Gaming equipment maker Paul-Son Gaming Corp. of Las Vegas sued to force its insurance companies AIG Technical Services Inc. and National Union Fire Insurance Co. to indemnify the company against a lawsuit filed by a former executive.
Paul-Son was sued on March 24, 2000, by Martin S. Winick, a former president and director of Paul-Son subsidiary Authentic Products, who claimed he was wrongfully stripped of 300,000 Paul-Son stock options.
Winick, who alleged he was engaged in 1993 to help convert Paul-Son into a publicly traded company, also accused Eric Endy, the trustee of the Paul S. Endy Jr. Living Trust and Laurence A. Speiser, the company's legal counsel, of conspiring to strip him of his alleged "rightful compensation."
Winick, in his lawsuit, said Paul-Son's late chairman, Paul Endy, agreed in 1995 to award him the stock options over a three-year period for his consulting services.
Paul-Son, which said it was insured for up to $3 million by AIG and National Union, sued the companies in Clark County District Court last week, alleging that without the insurance coverage, the "settlement demands and likely exposure in the Winick claim leave Paul-Son's personal, corporate and private assets in jeopardy."
The gaming company said it has "incurred enormous expenses in defending itself and its officers and directors to this date and in the very near future (expects) these expenses will escalate because of the discovery, which will soon commence, and (that) having to pay for its defense without reimbursement has stressed Paul-Son financially and will continue to do so."
Dana Nitz, Paul-Son's attorney, could not be reached for comment on how much in legal expenses the company has incurred in defending itself against the Winick lawsuit.
The suit said the defendants not only delayed starting their investigation and "engaged in a burdensome, oppressive and redundant investigation," but also repeatedly ignored Paul-Son's calls over its claims.
Paul-Son also disputed the defendants' alleged claims that it was denied coverage because its insurance policy "contained an 'insured vs. insured' exclusion which precluded coverage."
The suit said the defendants had a "duty to defend Paul-Son because claims against (it) rose before Winick became a director and after he resigned as a director and in fact presented a possible factual or legal basis on which defendants could be obligated to indemnify them as their insureds."
The defendants could not be reached for comment on the allegations.
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