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The "Farmers Insurance News-Alert" website is dedicated to providing the consumer and general public with detailed information concerning the Farmers Insurance Group. This includes fraud reports, consumer complaints, lawsuit's and other legal actions taken against this company. All information contained herein is for educational purposes only. Original sources, when known are sited.

 

Verdict & Settlement Summary

JURY VERDICT SUMMARY

INSURANCE BAD FAITH: ARSON FIRE AT VACANT RESIDENCE

VERDICT: $12,167,000.00
PLAINTIFF ATTORNEY: Michael H. Whitehill, Esq. (KUSSMAN & WHITEHILL) Los Angeles
DEFENDANT'S ATTORNEY: Joseph C. Girard, Esq. - Marina del Rey
TRIAL JUDGE: William McFadden - Torrance, Department M
TRIAL TIME: 8 days
DELIBERATION TIME: 3 hours - Compensatory Damages
1 hour - Punitive Damages

CASE: A. BARTON CLEVELAND v. FARMERS INSURANCE GROUP and FIRE INSURANCE EXCHANGE - SWC 95403

FACTS: Plaintiff, A. Barton Cleveland, fifty-four years old, is the owner of Mr. Pockets Billiards Parlor in Manhattan Beach. In February of 1987, Mr. Cleveland purchased a residence directly adjacent to Mr. Pockets. The house was unfurnished and remained vacant after being purchased by Plaintiff. On June 3, 1987 the house caught fire. Mr. Cleveland was in Hawaii vacationing at the time of the fire.

The Fire Department determined the cause of the fire was arson. No suspects were ever identified. After the fire Mr. Cleveland applied for a Conditional Use Permit to demolish the residence and use the lot as a parking lot for Mr. Pockets.

When Defendants learned the fire was caused by arson they immediately retained Counterforce Investigations to do complete cause and origin arson investigation. That investigation included complete background investigation of Mr. Cleveland. A handwritten entry was found in the file of Counterforce Investigations purporting to document a conversation with the Manhattan Beach fire Department which in part stated "Want insured to think that if he collects we will nail him".

In July, after Counterforce completed its investigation, in which it obtained no evidence linking Plaintiff to the fire, the file was referred to the law firm of Barry Zalma Inc. Mr. Cleveland was asked to appear at an examination under oath. He was further requested to produce income tax returns from 1983 through 1986, information with respect to all insurance policies he held in a three year period, as well as all insurance claims he had filed during a three year period. Mr. Cleveland refused to appear at the examination under oath or produce the requested documents contending they were irrelevant to his claim. The examination under oath was scheduled a second time and Mr. Cleveland again failed to appear.

On October 16, 1987, Plaintiff filed a Complaint against Defendants. On November 9, 1987, Defendants denied Plaintiff's claim "unequivocally and irrevocably" on the grounds that he failed to appear at the scheduled examinations under oath.

PLAINTIFF'S CONTENTIONS:

Plaintiff argued that Defendants' actions constituted a breach of the covenant of good faith and fair dealing and violated Insurance Code, 790.03(h). In addition, Plaintiff argued Defendants had committed fraud since Plaintiff purchased the policy based on Farmers presentation that he would receive "fast fair and friendly service." Plaintiff prevailed on all three causes of action.

DEFENDANT'S CONTENTIONS:

Defendants' claimed that Plaintiff breached a material condition precedent to recovery under the policy by failing to appear at the examination under oath and produce the requested documents. Defendants further argued that Plaintiff had breached his covenant of good faith and fair dealing to Defendants by failing to produce information necessary to a complete and accurate adjustment of his claim. Finally, Defendants claimed that only Fire Insurance Exchange, the company writing the policy, and not Farmers Group Inc., could be held liable.

SETTLEMENT:
Offer: None
Demand: CCP 998 - March 1988 - $300,000
VERDICT: $12,167,000.00
TOTAL: $167,000 Compensatory Damages
$12,000,000 Punitive Damages
JURY POLL: 12-0 Breach of the Covenant of Good Faith and Fair Dealing
12-0 Violation of Insurance Code, 790.03
11-1 Fraud
11-1 No breach of the Covenant of Good Faith and Fair Dealing by Plaintiff
12-0 Malice, Oppression & Fraud
9-3 Punitive Damages (Two Jurors wanted to award Twenty Million.)
PLAINTIFF'S EXPERTS: NONE
DEFENDANT'S EXPERTS: Larry Haile - Attorney - Marina Del Rey
Gilbert Archuletta - Attorney and Former Mayor of Manhattan Beach,
Andrew Lilly - Real Estate Appraiser - Los Angeles
Barry Pape - Fire & Origin Expert -
Manhattan Beach Fire Department

 

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