Facts

Plaintiff sustained a fire at its jewelry store wherein its gold jewelry inventory was damaged and lost. Specifically, plaintiff claimed that $1.7 million of its gold jewelry items were damaged while kept inside its safes at the time of the fire and $54,000 of its gold jewelry items were lost as they were kept outside of its safes at the time of the fire.

Defendant insured plaintiff's gold jewelry items and provided a coverage limit of $800,000 for plaintiff's In-Safe gold jewelry items and $40,000 for plaintiff's Out-Of-Safe gold jewelry items. After a thorough investigation, defendant discovered that it was scientifically impossible for plaintiff's claimed In-Safe gold jewelry items to have sustained damage while kept inside its fire-rated Safes as said gold had annealed which could only happen if the temperatures inside the Safes exceeded 800 F. Given that plaintiff's paper, plastic, fabric, and tupperware items inside the Safes had not burned or melted, it was scientifically impossible for plaintiff's gold jewelry items to have annealed while kept inside its Safes. As such, the only logical conclusion was that plaintiff committed insurance fraud by claiming its out-of-safe gold jewelry items were kept inside its Safes in order to take advantage of the higher In-Safe limit of the Policy.

Defendant declined coverage for plaintiff's fire loss due to plaintiff committing insurance fraud.

Plaintiff filed suit for breach of contract and insurance bad faith.

Settlement Discussions

Plaintiff lowered it's initial demand of $5 million to $1.5 million. Defendant offered $60,000.

Damages

Plaintiff sought in excess of $5 million.

Result

Judgment for defendant and dismissal of action in its entirety. After a 1-month bench trial and testimonies from 14 witnesses, the court found that plaintiff had committed insurance fraud, dismissed plaintiff's breach of contract and bad faith causes of action, and awarded a judgment to defendant to which defendant will now seek all of its recoverable costs, including investigation and expert fees, from plaintiff.