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Case3:12-cv-01147-MMA-MDD Document 1 Filed 05/10/12 Page 1 of 8

1 Gary W. Osborne (Bar No. 145734) Dominic S. Nesbitt (Bar No. 146590) 2 OSBORNE & NESBITT LLP 3 San Diego, California 92101 Phone: (oT9) 557-0343 4 Fax: (619)557-0107 5 anesbitt@bnlawlrptcom 6 Attorneys for Plaintiff 8 9
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1. Plaintiff National Steel and Shipbuilding Company ("NASSCO") alleges as vs. CENTURY INDEMNITY COMPANY, a Pennsylvania corporation, successor to Cigna Specialty Insurance Company, fka California Union Insurance Company, Defendant. UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF CALIFORNIA NATIONAL STEEL AND SHIPBUILDER COMPANY, a Nevada corporation, Plaintiff, CASE NO.
"I2CV1147MMAMDD

501 West Broadway, Suite 1760

gosborne(g),onlawllp.com

7 NATIONAL STEEL AND SHIPBUILDING COMPANY

COMPLAINT FOR BREACH OF CONTRACT; TORTIOUS BREACH OF THE IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING; FOR PUNITIVE DAMAGES; AND FOR DECLARATORY JUDGMENT

21 follows:
JURISDICTION AND VENUE This Court has jurisdiction over the subject matter of this complaint

24 pursuant to 28 U.S.C. 1332(a) because there is complete diversity of citizenship 25 between the parties and the amount in controversy exceeds the sum of $75,000, 26 exclusive of interest and costs. 27
2. Venue is proper in this District under 28 U.S.C. 1391 (b), as the contracts

28 of insurance which are the subject of this action were entered into, and were to be
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COMPLAINT

Case3:12-cv-01147-MMA-MDD Document 1 Filed 05/10/12 Page 2 of 8

1 performed, within this District, and the bodily injuries giving rise to the insurance claims 2 which are the subject of this action occurred in this district. 3 4 3. THE PARTIES Plaintiff NASSCO is a corporation duly organized and existing under the

5 laws of the State of Nevada, with its principal place of business in San Diego, California. 6 4. Plaintiff is informed and believes and on that basis alleges that Defendant

7 CENTURY INDEMNITY COMPANY, successor to Cigna Specialty Insurance 8 Company, formerly known as California Union Insurance Company ("Cal-Union") is, 9 and at all relevant times has been, a corporation organized and existing under the laws of 10 the State of Pennsylvania, with its principal place of business also in Pennsylvania. 11 12 A. 13 14 GENERAL ALLEGATIONS Cal-Union Insured NASSCO Under Three Consecutive Excess Workers' Compensation Policies 5. Cal-Union issued three consecutive Excess Workmen's Compensation and

15 Employers' Liability policies to NASSCO. The third and last year's policy was 16 designated by policy no. ZCV 00 36 37, was issued for the policy period of October 1, 17 1976 to October 1, 1977, and had policy limits of $500,000, in excess of a retained limit 18 of $250,000. The first and second years' policies were designated by policy nos. ZCX 19 00 11 52 and ZCX 00 13 81, respectively. Plaintiff is informed and believes and on that 20 basis alleges that the first year's policy was issued for the policy period of October 1, 21 1974 to October 1, 1975, the second for the policy period of October 1, 1975 to

22 October 1, 1976, and that said policies carried policy limits of $2 million and were 23 subject to a retained limit of $250,000. Although the Plaintiff does not have a copy of 24 the first year's policy, and has only certain forms associated with the second year's 25 policy, it is informed and believes and on that basis alleges that, as relevant to plaintiffs 26 claims, these policies' insuring provisions, exclusions, and conditions were, in all 27 material respects, substantially similar to the provisions in the third year's policy. 28
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COMPLAINT

Case 3:12-cv-01147-MMA-MDD Document 1 Filed 05/10/12 Page 3 of 8

6.

Under the third year policy's Insuring Agreement, Cal-Union agreed to

2 indemnify NASSCO against loss in excess of the retained limit as a result of injury by 3 accident occurring during the policy period which NASSCO sustained "because of. . . 4 compensation and other benefits required of [NASSCO] by the Workmen's 5 Compensation Law." The policy then defines "Workmen's Compensation Law" to 6 specifically include the United States Longshoremen's and Harbor Workers' 7 Compensation Act ("LHWCA."). 8 B. 9 NASSCO Sustains Loss Covered by the Policies 7. Four NASSCO employees were injured by accidents occurring during the

10 policy periods of the Cal-Union policies, as follows: Arthur Boies ("Boies"), by 11 accident occurring during the 1974/1975 policy; William Blair ("Blair"), by accident 12 occurring during the 1975/1976 policy; and Samuel Pagano, Jr. ("Pagano") and Mikel 13 Fonce ("Fonce"), by accidents occurring during the 1976/1977 policy. 14 8. NASSCO has sustained loss in excess of the policies' retained limits as a

15 result of the injury claims of the above-referenced four employees. The losses sustained 16 are because of compensation and other benefits required of NASSCO by the 17 Workmen's Compensation Law, including the LHWCA. Specifically, NASSCO has 18 incurred loss in the form of direct payments of medical, disability and other benefits to 19 the employees, and has incurred additional loss in the form of annual assessments into 20 the Special Fund established by section 44 of the LHWCA which are used to fund 21 additional benefits to the same employees. 22 C. 23 24 Cal-Union Wrongfully Denies NASSCO's Requests for Reimbursement 9. On April 16, 2009 and April 17, 2009, respectively, NASSCO submitted

25 written requests with supporting documentation to Cal-Union for reimbursement of loss 26 sustained in excess of the policy's retained limits with respect to the Pagano and Fonce 27 workers' compensation claims. 28 ///
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COMPLAINT

Case3:12-cv-01147-MMA-MDD Document 1 Filed 05/10/12 Page 4 of 8

10.

Cal-Union denied the requests for reimbursement on the Pagano and Fonce

2 claims, maintaining that Special Fund assessments are not "compensation or other 3 benefits" required of NASSCO under the workers' compensation law, and that without 4 the inclusion of those assessments in the Pagano and Fonce claims, "neither claim has 5 yet penetrated the $250,000 retention layer as required by the Excess Policy." 6 11. On August 31, 2011 and September 7, 2011, respectively, NASSCO

7 submitted written requests with supporting documentation to Cal-Union for 8 reimbursement of loss sustained in excess of the policy's retained limits with respect to 9 the Boies and Blair claims. 10 12. Cal-Union has failed to respond to NASSCO's requests for reimbursement

11 with respect to the Boies and Blair claims. 12 13 14 15 13. FIRST CLAIM FOR RELIEF Breach of Contract (Duty to Indemnify) (By NASSCO against Cal-Union) Plaintiff incorporates and re-alleges paragraphs 1 through 12 as though fully

16 set forth herein. 17 14. Plaintiff performed all conditions, covenants, and promises required on its

18 part to be performed in accordance with the terms and conditions of Cal-Union's 19 policies. 20 15. Cal-Union breached its duty to indemnify NASSCO for loss sustained by

21 NASSCO in excess of the retained limits of the policies with respect to the workers' 22 compensation claims of employees Pagano, Fonce, Boies and Blair. 23 16. As a direct and proximate result of the above-mentioned breaches of

24 contract by Cal-Union, NASSCO has been damaged in a total amount to be proven at 25 trial. Said damages exceed the jurisdictional minimum required by this Court.
26 27 28 /// /// ///
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COMPLAINT

Case3:l2-cv-01147-MMA-MDD Document 1 Filed 05/10/12 Page 5 of 8

1 2 3 4 5 17.

SECOND CLAIM FOR RELIEF Tortious Breach Of The Implied Covenant Of Good Faith And Fair Dealing (By NASSCO against Cal-Union) Plaintiff incorporates and re-alleges paragraphs 1 through 12 and 14

6 through 16 as though fully set forth herein. 7 18. A relationship of trust and confidence was established between Cal-Union,

8 on the one hand, and NASSCO on the other hand, by virtue of NASSCO's status as an 9 insured under Cal-Union's policies. As a result, Cal-Union had a duty to deal fairly and 10 in good faith in all matters between them. 11 19. NASSCO is informed and believes and on that basis alleges that Cal-Union

12 breached its duty of good faith and fair dealing by, among other things, doing the 13 following: 14 15 16 17 18 19 20 21 22 23 24 20. d. c. a. b. wrongfully and unreasonably denying its coverage obligations; failing to respond to NASSCO's requests for reimbursement with respect to the Boies and Blair claims; so plainly misstating the application of law to its policies and coverage terms as to violate Insurance Code 790.03(a) by "making . . . or causing to be made . . . any . . . statement misrepresenting the terms of any policy issued . . . or the benefits or advantages promised thereby . . ."; and failing to give at least as much consideration to the welfare of NASSCO as it did to its own interests. As a direct and proximate result of the above-mentioned breaches of the

25 duty of good faith and fair dealing, NASSCO has been damaged in an amount to be 26 proven at trial. Said damages exceed the jurisdictional minimum required by this Court. 27 21. NASSCO is informed and believes and on that basis alleges that Cal-Union

28 has deliberately denied insurance benefits to NASSCO, despite knowing facts which
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COMPLAINT

Case3:12-cv-01147-MMA-MDD Document 1 Filed 05/10/12 Page 6 of 8

1 established that NASSCO was clearly and unambiguously entitled to such benefits. Cal2 Union made a calculated and deliberate decision to act in this manner and gamble that its 3 actions would go unchallenged. Cal-Union has intentionally withheld benefits despite 4 knowledge of its contractual and statutory obligations, and has acted with an intent to 5 enrich itself while injuring and harming NASSCO. Cal-Union's conduct in this matter 6 clearly satisfies the statutory grounds of "oppression, fraud or malice" so as to justify an 7 award of punitive damages in order to punish it and to deter such conduct in the future. 8 9 10 11 22. THIRD CLAIM FOR RELIEF Declaratory Judgment (By NASSCO against Cal-Union) Plaintiff incorporates and re-alleges paragraphs 1 through 12 and 14

12 through 16 as though fully set forth herein. 13 23. An actual controversy has arisen and now exists between NASSCO on the

14 one hand, and Cal-Union on the other hand, concerning their respective rights and duties 15 under the third year's policy. NASSCO contends, and Cal-Union denies, that 16 NASSCO is entitled to be reimbursed by Cal-Union, up to the limits of the third year's 17 policy, for all amounts NASSCO pays to fund ongoing LHWCA Special Fund benefits 18 for surviving claimants Pagano and Fonce. A judicial determination of this issue is 19 necessary to determine the respective rights, obligations and liabilities of NASSCO and 20 Cal-Union under the third year's policy. 21 24. NASSCO desires a judicial determination pursuant to 28 U.S.C. 2201 of

22 its rights under the third year's policy with respect to ongoing payments made by the 23 LHWCA Special Fund to surviving claimants Pagano and Fonce. 24 WHEREFORE, Plaintiff NASSCO prays for judgment against defendant Cal-

25 Union as follows: 26 1. For a judicial declaration pursuant to 28 U.S.C. 2201 that Cal-Union has

27 a duty to reimburse NASSCO, up to the limits of the third year's policy, for all amounts
28 ///
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COMPLAINT

Case 3:12-cv-01147-MMA-MDD

Document 1 Filed 05/10/12 Page 7 of 8

1 NASSCO pays to fund ongoing LHWCA Special Fund benefits for surviving claimants 2 Pagano and Fonce; 3 2. For damages sustained as a result of the breaches and tortious breaches of 4 contract alleged herein, according to proof; 5 3. For attorney's fees including, but not limited to, an award of attorney's fees

6 pursuant to Brandt v. Superior Court, 37 Cal. 3d 813 (1985); 7 8 4. 5. For punitive damages pursuant to California Civil Code section 3294; and For prejudgment interest, costs and expenses of suit, and such other and

9 further relief as the Court deems just and proper. 10 11 DATED: May 10, 2012 12
13

OSBORNE & NESBITT LLP By: /s/ Gary W. Osborne Gary W. Osborne Attorney for Plaintiff NATIONAL STEEL AND SHIPBUILDING COMPANY Email: gosborne(g),onlawllp.com

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COMPLAINT

&JS44 (Rev. 12/07)

Case 3:12-cv-01147-M^^gl^ ( -pp|^igi||^ E ^lecl 05/10/12 Page 8 of 8

The JS 44 civil cover sheet and the information contained herein neither replace nor supplement the filing and service of pleadings or other papers as required by law, except as provided by local rules of court. This form, approved by the Judicial Conference of the United States in September 1974, is required for the use of the Clerk of Court for the purpose of initiating the civil docket sheet. (SEE INSTRUCTIONS ON THE REVERSE OF THE FORM.)

I. (a) PLAINTIFFS National Steel and Shipbuilding Company, a Nevada corporation.


(b) County of Residence of First Listed Plaintiff S a n DJegO (EXCEPT IN U.S. PLAINTIFF CASES)

DEFENDANTS Century Indemnity Company, a Pennsylvania corporation, successor to Cigna Specialy Insurance
County of Residence of First Listed Defendant Pennsylvania (IN U.S. PLAINTIFF CASES ONLY) NOTE: IN LAND CONDEMNATION CASES, USE THE LOCATION OF THE LAND INVOLVED.

(c)

Attorney's (Firm Name, Address, and Telephone Number)

Attorneys (If Known)

"I2CV1147MMAMDD

Gary W. Osborne, Osborne & Nesbitt, LLP 501 W. Broadway, Suite 1760, SD, CA 92101 619-557-0343
II. B A S I S O F J U R I S D I C T I O N 1 U.S. Government Plaintiff (Place an "X" in One Box Only) 3 Federal Question (U.S. Government Not a Party) I I I . C I T I Z E N S H I P O F P R I N C I P A L P A R T I E S ( P l a c e an "X" m One Box for Plaintiff (For Diversity Cases Only) and One Box for Defendant) PTF DEF PTF DEF Citizen of This State Ht 1 1 Incorporated or Principal Place 4 4 of Business In This State Citizen of Another State

2 U.S. Government
Defendant

5? 4 Diversity (Indicate Citizenship of Parties in Item III)

2 a 3

Incorporated and Principal Place of Business In Another State

X5

Citizen or Subject of a Foreign Country

3 Foreign Nation

6 ae
OTHER STATUTES 1

IV. NATURE OF SUIT


1 55 CONTRACT 110 Insurance 120 Marine 130 Miller Act 140 Negotiable Instrument 150 Recovery of Overpayment & Enforcement of Judgment 151 Medicare Act 152 Recovery of Defaulted Student Loans (Excl. Veterans) 153 Recovery of Overpayment of Veteran's Benefits 160 Stockholders' Suits 190 Other Contract 195 Contract Product Liability 196 Franchise REAL PROPERTY 210 Land Condemnation 220 Foreclosure 230 Rent Lease & Ejectment 240 Torts to Land 245 Tort Product Liability 290 All Other Real Property

(Place an "X" in One Box Only) TORTS PERSONAL INJURY 310 Airplane 315 Airplane Product Liability 320 Assault, Libel & Slander 330 Federal Employers' Liability 340 Marine 345 Marine Product Liability 350 Motor Vehicle 355 Motor Vehicle Product Liability 360 Other Personal Injury CIVIL RIGHTS 441 Voting 442 Employment 443 Housing/ Accommodations 444 Welfare 445 Amer. w/Disabilities Employment 446 Amer. w/Disabilities Other 440 Other Civil Rights PERSONAL INJURY 362 Personal Injury Med. Malpractice 365 Personal Injury Product Liability 368 Asbestos Personal Injury Product Liability PERSONAL PROPERTY 370 Other Fraud 371 Truth in Lending 380 Other Personal Property Damage 385 Property Damage Product Liability PRISONER PETITIONS 510 Motions to Vacate Sentence Habeas Corpus: 530 General 535 Death Penalty 540 Mandamus & Other 550 Civil Rights 555 Prison Condition

FORFEITURE/PENALTY

BANKRUPTCY

610 Agriculture 620 Other Food & Drug 625 Drug Related Seizure of Property 21 USC 881 630 Liquor Laws 640 R.R. & Truck 650 Airline Regs. 660 Occupational Safety/Health 690 Other LABOR 710 Fair Labor Standards Act 720 Labor/Mgmt. Relations 730 Labor/Mgmt.Reporting & Disclosure Act 740 Railway Labor Act 790 Other Labor Litigation 791 Empl. Ret. Inc. Security Act

422 Appeal 28 USC 158 423 Withdrawal 28 USC 157 PROPERTY RIGHTS 820 Copyrights 830 Patent 840 Trademark

SOCIAL SECURITY 861 HIA(1395ff) 862 Black Lung (923) 863 DTWC/DIWW (405(g)) 864 SSID Title XVI 865 RSI (405(g)) FEDERAL TAX SUITS 870 Taxes (U.S. Plaintiff or Defendant) 871 TRSThird Party 26 USC 7609

IMMIGRATION 462 Naturalization Application 463 Habeas Corpus Alien Detainee 465 Other Immigration Actions

400 State Reapportionment 410 Antitrust 430 Banks and Banking 450 Commerce 460 Deportation 470 Racketeer Influenced and Corrupt Organizations 480 Consumer Credit 490 Cable/Sat TV 810 Selective Service 850 Securities/Commodities/ Exchange 875 Customer Challenge 12 USC 3410 890 Other Statutory Actions 891 Agricultural Acts 892 Economic Stabilization Act 893 Environmental Matters 894 Energy Allocation Act 895 Freedom of Information Act 900 Appeal of Fee Determination Under Equal Access to Justice 950 Constitutionality of State Statutes

V. ORIGIN S 1 Original Proceeding

(Place an "X" in One Box Only) [~J 2 Removed from [~J 3 State Court

Remanded from Appellate Court

VI. CAUSE OF ACTION


VII. REQUESTED IN
COMPLAINT:

Brief description of cause:

^.^ S C Cl Se S cT m
UNDER F.R.C.P. 23 (See instructions):

5 Transferred from 6 Multidistrict another district Litigation (specify) hich you are filing (Do not cite jurisdictional statutes unless diversity): 4 Reinstated or Reopened

Appeal to District Judge from Magistrate Judgment

Breach ot insurance contract and bad taith


CHECK IF THIS IS A CLASS ACTION DEMANDS
CHECK YES only if demanded in complaint: JURY D E M A N D : 0" Yes No An amount exceeding $75,000

VIII. RELATED CASE(S) IF ANY


DATE

JUDGE
SIGNATURE OF ATTORNEY OF RECORD

DOCKET NUMBER

05/10/2012
FOR OFFICE USE ONLY RECEIPT # AMOUNT

/s/Gary W. Osborne, Esq.

APPLYING TFP

JUDGE

MAG. JUDGE

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