Facts

LMA North America Inc. sued National Union Fire Insurance Co. of Pittsburgh, PA, alleging breach of contract and breach of the implied covenant of good faith and fair dealing.

National Union issued an insurance policy to LMA for the period covering Jan. 1, 2004 through Jan. 1, 2005. This policy had a $14 million excess policy limit. This policy was also excess to another insurance policy issued by Transcontinental Insurance Co. to LMA, which had a limit of $1 million per occurrence. National Union's policy covered "advertising injury" as that term was defined in the policy.

LMA and Ambu Inc. made competing laryngeal mask airway products. LMA advertised its product from 2004 and 2009. In 2007, LMA filed a patent infringement lawsuit against Ambu. Ambu then filed several counter-claims against LMA. LMA tendered the underlying claim to Transcontinental and National Union. Transcontinental agreed to defend LMA, while National Union elected to have little or no involvement in the defense of Ambu's counter-claims against LMA. Eventually, LMA and Ambu agreed to a contingent settlement of $4.75 million. LMA subsequently sought indemnity from National Union. Although Transcontinental was willing to pay its full $1 million limit towards the $4.75 million settlement, National Union continued to delay its reply. Finally, National Union rejected the settlement and didn't offer to assume the defense of the underlying suit until after LMA was forced to finalize the settlement with Ambu.

PLAINTIFF'S CONTENTIONS:
LMA contended that National Union unreasonably and arbitrarily refused either to approve the settlement or assume the defense of Ambu's underlying counter-claims. As such, National Union breached its contract and also committed a breach of the implied covenant of good faith and fair dealing.

DEFENDANT'S CONTENTIONS:
National Union denied LMA's substantive allegations, and asserted several affirmative defenses.

Damages

LMA sought $3.75 million in damages plus interest, attorney fees and costs and other compensatory damages.

Result

The jury found in favor of LMA and awarded the insured $3.75 million in damages. The jury also found that National Union breached its duty of good faith and fair dealing. An award for fees and costs are pending.