News & Events

On July 10, 2013, the Superior Court of Pennsylvania vacated a $95 million judgment against the Firm’s client American Nuclear Insurers (ANI).  The dispute involved the extent of ANI’s obligation to provide coverage for hundreds of radiation injury claims brought against ANI’s insureds, Babcock & Wilcox and ARCO.  ANI was defending the claims subject to a reservation of rights when the insureds settled the claims for $80 million over ANI’s objection and without ANI’s consent.   The trial court determined that ANI was obligated to indemnify the insureds for the settlement if the settlement was determined to be “fair and reasonable,” rejecting ANI’s contention that under its consent-to-settlement rights ANI owed no coverage unless its decision to reject settlement was found to be in bad faith.  The case was tried to a jury, which found the settlement to be fair and reasonable, and judgment was entered against ANI in the amount of $95 million (including interest).  Addressing the issue as one of first impression in Pennsylvania, the Superior Court rejected the “fair and reasonable” standard adopted by the trial court.  Instead, the appellate court held that when an insured accepts an insurer’s defense subject to a reservation of rights, the insurer retains the right under its policy to control settlement so long as it does not do so in bad faith.  Accordingly, the appellate court vacated the judgment and remanded with instructions to conduct a new trial under the correct standard.

The Simpson Thacher team representing ANI includes Andrew Amer, Michael Garvey, Susannah Geltman, Meghan Cannella and Matthew O’Connor.