DennisBeaverApril 05, 2008 (Original publish date) • By Dennis Beaver

It is difficult to fathom why, once in a while, you find a lawyer who knowingly helps a client to do something that could result in criminal prosecution for the client and loss of the lawyer’s license to practice law.

While the names have been changed, the basic facts of today’s story are accurate.

In July of 2007, Donald’s septic system backed up, causing water damage to the floor and carpeting in a bedroom. Flood Co, a disaster recovery company, was sent out by his insurance agent. They placed bedroom furniture in his garage temporarily, while repairs took place.

Once completed, two Flood Co employees returned and moved the furniture back inside. A Flood Co employee — who had done time in prison years earlier — found a small purse containing several pieces of woman’s jewelry in a dresser drawer and took it.

Donald discovered the missing jewelry, phoned Flood Co, reported the loss, but stated, “Don’t worry, this was costume jewelry from my mother-in-law. It only has sentimental value.”

What happened to sentimental value?

Flood Co was apologetic and at all times completely honest, acknowledging that the suspected employee did have a past criminal record, but that there never were any similar problems with her. Flood Co’s general manager and attorney immediately offered to compensate Donald for provable losses.

Suddenly “costume jewelry” became “family heirloom, valuable jewelry.”

The dollar loss he claimed on a police report then jumped to over $20,000 and included his wife’s engagement rings.

Can you prove the value?

“A change in value and nature of items taken is a huge red flag. Before anyone is going to write out a check for $20,000, proof of the loss must be established,” commented Bob West, a former claims adjuster for Farmers Insurance in Southern California.

“The fact that an employee has done time is not the issue. Donald has the duty of proving value in some generally acceptable manner. He now claims it is $20,000, after stating that it was worthless. Why not say it was worth $50,000? $75,000?” an insurance defense attorney asked, with a tone of voice which meant something fishy was going on here.

“If you have that kind of jewelry at home and it is not listed under your homeowner’s policy, something is very wrong,” added a claims adjuster with GAB Business Services told me.

“All we wanted was something, such as receipts, old appraisals, insurance contracts listing the items, photos of Momma wearing it, anything credible to show that it was not merely fake jewelry.”

“Despite repeated requests for the home-owner to prove the claim with credible evidence, he never gave us a thing to show the jewelry was worth what he insisted we pay,” Flood Co’s lawyer stated.

$35,000 or you’ll be exposed!

In November of 2007, Donald barged into Flood Co’s main office, “demanding $35,000 or he was going to take the matter to the public on television and file a lawsuit for $35,000 plus other damages, embarrassing them,” according to office staff. That behavior could easily be seen as extortion, or blackmail as it is defined under California Penal Code Section 518.

Flood Co, nevertheless politely wrote Donald, asking that he simply work with them to prove the claim and not come to their office in the future, screaming threats.

Then Donald hired an attorney, who sent a similar, $35,000 demand letter. Once again he was asked for proof of the loss, but this time, something completely unexpected occurred.

An appraisal arrives

Donald’s attorney sent an “appraisal,” dated December, 2007, listing all the items taken, valued at $24,000.

The only problem was that the jewelry was stolen months earlier! More red flags.

“Under these circumstances, the appraisal must state it was based on a verbal description and not upon actually seeing the items. An appraisal without that clear language is worthless at best, and highly suspect,” I was told by master gemologist and appraiser Nancy Stacy of Walnut Creek.

Donald’s appraisal lacked that critical language.

On to court?

Flood Co’s lawyer, keeping his cool, again wrote Donald’s attorney.

“You have given us a worthless appraisal. Your client could have, but did not insure the jewelry. He has not even made a claim under his homeowner’s policy. That policy would pay him $1,500 for unlisted jewelry, but we will offer $2,500 in good faith, unless, of course, you can credibly prove the claim. Why don’t we all get together, discuss this, and work out a fair resolution, as we have said over and over again.”

Blackmail? Extortion?

Instead of accepting that offer and trying in good faith to settle the matter, Donald’s lawyer replied:

“… We have prepared a complaint which seeks damages against your client … We are also considering advising the public through a press conference to announce the lawsuit, as we feel it is of great public importance that others are made aware of the kinds of dangers to which Flood Co exposes its clients.”

Blackmail and extortion? Pay or we will “expose” you? This is defined in Penal Code Sections 518 through 523.

For a moment, step into the shoes of Flood Co’s attorney. What would you do? Pay and give in to threats, which if carried out might hurt Flood Co’s reputation? Would you report these threats to law enforcement? Wait and see if they really do file suit?

Lawyers are required to competently and diligently represent their clients, but we must observe the law we are sworn to follow. Some lawyers will do anything for a buck.


Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.



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