Judge Refuses to Stay Insurers’ Litigation Against Homestore
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A group of insurers who wrote $80 million in policies for officers and directors of online real estate firm Homestore Inc. won a round in federal court in Los Angeles on Monday in their attempt to void the coverage on grounds the Westlake Village company misstated its financial results.
Ruling in a lawsuit filed by a unit of Chubb Group of Insurance Cos., which issued a $10-million policy, U.S. District Judge Manuel Real refused Homestore’s request to stay the litigation. Other insurers who have sued include Genesis Insurance Co., which provided $10 million in coverage, and TIG Insurance Co. of Michigan, which issued a $5-million policy.
The insurers contend the policies should be rescinded because of what TIG lawyer Kim West called “extraordinary” circumstances -- Homestore’s huge restatement of its 2001 financial results and guilty pleas by four of its former financial officers to falsely inflating revenue.
Executives couldn’t be reached for comment at Homestore, which is targeted in numerous lawsuits alleging fraud.
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