LOS ANGELES DAILY JOURNAL
Jury Awards Marine $3.5 million
By Pat Broderick
Daily Journal Staff Writer
This article appears on Page 3
SAN DIEGO - At noon Tuesday, U.S. Marine Capt. John Colombero called from his base in Iraq to his attorney at a Vista courthouse, as instructed.
Colombero was scheduled to receive an update on jury deliberations in his insurance bad faith trial, but instead his lawyer, Ricardo Echeverria, informed him a San Diego jury in Vista had just awarded him $3.5 million in punitive damages in a lawsuit against his insurance company. USAA Casualty Insurance Co. v. Colombero v. USAA Casualty Insurance Co., GIN 058247 (San Diego Super. Sup. Ct. April 1, 2008).
"He had been deployed half way through the trial," Echeverria said of the monthlong court proceeding. "I put him on the speaker box so that he could talk with the jury." The award was added to the $50,000 that Colombero won last week for emotional distress in the case. Echeverria said he also will be asking for attorney fees and costs. He expects post-trial motions to begin in 60 to 90 days.
Colombero, 34, is serving his third tour of duty in Iraq. The dispute started in 2004, after a pipe burst during construction of an addition to Colombero's Oceanside home, causing an estimated $84,000 in damage.
According to the trial brief, Colombero hired APS General Contractors Inc., which dug footings for the addition and noticed water that appeared to be coming from beneath the house. The next day, APS hired a plumbing contractor, Pipes Plumbing, to investigate.
Pipes discovered what the complaint described as "a sudden and accidental" hot water line burst under the slab of the house, where the garage and the living room came together. Workers rerouted all hot water lines. APS continued to set the footings for the addition, while pumping out excess trench water around them. After completing the rerouting, the main water line was turned back on.
At one point, the suit says, Colombero returned home and discovered water buildup on the carpet near the doorway entrance. He traced the water along the living room wall and into the garage, where he found water streaming into the garage. Colombero immediately contacted Pipes and asked for a specialist to do an emergency investigation.
Pipes investigated and informed Colombero that the hot water lines were free from defect and not causing the water build-up. A further investigation by Pipes revealed that the water was coming from a cold water line burst.
Pipes then contacted Sea Coast Restoration to remove the saturated carpet and begin the dry-out process. A "significant" crack in the slab then was discovered, and Colombero filed a claim with USAA Casualty Insurance Co.
According to the complaint, "USAA unreasonably relied on an expert, whose credibility was at issue, to deny the claim; failed to interview any of the witnesses, while ignoring evidence that would support coverage; failed to interview Colombero or Colombero's expert; and unreasonably delayed [doing anything for] two years before hiring a geotechnical expert."
Although Colombero has an "all risk policy," according to the complaint, USAA denied his claim as not being covered.
"The punitive damage award is not a vote against USAA, but more a vote in favor of USAA [policyholders]," Echeverria of Claremont-based Shernoff Bidart Darras Echeverria said. "Our hope is that this won't happen again. This will make them a better company."
San Antonio, Texas-based USAA, with six million policyholders, is one of the nation's largest insurers of active and retired military personnel. USAA's lawyer, Paul R. Fine of Los Angeles' Daniels Fine Israel Schonbuch & Lebovits, could not be reached for comment. A spokesman for the insurer, Paul Berry, said the company will appeal.
"USAA worked very hard over a period of years to resolve this claim - a claim where two prominent engineers determined that plumbing leaks had nothing to do with the foundation damage," Berry said. "We are disappointed with the decision, and confident that this result will be corrected by the appellate court."
Berry, speaking from his San Antonio office, added, "USAA is a company that doesn't have a lot of issues like this. We are an insurer of the military, and we take care of the military. Having conflict with our members is not the norm."
David Rossmiller, managing editor of the Insurance Coverage Law Blog, and a partner at Dunn Carney Allen Higgins & Tongue in Portland, Ore., isn't especially surprised by the size of the award.
"Insurance companies are always a good bet to get punitive damages, because nobody likes insurance companies," he said.
Noting constitutional limits that have been imposed on punitive damages in cases like this, Rossmiller said he thinks that the amount will be reduced. But that doesn't stop juries from reacting emotionally to what they often see as stressed-out victims, he said.
"It's not just a breach of contract that makes juries mad, but people they see as being taken advantage of when they have nowhere else to turn," Rossmiller said. "That accounts for a lot of animus against insurance companies, and why punitive damages are so big.
"Whether that is an accurate perception, I don't know. But it's a common feeling among juries. And when juries get angry, they start adding zeros to the award."
