McGuinness & Associates Won an $8.4 Million Dollar Verdict for Church in Construction Defect / Mold / Insurance Bad Faith Case

In construction defect and related insurance actions on behalf of the First Southern Baptist Church of Walnut, McGuinness & Associates attorneys recently obtained an $8.4 million trial verdict against KO-AM.

Initially, KO-AM brought legal actions against the Church for payment claims. The Church had hired KO-AM Company to build a gymnasium and youth center. Upon examination by our experts, these new structures exhibited numerous defects, including the growth of a dangerous stachybotrys mold. McGuinness & Associates defended the Church against KO-AM’s payment claims. In addition, this firm brought defect claims against the general contractor and its subcontractors.

KO-AM then tendered coverage claims under several of its insurance policies. One of the insurers, agreed to defend the general contractor, but would not pay enough to correct the many construction defects. The remaining insurers refused to acknowledge any coverage for the Church's claims against the general contractor. Consequently, McGuinness & Associates attorneys negotiated a strategic settlement agreement with the defending insurer and subcontractors.

Pursuant to this agreement, the settling entities, collectively, paid the Church $800,000. In addition, the Church took an assignment of rights which allowed the Church to proceed to trial to prove its remaining damage claims. McGuinness & Associates's directed communications to the non-settling insurers providing a final opportunity for them to settle. The insurers refused.

At trial, the Church was awarded an $8.4 million judgment. This award was both for the construction defect damages, and for approximately $5 million in damages for lost revenue from declining Church membership. This firm then pursued an insurance bad faith action against the non-settling insurers. A $4 million settlement was ultimately obtained as a result of that bad faith action.

 

Our Lawyers Won a Defense Verdict to a Multi-Million Dollar Lawsuit for Construction Defects and Delay

McGuinness & Associates achieved a defense verdict for a contractor client, which was sued for payment of a multi-million dollar defects and delay impacts claim. This litigation concerned the installation of a life/fire/safety (“LFS”) system on a 54-story office building project. The client was alleged to have been responsible for delaying project completion, occupancy and the receipt of rents by in excess of one year.

The client did, indeed, miss its scheduled milestone dates by the alleged one year time period. On such a project, a certificate of occupancy must be issued by a municipal inspector before tenants can occupy the structure. The building could not obtain a certificate of occupancy until the client’s LFS system was operational. The owner thus claimed delay damages for a loss of rents and other uses during the delay period, in an amount exceeding $10 Million.

The owner bore a burden to prove that our client caused damages resulting from the delayed occupancy. Through investigation and effective litigation, a concurrence of critical delay by other subcontractors was discovered. This concurrent, critical delay was confirmed through expert analysis which provided our client with a strong ground of defense.

At trial, the judge was persuaded that insufficient evidence existed to prove that our client was the actual cause of the delayed occupancy, as opposed to the several other subcontractors who were late in completing their work. Not a single dollar of damage was attributed to our client either for the alleged defects and/or for the delay damages asserted.

 

Our Lawyers Won a $1.5 Million Verdict, With a $1 Million Punitive Damages Award, After Defendant’s
Rejection of a $25,000 Settlement Offer

In an action involving the break up of two doctors sharing a medical practice, the client pursued a damage claim which was initially unquantified. The client believed that his partner had failed to pay profit sharing amounts of approximately $80,000.00. The client’s original counsel had tendered a $25,000.00 statutory settlement offer which was rejected by the defendant.

Through written discovery, document productions and depositions, the base claim became quantified. Moreover, a pattern of deceitful and unfair business practices by the defendant against our client, and to other business persons with whom he dealt, emerged. At trial, the judge was persuaded to admit all such evidence for the jury to consider. This evidence effectively served to impeach defendant’s character.

The client’s damage claim was developed further, to include lost profits and business opportunities emanating from the rancor which developed between the two doctors. The defendant doctor was found to have interfered with the client’s business relationship with a hospital at which both worked. The client’s original $80,000 claim was thereby expanded substantially to include lost profits, diminished reputation and impaired pecuniary opportunities.

An extensive damage analysis was presented at trial, and the jury was persuaded to accept all of the damage items sought by our client. Evidence of the defendant’s unfair and deceitful conduct led the jury to find our client’s misappropriation claim to be valid, as well as the loss profits and opportunity damages, all of which totaled $500,000.00.

The jury also found the defendant had committed fraud by engaging in such deceit with malice and ill will toward our client. Consequently, the jury awarded punitive damages against the defendant doctor for an amount in excess of $1 Million. The total verdict obtained by this firm’s lawyer at trial exceeded $1.5 Million.

 

Obtained A Full Recovery Of $750,000 From A Major California Bank For Negligent Payment Of
Fraudulent Checks Drafted On A Client’s Business Account

This firm obtained, through settlement, a full recovery of $750,000 from a major California Bank for negligent payment of fraudulent checks, wrongfully drafted on the business account of our client. Our client employed a bookkeeper who over the course of many years routinely drafted fraudulent checks to herself and third parties. Her purpose in doing so was to embezzle company funds by converting these checks to cash and/or deposits to her personal account.

The Bank failed to recognize and respond to classic fraud indicators inherent in these embezzlement transactions. The Bank tenaciously defended every aspect of the case, arguing that it bore no duty of care to our client and that it would prevail on summary judgment. The Bank insisted that California Law so plainly favored its case, that little to no risk existed in the matter actually proceeding to trial.

In California, a complex statutory scheme exists to guide the rights and obligations of both Banks and their account holders. California Bank statutes are not, however, dispositive of all potential embezzlement liability. To the contrary, Bank conduct and the nature of embezzlement activity must be carefully analyzed to determine whether actual Bank liability exists. In the referenced case, Bank operating procedures, training and management practices were identified and evidence concerning the insufficiency of such procedures and practices was submitted to the Court in opposition to the Bank’s summary judgment motion. Based on the evidence submitted, the Court found issues of Bank liability for negligent payment of the fraudulent checks.

The Bank failed to obtain its summary judgment and was instead ordered to trial. The Bank then dramatically altered its settlement position, raising its offer from a low five figure sum to a high six figure sum, resolving the legal action. The Bank’s payment comprised the approximate amount of all embezzled funds. A judgment was also obtained by this firm against the employee embezzler for other damages caused to our client, in an amount of $499,000.

 

Defense Of A Major Overnight Mail And Shipping Company To High Potential Damages Emanating From The Collapse Of A Scissor Lift

Counsel for this firm represented a major overnight mail delivery and freight shipping company (“Delivery Company”) in a case arising from a defective scissor lift. During ordinary operating conditions, the scissor lift collapsed, injuring two employees. One of the employees suffered lacerations and broken bones. Unfortunately, a second employee was more seriously injured, becoming paraplegic. Our client was sued for providing a dangerous workplace environment, allegedly created by the defective scissor lift.

Through the course of discovery and expert analysis, the lift was found to be defectively manufactured. Through negotiations, liability was indeed assumed by the manufacturer and a separate maintenance provider company. Notwithstanding the high amount of potential monetary damage, our Delivery Company client was not required to pay any money to achieve a full resolution of the matter. Moreover, our client was fully released from any liability pursuant to a global settlement agreement reached among all parties to the lawsuit.

 


Achieved A $500,000 Recovery And Advantageous Future Terms of Employment In A Racial Discrimination Case

 

Our clients were employees at a specific station in the department of a large municipality. The station was managed by a department chief (the “Chief”) who both exercised full charge over assignments given to the employees and bore responsibility for completing their performance evaluations. Our clients asserted that they were often demeaned and oppressed on the basis of their race and national origin. Our clients also asserted that they had been unfairly treated in their career paths, on the same basis.

In testimony, the Chief explained that the department’s culture was to use racial remarks as a means for providing a comedic break to an otherwise stressful environment. The Chief explained that comments such as “lazy Mexican” and/or “lazy black man” were terms used at the department in jest. When asked to give an example of an acceptable comedic remark, the Chief testified “Mexicans sure like their burritos and beer.” Witnesses within the department came forward to testify concerning frequent, demeaning racial slurs used at the department. The type of language described was both extensive and highly offensive.

According to sworn testimony, the Chief provided desirable assignments to white employees and assignments that were not as desirable or would not lead to promotions to minority employees. Case witnesses also testified that the Chief threatened minority employees with poor performance ratings and he withheld performance evaluations for substantial time periods to maintain leverage. Upon our clients’ requesting an inquest concerning the Chief’s conduct, evidence indicates that serious retaliation ensued. Past performance evaluations were replaced by amended evaluations which were substantially downgraded. The downgraded evaluations disqualified these employees from both eligibility for lucrative special assignments and promotions.

Initially, the municipality stonewalled any serious negotiations, despite having initiated settlement meetings. Instead, our clients were told they would be fortunate simply to continue in their employment with the municipality. In addition, our clients were threatened that if they failed to prevail in the action, the municipality would pursue all of its litigation costs by evicting them from their homes which would then be sold.

After this firm completed its investigations and discovery; and on the eve of trial, the tenor of the department’s posturing significantly changed. In a reversal of all prior negotiations, the department agreed to resolve the matter by means of a $500,000 settlement payment to our clients. In addition, it was agreed that all performance evaluations which had been downgraded would be restored to their initial ratings and those which were pending would be conducted by specific persons who were deemed not implicated in the racial discrimination activity. The municipality also agreed to provide elevated positions and job benefits based upon the merit of restored and newly issued performance evaluations.

 


Established A Complete Defense To Liability Allegations For The Alleged Failure Of A Smoke Detector
To Activate In A Student Dormitory Unit

Student occupants of a dormitory unit suffered severe burns in a fire which erupted when one of the occupants fell asleep while smoking in bed. One of the students was so severely burned that tissue damage permeated to the bone and damage to vital organs was significant. This student required substantial grafting and reconstructive surgery over the course of several years to partially restore functionality and appearance. The second student suffered burns, but far less severe.

Witnesses testified that our client’s smoke detector did not activate, even though black smoke was billowing out from under the students’ closed door. Allegations were raised that had the smoke detector properly activated, the students would have awakened promptly and evacuated the room before suffering burn injuries. Instead, the more severely injured student was described by expert testimony as having remained asleep for an extended duration while his body burned. Ultimately, other resident students observing the smoke, entered the room and rescued the burned occupants.

Claims of negligence and product liability were asserted against our client. During our investigation and in the course of litigation, this firm discovered facts which established a strong defense to these actions. Fire department records were subpoenaed and reviewed. These records revealed that upon entry of the dormitory unit the firefighters observed that a beanie had been placed over our client’s smoke detector unit. Witnesses testified that the severely burned student had participated in a day trip to Tijuana during which he drank excessively. Such testimony also established that this student had placed his beanie over the smoke detector to purposely disable the unit. The student was smoking marijuana and sought to avoid any detection of that activity.

Based on expert advice concerning the high reliability of smoke detector units, counsel for plaintiffs was challenged to test our client’s device at Underwriter Laboratories (“UL”) in Chicago. The condition for such a test was that actions against our client would be dismissed if the unit properly activated under appropriate laboratory conditions. All parties agreed and met at the UL facilities in Chicago to observe the test. The test was administered by UL technicians and the smoke detector properly performed. Without either further litigation or payment of any kind, all actions against our client were dismissed.

 


Prevailed On Appeal To Overturn A Judgment Entered Against Our Clients

Our clients comprised a faction of church congregants, headed by its founding pastor. The founding pastor had worshiped with his congregation at their Church venue for over twenty-five years. As the time came for the founding pastor to retire, he selected a successor pastor to replace him. The successor pastor assumed control of Church affairs. The founding pastor remained a part of the Church, as its Emeritus Pastor.

Soon after assuming control, the successor pastor announced that substantial changes were to occur at the Church. These changes included an abandoning of certain fundamental Church principles and practices, including a then existing affiliation between the Church and its denomination’s hierarchical bodies. Our clients’ faction of the Church opposed such changes and became known as the Traditional Faction (“Traditional Faction”).

The new pastor became disenchanted with the Traditional Faction and he excluded them from participating in Church activities. Prior to our engagement, the new pastor initiated legal action and sought a court order enjoining the Traditional Faction and the founding pastor from entering upon Church property. This order was granted and became a judgment.

This firm prepared and filed an appeal and then presented oral argument to the District Court of Appeals. The Appellate Court was thereby persuaded to reverse and vacate the trial court’s prior order against our clients. On remand, the Traditional Faction of the Church pursued its own legal action to: (1) obtain access to Church activities; (2) maintain traditional Church principles and practices through control of the pulpit; and (3) perpetuate the Church’s connection with its existing hierarchical bodies. Subsequently, a summary judgment order was obtained on behalf of our clients, who were then granted full possession and control of their Church.

 

Established A Defense To The Alleged Failure Of A Chemical Fire Suppression System To Activate

Defended the manufacturer of a chemical fire suppression system which serviced a deep fryer appliance. The deep fryer appliance malfunctioned resulting in a catastrophic fire which destroyed an entire restaurant building. The suppression system failed to extinguish the fire and indeed did not activate. This firm developed evidence that the deep fryer had a history of malfunctions resulting in frequent grease fires that would cause the suppression system to activate. When activated, the suppression system would inundate the deep fryer and the work area with fire retardant chemicals, disrupting usage of the machine and surrounding work areas.

An examination of the deep fryer established that the suppression system had been purposefully disengaged. It thus became apparent that, rather than repair the deep fryer from causing grease fires, the user decided to simply disengage the suppression system. A strong defense was thereby established posturing the case for a successful settlement resolution for the client.

 

Our Lawyers Won a $1.5 Million Verdict, With a $1 Million Punitive Damages Award, After Defendant’s
Rejection of a $25,000 Settlement Offer

In an action involving the break up of two doctors sharing a medical practice, the client pursued a damage claim which was initially unquantified. The client believed that his partner had failed to pay profit sharing amounts of approximately $80,000.00. The client’s original counsel had tendered a $25,000.00 statutory settlement offer which was rejected by the defendant.

Through written discovery, document productions and depositions, the base claim became quantified. Moreover, a pattern of deceitful and unfair business practices by the defendant against our client, and to other business persons with whom he dealt, emerged. At trial, the judge was persuaded to admit all such evidence for the jury to consider. This evidence effectively served to impeach defendant’s character.

The client’s damage claim was developed further, to include lost profits and business opportunities emanating from the rancor which developed between the two doctors. The defendant doctor was found to have interfered with the client’s business relationship with a hospital at which both worked. The client’s original $80,000 claim was thereby expanded substantially to include lost profits, diminished reputation and impaired pecuniary opportunities.

An extensive damage analysis was presented at trial, and the jury was persuaded to accept all of the damage items sought by our client. Evidence of the defendant’s unfair and deceitful conduct led the jury to find our client’s misappropriation claim to be valid, as well as the loss profits and opportunity damages, all of which totaled $500,000.00.

The jury also found the defendant had committed fraud by engaging in such deceit with malice and ill will toward our client. Consequently, the jury awarded punitive damages against the defendant doctor for an amount in excess of $1 Million. The total verdict obtained by this firm’s lawyer at trial exceeded $1.5 Million.

 

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