Insurance Company: Alan Gross Not Covered Reply

By Tracey Eaton, Along the Malecon

Poor, poor Alan   Gross. A New Jersey insurance company denied Friday that it owed any money to   Gross, an American development worker jailed in Cuba since 2009. A lawyer for   Federal Insurance Company said Gross wasn’t covered under the kidnap and   ransom policy that Development Alternatives Inc., or DAI, purchased in 2009. Under   the $5 million policy, Federal agreed to pay Bethesda, Md.-based DAI certain   costs if any of its employees were wrongfully detained. Cuban authorities   arrested Gross in December 2009 and accused him of bringing satellite   communication gear into the country in violation of Cuban law. He was later   sentenced to 15 years in prison.

Gross and his wife, Judith Gross, sued Federal on Nov. 16, saying they were entitled to compensation under the policy. But Lisa R. Bonanno, a Washington, D.C., lawyer for Federal, said Gross wasn’t eligible to collect any money. In court documents filed Friday, Bonanno cited three reasons:

  1. First, Plaintiffs lack standing to pursue the claims alleged in the Complaint. …the policy only requires Federal to provide coverage to DAI for the expenses that it pays in connection with a Wrongful Detention. Thus, the policyholder DAI – and DAI alone – is the only party entitled to make the claim that Plaintiffs bring here.
  2. All of the counts pled in the Complaint are based on the false premise that Federal is obligated to  provide coverage directly to the Plaintiffs. That premise clearly is wrong and is belied by the unambiguous terms of the policy, which only require Federal to reimburse DAI for the expenses that it pays. In fact, the policy makes clear that no “loss” is deemed to have been sustained unless DAI has made such a payment.
  3. … Federal’s only obligation under the policy is to reimburse DAI for the expenses that it actually pays. Thus, unless and until that happens, Federal has no duty to pay anything.

Bonanno also said the Gross family’s lawsuit against Federal could not be settled until a separate lawsuit they filed against DAI had run its course. The Gross family sued Federal for past and future legal fees, medical expenses and other expenses. They alleged “breach of contract” and “failure to act in good faith,” and said Federal refused “to fulfill its contractual obligations.” They also said Federal had paid $2.3 million to DAI and other parties because it wanted to deplete the $5 million policy limit and avoid potentially greater payments in the future. Federal denied that in its Jan. 4 response to the lawsuit. It said the Gross family isn’t alleging that DAI has paid any of the specific expenses that they seek to recover.

As a result, no insurable “loss” has been sustained, and Plaintiffs’ claims fail as a matter of law. Federal also reserved the right to challenge Alan Gross’s claim that he was insured under the policy since DAI’s subcontract was with his company, JBDC, and Gross “was not actually an ‘independent contractor’ of DAI.”

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