Free Memorandum - District Court of Arizona - Arizona

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27

JOSEPH C. DOLAN, ESQ. (007376) 1650 North 1st Avenue Phoenix, Arizona 85003 (602) 266-7667 Fax (602) 277-9839 Attorney for Plaintiff IN THE UNITED STATES DISTRICT COURT IN AND FOR DISTRICT OF ARIZONA JERRY SIMMS, a single man, Plaintiff, TRIAL MEMORANDUM OF LAW vs STATE FARM FIRE AND CASUALTY COMPANY, an Illinois corporation; ABC CORPORATIONS I-X; JOHN DOES I-X, Defendants. CV-03-1415-PHX-ROS

Plaintiff requests that the Court consider the following legal authorities in connection with the trial of this matter. Although this matter will be tried to a jury, it is anticipated that motions for judgment as a matter of law will be urged throughout the trial. The following legal authorities will be important. I. BREACH OF CONTRACT HAS ALREADY BEEN ESTABLISHED Plaintiff filed this suit on March 19, 2003. Plaintiff alleged that State Farm had breached its contract to pay for the structural damages sustained by the plaintiff's residence during a fire that occurred in March of 2001. State Farm filed its answer denying that it had breached its contract. State Farm asserted that it had paid for all covered damages. In fact, State Farm had not paid for all covered damages sustained by the plaintiff's structure prior to the filing of this suit. Photographs taken within a week after the fire demonstrated heat damage to plaintiff's residence in an area of the house which was never addressed by State Farm through its investigation and adjustment of this claim. State Farm's adjuster on this loss, Ken Ridolfi,

Case 2:03-cv-01415-ROS

Document 147

Filed 12/02/2005

Page 1 of 5

1 2 3 4 5 6 7 8 9 10 11

never required plaintiff to submit a proof of loss to document all areas of claimed damages. Rather, State Farm chose to investigate and adjust the loss without the requirement of a proof of loss. As a result, State Farm was obligated to reasonably and thoroughly investigate the scope of damages to plaintiff's residence. The evidence in this case will show that there was an obvious area of damage to the fascia and vertical structures of the main house facing the golf course. Photographs show that this was visible in March of 2001. Yet, State Farm did not issue a check for these damages until it was specifically demanded of them long after the present lawsuit had been filed. State Farm has now admitted that it owed the expense of repairing this fascia. It has issued a check (which only partially covers the repair cost). By undertaking to adjust this loss and begin making payments without requiring plaintiff to submit his own proofs of loss, State Farm assumed the obligation to properly investigate the complete scope of this loss. It cannot be heard to complain that certain items of damage were not specifically pointed out by the plaintiff. For cases obligating the carrier to conduct a complete and thorough investigation of the loss, see Walter v Simmons, 169 Ariz. 229, 238, 818 P. 2d 214, 223 (1991); Zilisch v State Farm Mut. Auto. Ins. Co., 196 Ariz. 234, 237-238, 995 P.2d 276, 280 (2000); Deese v State Farm Mut. Auto. Ins. Co., 172 Ariz. 504, 507, 838 P.2d 1265, 1268 (1992. In summary, by admitting that there was heat damage from the fire which was visible in March of 2001 but as to which payment was not made until March of 2005, State Farm has effectively admitted that it breached its contract of insurance by making payment only after years of litigation. II. STATE FARM'S DUTY TO COMPLETELY AND THOROUGHLY ADJUST THIS CLAIM IS NON-DELEGABLE. State Farm had the duty to completely and thoroughly investigate and adjust this claim. State Farm cannot delegate its duty in this regard to a non-employee building contractor. See Walter v Simmons, 169 Ariz. 229, 238, 818 P. 2d 214, 223 (1991). In the present case, Dusty Creek Builders prepared an estimate to repair the damages to the Simms residence. State Farm cannot take the view that it could delegate its obligation to investigate

JOSEPH C. DOLAN

1650 North First Avenue Phoenix, Arizona 85003

12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27

2 Case 2:03-cv-01415-ROS Document 147 Filed 12/02/2005 Page 2 of 5

1 2 3 4 5 6 7 8 9 10 11

the nature and extent of damages to Dusty Creek Builders, the building contractor who prepared an estimate of repair. State Farm had the non-delegable duty to prepare its own scope of loss. Walter v Simmons, 169 Ariz. 229, 238, 818 P. 2d 214, 223 (1991). State Farm's adjuster, Mr. Ridolfi, admitted that he and his supervisor, Mr. Bob Null, actually set the definitive scope of loss in this matter. State Farm cannot attempt to exonerate himself from liability resulting from its failure to properly determine the scope of damages by blaming Dusty Creek Builders. See Walters v Simmons; see Meineke v GAB Business Services, 195 Ariz. 564, 991 P.2d 267 (1999). III. THE "NO HINDSIGHT" RULE PRECLUDES STATE FARM FROM RELYING UPON AFTER ACQUIRED EVIDENCE IN DEFENSE OF ITS BAD FAITH CLAIM State Farm cannot rely upon after acquired evidence in arguing that it did not act in bad faith. The Court must determine whether State Farm acted in bad faith based upon the evidence that was available to be considered at the time that State Farm made its decisions regarding the claims presented herein. Paulson v State Farm Mut. Auto. Ins. Co., 867 F. Supp. 911, 918 (C. D. Cal. 1994); Austero v National Cas. Co., 84 Cal. App. 3d 1, 32, 148 Cal. Rptr. 653 (1978); Troutt v Colo. W. Ins. Co., 246 F. 3d 1150, 1161 (9th Cir. 2001). IV. CLEAR AND CONVINCING EVIDENCE OF ENTITLEMENT TO PUNITIVE DAMAGES Plaintiff submits that the evidence in this case will show, among other things, that Ken Ridolfi

JOSEPH C. DOLAN

1650 North First Avenue Phoenix, Arizona 85003

12 13 14 15 16 17 18 19

of State Farm misrepresented the policy language to plaintiff at the outset of Mr. Ridolfi's handling of 20 this claim. Plaintiff will testify that Mr. Ridolfi advised him that he had to stay at his residence as a 21 condition of receiving coverage under this insurance policy despite the fact that the residence had 22 sustained heavy fire damage in parts of the structure. The evidence will show that the insurance 23 policy does not require plaintiff to remain at the residence as a condition of his insurance coverage. 24 Plaintiff will argue that Mr. Ridolfi misrepresented the policy language to plaintiff in an effort to gain 25 a financial advantage over plaintiff. Had plaintiff moved out of his property and invoked the ALE 26 coverage, it would have been easily foreseeable that State Farm would be paying thousands of dollars 27

3 Case 2:03-cv-01415-ROS Document 147 Filed 12/02/2005 Page 3 of 5

1 2 3 4 5 6 7 8 9 10 11

per night in alternative housing. Plaintiff lives in a 10,000 square foot mansion on the Biltmore golf course. The rental of a substantially similar property would cost State Farm many thousands of dollars. The reasonable inference to be drawn from these circumstances is that Mr. Ridolfi sought to avoid the additional living expense exposure under the State Farm policy by advising plaintiff that he did not have a right to move out of the house. As to misrepresentations generally concerning the terms of an insurance policy, see A.R.S. § 20-443; as to the prima facie showing of entitlement to punitive damages based upon misrepresentations, see Hangarter v Provident Life & Accident Ins. Co., 373 F.3d 998 (9th Cir. 2004). Plaintiff also bases his claim for entitlement of punitive damages upon the pattern of conduct exhibited by Ken Ridolfi, the State Farm adjuster in this matter. The evidence will show that Ken Ridolfi refused to pay for damage to the outdoor patio furniture even though the outdoor patio furniture was water damaged as a result of the fire fighting activities; he refused to pay to allow the roof and walls of the house to be power washed despite the fact that the house was extensively smoke and soot damaged as a result of this fire. He refused to pay for obvious damage to the concrete in the plaintiff's driveway despite the fact that the concrete received obvious heat damage. He also refused to follow up on the indications of extensive heat damage to the "Dryvit" system which forms the exterior surface of the plaintiff's residence. This pattern will demonstrate a callas disregard for the rights of plaintiff. This pattern demonstrates that Mr. Ridolfi's conduct was knowing, not inadvertent. See Hawkins v Allstate Ins. Co., 152 Ariz. 490, 733 P.2d 1073 (1987).

JOSEPH C. DOLAN

1650 North First Avenue Phoenix, Arizona 85003

12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27

RESPECTFULLY SUBMITTED this 2nd day of December, 2005.

By

s/Joseph C. Dolan 007376 JOSEPH C. DOLAN, ESQ. 1650 North 1st Avenue Phoenix, Arizona 85003 Attorney for Plaintiff

4 Case 2:03-cv-01415-ROS Document 147 Filed 12/02/2005 Page 4 of 5

1 2 3 4 5 6 7 8 9 10 11

CERTIFICATE OF SERVICE I HEREBY CERTIFY that on December 2, 2005, I electronically transmitted the attached document to the Clerk's Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to the following CM/ECF registrants: William Phillips, Esq. BROENING OBERG WOODS & WILSON 1122 East Jefferson Phoenix, Arizona 85036 Attorneys for State Farm

I HEREBY CERTIFY that on December 2, 2005 I served the attached document by mailing a copy of the following: Hon. Roslyn Silver United States District Court, Suite 624 401 W. Washington Street Phoenix, Arizona 85003-2158

JOSEPH C. DOLAN

1650 North First Avenue Phoenix, Arizona 85003

12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27

s/Joseph C. Dolan, Esq. 007376 Attorney

5 Case 2:03-cv-01415-ROS Document 147 Filed 12/02/2005 Page 5 of 5