Trendsetter HR LLC v. Zurich American Insurance Co., No. 19-10056 (5th Cir. 2020)Annotate this Case
Zurich filed suit against Trend after Trend purchased workers' compensation insurance from Zurich and then eventually went with a new insurance provider. Trend then filed for bankruptcy and the bankruptcy court allowed Zurich's claims for various unpaid invoices, estimated future losses, and unpaid fee schedule write-down fees.
The Fifth Circuit affirmed the district court's decision upholding the bankruptcy court's allowance of Zurich's unpaid-invoices and future-losses claims. The court applied federal bankruptcy law and held that there was no legal error due to unintentionality; Zurich's unpaid-invoices claim was a cognizable bankruptcy claim because the underlying invoices were enforceable rights to payment under New York law; the bankruptcy court did not clearly err in its assessment of the evidence by concurrently allowing Zurich's claims such that the total allowance was $4,674,629 for "future losses." The court also held that there was no error in the bankruptcy court's allowance of Zurich's claim for unpaid fee schedule write-down fees. In this case, Zurich has a cognizable claim to the unpaid fee schedule write-down fees, and the bankruptcy court did not clearly err by concluding that the "25% of Total Savings" fee, as applied to fee schedule write-downs, was not unconscionable.