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Posted: April 3, 2018

First Department Denies Motion to Stay Order Directing Excess Insurers to Advance Defense Costs

This blog previously covered Justice Sherwood’s decision in Freedom Specialty Ins. Co. v. Platinum Mgt. (NY), LLC, 2017 NY Slip Op 32728(U), which granted a preliminary injunction directing three excess D&O insurers to advance attorneys’ fees and costs for the defense of a securities fraud prosecution and a related SEC enforcement action.  (N.B. I represent one of the insureds and argued the preliminary injunction motion on behalf of all the insureds.)  On March 22, 2018, the First Department denied the motion of one of the excess insurers (Freedom Specialty) to stay the preliminary injunction pending appeal.  Thus, advancement of much needed funds, pursuant to the order, must commence immediately.

Also of note:  Justice Sherwood’s ruling was recently the subject of an extended article in the New York Law Journal (available here), which analyzes the decision as a “demonstrat[ion] that the courts [] understand the importance of advancement of defense costs related to regulatory proceedings.”

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