Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Twin River Worldwide Holdings, Inc. v. National Union Fire Insurance Co. of Pittsburgh, P.A.

United States District Court, D. Rhode Island

August 1, 2018




         This dispute arose from Twin River's tender offer to Contingent Value Rights Holders (CVRs) on their post-bankruptcy shares. Twin River believed that it owed the CVRs a duty to pay them fair value before their shares expired and the common stock Stockholders, believed that Twin River had no duty to the CVRs, and a superior fiduciary duty to them NOT to pay the CVRs. In the end, Twin River paid the CVRs and settled the dispute with the Stockholders for $5.6 million after notifying National Union Fire Insurance Company of a potential claim under its insurance policy. Twin River made a claim for reimbursement under the policy and National Union denied coverage because it determined that Twin River did not make the payment to settle a covered claim.

         Both Twin River and National Union have moved for summary judgment, [1]agreeing that there are no disputed issues of material fact on the breach of contract claim. They disagree on the outcome; Twin River advocates for coverage and National Union says there is none. The question posed in this case is whether the insured's payment to Stockholders and others to settle a dispute that arose from its bankruptcy, constitutes a covered claim under its insurance policy, requiring reimbursement of the payment. The Court agrees that summary judgment is appropriate here and answers that question in Twin River's favor. The $5.6 million settlement is a covered claim for a wrongful act under the policy and Twin River gave appropriate notice. Twin River's motion (ECF No. 22) is GRANTED; National Union's motion (ECF No. 24) is DENIED.


         Twin River is a casino and live entertainment venue in Lincoln, Rhode Island. It filed for bankruptcy on June 23, 2009. The Plan of Reorganization coming out of bankruptcy created two classes of stockholders-the first lien lenders received 100% of Twin River's common stock and $300 million in new first lien debt (Stockholders) and the second lien lenders received Contingent Value Rights.[2] The CVRs would receive a portion of the consideration that Twin River would otherwise pay to the Stockholders if Twin River engaged in a fundamental transaction such as a sale, by November 5, 2017, otherwise the CVRs would receive nothing.

         By all accounts, Twin River did well coming out of bankruptcy and had some opportunities for growth. In June 2014, Twin River announced a potential buy back of the CVRs. Stockholders Solus Alternative Asset Management, LP (Solus) and Wingspan Asset Management, LP (Wingspan) sent a letter to Twin River on June 27, 2014 (the First Salvo), asserting that Twin River had a duty to them to delay making a fundamental transaction until after the expiration of the CVRs' rights to any payment, insisting that Twin River owed no fiduciary duty to the CVRs and threatening legal action. By letter dated October 22, 2014, Twin River notified its insurer, National Union, that Solus and Wingspan alleged that it was potentially in breach of its fiduciary duty to them both because Twin River was considering paying the CVRs on their shares, and because it was overvaluing the CVR share price. There is no dispute that the parties considered this letter as a notice of circumstance, notifying National Union that Twin River faced a situation with its Stockholders that had the potential to turn into a claim.

         Taking the threat of suit from the Stockholders seriously, Twin River went back to Bankruptcy Court to clarify its obligations to the CVRs in light of the Stockholder's objections. The Bankruptcy Court required Twin River to file a declaratory judgment action, referred to as the Adversary Proceeding, against Solus, Wingspan, and another complaining Stockholder, Apollo Twin River Management, L.P. (Apollo). Because Twin River believed that it had an obligation to the CVRs, it advocated that position in the Adversary Proceeding against the interests of the Stockholders. The Bankruptcy Court agreed with Twin River and the CVRs that Twin River did have obligations to the CVRs.[3]

         The Stockholders appealed the Bankruptcy Court's decision on November 13, 2015; the same day, Solus' counsel sent a letter (the Second Salvo) to Twin River warning that Twin River would be in further breach of its fiduciary duties to the Stockholders if it went forward with a tender offer to the CVRs, citing the initial breach as Twin River's decision to file the Adversary Proceeding[4] in the first place.

         Upon receiving the Bankruptcy Court's blessing, Twin River announced a tender offer to the CVRs. That same month, Apollo filed suit in Delaware against Twin River's Board of Directors and its Chief Financial Officer, alleging that Twin River's tender offer to the CVRs violated its fiduciary duties to the Stockholders (the Derivative Action). It sought rescissory damages due to a decrease in common stock prices.

         Facing suit in Rhode Island and Delaware, Twin River, with National Union's consent, met with representatives of the CVRs and Stockholders to try to resolve the CVR value issue. The draft Memorandum of Understanding ("MOU") stated that the Stockholders would drop their pending appeal in the Adversary Proceeding and that Twin River would pay them $5.6 million to reimburse their legal expenses and in exchange for releases relating not only to the appeal, but also to the Derivative Action and any other direct claims. Through a series of proposals attempting to settle the case, Twin River received a letter on January 21, 2016 ("Settlement Demand Letter") where the Stockholders repeated the allegation that Twin River breached its fiduciary duty and demanded reimbursement of $5.6 million they spent in fees and expenses and that Twin River limit its per share price to $425 per CVR. Twin River provided both the MOU and letter to National Union who responded that it had doubts about coverage for the proposed settlement, but agreed not to raise lack of advance consent as a coverage defense. National Union did not participate at all in the negotiations, ask for information about the claims, or request allocation of any potential settlement proceeds.

         Twin River settled the dispute with the Stockholders and CVRs in February 2016 for $5.6 million with releases, and stipulations of dismissal of all claims and potential claims.[5] The Delaware Court approved the settlement. National Union thereafter denied the claim.

         Twin River filed this suit, seeking coverage for the $5.6 settlement payment under the policy. National Union counters that Twin River failed to assert a claim.


         Rule 56(a) of the Federal Rules of Civil Procedure directs courts to "grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56 (a). When evaluating "'cross-motions for summary judgment, the standard does not change; [courts] view each motion separately and draw all reasonable inferences in favor of the respective non-moving party.'" Bonneau v. Plumbers & Pipefitters Local Union 51 Pension Trust Fund,736 F.3d ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.