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Michelman & Robinson Wins Unanimous Verdict in Bad Faith Lawsuit

April 3, 2009

Michelman & Robinson, LLPs ("M&R") Insurance Coverage & Bad Faith Department obtained a defense verdict for in a lawsuit that sought over $54 million in damages against Continental Casualty Company and Transportation Insurance Company (collectively known as CNA).

As one of California's leading firms in bad faith defense, CNA retained M&R to represent the carrier in a matter filed by Enodis Corporations (Enodis) against CNA alleging a cause of action for breach of contract, bad faith, violation of Business and Professional Code 17200 and Declaratory Relief. Policy disputes occurred between the two parties after consumers and multiple home building companies filed a series of underlying actions against the Enodis subsidiary, Consolidated Industries Corporation (Consolidated) for the manufacture of defective furnaces, and Enodis argued that CNA had failed to defend and indemnify it in the event of such claims.

M&R prevailed on all but one of its motions for summary adjudication stemming from the original suit that sought in excess of $54 million in damages. On February 26, 2009, M&R successfully defended CNA against the remaining claim for defense fees and costs of $278,000 when U.S. District Court Judge Christina Snyder ruled in CNAs favor after a short bench trial.

The Court granted M&Rs numerous motions for summary adjudication after its experienced defense team exposed significant shortcomings in Enodis case. Although the plaintiff maintained that CNA was bound to defend and indemnify it, M&R demonstrated that CNAs insurance policy did not cover the defense of Enodis after the conglomerate had made voluntary payments to the various parties involved in the defective furnace manufacturing lawsuits against its subsidiary Consolidated. Ultimately M&R established that Enodis primarily sought relief from CNA after an Indiana Bankruptcy Court found it liable for a $53 million judgment for fraudulent transfers associated with Enodis' sale of Consolidated.