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Appraisal, Bad Faith Litigation, and Appeal

By April 30, 2010June 2nd, 2020Insurance



  • Based on its expertise in comprehensive insurance and bad faith claims, Cummins & White secured a favorable decision in bad faith litigation, with its client paying only $100,000—significantly less than the $18 million, plus punitive damages sought by the Plaintiffs.
  • The firm successfully navigated the case from claim adjustment and appraisal, through the appeals process, returning to superior court where their in-depth motion for summary judgment convinced the Plaintiffs’ counsel to drop most of the damage claims.
  • The subsequent trial in superior court proceeded in a unique format consisting of mostly written testimony and with the agreement of the Plaintiffs to cap the insurance company’s exposure at $1 million.


Case Study

Cummins & White, LLP successfully represented an insurance company in an appraisal, appeal, bad faith litigation, and eventual trial in conjunction with a claim for repair costs for two medical buildings damaged in the 1994 Northridge earthquake. The complex case began with an appraisal of the damaged buildings due to a disputed claim and subsequent payment of an award by the insurance company, and ended with a unique trial procedure for a claim of bad faith. Larry Arnold and Annabelle Harris of Cummins & White skillfully secured a favorable ruling when the judge found insufficient evidence of bad faith to support a judgment. In turn, the Plaintiffs, who originally sought $18 million plus punitive damages, received a drastically reduced award of only $100,000.


In 1994, two medical buildings located in Encino, CA were badly damaged in the Northridge earthquake. The claim was adjusted for two years, and when the parties were unable to agree on the value of the losses, the owners of the buildings requested an appraisal according to the terms of its insurance policy. The insurance company retained Cummins & White to handle the appraisal.

As part of the appraisal, the firm worked with building experts to consider the disputed areas of the claim and to present its case in front of the appraisal panel. The appraisal was completed, and the owners received an award, which was paid by the insurance company. However, the owners then sued the insurance company for $18 million, plus punitive damages, claiming bad faith, lost rents, decrease in property value, and attorneys’ fees. In response, Cummins & White filed a pleading claiming that the suit should be dismissed because it was not brought within the statute of limitations in the insurance policy. Cummins & White prevailed on behalf of the insurance company.

The owners of the medical building then appealed. However, while the appeal was pending, the California legislature passed a bill allowing insureds to “revive” stale Northridge earthquake claims. The statute extended the contractual one-year limitation period in most insurance policies. As a result, the appellate court remanded the case back to superior court for action.

Legal Strategy

After comprehensive discovery, Cummins & White filed a motion for summary judgment in Los Angeles County Superior Court, requesting that the court make a determination that the conduct of the insurance company was not unreasonable and that there was no bad faith. The motion contained substantial evidence supporting each essential element of the defense.

After receiving the motion for summary judgment and before a decision was made by the court, the Plaintiffs reversed course, agreeing to dismiss all damages claimed ($18 million, plus punitive damages) and proceed with a stipulated trial procedure in which the only amount sought would be the approximately $1 million the Plaintiffs had incurred in attorneys’ fees. Both parties agreed that if the judge found bad faith, the most that would be awarded to the Plaintiffs was the nearly $1 million. In contrast, if the judge found no bad faith, the insurance company would pay $100,000.

The trial proceeded with primarily written witness testimony (only certain witnesses were called live for cross-examination). After a three-day trial, the judge issued judgment in favor of the Defendant, with an opinion noting that although there had been instances of less-than-perfect conduct by the insurance company, there was insufficient evidence of bad faith to support a judgment.


According to Mr. Arnold, lead counsel from Cummins & White, the firm’s extensive experience dealing with comprehensive insurance and bad faith claims prepared them to deal with the complex issues of this case, which proceeded from claim to appraisal to appeal, and then to trial over the course of 15 years. This experience includes its appellate work in 2001 on the groundbreaking published decision Chateau Chamberay Homeowners Association. vs. Associated International Insurance Co., which sets the standard for bad faith liability under California law.

“We are very familiar with the applicable law in bad faith claims since we have been involved in the creation of many California insurance law standards and decisions,” he said. “Cummins & White was connected with the appellate decisions of virtually every case cited by both parties and the judge in this case. That experience helped us successfully navigate the case on behalf of our client and significantly limit the damage.”

“Importantly, because many witnesses were deceased or could not be found, we had to create the story largely from the documents,” Mr. Arnold added. “It was a challenge to compile and present thousands of documents generated over many years into a concise, compelling story for the judge, which established that the insurance company handled the claim appropriately. We know that to win a case like this, we must take charge of the story that is presented and back it up with evidence. The simpler it is to follow, the more likely our story will be heard.”