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The Board of Appeal confirms termination of Office Depot's action against AIG



A federal appeals court has upheld the dismissal of a lawsuit filed by Office Depot Inc. against an entity of American International Group Inc., stating that the insurer had no obligation to defend or injure the tortfeasor in connection with a whistleblower. litigation that resulted in a settlement of $ 68.5 million plus $ 9 million in attorney fees.

In its second decision in the case, the 9th U.S. Circuit Court of Appeals in San Francisco agreed with a lower court in Pasadena, California, that AIG Specialty Insurance Co. had no obligation to defend or injure the Boca Raton, Florida-based dealer under a political exclusion in its coverage, according to Friday's judgment in Office Depot Inc. v. AIG Specialty Insurance Co.

The case involved 1

9 political subdivisions in California, on whose behalf the whistleblower originally sued, which interfered with the lawsuit. The employer had claimed that Office Depot had overcharged the office supplies units.

Following AIG's denial of coverage, the district court granted AIG a summary judgment on the allegations of breach of AIG's obligation to defend and replace Office Depot but refused to dispose of an item

On appeal, the 9th Circuit unanimously overturned the lower court's decision The Act excludes coverage, but gave the district court the right to consider AIG's alternative arguments based on the insurance's scope for coverage and exceptions.

On arrest, the district court ruled again in AIG's favor and was confirmed by a three-judge appeals panel.

The Panel Court stated that the insurance contract's exclusion from contract excludes coverage.

"We conclude, noting the inconvenient breadth of such exclusions of contract, that the charges in the (whistleblower) trial are adopted directly or indirectly regarding Office Depot's contractual obligations and therefore the trial is excluded from coverage under exclusion of contract," the decision states and confirms the decision of the lower court.

Lawyers in the case did not respond to a request for comment.

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