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with less knowledge. More specifically, this would be one of the last scenarios when a

court’s equitable heartstrings would lead it to do what it should not — that is, undercut a

court rule requiring a certain level of pleading. The Litigation Trust has had far more

access to information than the typical plaintiff, having access to voluminous documents

during the bankruptcy proceedings, for more than a year before it filed its complaint.127

Thus, it was better positioned than most fraud plaintiffs to meet the standards of Rule


Finally, the Litigation Trust fails to plead a fraud claim for another important

reason that I adverted to earlier. The Litigation Trust is only entitled to bring claims

possessed by Trenwick America. By the Litigation Trust’s own admission, Trenwick

America’s board of directors knew the true facts about all the issues said to have been

misrepresented. As a result, Trenwick America – as an entity – did not rely to its

detriment on any of the misstatements, despite the cursory statement in the complaint that

the “plaintiff” relied on the false statements to its detriment.128 To the extent that the

Litigation Trust is referring to itself, it could not have relied on the statements at issue as

it did not exist when those statements were made. To the extent that the Litigation Trust

is referring to Trenwick America, its statement makes no sense because the complaint

alleges that those who controlled Trenwick America knew the statements were


127 In addition, there apparently was an investigation in which the trustee, creditors, and Trenwick America’s bankruptcy counsel participated to determine what claims could be brought. Trial Tr. at 99, 101, 114. , 2005 WL 1594085, at *11 (“Delaware law states the knowledge of an agent acquired while acting within the scope of his or her authority is imputed to the principal.”). 128


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