Facts

Plaintiff Dr. Laura Darby is an internist who entered into a contract with Novato Community Hospital to provide medical services in the Novato community, starting on Jan. 1, 2003. Darby incorporated her practice on Jan. 15, 2003, and named it "Laura Darby, M.D., a professional corporation." As part of her contract with the hospital, Darby took over the office space leased to another doctor and inherited the doctor's patient files. During the start-up phase of Darby's business, she contacted Marc Beaulieu, an insurance broker employed by defendant Addison Bay Insurance Brokers Ltd., dba Vista International Insurance Brokers (Vista). Vista secured Maryland Casualty Co. business owner's insurance policy (BOP) for Darby. The BOP listed Darby's professional corporation as the named insured, but did not list her individually. Darby's business plan called for expanding the scope of her practice from internal medicine to include cosmetic procedures, such as microdermabrasion, laser hair removal, and Botox injections. Darby claimed that her business was just beginning to take off when, in July 2005, a fire damaged her office, patient files, and medical equipment. Darby submitted a claim to Maryland Casualty and Maryland Casualty began adjusting the loss. Darby became dissatisfied with Maryland Casualty's handling of the claim and filed suit against Maryland Casualty and Vista. Darby alleged that Maryland Casualty's handling of the claim was done in bad faith, interrupted and destroyed her growing business, and caused her to lose $3 million in income.

Initially, Darby erroneously sued Maryland Casualty as Zurich America.

PLAINTIFF'S CONTENTIONS:
Darby contended that Vista was negligent for not placing Darby as an individually named insured on the policy. Darby claimed that because of the handling of her claim, her business failed and her chances of owning a practice in the future were nonexistent. Darby contended that she specifically asked that Vista list her individually on the BOP. Darby contended that the failure to do so, and Maryland Casualty's bad faith, resulted in her inability to personally recover for damages caused by the fire.

DEFENDANT'S CONTENTIONS:
Vista denied that Darby asked to be named individually, contended that Darby received exactly what she requested, and asserted that the business could have succeeded if she had made better business decisions. Vista further argued that the business lost significant amounts of money each year that it was in operation and never made a profit, either before or after the fire. Vista further argued that the failure to name Darby personally was immaterial because all of the business property was owned by the professional corporation, and that the corporation was entitled to recover all the business losses that Darby would have pursued individually. As such, Vista argued, there would have been no benefit to Darby had she been named on the policy individually. The defense further argued that, notwithstanding the distinction between Darby personally and the professional corporation, Maryland Casualty never denied coverage or withheld or limited any payments to Darby on that basis. Vista admitted evidence of the exact amounts that Darby received during the claim adjustment as well as the amount of the Maryland Casualty settlement given that Darby contended that she was not fully compensated as a result of the adjustment and settlement.

Settlement Discussions

Darby demanded $250,000. Vista offered $20,000 to Darby individually and a waiver of costs to the professional corporation, both via C.C.P. section 998.

Damages

Darby sought $3 million in lost lifetime earnings that she claimed she could have expected but for the failure of the business and Maryland Casualty's bad faith. Darby contended that she would have been entitled to recover those damages in her bad faith law suit against Maryland Casualty, had she been individually named as an insured on the policy.

Result

Prior to trial, Maryland Casualty settled with Darby for a confidential sum. The jury found for Vista. Because Darby rejected Vista's C.C.P. section 998 offer, Vista was awarded $73,108 in costs and expert witness fees.

Other Information

Please note, this is a republication. This case report was previously published in error and this represents the corrected version. FILING DATE: April 4, 2006.

Deliberation

two hours

Length

nine days