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Insurer on hook for prior settlement

A federal judge resolved a complex insurance dispute in which responsibility for an earlier settlement was litigated for more than five years. 

The case stems from an attack that James Helderle, a recently hired cable technician, committed on a young woman in St. Charles in 2012. After Helderle’s conviction and sentencing, the victim filed a lawsuit against Charter Communications; its prime contractor, Communications Unlimited Inc. (CUI), and Broadband Infrastructure Connection LLC (BIC), a now-defunct communications contractor that was working for CUI.

The victim agreed to a $1.65 million settlement that released CUI and Charter. CUI and its insurers then filed an action in federal court seeking to recover from BIC’s insurance policy through Mid-Continent Casualty Company. The policy was intended to indemnify CUI against third-party claims. BIC, however, denied that it was Helderle’s employer. 

In 2019, a jury found that the attacker was at minimum jointly employed by BIC and CUI. On the eve of trial, the parties entered a stipulation dismissing BIC from the case while making clear that the claims remained against Mid-Continent.

Despite the jury’s findings, Mid-Continent maintained that CUI was not entitled to coverage. The insurer argued that the claim did not arise out of BIC’s “ongoing operations” for CUI, as Helderle was fired before he committed his assault, and that even if the policy applied, further findings were needed to allocate part of the settlement to Charter. 

It also argued that an “other insurance” provision in the policy placed responsibility for the settlement on CUI’s policies.

Tyson Ketchum and Jonathan Shulan of Armstrong Teasdale, who represented CUI’s insurers, said the case presented an issue of first impression in Missouri: How should a trial court allocate an underlying settlement in which multiple defendants were released? 

Judge Audrey Fleissig held a one-day bench trial in October 2020, hearing testimony from CUI and its insurers regarding the settlement they negotiated with the victim. The witnesses testified that the entire settlement was paid on behalf of CUI and no money was paid on Charter’s behalf because of Charter’s strong legal and factual defenses to liability.

Nearly a year later, Fleissig allocated the entire settlement to CUI and found that BIC was contractually obligated to indemnify CUI for the underlying settlement. She also imposed more than $700,000 in prejudgment interest.

After Fleissig denied a request to change her ruling, Mid-Continent agreed not to appeal and to pay the judgment and costs. 

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$2.38 million judgment

Insurance

Venue: U.S. District Court for Eastern District of Missouri

Case Number/Date: 4:16-cv-516/Sept. 1, 2021

Judge: Audrey Fleissig

Caption: Communications Unlimited Contracting Services Inc., The Charter Oak Fire Insurance Company and St. Paul Fire and Marine Insurance Company v. Mid-Continent Casualty Company

Plaintiffs’ Attorneys: Tyson Ketchum and Jonathan Shulan, Armstrong Teasdale, Kansas City and St. Louis (for Charter Oak and St. Paul); Michael Cerulo and Erica Briscoe, Baty Otto Coronado, St. Louis (for CUI)

Defendant’s Attorneys: Curtis Roggow, Sanders Warren Russell & Scheer, Overland Park, Kansas; John Franke and Heather Marengo-Hatley, Franke Schultz & Mullen, Kansas City