Insurer delays payment after business loss; $5 million bad-faith verdict after $250K offer. Riverside County.

Summary

Defendant insurance company delays payment on a valid claim. Jury verdict for over $5 million.

The Case

  • Case Name: Palm Springs Pump v. Peerless Insurance Company, et al.
  • Court and Case Number: Riverside Superior Court/ INC 1109263
  • Date of Verdict or Judgment: Thursday, April 11, 2013
  • Date Action was Filed: Tuesday, November 15, 2011
  • Type of Action: Insurance – Bad Faith, Claims Handling
  • Judge or Arbitrator(s): Hon. Daniel Ottolia
  • Plaintiffs:
    Palm Springs Pump
  • Defendants:
    Peerless Insurance Company

The Result

  • Gross Verdict or Award: $5,036,498
  • Economic Damages:

    Lost Profit: $1,376,498
    Attorneys Fees: $160,000

  • Punitive Damages:

    $3,500,000

  • Trial or Arbitration Time: 9 days
  • Jury Deliberation Time: 4 hours
  • Jury Polls: 12-0 on liability and damages

The Attorneys

  • Attorney for the Plaintiff:
    Liddy Law Firm by Donald G. Liddy and Yasmine A. Hussein, Pasadena
    Shoop | APC Law Corporation, by David R. Shoop, Beverly HIlls
  • Attorney for the Defendant:
    Lindahl Beck, LLP by Kelley K. Beck and Paul J. Fraidenburgh, Los Angeles

The Experts

  • Plaintiff's Technical Experts:
    David F. Peterson, J.D., Insurance Claims Handling/ Bath Faith Expert, Oakview
    Peter D. Wrobel, CPA/Economist, Los Angeles
  • Defendant's Technical Experts:
    David A. Reilly, Insurance Claims and Coverage Expert/Insurance Consultant, El Cajon
    Christopher K. Money, C.P.A., C.F.E., Accountant, Newport Beach
    Robert A. Kadlec, Mechanical Engineer, Santa Monica

Facts and Background

  • Facts and Background:

    Defendant Peerless Insurance Company sold an insurance policy to Plaintiff Palm Springs Pump to insure a drill rig used to drill water wells. This was one of several policies plaintiff purchased from defendant.

    On December 9, 2010 the drill rig was damaged in an accident. Plaintiff made a claim to Peerless for insurance benefits under the policy. Plaintiff lost the use of the drill rig and the company suffered lost profits as they waited over six months.

    Defendant had an answer as to the cause of the failure and that it was a covered loss approximately one month after the claim was made. They spent the next several months delaying payment on the claim and hiring additional experts who made the same determination as the first expert back when the claim was filed.

    Even after they accepted coverage 6-7 months after the claim (all the while fully aware that the company was losing money drastically as days went by - but there was no concern about this since Peerless was not liable for business interruption coverage), it took another few months to actually make full payment on the claim.

    The amount paid on the underlying policy was $490,000.

  • Plaintiff's Contentions:

    That defendant insurance company unreasonably and in bad faith delayed and mishandled the claim, hired biased experts, hid relevant evidence and acted with malice and oppression in delaying payment for over six months.

  • Defendant's Contentions:

    That it handled the claim appropriately and paid plaintiff company all the benefits that were owed.

Demands and Offers

  • Plaintiff §998 Demand: $5,000,000
  • Defendant §998 Offer: $125,000

Disclaimer

This is not an official court document. While the publisher believes the information to be accurate, the publisher does not guarantee it and the reader is advised not to rely upon it without consulting the official court documents or the attorneys of record in this matter who are listed above.

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