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Telamon suffers new setback in $5M insurance lawsuit

April 14, 2016

A judge has dismissed the final count in a lawsuit that Carmel-based Telamon Corp. filed against its insurers in an effort to recoup more than $5 million in losses caused by a former employee’s thievery.

Chief Judge Richard Young in U.S. District Court for the Southern District of Indiana on Monday dismissed Telamon’s claim that affiliates of Connecticut-based Travelers Insurance acted in bad faith through their “unfounded delay and exhaustive and expensive claims investigation.”
 
Telamon had faced long odds winning on that claim given Young’s ruling in December dismissing the company’s breach-of-contract claims and concluding that the policies cited in the suit did not cover its losses.
 
Telamon, a provider of services to telecom companies and other industries, sued the Travelers affiliates in 2013, two years after the company discovered it was a victim of a massive theft by Juanita Berry, the most-senior manager at Telamon’s Dayton, New Jersey, office and warehouse.
 
Federal investigators alleged Berry sold new and used circuit boards owned by Telamon as if they belonged to her company, J. Starr Communications Inc., and kept the proceeds—fraud she hid from higher-ups by altering records.
 
Last fall, a federal jury in New Jersey found Berry guilty on six counts of wire fraud and tax evasion.
 
Telamon’s quest to get its insurers to cover the losses was beset by legal setbacks almost from the start.
 
The company’s 2013 suit sought to collect under both a Charter Oak Fire Insurance Co. commercial insurance policy running from October 2010 to October 2011 and a Travelers Casualty and Surety Co. of America policy covering October 2010 to October 2013.
 
More than a year later, in June 2014, Telamon asked the court for permission to file an amended complaint expanding its scope to include a Charter policy from one year earlier and a “premier property protection” policy issued by another Travelers unit—St. Paul Fire and Marine Insurance Co.—covering October 2007 through October 2009.
 
Travelers balked, saying it was way too late in the game to recast the case. Magistrate Judge Debra McVicker Lynch agreed, telling Telamon it had missed the deadline for filing an amended complaint by more than a year.
 
“The court determines that Telamon did not act diligently in seeking to amend,” she wrote in her March 2015 ruling, noting the company knew before it filed the original complaint that the thefts might have started as early as 2006 and that it had other insurance coverage and policies that were in effect before 2010.
 
Unbowed, Telamon last year filed a new federal suit that included the earlier coverage. But Young tossed that out in January—ruling the new case violates the doctrine of “claims-splitting,” which prevents plaintiffs from bringing a new case built on the same allegations asserted in a prior one.
 
“The claims based on the Charter Oak and St. Paul policies at issue in Telamon II could have been brought in Telamon I,” Young wrote. “Telamon did not timely assert those claims, and it cannot now circumvent the court’s ruling denying its motion … to amend in Telamon I by filing the present lawsuit.”
 
Six days after Young entered that ruling, Barnes & Thornburg filed notice with the court that it was withdrawing because Telamon “desires to retain alternate counsel.”
 
Telamon General Counsel Abe Gregory declined to discuss the circumstances of B&T’s dismissal but said the firm continues to provide “high-quality legal services” to Telamon on other matters.
 
Telamon is far from conceding defeat in its battle with Travelers. It’s appealing the dismissal of its breach-of-contract claims and the dismissal of its 2015 lawsuit.
 
“While Telamon respects the opinions of the court, Telamon also notes its right to disagree with such opinions and seek appeal,” Gregory said in a statement last week.

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