Posted on 05 Mar 2009
Investment firm Starr International Co., which is run by former American International Group Inc. Chief Executive Officer Maurice "Hank" Greenberg, lost a bid before a federal judge to dismiss a claim brought by AIG.
Starr, referred to as SICO in court documents, sued in 2005 claiming AIG, the world’s biggest insurer by assets, refused to return an art collection valued at more than $15 million, as well as computers and business records. AIG countersued, claiming Greenberg, then its biggest investor, left the company with 290 million shares of AIG stock held by SICO.
U.S. District Judge Jed Rakoff in Manhattan yesterday rejected Starr’s renewed bid to dismiss New York-based AIG’s counter-claim that it unlawfully appropriated its property, referred to as conversion. Rakoff ruled that Starr’s request was untimely and that U.S. District Judge Barbara Jones, who previously presided over the case, had rejected Starr’s motion to dismiss the conversion claim earlier.
Jones found that questions of whether the acquired shares should have been in the trust and whether SICO breached its fiduciary duty in administering the trust must be answered at trial, Rakoff said in his ruling. “Judge Jones’ decision thus implicitly rejected the argument that SICO makes now” that AIG had no legal claim to the shares, he said.
Rakoff said he reviewed Starr’s request and concluded that under New York State law the conversion claim was a question of law to be determined by a jury.
AIG has one purpose in pursuing the lawsuit: “To add hundreds of millions of dollars to a bonus pool available to AIG’s top 700 executives,” Liz Bowyer, a spokeswoman for Starr, said in an e-mailed statement.
AIG is “pleased” that it’s entitled to go to trial, Mark Herr, a spokesman, said in a statement.
A trial, which was originally scheduled to begin this week, is now set to begin June 15, Rakoff had ruled earlier. In June, Jones dismissed four claims brought by AIG and ruled that Greenberg must face trial on three remaining claims which relate mostly to whether Starr is a trust for AIG’s benefit. AIG argued that the stock was held in trust for the benefit of AIG employees.
The trust issue was raised only after Starr sued for the return of the artwork, Bowyer said.