Confidential
Settlement – $0Judge
Court
Fresno Superior
Attorneys
Plaintiff
Brad W. Seiling
(Manatt, Phelps & Phillips LLP)
Experts
Plaintiff
Gary A. Hernandez
(technical)
Alan Fishbein
(technical)
Monte Schultz
(technical)
Defendant
Candice Brooks
(technical)
Robert Quinn
(technical)
David Petersen
(technical)
A. Mason Blodgett
(technical)
Joe Penbera
(technical)
David Kuizenga
(technical)
Facts
Cross-complainants Fred Jones and Mildred Jones operated cross-complainant Fred Jones Trucking, a trucking business. Cross-defendant Cal-Eagle Insurance Company issued a commercial trucking policy to defendant/cross-complainant Fred Jones with a policy period of March 27, 1991 through March 29, 1992. Several months after the policy expired, Cal-Eagle conducted an audit of the trucking operations, and on Sept. 16, 1992, billed the insureds for additional premiums of $111,523. Cal-Eagle claimed the additional premiums were based on the application of Rule 23 of the California Assigned Risk Plan. In July 1992 the Department of Insurance retroactively revised Rule 23 for the purpose of reducing insured's premiums. Cal-Eagle eventually reduced the additional premiums to $51,294. When the insureds failed to pay the additional premiums, Cal-Eagle assigned its claim to plaintiff Jonathan Neil & Associates and a collection action was filed in June of 1994. The Joneses cross-complained, alleging insurance bad faith and fraud against Cal-Eagle, and negligence against the cross-defendant insurance agency (settled).
Settlement Discussions
The Joneses made a settlement demand for $5 million. Cal-Eagle made a settlement offer of $350,000. In the early stages of trial, the insurance agency entered into a "high-low" settlement with the Joneses in the amounts of $325,000 low/$600,000 high.
Result
"CONTENTIONS" (continuation): The Joneses also argued that during the second audit, Cal-Eagle made certain findings in order to deny the Joneses to an excess rating, which findings were directly contrary to findings Cal-Eagle made during the first audit based on the same records; during the first audit, Cal-Eagle determined that the "cost of hire" of the Joneses' subhaulers was $369,482, whereas during the second audit, Cal-Eagle found that the Joneses' "cost of hire" of their subhaulers was $726,689, even though the Joneses' revenue for their entire operation was only $601,836; and that even though unsuccessful in lobbying the DOI to include additional requirements in revised Rule 23, Cal-Eagle nevertheless added these requirements to its internal standards as a precondition to an excess rating, which requirements Cal-Eagle knew were impossible to comply with. The Joneses also contended that upon revised Rule 23 coming into effect, Cal-Eagle instructed its auditors to go out to the insureds' premises and look for other ways to increase premiums to offset anticipated losses that Cal-Eagle would suffer based on the reduced rates called for by the revised rule; that when the Joneses complained to the DOI, Cal-Eagle concealed from the department the fact that it had not allowed the Joneses time to re-create their records as required by directives from the DOI and CAARP; and that Cal-Eagle treated all of their similarly situated insureds in the same way they treated the Joneses.
Other Information
The verdict was reached approximately three years after the case was filed. An arbitration was held in February 1996 before Joseph Marchini resulting in a $345,000 award for the Jonesses against Cal-Eagle only.
Deliberation
3 days
Poll
on the complaint: 12-0 defense. On the cross-complaint: 12-0 (insurance bad faith); 9-3 (fraud); 12-0 defense (negligence, in favor of the cross-defendant insurance agency); 12-0 (compensatory damages); 12-0 (punitive damages)
Length
12 weeks
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