Your SlideShare is downloading. ×
1 main
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×

Introducing the official SlideShare app

Stunning, full-screen experience for iPhone and Android

Text the download link to your phone

Standard text messaging rates apply

1 main

335
views

Published on

Read the whole story at: …

Read the whole story at:

http://byliner.com/jon-krakauer/stories/excerpt-three-cups-of-deceit


0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
335
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
1
Comments
0
Likes
0
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. Case 2:12-cv-00075-DLC Document 1 Filed 10/31/12 Page 1 of 23Carey E. MatovichJesse MyersMATOVICH, KELLER & MURPHY, P.C.2812 First Avenue North, Suite 225P.O. Box 1098Billings, MT 59103-1098Telephone: (406) 252-5500Facsimile: (406) 252-4613Email: cmatovich@mkfinn.comEmail: ;myers@mkfinn.comJohn M. KauffmanLilia TyrrellKASTING, KAUFFMAN & MERSEN, P.C.716 S. 20th Avenue, Suite 101Bozeman, MT 59718Telephone: (406) 586-4383Facsimile: (406) 587-7871Email: jkauffman@kkmlaw.netEmail: Ityrrell@kkmlaw.netA ttorneys for Central Asia Institute IN TIlE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MONTANA BUTTE DIVISION ) CENTRAL ASIA INSTITUTE, ) ) Cause No. CV-I;J.=75-t3u- DLL Plaintiff, ) ) vs. ) COMPLAINT AND DEMAND ) FOR JURY TRIAL PHILADELPHIA INDEMNITY ) INSURANCE COMPANY, )- - - - - - - - - - - ---~) Complaint and Demand for Jury Trial- 1
  • 2. Case 2:12-cv-00075-DLC Document 1 Filed 10/31/12 Page 2 of 23 Defendant. ) Plaintiff Central Asia Institute ("CAl"), by and through its attorneys, filesthis Complaint against Defendant Philadelphia Indemnity Insurance Company("Philadelphia"), and alleges as follows. NATURE OF THE ACTION 1. CAl files suit for declaratory relief and for recovery of compensatoryand punitive damages from Philadelphia arising out of Philadelphias failure tohonor its obligations under its insurance contract with CAl and for its unfair,erroneous, and bad faith refusal to pay Defense Costs incurred by CAl for coveredclaims. PARTIES 2. CAl is a Delaware 501(c)(3) non-profit corporation, with its principleplace of business in Montana. CAls charitable mission is to empowercommunities of Central Asia through literacy and education, especially for girls, topromote peace through education and convey the importance of these activitiesglobally. 3. Philadelphia is a foreign insurance company authorized to do businessin Montana. Philadelphia is a Pennsylvania corporation, with its principle place ofbusiness in Pennsylvania. Complaint and Demand tor Jury Trial- 2
  • 3. Case 2:12-cv-00075-DLC Document 1 Filed 10/31/12 Page 3 of 23 JURISDICTION AND VENUE 4. CAl and Philadelphia are citizens of different states and the amount incontroversy in this matter exceeds $75,000, exclusive of interest and costs. ThisCourt has diversity jurisdiction pursuant to 28 U.S.C. § 1332. 5. Venue is proper in this Court pursuant to 28 U.S.C. § 1391 (b)(2) andLocal Rule 3.2(b). ALLEGATIONS COMMON TO ALL CLAIMS 6. CAl purchased Philadelphia Commercial Lines Policy No.PHSD577929 with a Policy Period of December 1,2010, through December 1,2011 (the "Policy"). A true and correct copy ofthe Policy is attached as Exhibit 1. 7. CAl is the Named Insured Organization under the Policy. The Policyprovides liability insurance for the Organization (CAl), in addition for IndividualInsureds. The Individual Insureds under the Policy include, inter alia, CAls past,present, and future officers and directors, including but not limited to its executivedirector. 8. During the Policy Period and at all relevant times herein, GregMortenson ("Mortenson") served as CAls executive director, and is an IndividualInsured under the Policy. CAl has a duty to indemnify Mortenson, as the Complaint and Demand for Jury Trial - 3
  • 4. Case 2:12-cv-00075-DLC Document 1 Filed 10/31/12 Page 4 of 23executive director of CAl under Delaware law and under an indemnificationresolution passed by its Board of Directors. 9. Under the terms of the Policy, CAl and Mortenson had (and have)responsibility to defend any Claim made against them. They are obligated to electcounsel oftheir choice, subject to approval of Philadelphia. Philadelphiasapproval may not be unreasonably withheld. 10. Under the terms of the Policy, Philadelphia has a duty to advanceDefense Cost for investigation, adjustment, defense and appeal of claims, inaddition to the Limit of Liability as follows: If the Insured has assumed the defense of a Claim pursuant to A. above, the Underwriter shall advance Defense Cost prior to the final disposition of a Claim ... 11. The Policy defines the term "Defense Cost" as "any reasonable andnecessary legal fees and expenses incurred in the defense of a Claim, whether bythe insured with the Underwriters consent or directly by Underwriter, in theinvestigation, adjustment, defense and appeal of a Claim ... " Hereinafter the termis referred to as "Defense Cost" or "Defense Costs." 12. Payment of Defense Costs by Philadelphia under the Policy is anobligation which is in addition to, and not part of, the Limit of Liability unless theapplicable Limit of Liability has been exhausted by payment of damage claims. Complaint and Demand for Jury Trial. 4
  • 5. Case 2:12-cv-00075-DLC Document 1 Filed 10/31/12 Page 5 of 23 13. CAr incurred Defense Costs for itself and for Mortenson inconnection with the lawsuit initiated against them on or about May 5, 20 II, in theUnited States District Court of Montana known as Case No. CV-II-72-M-DWM("Pfau Litigation"). 14. The plaintiffs in the Pfau Litigation claimed to have purchased booksauthored by Mortenson entitled Three Cups ofTea and Stones Into Schools. Thecomplaints filed against Mortenson and CAl in the Pfau Litigation contained avariety of legal and equitable claims (fraud, deceit, RICO violations breach ofcontract, unjust enrichment and constructive trust) all of which were predicated onthe same core set of factual allegations. IS. The plaintiffs in the Pfau Litigation amended their complaint fourtimes. CAl timely provided Philadelphia with copies of the First, Second, Third,and Fourth Amended Complaints filed in the Pfau Litigation. A copy of the FourthAmended Complaint is attached as Exhibit 2. 16. The Pfau Litigation at all times involved an attempt to establish anationwide class of book purchasers and included motions and briefs on classcertification, discovery, and whether the matter should be dismissed for failing tostate claims upon which relief could be granted. 17. On April 30, 2012, the United States District Court for the District ofMontana dismissed the Fourth Amended Complaint filed in the Pfau Litigation Complaint and Demand for Jury Trial - 5
  • 6. Case 2:12-cv-00075-DLC Document 1 Filed 10/31/12 Page 6 of 23with prejudice, holding, in part, that the plaintiffs had failed to state claims uponwhich relief could be granted. Plaintiffs appealed the decision to the Ninth CircuitCourt of Appeals and that appeal is pending 18. CAl wrote to Philadelphia on May 27, 2011, and again on May 31,2011, to notify Philadelphia of the Piau Litigation and to request full coverageunder the Policy, including approval of retained counsel (the "May 2011 Notices").Philadelphia acknowledged receipt ofthe May 2011 Notices on June 2, 2011. 19. Separately from the May 2011 Notices, Mortenson notifiedPhiladelphia of the Piau Litigation on or about June 9, 2011, and requested fullcoverage under the Policy including approval of counsel. Philadelphiaacknowledged receipt of Mortensons notice of loss on June 17,2011. 20. Given the complex and nation-wide issues presented in the PiauLitigation and the fact that it was filed in the United States District Court in theState of Montana, it was reasonable and necessary for CAl and Mortenson toengage both Montana counsel and national counsel with experience in RICO, classaction, and the other claims in this litigation, which they had done, and of whichthey timely notified Philadelphia. 21. Following receipt ofthe complaint in the Piau Litigation, CAlincurred reasonable and necessary Defense Costs investigating, preparing to Complaint and Demand for Jury Trial- 6
  • 7. Case 2:12-cv-00075-DLC Document 1 Filed 10/31/12 Page 7 of 23defend, and defending itself and Mortenson against the allegations therein, andcontinues to do so with respect to the appeal. 22. CAl also incurred Defense Costs for itself and for Mortenson inconnection with investigations initiated against them beginning in May of2011, bythe Office of the Attorney General ofMontana 23. On or about September 16,2011, CAl (i) notified Philadelphia of itsdefense in the AG Matter, (ii) provided Philadelphia with applicablecorrespondence from the Office of the Montana Attorney General; and (iii)requested full coverage under the Policy including but not limited to approval ofretained counsel. Philadelphia received the September 16, 2011, notice from CAL 24. On or about May 27 and 31, June 21, and August 1, 2011, Mortenson(i) notified Philadelphia of his defense in the AG Matter; (ii) provided Philadelphiawith applicable correspondence from the Office ofthe Montana Attorney General;and (iii) requested full coverage under the Policy including approval of retainedcounsel. Philadelphia received the May 27 and 31, June 21, and August 1, 201 I,notices from Mortenson. 25. CAl and Mortenson had each retained legal counsel to assist themwith the AG Matter. Given the complex issues presented in the AG Matter, it wasreasonable for CAl and Mortenson to engage both Montana counsel and counsel Complaint and Demand for Jury Trial - 7
  • 8. Case 2:12-cv-00075-DLC Document 1 Filed 10/31/12 Page 8 of 23with experience working with administrative attorneys general investigationsinvolving non-profit corporations and their directors. 26. On AprilS, 2012, CAl, Mortenson and the Office of the MontanaAttorney General entered into a Settlement Agreement and Assurance of VoluntaryCompliance regarding the AG Matter. CAl incurred Defense Costs for both itselfand Mortenson, as that term is defined in the Policy, to achieve this result. 27. The Piau Litigation and the AG Matter (collectively, the "Claims")are covered matters within the Policy. Philadelphia must pay the Defense Costsincurred by CAl for itself and Mortenson in connection with the Claims. 28. CAl has complied with ail applicable conditions precedent to entitle itto the benefits afforded by the Policy with respect to payment of Defense Costs forthe Claims. 29. CAl regularly provided Philadelphia with copies of legal bills itreceived (and which it had paid) from its defense counsel and requested thatPhiladelphia recognize its duty to pay and advance to CAl the Defense Cost it wasincurring. CAl did not receive a reservation of rights letter from Philadelphia inwhich Philadelphia set forth any facts or law that might relieve Philadelphia of itsobligation to provide full coverage under the Policy, until after significant DefenseCosts for the Claims had been incurred. Complaint and Demand for Jury Trial - 8
  • 9. Case 2:12-cv-00075-DLC Document 1 Filed 10/31/12 Page 9 of 23 30. On or about December 6, 2011, Philadelphia first acknowledged thatthe Piau Litigation and AG Matter constituted Claims during the Policy Period. 31. In the December 6, 20 II letter, Philadelphia claimed it issued CAl a"reservation of rights on June 17,2011." CAl never received such a "reservationof rights" on or about June 17,2011. 32. Mortenson received a letter from Philadelphia on or about June 17,2011, in which Philadelphia only discussed why it might reserve its rights. 33. Before December 6, 2011, Philadelphia never informed CAl of Policydefenses it intended to raise or provided CAl a reasonable explanation based uponthe applicable facts and law of why CAl may not receive advances orreimbursements for all Defense Costs. 34. Before December 6, 2011, Philadelphia never stated or suggested thatCAlor Mortenson should not retain counselor should not proceed with the defenseof all ofthe Claims, as required by the Policy. Philadelphia did not state or suggestthat any portion of the Defense Cost might be apportioned in a manner designatedby Philadelphia. 35. On or about December 6,20 II, Philadelphia wrote to CAl andrepudiated its duty to advance Defense Cost in full. For the first time, Philadelphiaclaimed it was only obligated to reimburse CAl for 35% of the Defense Costincurred by CAl in defending the Piau Litigation; 25% of the Defense Cost Complaint and Demand for Jury Trial - 9
  • 10. Case 2:12-cv-00075-DLC Document 1 Filed 10/31/12 Page 10 of 23incurred by Mortenson in defending the Piau Litigation; 20% of the Defense Costincurred by Mortenson in defending the AG Matter; and 100% of the Defense Costincurred by CAl in defending the AG Matter. By presenting the foregoingallocation percentages, Philadelphia misrepresented its obligations under thePolicy. 36. Philadelphia contended that it could allocate in the manner discussedin its December 6,2011, letter based upon the following provision in Part 6,Section XIX ofthe Policy (the "Allocation Provision"): If both Loss covered by this Policy and Loss not covered by this Policy are incurred either because a Claim includes both covered and uncovered matters, or because a Claim is made against both the Individual Insured and/or the Organization, and others, the Insured and the Underwriter shall use their best efforts to agree upon a fair and proper allocation of such amount between covered Loss and uncovered loss. Any such allocation shall be based upon the relative legal exposures of the parties to covered and uncovered matters. 37. Philadelphia may not use the "Allocation Clause" to limit the scope ofits obligation to advance or reimburse 100% of the Defense Costs incurred by CAlin connection with the Claims because: a. The Allocation Clause, as interpreted by Philadelphia, is contrary to Montana law. Moreover, the claims in both the Piau Litigation as well as the claims in the AG matter were so inextricably intertwined so as to make them inseparable when it came to incurring the attorneys fees and costs defending the same. As a result, it is unreasonable to attempt to Complaint and Demand for Jury Trial - 10
  • 11. Case 2:12-cv-00075-DLC Document 1 Filed 10/31/12 Page 11 of 23 allocate Defense Costs amongst the claims and Philadelphia is responsible for 100% of the Defense Costs. b. Philadelphia has acquiesced to the choices of counsel made by CAl and Mortenson and to the amounts incurred by CAl in defending CAl and Mortenson on the Claims. Philadelphia has not properly reserved its rights and is estopped from (i) challenging the reasonableness and necessity of hiring the counsel chosen by CAl and Mortenson; (ii) challenging the amounts incurred by CAl and Mortenson in defending against the Claims and; (iii) reimbursing CAl, in full, for the entire Defense Costs it has incurred for itself and Mortenson in connection with the Claims. 38. In addition to imposing an arbitrary allocation percentage to reduce itsobligation to CAl, Philadelphia also attempted in its December 6, 20 11, letter tolower the rate it would compensate the attorneys hired by CAl and Mortenson,though Philadelphia had knowledge these attorneys had been engaged at contractedrates since May, 20 11, and they had already undertaken significant efforts indefending the Claims. 39. By email datedJanuaryI8.2012.Philadelphia belatedly requestedthat retained defense counsel provide litigation plans and budgets for the Claims. Complaint and Demand for Jury Trial - 11
  • 12. Case 2:12-cv-00075-DLC Document 1 Filed 10/31/12 Page 12 of 23 40. By email dated January 19, 2012, Philadelphia belatedly attempted tounilaterally impose reporting and billing "guidelines" on the previously retaineddefense counsel. 41. Despite Philadelphia receiving notice of one or more of the Claimsbeginning in May of 20 II, Philadelphia made no payment to CAl for DefenseCosts for over a year, including the "allocations" suggested in its December 6,2011, letter. In the interim, CAl had incurred and paid hundreds of thousands ofdollars in Defenses Costs for itself and Mortenson, for which Philadelphia wasresponsible. 42. CAl made numerous pleas to Philadelphia to pay Defense Costs, butthe pleas were ignored or received substantially and unreasonably delayedresponses. 43. As of August 13,2012, more than fourteen (14) months after litigationin the Piau Litigation and the AG matter had been commenced and after themajority of anticipated Defense Costs had been incurred, Philadelphia had onlyreimbursed CAl for less than 6% of the Defense Cost CAl had incurred for itselfand Mortenson in defending the Claims. 44. On August 27,2012, Philadelphia issued a second letter with newproposed percentages for covering Defense Costs. In the August 17, 20 II, letter,Philadelphia proposed to reimburse CAl 33% of the defense fees and costs Complaint and Demand for Jury Trial - 12
  • 13. Case 2:12-cv-00075-DLC Document 1 Filed 10/31/12 Page 13 of 23incurred by Mortenson in the Piau litigation prior to the Fourth AmendedComplaint; 15% of Mortensons defense fees and costs in the Piau litigation afterthe Fourth Amended Complaint; 35% "allocation" of defense fees and costsincurred by CAl in the Piau Litigation; 50% of Mortensons defense fees and costsfor the AG matter; and 100% of CAls costs for the AG matter, with CATs feesto be "adjusted" to "Philadelphias agreed upon rates and less certain deductions."By presenting the foregoing allocation percentages and arbitrary ratemodifications, Philadelphia misrepresented its obligations under the Policy. 45. Philadelphia is estopped from attempting to impose the allocationsand fee reductions reflected in its December 6,2011, and August 27, 2012, letters.The Policy directs the insureds (CAl and Mortenson) to initially assume fullcontrol of their defense, which they did with the full knowledge and acquiescenceof Philadelphia, with Philadelphias full knowledge of and acquiescence in therates charged by the defense attorneys, and with Philadelphias full knowledge andacquiescence that a full defense was necessary. 46. Despite numerous communications by CAl to Philadelphia regardingpayments, Philadelphia refuses to pay all of CAls and Mortensons Defense Costsarising from the investigation, adjustment, defense and appeal of the Claims.Philadelphia has not even paid CAl the amounts Philadelphia had agreed to pay inits December 6, 2011, and August 27, 2012, letters. Complaint and Demand for Jury Trial- 13
  • 14. Case 2:12-cv-00075-DLC Document 1 Filed 10/31/12 Page 14 of 23 47. Philadelphia has acted in bad faith by refusing to acknowledge theapplicable scope of coverage of the Claims, refusing to engage in timely andmeaningful communications with CAl, refusing to pay and advance the reasonableand necessary Defense Cost associated with the Claims; and attempting toarbitrarily reduce fees incurred by CAl and Mortenson. COUNT I DECLARATORY JUDGMENTRE: DEFENSE COST 48. CAl incorporates by reference the enumerated paragraphs above, as iffully set forth herein. 49. Under the Policy, Philadelphia has both a duty to defend (by payingDefense Costs) and a duty to indemnify (pay damages). The duty to defend isbroader than the duty to indemnify. Philadelphia must pay Defense Costs if anyfacts or allegations bring the Claims even potentially within the protectionpurchased by CAl, even if the claims are groundless, false or fraudulent. 50. CAl has complied with the terms of the Policy in order to receive thebenefits ofthe Policy. It timely paid its premiums for the Policy. It timelyprovided Philadelphia with notice of the Claims. CAl has complied with allmaterial terms of the Policy. CAl and Mortenson have incurred and paid hundredsof thousands of dollars in Defense Costs, which are Philadelphias responsibility. Complaint and Demand for Jury Trial - 14
  • 15. ------ - - - - - - - - - - - Case 2:12-cv-00075-DLC Document 1 Filed 10/31/12 Page 15 of 23 51. Under the Policy, Philadelphia has an obligation to pay, advanceand/or reimburse CAl and Mortenson all reasonable and necessary Defense CostsCAl has incurred for itself and Mortenson in connection with the Claims. 52. CAl has repeatedly demanded payment ofthe reasonable andnecessary Defense Costs incurred in defending the Claims. 53. Philadelphia has improperly refused to pay, advance or reimburse allofthe reasonable and necessary Defense Costs incurred by CAl on behalf of itselfand Mortenson. 54. An actual controversy exists between the parties regarding theirrespective rights and remedies under the Policy. CAl contends Philadelphia has nolegal right under the Policy or under Montana law (i) to allocate percentages ofDefense Costs it will pay under the Policy; (ii) to impose below market rates itarbitrarily determines approporiate and to pay less than the actual fees incurred byCAl and Mortenson for Defense Costs for the Claims; (iii) to withhold payment toCAl of the Defense Costs it has already incurred in connection with the Claims or(iv) to refuse to advance on-going Defense Cost for the Claims. 55. A declaration of rights pursuant to 28 U.S.C. §§ 2201 and 2202 andRule 57 of the Federal Rules of Civil Procedure would alleviate the uncertaintyfacing CAl with regard to Philadelphias obligations under the Policy to pay andadvance Defense Cost arising from the Claims. Complaint and Demand for Jury Trial - 15
  • 16. - - - - - - - - - - - - " " ,.. _-,_ ..,-,,--­ Case 2:12-cv-00075-DLC Document 1 Filed 10/31/12 Page 16 of 23 56. CAl is entitled to a declaration that under the terms of the Policy, Philadelphia (i) may not allocate a percentage of Defense Costs it will pay under the Policy for fees and costs incurred in connection with the Claims; (ii) may not impose below market rates it arbitrarily determines approporiate and pay less than the actual fees incurred by CAl and Mortenson for Defense Costs for the Claims; (iii) must reimburse CAl all of the Defense Costs CAl incurred for itself and Mortenson in connection with the Claims and (iv) must advance on-going Defense Cost for the Claims in the appeal of the Piau Litigation. COUNT II BREACH OF CONTRACT 57. CAl incorporates by reference the enumerated paragraphs above, as if fully set forth herein. 58. Under the applicable standards of Montana law and the Policy, Philadelphia is obligated to pay and advance all of the reasonable Defense Costs CAl incurred for itself and Mortenson with respect to the Claims. Philadelphia must pay and advance the same, according to the Policy, "prior to the final disposition of a claim." 59. An insurers defense-payment obligation is broader than its obligation to indemnify. Complaint and Demand for Jury Trial- 16
  • 17. Case 2:12-cv-00075-DLC Document 1 Filed 10/31/12 Page 17 of 23 60. CAl has complied with all conditions and obligations under the Policyregarding its rights to receive Defense Costs from Philadelphia with respect to theClaims. 61. Philadelphia breached the Policy by denying it has the obligation topay, advance or reimburse the reasonable and necessary Defense Costs CAl hasincurred for itself and Mortenson and will continue to incur in defense and appealof the Claims. 62. Because Philadelphia has not paid according to the Policy terms, CAlbeen damaged. CAl has paid for Defense Costs without being reimbursed thesame. CAl has had to advance Defense Costs that it would not have had toadvance but for Philadelphias intransigence. CAl has had to engage legal counselto enforce its rights under the Policy. 63. CAl has suffered the foregoing damages despite having paidsubstantial premiums to Philadelphia for the Policy. 64. CAl is entitled to a judgment in its favor and against Philadelphia inan amount proven at trial that will compensate CAl for the damages incurred byPhiladelphias breach of the Policy, together with CAls reasonable attorneys feesand costs. 65. Once CAl provided notice to Philadelphia of the Claims, it shouldhave paid, advanced or reimbursed the Defense Costs. The Defense Costs are an Complaint and Demand for Jury Trial - 17
  • 18. Case 2:12-cv-00075-DLC Document 1 Filed 10/31/12 Page 18 of 23amount certain due on a date certain and, as a result, CAl is entitled to recover pre­judgment interest on the amount owed at the rate of 10% per annum. COUNT III UNFAIR TRADE PRACITCES 66. CAl incorporates by reference the enumerated paragraphs above, as iffully set forth herein. 67. CAl properly gave Philadelphia notice of the Claims and the Claimsincluded "Wrongful Acts" and "Claims," as those terms are defined in the Policy. 68. Philadelphia knew it had an obligation to advance timely andcomplete Defense Costs for the Claims. 69. Philadelphia wrongfully refused (and continues to refuse) to pay andadvance the reasonable and necessary Defense Costs incurred by CAl for itself andMortenson. 70. Philadelphia unreasonably withheld (and continues to withhold)payment of reasonable and necessary Defense Costs despite CAls full compliancewith all Policy requirements. Such withholding is with the wrongful intent ofdepriving CAl of its rights. 71. Philadelphia failed to use reasonable care in the exercise ofitsrelationship with CAL Philadelphia has not acted as a reasonable insurer wouldhave acted under the same or similar facts and circumstances. Complaint and Demand for Jury Trial - 18
  • 19. Case 2:12-cv-00075-DLC Document 1 Filed 10/31/12 Page 19 of 23 72. Philadelphias actions in regard to CAls claims for Defense Costswere without justification or excuse. At worse, they were taken in bad faith andwithout regard to the adverse effect it would have on CAL At best, Philadelphiasconduct is grossly negligent and oppressive. In any event, its actions were taken tofurther Philadelphias own improper objectives and with disregard for the interestsof CAI, to the prejudice and detriment of CAl in violation of Montana law. 73. Philadelphia has violated subparagraphs (1), (4), and (5) of MontanasUnfair Trade Practices Act, Section 33-18-20 I, MCA, by misrepresenting pertinentfacts or insurance policy provisions relating to coverage at issue, by refusing to payclaims for Defense Cost without conducting a reasonable investigation based uponall available information, and/or by failing to affirm or deny coverage of claimswithin a reasonable time, causing CAl to suffer injury, damage and loss, givingrise to a general tort action in favor of CAl pursuant to Section 33-18-242, MCA. 74. Philadelphia knew at all times that it was unlawful to misrepresentpertinent facts or Policy provisions relating to coverage at issue in handling claims. 75. Philadelphia knew at all times that it was unlawful to disregardpertinent policy provisions and/or refuse to pay claims without conducting areasonable investigation based upon all available information, and giving dueconsideration to the plain language of its insurance contract, both as to theparticular facts and the applicable law governing the claim. Complaint and Demand for Jury Trial- 19
  • 20. Case 2:12-cv-00075-DLC Document 1 Filed 10/31/12 Page 20 of 23 76. Philadelphia knew at all times that in return for the premiums paid byCAl, it was obligated to adjust, pay and advance Defense Costs in accordance withthe terms, provisions and requirements of the Policy and Montana law. 77. Philadelphia knowingly applied its own internal procedures and rulesin intentional and conscious disregard of the applicable provisions of the Policyand Montana law, all for the purpose of enhancing its profit at CAls expense andgaining unfair advantage over its competitors, and in conscious disregard of thecertainty that CAl, which had the right to rely and did rely upon Philadelphiasfalse promises and misrepresentations, would suffer injury as a result. 78. At all relevant times, Philadelphia acted in conscious disregard of, orindifference to, the knowledge that its arbitrary and unjustifiable conduct injuredCAl, and did so pursuant to policies, procedures and programs designed andcalculated to justify wrongdoing in the process of adjusting legitimate claims andevade the responsibility imposed upon all legitimate insurers to reimburse insuredsin strict accordance with the promises set forth in the Policy. 79. Philadelphias acts, decisions, and conduct clearly and convincinglydemonstrate actual malice, actual fraud, or both. CAl is entitled to a judgment inits favor and against Philadelphia for punitive damages in an amount to be provenat trial. CAl should be awarded such damages against CAl for the purpose ofdisgorging from Philadelphia all ill-gotten gains obtained through such wrongful Complaint and Demand for Jury Trial" 20
  • 21. Case 2:12-cv-00075-DLC Document 1 Filed 10/31/12 Page 21 of 23behavior, taking the profit out of unlawful claim handling practices, punishing andmaking an example of Philadelphia sufficient to deter similar fraudulent andmalicious behavior by it and all other insurers doing business in Montana now andforever in the future, all in accordance with the strict procedural and substantiveprotections afforded by Montana law. 80. As a result of Philadelphias wrongful conduct, CAl has been requiredto obtain counsel to represent its interests in pursuing this claim. As a result, CAlhas incurred, and will continue to incur, attorneys fees and litigation expenses inorder to establish its right to compensation for Defense Costs under the Policy. WHEREFORE, CAl respectfully prays for the Court grant CAl thefollowing relief; 1. Issue a judgment in favor of CAl and against Philadelphia declaringthat Philadelphia, as a matter of fact and law, is obligated to pay and advance allsums for all of the Defense Costs CAl incurred for itself and Mortenson for theClaims, and that Philadelphias duty to pay and advance all of the Defense Costswill continue until the Claims are finally resolved; 2. Issue a judgment in favor of CAl and against Philadelphia forPhiladelphias breach of the terms of the Policy and awarding CAl compensatorydamages and pre-judgment interest as proven at trial; Complaint and Demand for Jury Trial - 2 J
  • 22. Case 2:12-cv-00075-DLC Document 1 Filed 10/31/12 Page 22 of 23 3. Issue a judgment in favor of CAl and against Philadelphia forPhiladelphias violation of Montanas Unfair Trade Practices Act, awarding CAlcompensatory and punitive damages as proven at trial; 4. Issue a judgment in favor of CAl and against Philadelphia awardingCAl its reasonable attorneys fees incurred in this matter, together with costs anddisbursements as allowed by law or in equity; and 5. Issue an Order granting CAl such other and further relief as the Courtdeems just and proper under the circumstances. DATED this 31 st day of October, 2012. MATOVICH, KELLER & MURPHY, P.C. By: lsi Carey E. Matovich Carey E. Matovich Jesse Myers KASTING, KAUFFMAN & MERSEN, p.e. By: lsi John M Kaufftnan John M. Kauffinan Lilia Tyrrell DEMAND FOR JURY TRIAL Plaintiff Central Asia Institute hereby demands a jury for all issues properlytriable by a jury in this matter. DATED this 31 st day of October, 2012. Complaint and Demand for Jury Trial - 22
  • 23. Case 2:12-cv-00075-DLC Document 1 Filed 10/31/12 Page 23 of 23 MATOVICH, KELLER & MURPHY, P.e. By: /s/ Carey E. Matovich Carey E. Matovich Jesse Myers KASTING, KAUFFMAN & MERSEN, P.e. By: /s/ John M Kaufftnan John M. Kauffman Lilia Tyrrell Complaint and Demand for Jury Trial- 23