Confidential
Settlement – $2,600,000Judge
Court
San Diego Superior
Attorneys
Plaintiff
Frederick L. Cottrell III
(Richards, Layton & Finger PA)
Defendant
Craig A. Miller
(Miller & Calhoon)
Facts
In 1992, a corporation, its officers and directors, and certain institutional underwriters and investors were named as defendants in a class action lawsuit alleging violations of federal and state securities laws. The corporation's officers and directors were insured by the insurance company under a directors and officers excess liability insurance policy with $5,000,000 policy limits. The officers and directors alleged that they repeatedly requested that the insurance company reimburse them for attorney's fees and costs incurred to defend the class action lawsuit and further requested that the insurance company participate in settlement negotiations. They also alleged that the insurance company refused to cooperate with the corporation or its officers and directors in any fashion and secretly filed an action for declaratory relief against the corporation and its officers and directors in Delaware State Court on April 2, 1995 in order to obtain substantive and procedural advantages. The insurance company alleged that it fully cooperated with its insureds and that it filed the declaratory relief action on April 2, 1995, to seek a declaration of its rights and duties under the policy. On May 1, 1995, the corporation and its directors and officers filed an action for declaratory relief and breach of the implied covenant of good faith and fair dealing in San Diego Superior Court and moved to dismiss the Delaware action. On September 19, 1995, the motion to dismiss the directors and officers on jurisdictional grounds from the Delaware action was granted, but the motion to dismiss the corporation based upon forum non conveniens was denied. On October 25, 1995, the corporation and the officers and directors voluntarily dismissed the California action. On November 3, 1995, the corporation answered the Delaware complaint for declaratory relief and filed the counterclaim for bad faith against the insurer based on a breach of the implied covenant of good faith and fair dealing theory of recovery.
Settlement Discussions
The settlement discussions were not disclosed.
Damages
Per the corporation, the corporation claimed $2,600,000 in damages. (The insurer claimed that the corporation was not entitled to recover any damages and that the corporation actually claimed $5,600,000 in damages.)
Result
A voluntary mediation was held on February 2, 1996, before Hon. J. Lawrence Irving, retired, resulting in the reported settlement.
Other Information
The settlement was reached approximately nine months after the case was filed. Per the insurer, the settlement followed the corporation's unsuccessful attempts to dismiss the Delaware case, and the corporation's voluntary dismissal of the California case.
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