In January of 2011, 10 ACE Group Companies agreed to pay $70 million in settlement fees to the New York Workers’ Compensation Board after an investigation into whether certain insurance companies had been overcharging policyholders.
ACE Insurance Group Breached Duty to Defend, Judge Rules in Pepsi Insurance Lawsuit
February 15, 2011 - A California court has cited Century Indemnity Co. for what it called egregious delays in paying defense claims for a client embroiled for a decade-plus in hundreds of environmental lawsuits.
“The evidence establishes that … Century has breached its duty to defend through its pattern of delaying its reimbursements to Pepsi,” wrote U.S. District Judge Stephen Wilson in his opinion issued in a lawsuit pitting Pepsi-Cola Metropolitan Bottling Co. against Insurance Co. of North America. The defendant had handled a general liability policy for Pepsi’s manufacturing site in Willits, California, and was succeeded by Century following its acquisition by ACE.
Pepsi had sued Insurance Company of North America in April, 2010, charging it with breach of contract and dealing in bad faith. Among other things, it sought a declaratory judgment that INA and Century had a duty to defend the company and pay its claims stemming from lawsuits lodged against Pepsi.
Pepsi-Cola Metropolitan has racked up more than 1,100 environmental lawsuits over its ownership of a manufacturing facility, which served for years as a chrome-plating operation. Plaintiffs have claimed in suits filed beginning in the late 1990s, that they suffered a host of medical and environmental injuries due to soil, air and water contaminations allegedly caused by the northern California facility.
The latest lawsuit, between insured and insurer, originally included OneBeacon America Insurance Co. as a defendant. After OneBeacon settled, INA-Century was left as the last primary insurer for Pepsi to have not come to terms with Pepsi over handling claims.
In his partial summary judgment order, Judge Wilson granted two motions in favor of Pepsi, including his decision that Century had a duty to defend the company. Some of that argument had boiled down to not whether Century was paying a claim, but that it was foot-dragging.
“Although the Court does not find that California law requires that an insurer must blindly pay even unreasonable and unnecessary … fees immediately as a matter of law, here, Century has not offered any evidence to show its year-long, and in some instances, two year-long delays could be reasonable,” he wrote. In two specific lawsuits mentioned in his ruling, the judge said Century waited on average more than one year before paying an invoice.
Just over two months after Judge Wilson filed his order on the partial summary judgment motions, the Parties filed, on Feb 9th, notice with the court that hey have reached a settlement on all outstanding issues in the litigation.
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