Lockwood Int'l, B.V. v. Volm Bag Company, 273 F.3d 741 (7th Cir. 2001), aff'd, No. 96-C-673, 2002 U.S. Dist. LEXIS 13869 (E.D. Wis. June 28, 2002)

Lockwood Int'l, B.V. v. Volm Bag Company, 273 F.3d 741 (7th Cir. 2001), aff'd, No. 96-C-673, 2002 U.S. Dist. LEXIS 13869 (E.D. Wis. June 28, 2002) (Justices Posner, Flaum, and Manion issued an opinion reversing and remanding the decision of Judge Randa.)  The panel found that a liability insurer with an obligation to defend a third-party action against its policyholder was precluded from avoiding its defense obligation by paying the plaintiff in the third-party action to replead covered and potentially covered claims as non-covered claims. The Court of Appeal condemned the insurers' tactics in unequivocal terms: "We have difficulty imagining a more conspicuous betrayal of the insurer's fiduciary duty to its insured than for its lawyers to plot with the insured's adversary a repleading that will enable the adversary to maximize his recovery of uninsured damages from the insured while stripping the insured of its right to a defense by the insurance company." Id. at 744.