Big Fight Over Big Beverly Hills Mansion
LOS ANGELES (CN) - The owner of what's been called the biggest mansion in Beverly Hills - formerly owned by Sonny & Cher and Sylvester Stallone - claims in court that its insurer lowballed it after the estate went up in flames more than three years ago.
9712 Oak Pass Road LLC sued National Surety in Superior Court for breach of implied covenant of good faith and fair dealing.
It claims National Surety "employed delay tactics" to reap interest on the millions it knew it would eventually have to pay, and knew the payments it did make to replace the fire damaged mansion were unreasonably meager.
The owner says it bought the "one-of-a-kind" 30-acre hilltop compound from Kirk Kerkorian in 2009. Stallone paid Kerkorian $5.7 million for the property in the 1990s and sold it back to the businessman for $5.2 million seven years later.
The new owner claims it paid $499,000 in annual insurance premiums to National Surety, to cover up to $200 million in real property damage, $3 million in personal property damage and $43 million for lost business income.
A fire badly damaged the 8,000-square foot mansion on Sept. 14, 2010. Engineers concluded it would be cheaper to knock down the mansion and start over, the owner claims in the lawsuit.
But National Surety contested contractors' estimates of the costs of replacing the mansion and grounds. The parties could not find common ground on costs for contents and lost rents either, according to the 9-page lawsuit.
The owner claims National Surety paid it $4,569,278.04 to replace the mansion, $311,565.90 for contents, and $462,067 for 12 months of lost rents - though the owner estimated it would take nearly 30 months to complete the work.
When appraisers for the two parties failed to agree on the value of the property, the owner says, it demanded that an appraisal panel break the deadlock.
The panel valued the estate at $7,763,382.25 - 70 percent more than the $4,569,278.04 National Surety offered, according to the complaint.
Contents came in at $1,040,924.68 - 334 percent more than the defendant's $311,565.90 offer - and the panel's award of $1,001,145.08 in lost rent during the time needed to complete the mansion was 217 higher than the insurer offered.
The owner seeks damages and punitive damages for breach of implied covenant of good faith and fair dealing and a declaration that the insurance company must pay for lost rents from the time of the loss to when the panel evaluated the mansion.
The owner is represented by Brian Grossman with Tesser Ruttenberg & Grossman.