Oberlin College sues insurers for denying $36M payment to bakery wrongly accused.
Oberlin College Sues Insurers for Refusing to Cover $36 Million Damages Owed to Gibson’s Bakery
Oberlin College finds itself in a legal battle with four insurers who have refused to pay the $36 million in damages owed to Gibson’s Bakery, the victims of false accusations of racism. The college initially downplayed the significance of the verdict, claiming it would not impact their academic and student experience. However, the insurers have now denied the college the millions it has already paid to the Gibson family, leading to a lawsuit filed by Oberlin College in April.
Insurers Deny Coverage
According to Legal Insurrection, Oberlin College is suing Lexington Insurance Company, United Educators Insurance, Mount Hawley Insurance Company, and StarStone Specialty Insurance Company. The college alleges that these insurance companies wrongfully refused to honor their promises to protect Oberlin College’s interests and its former vice president and dean of students, Meredith Raimondo, who played a leading role in the false accusations against Gibson’s Bakery.
The college hopes that the court will compel the insurers to reimburse the $36 million already paid to the Gibsons. While one insurance company provided $1 million, Oberlin argues in the lawsuit that it incurred millions of dollars in defense costs pursuing appeals, which the insurers encouraged to potentially reduce the damages. The exact amount spent on legal fees throughout the lawsuit, trial, and appeals process remains unclear.
Failed Coverage Obligations
Oberlin College had commercial umbrella liability coverage of $25 million from Lexington, a $10 million policy from Mount Hawley, a $5 million policy from StarStone, and $25 million in overlapping educators’ legal liability coverage from United Educators. However, the insurers have failed to pay a single penny towards the $36,590,572.48 sum paid by Oberlin to the Gibson plaintiffs. The college claims that Lexington and United Educators engaged in a systematic effort to avoid their coverage obligations by shifting responsibility to each other and other insurance companies, as well as to the college itself.
Had the insurers taken the opportunity to resolve the litigation before trial, Oberlin asserts that the case could have been settled for less than $10 million.
The Gibson’s Bakery Incident
The legal battle stems from an incident where several non-white Oberlin students attempted to steal alcohol from Gibson’s Bakery, a beloved local establishment. When a member of the Gibson family working at the bakery confronted the students, they attacked him. The students were subsequently arrested, pleaded guilty, and admitted that race had no role in the incident.
Despite this, other students and faculty accused the bakery of racism and staged protests outside. Oberlin officials fully endorsed and supported the protestors’ false narrative. Some demonstrators even entered the bakery, harassed customers, and vandalized property. Behind the scenes, Oberlin administrators disparaged the bakery and anyone who defended it.
In the end, the jury sided with Gibson’s Bakery and awarded $44 million in damages, which was later reduced to $36 million due to state limits.
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