(Orange County, CA) In a contentious professional liability jury trial venued in Orange County Superior Court, the Honorable David R. Chaffee entered judgment in favor of defendants at close of plaintiff's case. The jury trial lasted nearly a week and included complex facts and legal issues related to the conduct of an insurance broker engaging in solicitation and management of insurance for his clients.
The underlying case included two plaintiffs, Ducoing Management, Inc. and Ducoing Enterprises, Inc., that alleged their insurance broker and brokerage firm failed to procure insurance that covered crime and/or employee theft. Plaintiffs were represented by Roger Behle with Foley Bezek Behle & Curtis, LLP. in Costa Mesa, California. Defendants were represented by Wood Smith Henning & Berman's Newport Beach office.
The plaintiff's case stems from an incident in approximately July 2008 when plaintiffs discovered one of their employees stole and forged payroll checks that were cashed at numerous liquor stores. Plaintiffs sought reimbursement of fraudulently cashed checks, business costs and legal fees allegedly incurred in separate litigation related to the employee theft under the legal theory "tort of another".
During the course of litigation, defendants learned that plaintiffs' previously obtained substantial reimbursement from the plaintiffs' bank that held the payroll accounts for the stolen checks. In addition, it was revealed that the employee who committed the crime pled guilty to money laundering and making false entries and was Ordered to pay restitution in the amount of $92,542. Defendants also discovered that one of the two plaintiffs obtained a $69,372 judgment against liquor stores who cashed forged checks.
During WSHB's cross examination of plaintiff's insurance expert James Cox, CPCU, the expert witness acknowledged that subject to certain expectations the standard of care for insurance brokers in California is such that they do not have a duty to volunteer coverage to clients. Mr. Cox also testified that policy holders have an independent duty to report claims to their insurance carrier. Earlier in the trial, the plaintiffs' representative responsible for managing and maintaining insurance acknowledged that she never specifically requested crime coverage or employee dishonesty coverage from the insurance broker.
Critical testimony in favor of the defense was also solicited by WSHB trial attorney Donia Royster from one of the owners of the two companies, who testified that plaintiffs were separate legal entities incorporated with the California Secretary of State. The Court's ruling relied heavily on the plaintiffs' standing as separate legal entities and their inability to claim damages incurred by each other.
Plaintiffs previously rejected defendants' pretrial offer to compromise pursuant to California Code of Civil Procedure section 998. Defendants plan to recover all costs, including expert fees. Defense experts included economist David Weiner and insurance expert Robert Ford. In addition to James Cox, CPCU, at trial plaintiffs also offered expert testimony from William Ackerman, CPA.