Friday, November 21, 1997
Valley Edition
Section: Metro
Page: B-1
Valley Condo Owners Protest Over Insurer's Quake Repairs;
Recovery: Thirty from Park Northridge complex demonstrate, say Farmers
shortchanged the group by $5 million.;
By: BARRY STAVRO
TIMES STAFF WRITER
A group of 30 San Fernando Valley protesters paraded in front of Farmers Insurance
headquarters in downtown Los Angeles Thursday claiming the company shortchanged them $5
million in paying for Northridge earthquake repairs.
Owners of the 195-unit Park Northridge condo complex sued Farmers for bad faith and breach
of contract, and face $4 million in debts to the city, the Small Business Administration
and their contractor to help finish repairs on condominiums.The group says Farmers
refused to honor a guaranteed-replacement quake policy, and that Farmers cut corners by
using two sets of deductibles. They further allege the company refused to pay for some
caissons to help buttress foundations and wouldn't pay the full cost for upgrades that
condo owners made over 20 years, ranging from marble fireplaces to landscaping.
"Farmers is claiming construction costs were exorbitant," said Scott Seaton, the
condo group's president, although the group relied on engineers that Farmers approved.
Farmers spokesperson Diane Tasaka said the company has paid $13.9 million for quake
repairs on the Park Northridge condo complex, but she declined to comment further.
Farmers started off handling the quake repairs fairly, said Gary Vollers, former president
of the condo association. Then two years ago, Farmers representatives told him, "
'That's all the money we're going to give. That's it.' They have really surprised us by
their lying and evasiveness," he said.
The quake policy had a 10% deductible, Vollers said. But some 40 condos had to be razed
and rebuilt entirely, he said, and Farmers pegged those repair costs at the actual
replacement cost, while condos needing only partial repairs were
pegged at a "projected replacement cost," instead of a flat, uniform 10%
deductible.
"They used two different methods to calculate the deductible. And guess what? It came
out to their benefit,' he said.
"They rewrote the rules. It's really bad faith," said Ralph Martin, 67, a
retiree at the complex. Some condo owners had to move out for two years as quake repairs
were stalled over billing disputes.
Brian Kabateck, one of the condo group's attorneys, said Farmers' policy requires it to
pay for full repairs so the complex looks as it did on the day of the January 1994
temblor.
At the morning protest, some needed canes to walk, and most of them were old enough to
collect Social Security. But they sounded young in voice as they chanted their gripes
against the company.
As Farmers employees walked out of the building at lunchtime, the ring of protesters
peppered them with chants, "We'll take a check right now" and "How can you
work for liars and cheats?"
Most Farmers employees walked past quickly, avoiding looking at the group. One Farmers
employee muttered under her breath, "I have a family to feed."
Park Northridge, built in 1975, was one of the first condo complexes in the San Fernando
Valley, and the attractive two-story complex with beige stucco walls and red tile roofs at
the foot of the Santa Susana Mountains is framed by
eucalyptus and pine trees.
About 20 condo owners lost their properties in foreclosure because they couldn't afford
out-of-pocket expenses to finish repairs, and the remaining residents are bitter that
Farmers isn't willing to settle the case, Vollers said.
If the group doesn't win its Superior Court case next year, Seaton said, each condo owner
will be hit with a $25,000 bill to cover the condo association's debts, and that will
trigger more foreclosures.
"Nobody is looking to make money. We just want to get rid of the debt Farmers gave
us," Martin said.
All told, Farmers was hit with 36,700 Northridge quake claims and has paid out $1.8
billion for damage repairs. Farmers still has 298 unresolved Northridge quake claims,
Tasaka said.
Descriptors: DEMONSTRATIONS -- LOS ANGELES; FARMERS INSURANCE
GROUP; INSURANCE INDUSTRY -- SUITS; INSURANCE CLAIMS;
EARTHQUAKE INSURANCE; CONDOMINIUMS; SAN FERNANDO VALLEY;
Copyright (c) 1997 Times Mirror Company |