Gray•Duffy, LLP Successfully Negotiates Full Dismissal of Client in Lawsuit Claiming Insurance Broker Malpractice

April 2015

Overview

Michael Eisenbaum of Gray•Duffy’s Encino office successfully reached an agreement for a complete dismissal of the firm’s client, a wholesale insurance broker. The wholesale broker had placed business premises coverage to a local property management company through retail and mid-level insurance brokers.

Discussion

Norma Gertrude Chavez v. Gwendolyn M. Narleski The two-tiered lawsuit involved a slip and fall by an elderly woman on the sidewalk in front of a residential property. She sustained a fractured hip and claimed $600,000 in damages. The woman filed suit against the property owner, who then cross-complained against the property management company. The insurance carrier for the property management company denied coverage, asserting that the policy only applied to the business premises of the management company, and not any of its off-site managed locations. The property management company filed a cross-complaint against all three insurance brokers involved in the placement of the insurance. The entire case was heavily litigated on all fronts. As a result of the extensive discovery and investigation, Mr. Eisenbaum was able to establish that the policy provided for the management company was the type requested by the mid-level broker, and both the original quotes and the policy itself specifically stated that coverage was strictly limited to the management company’s business premises. However, unknown to the wholesale broker who had no direct communication with the insured management company, the management company had requested coverage for all of its management activities. This request was conveyed to the retail broker prior to the slip and fall incident. The case ultimately proceeded to mediation, which resulted in a settlement of $210,000 for the woman and the property management company received $77,500 to reimburse them for its defense costs for the uncovered claim. As part of the settlement agreement, the firm’s client received a full release and dismissal without providing any contribution to the settlement for the management company, which was funded by the two other insurance brokers.

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.