Settlement Amount:
$1,000,000

Case Name:
THE REPUBLICAN CENTRAL COMMITTEE OF SAN DIEGO COUNTY,
et al. v. FIREMANS FUND INSURANCE COMPANY

Case Number:
Superior Court of California County of San Diego, No.
5.9978

Plaintiff:
The Republican Central Committee of San Diego County,
et al.

Defendants:
Firemans Fund Insurance Company

Facts and Background:
Fireman’s Fund issued a General Liability Insurance Policy to the
Republican Central Committee which included liability insurance
for members, volunteers and employees of the Republican Central
Committee.

In May of 1980, a lawsuit was filed against individual members
and employees of the various Republican Central Committee. The
action filed against the Republican Central Committee, and its
members, included but was not limited to: libel and slander
causes of action.

On May 21, 1982, Terry Knoepp, Esquire, while defending The
Republican Central Committee in the action brought against them
by Wanda Vail, requested Fireman’s Fund Insurance Company to
provide a defense to The Republican Central Committee, and the
individuals who had been sued for libel and slander. On August 4,
1982, Walter Rogers, a Fireman’s Fund employee, wrote to Terry
Knoepp to notify him that Fireman’s Fund was denying the request
for defense on the ground that the Complaint filed against The
Republican Central Committee contained allegations of statements
occurring prior to the policy’s effective date of coverage. On
September 7, 1982, Fireman’s Fund Insurance Company again denied
the claim on the ground that the libel and slander occurred
before the effective date of coverage and further contended that
the acts alleged were intentional and were ratified by the
members of The Republican Central Committee.

On January 17, 1983, the Vail v. The Republican Central Committee
action settled on the first day of trial. However, the Republican
Central Committee, and individual members of the Committee,
incurred attorneys’ fees in the amount of $38,000 which were
special damages incurred as a consequence of the wrongful refusal
of Fireman’s Fund to provide a defense or reimburse for defense
costs in relation to the underlying action.

On September 29, 1983, The Republican Central Committee, and the
individual plaintiffs, filed suit against Fireman’s Fund
Insurance Company, alleging breaches of the implied covenant of
good faith and fair dealing and violations of §790.03 (h) of the
California Insurance Code, as a consequence of Fireman’s Fund’s
refusal to provide a defense under the terms of the Comprehensive
General Liability Policy.

On August 8, 1985, Fireman’s Fund paid The Republican Central
Committee approximately $38,000 as reimbursement for the costs
incurred by the Committee as a consequence of the wrongful
refusal to defend. The Republican Central Committee, and the
individual members, reserved the right to proceed with the cause
of action alleging breach of implied covenant of good faith and
fair dealing and violations of Insurance Code §790.03 (h) seeking
recovery of damages for emotional harm, economic loss, and
punitive damages.

During trial of the action, Fireman’s Fund contended that they
received late notice of the claim, that they made a mistake in
regard to failing to provide a defense, and that they had not
engaged in any actions constituting breach of the implied
covenant of good and fair dealing or any violations of §790.03
(h) of the California Insurance Code.

The insureds contended that Fireman’s Fund had engaged in a
conscious disregard of rights. had violated various provisions of
§790.03 (h) of the California Insurance Code and various
provisions of their own Claims Procedures Manual. They further
contended that Fireman’s Fund had engaged in similar unfair
practices in the handling of other claims involving requests for
defense under Comprehensive General Liability Policies.

Fireman’s Fund Insurance Company, in addition to retaining the
Law Offices of Higgs, Fletcher & Mack, retained the Law Offices
of Luce, Forward, Hamilton & Scripps for purposes of having
Messrs. Robert Steiner, Richard Spirra and Val Hoy provide
litigation defense as it pertained to Colonial Life aspects of
the case which directed evidence toward unfair claims practices
engaged in by Fireman’s Fund in other cases. The other similar
unfair practices alleged by the insureds pertained to violations
of §790.03 (h) of the California Insurance Code, other instances
involving similar failures to investigate claims prior to
initiating denial of claims and other evidence in satisfaction of
the "common occurrence" requirements of §1101 (b) of the Evidence
Code.

After six weeks of trial, the case settled in the amount of
$1,000,000.