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AIG unit must cover subpoena costs in university molestation case


A unit of American International Group Inc. must pay costs associated with subpoenas in an investigation of a former Syracuse University assistant basketball coach accused of molesting two boys, a New York appellate court has ruled in upholding a lower court ruling.

The investigation began in November 2011, when two former Syracuse University ball boys accused former assistant basketball coach Bernie Fine of molesting them as children.

Six state and federal subpoenas were issued in the investigation, according to court papers.

Prosecutors eventually decided that the allegations were outside the statute of limitations, and Mr. Fine never was charged in the case, according to news reports.

Syracuse University sued National Union Fire Insurance Co. of Pittsburgh, Pa., a unit of New York-based AIG, in New York Supreme Court in Syracuse after the insurer denied coverage for costs associated with the subpoenas.

According to court documents, the university is seeking $4 million for losses arising from the subpoenas.

New York Supreme Court Justice Donald A. Greenwood held that National Union was obligated to cover costs under terms of its policy in a March 2013 ruling in Syracuse University v. National Union Fire Insurance Co. of Pittsburgh, Pa.

“The terms of the policy and the definition of 'claim' here are clear and unambiguous and thus must be enforced as written,” Justice Greenwood ruled. “We reject the insurers' crabbed view of the nature of a subpoena as a 'mere discovery device' that is not even 'similar' to an investigative order.”

In a two-sentence order issued Dec. 27, five justices of the state's Supreme Court's appellate division in Rochester, N.Y., unanimously upheld Justice Greenwood's ruling.