united states district court louisville divison · 6. defendant michael curtin (“curtin”) is a...

Complaint -

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF KENTUCKY

LOUISVILLE DIVISON

CIVIL ACTION NO. _____________________ NAVIGATORS INSURANCE COMPANY PLAINTIFF v. THE UNIVERSITY OF LOUISVILLE FOUNDATION, INC. Serve: Franklin K. Jelsma, Registered Agent Wyatt, Tarrant & Combs, LLP 500 W. Jefferson Street, Suite 2800 Louisville, KY 40202 JAMES R. RAMSEY 8902 Adrienne Ct. Louisville, KY 40245, KATHLEEN SMITH 3604 Hillcreek Road Louisville, KY 40220, BURT DEUTSCH 2017 Lowell Avenue Louisville, KY 40205, MICHAEL CURTIN 600 NW 104th Terrace Kansas City, MO 64154, and JASON TOMLINSON 908 Willow Pointe Drive Louisville, KY 40299 DEFENDANTS

COMPLAINT Plaintiff, Navigators Insurance Company (“Navigators”), for its Complaint against

Defendants University of Louisville Foundation, Inc., James R. Ramsey, Kathleen Smith, Burt

Deutsch, Michael Curtin, and Jason Tomlinson, states:

3:18-cv-437-DJH

Case 3:18-cv-00437-DJH Document 1 Filed 07/06/18 Page 1 of 18 PageID #: 1

Complaint -

I. PARTIES AND JURISDICTION

1. Plaintiff, Navigators Insurance Company, is a New York corporation with its

principal place of business in New York. Navigators is authorized to conduct business in

Kentucky.

2. Defendant The University of Louisville Foundation, Inc. (“the Foundation”) is a

non-profit corporation organized under the laws of Kentucky with its principal place of business

in Kentucky.

3. Defendant James R. Ramsey (“Ramsey”) is a resident and citizen of Jefferson

County, Kentucky.

4. Defendant Kathleen Smith (“Smith”) is a resident and citizen of Jefferson County,

Kentucky.

5. Defendant Burt Deutsch (“Deutsch”) is a resident and citizen of Jefferson County,

Kentucky.

6. Defendant Michael Curtin (“Curtin”) is a resident and citizen Missouri.

7. Defendant Jason Tomlinson (“Tomlinson”) is a resident and citizen of Jefferson

County, Kentucky.

8. This Court has jurisdiction over this action pursuant to 28 U.S.C. § 1332(a)

because it involves citizens of different states and the amount in controversy, as described more

fully below, exceeds the sum or value of $75,000, exclusive of interest and costs.

9. This Court has jurisdiction to enter a declaratory judgment under Fed.R.Civ.P. 57

and 28 U.S.C. §§ 2201-2202.


Complaint -

II. GENERAL FACTUAL BACKGROUND

10. Navigators is in the business of, among other things, issuing directors and officers

liability insurance policies.

11. Navigators issued Not-For-Profit InNAVation Policy number

NY16DOLVBEOAWNV to the Foundation (“the Policy”) with a Policy Period from 09/01/2016

to 09/01/2017.

12. Under the Policy, the maximum aggregate Limit of Liability for all Loss,

including Costs of Defense, under the Directors and Officers (“D&O”) Coverage Part is $10

million. Coverage under the D&O Coverage Part is subject to a $25,000 self-insured Retention

for each Claim under Insuring Agreement B. Costs of Defense are part of, and not in addition to,

the Limit of Liability.

13. In connection with the underwriting of the Policy, Navigators required the

Foundation to complete and sign an “Application for Not-For-Profit Directors and Officers

Liability Insurance, Employment Practices Liability Insurance and Fiduciary Liability Insurance”

(the “Application”).

14. Tomlinson signed and submitted the Application on behalf of the Foundation and

other Insureds on August 29, 2016.

15. The Application asked the following Question 7.c., to which Tomlinson answered

“no:”

Does the Applicant or any person in his or her capacity as a director, officer, trustee, or any person responsible for insurance, complaints or claim reporting, have knowledge of any act, error, omission, fact, incident, situation, unresolved dispute or any other circumstance that is or could be the basis for a claim under the proposed insurance policy?

* * *


Complaint -

REPORT KNOWLEDGE OF SUCH INCIDENTS TO YOUR CURRENT INSURER PRIOR TO YOUR CURRENT POLICY EXPIRATION. IT IS UNDERSTOOD AND AGREED THAT ANY CLAIM ARISING OUT OF ANY SITUATION THAT IS OR SHOULD HAVE BEEN REPORTED IN [7.c] ABOVE IS EXCLUDED FROM THE PROPOSED INSURANCE [(the “Knowledge Exclusion”)].

16. The DECLARATIONS AND SIGNATURE section of the Application contains

the following NOTICE TO APPLICANT:

FOR THE PURPOSES OF THIS APPLICATION, THE UNDERSIGNED AUTHORIZED AGENT OF THE PERSON(S) AND ENTITY(IES) PROPOSED FOR THIS INSURANCE DECLARES THAT TO THE BEST OF HIS/HER KNOWLEDGE AND BELIEF, AFTER FULL INVESTIGATION INQUIRY OF EVERY DIRECTOR, OFFICER, TRUSTEE, OR ANY PERSON RESPONSIBLE FOR INSURANCE, COMPLAINTS OR CLAIM REPORTING, THE STATEMENTS IN THIS APPLICATION AND IN ANY ATTACHMENTS, ARE TRUE AND COMPLETE. THE INSURER IS AUTHORIZED TO MAKE INQUIRY IN CONNECTION WITH THIS APPLICATION. ACCEPTING THIS APPLICATION DOES NOT BIND THE INSURER TO PROVIDE, OR THE APPLICANT TO PURCHASE, THE INSURANCE.

17. On April 25, 2018, the Foundation and the University of Louisville filed a

Complaint With Jury Trial Demand in an action styled The University of Louisville and The

University of Louisville Foundation, Inc. v. James Ramsey, et al., Case No. 18-CI-002385,

Jefferson Circuit Court, Commonwealth of Kentucky (the “Lawsuit”).

18. The Lawsuit was filed by the Foundation and the University of Louisville (the

“University”) (together with the Foundation, the “Lawsuit Plaintiffs”) against: (1) Ramsey

(former President of the University and former President of the Foundation), (2) Tomlinson

(former Assistant Treasurer of the Foundation), (3) Curtin (former Assistant Treasurer of the

Foundation), (4) Smith (former Assistant Secretary of the Foundation and former Chief of Staff

for the University President), (5) Deutsch (former member of the Foundation’s Board of


Complaint -

Directors and Executive Committee) (collectively, the “Individual Defendants”), and (6) Stites &

Harbison, PLLC (former counsel for the University and the Foundation).

19. The Foundation is a non-profit entity that was established to hold and manage the

University’s endowment.

20. The Lawsuit Plaintiffs allege that the Individual Defendants knowingly caused the

Foundation to spend endowment funds at an excessive and unsustainable rate, while

simultaneously authorizing the payment of excessive compensation to Ramsey, Smith, and

others associated with the Foundation.

21. According to the Lawsuit, as of 2008, the Foundation had a spending policy that

allowed it to spend 7.48% of the fair market value of the University’s endowment each year. In

2012, the Foundation’s investment advisor—Cambridge Associations—allegedly advised the

Foundation that the spending policy was unsustainable and recommended various adjustments,

including decreasing the spending percentage to 5.5%. The Lawsuit Plaintiffs have alleged that

the Foundation’s Finance Committee never considered that recommendation and the

Foundation’s spending policy remained at 7.48% until 2016. The Lawsuit Plaintiffs further

allege that the Foundation’s spending rate was much higher than 7.48% because the Individual

Defendants artificially inflated the value of the endowment by re-categorizing expenditures as

investments and recording fictitious returns. As a result, the Lawsuit Plaintiffs contend, the

Individual Defendants substantially depleted the value of the University’s endowment.

22. The Lawsuit Plaintiffs allege that the Individual Defendants depleted the

endowment by issuing approximately $55 million in loans from the endowment to University

Holdings, Inc. (“UHI”) for the purpose of investing in real estate and other speculative ventures.


Complaint -

23. The Lawsuit Plaintiffs also allege that the Individual Defendants caused the

Foundation to pay excessive compensation to Ramsey, Smith and others.

24. The Lawsuit Plaintiffs allege that, in addition to their base salaries as officers of

the University and the Foundation, Ramsey and Smith collectively received over $11 million in

deferred compensation through 2016.

25. The Lawsuit Plaintiffs allege that, because that deferred compensation was not

included in the Foundation’s budget, the Foundation funded that deferred compensation by

liquidating certain assets.

26. The Lawsuit Plaintiffs allege that at least some of the deferred compensation

payments were never approved by the Foundation’s Board or Executive Committee.

27. Navigators has offered to defend Defendants Ramsey, Smith, Deutsch, Curtin,

and Tomlinson in the Lawsuit, subject to Navigators having reserved the right to deny coverage

for the claims in the Lawsuit, and subject to Navigators having reserved the right to seek

rescission of the Policy.

28. Defendants Ramsey, Deutsch, Curtin, and Tomlinson are seeking, from the

Foundation, advancement or indemnification for their costs, expenses, and damages from the

Lawsuit.

29. If the Foundation pays advancement or indemnification for any or all of the other

Defendants, then the Foundation will seek to require Navigators to reimburse those payments

under the Policy.

30. All conditions precedent to the relief requested by Navigators have been

performed or have occurred.


Complaint -

31. There is an actual controversy existing between the Navigators and the Individual

Defendants Navigators’ obligations, if any, to provide coverage under the Policy. The

Foundation is named as a party to this action in order to answer for any interest that it may claim

to have in the outcome of this controversy.

32. Navigators has no adequate remedy at law and this is a proper case for the Court

to exercise jurisdiction and declare rights and liabilities of the parties.

COUNT I - Rescission

33. Navigators incorporates by reference all allegations in the preceding paragraphs

as if set forth in full in this paragraph.

34. Section VIII.F. of the General Terms and Conditions of the Policy

(“Representations Provision”) states:

It is agreed by the Insureds that the particulars and statements contained in the Proposal Form [(i.e., the Application)] and any information provided therewith (which shall be on file with the Insurer and be deemed attached hereto as if physically attached hereto) are the basis of this Policy and are to be considered as incorporated in and constituting a part of this Policy. It is further agreed by the Insureds that the statements in the Proposal Form or in any information provided therewith are their representations, that they are material and that this Policy is issued in reliance upon the truth of such representations; provided, in the event that the Proposal Form contains misrepresentations made with the actual intent to deceive or contains misrepresentations which materially affect either the acceptance of the risk or the hazard assumed by Underwriters under this Policy, this Policy shall be void and have no effect whatsoever with respect to those Insureds who made or had knowledge of such misrepresentations.

35. Kentucky’s “Rescission Statute,” K.R.S. § 304.14-110, provides that

misrepresentations or omissions in a policy shall not prevent recovery under that policy unless

either: (1) the misrepresentations were fraudulent; or (2) the misrepresentations were “material

either to the acceptance of the risk, or to the hazard assumed by the insurer;” or (3) “the insurer


Complaint -

in good faith would either not have issued the policy or contract, or would not have issued it at

the same premium rate, or would not have issued a policy or contract in as large an amount, or

would not have provided coverage with respect to the hazard resulting in the loss, if the true facts

had been made known to the insurer…”

36. The Application contains misrepresentations that materially affected the

acceptance of the risk or hazard assumed by Navigators under the Policy.

37. At the time the Application was executed, the Foundation and its directors and

officers were aware of various acts, errors, omissions, facts, incidents, situations, unresolved

disputes or other circumstances that could form the basis of a Claim under the Policy and, in fact,

have now given rise to the Lawsuit.

38. On June 25, 2015, Kentucky’s Auditor of Public Accounts (the “State Auditor”)

initiated an examination (the “Examination”) of the Foundation. See Mike Harmon,

Examination of the Governance of the University of Louisville Foundation and its Relationship

to the University of Louisville (December 14, 2016) (the “Audit Report”).

39. The Foundation’s directors and officers were aware of the Examination before the

Application was submitted to Navigators.

40. The Audit Report states that, in the course of the Examination, the State Auditor

“interviewed over 20 individuals, including both current and former UofL and ULF Board

members, the former UofL President, who also served as the ULF President until September 16,

2016, and various other University and Foundation personnel.” See Auditor Report at 2.

41. The Audit Report states that the Foundation’s board chair specifically requested

that the newly-elected State Auditor proceed with the investigation in January 2016 (i.e.,

approximately seven months before the Application was submitted to Navigators).


Complaint -

42. The Examination resulted from concerns raised in April and May 2015, first by

local media and later by University trustees, about the validity of certain deferred compensation,

and compensation generally, paid by the Foundation to Ramsey, Smith and others.

43. Upon information and belief, University trustee Steve Wilson sent an email to the

State Auditor on April 29, 2015, stating in part that the Foundation’s compensation

“arrangements … should have been provided to the [University] Board of Trustees in order for

us to meet our fiduciary and statutory responsibilities.”

44. In his April 29, 2015 email, Mr. Wilson demanded that the State Auditor “conduct

a ‘truly independent accounting’ of the finances of the university and … [the] foundation.…”

45. The Foundation anticipated that these concerns could give rise to a Claim

because, at least as early as April 2015, the Foundation retained counsel to address these issues.

46. The Examination concluded in December 2016 with findings that, inter alia,

Ramsey was compensated beyond the amount authorized by the University and the Foundation.

See Audit Report at pp.33-34.

47. The Examination also encompassed an analysis of the Foundation’s spending

policy. During the Examination, the State Auditor requested a “prudency analysis” from the

Foundation.

48. At least as early as May 2016, the Insureds were aware that the Foundation’s

“unsustainable spending” was the subject of a state Examination.

49. Justin Ruhl (Director of Foundation Accounting Operations) sent a May 10, 2016

e-mail to Tomlinson stating that: (i) the Foundation’s “spending policy … is not sustainable in

the long term,” (ii) the Foundation’s spending policy created a “guilty until proven innocent

[standard] right from the start,” and (iii) the “actual financial health of the Foundation at this


Complaint -

current point is not the same [as] the Leadership’s perceived financial health of the entities.”

(“I’m probably stating the obvious, but our unsustainable spending is not just limited to

endowments or ULF. This is a global problem with ULF and ULREF.”).

50. In the Application, the Foundation answered “no” to the following question:

Does the Applicant or any person in his or her capacity as a director, officer, trustee, or any person responsible for insurance, complaints or claim reporting, have knowledge of any act, error, omission, fact, incident, situation, unresolved dispute or any other circumstance that is or could be the basis for a claim under the proposed insurance policy?

51. The Insureds’ answer to Question 7.c. was false and/or misleading because it

failed to disclose the compensation and spending policy issues that were being investigated by

the State Auditor.

52. The Insureds’ answer to Question 7.c. was further misleading because the

Insureds failed to describe the circumstances surrounding a $38 million loan from the University

to the Foundation that was the subject of substantial scrutiny just months before the inception of

the Policy.

53. Upon information and belief, a $38 million loan from the University to the

Foundation first became the subject of public scrutiny through media reports in May 2016.

54. Following those May 2016 media reports, the University’s Board began to

increasingly question the loan. For example, during a June 6, 2016 meeting of the Finance

Committee of the University Board, board members asked whether it was possible for the

University to demand repayment of the loan.

55. During an August 25, 2016 meeting of the University trustees, Larry Benz (a

University trustee) publicly stated that he had demanded information from the Foundation about

the $38 million loan.


Complaint -

56. On August 29, 2016 (the same day the Application was executed), the Foundation

received a letter from Mr. Benz stating that he planned to demand that an independent

accounting firm conduct a review of the Foundation and its related entities.

57. The scrutiny surrounding the Foundation and the $38 million loan ultimately led

to the following events (all of which occurred within just one month of the inception of the

Policy): (1) the September 9, 2016 resolution by the University’s board that threatened to sue the

Foundation if the Foundation did not share financial records and agree to an audit by an outside

accounting firm, (2) the September 15, 2016 resignation of Ramsey from the Foundation, (3) the

September 26, 2016 announcement that Smith had been placed “on leave” by the Foundation,

and (4) the University’s September 26, 2016 request for proposals for a “Special Forensic Audit”

relating to the activities and accounts of the Foundation, which was eventually undertaken by

Alvaraz & Marsal.

58. Because the circumstances and inquiries surrounding the $38 million loan could

have reasonably formed the basis of a Claim, the Insureds’ failure to disclose such circumstances

and inquiries further render the answer to Question 7.c. false and/or misleading.

59. The Application was also false and/or misleading because it misrepresented the

Foundation’s financials.

60. Question No. 4 of the Application asked the Foundation to provide, among other

things, information about the Foundation’s two most recent financial years, i.e., the July 1, 2014

to June 30, 2015 fiscal year (“2014-2015 FY”) and the July 1, 2015 to June 30, 2016 fiscal year

(“2015-2016 FY”).

61. In response to Question 4 of the Application, the Foundation provided the

following information:


Complaint -

4. Financial Information Most recent fiscal

year Prior fiscal year

A. Total Annual Revenue (grants, donations, membership dues, etc.)

$105,189,921 $77,653,000

B. Net Income/Loss ($132,171,910) ($46,575,000) C. Total Assets $977,722,950 $1,046,779,000 D. Fund Balance, Net Assets or

Equity* $704,443,447 $836,515,000

*If Fund Balance, Net Assets, or Equity is negative, please include the most recent financial statement and an explanation.

62. On October 27, 2016, the Foundation issued an audited financial statement (the

“2016 Audited Financials”) for the 2015-2016 FY, which included a restatement of the

Foundation’s financial results for the 2014-2015 FY. As shown in the following, the financial

information in the 2016 Audited Financials for the 2014-2015 Fiscal Year is different from the

financial information in the Application:

2014-2015 FY Application 2016 Audited Financials Difference Percentage

Change A Total Annual

Revenue (grants, donations, membership dues, etc.)

$77,653,000 $77,476,000 -$177,000 -.20%

B Net Income/Loss -$46,575,000 -$46,408,000 $167,000 .30% C Total Assets $1,046,779,000 $1,047,442,000 $663,000 .06%

63. The financial information in the 2016 Audited Financials for the 2015-2016 FY is

materially different from the financial information in the Application as shown below:


Complaint -

64. 2015-2016 FY Application 2016 Audited Financials Difference Percentage

Change A Total Annual

Revenue (grants, donations, membership dues, etc.)

$105,189,921 $64,188,000 -$41,001,921 -39%

B Net Income/Loss -$132,171,910 -$107,462,000 $24,709,910 18% C Total Assets $977,722,950 $898,818,000 -$78,904,950 -8%

65. The Application submitted to Navigators on behalf of the Insureds was false

and/or misleading because it: (1) failed to disclose the Examination, (2) failed to disclose the

public and private scrutiny of the Foundation’s compensation structure, spending policy, and $38

million loan from the University, and (3) provided materially inaccurate financial information.

66. If the true facts had been made known to Navigators as required by the

Application and Kentucky law, Navigators in good faith would either not have issued the Policy

or not have issued it at the same premium rate.

67. The above-described representations to Navigators in the Application were

material either to the acceptance of the risk, or to the hazard assumed by Navigators.

68. Navigators is entitled to entry of a judgment declaring that the Policy is void and

rescinded ab initio.

COUNT II – Declaration Concerning Coverage



70. Pleading alternatively, if the Policy is not declared void ab initio, then the Policy

does not provide coverage for the claims in the Lawsuit.

71. The “Insured v. Insured Exclusion” at Section III.H. of D&O Coverage Part

provides:


Complaint -

[Navigators] shall not be liable under this Coverage Part to make any payment for any Loss in connection with any Claim made against any Insured by or on behalf of any Insured or any security holder of the [Foundation]; provided, however, that this exclusion shall not apply to any Claim:

1. brought by any Insured where such Claim is in the form of a cross-claim or third party claim for contribution or indemnity which is part of and results directly from a Claim which is not otherwise excluded by the terms of this Coverage Section;

2. brought by any security holder of the [Foundation], whether directly or derivatively, if the security holder bringing such Claim is acting totally independently of, and without the solicitation, assistance, active participation or intervention of, the [Foundation] or any Insured Person;

3. brought in any bankruptcy proceeding by or against any entity included within the term “Company” by any creditors committee, examiner, trustee, receiver, liquidator or rehabilitator appointed with respect to such entity;

4. brought by any Insured Person who has neither served in such capacity nor as consultant to any entity included within the term “Company” for at least three (3) years prior to such Claim having been first made;

5. brought by any Insured Person of any entity included within the term “Company” formed and operating outside the United States of America or any of its territories or possessions against such Company or any Insured Person thereof, if such Claim is brought and maintained outside the United States of America, Canada or any other common law jurisdiction; or

6. arises out of, is based upon, or is attributable to any whistleblower activity, including but not limited to any such activity protected under the Sarbanes-Oxley Act of 2002, the False Claims Act, or any similar federal, state, local or foreign law or statute.

72. The Lawsuit is a Claim made against Insureds (Ramsey, Tomlinson, Curtin,

Deutsch, and Smith) by another Insured (the Foundation).

73. The claims in the Lawsuit are excluded by the Insured v. Insured Exclusion, and

none of the six exceptions to the Insured v. Insured Exclusion apply to the Lawsuit.


Complaint -

74. The claims in the Lawsuit are barred from coverage under the Policy pursuant to

the Knowledge Exclusion set out in Paragraph 15 above.

75. The Absolute Professional Services Exclusion at Endorsement No. 5 of the Policy

states that Navigators will not be liable to make any payment of any Loss in connection with any

Claim made against any Insured based upon, arising out of, relating to, directly or indirectly,

resulting from, or in any way involving any provision of or failure to provide any professional

service.

76. The Lawsuit alleges that the Individual Defendants mismanaged the funds in the

University’s endowment.

77. The Lawsuit specifically alleges a cause of action based on violations of the

Kentucky Uniform Prudent Management of Institutional Funds Act.

78. Because the management and investment of the University’s endowment

constitutes a professional service, the Absolute Professional Services Exclusion precludes

coverage for claims based on violations of the Kentucky Uniform Prudent Management of

Institutional Funds Act.

79. The term “Loss” is defined at Section II.N. of the General Terms and Conditions

and Section II.E. of the D&O Coverage Part, as amended by Endorsement No. 3, to not include,

among other things, any matter which may be deemed uninsurable under the law.

80. Among other things, the Lawsuit seeks to recover the allegedly excessive

compensation paid to certain of the Individual Defendants.

81. The return of any actual or alleged excessive compensation would constitute

restitution or the disgorgement of an ill-gotten gain, which is uninsurable as a matter of law.


Complaint -

82. Navigators is not liable for any sums reflecting the return of compensation or any

other amounts that do not constitute covered or insurable Loss under the Policy.

83. Section III.A.1 of the D&O Coverage Part of the Policy states that Navigators will

not be liable under Insuring Agreements A or C to make any payment of any Loss in connection

with any Claim made against any Insured brought about or contributed to by the gaining by any

Insured of any profit, advantage or remuneration to which such Insured was not legally entitled;

provided, however this exclusion shall only apply if it is finally adjudicated such conduct in fact

occurred.

84. Navigators will not be liable under Insuring Agreement A of the D&O Coverage

Part to the extent there is a final adjudication that any Insured Person gained any profit,

advantage or remuneration to which they were not legally entitled.

85. Section III.A.2 of the D&O Coverage Part of the Policy states that Navigators will

not be liable under Insuring Agreements A or C to make any payment of any Loss in connection

with any Claim made against any Insured brought about or contributed to by the deliberately

fraudulent or criminal acts of any Insured; provided, however this exclusion shall only apply if it

is finally adjudicated such conduct in fact occurred.

86. Navigators will not be liable under Insuring Agreement A of the D&O Coverage

Part to the extent a final adjudication establishes any Insured Person engaged in any deliberately

fraudulent or criminal acts.

87. Navigators reserves the right to amend this pleading to allege other coverage

defenses.


Complaint -

COUNT III – Judgment for Reimbursement



89. In the Lawsuit, Navigators is incurring the cost of defending Defendants Ramsey,

Smith, Deutsch, Curtin, and Tomlinson.

90. Section VI of the Policy states in part: “If a Claim made against any Insured

includes both covered and uncovered matters, or is made against any Insured and others, the

Insureds and the Insurer recognize that there must be an allocation between Loss and uninsured

damages, settlement amounts and other liabilities in connection with such Claim.”

91. Navigators is entitled to a judgment against each Defendant to reimburse

Navigators for all money paid by Navigators to defend that Defendant, or to reimburse that

Defendant for any advancement or indemnification, for all claims not covered by the Policy.

92. If the Policy is rescinded or coverage for all claims in the Lawsuit is excluded

under the terms of the Policy, then Navigators is entitled to a judgment against each Defendant to

reimburse Navigators for all money paid by Navigators to defend that Defendant.

WHEREFORE, Plaintiff, Navigators Insurance Company, demands that judgment be

entered against Defendants:

1. Declaring that the Policy is void and rescinded;

2. If the Policy is not declared void and rescinded, then declaring that the Policy

does not provide coverage for the claims alleged in the Lawsuit;

3. Awarding Navigators a judgment against each Defendant to reimburse Navigators

for all money paid by Navigators to defend that Defendant;


Complaint -

4. Awarding Navigators its costs and attorney’s fees, if appropriate; and

5. Awarding Navigators any and all other relief to which it may appear entitled.

Respectfully submitted, s/Robert L. Steinmetz Robert L. Steinmetz [email protected] Gwin Steinmetz & Baird, PLLC 401 West Main Street, Suite 1000 Louisville, KY 40202 (502) 618-5711 (phone) (502) 618-5701 (fax) Counsel for Navigators Insurance Company

T:\STEINMETZ\Navigators\UofL Foundation\Complaint - Navigators.doc


JS 44 (Rev. 06/17) CIVIL COVER SHEETThe JS 44 civil cover sheet and the information contained herein neither replace nor supplement the filing and service of pleadings or other papers as required by law, except asprovided by local rules of court. This form, approved by the Judicial Conference of the United States in September 1974, is required for the use of the Clerk of Court for thepurpose of initiating the civil docket sheet. (SEE INSTRUCTIONS ON NEXT PAGE OF THIS FORM.)

I. (a) PLAINTIFFS DEFENDANTS

(b) County of Residence of First Listed Plaintiff County of Residence of First Listed Defendant(EXCEPT IN U.S. PLAINTIFF CASES) (IN U.S. PLAINTIFF CASES ONLY)

NOTE: IN LAND CONDEMNATION CASES, USE THE LOCATION OF THE TRACT OF LAND INVOLVED.

(c) Attorneys (Firm Name, Address, and Telephone Number) Attorneys (If Known)

II. BASIS OF JURISDICTION (Place an “X” in One Box Only) III. CITIZENSHIP OF PRINCIPAL PARTIES (Place an “X” in One Box for Plaintiff(For Diversity Cases Only) and One Box for Defendant)

u 1 U.S. Government u 3 Federal Question PTF DEF PTF DEFPlaintiff (U.S. Government Not a Party) Citizen of This State u 1 u 1 Incorporated or Principal Place u 4 u 4

of Business In This State

u 2 U.S. Government u 4 Diversity Citizen of Another State u 2 u 2 Incorporated and Principal Place u 5 u 5Defendant (Indicate Citizenship of Parties in Item III) of Business In Another State

Citizen or Subject of a u 3 u 3 Foreign Nation u 6 u 6 Foreign Country

IV. NATURE OF SUIT (Place an “X” in One Box Only) Click here for: Nature of Suit Code Descriptions.CONTRACT TORTS FORFEITURE/PENALTY BANKRUPTCY OTHER STATUTES

u 110 Insurance PERSONAL INJURY PERSONAL INJURY u 625 Drug Related Seizure u 422 Appeal 28 USC 158 u 375 False Claims Actu 120 Marine u 310 Airplane u 365 Personal Injury - of Property 21 USC 881 u 423 Withdrawal u 376 Qui Tam (31 USC u 130 Miller Act u 315 Airplane Product Product Liability u 690 Other 28 USC 157 3729(a))u 140 Negotiable Instrument Liability u 367 Health Care/ u 400 State Reapportionmentu 150 Recovery of Overpayment u 320 Assault, Libel & Pharmaceutical PROPERTY RIGHTS u 410 Antitrust

& Enforcement of Judgment Slander Personal Injury u 820 Copyrights u 430 Banks and Bankingu 151 Medicare Act u 330 Federal Employers’ Product Liability u 830 Patent u 450 Commerceu 152 Recovery of Defaulted Liability u 368 Asbestos Personal u 835 Patent - Abbreviated u 460 Deportation

Student Loans u 340 Marine Injury Product New Drug Application u 470 Racketeer Influenced and (Excludes Veterans) u 345 Marine Product Liability u 840 Trademark Corrupt Organizations

u 153 Recovery of Overpayment Liability PERSONAL PROPERTY LABOR SOCIAL SECURITY u 480 Consumer Credit of Veteran’s Benefits u 350 Motor Vehicle u 370 Other Fraud u 710 Fair Labor Standards u 861 HIA (1395ff) u 490 Cable/Sat TV

u 160 Stockholders’ Suits u 355 Motor Vehicle u 371 Truth in Lending Act u 862 Black Lung (923) u 850 Securities/Commodities/u 190 Other Contract Product Liability u 380 Other Personal u 720 Labor/Management u 863 DIWC/DIWW (405(g)) Exchangeu 195 Contract Product Liability u 360 Other Personal Property Damage Relations u 864 SSID Title XVI u 890 Other Statutory Actionsu 196 Franchise Injury u 385 Property Damage u 740 Railway Labor Act u 865 RSI (405(g)) u 891 Agricultural Acts

u 362 Personal Injury - Product Liability u 751 Family and Medical u 893 Environmental Matters Medical Malpractice Leave Act u 895 Freedom of Information

REAL PROPERTY CIVIL RIGHTS PRISONER PETITIONS u 790 Other Labor Litigation FEDERAL TAX SUITS Actu 210 Land Condemnation u 440 Other Civil Rights Habeas Corpus: u 791 Employee Retirement u 870 Taxes (U.S. Plaintiff u 896 Arbitrationu 220 Foreclosure u 441 Voting u 463 Alien Detainee Income Security Act or Defendant) u 899 Administrative Procedureu 230 Rent Lease & Ejectment u 442 Employment u 510 Motions to Vacate u 871 IRS—Third Party Act/Review or Appeal ofu 240 Torts to Land u 443 Housing/ Sentence 26 USC 7609 Agency Decisionu 245 Tort Product Liability Accommodations u 530 General u 950 Constitutionality ofu 290 All Other Real Property u 445 Amer. w/Disabilities - u 535 Death Penalty IMMIGRATION State Statutes

Employment Other: u 462 Naturalization Applicationu 446 Amer. w/Disabilities - u 540 Mandamus & Other u 465 Other Immigration

Other u 550 Civil Rights Actionsu 448 Education u 555 Prison Condition

u 560 Civil Detainee - Conditions of Confinement

V. ORIGIN (Place an “X” in One Box Only)u 1 Original

Proceedingu 2 Removed from

State Courtu 3 Remanded from

Appellate Courtu 4 Reinstated or

Reopenedu 5 Transferred from

Another District(specify)

u 6 MultidistrictLitigation -Transfer

u 8 Multidistrict Litigation - Direct File

VI. CAUSE OF ACTIONCite the U.S. Civil Statute under which you are filing (Do not cite jurisdictional statutes unless diversity):

Brief description of cause:

VII. REQUESTED IN COMPLAINT:

u CHECK IF THIS IS A CLASS ACTIONUNDER RULE 23, F.R.Cv.P.

DEMAND $ CHECK YES only if demanded in complaint:JURY DEMAND: u Yes uNo

VIII. RELATED CASE(S) IF ANY (See instructions):

JUDGE DOCKET NUMBERDATE SIGNATURE OF ATTORNEY OF RECORD

FOR OFFICE USE ONLY

RECEIPT # AMOUNT APPLYING IFP JUDGE MAG. JUDGE

NAVIGATORS INSURANCE COMPANY

NEW YORK

ROBERT L. STEINMETZ, Gwin Steinmetz & Baird PLLC, 401 West Main Street, Suite 1000, Louisville, KY 40202 (502) 618-5700

THE UNIVERSITY OF LOUISVILLE FOUNDATION, INC.; JAMES R. RAMSEY; KATHLEEN SMITH; BURT DEUTSCH; MICHAEL CURTIN; JASON TOMLINSON

28 U.S .C. 1332(a)

/s/ Robert L. Steinmetz

Insurance -- reimbursement, coverage, rescission

X

7/6/2018

Case 3:18-cv-00437-DJH Document 1-1 Filed 07/06/18 Page 1 of 2 PageID #: 19

JS 44 Reverse (Rev. 06/17)

INSTRUCTIONS FOR ATTORNEYS COMPLETING CIVIL COVER SHEET FORM JS 44Authority For Civil Cover Sheet

The JS 44 civil cover sheet and the information contained herein neither replaces nor supplements the filings and service of pleading or other papers asrequired by law, except as provided by local rules of court. This form, approved by the Judicial Conference of the United States in September 1974, isrequired for the use of the Clerk of Court for the purpose of initiating the civil docket sheet. Consequently, a civil cover sheet is submitted to the Clerk ofCourt for each civil complaint filed. The attorney filing a case should complete the form as follows:

I.(a) Plaintiffs-Defendants. Enter names (last, first, middle initial) of plaintiff and defendant. If the plaintiff or defendant is a government agency, useonly the full name or standard abbreviations. If the plaintiff or defendant is an official within a government agency, identify first the agency and then the official, giving both name and title.

(b) County of Residence. For each civil case filed, except U.S. plaintiff cases, enter the name of the county where the first listed plaintiff resides at the time of filing. In U.S. plaintiff cases, enter the name of the county in which the first listed defendant resides at the time of filing. (NOTE: In land condemnation cases, the county of residence of the "defendant" is the location of the tract of land involved.)

(c) Attorneys. Enter the firm name, address, telephone number, and attorney of record. If there are several attorneys, list them on an attachment, notingin this section "(see attachment)".

II. Jurisdiction. The basis of jurisdiction is set forth under Rule 8(a), F.R.Cv.P., which requires that jurisdictions be shown in pleadings. Place an "X" in one of the boxes. If there is more than one basis of jurisdiction, precedence is given in the order shown below.United States plaintiff. (1) Jurisdiction based on 28 U.S.C. 1345 and 1348. Suits by agencies and officers of the United States are included here.United States defendant. (2) When the plaintiff is suing the United States, its officers or agencies, place an "X" in this box.Federal question. (3) This refers to suits under 28 U.S.C. 1331, where jurisdiction arises under the Constitution of the United States, an amendment to the Constitution, an act of Congress or a treaty of the United States. In cases where the U.S. is a party, the U.S. plaintiff or defendant code takes precedence, and box 1 or 2 should be marked.Diversity of citizenship. (4) This refers to suits under 28 U.S.C. 1332, where parties are citizens of different states. When Box 4 is checked, the citizenship of the different parties must be checked. (See Section III below; NOTE: federal question actions take precedence over diversity cases.)

III. Residence (citizenship) of Principal Parties. This section of the JS 44 is to be completed if diversity of citizenship was indicated above. Mark thissection for each principal party.

IV. Nature of Suit. Place an "X" in the appropriate box. If there are multiple nature of suit codes associated with the case, pick the nature of suit code that is most applicable. Click here for: Nature of Suit Code Descriptions.

V. Origin. Place an "X" in one of the seven boxes.Original Proceedings. (1) Cases which originate in the United States district courts.Removed from State Court. (2) Proceedings initiated in state courts may be removed to the district courts under Title 28 U.S.C., Section 1441.When the petition for removal is granted, check this box.Remanded from Appellate Court. (3) Check this box for cases remanded to the district court for further action. Use the date of remand as the filing date.Reinstated or Reopened. (4) Check this box for cases reinstated or reopened in the district court. Use the reopening date as the filing date.Transferred from Another District. (5) For cases transferred under Title 28 U.S.C. Section 1404(a). Do not use this for within district transfers or multidistrict litigation transfers.Multidistrict Litigation – Transfer. (6) Check this box when a multidistrict case is transferred into the district under authority of Title 28 U.S.C. Section 1407. Multidistrict Litigation – Direct File. (8) Check this box when a multidistrict case is filed in the same district as the Master MDL docket. PLEASE NOTE THAT THERE IS NOT AN ORIGIN CODE 7. Origin Code 7 was used for historical records and is no longer relevant due to changes in statue.

VI. Cause of Action. Report the civil statute directly related to the cause of action and give a brief description of the cause. Do not cite jurisdictional statutes unless diversity. Example: U.S. Civil Statute: 47 USC 553 Brief Description: Unauthorized reception of cable service

VII. Requested in Complaint. Class Action. Place an "X" in this box if you are filing a class action under Rule 23, F.R.Cv.P.Demand. In this space enter the actual dollar amount being demanded or indicate other demand, such as a preliminary injunction.Jury Demand. Check the appropriate box to indicate whether or not a jury is being demanded.

VIII. Related Cases. This section of the JS 44 is used to reference related pending cases, if any. If there are related pending cases, insert the docket numbers and the corresponding judge names for such cases.

Date and Attorney Signature. Date and sign the civil cover sheet.


AO 440 (Rev. 06/12) Summons in a Civil Action

UNITED STATES DISTRICT COURTfor the

__________ District of __________

))))))))))))

Plaintiff(s)v. Civil Action No.

Defendant(s)

SUMMONS IN A CIVIL ACTION

To: (Defendant’s name and address)

A lawsuit has been filed against you.

Within 21 days after service of this summons on you (not counting the day you received it) — or 60 days if youare the United States or a United States agency, or an officer or employee of the United States described in Fed. R. Civ.P. 12 (a)(2) or (3) — you must serve on the plaintiff an answer to the attached complaint or a motion under Rule 12 ofthe Federal Rules of Civil Procedure. The answer or motion must be served on the plaintiff or plaintiff’s attorney,whose name and address are:

If you fail to respond, judgment by default will be entered against you for the relief demanded in the complaint. You also must file your answer or motion with the court.

CLERK OF COURT

Date:Signature of Clerk or Deputy Clerk

Western District of Kentucky


THE UNIVERSITY OF LOUISVILLE FOUNDATION, INC.; JAMES R.RAMSEY; KATHLEEN SMITH; BURT

DEUTSCH; MICHAEL CURTIN AND JASON TOMLINSON

THE UNIVERSITY OF LOUISVILLE FOUNDATION, INC.Serve: Franklin K. Jelsma, Registered Agent Wyatt, Tarrant & Combs, LLP 500 West Jefferson Street, Suite 2800 Louisville, KY 40202

Robert L. SteinmetzGwin Steinmetz & Baird PLLC401 West Main Street, Suite 1000Louisville, KY 40202


AO 440 (Rev. 06/12) Summons in a Civil Action (Page 2)

Civil Action No.

PROOF OF SERVICE(This section should not be filed with the court unless required by Fed. R. Civ. P. 4 (l))

This summons for (name of individual and title, if any)

was received by me on (date) .

u I personally served the summons on the individual at (place)

on (date) ; or

u I left the summons at the individual’s residence or usual place of abode with (name)

, a person of suitable age and discretion who resides there,

on (date) , and mailed a copy to the individual’s last known address; or

u I served the summons on (name of individual) , who is

designated by law to accept service of process on behalf of (name of organization)

on (date) ; or

u I returned the summons unexecuted because ; or

u Other (specify):

.

My fees are $ for travel and $ for services, for a total of $ .

I declare under penalty of perjury that this information is true.

Date:Server’s signature

Printed name and title

Server’s address

Additional information regarding attempted service, etc:

0.00




__________ District of __________

))))))))))))


Defendant(s)






CLERK OF COURT






James R. Ramsey8902 Adrienne CourtLouisville, KY 40245

