Imagine this: you move into your new home in Nevada. It sparkles with the bright sun bouncing off pristine countertops and cushioned by plush carpet. Your last box is finally unpacked, and you sit down on your sofa resting easy, knowing that you’ve dotted every i and crossed every t in terms of homeowner protections and insurance coverage. And then you hear a terrifying sound. Jumping up to look out the window, you see a nearby earthen levee crumbling, and water rushing in toward your new home. This is the situation that faced hundreds of homeowners near the city of Fernley. But beyond repairing the damage to their homes, they’ve had to hire Nevada attorneys to fight for them when the insurance company for the home builder wouldn’t pay out.
Business litigators like Robert A. Ryan could parse this case pretty easily for you, but we can, too. Here’s what happened: Everest Indemnity Insurance Co. refused to cover the cost associated with the damages caused by the collapse of the left embankment of the Truckee Canal, citing its failure as applying under the “Earth Movement Exclusion” clause to the insurance policy. You don’t have to be one of the top Nevada attorneys to feel that this exclusion seems a little underhanded, since it’s more meant to apply to things like earthquakes. But Everest stood their ground, saying that “since the canal was an earthen structure it was off the hook.”
When the homeowners took the insurance company to trial over the exclusion clause in a class-action suit, expectations were that the deliberations by the jurors would last up to three weeks. They settled it in a matter of three hours. The Nevada attorneys representing the homeowners did a convincing job of demonstrating that “the Fernley flood was caused by human error,” and was unequivocally “a man-made event.” This classification would force Everest’s policy to apply to the flooding damage caused by the levee collapse.
But Everest didn’t go down without a fight—they pointed to the fact that “the levee has a history of failures,” and that the homebuilders “had the option to purchase a policy with earth movement coverage.” The fact that they’re trying to get apple juice from oranges isn’t the fault of the insurance company—they should have bought apples in the first place.
While no Nevada attorneys would actually make that apple-orange metaphor in a courtroom, the point was essentially the same. Only the jury wasn’t buying it, and agreed with the plaintiffs of the suit, determining that Everest “must pay out at least $4.5 million” for the case. And that doesn’t even include punitive damages, which were scheduled to be considered less than a week later.
The fun part of this for the public? It’s all available to watch on the Courtroom View Network, so all your questions about how it might go down can be answered in real time. And who knows what other interesting cases you might come across.