Local News in Brief : North Tustin : Insurance Firm Must Pay Couple $2 Million

Allstate Insurance Co., after a trial in Orange County Superior Court, was ordered to pay a Villa Park couple more than $2 million for failing to honor a policy covering a house in North Tustin that split apart due to land slippage.

The award included jury verdicts of $600,000 for financial loss and emotional distress and $1.2 million in punitive damages, as well an additional $275,000 that Orange County Superior Court Judge William F. Rylaarsdam determined fell under benefits of the policy.

The money will go to William and Paige Baker, a couple now living in Villa Park, whose finances collapsed after they invested in a North Tustin house in 1980, said their attorney, Michael Thamer.

The Bakers bought the house in the 1700 block of Sirrine Drive with another investor for $250,000, intending to renovate and resell it. Shortly after escrow closed in March, 1980, cracks began appearing in the walls and extensive repairs had to be undertaken on the house, which sat on a hill that had been improperly prepared by its builders, Thamer said.

The Bakers, who became the sole owners of the house, eventually were ordered by county inspectors to demolish the structure.

The dispute with Allstate centered on whether the “all-risk” policy issued by the company covered earth movement caused by a third party’s negligence. The judge ruled Wednesday in Santa Ana that the company had misled the Bakers when it told them their house wasn’t covered.

Attorneys for Allstate did not return telephone calls Thursday.