Lewis R. Schmid and Judith E. Schmid v. Federal Insurance Company, et al.
Published: Apr. 27, 1996 | Result Date: Apr. 1, 1996 | Filing Date: Jan. 1, 1900 |Case number: 686651 – $17,062,000
Judge
Court
Orange Superior
Attorneys
Plaintiff
Wylie A. Aitken
(Aitken Aitken Cohn)
Defendant
Experts
Plaintiff
Stephen D. Prater
(technical)
Defendant
Robert A. Davidson
(technical)
Facts
On April 11, 1991, a fire erupted severely damaging approximately 80% of the plaintiffs', Lewis and Judith Schmid's ("the Schmids"), home and their personal property. Lewis R. Schmid, a developer and contractor, built the home in 1969 and upgraded it several times. The home was insured by the defendant, Federal Insurance Company ("FIC"), one of the Chubb Group of Insurance Companies. The Schmids had purchased a masterpiece policy with basic insurance policy limits of $705,000 for the dwellling and $325,000 for its contents. This was increased to $1,410,000 if a decision was made to rebuild the home. The contents limits increased proportionately 50 cents per every dollar spent on rebuilding the house over the basic policy limits. The plaintiffs alleged that the defendants knew that the loss exceeded the basic policy limits. Shortly after the fire, the senior adjustor advised the Schmids that in order to cash out, they would have to accept the basic policy limits. The Schmids undertook preliminary steps to rebuild their home with the consent of the defendant, FIC. Lewis Schmid hired a structural engineer and on August 27, 1991, a meeting was held at the site to finalize the scope of work. The plaintiffs' contractor and two of the defendant FIC's contractors met in January of 1992 to compare bids. There was nearly a $500,000 difference between the bids. The plaintiffs alleged that neither of the defendant FIC's contractors used the architectural plans to prepare their estimates and they deliberately failed to bid to upgrade for current building codes or include drapes, carpets or appliances. In March of 1992, the defendant FIC's adjustor paid the basic policy limits of $705,000 and demanded that the issue go to litigation (appraisal). The appraisal process allegedly cost the Schmids nearly $60,000. In January of 1994, the appraisal was completed and the award was approximately $1,285,000. The plaintiffs brought this bad faith action against the defendants based on breach of contract and tortious breach of the implied covenant of good faith and fair dealing theories of recovery.
Settlement Discussions
The plaintiffs made a C.C.P. º998 settlement demand for $750,000 for Lewis Schmid and $500,000 for Judith Schmid in July of 1994. The defendants made a $100,000 offer at trial.
Damages
The plaintiffs' appraisal cost was $54,591 and the cost of storage was $9,380. Attorney's fees are to be determined by the court and loss of use of funds are also to be determined by the court.
Other Information
The verdict was reached approximately four years after the case was filed.
Deliberation
1 day and 2 hours
Poll
12-0 (consequential damages), 11-1 (emotional distress), 12-0 (malice, oppression and fraud), 9-3 (punitive damages award), 12-0 (punitive damages)
Length
3 weeks
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