Broker-Dealer Litigation - Greenberg Traurig LLP

L. Contribution, Indemnification
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Loumiet v. Office of Comptroller of Currency, 650 F.3d 796 (D.C. Cir. 2011).
The D.C. Circuit held that outside counsel that was retained by a bank’s audit committee
to investigate alleged fraud was entitled to attorneys’ fees under the Equal Access to Justice Act,
5 U.S.C. § 504. Outside counsel prevailed in an administrative proceeding the Office of
Comptroller brought against him under to the Financial Institutions Reform, Recovery, and
Enforcement Act. The D.C. Circuit concluded that the government was not substantially
justified in bringing the administrative proceedings and awarded attorneys’ fees to outside
counsel.
MBIA Inc. v. Fed. Ins. Co., 652 F.3d 152 (2d Cir. 2011).
The Second Circuit held that, under Connecticut law, costs incurred by a special litigation
committee were covered as “defense costs” or expenses incurred in defending or investigating
claims. The court concluded that a New York Attorney General’s subpoena regarding the
insured’s purchase of reinsurance for its guarantee of bonds transaction and an SEC oral request
for documents constituted “Securities Claims” and were covered under the policies at issue.
IAC/InterActiveCorp v. O’Brien, 26 A.3d 174 (Del. 2011).
The Delaware Supreme Court affirmed the trial court’s holding that, given the unusual
circumstances of the case, an indemnification claim was not controlled by the statute of
limitations. The appellee brought an indemnification claim against his former employer for fees
incurred in a shareholder-initiated arbitration. The former employer went bankrupt before the
litigation concluded. The appellee then sued the former employer’s parent company, seeking the
same indemnification.
While acknowledging that the claim would likely be time barred by the applicable
limitations period, the lower court held that due to the exceptional circumstances of the case, the
statute of limitations did not apply to the claim. The lower court held that the claim was timely
under the doctrine of laches. The Delaware Supreme Court affirmed, noting that: (1) appellant
timely pursued his claim against both the former employer and its parent; (2) according to the
parent, it controlled the former employer’s defense in the indemnification action; (3) the
bankruptcy was unexpected; and (4) appellant’s indemnification claim was meritorious. The
Delaware Supreme Court also rejected the appellant’s challenge to the amount of fees awarded.
The court reviewed the trial court’s award for abuse of discretion and found none, noting that the
trial court carefully analyzed the amounts charged and the work performed.
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