Award to Downey S&L; Grows to $6.9 Million

It took almost four years, but Downey Savings & Loan Assn. in Costa Mesa finally collected a $5.1-million judgment it won against an insurance carrier in 1983. And the check, received June 23, was actually for $6.9 million.

Accrued interest added $1.8 million to the award that Ohio Casualty Insurance Co. was required to pay because of what a court had ruled was its “bad faith” refusal in 1975 to defend the S&L; under an insurance policy covering employee wrongdoing and to pay the policy’s proceeds to a victim of employee fraud.

An official at Downey said the check arrived shortly after the state Supreme Court refused to review the state Court of Appeal’s decision to uphold the original verdict. The appeal court also ordered Ohio Casualty to pay attorney fees, which Downey estimates at $900,000.

The 1983 jury verdict consisted of $152,983 in general damages and $5 million in punitive damages. Interest on the judgment since the verdict accounts for the remaining amount. The general damages amount will be added to Downey’s net income for the quarter, the punitive amount to its gross income, a spokesman said.