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Associated Aviation Underwriters v. Wood

9/29/2004

ng the hearing, Intervenors argued, inter alia, the agreement was reasonable because of TAA/City's potential exposure to a large jury verdict if the underlying tort cases went to trial. In support of that argument, an attorney who had represented TAA/City in the underlying cases testified that their liability defenses in those cases were, at best, tenuous. Intervenors also adduced expert testimony that, despite the fact that discovery had not been completed on all of them, TAA/City's "'global'" or aggregate settlement with all claimants/Intervenors was the common practice in mass-tort cases. Finally, Intervenors presented expert testimony, again from Legator, that TCE might have caused their alleged injuries. Legator, however, had not personally examined any individual Intervenor or their medical records.


In response, AAU argued the Morris agreement was unreasonable because TAA/City had not obtained information on all of the Intervenors and thus had lacked enough information to determine whether an aggregate settlement was appropriate. In addition, AAU presented testimony that TCE could not have caused Intervenors' alleged injuries and, therefore, that TAA/City's Morris settlement was unreasonable.


In its April 2002, post-hearing minute entry, the trial court first noted:


Now that the evidence has been fully presented to the Court..., it is much clearer how this case was analyzed by the insured, the insurers, the attorneys involved, and others, at the time of the Morris Agreement and in the many months leading up to it. It is clear that the insured analyzed this settlement on a "global" basis. This is not to say, however, that no consideration was given to the claims of individual plaintiffs. One notable example is the claim of plaintiff Barbara Valenzuela. Defense counsel considered her claim to be a pivotal claim. The defendants thought that her claim had as good a chance as any to be dismissed as a matter of law because of lack of the element of causation. The defense attorneys thought [the summary judgment motion as to her claim] could not be lost. When it was, it was a "sobering event." The Barbara Valenzuela case was an "important event" and "changed the mood in the case." It resulted in the parties and their attorneys believing that the plaintiffs in the underlying action would probably survive pretrial motions for summary judgment and would probably survive a request for a directed verdict at the time of trial. The parties realized that if [Barbara Valenzuela's] case would get to the jury then probably the cases in general would also get to the jury. Although many of the attorneys involved thought and hoped that the case was defensible, they realized that issue would be decided by the jury and that if the jury decided the case adversely to the City or TAA that the potential damages were extremely high.


The trial court then adopted and rejected various findings proposed by both sides. Intervenors' proposed findings of fact, which the trial court adopted, included the following:


The claims alleged by the plaintiffs in the Valenzuela and Gerardo actions were for serious and substantial personal injuries, wrongful death and loss of consortium. The claims were vigorously prosecuted and defended. Significant discovery was undertaken prior to the settlement. Over 900 plaintiffs had completed written discovery, approximately 400 plaintiffs had been deposed, and hundreds of thousands of pages of documents had been exchanged between the parties at the time of the settlement. Extensive investigations of the relevant fact pattern had been conducted by state and federal governmental agencies as well as by numerous experts retained by the parties.




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