It's not a very recognizable law firm, even in the San Diego community, but there's at least one insurance company that's heard of Lucas & Haverkamp.

The local firm, comprising Stephen Lucas and Albert Haverkamp, secured a $22.4 million victory on behalf of the Fresno Unified School District over Coregis Insurance Co. for its refusal to cover discrimination claims.

Coregis, which failed on appeal, declined to petition the state Supreme Court. It recently delivered the multimillion-dollar check, concluding a case that began in 1998.

"In the 26 years I've been practicing, it's the most gratifying outcome that I've had," Lucas said. "For many trial lawyers, it's kind of a case of a lifetime. But under the facts and circumstances, in the end, justice prevailed, and the insurance company was forced to pay and was punished for their failure to treat their insured the way they were supposed to be treated."

The money will be used to upgrade the Fresno Unified School District's technology, including the addition of new computers, and to purchase school buses. Fresno is the fifth-largest school district in California with 80,000 students in 140 schools.

"It's gratifying to recover such a large and remarkable amount," Haverkamp said. "And it's most gratifying because it's such a worthwhile client. It isn't one person. This was a school district that's extremely needy, and this money will be used in beneficial ways."

The dispute had its origins in the late 1970s, when Fresno, along with many San Diego County school districts, purchased a "School Package Policy" underwritten by Coregis, owned, until recently, by General Electric Capital.

According to Haverkamp, the policy was initially written as an all-risk policy, covering everything from property to liability. It also contained a large, self-insured retention of approximately $100,000. School districts would be responsible for only the first $100,000 in settling a case.

"This policy was a special policy created here in San Diego and created specifically for school districts," Haverkamp said. "And it was a very popular policy with school districts."

When several schools owning the policy were sued for discrimination, however, Coregis declined coverage, claiming there was an exclusionary provision.

Haverkamp did say that in the early 1990s an exclusion was written into the policy. When several school districts said they really needed coverage for discrimination claims, the insurance company sold it as an extra benefit for an additional cost.

"Yet, when it came time to be covered, the insurance company said that endorsement has no affect on the occurrence exclusion," Haverkamp said. "It became an illusory endorsement."

The Sweetwater Union and Lemon Grove school districts in San Diego County sued Coregis, and each won a ruling in San Diego Superior Court stating the insurance company was liable for the claims.

Despite those two outcomes, Coregis again denied coverage on a discrimination claim, this time to the Fresno Unified School District.

Lucas & Haverkamp filed suit on behalf of the Fresno schools in 1998, and a superior court judge awarded the district $972,000 for contract damages. Five days later, a jury awarded it an additional $13 million in punitive damages.

"The jury felt it was outrageous conduct by the insurance company to take the position it took with Fresno because they already knew it was not a legally sound position to take," Lucas said. "It got the jury upset."

The trial judge knocked down the jury award to $5 million, but the appellate court reinstated the original verdict.

The appellate court also ordered General Electric Capital to pay interest on the contract and punitive damages, bringing the total award to $22.4 million.

"You almost never, ever see the appellate court raise the amount of punitive damages," Lucas said.

Haverkamp said he and Lucas noticed a statewide pattern of schools being denied coverage. He said school districts, which usually find themselves fending off litigation rather than instigating it, should be more aggressive when it comes to insurance coverage.

"I think an important thing for school districts to learn is to think outside the box," Haverkamp said. "That they can be wronged by an insurance company just like anybody else, and they, and other school districts, need to be diligent in reviewing their policies."

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