Facts

Fire Insurance Exchange issued a Homeowners Insurance Policy to plaintiff Daniel Guerrette for his home in Kings Beach.

In August 2007, plaintiff, a skilled contractor and craftsman, was remodeling his home when it was completely destroyed by an accidental fire. Plaintiff immediately notified Fire Insurance Exchange of the loss.

Fire Insurance Exchange, through Farmers Insurance Exchange, responded to the claim, inspected the loss site, and issued some payments for actual cash value for the dwelling, payments for Additional Living Expense coverage, and partial payments for damaged personal property. Plaintiff began reconstruction of his home.

In February 2008, plaintiff sent Fire Insurance a third inventory of lost personal contents, totaling about $190,000. Plaintiff supported two items on his inventory submission with documents he described as "receipts." Fire Insurance assigned a Special Investigation Unit investigator to interview plaintiff, and engaged counsel to assist in the investigation of the contents claim and take an Examination Under Oath. Farmers Insurance Exchange claims counsel received verification from two separate vendors that the documents plaintiff had submitted to Fire Insurance as receipts were in fact "quotes," and that plaintiff had not made any purchases from those vendors.

Fire Insurance then denied the claim based on material misrepresentation and concealment. Fire Insurance declined to issue any payment for the third contents submission, refused to pay the $60,000 it had withheld for depreciation of the dwelling, and terminated plaintiff's Additional Living Expense coverage, forcing plaintiff and his daughter to vacate a leased home and move into a motorhome.

Plaintiff never completed the rebuild of his home, and lost the property in a short sale in 2009.

Plaintiff sued Fire Insurance Exchange, Farmers Insurance Exchange, and Farmers Group Inc. for breach of contract, breach of the implied covenant of good faith and fair dealing, intentional infliction of emotional distress, fraud, and breach of fiduciary duty.

PLAINTIFF'S CONTENTIONS:
Plaintiff alleged that Fire Insurance breached the insurance contract and committed tortious conduct by wrongly denying the claim based on a biased and incomplete investigation and materially inaccurate facts.

Plaintiff contended that Fire Insurance prematurely denied the claim without conducting his Examination of Oath, without considering plaintiff's explanation that he had submitted "quotes" at the request of Fire Insurance, and that Fire Insurance's claim file contained photographs showing many of the damaged contents listed on his third inventory submission, including the property described in the disputed documents which plaintiff submitted to support his claim for personal property.

Plaintiff alleged that Farmers Group Inc. and Farmers Insurance Exchange were alter egos of Fire Insurance Exchange and that all three defendants were jointly and severally liable as joint venturers.

DEFENDANTS' CONTENTIONS:
Fire Insurance Exchange contended that plaintiff submitted a false personal property claim supported by quotes which plaintiff had altered to look like receipts. Fire Insurance also contended that plaintiff made other material misrepresentations and concealed other material facts to Fire Insurance's attorney and investigators, which Fire Insurance discovered during the litigation and trial.

Settlement Discussions

Plaintiff demanded $30 million to settle. Defendants Fire Insurance Exchange and Farmers Insurance Exchange made no offers to settle.

Damages

Plaintiff sought over $300,000 in unpaid policy benefits for dwelling coverage, contents coverage, and coverage for additional living expense. He also sought economic extra-contractual damages due to the loss of his home after Fire Insurance denied his claim. He claimed loss of income, past and future, resulting from the uncompensated loss of all of his tools in the fire. He also sought punitive damages.

Injuries

Plaintiff claimed emotional distress damages for severe depression and post-traumatic stress disorder associated with being homeless and unemployable due to his lack of tools.

Result

Defense verdict. The jury returned a special verdict, for the defense, finding that plaintiff made material misrepresentations of fact in submitting his insurance claim.

Other Information

FILING DATE: Oct. 29, 2008. Following a one week bench trial in May 2011, the court issued a Statement of Decision that Farmers Group Inc. was not the alter ego of either Fire Insurance Exchange or Farmers Insurance Exchange. Plaintiff then abandoned his claim that Farmers Insurance Exchange was the alter ego of Fire Insurance Exchange. Jury trial commenced July 7, 2011 against all three defendants. After plaintiff rested, the court granted Farmers Group Inc.'s motion for nonsuit, ruling that plaintiff's evidence was insufficient to establish that Farmers Group Inc. was a joint venturer of either Fire Insurance Exchange or Farmers Insurance Exchange. Plaintiff voluntarily dismissed his causes of action for intentional infliction of emotional distress, fraud, and breach of fiduciary duty and proceeded on his causes of action for breach of contract and insurance bad faith against Fire Insurance Exchange and joint venture liability against Farmers Insurance Exchange.

Deliberation

six hours

Poll

10-2 (defense)

Length

30 days