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Plaintiff v. Insurer

February 2012

Sedgwick won summary judgment for our client, an insurer, in a breach of contract and bad faith lawsuit filed in California state court.  The plaintiff submitted a $3.8 million lost rents claim in connection with repeated acts of vandalism at a commercial property. The plaintiff alleged the insurer delayed resolving the property claim, which resulted in the plaintiff losing prospective tenants and rents.  The insurer denied the lost rents claim, since the building had been vacant for several months prior to the vandalism.  In its lawsuit, the plaintiff alleged that the insurer's denial was in bad faith.  Although no California case had ruled on the issue of causation for a lost rents claim, Sedgwick obtained summary judgment by establishing that the insured's "loss of prospective client" argument was false, and that the policy’s lost rents provision did not provide lost rent coverage for an unleased building.