Metropolitan News-Enterprise


Wednesday, November 30, 2005


Page 1


Court Says Broker Was Insurer’s ‘Representative,’ Revives Suit Over Northridge Earthquake Damage


By a MetNews Staff Writer


An insurance broker for the California Fair Plan was the insurer’s “representative” for purposes of the statute reviving some time-barred homeowners’ claims for damage sustained in the Northridge earthquake, this district’s Court of Appeal has ruled.

The Monday ruling by Div. Seven reinstates a suit by Jose and Marie Arocho concerning damage to two properties insured by the Fair Plan.

The Arochos contend that they obtained coverage through Kosmos Insurance Agency, a Santa Ana-based broker, prior to the January 1994 earthquake. When they contacted Kosmos within days of the quake, they allege, they were told to effect their own repairs.

No one from the agency ever came out to inspect their properties, they allege.

The Arochos sued the Fair Plan on Dec. 31, 2001, the last day to bring an action under Code of Civil Procedure Sec. 340.9. The statute revived time-barred Northridge earthquake claims as to which the insured contacted the insurance company or its “representative” prior to Jan. 1, 2000.

Los Angeles Superior Court Judge Charles W. McCoy ruled that the broker was acting on behalf of the insureds and was thus not a representative of the Fair Plan within the meaning of the statute. He sustained the insurer’s demurrer.

But Justice Earl Johnson Jr., writing for the Court of Appeal, said the trial judge’s ruling was inconsistent with the apparent intent of the Legislature, which imposed the contact requirement in order to prevent submission of fabricated claims.

The justice noted that lawmakers used the term “representative” rather than the more limited “agent,” suggesting a broader intent.

In the specific case of the Fair Plan, Johnson reasoned, the insureds had a reasonable belief that the broker was the appropriate party to whom the claim should be reported.

“...Fair Plan, through its insurance policy and its contractual arrangements with its ‘producers’ [including Kosmos] invited its insureds to report losses to those producers and, in turn, authorized the producers to forward those loss claims to Fair Plan,” Johnson wrote.

He cited a provision in the policy instructing insureds to “give immediate notice [of claims] to us or our agent.” Fair Plan, he added, had no “agents” to whom claims could be reported other than “producers” like Kosmos.

Attorneys on appeal were Jeffrey D. Diamond for the plaintiffs and Richard B. Wolf and Gerard A. Lafond Jr. of Lewis Brisbois Bisgaard & Smith for the insurer.

The case is Arocho v. California Fair Plan Insurance Company, 05 S.O.S. 5320.


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