The Incident
On December 7, 2013, Henry and Carlene Lains suffered a devastating fire at their home in Enumclaw, Washington. The family, which included special needs children, held a “Gold Star” homeowners policy that promised replacement cost coverage. However, instead of the prompt assistance they paid for, the Lains family faced years of delays, lowballing, and aggressive litigation tactics from their insurer, American Family Mutual Insurance Company.
The Insurer’s Failure
Following the fire, American Family’s vendors placed tarps on the roof. These tarps blew off on multiple occasions, allowing winter rains to flood the home and causing extensive mold growth. Despite this, American Family refused to treat the water damage as a separate claim, attempting to cap the family’s recovery at a single policy limit of roughly $269,000, even though repair estimates had climbed to nearly $700,000. Furthermore, the insurer failed to pay for necessary mold, lead, and asbestos remediation—a legal precondition to reconstruction—leaving the family displaced for over two years.
Our Strategy and Legal Victories
Led by attorney Isaac Ruiz, we launched an aggressive legal strategy to hold the insurer accountable for bad faith and breach of contract. We secured several critical victories during litigation. For example:
Multiple Occurrences: We successfully argued that the water intrusion incidents were separate “occurrences” from the initial fire. The U.S. District Court agreed, ruling that the Lainses were entitled to additional policy limits for these subsequent losses.
Improper Depreciation: We uncovered that American Family and its vendor, Enservio, were depreciating personal property—including items like a jewelry box and a wedding dress—by 100% based solely on age, ignoring their actual condition. We moved for partial summary judgment, and the Court ruled that American Family violated Washington Administrative Code (WAC) 284-30-380(7) by failing to accurately evaluate actual cash value. The Court further ruled that American Family could not depreciate labor costs on the structural repairs.
Discovery Sanctions: We aggressively pursued discovery regarding American Family’s internal incentives. We sought evidence showing the insurer rewarded adjusters for “severity control” (lowering payments). When the insurer withheld business plans and financial metrics, we moved for sanctions and default judgment to expose their “blind man’s bluff” litigation tactics.
The Result
By systematically dismantling the insurer’s defenses and proving they violated both their own policy and Washington law, we placed the Lains family in a position of strength. Facing a trial where we intended to prove that the insurer put its financial interests above those of its policyholders, American Family agreed to a confidential settlement that we’re extremely proud to have accomplished.
This case was Lains v. American Family.