Robert W. Johnson & Associates was retained to provide economic testimony regarding the appropriate methodology for quantifying the minimum cost to repair partially damaged property and a framework for calculating punitive damages.
Location: Los Angeles, California
Case: Nordhoff Townhomes vs. Farmers Group, Inc., et al.
Court: Los Angeles County, California Superior Court, No.BC188792.
Plaintiff’s Attorneys: Bernie Bernheim and David C. Parisi, Law Offices of Bernie Bernheim, North Hollywood, California; Richard Friedman and Jeffrey Rubin, Law Offices of Freidman, Rubin & White, Anchorage,
Case Synopsis: On January 17, 1994, the Northridge earthquake struck the greater Los Angeles area, and the Nordhoff Townhomes suffered extensive damage throughout the entire complex. The Nordhoff Townhomes Homeowners Association and their experts determined that the 50-unit complex was a total loss. Farmers Group Company, Truck Insurance Exchange, was of the opinion that the property was not a complete loss.
Farmer’s method of calculating the “actual cash value” loss (in a partial destruction) was the old, replacement cost less depreciation method. This was in opposition to recent California Supreme Court cases (Jefferson vs. Superior Court, 1970 3 Cal.3rd 398 and Orenzo Cheeks v. Fair Plan, 61 Cal.App4th 423) which stated that the proper method was the “instantaneous reduction in fair market value.”
While there was significant debate regarding what was the total or maximum reduction in the fair market value of the property, there was general consensus regarding the cost to repair the property. In addition, the punitive damages portion of the trial was bifurcated.