Reliance Group Holdings, Inc. v. National Union Fire Insurance

Milonas, J.

(dissenting in part). I disagree with the majority only insofar as their decision relates to Reliance’s claim for reimbursement of the legal expenses attributable to Steinberg. In that regard, the opinion herein states that Steinberg "undoubtedly would have been entitled to indemnification for his defense costs if he had engaged separate counsel”, but instead he was, in effect, represented in the defense of Heckmann v Ahmanson (168 Cal App 3d 119, 214 Cal Rptr 177), by Reliance’s counsel. Therefore, the majority conclude, the issue of Steinberg’s entitlement of indemnification for defense costs under the directors and officers liability and indemnity policy presents a factual matter for the determination of a jury as to whether his actions were that of a shareholder, on the one hand, or officer or director on the other.

However, in my opinion, the settlement in the Heckmann action in no way required Steinberg to pay any part of that settlement or to assume any obligation whatever notwithstanding that he was the controlling stockholder of Reliance and one of the defendants in that litigation. In view of the fact that Steinberg never became obligated in the slightest to make any payment or, indeed, received any benefit in his own name from the settlement, he was never responsible for any portion of the legal fees. Consequently, it is unnecessary to consider whether Steinberg’s control of Reliance was strictly as a shareholder, as defendants contend and, thus, not within the scope of the insurance coverage, or whether he was acting solely as corporate officer or director, as Reliance urges. Since there was no claim against Steinberg which could properly be indemnified pursuant to the policy, none of the settlement costs being "actually and reasonably incurred” (Del Code Annot, tit 8, § 145 [a]) by him personally, the complaint should be dismissed in its entirety.

Sullivan, J. P., and Wallach, J., concur with Carro, J.; Milonas and Kupferman, JJ., dissent in part in an opinion by Milonas, J.

Order of the Supreme Court, New York County, entered May 6, 1991, is modified, on the law, without costs, to grant the motion of the defendant National Union Fire Insurance Company of Pittsburgh, Pa. for summary judgment dismissing the complaint only with respect to plaintiffs’ claim for indemnification regarding the $21.1 million settlement of the Heckmann v Ahmanson litigation, and to grant the motion of the defendant Continental Casualty Company for summary judgment dismissing the complaint in its entirety, and as so modified, affirmed.