Asset Protection
What is Asset Protection and Why you need Asset Protection
I just read a case from November 2011, Barry Wallman et al., Plaintiffs and Appellants, v.
Benjamin Suddock, et al., Defendants and Respondents, 200 Cal. App. 4th 1288; 2011 Cal. App.
LEXIS 1441, that makes the argument clear.
The landlord owned a property where a child fell and had a serious head injury. When the
lawsuit was filed the property owner had an insurance policy and an umbrella policy, so he
should have been good to go. Right? Well not this time.
Apparently the owner trusted his insurance agent to counsel him on what kind, and how much,
insurance coverage he needed. The result? The claim was so great that the underlying insurance
company paid out the policy limits on the claim. The insurance company that wrote the umbrella
policy said the claim fell outside the umbrella, and they refused to pay. That left the owner
holding the bag for a half million-dollar settlement.
Quoting from the opinion, “On April 4, 2006, Anthony Rodriguez, through his mother as guardian
ad litem, sued Barry Wallman for the injuries he suffered when he fell from the window of the
Ingraham property in February 1994. The Wallmans tendered the Rodriguez action to Crusader,
which had provided primary insurance for the Ingraham property for the 1993–1994 policy
year. Crusader accepted the tender and appointed counsel to defend the Wallmans.
When the Wallmans learned that the damages sought in the Rodriguez action might exceed the
Crusader policy limits, they tendered the action to American Guarantee. American Guarantee
denied coverage.
The Wallmans settled the Rodriguez litigation in May 2007 for $1 million. Crusader contributed
its policy limits of $500,000, and Barry Wallman contributed the remaining $500,000.”
Wallman, who contributed the “remaining $500,000” was the owner of the property. He
subsequently filed a lawsuit against the insurance agent. He said that he agent advised them and
tried to create “a triable issue of fact as to whether the Suddock defendants made
misrepresentations as to the coverage they obtained for plaintiffs by referencing Mr. Suddock's
statement that ‘he could not imagine any claim for which we would not have coverage.’” The
court didn’t agree. Their insurance agent wasn’t held liable for breaching his duty of care in
advising the property owner.
The lesson? It is imperative that the owner assures that his insurance and business
organizational structure will meet his needs to protect against the foreseeable risk from tort
liability. The owner needs asset protection strategies. Asset protection is using certain legal
techniques to protect personal assets from civil money judgments. There can be a variety of
problems that land someone in court. It is important to not only have insurance, but to assure
it’s the right type with the right policy limits. Further, income-producing properties should be
held in a business structure that only exposes the risk to the business, and not to the owner’s
personal property.
Please feel free to call us to review your policy and business structure or if you have any Estate
Planning needs. Scott Rights - RIGHTS & HAND, Attorneys at Law – 619.796.3401
©2012 Scott Rights, Esq. RIGHTS & HAND, Attorneys at Law. The information here is not the same as legal advice,
which is unique to each set of facts. You must consult with a lawyer to determine the appropriate action in your
specific case. www.sandiegoevictioncenter.com