Gray•Duffy Successfully Negotiates Settlement of 25 Separate Lawsuits Arising from Catalina Island Fire

October 2012

Overview:

Ronald Mandel of Gray•Duffy’s Encino office successfully resolved a series of lawsuits against the firm’s client who was responsible for causing the fire on Catalina Island. The settlement utilized all available insurance for the client which allowed the client to avoid bankruptcy, despite the damages estimated at more than $50 million.

Discussion:

On May 7, 2007, a massive fire occurred on Catalina Island burning more than 4,500 acres,
of the Island . Due to the fire, tourism on the island was seriously impacted and caused significant disruption to all activities on the Island. The fire destroyed a number of structures as well as significant wildlife and valuable endemic vegetation which led to the potential for disastrous mudslides and floods.

Gray•Duffy represented Allstate Tower, Inc., a company involved in the construction and maintenance of communication towers on the Island. The claims involved property damage, habitat damage, business interruption, loss of earnings, and the need to construct mudslide and flood control barriers throughout the affected sections of the Island. Twenty-five separate lawsuits were filed involving 45 plaintiffs, with the damages claimed in excess of $50 million. All of the lawsuits were consolidated and venued in the Los Angeles Superior Court.

Ron Mandel with Gray•Duffy acted as lead defense counsel for the four defendants involved. Over the course of four years of litigation, Mr. Mandel was involved in two trials arising out of the case, an alter ego bench trial and a jury trial. More than 100 depositions were taken leading up to trial for the 25 cases.

In February 2012, the parties agreed to, and were involved, in five days of mediation. At the conclusion of the mediation, the consolidated group of plaintiffs agreed on a $28 million final settlement and ending litigation.

Of the $28 million settlement, Allstate Tower’s insurance carrier paid their insurance limits of $11 million, with the remainder paid by the other defendants, saving Allstate Tower from bankruptcy as its insurance limits were inadequate to pay both the estimated damages and the ultimate settlement.

Please Note: This article is necessarily general in nature and is not a substitute for legal advice with respect to any particular case. Readers should consult with an attorney before taking any action affecting their interests.