FIREMAN’S FUND WINS HUGE BAD FAITH CASE IN COMMERCIAL HURRICANE IKE CASE IN HOUSTON

This past Monday, November 25^th, a take nothing final judgment was entered in favor of Fireman’ Fund Insurance Company in a Hurricane Ike bad faith case involving more than 3 million square feet of retail shopping mall space at Greenspoint Mall and San Jacinto Mall in Houston.   Plaintiffs sued for and asked the jury for more than $100 million in damages for allegedly underpaid property damage at both malls purportedly caused by Hurricane Ike, plus treble damages under the Insurance Code for alleged bad faith.  The case is believed to involve the largest amount of actual damages sought from a jury at trial in an insurance bad faith case in Texas in more than 20 years.  

Trial lasted for 8 weeks over July, August and September.   The case was brought by a Hollywood movie producer, Bob Yari, who held an ownership interest in multiple partnerships which managed and allegedly owned both malls.  The case – styled Triyar Companies LLC et al vs Fireman’s Fund Insurance Company, Cause No. 2010-47654, in the 55^th Judicial District Court of Harris County, Texas – arose out of Fireman’s Fund’s investigation and payment of property damage at both malls due to high winds from Hurricane Ike, which hit Houston on September 12^th and 13^th, 2008.  After a lengthy claims investigation, Fireman’s Fund estimated the Ike damage to both malls at $11.5 million and, after applying both the $4 million deductible applicable to both malls and substantial depreciation to both of the 30-year-old malls, it paid Triyar $4.2 million.   Triyar then sued for more than $100 million which it claimed was the replacement cost to repair and/or replace the property damage at both malls caused by Hurricane Ike as well as its alleged business income losses and other damages not previously paid for by Fireman’s Fund. 

Fireman’s Fund asserted multiple defenses including standing, the failure to make repairs, and fraud, among others.  Fireman’s Fund alleged the partnerships who owned both malls were not insureds on its commercial property policy.  Fireman’s Fund also defended on the basis the mall owners failed to timely repair and replace the damaged property and were thus limited to the ACV amounts which FFIC previously paid.  Fireman’s Fund also asserted a fraud defense because of testimony from one of the estimators hired by the insured’s public adjuster who testified under oath that the initial repair estimate from the PA included more than $24 million in damages which either did not exist or were, in his words, “fluff.”  Fireman’s Fund also attacked the scope of alleged damages and alleged costs to repair and replace as excessive and unreasonable. 

Following an 8 week trial earlier this fall, the jury determined after 5 days of deliberations that FFIC did not breach its contract with Triyar, the insured.   Last Monday, State District Court Judge Jeff Shadwick entered a take nothing final judgment in favor of Fireman’s Fund ruling that the Plaintiffs take nothing on any of their claims against the carrier. 

The marathon 8-week trial was tried by Chris Martin and Molly Pela of MDJW along with co-counsel Rob Hoffman of Gardere Wynne Sewell.  We wish to congratulate Fireman’s Fund and our co-counsel, Rob Hoffman, on this great win and thank FFIC for the opportunity to represent it in this significant lawsuit.