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Verdicts & Settlements |
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$350,000 settlement on Insurance Bad Faith case.
Case I.D. Confidential. Result: June 09, 1998
L.A. Superior Central , Dept. 26 HON Ernest G. Williams
Topic: Insurance
Sub topic: Breach of Contract
Sub-sub topic: Bad Faith Settlement: $350,000
Attorneys:
Plaintiff- Lee Feldman, Law Offices of Lee Feldman, Los Angeles
Plaintiff- Alicia Olivares, Law Offices of Lee Feldman, Los Angeles
Defendant- UNKNOWN UNKNOWN
Technical Experts:
Plaintiff- Robert Cooper insurance claims handling, Beverly Hills
Defendant- F. David Chavez structural engineer, Jackson
Defendant- Julius Kummerman construction costs, Encino
Defendant- Boyd Veenstra insurance claims handling, Burbank
Facts: On Jan. 17, 1995, the plaintiffs. home was damaged in the Northridge earthquake. In May 1994, defendant insurer sent an expert to inspect the damage and assess repair costs. After completing the inspection, the defendant. s contractor represented to the plaintiffs that the damage fell below their $24,100 deductible. On that basis, the insurer denied plaintiffs. claim. Because plaintiffs had no reason to believe that they had been deceived about the repair costs, they did not pursue the claim. In January 1995, however, when rain began seep in through cracks in their ceiling, plaintiffs started to suspect that their damages were more substantial than they were led to believe. The plaintiffs then retained a contractor who performed a cursory inspection and priced the damage at roughly $36,000. Upon receiving the insured. s estimate, defendant insurer re-inspected and conceded that their original estimate had omitted several items, totaling nearly $10,000. The insurer then tendered a check to the insured. At this time, the insureds refused to cash the check until they could obtain a second opinion to ensure that all the damage had been uncovered. That second opinion estimated damages of $122,000. When the insurer received the second estimate, it initially refused to reopen the claim. Later, the insurer did reopen the claim and sent several additional experts to assess the damages. Nearly one year later, after allegedly leading the insureds to believe that their claim would be paid, defendant insurer had an attorney send the insureds a letter indicating that the company was taking the position that the claim was barred by the one-year lawsuit provision contained in the policy. The plaintiffs brought this action against the defendant based on insurance bad faith.
Contentions: The plaintiffs contended that their lawsuit was timely because they did not discover damages that exceeded their deductible until January 1995. The plaintiffs further contended that they acted reasonably despite their failure to discover the additional damage because defendant. s own expert had also missed the additional damage, either intentionally or negligently. The plaintiffs also asserted that defendant insurer was barred by the doctrine of waiver from asserting the statute after having reopened the claim two weeks before, then making a payment three weeks after the statute supposedly ran; that the doctrine of estoppel barred the defendant from asserting that the lawsuit was untimely because defendant itself had caused the plaintiffs to delay filing suit by misrepresenting that the damages were less than the deductible; and that defendant was estopped from relying on the statute because it had reopened the claim, promised to investigate, then failed to notify the insureds that the statute was going to run, or inform them about how they could calculate the statute themselves. Finally the plaintiffs claimed that the damages were approximately $100,000, as indicated in the insureds. final estimate. The plaintiffs pointed out that the insurer denied the claim solely on the ground that it was time-barred, not because the estimate was excessive. The defendant contended that the claim was time-barred, that the statute was not tolled by the request to reopen, that the doctrine of estoppel was inapplicable, and that it never waived any of its rights. Defendant further contended that its payment of $6,330.11 in 1996 satisfied its obligation to pay the claim and that the damages were actually less than the $36,000 estimated by one of plaintiff. s original contractors.
Damages: The plaintiffs claimed approximately $100,000 ($135,000, as per defendant) in earthquake damages.
Jury trial: Length eight days; Poll, 12-0 (lawsuit was timely), 12-0 (doctrine of waiver), 12-0 (doctrine of estoppel), 12-0 (breach of contract), 12-0 (contract damages of $97,500); Deliberation 1½ days.
Settlement Discussions: The plaintiffs initially demanded $350,000, which was later reduced to $250,000 with an indication that an offer of $175,000 would be accepted. A mediation held before retired Justice Edward Panelli in December 1997 did not resolve the matter. On the eve of trial, defendant served a C.C.P. §998 offer in the amount of $125,000. The plaintiff agreed to accept the C.C.P. §998 offer if defendant would agree to also pay costs of roughly $7,500. The defendant rejected that counter-offer. According to the plaintiffs, defendant then conditionally withdrew the C.C.P. §998 offer, stating that it would not pay $125,000 to plaintiffs unless they persuaded their brother (who lives next door and has an identical case against this defendant that is set for trial in October 1998) to settle for the same amount. The plaintiffs rejected the new condition. After the unanimous verdict was reached in the breach of contract trial phase, defendant agreed to pay the sum of $350,000. The plaintiffs accepted.
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