Fresno Unified School District Awarded $13 Million in Punitive Damages in Bad Faith Insurance Suit Against Coregis Insurance Company.

Business Editors

FRESNO, Calif.--(BUSINESS WIRE)--Oct. 10, 2000

A 12-member jury awarded the Fresno Unified School District (FUSD) $13 million in punitive damages on October 6, 2000 in its bad faith insurance suit against Coregis Insurance Company (Coregis), a GE Capital Company, and subsidiary of General Electric Co. (NYSE:GE).

Judge Michael S. Ullman presided over the trial which began September 20, 2000 in Sacramento Superior Court. On October 2, 2000, Plaintiff's Motion for Directed Verdict was granted, and the FUSD was awarded $972,000 in damages. FUSD was represented by Stephen D. Lucas and Albert E. Haverkamp, with the San Diego law firm of Lucas, Mullany, Boyer & Haverkamp. Fresno Unified School District v. Coregis Insurance Company, Case No. 99AS00773.

"Coregis denied insurance coverage to the Fresno Unified School District," explained Stephen D. Lucas, "even though it knew for a fact that its policy with the District covered discrimination claims. To add insult to injury, Coregis tried to hide from the District the fact that it had litigated and lost similar suits on the issue of coverage on claims made by school districts in San Diego County."

Faced with discrimination claims in 1994 and 1996, the FUSD requested that Coregis defend the cases under its insurance policy. The company took the position that it did not have to defend or indemnity Plaintiff because all discrimination claims involved intentional conduct. Coregis ignored prior adverse court rulings finding coverage for discrimination claims, and, instead, continued issuing the same blanket form letter denying the claims in both matters.

San Diego based California Institutional Insurance Agency (CIIA) was the exclusive broker/wholesaler of the policy issued by Coregis, a national insurer of school and water districts. In 1988, FUSD renewed its policy with Coregis, purchasing Endorsement CIIA-81 for an additional premium of $7,000 to provide defense and indemnity coverage against discrimination claims. Contrary to the intent of Endorsement CIIA-81, Coregis steadfastly refused to defend or indemnify other California school districts in discrimination cases.

"Justice has been served," stated Albert E. Haverkamp "The jury saw right through Coregis' ploys to deny insurance coverage to the District, sending a loud and clear message through their $13 million punitive damage award that it will not tolerate such egregious conduct. The verdict also sends a wake up call to risk managers to be especially vigilant in reviewing the coverage provisions under their policies."

NOTE TO EDITORS: Defendant was represented by Marc Wolfe with Bollinger, Ruberry & Garvey, Chicago, IL.; telephone: [phone].