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This Courthassubject matterjurisdictionunder2g U.S.C. 1332, $ diversityjurisdiction. l' Defendants.
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DefendantONEBEACON AMERICA INSURANCE coMpANy ("oneBeacon,,) because oneBeaconhas madeor established constitutionallysufficient contactsin this judicial district and elsewhere in the Stateof california to permit this court,s exercise of personal jurisdiction and OneBeacon conductsand./or transacts business within this judicial district, and has sufficient contacts within this judicial district by virtue of its dealingswith ACE as set forth below, and elsewhere in the state of california to permit this court's exercise of personal jurisdiction. venue is properin thisjudicial districtpursuant to 2g u.s.c. $ l391(b) and (c) because a substantial part of the actscomplainedof hereinoccurred in this judicial district and/oreachparty is subjectto personal jurisdiction in this judicial district. PARTIES 4' Plaintiff ACE is a Pennsylvania corporation with a principalplaceof 3'
2'
r6 business in Philadelphia, Pennsylvania. At all relevanttimesherein,plaintiff ACE t7 was and is duly authorizedto transactinsurancebusiness
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in the County of Los Angelesand Stateof California. Plaintiff ACE is informed and believesthat Defendant oneBeaconis a Massachusetts corporationwith a principal place of business in Boston, Massachusetts. At all times relevantherein,DefendantoneBeacon was and is authorizedto transactinsurance business in the Stateof california. 6' The true namesand capacities, whetherindividual, corporate, associate or otherwise,of DefendantDoes 7-20,inclusive, are unknown to plaintiff at this time' and Plaintiff thereforesuessaid Defendants by suchfictitious names,and will ask leaveof court to amendthis complaint to show their true namesand capacities when the identitieshave beenascertained. Plaintiff is further informed and believes and thereonallegesthat eachof the fictitiously namedDefendants was and is 5'
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legally responsible to Plaintiff in somemannerin connectionwith the matters hereinafter alleged. FACTS 7. At all relevanttimes herein,Nederlander-Greek, Inc. (hereinafter
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"Nederlander")was the mutual insuredof Plaintiff ACE and Defendant OneBeacon, and was coveredunderprimary and excessliability policiesof insurance issuedby OneBeacon and ACE,,respectively,as more particularly identified hereinafter. 8' As more fully set forth below, ACE, as excesscarrier for Nederlander,
is subrogated to Nederlander's rights againstOneBeacon, for OneBeacon's breach of the implied covenantof good faith and fair dealing,arising out of OneBeacon's unreasonable failure and refusalto settlean underlyingpersonalinjury action
1 3 against Nederlander within its $1 million policy limits. As a resultof OneBeacon's t 4 unreasonable failure and refusalto settlethe
casewithin its policy limits, including
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OneBeacon's unreasonable refusalto acceptthe claimant'spolicy limits demand,a reasonably expected excess verdictin the total amountof $3,236,455.31 was
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9. THE POLTCIES Plaintiff ACE is informed and believesand thereonallegesthat
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numberGL00696-00, for rheperiodApril 13,2009throughApril 13,2010, with limits of liability for bodily injury of $1 million per occurrence and naming
2 5 Nederlander as an insured(the "oneBeaconpolicy"). The oneBeacon policy 26 promisedand represented, inter alia, to Nederlander,
that:
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10.
The limits of liability for bodily injury are$1 million per occtllrence;
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(a)
limits, andagainst those sumsit would become legallyobligated to pay asdamages for bodilyinjury duringthe oneBeacon policy periodandcaused by an
"occurrencet'; (b) OneBeacon had a duty to defend,at its sole expense, any suit against
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any Nederlander insuredseekingcovereddamages on accountof bodily injury; (") Nederlander's operations at various locationswere coveredfor such
bodily injury liability including the GreekTheatrein Los Angeles,California; and (d) In any lawsuit which it was defending,OneBeacon agreed to pay all pre-appeal coststaxedagainstNederlander under the supplementary payments provisionof the OneBeacon policy. 1i. Plaintiff ACE is informedand believes that at all relevant timesherein
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a duty to act fairly and in good faith in handlingthird-party claims is implied in the OneBeacon policy. OneBeacon was thereforerequiredto act fairly and in good objectively and reasonably investigate any third-party claim againstits insureds, to properly evaluateliability and damages connected with any third-partyclaim and to effectuate reasonable settlements of the third-party claims,when liability is reasonably clear,including the duty to acceptsettlement demands within its policy limits whena verdictis likely to be in excess of the policy limits. 12. Plaintiff ACE,issued a commercial umbrellapolicy of liability insurance bearing policy numberM00532939, for the periodApril 13,2009to April 13, 2010,and namingNederlander as an insured(the ,,ACEpolicy"). The ACE policy provided,inter alia, that: (a) The limits of liability for bodily injury are $25 million for each
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damages that Nederlander becamelegally obligatedto pay which are in excess of all scheduled underlyinginsurance, providedthat no liability would attachunless and until all suchunderlying insurance had beenexhausted by payments of settlements or judgmentson lossescoveredunder suchpolicy; (c) The ACE policy covered,in pertinentpart, bodily injury which
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occurredduring its policy period and was causedby an occurrence; (d) Nederlander'soperations at various locationswere coveredfor
suchbodily injury liability including the GreekTheatrein Los Angeles,California; (e) The ACE policy had no affirmative duty to defendNederlander
1 0 or pay for defense costswhere underlying insurance, including the OneBeacon 1 1 policy, had sucha defense obligation;and t2
(0 Nederlander's rights to recoveragainstotherpartiesfor any
2009,within the policy period of OneBeacon policy, DeniseHerron ("Herron") was was injuredallegedlyas a resultof Nederlander's negligence. 14. Plaintiff ACE is fuither informed and believesthat as a resultof the
22 but not limited to, a compoundfractureof her right ankle,which resultedin the 23 needfor severalsurgeries, which never fully resolvedher condition. 24
15. Plaintiff ACE is informedand believes that as a resultof the fall,
25 Herron filed a personalinjury action on April 20,2010, entitled, Herron v. 26 Nederlander-Greek, et al., Los AngelesCounty SuperiorCourt, CaseNo. 2 7 8C436191 (the "Herron Action"). In her Complaint,Herron allegedcauses of 2 8 action for generalnegligence, premisesliability and breachof mandatoryduty, F'OR EQUTABLE SUBROGATION AND REIMBURSEMENT
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contendingthere was an unreasonable risk of harm createdby Nederlanderin that Herronclaimedeconomicdamages from $500,000 to $g,000,000. Herron's medical expertopinedthat as a result of her injuries,Herron's bonesmight not fuse, and shecould possiblyrequireamputationof her leg abovethe right ankle and below the knee- Herron's economistexpertopinedthat her future lossof eamings would be between and $3.4 million. $900,000 16. Upon information and belief, Nederlander tendered the HerronAction
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to DefendantOneBeacon underthe primary policy. DefendantOneBeacon accepted the tenderof the defense and assigned counselto defendNederlander. Defendant OneBeacon was obligatedto properly and thoroughly investigate the HerronAction and perforrnan accurate assessment of liability and damages, and basedthereon was requiredto accepta reasonable settlement demandwithin its policy limits.
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ONEB
17.
N'S
SONABLE FAILURE
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20 damages that rangedfrom S500,000 to $g,000,000, and all medicalexperts, 2I 2 2 requireamputationof Herron's right leg, abovethe ankle and below the knee.The 23 testimonyby otherlay witnesses, includingNederlander's own employees, 24
evidenced that therewas a substantial likelihood of recoveryin excess of the
2 5 OneBeacon policy limits if the casewere to go to trial. Thus, a verdict in excess of 26 the $1 million policy limits of the OneBeacon policy was substantially likely, and 2 7 was or shouldhavebeenapparent to OneBeacon, in light of Herron's injuries and 2 8 the probableliability of Nederlander.
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18.
OneBeacon to settlethe Herron Action for the $l million policy limits. On February25,2011, a! a mandatorysettlement conference, a policy limits demand was madeby Herron in the underlying action.Notwithstandingthat therewas a substantial risk of an excess verdict, OneBeacon unreasonably refusedto accepta settlement offer within the policy limits. OneBeacon refusedto settlefor the $l million policy limits eventhough OneBeacon was urgedto seffleby its insured Nederlander and its own defensecounsel,was advisedby the trial judge acting as judge that the reasonable settlement settlement value was in excess of OneBeacon's policy limits, and was further wamed by the settlement judge that the reasonable likely verdictagainst Nederlander was well in excess of OneBeacon's policy limits. Under suchcircumstances, a reasonable insurerwould have accepted a policy limits
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1 3 demand.Notwithstandingthat the objectivelyreasonable evaluations by defense T 4 counseland the settlement judge all indicatedthat the likely anticipated verdict was 1 5 in excess of the limits of the OneBeacon policy, OneBeacon unreasonably refused t6 t7
to settlewithin its policy limits. 19. Further,during trial, as evidencewas presented and rulings were made
2 0 notice and demands from ACE.As a result of OneBeacon's unreasonable failure 2l 22 excess verdict,in the total amountof $3,236,455.31. After deductions for 23 comparative judgment was enteredon March 28, z0ll against negligence, 24 Nederlander in the amountof $2,346,430.09, which was $l ,346,430.09 in excess of 2 5 the OneBeacon policy limits. 26
20. Thereafter, OneBeacon failed and refusedto direct,requireor fund an
2 7 appealof the verdict, despitenotice and demands for samefrom ACE, and instead 28 only tenderedits policy limits of $1 million toward satisfaction of the verdict FOR EQUITABLE STJBROGATION AND REIMBURSEMENT
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of the verdict which was in excessof the OneBeacon policy limits, in the amountof $1,346,430.09. By reason of ACE's paymentof the excess judgment,ACE is subrogated to Nederlander's rights againstOneBeacon for OneBeacon's breachof the implied covenantof good faith and fair dealing for unreasonably refusingto settlewithin its policy limits. ACE hereinseeksfrom OneBeacon all amountspaid by ACE in excess of OneBeacon's $1 million policy limits, plus interest and costs. 22. Any paymentsby ACE were and are and subjectto a reservation of ACE's rights to seekreimbursement from DefendantOneBeacon of all or a portion of the payments. FIRST CA
IN SUBROG
23.
Plaintiff ACE re-alleges and incorporates hereinby reference the Pursuant to the terms,conditionsand implied obligationsof its primary
allegations of paragraphs r-21, inclusive,of this compraint. 24. policy of insurance, including the implied covenantof good faith and fair dealing,it was OneBeacon's duty to, amongother things,properly manageand oversee the Herron Action; properly and thoroughly investigate Herron's claim against settlewithin the OneBeacon policy limits if possible; properlyand accurately
2 0 Nederlander; properly conductsettlement negotiations, and, with respectthereto, 2l 22 evaluatethe issuesof damages and liability in the Herron Action; properly and 2 3 accuratelyappriseNederlander and excess insurers,including Plaintiff ACE, of 24 Herron's settlement demands and negotiations in connectiontherewith;and 2 5 properly and accuratelyevaluatesettlementand settle theHerroreAction where 26 therewas a substantial likelihood of a judgment for more than OneBeacon's policy 2 7 limits. 28
25. DefendantOneBeacon breached its obligationsand dutiesunderthe
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terms and conditionsof its primary policy of insurance by failing to do all of the aforementioned in paragraph20, above,among otherthings. As the sole,direct and proximateresultof OneBeacon's failure to fulfill its contractualand implied obligationsto Nederlander as previously alleged, OneBeacon unreasonably failed and refusedto settleor evenattemptto settlethe caseat the limits of its primary policy, althoughHerron made a policy limits demandto settle theHerron Action,althoughevidencepresented and rulings made during trial increased the alreadysubstantial likelihood of an excess verdict and althoughACE demanded sucha settlement by oneBeacon. Despitethe evidence that would have led a reasonable insurerto concludethat the reasonable settlement value of the casewas more than $l million, and that a likely reasonable verdict was well in excess of $l million, OneBeacon unreasonably failedto accept the policy at the limits 26'
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of ofthe policy. As a directresultof its breachof the implied covenant of good 1 5 faith and fair dealing,OneBeacon has causedharm and damageto Nederlander by
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rendered
Under the principlesof equitablesubrogation, as well as the contractual subrogation provision in the ACE policy, Plaintiff ACE standsin the shoesof its insuredand is subrogated to Nederlander's rights underthe OneBeacon primary policy and thus ACE hasthe right to assertany and all rights that the
22 Nederlander hasthereunder againstOneBeacon, including, without limitation, 23 right of recoveryagainstOneBeacon for breachof its contractualand good 24 25 the subrogee of Nederlander, is entitledto recoverfrom OneBeacon all 26 paid in excess of the availablelimits of the OneBeacon policy, along 27 judgment interestthereonand costs. 28
28. The damages incurredby Nederlander, and paid by plaintiff ACE,
faith as
FOREQUITABLESUBROGATTbUA-ND-ffiIIVfBURSEMENT
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would havebeenavoidedif DefendantOneBeacon had properly and reasonably fulfilled its obligationsunderthe covenantof good faith and fair dealingto settle the casewithin the policy limits. It is thus inequitableand unjust for ACE, and not OneBeacon, to suffer said harm and damages. 29. Plaintiff ACE has demanded that DefendantOneBeacon pay all
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amountsACE paid in excessof the availablelimits of the OneBeacon policy, along with any pre-judgmentinterestthereonand costs.DefendantOneBeacon has failed and refusedto pay any of said sumsto ACE. PRAYER WFIEREFORE,Plaintiff ACE prays for judgment, as follows: l. For compensatory damages in a minimum amountof 51,346,430.09, or
1 3 for all amountspaid or incurredby ACE as a resultof the excess verdict; t4 15 16 I7 l8 T9 20 2I 22 23 24 25 26 27 28 _10_ FOR EQUITABLE SUBROGATIONAND REIMBURSEMENT INSURANCECOMPANY
2. 3. 4. Dated: For pre-judgmentintereston the foregoingsum at the legal rate; For costsof suit incurredherein;and just and proper. For suchother and further relief as the Court deems May 20,2013 NIXON PEABODY LLP
NOTICEOF ASSIGNMENT TO TJNITED STATES MAGISTRATEJT]DGE FORDISCOVERY This case hasbeenassigned to District JudgeCormacJ. Carney andthe assigned discovery Magistrate Judge is AndrewJ. Wistrich. The case numberon all documents filed with the Court shouldreadasfollows: SACV13 - 7 97 CiIe (A,rVIx)
Pursuant District Court for the Central to General Order05-07of the UnitedStates District of California,the Magistrate hasbeendesignated related Judge to heardiscovery motions.
NOTICE TO COUNSEL (if a removalactionis A copyof thisnoticemustbe servedwiththe summons and complaint on all defendants filed,a copyof thisnoticemustbe serued on all plaintiffs). location: Subsequent documents mustbe filedat the following I I WesternDivision 312N. SpringSt.,Rm.G-8 Los Angeles,CA 90012 -J.fSouthern Division I I EasternDivision 411WestFourthSt.,Rm.1-053 3470TwelfthSt.,Rm.134 Riverside, CA 92501 SantaAna, CA 92701-4516
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(c) List.thecountyinthisDistrict;{alifornracounty.outsideofthisDistrict; Stateifotherthancalifornia;orForeigncountry,inwhichEACHclaimaros NorE: In land condemnationcases, use the rocaiionof the tract of rand invorved.
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X . S I G N A T U RO EF A T T O R N E Y ( O RS E L F - R E P R E S E N T D LE IT IGANT):
DATE:
N a t u r eo f S u i t C o d e 861
Abbreviation ltA
Substantive Statement o f C a u s eo f A c t i o n A l l c l a i m s f o r h e a l t h i n s u r a n c e b e n e f i t s ( M eu dn ic )i t l e l S , P a f t A , t da erre T oh feSocla l e c u r i t y A c t , a s a m e n dA S ed .o , ls i n c l u d _ e _ c l ab im sospitals yh s,k i l l e d nursing facilrties e, tc., f o r c e r t i f i c a t i oa ns p r o v i d e r s o f s e r v i c eu s n d e r t h ep r o g r u . , ( 4 2U . S . C 1.9 3 s F F ( b ) ) A l lc l a i m s f o r " B i a c k L u n g " b e n e f i t s u n d e r T i t l e 4 t ,h Pe aF r te B o rfC d, e a lo a M l i n e H e a l t h a n d S a f e r y A1 c9 to 6f9r 3 0 U S C
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3L
863
DIWC
A l , lc l a i m s f i l e d b y i n s u r e d w o r k e r s r d i s - a b r l i t i yn s u r a n c e b e n e f i t s u n d e r T i t l e 2 o f t h e S o c i a l S e c u r i t yA c t , a s a m e n d e d ; p l u s a l l c l a i m sf i l e d f o r c h i d ' s i n s u r a n c e e n e f i t sb a s e do n d i s a b r l i t y . ( 4 2U . S . C . 4 0 5 (g)) All claims frledfor widows or wtdowers insurancebenefits based on disability under Title 2 of the S o c i a l S e c u r i t yA c t , a s amended (42USC 405(q)) A l 1c l a i m sf o r s u p p l e m e n t a ls e c u r i t y i n c o m e p a y m e n t sb a s e d u p o n d i s a b i l i t y f i l e d u n d e r T i t l e l 6 o f t h e S o c i a lS e c u r i t y A c t ,a s amended A l l c l a i m s f o r r e t i r e m e n t ( o l d a g e ) a n d s u r v r v o r sb e n e f i t s u n d e r T t t l e 2 o f t h e S o c i a l S e c u n t y A c t , as amended (42 U.5.C. a0s (o))
863
DIWW
864 865
55lD RSI
(02/1 cv-71 3)
C V I LC O V E R SHEEI
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