A Delaware court has dismissed a $150 million lawsuit filed by Wal-Mart against AIG and Hartford over corporate-owned life insurance policies, ruling that Wal-Marts claims are barred by the statute of limitations.
The Delaware Chancery Court ruled Wal-Mart failed to take appropriate legal action at the time when it should have discovered that the COLI policies it purchased from AIG and Hartford might not produce the results Wal-Mart expected.
A barrage of relevant information was readily available in the marketplace on the legal and legislative issues surrounding the broad-based COLI policies (sometimes called “janitors insurance”) that Wal-Mart purchased, the court said.
This information was more than sufficient to put a company of the size and sophistication of Wal-Mart on notice about the risks associated with those policies well before Wal-Mart decided to pursue its claims.
Under Delaware law, the court noted, the statute of limitations for tort, contract and fiduciary duty claims is 3 years. Wal-Mart filed its lawsuit on Sept. 3, 2002. This means, the court said, that Wal-Mart must have been unaware of its claims prior to Sept. 3, 1999, for the lawsuit to stand against the statute of limitations.
However, the court said, the record is rife with observable or objective factors that should have put Wal-Mart on inquiry notice as early as 1993. Thus, the court said, Wal-Marts action is barred by the statute of limitations and must be dismissed.
The COLI policies at issue in the case were purchased from AIG Life and Hartford Life beginning in 1993.