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Lexington Insurance Co. v. Mga Entertainment, Inc.

United States District Court, S.D. New York

June 3, 2014

LEXINGTON INSURANCE COMPANY, NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA, AMERICAN INTERNATIONAL UNDERWRITERS INSURANCE COMPANY AND CHARTIS SPECIALTY INSURANCE COMPANY, Plaintiffs,
v.
MGA ENTERTAINMENT, INC., Defendant.

Mark D. Sheridan, Esq., Mark C. Errico, Esq., Patton Boggs LLP, Newark, New Jersey, For Plaintiffs and Counterdefendants National Union Fire Insurance Company of Pittsburgh, PA:

Michael J. Bidart, Esq., Ricardo Echeverria, Esq., Shernoff Bidart Echeverria Bentley LLP, Claremont, California, For Defendant and Counterclaimant MGA Entertainment, Inc:

MEMORANDUM OPINION AND ORDER

SHIRA A. SCHEINDLIN, District Judge.

I. INTRODUCTION

On July 10, 2013, I held that National Union Fire Insurance Company of Pittsburgh, PA ("National Union") had a duty to defend MGA Entertainment ("MGA")[1] in connection with a copyright infringement action brought by Bernard Belair against MGA in this Court (the " Belair action").[2] On August 8, 2013, I set a discovery and briefing schedule on the issue of damages.[3]

On February 28, 2014, MGA moved for summary judgment against National Union, seeking $2, 823, 992.34 in attorneys' fees and costs incurred in the defense of the Belair action, plus prejudgment interest. On March 28, 2014, National Union cross-moved for summary judgment, arguing that MGA suffered no damages because it was not legally obligated to pay any amounts in connection with the Belair action due to a settlement between MGA and its law firms, Skadden, Arps, Slate, Meagher & Flom, LLP ("Skadden") and Orrick, Herrington & Sutcliffe, LLP ("Orrick"). In the alternative, National Union argues that MGA's damages award should be reduced in proportion to the amounts compromised in the Skadden and Orrick settlements.

After a telephone conference with the Court held on May 15, 2014, MGA produced cancelled checks and other documentation showing that it directly paid approximately $2.4 million of the total amount invoiced on the Belair action prior to the Skadden and Orrick settlements. National Union informed the Court on May 22, 2014 that it "has agreed to pay MGA the stipulated amount of $2, 408, 916.02 plus prejudgment interest in an amount to be calculated by the parties."[4] But the parties continue to dispute what obligation, if any, National Union has as to the remaining $415, 076.32, which represents the amount outstanding on the Belair invoices at the time of MGA's global settlements with Skadden and Orrick.

II. BACKGROUND

In 2009, MGA retained Orrick to defend the Belair action and to replace Skadden as MGA's lead counsel in an unrelated action involving Mattel, Inc. (the " Mattel action").[5] In 2011, MGA replaced Orrick with Skadden as its counsel in both cases.[6] "During the course of the Belair and Mattel lawsuits, MGA became embroiled in disputes with both the Orrick and Skadden firms about their fees."[7] The total amount billed to MGA in legal costs pertaining to the defense of the Belair action was $2, 823, 992.34.[8] MGA paid $2, 408, 916.02 of that amount directly to the law firms and vendors prior to the global settlements.[9]

On April 17, 2012 and June 23, 2013, MGA entered into confidential settlement agreements with Skadden and Orrick, respectively.[10] Both firms agreed to accept a fixed sum less than the outstanding unpaid invoices for both the Mattel and Belair actions.[11] The total outstanding balance owed to Skadden and Orrick for both actions was [REDACTED/].[12] The total amount paid by MGA to Skadden and Orrick as a result of the settlements was [REDACTED/], approximately [REDACTED/] of the total amounts owed.[13] The settlement agreements did not identify any specific written off invoices or time entries and did not allocate any specific amount as to the Belair or Mattel action.[14] The outstanding balance on invoices pertaining to the Belair action was $415, 076.32.

III. APPLICABLE LAW

A. Legal Standard

Summary judgment is appropriate "where, construing all the evidence in the light most favorable to the non-movant and drawing all reasonable inferences in that party's favor, there is no genuine issue as to any material fact and... the movant is entitled to judgment as a matter of law.'"[15] In deciding a motion for summary judgment, "[t]he role of the court is not to resolve disputed issues of fact but to assess whether there are any factual issues to be tried."[16] "Credibility determinations, the ...


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