District Judge Shira A. Scheindlin
In 2009 MGA retained the Orrick law firm to defend Belair’s infringement suit, and replace Skadden Arps in a suit involving Mattel Inc. In 2011 it replaced Orrick with Skadden in both cases. Fee disputes arose. It was billed $2.8 million for the Belair defense. Skadden and Orrick agreed to accept a fixed sum for the two cases. After a July 2013 ruling that National Union Fire Ins. Co. had to defend MGA in the Belair case, MGA sought judgment for the $2.8 million. National Union (NU) argued that under the Skadden and Orrick settlements, MGA did not have to pay anything in the Belair case and was not damaged. In May 2014 NU stipulated to pay MGA $2.4 million plus prejudgment interest. The parties dispute NU’s duty as to the $415,076 difference between the stipulated amount and that billed in the Belair case. NU was ordered to pay MGA $2.4 million plus $482,549 prejudgment interest. MGA was owed no more than the $2.4 million it actually paid. Given MGA’s payment of counsel the California Supreme Court’s 1957 decision in Arenson v. National Auto. & Cas. Ins. Co. did not apply. The court could not find any action wherein a policyholder fully paid its attorneys, and the insurer had to pay more than the policyholder actually paid.