An insurer seeking more than $4 million from its underwriter after settling with former New York Giants and Tampa Bay Buccaneers kicker Lawrence Tynes, whose career was cut short by an infected toe, got a sympathetic hearing from federal appeals judges Tuesday.
Tynes, known for kicking the legendary field goal in 2008 that sent the Giants to the Super Bowl, sued the Buccaneers for $20 million in 2015, alleging he contracted a staph infection at a team facility that ended his career. Now the insurer,
American Specialty lawyer Larry Ingram of Porter Wright Morris & Arthur LLP argued Tuesday the lower court was correct in ruling Indiana law required Axis to allow American Specialty to participate in any claim settlement. But Seventh Circuit Judges Ilana Rovner and David Hamilton, two of the judges on a three-judge panel hearing the case, expressed doubts about that reasoning.
Axis lawyer Brian Paul of Faegre Drinker Biddle & Reath LLP argued, and Hamilton seemed to agree, that Axis invited American Specialty to participate but American Specialty declined for more than a year to even respond to Axis queries.
“It looks to me like your client put its head under the covers,” Hamilton told Ingram.
And when Ingram said that Axis’s interpretation of the agreement between insurers provided no risk to Axis and all the risk to American Specialty, Rovner said, “I could not agree less.”
The lower court mistakenly ruled American Specialty didn’t need to indemnify Axis against any loss on a potential claim filed by Tynes because, under Indiana law, Axis fully complied with an agreement making American Specialty an underwriter to the Buccaneer policy, Paul argued. Part of that contact allowed Axis to settle any dispute with the Buccaneers without the approval of American Specialty, he said.
“Axis can’t be faulted for exercising its contractual rights,” Paul said.
Buccaneer insurance agent Marsh & McLennan had contacted American Specialty seeking an insurance quote for excess employer’s liability insurance as a result of a possible Tynes lawsuit. American Specialty referred Marsh’s query to Axis; American Specialty served as the underwriter for an Axis excess policy to the Buccaneers in June 2013.
The American Specialty-Axis underwriting agreement permitted Axis to handle by itself any legal disputes involving the policy. Axis did so and negotiated a payment to the Buccaneers without admitting liability in exchange for the Buccaneers agreeing not to sue Axis. Axis then sued American Specialty in Indiana court, where American Specialty is located, seeking indemnification for Axis’s contribution to the settlement, which Axis claimed in a court filing was more than $4 million.
American Specialty argued that Axis isn’t entitled to indemnification under Indiana law because Axis voluntarily decided to settle the Tynes litigation, and because Axis needed to provide American Specialty an opportunity to defend itself before settling, which it didn’t do. US Judge Damon Leichty agreed and in March 2023 dismissed the case. Axis appealed.
Paul and Stephanie Gutwein of Faegre Drinker Biddle & Reath LLP represent Axis Insurance Co. Ingram and Christina Flatau of Porter Wright Morris & Arthur LLP, and William Kealey of Stuart & Branigin LLP represent American Specialty Insurance & Risk Services Inc.
The case is Axis Insurance Co. v. American Speciality Insurance & Risk Services, 7th Cir., No. 23-1698, oral arguments 1/9/24.