ReBlog From Merlin Law Group-Can a Condo Association Get Out of an Insurance Settlement Agreement?

Saw this on  a Google alert…

so I’m reblogging the post from Merlin Law Group’s Blog

Can a Condo Association Get Out of an Insurance Settlement Agreement?

What happens when a condominium or homeowners association enters into a settlement agreement with an insurance company and later finds out that the settlement was not enough or was fraudulently induced? That is exactly what happened in California in the case of Village Northridge Homeowners Ass’n v. State Farm Fire and Cas. Co., 237 P.3d 598 (Cal. 2010).
Village Northridge Homeowners Association entered into a settlement agreement with its insurance company for $1.5 million for earthquake damage, based on representations from the insurance company that the insurance policy only provided $4.9 million worth of coverage. The settlement agreement expressly stated that the association could not bring suit against the insurance company for any issue related to the earthquake damage after the settlement. The association later learned that the policy actually provided $11.9 million worth of coverage, and filed suit against the insurance company for fraudulent inducement into the settlement agreement.
The problem with the homeowners association’s lawsuit for fraudulent inducement was the settlement agreement expressly prohibited it from filing a lawsuit against the insurance company. The trial court told the homeowners association that it would have to return the $1.5 million in settlement funds if it wanted to proceed on the lawsuit for fraudulent inducement, but…CLICK TO READ THE REST OF THIS ARTICLE

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