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A federal judge has denied a request by insurance companies that paid legal costs for MGA Entertainment Inc. in its successful case against Mattel Inc. to intervene in a bid to snag part of the $141 million in attorney fees and costs awarded to the Bratz doll manufacturer.

Four insurance firms — National Union Fire Insurance Co. of Pittsburgh, Lexington Insurance Co., Chartis Specialty Insurance Co. and Crum & Forster Insurance Co. — filed the motion to intervene in the case on Aug. 26, arguing they are entitled to reimbursement for MGA’s defense fees and costs.

On Sept. 27, U.S. District Judge David Carter in Santa Ana, Calif., denied the motion, concluding that intervention in the case is "untimely" and "futile."

In his ruling, Carter concluded that the insurers should have made their claim before MGA had applied for attorney fees and costs in the case.

Since they did not, "the insurers can no longer attempt to step into MGA’s shoes and directly recover reasonable attorneys’ fees from Mattel. And any claim for reimbursement of those fees from MGA would unduly prolong this litigation, which has been administratively closed and is now on appeal."

Further, he said, intervening in the case would do nothing to ensure that MGA would pay its insurers before depleting the $141 million.

Carter awarded the fees and costs on Aug. 4 as part of a $310 million judgment for MGA. Mattel has indicated it plans to appeal the judgment to the U.S. Court of Appeals for the 9th Circuit.

The judgment also includes $85 million in exemplary damages plus a jury verdict, which he lowered to $85 million from $88.5 million, which was awarded on April 21. The jury awarded the damages after finding that Mattel, maker of Barbie, stole trade secrets from MGA by planting spies at industry trade shows. But the jury rejected Mattel’s argument that it owned the copyright to the Bratz doll.

Lexington provided general liability coverage for MGA from 2006 through 2008, while National Union and Chartis provided excess umbrella coverage from 2001 through 2003. Crum & Forster provided coverage from 2003 through 2005.

In their motion to intervene, the insurers said they had paid $80 million for MGA. But MGA has sued its insurers over coverage of the Mattel case.

In 2009, in a case against Crum & Forster, former U.S. District Judge Stephen Larson, ruling on a summary judgment motion, found that Crum & Forster had a duty to defend MGA. Lexington also has suits pending 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 Carter.

In his ruling in the Mattel case, Carter said the insurers were on notice that MGA might not give them part of the award.

"Nowhere in MGA’s fee application or briefing in support of its application did MGA indicate that it was pursuing attorney fees on behalf of its insurers," he wrote. "Moreover, the fact that MGA and its insurers have been engaged in other contentious litigation about coverage obligations, including a claim by MGA that the insurers acted in bad faith, should have alerted the insurers to MGA’s unwillingness to champion their claims."

A lawyer for National Union Fire, Lexington and Chartis, William Hanssen, a partner at Drinker Biddle & Reath’s Los Angeles office, did not return a call for comment. Susan Field, a partner at Musick Peeler & Garrett in Los Angeles, who represents Crum & Forster, declined to comment.

Amanda Bronstad can be contacted at [email protected].

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