Claims Continue to Seep Through Legislative Cracks Created by Northridge
By Robert Warne - April 29, 2002The U.S. Supreme Court has declined without comment to close a legislative
crack in California law that allowed Northridge earthquake claimants a second
chance to file claims.
Gov. Gray Davis signed into law Senate Bill 1899 that enacted
Code of Civil Procedure (CCP) Section 340.9, Sept. 30, 2000. This
legislation revived certain Northridge earthquake claims that would have otherwise
been barred by contractual limitation provisions.
Claimants had from Jan. 1, 2001 to Jan. 1, 2002 to seek review of damage claims
barred by a one-year statute of limitations.
The Supreme Court Justices made their April 29 decision without hearing insurers'
arguments. Still the ruling doesn't completely extinguish the option for other
insurers to challenge the constitutionality of SB 1899 in state and federal
courts.
American International Group Inc. reported a fourth-quarter charge of
$20.4 million related to claims that have resulted following the passage of
the legislation. Woodland Hills-based 21st Century Insurance Co. also
reported that it has set aside $70 million to cover its liabilities from claims
enacted from the statute.
Stephen Hayes from the law firm of Ropers, Majeski, Kohn & Bently
told adjustercom.com, that in the final weeks of 2001 there were over 1,000
lawsuits filed.
"So many were filed in fact that the Superior Court in the County of Los
Angeles has entered a stay-staying all these claims while they sort through
and figure out procedurally and administratively how they are going to deal
with the enormity of lawsuits filed," explained Hayes.
The statute resurrected exposure to debts property and casualty insurers thought
were satisfied well before 2000.
Attorneys for policyholders have argued that CCP Section 340.9 provides two
safe harbors for insurers.
Insurers should be insulated from any claim "that has been litigated to
finality in any court of competent jurisdiction prior to the effective date
of this section."
They should also be protected in cases where there was "any written compromised
settlement agreement which has 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."
But, the safe harbor hasn't been 100 percent effective for insurers as seen
in the cases discussed in adjustercom.com's feature article, Northridge
Earthquake Claims Going off the Richter Scale. | 
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