Judge Peter A. Hernandez, Case 19PSCV00610 2022-08-11 Tentative Ruling

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Counsel may submit on the tentative rulings by calling the clerk in Dept. O at 909-802-1126 before 8:30 the morning of the hearing. Submission on the tentative does not bind the court to adopt the tentative ruling at the hearing should the opposing party appear and convince the court of further modification during oral argument.

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Defendant State Farm General Insurance Company’s Motion for Summary Judgment is GRANTED.

Plaintiffs own the real property known as 618 Pearlanna Drive in San Dimas (“subject property”). On or about December 9, 2007, Plaintiffs leased the subject property to Dave Fetters and Daniele Fetters (“The Fetters”), who lived in the subject property continuously from that date until they suddenly abandoned the subject property. The subject property was in good condition when the lease commenced. When Plaintiffs visited the subject property, The Fetters never let them inside. Plaintiffs believed The Fetters wanted privacy because of their autistic son. On or about February 4, 2019, Plaintiffs were informed that The Fetters were not living in the subject property. Plaintiffs came to inspect the subject property and found that it was destroyed and in an uninhabitable condition of filth and decay. On or about February 6, 2019, the City of San Dimas told Plaintiffs to board up the subject property. At all relevant times, Plaintiffs had a written Rental Dwelling Policy from State Farm General Insurance Company (“State Farm”) for the subject property, insuring accidental direct physical loss to the subject property. Plaintiffs made a claim under the policy but State Farm denied it.

On July 3, 2019, Plaintiffs filed a complaint, asserting causes of action against State Farm, The Fetters and Does 1-100 for:

The Final Status Conference is set for September 6, 2022. Trial is set for September 20, 2022.

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 a judgment as a matter of law.” (Adler v. Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119 [emphasis theirs].)

“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.” (Code Civ. Proc., § 437c, subd. (p)(2).) “A defendant insurer, for example, may establish that the insured’s loss is excluded from coverage.” (Alex R. Thomas & Co. v. Mutual Service Casualty Ins. Co. (2002) 98 Cal.App.4th 66, 72.)

“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.” (Code Civ. Proc., § 437, subd. (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.)

“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.” (Id. at 467; Code Civ. Proc., § 437c, subd. (c).)

State Farm moves for an order granting summary judgment in its favor on Plaintiffs’ complaint; in the alternative, State Farm seeks summary adjudication as follows:

Issue #1: Plaintiffs cannot establish a claim for breach of contract against State Farm as a matter of law.

Issue #2: Plaintiffs’ loss is excluded by Plaintiffs’ State Farm policy as it was caused by contamination; accordingly, Plaintiffs’ declaratory relief cause of action fails as a matter of law.

The court rules on State Farm’s evidentiary objections as follows: Overruled as to Nos. 1 and 2.

“A cause of action for damages for breach of contract is comprised of the following elements: (1) the contract, (2) plaintiff's performance or excuse for nonperformance, (3) defendant's breach, and (4) the resulting damages to plaintiff. (Careau & Co. v. Security Pacific Business Credit. Inc. (1990) 222 Cal.App.3d 1371, 1388.) Further, “[a] complaint for declaratory relief must demonstrate: (1) a proper subject of declaratory relief, and (2) an actual controversy involving justiciable questions relating to the rights or obligations of a party.” (Brownfield v. Daniel Freeman Marina Hospital (1989) 208 Cal.App.3d 405, 410.)California courts interpret insurance contracts in the manner described by the Supreme Court in MacKinnon v. Truck Ins. Exchange (2003) 31 Cal.4th 635, 647-648:

general rules of contract interpretation. [Citation.] ‘The fundamental rules of

contract must give effect to the “mutual intention” of the parties. “Under

statutory rules of contract interpretation, the mutual intention of the parties at

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.)” [Citations.] A policy provision

interpreted as a whole, and in the circumstances of the case, and cannot be found

Moreover, insurance coverage is ‘”’interpreted broadly so as to afford the

greatest possible protection to the insured, [whereas] ... exclusionary clauses are interpreted narrowly against the insurer.’”’ [Citation.] . . . “the burden rests upon the insurer to phrase exceptions and exclusions in clear and unmistakable language.” [Citation.] The exclusionary clause “must be conspicuous, plain and clear.”’

[Citation.] This rule applies with particular force when the coverage portion of the insurance policy would lead an insured to reasonably expect coverage for the claim purportedly excluded. [Citation.] The burden is on the insured to establish that the

claim is within the basic scope of coverage and on the insurer to establish that the

“Whether a loss is covered turns on whether it was caused by a covered or excluded peril. Where both covered and excluded perils have contributed to the loss, a proximate cause analysis (often referred to as the ‘efficient proximate cause’ analysis) establishes the predominant or most important cause. If the predominant cause is a covered peril, the loss is covered by the policy, even if other noncovered causes contributed to it; if the predominant cause is an excluded peril, the loss is not covered.” (Alex R. Thomas & Co., supra, 98 Cal.App.4th at 77 [citations omitted].)

“An insured may not avoid a contractual exclusion merely by affixing an additional label or separate characterization to the act or event causing the loss.” (Chadwick v. Fire Ins. Exchange (1993) 17 Cal.App.4th 1112, 1117.)

The facts are largely undisputed by the parties. State Farm issued a rental dwelling policy, effective August 13, 2018 to August 13, 2019 to Plaintiffs, insuring their interest in the subject property (“Policy”). (UMF No. 1.) The Policy had limits of $273,400 for the dwelling, $13,670 for personal property, and the actual loss incurred for loss of rents, as well as carrying various endorsements and a deductible of $250. (UMF No. 2.) The Policy extends coverage to accidental direct physical loss subject to the Policy's exclusions. (UMF No. 3.) The Policy provides, in part, the following:

h. wear, tear, marring, scratching, deterioration, inherent vice, latent defect or mechanical breakdown;

the resulting loss is itself a Loss Not Insured by this Section.” (UMF No. 4).[1]

of the items below. Further, we do not insure for loss described in paragraphs 1.

and 2. immediately above regardless of whether one or more of the following: (a)

directly or indirectly cause, contribute to or aggravate the loss; or (b) occur before,

at the same time, or after the loss or any other cause of the loss: a. conduct, act,

failure to act, or decision of any person, group, organization or governmental body whether intentional, wrongful, negligent, or without fault.”

Plaintiffs purchased the subject property in the 1970s and used it as a rental property from that time. (UMF No. 7.) In 2007, Plaintiffs began renting the subject property to Dave Fetters and Danielle (Crawford) Fetters (the “Fetters”). (UMF No. 8.) The Fetters resided at the subject property with their children, including their autistic son. (Id.) Mr. Gulli would pick up the monthly rent check from the Fetters at the subject property and informally inspect the subject property at that time. (UMF No. 9.) In approximately 2018, the Fetters ceased allowing Mr. Gulli inside the subject property. (UMF No. 10.) The last time Mr. Gulli saw the inside of the subject property was in mid-2018. (Id.)

On February 5, 2019, Mr. Gulli received a letter from the City of San Dimas (“City”) advising him that the Los Angeles County Sheriff’s Department (“LASD”) and Los Angeles County Fire Department had been to the subject property and the Fetters' children had been removed from the home. (UMF No. 13.) Due to the condition of the subject property, it was posted as non-habitable and considered unsafe. (Id.) The Sherriff s deputies documented the condition of the property. (Id.)

Mr. Gulli hired Cut N' Dry Restoration (“Cut N’Dry”) to board up the subject property, and Titan Environmental (“Titan”) to test for asbestos. (UMF No. 14.) Photos and reports from City, LASD, Cut N' Dry, and Titan documented the deterioration of the physical condition of the subject property, primarily related to the fecal contamination of nearly all interior surfaces throughout the subject property, as well as the presence of rodent feces, the buildup of trash, and physical damage to the surfaces of the subject property. (UMF No. 15.) The damage was caused by the Fetters' autistic son. (Id.)

After the loss, Mr. Gulli was advised by the neighbors that, in the months preceding the loss, the son lived in the house and the rest of the family slept in automobiles in the driveway (UMF No. 16.) City advised Mr. Gulli that the subject property would have to be torn down to the studs to remediate the contamination. (UMF No. 17.) Titan recommended that the subject property be remediated, including the disposal of all contents as hazardous infectious waste and the removal of all areas contaminated with fecal matter, including structural components (cabinets, sinks, walls, and even outlets. (UMF No. 18.) Reconstruction and remediation was subsequently performed on the subject property and Plaintiffs were able to rent out the subject property again in approximately March 2020. (UMF No. 19.)

Mr. Gulli reported the loss to State Farm on February 8, 2019, advising State Farm that he believed his tenants' autistic son had vandalized the subject property, but that he did not think it was intentional. (UMF No. 20.) He recounted that City had instructed him to board up the subject property because it was toxic. (Id.) State Farm investigated the loss, contacted Cut N’Dry, who advised the subject property was a full biohazard loss due to contamination with human feces throughout the subject property. (UMF No. 21.) State Farm requested that Cut N' Dry send photos. (Id.) State Farm spoke with Titan and requested the photos and documentation. (UMF No. 22.) State Farm contacted City, which advised that the house needed to be gutted or demolished due to the biohazard. (UMF No. 23) City stated the house was considered "like a drug lab" and would need to be addressed as such. (Id.) State Farm received color photos of the subject property from City, which confirmed significant contamination with feces, rodents, mold, and poor living conditions. (Id.) City emailed photos and documents related to the loss on February 29, 2019. (Id.)

State Farm issued a Reservation of Rights letter on February 22, 2019. (UMF No. 24.) On March 5, 2019, State Farm issued a denial letter. (UMF No. 27.) Plaintiffs filed this instant action on July 3, 2019. The Fetters have defaulted and have not been involved in this litigation. (UMF No. 29.)

State Farm has presented evidence that the efficient proximate cause of the loss was contamination, which is excluded from coverage. Contamination has been defined as an “‘impairment or impurity result[ing] from mixture or contact with a foreign substance,’. . . ‘to render unfit for use by the introduction of unwholesome or undesirable elements’. . . or ‘a condition of impurity resulting from mixture or contact with a foreign substance.’” (Alex R. Thomas & Co., supra, 98 Cal.App.4th at 73 [citations omitted].) Here, the subject property was significantly contaminated throughout, with feces and other biohazards. Due to the condition of the subject property, City declared it to be non-habitable and unsafe. Again, photos and reports from City, LASD, Cut N’Dry and Tiran documented the deterioration of the physical condition of the subject property, primarily related to the fecal contamination of nearly all interior surfaces throughout the subject property, as well as the presence of rodent feces, the buildup of trash, and physical damage to the surfaces of the subject property. City advised Mr. Gulli that the subject property would have to be torn down to the studs to remediate the contamination. Titan also recommended that the subject property be remediated, including the disposal of all contents as hazardous infectious waste and the removal of all areas contaminated with fecal matter, including structural components.

Further, State Farm points out that damage to the subject property potentially attributable to other causes was excluded by the policy, including loss caused by “wear, tear, marring, scratching, deterioration,” “rust or wet or dry rot,” and “birds, vermin, rodents, insects or domestic animals.”

Inasmuch as State Farm satisfied its burden of showing an excluded peril, the burden is shifted to Plaintiffs to show the existence of a triable issue of fact on that issue. Plaintiffs do not object to any evidence submitted by State Farm or dispute any material fact but nevertheless contend that the efficient proximate cause of the loss was vandalism, which is not excluded from coverage. The term “vandalism” in its “ordinary and popular sense,” however, “refers to ‘willful or malicious destruction or defacement of public or private property.’ Merriam-Webster Dictionary (2012) ‘Malicious’ in turn is defined . . . as ‘having or showing a desire to cause harm to someone.’ (Merriam-Webster Dict) Online (2015) <http://www.merriam-webster.com/dictionary/malicious> [as of Apr. 3, 2015].) Using these dictionary definitions, vandalism in the ordinary and popular sense, means the willful destruction of property or the destruction of property with a ‘desire to cause harm.’” (Ong. v. Fire Ins. Exchange (2015) 235 Cal.App.4th 901, 908.) Plaintiffs have not submitted any evidence reflecting that the Fetter’s autistic son acted with intent or malicious desire to cause harm; rather, Plaintiffs have maintained that the Fetter had “lost control of their autistic son” (Gulli Decl., ¶ 4) and that the damage was not done intentionally (Heyer Decl., ¶ 6, Exh. 2, Bates Stamp No. Gulli CF 28.) At any rate, it was contamination of the subject property that required tearing it down to the studs, not vandalism.

Plaintiffs next contend that the Fetters’ neglect of the subject property caused the damage to the subject property, such that the loss should be covered. Again, however, while the Fetters certainly failed to maintain the subject property, this was not the efficient proximate cause of the loss; contamination was. Next, Plaintiffs’ own neglect, which is excluded from coverage, must be considered. Plaintiffs had not inspected the inside of the subject property for some time before the loss was discovered. Further, the Policy specifically excludes a loss caused by “wear, tear, marring, scratching, deterioration. . .” To the extent the damage on the subject property can also be attributed to lack of “wear, tear, marring, scratching, deterioration. . .,” the exclusion for deterioration is not limited to that which is “usual, ordinary, or normal.” (Murray v. State Farm Fire & Casualty Co. (1990) 219 Cal.App.3d 58.)

Plaintiffs finally contend that State Farm is precluded from obtaining summary judgment because they are entitled to “resulting loss” from contamination. However, an ensuing loss provision “appl[ies] to the situation where there is a ‘peril,’ i.e., a hazard or occurrence which causes a loss or injury, separate and independent but resulting from the original excluded peril, and this new peril is not an excluded one, from which loss ensues. For example, in Murray, the initial excluded peril was the corrosion of the pipe and leakage of water, and the second resulting peril was the settling of soil.” (Acme Galvanizing Co. v. Fireman’s Fund Ins. Co. (1990) 221 Cal.App.3d 170, 179-180.) Here, there is no peril separate and independent from the initial excluded peril.

For the reasons identified above, the court determines that Plaintiffs have failed to meet their burden of establishing a triable issue of fact as to the efficient proximate cause of the loss, or as to coverage for the loss under the Policy. Accordingly, the motion is granted.

[1] Plaintiffs dispute UMF No. 4 on the basis that the language quoted by Defendant was replaced by Special Form 3, set forth at pages A-3 and A-4 of Exhibit A to the Declaration of James Gulli. The top right-hand corner of page A-3 references “FE-8315.2,” which Defendant’s Claim Team Manager Rex Heyer attests comprises part of the Policy. (Heyer Decl., ¶ 5, Exh. 1.) Accordingly, the court has quoted the language of FE-8315.2.

[2] Plaintiff disputes UMF No. 4 on the basis that the language quoted by Defendant was replaced by Special Form 3; however, the language quoted by Plaintiffs in UMF No. 4 is identically set forth on Exhibit A-34 to Gulli’s Declaration, does not appear to be a not part of Special Form 3.