|Thursday, July 4, 1991
Orange County Edition
Section: PART A
O.C. Jury Hits Insurance Firm for $62 Million
By: LYNN SMITH
TIMES STAFF WRITER
An Orange County jury Wednesday awarded $62
punitive damages--to a Cypress engineering firm and four
contended that their insurance company failed to honor a
At the end of a 10-week trial, jurors said they found
Insurance Exchange and its parent company, Farmers
Insurance Co., acted
in bad faith and committed "malice, fraud or
oppression" toward the
engineering firm, Marmac, its founder and four
stockholders in rejecting
their claim for legal defense.
The huge award is one of the largest judgments ever in
A Farmers spokesman said the company will file an appeal.
"It is an extremely excessive award and out of line
with the facts of
the case," said John C. Millen, director of media
relations for Farmers
Insurance Group. "We would expect a more favorable
decision upon appeal."
The jury award constituted only about $1 million in
and more than $60 million in punitive damages.
"We feel the insurance company really wronged all
the plaintiffs, and
this was going on for more than 4 1/2 years since they
defense," said jury member Sheila E. Popely, a nurse
Valley. "It seems like an example has to be made
that insurance companies
have to look out for their policyholders."
After seeing the assets of Farmers, Popely said, it was
damages of "1 or 2 million would not have made an
"This is hopefully to deter future things like this
In addition, the jury verdict contradicts recent trends
insurance companies slip out of their responsibilities,
King, past president of the Orange County Bar Assn.
"Everybody is taken in by insurance company
propaganda that they are
barely making ends meet," King said. "When you
see their books, it's
ridiculous. It's important that any punitive damage be
The case began in 1986 when Marmac's founder, James R.
Huntington Beach, sold his stock to four buyers. When an
stockholder sued, alleging a conspiracy between Waller
and the buyers,
the defendants sought to finance their legal defense
insurance by filing a claim.
Waller, 58, was exonerated in the original trial, but the
the others is proceeding in Orange County Superior Court.
Meanwhile, the defendants were unable to get Farmers to
"They slammed the door," Waller said. "I
waited almost a year in hopes
it would get resolved, but it didn't work. I couldn't
even get anybody to
answer my letters or sit down and talk with me,
Representing the plaintiffs, Brentwood attorney William
H. Ford called
Farmers' rejection of the claim "economic
knee-jerk," saying the insurer
did not honor the claim because of the expense.
"There was also sandbagging--nonspecific denial for
the claim. 'We'll
deny, but not tell you the reasons,' " he said.
Over four years, Ford said, the plaintiffs heard
"serial denials. New
and different reasons were coming all the time. All to
and keep Waller out of court."
Waller said, "They hoped I would go away. I just
believed in a
principle stronger than the cost."
The suit was filed against the insurance company in 1987.
Farmers' chief executive, Leo E. Denlea Jr., declined to
Ford said he hoped the case would establish a legal
case will stand hopefully for the proposition that when
company denies a claim, it must do so with specific
reasons for the
denial," he said. "They can't sandbag the
insured, as done in this case."
Waller said the jury's decision vindicates his decision
with the suit: "Maybe in the future, insurance
companies will stop, look
and listen before they leap."
Descriptors: FARMERS INSURANCE GROUP; TRUCK INSURANCE
EXCHANGE; SUITS; LIABILITY
Copyright (c) 1991 Times Mirror Company