Prosper has sued Greenwich Insurance for failing to defend in class action

[xraider]

Prosper, through another fancy (read: expensive) San Francisco law firm, has brought a breach of contract and "bad faith" suit against its insurer, Greenwich, for refusing to defend it in the class action.

Sadly, not enough of the policy is attached for me to comment further.

I did check to see if my law firm represents Greenwich, since I would have LOVED to be involved in the defense of this action.     Sadly, I don't think we do.

I wonder if Prosper is paying its current defense counsel in the class action (which I imagine is likely charging it north of $600/hour for the partners) or if its financial state is such that it will be switching counsel?

Another docket to check regularly.

For the curious, the case can be found at the San Francisco Superior Court website; search Prosper Marketplace.

[112233]

if greenwich was contractually obligated to defend prosper in class action lawsuits, why would they then renege? prosper may have a good chance of losing, but does that matter?

[112233]

it would be nice if prosper was this aggresive with borrowers who breach their contracts

[xraider]

if greenwich was contractually obligated to defend prosper in class action lawsuits, why would they then renege? prosper may have a good chance of losing, but does that matter?

I don't have the policy, so can't read the language.  ALL kinds of things are excluded from liability coverage.  Maybe SEC actions?  Maybe fraud?  I could only guess what the basis of the denial is, since it wasn't attached.  I'll check to see if there's another link with more of the documents later.

Too bad Prosper is more protective of itself than of its lenders.  Then, it wouldn't be here!

[divindj]

it would be nice if prosper was this aggresive with borrowers who breach their contracts

they refused to add "hired goons collections" when i requested them back in 2006... wonder if they'd be interested in using them now with their insurance :-)

[112233]

pay me now, or pay me later

.. isnt that what lawyers say?

[Xenon481]

It really sounds like Greenwich believes that Prosper did something seriously wrong and outside of coverage (like illegal acts, maybe) and so refused coverage.

Nominate for Lobby.

[Mtnchick]

It really sounds like Greenwich believes that Prosper did something seriously wrong and outside of coverage (like illegal acts, maybe) and so refused coverage.

Nominate for Lobby.

2nd

[Investar]

I don't have the policy, so can't read the language...

Most of it is attached as part of the complaint. Here's the link to the case (that it took me an hour to find - ya gotta be in the right search box or ya get nada I found out)

http://webaccess.sftc.org/Scripts/Magic94/mgrqispi94.dll?APPNAME=IJS&PRGNAME=ROA22&ARGUMENTS=-ACGC09491736

[big-al]

I don't have the policy, so can't read the language...

Most of it is attached as part of the complaint. Here's the link to the case (that it took me an hour to find - ya gotta be in the right search box or ya get nada I found out)

http://webaccess.sftc.org/Scripts/Magic94/mgrqispi94.dll?APPNAME=IJS&PRGNAME=ROA22&ARGUMENTS=-ACGC09491736

I doubt if that's anywhere near 'most' of the policy.  On page 12, there is a long list of forms and endorsments, none of which appears to be present.  I don't even see the E&O Exclusion.

[112233]

34. In the Denial Letter, Greenwich based its denial of coverage exclusively on a General Errors & Omissions Exlcusion contained in Endorsement No. 26 to the Policy (the "E&O Exclusion"), which excludes coverage for Loss arising out of the rendering of, or failure to render, "services performed for others for a fee or commiission..." Greenwich reserved its right to deny coverage on various other grounds set forth in the Denial Letter

http://207.215.212.22/minds_asp_pdf/mainpage.asp?Web_Server=207.215.212.22&MINDS_Server=ntimagex&Category=C&DocID=02594013

so no coverage for fee/commission based services?

The insurance almost sounds pointless if this is the case

[Chamatrain]

34. In the Denial Letter, Greenwich based its denial of coverage exclusively on a General Errors & Omissions Exlcusion contained in Endorsement No. 26 to the Policy (the "E&O Exclusion"), which excludes coverage for Loss arising out of the rendering of, or failure to render, "services performed for others for a fee or commiission..." Greenwich reserved its right to deny coverage on various other grounds set forth in the Denial Letter

http://207.215.212.22/minds_asp_pdf/mainpage.asp?Web_Server=207.215.212.22&MINDS_Server=ntimagex&Category=C&DocID=02594013

so no coverage for fee/commission based services?

If that means what I think it does and it's a valid exclusion, it's further indication of  Prosper being put together by numbskulls who continued to get dumber and dumber.

[112233]

is that why ed (maybe) got fired?

[NewHorizon]

I read Greenwhich's position (IANAL) as saying Prosper did something they weren't supposed to do, or didn't do something they WERE supposed to do.  IOW, "we don't insure against your own screw-ups."

So is the idea that Prosper could only file an insurance claim AFTER they win the class action case (hey, play along here) which, in turn, would imply that Prosper didn't screw up?

[Investar]

....Most of it is attached as part of the complaint.

I doubt if that's anywhere near 'most' of the policy.  On page 12, there is a long list of forms and endorsments, none of which appears to be present.  I don't even see the E&O Exclusion.

Page 62 of 68 (the way mine downloaded)