September 20, 2005
Equitable Estoppel May Revive Northridge Earthquake Claims
Doheny Park Terrace Homeowners Association, Inc. v. Truck Insurance Exchange, B174036.
A suit against an insurer for not paying a claim related to the Northridge earthquake may be timely under the doctrine of equitable estoppel, even if not filed within either the contractual limitations period or the one-year period for revival of such claims adopted by the Legislature, the Court of Appeal for this district ruled yesterday.
Div. Three, overturning a contrary ruling by Los Angeles Superior Court Judge Carl West, reinstated a suit by the Doheny Park Terrance Homeowner’s Association against Truck Insurance Exchange.
The suit grew out of claims submitted by the association, representing owners of 21 condominium units in Beverly Hills, following the earthquake on Jan. 17, 1994. Truck concluded that the property sustained nearly $36,500, which was less than the applicable deductible, so the claim was denied.
Nine Years Later
The association took no action until nine years later, when, according to its complaint, it was advised by an expert that the earthquake damage was more extensive than Truck had determined. In April 2003, the association sued for breach of contract, bad faith, fraud, and unfair competition, although the last cause of action was voluntarily dismissed.
The association said that as a lay organization, it necessarily relied on Truck’s investigation and assessment of the damage.
Posted by joewest at 4:50 PM
July 18, 2005
CA: Jury Verdict of $9,890,187.55 Against Farmers Insurance Exchange
A Los Angeles County jury returned a verdict of $9,890,187.55 against Farmers Insurance Exchange over the insurer's bad faith refusal to defend two of its insureds. (Walker, et al. v. Farmers Group, Inc., et al., BC312281)
The plaintiffs, Ms. Walker and Ms. Williams, were insured under a liability policy Farmers issued to their homeowners association. The policy provided liability coverage for their liability as condominium owners arising out of accidents occurring on the common areas. The plaintiffs were sued in 2002 by a neighbor who was badly injured when she was allegedly hit by the plaintiffs' garage door. The neighbor alleged that the homeowners association failed to maintain the common areas in a safe condition and should have foreseen that the design of the walkway around the garages, the recent installation of electrically operated garage door openers, and the design of the garage doors which swung outward when opened, would one day lead to an accident when a door was opened with a remote controller.
When the neighbor, who was 86 years old, sued Ms. Walker and Ms. Williams and the homeowners association, Farmers refused to defend plaintiffs, but did defend the association. Farmers also directed its lawyers to file a cross-complaint against Ms. Walker and Ms. Williams on behalf of the association.
Ms. Walker, who is 80, and Ms. Williams, who is 65, used their credit cards to retain a lawyer. Faced with a probable jury verdict of $300-350 thousand dollars, which would have forced them to lose their home, Ms. Walker and Ms. Williams borrowed enough money from friends to settle with the neighbor just before trial.
Ms. Walker and Ms. Williams sued Farmers in March 2004 for breach of the insurance contract and breach of the implied covenant of good faith and fair dealing. In a bench trial in May, Judge James R. Dunn ruled that Farmers had breached its insurance contract by not providing Ms. Walker and Ms. Williams with a defense. A jury trial was then conducted to determine whether Farmers acted in bad faith in failing to provide a defense to investigate the insureds' claim for coverage or to follow its own procedures in handling such claims.
The jury returned its verdict at the end of its second day of deliberations, awarding $51,931.80 in contract damages, $1,500,000 in emotional distress and $8,338,255.75 in punitive damages. The jurors were unanimous in their finding of liability and in the amount of damages. The plaintiffs' post-trial motion for attorney's fees has not yet been heard.
Posted by joewest at 10:06 AM
July 14, 2005
Texas Court Finds 'Occurrence,' 'Property Damage,' Multiple Occurrences From Defective EIFS
Affirming in part and reversing in part, a Texas appeals court on June 2 ruled that "occurrence" and "property damage" elements were satisfied regarding damage from defective synthetic stucco, that each damaged home is a separate occurrence, that business risk exclusions don't apply, that excess insurance cannot be reached and that fact issues exist on other issues (Lennar Corp., et al. v. Great American Insurance Co., et al., No. 14-02-00860-CV, Texas App.; 2005 Tex. App.).
From early 1996 through late 1999, Lennar built more than 400 homes in the Houston area with a synthetic stucco called Exterior Insulation and Finish System (AEIFS@). According to Lennar, the manufacturers of EIFS marketed it as an ideal product for wood-framed houses. However, Lennar contends it later discovered that EIFS is defectively designed such that it traps water behind it and does not allow the water to drain. Consequently, the trapped water can cause damage, such as wood rot, mold, and termite infestation, among other problems, to other parts of the home.
Through the spring of 1999, Lennar had received a few complaints from homeowners about EIFS-related problems. In the spring of 1999, the complaints increased after television programs regarding EIFS aired. According to Lennar, it initially accepted the manufacturer's position that the problems were caused by installation error and/or were typical of wood-framed homes. Therefore, Lennar addressed these complaints on an individual basis. However, by September 1999, after spending the summer responding to complaints, Lennar became convinced EIFS is a defective product.
Thereafter, Lennar removed the EIFS from all the homes and replaced it with a traditional stucco. According to Lennar, it also repaired resulting water damage to the homes although the extent to which any homes sustained damage is disputed. Lennar then sought indemnification for all its replacement and repair costs from the carriers. The carriers refused to indemnify Lennar for the EIFS claims contending there is no coverage under their policies.
Posted by joewest at 10:38 AM