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The Collaborative Clearinghouse for Lawsuits and Other Claims Against ACE Group Insurance Companies

ACE Sues Fellow Insurer in Excess Liability Tiff

June 10th, 2013 - ACE Property & Casualty Co. has sued OneBeacon America Insurance Co. for allegedly failing to properly handle a personal injury suit that forced the ACE Group unit to pay a $1.3 million judgment on a mutual client.

Both ACE Property and OneBeacon had insured Nederlander-Greek Inc., which operates the Greek Theatre in Los Angeles on behalf of the city. OneBeacon was the primary liability carrier, with a $1 million policy limit, while ACE Property supplied excess coverage up to $25 million by way of a commercial umbrella policy.

On September 2nd, 2009, Denise Herron was at the 5,900-seat, outdoor theatre when she allegedly sustained a compound fracture of her right ankle as a result of negligence by the owner.  On April 20th, 2010, she sued Nederlander-Greek for damages in California state court.

Herron estimated her damages to be as high as $8 million, well in excess of the OneBeacon limit. Prior to trial, ACE Property said that OneBeacon had an opportunity to settle the lawsuit for the $1 million policy limit.

Further, claimed ACE, OneBeacon was advised at a mandatory pre-trial settlement conference by the presiding judge that a reasonable settlement would exceed its policy limits. Yet, OneBeacon allegedly refused to settle and went to trial, where a judgment was entered for Herron in the amount of $2.346 million.

ACE said that OneBeacon refused its demand that it appeal the verdict, and instead tendered its payment for $1 million. ACE paid the excess amount, $1.346 million, and now as subrogee of Nederlander-Greek has asked a federal court in Los Angeles to award it that amount from OneBeacon.

ACE accused OneBeacon of breaching the implied covenant of good faith and fair dealing, saying it failed to fulfill its obligations to its client by not attempting to settle at the pre-trial stage.

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