Facts

Arthur and Joann Hurtado owned a home in La Crescenta that was damaged by the Jan. 17, 1994 Northridge earthquake. On April 7, 1995, plaintiff Joann Hurtado reported an earthquake claim to Allstate Insurance Company. Allstate assigned the claim to its one-year unit set up to investigate claims made more than one year after the earthquake.

On April 19, 1995, Allstate sent a property adjuster from Allstate to her home. As part of the investigation, Allstate brought a stenographer for transcription purposes. Hurtado said she had noticed minor tile damage to her master bathroom shortly after the earthquake, but she was not asked if she thought it was caused by the earthquake, nor was she asked what "right after the earthquake" meant. Hurtado indicated she did not make a closer inspection of the property until early 1995 because her husband was terminally ill with cancer and died on Christmas Eve, and a neighbor told her in 1995 that she reported her claim and more damage than she thought she had was discovered.

Based on the information plaintiff provided in the transcribed statement, Allstate denied the claim, contending that plaintiff failed to report it within one year of when she first knew or reasonably should have known of appreciable damage to her property. Allstate also denied the claim for failure to give a sworn proof of loss, although Allstate never requested one and did not require them on earthquake claims.

Later in 1995, an attorney for Hurtado sent Allstate a copy of Prudential-LMI v. Superior Court, a California Supreme Court case that applies a "delayed discovery rule" to the one year suit limitation in first party progress property damage cases. The claim was redenied.

In 1998, Hurtado learned of a class action suit against Allstate based on its handling of earthquake claims, and she asked Allstate again to reconsider the claim, but it was again redenied.

In 2000, the California legislature revived certain Northridge Earthquake claims, in effect reopening the filing window.

Hurtado sued Allstate, which voluntarily reopened the claim and paid plaintiff $78,004.

PLAINTIFF'S CONTENTIONS:
Plaintiff maintained her suit for breach of contract and bad faith, contending that Allstate improperly denied her claims in 1995 and 1998 and that their payment was insufficient to cover the earthquake damage. Plaintiff also claimed the property adjuster did not reveal that he was part of Allstate's "One Year Unit" whose only task was to evaluate claims for denial based on untimeliness; that during the inspection progressive damage was identified; and that Allstate never explained how it calculated the one year cut of for claim reporting, or how the one year was potentially extended during the time the claim was under investigation, nor did it discuss numerous facts provided by Hurtado favoring delayed discovery.

DEFENDANT'S CONTENTIONS:
Allstate denied plaintiff's allegations. Allstate contended that it did not breach the insurance contract or act in bad faith by denying the claim in 1995 or 1998. Allstate also contended that it paid plaintiff enough to repair earthquake damage in 2004, after the lawsuit was filed.

Settlement Discussions

The plaintiff made a C.C.P. section 998 demand of $99,000 before trial; and during the trial demanded $250,000 to settle the case. Allstate made a C.C.P. section 998 offer of $10,001 before trial; and during the trial offered to settle for $25,000.

Damages

The plaintiff claimed the cost to repair damage of $350,000, less Allstate's post-litigation payment of $78,000, plus prejudgment interest in excess of $200,000, damages for emotional distress, attorney fees and punitive damages.

Result

The jury returned a verdict for the defendant.

Deliberation

six hours

Poll

9-2 (the parties stipulated to an 11-person jury on the last day of deliberations)

Length

four weeks