Chicago Title Insurance Company v. AMZ Insurance Services, Pacific Specialty Insurance Company, McGraw Company
Published: Oct. 4, 2008 | Result Date: Jun. 25, 2008 | Filing Date: Jan. 1, 1900 |Case number: 06CC08942 Verdict – $270,200
Facts
On Nov. 11, 2005, the home of Cheryl and Thomas Mustain was damaged in a fire. Plaintiff Chicago Title Insurance Co. (CTI) gave $270,000 for the Mustains' losses. Prior to this, CTI handled the Mustains' escrow when they wanted to refinance their home.
The lender required the issuance of a new homeowners policy, which involved AMZ Insurance Services, an insurance broker. AMZ named Pacific Specialty Insurance Co. as the insurer. Escrow was closed on Oct. 13 but the premium was not paid by Chicago Title at its closing.
About a month afterwards, the fire occurred at the Mustains' home, which caused the death of Thomas Mustain and the obliteration of the residence. Pacific Specialty declined coverage and Chicago Title compensated the Mustains with $270,200 and obtained an complete assignment of rights for the asserted insurance binder. Chicago Title brought an action against Pacific Specialty, AMZ and its parent company, McGraw Company, claiming breach of contract, indemnity, subrogation and bad faith.
Contentions
DEFENDANT'S CONTENTIONS:
Pacific Specialty asserted that documents purporting to be property insurance was not a valid insurance policy as no contract was formed, and AMZ was not Pacific Specialty's agent. Furthermore, AMZ canceled evidence of the policy before the fire, and Chicago Title was voluntarily compensating the Mustains, which precluded a right to subrogation. Lastly, Pacific Specialty did not act in bad faith as no policy existed, no claim was created and no issues remained for litigation. AMZ asserted that it had authorization in issuing insurance binders for Pacific Specialty. AMZ further claimed that the binders were voided before the fire happened and that it was delivered to both the mortgage company and the Mustains.
Settlement Discussions
A demand for $250,000 was made and no offer was returned.
Damages
Chicago Title demanded $270,000 to be given to the Mustains as well as attorney fees due to the bad faith tort.
Result
The jury found in favor of Chicago Title and awarded it $270,000 because Pacific Specialty's actions were in bad faith.
Deliberation
40 minutes
Poll
12-0
Length
six days
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