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Fire Claim Burns Insurance Company With Punitive Damages

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This fire burned more than a house. A California jury torched the Fidelity National Insurance Company with $5.2 Million in punitive damages because it acted with malice, oppression and fraud in the handling of a fire loss claim filed by Larry Stone and Linda Della Pelle.

This fire burned more than a house. A California jury torched the Fidelity National Insurance Company with $5.2 Million in punitive damages because it acted with malice, oppression and fraud in the handling of a fire loss claim filed by Larry Stone and Linda Della Pelle.

The jury’s verdict and the underlying facts are covered well in an article posted online.

Fire victims to get $5.2M
Burned home led to feud over insurance
By Caroline An, Staff Writer

CLAREMONT – In the first court case stemming from the 2003 wildfires to reach a verdict, a Claremont couple was awarded nearly $5.2 million in punitive damages from their insurance company this week.
A jury in Pomona found Wednesday that Fidelity National Insurance Company acted with malice, oppression and fraud in the handling of a claim filed by Larry Stone and Linda Della Pelle.

“I thank God the jury was not deceived by the smoke-and-mirror tactics of the Fidelity National Insurance Company lawyers,” Della Pelle said of the verdict.

Representatives for Fidelity did not return calls for comment.

The couple’s home suffered extensive damage when the Grand Prix Fire swept through the area in October 2003. They have since sought to rebuild their home on the 900 block of Marymount Lane, but have been unsuccessful due to their two-year battle with Fidelity.

The couple filed a lawsuit against Fidelity in October 2004, charging the company with low-balling the replacement cost of the home.

“For almost a full year, Larry and I tried our best to elicit fair treatment,” Della Pelle said. “We were compelled to take legal action.”

Ricardo Echeverria, who represented the homeowners, said he is pleased with the verdict.

“The verdict sends a clear message to the insurance industry that this type of conduct will not be tolerated,” he said. “The hope is that it will benefit all of the other wildfire victims in trying to reach a resolution of their claims.”

A spokeswoman for the California Department of Insurance was contacted but would not comment on the case because she didn’t know the specifics.

The couple’s home was insured under Fidelity’s Coverage A policy, which provided up to $320,000 in coverage. The policy contained an endorsement allowing for an additional $480,000, making the total amount available $800,000.

Shortly after the couple filed a claim in 2003, Fidelity began to investigate the replacement cost of the home. Both sides hired contractors to assess the cost of rebuilding the home.

In the trial, the couple was seeking $600,292.23 plus a 5 percent contingency fee of $30,000, which included items such as mold testing and mold abatement.

Fidelity agreed to cover only $433,195.45, based on their contractor’s bid.

The jury awarded $616,000 to replace the home and $5.2 million in punitive damages.

Stone and Della Pelle are currently renting a condominium in the city and said they will begin looking for contractors to rebuild their home.

Della Pelle said their recovery from the fire has been complicated by the stress of dealing with the insurance company. However, she is heartened by the news that they can begin to rebuild.

“It’s a new and exciting process for us,” Della Pelle said. “It’s something creative and constructive.”

There are close to 140 individual cases related to the 2003 wildfires pending in San Diego, San Bernardino and Los Angeles counties, Echeverria said. The majority of the lawsuits filed are against State Farm Insurance and Allstate Insurance.

Wednesday’s verdict provided some hope to homeowners who are waiting for their own cases to be heard.

Jim Gianakos lost two homes in Palmer Canyon in 2003 and filed a lawsuit against his insurance carrier a year ago. While a trial date has not been set, Gianakos said his case is very similar to Stone and Della Pelle’s because he said the company has been providing low-ball replacement cost values.

“It’s really disheartening that you put your good faith into the insurance company and the next thing you know you’re being investigated and made to feel like a criminal,” he said.

Gianakos said he hopes to rebuild his homes in Palmer Canyon within the next two years. He said the infrastructure will have to be redeveloped and could slow the process of rebuilding homes in the area.

While the verdict is seen as a victory for homeowners, skeptics say the culture of the insurance industry is not likely to change.

“This doesn’t affect the insurance industry. Every time there is a disaster they misconstrue their policy and they confuse people,” said Ray Bourhis, lawyer and author of “Insult to Injury,” which examines the bad-faith practices of insurance companies. “Having an insurance license is like a license to steal.”

Bourhis, who is not connected with the fire suits, said insurance company profits are so high that an award of this size is insignificant overall.

Thomas Girardi, who is representing different homeowners in a similar case, said he is grateful for the jury’s decision and is hopeful that insurance companies will adopt fair practices.

“This jury understood the massive harm that people have incurred and have seen the conduct of the insurance carriers and wanted to make things right,” Girardi said.

“What this jury did not only helped the family, but will help all the other families,” he said.