DEG Client Awarded $48.5 Million in Insurance Dispute

in News

OCTOBER 2008; LOS ANGELES, CALIFORNIA – A nine-member federal jury
unanimously awarded $48.5 million to Sempra Energy following a two-week federal trial
against the insurance broker Marsh USA Inc. Digital Evidence Group managed all
aspects of the courtroom presentation of the evidence.
Marsh was charged with breach of contract after a political-risk policy failed to cover an
investment that was affected by a change in government policy in Argentina. “Sempra
thought it bought the right kind of insurance policy,” said Kirk Pasich, a Los Angelesbased
partner at Dickstein Shapiro, who was lead counsel for Sempra. “Marsh made a
mistake and the jury made them pay for the mistake.”
The lawsuit stemmed from an insurance policy Sempra purchased through Marsh to
cover investments in two natural gas companies in Argentina. The investments were
indexed to the U.S. dollar, shielding Sempra from any devaluation in the Argentine peso,
but Argentina’s government set aside the indexing in 2002.
Sempra’s insurance company, AIG’s National Union, refused to provide coverage,
alleging that the policy did not kick in as a result of the government’s action. In 2006, an
arbitrator concluded the same thing, denying Sempra’s $48.5 million claim.
Sempra alleged that Marsh was fully aware of the specifics of its investment in the South
American country and that it wanted coverage for the scenario that occurred.
Accordingly, because the insurance policy was bought through Marsh, Sempra hired
Pasich to bring suit against Marsh for professional negligence, negligent
misrepresentation and breach of contract.
According to Sempra and its lawyers at Dickstein Shapiro, a more appropriate insurance
policy was available but Marsh steered it to a policy that did not fully cover the
company’s investments. The Los Angeles jury agreed with the assessment.