Preview
1/SUIZ4, 4:49 FIV vetails
Case Information
22CV02982 | PAUL BETENBAUGH vs SAFECO INSURANCE COMPANY OF AMERICA, a New Hampshire
corporation, GURNEE MASON RUSHFORD BONOTTO & FORESTIERE, LLP,PHILLIP BONOTTO, TRACY
FRITCH-THYM
Case Number Court
22CV02982 Civil
File Date Case Type Case Status
09/16/2022 (16) Unlimited Fraud Opened
Party
Plaintiff Active Attorneys ¥
BETENBAUGH, PAUL Lead Attorney
Gavrilov, Ognian A
Retained
Attorney
Coleman, Michael
Retained
Attorney
DARLING, ALEXANDRA
Retained
Defendant Active Attorneys ¥
SAFECO INSURANCE COMPANY OF AMERICA, a New Hampshire Attorney
corporation Sanders, Robert Allan
Retained
Wttnn-Hanactal ananlann tidladtaacnh sland IDacdtallllamaNMaclanannnRhndAnrn—n AIAN
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Defendant Active Attorneys ¥
GURNEE MASON RUSHFORD BONOTTO & FORESTIERE, LLP
Lead Attorney
Kohls, Daniel Vincent
Retained
Attorney
Koberlein, Leighton Bernard
Retained
Defendant Active Attorneys ¥
BONOTTO, PHILLIP R
Lead Attorney
Kohls, Daniel Vincent
Retained
Attorney
Koberlein, Leighton Bernard
Retained
Defendant Active Attorneys
FRITCH-THYM, TRACY W
Lead Attorney
Kohls, Daniel Vincent
Retained
Attorney
Koberlein, Leighton Bernard
Retained
Events and Hearings
09/16/2022 Complaint - Unlimited Civil First Paper Filing {$435} v
AttnadlInArtaAl AnAlAnnA thilastanh alaudlDartalllLiamaN\AlarisannannR hndAnrnenlN 9aIAN
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Comment
1. Professional Neglience 2. Breach of Fiduciary Duty 3. Breach of Contract 4. Fraudulent
Concealment 5. Breach of the Implied Covenant of Good Faith and Fair Dealing
09/16/2022 Civil Case Cover Sheet
09/16/2022 Summons (Civil) ¥
Comment
issued
09/16/2022 Notice of Case Management Conference
09/16/2022 Proof of Service
Unserved
03/01/2023 Case Management Statement
03/13/2023 Notice v
Comment
Rescheduling CMC
04/12/2023 Case Management Conference v
Original Type
Case Management Conference
Judicial Officer
Ekland, Alicia
Hearing Time
2:30 PM
Result
Held
07/12/2023 Case Management Conference ¥
Original Type
Case Management Conference
Judicial Officer
Ekland, Alicia
Hearing Time
2:30 PM
Result
Held
Parties Present#
Plaintiff
lAttnan:lInartal annlann tilastanh alaudlDarctalllama AMarlisananndhadnarnal QIAN
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Attorney: Gavrilov, Ognian A
07/12/2023 Minutes
09/12/2023 Case Management Statement
09/13/2023 Case Management Conference ¥
Original Type
Case Management Conference
Judicial Officer
Ekland, Alicia
Hearing Time
2:30 PM
Result
Held
Comment
*status of federal case*
Parties Present#
Plaintiff
Attorney: DARLING, ALEXANDRA
09/13/2023 Minutes
09/25/2023 Notice and Acknowledgment of Receipt v
Comment
SAFECO INSURANCE
09/27/2023 Notice and Acknowledgment of Receipt v
Comment
PHILLIP BONOTTO
09/27/2023 Notice and Acknowledgment of Receipt v
Comment
GURNEE MASON RUSHFORD CONOTTO & FORESTIERE, LLP
09/27/2023 Notice and Acknowledgment of Receipt v
Comment
TRACY W. FRITCH-TYM
10/20/2023 1st Paper Fee - Unlimited (Answer) {$435} v
hAttnanslnartal ananlann tilartanah alaud/DactallllamaNNarlisannnnd hanAnrnneN AIAN
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Comment
NOT AN ANSWER. USED FOR 1ST FILING FEE
10/20/2023 Motion - No Fee v
Comment
NOTICE OF MOTION AND MOTION TO STAY; AND MEMORANDUM OF PNTS AND AUTHS.
10/26/2023 Request v
Comment
FOR JUDICIAL NOTICE IN SUPPORT OF DEFENDANT SAFECO INSURANCE COMPNAY OF
AMERICA'S MOTION TO STAY
11/01/2023 Memorandum of Points & Authorities v
Comment
IN OPPOSITION TO DEFENDANT SAFECO INSURANCE COMPANY OF AMERICA'S MOTION TO
STAY
11/01/2023 Notice v
Comment
OF PLAINTIFF'S MOM-OPPOSTITION TO DEFENDANTS GURNEE MASON RUSHFORD
BONOTTO & FORESTIERE, LLP, PHILLIP R. BONOTTO AND TRACY 2. FRITCHTHYM'S MOTION
TO TRANSFER VENUE
11/01/2023 Proof of Service
11/01/2023 Proof of Service
11/02/2023 Proof of Service
11/02/2023 Proof of Service
11/07/2023 Reply Filed v
Comment
REPLY BRIEF IN SUPPORT OF DEFENDANT SAFECO INSURANCE COMPANY OF AMERICA'S
MOTION TO STAY
11/07/2023 Notice v
Comment
DEFENDANT SAFECO INSURANCE COMPANY OF AMERICA'S NOTICE OF NON OPPOSITION TO
DEFENDANTS GURNEE MASON RUSHFORD BONOTTO & FORESTIERE LLP, PHILLIP R.
BONOTTO, AND TRACY W. FRITCH-THYM'S MOTION TO TRANSFER VENUE
11/07/2023 Answer / Response / Denial - Unlimited v
AttnansllnActal annlann tilartaah alauAlDactallllamaNNMarlianannN
haAnarInaeN cIAn
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Comment
NOT AN ANSWER; CODE USED TO GENERATE FIRST PAPER FEE
11/07/2023 Answer/ Response / Denial - Unlimited v
Comment
NOT AN ANSWER; CODE USED TO GENERATE FIRST PAPER FEE
11/07/2023 Answer/ Response / Denial - Unlimited v
Comment
NOT AN ANSWER; CODE USED TO GENERATE FIRST PAPER FEE
11/07/2023 Motion - No Fee
Comment
DEFENDANTS GURNEE MASON RUSHFORD BONOTTO & FORESTIERE, LLP; PHILLIP R.
BONOTTOW AND TRACY W. FRITCH-THYMS NOTICE OF MOTION AND MOTION TO TRANSFER
VENUE
11/07/2023 Request for Judicial Notice v
Comment
IN SUPPORT OF DEFENDANTS GURNEE MASON RUSHFORD BONOTTO & FORESTIERE, LLP,
PHILLIP R BONOTTO AND TRACY W FRITCH-THYMS MOTION TO TRANSFER VENUE
11/07/2023 Memorandum of Points & Authorities v
Comment
IN SUPPORT OF DEFENANTS GURNEE MASON RUSHFORD BONOTTO & FORESTIERE, LLP,
PHILLIP R BONOTTO AND TRACY W FRITCH-THYMS NOTICE OF MOTION AND MOTION TO
TRANSFER VENUE
11/07/2023 Declaration ¥
Comment
OF PHILLIP R BONOTTO IN SUPPORT OF MOTION TO TRANSFER VENUE
11/07/2023 Declaration v
Comment
OF TRACY W FRITCHOTHYM IN SUPPORT OF MOTION TO TRANSFER VENUE
11/14/2023 Stipulation & Order - No Fee
11/15/2023 Motion Hearing - Predisposition ¥
Judicial Officer
Ekland, Alicia
lAttnas/Inartal analann tiladtaanh alauidl/DartallllamaNMadsanannandhadAnrIinaN clIANn
1/5U/24, 4:49 FIV vetalls
Hearing Time
2:30 PM
Cancel Reason
Vacated
Comment
TO STAY
12/05/2023 Case Management Statement
12/05/2023 Case Management Statement
12/05/2023 Proof of Service
12/05/2023 Notice of Remote Appearance
12/06/2023 Motion Hearing - Predisposition v
Judicial Officer
Ekland, Alicia
Hearing Time
2:30 PM
Comment
DEFENDANTS GURNEE MASON RUSHFORD BONOTTO & FORESTIERE, LLP; PHILLIP R. BONOTTOW
AND TRACY W. FRITCH-THYMS NOTICE OF MOTION AND MOTION TO TRANSFER VENUE
12/06/2023 Motion Hearing - Predisposition v
Original Type
Motion Hearing - Predisposition
Judicial Officer
Ekland, Alicia
Hearing Time
2:30 PM
Result
Held
Comment
*Motion to Stay*
Parties Present«
Defendant
Attorney: Koberlein, Leighton Bernard
Defendant
Attorney: Koberlein, Leighton Bernard
Defendant
Attorney: Koberlein, Leighton Bernard
AttnanslAactal analann tilactaah alaudl(DartallllamaNMariszannnnMndnarIneN TIAN
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12/06/2023 Minutes
12/06/2023 Order v
Judicial Officer Comment
Ekland, Alicia Granting Dft Safeco Insurance Company of America's Motion to Stay
12/12/2023 Order Regarding Remote Appearance v
Judicial Officer
Ekland, Alicia
12/14/2023 Notice of Remote Appearance
12/18/2023 Order Regarding Remote Appearance ¥
Judicial Officer Comment
Ekland, Alicia GRANTED
12/18/2023 Notice of Hearing v
Comment
CHANGING LOCATION
12/20/2023 Case Management Conference v¥
Original Type
Case Management Conference
Judicial Officer
Ekland, Alicia
Hearing Time
2:30 PM
Result
Held
Comment
*staus of federal case*
Parties Presenta
Plaintiff
Attorney: DARLING, ALEXANDRA
Defendant
Attorney: Sanders, Robert Allan
12/20/2023 Notice v
AHtnnddnartal analann thilartanh sland /Dartalllama \MlacisannnnadAnrnaeN o1ln
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Comment
Notice of Disassociation of Counsel Frank Faizetta
12/20/2023 Minutes
01/03/2024 Notice v
Comment
CONTINUED COURT HEARING
01/04/2024 Notice of Remote Appearance
srasiznna Sra Really aril Bieter
01/10/2024 Status v
Original Type
Status
Judicial Officer
Ekland, Alicia
Hearing Time
2:30 PM
Result
Held
Comment
OF TRANSFER
Parties Present
Defendant
Attorney: Sanders, Robert Allan
Defendant
Attorney: Koberlein, Leighton Bernard
Defendant
Attorney: Koberlein, Leighton Bernard
Defendant
Attorney: Koberlein, Leighton Bernard
01/10/2024 Minutes
01/11/2024 Minute Order
Judicial Officer
Ekland, Alicia
01/17/2024 Correspondence Returned Undeliverable
lAttnnIIAActal annlann tilactaanh alaundlDartallliamaNMarleanannnhaAndneNn alAN
t 1 SUIL4, "4:49 rM vetalls
01/30/2024 Change of Venue v
Comment
Granted to Sacaramento County
01/30/2024 Notice v
Comment
Record & Notice of Transfer
02/21/2024 Status ¥
Judicial Officer
Ekland, Alicia
Hearing Time
2:30 PM
Comment
OF TRANSFER
f Ss
7
Ve tilartaah Aland Darnall
Ams MMacliannnnMnadnnaN ANIAN
ATTORNEY OR PARTY WITHOUT ATTORNEY (Name, State B ber, and address):
CM-010
FOR COURT USE ONLY
an Gavrilov SBN 258583
Gavrilov & Brooks D ORIGINAL
2315 Gavrilov & Brooks
Sacramento, CA 95816 i |
TELEPHONE NO.: (16 504-0529 Faxno.: (916) 727-6877 F | L. E 3 c
ATTORNEY FOR (Name): Paul etenbaugh _ G °
SUPERIOR COURT OF CALIFORNIA, COUNTY OF Glenn E SEP 16 2022 N
STREET ADDRESS: oe we eyoaniore Rivet _ :
MAILING ADDRESS: . Sycamore Stre COURT
city anoz cove: Willows, CA 95988 E84 OF He S Sepury |
srancu name: Glenn County Superior Court
CASE NAME:
Betenbaugh v. Safeco Ins., et al.
ZT oan CASE coer SHEET Complex Case Designation CASE wet y 02-9 8 2 |
Unlimited Limited
(Amount (Amount CJ Counter CJ Joinder Toon
demanded demanded is Filed with first appearance by defendant ,
$25,000 or less)
exceeds $25,000) (Cal. Rules of Court, rule 3.402) DEPT:
Items 1-6 below must be completed (see instructions on page 2).
1. Check one box below for the case type that best describes this case:
Auto Tort Contract Provisionally Complex Civil Litigation
Auto (22) [_] Breach of contractWwarranty (06) (Cal. Rules of Court, rules 3.400-3.403)
Uninsured motorist (46) C_] Rule 3.740 collections (09) Cc] Antitrust/Trade regulation (03)
Other PI/PD/WD (Personal Injury/Property fa Other collections (09) Construction defect (10)
Damage/Wrongful Death) Tort Insurance coverage (18) Mass tort (40)
Asbestos (04) <
[1] other contract (37) Securities litigation (28) im
Product liability (24) Real Property [_] EnvironmentatToxic tort (30) >
Medical malpractice (45) [J Eminent domain/Inverse Insurance coverage claims arising from the a
[_] Other PI/PD/WD (23) condemnation (14) above listed provisionally complex case €
on-PI/PD/WD (Other) Tort [] wrongful eviction (33) lypes (#1) La
cS Business tort/unfair business practice (07) [] other real property (26) Enforcement of Judgment | ne
C_] civil rights (08) Unlawful Detainer [7] Enforcement of judgment (20) Seer
[J Defamation (13) Commercial (31) Miscellaneous Civil Complaint
CY] Fraud (16) Residential (32) [_] rico 27)
[_] intellectual property (19) Drugs (38) [J other complaint (not specified above) (42)
[_] Professional negligence (25) Judicial Review Miscellaneous Civil Petition
CJ Other non-PI/PD/WD tort (35) Asset forfeiture (05)
Partnership and corporate governance (21)
pmerovment CL] Petition re: arbitration award (11) | Other petition (not specified above) (43)
Wrongful termination (36) Cc] Writ of mandate (02)
Other employment (15) [] Other judicial review (39)
2. Thiscase L_]is [Ly] isnot complex under rule 3.400 of the California Rules of Court. If the case is complex, mark the
factors requiring exceptional judicial management:
—a. | Large number of separately represented parties d. | Large number of witnesses
|__| Extensive motion practice raising difficult or novel _e. CJ Coordination with related actions pending in one or more courts
issues that will be time-consuming to resolve in other counties, states, or countries, or in a federal court
Y__| Substantial amount of documentary evidence f. CJ Substantial postjudgment judicial supervision
~“Remedies sought (check all that apply): aly] monetary b.[_] nonmonetary; declaratory or injunctive relief — c.LV] punitive
4. Number of causes of action (specify): 5
5. This case CJ is Ww) isnot aciass action suit.
6. If there are any known related cases, file and serve a notice of related case. (You may use form CM-015. )
Date: September 16, 2022 “a —
Ognian Gavrilov __ > i ae ee =
(TYPE OR PRINT NAME) (SIGNATURE OF PARTY OR ATTORNEY FOR PARTY)
NOTICE
e Plaintiff must file this cover sheet with the first paper filed in the action or proceeding (except small claims cases or cases filed
under the Probate Code, Family Code, or Welfare and Institutions Code). (Cal. Rules of Court, rule 3.220.) Failure to file may result
in sanctions.
° File this cover sheet in addition to any cover sheet required by local court rule.
e If this case is complex under rule 3.400 et seq. of the California Rules of Court, you must serve a copy of this cover sheet on all
other parties to the action or proceeding.
¢ Unless this is a collections case under rule 3.740 or a complex case, this cover sheet will be used for statistical purposes only.
Form Adopted for Mandatory Use Cal. Rules of Court, rules 2.30, 3.220, 3.400-3.403, 3.740;
Judicial Council of California CIVIL CASE COVER SHEET Cal. Standards of Judicial Administration, std. 3.10
CM-010 [Rev. July 1, 2007]
www.courtinfo.ca.gov
LJ ORIGIN
FILED
SEP 16 2022
Zza2mrog
0
5
COMPLAINT
Gendersen’s counsel stated, “[i]n the interim, please provide me with the names of Mr.
Betenbaugh’s Cumis counsel. As we both know, Civil Code section 2860(b) makes Cumis
counsel mandatory in cases where the carrier is defending under reservation of rights.”
26. Betenbaugh is informed and believes, and thereon alleges that Firm Defendants
+
never informed Betenbaugh of the 2021 Settlement Offer. Betenbaugh is further informed and
Nn
believes, and thereon alleges that Safeco instructed Firm Defendants not to communicate the
DH
2021 Settlement Offer to Betenabugh, and Firm Defendants followed Safeco’s instruction.
NI
27. On July 21, 2021, the Firm Defendants and Safeco rejected the 2021 Settlement
wea
Offer without Betenbaugh’s knowledge or consent, and instead made a settlement offer of
oO
10 $150,001 pursuant to California Code of Civil Procedure section 998 (“998 Offer”). In his
11 rejection letter, Bonotto stated, “At this point, both my client and his insurance carrier are
12 prepared to try the case against that settlement offer.” Bonotto further stated, “Separately, we
13 disagree with your interpretation of Ca. Civ. Code 2860. Furthermore, any rights, obligations, or
14 duties if any exist contained in Ca. Civ. Code 2860 are between Mr. Betenbaugh and his
15 insurance carriers and do not involve plaintiff. Regardless, my firm is the sole representation in
16 this matter on behalf of Mr. Betenbaugh. Accordingly, please direct all communications you
17 have for Mr. Betenbaugh through my office.”
18 28. Betenbaugh is informed and believes, and thereon alleges that in sending the
19 Settlement Correspondence quoted above in Paragraph 27, Firm Defendants were acting at the
20 direction of Safeco and its representatives and putting Safeco’s interests above that of their
21 client, Betenbaugh, consistent with the Defendants’ established pattern and practice, as alleged
me more fully herein.
23 29. On July 21, 2021, Gundersen rejected the inadequate 998 Offer. In so doing,
24 Gundersen’s counsel further stated, in relevant part:
25 More importantly, let me clear up your confusion because I am keenly aware that
your office is not trained in insurance bad faith and legal malpractice. Civil Code
26
2860 can only be circumvented if the carrier agrees there is no reservation of
a? rights, that they will pay all damages, including punitive damages, and there is no
other conflict of interest. While the carrier gets to avoid bad faith if the
28 aforementioned issues are resolved (which is highly doubtful here), your office,
6
COMPLAINT
on the other hand, has competing ethical and legal duties that are not subject to
waiver. For example, your office is clearly beholden to the insurance carrier and
the carrier’s desire to gamble cannot be reconciled with your client’s desire to
NY
avoid public humiliation from the sizable punitive damages award that is coming
his way. Speaking of punitive damages, I get to examine your client’s financial
WH
condition on the stand, which is a problem for you because I will get to ask him if
Fe
he has valued the malpractice case against your firm and the bad faith case against
the carrier.
OU
It is also your independent duty to inform your client that it is my practice to
collect the excess verdict directly from the defendant when I pop a policy at trial.
NO
In other words, I do not accept bad faith assignments. If a defendant files
bankruptcy, I then take the insurance bad faith and attorney malpractice cases
me
from the bankruptcy trustee on contingency.
So
30. On July 22, 2021, Bonotto confirmed receipt of Gundersen’s rejection of the 998
Offer and stated, “I would appreciate the professional courtesy of you not attempting to instruct
SS
ES|lUhL ES|hl
me how to handle our case.”
31. On July 22, 2021, Gundersen’s counsel responded in relevant part:
oH
Mr. Bonoto,
FO OE
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My responses to you were not rooted in arrogance or absence of professional
courtesy. I have an affirmative duty to my client to make sure I have you and the
YF
insurance carrier properly set up for malpractice and bad faith should things go
Aaa
sideways for you in trial. You are an experienced trial attorney, so you must
KF
know the result of this case is wildly unpredictable on both sides and I can just as
FY
easily leave the court with a $20M verdict against your client or with a number
that I won’t like.
F§-
G&Ge
The last time I popped a policy the insurance carrier (Liberty Mutual) hired Blake
KF
Russum from Ropers Majeski to tell me how I didn’t properly open the policy and
BB
NO
didn’t properly set up the attorney. The carrier ultimately paid the full judgment
but not until I had to waste time by garnishing wages, filing liens, and setting up
NO
the debtor’s examination.
BBR
NO
The bottom line is that while you may not like the e-mails I sent, they are all
within bounds and they are meant to document your office’s and the insurance
NO
carrier’s actions in case the carrier takes the position that they do not wish to pay
B®
NYO
the judgment.
NO
R
32. Thus, no later than July 22, 2021, Firm Defendants and Safeco were on notice of
the following:
SNR
NN
(A) Safeco was at significant risk of facing liability on an insurance bad faith action for
Do
COMPLAINT
its unreasonable refusal to settle for the Policy Limits;
(B) The Firm Defendants and Safeco, on the one-hand, and Betenbaugh on the other
NO
hand, had an irreconcilable conflict of interest such that Betenbaugh should have been properly
WY
advised of his right to obtain Cumis counsel;
F&F
(C) Betenbaugh was staring down the barrel of a jury verdict far in excess of his Policy
nO
Limits, which if obtained, could and would ruin him financially; and,
DN
(D) The Firm Defendants were in the midst of committing attorney malpractice by failing
NI
to communicate an offer of settlement to their client, rejecting an offer for settlement of Policy
eo
Limits without their client’s knowledge or consent, and failing to properly advise Betenbaugh of
oO
his right to Cumis counsel.
OO
TRIAL IN THE UNDERLYING ACTION
KF
33. On August 17, 2021, trial commenced in the Underlying Action. Betenbaugh’s
NY
entire defense at trial was predicated on the theory that the Craigslist Posts were merely a
WY
lighthearted joke for which Betenbaugh did not willfully commit any injury.
FF
Rm
34. On the seventh day of trial, August 27, 2021, Gundersen’s counsel made a motion
A
to conform to proof to add a cause of action for Negligent Infliction of Emotional Distress. In
DBD
support of his oral motion, Gundersen’s counsel stated, in relevant part, “the reason we bring it
NY
wR
today, Mr. Betenbaugh testified at length how he thought this was a prank. And so if the jury
Be
takes the position this was a prank, then negligent infliction of emotional distress would kick in.”
OO
35. Bonotto responded, “Your Honor, we have no objection to the amending in that —
CFO
RO
in that fashion.” Thus, at trial, the operative complaint was amended to conform to proof to add
K|§
HNO
a negligence-based-cause of action.
Ne
WN
36. In light of the oral amendment to the operative complaint, Gundersen’s counsel,
WHY
NH
on the one hand, and the Firm Defendants, on the other hand, worked together to craft the special
fF
WN
verdict form (“Special Verdict Form”). Question 2 of the Special Verdict Form (“Question 2”)
UN
NHN
read: “Was the conduct of Paul Betenbaugh: Defamation OR False Light OR Negligent Infliction
Dn
NO
of Emotional Distress OR Intentional Infliction of Emotional Distress?” Thus, Question 2 makes
wpoy
oN
no distinction between whether the jury was asked to find Betenbaugh liable for an intentional
NY
8
COMPLAINT
tort or a negligence-based cause of action.
37. On the tenth day of trial, September 1, 2021, the jury unanimously answered
NY
Question 2 in the affirmative. The jury further awarded Gundersen $3 million in past
WD
noneconomic loss, and $5 million in future noneconomic loss, including loss for “mental
FF
suffering, anxiety, humiliation, [and] emotional distress[.]” A true and correct copy of the
HO
Special Verdict Form is attached hereto as Exhibit 2 and is incorporated by reference as though
Dn
fully set forth herein.
wean
38. | On September 17, 2021, judgment was entered in favor of Gundersen and against
Betenbaugh. On February 10, 2022, a Corrected Amended Judgment was entered, which
oOo
included, inter alia, $2,827,397 in pre-judgment interest to Gundersen through November 30,
le
SS
2021 from Betenbaugh. The Corrected Amended Judgment included $3 million in favor of
OO Sell
Gundersen and against Betenbaugh for past noneconomic loss, $5 million in favor of Gundersen
GBR
and against Betenbaugh for future noneconomic loss, and $35,000 in stipulated punitive
OS
damages.
ek
OF
THE FIRM DEFENDANTS’ TORTIOUS ACTS IN THE UNDERLYING LITIGATION
FF
Bah
39, Betenbaugh is informed and believes, and thereon alleges that in attempting to
KF
defend the Underlying Action, the Firm Defendants placed the interests and wishes of Safeco
FS
above the interests of Betenbaugh, in violation of Firm Defendants’ professional and fiduciary
HF
Se
obligations.
KF
40. Betenbaugh is further informed and believes, and thereon alleges that the Firm
NO
BSB
Defendants placed the interests of Safeco above Betenbaugh’s interests because Safeco, and its
YN
BBB
parent company Liberty Mutual, are important clients to the Firm, and Firm Defendants wish to
ND
maintain a continuing, ongoing, and mutually beneficial relationship with one of the Firm’s
NB
flagship clients.
RP
NO
41. The Firm Defendants’ derogation of duty took multiple forms and permutations
NO
Ro
throughout the life of the Underlying Action, and infected the quality of representation rendered
NO
to Betenbaugh.
NO
eS
42. Betenbaugh is informed and believes, and thereon alleges that from the inception
9
COMPLAINT
of the Underlying Action, the Firm Defendants were aware that Safeco has a pattern and practice
of gambling the integrity of their insureds’ financial security by refusing to settle cases of clear
NN
liability for the policy limits. The Firm Defendants failed to advise Betenbaugh of Safeco’s
WY
pattern and practice. Firm Defendants and Safeco concealed Safeco’s well-established pattern
F&_
and practice from Betenbaugh.
un
43. The Firm Defendants failed to advise Betenbaugh that he was at risk of facing a
Bn
verdict in excess of the Policy Limits, or that Safeco did not intend to cover any verdict rendered
NY
against him.
wa
44. The Firm Defendants failed to properly advise Betenbaugh of his right to Cumis
oO
counsel. Had Betenbaugh known of Safeco’s standard pattern and practice, known of the
Oe
conflict of interest between the Firm Defendants and Safeco, and fully understood his right to
Cumis counsel, Betenbaugh would have sought and obtained Cumis counsel to safeguard his
interests.
S|
45. | The Firm Defendants failed to communicate the 2021 Settlement Offer to
FEF
FO
Betenbaugh. Betenbaugh is informed and believes, and thereon alleges that Firm Defendants
rejected the 2021 Settlement Offer at Safeco’s direction, without first informing Betenbaugh of
FF
its existence.
KF
46. Firm Defendants unilaterally and without the knowledge or consent of
FF
Betenbaugh waived any opportunity for Betenbaugh to assert he was acting within the course
KF
and scope of his employment at Edward Jones when he issued the Craigslist Posts (the
NO
“Employment Defense”).
NY
47, Had the Firm Defendants not waived the Employment Defense, Edward Jones
NH
would have had to pay any verdict rendered against Betenbaugh pursuant to the doctrine of
NH
respondeat superior, regardless of whether the verdict was issued for committing an intentional
NO
tort or a negligence-based tort.
NO
48. Firm Defendants’ unilateral waiver of the Employment Defense was made with
full knowledge that Safeco was proceeding with a reservation of rights, and with full knowledge
that Safeco would refuse to pay any verdict, if any, rendered against Betenbaugh in the
10
COMPLAINT
Underlying Action.
49. Betenbaugh is informed and believes, and thereon alleges that Firm Defendants,
and each of them, failed to consult an employment attorney before waiving the Employment
Defense. Betenbaugh is further informed and believes, and thereon alleges that had Firm
Ff
Defendants consulted an employment attorney before waiving the Employment Defense, they
nN
would have discovered that the Employment Defense would fully protect Betenbaugh in the
Dn
event of an adverse verdict. Firm Defendants’ unilateral decision to waive the Employment
NI
Defense fell below the applicable standard of care.
wo
50. Betenbaugh is informed and believes, and thereon alleges that from the inception
o
10 of the Underlying Action to the date of this Complaint, Safeco paid more than $500,000 in
11 attorneys’ fees to “defend” Betenbaugh in the Underlying Action.
12 51. Betenbaugh is informed and believes, and thereon alleges that any reasonable
13 attorney in Firm Defendants’ position would have:
14 (A) Placed Betenbaugh’s interests above the interests of Safeco;
15 (B) Informed Betenbaugh of Safeco’s pattern and practice of gambling its
16 insureds’ financial security by refusing to settle cases of clear liability in hopes of obtaining a
17 favorable verdict at trial;
18 (C) Informed Betenbaugh of Safeco’s intention to disclaim any duty to settle
19 for the Policy Limits;
20 (D) Informed Betenbaugh of Safeco’s intention to disclaim any duty to
21 indemnify if Betenbaugh was hit with an adverse verdict at trial;
22 (E) Informed Betenbaugh of the substantial likelihood of an adverse verdict at
23 trial;
24 (F) Informed Betenbaugh of the substantial likelihood of an adverse verdict at
25 trial in excess of the Policy Limits;
26 (G) Informed Betenbaugh of the conflict of interest between the Firm
7? Defendants and Safeco, on the one hand, and Betenbaugh on the other hand; and,
28 (H) Properly informed and advised Betenbaugh of his right to Cumis counsel.
11
COMPLAINT
52. Betenbaugh is informed and believes, and thereon alleges that any reasonable
attorney in Firm Def
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1/SUIZ4, 4:49 FIV vetails Case Information 22CV02982 | PAUL BETENBAUGH vs SAFECO INSURANCE COMPANY OF AMERICA, a New Hampshire corporation, GURNEE MASON RUSHFORD BONOTTO & FORESTIERE, LLP,PHILLIP BONOTTO, TRACY FRITCH-THYM Case Number Court 22CV02982 Civil File Date Case Type Case Status 09/16/2022 (16) Unlimited Fraud Opened Party Plaintiff Active Attorneys ¥ BETENBAUGH, PAUL Lead Attorney Gavrilov, Ognian A Retained Attorney Coleman, Michael Retained Attorney DARLING, ALEXANDRA Retained Defendant Active Attorneys ¥ SAFECO INSURANCE COMPANY OF AMERICA, a New Hampshire Attorney corporation Sanders, Robert Allan Retained Wttnn-Hanactal ananlann tidladtaacnh sland IDacdtallllamaNMaclanannnRhndAnrn—n AIAN é 1 SU/Z4> 4:45 rM vetalls Defendant Active Attorneys ¥ GURNEE MASON RUSHFORD BONOTTO & FORESTIERE, LLP Lead Attorney Kohls, Daniel Vincent Retained Attorney Koberlein, Leighton Bernard Retained Defendant Active Attorneys ¥ BONOTTO, PHILLIP R Lead Attorney Kohls, Daniel Vincent Retained Attorney Koberlein, Leighton Bernard Retained Defendant Active Attorneys FRITCH-THYM, TRACY W Lead Attorney Kohls, Daniel Vincent Retained Attorney Koberlein, Leighton Bernard Retained Events and Hearings 09/16/2022 Complaint - Unlimited Civil First Paper Filing {$435} v AttnadlInArtaAl AnAlAnnA thilastanh alaudlDartalllLiamaN\AlarisannannR hndAnrnenlN 9aIAN 1/50/24, 4:49 FIVI vetallsS . Comment 1. Professional Neglience 2. Breach of Fiduciary Duty 3. Breach of Contract 4. Fraudulent Concealment 5. Breach of the Implied Covenant of Good Faith and Fair Dealing 09/16/2022 Civil Case Cover Sheet 09/16/2022 Summons (Civil) ¥ Comment issued 09/16/2022 Notice of Case Management Conference 09/16/2022 Proof of Service Unserved 03/01/2023 Case Management Statement 03/13/2023 Notice v Comment Rescheduling CMC 04/12/2023 Case Management Conference v Original Type Case Management Conference Judicial Officer Ekland, Alicia Hearing Time 2:30 PM Result Held 07/12/2023 Case Management Conference ¥ Original Type Case Management Conference Judicial Officer Ekland, Alicia Hearing Time 2:30 PM Result Held Parties Present# Plaintiff lAttnan:lInartal annlann tilastanh alaudlDarctalllama AMarlisananndhadnarnal QIAN 1/5UIZ4, 4:49 PM vetalls Attorney: Gavrilov, Ognian A 07/12/2023 Minutes 09/12/2023 Case Management Statement 09/13/2023 Case Management Conference ¥ Original Type Case Management Conference Judicial Officer Ekland, Alicia Hearing Time 2:30 PM Result Held Comment *status of federal case* Parties Present# Plaintiff Attorney: DARLING, ALEXANDRA 09/13/2023 Minutes 09/25/2023 Notice and Acknowledgment of Receipt v Comment SAFECO INSURANCE 09/27/2023 Notice and Acknowledgment of Receipt v Comment PHILLIP BONOTTO 09/27/2023 Notice and Acknowledgment of Receipt v Comment GURNEE MASON RUSHFORD CONOTTO & FORESTIERE, LLP 09/27/2023 Notice and Acknowledgment of Receipt v Comment TRACY W. FRITCH-TYM 10/20/2023 1st Paper Fee - Unlimited (Answer) {$435} v hAttnanslnartal ananlann tilartanah alaud/DactallllamaNNarlisannnnd hanAnrnneN AIAN 1/SUIZ4, 4:49 FIV vetalls Comment NOT AN ANSWER. USED FOR 1ST FILING FEE 10/20/2023 Motion - No Fee v Comment NOTICE OF MOTION AND MOTION TO STAY; AND MEMORANDUM OF PNTS AND AUTHS. 10/26/2023 Request v Comment FOR JUDICIAL NOTICE IN SUPPORT OF DEFENDANT SAFECO INSURANCE COMPNAY OF AMERICA'S MOTION TO STAY 11/01/2023 Memorandum of Points & Authorities v Comment IN OPPOSITION TO DEFENDANT SAFECO INSURANCE COMPANY OF AMERICA'S MOTION TO STAY 11/01/2023 Notice v Comment OF PLAINTIFF'S MOM-OPPOSTITION TO DEFENDANTS GURNEE MASON RUSHFORD BONOTTO & FORESTIERE, LLP, PHILLIP R. BONOTTO AND TRACY 2. FRITCHTHYM'S MOTION TO TRANSFER VENUE 11/01/2023 Proof of Service 11/01/2023 Proof of Service 11/02/2023 Proof of Service 11/02/2023 Proof of Service 11/07/2023 Reply Filed v Comment REPLY BRIEF IN SUPPORT OF DEFENDANT SAFECO INSURANCE COMPANY OF AMERICA'S MOTION TO STAY 11/07/2023 Notice v Comment DEFENDANT SAFECO INSURANCE COMPANY OF AMERICA'S NOTICE OF NON OPPOSITION TO DEFENDANTS GURNEE MASON RUSHFORD BONOTTO & FORESTIERE LLP, PHILLIP R. BONOTTO, AND TRACY W. FRITCH-THYM'S MOTION TO TRANSFER VENUE 11/07/2023 Answer / Response / Denial - Unlimited v AttnansllnActal annlann tilartaah alauAlDactallllamaNNMarlianannN haAnarInaeN cIAn . U9U124, "4:49 FM vetalls Comment NOT AN ANSWER; CODE USED TO GENERATE FIRST PAPER FEE 11/07/2023 Answer/ Response / Denial - Unlimited v Comment NOT AN ANSWER; CODE USED TO GENERATE FIRST PAPER FEE 11/07/2023 Answer/ Response / Denial - Unlimited v Comment NOT AN ANSWER; CODE USED TO GENERATE FIRST PAPER FEE 11/07/2023 Motion - No Fee Comment DEFENDANTS GURNEE MASON RUSHFORD BONOTTO & FORESTIERE, LLP; PHILLIP R. BONOTTOW AND TRACY W. FRITCH-THYMS NOTICE OF MOTION AND MOTION TO TRANSFER VENUE 11/07/2023 Request for Judicial Notice v Comment IN SUPPORT OF DEFENDANTS GURNEE MASON RUSHFORD BONOTTO & FORESTIERE, LLP, PHILLIP R BONOTTO AND TRACY W FRITCH-THYMS MOTION TO TRANSFER VENUE 11/07/2023 Memorandum of Points & Authorities v Comment IN SUPPORT OF DEFENANTS GURNEE MASON RUSHFORD BONOTTO & FORESTIERE, LLP, PHILLIP R BONOTTO AND TRACY W FRITCH-THYMS NOTICE OF MOTION AND MOTION TO TRANSFER VENUE 11/07/2023 Declaration ¥ Comment OF PHILLIP R BONOTTO IN SUPPORT OF MOTION TO TRANSFER VENUE 11/07/2023 Declaration v Comment OF TRACY W FRITCHOTHYM IN SUPPORT OF MOTION TO TRANSFER VENUE 11/14/2023 Stipulation & Order - No Fee 11/15/2023 Motion Hearing - Predisposition ¥ Judicial Officer Ekland, Alicia lAttnas/Inartal analann tiladtaanh alauidl/DartallllamaNMadsanannandhadAnrIinaN clIANn 1/5U/24, 4:49 FIV vetalls Hearing Time 2:30 PM Cancel Reason Vacated Comment TO STAY 12/05/2023 Case Management Statement 12/05/2023 Case Management Statement 12/05/2023 Proof of Service 12/05/2023 Notice of Remote Appearance 12/06/2023 Motion Hearing - Predisposition v Judicial Officer Ekland, Alicia Hearing Time 2:30 PM Comment DEFENDANTS GURNEE MASON RUSHFORD BONOTTO & FORESTIERE, LLP; PHILLIP R. BONOTTOW AND TRACY W. FRITCH-THYMS NOTICE OF MOTION AND MOTION TO TRANSFER VENUE 12/06/2023 Motion Hearing - Predisposition v Original Type Motion Hearing - Predisposition Judicial Officer Ekland, Alicia Hearing Time 2:30 PM Result Held Comment *Motion to Stay* Parties Present« Defendant Attorney: Koberlein, Leighton Bernard Defendant Attorney: Koberlein, Leighton Bernard Defendant Attorney: Koberlein, Leighton Bernard AttnanslAactal analann tilactaah alaudl(DartallllamaNMariszannnnMndnarIneN TIAN . UOUIZ4,"4:49 FM vetails 12/06/2023 Minutes 12/06/2023 Order v Judicial Officer Comment Ekland, Alicia Granting Dft Safeco Insurance Company of America's Motion to Stay 12/12/2023 Order Regarding Remote Appearance v Judicial Officer Ekland, Alicia 12/14/2023 Notice of Remote Appearance 12/18/2023 Order Regarding Remote Appearance ¥ Judicial Officer Comment Ekland, Alicia GRANTED 12/18/2023 Notice of Hearing v Comment CHANGING LOCATION 12/20/2023 Case Management Conference v¥ Original Type Case Management Conference Judicial Officer Ekland, Alicia Hearing Time 2:30 PM Result Held Comment *staus of federal case* Parties Presenta Plaintiff Attorney: DARLING, ALEXANDRA Defendant Attorney: Sanders, Robert Allan 12/20/2023 Notice v AHtnnddnartal analann thilartanh sland /Dartalllama \MlacisannnnadAnrnaeN o1ln 1/SUIZ4, 4:49 FIV vetalls Comment Notice of Disassociation of Counsel Frank Faizetta 12/20/2023 Minutes 01/03/2024 Notice v Comment CONTINUED COURT HEARING 01/04/2024 Notice of Remote Appearance srasiznna Sra Really aril Bieter 01/10/2024 Status v Original Type Status Judicial Officer Ekland, Alicia Hearing Time 2:30 PM Result Held Comment OF TRANSFER Parties Present Defendant Attorney: Sanders, Robert Allan Defendant Attorney: Koberlein, Leighton Bernard Defendant Attorney: Koberlein, Leighton Bernard Defendant Attorney: Koberlein, Leighton Bernard 01/10/2024 Minutes 01/11/2024 Minute Order Judicial Officer Ekland, Alicia 01/17/2024 Correspondence Returned Undeliverable lAttnnIIAActal annlann tilactaanh alaundlDartallliamaNMarleanannnhaAndneNn alAN t 1 SUIL4, "4:49 rM vetalls 01/30/2024 Change of Venue v Comment Granted to Sacaramento County 01/30/2024 Notice v Comment Record & Notice of Transfer 02/21/2024 Status ¥ Judicial Officer Ekland, Alicia Hearing Time 2:30 PM Comment OF TRANSFER f Ss 7 Ve tilartaah Aland Darnall Ams MMacliannnnMnadnnaN ANIAN ATTORNEY OR PARTY WITHOUT ATTORNEY (Name, State B ber, and address): CM-010 FOR COURT USE ONLY an Gavrilov SBN 258583 Gavrilov & Brooks D ORIGINAL 2315 Gavrilov & Brooks Sacramento, CA 95816 i | TELEPHONE NO.: (16 504-0529 Faxno.: (916) 727-6877 F | L. E 3 c ATTORNEY FOR (Name): Paul etenbaugh _ G ° SUPERIOR COURT OF CALIFORNIA, COUNTY OF Glenn E SEP 16 2022 N STREET ADDRESS: oe we eyoaniore Rivet _ : MAILING ADDRESS: . Sycamore Stre COURT city anoz cove: Willows, CA 95988 E84 OF He S Sepury | srancu name: Glenn County Superior Court CASE NAME: Betenbaugh v. Safeco Ins., et al. ZT oan CASE coer SHEET Complex Case Designation CASE wet y 02-9 8 2 | Unlimited Limited (Amount (Amount CJ Counter CJ Joinder Toon demanded demanded is Filed with first appearance by defendant , $25,000 or less) exceeds $25,000) (Cal. Rules of Court, rule 3.402) DEPT: Items 1-6 below must be completed (see instructions on page 2). 1. Check one box below for the case type that best describes this case: Auto Tort Contract Provisionally Complex Civil Litigation Auto (22) [_] Breach of contractWwarranty (06) (Cal. Rules of Court, rules 3.400-3.403) Uninsured motorist (46) C_] Rule 3.740 collections (09) Cc] Antitrust/Trade regulation (03) Other PI/PD/WD (Personal Injury/Property fa Other collections (09) Construction defect (10) Damage/Wrongful Death) Tort Insurance coverage (18) Mass tort (40) Asbestos (04) < [1] other contract (37) Securities litigation (28) im Product liability (24) Real Property [_] EnvironmentatToxic tort (30) > Medical malpractice (45) [J Eminent domain/Inverse Insurance coverage claims arising from the a [_] Other PI/PD/WD (23) condemnation (14) above listed provisionally complex case € on-PI/PD/WD (Other) Tort [] wrongful eviction (33) lypes (#1) La cS Business tort/unfair business practice (07) [] other real property (26) Enforcement of Judgment | ne C_] civil rights (08) Unlawful Detainer [7] Enforcement of judgment (20) Seer [J Defamation (13) Commercial (31) Miscellaneous Civil Complaint CY] Fraud (16) Residential (32) [_] rico 27) [_] intellectual property (19) Drugs (38) [J other complaint (not specified above) (42) [_] Professional negligence (25) Judicial Review Miscellaneous Civil Petition CJ Other non-PI/PD/WD tort (35) Asset forfeiture (05) Partnership and corporate governance (21) pmerovment CL] Petition re: arbitration award (11) | Other petition (not specified above) (43) Wrongful termination (36) Cc] Writ of mandate (02) Other employment (15) [] Other judicial review (39) 2. Thiscase L_]is [Ly] isnot complex under rule 3.400 of the California Rules of Court. If the case is complex, mark the factors requiring exceptional judicial management: —a. | Large number of separately represented parties d. | Large number of witnesses |__| Extensive motion practice raising difficult or novel _e. CJ Coordination with related actions pending in one or more courts issues that will be time-consuming to resolve in other counties, states, or countries, or in a federal court Y__| Substantial amount of documentary evidence f. CJ Substantial postjudgment judicial supervision ~“Remedies sought (check all that apply): aly] monetary b.[_] nonmonetary; declaratory or injunctive relief — c.LV] punitive 4. Number of causes of action (specify): 5 5. This case CJ is Ww) isnot aciass action suit. 6. If there are any known related cases, file and serve a notice of related case. (You may use form CM-015. ) Date: September 16, 2022 “a — Ognian Gavrilov __ > i ae ee = (TYPE OR PRINT NAME) (SIGNATURE OF PARTY OR ATTORNEY FOR PARTY) NOTICE e Plaintiff must file this cover sheet with the first paper filed in the action or proceeding (except small claims cases or cases filed under the Probate Code, Family Code, or Welfare and Institutions Code). (Cal. Rules of Court, rule 3.220.) Failure to file may result in sanctions. ° File this cover sheet in addition to any cover sheet required by local court rule. e If this case is complex under rule 3.400 et seq. of the California Rules of Court, you must serve a copy of this cover sheet on all other parties to the action or proceeding. ¢ Unless this is a collections case under rule 3.740 or a complex case, this cover sheet will be used for statistical purposes only. Form Adopted for Mandatory Use Cal. Rules of Court, rules 2.30, 3.220, 3.400-3.403, 3.740; Judicial Council of California CIVIL CASE COVER SHEET Cal. Standards of Judicial Administration, std. 3.10 CM-010 [Rev. July 1, 2007] www.courtinfo.ca.gov LJ ORIGIN FILED SEP 16 2022 Zza2mrog 0 5 COMPLAINT Gendersen’s counsel stated, “[i]n the interim, please provide me with the names of Mr. Betenbaugh’s Cumis counsel. As we both know, Civil Code section 2860(b) makes Cumis counsel mandatory in cases where the carrier is defending under reservation of rights.” 26. Betenbaugh is informed and believes, and thereon alleges that Firm Defendants + never informed Betenbaugh of the 2021 Settlement Offer. Betenbaugh is further informed and Nn believes, and thereon alleges that Safeco instructed Firm Defendants not to communicate the DH 2021 Settlement Offer to Betenabugh, and Firm Defendants followed Safeco’s instruction. NI 27. On July 21, 2021, the Firm Defendants and Safeco rejected the 2021 Settlement wea Offer without Betenbaugh’s knowledge or consent, and instead made a settlement offer of oO 10 $150,001 pursuant to California Code of Civil Procedure section 998 (“998 Offer”). In his 11 rejection letter, Bonotto stated, “At this point, both my client and his insurance carrier are 12 prepared to try the case against that settlement offer.” Bonotto further stated, “Separately, we 13 disagree with your interpretation of Ca. Civ. Code 2860. Furthermore, any rights, obligations, or 14 duties if any exist contained in Ca. Civ. Code 2860 are between Mr. Betenbaugh and his 15 insurance carriers and do not involve plaintiff. Regardless, my firm is the sole representation in 16 this matter on behalf of Mr. Betenbaugh. Accordingly, please direct all communications you 17 have for Mr. Betenbaugh through my office.” 18 28. Betenbaugh is informed and believes, and thereon alleges that in sending the 19 Settlement Correspondence quoted above in Paragraph 27, Firm Defendants were acting at the 20 direction of Safeco and its representatives and putting Safeco’s interests above that of their 21 client, Betenbaugh, consistent with the Defendants’ established pattern and practice, as alleged me more fully herein. 23 29. On July 21, 2021, Gundersen rejected the inadequate 998 Offer. In so doing, 24 Gundersen’s counsel further stated, in relevant part: 25 More importantly, let me clear up your confusion because I am keenly aware that your office is not trained in insurance bad faith and legal malpractice. Civil Code 26 2860 can only be circumvented if the carrier agrees there is no reservation of a? rights, that they will pay all damages, including punitive damages, and there is no other conflict of interest. While the carrier gets to avoid bad faith if the 28 aforementioned issues are resolved (which is highly doubtful here), your office, 6 COMPLAINT on the other hand, has competing ethical and legal duties that are not subject to waiver. For example, your office is clearly beholden to the insurance carrier and the carrier’s desire to gamble cannot be reconciled with your client’s desire to NY avoid public humiliation from the sizable punitive damages award that is coming his way. Speaking of punitive damages, I get to examine your client’s financial WH condition on the stand, which is a problem for you because I will get to ask him if Fe he has valued the malpractice case against your firm and the bad faith case against the carrier. OU It is also your independent duty to inform your client that it is my practice to collect the excess verdict directly from the defendant when I pop a policy at trial. NO In other words, I do not accept bad faith assignments. If a defendant files bankruptcy, I then take the insurance bad faith and attorney malpractice cases me from the bankruptcy trustee on contingency. So 30. On July 22, 2021, Bonotto confirmed receipt of Gundersen’s rejection of the 998 Offer and stated, “I would appreciate the professional courtesy of you not attempting to instruct SS ES|lUhL ES|hl me how to handle our case.” 31. On July 22, 2021, Gundersen’s counsel responded in relevant part: oH Mr. Bonoto, FO OE eR My responses to you were not rooted in arrogance or absence of professional courtesy. I have an affirmative duty to my client to make sure I have you and the YF insurance carrier properly set up for malpractice and bad faith should things go Aaa sideways for you in trial. You are an experienced trial attorney, so you must KF know the result of this case is wildly unpredictable on both sides and I can just as FY easily leave the court with a $20M verdict against your client or with a number that I won’t like. F§- G&Ge The last time I popped a policy the insurance carrier (Liberty Mutual) hired Blake KF Russum from Ropers Majeski to tell me how I didn’t properly open the policy and BB NO didn’t properly set up the attorney. The carrier ultimately paid the full judgment but not until I had to waste time by garnishing wages, filing liens, and setting up NO the debtor’s examination. BBR NO The bottom line is that while you may not like the e-mails I sent, they are all within bounds and they are meant to document your office’s and the insurance NO carrier’s actions in case the carrier takes the position that they do not wish to pay B® NYO the judgment. NO R 32. Thus, no later than July 22, 2021, Firm Defendants and Safeco were on notice of the following: SNR NN (A) Safeco was at significant risk of facing liability on an insurance bad faith action for Do COMPLAINT its unreasonable refusal to settle for the Policy Limits; (B) The Firm Defendants and Safeco, on the one-hand, and Betenbaugh on the other NO hand, had an irreconcilable conflict of interest such that Betenbaugh should have been properly WY advised of his right to obtain Cumis counsel; F&F (C) Betenbaugh was staring down the barrel of a jury verdict far in excess of his Policy nO Limits, which if obtained, could and would ruin him financially; and, DN (D) The Firm Defendants were in the midst of committing attorney malpractice by failing NI to communicate an offer of settlement to their client, rejecting an offer for settlement of Policy eo Limits without their client’s knowledge or consent, and failing to properly advise Betenbaugh of oO his right to Cumis counsel. OO TRIAL IN THE UNDERLYING ACTION KF 33. On August 17, 2021, trial commenced in the Underlying Action. Betenbaugh’s NY entire defense at trial was predicated on the theory that the Craigslist Posts were merely a WY lighthearted joke for which Betenbaugh did not willfully commit any injury. FF Rm 34. On the seventh day of trial, August 27, 2021, Gundersen’s counsel made a motion A to conform to proof to add a cause of action for Negligent Infliction of Emotional Distress. In DBD support of his oral motion, Gundersen’s counsel stated, in relevant part, “the reason we bring it NY wR today, Mr. Betenbaugh testified at length how he thought this was a prank. And so if the jury Be takes the position this was a prank, then negligent infliction of emotional distress would kick in.” OO 35. Bonotto responded, “Your Honor, we have no objection to the amending in that — CFO RO in that fashion.” Thus, at trial, the operative complaint was amended to conform to proof to add K|§ HNO a negligence-based-cause of action. Ne WN 36. In light of the oral amendment to the operative complaint, Gundersen’s counsel, WHY NH on the one hand, and the Firm Defendants, on the other hand, worked together to craft the special fF WN verdict form (“Special Verdict Form”). Question 2 of the Special Verdict Form (“Question 2”) UN NHN read: “Was the conduct of Paul Betenbaugh: Defamation OR False Light OR Negligent Infliction Dn NO of Emotional Distress OR Intentional Infliction of Emotional Distress?” Thus, Question 2 makes wpoy oN no distinction between whether the jury was asked to find Betenbaugh liable for an intentional NY 8 COMPLAINT tort or a negligence-based cause of action. 37. On the tenth day of trial, September 1, 2021, the jury unanimously answered NY Question 2 in the affirmative. The jury further awarded Gundersen $3 million in past WD noneconomic loss, and $5 million in future noneconomic loss, including loss for “mental FF suffering, anxiety, humiliation, [and] emotional distress[.]” A true and correct copy of the HO Special Verdict Form is attached hereto as Exhibit 2 and is incorporated by reference as though Dn fully set forth herein. wean 38. | On September 17, 2021, judgment was entered in favor of Gundersen and against Betenbaugh. On February 10, 2022, a Corrected Amended Judgment was entered, which oOo included, inter alia, $2,827,397 in pre-judgment interest to Gundersen through November 30, le SS 2021 from Betenbaugh. The Corrected Amended Judgment included $3 million in favor of OO Sell Gundersen and against Betenbaugh for past noneconomic loss, $5 million in favor of Gundersen GBR and against Betenbaugh for future noneconomic loss, and $35,000 in stipulated punitive OS damages. ek OF THE FIRM DEFENDANTS’ TORTIOUS ACTS IN THE UNDERLYING LITIGATION FF Bah 39, Betenbaugh is informed and believes, and thereon alleges that in attempting to KF defend the Underlying Action, the Firm Defendants placed the interests and wishes of Safeco FS above the interests of Betenbaugh, in violation of Firm Defendants’ professional and fiduciary HF Se obligations. KF 40. Betenbaugh is further informed and believes, and thereon alleges that the Firm NO BSB Defendants placed the interests of Safeco above Betenbaugh’s interests because Safeco, and its YN BBB parent company Liberty Mutual, are important clients to the Firm, and Firm Defendants wish to ND maintain a continuing, ongoing, and mutually beneficial relationship with one of the Firm’s NB flagship clients. RP NO 41. The Firm Defendants’ derogation of duty took multiple forms and permutations NO Ro throughout the life of the Underlying Action, and infected the quality of representation rendered NO to Betenbaugh. NO eS 42. Betenbaugh is informed and believes, and thereon alleges that from the inception 9 COMPLAINT of the Underlying Action, the Firm Defendants were aware that Safeco has a pattern and practice of gambling the integrity of their insureds’ financial security by refusing to settle cases of clear NN liability for the policy limits. The Firm Defendants failed to advise Betenbaugh of Safeco’s WY pattern and practice. Firm Defendants and Safeco concealed Safeco’s well-established pattern F&_ and practice from Betenbaugh. un 43. The Firm Defendants failed to advise Betenbaugh that he was at risk of facing a Bn verdict in excess of the Policy Limits, or that Safeco did not intend to cover any verdict rendered NY against him. wa 44. The Firm Defendants failed to properly advise Betenbaugh of his right to Cumis oO counsel. Had Betenbaugh known of Safeco’s standard pattern and practice, known of the Oe conflict of interest between the Firm Defendants and Safeco, and fully understood his right to Cumis counsel, Betenbaugh would have sought and obtained Cumis counsel to safeguard his interests. S| 45. | The Firm Defendants failed to communicate the 2021 Settlement Offer to FEF FO Betenbaugh. Betenbaugh is informed and believes, and thereon alleges that Firm Defendants rejected the 2021 Settlement Offer at Safeco’s direction, without first informing Betenbaugh of FF its existence. KF 46. Firm Defendants unilaterally and without the knowledge or consent of FF Betenbaugh waived any opportunity for Betenbaugh to assert he was acting within the course KF and scope of his employment at Edward Jones when he issued the Craigslist Posts (the NO “Employment Defense”). NY 47, Had the Firm Defendants not waived the Employment Defense, Edward Jones NH would have had to pay any verdict rendered against Betenbaugh pursuant to the doctrine of NH respondeat superior, regardless of whether the verdict was issued for committing an intentional NO tort or a negligence-based tort. NO 48. Firm Defendants’ unilateral waiver of the Employment Defense was made with full knowledge that Safeco was proceeding with a reservation of rights, and with full knowledge that Safeco would refuse to pay any verdict, if any, rendered against Betenbaugh in the 10 COMPLAINT Underlying Action. 49. Betenbaugh is informed and believes, and thereon alleges that Firm Defendants, and each of them, failed to consult an employment attorney before waiving the Employment Defense. Betenbaugh is further informed and believes, and thereon alleges that had Firm Ff Defendants consulted an employment attorney before waiving the Employment Defense, they nN would have discovered that the Employment Defense would fully protect Betenbaugh in the Dn event of an adverse verdict. Firm Defendants’ unilateral decision to waive the Employment NI Defense fell below the applicable standard of care. wo 50. Betenbaugh is informed and believes, and thereon alleges that from the inception o 10 of the Underlying Action to the date of this Complaint, Safeco paid more than $500,000 in 11 attorneys’ fees to “defend” Betenbaugh in the Underlying Action. 12 51. Betenbaugh is informed and believes, and thereon alleges that any reasonable 13 attorney in Firm Defendants’ position would have: 14 (A) Placed Betenbaugh’s interests above the interests of Safeco; 15 (B) Informed Betenbaugh of Safeco’s pattern and practice of gambling its 16 insureds’ financial security by refusing to settle cases of clear liability in hopes of obtaining a 17 favorable verdict at trial; 18 (C) Informed Betenbaugh of Safeco’s intention to disclaim any duty to settle 19 for the Policy Limits; 20 (D) Informed Betenbaugh of Safeco’s intention to disclaim any duty to 21 indemnify if Betenbaugh was hit with an adverse verdict at trial; 22 (E) Informed Betenbaugh of the substantial likelihood of an adverse verdict at 23 trial; 24 (F) Informed Betenbaugh of the substantial likelihood of an adverse verdict at 25 trial in excess of the Policy Limits; 26 (G) Informed Betenbaugh of the conflict of interest between the Firm 7? Defendants and Safeco, on the one hand, and Betenbaugh on the other hand; and, 28 (H) Properly informed and advised Betenbaugh of his right to Cumis counsel. 11 COMPLAINT 52. Betenbaugh is informed and believes, and thereon alleges that any reasonable attorney in Firm Def