Judge Gary Y. Tanaka, Case 19TRCV00670 2023-03-13 Tentative Ruling

LOS ANGELES SUPERIOR COURT – SOUTHWEST DISTRICT

Honorable Gary Y. Tanaka Monday, March 13, 2023

Department B Calendar No. 4

USAA Casualty Insurance Company’s Motion to Continue Trial is denied. However, the Court on its own motion continues the trial date.

Plaintiffs filed their Complaint on August 1, 2019. Plaintiffs allege the following facts. Plaintiffs suffered a drain leak and water damage on real property owned by them and insured with Defendant USAA. USAA engaged in an unreasonable and conscious effort to delay, withhold, and deny payment of policy benefits. Plaintiffs were denied payments that were owed to them under the policy. Plaintiffs allege the following causes of action: 1. Breach of the Implied Covenant of Good Faith and Fair Dealing; 2. Breach of Contract; 3. Negligence.

Defendant’s request for judicial notice is granted pursuant to Evidence Code section 452(d).

Plaintiffs’ objections to the excerpts of the deposition testimony presented in Exhibit 56 to the supplemental declaration of Linda Oliver are sustained.

The purpose of a motion for summary judgment or summary adjudication “is to provide courts with a mechanism to cut through the parties’ pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) “Code of Civil Procedure section 437c, subdivision (c), requires the trial judge to grant summary judgment if all the evidence submitted, and ‘all inferences reasonably deducible from the evidence’ and uncontradicted by other inferences or evidence, show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” (Adler v. Manor Healthcare Corp. (1992) 7 Cal. App. 4th 1110, 1119.)

“On a motion for summary judgment, the initial burden is always on the moving party to make a prima facie showing that there are no triable issues of material fact.” (Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal. App. 4th 1510, 1519.) A defendant moving for summary judgment or summary adjudication “has met his or her burden of showing that a cause of action has no merit if the party has shown that one or more elements of the cause of action . . . cannot be established, or that there is a complete defense to the cause of action.” CCP § 437c(p)(2). “Once the defendant . . . has met that burden, the burden shifts to the plaintiff . . . to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto.” CCP § 437c(p)(2). “If the plaintiff cannot do so, summary judgment should be granted.” Avivi v. Centro Medico Urgente Medical Center (2008) 159 Cal. App. 4th 463, 467.

“A plaintiff or cross-complainant has met his or her burden of showing that there is no defense to a cause of action if that party has proved each element of the cause of action entitling the party to judgment on the cause of action. Once the plaintiff or cross-complainant has met that burden, the burden shifts to the defendant or cross-defendant to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto.” Code Civ. Proc., § 437c(p)(1).

“When deciding whether to grant summary judgment, the court must consider all of the evidence set forth in the papers (except evidence to which the court has sustained an objection), as well as all reasonable inferences that may be drawn from that evidence, in the light most favorable to the party opposing summary judgment.” (Avivi, 159 Cal.App.4th at 467; CCP § 437c(c).)

Defendant moves for summary adjudication of the first cause of action for Breach of the Implied Covenant of Good Faith and Fair Dealing in the Complaint. The motion is made on the ground that “(1) USAA CIC has accepted coverage and paid the loss for both dwelling and additional living expenses, and it is plaintiff, not USAA CIC that has failed to produce evidence of the amount of covered personal property, and therefore (2) there is a genuine dispute regarding coverage and/or the obligation to pay additional benefits under the USAA CIC policy[.]” (Notice of Motion, page 2, lines 4-8). The Court notes that page 2, lines 11 and 12 of the Notice of Motion, as well as page 15 of the memorandum of points and authorities refer to Plaintiffs’ claim for punitive damages. However, the notice of motion did not properly set forth notice of the claim for punitive damages, as an issue sought to be adjudicated, nor did the separate statement set forth the claim for punitive damages as a separate issue sought to be adjudicated.

Defendant has met its initial burden to show that an essential element of the cause of action cannot be established and/or that there is a complete defense to the cause of action. However, Plaintiffs have met their burden to provide specific facts to show the existence of a triable issue of material fact as to their first cause of action. (Plaintiffs’ Separate Statement of Additional Material Facts and Supporting Evidence, 46-81).

Plaintiffs presented facts to indicate that their policy with Defendant provided coverage for personal property and dwelling losses arising out of the initial flooding. (Id.) Plaintiffs submitted facts to show the existence of a triable issue of material fact as to whether the purported exclusions in the policy were applicable to Plaintiffs’ loss. (Id.) Thus, a triable issue of material fact exists as to whether Defendant’s failure to provide coverage for all property damage losses constitutes sufficient facts to maintain a cause of action for Breach of the Implied Covenant of Good Faith and Fair Dealing. (Id.)

Defendant maintains that the personal property portion of the loss could not be covered because any damages stemmed from asbestos – a purported uncovered event – rather than water. However, a triable issue of fact exists as to whether the cause of the loss stemmed from a single occurrence – the initial water leak – as opposed to partitioning and separating out the subsequent attempt to remedy the water leak which purportedly caused asbestos exposure. (Id.) A triable issue of material fact exists as to the actual proximate cause of the loss and whether, in fact, the cause was the initial water leak. In addition, Plaintiffs present evidence that they, contrary to Defendant’s contentions, did, in fact, attempt to mitigate the loss by attempting to obtain the source of the water leak. (Id. at 61).

“Under the efficient proximate cause doctrine, “‘[w]hen a loss is caused by a combination of [ ] covered and specifically excluded risks, the loss is covered if the covered risk was the efficient proximate cause of the loss,’ but ‘the loss is not covered if the covered risk was only a remote cause of the loss, or the excluded risk was the efficient proximate, or predominate cause.’ ” (Julian v. Hartford Underwriters Ins. Co. (2005) 35 Cal.4th 747, 750, 27 Cal.Rptr.3d 648, 110 P.3d 903 (Julian).) Section 530 is a codification of the efficient proximate cause doctrine (Julian, supra, 35 Cal.4th at p. 750, 27 Cal.Rptr.3d 648, 110 P.3d 903) and provides: “An insurer is liable for a loss of which a peril insured against was the proximate cause, although a peril not contemplated by the contract may have been a remote cause of the loss; but he is not liable for a loss of which the peril insured against was only a remote cause.” City of Carlsbad v. Insurance Co. of State of Pennsylvania (2009) 180 Cal.App.4th 176, 183. “Coverage should be determined by a jury under an efficient proximate cause analysis. Accordingly, bearing in mind the facts here, we conclude the question of causation is for the jury to decide.” Garvey v. State Farm Fire & Casualty Co. (1989) 48 Cal.3d 395, 412.

Thus, Plaintiffs have presented facts as to whether the water leak was actually the efficient proximate cause of the loss, and, thus, whether Defendants’ refusal to cover the loss based on a finding that asbestos was the cause of the loss and not water constituted a breach of the covenant of good faith and fair dealing. In fact, Plaintiffs presented evidence that Defendant’s internal manuals defined efficient proximate cause in the following manner: “Where the member experiences a loss due to multiple potential causes, the insurer must determine ‘the efficient proximate cause’ of the loss. That means that we must determine the predominant cause of the loss, that is the cause without which the loss would not have occurred when it did. If the efficient proximate cause of the loss is not excluded by the policy we provide coverage for the damage, even though excluded causes may have contributed to the loss. If the efficient proximate cause of the loss is excluded, then the loss is excluded. Determining the efficient proximate cause typically requires an evaluation by a qualified expert.” (Plaintiffs’ Separate Statement of Additional Material Facts and Supporting Evidence at 62). Thus, a triable issue of material fact exists as to whether the personal property damages constituted a covered loss even if the damage may have occurred from the exposure to asbestos because the proximate cause of the loss was the initial water leak. (Id. at 65-66).

In addition, a triable issue of material fact exists as to whether the cause of action is viable based on the failure to properly investigate the claim. “While an insurance company has no obligation under the implied covenant of good faith and fair dealing to pay every claim its insured makes, the insurer cannot deny the claim without fully investigating the grounds for its denial. To protect its insured's contractual interest in security and peace of mind, it is essential that an insurer fully inquire into possible bases that might support the insured's claim before denying it. By the same token, denial of a claim on a basis unfounded in the facts known to the insurer, or contradicted by those facts, may be deemed unreasonable. A trier of fact may find that an insurer acted unreasonably if the insurer ignores evidence available to it which supports the claim. The insurer may not just focus on those facts which justify denial of the claim.” Wilson v. 21st Century Ins. Co. (2007) 42 Cal.4th 713, 720–721 (internal citations and quotations omitted). Plaintiff submitted facts to show the existence of a triable issue of material fact as to whether Defendant failed to thoroughly investigate the claim, including, whether Defendant failed to timely review the video of the leak, failed to properly consult with experts, and whether Defendant failed to comply with its own policies. (Plaintiffs’ Separate Statement of Additional Material Facts and Supporting Evidence, 55-71).

Defendant contends that any denial of coverage stemmed from Plaintiffs’ own failures in providing the necessary information regarding the loss to Defendant. However, Plaintiff presented sufficient evidence to show the existence of a triable issue of fact as to whether they adequately cooperated with Defendant in providing the information required by Defendant. (Id. at 80-81).

Thus, for the foregoing reasons, Defendant’s Motion for Summary Adjudication is denied.

Pursuant to CRC Rule 3.1332(a), “To ensure the prompt disposition of civil cases, the dates assigned for a trial are firm. All parties and their counsel must regard the date set for trial as certain.” Under CRC Rule 3.1332(b), “A party seeking a continuance of the date set for trial, whether contested or uncontested or stipulated to by the parties, must make the request for a continuance by a noticed motion or an ex parte application under the rules in chapter 4 of this division, with supporting declarations. The party must make the motion or application as soon as reasonably practical once the necessity for the continuance is discovered.”

Under CRC Rule 3.1332(c), “[a]lthough continuances of trials are disfavored, each request for a continuance must be considered on its own merits. The court may grant a continuance only on an affirmative showing of good cause requiring the continuance. Circumstances that may include good cause include:

(1) The unavailability of an essential lay or expert witness because of death, illness, or other excusable circumstances;

(2) The unavailability of a party because of death, illness, or other excusable circumstances;

(3) The unavailability of trial counsel because of death, illness, or other excusable circumstances;

(4) The substitution of trial counsel, but only where there is an affirmative showing that the substitution is required in the interests of justice;

(A) The new party has not had a reasonable opportunity to conduct discovery and prepare for trial; or

(B) The other parties have not had a reasonable opportunity to conduct discovery and prepare for trial in regard to the new party's involvement in the case;

(6) A party's excused inability to obtain essential testimony, documents, or other material evidence despite diligent efforts; or

(7) A significant, unanticipated change in the status of the case as a result of which the case is not ready for trial.”

Other factors set forth in CRC Rule 3.1332(d) that are relevant in determining whether to grant a continuance include:

(2) Whether there was any previous continuance, extension of time, or delay of trial due to any party;

(4) The availability of alternative means to address the problem that gave rise to the motion or application for a continuance;

(5) The prejudice that parties or witnesses will suffer as a result of the continuance;

(6) If the case is entitled to a preferential trial setting, the reasons for that status and whether the need for a continuance outweighs the need to avoid delay;

(7) The court's calendar and the impact of granting a continuance on other pending trials;

(10) Whether the interests of justice are best served by a continuance, by the trial of the matter, or by imposing conditions on the continuance; and

(11) Any other fact or circumstance relevant to the fair determination of the motion or application.

Defendant moves to continue the trial date on the ground that the motion for summary adjudication could not be noticed to be heard until March 13, 2023. The Court notes however, that after the motions were filed the motion for summary adjudication hearing date was advanced to February 22, 2023 and it was only Defendant’s improper submission of new evidence with the Reply that caused the motion to be continued back to the original March 13, 2023 date. Defendant also moves to continue trial on the ground that Defendant “only recently was able to complete Plaintiffs’ depositions, and still has not yet received the transcripts of the depositions. Defense counsel require additional time to prepare the case for trial, prepare its pretrial motions and potentially to further engage in informal settlement discussions. Irreparable harm will result if Defendant is not permitted the time to complete discovery, investigation and pretrial motions, which may narrow the issues to be tried, and to explore opportunities for settlement prior to trial.” (Notice of Motion, page 2, line 2-7).

Defendant’s motion to continue trial is denied. As noted above, the motion for summary adjudication hearing date was advanced to February 22, 2023. The only reason why the motion is now being heard on this date was the submission of new evidence with the Reply by moving party. As to any additional discovery that needs to be conducted, no good cause has been shown to continue the trial. If discovery was required, the proper recourse would have been to file a timely motion to reopen discovery.

The Court can hear the parties’ input regarding their interest in participating in a mandatory or voluntary settlement conference. The Court is amenable to working with the parties to attempt to arrange such a conference. With all the above factors being noted, the Court must continue the trial pursuant to Cal. Rules of Court, Rule 3.1332(d)(7) and (11). The Court’s calendar and “other factors” exist which mandates the continuance of the trial date. The Court is unavailable to proceed with a trial on March 28, 2023 because the Court will be dark on that date.

Defendant’s Motion to Continue Trial is denied. However, the Court on its own motion must continue the trial date and final status conference date.