AHK Law Office

$2,280,000 Insurance Bad Faith Jury Verdict Obtained by Adleson, Hess & Kelly on Behalf of Client

July 22, 2015 – San Francisco, California  - After an 8-day trial before Judge Alsup in the Northern District, the 8-member jury returned a unanimous verdict in favor of our client Doublevision in a bad faith action against Navigators Specialty Insurance Company, for $2,280,000, the full amount requested.  Our firm co-counseled with Ryan Lapine of Rosenfeld Meyer and Susman of Beverly Hills.

Doublevision, an independent film company, had placed $250,000 in an escrow for funding of a film. The defendants, an escrow company, CES, and its owner, Ms. Hardstone, mistakenly paid the $250,000 to the wrong entity. This caused our client $1.5 million in lost film funding. Doublevision sued CES and Hardstone in state court. The escrow company had a $1,000,000 wasting E&O policy issued by Navigators. 

Early in the underlying litigation, Doublevision's counsel served a Code of Civ. Proc. Section 998 offer to compromise for $245,000. Navigators ignored the offer. Throughout the litigation, though Navigators knew it could settle the matter in the $250,000 to $300,000 range, it refused to do so.  Many months later, after depleting the policy by refusing to settle the underlying matter, Navigators "interpleaded" the remaining policy limit, without naming all creditors/claimants. In so doing, it left no amount for continued defense of the action, though trial was just about three months away. It withdrew from the defense, leaving its insureds with the obligation to fund the case. The underlying jury awarded $1,500,000 in favor of Doublevision, which then obtained an assignment of the escrow company's rights against Navigators. This bad faith action followed.

Navigators took the position that because it had paid or interpleaded its entire $1,000,000 policy limits, it could not be required to pay any additional monies. It also claimed it acted reasonably in ignoring the settlement demand and other settlement overtures. The jury determined that Navigators had violated its duty to accept the underlying CCP 998 offer. The jury found Navigators had also violated a duty to pursue settlement even after the CCP 998 offer had expired. In addition, Judge Alsup directed verdict on Doublevision's claim of breach of duty to defend, based on Navigators' interpleader of the remaining policy funds without setting aside amounts for defense of the insureds. The jury returned a verdict for $2,280,000 and found that Navigators was not entitled to an offset for any amounts it paid to resolve other matters.

Randy Hess handled preparation of a number of witnesses, including cross-examining the crucial insurer's standard of care expert on the subject of insurer's claims handling, whose testimony demonstrated unfamiliarity with fair claims handling practices.  Nicole Adams-Hess, in her first jury trial experience, examined the escrow duty of care of expert, even making this dry subject sound interesting, assisted with witnesses during the trial, and helped with briefing and arguments.  Pam Bower prepared expert witnesses and drafted crucial briefs and arguments throughout the trial. Steve Prater and Mark Fredkin presented expert testimony on behalf of the client on the reasonableness of the settlement offers and on the interpleader action.  Their testimony was crucial to this victory.