A jury in Santa Barbara has awarded $19 million to plaintiffs who entered into a 2016 agreement to purchase a jet aircraft with now-incarcerated attorney Michael Avenatti, finding that the aircraft’s insurer failed to fulfill conditions of the insurance policy.
The Santa Barbara law firm Cappello & Noel LLP reported on Oct. 10 that the plaintiffs, including the company Passport 420 LLC and William Parrish, received the damages award as a result of a jury verdict in Santa Barbara Superior Court. Parrish and Avenatti, who was sentenced to a 14-year sentence in 2022 for stealing millions of dollars from clients, including a paraplegic with mental health problems, formed Passport 420 to purchase the aircraft.
But the jet was seized in April 2019 as a result of a U.S. Attorney’s Office’s indictment against Avenatti, who had previously represented pornographic film actress Stormy Daniels in a lawsuit against former President Donald Trump. Avenatti was eventually sentenced for stealing funds from his clients in addition to obstructing an Internal Revenue Service investigation of payroll taxes owed by an Avenatti-owned coffee company, according to prosecutors.
The jury concluded that Starr Indemnity and Liability Co., which had insured the aircraft, acted in bad faith when it declined to pay an insurance claim submitted by the policyholder, Passport 420, in the wake of the plane’s seizure at Santa Barbara Airport.
The plaintiffs argued that the seizure led to a “physical loss” that the insurer was liable for. But Starr argued that the policy coverage was likely limited due to Avenatti’s involvement in pending criminal charges in the Central District of California federal court. The plaintiffs alleged in court documents that they were victims of a breach of contract.
Lawrence Conlan, one of the attorneys representing Passport 420, indicated that the jury held Starr liable for the $4 million policy it issued, as well as $15 million in punitive damages.
“After years of textbook insurance company delays and waste, we proved that Starr was wrong to deny responsibility to Passport,” Conlan said. “The message is clear – for those who try to hide their own misconduct behind Avenatti’s bad acts, there is no shelter.”
Conlan told the Southern California Record that he expects to have a final judgment in the legal action by sometime next week.
“Starr was dead wrong to argue that the claim was not covered and that it acted reasonably,” Richard Lloyd, another attorney who represented Passport 420, said. “As we’ve said all along, and the jury agreed, Starr must pay.”
The case was transferred from the Central District of California federal court to the Santa Barbara Superior Court in 2019. In federal court, the plaintiffs argued that Avenatti and his companies also had a duty to pay for any loss that resulted from the seizure of the plane.
Avenatti has been incarcerated in federal prison since Feb. 7, 2022, after being sentenced in a case tried in New York. As a result of actions in the Central District of California, Avenatti was also ordered to pay $10.8 million in restitution to four clients and the IRS.
“Michael Avenatti was a corrupt lawyer who claimed he was fighting for the little guy,” U.S. Attorney Martin Estrada said in 2022. “In fact, he only cared about his own selfish interests. He stole millions of dollars from his clients – all to finance his extravagant lifestyle that included a private jet and race cars. As a result of his illegal acts, he has lost his right to practice law in California, and now he will serve a richly deserved prison sentence.”
In the case of a client named Alexis Gardner, Avenatti obtained a $3 million settlement on her behalf but never provided her a copy of the settlement agreement and used $2.5 million of the proceeds to purchase his interest in the jet, according to the U.S. Attorney’s Office in the Central District.