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Insurers Want a Cut of MGA'S $141M Attorney Fees

August 31, 2011 | Posted in : Billing Practices, Coverage of Fees, Defense Fees / Costs, Expenses / Costs, Fee Award, Fee Dispute, Fee Entitlement / Recoverability, Fee Request

A recent NLJ story, “Insurers Demand a Piece of MGA’s $141 Million Legal Fees and Costs Award” reports that the insurance companies that paid the legal bills associated with MGA Entertainment Inc.’s successful court battle with Mattel Inc. are seeking to recover a portion of the $141 million in attorney fees and costs awarded to the Bratz doll manufacturer.  In an Aug. 26 motion to intervene, four insurance companies said they have rights to share in the fees and costs awarded to MGA earlier this month after a federal jury issued an $88.5 million verdict against Mattel.

In their motion to intervene, the insurance companies claimed to have spent $80 million in legal fees and costs for MGA.  Of that, three of the insurers – National Union Fire Insurance Co. of Pittsburgh, Lexington Insurance Co. and Chartis Specialty Insurance Co. – claimed to have spent more than $55 million.  Lexington provided general liability coverage for MGA from 2006 through 2008, while National Union and Chartis provided excess umbrella coverage from 2001 through 2003.  The forth company, Crum & Forster Specialty Insurance Co., which provided coverage from 2003 through 2005, claimed to have spent more than $25 million.

“A significant portion of the fees and costs paid by the proposed Intervenors are the fees and costs the MGA [has] now been awarded,” wrote lawyers for the insurance firms.  “Despite these rights, MGA has advised this Court and Mattel that the insurers are not entitled to any portion of the fees and costs that have been awarded.”  In opposing attorney fees and costs, Mattel’s lawyers emphasized that MGA was well funded by insurance companies and didn’t need such compensation.  MGA’s lawyers, in response, said that insurance companies would not be receiving funds awarded as part of the fee request.  The fee award was designed to cover billing invoices for a long list of law firms, including Skadden, Arps, Slate, Meagher & Flom; Orrick, Herrington & Sutcliffe; and O’Melveny & Myers.

In addition, a hearing was scheduled regarding whether MGA, which disputes O’Melveny’s claims for unpaid legal fees, should be sanctioned for alleged discovery abuses.  Separately, Lexington also has suits against MGA and Crum & Forster.  In the Crum & Forster case, Lexington seeks reimbursement for more than $40 million in defense fees, costs and related expenses it paid to MGA.  The insurance cases have been consolidated before U.S. District Judge David Carter in Santa Ana, Calif. and are scheduled to go to trial on Feb. 7.