Cell Tech Case Study

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Law360, Los Angeles (February 17, 2016, 8:58 PM ET) -- Nutritional supplement maker Cell Tech International shareholders on Wednesday urged the Ninth Circuit to find that anAmerican International Group unit owes them them millions of dollars in prejudgment interest on a $4.1 million judgment against the insurer, saying a lower court erred in ruling that a $5 million policy limit precludes the interest. In an opening brief Wednesday, appellants Daryl Kollman and Helen Frazer argued that National Union Fire Insurance Co. of Pittsburgh, PA should pay 9 percent interest dating back to September 2004 on the $4.1 million owed in a coverage row stemming from a decade-old $40 million jury verdict in a shareholder suit. They contended that an Oregon…show more content…
Shortly thereafter, Hateley declared bankruptcy as a result of the $40 million verdict. In the September judgment, Judge Panner awarded Cell Tech more than $880,000, plus prejudgment interest, and Kollman and Frazer $4.1 million plus attorneys' fees with no prejudgment interest. He awarded Hately's bankruptcy trustee $2 million plus post-judgment interest, and another $515,000 for attorneys' fees and costs. In Wednesday's brief, Frazer and Kollman argued that prejudgment interest must be paid except when policies unambiguously limit it, and that the National Union policy's limit on prejudgment interest only applies to judgments entered against the insured, not the insurer itself. "Nothing in the insurance policy states that if National Union breaches the insurance policy and fails to timely pay its policy limits, that it will not be responsible for any pre or post-judgment interest that is required by Oregon statute for a breach of contract," they argued. Representatives for the parties could not be reached for comment late
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