Jury Verdict of over $10 Million Against Farmers Insurance Exchange
July 15, 2005
Business Wire
Los Angeles–Yesterday, a Los Angeles County jury returned a verdict of $9,890,187.55 against Farmers Insurance Exchange over the insurer’s bad faith refusal to defend two of its insureds. (Walker, et al. v. Farmers Group, Inc., et al., BC312281)
The plaintiffs, Ms. Walker and Ms. Williams, were insured under a liability policy Farmers issued to their homeowners association. The policy provided liability coverage for their liability as condominium owners arising out of accidents occurring on the common areas. The plaintiffs were sued in 2002 by a neighbor who was badly injured when she was allegedly hit by the plaintiffs’ garage door. The neighbor alleged that the homeowners association failed to maintain the common areas in a safe condition and should have foreseen that the design of the walkway around the garages, the recent installation of electrically operated garage door openers, and the design of the garage doors which swung outward when opened, would one day lead to an accident when a door was opened with a remote controller.
When the neighbor, who was 86 years old, sued Ms. Walker and Ms. Williams and the homeowners association, Farmers refused to defend plaintiffs, but did defend the association. Farmers also directed its lawyers to file a cross-complaint against Ms. Walker and Ms. Williams on behalf of the association.
Ms. Walker, who is 80, and Ms. Williams, who is 65, used their credit cards to retain a lawyer. Faced with a probable jury verdict of $300-350 thousand dollars, which would have forced them to lose their home, Ms. Walker and Ms. Williams borrowed enough money from friends to settle with the neighbor just before trial.
Ms. Walker and Ms. Williams sued Farmers in March 2004 for breach of the insurance contract and breach of the implied covenant of good faith and fair dealing. In a bench trial in May, Judge James R. Dunn ruled that Farmers had breached its insurance contract by not providing Ms. Walker and Ms. Williams with a defense. A jury trial was then conducted to determine whether Farmers acted in bad faith in failing to provide a defense, to investigate the insureds’ claim for coverage or to follow its own procedures in handling such claims.
The jury returned its verdict at the end of its second day of deliberations, awarding $51, 931.80 in contract damages, $1,500,000 in emotional distress and $8,338,255.75 in punitive damages. The jurors were unanimous in their finding of liability and in the amount of damages. The plaintiffs’ post-trial motion for attorney’s fees has not yet been heard.
