Facts

A truck belonging to George and Geneva Cortez was stolen from their residence. The truck was insured by Farmers Insurance Exchange (FIE). FIE had been providing both liability and comprehensive insurance to various vehicles owned by the Cortez family for over 20 years, and investigated, accepted and paid three prior auto theft claims by the Cortez family. However, FIE denied the Cortez's claim for the stolen truck. The Cortez's filed suit.

PLAINTIFFS' CONTENTIONS:
The plaintiffs claimed that defendant had conducted a prejudicial investigation. They contended that defendant was predisposed to deny their claim, and that several entries in the claims file by defendant 's personnel misrepresented the facts. The plaintiffs advised defendant of several auto, commercial and agricultural thefts in the area, and encouraged defendant to verify this information with law enforcement. They also advised defendant that several neighbors could verify and provide information regarding the thefts in the area. The defendant never inquired into the thefts. It also never contacted Geneva Cortez, who was the principal user of the stolen truck, nor George Cortez's employer.

DEFENDANT'S CONTENTIONS:
The defendant argued that the plaintiff’s specific denial of any previous auto theft claims under his policy, his financial condition with relation to the status of the leased vehicle, and his alleged lack of knowledge with regards to his outstanding loans, credit status, and employment status and history were all material misrepresentations that warranted denial of this suspicious claim. The defendant also contended that evidence developed during discovery indicated that plaintiff’s previous three auto theft claims were for thefts that occurred under scenarios suspiciously identical to the theft that was the subject of this lawsuit, which was statistically against the odds, and that plaintiffs’ financial condition was in a far more dire condition than he had revealed during the claims investigation.

Settlement Discussions

The plaintiffs made a C.C.P. Section 998 demand of $350,000. The defendant offered $3,500 prior to a summary judgment hearing.

Damages

The plaintiffs continued to make payments on the truck's lease after it was stolen, in the amount of $5,211.28, and sought the value of the truck as well. The plaintiffs also claimed emotional distress.

Result

The parties settled for $190,000.

Other Information

The defendant moved for summary adjudication as to the punitive damages aspect, which was also denied based in part on an exhibit from the defendant’s file which misinterpreted the facts that tendered to support the denial of plaintiff’s claim.