A Los Angeles Superior Court jury Tuesday ordered Harbor Insurance to pay $23 million in damages to a client hotel firm that the insurance company had pressured into sharing the burden of a multimillion-dollar personal injury settlement.
The case involved a 1977 diving accident in a swimming pool at a hotel owned by a subsidiary of American Motor Inns in the U.S. Virgin Islands that left a Navy man a paraplegic. According to court testimony, Los Angeles-based Harbor Insurance refused to settle for $2 million unless the subsidiary, Flamboyant Investment, paid $500,000 toward the settlement.
As a result, the case went to trial and the victim, Richard Utesch, was awarded $6.8 million. Because of the $6.8-million judgment, attorneys for the hotel company argued that the firm was unable for three years to qualify for financing for a planned business expansion and that it lost up to $20 million in revenue.
While the $6.8-million award was on appeal, Harbor Insurance offered the victim a $2-million settlement and the possibility of further compensation, if he would pursue additional settlement money from the hotel company's subsidiary, according to testimony.