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Insurer Must Defend All Claims If Any Is Covered by Policy

Carrier is not required to cover legal fees incurred before claim was tendered by insured
An insurance carrier has a duty to defend its insured against all claims contained in a complaint if any one of them is potentially covered by the insurance policy, the Ninth Circuit Court of Appeals has affirmed. But the carrier is not obligated to pay damages imposed by the trial court on its own initiative or to pay legal fees incurred by the insured in the six months before it tendered the claim to the carrier. ( Research Corporation v. Westport Insurance Corporation , 9th Cir., No. 05-16031, 8/20/08.) The nonprofit Research Corporation was sued for breach of contract, conversion of royalties, conversion of technical information, fraudulent concealment, breach of the implied covenant of...

Court Acquits Jihadists Of Some False Reporting Charges

Executives not guilty of failing to report successor status on Form 1023, but are guilty of other false statements
Despite a jury verdict convicting three nonprofit executives of a series of crimes involving false filings with the IRS and false statements to other governmental agents, the federal District Court in Massachusetts has acquitted the defendants on certain charges involving improper reports or statements. ( U.S. v. Mubayyid , Crim. No. 05-40026, 7/24/08 .) ( See Nonprofit Issues ®, 1/1/08 .) Early In its opinion the Court recognized that “the struggle against religious and political extremism in general, and terrorism in particular, is likely to be the principal challenge facing this nation, and the rest of the world, for many years to come.” But the role of the Court, it said, “is...

Condo Directors Not Personally Liable Although Association Is Liable for Failure to Act

California Court gives deference to directors’ judgment, but affirms Order for Association to fix building
A Court of Appeals in California has held that there is no internal inconsistency in a jury verdict holding a condominium association liable to unit owners for defects in the building but exonerating individual directors from personal liability for failing to order the work done. ( Ritter & Ritter v. The Churchill Condominium Association , Ct. of App., Second App. Dist., Div. Eight, No. B187840, 7/22/08.) When a unit owner complained of odors in the unit, the problem was traced to a failure to put adequate fire stopping around pipes penetrating the slab between floors. When the owners demanded that the Association fix the problem, the directors decided not to do so, ordered the owners...

Court Orders Nonprofit to Provide Access to All Financial Records

Offer to show records at 10 p.m. Saturday is not within reasonable business hours
An appellate court in Texas has ordered a nonprofit condominium council to give a director access to all of its financial records and not just a computer disk containing copies of its computer entries. The Court has held that the state’s nonprofit corporation law, the condominium law, and the organization’s bylaws all require access to the bills, contracts, and other backup documents that the Council keeps in the normal course of its accounting. ( Shioleno v. Sandpiper Condominium Council , Ct. of App., TX, Thirteenth Dist., No. 13-07-00312, 7/17/08.) A member of the Council’s board sought access to the records in 2006 because he suspected accounting irregularities, poor management...

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