Case Background

Alpha GRP, Inc., a Delaware-based motorsports company, and its officer, Colin Dyne, filed a lawsuit against their long-time insurance broker, Woodruff-Sawyer & Co., over advice given during the company’s wind-down process. Alpha GRP had been organising and promoting automotive races, but later opted to shut down operations through an “assignment for the benefit of creditors.” In doing so, they relied on Woodruff-Sawyer’s advice to purchase tail insurance policies intended to protect against lawsuits during the shutdown. The core of the dispute revolved around whether those policies would cover lawsuits filed by unpaid creditors.

The cause that led to the dispute

Plaintiffs alleged that Woodruff-Sawyer had negligently advised them to buy extended “tail” coverage on existing director and officer (D&O) policies that specifically excluded coverage for claims made by creditors. Plaintiffs argued that Woodruff-Sawyer, while presenting itself as a specialist in risk management and insurance for businesses winding down, had failed to inform them of this critical exclusion. They claimed this omission rendered the policies effectively worthless for the circumstances they were in.

Injuries suffered

After relying on the broker’s advice and purchasing the tail policies, paying more than $261,000 in premiums, Alpha GRP and Dyne were sued in several creditor-related lawsuits. When they tried to invoke coverage, the insurer denied it based on the creditor exclusion in the policy. As a result, Alpha and Dyne had to fund their legal defenses out of pocket, incurring significant legal fees and facing potential settlements or judgments.

Damages sought

Alpha GRP sought compensation for the policy premiums they believed were wasted and for the ongoing legal fees and risks from the creditor lawsuits. Dyne, individually, sought reimbursement for legal costs stemming from three separate lawsuits. Plaintiffs claimed the policies should have provided coverage, and the broker should be responsible for the financial consequences of its flawed advice.

Key Arguments and Proceedings

The trial began in February 2025 in Contra Costa County. Plaintiffs claimed that Woodruff-Sawyer had a duty to advise them accurately about policy exclusions, especially because the firm had explicitly recommended the tail coverage as a way to protect Alpha’s leadership during the business wind-down. According to the Plaintiffs, the broker knew Alpha was proceeding with an assignment for the benefit of creditors, and it knew or should have known that lawsuits from those creditors were likely.

Defendant Woodruff-Sawyer denied all claims and broadly defended itself by asserting that Alpha GRP bore responsibility for understanding its coverage and for making the final purchasing decisions. The firm argued that it had not breached any duty, had not misrepresented the policy’s terms, and that Alpha’s negligence contributed significantly to any resulting harm.

Legal Representation

Plaintiff(s): Alpha GRP, Inc| Colin Dyne

·       Counsel for Plaintiff(s): Alan H. Packer | Jacqueline V. McCalla

Defendant(s): Woodruff-Sawyer & Co.

·       Counsel for Defendant(s): Daniel V. Kohls of Hansen

Key Arguments by Counsel

Plaintiffs emphasised that Woodruff-Sawyer had not just acted as an intermediary, but had taken on an advisory role, offering recommendations tailored to Alpha’s shutdown strategy. They painted the broker’s guidance as affirmatively misleading, asserting that a reasonable professional would have known to flag the exclusion for creditor claims.

The defense, meanwhile, portrayed Alpha as a sophisticated business entity that should have reviewed the policy terms itself. They argued that Alpha’s failure to do so and its internal decisions, not the broker’s, had caused any harm.

Claims Asserted

Declaratory Relief

Alpha and Dyne both sought court declarations that the broker owed them a duty to provide accurate advice and had breached it, leading to uncovered liabilities.

Negligence

Alpha claimed the broker failed to exercise due care in recommending the tail policies and failed to warn about their limitations, despite knowing the risks Alpha faced in a creditor-heavy wind-down.

Negligent Misrepresentation

Alpha alleged that Woodruff-Sawyer had misrepresented the adequacy of the tail coverage and had done so either knowingly or recklessly, for financial gain.

Indemnity and Contribution

Dyne, sued personally in the creditor actions, sought indemnity and contribution from Woodruff-Sawyer for all attorney’s fees and costs incurred in his defense.

Defense Arguments

Woodruff-Sawyer denied all allegations, asserting it had no legal duty beyond facilitating the transaction. It claimed Alpha had failed to mitigate damages, contributed to its own losses through negligence, and lacked standing for certain claims. The broker also argued that the Plaintiffs had waived or forfeited their claims and were barred by unclean hands, consent, and estoppel. Multiple affirmative defences were raised, including that third parties or natural events, not Woodruff-Sawyer, were responsible for the losses.

Jury Verdict

On February 24, 2025, the jury returned a mixed verdict. It found that Woodruff-Sawyer had been negligent and that its negligence substantially caused harm to Alpha GRP. However, the jury also found Alpha partially at fault. It assessed total damages at $266,917.81, but attributed 30% responsibility to Woodruff-Sawyer and 70% to Alpha, reducing the award to $73,474.44. The court entered judgment in that amount in Alpha’s favour.

As for Colin Dyne, the jury found that Woodruff-Sawyer’s conduct had not been a substantial factor in causing him harm. Therefore, the jury denied his claims for reimbursement of defense costs in the creditor lawsuits. Judgment was entered in favour of Woodruff-Sawyer against Dyne. Both parties were ordered to bear their own legal costs.

Court documents are available upon request at jurimatic@exlitem.com