Financial Pacific Insurance Co. v. J&L Properties, et al.
Published: Mar. 9, 1996 | Result Date: Jan. 31, 1996 | Filing Date: Jan. 1, 1900 |Case number: 554673 – $0
Judge
Court
Sacramento Superior
Attorneys
Plaintiff
Defendant
Experts
Plaintiff
Dennis Greenbaum
(technical)
William Manfre
(technical)
Allan Phillips
(technical)
Defendant
Robert Quinn
(technical)
Facts
The defendant/cross-complainant, J&L Properties ("J&L"), a homebuilder, was insured by the plaintiff/cross-defendant, Financial Pacific Insurance Company ("Financial Pacific") under a general liability policy for the period of June 30, 1993, to June 30, 1994. In May of 1994, J&L was sued for copyright infringement by another homebuilder, Winncrest Homes, Inc. The copyright violations stemmed from J&L's admitted use of designs from brochures created by Winncrest Homes. The designs were used to produce a series of working drawings and the plans incorporating the designs were used by J&L to build approximately 100 homes in six subdivisions located in the Sacramento area. J&L tendered the copyright infringement suit to Financial Pacific requesting a defense and indemnification. J&L conducted settlement negotiations with Winncrest and within two and one-half weeks of tendering the claim had settled the copyright infringement suit for $100,000. The settlement included the right of J&L to continue to use the designs in question in two subdivisions either under construction or being planned. After agreeing to settle the case, J&L contacted Financial Pacific and requested settlement authority. Financial Pacific orally agreed to contribute "up to $100,000" to settle the case, subject to a reservation of rights and with the understanding that its investigation was not complete. A written letter explaining the basis of the reservation of rights was never sent. J&L paid the $100,000 settlement using its own funds and entered into a written settlement agreement with Winncrest Homes. Financial Pacific, unaware of the actual settlement, thereafter contacted J&L and demanded that J&L not make any settlement offers as Financial Pacific believed the case was potentially defensible. J&L advised Financial Pacific that the case had been settled and sent a copy of the written settlement agreement which included reference to the right to the continued use of the designs. Financial Pacific indemnified J&L for the $100,000 settlement payment, subject to a reservation of rights to recover all amounts paid under the policy to indemnify and defend J&L for the Winncrest claim. Financial Pacific subsequently filed suit for declaratory relief, breach of contract and equitable restitution. J&L counter-claimed for breach of contract, breach of the covenant of good faith and fair dealing, fraud and declaratory relief.
Settlement Discussions
The plaintiff, Financial Pacific, offered to accept $50,000 on its complaint. The defendant, J&L, demanded $300,000 to settle its bad faith cross-complaint.
Damages
The plaintiff, Financial Pacific, sought to recover the $100,000 indemnity payment made on behalf of J&L.
Other Information
The verdict was reached approximately one year and one month after the case was filed. The jury verdict was in favor of the plaintiff, Financial Pacific, and held there was no coverage. The jury rendered a general verdict with special findings during the first phase of the trial which concerned the coverage issues and J&L's equitable defenses. The jury found that there was no coverage under the advertising injury coverage part; J&L's copyright infringement constituted a willful act or acts; J&L had breached material terms of the policy and had concealed relevant information from Financial Pacific; Financial Pacific had been substantially prejudiced thereby; and that Financial Pacific had neither waived nor was it estopped to assert its defenses to coverage.
Deliberation
2+ hours
Poll
11-1
Length
10 days
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