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

ALFRED H SIEGEL vs. CERTAIN UNDERWRITERS AT LLOYDS OF LONDON

ATTENTION: It is possible that this information may no longer be current and therefore may be inaccurate. The index contains both open and closed cases and is not a complete list of cases in which an ACE Insurance Group company is involved. This information is provided to give interested persons an idea of the issues disputed in the indexed cases. For a full understanding of a case, one should read the rest of the court file, including the response. For the most up-to-date and complete information on a case, visit www.pacer.gov or contact the clerk of the relevant court.

Case Number: 
BC469091 Search Pacer
ACE Group party(s): 
Opposing Party: 
ALFRED H SIEGEL
Court Type: 
State
State Court: 
California.Supeior Court (Los Angeles County)
Date Filed: 
Sep 7 2011

"FIRST CAUSE OF ACTION:
BREACH OF CONTRACT

49. The Trustee realleges and incorporates by reference paragraphs 1 through 48 of this Complaint, as if fully restated herein.

50. The Trustee, acting on behalf of the Estate and thereby stepping into the shoes of the Debtor as "Named Insured," is seeking to enforce the terms of the D&O Policies that the Debtor contracted for and purchased from the 2007-08 Insurers and 2008-09 Insurers.

51. The Debtor fully performed its obligations under the 2007-08 Policies and 2008-09 Policies by paying nearly $8 million in premiums to the 2007-08 Insurers and 2008-09 Insurers in return for coverage that purported to protect the Debtor and its directors and officers.

52. Implied in each of the D&O Policies is a covenant that each of the Defendants herein would act in good faith and deal fairly with the Debtor and its directors and officers, that they would do nothing to interfere with their insureds' rights to receive the benefits due under the D&O Policies, and that they would give at least the same level of consideration to their insureds' interests as they give to their own interests.

53. The 2008-09 Insurers have duties under their policies, the law and insurance industry custom and practice to, among other things, (1) timely and fully pay for defense costs and loss incurred by either the Former Ds&Os or by the Trustee to the extent that the Estate is obligated to indemnify any of those individuals in respect of the Trustee Action, (2) conduct a thorough investigation, including as to all of the bases that might support coverage under the 2008-09 Policies for amounts incurred in the Trustee Action before denying coverage for their insureds' loss incurred therein, (3) not to seek to protect their own interests and prejudice those of the Trustee by attempting to funnel payment of loss through the 2007-08 Policies, as opposed to the 2008-09 Policies, in an effort to reduce their exposure under the 2008-09 Policies, with respect to the Trustee Action, and (4) agree to fund reasonable settlements that may be entered in the Trustee Action without any consideration of claimed coverage defenses, or to pay for any judgment that may be entered therein. In breach of these and other duties, the 2008-09 Insurers have refused to pay any defense fees and costs that have been or will be incurred in connection with the Trustee Action without any valid basis for their refusal and have denied any obligations to pay for any settlement or judgment that may be
entered in that Action, despite the 2008-09 Insurers' understanding of the coverage provided by their Policies and of their insureds' reasonable expectations for coverage. The 2008-09 Insurers have done so in conscious and complete disregard of their insureds' rights, applicable law, policy language, the facts and public policy. The 2008-09 Insurers have breached their duties under their Policies by, among other things:

a. Relying upon, among other baseless defenses, inapplicable policy exclusions, the Trustee is informed and believes and based thereon alleges, that Lloyds denied coverage for the Trustee Action under the 2008-09 Lloyd's policy;
b. Relying upon, among other baseless defenses, inapplicable policy exclusions, the Trustee is informed and believes and based thereon alleges that the 2008-9 excess insurer Defendants repudiated their contractual obligations under their Policies by stating that they will not provide coverage for the Trustee
c. Unreasonably and consciously devising a pretextual scheme to compromise the Trustee's rights to coverage under the D&O Policies by, among other things, interpreting the Tripp Exclusion so broadly as to make coverage for any claims under the 2008-09 Policies illusory;
d. Forcing the Trustee to undertake litigation in various courts, including the Bankruptcy Court, in order to vindicate the Debtor's right to receive the benefits of, at least, the 2007-08 Policies and 2008-09 Policies;
e. Asserting grounds to avoid coverage that they know are not supported by, and are contrary to, the terms of the 2008-09 Policies, the law, insurance industry custom and practice, the parties' course of dealings, and the facts;
f. Wrongfully depriving the Former Ds&Os of the insurance benefits for which the Debtor contracted pre-petition;
g. Failing to conduct an adequate investigation of their insureds' loss and asserting grounds to avoid coverage based on their inadequate investigation;
h. Failing to fully inquire into possible bases that might support coverage for their insureds' loss; and
i. Giving greater consideration to their own interests than they gave to their insureds' interests.

54. As a direct and proximate result of the 2008-09 Insurers' breaches of their Policies, the Trustee and the Former Ds&Os for whose benefit, inter alia, the Debtor purchased the 2008-09 Policies, have suffered, and continue to suffer, and will suffer in the future damages in an amount in excess of the Court's jurisdictional limits. The actual amount of damages has not yet been precisely ascertained, but includes all defense fees and costs and other loss that the Trustee and the Former Ds&Os have incurred and will continue to incur in connection with the Trustee Action. When the precise amount of the insureds' damages are known, the Trustee will seek leave to amend this Complaint accordingly.

55. In particular, the Trustee has been damaged because, among other things, the Trustee has been denied, and will be denied, the benefits of the insurance coverage to which it is entitled and for which the 2008-09 Insurers collected substantial premiums. The Trustee has been forced to incur the substantial burden and expense of bringing and pursuing this action. And as a proximate result of the 2008-09 Insurers' breaches of their contractual duties, the Trustee has and will suffer damages and out-of-pocket expenses, including attorneys' fees and costs, plus interest.

SECOND CAUSE OF ACTION:
TORTIOUS BREACH OF THE IMPLIED COVENANT OF GOOD FAITH AND FAIRDEALING

56. The Trustee realleges and incorporates by reference paragraphs 1 through 55 of this Complaint, as if fully restated herein.

57. In breach of the implied covenant of good faith and fair dealing, with respect to the Trustee Action, the 2008-09 Insurers did the things and committed the acts alleged above for the purpose of consciously withholding from the Trustee and the Former Ds&Os the rights and benefits
to which they are entitled under the 2008-09 Policies and without considering their insureds' interests at least to the same extent as they considered their own interests.

58. As a direct and proximate result of the 2008-09 Insurers' acts, the Trustee and the Former Ds&Os have been damaged in an amount in excess of the Court's jurisdictional limits. The actual amount of damages has not yet been precisely ascertained. When the precise amount of
damages is known, the Trustee will seek leave to amend this Complaint accordingly.

59. The 2008-09 Insurers' acts are inconsistent with the Trustee's reasonable expectations, are contrary to established claims practices and legal requirements, and constitute bad faith.

60. Pursuant to the holding in Brandt v. Superior Court, 37 Cal. 3d 813 (1985), the Trustee is entitled to recover all attorneys' fees that the Estate reasonably has incurred, and is incurring, in its efforts to obtain the benefits of the coverage that the 2008-09 Insurers wrongfully
have withheld, and are withholding, in bad faith, plus interest. The total amount of these attorneys' fees is currently unknown. The Trustee will seek leave to amend this Complaint to allege the precise amount of these fees when the total amount is known.

61. The 2008-09 Insurers' conduct has been done with a conscious disregard of their insureds' rights, constituting oppression, fraud, and/or malice. The 2008-09 Insurers have engaged in a series of acts designed to deny wrongfully the benefits due under their policies. Specifically, the 2008-09 Insurers, by acting as alleged above, in light of the information, facts, and law to the contrary, consciously disregarded their insureds' rights and forced them to incur substantial financial loss, without any assistance from them, thereby inflicting substantial financial damage on their insureds. The 2008-09 Insurers ignored their insureds' interests and concerns, with the requisite intent to injure, and acted fraudulently, within the meaning of California Civil Code section 3294. Therefore, the Trustee is entitled to recover punitive damages from the 2008-09 Insurers in an amount sufficient to punish and to make an example of them and in order to deter similar conduct.

THIRD CAUSE OF ACTION;
DECLARATORY JUDGMENT

62. The Trustee realleges and incorporates by reference paragraphs 1 through 61 of this Complaint, as if fully restated herein.

63. An actual controversy exists between the Trustee and the Defendants concerning the respective rights and obligations of the insureds and insurers under the 2007-08 Policies and the 2008-09 Policies. The Trustee contends that the Tripp Exclusion and other exclusions upon which
the Trustee is informed and believes the 2008-09 Insurers seek to rely to avoid coverage do not apply to the claims asserted in the Trustee Action and that the claims asserted in the Trustee Action were timely made and otherwise are covered under the 2008-09 Policies.

64. The Trustee also contends that the Tripp Exclusion and other exclusions upon which the Trustee is informed and believes the 2008-09 Insurers seek to rely to avoid coverage do not apply to preclude coverage for the Trustee for any of the Former Ds&Os' proofs of claim for losses arising from the claims asserted against them in the Trustee Action, in the event that such indemnity claims are allowed over the Trustee's objections.

65. The Trustee is informed and believes and based thereon alleges that Defendants maintain that the claims in the Trustee Action are not entitled to coverage under the 2008-09 Policies, that any allowed indemnity claims of the Former Ds&Os for losses arising from the claims asserted
against them in the Trustee Action are not entitled to coverage under the 2008-09 Policies, and that the insurers have no obligation to pay or indemnify any amounts under those Policies in respect of the foregoing. Instead, the 2008-09 Insurers have sought to funnel all expenditures to the 2007-08 Policies in an effort to prematurely exhaust those policies and to leave the Trustee and the Former Ds&Os without any financial protection under the 2008-09 Policies for the Trustee Action.

66. The Trustee requests a judicial determination of the rights and obligations of the insurers and the insureds under the Policies and a declaration that Defendants are obligated to pay and indemnify the insureds there under in accordance with the Policies with respect to the Trustee
Action.

67. Such a declaration is necessary and appropriate at this time in order that the Trustee may ascertain its rights and those of the other insureds with respect to Defendant insurers."

The provided text is an excerpt from a document filed in this case. For a full understanding of the case, one should read the complete court file, including the response.

Javascript is required to view this map.