Farmer Insurance Complaint: Bad Faith Lawsuit

Farmers Insurance Complaint Bad Faith Lawsuit

Farmers Loses Judgment

The insurer must pay $9.9 million to two women it chose not to defend in a liability suit.

July 19, 2005 latimes.com
By Molly Selvin, Times Staff Writer

A Los Angeles County Superior Court jury has ordered Farmers Insurance Group Inc. to pay $9.9 million to two women for failing to defend them when a neighbor was injured by a garage door at their condominium complex.

Retirees Linda Williams, now 65, and B.J. Walker, 80, who share a Los Angeles condo, were sued by neighbor Juanita Wasson after she fell in front of their garage in 2001 and suffered a broken hip. The homeowner association at the complex where all three women live carried liability coverage with Farmers.

Wasson, who was 85 at the time, sued the homeowner association and Williams and Walker for reimbursement of $60,000 in medical bills, including surgery. Wasson alleged that Walker was at fault because she remotely opened her electric garage door before looking to see whether the driveway was clear.

Farmers defended the condo association in the case, but the insurer filed a cross complaint against Walker and Williams alleging that Wasson’s fall was due to Walker’s negligence.

Walker and Williams filed a bad-faith suit against Farmers.

Williams and Walker, who have lived in the complex for 13 years, were worried they would lose their home if they lost their liability case.

The women, who had already maxed out their credit cards to hire a lawyer, borrowed $6,500 more from friends to settle with Wasson for a portion of her medical expenses

"I guarded my credit all my life," Walker recalled Monday, "but we were just about tapped and I was so scared."

In a May bench trial, Superior Court Judge James R. Dunn ruled that Farmers had breached its insurance contract by failing to defend the two women.

And in a damages trial that ended Friday, a jury awarded $1.5 million to Walker and Williams for emotional distress, $8.3 million in punitive damages and $52,000 in contract damages.

In a statement, Farmers said, "We … disagree with the verdict." The company said it was considering whether to ask for a new trial or to appeal.

Los Angeles-based Farmers is a unit of Zurich Financial Services of Switzerland.

The suit was a "garden variety bad-faith case where the insurance company denies benefits with no justifiable reason for doing so," said L.A. attorney John Quisenberry, who represented Walker and Williams.

"What’s different is that Farmers knew its actions might cause these women to lose their home."

The Quisenberry Law Firm Announces a Jury Verdict of $9,890,187.55 Against Farmers Insurance Exchange

Posted on:
Monday, July 18, 2005 03:07 AM Copyright @ 2004, dBusinessNews.

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.