Free Motion to Enforce - District Court of Colorado - Colorado

Case 1:01-cv-00275-JLK

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Filed 04/13/2006

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO

Civil Action No. 01-CV-0275-JLK DOMINICK PAOLONI, et al., Plaintiffs, vs. DONALD I. GOLDSTEIN, et al., Defendants, and NBSA, LLC, et al., Relief Defendants. ______________________________________________________________________________ Civil Action No. 03-CV-0807-JLK-CBS VIATICAL LIQUIDITY, LLC, a California limited liability corporation, Plaintiff, v. MARK WOLOK, et al., Defendants. _____________________________________________________________________________ MOTION TO ENFORCE SETTLEMENT AGREEMENT _____________________________________________________________________________ COME NOW the Plaintiffs by and through their attorneys, Dill, Dill, Carr, Stonbraker & Hutchings, P.C., and move that this Court enforce the September 16, 2005, Settlement Agreement which, pursuant to the Order Approving Settlement Agreement of October 19, 2005

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[Docket Entry No. 773], became an order of this Court. (The Settlement Agreement is attached hereto as Exhibit A.) In particular, the Plaintiffs move for enforcement of Section II.A. of the Settlement Agreement and, in particular, that Chicago Insurance Company be ordered to pay the remaining limits of liability under the 2001-2002 Policy (as defined in the Settlement Agreement) in the amount of $829,137.92 and, in support thereof, state as follows: 1. During the course of litigation of the above-referenced matters, and in accordance

with Fed.R.Civ.P. 26(a)(1)(D) Defendants disclosed to the Plaintiffs the insurance policy for the period of October 16, 2001 to October 16, 2002 (the "2001-2002 Policy") insuring Defendants Hyman Lippitt, P.C. and its attorneys. (The Professional Liability Insurance Policy disclosed to the Plaintiffs is attached hereto as Exhibit B.) The Declarations page attached to the Professional Liability Insurance Policy states a limit of liability of $5,000,000 for each claim, an aggregate $5,000,000 limit of liability and that claim expenses are included within the limits of liability. At the time Plaintiffs entered into the September 16, 2005, Settlement Agreement, based upon Defendants' representations and disclosures, Plaintiffs understood that claim expenses reduced the $5,000,000 limit of liability. 2. Based upon Defendants' disclosures pursuant to Fed.R.Civ.P. 26(a)(1)(D) and

representations during the course of settlement that the $5,000,000 limit of liability was reduced by claim expenses, Plaintiffs specifically entered into Section II.A. of the Settlement Agreement which provides in pertinent part as follows: As consideration for the Release provided in Section IX. below, as well as for other promises and considerations set forth in this Agreement, Chicago Insurance Company shall pay the minimum sum of $4,164,345.50 plus any remaining limits of liability under the 2001-2002 Policy after all defense fees, expenses and costs have been deducted therefrom, within fourteen calendar days of the Effective Date.

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Chicago Insurance Company agreed to pay and the Plaintiffs agreed to accept under the 20012002 Policy the full limits of liability. Based on Defendants' representations to Plaintiffs, Plaintiffs understood that the limits of liability were reduced by defense fees, expenses and costs which accounts for the language in Section II.A. of the Settlement Agreement. On or about December 13, 2005, Chicago Insurance Company paid to the Plaintiffs the sum of $4,170,862.08, which is the amount Chicago Insurance Company represented was remaining after final calculation of defense fees, expenses and costs. 3. On or about January 17, 2006, during the course of discovery under Section VIII.

of the Settlement Agreement entitled "Agreement Concerning Coverage of the 2002-2003 Policy," Plaintiffs were provided for the first time with a letter dated July 18, 2002, from Michael G. Ostler, a Senior General Adjuster assigned by Interstate Insurance Group, a part of Chicago Insurance Company addressed to Mr. Douglas A. Hyman of Hyman Lippitt, P.C. regarding the nature and extent of coverage under the 2001-2002 Policy. This letter is

commonly referred to as a "reservation of rights" letter. This letter is attached hereto as Exhibit C. The fourth paragraph on page 2 states the following: As background, let me remind you that Chicago Insurance issued a lawyer's professional liability insurance policy to Hyman Lippitt, P.C. The certificate number is LWB-2016725. This is a claims-made and reported policy with a policy period from October 16, 2001 to October 16, 2002. Limits of liability are $5,000,000 per claim and $5,000,000 in the aggregate for each policy period. There is a $25,000 deductible for each claim. Claim expenses (including attorneys' fees) will not reduce the available per claim limit of liability. The deductible applies only to damages. (Emphasis added.) 4. The underlined sentence quoted in the immediately preceding paragraph from the

reservation of rights letter broadened the coverage under the 2001-2002 Policy. The 2001-2002

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Policy contains a "liberalization clause" found in Section IX.Q. of the 2001-2002 Policy. The liberalization clause states: If the company [Chicago Insurance Company] adopts any revision that would broaden the coverage under the policy without additional premium at any time during the policy period, the broadened coverage will immediately apply to this policy. (Brackets added.) 5. The July 18, 2002 letter broadened the coverage available to the insured under the

2001-2002 Policy by providing that claim expenses will not reduce the available per-claim limit of liability. In other words, the July 18, 2002, letter increased the amount of coverage available to the insured by providing that claim expenses are payable in addition to the limits of liability. This is a broadening of the coverage to the insured as it makes more insurance coverage available to the insured. 6. The court-ordered Settlement Agreement requires payment of the full limits of

liability under the 2001-2002 Policy to the Plaintiffs. The only reason Section II.A. contains the language "after all defense fees, expenses and costs have been deducted therefrom" is because the Defendants and Chicago Insurance Company had not disclosed the July 18, 2002, letter to the Plaintiffs at the time of entry into the Settlement Agreement and thus Plaintiffs believed, pursuant to the disclosures and representations made, that on the settlement date claim expenses were included within the limit of liability. However, even though such language exists within Section II.A. of the Settlement Agreement, it is clear based upon the remaining language of Section II.A. that it was not only the intent but the agreement of Chicago Insurance Company to pay the full limits of liability to the Plaintiffs under the 2001-2002 Policy. Plaintiffs thus seek enforcement of the court-approved Settlement Agreement that Chicago Insurance Company pay

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the full limits of liability under the 2001-2002 Policy to the Plaintiffs. As a result of the broadening of coverage under the liberalization clause (Section IX.Q.) of the 2001-2002 Policy, Plaintiffs are entitled to payment of the full $5,000,000 limit of liability. There currently remains unpaid from the full $5,000,000 limit of liability the sum of $829,137.92. 7. Plaintiffs have conferred with Michael Tone, attorney for Chicago Insurance

Company, who advises the undersigned that Chicago Insurance Company opposes this Motion. 8. In support of this Motion, attached as Exhibit D is the expert opinion of Laura A.

Michaelis, Associate Professor, University of Colorado at Boulder, Department of Linguistics in which she opines that the 2001-2002 Policy is ambiguous with regard to what is required to change or as to what constitutes "any revision" to the Policy. Further, Laura Michaelis opines, based on linguistic interpretation that the preferred reading of Section IX.Q., the liberalization clause, is that the phrase "any revision" includes the July 18, 2002 letter, which broadens coverage under the 2001-2002 Policy. 9. In support of this Motion, Plaintiffs have concurrently filed a Memorandum in

Support of Motion to Enforce Settlement Agreement. WHEREFORE, for the foregoing reasons, the Plaintiffs request that this Court enforce the provisions of the court-ordered Settlement Agreement of September 16, 2005, and order that Chicago Insurance Company pay the remaining limits of liability under the 2001-2002 Policy in the amount of $829,137.92 and for any other relief deemed just and proper under the circumstances.

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Respectfully submitted, DILL DILL CARR STONBRAKER & HUTCHINGS, P.C.

/s/ John A. Hutchings John A. Hutchings Robert A. Dill 455 Sherman Street, Suite 300 Denver, Colorado 80203 Telephone: (303) 777-3737 Facsimile: (303) 777-3823 E-mail: [email protected] [email protected] ATTORNEYS FOR PLAINTIFFS CERTIFICATE OF SERVICE I hereby certify that on April 13, 2006 I electronically filed the foregoing MOTION TO ENFORCE SETTLEMENT AGREEMENT with the Clerk of Court using CM/ECF System, which will send notification of such filing to the following e-mail addresses: [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected]

and I hereby certify that I have mailed the MOTION TO ENFORCE SETTLEMENT AGREEMENT to the following non-CM/ECF participants by depositing same in the United States mail, postage prepaid, addressed to the following on April 13, 2006: Thomas B. Quinn, Esq. White & Steele 950 17th Street, 21st Floor Denver, Colorado 80202-2804 Akerman Senterfitt 350 East Las Olas Boulevard Suite 1600 Ft. Lauderdale, Florida 33301 Robert S. Harrison, Esq. Matthew D. Klakulak, Esq. Robert Harrison & Associates, PLC 240 East Merrill Street Birmingham, Michigan 48009 Gary Hoskie Professional Consultants & Managers, Inc. 1706 Surfside Drive Hutchinson Island, Florida 34949

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Mr. Isadore Cohen 1920 East Hallandale Boulevard Suite 626 Hallandale, Florida 33009

Michael P. Tone, Esq. Ross, Dixon & Bell, LLP 55 West Monroe Street Suite 3000 Chicago, Illinois 60603-5758

/s/ Charlene Huffman

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