Couple Awarded $12 Million After Insurer Denied Claim

A Bonita couple has won a $12-million judgment against an insurance company that denied their 1987 claim for structural damage to their home.

A Superior Court jury here ordered the Transamerica Insurance Co. to pay Denise and Dominick Tomaselli $11.3 million in punitive damages, $500,000 in compensatory damages and $260,000 to fulfill the claim, said Jack Winters, the couple’s attorney.

The Tomasellis discovered a half-inch crack running through the floor of their kitchen in 1987 and filed a claim with Transamerica, which had been their insurance carrier since 1977, Winters said.

The firm agreed to the claim, which would have cost the company about $200,000, but then denied it, saying that the Tomasellis should have addressed the problem four years earlier when a hairline crack was found in a bathroom, the lawyer said.

“Eleven million in punitive damages is literally a day and a half of net profits after taxes for Transamerica,” Winters said, defending the large judgment handed down Monday. “This would be akin to a $300 fine to a person who makes $50,000 a year after taxes.”

“Needless to say, the check is not in the mail,” said Colin McRae, general counsel of Transamerica, who plans to appeal. “Just by the size of the verdict compared to the amount of damage suffered by these folks, it’s almost intuitively excessive. This is a significant amount of money to us.”

The award is the largest bad-faith judgment ever against the insurance giant, McRae said.