FILED: NEW YORK COUNTY CLERK 06/19/ :05 PM INDEX NO /2015 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 06/19/2015

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1 FILED: NEW YORK COUNTY CLERK 06/19/ :05 PM INDEX NO /2015 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 06/19/2015 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK X PARIS & CHAIKIN, PLLC, IAN M. CHAIKIN, ESQ. and JASON PARIS, ESQ. Index No /2015 Plaintiffs, v. LIBERTY INSURANCE UNDERWRITERS, INC. ANSWER TO COMPLAINT WITH AFFIRMATIVE DEFENSES Defendant X Defendant, LIBERTY INSURANCE UNDERWRITERS INC. ( Liberty ) by and through its attorneys, KAUFMAN BORGEEST & RYAN LLP, as and for its Answer to the Plaintiffs Complaint for Declaratory Judgment (the Complaint ), states and alleges upon information and belief: PARTIES 1. Liberty admits the allegations contained in paragraph 1 of the Complaint. 2. Liberty denies knowledge or information sufficient to form a belief as to each and every allegation contained in paragraphs 2 and 3 of the Complaint. 3. Liberty denies each and every allegation contained in paragraph 4 of the Complaint. VENUE 4. Liberty admits the allegations contained in paragraph 5 of the Complaint. FACTUAL BACKGROUND 5. Liberty denies knowledge or information sufficient to form a belief as to each and every allegation contained in paragraphs 6, 7, 8, 9 10, and 11 of the Complaint. 6. With respect to paragraph 12 of the Complaint, Liberty admits that P&C sent a letter dated October 17, 2013 to Liberty regarding Rubino s alleged wrongdoing. Liberty

2 respectfully refers the Court to the October 17, 2013 correspondence which, in its entirety, speaks for itself. Liberty admits that it issued New York Lawyers Professional Liability Insurance Policy No. LPA (the Policy ) to Paris & Chaikin PLLC ( P&C ). All other allegations in paragraph 12 of the Complaint are denied. 7. Liberty admits the allegations in paragraph 13 of the Complaint to the extent that that Liberty sent a letter to P&C on November 12, Liberty respectfully refers the Court to the November 12, 2013 correspondence which, in its entirety, speaks for itself. 8. With respect to paragraph 14 of the Complaint, Liberty admits that it received a letter from Woodbridge Structured Funding, LLC dated April 23, 2014 regarding losses it allegedly sustained. Liberty respectfully refers the Court to the April 23, 2014 correspondence which, in its entirety, speaks for itself. All other allegations in paragraph 14 of the Complaint are denied. 9. With respect to paragraphs 15 and 16 of the Complaint, Liberty admits that it sent P&C a letter dated July 17, Liberty respectfully refers the Court to its July 17, 2014 correspondence which, in its entirety, speaks for itself. Liberty denies all other allegations and characterizations in paragraphs 15 and 16 of the Complaint. 10. With respect to paragraph 17 of the Complaint, Liberty admits that JG Wentworth sent P&C a letter dated August 8, 2014, regarding alleged losses suffered by JG Wentworth. Liberty respectfully refers the Court to the August 8, 2014 letter from JG Wentworth, which, in its entirety, speaks for itself. Liberty denies all other allegations and characterizations made in paragraph 17 of the Complaint. 11. With respect to paragraphs 18 and 19 of the Complaint, Liberty admits that on April 8, 2015, Twin Piers Investments, LLC ( Twin Piers ), brought an action in the Supreme Court of the State of New York, County of New York, purportedly as an assignee of Woodbridge Structured Funding, LLC, against P&C, Ian M. Chaikin and Jason Paris, seeking in excess of $2 million for alleged malpractice and employee fraud. 2

3 THE POLICY 12. With respect to paragraphs 20 and 21 of the Complaint, Liberty admits that it issued New York Lawyers Professional Liability Insurance Policy No. LPA to P&C for the Policy Period effective June 18, 2013 through June 18, 2014, which provides for a $1 million limit of liability for each claim or related claims, a $2 million aggregate limit of liability, and a $2,500 deductible per claim, subject to all of the other terms, exclusions, conditions, and endorsements in the Policy. All other allegations in paragraphs 20 and 21 of the Complaint are denied. 13. Liberty admits the allegations contained in paragraph 22 of the Complaint. 14. Liberty denies each and every allegation contained in paragraph 23 of the Complaint. Liberty has fully reserved its rights, privileges and defenses under the Policy, at law and in equity, and has not conceded that P&C s claims are unqualifiedly covered by the Policy. Liberty respectfully refers all questions of fact to the trier of fact and all questions of law to the Court. 15. With respect to paragraph 24 of the Complaint, Liberty respectfully refers the Court to Liberty s coverage position letter dated July 17, 2014, which, in its entirety, speaks for itself. All other allegations made in paragraph 24 of the Complaint are denied. 16. With respect to paragraph 25 of the Complaint, Liberty admits that the paragraph accurately quotes a portion of the Policy, but respectfully refers the Court to the Policy which, in its entirety, speaks for itself. All other allegations made in paragraph 25 of the Complaint are denied. 17. Liberty denies each and every allegation contained in paragraph 26 of the Complaint. 18. Liberty denies each and every allegation contained in paragraph 27 of the Complaint and respectfully refers all questions of law to the Court. 19. Liberty denies each and every allegation contained in paragraph 28 of the Complaint. 20. Liberty denies each and every allegation contained in paragraph 29 of the Complaint and respectfully refers all questions of law to the Court. 3

4 21. Liberty denies each and every allegation contained in paragraph 30 of the Complaint and respectfully refers all questions of law to the Court. First Cause of Action - Declaratory Judgment Answering paragraph 31 of the Complaint, Liberty repeats and realleges each and every denial and denial made upon information and belief as to each of the allegations of the Complaint reiterated and realleged by the plaintiffs in paragraphs "1" through 30 of the Complaint. 23. Liberty submits that paragraph 32 of the Complaint is merely an accurate partial quotation from the CPLR, and, accordingly, no response is required. To the extent that a response to paragraph 32 of the Complaint is required, Liberty denies all allegations contained therein and respectfully refers all questions of law to the Court. 24. With respect to paragraph 33 of the Complaint, Liberty admits that a coverage dispute exists now or will exist in the future and respectfully refers all questions of law to the Court. 25. Liberty denies each and every allegation contained in paragraphs 34, , 37 and 38 of the Complaint. Second Cause of Action - Declaratory Judgment Answering paragraph 39 of the Complaint, Liberty repeats and realleges each and every denial and denial made upon information and belief as to each of the allegations of the Complaint reiterated and realleged by the plaintiffs in paragraphs "1" through 38 of the Complaint 27. With respect to paragraph 40 of the Complaint, Liberty respectfully refers the Court to Liberty s coverage position letter dated July 17, 2014, which, in its entirety, speaks for itself. Liberty admits that the paragraph accurately quotes a portion of the Policy, but respectfully refers the Court to the Policy which, in its entirety, speaks for itself. All other allegations made in paragraph 40 of the Complaint are denied. 4

5 28. Liberty denies knowledge or information sufficient to form a belief as to each and every allegation contained in paragraph 41 of the Complaint. 29. Liberty denies the allegations contained in paragraphs 42, 43, 44, 45 and 46 of the Complaint and respectfully refers all questions of fact to the trier of fact and all questions of law to the Court. Third Cause of Action - Breach of Contract Answering paragraph 47 of the Complaint, Liberty repeats and realleges each and every denial and denial made upon information and belief as to each of the allegations of the Complaint reiterated and realleged by the plaintiffs in paragraphs "1" through 46 of the Complaint. 31. With respect to paragraph 48 of the Complaint, Liberty respectfully refers the Court to the Policy, which, in its entirety, speaks for itself, and refers all question of law to the Court. 32. With respect to paragraph 49 of the Complaint, Liberty admits that P&C has paid the requisite premiums and gave timely notice with respect to the claims brought against P&C. Liberty denies all other allegations contained in paragraph 49 of the Complaint. 33. Liberty denies the allegations contained in paragraph 50 of the Complaint. Liberty s coverage position is articulated in its July, 17, 2014 letter, which, in its entirety, speaks for itself. 34. Liberty denies each and every allegation contained in paragraph 51 of the Complaint. WHEREFORE PARAGRAPHS 35. Liberty is not required to respond to the Complaint s Wherefore Paragraphs as those paragraphs are merely a characterization of the relief plaintiffs seeks. To the extent that the prayer for relief is deemed to contain allegations, Liberty denies each and every allegation and 5

6 specifically denies that plaintiffs are entitled to damages, costs, disbursements, attorneys fees, interest, and any other form of relief. be granted. AFFIRMATIVE DEFENSES FIRST AFFIRMATIVE DEFENSE 36. The Complaint fails to state a cause of action against Liberty upon which relief may SECOND AFFIRMATIVE DEFENSE 37. Plaintiff s claims are barred by the terms, conditions and exclusions of New York Lawyers Professional Liability Insurance Policy No. LPA (the Policy ). THIRD AFFIRMATIVE DEFENSE 38. The First and Third Counts in the Complaint should be dismissed because a single $1 million limit of liability applies to the underlying claims asserted against P&C. Pursuant to the Multiple Insureds, Claims and Claimants provision in the Policy, Claims alleging, based upon, arising out of or attributable to the same or related wrongful acts shall be treated as a single claim regardless of whether made against one or more than one of you. All such claims, whenever made, shall be considered first made during the policy period or any extended reporting period in which the earliest claim arising out of such wrongful acts was first made, and all such claims shall be subject to the same limits of liability. The claims asserted against P&C related to Rubino s alleged wrongdoing, all arise out of and/or are attributable to the same or related wrongful acts, namely Rubino s alleged serial fabrication of court approvals for structured settlement transactions and P&C s failure to identify or stop such activity. All of the claims brought against P&C allege and are based upon, arise out of and are attributable to these same or related wrongful acts. As such, all such matters are deemed a single Claim under the terms of the Policy and are subject to a single $1 million limit of liability. FOURTH AFFIRMATIVE DEFENSE 39. The Second Count in the Complaint should be dismissed because a declaratory judgment on the applicability of Exclusion 2 of the Policy is not ripe for decision. Liberty has not 6

7 denied coverage based on Exclusion 2. By its terms, Exclusion 2 only applies when the Insured engaged in fraudulent, criminal, malicious, or deliberately wrongful acts or omissions, and such acts or omissions are finally adjudicated or admitted by the Insured. Liberty has only reserved its right to apply this exclusion if and when such acts or omissions are established by a final adjudication or admission by the Insured. FIFTH AFFIRMATIVE DEFENSE 40. The Third Count in the Complaint should be dismissed because there has been no breach or anticipatory breach of contract. Liberty has reserved its rights under the Policy and advised that the submitted matters appear to constitute a single Claim subject to a single $1 million limit of liability. P&C has not yet requested indemnity payment to pay for any settlements or judgments in these underlying matters. SIXTH AFFIRMATIVE DEFENSE 41. The causes of action are barred to the extent that they were not filed within the applicable statutes of limitation and/or administrative filing periods. SEVENTH AFFIRMATIVE DEFENSE 42. The causes of action are barred, in whole or in part, by the principles of waiver and/or estoppel. EIGHTH AFFIRMATIVE DEFENSE 43. Plaintiffs claims are barred or limited to the extent that Plaintiffs have failed to mitigate their damages. NINTH AFFIRMATIVE DEFENSE 44. Plaintiff s claims are barred or limited to the extent that Liberty is entitled to a set off of amounts sought in this action which have been or will be collected from any other source. TENTH AFFIRMATIVE DEFENSE 45. Defendant Liberty reserves the right to amend this answer to assert additional affirmative defenses, as revealed or suggested by ongoing discovery and investigation. 7

8 WHEREFORE, defendant Liberty hereby demands judgment dismissing Plaintiffs Complaint herein, with prejudice as to defendant Liberty together with the costs and disbursements of this action, including reasonable attorneys fees, and for such other, further and different relief as this Court may deem just and proper. To the best of my knowledge, information and belief, formed after an inquiry reasonable under the circumstances, the presentation of this paper or the contentions herein are not frivolous, as that term is defined in Part 130 of the Court Rules. Dated: New York, New York June 19, 2015 KAUFMAN BORGEEST & RYAN LLP By: /s/ Andrew Oldis Julianna Ryan Andrew Oldis Attorneys for Defendant LIBERTY INSURANCE UNDERWRITERS INC. 120 Broadway, 14 th Floor New York, New York (212)

9 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK X PARIS & CHAIKIN, PLLC, IAN M. CHAIKIN, ESQ. and JASON PARIS, ESQ. Index No /2015 Plaintiffs, v. LIBERTY INSURANCE UNDERWRITERS, INC. ATTORNEY S AFFIRMATION OF SERVICE BY E-FILING Defendant X I, Andrew Oldis, an attorney admitted to practice law in the Courts of the State of New York, hereby affirm that I am not a party to this action, I am over 18 years of age and maintain my place of business in New York, New York. That on the 19 th day of June, 2015, I caused the attached ANSWER TO COMPLAINT WITH AFFIRMATIVE DEFENSES to be served upon all parties as appearing on the Supreme Court, State of New York Electronic Filing website at the addresses designated by said parties. /s/ Andrew Oldis ANDREW OLDIS