Judge John J. Kralik, Case 22BBCV00585 2023-03-24 Tentative Ruling

Plaintiff Panos Paul Simonian (“Plaintiff”) alleges that Defendant Mercury Insurance Company (“Defendant”) failed to satisfy its contractual obligations as it relates to Plaintiff’s claims for damages and to follow the proper procedures under the insurance policy provided by Defendant to Plaintiff. Plaintiff alleges that on September 18, 2021, Plaintiff’s vehicle was insured by the policy at the time of loss and that Plaintiff timely made a claim for damages. Plaintiff alleges that on September 21, 2021, Defendant created an estimate, which the parties did not dispute in amount or extent of damages, but at some point, Defendant refused to pay for the repair of the damages.

The first amended complaint (“FAC”), filed November 18, 2022, alleges causes of action for: (1) breach of contract; and (2) bad faith.

On December 21, 2022, Defendant filed a motion to compel Plaintiff to submit his vehicle, which is subject to this action, for appraisal, pursuant to Condition 2 of his insurance policy.

“It is well settled that ‘[a]n agreement to conduct an appraisal contained in a policy of insurance constitutes an “agreement” within the meaning of [Code of Civil Procedure] section 1280, subdivision (a), and therefore is considered to be an arbitration agreement subject to the statutory contractual arbitration law. [Citation.]’” (Lambert v. Carneghi (2008) 158 Cal.App.4th 1120, 1129.) CCP § 1280(a) defines “agreement” to include, but is not limited to, “agreements providing for valuations, appraisals, and similar proceedings and agreements between employers and employees or between their respective representatives.”

CCP § 1281.2 permits the Court to order parties to a written arbitration agreement to arbitrate a controversy upon the petition of a party to the arbitration agreement, if the Court determines that an agreement to arbitrate the controversy exists. (Mission Viejo Emergency Medical Associates v. Beta Healthcare Group (2011) 197 Cal.App.4th 1146, 1153.) The moving party bears the burden of proving the existence of a valid arbitration agreement by a preponderance of the evidence, while a party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense. (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236.)

Defendant moves to compel Plaintiff to produce his vehicle for an appraisal pursuant to the terms of the insurance policy.

Defendant provides the declaration of Michael Evers, a Field Investigations Supervisor for Defendant’s Special Investigations Unit. Mr. Evers provides a copy of the insurance policy that was in effect from April 29, 2021 to October 29, 2021 for the subject vehicle owned by Plaintiff. (Evers Dec., ¶3, Ex. 100.) Under “Part III – PHYSICAL DAMAGE – CONDITIONS,” Condition 2 states:

2. Appraisal--Coverages D, E and L: If the named insured (or his chosen repair facility) and the company fail to agree as to the amount, cause, or extent of the loss, each shall on the written demand of either, select a practicing and qualified motor vehicle repair appraiser. The appraisers shall first select an umpire, and failing for fifteen (15) days to agree upon such umpire, then, on request by the named insured or the company, such umpire shall be selected by a judge of a court of record in the county and state in which such appraisal is pending. The appraisers shall then appraise the loss at reasonable time and place, stating separately the actual cash value at the time of loss, or as requested, the amount, cause, or extent of the loss, and failing to agree shall submit their differences to the umpire. An award in writing of any two shall determine the amount of the loss and shall be binding on all parties concerned.

The company shall not be held liable for any loss or damages unless the company has had reasonable opportunity to inspect the damaged vehicle prior to the commencement of repairs, and in the event of disagreement, a reasonable opportunity to initiate appraisal proceedings.

The named insured and the company shall each pay their chosen appraiser and shall bear equally the other expenses of the appraisal and umpire, unless the award is equal to or greater than the last demand made by the named insured, in which case the company shall pay all reasonable costs of appraisal, but the company will not be responsible for attorney fees.

The company shall not be held to have waived any of its rights by any act relating to appraisal.

Defendant argues that the Court should compel Plaintiff to submit to an appraisal (akin to submitting to arbitration) based on CCP § 1281.2 and Condition 2 of the Insurance Policy because there currently exists a dispute between the parties regarding the amount, cause, or extent of Plaintiff’s claimed loss.

Plaintiff states in his opposition that he does not contest that an arbitration clause exists in the policy but argues that it does not apply because there must first be a disagreement between the parties. (Opp. at p.3.) Plaintiff argues that there is no dispute between the parties because he already agreed to the initial estimate provided by Defendant’s assessed damages, which Defendant later retracted. Plaintiff argues that he has not disagreed with Defendant’s initial estimate, but instead that Defendant disagreed with its own estimate and is now seeking this appraisal. Plaintiff argues that it has cooperated with Defendant’s demand for an appraisal and that Defendant inspected the vehicle on 4 separate occasions. Plaintiff’s counsel, Mari Kiridjian, provides a copy of Defendant’s September 21, 2021 estimate. (Kiridjian Decl., ¶4, Ex. 1.) The appraiser is identified as Francisco Cardenas of Defendant, who made a net estimate total of $31,587.38. (Id.) Counsel Kiridjian states that instead of making the payment, Defendant hired Shideh Engineering to perform an inspection of the vehicle. (Id., ¶5.) Thereafter, on March 22, 2022, Defendant issued a letter invoking Condition 2 of the insurance policy. (Id., ¶6, Ex. 2.) Upon Defendant’s insistence that each party obtain their own appraiser, Plaintiff hired SG Automotive Logistics, Inc. and Defendant hired Universal Appraisal Company, and the appraisers inspected the vehicle on March 29, 2022, wherein Plaintiff’s appraiser reviewed and agreed with Defendant’s September 21, 2021 assessment. (Id., ¶¶7-9.) On August 1, 2022, Defendant issued its company Estimate for $35,331.00. (Id., ¶10, Ex. 3.) Plaintiff also argues that Defendant has not provided a statement of rejection pursuant to California Code of Regulations, Title 10, Section 2695.7(b) (though this is not a requirement under the insurance policy).

According to the timeline of events, the loss occurred on September 18, 2021. (Kiridjian Decl., ¶3.) Defendant issued the estimate dated September 21, 2021. (Id., ¶4, Ex. 1.) In October 2021, Defendant retained counsel Colman Perkins Law Group to assist in investigating the claim. (Evers Decl., ¶4.) On January 25, 2022, Michael G. Hogan of Colman Perkins Law Group sent a letter to Plaintiff demanding arbitration pursuant to the Appraisal provision. (Id., ¶5, Ex. 1.) On March 22, 2022, Defendant sent another letter stating that it did not agree with Plaintiff as to the amount, cause, or extent of the loss. (Kiridjian Decl., ¶6, Ex. 2.) On August 1, 2022, Defendant issued a new estimate. (Id., ¶10, Ex. 3.)[1] Based on the documentary evidence provided by the parties, while Defendant did produce an initial estimate, it revoked/amended its estimate. It is apparent that Plaintiff (by way of his opposition) disagrees with the latest version of the estimate. As such, there is a dispute regarding the estimated amount of repairs and damages.

Based on the state of the parties’ disagreement on the estimated amount, there appears to presently be a dispute regarding the amount, cause, or extent of the loss. While Plaintiff would like the initial estimate provided by Defendant, Defendant has amended its initial estimate with a second estimate that Plaintiff clearly disagrees with. By way of the procedure in Condition 2, (1) each party will select a practicing and qualified motor vehicle appraiser, (2) the appraisers will select an umpire within 15 days, or the Court will select an umpire if the appraisers cannot agree; and (3) the appraisers shall appraise the loss and if they fail to agree in amount, they shall submit their differences to the umpire. Although both parties already produced their own appraisers to inspect the vehicle, an umpire was not present at that appraisal. As such, the Court will compel the parties to submit to an appraisal pursuant to Condition 2 of the insurance policy.

Defendant Mercury Insurance Company’s motion to compel Plaintiff to submit the subject vehicle for an appraisal pursuant to Condition 2 of the insurance policy is granted.

[1] It is unclear when Plaintiff sent any correspondence or informed Defendant that he agreed with the initial September 21, 2021 estimate, as no exhibits evidencing this are attached and Plaintiff has not provided his own declaration. It is also equally unclear why Defendant amended/rejected its own initial estimate in the first place as no documents/declaration are provided to show whether there was an error or mistake in the initial estimate.

Superior Court of California

County of Los Angeles

Department B