A high-stakes legal battle has unfolded between a property investment firm and two major insurance companies over alleged failures to defend against lawsuits, potentially costing the plaintiffs over $1 million. Rancho Oaks Investments, LLC, along with Andrew Winchester representing the Estate of Richard Winchester and the Winchester Family Trust, filed a complaint in Ventura County on August 20, 2024, against Mid-Century Insurance Company and Farmers Insurance Exchange.
The plaintiffs accused the defendants of wrongfully refusing to defend them in lawsuits initiated by Starbucks Corporation and Lighting & Bulbs Wholesale Supply, Inc. (L&B). Rancho Oaks had leased commercial properties to both companies. The dispute began when L&B sued Rancho Oaks and Starbucks for damages related to property access issues caused by a reciprocal easement agreement. Subsequently, Starbucks filed a cross-complaint against Rancho Oaks and L&B.
Rancho Oaks contended that Mid-Century and Farmers were bound by their employees' admissions that they had a duty to defend under their insurance policies. They argued that these admissions should compel the insurers to cover defense costs. However, the court found that such internal opinions did not constitute binding admissions. Additionally, it was determined that the alleged property damage did not meet the policy's definition of being caused by an "occurrence," which is defined as an accident.
The initial lawsuit from L&B stemmed from complications arising after Starbucks opened a drive-thru coffee shop adjacent to L&B’s store in March 2013. As Starbucks grew increasingly popular, traffic congestion began obstructing access to L&B’s premises, significantly impacting its business operations and customer satisfaction. L&B's complaint included six causes of action ranging from breach of lease to nuisance creation against Starbucks.
Starbucks’ cross-complaint added another layer of complexity by seeking equitable indemnity from Rancho Oaks and Richard Winchester if found liable for any damages claimed by L&B. This multi-faceted litigation prompted Rancho Oaks to seek defense coverage from their insurers under policies issued by Mid-Century and Farmers.
Initially, both insurers agreed to provide defense but later withdrew their support in October 2019, citing that the claims were contractual or intentional rather than accidental—thus falling outside policy coverage for "property damage" caused by an "occurrence." Consequently, Rancho Oaks funded its own legal defense and sought redress through this lawsuit against Mid-Century and Farmers.
The plaintiffs are seeking substantial compensation exceeding $1 million for costs incurred during their self-funded legal defense due to what they describe as bad faith denial of coverage obligations by the insurers. They argue that this denial forced them into significant financial strain including attorney fees, litigation costs, settlement funds expended unnecessarily due to lack of insurer support.
Representing the plaintiffs are attorneys from Foley Bezek Behle & Curtis led by Kevin D. Gamarnik while Woolls Peer Dollinger & Scher with Gregory B. Scher and H. Douglas Galt represent the defendants. The case is presided over by Judge Ronda J. McKaig in Ventura County Superior Court under Case ID No: 56-2022-00567432-CU-BC-VTA.