NU Online News Service, March 5, 2004, 11:10 a.m. EST – A Delaware court has dismissed a $150 million lawsuit filed by Wal-Mart against AIG Inc. and Hartford Financial Services Group over corporate-owned life insurance policies.[@@]
Ruling that Wal-Mart’s claims are barred by the statute of limitations, the Delaware Chancery Court ruled Wal-Mart failed to take legal action at the time it should have known that the COLI policies might not produce the results it expected.
There was ample information readily available in the marketplace on the legal and legislative issues surrounding the broad-based COLI policies (sometimes called “janitor’s insurance) that Wal-Mart purchased from AIG and Hartford, the court said.
The court argued that this information was more than enough to put a company of the size and sophistication of Wal-Mart on notice about the risks of those policies well before Wal-Mart decided to pursue its claims.
Under Delaware law, the statute of limitations for tort, contract and fiduciary duty claims is three years. Wal-Mart filed its lawsuit on Sept. 3, 2002. This means that Wal-Mart must have been unaware of its claims before Sept. 3, 1999 for the lawsuit to stand against the statute of limitations, the court noted.
Wal-Mart bought the COLI policies beginning in 1993. It said it purchased the policies, which covered rank-and-file workers, for several reasons, including the tax benefits of paying premiums and other plan costs.