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Friday, November 21, 1997
Home Edition
Section: Metro
Page: B-6

Condo Owners Picket Insurance Company;
Northridge quake: Group says firm shortchanged them $5 million in paying for
repairs to their complex.;


A group of 30 San Fernando Valley protesters paraded in front of Farmers Insurance headquarters in downtown Los Angeles on Thursday contending that the company shortchanged them $5 million in paying for repairs to their condo
complex, which was damaged in the Northridge earthquake.

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 that the company refused to pay for some caissons and ground fill to rebuild foundations and wouldn't pay the full cost for upgrades that condo owners made over 20 years, on everything from marble fireplaces to landscaping.

"Farmers is claiming construction costs were exorbitant," although they relied on engineers that Farmers approved, said Scott Seaton, the condo group's president. Farmers spokeswoman 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.

Owners of the 195-unit Park Northridge condo complex have sued Farmers for bad faith and breach of contract. They face $4 million in debts to the city, the Small Business Administration and a contractor to help finish repairs on their

Farmers started off handling the quake repairs fairly, said Gary Vollers, former president of the condo association. Then Farmers representatives told him two years ago, " 'That's all the money we're going to give. That's it,' " he said.

The quake policy had a 10% deductible, Vollers said. But about 40 condos had to be razed and rebuilt entirely, he said. 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, he said.

"They rewrote the rules. It's really bad faith," said Ralph Martin, 67, a retiree who lives 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 attorney, 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.

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?"

Park Northridge, built in 1975, was one of the first condo complexes in the San Fernando Valley. The 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 property 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.


Copyright (c) 1997 Times Mirror Company


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