The Duel of Los Angeles, dubbed the "Incident at Stark Industries" by S.H.I.E.L.D. and the general press, was a confrontation between Tony Stark and Obadiah Stane.
Obadiah Stane tried to get his scientists to make a smaller version of the Arc Reactor. However they failed, so Stane broke into Tony Stark's Mansion and temporarily paralyzed him with a Sonic Taser. Stane pulled out the power source from Stark's heart, taunting him all the while.
After he departed, Stark realised his only hope for survival was the preserved Arc Reactor that Pepper Potts gave him in a display case. He struggled to get the power source but managed to get it installed as James Rhodes arrived.
Potts, Phil Coulson, and several S.H.I.E.L.D. agents arrived at Stane's research lab at Stark Industries Headquarters. They spotted the Mark I Armor and a storage location where something else was kept. Just then, a gigantic robotic suit came to life and attacked them. It was Stane in his suit, code-named the Iron Monger. Stane took out the S.H.I.E.L.D. agents and chased Pepper to the parking lot.
Rhodes watched Stark suit up, awestruck at the Iron Man armor. J.A.R.V.I.S. warned Stark that he had only about half power in the suit, as the older power source was not designed to work alongside the newer suit.
Iron Man arrived and attacked Iron Monger. Both ended up bouncing onto the highway. Stane attempted to kill Iron Man with a car full of civilians, however, Stark managed to disarm him and safely place the car down, although he was injured in the process. Stane recovered and overpowered Iron Man with his armor's superior strength in addition to his own armor quickly losing its strength.
Iron Man theorised that while Obadiah's suit is more powerful than his, it likely had the same icing problem as the Mark II since it was reverse engineered from the Mark I. Iron Man attempted to fly as high as possible to lure Iron Monger into chasing him and reaching the altitude that would freeze the armor. His theory proved to be correct, and Iron Monger shut down mid-air causing it crash into the Stark Industries Headquarters building, while Iron Man fell moments after, his battery running out of power.
However, Iron Monger somehow recovered and the two clashed again. Running out of ideas, Stark instructed Pepper Potts to overload the building's Arc Reactor, in order to generate a shock wave strong enough to knock out the Iron Monger's suit. Stark tried to buy Pepper time by damaging Iron Monger's targeting system, but in the process got himself cornered up in the roof at the mercy of his nemesis and lost the armor's helmet.
Now that he was blinded, Stane opened up the Iron Monger's cockpit, exposing himself to fire his weapons, and taunted Stark about how he created the best weapon ever as he repeatedly tried to shoot him but missed due to the targeting system malfunctioning. Stark begged Pepper to blow up the roof. Pepper hesitated, believing that Stark would also be killed, but reluctantly pushed the master button.
The Arc released a powerful blast of electricity, knocking out Stane and injuring Stark. An unconscious Iron Monger then fell into the reactor which exploded, killing Stane. The energy wave from the Reactor also managed to re-charge Stark's heart battery, saving him from death.