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SOUTHERN CALIFORNIA / A news summary | The Local Review

$40 Million Awarded in Insurance Suit

May 11, 2000

LOS ANGELES — A Los Angeles Superior Court jury Wednesday awarded a former San Bernardino County contractor $40 million in punitive damages for a claim in which he accused an affiliate of Farmers Insurance Group of bad faith.

Craig Rossell, the attorney who represented contractor Perry Hanstad, 48, said the case was "part of a huge pattern of denying and delaying payments on claims."

The case stemmed from Farmers' failure to pay a 1993 fraud award imposed against the contractor, who was insured by Truck Insurance, an affiliate of Farmers.

That fraud judgment came out of an arbitration case involving a remodeling and expansion job in Arcadia.

Even though fraud was covered by Hanstad's policy, Farmers balked at paying, ultimately forcing Hanstad into bankruptcy, according to Hanstad's 1996 bad-faith lawsuit against Truck Insurance. The insurer also claimed it was not obligated to defend Hanstad against the fraud allegations.

In addition, the jury awarded Hanstad about $2 million in compensatory damages last week.

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