Judge: Elaine W. Mandel, Case: 23SMCV01291, Date: 2024-02-16 Tentative Ruling
Case Number: 23SMCV01291 Hearing Date: February 16, 2024 Dept: P
Tentative Ruling
Halley, et al. v.
California Fair Plan Ass’n. et al., Case No. 23SMCV01291
Hearing Date
February 16, 2023
Defendants’
Demurrer to Complaint
Plaintiff Halleys’
house and guest house were damaged in the 2018 Woolsey fire. They received insurance
compensation for damage to the house. Plaintiffs allege they believed the house
and guest house were covered by a single insurance policy but later discovered
the structures were covered under two separate policies. The guest house was
insured under a policy issued by defendant California Fair Plan Association,
which plaintiffs allege wrongfully denied their claim. Fair Plan demurs.
One-Year Suit
Provision
Fair Plan argues
the claims are time barred, as the insurance policy states “[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.” Fair Plan RJN, Exhibit 1. The time
limitation is extended to two years if the loss relates to a state of emergency
under Gov. Code §8558(b).
Cal. Ins. Code
§2071 contains a standardized insurance policy, including a one-year
limitations period. Considering this statutory provision, courts have upheld
insurance policies requiring legal actions to be brought within one year of any
claimed loss. Prudential v. Superior Court (1990) 51 Cal.3d 674, 683.
This action was
filed March 23, 2023; the fire was November 2018. Complaint ¶10. If the policy’s
time limitation is enforceable, the claim is time-barred whether the claims
period is one year or two.
Plaintiffs argue
the one-year provision does not apply due to delayed discovery and bad faith,
citing Frazier v. Metropolitan Life Ins. (2011) 83 Cal.App.3d 38 and Murphy
v. Allstate Ins. Co. (1978) 83 Cal.App.3d 90 for the principle that a bad
faith insurance action is not “on the contract,” so not subject to the policy’s
limitations provision.
Blue Shield of
California Life & Health Ins. Co. v. Superior Court (2011) 192
Cal.App.4th 727 repudiated Frazier and Murphy, concluding “[t]ort
actions for breach of the implied covenant are now considered to be on the
policy,” so subject to a policy’s shortened limitations period. Id. fn.
12. Under Blue Shield, the limitations period applies.
The Halleys allege
delayed discovery, arguing they timely initiated a claim on the policy that
they (incorrectly) believed covered the entire property (house and guest house),
and were unaware that the guest house was covered under a separate policy.
Whether their belief that one policy covered both structures was reasonable is
a factual issue, which cannot be decided on demurrer. Plaintiffs adequately
allege delayed discovery of the separate guest house policy; the action cannot
be deemed untimely at the demurrer stage. OVERRULED.
First Cause of
Action
To allege a cause
of action for breach of contract, plaintiff must either attach the contract,
plead its terms verbatim or set forth the legal effect of the relevant terms. E.g.,
Const. Protective Servs., Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th
189, 198-199.
Fair Plan argues plaintiffs
failed to attach the contract or plead the legal effect of its terms. The court
agrees. Plaintiffs attach documents related to the Fair Plan policy as exhibit
B, but the exhibit does not include the complete policy. Additionally, the
complaint does not clearly set forth the terms of the policy that they allege were
breached. The Halleys do not address this deficiency in their opposition. SUSTAINED
with ten days leave to amend.
Second Cause of Action
for Breach of the Covenant of Good Faith and Fair Dealing
Since this cause
of action is based on an alleged breach of the insurance contract, it is
subject to demurrer for the same reasons stated above. SUSTAINED with ten days
leave to amend.
Motion
to Strike
Since all causes of action alleged against defendant Fair Plan are subject to demurrer,
the motion to strike is MOOT.