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.



Tuesday, July 12, 1988

By ALAN GATHRIGHT, Mercury News Staff Writer

A San Jose jury has found that a Farmers Insurance Group subsidiary should pay a total of $5.1 million to two Monterey County homeowners for fraudulently failing to compensate them for toxic contamination of their water wells.

Superior Court Judge William J. Fernandez is expected to sign the final judgment today.

The jury on Thursday found Fire Insurance Exchange guilty of fraud, malice and causing emotional distress, and it awarded $2,575,000 to Joseph and Linda Plescia and $2,535,000 to Shirley Potter. Both homeowners lived on Crazy Horse Canyon Drive north of Salinas.

Geoffrey Van Loucks, attorney for the homeowners, said the Farmers subsidiary violated legally mandated standards for prompt payment.

''The only way that a company like this is going to pay attention to the law is if they get a strong message," he said. "Maybe this verdict will force them to (enforce) standards, and other people won't suffer like this."

The homeowners' wells were contaminated in the spring of 1985 by a carcinogenic chemical that leaked from the Salinas municipal dump, Van Loucks said. The county health department said that the water shouldn't be used domestically and that the Plescias' children shouldn't even play on the grass after it was watered.

Although the families' homeowners insurance covered any damage rendering the houses uninhabitable, Van Loucks said, it took Farmers until January 1987 to partially compensate the families.

During this time, the families couldn't afford to move out of their homes and were forced to live in the contaminated environment, the attorney said. They drank and cooked with bottled water, and the Plescias drove their two young children 25 miles to their grandparents' home for showers.

The insurance firm didn't completely compensate the homeowners until days before the trial began in May 1988.

Van Loucks said the only explanation the firm gave for failing to pay was that its Los Angeles home office and a regional office each thought the other was paying the claim.


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