Facts

Plaintiff John Daniel Williams is a self-employed real estate and mortgage broker in Norman, Okla. Sometime in 1998, he became interested in a business venture proposed by his high school friend, plaintiff Steven Stuart Simon.

Simon resided in Southern California and worked in a Rhino Linings store in Santa Ana. Rhino Linings dealerships throughout the country sprayed pick-up truck beds with a polyurethane lining. The proposal called for Williams to finance the purchase of the dealership from Rhino Linings USA and for Simon to manage it.

In 1999, Williams and Simon opened Rhino Linings Santa Fe Springs. When they purchased the dealership through Rhino USA, they were referred to Robin Thaw, an insurance broker to handle their insurance needs. In 1999 Robin Thaw was employed at Driver Alliant Insurance Services (which had no affiliation with HRH). Thaw had developed a Rhino Linings dealership insurance package with Traveler's insurance, which she marketed and sold to Rhino Linings dealers throughout the country.

In January 1999, Thaw obtained insurance coverage for Rhino SFA, but failed to obtain workers' compensation coverage, as required by California state law. California Labor Code Section 3700 et. seq. Williams and Simon thought that they had full and complete insurance coverage when they purchased the Rhino dealers insurance package. Thaw contended she gave Williams a separate verbal quote for workers' compensation insurance and he refused it.

In January 2000, Robyn Thaw (working for defendant Mills Insurance Agency/HRH) obtained the subject policy for Rhino SFS, again obtaining only general liability insurance, this time through Hartford Insurance's "Spectrum" package program. At no time did Williams ask for workers' compensation insurance.

Finally, in January 2001, the Hartford policy was renewed through Hartford. Thaw was never contacted. There is no evidence that Rhino FSS asked for workers' compensation insurance.

In July 2001, a fire at Rhino SFS resulted in injury to an employee, Kendall Man. Without workers' compensation coverage Williams and Simon were, pursuant to California Labor Code Section 3706, named defendants in the third party action, Mann v. Rhino Linings USA et. al.

PLAINTIFFS' CONTENTIONS:
The plaintiffs contended that if the defendant had properly secured workers' compensation insurance coverage, the workers' compensation exclusivity provisions would have precluded Mann from suing his employer.

DEFENDANT'S CONTENTIONS:
The defendant contended that the plaintiffs never asked for workers' compensation coverage, and in fact, in the operative policy period, January 2001, HRH was never contacted at all.

Settlement Discussions

The defendant offered $50,000 at mediation with Jeffrey Krivis Esq. of First Mediation Corporation.

Result

On July 2, 2007, the Hon. William J. Birney Jr. awarded plaintiffs John D. Williams and Steven S. Simon in the total amount of $5,807,223, plus interest at the rate of ten percent.

Other Information

Although Rhino SFS did not have workers' compensation coverage, they did have general liability coverage through Hartford Insurance. In the Mann case, Williams and Simon were provided a defense by Hartford. Further, Hartford Insurance indemnified Williams and Simon up to the $1 million policy limits on the general liability policy. The Mann case was tried (also by plaintiffs' attorney Patrick G. Vastano) in the Los Angeles County Superior Court in Norwalk, resulting in a jury verdict against Rhino USA and Rhino SFS for $11,272,238. Rhino USA and Rhino SFS were both found to be 50 percent at fault and the judgment as to Rhino SFS was entered jointly and severally against Williams and Simon in an amount exceeding $6 million. The judgment was entered on March 2, 2004. Post judgment, Hartford paid the entire verdict against Rhino USA (approximately $8 million with interest) and $1 million as a partial satisfaction of the judgment entered against Williams and Simon. The outstanding, unpaid amount of the Mann verdict, approximately $5.8 million, was the damages claimed by Williams and Simon against the insurance brokers. Defendants are pursuing post trial motions and may appeal.