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| | Insurers’ Fault for Northridge Aftershock Claims?
By Robert Warne - March 11, 2003Carriers with exposure to revived Northridge earthquake claims lost some footing in court March 3 following a federal appeals court decision.
The 9th U.S. Circuit Court of Appeals overturned an earlier federal court decision in Campanelli v Allstate Insurance Co. that found Code of Civil Procedure Section 340.9 to be unconstitutional.
The case’s significance is that it was one of the first to test the strength of 340.9, which was enacted in 2000 when the Legislature passed Senate Bill 1899.
The Legislature wanted to give people like the plaintiff’s in the Campanelli case an opportunity to re-file Northridge earthquake related claims if there was any possibility that claimants were a victim of any insurance malfeasance.
There are two provisions that would preclude any actions under 340.9.
One, a claim couldn’t be reopened if it had been litigated to finality in any court of competent jurisdiction and had received a final judgment prior to Jan. 1, 2001. And two, any written compromised settlement agreement which had been made between an insurer and its insured where the insured was represented by counsel admitted to the practice of law in California at the time of the settlement, and who signed the agreement.
Allstate used these arguments and threw in a couple of federal and state constitution contractual and due process violation claims. But to no avail, the case was remanded to
the district court for further proceedings.
The California Supreme Court and the U.S. Supreme Court have so far refused to take up the issue of 340.9’s constitutionality.
So for now, with tensions strung high and the fault line widening, the thousands of claims filed between 2000 and 2001 will start to rock the Los Angeles County Superior Court and shake carriers’ books regardless if they committed any malfeasance or not.
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