Deaths Raise Questions About Insurer : Litigation: Insurance company seeks to prevent payment to families of two girls who died in crash. Attorney calls firm a ‘scam’ and says it doesn’t have money to pay the claim.

Everyone agrees that Amanda Susan Simon, Beth Suzanne Adams and Joanna Lowenstein were exceptional young women.

Good students with ambitious plans for their lives, the three University City teen-agers were described by friends and acquaintances who knew them as “generous” and “full of promise.”

But in June, 1989, the three were in a car that plowed into a moving van that had stopped in the middle of the freeway--stopped so the driver could urinate and change gas tanks.

Simons and Adams died when the small station wagon driven by Lowenstein plowed into the truck. Lowenstein survived, but says she remains emotionally scarred by the accident.

More than two years later, despite an agreement reached with the insurance company, neither Lowenstein nor the families of her two friends has received any money.

The next round is scheduled for Friday in San Diego County Superior Court, where attorneys for Meadowlark Insurance Co. will argue that Lowenstein and survivors of the two women killed are not entitled to any compensation.

Attorneys for the three plaintiffs say they fear their clients never will see any money because, the attorneys claim, Meadowlark doesn’t have the money to pay them. In fact, the company has been barred from selling insurance in California because it lacks the assets to back up its policies.

Local attorney Peter Klee, who is representing the insurance company based in the Dominican Republic, angrily contested the accusations that it cannot meet its responsibilities.

“This is a small, offshore insurance company, no question about it. It doesn’t purport to have the assets of a huge American insurance company. This doesn’t mean that it’s trying to commit fraud and cheat people,” said Klee, from the firm Luce, Forward, Hamilton & Scripps.

Klee does not deny that the company agreed last May to make an initial payment of $250,000 cash in June, followed by a $100,000 payment in August. The remaining $400,000 was to be paid when Meadowlark sold some real estate it said it owned in Utah.

But since then the insurance company has twice change attorneys. On June 17, after an apparent agreement had been reached, Klee appeared at a hearing as Meadowlark’s new attorney and informed the victims’ lawyers that the company had changed its mind about paying.

Klee was the third attorney hired by the company to represent it in the lawsuit brought by the victims and their families.

In a recent telephone interview, Klee said that Meadowlark officials re-examined the policy two years after the accident and “uncovered some facts” that made the policy worthless. According to Klee, company officials said that the premium on the policy had not been paid at the time of the accident.

However, an official from the Kearny Mesa insurance agency that sold the Meadowlark policy said that the premium was paid on time.

“There was nothing unusual about this policy. I have no knowledge that it was a late payment. We looked into this at one point and it wasn’t an issue,” said Max Gelwix, chief financial officer of the Pacific Insurance Agency.

Attorneys Daniel Krinsky, who is representing Simon’s parents, and John Moot, who is representing Lowenstein, charged that Meadowlark “is a scam” and said that the company is stalling in paying the claim because it has no assets.

“This is a company that just doesn’t have the money to honor a commitment, not a company that found something wrong with the policy. How could it have taken them two years to figure out that the policy wasn’t paid?” said Krinsky.

Lowenstein, now studying history and linguistics at Cornell University, and the other victims’ survivors declined to be interviewed for this story.

But records filed in the lawsuit tell the tragic story.

Lowenstein attended Gompers Secondary School, where she was co-valedictorian of her 1989 graduating class. In her spare time, she tutored inner-city school children.

Simon and Adams attended what was then the O’Farrell School of Creative and Performing Arts. Simon was an art student who showed a streak of eccentricity in the unusual color combinations that she used in her portraits. Adams was interested in the technical end of theater productions.

On June 23, 1989, Simon, 17, Adams, 16, and Lowenstein, who was 18 at the time, had planned to go to a teen-age nightclub, where they were going to hear some school friends who played in a rock band. It was the day after Lowenstein’s high school graduation.

While driving to the club that Friday night, Lowenstein’s subcompact station wagon slammed into the back of a moving van that had stopped in the slow lane of the southbound I-805 at the Clairemont Mesa Boulevard off-ramp.

A California Highway Patrol accident report said that Lowenstein was driving about 60 miles per hour at the time. There were no skid marks. Simon, who was in the front passenger seat, and Adams, who was sitting in the back, died at the scene.

Luis Gabriel Carrillo, the driver of the van, was returning to Tijuana after taking a load of furniture to Los Angeles. Carrillo said later that he stopped in the freeway’s slow lane at about 8:45 p.m., because he had to get out and urinate. The CHP report noted that Carrillo had not bothered to turn on the truck’s hazard lights.

”. . .There was no traffic. The freeway was empty. That’s why it seemed easy to me (to stop in the slow lane),” Carrillo, 41, said in a May 30, 1990, deposition.

On the night of the accident, Carrillo, who was not charged, told CHP investigators that the moving van ran out of gas and he had jumped out to manually switch gas tanks. In fact, there was still gasoline in the tank that was being used, the driver later revealed.

During the deposition, Carrillo, a Tijuana resident, said he lied to CHP officers because he was afraid of losing his California driver’s license. His license was subsequently suspended.

The CHP report said that Carrillo and Lowenstein were both to blame for the accident. It noted that Lowenstein contributed to the accident by failing to watch the roadway, but she was not charged.

Carrillo and the owner of the van, Muebleria Industria de Mexico, a Tijuana furniture manufacturer, were covered by a policy issued by Meadowlark. Under the terms of the policy, which was good only in the United States and available only to Mexican citizens, the most that Lowenstein and families of the other two victims could recover was a total of $750,000.

Emilio Alvarez Horta, who owned the truck involved in the accident and who bought the policy on June 14, 1989--more than a week before the accident--could not be reached for comment. He failed to return phone calls made to his Tijuana home.

Meadowlark is no stranger to controversy. The company has been prohibited from selling insurance in California, Wyoming and New Mexico. In August, 1989, less than two months after the accident, the California Insurance Department told Meadowlark that it could not do business in the state.

John McBride, an attorney with the Wyoming Insurance Department, said that Meadowlark officials received “an order of ineligibility to do business” in Wyoming on April 26, 1990.

“They didn’t have $500,000 in trust for the protection of their U.S. policyholders. They had previously posted various assets, but we became skeptical and asked them to place $500,000 in cash. They failed to do this, so we disqualified them from doing business,” said McBride.

On Aug. 23, 1990, the New Mexico Department of Insurance issued a similar order for the same reason. The New Mexico order noted that the assets and liabilities posted by Meadowlark “raised substantial questions.”

Most of the assets listed by the company were in mortgage loans for condominiums in the small desert town of Marfa, Texas. New Mexico officials further noted that most of the notes were not for first-mortgage loans.

According to the 10-page order issued by New Mexico officials, Meadowlark officials contended that the company could not be regulated in the United States because it was an offshore company.

An investigation by New Mexico officials revealed that Meadowlark was originally headquartered in the Turk and Caicos Islands, British West Indies, but moved its offices to the Dominican Republic when the government required all insurance companies with offices there to register with local authorities.

“The (New Mexico) superintendent of insurance must be concerned because of the obvious appearance that Meadowlark is deliberately seeking to avoid scrutiny by any regulatory authority,” said the order signed by Supt. Fabian Chavez Jr.

Klee acknowledged that Meadowlark “has had some regulatory problems.”

Meanwhile, as the case makes its way through the legal system in San Diego County, Krinsky and Moot see their chances of ever collecting a settlement for their clients growing smaller and smaller.

“Meadowlark is a scam, a shell or they’re just a bunch of crooks. For God’s sake. How many insurance companies do you know of that have to sell some real estate in order to make a $750,000 settlement,” said Moot.

“We have two young American girls who were full of promise, dead,” said Krinsky. “And nothing to show for it. . . . The only reason why we agreed to this very unusual settlement (of paying the claim in installments) is because these guys appeared to be on the verge of bankruptcy.”

Klee, who said that he was “reluctant to try this case in the press,” nevertheless accused Krinsky and Moot of “attempting to win a war in the media because they don’t believe they can win in the courtroom.”

He insisted that Meadowlark’s reluctance to pay is based on legal grounds and “not because we’re trying to commit fraud or cheat anybody.”

“The fact of the matter is that there are apparently some very serious coverage problems with the policy,” said Klee. “If these problems are proven to exist, there simply won’t be any coverage for the accident.”

The first attorney hired by Meadowlark came from another prominent San Diego law firm, Neil, Dymott, Perkins, Brown & Frank. Attorney Roger Perkins, who was handling the Meadowlark case for the firm, did not return phone calls to his office, and attempts to find out why the firm severed its ties with Meadowlark were unsuccessful.

However, an employee of the firm said that “Meadowlark was not paying our bills.”

In addition to Klee, Albuquerque attorney Stephen Rhoades and attorney Gary L. Jacobsen, from the San Diego-based firm of Morris, Polich & Purdy, are also representing Meadowlark. Both Rhoades and Jacobsen refused to comment on the case.