Jay Carter, Jr. v. Cigna Specialty Insurance Company; Mendes & Mount; Robert Rees; Donald Fitzpatrick; and Ty Vanderford
Published: Jul. 25, 1998 | Result Date: May 18, 1998 | Filing Date: Jan. 1, 1900 |Case number: BC158233 Verdict – $1,284,000
Judge
Court
L.A. Superior Central
Attorneys
Plaintiff
Defendant
Robert A. Cutbirth
(Slovak, Baron, Empey, Murphy & Pinkey LLP)
Matthew W. Close
(O'Melveny & Myers LLP)
Moris Davidovitz
(Davidovitz and Bennett LLP)
Experts
Plaintiff
David F. Peterson
(technical)
Defendant
Gene A. Weisberg
(Gladstone Weisberg ALC)
(technical)
Gary A. Hernandez
(technical)
Facts
Plaintiff Jay Carter, Jr. (Carter), was the president of Carter Wind Systems, Inc., a Texas corporation (CWS). CWS manufactured, sold and maintained energy producing wind turbine generators. In 1985, CWS obtained a warranty insurance policy from California Union Insurance Company (now Cigna) to provide the financial backing for the warranty CWS issued to the purchasers of its wind turbines. Defects in the wind turbines resulted in claims made by CWS, which were investigated and paid by Cigna in June 1988. At the end of 1988, serious financial difficulties caused CWS to go out of business. The wind turbine owners, who were additional named insureds on the policy, assumed the operation and maintenance of the wind turbines. However, at the end of the 5-year policy term, the wind turbines were still defective and the owners sought the full replacement cost from Cigna. Ultimately, the wind turbine owner's litigation against Cigna was settled in May 1993. Cigna paid a total of $6.4 million in losses under the policy. In December 1993, Cigna, through its attorneys Mendes & Mount, Donald Fitzpatrick and Ty Vanderford, sued CWS and Carter for fraud in the inducement of the insurance contract and sued Carter as the alleged alter ego of CWS more than eight years after the policy was issued. Cigna sought damages against Carter personally in excess of $6.4 million. Although Cigna obtained a judgment for breach of contract against CWS, a judgment was entered in favor of Carter on all claims, including the fraud and alter ego allegations. Carter then initiated this action for malicious prosecution against Cigna, its claim manager, and the Mendes & Mount attorneys.
Settlement Discussions
Before trial, the plaintiff demanded $500,000 to settle against all defendants. That offer was rejected. During trial, but prior to the court's finding of no probable cause, the plaintiff offered to settle with the Mendes & Mount defendants for $600,000 (per the plaintiff), $1.2 million per the defendant. That offer was rejected.
Damages
The plaintiff claimed approximately $82,000 for defense costs of the underlying action, emotional distress and punitive damages. Per the defendant, the plaintiff claimed $600,000 to $1.2 million for emotional distress and $5.5 million for punitive damages.
Other Information
The verdict was reached approximately one year and eight months after the case was filed. Defendants Cigna and Rees settled with the plaintiff during the first week of trial. The verdict was against defendants Mendes & Mount, Donald Fitzpatrick and Ty Vanderford. The punitive damages award was against Mendes & Mount only.
Deliberation
two days
Poll
various
Length
five weeks
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