Quote of the Day - Man's mind, once stretched by a new idea, never regains its original dimensions.
Under California Insurance Code section 2071 (standard fire insurance form), homeowners have twelve months to bring suit against an insurance carrier after denial of a claim. Some homeowners got an additional extension under California Code of Civil Procedure section 340.9 (the Northridge Earthquake statute of limitations revival).
The Court of Appeal decided the legislature's extension wasn't good enough. They invoked the doctrine of equitable estoppel (yes, I know it's an Australian definition, but it was pretty good) to allow homeowners to bring suit against their insurance carriers arising out of the earthquake, now some 11 years ago. Why you may ask?
The Plaintiff essentially lost the value of her house. 21st Century paid her $5255.48 under her "other structures" coverage, and then following a reinspection of the property, 21st Century paid an additional $1950.
Regular readers know I don't quote at length from cases. But this one's worth a read, and will explain exactly why Courts grant the kind of relief sought. Here's the Court's take:
"The legislative record shows section 340.9 was enacted in response to 'reports of rampant mishandling of insurance claims by insurers.' The author of the legislation claimed following the devastation caused by the Northridge quake many victims were devastated a second time when their insurance companies denied or low-balled their claims for compensation. And '[w]hen homeowners complained to the Department of Insurance to obtain relief, the department afforded no help.' The Legislature received reports insurers 'engaged in a systematic program of misleading consumers about the nature and extent of damage to their homes' and, when the deceived homeowners learned the true extent of their damage, 'the insurers simply refused to pay claims on the basis that the claims had become time-barred.' The legislation's author was quoted as stating 'the one-year statute of limitations that is current law under Insurance Code section 2071 has barred victims from being fairly compensated for their losses . . . [because they] were misled about the extent of damage done as a result of the earthquake.' A Senate analysis of the legislation cited news accounts stating '[m]any victims . . . have received only partial settlements for their earthquake claims, and others have received no compensation at all, having been improperly told that the damage they suffered was below policy deductibles.' In subsequent years, when the victims tried to present newly discovered evidence of damage to their insurers, insurers 'stonewalled claims, leaving homes, condominiums, and apartment buildings in shambles and homeowners without any recourse.'"
(Cordova v. 21st Century Insurance Co. 2005 DJDAR 5285 May 9, 2005, footnotes omitted).
Think we have activist judges on our hands? Or judges that are interested in dispensing justice?