Wakaya Perfection is suing Liberty Mutual, claiming the insurer refused to honor a contract. Liberty Mutual responded by filing a counterclaim against Wakaya Perfection in an Ohio District Court. The insurer alleges Wakaya misrepresented facts when applying for a policy.
Liberty Mutual claims Wakaya Perfection sought coverage through CAL Insurance & Associates on March 1, 2016. Wakaya requested the policy be backdated to February 21, 2016, stating they intended to cancel an existing policy with CNA Financial Corporation. Liberty Mutual asserts Wakaya failed to disclose a demand letter received from Youngevity on February 22, 2016. This letter preceded Youngevity’s eventual lawsuit against Wakaya.
The insurance application process required Wakaya Perfection to certify no known losses occurred between February 21, 2016, and March 3, 2016. Todd Smith, acting for Wakaya, signed a “no known losses” letter on or about March 3, 2016. This certification, according to Liberty Mutual, was false. Youngevity filed its lawsuit against Wakaya on March 17, 2016.
Liberty Mutual contends that Todd Smith knew Youngevity intended to sue before applying for insurance. The insurer claims Wakaya and Smith were aware their representations were false, having been notified multiple times about Youngevity’s threatened litigation. Five months after Youngevity initiated legal action in California, Wakaya filed a claim with Liberty Mutual.
The ongoing Youngevity litigation has already cost Liberty Mutual millions in legal fees and expenses. Liberty Mutual’s counterclaim seeks to invalidate Wakaya’s insurance contract due to alleged false representations during the application. The insurer argues the policies are void because of these material misstatements. Wakaya and Smith maintain the policies are valid. Liberty Mutual is demanding at least $4 million in damages, plus legal costs. The insurer filed its answer and counterclaim on August 20, 2019.