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Coverage Scenarios

There are numerous situations that may cause a claim to be filed. Below are some possible scenarios.

A minority shareholder in a family-owned electrical contracting business sues the two major shareholders on behalf of the company, claiming they breached their fiduciary duties. The minority shareholder claims that the majority shareholders, by drawing excessively large salaries and bonuses, caused the company to lose money. The court rules in favor of the majority shareholders, but the defense costs amount to $150,000.

A small trucking company hires a contractor to pave its parking lot. The contractor then hires a subcontractor to assist in necessary earth moving, but fails to pay them. They in turn seek payment from the trucking company. The president of the trucking company sends letters to the subcontractors suggesting they seek payment from the contractor. The contractor sues the trucking president, alleging defamation and interference with prospective business advantage, since they suggested that the contractor was financially unstable. The trucking company and its president eventually pay $90,000 to settle the case, on top of the defense costs of $40,000.

An employee decides to take an "early retirement" package primarily because management discussions had outlined that a downsizing would likely occur within the following 12 months. The employee's decision was based upon the understanding that voluntarily leaving the company was more lucrative than being terminated. A year after the employee left the company, the reductions in staff had not occurred, and the individual's position had been posted and filled. The ex-employee filed a suit, claiming management had misled him by providing incorrect projections that resulted in a career decision with significant ecnomic loss. While the employee eventually was rehired, legal fees amounted to $35,000.

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