Oct. 17, 2013
Bruce A. Friedman
See more on Bruce A. FriedmanADR Services Inc. Los Angeles Specialties: insurance, business, class actions, real estate
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In this case, the defendant had sent out thousands of unsolicited texts, leaving him liable for a $500 fine per communication, Friedman said.
But complicating the matter, the statute didn't specifically refer to text messages.
"I think that the court would have applied the law to the texts, and it provided leverage in the negotiation," Friedman said.
There also was the question of whether the company was responsible, as the sales representative sent out the unsolicited texts on his own," he added.
"This raises a very significant insurance issue," Friedman said.
The insurance carrier contended that the directors and officers policy didn't cover the case based on an exclusion for invasion of privacy.
Meanwhile, Friedman said, "California courts have made an interesting distinction regarding invasion of privacy coverage between the right to not have your privacy invaded, and not having your public information disseminated.
In this regard, Friedman added, the courts have ruled that insurance is appropriate only in the case of improperly disseminating personal information, but not in safeguarding an individual's right to peace and quiet.
But there were many issues that created risk in the case and insurance coverage to generate a willingness to settle the dispute, he said.
Friedman also mediated a dispute by a business broker who was trying to collect a commission on the sale of a car wash.
He sued the owner of the car wash and its CEO. The company then went into bankruptcy. The CEO had been insured by a management liability policy.
The business broker then sued the directors and officers policy insurer directly to collect a judgment for the commission rendered by the Los Angeles Superior Court.
"In mediation, the issues involved the extent of coverage under the policy and whether the judgment obtained for the commission was excluded under the policy based on a number of exclusions," Friedman said.
The plaintiff faced the risk of losing the insurance company as a source of payment and having to collect that money from the individual defendant CEO, which, Friedman said, "is always a challenge."
On the other hand, he added, "The insurance company had to deal with the risk of whether they were responsible for everything, or nothing."
With so much uncertainty, Friedman said, the parties agreed to comprise and settled the case.
- Pat Broderick
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