A New York appellate court recently affirmed a lower court’s ruling that a claims-made policy issued to Syracuse University covered the university’s cost of responding to investigative subpoenas issued in connection with sexual abuse allegations against its former Associate Basketball Coach, Bernie Fine.
In November 2011, Syracuse University became aware of public media reports of allegations that Bernie Fine sexually abused two former participants in the university’s basketball program (referred to as “ball boys”) over a period of years while acting in his capacity as the university’s Associate Basketball Coach. Over the next two months, the university received six subpoenas in connection with state and federal investigations: three grand jury subpoenas duces tecum from the U.S. Attorney’s Office and three grand jury subpoenas duces tecum from the Onondaga County District Attorney’s Office. Thereafter, the university sent its insurer copies of the subpoenas and requested coverage for the costs in responding to them. The insurer denied coverage.
In the ensuing declaratory judgment action, the trial court considered whether the policy’s definition of claim included costs associated with complying with a subpoena. The policy defined claim as “a written demand for monetary, non-monetary or injunctive relief” or a “a civil, criminal, administrative, regulatory or arbitration proceeding for monetary or non-monetary relief which is commenced by: … (ii) return of an indictment, information or similar document (in the case of a criminal proceeding).” The trial court held that the costs were covered, thereby rejecting the insurer’s view of the nature of the subpoena as a “mere discovery device” that is not even similar to any investigative order. In addition, the court noted that an insurer need not be the target of an investigation for coverage to apply.
The insurer appealed the lower court’s ruling. In a terse opinion, the Appellate Division, Fourth Department affirmed the lower court’s granting summary judgment in favor of the university.
For a copy of the decision, click here.