Case Type: Business & Corporate Litigation
Opposing Party: Commercial Insurance Company
Our client obtained insurance coverage for a recently purchased commercial building, which it was planning to remodel. While it was obtaining the permits for the remodel, it leased the entire building to a single tenant that was starting a new technology company that was creating mobile phone applications. Though the tenant rented the entire building, it was physically occupying only a fraction of it because it was relatively new company.
Several months later, a water supply line in the building burst, which caused significant flooding and damage costing our client approximately $43,000 to repair. Our client filed a claim with its insurance company for reimbursement of the repair costs, but its insurance company denied coverage by claiming that at least 31% of the building was not occupied as required by the insurance policy.
After our client retained us, we filed a lawsuit in California State Court against the insurance company, alleging three causes of action–including (1) Breach of Contractual Duty to Pay a Covered Claim; (2) Breach of the Implied Obligation of Good Faith and Fair Dealing; and (3) Violation of California Business & Professions Code sections 17200 et seq.
In response to the lawsuit, the insurance company filed a motion to remove the case from being heard in State Court to Federal Court instead. We aggressively opposed the motion and the court ruled in our favor by denying the motion.
Within a week after losing its motion, the insurance company settled the case for $60,000.00 (more than the original costs of repair).