In Latest Salvo, AIG Says Its Former Dellwood Executives Are ‘Bad Leavers’

In its latest court filing to keep alive a lawsuit against startup Dellwood Insurance, American International Group said its new competitor has failed to explain why the suit cannot proceed.

AIG argued in a brief filed yesterday in U.S. District Court in New Jersey that Dellwood “sought to argue” that AIG could not proceed with a lawsuit against Dellwood after it previously dropped claims against three of its executives — all former AIG employees.

Dellwood filed to dismiss the case in June res judicata doctrine. Dellwood asserted that since AIG’s actions against Dellwood included allegations similar to the claims against the individual directors, the suit could not stand. AIG initially named Michael Price, Kean Driscoll and Thomas Connolly individually in the suit. Each was employed with AIG before starting underwriter E&S Dellwood. Price and Driscoll are CEO and CUO, respectively, of Dellwood, which launched in March for wholesale brokers with an eye on small and midsize business risks. Connolly is Dellwood’s chief financial officer.

But the doctrine, the AIG said, applies only to subsequent cases, not to bar claims in the same case. AIG called Dellwood’s arguments “quixotic.”

“However much Dellwood may try to spin it otherwise, the former executives’ voluntary dismissal was not an adjudication of the merits of AIG’s claim in their favor,” AIG said. The company went on to allege that Dellwood and its executives stole confidential information and trade secrets later used in Dellwood’s business plans, while violating their employment contracts with AIG.

In addition, AIG used the filing to respond to other Dellwood claims, including that AIG was using the court system to defeat a “startup.”

“With all due respect to Dellwood’s ambitions, the reality is that, as one of the largest insurance companies in the world, AIG competes with countless competitors, virtually all of them larger than Dellwood,” the company’s lawyers wrote. “AIG, however, will not tolerate any company misappropriating its confidential information and assets to compete unfairly.”

Dellwood, in his dismissal filing, also claimed that AIG makes it very difficult for employees to leave the company for other jobs in the industry, even referencing the lyrics to the Eagles song. Hotel California: “You can leave whenever you want, but you can never leave.”

AIG said the insurance industry is full of people from other companies who spent significant time at AIG, adding that “the critical difference in this case is that the former executives who founded Dellwood were bad people who left and breached their obligations which they owed to AIG”.

Returning to Hotel Californiacounsel for AIG pointed out that the song is not about capturing guests, but is “a metaphor that describes the plight of those who, like Dellwood and its executives, have made bad decisions and engaged in other problematic behaviors . . .”

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