Ronald L. Wolfe & Associates Inc. v. State Compensation Insurance Fund
Published: Jul. 23, 2005 | Result Date: May 9, 2005 | Filing Date: Jan. 1, 1900 |Case number: 01112461 Verdict – $0
Judge
Court
Santa Barbara Superior
Attorneys
Plaintiff
Defendant
James M. Burgess
(Burgess Law Corporation)
Facts
FACTS ACCORDING TO THE PLAINTIFF: The defendant, State Compensation Insurance Fund (State Fund), provided workers' compensation insurance coverage to the plaintiff, Ronald L. Wolfe & Associates Inc. (plaintiff) from May 19, 1998 through Jan. 31, 2001. Having received numerous incorrect billing statements from State Fund for a previous policy period, when the plaintiff received a billing in October 2000 from State Fund which appeared excessive, it submitted a payment for the correct amount it believed was owed along with a spread sheet showing the basis for the calculation. State Fund never responded to this correspondence. In January 2001, the plaintiff received a cancellation notice, indicating that the policy would be cancelled on Jan. 31, 2001 if all outstanding premiums were not paid but did not state the total amount that was allegedly outstanding. The plaintiff's corporate accountant left numerous messages with the State Fund representative responsible for the account seeking to discuss the cancellation notice which the plaintiff believed had been issued in error. None of these messages were returned until two days after the purported Jan. 31, 2001 cancellation date. In that message, the State Fund representative acknowledged having received the plaintiff's messages, apologized for not having called back sooner and promised to call the following Monday. The State Fund representative never called back. On Feb. 14, 2001, one of the plaintiff's employees was injured at work. The plaintiff tendered the claim to State Fund which denied it based on the claim that the plaintiff's policy had been cancelled. The plaintiff then paid in full the total amount that State Fund demanded to obtain a new policy, still believing the amount was incorrect. In June 2001, State Fund sent the plaintiff a refund check for a portion of the premium paid to obtain the new policy.
Settlement Discussions
Prior to trial, the plaintiff demanded $250,000. In response, State Fund reiterated its offer from the previous year that it would pay $80,000 to settle the case.
Specials in Evidence
ACCORDING TO THE PLAINTIFF: The defendant, State Compensation Insurance Fund (State Fund), provided workers' compensation insurance coverage to the plaintiff, Ronald L. Wolfe & Associates Inc. (plaintiff) from May 19, 1998 through Jan. 31, 2001. Having received numerous incorrect billing statements from State Fund for a previous policy period, when the plaintiff received a billing in October 2000 from State Fund which appeared excessive, it submitted a payment for the correct amount it believed was owed along with a spread sheet showing the basis for the calculation. State Fund never responded to this correspondence. In January 2001, the plaintiff received a cancellation notice, indicating that the policy would be cancelled on Jan. 31, 2005 if all outstanding premiums were not paid but did not state the total amount that was allegedly outstanding. The plaintiff's corporate accountant left numerous messages with the State Fund representative responsible for the account seeking to discuss the cancellation notice which the plaintiff believed had been issued in error. None of these messages were returned until two days after the purported Jan. 31, 2001 cancellation date. In that message, the State Fund representative acknowledged having received the plaintiff's messages, apologized for not having called back sooner and promised to call the following Monday. The State Fund representative never called back. On Feb. 14, 2001, one of the plaintiff's employees was injured at work. The plaintiff tendered the claim to State Fund which denied it based on the claim that the plaintiff's policy had been cancelled. The plaintiff then paid in full the total amount that State Fund demanded to obtain a new policy, still believing the amount was incorrect. In June 2001, State Fund sent the plaintiff a refund check for a portion of the premium paid to obtain the new policy.
Damages
The plaintiff claimed $103,000 plus attorney's fees and punitive damages.
Injuries
PLAINTIFF CONTENTIONS: The plaintiff contended that State Fund cancelled the plaintiff's policy for alleged nonpayment of premiums in an amount State Fund later conceded was incorrect; State Fund refused to withdraw the cancellation (an action specifically authorized by State Fund's corporate guidelines) in order to avoid covering the claim the plaintiff tendered in the interim. State Fund created confusion concerning the precise amount the plaintiff was required to pay by sending multiple, contradictory billings. The plaintiff further contended State Fund ignored the plaintiff's numerous requests for information concerning additional premium demands until after the effective date for cancellation of the policy. DEFENDANT CONTENTIONS: State Fund contended that the plaintiff had never lodged any dispute concerning the outstanding invoices prior to the cancellation date. State Fund was not aware of any dispute relating to the outstanding invoices prior to cancellation. The cancellation was made in good faith. State Fund further contended that the plaintiff had an obligation to communicate with State Fund if it disputed premium. As it turned out, even after the cancellation, the plaintiff never disputed all of the premium that was outstanding at the time of cancellation and, therefore, undisputed premium was owed at that time. State Fund complied with its contractual obligations and its internal guidelines. State Fund contended that it gave proper notice and had a valid reason for cancellation (i.e., nonpayment of premium) and, therefore, the cancellation was valid. State Fund had no obligation to withdraw a valid cancellation. The claim that was made after the cancellation was not a factor in any cancellation decision or any decision not to withdraw the cancellation.
Other Information
The plaintiff waived its appeal in exchange for a waiver of costs.
Deliberation
five hours
Poll
12-0 (for defense on the bad faith claim), 11-1 (for defense on the breach of contract claim)
Length
eight days
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