Judge Barbara M. Scheper, Case 22STCV04504 2023-03-27 Tentative Ruling

Judge: Barbara M. Scheper, Case: 22STCV04504, Date: 2023-03-27 Tentative Ruling

Case Number: 22STCV04504 Hearing Date: March 27, 2023 Dept: 30

Dept. 30

Calendar No.

Halajyan vs. Liberty Ins. Corp., et. al., Case No. 22STCV04504

Tentative Ruling re: Defendant’s Motion to Stay Proceedings

Defendant Liberty Insurance Corporation (Defendant) moves to stay proceedings to allow Defendant to take the “examination under oath” (EUO) of Plaintiff Kristine Halajyan (Plaintiff) and further investigate Plaintiff’s insurance claim. The motion is denied.

“Trial courts generally have the inherent power to stay proceedings in the interests of justice and to promote judicial efficiency.” (Freiberg v. City of Mission Viejo (1995) 33 Cal.App.4th 1484, 1489.) “In ruling on a motion for a stay order, the assigned judge must determine whether the stay will promote the ends of justice, considering the imminence of any trial or other proceeding that might materially affect the status of the action to be stayed, and whether a final judgment in that action would have a res judicata or collateral estoppel effect with regard to any common issue of the included actions.” (Rules of Court, rule 3.515(f).)

Plaintiff’s claims in this action arise out of a homeowners insurance policy issued by Defendant, insuring Plaintiff’s home in Palmdale, California, for the period from February 23, 2020, to November 7, 2020. (Comp. ¶¶ 5-6.) In November 2020, Plaintiff reported a claim for smoke and soot damage to her home caused by a wildfire. (Bederman Decl. ¶ 2.) Following investigation, on February 10, 2021, Defendant sent Plaintiff a letter denying coverage for the claim. (Bederman Decl. ¶ 2, Ex. A.) Over the next year, Plaintiff challenged Defendant’s findings, but Defendant declined to revisit its conclusion. (Bederman Decl. ¶ 3, Exs. B-D.)

Plaintiff filed the current suit on February 4, 2022. On July 5, 2022, Defendant’s counsel advised Plaintiff’s counsel that Defendant would request Plaintiff’s EUO. (Bederman Decl. ¶ 5, Ex. F.)

Defendant now requests that this action be stayed pending the completion of Plaintiff’s EUO and the resolution of her insurance claim. Defendant argues that a stay is warranted because Plaintiff’s insurance claim may be resolved following her EUO, and concurrent litigation will lead to duplicative discovery. Defendant further argues that Plaintiff has no right to litigate this action until she submits to the EUO, citing the rule that an insured’s compliance with an insurer’s reasonable request for an EUO is a prerequisite to recovery under the insurance policy. (Brizuela v. CalFarm Ins. Co. (2004) 116 Cal.App.4th 578, 587; Abdelhamid v. Fire Ins. Exchange (2010) 182 Cal.App.4th 990, 1003–1004.)

Given the timeline of events here, Defendant has failed to show that Plaintiff must submit to the EUO to maintain this suit. Defendant denied Plaintiff’s claim on February 10, 2021, and Plaintiff brought this action on February 4, 2022. (Bederman Decl. ¶ 2, Ex. A.) However, Defendant did not request the EUO until July 5, 2022. (Bederman ¶ 5, Ex. F.) Defendant cites the Policy provision that “[n]o action can be brought unless the policy provisions have been complied with and the action is started within one year after the date of loss.” (Luckritz Decl. ¶ 5, Ex. A, p. 10 [29].) But neither this provision nor applicable law suggest that Plaintiff, having filed suit after denial of coverage, is barred from maintaining her action if Defendant subsequently reopens the investigation and requests an EUO. (See Gruenberg v. Aetna Ins. Co. (1973) 9 Cal.3d 566, 581 [finding that “plaintiff's failure to appear at the office of the insurers' counsel in order to submit to an examination under oath and to produce certain documents, as appearing from the allegations of the complaint, is not fatal to the statement of such cause of action”].)

Defendant’s apparent denial of Plaintiff’s insurance claim on February 10, 2021, casts further doubt on the argument that Plaintiff must submit to an EUO to maintain this action, as an insurer’s denial of coverage generally releases an insured from policy obligations. (See 1 California Ins. Law Dictionary & Desk Ref. (2022 ed.) § D25:7 [“Denial of coverage by insurer releases insured from all contractual obligations under the policy”; citing cases].) Finally, a stay is not warranted given the evidence that Defendant only reopened its investigation into Plaintiff’s claim after the filing of this litigation. (Bederman Decl. ¶ 5, Ex. E.) Imposing a stay to allow Defendant to conduct its belated investigation of the claim would not be in the interests of justice.