Settlement Amount:
$900,000

Case Name:
PACIFIC FLOOR COVERING et. al. v. TRUCK INSURANCE EXCHANGE, et.
al.

Case Number:
San Diego Superior Court, No. 628168

Plaintiff:
Pacific Floor Covering et. al.

Defendant:
Truck Insurance Exchange, et. al.

Facts and Background:
Plaintiff, Pacific Floor Covering, (Pacific) was a defendant in a
civil action brought by Lee Johnson Development, the owner of a
luxury nursing home facility in Rancho Santa Fe, California. The
plaintiff was a subcontractor and was hired to install carpet and
wood flooring at the Casa Palmera Nursing Home facility, which
was owned and developed by the Lee Johnson Development Company.

After completion of the project, the floor at the facility
"buckled." Pacific was named as a defendant in civil suits filed
by the developer and the contractor of the project. The civil
action against Pacific resulted in a settlement in which Pacific
received monies it was owed for the project. (Pacific paid no
money in resolution of the suits brought against them by Lee
Johnson Development.) In the suit originally filed against
Pacific, Lee Johnson contended that the nursing home was opened
at a delayed date and that there were problems with the flooring.

Pacific tendered the defense of the civil suit brought by the
developer to defendant, Truck Insurance Exchange, in September of
1988 and Truck Insurance Exchange refused to defend the above
action. Truck Insurance Exchange denied that claim on the basis
of the products hazard exclusions of the insurance policy.

As a consequence of the insurance company’s refusal to provide a
defense, Pacific incurred approximately $40,000 in attorneys’
fees in its defense of the civil action.

Pacific filed a civil action against Truck Insurance for the
breach of the implied covenant of good faith and fair dealing
arising out of the insurers’ duty to defend. Before this case
proceeded to trial, Truck Insurance reimbursed Pacific the
approximately $40,000 in attorneys’ fees that Pacific incurred in
defending the underlying action. (The court ruled as a matter of
law that Pacific was owed a defense by Truck Insurance Exchange.)
The court also ruled that the products hazard and completed
operations hazard exclusions were not applicable in regard to the
insurer’s duty to defend Pacific.

The second phase of the trial proceeded before a jury for ten
days until a settlement was reached.

Damages:
Emotional distress