William Young et al v. The Allstate Company

On January 26, 2024, the California jury returned a $97,497.57 verdict in favor of William and Kelly Young after their insurance company, Allstate Insurance Company was found liable for intentional misrepresentation of the insurance contract.

Case Background

On May 1, 2020, William and Kelly Young filed a lawsuit against Allstate Insurance Company for intentional misrepresentation before the California Central District Court. This case was assigned to Judge Terry J. Hatter, Jr and referred to Magistrate Judge Pedro V. Castillo. [Case number: 2:20-cv-04048]

Cause

William and Kelly Young, a married couple, purchased a homeowner’s insurance policy from Allstate Insurance Company (“Allstate”), believing it would cover the rebuilding of their home if destroyed by wildfire. In November 2018, the Youngs lost their home in the Woolsey Fire. They soon discovered that Allstate had significantly misled them about their ability to rebuild the home for the amount previously stated.

For over thirty years, the Youngs relied on their friend, a long-time Allstate agent, to determine their insurance needs. They frequently informed the agent, and later his son, another Allstate agent, that they had no idea about the cost to rebuild their house in the event of total loss. Both agents assured them that their policy limits were adequate. Trusting these assurances, the Youngs continued to renew their policies based on this information.

After the fire, the agents admitted they were unsure of the actual rebuild costs. They revealed that Allstate had used a formulaic estimate, which was known to be inadequate. Allstate had been aware of this inadequacy, particularly following the Thomas Fire of the previous December. The numerous rebuild estimates from that fire demonstrated that the figure provided to the Youngs was grossly insufficient.

The Youngs then sought compensation from Allstate for the actual costs of reconstruction, rather than the much lower amount initially recommended and listed in their insurance policy.

Damages

The Youngs sought judgment against Allstate as follows:

First Cause of Action for Reformation:

  1. Adjust the Dwelling Limit under the Policy to reflect the true and reasonable costs of rebuilding their home. This includes costs for the Main Dwelling, Shrubbery, Building Code Compliance, Other Structures, and BSREL.
  2. Modify other Policy provisions as necessary to align with the reformed Dwelling Limit.

Second Cause of Action for Intentional Misrepresentation:

  1. Award compensatory damages.
  2. Grant punitive damages.
  3. Provide pre-judgment and post-judgment interest.
  4. Cover the costs of the suit.

Third Cause of Action for Negligent Misrepresentation:

  1. Award compensatory damages.
  2. Provide pre-judgment and post-judgment interest.
  3. Cover the costs of the suit.

Fourth Cause of Action for Negligence:

  1. Award compensatory damages.
  2. Provide pre-judgment and post-judgment interest.
  3. Cover the costs of the suit.

Fifth Cause of Action for Promissory Estoppel:

  1. Issue an order preventing Allstate from using the Dwelling Limit as a defense against reimbursing the Youngs for their actual rebuild costs.
  2. Cover the costs of the suit.

Sixth Cause of Action for Violation of Cal. Ins. Code Section 2051.5:

  1. Award compensatory damages.
  2. Provide declaratory and injunctive relief to enforce the Policy terms.
  3. Provide pre-judgment and post-judgment interest.
  4. Cover the costs of the suit.

Seventh Cause of Action for Breach of the Covenant of Good Faith and Fair Dealing:

  1. Award compensatory damages.
  2. Grant attorneys’ fees.
  3. Award punitive damages.
  4. Provide declaratory and injunctive relief to enforce the Policy terms.
  5. Provide pre-judgment and post-judgment interest.
  6. Cover the costs of the suit.

Eighth Cause of Action for Unfair Competition:

  1. Issue an order to halt Allstate’s unfair practices and compel payment of the actual rebuild costs.
  2. Order Allstate to provide reasonable rebuild estimates to future homeowners.
  3. Award attorney’s fees.

Key Arguments and Proceedings

Legal Representation

  • Plaintiff(s): William Young | Kelly Young
    • Counsel for Plaintiff(s): Lamdien T Le | David A Shaneyfelt
  • Defendant(s): Allstate Insurance Company
    • Counsel for Defendant(s): Justin Alan Martin | Ronald D. Kent

Claims

The Plaintiffs claimed that Allstate withheld the accurate estimate for rebuilding the Youngs’ home, although it was required to provide this estimate. Additionally, by presenting the Dwelling Limit to the Youngs without disclosing the accurate rebuilding estimate, Allstate misled them. The Youngs asked the Hermans to secure an adequate Dwelling Limit, and the Hermans promised to do so.

However, the Hermans failed to obtain a sufficient Dwelling Limit for the Youngs, showing negligence in their duties. As a result, the Youngs suffered harm due to the inadequate Policy. They relied on Allstate’s misleading representation, which led them to purchase a Policy with an insufficient Dwelling Limit. Consequently, Allstate could not use the Dwelling Limit as a defense against the Youngs.

Defense

Allstate denied the allegations levied against it. It maintained that it had discharged all obligations under the insurance contract.

Jury Verdict

On January 26, 2024, the California jury returned a $97,497.57 verdict in favor of the Plaintiffs. The jury determined that Allstate owed the Plaintiffs 97k in addition to the amount paid under the Dwelling Protection and Building Codes coverage to rebuild their home to the same kind and quality before the Woolsey Fire.

Honorable Terry J. Hatter, Jr entered a judgment consistent with the verdict on February 6, 2024.

Court Documents:

Available upon request