An Alameda County jury returned a verdict against Truck Insurance Exchange, one of the Farmers Group of Companies, finding that Farmers acted in bad faith in refusing to defend its insured in an underlying dog mauling lawsuit that resulted in a $10 million judgment ($12.5 million with interest) against its insured. Liang, et al. v. Truck Ins. Exch., Alameda County Superior Court, Case No. CV24063297. Trial counsel was Terry Coleman of Pillsbury & Coleman, LLP. Defense counsel was Julie Hyashida of BHC Law Group. The trial judge was the Hon. Chad Stegeman, new to Alameda’s civil trial department.
The underlying action was filed by Andrea Posey, Miles Cooper and Maryanne Cooper of Cooper Law, LLP, on behalf of 10-year-old Youyi Liang and his mother, Yaping Sun. Liang and Sun were attacked by a pitbull when they were on a morning walk in their Dublin, California condo complex. The dog had escaped a fellow condo owner’s unit when her mother was going in and out of the unit, leaving the unit door ajar, while sweeping the common area sidewalk.
All unit owners were covered under the HOA’s $1 million liability policy with Farmers for liability “arising out of” common area maintenance. Because the dog escaped during common area maintenance, Farmers should have at least provided the unit owner a defense. Farmers, however, denied coverage, contending that the maintenance of the common area did not cause the dog bite to occur, rather, it was caused by the recklessness of the dog’s owner who had failed to control the vicious animal.
Following Farmers’ coverage denial, the underlying action proceeded to a bench trial before Judge Stephen Kaus, who awarded damages of $7.5 million to Liang and $2.5 million to Sun. Pillsbury & Coleman then filed the bad faith action against Farmers on behalf of all parties, Liang and Sun, as well as the Farmers’ insured who was denied coverage, Patricia Aguinaga.
The bad faith action proceeded to trial last year, ending in mistrial. Although Farmers had issued a 998 offer of $1.25 million before the first trial, it offered ZERO in advance of the retrial.
The jury saw through Farmers’ excuses in not providing coverage to its insured. These cases are extraordinarily complex from beginning to end, involving initial coverage evaluation, navigating the setting-up of a non-collusive underlying trial proceeding, and prosecuting the bad faith action. In the end, Farmers will be responsible for a $12.5 million judgment on a $1 million policy.
Pillsbury & Coleman publicly exposed a previously hidden improper claims-handling practice at Farmers – the dissemination of a Closing Ratio performance goal to its Coverage Review Team. The Coverage Review Team makes liability coverage decisions for all Farmers-affiliated companies. For every claim sent to the Coverage Review Team, the goal is to “close” a claim. The fastest way to close a claim is to deny coverage, and no surprise, the Coverage Review Team finds no coverage nearly 78% of the time. The documents and testimony exposing this corruption have already been shared with policyholder counsel nationwide so that they may now use this evidence to obtain justice for other Farmers insureds who have been victimized by the Farmers denial machine.