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

RCM TECHNOLOGIES, INC. v. MEGASOFT, LTD

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: 
BC490875 Search Pacer
ACE Group party(s): 
Court Type: 
State
State Court: 
California.Supeior Court (Los Angeles County)
Date Filed: 
Aug 29 2012

"FIRST CAUSE OF ACTION
(Implied Contractual Indemnity on Behalf of RCM Against the Trianz Entities and Does 1-50 and on Behalf of ACE Against All Defendants)

11. Plaintiffs refer to, and incorporate herein by this reference, each and ever}' allegation of paragraphs 1 through 10 of the complaint as though fully set forth herein at length.

12. Plaintiffs are informed and believe, and on that basis allege that, in or around October of 2004. RCM entered into a goods and services contract with Topa Insurance Group ("Topa") and subsequent scopes of work whereby RCM agreed to design, build, test, document, and deploy a new policy and rating issuance system called "CAPRI" for use in Topa's business operations. This contract will hereinafter be referred to as the "CAPRI Contract."

13. Plaintiffs are informed and believe, and on that basis allege that, to assist in RCM's performance of the CAPRI Contract, RCM entered into various oral and/or written agreements with MCI and its predecessor Visual Soft, under the terms and conditions of which MCI agreed to provid offshore and onsite design, development, testing, support and remediation, and enhancement services in connection with the CAPRI Contract ("MCI Contracts").

14. Plaintiffs are informed and believe, and on that basis allege that, on or about June 11,2008, Topa Filed a complaint against RCM in the California Superior Court, County of Los Angeles, arising from the goods and services delivered under the CAPRI Contract. The action entitled Topia Insurance Group v. RCM Technologies. Inc. et al.. case no. BC 392435 CTopa Action"), alleges  breach of the CAPRI Contract and subsequent scopes of work. A copy of Topa's complaint, filed on or about June 11,2008, is attached as Exhibit "A" hereto and incorporated by reference. A copy of RCM's Answer to Topa's Complaint is attached as Exhibit "B" hereto and incorporated by reference.

15. Plaintiffs are informed and believe, and on that basis allege that, the Topa Action settled in or around October 2009 with Plaintiffs making monetary payments to Topa and one another in resolution therein within two (2) years prior to the filing of this Complaint.

16. Plaintiffs are informed and believe, and on that basis allege that, ACE issued to RCM the DigitechSM Digital Technology & Professional Liability policy no. G21643476-006. with an effective policy period from April 23, 2008 to April 23. 2009 ("Policy"). The Policy contained thefollowing language:

In the event of any payment under this Policy, the Insurer shall be subrogated to the extent of such payment to all the rights of recovery of die Insureds. The Insureds shall execute all papers required and shall do everything necessary to secure and preserve such rights, including the  execution of such documents necessary to enable the Insurer effectively t bring suit or otherwise pursue subrogation rights in the name of the Insureds.  A copy of the Policy is attached as Exhibit UC" hereto and incorporated by reference.

17. Plaintiffs are informed and believe, and on thai basis allege that, in settlement of the Topa Action. ACE made payments to Topa on behal f of RCM pursuant to the Policy over the last two (2) years, prior to the filing of this Complaint, from 2009 with the latest payment from ACE to Topa in February 2011 for over one million dollars. ACE has paid at least, approximately, two million dollars since 2009 relative to resolving the Topa Action arid associated litigation.

18. Plaintiffs are informed and believe, and on that basis allege that, the claims asserted by Topa against RCM in the Topa Action were caused primarily and ultimately by Defendants' breach of contract with RCM. Defendants' breach of warranty, Defendants' misrepresentations, Defendants' negligence, and Defendants' negligent performance of contractual duties. RCM has denied and continues to deny any fault on its part. Any liability imposed against RCM is not the result of any actual fault on its part but solely by operation of law arising from Defendants' breac and/or negligence that rendered RCM unable to perform its agreement with Topa. By virtue thereof Defendants are obligated to indemnify RCM herein.

19. Plaintiffs are informed and believe, and on that basis allege that, pursuant to the subrogation rights contained in the Policy and otherwise, ACE has the right to pursue Defendants in the same manner as RCM. Defendants are obligated to indemnify ACE in the same manner as RCM.

SECOND CAUSE OF ACTION
(Total Equitable Indemnity on Behalf of RCM Against the Trianz Entities
and Does 1-50 and on Behalf of ACE Against All Defendants)

20. Plaintiffs refer to, and incorporate herein by this reference, each and every allegation of paragraphs 1 through 19 of the complaint as though fully set forth herein at length.

21. Plaintiffs are informed and believe, and on that basis allege that, to the extent RCM made monetary payments to Topa in resolution of the Topa Action, under any theory of recovery relevant thereto, RCM. alleges that its liability, if any, is passive and derivative only and that the liabilities of the Defendants were active and primary.

22. Plaintiffs are informed and believe, and oh that basis allege that, by reason of the foregoing, Plaintiffs are entitled to be indemnified by the Defendants for any amounts which may in good faith be paid by way of compromise, settlement, or judgment and are further entitled to costs and expenses, including reasonable attorneys1 fees incurred in connection therewith.- The total amounts of said sums have not yet been ascertained and leave will be sought so as to insert the true amount thereof as soon as same is ascertained.

THIRD CAUSE OF ACTION
(Equitable Apportionment of Fault on Behalf of RCM Against the Trianz Entities
and Does 1-50 and on Behalf of ACE Against All Defendants)

23. Plaintiffs refer to, and incorporate herein by this reference, each and every allegation of paragraphs 1 through 22 of the complaint as though fully set forth herein at length.

24. Plaintiffs are informed and believe, and on that basis allege that, by reason of tlie foregoing, Plaintiffs are entitled to a declaration with respect to the relative proportion of negligence, fault, and/or liability of Defendants, and each of them, which proximately caused and/or contributed to Topa:s alleged loss, damages, or harm.

FOURTH CAUSE OF ACTION
(Contribution on Behalf of RCM Against the Trianz Entities aud Does 1-50 and on Behalf of ACE Against All Defendants)

25. Plaintiffs refer to, and incorporate herein by this reference, each andevery allegation of paragraphs 1 through 24 of the complaint as though fully set forth herein at length.

26. Plaintiffs are informed and believe, and on that basis, allege that, RCM was in no way negligent or otherwise responsible for the acts, injuries, or damages alleged in the Topa Action. To the extent the Topa Action settled as a result of the matters alleged in ihe Topa complaint. Defendants, and each of them, are obligated to reimburse and will be liable to RCM for all Or any liability so assessed by-way of contribution.

27. Plaintiffs are informed and believe, and on that basis allege that, pursuant to ihe subrogation rights contained in the Policy and otherwise. ACE has the right to pursue Defendants in the same manner as RCM. Accordingly, ACE asserts its right to such contribution in the same manner as RCM.

FIFTH CAUSE OF ACTION
(Breach of Contract on Behalf of RCM Against the Trianz Entities and Docs 1-50 and on Behalf of ACE Against All Defendants)

28. Plaintiffs refer to, and incorporate herein by this reference, each and every allegation of paragraphs 1 through 27 of the complaint as though fully" set foflh herein at length.

29. Plaintiffs are informed and believe, and on that basis allege mat, RCM and Defendants herein, and each of them, entered into various oral and written agreements wherebyDefendants agreed to provide expert designers, developers, testers, and technical writers to assist in developing and implementing the CAPRI software under the CAPRI Contract. Specifically, between approximately January 2005 and March 2008, RCM and Defendants entered into various oral and written scopes of work whereby Defendants agreed to provide, among oilier items, fully developed, tested, and functioning application code for the CAPRI system as well as defect remediation and enhancements to the CAPRI application.

30. Plaintiffs are informed and believe, and on that basis allege that, pursuant to the agreements as alleged above, Defendants herein, and each of them, agreed that all work performed on the CAPRI project would be of the highest quality and would conform to industry accepted standards for similar custom system development projects as set forth in the terms of the contract.

31. Plaintiffs are infonned and believe, and on that basis allege that RCM has performed all obligations on its part to perform under the contracts described above.

32. Plaintiffs are infomied and believe, and on that basis allege that, as a result of the allegations asserted in the underlying complaint. Defendants, and each of them, have breached their agreements with RCM in failing to perform under the agreements in a good and workmanlike manner and failing to perform in accordance with accepted industry standards for similar custom system development projects.

33. Plaintiffs are infonned and believe, and on that basis allege that, as a proximate result of the breach of the contracts by Defendants herein, RCM has been damaged in the amount it paid in settlement of the Topa Action.

34. Plaintiffs are informed and believe, and on that basis allege that pursuant to the subrogation rights contained in the Policy and otherwise, ACE has the fight to recover these damages from Defendants in the same manner as RCM for payments it made to Topa on RCM's behalf.

SIXTH CAUSE OF ACTION
(Declaratory Relief on Behalf of RCM Against the Trianz Entities and Does 1-50 and on Behalf of ACE Against All Defendants)

35. Plaintiffs refer to, and incorporate herein by this reference, each and every allegation of paragraphs 1 through 34 of the complaint as though fully set forth herein at length.

36. Plaintiffs are infonned and believe, and on that basis allege that, an actual controversy exists between the parties hereto relating to their rights, duties, and liabilities. Plaintiffs contend that, to the extent payments were made to Topa, they are entitled to be indemnified and/or entitled to contribution as hereinabove alleged and are entitled to judgment over and against Defendants, and each of them, in like amount. In addition thereto, Plaintiffs contend that they are entitled to judgment for costs and expenses in defending said action, including a easonable attorneys' fees.
Plaintiffs are informed, believe, and thereon allege that Defendants, and each of them, contend t the contrary.

SEVENTH CAUSE OF ACTION
(Express Contractual Indemnity on Behalf of RCM Against the Trianz Entities and Does 1 -50 and on Behalf of ACE Against All Defendants)

37. Plaintiffs refer to, and incorporate herein by this reference, each and every allegation of paragraphs 1 through 36 of the complaint as though fully set forth herein at length.

38. Plaintiffs are informed and believe, and on that basis allege that, the MCI Contracts contained express indemnity clauses that required MCI. to indemnify RCM for any legal proceedings that resulted from MCI's conduct under the contract. The February 17, 2004 MCI Contract slates a follow Indemnification: Each party which negligently or willfully commits a wrongful act or omission, the "offending party" shall at its own expense.  indemnify, defend and hold the other party, its partners, employees, agents affiliates, designees and assignees, harmless from and against any arid all 15 suits, causes of action, proceedings, loss, damage, liability or expense,including defense costs and legal fees, and claims of any name, including but not limited to, damage to property and personal injuries, including death, arising out of or resulting from any such negligent act or omission of the offending party relating to the performance of this Agreement. The offending party, at its expense, shall defend any suit or dispose of any claim or other proceeding brought against said indemnities on account of such damage or
injury, and shall pay all expenses, including reasonable attorney's fees, and satisfy all judgments which may be incurred by or rendered against said indemnities. A copy of the February 17,2004 MCI Contract is attached as Exhibit "D" hereto an incorporated by reference. Subsequent agreements between RCM and MCI contained similar provisions. A copy of the January 4, 2005 MCI Contract, which also contains an indemnity clause, is attached as Exhibit "E" hereto and incorporated by reference.
 

EIGHTH CAUSE OF ACTION
(Negligence on Behalf of RCM Against the Trianz Entities and Does 1.-50 and on Behalf of ACE Against All Defendants)

39. Plaintiffs refer to. and incorporate herein by this reference, each and every allegation of paragraphs 1 through 38 of the complaint as though fully set forth herein at length.

40. Plaintiffs are informed aiid believe, and on that basis allege that. Defendants owed RCM a duty to exercise reasonable care and diligence in connection with its performance under the MCI Contracts.

41. Plaintiffs are informed and believe, and on that basis allege that, as a result of the allegations asserted in the underlying complaint, Defendants, and each of them, have breached their agreements with RCM in failing to perform under the agreements in a good arid workmanlike manner and failing to perform in accordance with accepted industry standards for similar custom system development projects. Defendants negligently, carelessly, and wrongfully failed to use reasonable care in performance of their obligations under the MCI Contracts.

42. Plaintiffs are informed and believe, and on that basis allege that, as a proximate result of Defendants' conduct, Plaintiffs have been injured in the amounts paid to Topa in resolution of the Topa Action.

43. Plaintiffs are informed and believe, and on that basis allege that, at all times mentioned herein, die payments paid to Topa in resolution of the Topa Action were and are reasonable and were paid pursuant to law.

44. Plaintiffs are informed and believe, and on that basis allege that, pursuant to the subrogation rights contained in the Policy and otherwise, ACE has the right to pursue Defendants in the same manner as RCM to seek damages as a result of Defendants' negligence.

45. Plaintiffs are informed and believe, and on that basis allege that, by reason of the foregoing allegations. Plaintiffs are entitled and hereby demands judgment for any and all prejudgment interest allowed pursuant to California Civil Code section 3291 and any and all interest allowed by law.

NINTH CAUSE OF ACTION
(Third Part}' Beneficiary on Behalf of ACE Against All Defendants)
46. Plaintiffs refer to, and incorporate herein by this reference, each and every allegationof paragraphs 1 through 45 of the complaint as though fully set forth herein at length.

47. Plaintiffs are informed and believe, and on that basis allege thai, by reason of thePolicy language, ACE was a third party beneficiary to the MCI Contracts. Based on that belief, Defendants were required to exert the same care under the MCI Contracts to protect ACE's interest as to protect RCM's interest.

48. Plaintiffs are informed and believe, and on that basis allege that, pursuant to the subrogation rights contained in the Policy and otherwise, ACE has the right to recover these damages from Defendants as a third party beneficiary under the MCI Contracts.

WHEREFORE, Plaintiffs pray for judgment as follows:
1. That the Court determine the rights, duties, and obligations of the parties to this action;
2. That, in the event it be determined that there is any sum due to Plaintiffs, the Court further declare and adjudge that such liability be that of the Defendants, and each of them, and that Plaintiffs are entitled to contribution and/or indemnity from Defendants as hereinabove alleged;
3. For costs of suit, including reasonable attorneys' fees and investigative costs;
4. For any and all prejudgment interests allowed pursuant to California Civil Code section 3291 and any and all other interest allowed; and
5. For such other and further relief as the Court may seem 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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