Sunny Cameron and Matt Sorensen defended the managing general agent of an insurance company in a multi-million dollar arbitration brought by the insurance company. The insurer sought to recover approximately $10 million from the managing general agent under theories of contractual and common law indemnity, breach of contract and fraud. Following a week-long hearing and an extensive post-hearing briefing, a majority of the three-member arbitration panel found that the managing general agent was not liable to the insurance company for any of the damages sought in the arbitration.
The arbitration arose out of a lawsuit involving a Florida law firm that had taken out a malpractice policy with the insurer. The Florida law firm and its partners were sued for breaches of their fiduciary duties and to recover excessive trustee and attorney’s fees by the beneficiaries of a trust for which one of the firm’s partners served as trustee. That underlying lawsuit resulted in a judgment of more than $7 million against the Florida law firm and its partners. Following the entry of the judgment in the underlying case, the firm threatened the insurer and its managing general agent with claims of bad faith, alleging a failure to defend the underlying lawsuit and to settle the case within the limits of the firm’s malpractice policy. Ultimately, the insurer agreed to settle the threatened claims by agreeing to fully indemnify the firm and its partners for the entirety of the judgment that had been entered in the underlying lawsuit and for any unpaid attorneys’ fees incurred by the firm in the underlying litigation.
Thereafter, the insurer initiated an arbitration against the managing general agent, pursuant to the terms of their management agreement, seeking to recover all of the expenses it had agreed to assume in connection with its settlement with the Florida law firm. The insurer sought over $8 million in damages, fees and other expenses that it had paid in connection with the resolution of the underlying lawsuit, inclusive of millions of dollars in attorneys’ fees incurred by the Florida law firm and the trust beneficiary plaintiffs in the underlying trial and appeal. The insurer also sought to recover the fees and expenses it claimed to have incurred in connection with the arbitration and related proceedings against the managing general agent.
A three member arbitration panel heard evidence in the case in September of 2014. Following the hearing, the parties submitted extensive post-trial briefs. Through the evidence presented at the hearing and the post-trial submission, Sunny Cameron and Matt Sorensen established that the Florida law firm had waived any rights to defense or indemnity under its malpractice policy and that none of the claims for which damages had been awarded against the Florida law firm in the underlying lawsuit were covered under the malpractice policy. As a result, the panel concluded that the settlement agreement between the insurance company and the Florida law firm and its partners was unreasonable and that the damages sought in the arbitration, all of which flowed from that settlement agreement, were not proximately caused by the managing general agent’s acts or omissions. Accordingly, the panel found in favor of the managing general agent on all claims.