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Insurance
Indemnity
Negligence

Loren Lutz, et al. v. Chubb & Son, Inc., et al.

Published: Apr. 5, 1997 | Result Date: Mar. 14, 1997 | Filing Date: Jan. 1, 1900 |

Case number: BC115192 –  $130,737

Judge

Owen Lee Kwong

J. Michael Byrne

Court

L.A. Superior Central


Attorneys

Plaintiff

David Gorney


Defendant

Michael T. Montgomery
(McCluskey & Montgomery LLP)


Experts

Defendant

Dean Colin
(technical)

Facts

Plaintiff Keeling & Company was an insurance agent and an admitted agent of the defendant Chubb/Federal. The insureds, Loren and Mari on Lutz, were clients of Keeling & Co. and insureds of Chubb/Federal. Chubb carried the insureds on its Masterpiece Fair Plan Extension policy with limits of $208,000. The Chubb policy did not cover fire. During the Chubb appraisal of the insureds' home, Chubb determined that the actual replacement cost for the Lutz home was $381,000 and so advised Keeling. Keeling advised the insureds of this and used the Chubb/Federal appraisal to set the limits of the insureds' California Fair Plan policy at $381,000. On Oct. 27, 1993, the home was totally destroyed in the Altadena fire. The insureds obtained estimates of reconstruction ranging from $639,000 to $800,000. The insureds sued the Chubb/Federal and Keeling, claiming over $1 million damages. Keeling & Company cross-complained against Chubb/Federal based on contractual and equitable indemnity theories of recovery. The insureds also sued Keeling & Company for professional negligence and misrepresentation concerning the policy limits and description of what the Chubb policy covered. Judge Melvin Grover granted summary judgment on the insured's complaint to Chubb/Federal in February 1996. One day before the original trial in March 1996, Keeling settled with the insureds for $125,000, while retaining its right to pursue the cross-complaint. The verdict reported is the trial of the cross-complaint which took place almost a year after Keeling & Company's settlement with the insureds.

Settlement Discussions

Prior to Keeling's initial settlement with the insureds, Chubb/Federal declined to pay anything. At a subsequentmandatory settlement conference, Chubb/Federal offered $5,000 to Keeling & Company. During jury selection on the trial of the cross-complaint, Chubb/Federal made a settlement offer of $20,000. Keeling rejected the offer and countered with a $100,000 demand which was not accepted.

Damages

Plaintiff Keeling claimed $172.400 in damages, consisting of $125,000 for Keeling's underlying settlement with the insureds and $47,400 for Keeling's underlying defense costs.

Other Information

After the fire (and without any subsequent inspection), Chubb/Federal offered to renew the insureds policy and ultimately increased the policy limits to $526,000. The court refused to allow any reference to this post-loss increase in the policy limit over the plaintiff's objections. However, the court allowed a redacted version of the letter into evidence. The redacted portion referred to the prior "drive by" inspection as an "appraisal" POST TRIAL MOTIONS: Keeling & Company has requested the court to award prejudgment interest and attorney's fees.

Poll

12-0 (liability), 10-2 (damages)


#101427

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