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home / insurance / in the media

Associated Press State & Local Wire
Oct 23, 2002

Appellate court rules quake lawsuit against can go forward

LOS ANGELES (AP) - A lawsuit accusing State Farm Insurance Co. of mishandling claims from the devastating 1994 Northridge earthquake may go forward, an appeals court ruled Tuesday.

The panel from the Second District Court of Appeal rejected the insurance company's motion to stop the lawsuit brought by a policyholder represented by The Foundation for Taxpayer and Consumer Rights.

"We can now finally take on the real issue in this case of whether State Farm has mishandled legitimate insurance claims and mistreated its policyholders," said Pamela Pressley, a staff attorney for the Santa Monica-based foundation.

The policyholder filed suit in April on behalf of all policyholders, alleging State Farm mishandled Northridge quake claims by misrepresenting available benefits to policyholders by either giving low payouts or delaying claims.

A Los Angeles Superior Court judge granted State Farm's motion to strike the lawsuit, claiming it was a consumer suit to curb the company's freedom of speech. The appellate court reversed that ruling and remanded the case back to Superior Court.

The Jan. 17, 1994, Northridge quake, which measured magnitude-6.7, caused more than 70 deaths and about $15.3 billion in insured losses. About 114,000 homes and other buildings were damaged.

The quake's epicenter was a mile south of the San Fernando Valley's crowded Northridge section.

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