Failure of Insurance Carrier to Pay $1.15 Million Attorneys’ Fees Award was Breach of Contract, Federal Court Says

LiMandri & Jonna LLP is pleased to announce a major victory on behalf of clients in an insurance dispute. In November 2017, after a 5-week bench trial in San Diego Superior Court, LiMandri & Jonna LLP prevailed in litigation designed to save the Neighborhood Market Association, a trade association of local convenience and liquor stores, from gross mismanagement. The case was brought by the founders of the NMA and sought to hold its prior leaders accountable for breaches of fiduciary duty. Because it was a “derivative suit” brought on behalf of all NMA members, the Court awarded the prevailing plaintiffs their attorneys’ fees and costs, which amounted to $1.15 million.

Following the award, the NMA’s insurance carrier refused to pay the fees and actually sued the prevailing plaintiffs in federal court – asking the court to confirm that it did not need to pay the fees based on the terms of its insurance policy. LiMandri & Jonna LLP immediately filed a counterclaim against the insurance carrier, and sought a judicial decree that the NMA’s insurance carrier was required to pay the attorneys’ fees award up to the policy limits.

On May 14, 2019, the federal court granted LiMandri & Jonna’s motion for summary judgment, and denied the insurance carrier’s cross-motion for summary judgment. The Court found that the attorneys’ fees award was covered by the NMA’s insurance policy, and that the insurance carrier breached its contract with the NMA when it refused to pay.

LiMandri & Jonna is proud to have provided their clients with another clear win. The three business owners who initiated the underlying litigation, Arkan Somo, Samir Salem, and Basil Zetouna, expended hundreds of hours and more than a million dollars in an honorable effort to save the NMA from its prior management. The Court correctly found that they deserved to have their efforts repaid.

The insurance litigation was handled by Attorneys Charles S. LiMandri and Jeffrey M. Trissell. The decision is titled United States Liab. Ins. Co. v. A&B Mkt. Plus, Inc., No. 3:19-CV-0172-GPC-AGS, 2019 WL 2107808 (S.D. Cal. May 14, 2019). The full order can be found here.


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