Successfully mediated a bad faith breach of a homeowners insurance contract case. Plaintiff homeowner purchased a tract home and obtained insurance for it through Defendant/Insurer. A few years after purchasing the home, a significant water leak manifested in a ceiling. Plaintiff immediately reported the leak to her insurer and requested assistance in stopping and repairing it. It was determined the leak emanated from a defective PEX water line, installed by the original mass developer/builder of the home. Defendant sent a series of its regular vendors to determine the extent and cause of the loss and determine the scope and amount of the covered cost of repairs together with Defendant's adjuster. Plaintiff then hired a separate contractor to assess the loss, who concluded that the actual scope of damage and cost to make the necessary repairs was substantially higher. Plaintiff claimed that Defendant unreasonably and tortiously low-balled its repair estimate with its "captive vendors" and then wrongfully asserted exclusions in the policy to try to avoid paying for necessary repairs; and unreasonably failed to advance and approve the full extent of her necessary temporary living expense benefits while the home was uninhabitable because the water main had to be turned off for over four months. Plaintiff also claimed that she suffered emotional distress from being forced to live in the home during that time with no running water due to Defendant's falure to pay for alternative lodging. The case settled at the initial mediation session after Plaintiff filed suit but before the parties engaged in any discovery.
Following failed settlement negotiations arising from a solo automobile accident, injured passenger sued the insured driver. Driver’s insurer then sued the third-party claimant passenger for breach of their alleged settlement agreement. Granted summary judgement in favor of insurer against third-party liability claimant, on their respective cross-motions for summary judgement on the issue of whether a binding contract was created by insurer’s alleged acceptance of claimant’s time-limited $100,000 policy limit demand. Insurer contended that the claimant was contractually obligated to sign the bargained for “Release of All Claims” when it timely tendered the bodily injury policy limits of $100,000. Claimant contended that there was no acceptance of the offer to settle because insurer introduced a new term in the release, requiring a release of “all” claims. Claimant asserted that his offer to settle his bodily injury claim did not include an offer to settle any additional claims he might assert for property damage. The grant of summary judgment in favor of the insurer enforcing the settlement agreement was affirmed in a published decision by the Sixth District Court of Appeal. (H046475).
Property owner suffered an adverse judgement following a trial, which resulted in the imposition of an easement across his property. His Title Insurer had previously rejected his tender of defense against the easement claim. Following trial of the underlying easement action, he sued the Title Insurer for bad faith breach of the title insurance contract. The parties waived a jury and the coverage issue was tried to the Court. In that action it was determined as a matter of law that the insurer breached the duty to defend, that its denial of coverage was wrongful, that it was therefore bound by the judgment in the underlying action, and that it was liable for all costs and attorneys’ fees incurred by the insured in defending the action, plus pre-judgement interest thereon and consequential damages for emotional distress and diminution in value of the property resulting from the easement.
Hon. Paul Burdick (Ret.)
96 North Third Street Suite 350 San Jose, CA 95112