The firm recently obtained an important victory for our client, AIG, securing a summary order from the Delaware Supreme Court in a suit in which the eight plaintiffs—joint ventures between branches of the United States military and large real estate development corporations—alleged that AIG breached their guaranteed investment contracts (“GICs”) in 2008 by triggering the GICs’ event of default provisions, notwithstanding that the plaintiffs had received back their full principal invested under the GICs, with accrued interest, when AIG’s ratings were downgraded in 2008.
The plaintiffs filed their complaint in August 2011, copying their allegations almost word-for-word from another complaint that was filed against AIG in the Southern District of New York in September 2009. Following briefing and oral argument, the Delaware Superior Court had indicated from the bench its intent to grant AIG’s motion to dismiss the suit, agreeing with its argument that, having received back all principal invested under the GICs, with accrued interest, the plaintiffs could not recover under any theory of damages for any alleged event of default, even if one had occurred. The plaintiffs sought leave to amend their complaint, and the Superior Court reluctantly agreed.
Just days before filing their Amended Complaint, the plaintiffs contacted AIG and sought to reinvest funds under the GICs, arguing that, if AIG was correct that no event of default occurred in 2008, the GICs were still in force and the plaintiffs still had the right to invest. AIG refused the investment, arguing that the GICs had terminated by their own terms following repayment of the plaintiffs’ invested funds in 2008. In the Amended Complaint, the plaintiffs added a claim for breach of the GICs on the basis of AIG’s refusal to accept the additional investments. The Superior Court refused the plaintiffs’ request for a second oral argument, and by order dated September 27, 2012, granted AIG’s motion to dismiss the Amended Complaint in its entirety. The Court reiterated its conclusion that the plaintiffs had suffered no damages from any alleged event of default, and also agreed with AIG that the GICs terminated upon repayment of the plaintiffs’ invested funds in 2008.
The plaintiffs appealed and, following briefing and oral argument, the Delaware Supreme Court issued a summary affirmance, agreeing in full with the Delaware Superior Court’s dismissal of the Amended Complaint. This total victory was especially important for AIG, as it put an end not only to the plaintiffs’ case, but to potential copycat cases from other parties who had entered into substantially similar contracts with AIG.