Judge: Joel L. Lofton, Case: 22AHCV00387, Date: 2024-05-23 Tentative Ruling
Case Number: 22AHCV00387 Hearing Date: May 23, 2024 Dept: X
Tentative Ruling
Judge Joel L. Lofton,
Department X
HEARING DATE: May
23, 2024 TRIAL DATE: July 30, 2024
CASE: LEXINGTON INSURANCE
COMPANY v. CELL-CRETE CORPORATION
CASE NO.: 22AHCV00387
MOTION
FOR SUMMARY JUDGMENT
MOVING PARTY: Plaintiff Lexington Insurance Company
RESPONDING PARTY: Defendant
Cell-Crete Corporation
SERVICE: Filed September 28, 2023
OPPOSITION: Filed May 6, 2024
REPLY: Filed May 17, 2024
RELIEF
REQUESTED
Plaintiff requests summary judgment, or in the alternative, summary
adjudication against Defendant on Plaintiff’s breach of contract cause of
action.
BACKGROUND
On June 21, 2022, Plaintiff
Lexington Insurance Company (“Plaintiff” or “Lexington”) filed a complaint for
money damages, alleging (1) breach of contract; and (2) unjust enrichment
against Defendant Cell-Crete Corporation (“Defendant”). On July 27, 2023,
Plaintiff filed a First Amended Complaint (“FAC”) against the same defendant,
alleging the same causes of action.
The FAC alleges that Plaintiff issued an
insurance policy (Policy No. 1323835, referred to as the “03 Policy”) that was
effective from October 1, 2003, to October 1, 2004. (FAC ¶ 5.) This policy
required the insured to repay up to a $15,000 deductible per occurrence for
claims covered by Plaintiff. (Id. ¶ 6.) The “03 Policy” was subsequently
renewed multiple times under different policy numbers, collectively referred to
as the “Policies.” (Id. ¶ 7.) Several claims were made to Plaintiff
under these Policies, and Plaintiff fulfilled its obligations by defending and resolving
each claim. (Id. ¶ 8.) According to the terms of the Policies, the
insured is required to pay the deductible amount for each claim, however, the
insured failed to do so. (Id.)
TENTATIVE RULING
The Court
GRANTS Plaintiff’s motion for summary judgment.
OBJECTIONS TO EVIDENCE
Defendant’s
Evidentiary Objections to the Declaration of Kerry Keker is OVERRULED in full.
Plaintiff’s Evidentiary Objection to the Entire Declaration of David L. Brault
is SUSTAINED in full.
LEGAL STANDARD
Under Code of Civil Procedure section 437c(p)(1), a plaintiff or
cross-complainant has the initial burden on summary judgment or adjudication 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 that
cause of action. Once that burden is met, the burden shifts to the defendant or
cross-defendant to show that a triable issue of one or more material facts
exists as to that cause of action or a defense thereto.
On a motion for summary judgment, the moving party’s supporting documents
are strictly construed and those of his opponent liberally construed, and
doubts as to the propriety of summary judgment should be resolved against
granting the motion. (D’Amico v. Board of Medical Examiners (1974) 11
Cal.3d 1, 21; Binder v. Aetna Life Ins. Co. (1999) 75 Cal.App.4th 832,
839.)
Furthermore, on summary judgment, the issues are defined by the
pleadings. (See Physicians Comm. For Responsible Medicine v. McDonald’s
Corp. (2010) 187 Cal.App.4th 554, 568 [“the issues framed by the pleadings
are the only issues a motion for summary judgment must address.”]; FPI
Development, Inc. v. Nakashima (1991) 231 Cal. App. 3d 367, 382-383; Jordan-Lyon
Prods., ITD., v. Cineplex Odeon Corp. (1994) 29 Cal.App.4th 1459, 1472; Bostrom
v. County of San Bernardino (1995) 35 Cal. App. 4th 1654, 1663; 580 Folsom
Assocs. v. Prometheus Dev. Co. (1990) 223 Cal. App. 3d 1, 14, 18 [burden to
address theories “reasonably contemplated by the opponent’s pleading”]; Melican
v. Regents of Univ. of Cal. (2007) 151 Cal. App. 4th 168, 182 [not
requiring party to negate an unstated claim].)
Courts cannot decide summary judgment or adjudication motions based upon
credibility. (AARTS Prods., Inc. v. Crocker Nat’l Bank (1986) 179
Cal.App.3d 1061, 1064.) “[T]he role of the court in summary judgment
proceedings is not to weigh the evidence, but to determine whether there exists
a triable issue of material fact.” (Habitat Trust for Wildlife, Inc. v. City
of Rancho Cucamonga (2009) 175 Cal. App. 4th 1306, 1342.) That said, the
affidavits and declarations of the moving party are strictly construed and
those of the opponent are liberally constructed. (Howe v. Pioneer Mfg Co.
(1968) 262 Cal. App. 2d 330, 336-37.)
DISCUSSION
Plaintiff’s Undisputed Material Facts
Plaintiff and Defendant are
parties to several insurance contracts, specifically commercial general
liability policies known by different policy numbers. The “04 Policy” (Policy
No. 2063217) was effective from October 1, 2004, to October 1, 2005. (Plaintiff’s
Undisputed Material Facts “UMF” 1-3.) It obligates Plaintiff to pay damages for
bodily injury or property damage and defend the insured against related
lawsuits, with the insured required to pay any applicable deductible. (UMF 10,
28, 29.) Defendant paid a premium for this policy, and the terms do not excuse
the deductible after coverage is provided. (UMF 2, 34.) Similarly, the “06
Policy” (Policy No. 6501559) was in effect from October 1, 2006, to October 1,
2007 (UMF 4-6). It contains the same provisions regarding Plaintiff’s
obligations and Defendant’s deductible payments. (UMF 16, 37, 38.) Defendant
paid a premium for this policy as well, and it also does not excuse the
deductible. (UMF 5, 44.) The “07 Policy” (Policy No. 3158725) was effective
from October 1, 2007, to October 1, 2008. (UMF 7-9.) This policy mirrors the
previous policies in terms of Lexington’s obligations and the requirement for
the insured to pay the deductible. (UMF 46, 47.) The insured paid a premium for
the “07 Policy,” and it does not contain a provision that excuses the
deductible. (UMF 8, 53.)
Defendant was a cross-defendant
in several lawsuits. In the case of Marriott Ownership Resorts, Inc. v.
Suffolk Construction Company, Inc. (“Newport Coast”), Superior Court Case #30-2019-01080122,
Plaintiff provided coverage under the “04 Policy” and expended $70,123.47 in
defense and indemnity. (UMF 11, 13-15.) Plaintiff demanded reimbursement of the
$15,000 deductible from the insured, which has not been paid. (UMF 35-36.) In Giant
Development LP v. J.H. Fitzmaurice (“JH Fitzmaurice”), Contra Costa
Superior Court Case #C17-01059, Plaintiff provided coverage under the “06
Policy” and expended $12,794.61 in defense costs. (UMF 17-20.) Plaintiff demanded
reimbursement of this deductible, which remains unpaid. (UMF 43, 45.) In Cabrillo
USD v. West Bay Builders, Inc. (“Cabrillo”), San Mateo Superior Court Case
#17CIV00937, Plaintiff provided coverage under the “07 Policy” and expended
$1,128.01 in defense costs. (UMF 23-26.) The deductible reimbursement has not
been received from the insured. (UMF 52, 54.) Overall, the policies
collectively require a $15,000 deductible per occurrence. (UMF 30, 39, 48.) Plaintiff
has demanded reimbursement for the deductibles related to these three claims,
totaling $28,922.62, but the insured has not paid this amount, causing
Lexington financial damage. (UMF 35, 43, 52, 36, 45, 54.)
Breach of Contract
“The standard elements of a claim
for breach of contract are: ‘(1) the contract, (2) plaintiff’s performance or
excuse for nonperformance, (3) defendant’s breach, and (4) damage to plaintiff
therefrom.’” (Wall Street Network, Ltd. v. New York Times Co. (2008) 164
Cal.App.4th 1171, 1178.)
Plaintiff argues that it makes a
prima facie case for breach of contract: (1) a valid contract exists between
the parties, (2) Plaintiff performed its obligations, (3) the insured breached
the contract by failing to pay the deductible, and (4) Plaintiff suffered
damages as a result. The Policies are standard Commercial General Liability
Insurance Policies, which govern the rights and responsibilities of both
parties. Defendant accepted these terms by applying for the policies and paying
the premiums. The policies explicitly state that Plaintiff would provide
insurance coverage and defend against claims, while the insured is responsible
for the deductible. (UMF 1-3, 10, 28, 29, 34.)
Plaintiff claims it fulfilled its
obligations by providing coverage and defending the insured in three lawsuits: Newport
Coast, JH Fitzmaurice, and Cabrillo, and incurred expenses
totaling $28,922.62 for these claims. (UMF 10, 16, 22, 28, 37, 46.) Plaintiff
argues that there is no dispute that it performed its duties under the policies
(UMF 11, 13-15, 17-20, 23-26), and that Defendant breached the contract by
failing to reimburse Plaintiff for the deductible amounts. Plaintiff asserts
that the policy language is clear and explicit that Defendant is responsible
for the deductible. (UMF 28, 37, 46, 35, 43, 52.) Plaintiff asserts that it has
been damaged by Defendant’s failure to pay the deductible, amounting to
$28,922.62. Additionally, Plaintiff seeks pre-judgment interest, calculated
from the filing date of the complaint, totaling $8,450.64. Plaintiff also seeks
costs for filing the complaint, service of process, and the motion for summary
judgment, totaling $990.00. The total judgment sought by Plaintiff is
$38,363.26.
In opposition, Defendant argues that
Plaintiff failed to meet its burden of proof in its motion for summary judgment
due to the inadmissibility of much of the evidence provided. According to Defendant,
Plaintiff’s evidence does not show that payments were made for bodily injury or
property damage claims, which is necessary to trigger the deductible
obligations under the policies. Defendant contends that Plaintiff’s claim
regarding the Cabrillo USD matter is time-barred. The statute of
limitations for filing a suit for breach of a written contract is four years,
and since Plaintiff demanded payment on July 27, 2017, and Defendant responded
on August 30, 2017, refusing to pay, the lawsuit filed on June 21, 2022,
exceeds this period.
Defendant also argues that a factual
question exists regarding whether Plaintiff waived its right to recover future
deductibles as part of the resolution of a previous case (Los Angeles Superior
Court case number EC 061168). Additionally, Defendant asserts that two
insurance carriers, including Gemini Insurance, resolved the JH Fitzmaurice
matter, which satisfied the deductible obligation. Defendant explains that Plaintiff’s
attempt to collect another deductible from Defendant is considered “stacking”
of deductibles, which is not permissible under California law as it would
provide the insured with less coverage than purchased. Furthermore, Defendant
points out that according to the insurance contract, deductibles are applicable
only if payments were made for bodily injury or property damage. Here, Plaintiff
submitted no evidence that such payments were made, failing to meet its burden
to prove that deductibles are owed.
In reply, Plaintiff argues that Defendant’s
affirmative defenses relying on new facts are waived because Defendant failed
to provide additional material facts in a separate statement, as required by
California Rules of Court 3.1350(f)(3). Defendant’s opposition introduced new
facts through the declaration of David Brault and exhibits but did not include
them in a separate statement. Plaintiff objects to the testimony of David L.
Brault and his exhibits under the Advocate Witness Rule, arguing that Brault
contacted AIG (Lexington’s parent company) during active litigation without
disclosing the conflict, which violates ethical standards and the spirit of
CRPC 4.2. Plaintiff asserts that Brault is improperly acting as both an
advocate and a witness, creating potential problems.
Regarding the Cabrillo USD
matter, Plaintiff contends that the claim is not time-barred because Plaintiff
made its last external payment on June 21, 2018, and filed the suit on June 21,
2022, within the four-year statute of limitations. Plaintiff disputes Defendant’s
assertion that the statute was triggered on August 30, 2017, arguing that there
is no evidence of a deductible demand or refusal from that date. Plaintiff also
denies that it waived its deductible claims, stating that there is no evidence
of any policy endorsement waiving deductibles. The standard changes provision
in the policies indicates that any modifications must be endorsed by Plaintiff,
and no such endorsement exists.
Regarding the JH Fitzmaurice
matter, Plaintiff argues that Defendant’s payment to another carrier (Gemini)
does not resolve its deductible obligation to Plaintiff. Plaintiff maintains
that the policies’ language is clear and unambiguous, requiring Cell-Crete to
reimburse deductibles regardless of payments to other carriers. Plaintiff also
refutes Cell-Crete’s claim of “stacking” deductibles, emphasizing that the
policies contain anti-stacking endorsements. Plaintiff asserts that payments
were made for defense costs related to property damage claims, as documented in
the Declaration of Kerry Keker. Plaintiff claims to have provided evidence of
payments made in defense of Defendant, countering Defendant’s claim that no
evidence was submitted. Finally, Plaintiff states there is no policy
modification excusing deductible reimbursement.
The Court finds that Plaintiff has
established the necessary elements for a breach of contract claim. First, there
is a valid contract between the parties, as evidenced by the insurance
policies. Plaintiff has demonstrated its performance by providing coverage and
defending the insured in the specified lawsuits, incurring substantial expenses
in the process. Defendant’s failure to reimburse the deductible amounts as
stipulated in the policies constitutes a breach. Consequently, Plaintiff has
suffered damages amounting to $28,922.62 due to this breach.
Plaintiff’s arguments regarding the
inadmissibility of Defendant’s evidence and the assertion that Defendant’s new
facts were not properly presented in a separate statement are upheld. The Court
agrees that Defendant’s failure to comply with procedural requirements
undermines its defenses. Moreover, Plaintiff’s objection to David L. Brault's
testimony, based on the Advocate Witness Rule, appears to be valid, as his dual
role as an advocate and a witness poses ethical concerns.
Regarding the statute of limitations
for the Cabrillo USD matter, the Court finds that Plaintiff’s claim is
not time-barred. Plaintiff’s last external payment was made on June 21, 2018,
and the lawsuit was filed on June 21, 2022, within the four-year statute of
limitations. Defendant’s assertion that the statute was triggered on August 30,
2017, lacks supporting evidence and is therefore unconvincing.
The Court also finds that Plaintiff
did not waive its deductible claims, as there is no evidence of any policy
endorsement waiving deductibles. The policies’ terms state that any
modifications must be endorsed by Plaintiff, and no such endorsement exists.
In the case of the JH Fitzmaurice
matter, Defendant’s payment to another carrier (Gemini) does not absolve its
deductible obligation to Plaintiff. The policies’ language requires Defendant
to reimburse Plaintiff for deductibles, irrespective of payments to other
carriers. Plaintiff's anti-stacking endorsements further negate Defendant’s
argument regarding “stacking” deductibles.
Plaintiff has provided sufficient
evidence of payments made for defense costs related to property damage claims,
countering Defendant’s claim of inadequate proof. The policies obligate
Defendant to reimburse the deductible amounts once Plaintiff covers the loss
and pays to settle claims.
Thus, the Court finds that Plaintiff
sufficiently shows that there are no triable issues of fact as to the breach of
contract claim. The Court finds that Plaintiff is entitled to an award of $38,363.26,
which includes pre-judgment interest and costs.
CONCLUSION
The
Court GRANTS Plaintiff’s motion for summary judgment.
Moving
Party to provide notice.
Dated: May 23, 2024 ___________________________________
Joel
L. Lofton
Judge
of the Superior Court
Parties who intend to submit on this tentative must send an
email to the court indicating their
intention to submit. alhdeptx@lacourt.org