Confidential
Settlement – $375,000Facts
Defendant/cross-complainant City leased port premises to plaintiff/cross-defendant. The lease included an indemnity provision and also required plaintiff/cross-defendant to add the City as an additional insured under its liability policy. The insurer was also a plaintiff/cross-defendant in this action. Plaintiff/cross-defendant's employee was insured on the job and sued the City, alleging that the premises were defectively designed. The City tendered the claim to plaintiff/cross-defendant insurer, which assigned the matter to defense counsel and issued no reservation of rights. Four years later, shortly before trial, the City's main expert witness (who was also a City employee) changed his opinion and concluded that the premises did not, after all, comply with the Building Code in some respects. Upon learning this news from the defense counsel which it had appointed to represent the City, plaintiff/cross-defendant insurer asked that counsel for advice regarding withdrawing from the defense. Defense counsel wrote to the insurer, advising how best to disclaim coverage, and how the City might be expected to respond, enclosing a proposed letter to the City. After plaintiff/cross-defendant insurer approved it, defense counsel sent the letter to the City, asserting that the insurer was no longer obligated to defend or indemnify the City, stating that they were withdrawing the defense and denying coverage, and demanding that the City reimburse for defense expenses incurred to date. With trial only a few days away, the City paid $315,000 to settle the underlying case. Plaintiff insurer then filed this action against the City, seeking reimbursement of over $200,000 expended in defense of the underlying actions. The City filed a cross-complaint, seeking to recover its $315,000 indemnity payment and alleging bad faith. The City was granted summary judgment as to plaintiff insurer's complaint, which left only the City's cross-complaint.
Settlement Discussions
Before this action was filed, the City offered to treat the matter as a "wash." The insurer refused, and proceeded to file its complaint. After the City reviewed the file from the underlying case, it made a C.C.P. º998 demand of $425,000. The insurer made no offer until a voluntary settlement conference on Jan. 8, 1998, before Judge Victor T. Barrera when it offered $200,000.
Damages
The insurance company sought recovery of over $200,000 in defense expenses. The City sought recovery of $315,000, plus interest and bad faith damages.
Other Information
The settlement was reached approximately four years and one month after the case was filed. The case settled for $375,000 one week after the voluntary settlement conference, just before trial. SETTLEMENT CONFERENCE: A settlement conference was held on Jan. 8, 1998, before Judge Victor T. Barrera, resulting in an offer by plaintiff/cross-defendant insurer.
For reprint rights or to order a copy of your photo:
Email
jeremy@reprintpros.com
for prices.
Direct dial: 949-702-5390