Apartments

By WADE DANIELS Staff Reporter Three and a half years after the Northridge earthquake, numerous Valley homeowners and building owners still await their day in court against their insurance companies. Around 10,000 of the roughly 390,000 claims resulting from the Northridge quake have not been settled, according to the California Department of Insurance. The resulting lawsuits primarily allege underpayment of claims, including allegations of fraud by insurers. “In most cases, a homeowner was either offered too little money to fix the damage or the damage wasn’t discovered until some time after the quake,” said attorney John Quisenberry, whose Century City firm, Quisenberry & Barbanel LLP, is handling about 40 suits against insurance companies, most of them filed by Valley property owners. “In some cases, the insurers have apparently acted in bad faith.” Such is the basis of a suit filed by an association of homeowners at the Park Northridge condominium complex against Farmers Insurance Group. The plaintiffs say that Farmers guaranteed a certain level of coverage when the 195-unit condo complex bought its policy, but received a lower level of payment after the quake. Farmers has paid the condo owners about $15 million in damage claims, but the suit is seeking about $5 million more, according to Quisenberry. The case, set for trial in Los Angeles Superior Court in October, alleges Farmers guaranteed to pay for damage to the foundations of the complex’s buildings, as well as to pay for re-stabilizing the dirt fill beneath, and then reneged. It also accuses the insurer of rejiggering the deductible level after the earthquake. Earlier, Farmers had refused to pay for damage to the interiors of the condos, said Quisenberry, who obtained a certified copy of the policy and pointed out that it stipulates that interior damages are covered. Farmers representatives did not return phone calls last week. The structural damage at the Park Northridge complex is mostly fixed, he said, but many of the homeowners are still living in damaged units and have taken out $3 million in loans to help pay for the repairs. Lawyers and representatives of homeowner associations say there are many instances where families are unable to live in their homes as they pursue litigation against insurers. Bill Sirola, a spokesman for State Farm Insurance Cos., said “99.9 percent” of the roughly 120,000 claims from the quake have been settled, but that the company reopens five to 10 claims cases per week from people who discovered that their property is more damaged that originally assessed. Of the 390,000 claims, insurers have paid out on about 260,000 cases, while the rest were deemed to have damages below the deductible. Several lawsuits allege that insurance adjusters concocted artificially low damage assessments. Teri Diamond says that happened to her when she filed a claim for damages to her Granada Hills home. Diamond said that about a week after the quake, an adjuster from 20th Century Insurance Co. came to the house and seemed to give it a thorough examination. A week later, another adjuster came to the house, told her that the previous inspector was no longer with the company, and spent very little time arriving at what she later thought was a woefully low settlement. The repairs, according to Diamond, involved removal of her home’s asbestos insulation, as well as structural damage. “We hired structure specialists and other experts who say that 20th Century owes about $230,000,” said Diamond. “They’ve paid about $70,000.” Diamond and her husband have filed a suit seeking what they believe to be full payment, as well as punitive damages. Rick Hill, a spokesman from 20th Century, would not comment on Diamond’s case, but noted that of the 46,400 claims filed from the Northridge quake, only 400 remain unsettled. As for the instances of policy holders discovering additional damages in the years after the quake, Hill said the company is skeptical about the veracity of such claims. “It’s funny that we had a much stronger earthquake in 1970, but every time somebody finds damage to their foundation it means it happened in 1994,” Hill said. Lawyers such as Debra Wegman concede that the majority of quake claims have been settled in good faith. But some of the cases considered “settled” by the insurers have not been resolved to the satisfaction of policy holders. “Some of the people who were told their damages were below the deductible eventually figure out that this wasn’t the case at all,” said Wegman, an attorney with Westwood-based Mazursky, Schwartz & Angelo. Whatever the current numbers of quake-related lawsuits pending, Wegman believes their numbers could soon grow in light of a few recent high-profile settlements. For example, in early August, a South Central Los Angeles couple was awarded $7.74 million in a jury judgment against Farmers Home Group, which is not affiliated with Farmers Insurance Group. The jury decided that the company acted in bad faith when it told Leon and Mittie Robbins that the damage to their home was below their deductible. The judgment included $7.6 million in punitive damages. Wegman said there are thousands of insurance policy holders who, upon hearing about such awards, may be “waking up” to the possibility that they were not dealt with fairly. She explained that insurers sometimes disagree with policy holders over the deadline for filing claims. While many insurers, including 20th Century, State Farm and others, say a claim must be filed within a year of the quake to be valid, some lawyers and policy holders contend the cutoff is a year from the time the damage is discovered. “We know of two to three thousand people who were told they filed claims after the time limitation passed,” Wegman said, “though they actually were not informed correctly about their rights.”