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Multiple mediations resolve claims of manipulated accounts, embezzlement — $18.7M settlement

Virginia Lawyers Weekly//January 18, 2022

Multiple mediations resolve claims of manipulated accounts, embezzlement — $18.7M settlement

Virginia Lawyers Weekly//January 18, 2022//

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Type of action: Insurance coverage

Injuries alleged: Financial losses of approximately $15 million due to misconduct of a senior collections manager

Name of case: The Brink’s Company v. Certain Underwriters at Lloyd’s London Subscribing to Policy No. B0901/LI1831111

Court: United States District Court for the Eastern District of Virginia

Case no.: 3:21-cv-00658

Name of judge or mediator: Judge Dennis M. Cavanaugh (Ret.)

Date resolved: 12/13/2021

Special damages: Damages to accounts receivable of $15 million; costs to reconstruct accounts receivable sub-ledger of $4.5 million; costs to prepare proof of loss of $781,000; prejudgment interest totaling $3.2 million

Demand: $23,000,000

Offer: $250,000

Verdict or settlement: Settlement

Amount: $18,779,921.73

Attorneys for plaintiff (and city): Robert F. Redmond Jr.,
Matthew D. Fender and Matthew T. Butler, Richmond

Description of case: Brink’s suffered losses due to the misconduct of a senior collections manager in its New York City office. The manager manipulated Brink’s accounts receivable over a course of years to hide problem accounts and make himself look better. His actions included embezzlement of $ 1.2 million dollars. When Brink’s learned of his manipulation and embezzlement, it made a claim on its commercial crime policy carrier — Chubb European Group — and its excess insurer, Lloyd’s of London. Chubb, the primary carrier, paid the embezzlement claim shortly after it was reported. Chubb and Lloyd’s, however, refused to pay for the losses associated with manipulation of accounts receivable. Brink’s filed suit in Henrico Circuit Court in April 2020 seeking to recover for losses attributable to the manipulated accounts receivable. The insurer defendants removed the case to the Eastern District of Virginia. The parties litigated intensely for several months in the EDVA. The parties held several hearing before the court and the court appointed a special master to address discovery issues. In March 2021, when the pretrial schedule reached the point of expert witness disclosures, the parties mutually agreed to dismiss without prejudice in order to allow for mediation. The case was mediated by the insurer’s choice, U.S. District Judge Dennis Cavanaugh (Ret.). Judge Cavanaugh held mediation on July 20, 2021 which did not reach resolution. Brink’s filed suit again in the Eastern District of Virginia on Oct. 18, 2021, and the case was assigned to U.S. District Judge John A. Gibney. Shortly after the case was re-filed, Chubb and Lloyd’s requested another mediation. At the Nov. 2, 2021, mediation before Judge Cavanaugh, Chubb tendered its full remaining policy limits of $8,779,921.73. After Brink’s settled with Chubb, it filed an amended complaint against Lloyd’s only seeking the remaining balance of its damages under the Lloyd’s Excess Policy. Brink’s and Lloyd’s held another mediation with Judge Cavanaugh on Nov.29, 2021. That mediation was not successful but laid the groundwork for further discussions. On December 13, 2021, Lloyd’s agreed to pay Brink’s $ 10 million in settlement. In sum, Brink’s recovered $ 18,779,921.73 as a result of its insurance coverage lawsuit.


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