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

OLEN PROPERTIES CORP. et al v. ACE AMERICAN INSURANCE COMPANY et al.

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: 
2:15-cv-09740 Search Pacer
ACE Group party(s): 
Opposing Party: 
Olen Properties Corp.
Court Type: 
Federal
US District Court: 
Central District of California
Date Filed: 
Dec 18 2015

 

 

[1]         Plaintiff Olen Properties Corp. is a Florida corporation which at all times
relevant hereto was doing business in the County of Orange, State of California.

Plaintiffs Olen Properties Corp., Igor M. Olenicoff and Julie A. Ault, allege as
follows:

GENERAL ALLEGATIONS

[1] Plaintiff Igor M. Olenicoff is a citizen of the State of Florida.

[1] Plaintiff Julie A. Ault is a citizen of the State of California.Plaintiffs are informed and believe and on that basis allege that Defendant

  1. ACE American Insurance Company (“ACE American”) is incorporated in the State of
    Pennsylvania and, at all times relevant, was doing business and is doing business in the
    County of Orange, State of California.
  2. The true names and capacities of defendants named as Doe 1 through Doe
    50, inclusive, are presently unknown to Plaintiffs. Plaintiffs will amend this Complaint,
    setting forth the true names and capacities of these fictitious Defendants when they are
    ascertained. Plaintiffs are informed and believe and on that basis allege that each of the
    fictitious defendants has participated in the acts alleged in this Complaint to have been
    done by ACE American.
  3. Plaintiffs are informed and believe and on that basis allege that, at all
    relevant times, each of the defendants, whether named or fictitious, was the agent or
    employee of each of the other defendants, and in doing the things alleged to have been
    done in the Complaint, acted within the scope of such agency or employment, or ratified
    the acts of the other.
  4. Plaintiffs are informed and believe and thereupon allege that, at all times
    material herein, ACE American and Does 1 through 50 (collectively referred to herein as
    "Defendants") and each of them, and/or their agents, employees or supervisors, authorized,
    condoned and ratified the unlawful conduct of each other.
  5. Plaintiffs are informed and believe and thereupon allege that, at ail times
    material herein, Defendants and/or their agents, employees and supervisors knew or
    reasonably should have known that unless they intervened to protect Plaintiffs, and to
    adequately supervise, prohibit, control, regulate, discipline, and/or otherwise penalize the
    conduct of the employees of Defendants set forth above, the remaining Defendants and
    employees would have perceived the conduct and omissions as being ratified and
    condoned.
  6. Plaintiffs are informed and believe that Defendants, and each of them,
    committed other wrongful acts or omissions of which Plaintiffs are presently unaware.

Plaintiffs shall conduct discovery to identify said wrongful acts, and will seek leave of
Court to amend this Complaint to add said acts upon discovery.

  1. All of the following acts occurred in Orange County, California which
    provides subject matter and personal jurisdiction to this Court. At all times alleged herein,
    ACE American had issued policies of insurance which provided a duty to defend causes of
    action for malicious prosecution alleged against Plaintiffs. In 2012, two actions were filed
    against Plaintiffs Olen Properties Corp. and Igor M. Olenicoff in the County of Orange.

The actions were entitled UBS AG v. Igor M. Olenicoff, Olen Properties Corp., Julie A.
Ault, et al.. Case No. 30-2012-00589134 (the “UBS Action”) and Bradley Birkenfeld v.
Igor Olenicoff and Olen Properties Corp. et al. assigned Case Nos. 30-2012-00613163
(the “Birkenfeld Action”). Plaintiff Julie A. Ault was named as a defendant in the UBS
action. The two actions were consolidated (hereinafter the consolidated actions are
referred to as the “Underlying Action”).

  1. Plaintiffs timely tendered the defense of the Underlying Actions to
    Defendants.
  2. Defendants had a duty under the relevant policies to defend its insureds
    (defendants in the Underlying Action) as the policies provided coverage for the defense of
    malicious prosecution actions. Neither the policy nor the applicable law provided for
    indemnity of a malicious prosecution action if Plaintiffs were found liable in the
    Underlying Action.
  3. Other than initially acknowledging receipt of the tender of the defense,
    Defendants did not respond to the tender of defense for seven (7) months. By an undated
    letter, Defendants finally agreed to accept the tender of defense under a reservation of
    rights. It took seven months for Defendants to finally acknowledge their obligations under
    the policies of insurance and accept the tender of the defense.
  4. During the preceding seven months before Defendants accepted the tender of
    defense, Plaintiffs were required to defend themselves in the Underlying Action, including
    incurring substantial attorneys’ fees and costs.
  5. Under the policy and the law, Defendants had an immediate duty to defend
    Plaintiffs in the Underlying Action. In failing timely to accept the tender of defense of the
    Underlying Action, Defendants breached the policy and the covenant of good faith and fair
    dealing. By their unreasonable delay in accepting the tender of defense. Defendants
    waived any rights they may have had under Civil Code §2860.
  6. After its belated acceptance of the defense of the Underlying Action,
    Defendants then unreasonably delayed in paying the fees and costs incurred by Plaintiffs.
    Defendants refused to pay for all fees incurred by Plaintiffs in defending the Underlying
    Action.
  7. After an unreasonable delay in accepting tender of the defense of the
    Underlying Action and an unreasonable delay in reimbursing Plaintiffs for some of the
    fees and costs incurred during that delay, Defendants then attempted to invoke the
    provisions of Civil Code §2860 and sought to either require that Plaintiffs accept “panel
    counsel” only a few weeks before the trial was set to begin in an extremely complicated
    case or accept rates lower than those charged by Plaintiffs’ counsel. In failing to accept
    the tender of the defense immediately, Defendants breached the policy, engaged in bad
    faith, waived their right to control the defense of the Underlying Action and waived their
    rights to rely upon Civil Code §2860 to appoint “panel counsel,” to “pay panel rates” or to
    have the fee dispute arbitrated.
  8. Defendants were unreasonably dilatory in paying fees and costs incurred in
    the Underlying Action even after their belated acceptance of the tender of the defense.
  9. The hourly rates charged by counsel for Plaintiffs in the Underlying Action
    were reasonable in light of the experience of counsel, the prevailing rate in the community,
    the complexity of the litigation and the aggressive posture taken by counsel for UBS and
    Birkenfeld in the Underlying Action.

FIRST CAUSE OF ACTION FOR BREACH OF CONTRACT
(Against All Defendants)

  1. Plaintiffs incorporate by reference as if set forth herein in full their
    allegations in paragraphs 1 through 19, inclusive.
  2. At all times relevant. Defendants owed a duty under the policies issued by
    ACE American to Plaintiffs in the Underlying Action, policy numbers PMD G23 869304
    and PMD G23869304. The CGL Policies covered damages for “personal and advertising
    injury” to which the insurance applies. Malicious prosecution is listed as a covered offense
    under the personal and advertising injury coverage part. The policies were in effect at all
    times relevant.
  3. Defendants failed and/or refused to timely and properly pay benefits due
    under the policies and unreasonably and without proper cause withheld benefits owing to
    Plaintiffs under the policies and breached their obligations under the policies.
  4. Plaintiffs fulfilled all of their obligations under the policies of insurance.
  5. As a direct and proximate result of the foregoing. Plaintiffs have been
    damaged. They have incurred attorneys’ fees and costs in defending themselves in the
    Underlying Action. In addition, numerous hours were spent by both Julie Ault and her
    staff, corporate counsel for Olen Properties Corp., in assisting in the defense of the
    Underlying Action during the time that Defendants were ignoring their obligations under
    the policy of insurance.
  6. Plaintiffs have sustained damages in excess of $700,000, in attorneys’ fees
    and costs in defending themselves in the Underlying Action as a result of Defendants
    breach of their obligations under the policies of insurance.
  7. As a further direct and proximate result of the foregoing, Plaintiffs are
    entitled to all foreseeable consequential damages.

SECOND CAUSE OF ACTION FOR BREACH OF THE

COVENANT OF GOOD FAITH AND FAIR DEALING
(Against All Defendants)

  1. Plaintiffs incorporate by reference as if set forth herein in full their
    allegations in paragraphs 1 through 26, inclusive.
  2. Plaintiffs entered into the contract of insurance with Defendants seeking
    security and peace of mind. The covenant of good faith and fair dealing is implied in
    every contract of insurance.
  3. The covenant of good faith and fair dealing required Defendants to give
    Plaintiffs’ interests at least as much consideration as they gave to their own interests.
    Defendants did not do so.
  4. The covenant of good faith and fair dealing required Defendants to act
    reasonably and to immediately accept the tender of the defense of a claim covered under
    the policies of insurance. Defendants did not do so.
  5. Under the covenant of good faith and fair dealing. Defendants had an
    unconditional and independent duty to fulfill their contractual obligations. Defendants did
    not do so.
  6. Under the covenant of good faith and fair dealing. Defendants had the
    obligation to do everything that the contract of insurance presupposes they will do to
    further the purpose of insurance, which is the full and prompt payment of policy benefits to
    the policyholders. Defendants did not do so.
  7. Under the covenant of good faith and fair dealing, Defendants were obligated
    to pay all reasonable and necessary defense costs. Defendants did not do so.
  8. In breach of the covenant of good faith and fair dealing, Defendants
    unreasonably and without proper cause delayed in providing benefits due under the policy
    and refused to pay policy benefits. Defendants and their representatives elevated their
    interests above Plaintiffs and subordinated Plaintiffs’ interest to Defendants’ interests and
    III

engaged in wrongful, abusive, fraudulent, unreasonable and tortious conduct with respect
to Plaintiffs and their claims.

  1. Defendants tortuously breached the covenant of good faith and fair dealing
    by engaging in the following conduct, among others, in reckless disregard for Plaintiffs’
    rights under the policy:
  1. unreasonably delaying in accepting the tender of defense of the Underlying
    Action;
  2. unreasonably delaying in paying benefits once they finally agreed to accept
    the tender of defense of the Underlying Action, at one point leaving an outstanding balance
    of over $500,000;
  3. attempting to appoint “panel counsel” to represent Plaintiffs only weeks
    before the initial trial date which would have severely prejudiced Plaintiffs in light of the
    complexity of the Underlying Action and the voluminous discovery and motions in that
    action as well as the action upon which the malicious prosecution was based;
  4. attempting to appoint “panel counsel” when there was a clear conflict of
    interest between Plaintiffs and Defendants;
  5. insisting, despite legal authority to the contrary, that they would only pay
    “panel rates” to defend Plaintiffs in the Underlying Action;
  6. unreasonably delaying payment of fees and costs incurred, including those
    incurred by experts retained by Plaintiffs and thereby jeopardizing the defense of the
    Underlying Action (fees and costs are still outstanding as of the date of this filing);
  7. delaying payment of fees and costs incurred while Defendants attempted to
    find additional coverage from other carriers rather than paying the fees and costs to
    Plaintiffs and seeking subrogation or equitable indemnity against those carriers if
    additional coverage was found;
  8. failing to properly and folly investigate Plaintiffs’ claims;
  9. failing to evaluate Plaintiffs’ claims objectively;
  10. using improper standards to adjust Plaintiffs’ claims;

k failing to advise Plaintiffs of all benefits, coverages, time limits and other
provisions that might apply to Plaintiffs’ claim under the policies in a as required by Title
10 of the California Code of Regulations, Chapter 5, section 2695.4, subd (a);

  • compelling Plaintiffs to institute litigation to recover amounts due under the
    policies;

m.     deliberately denying benefits Defendants knew were owed under the policy
in conscious disregard of Plaintiffs’ known rights and established California case law: and

n.     failing to respond in writing, to claims submitted by Plaintiffs in the manner
and in the time frame required by the California Fair Claims Settlement Practices Act, (10
CCR §2695.1, et seq.)

  1. Defendants’ motivation was clear. As they had no obligation to indemnify
    Plaintiffs if an adverse judgment was entered against them for malicious prosecution,
    Defendants could care less about whether or not Plaintiffs would be found liable. A
    verdict against Plaintiffs in the Underlying Action would not impact Defendants at all. As
    a result, their only consideration was to defend as cheaply as possible regardless of the
    consequences to Plaintiffs. There was a clear conflict of interest between Defendants and
    Plaintiffs which would have precluded appointment of “panel counsel” only weeks before
    the initial trial date.
  2. As a further direct and proximate result of the foregoing. Plaintiffs have
    incurred attorneys’ fees and will continue to incur attorneys’ fees in pursuing benefits
    owed under the policies of insurance. Pursuant to Brandt v. Superior Court (1985) 37
    Cal.3d 813, Plaintiffs may recover their fees and costs incurred in recovering those unpaid
    benefits.
  3. As a direct and proximate result of the foregoing, Plaintiffs Igor M.
    Olenicoff and Julie A. Ault have suffered emotional distress and will seek damages for the
    emotional distress they have had and will continue to suffer.
  4. To prevent the continued wrongdoing set forth above and to discourage other
    insurers from engaging in these practices, Plaintiffs seek punitive and exemplary damages.

Plaintiffs are informed and believes and on that basis alleges that Defendants' conduct was
oppressive and malicious in that it was outrageous, intentional and demonstrated a callous
disregard of Plaintiffs’ rights. Upon information and belief, the conduct of Defendants
described above was part of a pattern and practice designed to force claimants to accept
less benefits than they would otherwise be entitled to receive under the terms of their
policies and to unfairly minimize the financial exposure and risk of Defendants. In doing
the acts described in this Complaint, Defendants acted intentionally, with a conscious
disregard of the known rights of Plaintiff, and did so in a fraudulent and oppressive
manner, all of which warrants the imposition of punitive damages under the California
Civil Code §3294 in an amount sufficient to punish and deter Defendants from engaging in
similar conduct in the future.

  1. Defendants’ conduct was undertaken or approved by their officers or
    managing agents who are and were responsible for claims supervision, operations,
    communications and decisions. This unreasonable conduct was undertaken on behalf of
    Defendants. Defendants had advance knowledge of the actions and conduct of said
    individuals whose actions were ratified, authorized and approved by Defendants, including
    managing agents whose identities are unknown at this time.
  2. Asa further direct and proximate result of the foregoing, Plaintiffs are
    entitled to unforeseeable consequential damages.

PRAYER FOR RELIEF

WHEREFORE, Plaintiffs pray for judgment as follows:

  1. For compensatory damages according to proof, including but not limited to
    the reasonable attorneys’ fees and costs incurred in defending the Underlying Action;
  2. For damages due under the policies of insurance, plus interest, including
    prejudgment interest and other economic and consequential damages in an amount
    according to proof at trial;
  3. For general damages, including emotional and mental distress, according to

proof;

  1. For special damages according to proof;
  2. For economic and consequential damages
  3. For interest at the legal rate from the date of injury or pursuant to Code of
    Civil Procedure §3287;
  4. For punitive and exemplary damages, according to proof;
  5. For attorneys' fees and costs of suit incurred, pursuant to Brandt v Superior
    Court (1985) 37 Cal.3d 813, and any other applicable provisions of law; and

           
 
 
     
     
 
   



For any other and further relief as the Court deems just and proper.

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.

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