Insurer lowballs repair payments on damaged restaurant building. $10.5 million for bad faith + punitives. Stanislaus County.


Snow storm collapses roof of building; insurer won't pay estimate to repair, says estimate includes code upgrades that it's not responsible for.

The Case

  • Case Name: NKD Diversified Enterprises, Inc. v. AMCO Insurance Company
  • Court and Case Number: Stanislaus Superior Court / 679681
  • Date of Verdict or Judgment: Wednesday, March 02, 2016
  • Date Action was Filed: Saturday, November 03, 2012
  • Type of Case: Breach of Good Faith, Insurance – Bad Faith, Claims Handling
  • Judge or Arbitrator(s): Hon. Roger Beauchese
  • Plaintiffs:
    NKD Diversified Enterprises, Inc.
  • Defendants:
    AMCO Insurance Company
  • Type of Result: Jury Verdict

The Result

  • Gross Verdict or Award: $10,506,820.60
  • Economic Damages:

    Policy Benefit: Repair Costs: $988,814.21

    Policy Benefit: Lost Rent: $78,000

    Lost rents (non-policy): $317,200

    Attorneys Fees: $622,809.39

  • Punitive Damages:


  • Trial or Arbitration Time: 6 weeks.
  • Jury Deliberation Time: 4 hours for first phase; 3 hours for second phase.
  • Jury Polls: Unanimous.

The Attorneys

  • Attorney for the Plaintiff:

    Kerley Schaffer LLP by Edward Kerley, Sarah Auten, Dylan Schaffer and John Melis, Oakland.

  • Attorney for the Defendant:

    Akin Gump Strauss Hauer & Feld LLP by James Fitzgerald and Bryan Wittlin, Los Amgeles.

The Experts

  • Plaintiff's Technical Expert(s):

    Robert Bresee, contractor, Madera.

  • Defendant's Technical Expert(s):

    Michael O'Connor, engineering, Sacramento.

    Charles Thomas, contractor.

    Joseph F. Gildner CPCU/PCLA, claims handling, San Clemente.


Facts and Background

  • Facts and Background:

    NKD Diversified Enterprises, Inc., owns a building in Tuolumne County which houses Diamond Jims restaurant. In 2011 a couple of very large snow storms overwhelmed the roof of the old building and caused major structural damage. Nationwide/AMCO relied on a local contractor to come up with an estimate. He did so, but Nationwide concluded the estimate was all for excluded repair costs, including code upgrades.

    The estimate was for $400,000; Nationwide paid $37,000 plus $25,000 for code upgrades. The building was not repaired and by the time of trial the repair estimate was nearly $1 million. There was also considerable consequential damages in the form of lost rents during the five years the building was out of commission. NKD sued AMCO Insurance Company, a subsidiary of Nationwide, for breach and bad faith.

  • Plaintiff's Contentions:

    That repair payments by defendant were inadequate. The damage was extensive. AMCO hid documents showing the damage was severe and that their own contractor agreed with NKD's repair estimate. That defendant violated a host of claims-handling laws and regulations, lied to plaintiffs about policy benefits, and deprived them of the ability to repair the building.

  • Defendant's Contentions:

    AMCO contended that its original repair payment of $37,000 and $25,000 for code upgrades was adequate; that there was no additional damage caused by the 2011 snow storms; that repair costs were excluded because they were code upgrades; that NKD was claiming for money that had already been paid by another insurer to the corporation that ran the restaurant (NKD was the building owner); that NKD's claim was so high that it amounted to fraud, and finally, that there was a genuine dispute, so no bad faith, and that there was no malice, oppression, or fraud.

Injuries and Other Damages

  • Policy benefits for repair; loss of rents under the policy; loss of rents not covered by the policy; attorneys fees.

Demands and Offers

  • Plaintiff Final Demand before Trial: $3,490,000 at MSC
  • Defendant Final Offer before Trial: $75,000