In March 2018, Maxum filed a lawsuit against Colliers, seeking a declaration from the court that it did not have a duty to cover the defense costs for the Texas case. By June 2019, Maxum had not paid any of Collier’s legal defense costs in the underlying suit.
It was not until September 2019, that Maxum paid Colliers $286,010, for what it said represented what the insurer thought was a reasonable defense cost.
Colliers Filed Suit Against Maxum
According to the record, that offer was unacceptable to Colliers which forced them to file suit against Maxum in the Northern District of Georgia in November 2019.
In the Colliers complaint, they allege breach of contract and bad faith over Maxum’s failure to pay for its total defense costs and did so in bad faith.
In April 2020, Maxum obtained a declaration from U.S. District Judge Orinda D. Evans finding that Colliers had failed to timely report the Texas case, and therefore the case did not fall within Maxum’s insurance coverage.
At a summary judgment proceeding, Colliers’ conceded that the ruling from Judge Evans had “capped” Maxum’s defense obligations under the policy. But Colliers argued that it had paid more than $1.6 million defending the Mattress Firm case between June 2017, when it notified Maxum of the action, and Judge Evans’ order.
