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January 13, 1994

$28-Million Verdict Against Transamerica A Los Angeles jury hit the former Transamerica Insurance Co. with the bad-faith verdict Tuesday for failing to make good on surety bonds after the contractor on a Malibu condominium project went bust. Transamerica wrote bonds guaranteeing that the contractor, Cates Construction of Lancaster, would finish the 21-unit project and that its subcontractors and material suppliers would be paid, according to Paul Shoop, lawyer for Talbot Partners, the condo developers. But when Cates abandoned the project and went out of business, Transamerica refused to pay for its completion, arguing that there was a dispute over whether Talbot had lived up to its part of the contract with Cates, Shoop said. Talbot subsequently lost the property when its bank foreclosed on the construction loan. In the ensuing legal action, an arbitrator ruled that Transamerica had breached its bond contracts and awarded Talbot $4,098,000 in damages and legal fees. Then, in a separate bad-faith trial, a Superior Court jury assessed the $28-million punitive judgment. Transamerica Insurance, formerly based in Woodland Hills, has since separated from Transamerica Corp., moved to New York and renamed itself TIG Holdings.

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