(rage 1 of 22) 1 | BROWNE GEORGE ROSS LLP Eric M. George (State Bar No, 166403) 2] eeeorre@berfirm.com FILED Tra Bibbero (State Bar No. 217518) ‘ 3] ibibbero@berfiem.com Super ae 4 | Car Alan Roth (State Bar No, 151517) cxothi or MAR 22 2018 5/2121 Avenue of the Stars, Suite 2800 a Los Angeles, California 90067 es ee 6 |) Telephone: (310) 274-7100 37|| Facsimile: (310) 275-5697 g|| Attorneys for Plaintiff Michael Ovitz 5 : 10 SUPERIOR COURT OF THE STATE OF CALIFORNIA n COUNTY OF LOS ANGELES, CENTRAL DISTRICT 99 na 174 13 || MICHAEL OVITZ, an individual, Case No. 14 Plaintiff, COMPLAINT FOR: 15 vs. (1) BREACH OF CONTRACT, (2) DECLARATORY RELIEF, AND 16 || FIREMAN’S FUND INSURANCE (3) TORTIOUS BREACH OF TRE, COMPANY, a California corporation; and IMPLIED COVENANT OF GOOD FAITH 17] DOBS 1 TO 10, inclusive, ee, ae Defendants. 2 21 2 2 2B > m 2 25 26 27 28 COMPLAINT oot 1 Bagel 1 = Doo 3D = 1732599407 - Doe type = ommn1 Plaintiff Michael Ovitz (“Plaintiff”) alleges as follows: 2 Nature of the Action 3 1. An insurance carrier, it has been said, is a company that will sell you an umbrella 4 || when the weather is good, and take it back when it rains. j 5 2, This adage is given new meaning by Fireman’s Fund Insurance Company 6|| Fireman's”). It sold its aptly-named “Umbrella Policy” to plaintiff, taking in substantial 7|| premiums for the promise of $30 million in excess insurance coverage. Then, when plaintiff 8|| himself was sued and sought fo invoke the insurance benefits he had paid for, Fireman's refused 9|||coverage. Fireman's chose to dishonor its coverage obligations notwithstanding the fact that both 10 |] primary carriers (AIG and Chubb) had recognized that the underlying claims were covered by 11 |) theit policies, and had honored their coverage obligations by paying the full policy limits of their 12] policies. 3 3. But not Fireman’s, It resorted to coverage positions so extreme and frivolous, as to 14 ll render coverage essentially nonexistent. Moreover, by refusing to contribute any meaningful 15 |] amount to’help settle the underlying matter, Fireman's sought to scuttle any settlement, hoping for 16 | an adverse finding Fiteman’s could then brandish as ah additional reason to deny coverage to its 17}] insured 18 4, Fireman's’ bad faith tactics to stymie settlement forced Plaintiff ~ literally on the 19 ]] Friday before the Monday “ inal Settlement Conference” preceding trial — to contribute his own 20|| funds in order to achieve settlement of the underlying claims. Absent this self-help, Fireman's 21|| would have achieved its goal of scuttling settlement and subjecting its insured to tral in a maiter 22 |] in which he was sued for tens of millions of dollars. 2 a] 5. "The present suit is brought to hold Fireman's accountable for its bad faith 38 24]f misconduct 3 as ‘The Parties % 96 6. Plaintiff is an individual residing in the County of Los Angeles. 27 28 COMPLAINT oof 1 Paget 3 ~ Doo zp = 1732529407 - Doo type = om(rage & of 22) i 7. Defendant Fireman’s Fund Insurance Company is a California corporation, a 2 || citizen of California for federal diversity jurisdiction and all other purposes, and at all relevant 3 || times was qualified to do business and was doing business in the State of California, 4 8. The true names and capacities of the Defendants sued herein as does 1-10, 5 || inclusive, are unknown to Plaintiff, who therefore sues said Defendant by such fictitious names. 6 | Plaintiff will amend this Complaint to allege their true names and capacities when ascertained. 7 || PlaintifF is informed and believes and thereon alleges that each of said ficttiously named 8|| Defendants is in some manner responsible, in whole or in pat, for the matters alleged herein. 9 Venue | 9, Venue properly lies in this judicial district inasmuch as some or all of the acts 11} giving rise to liability occurred in Los Angeles County. 12 Plaintiff's Insurance Coverage 13 10, Plaintiff is an insured under a homeowners’ policy issued by AIG Insurance | 14 || Company (“AIG”), policy number 0000937376, for the period from January 2, 2002, to January 2, 15 |) 2003, and any renewals thereof and predecessor policies thereto (the “AIG Homeowners’ Policy”. 16 || To date, Plaintiff has not been able to locate a copy of the Homeowners’ Policy, and Plaintiff does 17]| not know its exact terms at this time. Plaintiff is informed and believes, and thereon alleges, that 18 ||the AIG Homeowners’ Policy: (a) provides coverage for claims for “personal injury ... caused by 19}]an occurrence”; and (b) has a specified limit of liability per occurrence, 20 11, Plaintiff's also an insured under a commercial general liability policy issued by 21 |[ Chubb Insurance Company or one of its affiliates (“Chubb”) to Artists Management Group, LLC 22||(AMG”), policy number 7946-69-53, for the period November 23, 2001, to November 23, 2002, 23 || and any renewals thereof and predecessor policies thereto (the “Chubb CGL Policy”), Plaintiff is insured under the Chubb CGL Policy because he was an officer or director of AMG, the alleged 25 || acts at issue in the underlying litigation were performed at least in part in that capacity, and the BWWEA CCI RY 26 || Chubb CGL Policy provides coverage to officers and directors of AMG with respect to their duties 27 lin those capacities. The Chubb CGL Policy provides coverage for claims for “bodily injury asia aH COMPLAINT oot 1 Rage - Doe ID = 2752539607 ~ Deo aype(age 5 of 22) 1]... caused by an occurrence” and “personal injury... . caused by an offense.” The Chubb CGL | Policy has a specified limit of liability per occurrence. 12, Plaintiffis also an insured under Fireman's “The Fund Umbrella” Policy No. XYZ- } 000-6848-4377, for the period from November 23, 2001, to November 23, 2002, and any renewals thereof and predecessor policies thereto (the “Umbrella Policy”). Coverage A of the Umbrella Policy provides coverage for claims covered by Primary Insurance, to the extent such claims are in 7|| excess of the Primary Insurance’s limit of liability. The Umbrella Policy defines “Primary 8}| Insurance” as including the Chubb CGL Policy. Coverage B of the Umbrella Policy provides 9|] coverage for claims for “bodily injury ... caused by an occurrence,” and “personal injury 10 |)... caused by an offense” which are not covered by Primary Insurance or Coverage A. Fireman's 11 }/also provided Plaintiff with a Commereial and Personal Excess Personal Umbrella Liability 12|] Supplement (the “CAPE Supplement”) to the Umbrella Policy, which provides coverage for 13 [claims for “ bodily injury . .. caused by an occurrence,” and “personal injury ... eaused by an 14 || offense.” The CAPE Supplement provides that “when an occurrence is covered by Primary 15 |/Insurance, this coverage applies in excess of Primary Insurance.” The CAPE Supplement defines 16 || “Primary Insurance” as including the AIG Homeowners’ Policy. The Umbrella Policy, together 17| with the CAPE Supplement, is collectively referred to herein as the “Fireman’s Policy.” The 18 || Fireman's Policy has a $30 million limit of liability. 19 ‘The Underlying Claims 20|| 13. Plaintiff was named as a defendant in an action filed by Anita Busch titled Busch v. 21 || Pellicano, et al., Los Angeles Superior Court Case Number BC316318, which alleges that 22 || Plaintiff is responsible for injuries that private investigator Anthony Pellicano and his associates 23 23 fare alleged to have inflicted on Ms. Busch during the period that the AIG Homeowners", Chubb 5 24]/CGL and Fireman’s Policies were in effect (the “Underlying Claims”). ‘The Underlying Claims 3% 25 || sought damages for “personal injury caused by an occlrrence,” “bodily injury covered by an 26 || occurrence,” as well as “personal injury caused by an offense” within the meaning the AIG 27 || Homeowners’, Chubb CGL and Firernan’s Policies. The Underlying Claims are within the 28 || coverage of these Policies, and are not subject to any exclusion contained therein masse ee COMPLAINT Doct 1 Pagel 5 ~ Doc ID = 1732538407 ~ Doo aype = omarage 6 of 22) 1 14, Plaintiff throughout his defense of the Underlying Claims denied all liability 2] Nevertheless, given that litigation outcomes cannot be safely predicted, and given Ms, Busch’s 3 |[inflammatory allegations and the substantial injuries that she claimed, the Underlying Claims 4 || exposed Plaintiff to extreme financial exposure, and threatened his reputation. 5 Fireman's’ Bad Faith Breach of Its Duties 6 15, AIG and Chubb acknowledged their duty to defend the Underlying Claims under 7] the AIG Homeowners and Chubb CGL Policies, respectively, and actively did so. 8 16. Plaintiff, AIG and Chubb were actively involved in attempting to settle the 9] Underlying Claims and participated in mediation for that purpose. AIG and Chubb each 10 || acknowledged their willingness to contribute their respective policy limits to seitle the Underlying 11 |) Claims. However, these amounts were far from sufficient to meet Ms. Busch’s settlement 12 |] demands. | 17, On April 14, 2017, Plaintiff tendered the Underlying Claims to Fireman’s for 14 || defense and indemnity 15 18, Fireman's responded to the tender in a letter dated May 9, 2017 (the “May 9, 2017 16] Coverage Letter”), Although couched as a “reservation of rights,” the response was actually a 17] complete denial of coverage. Fireman's took that position even though: (a) it had acknowledged 18 | that “if there is primary coverage, we follow form unless there is an obvious exclusion”; (b) 23 19}]noted above, AIG was providing coverage; and (c) there is no obvious or possible exclusion under 20 | the Fireman's Policy. 2 19. Ina letter dated June 2, 2017 (the “June 2, 2017 Letter”), Plaintiff's counsel 22 responded to the May 9, 2017 Letter, explaining in detail why Fireman's” coverage positions were 23 || without basis. In addition, the June 2, 2017 Letter asked Fireman's to participate in the next. 24 || session of the mediation of the Underlying Claims and offered to provide Fireman's with any '3 25 ]/information that it might need to assist in its analysis of the Underlying Claims. Plaintiff's wiwercesty "© 26 }| counsel requested a response by June 12, 2017. Because Plaintiff did not receive a response by 27 | that date, on June 13, 2017, Plaintiff's counsel e-mailed the author of the May 9, 2017 Letter, whio 28 || in an email dated June 14, 2017, stated that Fireman's would respond shortly. ‘When no response mnsise 5. { COMPLAINT Doct 1 Pago# 6 = Doe 1D = 1732539407 ~ boo type = omaGage 1 of 22) LUE) A8 Sa] 10 Wl 12 13 4 15 16 7 19 20 a 2 2B 4 25 26 27 28 ‘was received, Plaintiff's counsel inquired again on July 6, 2017, but once again, no response was received 20. On July 12, 2017, Plaintif’s counsel wrote again to Fireman's (the “July 12, 2017 Letter”), The July 12, 2017 Letter informed Fireman's that Ms. Busch was demanding a settlement far in excess of AIG's policy limit, and that AIG appecred to be willing to fund a settlement up to its policy limit, Plaintiff's counsel also informed Fireman’s thatthe Underlying Claims could be settled if Fireman’s honored its coverage obligations to Plaintiff and participated in good faith in a mediation. PlaintfP's counsel requested that Fireman's confirm that it would “follow form’ and provide coverage as AIG wa’ doing 21. Finally, on July 21, 2017, Fireman's responded in a leter from its coverage counsel (the “July 21, 2017 Letter”), The July 21, 2017 Letter repeated many of its same baseless arguments as to why there was no coverage for the Underlying Claims. The July 21, 2017 Letter also stated that Fireman’s needed additional information and requested an electronic copy of documents related to the Underlying Claims. | 22. Shortly thereafter, Paintif?’s counsel provided Fireman's with the documents and information requested, including, inter alia, voluminous medical records, deposition transcripts and discovery responses from the underlying lawsuit and other relevant proceedings. 23. On September 12, 2017, Plaintiff's counsel forwarded to Firemans a September 8, 2017 letter from Ms. Busch’s counsel offering to settle the underlying claims for an amount well within the Fireman's Policy's limit. In an email ofthe same date, Plaintiff's counsel told | Fireman's that although Plaintiff denied causing Ms. Buseh’s damages, her settlement demand | was consistent with her statement of damages and discovery responses and well within the range of reason if she were able to support her liability theories and numbers at tral. 24, After September 12, 2017, Plaintiff's counsel provided Fireman's with additional documents and information concerning the Underlying Claims, including a comprehensive memo detailing the strengths and weaknesses of Mrs. Busch's claims and Plaintiff's defenses thereto 25. A mediation ofthe Underlying Claims was held on November 28, 2017. Plaintiff, | ‘Ms. Busch, their attorneys, and representatives of AIG, Chubb and Fireman’s were in attendance. mse be COMPLAINT Doct 1 Pages 7 = Boo 1D = 732520407 - nos ayp(rage 8 of 22) 1 || Fireman's did not participate in good faith at the mediation. As a result, Plaintiff was unable to : 2 |) settle the Underlying Claims. 3 26. On or about December 7, 2017, Plaintiff's counsel received a leter from Ms. 4 || Busch’s counsel offering to settle the Underlying Claims for an amount which was well within the 5 || limits of the Fireman's Policy (the “Settlement Demand”). The Settlement Demand stated that the 6 || settlement offer would remain open for 20 days. Under cover of a letter dated December 8, 2017 7|| (the “December 8, 2017 Letter”), Plaintiff's counsel forwarded the Settlement Demand to 8 || Fireman's, The December 8, 2017 Letter demonstrated in detail why the Settlement Demand was 9|| reasonable and why there was @ likelihood that judgment would be entered against Plaintiff in an 10 || amount exceeding the Settlement Demand. The December 8, 2017 Letter stated that the two 1 | primary cartiers, AIG and Chubb, were each willing to contribute their policy limits to a 12} settlement, and requested that Fireman’s contribute the remaining amount necessary to settle the 13 ||case, which amount was a fraction ofits $30 million policy limits. In the December 8, 2017 | 14 || Letter, Plaintiff's counsel offered to provide any further information tht Fireman’s might request. Is 27. _ Inits response dated December 26, 2017 (the “December 26, 2017 Letter"), | 16 | Fireman’s rejected Plaintif’s request. As a basis for its rejection, Fireman's misstated applicable 17 }) California law and asserted the same spurious coverage positions that Plaintiff had already shown 18 |/to be invalid, Fireman's also falsely claimed that the evidence was insufficient to support the 19 | Settlement Demand, thereby ignoring the clear evidence to the contrary that Plaintiff had given to 20|fit. Fireman’s offered to contribite a token amount to settlement, with a full reservation of rights, 21 }) knowing full well that its token offer was unreasonable and would be insufficient to settle the 2 || Underlying Claims. 7 2B 28, Ina letter dated January 12, 2018 (the January 12, 2018 Leiter”), Plaintiff's counsel tS 241) responded to Fireman's’ December 26, 2017 Letter, The January 12, 2018 Letter showed that 3:5 25||Fireman’s' December 26, 2017 Letter: (a) misstated California law concerning an ingurer’s duty 26 || to accept a reasonable settlement offer; (b) asserted spurious coverage exclusions; and (c) 27 |] improperly ignored the substantial evidence demonstrating the likelihood of a covered verdict in 28 |] excess of the Settlement Demand. The January 12, 2018 Letter reminded Fireman’s that, at that ~ COMPLAINT | ooh 1 Paget @ ~ Doo 1D = 3732539407 - neo type ~ omERGage 9 of 22) BANE? COED ul 12 13 4 16 7 18 19 20 21 2 2 m 25 %6 2 28 point, trial was just 24 days away, and requested that Fireman's immediately take action to settle the Underlying Claims in furtherance of its obligations to protect PlaintifP's interests. Although payment of a reasonable settlement within its policy limits was Fireman’s’ duty under California law, Plaintiff repeated a previous offer made by Plaintiff for Plaintiff and Fireman’s to co-fund equally the amount needed to achieve settlement (above AIG and Chubb’s combined policy limits), subject to a reservation of rights. Alternatively, Plaintiff requested that Fireman’s authorize Plaintiff to settle the case on his own up to a specified amount which was well within the ireman’s’ Policy limits. 29, Ina responsive letter dated January 17, 2018 (the “January 17, 2018 Letter"), Fireman’s refused to offer any more money towards settlement than the token amount it had previously offered. Fireman’s stated that it would not assert a “Voluntary Payments” defense should Plaintiff settle the Underlying Claims for the amount for which Plaintiff had requested authority inthe January 12, 2018 Letter. 30. Ina letter dated January 23; 2018 (the “January 23, 2018 Letter”), Plaintiff's counsel forwarded to AIG, Chubb and Fireman’s the proposal ofthe retired judge who was ‘mediating the Underlying Claims for resolution of the dispute between Plaintiff and Ms, Busch (the “Mediator’s Proposal”). The Mediator's Proposal was reasonable and well within the limits of the Fireman’s Policy. The January 23, 2018 Letter requested that Fireman's fund the amounts necessary to satisfy the Mediator's Proposal after the contributions from AIG and Chubb of their respective policy limits. 31. Unlike AIG and Chubb, Fireman's had taken the position that there was no coverage for the Underlying Claims because the Underlying Claims supposedly accused Plaintiff of intentional conduct and did not seek to impose lability on Plentff based on a vicarious liability theory. Under cover of the January 23, 2018 Leiter, Plaintiff's counsel forwarded | Fireman's Ms, Busch’s proposed Jury Instructions and Special Verdiet form, which Plaintif's counsel had recently received, which made it erystal clear, and dispelled any reasonable basis for doubt, that Ms, Busch was seeking to hold Plaintiff liable for Mr. Pellicano and his associates" conduct on a vicarious liability theory even if, as was the case, Plaintiff acted innocently. As mss 8. ‘COMPLAINT ype = omenrage 10 or 22) 1 || Plaintiff's counsel once again explained in the January 23, 2018 Letter, the theories of liability 2||advanced by Ms, Busch unquestionably triggered coverage under the Fireman’s Policy, and 3}| Fireman’s had no valid basis for contending otherwise. 4 32. Inalletter dated January 24, 2018 (the “Jenuary 24, 2018 Letter"), Fireman's adhered to its untenable coverage positions and refused to fund the amount necessary’to satisfy the Mediator’s Proposal 33. Ina letter dated January 25, 2018 (the “January 25, 2018 Letter”), Plaintiff's 8} counsel reiterated Plaintiff's proposal that Plaintiff and Fireman’s co-fund equally the differential 9 |Jamount (above the combined policy limits of the AIG and Chubb) called for by the Mediator’s 10] Proposal. The January 25, 2018 Letter once again explained why Fireman's’ coverage 11 |f reservations were invalid and why the coverage reservations ignored the evidence and the law. 12 34. Fireman’s refused Plaintiff's co-funding proposal and continued to refuse to pay 13 || the amounts necessary to settle the Underlying Claims. On January 26, 2018, Fireman's increased 14 | the amount it was willing to contribute to settlement, yet to a sum that remained far less than the 15 ]J amount necessary to settle the case. 16 35. © Facing substantial financial exposure and irreparable damage to his reputation if the 17 }]case was tried, on January 27, Plaintiff was forced to settle the Underlying Claims, (The total 18 |] amount agreed to in settlement is referred to herein as the “Settlement Amount.) AIG and Chubb 19} contributed amounts equal to their policy limits. Fireman's Fund made a contribution well below 20] its poliey limits, without any waiver and with a full reservation of rights, The Settlement Amount 21 j] exceeded the amounts that AIG and Chubb and Fireman’s had committed to and did contribute. 22 || Even though Fireman’s should have contributed the entire amount necessary to settle over AIG 2 23|| and Chubb’s policy limits contributions, Plaintiff had no choice but to personally agree to pay and 2 24 || be liable for the amounts of the settlement in excess of the insurers’ contributions. 2 3 25 36. Given the evidence and the circumstances the Settlement Amount is reasonable. : 26 37, Plaintiff believes and intends to establish through the course of discovery that 27 Fireman’s has instituted and maintained, and that Fireman’s presently continues to implement, the 28 || following bad faith practices: eases o COMPLAINT oot 2 Paget 10 ~ Doc TD = 1722839407 - Doo ype = ontrage 11. 0f 22) 1 (@) _distegarding California's Fair Claims Settlement Practices Regulations; 2 (b) requiring an insured to make repeated demands before Fireman’s agrees to 3 participate in a mediation; 4) (©) refusing to abide by the plain meaning af the word “accident” (which is not s| defined in Fireman’s’ policies) in the course of responding to claims for coverage; 6 (@) refusing to abide by its own definition of the phrase “Personal Injury” in the 7 course of responding to claims for coverage; 8 (©) denying coverage on the basis of nonexistent exclusions; 9 (©) denying coverage for alleged categories of damages when such coverage is, 10 required; u (@) abusing its role as an excess liability insurer (not responsible to fund its 12 insured’s defense) by preventing the insured from settling thereby requiring the insured to B continue to defend the litigation, all the while gambling on the insured either obtaining a 4 defense verdict (which would exonerate Fireman's from any liability) or suffering a Is plaintif?’s verdict after which Fireman's would reassert coverage defenses; and 16 (h) acting contrary to California law requiring that (i) “the only permissible 7 consideration in evaluating the reasonableness of the settlement offer becomes whether, in 18 light of the victim's injuries and the probable liability of the insured, the ultimate judgment 19 is likely to exceed the amount of the settlement offer,” and (ii) “a belief that the policy 20 does not provide coverage should not affect a decision as to whether the settlement offer in 2 question is a reasonable one.” (Johansen v. California State Auto Ass'n Inter-Ins, Bureaw 2 (1975) 15 Cal.34 9, 16.) 2 8 23 38, __PlaintifP’s belief that Fireman’s has a policy of engaging in the foregoing bad faith 2 06 practices is based on Fireman’s conduct towards Plaintiff, namely: = : : 25 (a) Fireman’s took until July 21, 2017 (49 days) to respond to Plaintiff's June as 2, 2017 Letter notwithstanding that the Fair Claims Settlement Practices requires an insurer 0 to respond to letters with a “complete response based on the facts as then known by the 28 licensee” within 15 days; and Plaintiff believes Fireman’s never performed an ssa _-10- COMPLAINT oot 2 Faget 21 ~ Doc XD « 17: 407 = Des Type = OnE(age 12 0€ 22) 1 investigation of the Underlying Claims notwithstanding that the Fair Claims Settlement 2 Practices requires an insurer to “conduct and diligently pursue a thorough, fair and 3 objective investigation ....” (Cal. Code Regs., tit. 10, ch. 5, subch. 7.5, §§ 2695.5(b), 4 2695.7(4),) 5 {b) Although Plaintiff requested in his June 2, 2017 and July 12, 2017 Letters 6 ‘that Fireman’s participate in the next mediation session, Fireman’s’ July 21, 2017 Letter 7 disclaimed any obligation to participate in mediation, and Fireman's continued to refuse 8 for some time after sending that letter to participate in mediation, 9 (©) __Firemen’s refused to acknowledge that the alleged conduct by third parties 10 for which Ms. Busch sought to hold Plaintiff vicariously liable was an “accident” u notwithstanding that caselaw makes clear that conduct, as alleged in the Underlying 12| Claims, that is unexpected, unforeseen, or undesigned by the insured is considered an 13 “accident” as that term is used in liability insurance policies. 14] (@). _Fireman’s persisted in arguing that Ms. Busch’s alleged emotional distress 15 ‘was not “Bodily Injury” as that term is used in the Fireman’s Policy notwithstanding that 16 Ms, Busch alleged severe physical injuries and resultant emotional distress, which 17 allegation brings the alleged emotional distress plainly within the Fireman’s Policy's 18 definition of “Bodily Injury.” 19 (©) __ Fireman's persisted in arguing that it did not owe coverage under the 20 Fireman’s Policy on the basis of a “mental abuse” abuse exclusion that applied only to the 2 CAPE Supplement and not to the Umbrella Policy. 2 (9) Fireman's persisted in arguing that it did not owe coverage under the 2B Fireman’s Policy for Ms, Busch’s alleged emotional distress notwithstanding that 244) emotional distress fell within the defined and covered category of “Bodily Injury” even if 25]| Ms, Busch’s emotional distress could conceivably be found to be not within the definition 264 of “Personal Injury” 7 (® __Fireman’s refused to settle the Underlying Claims, prolonging the 28 underlying litigation, knowing that (i) Plaintiff — and not Fireman’s ~ was partially liable a se, COMPLAINT. Doct 4 Paget 12 ~ Doo XD = 1732585407 ~ Doo Type = On(age 13. ot 22) 1 for Plaintiff's defense costs, (ii) Fireman’s would have no liability if Plaintiff prevailed in 2 the underlying litigation, and (iii) Fiteman’s would be able to continue to assert its 3 coverage defenses if Plaintiff suffered a verdict in the underlying litigation above the limits 4 of the AIG Homeowners’ and the Chubb CGL Policies. 5] (th) Fireman’s evaluated offers to settle the Underlying Claims on the basis of 6], legally impermissible considerations, including (i its belief there was not a “realistic 7) likelihood of a verdict in excess of policy limits,” and (i) its belief that the Fireman’s 8 Policy did not provide coverage. 9|| These tactics are part of a regular “playbook” of bad faith coverage denial tactics regularly used by 10 |) Fireman's against its insureds. It FIRST CAUSE OF ACTION 12 (Breach of Contract ~ Against Fireman's) B 39. Plaintiff repeats and incorporates by reference the allegations of paragraphs 1 14 | through 38 above is 40. Fireman's has been paid in full the required premiums for the Fireman’s Policy, 16 | and Plaintiff has satisfied all other conditions to coverage, or is otherwise excused from doing so. 7 Al ‘Under the Fireman’s Policy, Fireman's was required to indemnify Plaintiff for any 18 || amounts paid in settlement of the Underlying Claim in excess of the limits of the AIG 19 || Homeowners’ and Chubb CGL Policies, up to $30 million, : 20 ] 42. Fireman's breached the Fireman's Policy by refusing to fund the amounts 21 || necessary to satisfy the Settlement Demand, the Mediator’s Proposal and the Settlement Amount. 22} As a result, Plaintiff was required to use his own money, and to agree to be personally liable in the ee, fully paid under the Fireman’s Policy (after 2 2 24] contributions by AIG and Chubb). 2 5 28 43. Asa result of Fireman's breach of contract, Plaintiff has been damaged in an "te 26 || amount to be proven at trial. 2 28 l COMPLAINTrage 14 of 22) 1 SECOND CAUSE OF ACTION (Declaratory Relief ~ Against Fireman’s) | 44. Plaintiff repeats and incorporates by reference the allegations of paragraphs 1 4|) through 43 above. 3 45. Under the Fireman's Policy, Fireman's is required to indemnify Plaintiff for the 6 amounts he has already paid, and has agreed to pay inthe future, to settle the Underlying Claims. 7 46. Plaintiff is informed and believes that Fireman’s disputes the contention set forth in 8]] paragraph 45 above. 9 47. An actual controversy ofa justiciable nature presently exists between Plaintiff and 10]|Fireman’s concerning the proper construction of the Fireman’s Policy, and the rights and 11 | obligations of the partes with respect to indemnity for the Underlying Claims and the 12] responsibilty for the Settlement Amount, The controversy is of sufficient immediacy to justify 15 | the issuance off declaratory judgment. The issuance of declaratory relief by this Court will 14 || terminate some or all of the existing controversy between the parties. 15 THIRD CAUSE OF ACTION 16 (Tortious Breach Of Implied Covenant Of Good Faith And Fair Dealing - Against | W man’s) 18 48, Plaintiff repeats and incorporates by reference the allegations of paragraphs 1 19] though 47 above. 20 49. Implied in every contract of insurance, including the Fireman’ Policy, is a 21 || covenant of good faith and fair dealing which obligates insurers, including Fireman's, to act at all 22||times in good faith toward their insureds, including Plaintiff in this case. 23 50. Plaintiff reasonably expected that Fireman’s would protect Plaintiff against claims 24 ofthe sort asserted by Ms. Busch in the underlying lawsuit, and that Fireman's would deal with 25 || Plaintiff fairly, equitably, and in good faith. Plaintiff's expectations were brought about and wiucreerte 26 | intended by Fireman's as a result of, infer alia, the contractual language in the Fireman's Policy. 7 51. _Fireman’s has breached its obligation to act in good faith by, inter alia: 28 mse -13. ‘COMPLAINT Dot 1 Paget 14 - noe XD = 1732839407 - Doe type = OMEN(rage 15 2€ 22) i a. Failing to act in accordance with the law in its duties to Plaintiff as set forth 2 herein; 3 b. Refusing to acknowledge its duty to indemnify Plaintiff for covered 4 liabilities, as defined in the Fireman’s Policy, without regard to relevant insurance policy 5 language, relevant law, and the specific facts of the Underlying Claims; 6 ©. Interpreting the terms and conditions of the Fireman's Policy in an 7 unreasonable manner, which is wholly inconsistent with applicable law, solely in an effort 8 to avoid providing Plaintiff with coverage to which itis entitled under the Fireman's, 9 Policy; 10 d. Refusing to acknowledge coverage, or to withdraw or alter its denials of u coverage, notwithstanding its inability to identify supporting legal or factual authority for 12 its purported coverage defenses; 13 e. Failing to provide promptly a reasonable explanation of the basis relied on, 14 in relation to the facts or applicable law, for the denial of coverage; 1s £ Not attempting in good faith to evaluate settlement options realistically or to 16 negotiate a prompt, fair, and reasonable settlement within policy limi W g. Rejecting the Settlement Demand and the Mediator’s Proposal even though 18 they were reasonable and well within policy limits, and even though there was a likelihood 19 of a judgment in excess of those amounts; and 20 h. Forcing Plaintiff to file this litigation in order to obtain the rights and 21 benefits to which it is entitled under the Fireman’s Policy. 2 52, Fireman’s undertook this course of conduct with one objective in mind ~ forcing its 23 insured to trial. By so doing, Fireman's hoped Plaintiff would be subjected to an adverse ruling, 24||| which Fireman’s could then wield as a ground on which to deny coverage to Plaintiff. This course 25 [of action of forcing trial suited Fireman’s strategy perfectly, since (i) Fireman’s was not, 26 || contractually obligated to cover any of the mounting attorney's fees necessary for Plaintiff to 27) defend himself at trial; (ji) Fireman's would have no liability in the event Plaintiff prevailed in the 28 || underlying case; and (iii) Fireman's would argue, in the event Plaintiff were found liable in the | ‘COMPLAINT oot 1 eaged 15 - Doo ED = 1732528407 ~ Doo uype = onage 16 of 22) 1 | underlying case, that it was as a result of intentional acts for which Fireman's would then claim a 2|| coverage exclusion. In sum, Fireman's sought to protect its own financial interests by strategizing 3|]t0 scuttle settlement and force its insured to defend himself at trial 4 53. Fireman's" acts and omissions set forth herein were committed in bad faith, 5 || intentionally and/or with conscious and reckless disregard of Plaintif’s rights 6 SA, Fireman's has placed its own interests above those of Plaintiff forthe purpose of 7] saving money and unfairly maximizing its own profit atthe expense of Plaintiff. 8 55. Fiteman’s intentionally, maliciously and wantonly denied Plaintiff the very benefits 9 | for which Plaintiff bargained and paid substantial premiums. 10 56. Asadireet and proximate result of Fireman's’ breach ofthe implied covenant of 11 |] good faith and fair dealing contained in the Fireman’s Policy, Plaintiff has suffered, and continues 12 fto suffer, general and consequential damages. The damages suffered by Plaintiff include but are 15 | not limited tothe following: (i injury to PlainifP's reputation from being forced to publicly 14 | tigate the Underlying Claims, which allege, among other things, that Plaintiff assaulted and 15 | wiretapped Ms. Busch or conspired to do so; (ii) money Plaintiffis and has been forced to pay for 16 || a defense against the Underlying Claims above the amounts AIG and Chubb were paying towards 17]] Paint’ defense; and (ii the amousts that Plant i required to personally pay under the 18 | Setlement Agreement, after contribution from AIG, Chubb and Pireman’s 19 57. Imaddition to the damages alleged above, Plaintiff's damages include the costs, expenses and attomey's fees incurred in obtaining the contractual benefits to which Plaintiff is 21 {entitled under the Fireman's Policy, including the costs, expenses and attomney’s fees incurred in 22|| the instant action 2B 58. Fireman's’ conduct, as alleged above, was intended by them to cause injury to 24|| Plaintiff and constitutes malicious and despicable conduct carried on by them in willful and 25 || conscious disregard of Plaintiff's rights so as to constitute malice, oppression and/or fraud as 26 || defined by section 3294 of the Civil Code, thereby entitling Plaintiff to punitive damages. 27 || Fireman’s? despicable and malicious conduct was authorized or ratified by an officer, director or 28 |] managing egent of Fireman’s or performed by an officer, director or managing agent of Fireman's massa “15. COMPLAINT oot 1 Paget 26 = Soe XD = 1722539407 - Dec ype = ome(@age 17 of 22) 1 Prayer 2) WHEREFORE, Plaintiff prays for judgment as set forth below: 3 |. Fora declaration that Fireman's is required to (a) reimburse Plaintiff for amounts 4 ||he has personally paid for the settlement of the Underlying Claims and; (b) pay (in lieu of 5 | Plaintiff future amounts due in settlement of the Underlying Claims; 6 2. For compensatory damages according to proof, 7 3. For punitive damages according to proof; 8 4. For prejudgment interest atthe maximum legal rate; 9 5. Forhis attorneys” fees and expenses; 0 6. For eosts of suit; and n 7. For such other and further relief as the Court deems appropriate. 12 13} DATED: March 22, 2018 BROWNE GEORGE ROSS LLP Eric M. George My Ika Bibbero iG Carl Alan Roth 16 7 By: CucGacnr a ‘ Eric M. George Attomeys for Plaintiff Michael Ovitz 25 WAM CECOTLY 26 27] 28 COMPLAINT