Case Law Analysis
US Judge Strikes Restraining Notice, Allowing Defense Counsel to Be Paid in Insurance Spat
U.S. District Judge Lewis J. Liman of the Southern District of New York said a director-and-officer liability policy required that defense costs be paid directly to counsel and did not constitute a debt that could be attached as a property interest under New York civil practice rules.
A Manhattan federal judge has invalidated a restraining notice that barred an insurer from paying defense costs for a corporate officer who was slapped with a $3.3 million judgment for failing to pay off a 2016 loan.
The ruling found that the notice, served by plaintiff KLS Diversified Master Fund on insurer Liberty Special Markets, could not be used to prevent counsel for defendant Sean McDevitt from being paid for their work on the civil case.
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