Free Brief in Support of Motion - District Court of Colorado - Colorado

Case 1:01-cv-02018-RPM-MJW

Document 647-10
John Costigan, Volume I

Filed 03/01/2006

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 01-M-2018 (MJW)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a/k/ a AIMCO, a Maryland corporation,

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Plaintiff,
v.
NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA., a Pennsylvania corporation, SECURITY INSURANCE COMPANY OF HARTFORD, a

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Connecticut corporation,
FIRST CAPITAL AGENCY, INC., d/b/a FIRST CAPITAL GROUP, a New York corporation, NATIONAL PROGRAM SERVICES, INC., a New Jersey

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corporation,
VITO B. GRUPPUSO, a New Jersey resident, and ROGER METZGER ASSOCIATES, a New York corporation,

Defendants,
and
ROGER METZGER ASSOCIATES, a New York corporation, Third-Party Plaintiff,

v.
RAY BALDWIN, a Texas res ident, SWAIN & BALDWIN INSURANCE, INC., a Texas

19 corporation,
20 Third-Party Defendants,

21 and

23 Third-Party Plaintiff,

22 ROGER METZGER ASSOCIATES, a New York corporation,

24 v.
)5 r/

-.""._.......
Calderwood-Mackelprang, Inc. 303.477.3500

A-9

Case 1:01-cv-02018-RPM-MJW

Document 647-10
John Costigan, Volume I

Filed 03/01/2006

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Page 245

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ability to cancel the i 37 policy during the first

year because it was incurring losses greater than it

expected?

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A. It did not.
Q. Would you expect AIMCO to understand
that National Union could not cancel the policy

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simply because National Union was expecting - - was
experiencing losses higher than it expected?

A. i would assume that they would
understand that, yes.

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Q. AIMCO is a very large, if not the
country's largest real estate investment trust; is
that correct?

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A.
Q.

I

believe

it is

--

or was at one time.
manager

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And AIMCO had a

risk

,

that

was

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acting

on
A.

its behalf?
Yes.
And you didn't have to be that

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sophisticated to know the same thing.
Q.

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Right.

In other words, it wouldn i t be

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complicated to understand that regardless of what

National Union's desire might or might not be, that

National Union had no ability, simply due to higher
losses, to cancel the policy during the first year

term?
A. It didn i t have the right under the

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-.,,;~..Calderwood-Mackelprang, Inc. 303.477.3500

Case 1:01-cv-02018-RPM-MJW

Document 647-10
John Costigan, Volume I

Filed 03/01/2006

Page 3 of 6

Page 246

1 contract, that i s correct.
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Q.

Okay.

You state that - - let me be

specific here

4 In the fifth bullet point on page S,
S you discuss the payment of an additional $10 million
6 premium; is that correct?
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one, two, three, four.

A.
Q.

Yes.
And you say that as part of the

9 discussions that occurred in and around

10 September 29th, 2000, that, quote: These terms
11 continued the deductible at $S, 000 per occurrence

12 and by virtue of setting renewal rate parameters, an
.3 offer of continuation was understood."

14 Do you see that?
is
A.

Yes.

16 Q. Tell me every basis or every opinion
17 which supports your belief that an offer of
18 continuation was understood.

19 First of all, why don i t you explain to
20 us what you're referring to when you refer to an
21 offer of continuation?

22 A. The policy was a three-year prepaid
23 contract, not a three-year anniversary contract with

24 annual installments, but a three-year prepaid
')s contract.

-.._-~ ,
Calderwood-Mackelprang, Inc. 303.477.3500

Case 1:01-cv-02018-RPM-MJW

Document 647-10
John Costigan, Volume II

Filed 03/01/2006

Page 4 of 6

1 clear.
3 the question, and I believe your second statement

Page 482

2 THE DEPONENT: I believe I did answer
4 changed the question.

S Q (By Mr. Tuffley) Well, answer my

7 A. Reask it, please.
8 Q. Did Security, to your knowledge, ever
9 recei ve any of the AFCO proceeds? And by that
10 receipt, I mean that actually went into its bank

6 second question, then.

11 account.

12 A. I have not seen evidence that the
.3 proceeds from AFCO went into a Security of Hartford

14 bank account. I've seen no evidence on Security of
is Hartford i s bank accounts.

16 Q. And did you also review - - when you
17 reviewed the deposition testimony from First Capi tal
is witnesses, do you recall that they indicated that
19 they never received any or saw any proceeds from the

20 AFCO loan?

21 A. I recall that testimony from First
22 CapitaL.

23 Q. And do you recall that, in fact,
24 Security didn't even know that the AFCO loan existed
..s or had been made?

Calderwood-Mackelprang, Inc. 303.477.3500

Case 1:01-cv-02018-RPM-MJW

Document 647-10
John Costigan, Volume II

Filed 03/01/2006

Page 5 of 6

Page 644

1 A. Yeah. When you say "the major
2 players," the maj or players in terms of the

3 AIMCO-owned properties?

6 Q. And at that point in time, the
7 insured, through its risk manager, Ray Baldwin, had 8 an opportunity to answer any questions about the
9 policy to National Union and, likewise, National

4 Q. Yes. S A. Yes.

10 Union had an opportunity to request any information 11 they needed from Mr. Baldwin to satisfy themselves

12 about the policy; is that correct? "3 MR. ROBERTS: Let me object to the
14 form insofar as it implies that Baldwin was there

is only on behalf of one entity.

16 MR. BRADY: Join.
17 THE DEPONENT: And the answer to that
is is if he's Ray Baldwin, risk manager, contract risk

19 manager for AIMCO, the answer would be yes. If he's
20 Ray Baldwin, Swain and Baldwin, with any other
21 enti ties in the program, the answer would be no.

22 Q (By Mr. Collins) I i m going to tell
23 you that Mr. Baldwin testified that he was at that
24 meeting in his capacity as risk manager and

~S consultant for AIMCO.

Calderwood-Mackelprang, Inc. 303.477.3500

Case 1:01-cv-02018-RPM-MJW

Document 647-10
John Costigan, Volume II

Filed 03/01/2006

Page 6 of 6

Page 645

1 Does that mean that, therefore, he did
2 have an opportuni ty, on behal f of AIMCO, to ask any

3 questions necessary that he had about the coverage

4 provided under the policy?

S MR. BRADY: Objection.
6 THE DEPONENT: I suspect he could,
7 yes.

8 Q (By Mr. Collins) Well, from your
9 review of the file, do you believe that Mr. Baldwin

10 is knowledgeable about insurance issues?

11 A. Yes, I do.

12 Q. And, likewise, I would assume that
.3 National Union is also a fairly knowledgeable

14 insurance company; is that a fair statement? Or a
is sophisticated insurance company?

16 A. Well, they have knowledgeable people
17 working for it, and it i S a large insurance company

18 that's been around for a long time. That, I can all 19 agree to.
20 Q. Okay. So these two entities, AIMCO,

21 on the one hand, through its sophisticated risk 22 manager, and National Union, through its
23 well-qualified employees, had people present that

24 could meet face to face as principals to a contract
..s to discuss any questions they had about the risks

Calderwood-Mackelprang, Inc. 303.477.3500