Quake Victims Get a New Accounting

The figures on paper bore no resemblance to the reality of their lives.

Even as homeowners in South Los Angeles wrestled with the aftermath of the Northridge earthquake, insurance claims adjusters reached mathematical conclusions that seemed to deny the temblor’s aftermath in that part of the city.

“When [the adjuster] got through he said, ‘You have less than $10,000 in damage; therefore we can’t pay you,’ ” said William Newton, 88, of South Los Angeles. “I had a $10,000 deductible.”

Homeowners such as Newton knew the damage was much worse. The quake had rearranged their lives, leaving them to contend with sunken porches, collapsed and leaking roofs, broken beams, cracked walls and homes that had shifted on their foundations.

With no means of fighting back, many homeowners were forced to accept the price tag Farmers Home Group insurance company attached to their tragedy. After their claims were denied, they simply moved on with their lives, patching up their homes the best they could.

Leon Robbins might have done the same. But with the help of a Westside law firm, the 75-year-old World War II veteran filed suit against Farmers Home Group.

Last week a Los Angeles Superior Court jury awarded Robbins more than $7.6 million.

Minnesota-based Farmers Home Group is not affiliated with Farmers Insurance, a Los Angeles company.

John Quisenberry, an attorney who represented Robbins, said his client is one of more than a dozen South Los Angeles residents whose earthquake claims were unfairly denied by the company.

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After reviewing the files of several policyholders, Quisenberry argued that Farmers Home Group routinely denied claims of South Los Angeles policyholders by assessing their damage at less than their deductibles--and then leaving it to the residents to dispute their findings.

“The impact of this way of doing business fell heavily on the most vulnerable people,” Quisenberry said.

Kenneth N. Greenfield, an attorney who represented Farmers Home Group, said there was no practice of denying the claims of residents in South Los Angeles.

“Although I give these jurors credit for their thoughtfulness and their consideration of the evidence, they saw evidence that was slanted toward a finding of insurance bad faith,” Greenfield said. “There will be several post-trial motions [to reduce the damages], and if necessary there will be an appeal. If you went to any other insurance company, you would probably find the same degree of claims falling below the deductible.”

He said he did not know how many Farmers Home Group claims from South Los Angeles were paid.

But for residents in South Los Angeles the jury verdict is at least some vindication for what many said they had known all along: The math just didn’t add up.

The trail that led Quisenberry to homeowners in South Los Angeles actually began miles away in the San Fernando Valley with a vastly different house and set of circumstances.

In early 1996 lawyers at Quisenberry & Barbanel represented a couple who contended that Farmers Home Group should pay full replacement cost of their house, rather than the $260,000 policy limit that the company had agreed to pay. In an attempt to fortify that case, the court allowed attorneys to send letters to 1,600 Farmers Home Group policyholders, asking if they too “were having a problem with this insurance company,” Quisenberry said.

Farmers Home Group followed with a letter of its own, asking policyholders not to allow Quisenberry to review their files.

The response came swiftly.

“I had never run into so many angry people in my life,” Quisenberry said.

Robbins was among those who responded.

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For years, Robbins said, he had faithfully paid insurance premiums. So he figured he could expect help after the Northridge quake damaged his modest home. But according to the company, the damage at Robbins’ house amounted to less than his deductible and thus he would receive no help.

“I couldn’t compete with the company,” Robbins said. “It bothered me, but sometimes you have to live with what you have.” Wherever he found a leak, his philosophy became “put a bucket in the back and keep on going.”

Something about Robbins struck a chord with Quisenberry. The law firm sent a contractor to the home of the elderly couple and discovered that Robbins was right: There was more damage than the claims adjuster had noted. The jury awarded Robbins $46,000 for damage to his house.

The foundation was cracked. The roof leaked, the ceiling was damaged, the porch had sunk, there were cracks and weakened floors and the garage was badly damaged.

“He’s just a decent, ordinary citizen,” Quisenberry said of Robbins. “He’s from the old school. He always paid his bills. He always paid his premiums.”

The firm decided to take the Robbins case for no fee. Quisenberry contacted about 14 Farmers Home Group customers in South Los Angeles and “every one of them, with one exception, said their claims had been denied as below the deductible,” he said.

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A contractor sent to each house by the law firm returned with damage estimates that were three to four times higher than their deductibles, Quisenberry said, confirming residents’ complaints about the claims adjusters.

During the trial of Robbins’ suit, jurors heard testimony that presented two starkly different views of the quake and its impact on residents in South Los Angeles.

“You’ve got an area in Los Angeles which was more than 30 miles away from the epicenter of the earthquake,” Greenfield said of Robbins’ neighborhood. “The experts at trial testified that the farther away you got from the epicenter the less the damage was.”

Robbins’ house was old and, although there might have been damage, it did not stem from the quake, Greenfield said.

But jurors also heard from homeowners like Newton, who said his Crenshaw-area house was so badly damaged that he eventually received a federal disaster loan to repair it. The doors would not close, the floors had sunk, the porch had cracked, the chimney had broken away from the house and the house had shifted on its foundation.

“Just from what I know, I figured it would be more than $10,000,” Newton said. “[The adjuster] said no. He just came up with some figure. So I let it go. There was nothing I could say.”

Larry Perkins testified that he expected to receive some help as well, but his experience with the Farmers Home Group adjuster left him angry and frustrated.

“It was like a joke to him,” Perkins said. “He didn’t walk through the whole house. He barely looked at anything.”

The adjuster determined that the damage amounted to less than Perkins’ $10,000 deductible, leaving the family to live with the quake’s effects--or pay for repairs, Perkins said.

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For jurors, Greenfield’s question about the quake’s impact in South Los Angeles was a nonissue. The earthquake did hit South Los Angeles, they said.

Said Abbie Patterson of Inglewood, “We knew there was a lot of damage to the Coliseum and to homes along the Santa Monica Freeway.

“Also, it was very strange to me that so many people’s damage was so close to their deductible.”

But what proved to be convincing was the testimony of company officials and claims adjusters, said juror Cassandra Ratcliff of Hawthorne. There were no photos or evidence supporting their assessments, and Farmers Home Group’s witnesses offered inconsistent testimony, she said.

Ratcliff said jurors were left with the impression that the company was a slipshod operation and that adjusters were predisposed to denying claims.

“It seemed they didn’t care about the insured away from the epicenter,” Ratcliff said. “Nobody was asking questions.”