Mendes turns tables, and obtains a judgment notwithstanding a verdict
LOS ANGELES, CA/ It all started with what appeared to be a run-of-the-mill accident at an intersection in California. A car and a motorcyclist collide. Injuries occur. Insurers are notified. But this severe accident took a very wrong turn after the alleged tortfeasor (a Farmers insured), filed for bankruptcy during the pendency of his personal injury action.
Once in bankruptcy, not only was the personal injury action stayed until further order of the Bankruptcy Court, but all personal liabilities of the insured were to be discharged. With significant injuries and Farmers having offered its policy limits of $100,000, the plaintiff feared that any hope of setting up the insurer for an excess verdict would be erased by the bankruptcy.
Rather than allow the claim to be discharged in the insured’s bankruptcy, plaintiff’s counsel cleverly sought his own protection within the statutes of the bankruptcy code; he obtained a stipulated judgment from the insured that rendered the claim to be “non-dischargeable” by statute. In exchange, plaintiff agreed not to execute against the insured’s personal assets.
Despite the best efforts of Farmers’ appointed trial counsel, the re-commenced personal injury action resulted in a $2.3 million verdict against Farmers’ insured.
That’s where we came in. And the statute upon which plaintiff relied to obtain a stipulated judgment in bankruptcy was our key.
By filing a competing declaratory action and a motion to have Farmers intervene in the personal injury action, Mendes had the entire verdict set aside through a post-judgment motion to the trial court. The key to our success was the fact that the bankruptcy statute upon which plaintiff’s counsel had relied only rendered a claim “non-dischargeable” to the extent it was based upon willful and malicious conduct. We argued therefore that by entering into the stipulation, plaintiff ran afoul of California Insurance Code Section 533 which prohibits insurance coverage for willful conduct. Furthermore, that same stipulation took the claim outside of the grant of coverage, as there was no “accident” or “occurrence” under the Farmers policy, and the intentional act exclusion was also triggered.
Because plaintiff agreed not to execute against the tortfeasor, he took his chances with regard to any subsequent coverage decision. The trial court agreed with our arguments, and entered a judgment notwithstanding the verdict in favor of Farmers’ insured. Tables turned indeed.