Local News in Brief : Retrial in ‘Bad Faith’ Case

A state appellate court has ordered retrial of the “excessive” $40.3 million in damages won in 1985 by a Winnipeg women’s sportswear firm and its owner over Canadian Indemnity Co.’s “bad faith” refusal to indemnify them during a 1978 accident.

The accident occurred when the upright mast of a sailboat struck a power line, causing electrical shocks that cost passenger Douglas Michaelson his leg as the boat was being towed from Marina del Rey to Gardena for use in company advertisements.

Tan Jay International Ltd. and its owner, Peter Nygard, won a unanimous jury verdict of $5.3 million in compensatory damages and $35 million in punitive damages. Los Angeles Superior Court Judge James P. Kolts cut that to $4.8 million for Tan Jay, allotting Nygard nothing.

In granting the new damage trial Wednesday, the 2nd District Court of Appeal said the jury was “impermissibly swayed by passion and prejudice” in granting the $40.3-million verdict.