Confidential
Settlement – $5,037,110Facts
The defendants were the chairman and chief executive officer of a company that was insured by the plaintiff insurance company. They were also trustees of the pension plan and the Employee Stock Ownership Plan (ESOP). In 1991, they were named as defendants in a Federal ERISA action involving claims concerning employee benefits. They were named for activity they performed as trustees of the company's ESOP. When they requested that the insurance company to defend, it refused. The plaintiff produced evidence at trial that showed that they conducted an investigation seeking to avoid coverage and searching for "coverage outs." After nearly 10 months of investigation, the plaintiff insurance company sued for declaratory relief in 1992. In 1993, the court found that the plaintiff insurance company had a duty to defend the defendants but the plaintiff persisted in its refusal to defend. Because the plaintiff never defended, the defendants settled the ERISA cases shortly before their scheduled trial. The plaintiff brought this action seeking declartory relief against the defendants sued under bad faith and breach of contract.
Settlement Discussions
The plaintiff made a C.C.P. º998 settlement demand for $ _______. The defendant made a C.C.P. º998 offer of comrpomise for $ ______.
Damages
The defendants claimed $61,582 (on defending the two lawsuits the plaintiff refused to defend); $257,500 (for settling the two lawsuits); $600,000 (for emotional distress to each defendant - $1,200,000 total); $33,793 (for brandt fees) and $2 million (for punitive damages).
Other Information
The settlement was reached following a two-month trial that resulted in a $4,259,182 verdict for the plaintiff, which was substantially upheld on appeal. A mediation was held on April 2, 1998, before Justice David Eagleson, retired, resulting in no settlement.
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