Judge: Michael Small, Case: 20STCV48692, Date: 2024-06-06 Tentative Ruling

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Case Number: 20STCV48692    Hearing Date: June 6, 2024    Dept: 57

Hicham Zerhouni ("Zerhouni") and Wafae Bencherkoun (collectively, "the Plaintiffs") owned a 2016 Mercedes Benz S550 ("the Mercedes"), which was insured under an automobile insurance policy ("the Policy") issued by State Farm Mutual Automobile Insurance Company ("State Farm").   In March 2020, the Plaintiffs authorized Adam Lowe, a friend of Zerhouni's, to drive the Mercedes.  On March 26, 2020, Lowe informed the Plaintiffs that, while driving the Mercedes, he was involved in a  collision in which the Mercedes hit something in the road, swerved to the left, hit two parked cars, and then rolled over ("the "Crash").   The next day, the Plaintiffs made a claim to State Farm under the Policy for coverage of the damage to the Mercedes that resulted from the Crash.

After investigating the Crash, State Farm denied coverage.  In denying coverage, State Farm concluded that (1) the Crash did not occur as reported  and Plaintiff's claimed losses arising from the Crash thus were not covered under the Policy, and (2) Plaintiffs breached their obligations under the Policy by misrepresenting and concealing information that was material to State Farm's investigation.   Following State Farm's denial of coverage, the Plaintiffs  sued State Farm.  Their operative Second Amended Complaint ("SAC") asserts causes of action against State Farm for (1) breach of contract in denying coverage under the Policy for the Crash, and (2) bad faith denial of coverage. 

Pending before the Court is State Farm's motion for summary judgment or, alternatively, summary adjudication.  The Court is denying State Farm's motion because the evidence that Plaintiffs submitted in support of their opposition to the motion demonstrates that there are disputed issues of material fact as to both Plaintiffs' breach of contract claim and their claim for bad faith denial of coverage.  The existence of these disputed issues of material fact precludes the entry of summary judgment or summary adjudication in State Farm's favor. 

In support of its motion, State Farm submitted the declarations of its coverage counsel Richard Knapp ("Knapp"), who conducted the investigation, that led to State Farm's denial of coverage for the Crash under the Policy, and Michael Akerson ("Akerson"), an accident reconstruction expert whom State Farm retained in the course of its investigation.   State Farm's separate statement of undisputed material facts sets forth the critical portions of the Knapp and Akerson declarations.  The Plaintiffs' objections to Knapp's declaration are overruled.  Together, the Knapp and Akerson declarations satisfied State Farm's burden on summary judgment/adjudication of showing that one or more elements of Plaintiffs' claims for breach of contract and bad faith denial of coverage cannot be established and/or that State Farm has a complete defense to those claims.  (The Court notes that State Farm's briefs in support of its motion refer to a claim by Plaintiffs against State Farm for negligence.  The SAC contains no negligence claim.)  The burden thus shifted to the Plaintiffs to show that there are triable issues of material fact on their claims.  In the Court's view, the Plaintiffs carried their burden.

In support of their opposition to the motion, Plaintiffs submitted the declarations of Zerhouni and Jeffrey Suway, an accident reconstruction expert whom the Plaintiffs retained.  Plaintiffs also submitted a response to State Farm's separate statement of undisputed material facts; the response sets forth the critical portions of the Zerhouni and Suway declarations. 

The Plaintiffs' remarkably slender four-page opposition brief is short on argument and long on hyperbole.  Nevertheless, the Zerhouni and Suway declarations, together with Plaintiffs' response to State Farm's separate statement of undisputed material facts, show the presence of disputed issues of material fact that preclude the entry of summary judgment or summary adjudication for State Farm.  Specifically, the Zerhouni and Suway declarations raise triable issues of fact on whether the Crash occurred  as the Plaintiffs reported it did and whether the Plaintiffs breached their obligations under the Policy by concealing or misrepresenting information material to State Farm's investigation of the Crash.  ( The Plaintiffs' response to State Farm's separate statement of undisputed material facts is rife with typographical errors.  But those errors do not sap the force of the response.)

State Farm contends that the Plaintiffs did not provide Suway's export report to Knapp while he was conducting his investigation and therefore State Farm's acceptance of Knapp's recommendation to deny coverage under the Policy could not, as a matter of law, have been done in bad faith.  State Farm cites no authority for the proposition that an insurer is shielded as a matter of law from a bad faith claim by dint of its retention of an expert when the insured does not offer for the insurer's consideration in deciding whether to accept coverage for a claim an expert report of his or her own.  Suway's report, which counter's Akerson's, is fair game for the Plaintiffs to rely on in demonstrating the existence of a triable issue of fact on the reasonableness of State Farm's coverage decision for purposes of the Plaintiffs' bad faith claim.  Even if State Farm's contention about the Suway report is correct, Zerhouni's declaration creates a disputed issue of material fact on whether State Farm's denial of coverage was done in bad faith.  State Farm characterizes Zerhouni's declaration as "self-serving."  It is. But so what.  Zerhouni's declaration is quite detailed and furnishes a substantial response to the evidence (the Knapp and Akerson declarations) that State Farm submitted in support of its motion.

In sum, because there are disputed issues of material fact, it is for a jury at trial to resolve Plaintiffs’ claims for breach of contract and bad faith, not for the Court on summary judgment/summary adjudication.