, Supreme Court, New York County (Melvin L. Schweitzer, J.), entered June 23, 2014, which denied plaintiffs’ motion for summary judgment declaring that they have no duty to defend defendants in an adversary proceeding in a bankruptcy action, and granted defendants cross motion for the contrary declaration, unanimously modified, on the law, to declare that plaintiffs have a duty to defend defendants in the adversary proceeding, and otherwise affirmed, without costs.

Defendants are former directors and officers of Lyondell Chemical Company who seek insurance coverage for their defense of an adversary proceeding commenced by the creditors committee in Lyondell’s bankruptcy proceeding. The bankruptcy proceeding was commenced in 2009 by Lyondell, a company with which it had merged in 2007, and about 90 of their subsidiaries. Before the merger was consummated, a shareholder brought a putative class action challenging the merger price and alleging that Lyondell’s directors and officers had failed to get the best price possible for the company. Plaintiffs provided a defense for the directors and officers in that action, which eventually was dismissed (Lyondell Chem. Co. v. Ryan, 970 A2d 235 [Del 2009]). For the purpose of prosecuting the adversary proceeding, the creditors committee’s claims were assigned to a litigation trust, which alleged in its complaint that the merger price set by the directors resulted in a windfall to them, that the price was derived from misleading financial data, and that the financing arranged to consummate the merger was overleveraged, leading to the bankruptcy.

AMERICAN CASUALTY COMPANY OF READING, P.A. plf-ap, v. MORRIS GELB def-res

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