Gray·Duffy Negotiates Settlement in Insurance Broker Malpractice Case

August 2011

Overview

Ron Mandel of Gray·Duffy’s Encino office successfully defended Surplus and Wholesale Lines Insurance Brokerage, Brown & Riding Insurance Services and achieved a favorable settlement during the course of mediation in Phoenix, AZ.

Discussion

Bell & 3rd Plaza, LLC v. Brown and Riding Insurance Services, Inc., et al.

Bell & 3rd Plaza, LLC, a real estate development company, lost a motion for summary judgment in connection with its breach of contract and bad faith lawsuit against insurer Great American Insurance Company (Great American) in Arizona, which resulted in wholesale and surplus lines broker, Brown & Riding being sued in California along with retail broker, Frank Foroutan Insurance Agency.

The underlying Arizona case in which the insured, Bell & 3rd Plaza, LLC sued its insurer, Great American, arose out of a series of first party property losses involving theft and vandalism to a newly purchased property, a big box store in a shopping center that was formally a Walmart in Phoenix. Great American denied the claim based upon certain policy conditions.

Bell & 3rd Plaza sued Great American and a security service company in Arizona in which Great American obtained a motion for summary judgment against the insured in Arizona. After suffering a judgment of dismissal and the costs in connection with the motion for summary judgment, the insured filed a separate and distinct suit in California for negligence against both the retail broker and the wholesale and surplus lines broker.

After a number of cross-complaints were filed in California the parties agreed to hold a joint mediation involving the remaining Arizona case in which the insured was still a plaintiff against the security company, and in connection with the broker malpractice cases filed in California. At the time of mediation, the plaintiff claimed its damages were approximately $300,000. The mediation was held in Phoenix and resulted in a global settlement of both lawsuits, wherein Brown & Riding Insurance Services contributed $75,000, as part of an overall settlement in the amount of $150,000 and in addition to the insurer, GAIC, waived its claims for attorney’s fees and costs in connection with the Arizona summary judgment.

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.