I found the pleadings filed so far on Westlaw. I'm neither a litigator nor an insurance specialist but here is my synopsis of what the case is about and where it stands. It's a class action lawsuit filed in a US District Court by KAUAI SCUBA CENTER, INC, a Hawaii Corporation, individually and on behalf of a class of persons similarly situated. Richard Lesser's law firm and Schreiber & Schreiber (class action firm) are plaintiff's counsel. They are suing for 1. Rescission of the insurance contracts 2. Breach of Contract 3. Unjust Enrichment 4. Money Had and Received 5. Breach of Contract 6. Breach of Fiduciary Duty 7. Negligence 8. Intentional Misrepresentation 9. Negligent Misrepresentation 10. Rico 11. False Advertising 12. Fraudulent and Deceptive Business Practices. They are seeking damages in an amount equal to all the insurance premiums paid to PADI plus interest and attorneys fees. Defendants are PADI AMERICAS, INC., a California Corporation; PADI Worldwide Corp., a California Corporation; the PADI Risk Purchasing Group, Inc., a California Corporation; Vicencia & Buckley Insurance Services, Inc., a California Corporation; Lexington Insurance Company, a Delaware Corporation; York Risk Services Group, Inc., a New York Corporation.
Claims and allegations do not completely make it clear how the insurance policies were set up, but it appears that PADI sponsored and marketed commercial general liability ("GCL") and property damage ("PD") insurance to dive shop owners "brokered" exclusively by Vicencia & Buckley. Lexington Insurance Co. is the insurance company providing the coverage and York Risk Services is the claims adjuster for the program. Policies were not provided directly to the dive shops by Lexington. PADI appears to have provided GCL and PD insurance to the dive shops with no deductible. PADI then obtained 1 or more master insurance policies from Lexington for this program with a $300,000 deductible per occurence. The premiums paid by the dive shops
is greater than the premiums paid by PADI to Lexington and PADI intended to use the excess to pay the $300,000 mismatch - the retained risk. PADI was therefore providing insurance coverage to the dive shops (the retained risk) without proper insurance licensing and without maintaining the required reserves to support the retained insurance risk ($300,000 per occurrence).
Twelve pleadings filed so far and the action will need to survive a motion to dismiss by the defendants. The motion is primarily based on the fact that the plaintiffs have not actually lost money. There seems to be no evidence that PADI has failed to pay out any claim filed by Kuaui Scuba Center ot any other dive shop. If the action survives the motion to dismiss, the defendants will file an answer to the complaint, the parties will go thru a discovery process (requesting docs, interviewing various parties, etc.) and then go to trial unless the parties settle. Also, I think the court needs to certify the action as a "class action" which may be difficult to do. If you're a dive shop that made a claim received a payment from PADI, you probably don't want to rescind the contract. You'll get your premiums back but you'll also need to return the amounts you received for claims made under the policy.
They are trying to disqualify Richard Lesser because he previously represented PADI on other matters. Under the California attorney code of conduct this could be considered a conflict of interest if the matters he worked on are related to the issues in this case.
