In a case that underscores the importance of fair insurance practices, Ruiz & Smart secured a confidential settlement for a beloved, family-owned Chinese restaurant after its insurer failed to properly investigate and pay a vandalism claim. The matter arose in Renton, Washington, and centered on significant property damage to the restaurant’s newly purchased building during the early months of the COVID-19 pandemic.
Our clients, a multigenerational immigrant family, had long served the greater Seattle area through their business, Hong Kong Seafood Restaurant. After decades of operation, they had closed their original location in 2019 to prepare for retirement—but chose to reopen in a new location following overwhelming community support. That dream was quickly jeopardized when, during the spring of 2020, their vacant building suffered extensive vandalism damage.
The family promptly filed a claim with their insurer, Diamond State Insurance Company (DSIC). Initial inspections by DSIC’s own independent adjuster estimated the damage to be at least $250,000—much of it clearly attributable to vandalism, a covered loss under the policy. Yet, DSIC reclassified the incident as theft (an excluded peril), halted its investigation, and paid out only $1,759.19. Over the following months, DSIC misrepresented the status of its investigation and withheld its adjuster’s findings from the policyholder .
When the family sought a second opinion through a public adjuster, that expert estimated the damages at approximately $2.5 million. DSIC responded by hiring a new adjuster who lacked firsthand knowledge of the building’s condition and was tasked with retroactively separating vandalism damage from theft based on limited records. Compounding the unfairness, DSIC placed the claim under special investigation without basis and made no effort to speak with witnesses who had personal knowledge of the damage before repairs began.
The situation worsened when it was revealed that DSIC had deliberately told its adjuster not to conduct a full investigation or caption his photographs. Internal emails and deposition testimony confirmed that the insurer had not only failed to investigate, but had concealed material information from the insured and made misleading statements throughout the claims process .
Legal claims brought by Ruiz & Smart included breach of contract, bad faith, and violations of both Washington’s Insurance Fair Conduct Act and Consumer Protection Act. The firm prepared to show that DSIC’s conduct violated multiple industry standards and Washington Administrative Code regulations, including the duty to fairly investigate and the requirement to explain coverage decisions.
The case settled shortly before trial. Although the settlement amount is confidential under the terms of the agreement, the outcome represents a meaningful resolution for the client and a testament to their perseverance. It also reflects the seriousness of the claims and the litigation effort involved, including expert analysis, substantial discovery, and years of legal work .
This case highlights how vulnerable small businesses can be when insurers fail in their basic obligations—and how determined advocacy can restore accountability.