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HomeMy WebLinkAbout2006-11-07; City Council; 18774; Retention of special counselCITY OF CARLSBAD - AGENDA BILL AB# 18,774 MTG. 11/7/06 DEPT. CA RETENTION OF SPECIAL COUNSEL DEPT. HEAD CITY ATTY. <@& CITY MGR. *^O RECOMMENDED ACTION: Approve Resolution No. coverage issues. 2006-311 authorizing retention of special counsel for insurance ITEM EXPLANATION: The Council has previously authorized the City Attorney to retain certain law firms as special counsel. From time to time, these authorizations should be reaffirmed and amended to include new law firms and current proposal letters. The City Attorney recommends that the City Council authorize the retention of additional special counsel for insurance coverage issues. Insurance Coverage Issues: Law firm of Shipley & Kirch. FISCAL IMPACT: Sufficient funds for retention of special counsel for insurance coverage issues should be added to the City Attorney's office legal services account. ENVIRONMENTAL IMPACT: Pursuant to Public Resources Code section 21065 and CEQA Guidelines 15378, this ordinance does not constitute a "project" within the meaning of CEQA and, therefore, does not require environmental review. EXHIBITS: 1. Resolution No.2006-311 DEPARTMENT CONTACT: Ron Ball 760-434-2801 FOR CITY CLERKS USE ONLY. COUNCIL ACTION: APPROVED DENIED CONTINUED WITHDRAWN AMENDED B/ D D D D CONTINUED TO DATE SPECIFIC CONTINUED TO DATE UNKNOWN RETURNED TO STAFF OTHER -SEE MINUTES naaa \ I E g UJ § Q Y Q u__i <• — ; 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 I 18 | 19 20 21 22 23 24 25 26 27 28 RESOLUTION NO. 2006-311 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, AUTHORIZING THE RETENTION OF THE LAW OFFICES OF SHIPLEY & KIRCH FOR INSURANCE COVERAGE ISSUES WHEREAS, section 2.14.130 of the Carlsbad Municipal Code provides that the City Council may employ special legal counsel under terms it considers proper; and WHEREAS, the City Council has determined, upon recommendation of the City Attorney, that it is necessary to retain additional special counsel for insurance coverage issues; and WHEREAS, the City Attorney has received a proposal from the law firm of Shipley & Kirch to provide insurance coverage issues legal advisor services; and WHEREAS, the City Attorney recommends that the law firm of Shipley & Kirch be retained as special counsel for such services. NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Carlsbad, California, as follows: 1. That the above recitations are true and correct. 2. That the City Attorney is hereby authorized to employ the law firm of Shipley & Kirch to provide insurance coverage issues legal advisor services as he considers appropriate pursuant to the proposal attached as Exhibit "A". 3. That the City Council authorizes the expenditure of funds as may be necessary to pay the fees of special counsel insurance coverage issues legal advisor services provided, however, that sufficient funds are allocated in the City Attorney's budget, and provided further that the City Attorney shall report, at least bi-monthly, to the City Council on the status of the expenditure of such funds. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of Carlsbad on the 7th day of November, 2006, by the following vote: AYES: Council Members Lewis, Hall, Packard, Sigafoose NOES: None ABSENT: Council Member Kulchin IS, Mayor ATTEST: .0 KQK LORRAINE M. WOOD, City Clerk (SEAL) <xf~ t- fc. t - *J -"^ A.' ATTORNEYS AT LAW 2550 FIFTH AVENUE, SUITE 900 SAN DIEGO, CA 92103 TELEPHONE (619) 525-1630 FACSIMILE (619) 525-1633 OUT 2006 October 11, 2006 Ronald R. Ball, Esq. City Attorney City of Carlsbad 1200 Carlsbad Village Drive Carlsbad, CA 92008 Re: La Costa de Marbella HOA v. City of Carlsbad, et al.. Case No. GIN850408 WIR Holdings. LLC v. La Costa de Marbella HOA. et al.. Case No. GIN045127 Lindlev v. La Costa Marbella HOA. et al.. Case No. GIC849880 Uldricks v. La Costa Marbella HOA. et al.. Case No. GIC862785 Dear Mr. Ball: I am writing in response to the City of Carlsbad's (the "City") invitation to Shipley & Kirch to submit our proposal to provide legal services to the City in connection with the above- referenced La Costa de Marbella litigation. Shipley & Kirch is offering its services to the City in the area of insurance coverage litigation and consultation. This area of expertise is provided through Jacques J. Kirch, a principal in the firm. Mr. Kirch is the contact person with regard to this proposal and may be contacted at 2550 Fifth Avenue, Suite 900, San Diego, CA 92103, (619) 525-1630. Summary of Qualifications. Mr. Kirch graduated from the University of California at San Diego in 1982 with a Bachelor of Arts in Management Science. He received his juris doctor in 1986 from the University of Pacific, McGeorge School of Law. Mr. Kirch was a member of the Traynor Honor Society and received the American Jurisprudence Award in Corporate Law. Following law school, Mr. Kirch joined the insurance defense firm of Ropers, Majeski, Kohn, Bentley, Wagner & Kane in its main office located in Redwood City, California, where his practice emphasized insurance coverage litigation. In October 1987, Mr. Kirch returned to San Diego and joined Higgs, Fletcher & Mack's litigation department. At Higgs, Fletcher & Mack, Mr. Kirch's practice involved a wide range of insurance defense and insurance coverage litigation. He represented a number of insurance companies and insureds in matters involving insurance coverage, bad faith and insurance broker liability. -l- In July 1992, Mr. Kirch left Higgs, Fletcher & Mack to form Bartlett & Kirch. Mr. Lievers joined the firm January 1,1996, forming Bartlett, Kirch & Lievers. In February 2004, Mr. Kirch left Bartlett, Kirch & Lievers to form Shipley & Kirch. Mr. Kirch has practiced law in the field of insurance coverage and litigation for almost twenty (20) years. He is individually AV rated by the Martindale-Hubbell Law Directory. He is a member of the California State Bar, San Diego County Bar Association and the Bar Association of Northern San Diego County. Mr. Kirch was a member of the Board of Directors of the Bar Association of Northern San Diego County from January 2003 to January 2004. Mr. Kirch was counsel for Western Mutual at the trial level and on appeal in the reported case entitled Western Mutual Insurance Company v. Yamamoto (1994) 29 Cal. App. 4th 1474. Mr. Kirch was counsel for the insured at the trial level in the reported case entitled Employers Reinsurance Company v. Morris (2000) 84 Cal. App. 4th 1026. Mr. Kirch has been a speaker for a number of continuing legal education programs. He was a co-panelist with Judge Kevin Midlam (Ret.), in March 1995, in a program entitled "Recognizing and Procuring Insurance Coverage for your Clients - A Basic Primer on Insurance Policies" sponsored by the Bar Association of Northern San Diego County. In June 2002, he was the sole speaker for a seminar offered by the San Diego City Attorney's office entitled "Insurance Coverage for Defective Construction". In March 2003, he was the sole speaker for the civil litigation section of the Bar Association of Northern San Diego County in a program entitled "Obtaining Discovery from the Insurance Carrier in an Insurance Bad Faith Action". Mr. Kirch also appeared on two (2) separate occasions, mostly recently on June 8, 2004, on "Lawyers on the Line", a KOST Oceanside cable television program. Mr. Kirch has published two (2) articles in the North County Lawyer /"Reservations of Rights to Seek Reimbursement of Defense Expenses Should Require the Appointment of Counsel under Civil Code Section 2860", Volume 17, No. 8 (August 2000), and "Insureds May Pay Deductibles and Self-Insured Retentions with Payments made by Other Insurance", Volume 17, No. 11 (November 2000). Mr. Kirch has substantial experience representing governmental and public entities. Mr. Kirch is approved coverage counsel for the City of San Diego Public Works Department. He was previously coverage counsel for San Diego Transit Corporation, San Diego Trolley, Inc. and the Metropolitan Transit Development Board. He also previously represented the Federal Deposit Insurance Corporation (FDIC) under an outside counsel legal services agreement for matters involving specialized insurance coverage. -2- Representative Cases. While at Higgs, Fletcher & Mack, Mr. Kirch defended U.S. Fire and First State Insurance Company, together with lead counsel, Harry Carter, in McGraw v. National Union Insurance Company, et al. The case was decided after a six-week bench trial conducted by stipulation before the Honorable Gordon Cologne, retired former justice of California's Fourth District Court of Appeal. The insured sued First State, U.S. Fire and other insurers for breach of contract and "bad faith". U.S. Fire and First State had declined to defend their insured, a developer, against scores of claims by homeowners for damage to their homes resulting from movement of ancient landslides on which their homes had been constructed. Northbrook Insurance Company also sued First State and U.S. Fire for indemnity based upon equitable subrogation theories. Northbrook paid approximately $20,000,000.00 to settle the homeowners' claims against the insured. Mr. Carter and Mr. Kirch obtained a defense judgment. In Fine Particle Technology Corporation, et al. v. United States Fidelity and Guaranty Company. San Diego County Superior Court Case No. 699559, removed to the United States District Court, Southern District of California, and designated Case No. 96-1082-E (JFS), Mr. Kirch represented Fine Particle Technology Corporation in a declaratory relief and bad faith insurance dispute with three general liability insurers (St. Paul Fire & Marine, United States Fidelity and Guaranty Company, and National Union Fire Insurance Company of Pittsburgh, PA) that had issued policies to Fine Particle's predecessor. Fine Particle sought defense and indemnity under its predecessor's policies for an underlying civil action and a Regional Water Quality Control Board Order under which Fine Particle had been forced to investigate and cleanup soil and ground water contamination beneath Fine Particle's manufacturing facility in Auburn, California. Prior to Mr. Kirch's involvement, each carrier had refused to defend or indemnify. USF&G also denied the existence or issuance of its policy. The insured did not possess any USF&G policy documentation - only an old letter in an unrelated matter from its predecessor to USF&G with a reference to a policy number. Fine Particle had expended approximately $700,000 in defense, consultant, and cleanup costs and faced estimated future clean-up/remediation expenses of between $500,000 and $600,000. The dispute was successfully resolved through a combination of pre-suit and post-suit settlements in which Fine Particle was paid $1,235,000. In Truck Insurance Exchange, et. al. v. West American Insurance Company, et. al.. San Diego Superior Court Case No. N70282, Mr. Kirch represented Excel Plumbing, Inc. and its owner in a declaratory relief and bad faith insurance dispute with Excel's general liability insurers. The coverage litigation arose out of two underlying construction defect matters. Excel was the plumbing contractor in the construction of two large condominium projects involving several hundred units. Demands in excess of $2.8 million were presented against Excel. One of Excel's carriers, Truck Insurance Exchange, agreed to defend but refused to indemnify. Excel's other carriers, who ultimately were sued as the defendants in the bad faith action (West American Insurance Company, American States Insurance Company, Golden Eagle Insurance Company and American International Specialty Lines Insurance Company), all refused to defend or indemnify. In the construction defect action, on the eve of trial, Mr. Kirch persuaded Truck to settle both construction defect matters within Truck's policy limits, fully protecting the insured. Prior to filing the subsequent bad faith case against the non-participating carriers, Mr. Kirch then negotiated a "settlement" with Truck which included a joint prosecution agreement by which -3- Truck agreed to pay all of Excel's costs and expenses in the bad faith litigation to be filed, including all of Excel's hourly legal fees, and to assign 10% of Truck's recovery on its own claims against the defendants to Excel. Truck was represented by coverage counsel of its own in the underlying case, the "settlement", hi the bad faith case, Truck and the insured filed a joint complaint containing both Truck's causes of action for equitable contribution and the insured's causes of action for bad faith against the non-participating carriers. The bad faith action was successfully resolved on behalf of both Excel and Truck. All of the defendant carriers settled with the insured. All but West American settled with Truck. Truck's claims were tried. Mr. Kirch assisted Truck to prepare its case and in the trial as a retained expert consultant and testified on Truck's behalf at Truck's expense. Truck was successful at trial and obtained full reimbursement from West American for its share of the insured's defense and settlement in the underlying matters. Mr. Kirch's client, Excel, in addition to full defense and indemnity and payment of Mr. Kirch's fees in the bad faith case, received more than $127,500. In White v. National Life of Vermont and UNUM. Mr. Kirch represented a chiropractor in her disability insurance claim. The insured claimed she was no longer able to provide chiropractic adjustments and therefore was entitled to permanent disability benefits under the terms of her policies with National Life of Vermont (UNUM). The insured continued to operate her large, busy chiropractic office, receiving substantial income from that practice by engaging the services of associate chiropractors. The insurance carrier had obtained numerous hours of surveillance videotape over a period of approximately six months showing the insured engaged in a variety of recreational and physical activities. The insurance carrier denied the claim, contending that the insured was not physically restricted. Without filing suit, at a minimum of expense, Mr. Kirch negotiated a settlement in the sum of $450,000. In First Pacific National Bank v. Fidelity and Deposit Company of Maryland. Mr. Kirch represented First Pacific National Bank on a claim against its fidelity bond issued by Fidelity and Deposit Company of Maryland. A former officer of a subsidiary, Temecula Valley National Bank, had made a substantial loan to an automobile dealership in which he had a 10% interest. All principal and interest payments on the loan were made as scheduled. However, when the Bank discovered improprieties in the officer's lending practices, he was terminated. Later, in July 1995 when the principal sum of $824,223.91 became due, the dealership defaulted. The Bank sued the dealership and obtained settlement payments totaling $613,680, leaving a net loss of $210,543.91. (The Bank was represented by another firm in its claim against the borrower.) Mr. Kirch presented the Bank's claim for reimbursement of its net loss against the fidelity bond (less the $50,000 deductible on the bond). Without filing suit, and at minimal expense to the Bank, Mr. Kirch successfully obtained a $213,099.33 settlement of the bond claim, fully covering the Bank's loss, including the deductible. In San Diego Metropolitan Transit Development Board v. Industrial Indemnity Insurance Company of Hawaii. California Union Insurance Company, New York Marine and General Insurance, and Transamerica Insurance Company. San Diego Superior Court Case No. 622827, while at Higgs, Fletcher & Mack, Mr. Kirch represented the MTDB and the San Diego and Imperial Valley Railroad in a declaratory relief and breach of contract action against their primary and excess property insurers on a first-party claim concerning the destruction by fire of tunnel no. 8 on the unused desert line east of San Diego along the Mexican border. Within 60 days of filing the action, Mr. Kirch negotiated a $7.5 million settlement for the reconstruction of the tunnel. -4- In Dempsev v. Preferred Risk Mutual Insurance Company. San Diego Superior Court Case No. N64082, Mr. Kirch and Mr. Bartlett represented Turning Point United Pentecostal Church and its Pastor in a declaratory relief and bad faith action against the Church's general liability insurance company. The insurance company had initially refused to defend the Pastor and Church in an underlying wrongful discharge action filed by an ex-associate Pastor. On the eve of trial in the underlying action Preferred Risk agreed to defend and settle the underlying action. However, Preferred Risk then settled the action and required the Church to contribute $15,000 to that settlement. In the bad faith action, the firm obtained a $275,000 settlement within six months of filing. In American General Life Insurance Company vs. DeVries. San Diego County Superior Court Case No. 707632, Mr. Kirch represented American General Life Insurance Company in a declaratory relief and interpleader action arising out of various competing claims to $150,000 in life insurance proceeds. Before the defendants' answers were due, the action was settled including a provision for reimbursement of American General's attorney fees and costs. In Western Mutual Insurance Company vs. Yamamoto (1994) 29 Cal. App. 4th 1474, Mr. Kirch represented Western Mutual Insurance Company in a declaratory relief action against Western Mutual's insureds and a claimant. The insureds sought defense and indemnity from their homeowners insurance for an underlying civil action alleging the insured 's son had shot the plaintiff. Mr. Kirch gained access to records from juvenile court proceedings and, based on factual determinations made in the juvenile proceedings, obtained summary judgment in favor of Western Mutual that it had no obligations to defend or indemnify either the parents or their son against plaintiffs claims. On appeal, the judgment was affirmed and is published. In Bank of San Pedro vs. Southwest Marine, Los Angeles Superior Court Case No. C 758 004, Mr. Kirch was retained by Bank of San Pedro to represent the Bank's interests solely against Globe Indemnity Company for refusal to defend and indemnify against cross-complaints. The Bank had paid approximately $300,000 in attorney fees arguably incurred in response to the cross-complaints. No indemnity expenses were involved. Within ten days of retention, Mr. Kirch persuaded Globe to attend a settlement conference in Los Angeles and, without filing suit against Globe, obtain a settlement of Globe's bad faith. Globe wired directly to the Bank's account $1.1 million to reimburse the insured for all legal fees and costs incurred to that date in the main underlying action and two related actions. In addition, Globe agreed to defend the Bank against Southwest Marine's claims in the underlying actions without reservations of rights. Globe also agreed to indemnify the Bank for any settlement or judgment in the underlying action without reservation of rights. Approximately six months later, as costs of defense mounted, Globe then purchased a release from the above settlement by payment of $1 .25 million on behalf of the insured to Southwest Marine, fully protecting the Bank of San Pedro against those claims, and paying the additional sum of $629,600 to the Bank. In Kulick v. Hindemith. San Diego Superior Court Case No. N073015, the defendant was sued for alleged sexual battery by his former employee. Both Farmers (the homeowner's insurer) and Firemans Fund (the business liability insurer) refused to defend. Defendant paid $41,250.00 to settle plaintiffs claims and incurred $21,984.26 for defense expenses. Mr. Kirch was engaged as coverage counsel. Without filing suit Mr. Kirch obtained settlement payments to the insured/defendant from Farmers and Firemans Fund in the sum of $85,592.29. -5- In Kolar v. DiPiero, San Diego Superior Court Case No. N74464, Mr. Kirch was defense or "Cumis" counsel and coverage counsel for a former lessee of a car wash and service station sued by the owner/lessor. Plaintiff alleged the insured was responsible for contamination to structures, soils and groundwater and sought damages for cost of investigation, remediation and cleanup, and for loss of use and diminished market value of the property. This case was in Litigation for approximately 4 years before Mr. Kirch's retention. Prior to Mr. Kirch's involvement, the insured's defense had not been tendered. Despite "late notice" and a so-called "Absolute Pollution Exclusion", Mr. Kirch was able to obtain Golden Eagle Insurance Company's agreement to defend. In addition, based upon twelve cancelled checks dated from May 1986 to May 1987, Mr. Kirch convinced Truck Insurance Exchange ("Farmers") to defend and pay him as "Cumis" counsel. Truck denied any record of the insured or the policy and, other than the 12 checks, no policy documentation was found. Mr. Kirch negotiated a settlement of all claims against his client and obtained Golden Eagle and Farmers' commitment to pay the settlement in full. There was no contribution from the insured. No policy releases were given. In Morris v. Loelkes, Riverside Superior Court Case No. 237901, Mr. Kirch was coverage and defense counsel for a real estate broker sued for breach of fiduciary duty and constructive trust, among other things. Plaintiff claimed loss of approximately $1,000,000.00 for anticipated profits from his planned development of commercial property. In this transaction, Defendant represented both the seller of an undeveloped parcel of real property and concurrently represented a prospective buyer, the plaintiff. Plaintiff claimed he telephonically instructed defendant to accept seller's counteroffer but defendant informed plaintiff that the seller had already sold the property to an unnamed third party. Plaintiff alleged he then learned that defendant, his own broker, was that unnamed third party and filed suit. Mr. Kirch was retained several years into the case, after a number of defense attorneys had withdrawn for a variety of reasons, arbitration had been completed, discovery was closed, and the case was set for trial. Mr. Kirch tendered defense of the case to defendant's professional liability insurer, Employers Reinsurance Corporation. Employer's maintained that defendant had an ownership interest in the property, the claim was within the so called "own property" exclusion, and denied defendant's tender of defense. At trial call, Mr. Kirch settled the case. Defendant's settlement was in the "stated amount" of $200.000.00. However, Mr. Kirch structured the settlement such that defendant paid out-of-pocket only $5,000.00 and plaintiff agreed not to enforce the settlement agreement except against defendant's insurance carrier. Defendant, however, only gave plaintiff a partial assignment and retained her claims for payment of her defense expenses against the insurance company. Mr. Kirch then filed suit against the carrier in a second action entitled Loelkes v. Employers Reinsurance Corporation. San Diego County Superior Court Case No. N078534. Mr. Kirch also named as a nominal defendant, the plaintiff in the underlying action, Mr. Morris, as the partial assignee of the insured's rights. Mr. Kirch then negotiated a settlement of his client's retained claims and obtained payment of all of his client's defense expenses in the first action. Morris continued to litigate the assigned claims and Summary Judgment was granted to Employers. On appeal, summary judgment was reversed. The Fourth District Court of Appeal found the transaction was not excluded because the insured was not sued for her dealings with her own inventory or her "own property". The Fourth District Court of Appeal's opinion is published at Employers Reinsurance Corporation v. Morris (2000) 84 Cal. App. 4th 1026. The case was remanded and after a bench trial, Judge Anello entered judgment for Employers finding Mr. Kirch's client retained all of her claims for damages she in fact sustained and, therefore, Mr. Morris could not recover any damages on the assignment of rights. -6-°( In Karras. et. al. v. Teledyne Industries, Inc., et. al.. United States District Court, Southern District, case nos. 99 CV 0996 BTM (JAH), 00 CV 0204 BTM (JAH), and 00 CV 0958 BTM (JAH). Mr. Kirch represented Crest Motors and William Hardesty, III, its former owner, as defense or "Cumis" counsel and coverage counsel in three consolidated cases. The consolidated actions concerned approximately $40 million for clean up and remediation of contamination at the Chatham Brothers Site located west of Escondido. Mr. Kirch was retained one year into the litigation. He located 3 lost general liability policies from the early 1980's, obtained a defense from all 3 insurance companies and reimbursement in full of all pre-tender fees for prior counsel. Within 3 months of his substitution into the case, Mr. Kirch negotiated a settlement of all claims against his clients. The carriers paid the settlement in full. There was no contribution from the insured. No policy releases were given to the carriers. In Wells v. Baltimore Life Insurance Company. San Diego County Superior Court Case No. GIN015035, Mr. Kirch represented Mrs. Wells on a credit life insurance claim against BLIC following the death of her husband Mrs. Wells recalled purchasing "protection" at the closing of the loan for the second mortgage on her .house but no insurance documentation could be found. The insured's son called the lender to try to refinance in the hope his mother could afford to keep her home. The lender disclosed the existence of the credit life insurance to the son. Mrs. Wells' son called in the claim to WGI, BLIC's third party administrator. Through WGI, BLIC then denied Mrs. Wells" claim and rescinded the policy based on her deceased husband's alleged failure to disclose a 20 year history of GERD in the credit life application. When Mr. Kirch first took the case, the insured still had no policy documentation and the only proof of insurance was the denial letter from the TPA and the reference on that denial to a policy number. Mr. Kirch filed an action against BLIC alleging causes of action for declaratory relief, breach of contract, and bad faith. The first 8 months after the complaint was filed, BLIC was represented by multiple teams of lawyers from both the Los Angeles and San Diego offices of Alter & Hadden and another team at Halleland, Lewis, Nilan, Sipkins & Johnson in Minneapolis. (HLNS&J is National Counsel for Reliastar Life and ING-USA which provided 100% reinsurance, including defense and indemnity to BLIC, for this BLIC credit life program.) After defendant's motion for summary judgment had been denied and the Judge Sabraw ruled that insured's breach of contract, bad faith and punitive damages claims were sufficient to be presented to the jury at trial, the defendant replaced Alter & Hadden with Higgs, Fletcher & Mack. Mr. Kirch later associated in Harvey R. Levine, Esq., as co- counsel for the plaintiff. Mr. Levine and Mr. Kirch tried the case together; Mr. Levine as lead counsel and Mr. Kirch as second chair. Steven Cologne, Esq., at HF&M, and two attorneys from HLNS&J tried the case for BLIC. Trial was trifurcated into contract, bad faith, and punitive phases. In February 2003, after more than 4 weeks of trial, during the punitive phase, the case settled for $5.5 million. In NRC Environmental Services, Inc. f7k/a Foss Environmental Services Company v. Goodwin Myers d/b/a Myers Tank Lines, Case No. 04-2-05610-1 SEA, King County Superior Court, Washington State, removed to the United States District Court, Western District of Washington at Seattle, USDC Case No. C-4-0738, Mr. Kirch was admitted pro hac vice and represented Defendant Goodwin Myers as defense counsel and as insurance coverage counsel against Foss' claim for $449,999.98 in cleanup costs, plus interest and attorney's fees incurred as a result of the cleanup of a June 21, 2002 diesel spill on Harmony Grove Road in Escondido, California. Myers contracted with Foss to conduct the emergency response and cleanup of the spill. Foss estimated at the time the total project cost would be between $500,000.00 and $750,000.00. Myers' environmental liability insurance was with AIG. -7- Myers tendered the spill/claim to AIG and AIG assumed control of the cleanup project through its subsidiary AIG Consultants, Inc. Paul Enriquez, an engineer employed by AIG, was the project manager. Myers' policy limits were $1,000,000.00. The cost of the project was $1,429,042.53 when completed, nearly double the estimate and well in excess of Myers' limits. Prior to the Seattle litigation, AIG paid its policy limit to Foss without obtaining a release of Foss' claims against Myers. Foss then sued Myers as described above. Because AIG had already exhausted Myers' policy limits, AIG refused to defend Myers and abandoned Myers against Foss' remaining claims. Myers also had a separate policy issued by Clarendon National Insurance Company providing motor vehicle liability coverage. Clarendon also denied coverage because its policy contained a so-called "absolute pollution exclusion". Although it continued to deny coverage, Mr. Kirch persuaded Clarendon to provide a "courtesy defense" to Myers, under full reservation of rights, so that Clarendon might protect itself against its potential direct liability to the claimant (Foss) under the Federal Motor Carrier Act of 1980, 49 U.S.C. §§13906 et seq., and 49 Code of Federal Regulations §§387.15 et seq. Clarendon reserved its rights under California law, the terms of the policy, and the Federal Motor Carriers Act to later sue Myers for reimbursement of all expenses paid by Clarendon in connection with the Foss litigation. With Clarendon's funding, Mir Kirch conducted discovery and obtained Foss' and AIG Consultants' project files. Based on this information and with the assistance of an expert paid for by Clarendon, Mr. Kirch developed sufficient basis to allege that Foss overcharged Myers by approximately $550,000.00 and, thus, wrongfully inflated the cost of the project to $1,429,042.53. Mr. Kirch obtained a full release of all of Foss' claims against Myers and also a payment of $50,000.00 by Foss to Myers. All of Myers defense fees and settlement expenses were paid by Clarendon. Clarendon also released its reimbursement claim against Myers. Myers made no payment for any expense to anyone. He retained all his claims against AIG. Myers did not give any policy releases or assignments. In April 2005, Mr. Kirch then filed suit against AISLIC (the AIG carrier entity), AIG Consultants and Paul Enriquez in California in Myers v. American International Specialty Lines Insurance Company, et al.. San Diego County Superior Court Case No. GIE026416. The AIG Defendants were represented by a number of attorneys with Lewis, Brisbois, Bisgaard & Smith, LLP from both its San Diego and Los Angeles offices. In August 2005, Mr. Kirch associated in Joel R. Wohlfeil, Esq. of Boudreau, Albert & Wohlfeil, as co-counsel for Plaintiff. Mr. Kirch and Mr. Wohlfeil litigated the case together with Mr. Kirch as lead counsel. The complaint alleged causes of action against AISLIC for declaratory relief, breach of contract and bad faith. The complaint also statsd causes of action for negligence against AIG Consultants and Enriquez for mismanagement of the project. Plaintiff claimed that as a result of AIG Consultants' and Enriquez' mismanagement the cost of the project nearly doubled and, but for Defendants' negligence, there would have been sufficient policy limits to pay all claims against Myers arising from the June 21, 2002 spill. In addition, based on email correspondence and a settlement agreement between Foss and AIG obtained in discovery from Foss in the Seattle litigation, Mr. Kirch claimed that AIG improperly exhausted the insurance policy, conspired with the claimant, Foss, to convert Myers' policy limits to Foss and AIG's benefit, funded Foss' litigation against Myers and wrongfully abandoned Myers in the Seattle litigation and other proceedings. Among other things, Mr. Kirch sought damages and insurance coverage under the AIG policy for a criminal proceeding brought by the Department of Fish & Game ("DF&G") against Myers, a Hazardous Waste Generator Fee charged to Mr. Myers for the disposal of fuel contaminated soils, and for Myers' defense fees -8- and indemnity against an administrative proceeding brought by the Department of Toxic Substances Control ("DISC") and the Board of Equalization ("BOB"), and for Myers' attorney's fees for his subsequent "Late Protest", "Petition for Redetermination of Hazardous Waste Generator Fee" and "Request for Rectification of Waste and Claim for Refund of Amounts Paid" filed with the DISC and BOB. During the course of the litigation, Mr. Kirch filed multiple discovery motions against Defendants and was awarded $14,784.00 in sanctions. Defendants filed multiple motions for summary judgment and adjudication. The week before trial, Defendants' motions were denied. The evening before trial was to begin, the case settled in exchange for a substantial payment by AIG to Myers in an amount which is confidential pursuant to the terms of the settlement. References. The following is a list of three (3) references and a brief description of the type of work performed for, or relationship to, each: 2. Name John (Jack) C. Raymond CEO of The Greystone Group and The Raymond Companies, Past Chair and current board member of the San Diego Regional Economic Development Corporation and current member of the Board of Trustees for the San Diego Foundation 960 Cantebury Place, Suite 360 Escondido, CA 92025 (760) 745-2400 Harry Frizzell Claims Supervisor Nova Casualty Company 180 Oak Street Buffalo, NY 14203-1691 (800)289-3742x153 Hon. Eddie C. Sturgeon Judge of the Superior Court Department 14 250 East Main Street El Cajon, California 92020 (619)441-4600 Description General civil litigation and insurance coverage consultation. Insurance coverage litigation in the state of California and consultation regarding insurance coverage matters in a variety of jurisdictions including Florida, Arizona, Utah, Nevada and California. Presiding judge in Myers v. American International Specialty Lines Insurance Company, SDSC Case No. GIB 026416. -9- Rates. In the instant matter, Mr. Kirch has agreed to provide legal services to the City of Carlsbad at the reduced hourly rate of $155.00 per hour; the same rate paid to prior coverage counsel for the City. Costs. It is anticipated Shipley & Kirch will incur and advance for the client a variety of out- of-pocket costs in connection with our services. Whenever such costs are incurred, we will itemize them and bill them to the client. Typical of such costs are long distance telephone charges, messenger, carrier and express delivery charges, parking, facsimile charges, printing and reproduction costs, filing and service fees, deposition and transcript costs, witness fees, travel expenses, experts and other outside consultants, and computerized legal research (Westlaw) charges. Mileage will be charged to the client at 44.5d per mile. Monthly Billing. Shipley & Kirch's invoices will be submitted for payment on a monthly basis. Invoices are due when received. Professional Liability Insurance. Shipley & Kirch's professional liability insurance is provided by Greenwich Insurance Company through Ahern Insurance Brokerage with policy limits of $1,000,000.00 per claim and $1,000,000.00 aggregate limit of liability. Thank you for your consideration. Please feel free to call the undersigned if you have any questions. This proposal is a firm offer and shall remain open for a period of not less than thirty (30) days. JJK/rrj -10-