Santa Barbara, CA — The owner of a jet, Passport 420, has been awarded a $19 million judgment against Starr Indemnity & Liability Company. The insurer had denied a claim after the jet was seized, arguing that one of its owners, attorney Michael Avenatti, purchased his share using stolen funds.
The jet in question, a HondaJet HA-420, was seized in 2019 at the Santa Barbara Airport. This followed the indictment of Avenatti, who is currently serving a 14-year sentence in federal prison for pilfering settlement monies from his clients, funds which were used among other purchases, to acquire the jet in 2017 alongside partners.
The controversy began when Starr Indemnity refused to acknowledge the insurance claim by citing the criminal source of Avenatti’s investment in the aircraft. The ownership group, however, challenged this decision, leading to a protracted legal battle.
During the litigation, lawyers for Passport 420, Lawrence Conlan and Richard Lloyd from Cappello & Noël, pointed to the insurance policy’s language which covers up to $10 million for “physical loss” of any insured aircraft due to “confiscation, nationalization, seizure,” among other perils. The policy’s terms became a central point in the dispute.
After deliberation, the Santa Barbara jury found that the refusal by Starr Indemnity to honor the claim constituted bad faith. In addition to the aircraft’s original value of $4 million, which was awarded back to Passport 420, the jury assigned $15 million in punitive damages to the co-owners.
“This decision underscores the accountability that insurers have when dealing with claims and emphasizes that hiding behind another’s criminal actions is unacceptable,” attorney Richard Lloyd commented following the verdict. His colleague, Lawrence Conlan added, “It sends a clear message that misconduct on their part will not be shielded, no matter the circumstances surrounding the policyholder.”
In response to queries regarding their next steps or whether they will appeal the decision, Starr Indemnity has not made any immediate comment.
The lawsuit and its outcome have highlighted ongoing issues in the insurance industry, particularly how policies are interpreted in complex cases involving criminal activities of insured parties.
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