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Former NBA owners accuse insurance giant of acting in bad faith

Basketball fans throughout the nation -- especially here in the Bay Area -- are eagerly anticipating the start of the NBA season, which is still over a month away. The good news for these hoops fanatics is that while there's little to watch on television, there has been no shortage of intriguing stories in the newspaper about their favorite sport.

Indeed, it's worth noting that not all of these fascinating pieces have been confined to the sports section. By way of example, consider the nascent legal battle between the Atlanta Hawks Basketball and Entertainment LLC, former owners of this popular franchise, and AIG Insurance over an alleged breach of contract and insurance bad faith.

AHBE, which filed a civil suit against AIG in the Superior Court of Fulton County earlier this week, states in its complaint that its policy with the insurance giant provided coverage for certain losses attributable to employment practices, including both workplace torts and wrongful termination.

The complaint goes on outline how it alerted AIG back in April 2015 of certain employment-related claims being filed by then-general manager Danny Ferry, who had signed an $18 million contract back in 2012, and later reached a buyout agreement with him in June 2015, just two days prior to selling the franchise.

While the complaint indicates both the settlement amount paid to Ferry and the liability limits are confidential, the former would and should have been covered by the policy with AIG.

Specifically, AHBE accuses AIG of 1) refusing to acknowledge that a claim was ever filed, 2) refusing to recognize that its responsibilities under the policy were triggered, 3) failing to participate in the defense of the employment claims and 4) failing to cover the losses sustained in the settlement with Ferry.

"Despite an obligation to pay … as well as the fact that these claims clearly fell within the policy coverage, AIG has failed and refused to pay the covered loss without significant justification and in bad faith.," reads the complaint. "AIG had no reasonable basis to contend that a claim had not been made and that such claim was not covered.”

It will be fascinating to see how this case plays out. In the meantime, it's important for those who find themselves in similar situations, meaning where their insurer is failing to live up to its promises, to understand that they have rights and they have options.    

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