Case 2:12-cv-01321-RCJ -GWF Document 1

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Kevin J. Kieffer (Nevada Bar No. 7045) TROUTMAN SANDERS LLP kevin.kieffer@troutmansanders.com 5 Park Plaza Suite 1400 Irvine, CA 92614-2545 Telephone: 949.622.2700 Facsimile: 949.622.2739 Craig R. Delk (Nevada Bar No. 2295) CRD@thorndal.com THORNDAL, ARMSTRONG, DELK BALKENBUSH & EISINGER 1100 E. Bridger Avenue Las Vegas, NV 89101 Telephone: (702) 366-0622 Facsimile: (702) 366-0327 Attorneys for Plaintiff Houston Casualty Company UNITED STATES DISTRICT COURT DISTRICT OF NEVADA HOUSTON CASUALTY COMPANY, a Texas Corporation, Plaintiff, Case No. COMPLAINT FOR EQUITABLE CONTRIBUTION

12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1. Plaintiff Houston Casualty Company (Houston Casualty), for its Complaint, by and through its counsel, alleges as follows: JURISDICTION AND VENUE This Court has jurisdiction over this action pursuant to 28 U.S.C. ILLINOIS UNION INSURANCE COMPANY, an Illinois Corporation, Defendant. v.

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1332. There is complete diversity of citizenship between the parties, and the amount in controversy exceeds $75,000 exclusive of interest and costs. Plaintiff
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Houston Casualty is a Texas corporation with its principal place of business in Texas, and Defendant Illinois Union Insurance Company (Illinois Union) is an Illinois corporation with its principal place of business in Illinois. 2. Venue is proper in this District pursuant to 28 U.S.C. 1391, in that a

substantial part of the events giving rise to the claims at issue occurred in this District. PARTIES 3. Houston Casualty is an insurance company incorporated under the

laws of the State of Texas with its principal place of business in Texas, and as such, is a citizen of Texas within the meaning of 28 U.S.C. 1332(c)(1). 4. Illinois Union is an Illinois corporation with its principal place of

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business in Chicago, Illinois, and as such, is a citizen of Illinois within the meaning of 28 U.S.C. 1332(c)(1). OVERVIEW 5. This is an action against Illinois Union to recover a portion of the

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defense costs and indemnity Houston Casualty paid in connection with a claim against David L. Baird (Baird), a mutual insured of Houston Casualty and Illinois Union. Both Houston Casualty and Illinois Union provide co-primary coverage under their respective policies for defense and indemnity of Baird in the underlying action. Due to, among other things, the Illinois Union policys significantly higher Limit of Liability ($3 million vs. $1 million), equitable principles dictate that Illinois Union should have contributed at least 75% of the total costs of Bairds defense and indemnity. Despite its obligation to do so, Illinois Union unjustifiably refused to contribute any amounts to Bairds defense, and refused to contribute more than $150,000 towards the $585,000 total paid to settle the underlying action on behalf of Baird. Houston Casualty, in order to protect its interests and the interests of the insurers mutual insured, provided Baird with a defense and funded $435,000 of the $585,000 payment made to settle the underlying action on behalf of
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Baird. Accordingly, Houston Casualty is entitled to equitable contribution from Illinois Union in an amount in excess of $288,750. FACTUAL ALLEGATIONS The Houston Casualty Policy 6. Houston Casualty issued Professional Liability Errors and Omissions

Policy No. H706-12192 to David L. Baird; David L. Biard [sic], Inv Re dba Sperry Van Ness for the Policy Period of April 1, 2006 to April 1, 2007 (the Houston Casualty Policy). A true and correct copy of the Houston Casualty Policy is attached hereto as Exhibit A. The Houston Casualty Policy has a $1,000,000 aggregate Limit of Liability and a $2,500 per Claim Deductible. The Illinois Union Policy 7. Illinois Union issued Miscellaneous Errors & Omissions Policy No.

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EON G21656124 003 to Sperry Van Ness Newport Beach, Inc. for the Policy Period May 9, 2006 through May 9, 2007 (the Illinois Union Policy). A true and correct copy of the Illinois Union Policy is attached hereto as Exhibit B. The Illinois Union Policy has an Each Claim and Aggregate Limit of Liability of $3,000,000 and a $225,000 Each Claim Deductible. The LV Peter Action 8. On or about January 16, 2007, L.V. Peter, LLC (L.V. Peter) filed a

lawsuit against Van Ness & Sperry, Inc. (Van Ness & Sperry), Baird, and William C. Lentz, captioned L.V. Peter, LLC v. Van Ness & Sperry, Inc., et al., Case No. A534545 (Clark County Dist. Ct., Nevada) (the LV Peter Action). In the LV Peter Action, L.V. Peter alleged, among other things, that Baird and Van Ness & Sperry breached various obligations owed to L.V. Peter arising out of their representation of L.V. Peter in connection with its sale of an apartment building in Las Vegas, Nevada. 9.
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On or about March 9, 2007, Houston Casualty agreed to defend Baird

in the LV Peter Action, subject to a full reservation of rights. On or about June 13,
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2007, Illinois Union agreed to defend Van Ness & Sperry and Baird in the LV Peter Action subject to a full reservation of rights. However, despite repeated requests by Houston Casualty to do so, Illinois Union did not contribute any amounts to Bairds defense in the LV Peter Action, and Houston Casualty funded his entire defense. The Settlement of the LV Peter Action 10. Prior to the trial in the LV Peter Action, L.V. Peter agreed to settle

with and dismiss Baird from the action in exchange for a payment of $585,000. Of the total settlement payment, Illinois Union paid $150,000, and Houston Casualty paid $435,000. Houston Casualtys payment was made pursuant to a full reservation of rights, including the right to seek further contribution to the settlement from Illinois Union. Considering all the facts and circumstances, including the potential exposure to Baird, the settlement of the LV Peter Action was reasonable. 11. Notwithstanding its obligations under the Illinois Policy and applicable

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law, and despite Houston Casualtys request that Illinois Union contribute on an equitable basis, Illinois Union refused to contribute more than $150,000 to the $585,000 settlement. COUNT I (For Equitable Contribution) 12. Houston Casualty repeats and incorporates by reference the allegations

in Paragraphs 1 through 11 of this Complaint. 13. Houston Casualty and Illinois Union provide co-primary coverage for

Baird under their respective policies, and each insurer had a duty to defend and indemnify Baird in connection with the LV Peter Action. All conditions precedent to coverage under the Illinois Union Policy have been met. Accordingly, Illinois Union was required to contribute equitably with Houston Casualty for the defense and settlement of the LV Peter Action. Due to, among other things, the Illinois Union policys significantly higher Limit of Liability ($3 million vs. $1 million),
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equitable principles dictate that Illinois Union should have contributed at least 75% of the total costs of Bairds defense and indemnity. 14. Despite is co-obligation to defend and indemnify Baird, Illinois Union

refused to contribute to Bairds defense in the LV Peter Action, and refused to contribute more than $150,000 to the settlement of the LV Peter Action on behalf of Baird. Houston Casualty, in order to protect its interests and the interests of the insurers mutual insured, provided Baird with a defense and funded $435,000 of the $585,000 payment made to settle the LV Peter Action on behalf of Baird. 15. Houston Casualty has paid more toward Bairds defense and

settlement in the LV Peter Action than is equitable, while Illinois Union has paid less toward Bairds defense and settlement in the LV Peter Action than equity and justice demands. Under the terms of the Illinois Union Policy and applicable law, Illinois Union has an obligation to reimburse Houston Casualty for the amount that it should have paid toward Bairds defense and settlement.
16.

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Based on the foregoing, Houston Casualty is entitled to a judgment

awarding to Houston Casualty that portion of the settlement and defense expenses paid by Houston Casualty for which Illinois Union is liable as a matter of equity, plus interest thereon. PRAYER FOR RELIEF WHEREFORE, Houston Casualty requests that the Court enter judgment in its favor: A. B. For equitable contribution in an amount according to proof at trial; On all Counts, for attorneys fees, interest, costs and all other relief this Court deems just and proper.

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Dated:

July 26, 2012

Respectfully submitted, Kevin J. Kieffer TROUTMAN SANDERS LLP Craig R. Delk THORNDAL, ARMSTRONG, DELK BALKENBUSH & EISNER

By: /s/ Kevin J. Kieffer Kevin J. Kieffer Attorneys for Plaintiff Houston Casualty Company

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