J.P. MORGAN v. VIGILANT INS. CO.

Nos. 600979/09, 4899.

91 A.D.3d 226 (2011)

936 N.Y.S.2d 102

2011 NY Slip Op 8995

J.P. MORGAN SECURITIES INC. et al., Respondents, v. VIGILANT INSURANCE COMPANY et al., Appellants.

Appellate Division of the Supreme Court of New York, First Department.

Decided December 13, 2011.


Attorney(s) appearing for the Case

DLA Piper LLP (US), New York City ( Joseph G. Finnerty III , Megan Shea Harwick , Eric S. Connuck and Miles D. Norton of counsel), for Vigilant Insurance Company and Federal Insurance Company, appellants.

Drinker Biddle & Reath LLP, New York City ( Douglas M. Mangel , Marsha J. Indych , Ericka R. Lenz and David F. Abernathy of counsel), for Travelers Indemnity Company, appellant.

D'Amato & Lynch, LLP, New York City ( Luke D. Lynch, Jr. , Richard F. Russell and Liza A. Chafiian of counsel), for National Union Fire Insurance Company of Pittsburgh, Pa., appellant.

Kaufman Borgeest & Ryan LLP, New York City ( Scott A. Schechter of counsel), for Liberty Mutual Insurance Company, appellant.

Clyde & Co. US LLP, New York City ( Edward J. Kirk and Allison M. Calkins of counsel), for Certain Underwriters at Lloyd's London, appellant.

Landman Corsi Ballaine & Ford P.C., New York City ( Michael L. Gioia of counsel), for American Alternative Insurance Corporation, appellant.

Proskauer Rose LLP, New York City ( John H. Gross , Francis D. Landrey , Steven E. Obus and Seth Schafler of counsel), for respondents.

TOM, J.P., FRIEDMAN, ABDUS-SALAAM and ROMÁN, JJ., concur with ANDRIAS, J.


OPINION OF THE COURT

ANDRIAS, J.

The disgorgement payment to the Securities and Exchange Commission (SEC) in settlement of charges that plaintiffs' predecessors wilfully facilitated illegal mutual fund trading practices does not constitute an insurable loss under the primary professional liability policy issued by defendant Vigilant Insurance Company or the "follow the form" excess policies issued by the other insurer defendants. Accordingly, we reverse...

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