EAST ST. LOUIS – Mascoutah dentist Erik Taube failed to make a case that he can sue the Hartford insurance organization over a subsidiary’s denial of coverage for lockdown losses, Chief U.S. District Judge Nancy Rosenstengel ruled on Feb. 18.
Rosenstengel rejected his bid to treat a commercial policy with Twin City Fire Insurance as a policy of Hartford Financial Services Group holding company.
She dismissed his complaint without prejudice and granted leave to amend it so he could assert that Twin City Fire operates as alter ego of the holding company.
She wrote that a showing of alter ego “is especially difficult for a party to make in a breach of contract actions where courts should apply even more stringent standards to determine when to pierce the corporate veil than they would in tort cases.”
“But simply because it may be difficult for Taube to pierce the corporate veil does not prohibit Taube from amending his complaint and conducting discovery into this alter ego theory,” she wrote.
Taube sued the holding company and Twin City Fire last June, proposing to represent a class of Illinois dentists with lockdown claims.
Holding company counsel Patrick Kenny of Clayton, Mo. moved to dismiss the complaint in August.
He claimed the holding company doesn’t write insurance and didn’t write Taube’s policy or assume any responsibility under it.
He claimed Taube suffered no injury traceable to the holding company’s conduct.
He claimed Twin City Fire issued the denial letter.
Richard Cornfeld of St. Louis opposed the motion for Taube in October, claiming the policy referred to the entity he did business with as The Hartford.
“Nowhere does the policy say that The Hartford means Twin City, and who would think it does?” Cornfeld wrote.
He claimed Taube’s payment reminders showed the name The Hartford “in the company logo below a drawing of a reindeer.”
He claimed the president and secretary who signed the policy turned out to be president and assistant general counsel of the holding company.
He claimed damages “may be inconceivably huge, more than the subsidiaries can pay themselves.”
In November, Kenny replied that the policy identified Twin City Fire as insurer and mentioned the holding company “exactly zero times.”
He claimed that The Hartford is a trade name used by many entities and that it doesn’t refer specifically to the holding company.
“Shared officers and employees do not provide a basis for disregarding corporate separateness,” he wrote.
Rosenstengel found the holding company wasn’t a party to Taube’s policy.
She found the policy explained that a stock company of The Hartford insurance group provided the insurance.
She found it listed Twin City Fire as insurer.
“Even if The Hartford is a policy term, it is not ambiguous,” she wrote.
She found Taube’s policy included language that it was “issued by The Hartford writing company identified on your policy declarations page.”
She found the page identified Twin City Fire as insurance provider.
She allowed discovery on alter ego but expressed doubts.
She wrote that allowing Taube to proceed under the theory appeared to conflict with a principle that directors and officers holding positions with a parent and a subsidiary can and do change hats to represent the corporations separately.
She found Seventh Circuit appellate judges rejected the theory in 2007, because a plaintiff offered no evidence that respecting a defendant’s separate existence would sanction fraud or promote injustice.
In a footnote she wrote, “The Hartford’s logo is not a reindeer. The Hartford has elegantly explained that the trademark logo echoes the majestic stag depicted in Sir Edwin Landseer’s 1851 painting Monarch of the Glen.”
Cornfeld represents Taube in association with Mark Goldenberg of Edwardsville, who filed the complaint, and six other lawyers.