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For Want of a Fax: Insurer, Agency Hit With $1 Million Jury Verdict
Fulton County Daily Report
August 04, 2009
A tangled case stemming from what the plaintiff's attorney called a "simple failure to send a fax or e-mail" by an insurance agency has cost the agency, along with the insurance company whose policy it sold, more than $1 million, including $400,000 in attorney fees.
An attorney for Pacific Insurance Co. said it will appeal the $881,000 portion of the judgment it was ordered to pay to the plaintiff, Regency Savings Bank.
"These types of cases can be pretty dull," said Regency's attorney, Douglas G. Scribner of Alston & Bird. "But this was an interesting one, at least to me."
According to trial documents, the case began with the bank-financed purchase of an apartment complex in Northwest Atlanta in 2000. The complex's ownership changed hands several times over the next few years, and in 2003 Regency bought the mortgage from the original lender.
The property was insured by Pacific. When Regency bought the mortgage, it asked Jenkins, Skipworth & Associates, the insurance agency that sold the policy, to provide proof that Regency had been added to the policy.
Jenkins, Skipworth sent a proof of liability and insurance to Regency as requested but, according to the pretrial order, it never informed Pacific that that the mortgage-holder had changed. Nor had the agency informed Pacific that a new company was the property owner.
On Feb. 13, 2004, a fire damaged two of the builldings. But the property owner instructed the insurance agency not to file a claim with Pacific because "the insured was in the process of applying for a grant and did not want the property claim to interfere with that process," according to the order.
Almost one year later, the owner reversed his position and filed a claim, during which time the damaged buildings had fallen further into disrepair. It was only then that Pacific found out about the fire; an examiner placed the damage at almost $700,000.
The property owner defaulted on the mortgage in 2005, and when Regency sought to have Pacific cover the fire damage, the company claimed the bank was not the beneficary of its policy and refused.
In September 2006, Regency sued Pacific and Jenkins, Skipworth for breach of contract, bad faith and attorney fees. The defaulting property owner, Richard Princewill, eventually left the country, said Scribner.
"[Pacific's] position was that, since my clients had never been added to the policy, they weren't covered," said Scribner. "But the fact is, no mortgage company has ever been denied being added to a policy. All the experts said it's routine, happens every time.
"The part that still puzzles me is that they never even tried; the most they ever offered to pay us was $50,000. If they had offered a significant amount early on, [Regency] would have walked away."
In court filings, Pacific argued that Princewill never filed a claim, and that he had in any case breached his contract by not reporting the fire damage. The insurer also sought damages from Jenkins, Skipworth for its failure to forward the new mortgage-holder's information.
Jenkins, Skipworth, in turn, said Princewill, through his many deals transferring ownership of the apartments, was not even the property owner and that the agency thus owed neither him nor Regency any duty.
Following a three-day trial before Fulton County Superior Court Judge Constance C. Russell, on July 6 a jury ordered Pacific to pay Regency $881,740; it said Jenkins, Skipworth should pay Regency $225,000. The total verdict, including $400,000 in attorney fees and costs split between the defendants, was $1,106,740, said Scribner.
The jury also ordered Jenkins, Skipworth to pay Pacific $20,000.
"The attorneys' fees [award] tells me the jury was probably angry," said Scribner. "Their whole defense was, 'Yeah, but had we placed the call, you could've been added to the policy.' It made no sense."
Pacific's attorney, Philip W. Savrin of Freeman Mathis & Gary, said his clients are still discussing their options, but he planned to file an appeal.
"We're going to appeal the entire judgment," said Savrin. "I think the jury did the best with what they had. ... But this was an unprecedented expansion of insurance coverage by the court."
Jenkins, Skipworth, represented by Paul W. Burke and Eric R. Mull of Drew Eckl & Farnham, will not be appealing, said Burke.
"We are content with the verdict as the jury did essentially what we asked them to do in our closing arguments," said Burke via e-mail.
The case is Regency Savings Bank v. Pacific Insurance Co., No. 2006-CV-123845.
