L.A. Sound USA Inc., et al., v. St. Paul Fire & Marine Insurance
Published: Jul. 23, 2005 | Result Date: May 18, 2005 | Filing Date: Jan. 1, 1900 |Case number: 02CC22 Verdict – $0
Judge
Court
Orange Superior
Attorneys
Plaintiff
Guy O. Kornblum
(Guy O. Kornblum APLC)
Defendant
Robert M. Peterson
(Carlson Calladine & Peterson LLP)
Keith G. Wileman
(Milstein, Jackson, Fairchild & Wade, LLP)
Experts
Plaintiff
Paul W. Engstrom
(technical)
Defendant
David F. Peterson
(technical)
Gregory Gilchrist
(technical)
Andre E. Jardini
(Knapp, Petersen & Clarke)
(technical)
Facts
The defendant, St. Paul Fire & Marine Insurance Company issued a comprehensive business and technology liability insurance policy to plaintiffs, L.A. Sound and its directors, officers, and employees acting on behalf of L.A. Sound. L.A. Sound, LSY Trading & Development, and three individuals in various capacities, Steve Harrington, David Ji, and Ancle Hsu, were sued for fraud, breach of contract, and trademark infringement by Hollywood Sound, their joint venture partner. All five defendants hired Callahan & Blaine to defend them. St. Paul agreed to defend L.A. Sound under reservation of rights and acquiesced to Callahan & Blaine as "Cumis" counsel under Civil Code Section 2860. St. Paul agreed to defend Ji and Hsu, but only in their capacity as directors and officers of L.A. Sound. It refused to defend Ji and Hsu in their non-insured capacity and it declined to defend LSY and Harrington as non-insureds. St. Paul agreed to pay only 60 percent of Callahan & Blaine's fees and costs because the firm was representing insureds and non-insureds. Without the consent of and over the objections of the insureds and Callahan & Blaine as Cumis counsel, St. Paul entered into a partial settlement of the underlying litigation. It obtained a full release and dismissal of L.A. Sound, and a release, but not a dismissal, on behalf of Ji and Hsu for claims made against them as directors and officers of L.A. Sound, but not for claims made against them in their individual capacity or as directors or officers of LSY. It then withdrew its defense of Ji and Hsu. After the partial settlement, Ji and Hsu settled the remaining claims against them for $2.85 million.
Damages
The plaintiffs sought $5.5 million in compensatory damages and Brandt fees, plus punitive damages against the defendant.
Other Information
In a cross-complaint to be decided in a subsequent proceeding, St. Paul alleges that the policy should be voided due to misrepresentation in the policy application.
Deliberation
two days
Poll
12-0 (defense)
Length
seven weeks
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