Childcraft Wins $39.2 Million From Insurer : Award: The educational materials firm and its former president had sued over unpaid legal fees.

A Los Angeles Superior Court jury Wednesday awarded $39.2 million--including $36.5 million in punitive damages--to an educational materials firm and its former president, who accused their insurers of bad faith in refusing to fully pay their legal bills in a separate case.

The award went to Childcraft Education Corp., a New Jersey-based subsidiary of the Walt Disney Co., and Childcraft’s former president, Stephen Brotman. They sued two units of the Kemper Insurance Group after the insurers declined to pay for all of their legal bills stemming from a lawsuit filed against Childcraft by a competitor.

Kirk A. Pasich, a lawyer for Brotman, said he and his client “are thrilled” by the jury’s decision. Brotman’s portion of the award consists of $611,000 in compensatory damages and $20 million in punitive damages.

While Brotman ran up hundreds of thousands in legal bills, Pasich said, the Kemper firms for more than a year ignored his inquiries and delayed covering any of the costs. Kemper “let him get kicked around,” Pasich said.

The Kemper firms argued that the attorneys’ fees for Childcraft and Brotman, which they said amounted to around $300 an hour, were unreasonably high. Instead, the Kemper firms paid the lawyers at a rate of $135 an hour, which they described as in line with what they customarily pay for experienced attorneys.

Irwin Waldman, the lawyer for the Kemper units, said, “there never was a refusal to pay reasonable fees. It was a question of what’s reasonable.”

Waldman called the award “ridiculous,” and said he will return to Superior Court within 30 days to try to have it tossed out.

Ronald M. Oster, the lawyer for Childcraft, expressed confidence that the award will withstand legal challenges. He portrayed the case as one in which the insurance companies “tried to attack the lawyers as a smoke screen for their behavior, and the jury saw through it.”

The Kemper units involved in the case are American Motorists Insurance and Lumbermens Mutual Casualty, based near Chicago.