Level 3 Communications v. Federal Insurance Co.
United States Court of Appeals for the Seventh Circuit
272 F.3d 908 (2001)
- Written by Rich Walter, JD
Facts
Federal Insurance Company (Federal) (defendant) insured Level 3 Communications, Inc. (Level 3) (plaintiff) under a directors-and-officers policy that defined insurable losses as including amounts paid to settle a claim based on the insured’s alleged wrongful act. The former shareholders of a company acquired by Level 3 sued Level 3 for having gained control of the company through fraudulent misrepresentations. The shareholders claimed $70 million in damages. Level 3 settled the suit for $12 million but did not admit any guilt. When Federal refused to cover Level 3’s settlement payment, Level 3 sued and obtained a federal district court’s judgment in its favor. Federal appealed to the Seventh Circuit.
Rule of Law
Issue
Holding and Reasoning (Posner, J.)
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