A recent NLJ story, “MGA’s Insurer on the Hook for Bratz Litigation Cost” reports that a federal judge has ordered Evanston Insurance Co., one of MGA Entertainment Inc.’s insurers, to pay $8.5 million to the insurance companies that covered the Bratz doll manufacturer’s defense fees and costs during its drawn out litigation with Mattel Inc.  U.S. District Judge David Carter refused to trim the amount that Evanston could end up owing MGA, which it balked at defending during the litigation.

Carter’s ruling revealed that MGA is seeking about $175 million in attorney fees and costs from its insurers – far in excess of the $141 million in fees and costs awarded under the $310 million final judgment.  Mattel has appealed the judgment to the U.S. Court of Appeals for the Ninth Circuit.  Carter’s rulings set the stage for a trial over whether Evanston, which provided two general liability policies in 2001 and 2002, acted in bad faith when it denied coverage to MGA.

Evanston is one of three insurance companies that provided primary general liability coverage to MGA during the periods in which Mattel alleged its rival stole the copyright for the Bratz doll. Crum & Forster Specialty Insurance Co., which also refused to defend MGA.  In a motion, Evanston sought a number of discounts to reduce the amount it owes MGA should it be found liable.  MGA has estimated that Evanston is responsible for as much as $96 million of the $175 million in fees and costs in the Bratz doll litigation.  Of that, Evanston has paid $16 million but owes $80 million.

Evanston argued that MGA’s calculation was off because it involved numerous instances of incorrect costs, including a $13.2 million difference between the amount billed by Skadden Arps and what MGA actually paid the law firm, and at least $3.5 million that MGA has refused to by Orrick Herrington.  Evanston also challenged fees that MGA paid to defend individuals and entities that weren’t insured under its policies, including Carter Bryant, the designer of the Bratz doll.  Carter granted some of the deductions, including the Skadden bills, but rejected most of them.