Pacific Coast Machine v. Golden Eagle Insurance Corp.
Published: Feb. 18, 2004 | Result Date: Oct. 29, 2003 | Filing Date: Jan. 1, 1900 |Case number: RIC361881 Verdict – $7,500,000
Judge
Court
Riverside Superior
Attorneys
Plaintiff
Defendant
Facts
The plaintiff entity was a dealer in construction equipment that had purchased an insurance policy from the defendant. In August 2000, during a manufacturer's audit, it was discovered that a backhoe was missing. A claim for theft was submitted to the insurance company. The defendant, Golden Eagle, began an investigation as to the claim against the insured, which concluded in January 2001. The matter was sent to coverage counsel. In February 2001, a fraud complaint against the insured was filed with the Department of Insurance by Golden Eagle's Special Investigation Unit. Golden Eagle's coverage counsel elected to conduct examinations under oath of the insured's officers. One of the conclusions of coverage counsel was that the insured's story of the theft of the backhoe had a "credible ring" of truth. Nevertheless, the claim was denied as excluded under the policy. At her deposition, and again at trial, the handling adjuster of Golden Eagle admitted that she concluded that the backhoe was stolen. The insured was forced to pay approximately $57,400 to the manufacturer from its own funds for the theft of the backhoe.
Settlement Discussions
There was no settlement offer by the defendant. The plaintiff served a C.C.P. Section 998 offer for $699,999.
Result
The jury awarded $7.5 million in punitive damages. The parties stipulated to compensatory damages in the event of coverage. The plaintiff contended that all of its actual harm, whether compensated or not, plus all harm it potentially could have suffered must properly be considered when analyzing the punitive damages to be awarded.
Other Information
An attorney for the plaintiff stated that the trial was marked by the testimony of the defendant's former assistant vice president of claims who testified that he believed that the claim should have been paid. As implemented, the leakage program effectively denied the insured's the benefit of doubt on small property claims and advocated the aggressive use of exclusionary language. He admitted his decision to allow the claim to be denied was unreasonable. According to the defendant: The post-trial motions have now been completed and the trial judge granted a conditional new trial/remittitur reducing the punitive damages to $500,000. The new trial will be limited to determining the amount of punitive damages. The punitive award is now slightly greater than 3+ times the actual insured plus Brandt fees.
Poll
11-1 (coverage), 12-0 (bad faith, malice, fraud and oppression)
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