Snow storm collapses roof of building; insurer won't pay estimate to repair, says estimate includes code upgrades that it's not responsible for.
Policy Benefit: Repair Costs: $988,814.21
Policy Benefit: Lost Rent: $78,000
Lost rents (non-policy): $317,200
Attorneys Fees: $622,809.39
Kerley Schaffer LLP by Edward Kerley, Sarah Auten, Dylan Schaffer and John Melis, Oakland.
Akin Gump Strauss Hauer & Feld LLP by James Fitzgerald and Bryan Wittlin, Los Amgeles.
Robert Bresee, contractor, Madera.
Michael O'Connor, engineering, Sacramento.
Charles Thomas, contractor.
Joseph F. Gildner CPCU/PCLA, claims handling, San Clemente.
NKD Diversified Enterprises, Inc., owns a building in Tuolumne County which houses Diamond Jims restaurant. In 2011 a couple of very large snow storms overwhelmed the roof of the old building and caused major structural damage. Nationwide/AMCO relied on a local contractor to come up with an estimate. He did so, but Nationwide concluded the estimate was all for excluded repair costs, including code upgrades.
The estimate was for $400,000; Nationwide paid $37,000 plus $25,000 for code upgrades. The building was not repaired and by the time of trial the repair estimate was nearly $1 million. There was also considerable consequential damages in the form of lost rents during the five years the building was out of commission. NKD sued AMCO Insurance Company, a subsidiary of Nationwide, for breach and bad faith.
That repair payments by defendant were inadequate. The damage was extensive. AMCO hid documents showing the damage was severe and that their own contractor agreed with NKD's repair estimate. That defendant violated a host of claims-handling laws and regulations, lied to plaintiffs about policy benefits, and deprived them of the ability to repair the building.
AMCO contended that its original repair payment of $37,000 and $25,000 for code upgrades was adequate; that there was no additional damage caused by the 2011 snow storms; that repair costs were excluded because they were code upgrades; that NKD was claiming for money that had already been paid by another insurer to the corporation that ran the restaurant (NKD was the building owner); that NKD's claim was so high that it amounted to fraud, and finally, that there was a genuine dispute, so no bad faith, and that there was no malice, oppression, or fraud.
Policy benefits for repair; loss of rents under the policy; loss of rents not covered by the policy; attorneys fees.