Builder Wins $3 Million, Peace of Mind From Insurer That Deserted Him in ’78

Five homes were destroyed when a hillside gave way a decade ago in Laguna Beach’s Bluebird Canyon. The builder of the homes, Arthur T. Jenkins, had struggled with the memory--and financial burden--of the tragedy ever since.

On Thursday, the weight was lifted when a jury awarded Jenkins $3 million in damages after finding that an insurance company didn’t treat him fairly in handling the slide claims.

Jenkins, 52 of Orange, accused the Insurance Co. of North America of trying to avoid responsibility under its policies and then deserting him after an adverse verdict, despite its obligation to defend him in lawsuits stemming from the slide.

“This thing has been going on for nine or 10 years,” said jury foreman Scott E. Lambert of Anaheim. “This guy’s been carrying that load for all this time. We didn’t feel it was fair.”

Jurors, deliberating one day after hearing three weeks of evidence, fixed damages at $500,000 to compensate Jenkins for the harm he suffered, plus $2,500,000 to punish INA for the poor treatment of its customer.

The verdict is “unjustified,” INA attorney Michael J. Pearce said: “We feel it was the result of emotional feelings against insurance companies, instead of the facts of the case.”

Jenkins’ attorney, R. Richard Farnell, had asked jurors to return a large verdict to teach INA a lesson.

“The hope is that this will serve as a deterrent,” said Farnell’s co-counsel, Margaret Maas.

Jenkins, who has run a relatively small firm for 20 years, built five homes in Bluebird Canyon in 1974-75. He bought insurance from different firms, including INA, in 1974-79.

In 1978, the hillside and the houses moved. Homeowners found that their residences sat on an unstable, ancient landslide. Jenkins was hit with several lawsuits alleging negligent construction.

INA, which had insured Jenkins under two successive $300,000 policies in 1978 and 1979, accepted the responsibility of defending him.

After settling one claim for $225,000, INA lawyers took the other case to trial. A jury returned an $800,000 verdict against Jenkins.

At that point, INA paid the rest of its policy, $375,000, to the homeowners and withdrew from the case. INA lawyers simply disappeared, failing to file relatively routine motions seeking a new trial and failing to file appeals, Jenkins said.

Because he relied on advice from INA, Jenkins at first lost the opportunity to file claims against other firms that insured his business in the mid-l970s, he said.

INA lawyers sought to recoup their legal fees from the proceeds of the same policies that were too small to pay off all Jenkins’ creditors, another example of INA’s bad faith, according to the lawsuit.

Juror Gregory K. Wessman, an electronics engineer from Newport Beach, termed INA’s legal maneuvers in the case “unbelievable.”

The multimillion-dollar verdict was intended to show condemnation of INA, Wessman said, and “drive home the point.”

Pearce, for INA, said an appeal is being considered.

He added: “The essential point is that when Mr. Jenkins was sued by the homeowners, INA defended him. When we were called on to pay our policy limits, INA did that. We paid out every penny.”