Facts

Plaintiff StarPoint USA Inc., a former subsidiary of Daewoo Motor Co. Ltd., distributed Daewoo automobiles in the United States. In 2003, Michelle Bandy was involved in a car accident while driving a Daewoo manufactured car. Bandy filed suit against StarPoint and Daewoo, among others involved in the chain of distribution, alleging her vehicle was defectively designed. Daewoo entered into a good faith settlement with Bandy and obtained dismissals with prejudice for itself and Starpoint.

Starpoint filed a cross-complaint against Daewoo seeking indemnification for attorney fees and costs incurred and expended in defending the underlying matter and its efforts to prosecute the indemnity agreement.

Prior to trial, the court granted summary adjudication in favor of Daewoo on Starpoint's claims for deceit, unfair competition, and declaratory relief for indemnity of future actions.

According to defense counsel, prior to jury deliberations, the court granted Daewoo's motion for nonsuit on Starpoint's claims for breach of the covenant of good faith and fair dealing. According to plaintiff's counsel, the court allowed the breach of the convent of good faith and fair dealing to proceed in the jury trial as a contractual claim, but did not allow that cause of action to proceed as a tort claim.

The court reserved, as a matter of law, the ability to set the amount of reasonable attorney fees incurred in the prosecution of the indemnity agreement.

PLAINTIFF'S CONTENTIONS:
StarPoint contended that under the agreement, Daewoo had agreed to reimburse StarPoint for all legal fees and costs arising out of any lawsuits and legal proceedings. StarPoint further alleged that Daewoo was attempting to avoid its obligations by using its foreign corporation status and by taking advantage of its expedited liquidation proceedings in Korea. StarPoint contended Daewoo did not act in good faith and unfairly deprived StarPoint of its rights under the contract.

Starpoint contended that so much was at stake that it had no choice but to expend over $1.3 million enforcing the agreement, even though it only incurred $57,667 in the defense of the underlying products liability case. This is because there currently are several cases pending throughout the United States, which involve identical issues and there likely will be more cases in the future considering that more than 180,000 Daewoo vehicles were sold in the U.S.

DEFENDANT'S CONTENTIONS:
Daewoo contended that the express terms of the indemnity agreement did not include reimbursement for attorney fees and costs incurred in prosecuting the alleged indemnity agreement and that Starpoint unreasonably rejected Daewoo's offer to defend and indemnify Starpoint in the underlying matter. Daewoo further alleged that the indemnity agreement was unenforceable.

Result

The jury rendered a verdict in favor of StarPoint, finding Daewoo had breached the implied covenant of good faith and fair dealing and had the duty to defend and indemnify StarPoint, awarding Starpoint $57,667 in damages, as well as awarding attorney fees and costs. The jury also found that the agreement permitted Starpoint to recover attorney fees and costs incurred in the prosecution of the agreement. Determination of those fees is pending.

Other Information

According to cross-complainant's counsel: StarPoint incurred over $1.3 million in legal fees over seven years of litigation.

Length

eight days