Cases
Complex Insurance Coverage Recovery

Recovery of Insurance Proceeds

5/1/2011

Anthony Ostlund satisfactorily resolves dispute involving denial of key-person/succession plan funding, recovering insurance proceeds and bad faith damages

This was an interesting and challenging case, straight out of an episode of Law and Order that despite the tragic circumstances of Mr. Dobbs’ death, was settled to the satisfaction of all concerned.” --Steve Phillips, Attorney for Prostaff, Inc. 

Client Issue

Anthony Ostlund represented Prostaff, Inc., a privately owned, national provider of temporary help services, and the family of Jeff Dobbs, Prostaff’s founder, CEO, and a substantial shareholder.  

Jeff Dobbs died in 2007 in a hunting accident. Prostaff and related parties were the beneficiaries of $25 million in American General Insurance life insurance policies on Mr. Dobbs’ life.  The purpose of Prostaff’s insurance policy was to fund a buy-sell agreement that would allow the other owners of Prostaff to purchase Mr. Dobbs’ interest in the company in the event of his death. American General denied the claim based on a “Suicide Exclusion” in the policies. 

The Anthony Ostlund Approach

On behalf of Prostaff, Anthony Ostlund sued American International Group and American General Insurance for $25 million in life insurance proceeds, as well as additional damages of $10 million for bad faith coverage denial.  We secured expert testimony and other evidence showing that the death was accidental and demonstrating major flaws in American General's claim investigation.  Anthony Ostlund successfully kept AIG in as a defendant despite motions seeking its dismissal, even though the coverage in question was issued by its subsidiary, American General.  

Although the events surrounding Jeff Dobbs death took place in Minnesota, we chose to bring the case in state court in Houston, Texas, since Prostaff has significant business activities in Texas and in the Houston area.  Before initiating the suit, we conducted jury research “mini-trials” to assess which jurisdiction (Minnesota or Texas) would be best for the case.  We successfully brought and kept the case in our chosen jurisdiction.  We prevailed against motions by the insurer to dismiss and for summary judgment, despite the challenging nature of the facts.  We understand that this may have been the first occasion in which AIG itself was held in as a party to a case to face a jury trial based on the alleged bad faith actions of its subsidiary (in its investigation of the claim and denial of benefits). 

Results Achieved

The case was satisfactorily and confidentially resolved just before trial in May 2011.    

Client Testimonial

Business executives never enjoy litigating. When that is your only course of action you need the best. Rich Ostlund fits that description. Both public and private companies that I have been affiliated with as an owner and director over the past fifteen years have had numerous situations where litigating was our only avenue of choice. Rich was very successful in getting a favorable result for us because he developed a superior litigation strategy, was better prepared, and was extremely convincing in court.” –-Kevin Roberg, Prostaff Board Chairman at time of litigation

Prostaff, Inc. v. American International Group, Inc. and American General Life Ins. Co., District Court, Harris County, Texas, Cause No. 2009-18289