Farmers Insurance Company of Oregon Accused of “calculatingly malicious” in its Refusal to Pay
Owners of landslide home are first to sue insurer
Hendricksons say they were told 'earth movement' would be covered
By Shasta Kearns Moore
The Southwest Community Connection, Jan 1, 2009
HILLSDALE — The owners of the four-level home that cascaded down a hill into two other houses on Oct. 8 are the first of seven affected households to file suit against their insurance company for denying coverage.
Dave and Kathei Hendrickson allege in the $2 million complaint filed Dec. 10 in Multnomah County Circuit Court that Farmers Insurance Company of Oregon had been, at times, “calculatingly malicious” in its refusal to pay for any damage resulting from the landslide — which demolished the Hendricksons’ house and nearly everything in it.
Kathei Hendrickson was home when the slide occurred in the early morning and barely escaped thanks to quick action by her neighbors. The house and several hundred tons of debris are still sitting at the bottom of the hill, where the road — a portion of Terwilliger Boulevard — has been closed indefinitely.
Many of the homeowners are still not allowed back in their houses and are living with friends or in rental units as they continue to make mortgage payments.
Landslides are generally not covered
According to insurance and landslide experts, “earth movement,” as it is called in the insurance industry, is typically not covered by homeowner’s insurance and requires an extra — and extremely rare — policy.
However, the Hendricksons claim in their suit that a Farmers Insurance agent told them when they bought a “Protector Plus Homeowners Package” in 2005 that it would cover all eventualities, including earth movement.
According to the Hendrickson’s attorney, Bob Bonaparte, the agent “essentially told them they would be covered for every risk … so they purchased the policy, and lo and behold they weren’t.”
A claim denial letter dated Dec. 2 from Farmers Insurance Company of Oregon to the Hendricksons points to language in the policy that they say specifically denies coverage of damage resulting from earth movement, and any of its possible causes.
“The policy repeatedly emphasizes that landslide is never covered under this policy, however caused — whether combined with water or the negligent acts or omissions of people,” states the letter signed by Michael D. Flynn of Farmers Insurance.
What caused the landslide?
Insurance company experts, city engineers and others have all cited an unnatural water saturation of the hillside as the most likely cause of the landslide — though, as most of the evidence was washed away in the slide, the true, specific cause will likely never be fully known.
Records from the city’s Water Bureau show an excessive use of water since the last meter reading on July 31 — about 20,000 extra gallons, according to Dr. Wesley Spang, an engineering expert hired by Farmers Insurance. However, Spang and others have not been able to determine over what period of time the water use occurred nor whether it was intentional or caused by a leak.
According to legal documents, the release of excess water could have been triggered by several contractors working on the property in recent years. Two days before the slide, Team Clean Windows and More, LLC, power-washed the house; 10 days before, Harrity Tree Specialists removed an 80-year-old cedar tree; and in recent years, an unnamed contractor broke up concrete in front of the house and another installed a sprinkler system.
Regardless, says Farmers Insurance, the Hendricksons would not be covered for any of those possible causes.
In addition, the other six households affected by the catastrophe have all been denied claims against their own insurance companies and many are preparing claims against Farmers Insurance under the liability portion of the Hendricksons’ policy.
Though the Hendricksons’ complaint includes a request for a jury trial, their lawyer expects that in the middle of 2009 all of the parties to the various lawsuits — including the contractors — will sit down and negotiate who should pay what.
“Lawsuits should be flying any day,” Bonaparte said. “Ours was simply the first.”
Read the Lawsuit: Hendrickson vs Farmers Insurance Company of Oregon