Judge Monica Bachner, Case 20STCV32888 2023-01-05 Tentative Ruling

Department 71: Attorneys who elect to submit on these published tentative rulings, without making an appearance at the hearing, may so notify the Court by communicating this to the Department's staff at (213) 830-0771 before the set hearing time. See, e.g., CRC Rule 324(b). All parties are otherwise encouraged to appear by Court Call for all matters.

Defendant Kelly Williams Insurance Agency, Inc.’s motion for summary judgment is denied.

Defendant Kelly Williams Insurance Agency, Inc. (“Williams”) (“Defendant”) moves for summary judgment as to Plaintiff Adam Ambruso’s, individually and as Trustee of the Adam Ambruso Revocable Living Trust Dated July 15, 2014 (“Ambruso”) (“Plaintiff”), cause of action against Defendant Williams in his complaint (“Complaint”). (Notice of Motion, pg. 2; C.C.P. §437c.)

Defendant’s 12/19/22 request for judicial notice of Exhibit A, November 30, 2021, Complaint of 54 Dyer L.P. against Ambruso in C.D. Cal. Case No. 2:21-CV-09306-SVW-SK, including Exhibit G, is granted. (D-RJN, Exh. A.)

Defendant’s 12/19/22 request for judicial notice of Exhibit B, December 23, 2021, Memorandum of Points and Authorities in Support of Motion for Appointment of a Permanent Receiver in C.D. Cal. Case No. 2:21-CV-09306-SVW-SK, is granted. (D-RJN, Exh. B.)

Intervenor 54 Dyer, LP (“54 Dyer”) (“Intervenor”) filed a separate statement in opposition to the motion for summary adjudication in violation of C.R.C. Rule 3.1354(b) and 3.1350(h). Rule 3.1354(b) provides:

All written objections to evidence must be served and filed separately from the other papers in support of or in opposition to the motion. Objections to specific evidence must be referenced by the objection number in the right column of a separate statement in opposition or reply to a motion, but the objections must not be restated or reargued in the separate statement.

(C.R.C., Rules 3.1354(b), 3.1350(h).) The Court will not rule on the objections improperly raised. Intervenor has not filed evidentiary objections in opposition in accordance with C.R.C. Rule 3.1354. Moreover, as to one disputed fact, No. 32, Intervenor responded “disputed,” but provided no evidence to support this dispute, contrary to Rule 3.1350(h).

Defendant’s 12/19/2022 evidentiary objections to the December 13, 2022, Declaration of Ambruso are sustained as to Nos. 4, 5, 6, and 7. However, Intervenor resubmitted the Declaration of Ambruso that is properly signed under the penalty of perjury and is a proper substitute for the December 13, 2022, Declaration of Ambruso. Accordingly, the Court will treat the Declaration of Ambruso submitted on December 30, 2022, as evidence in place of Ambruso’s December 13, 2022, declaration.

On August 28, 2020, Plaintiff filed the operative Complaint against Defendants Xtremepreneurs Inc. dba 11 Dezign Builders (“11 Dezign”), Allied General Contractors, Inc. (“Allied”), and Williams (collectively, “Defendants”) alleging four causes of action: (1) breach of contract [against 11 Dezign], (2) breach of express warranty [against 11 Dezign], (3) negligence [against 11 Dezign, and Allied, and (4) negligence [against Williams].[1] (See Complaint.) On November 17, 2022, this Court granted Intervenor’s motion for leave to intervene. On December 13, 2022, Intervenor filed its Complaint in intervention.[2]

Defendant Williams filed the instant motion on July 25, 2022. Intervenor filed its opposition on December 12, 2022. Defendant Williams filed its reply on December 19, 2022. As of the date of this hearing, Plaintiff did not file an opposition and accompanying separate statement.

Plaintiff alleges he is the owner of real property located at 2538 Carman Crest Drive, Los Angeles, California 90068 (“Subject Property”). (Complaint ¶7.) Plaintiff alleges he entered into a written contract (“Contract”) with 11 Dezign to complete construction work and services to remodel the Subject Property (“Project”) and Dezign subsequently hired Allied as a subcontractor to perform and complete the foundation of the Project. (Complaint ¶¶8, 10.) Plaintiff alleges Allied poured concrete to set the foundation of the Property. (Complaint ¶11.) Plaintiff alleges structural deficiencies materialized in the Project (“Defects”). (Complaint ¶12.) Plaintiff alleges 11 Dezign was the named insured on the General Commercial Liability insurance policy issued by Kinsale Insurance Company (“Kinsale”) that was in effect for the duration of the work performed by 11 Dezign and Allied on the Project (“Kinsale Policy”). (Complaint ¶16.)

Plaintiff alleges Williams, as an insurance broker, was asked to ensure that Plaintiff was designated as an additional insured party under the Kinsale Policy. (Complaint ¶17.) Plaintiff alleges he received a “Certificate of Liability Insurance” dated April 10, 2017, produced by Williams purporting to certify that Plaintiff was named as an additional insured policy under the Kinsale Policy (“KWI Certificate”). (Complaint ¶19.) Plaintiff alleges on October 31, 2019, Kinsale denied the Kinsale Claim. (Complaint ¶20.) Plaintiff alleges he contacted Kinsale to discuss the denial of the Kinsale Claim, but Kinsale refused to discuss its coverage position with Plaintiff because Kinsale asserted Plaintiff was not a party to the Kinsale Policy and, despite the KWI Certificate, Plaintiff was not actually an additional insured under the Kinsale Policy. (Complaint ¶21.) Plaintiff alleges Williams failed to properly arrange for Plaintiff to be designated as an additional insured party under the Kinsale Policy. (Complaint ¶¶22.)

The vast majority of the facts are undisputed here. Plaintiff is the owner of the Subject Property, and on October 19, 2016, Plaintiff entered into a contract with 11 Dezign, a general contractor, for construction of a new home on that property. (Defendant’s Undisputed Separate Statement Fact [“D-USSF”] 1, 2.) 11 Dezign hired Allied as a subcontractor to complete the foundation. (D-USSF 3.) On October 13, 2017, structural deficiencies materialized relative to the foundation, concrete slab, and concrete walls, as well as shoring piles, which required extensive corrective actions at substantial cost. (D-USSF 4; Decl. of Campo, Exh. C at No. 17; Exh. D.) 11 Dezign obtained a Kinsale Policy with coverage from April 8, 2017, to April 8, 2018, through Defendant Williams. (D-USSF 5; Decl. of Campo, Exh. E.) As early as May 22, 2016, Plaintiff asked 11 Dezign to add him as an additional insured on the Kinsale Policy. (D-USSF 6; Decl. of Campo, Exh. C at No. 4.) Plaintiff made this request to be in contractual privity with Kinsale and received a copy of the policy and certificate of the Policy. (D-USSF 7-8.) Plaintiff does not name any individual at 11 Dezign to whom he directed the request and has no knowledge as to what 11 Dezign told Williams in this regard. (D-USSF 9; Decl. of Campo Exh. C at Nos. 18-19.) Insurance agent Grant Davis (“Davis”) submitted an October 1, 2019, claim to Kinsale on Plaintiff’s behalf. (D-USSF 10; Decl. of Campo, Exh. F at No. 72; Exh. G.[3]) On October 31, 2019, Kinsale issued a denial of the claim, alleging that Plaintiff was not an additional insured and 11 Dezign’s allegedly negligent work started before the inception of the Kinsale Policy. (D-USSF 11; Decl. of Campo, Exh. H.)

Plaintiff’s negligence cause of action against Williams is based on the improper designation, which precludes him from challenging Kinsale’s denial of coverage for 11 Dezign’s negligent work. (D-USSF 13.) In emails with a subsequent insurance broker at CRC, Davis admitted that Plaintiff should have made a claim to Kinsale when the defects came to light and had his own liability policy in place from the outset. (D-USSF 14; Decl. of Campo, Exh. I.)

Defendant Williams submitted evidence that to the extent the alleged defects rise to the level of “property damage,” which Williams does not concede, and began prior to the Policy inception date of April 8, 2017, the prior injury or damage exclusion is applicable, as the exclusion states the “insurance does not apply to ‘property damage’ which begins or takes place before the inception date of this Policy regardless of whether or not such ‘property damage’ is known to any insured.” (Defendant’s Disputed Separate Statement of Fact [“D-DSSF”] 22; Decl. of Campo, Exh. E.)

A defendant or cross-defendant 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, even if not separately pleaded, cannot be established, or that there is a complete defense to the cause of action. Once the defendant or cross-defendant has met that burden, the burden shifts to the plaintiff or cross-complainant to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto. The plaintiff or cross-complainant shall not rely upon the allegations or denials of its pleadings to show that a triable issue of material fact exists but, instead, shall set forth the specific facts showing that a triable issue of material fact exists as to the cause of action or a defense thereto.

Defendant Williams argues Plaintiff did not file an opposition, despite the fact that C.C.P. §437c(p)(2) provides that once a Defendant meets its initial burden, “the burden shifts to the plaintiff or cross-complainant” to show triable issues of fact. (Reply, pg. 2.) Defendant argues Intervenor does not provide legal authority to support filing its opposition. This Court is not aware of any legal authority supporting Intervenor’s opposition, or any legal authority denying an opposition of another party other than the plaintiff or a cross-complainant. For the purposes of this motion, the Court considers Intervenor’s opposition and separate statement in Plaintiff’s place.

To establish negligence against an insurance broker, Plaintiff must establish “(1) “[the broker’s] legal duty of care towards plaintiff[], (2) [the broker’s] breach of that duty, (3) injury to plaintiff[] as a proximate result of the breach, and (4) damage to plaintiff[].” (Wallman v. Suddock (2011) 200 Cal. App. 4^th 1288, 1308.))

Plaintiff alleges he, or those acting on his behalf, requested Defendant Williams to cause Plaintiff to become an additional named insured under the Kinsale Policy. (Complaint ¶37.) Plaintiff alleges Defendant Williams, as an insurance broker, owed a duty of care to Plaintiff to cause Plaintiff to become, and to cause Kinsale to recognize Plaintiff as, an additional named insured under the Kinsale Policy. (Complaint ¶38.) Plaintiff alleges Defendant Williams breached its duty to Plaintiff by, among other things, (a) failing to properly cause Plaintiff to be designated as an additional insured party under the Kinsale Policy, and (b) issuing the KWI Certificate even though Plaintiff had not actually been added as a named insured under the Kinsale Policy. (Complaint ¶39.) Plaintiff alleges because of Defendant Williams’s breach of duty Plaintiff has been damaged in an amount according to proof. (Complaint ¶40.)

Here, Williams limits its challenge to causation arguing Plaintiff cannot prove that the conduct of Williams proximately caused his damages (Toste v. Cal Portland Construction (2016) 245 Cal.App.4th 362, 370 [“if an accident would have happened anyway, whether the defendant was negligent or not, then his or her negligence was not a cause in fact, and of course cannot be the legal or responsible cause.”]); there is no possibility that Plaintiff as an additional insured on a general liability policy could have recovered from that policy for the named insured’s defective work (Maryland Casualty Co. v. Nationwide Insurance Co. (1998) 65 Cal.App.4th 21, 28); and policy exclusions preclude coverage to any insured, and as such, the Kinsale Policy is inapplicable for Plaintiff’s use against 11 Dezign and thus, unavailable in support of Plaintiff’s claim against Defendant Williams. (Motion at pgs. 12-16.)

“A substantial factor in causing harm is a factor that a reasonable person would consider to have contributed to the harm. It must be more than a remote or trivial factor. It does not have to be the only cause of the harm. [Conduct is not a substantial factor in causing harm if the same harm would have occurred without that conduct.]” (CACI 430.) If only one conclusion may reasonably be drawn from the evidence, this question is one of law. (Banville v. Schmidt (1974) 37 Cal.App.3d 92, 106.)

Foreseeability may be relevant to the [trier of fact’s] determination of whether the defendant’s negligence was a proximate or legal cause of the plaintiff’s injury.’ (Burns v. Neiman Marcus Group, Inc. (2009) 173 Cal.App.4th 479, 488 (internal citation omitted.).)

In Westrick v. State Farm Insurance, the Court states that an insurance agent who promises to procure insurance will be liable for his negligent failure to do so, and he cannot avoid liability for foreseeable harm caused by his silence or inaction. (Westrick v. State Farm Insurance (1982) 137 Cal.App.3d 685, 691.)

Defendant Williams cites Toste v. Cal Portland Construction for the premise that “if an accident would have happened anyway, whether the defendant was negligent or not, then his or her negligence was not a cause in fact, and of course cannot be the legal or responsible cause. (Toste v. Cal Portland Construction (2016) 245 Cal.App.4th 362, 370.) Defendant Williams argues that here, because Plaintiff could never have had coverage through the Policy, his damages would exist regardless of whether he was correctly added as an additional insured. (Motion, pg. 13.) Toste is inapposite because issue of proximate causation in Plaintiff’s claim against Defendant Williams relates to failure to insure Plaintiff under the Kinsale Policy. Proximate causation as to the construction defects under this cause of action is irrelevant.

As in Westrick, Defendant Williams acknowledges that Plaintiff requested to be an “additional insured” and that Defendant Williams issued Plaintiff an invalid certificate, and there is an existing third-party claim against Plaintiff. (Westrick, 137 Cal.App.3d pg. 691.) As such, Defendant Williams’s failures are proximately related to Plaintiff not being recognized as an insured under the Kinsale Policy.

As an additional insured under a liability policy, one is covered only to the extent his or her negligence, or that of the named insured, resulted in liability to someone else. (Maryland Casualty Co. v. Nationwide Insurance Co. (1998) 65 Cal.App.4th 21, 28.) An insurance policy is “written to protect the owner or beneficiary of the policy, who is termed a ‘first party.’ . . . Where the insurance is a liability policy, the protection afforded the owner is its provision for indemnification against claims of third parties for whose damage the insured is for some reason liable.” (Zephyr Park v. Superior Court (1989) 213 Cal.App.3d 833, 841 n.2.)

Defendant Williams argues Plaintiff’s recovery for third-party claims is limited to a named insured or a “first party.” Specifically, Defendant Williams submitted evidence that the Kinsale Policy’s Insuring Agreement under Section I, 1. states, “We will pay those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies.” (D-USSF 15; Decl. of Campo, Exh. E, pg. 1 of 16.) Defendant Williams submitted evidence that the endorsement for “additional insured” contains the provision is amended to include liability for “bodily injury” or “property damage” or “personal and advertising injury” caused in whole or in part by:

in the performance of your ongoing operations for the additional insured(s) at the location(s) designated above.

(D-USSF 16; Decl. of Campo, Exh. E, Endorsement CG 20 10 07 04.) Defendant Williams argues that according to the Kinsale Policy definitions, “property damage” means:

However, as Intervenor argues the “Named Insured” under the Kinsale Policy is defined as 11 Dezign, and had Defendant Williams properly issued a certificate as additionally insured, Plaintiff would have been an “Insured Party” or an “Additionally Insured,” not a “named insured.” The Kinsale Policy was intended to protect both Dezign and Plaintiff from consequential damages resulting from the acts of others. Intervenor argues it is a third-party claiming damages against Plaintiff in federal court (“54 Dyer Claim”) arising from the construction defects that are the subject of this action. Accordingly, Intervenor’s 54 Dyer Claim is a third-party claim. Had Defendant Williams properly issued a certificate to Plaintiff as an additional insured, The Kinsale Policy would have afforded Plaintiff protection from consequential damages arising from the acts of others.

When interpreting a policy’s exclusionary provisions, the burden is on the insurer “to phrase exceptions and exclusions in clear and unmistakable language.” (Harris v. Glens Falls Insurance Co. (1972) 6 Cal.3d 699, 701.) It is a “fundamental principle that an insurer cannot escape its basic duty to insure by means of an exclusionary clause that is unclear.” (State Farm Mutual Automobile Insurance Co. v. Jacober (1973) 10 Cal.3d 193, 201.) As a result, all “doubts, uncertainties and ambiguities” in exclusionary language in favor of the insured. (Producers Dairy Delivery Co. v. Sentry Insurance Co. (1986) 41 Cal.3d 903,

912.) This rule of interpretation applies even when another construction, one that would exclude coverage for the risk in question, is equally reasonable. (Smith Kandal Real Estate v. Continental Casualty Co. (1998) 67 Cal.App.4th 406, 415-416.)

“The fundamental rules of contract interpretation are based on the premise that the interpretation of a contract must give effect to the “mutual intention” of the parties. “Under statutory rules of contract interpretation, the mutual intention of the parties at the time the contract is formed governs interpretation. (Civ. Code, § 1636.) Such intent is to be inferred, if possible, solely from the written provisions of the contract. (Id., § 1639.) The ‘clear and explicit’ meaning of these provisions, interpreted in their ‘ordinary and popular sense,’ unless ‘used by the parties in a technical sense or a special meaning is given to them by usage’ (id., § 1644), controls judicial interpretation. (Id., § 1638.)” (Waller v. Truck Insurance Exchange, Inc. (1995) 11 Cal.4th 1, 18, as modified on denial of reh’g (Oct. 26, 1995).)

Defendant Williams argues damage to property that arises out of a contractor or subcontractor’s work under the named insured’s behalf is excluded from the Kinsale Policy, which precludes Plaintiff from coverage under the Kinsale Policy as an additional insured. (Motion, pg. 15.) Defendant Williams argues Plaintiff cannot recover based on the following exclusion: “That particular part of real property on which you or any contractors or subcontractors working directly or indirectly on your behalf are performing operations, if the ‘property damage’ arises out of these operations.” (D-USSF 18; Decl. of Campo, Exh. E at pg. 4 §2(j)(5).) Defendant Williams argues that the Kinsale policy excludes coverage for “property damage” to “your work” as well as “property damage” arising out of “a defect, deficiency, inadequacy or dangerous condition in ‘your product’ or ‘your work.’” (USSF 19; Decl. of Campo, Exh. E, pg. 5 §2(m)(1).) Defendant Williams further argues that the named insured vs. named insured exclusion, which states, “This insurance does not apply to any claim or ‘suit’ for ‘bodily injury,’ ‘property damage’ or ‘personal and advertising injury’ brought by one named insured against another named insured,” and the additional insured endorsement includes named additional insureds within the definition of insured, precluding Plaintiff’s coverage under the Kinsale Policy. (USSF 20; Decl. of Campo, Exh. E at Endorsement Nos. CAS3098-0110, CG 20 10 07 04.)

However, as Intervenor argues, the endorsement titled “damage to your work” in the Kinsale policy does not apply to exclusions for “property damage” to “your work” “if the damaged work or the work out of which damage arises was performed on your behalf by a subcontractor. (Opposition, pg. 10; Decl. of Campo, Exh. E, pg. 5 §2(l).) Construing the terms of the Kinsale Contract in their ‘ordinary and popular sense and resolving all “doubts, uncertainties and ambiguities” in exclusionary language in favor of the insured, Plaintiff’s “work” was performed on his behalf by a subcontractor, Allied, and as such, is not subject to an exclusion for property damage. (Producers Dairy Delivery Co. v. Sentry Insurance Co. (1986) 41 Cal.3d 903, 912.)

Finally, Williams alleges the exclusions in the Kinsale Policy would have prevented Plaintiff from filing a claim, but Defendant Williams fails to provide any evidence regarding what damages are sought, and presents no evidence that Plaintiff seeks to recover only the cost of repair to the defective work. (See Opposition, pg. 10.)

Based on the foregoing, Defendant Williams’s motion for summary judgment is denied.

[1] The Court notes Plaintiff’s 3rd and 4th causes of action are both for negligence but will treat them as separate causes of action for the purpose of this motion.

[2] Intervenor’s Complaint in intervention is not at issue in this motion.

[3] The Court notes Exhibit G is cut off at the righthand margin.