Law Offices Of

Gregory B. Scher

Greg Scher and Katy Nelson won summary judgment in favor of an insurer sued for bad faith denial of coverage for an assault and battery lawsuit. The underlying complaint, filed in 2011, alleged that the insured and a buddy repeatedly hit the claimant after they found him in bed with the buddy's wife. The insured sought insurance coverage under the general liability coverage of his homeowner's policy, arguing that there was a potential for coverage because the lawsuit alleged causes of action for negligence as well as intentional torts, and because the insured denied that he hit the claimant. The insured and the claimant eventually stipulated to a judgment of $250,000, and the claimant sued the insurer directly to collect the judgment. In the summary judgment motion, the insurer pointed out that the underlying complaint did not allege an "occurrence" that might be covered under the homeowner's policy, in spite of the fact that it contained a cause of action for negligence. The Los Angeles Superior Court, Central District, agreed that there was no potential for coverage for the underlying assault and battery action because the underlying lawsuit did not allege injuries caused by an “occurrence.”


Greg Scher obtained a defense verdict for an insurer client following a jury trial in Los Angeles Superior Court. The insured claimed the insurer improperly denied coverage for water damage to apartment building in California City, California when a pipe froze and burst. The policy excluded coverage for damage arising from a frozen and burst pipe in a vacant or unoccupied dwelling unless the policyholder either turns off the water and drains the pipes, or uses reasonable care to maintain heat. On inspection the adjuster learned that at the time of the loss the apartment was between tenants, but under lease for a one year term incepting in two weeks. He also saw that the power was out and the batteries had been removed from the thermostat. The adjuster obtained utility bills, which showed minimal natural gas use around the time of the loss. The adjuster denied the claim without speaking with the property manager, who later testified that she shut off the power and removed the batteries from the thermostat on the date of loss. Thus, the natural gas bill the adjuster relied on reflected gas usage over a three day period, not the thirty day billing period assumed. Nevertheless, the jury agreed the insured failed to use reasonable care to maintain the heat.


Greg Scher and Lisa Alderton obtained a defense verdict for an insurer client in the United Stated District Court for the Central District of California in a case involving bad faith allegations following a total loss house fire near Lake Arrowhead, California. The adjuster paid the Coverage A Building limit of the fire policy, which wasn’t sufficient to rebuild the insured’s recently remodeled house. The policy contained Extended Replacement cost coverage, however, providing an additional 25% of the coverage A limit. The insured inquired whether he could replace the house in a different location and still recover the ERC limits. The adjuster consulted with his supervisors and then told the insured that he could. In reliance, the insured purchased a new house in a different location. When the insured sought the ERC limits to cover the cost of the new house, the adjuster told him the ERC coverage was not available to him because he replaced in a different location. The jury deliberated 2½ hours before returning a defense verdict.


Greg Scher received a defense verdict for an insurer client in a bad faith lawsuit arising from an auto liability claim.  In February 2010, the client's insured struck a 72-year old woman in a crosswalk, causing brain and substantial other physical injuries.  The victim, who remained comatose for three months following the accident, was a Medicare recipient.  The insurance policy contained a $50,000 liability limit.  Two weeks after the accident counsel retained by the victim's son sent a "blind" policy limits settlement demand to the insurer requiring within thirty five (35) days either delivery of a release and check for the policy limit made payable to counsel and the claimant alone, or interpleader of the policy limit.  The demand letter stated that the claimant would be "exclusively responsible for all liens" and would indemnify the insurer and its insured against any lien claims.

Within the time specified, the insurer sent a check and a release for the policy limit to counsel.  However, the check named Medicare as an additional payee.  The proposed release also included a provision for the claimant to indemnify the insurer and its insured against lien claimants, as well as including a release of another named insured not involved in the accident. The claimant and counsel took that response as a rejection of the demand and a counter-offer.  

The claimant then filed suit and recovered a $5,000,000 judgment.    

After trial the insured assigned to the claimant his rights to collect from the insurer the amount of the excess judgment (without giving a covenant not to execute on the judgment against the insured).  Both the claimant and the insured then joined as plaintiffs in a bad faith suit. 

The court precluded evidence that the injured claimant had died approximately fourteen months after the accident, so the jury assumed the injured claimant needed the money for ongoing life care, while the insured – an elderly man working as a produce clerk in a grocery store – had experienced emotional distress accompanied by hypertension and depression as well as credit disability because of the unsatisfied judgment.  At the time of trial the judgment with interest amounted to more than $6,400,000.

The plaintiffs argued that if insurer didn't want to accept the payment terms and accept the indemnity offer, it should have filed the interpleader, as California law requires an insurer to settle a claim within policy limits when it has an opportunity to do so and excess exposure is realistic.  Having done neither, California law required the insurer to pay the full underlying judgment, with interest, as well as additional consequential damages to the insured.  Plaintiffs presented evidence that the insurer never interpleads under such circumstances and used that evidence to argue a pattern and practice of institutional misconduct. 

The pre-trial settlement demand was $72,000,000, making the decision to try the case relatively simple.  The insurer will be sending the claimant's counsel a check for its $50,000 policy limit shortly.


Greg Scher received a defense verdict in a recent trial for an insurance company client in Los Angeles Superior Court. The insurer had denied coverage to a construction contractor insured, who then defended himself and paid money to settle the underlying construction defect lawsuit. The insured then sued the client for bad faith. The Court then granted the insured's motion for summary adjudication, ruling that the insurer had and breached both a duty to defend a duty to indemnify. The case went to trial on the insured's claim for tortious breach of the implied covenant of good faith and fair dealing. Pre-trial mediation efforts proved fruitless when the insured refused to consider settlement at any sum less than $8 million. At trial, the jury decided that despite being wrong about its coverage determinations, the insurer acted reasonably and was not liable for "bad faith." The insured recovered nothing.


Greg Scher and Katy Nelson obtained summary judgment in favor of a property insurer client in an action seeking contract and bad faith damages following a refusal to pay for smoke and ash "damage" from a nearby wildfire.  Although the home didn't burn, the insured plaintiff argued that the insurer should have paid to clean the property. 

Recent Appellate Victories

Greg Scher and Jo Ann Montoya recently obtained victories for clients at the Court of Appeal. 

In BETA Healthcare Group Risk Management Authority v. NORCAL Mutual Insurance Company, the Second Appellate District, Division Two, upheld summary judgment in favor of our client on an issue of notice under a claims made and reported professional liability policy.  BETA argued that notice of a claim sent to one doctor under a claims made and reported policy insuring multiple doctors practicing within a medical group constituted notice of the claim to another doctor who treated the same patient for the same injury, even though that doctor was not specifically mentioned in the notice.  The appellate court held that the notice related to a single insured and no actual claim was "made" against the second doctor until he received notice that a claim was being made against him.  The separation of insureds provision in the NORCAL policy operated such that related claims against two physicians would not be considered a single claim, and notice of one claim to one doctor did not constitute notice of the other claim to another doctor under the same policy.


In Rivera v. Valley Forge Insurance Company, the claimant challenged the propriety of our client's cancellation of the general liability policy one day prior to a wrongful death loss.  A dispute arose over the terms of the premium payment plan.  The insured paid 50% of the premium as a down payment.  The carrier issued the policy and then invoiced for the next installment payment.  When the insured failed to pay the first installment, Valley Forge issued a Notice of Cancellation, mailing it to the insured and to the managing general agent, which sent it to the retail agent by facsimile.   The insured failed to pay by the due date and the policy cancelled.  The loss occurred one day later and the insured attempted to remit the premium payment after the loss.  Valley Forge refused to accept payment and returned the unearned premium to the insured.  The plaintiff (the deceased's mother) contended that having paid 50% of the premium as a down payment, it has at least six months of "equity" in the policy and Valley Forge was estopped to cancel before then, as no payment was due.  She also contended that the insured never agreed to a quarterly installment plan and that Valley Forge invoiced an improper amount.  The appellate court affirmed the summary judgment in favor of Valley Forge, concluding that the dispute regarding the payment plan was legally irrelevant because under any payment plan, the insured failed to pay the premium when due and Valley Forge properly cancelled the policy.


Greg Scher and Jo Ann Montoya recently obtained summary judgment for an insurer client who denied coverage to an insured on a commercial property policy when the insured’s bank account was looted by a computer hacker who gave the insured’s bank wire transfer instructions, successfully stealing hundreds of thousands of dollars. The insurance policy did provide coverage for stolen money and securities used in the insured’s business while at a bank, but when the insured submitted a theft claim, the insurer denied coverage based on an exclusion for property taken based on unauthorized instructions. The insured argued that the coverage exclusion only applied to money taken from the described business premises shown on the policy, and in any event the exclusion so applied would render the money and securities coverage illusory. Multiple rounds of supplemental briefing and oral argument resulted in the court rejecting the insured’s arguments and entering summary judgment in favor of our firm’s insurance company client.