Insurer refuses to pay $139K business burglary claim; $2.5 million verdict. Fresno County.


Insurer denies payment of claim for burglary of expensive equipment at bar/restaurant.

The Case

  • Case Name: Fresno Rock Taco, Zone Sports Center v. National Surety Corporation
  • Court and Case Number: United States District Court-Eastern District of California; Case No. 1:11-CV-00845
  • Date of Verdict or Judgment: Friday, August 22, 2014
  • Date Action was Filed: Sunday, February 12, 2012
  • Type of Case: Breach of Contract, Insurance – Bad Faith, Claims Handling
  • Judge or Arbitrator(s): Magistrate Sheila K. Oberto
  • Plaintiffs:
    Fresno Rock Taco, LLC
    Zone Sports Center, LLC
  • Defendants:
    National Surety Corporation
  • Type of Result: Jury Verdict

The Result

  • Gross Verdict or Award: $2,484,349
  • Economic Damages:

    $2,224,349 as to Fresno Rock Taco, LLC $260,000 as to Zone Sports Center, LLC

  • Trial or Arbitration Time: 2 1/2 weeks
  • Jury Deliberation Time: 2 1/2 days
  • Jury Polls: 8-0

The Attorneys

  • Attorney for the Plaintiff:

    Law Offices of Paul M. Smith II by Paul M. Smith, Fresno.

  • Attorney for the Defendant:

    Hager & Dowling by John Hager and Sean Cooney, Santa Barbara.

Facts and Background

  • Facts and Background:

    Fresno Rock Taco owned the restaurant and the equipment that was stolen. Zone Sports Center owned the building, and the two businesses had common ownership. 

    Plaintiffs made an insurance claim in February, 2009 to the defendant after their restaurant and building was broken into and several hundred thousand dollars worth of sophisticated lighting and concert equipment was stolen.

    Repeated attempts were made by plaintiffs and by the local insurance agent to get defendant insurer to either pay the claim or visit the site. Defendant never visited the site.

  • Plaintiff's Contentions:

    Plaintiffs' restaurant was robbed and the defendant was obligated to pay the claim.

    That in July, 2009 the Department of Insurance raided the restaurant acting on false information provided to them by the defendant. Nothing came of the raid. That the defendant then asked for an Examination Under Oath (EUO), presumably to clarify things; in reality, it was to deny the claim.  After the EUO in November, the claim was denied that following January.

    Plaintiff claimed that defendant made no good faith effort to settle the claim and that an adjuster never visited the site, never investigated the claim, and never talked to the only witness to the theft.  That defendant only interviewed 3 people, all of whom said it looked like a theft occurred.

  • Defendant's Contentions:

    That no theft occurred and that plaintiff intentionally and materially misrepresented an aspect of the claim and thus defendant could rightfully deny the claim.

Injuries and Other Damages

  • Plaintiff Fresno Rock Taco's initial claim was for $125,000. Plaintiff Zone Sports' initial claim was for $14,000.

Additional Notes

This was the second trial of this matter; the first ended in a hung jury.