On July 30, 2018, the Delaware Supreme Court, in a unanimous order written by Justice Vaughn, issued a decisive coverage victory for McKool Smith's client Teachers Insurance and Annuity Association of America (“TIAA”) and other related entities (collectively, “TIAA”), conclusively securing over $40 million in coverage from three insurance companies, primary insurer Illinois National Insurance Company (an AIG affiliate), and excess insurers Arch Insurance Company and ACE Insurance Company (including interest from the primary insurer).

First, Delaware’s highest court affirmed the October 20, 2016, summary judgment decision of Judge Jan Jurden of the Superior Court of Delaware in favor of TIAA, which found that a settlement of a civil lawsuit involving claims for disgorgement was an insurable loss under New York law. Like the court below, the Supreme Court distinguished the New York cases cited by the Insurers because those cases involved SEC or regulatory orders conclusively linking a government-mandated disgorgement payment with improperly acquired profits of the insured. By contrast, the Supreme Court found that TIAA settled civil suits in which it repeatedly denied any wrongdoing or liability in the underlying actions, that no court had found that TIAA had obtained any ill-gotten gains, and that TIAA’s consistent policies for the timing of valuing participants’ retirement accounts did not result in any such ill-gotten gains. Accordingly, the Supreme Court held that any policy prohibiting coverage for disgorgement did not apply under the facts of this case.

The Delaware Supreme court also upheld a jury verdict that McKool Smith secured for TIAA on December 12, 2016, dismissing the carriers’ reasonableness and consent-to-settle defenses, ruling that TIAA was entitled to full defense costs incurred in the two underlying class action lawsuits at issue.

TIAA is represented by Robert Manley of McKool Smith, and Jennifer C. Wasson of Potter Anderson & Corroon. 

The Supreme Court case is In re TIAA-CREF Insurance Appeals, Nos. 478, 2017; 479, 2017; 480, 2017; 481, 2017.  The lower court case is TIAA-CREF Individual & Institutional Services, LLC, et al., v. Illinois National Insurance Company, et al., C.A. No. N14C-05-178 JRJ CCLD, in the Superior Court of Delaware. 

With more than 185 trial lawyers across offices in Austin, Dallas, Houston, Los Angeles, Marshall, New York, Silicon Valley, and Washington, D.C., McKool Smith has established a reputation as one of America’s leading trial firms. Since 2006, the firm has secured ten nine-figure jury verdicts and twelve eight-figure jury verdicts. The firm has also won more VerdictSearch and The National Law Journal "Top 100 Verdicts" over the last ten years than any other law firm in the country. Courtroom successes like these have earned McKool Smith critical acclaim and helped the firm become what The Wall Street Journal describes as “one of the biggest law firm success stories of the past decade.” McKool Smith represents clients in complex commercial litigation, intellectual property, insurance recovery, bankruptcy, and white collar defense matters.

For more information, please contact Michael R. Coston (212) 402-9450 or mcoston@mckoolsmith.com.


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