TENTATIVE RULING

 

Calendar:    1

Date:          9/30/2022 

Case No: 19 GDCV00082 Trial Date: November 28, 2022 

Case Name: Nextgen Associates, Inc. dba Servicemaster Restoration by 

EMT v. Sawhney, et al.

MOTIONS FOR SUMMARY JUDGMENT (2)

(Or, in the Alternative, Summary Adjudication)

Moving Party:            Cross-defendant Mercury Insurance Company   

Cross-defendant Travelers Property Casualty Company of America Responding Party: Cross-complainant OM ABS, Inc. dba Carrows Restaurant

(No Opposition to Travelers’ Motion) 

RELIEF REQUESTED:

Mercury Insurance Motion

Order granting summary judgment in favor of cross-defendant Mercury Insurance Company

In the alternative summary adjudication for each cause of action, and/or claim for punitive damages. 

Travelers Property Casualty Company Motion

Summary judgment against defendant/cross-complainant OM ABS, Inc. dba Carrows Restaurant.  

In the alternative, summary adjudication of the second, fifth and/or sixth causes of action.    

CAUSES OF ACTION: from Cross-Complaint 

1) Breach of Contract v.  Mercury, Servicemaster 

2) Conversion v. All cross-defendants 

3) Implied Covenant of Good Faith and Fair Dealing v. Mercury, Servicemaster 

4) Quantum Meruit v. Mercury, Servicemaster 

5) Unjust Enrichment v. All cross-defendants 

6) Contribution and Equitable Indemnity v. All cross-defendants 

 

SUMMARY OF FACTS:

Plaintiff Nextgen Associates, Inc. dba Servicemaster Restoration by EMT (“Servicemaster”) alleges that it is in the business of emergency cleanup, fire and water remediation and repairs of real property, and that in February of 2018, it entered into a written Work Authorization Agreement signed by defendant Tavinder Sawhney wherein plaintiff agreed to perform, and defendants agreed to pay for, a work of improvement including emergency fire and water remediation, content pack-out and storage service, and other repairs at the place of business of Sawhney and defendants OM ABS, Inc. dba Carrows Restaurant (“Carrows”) and TSL Development, Inc. (“TSL”).   This work of improvement was necessitated by fire and water damage at defendants’ place of business.   

Plaintiff alleges that it performed the agreed work of improvement, furnished all necessary labor, services and material, and has paid the claims of all claimants who have furnished those items under the Agreement, but, despite demand, defendants have failed to fully pay the remaining sum due, leaving the sum of $66,623.56 due and owing.  The complaint also seeks the enforcement of a mechanic’s lien. 

Defendant Carrows has filed a cross-complaint against plaintiff Servicemaster as cross-defendant, as well as against cross-defendants Mercury Insurance Company, Travelers Casualty Insurance Company of America, and Travelers Commercial Insurance Company.  The cross-complaint alleges that at the time the Carrows Restaurant premises suffered partial fire destruction to both the exterior and interior of the restaurant, the restaurant premises, interior portion, was insured by Mercury Insurance Company (“Mercury”), and the exterior portion was insured through defendants Travelers Casualty Insurance Company of America and Travelers Commercial Insurance Company (“Travelers”) by the landlord of the restaurant, TSL.  

Cross-complainant alleges that as a result of cross-complainant’s fire claim, cross-defendant Mercury engaged cross-defendant Servicemaster to repair and restore the restaurant, and that Mercury did approve of work and pay invoices as specified in the Agreement between the parties.  Cross-complainant alleges that Servicemaster partially performed its services, including taking possession of the restaurant removable kitchen equipment, pot, pans, and food utensils, valued at approximately $80,000 to $90,000.  The cross-complaint alleges that in July of 2018, Servicemaster breached the Agreement by only partially performing services, exiting the job site, and refusing to complete the contracted services for fire restoration, so that cross-complainant was required to hire other contractors to complete the fire restoration work to enable the restaurant to be reopened.   It is also alleged that Servicemaster had refused to return the previously removed kitchen equipment and property in its possession, which was essential for reopening the restaurant, and that although the majority of the kitchen equipment was finally returned as a result of a companion lawsuit in Orange County, a large number of kitchen utensils have not been returned, causing cross-complainant to have to repurchase utensils in order to reopen the restaurant.  

The cross-complaint also alleges that any dispute over unpaid invoices is exclusively between cross-defendants, and not cross-complainant, which has no contractual or legal obligation to pay any unpaid invoices, but that this responsibility lies solely with Mercury or Travelers.  It is also alleged that defendant Mercury breached the insurance contract with cross-complainant by failing to pay the remaining invoices to its approved vendor and causing the filing of the complaint and foreclosure of the mechanic’s lien action, to the damage of cross-complainant.    

ANALYSIS:

Mercury Insurance Company Motion

Under CCP § 437c(p)(2) a 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 that cause of action.  Once the …cross-defendant has met that burden, the burden shifts to the …cross-complainant to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto.”

CCP § 437c(f)(1) provides that “A motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty.”

Cross-Defendant Mercury Insurance Company seeks summary judgment or summary adjudication of the cross-complaint, arguing that cross-complainant cannot establish one or more elements of each cause of action of the cross-complaint, and cannot establish entitlement to punitive damages. 

ISSUE 1: There is no merit to cross-complainant’s first cause of action for breach of contract because no genuine triable issue of material fact exists upon which a finding of breach of contract could be based. 

The elements of a breach of contract have been set forth as follows:

“To prevail on a cause of action for breach of contract, the plaintiff must prove

(1) the contract, 

(2) the plaintiff's performance of the contract or excuse for nonperformance, 

(3) the defendant's breach, and 

(4) the resulting damage to the plaintiff.” 

Richman v. Hartley (2014, 2nd Dist.) 224 Cal.App.4th 1182, 1186.  

Cross-defendant Mercury argues that cross-complainant will be unable to establish that Mercury breached the insurance contract, as Mercury paid all benefits due and owed under its policy of insurance, which provided coverage only for damage to restaurant features qualifying as tenant improvements or betterment as defined in the policy.   Mercury argues that the monies sought by cross-complainant by the cross-complaint relate to a dispute over the cost of repair for damages to the building, as opposed to tenant improvements, which does not fall under the policy of insurance issued by Mercury but would fall under the policy of insurance issued by cross-defendant Travelers.  

Mercury submits a copy of the businessowners’ policy issued to cross-complainant OM ABS, Inc. DBA-Carrows Restaurant, which provides, in pertinent part:

“A.  Coverage…

1.  Covered Property

Covered Property includes Buildings as described under Paragraph a. below, Business Personal Property as described under Paragraph b. below ... 

a. Buildings, meaning the buildings and structures at the premises described in the Declarations, including:

(1) Completed additions;

(2) Fixtures, including outdoor fixtures;

(3) Permanently installed:

(a) Machinery; and 

(b) Equipment;

....

(5) Personal property owned by you that is used to maintain or service the buildings or structures or the premises, including:

(a) Fire extinguishing equipment; 

(b) Outdoor furniture; 

(c) Floor coverings; and 

(d) Appliances used for refrigerating, ventilating, cooking, dishwashing or laundering;

(6) If not covered by other insurance:

(a) Additions under construction, alterations and repairs to the buildings or structures; 

(b) Materials, equipment, supplies and temporary structures, on or within 100 feet of the described premises, used for making additions, alterations or repairs to the buildings or structures.

b. Business Personal Property located in or on the buildings or structures at the described premises or in the open (or in a vehicle) within 100 feet of the buildings or structures or within 100 feet of the premises described in the Declarations, whichever distance is greater, including:

(1) Property you own that is used in your business;

(2) Property of others that is in your care, custody or control, except as otherwise provided in Loss Payment Property Loss Condition Paragraph E.5.d.(3)(b);

(3) Tenant's improvements and betterments. Improvements and betterments are fixtures, alterations, installations or additions:

(a) Made a part of the building or structure you occupy but do not own; and (b) You acquired or made at your expense but cannot legally remove;

(4) Leased personal property which you have a contractual responsibility to insure.. and

(5) Exterior building glass...” 

[Ex. BB, Section 1, Property, Motion pp. 635-634].

Mercury argues that the uncontroverted evidence in this matter establishes that Mercury paid all benefits due and owed under this section of the policy, for a total of $126,038.93 paid under the tenant improvement coverage, and that Mercury was not required to pay any repairs other than those relating to tenant improvements or betterment.  [UMF Nos. 50, 52, and evidence cited].   

Mercury also argues that it has paid all sums due under the section of the policy providing coverage for loss of business income during the period of restoration.  The policy provides, at Section 1, Coverage A- Property:

“f. Business Income

(1) Business Income

(a) We will pay for the actual loss of Business Income you sustain due to the necessary suspension of your ‘operations’ during the ‘period of restoration’.”

[Ex. BB, p. 6, Motion p. 640].  

“Period of restoration” is defined as follows:

"9. ‘Period of restoration':

a. Means the period of time that:

(1) Begins:

(a) 72 hours after the time of direct physical loss or damage for Business Income coverage . . .

(2) Ends on the earlier of:

(a) The date when the property at the described premises should be repaired, rebuilt or replaced with reasonable speed and similar quality; or

(b) The date when business is resumed at a new permanent location."

[Ex. BB, pp. 33-34 of 53, Motion pp. 667-668]. 

 

Mercury argues that it timely obtained the input of an expert in calculating the amount of cross-complainant’s loss of business income, and continuously issued payments, including advance payments, for cross-complainant’s loss of business income claim, and has paid a total amount of $421,645.00 for the loss of business income through February 14, 2019.  [UMF Nos. 46, 50, 53, 54, 166, and evidence cited].  

Mercury submits evidence that it was agreed between Mercury and the insured’s counsel that the end date for the period of restoration would be January 31, 2019.  [UMF Nos. 43, and evidence cited, Castillo Decl. para. 75].  The showing appears sufficient to establish that cross-complainant will be unable to establish that Mercury breached the subject policy provisions to support a claim for breach of the policy.  This shifts the burden to cross-complainant to raise triable issues of material fact. 

Cross-complainant Carrows in opposition has filed a Declaration of Tavinder Sawhney and a Response to Cross-defendants’ Separate Statement.  There has been no timely Memorandum of Points and Authorities submitted in opposition to the motion. 

  

Under CRC Rule 1350(e), the documents in opposition to a motion for summary judgment must include a memorandum:

“Except as provided in Code of Civil Procedure section 437c(r) and rule 3.1351, the opposition to a motion must consist of the following separate documents, titled as 

shown:

(1) [Opposing party's] memorandum in opposition to [moving party's] motion for summary judgment or summary adjudication or both;

(2) [Opposing party's] separate statement in opposition to [moving party's] motion for summary judgment or summary adjudication or both;

(3) [Opposing party's] evidence in opposition to [moving party's] motion for summary judgment or summary adjudication or both (if appropriate); and

(4) [Opposing party's] request for judicial notice in opposition to [moving party's] motion for summary judgment or summary adjudication or both (if appropriate).”

(Emphasis added) 

This leaves the court without any legal arguments or authorities in opposition to the motion.   

The Response to Separate Statement, in response to Issue No. 1, indicates that all of cross-defendant’s offered facts are “Undisputed,” except the fact that a written work authorization was executed between plaintiff Servicemaster and Sunny Sawhney as president of Carrows.  [UMF No. 51].  The opposition indicates that this fact is disputed because the work order was between Mercury and Mercury’s Agent and approved vendor.  The response states that the signature was required to only allow Servicemaster to come on the premises to start work, and that all work was to be approved by Mercury, all invoices were to be approved by Mercury and all payment of invoices was to be by Mercury.  [Response to UMF No. 51].  The evidence cited for this response is the Sawhney Declaration at paragraphs 7, 8 and 9.

The Sawhney Declaration indicates that Sawhney is the president of defendant Carrows and states that after the insurance claim was filed, Sawhney was contacted by Mercury, advised that it had approved fire restoration vendors, and that not having experience with fire restoration, Sawhney relied on Mercury and chose one of their approved service providers.  [Sawhney Decl. para. 7].  Sawhney indicates he was contacted by an approved agent/vendor, Servicemaster, who wanted permission to start work, that Sawhney was requested to  execute a service order to allow Servicemaster to come onto the premises, and that he “consulted Mercury Insurance who advised that the document was just for Mercury’s Approved Agent/Vender could [sic] enter the premises and commence work, and my insurance policy would cover the fire restoration expenses.”   [Sawhney Decl., para. 8]. 

The Declaration then states:

“It was my understanding that aforementioned service order specified that all fire restoration work had to be approved in advance by Mercury, all invoices approved by Mercury, and all payment on work performed would be approved and paid by Mercury. Hence, it was my understanding that Mercury would be responsible for paying all work performed by its approved agent and vendor ServiceMaster, as to all fire restoration services performed in this insurance claim/incident.”

[Sawhney Decl., para. 9]. 

This evidence does not appear sufficient to raise a triable issue with respect to whether a contract was breached by the moving defendant.   

Specifically, cross-complainant makes no reference to any payment on work performed which was not made.  Cross-complainant concedes as “Undisputed” that Mercury paid a total of $126,038.93 under tenant improvement coverage, and $421,645.00 to cross-complainant for loss of business income during the period of restoration as defined by the policy.  [UMF Nos. 52, 54; Response to UMF Nos.  52, 54, “Undisputed.”].   The opposition points to, and presents no evidence of, any claim that was not paid.   

Cross-complainant also fails to show how this vague “understanding” could modify the written insurance agreement, and its express provisions.  Cross-complainant concedes as “Undisuputed” that the restaurant was “insured by policies of insurance issued by Mercury and Travelers.”  [UMF No. 48, and evidence cited; Response to UMF No.  48, “Undisputed.”].   Cross-complainant also concedes that “By its terms the Mercury policy provides that Mercury will pay for the cost of repair to damage to tenant improvements or betterments to the property and business personal property.”  [UMF No. 49, and evidence cited; Response to UMF No. 49, “Undisputed.”].  Cross-complainant fails to make any factual showing that there was any tenant improvement or betterments to the property or business personal property which was subject to the policy and that Mercury did not pay for the cost of repair or damage.   Cross-complainant makes no legal argument concerning what the policy language would encompass, by reference to any specific damage for which cross-complainant’s claim was not paid.   

Much of the balance of the Sawhney declaration is based on information and belief, so is not based on personal knowledge.  The summary judgment statute, CCP §437c, expressly provides at subdivision (d) that supporting or opposing declarations “shall be made by a person on personal knowledge.”   

The Second District in Weir v. Snow (1962) 210 Cal.App.2d 283, found that a declaration submitted in opposition to a motion for summary judgment, even liberally construed, was inadequate on several grounds, including: 

“The declaration does not show that the declarant could testify to any of the facts presented in the declaration.  On the contrary, a large portion of the statements therein are made solely on information and belief or the lack thereof.  Such belief, without more, is not competent testimony but a mere opinion or conclusion.”

Weir, at 290, footnote, quotation omitted.  

Cross-complainant’s position seems to be that there was an agreement that any work performed by Servicemaster would be paid for by Mercury, but cross-complainant points to nothing in either the policy or the agreement with Servicemaster which imposed such a term.  Even if such a term were found to have arisen, the opposition papers do not submit evidence of conduct on the part of Mercury which breached such a term.  In fact, the Sawhney Declaration indicates that this action, “is a dispute over unpaid Engineering and Supervisory fees charges by ServiceMaster for the fire restoration services approved by Mercury and/or Travelers, but Mercury and/or Travelers has and continues to fail to pay ServiceMaster.”  [Sawhney Decl., para. 11].  This suggests that Sawhney cannot in good faith declare that Mercury breached an agreement with cross-complainant but can at best declare that either Mercury or Travelers had a vague obligation to pay certain fees which has been breached.  This evidence is insufficient to support a reasonable inference that Mercury breached a contract with cross-complainant.  Cross-complainant has failed to raise triable issues of material fact.  The motion accordingly is granted as to the first cause of action for breach of contract.  

ISSUE 2: There is no merit to cross-complainant’s second cause of action for conversion because no genuine triable issue of material fact exists upon which a finding of conversion could be based. 

To establish a cause of action for conversion, cross-complainant must plead and prove the following elements: Ownership, or right to possession of property; wrongful disposition of property right; and damages.  Imperial Valley Land Co. v. Globe Grain & Milling Co. (1921) 187 Cal.352, 354.  

Mercury argues that cross-complainant cannot establish a cause of action against Mercury as a matter of law because Mercury never converted any of cross-complainant’s property, as cross-complainant acknowledges in the cross-complaint that it was Servicemaster, not Mercury, which took and refused to return cross-complainant’s kitchen equipment, utensils, and property.   Mercury argues that contrary to the allegations in the cross-complaint, uncontroverted evidence establishes that Mercury did not retain or engage Servicemaster, but it was cross-complainant which engaged Servicemaster’s services, and that Mercury never had the requisite intention to interfere with the possession of any such property.   

Mercury has submitted evidence showing that it was Servicemaster which took possession of the kitchen equipment and utensils alleged to have been converted, and that Servicemaster was selected and retained by cross-complainant, not by Mercury.  [UMF Nos. 55, 56, and evidence cited].  The argument is evidently that Servicemaster was not acting as an agent of Mercury, so that Mercury has no responsibility for its acts.  The Work Authorization is made by Sawhney as “Client” authorizing Servicemaster Restoration by EMT to proceed, and expressly states, “Client agrees that ServiceMASTER is an independent emergency mitigation repair company and is not the representative, agent, or employee of any insurance company.”  [See Motion, Ex. B, Cross-Complainant’s Responses to Request for Production of Documents, Response to Request No. 1, Ex. A]. 

This showing is sufficient to shift the burden to cross-complainant to raise triable issues of material fact.   

Cross-complainant in the Response to the Separate Statement seems to argue that the dispute is based on a refusal to make payments by both Mercury and Travelers.  [Response to UMF No.  57].   This argument does not support a reasonable inference to establish a conversion claim, as cross-complainant has failed to raise triable issues with respect to moving defendant having withheld any policy benefits which were in fact due, as discussed above.   

In addition, the second cause of action in the cross-complaint appears to be limited to the conduct of Servicemaster in refusing to return kitchen utensils, and its exit from the jobsite before completing the fire restoration services allegedly contracted by cross-complainant’s insurance carrier.  [See Cross-Complaint, paras. 42, 41].  There is no mention in the cause of action of any conversion conduct by the moving cross-defendant, only that the responsibility to pay unpaid invoices so that Servicemaster would release the personal property “solely lies with Cross-Defendants Mercury Insurance and/or Travelers Ins.”  [Cross-complaint, para. 39].  The pleading indicates that the unlawful conduct of “Defendants SMET, and Roes 1 to 100, and each of them, constitutes the civil wrong of Conversion…”  [Cross-complaint, para. 39].  The pleading does not allege conversion of policy benefits on the part of the insurers.  

Generally, the issues raised by a motion for summary judgment are directed to the allegations of the operative pleading, and, accordingly, “the opposing papers may not create issues outside of the pleadings.”  Mars v. Wedbush Morgan Securities, Inc. (1991, 2nd Dist.) 231 Cal.App.3d 1608, 1613-1614, citation omitted. Ordinarily, where opposition evidence on a motion for summary judgment is directed to issues not yet pled, the party opposing summary judgment should seek leave to amend the pleadings before the hearing on the motion for summary judgment.   Leibert v. Transworld Systems, Inc. (1995) 32 Cal.App.4th 1693, 1699.   Here, there has been no effort to amend the cross-complaint to allege any conversion based on the withholding of policy benefits, and cross-complainant may not raise such an issue in opposition to the motion. 

Cross-complainant also appears to argue that there are triable issues of material fact because cross-complainant disputes the fact that Mercury did not convert any of cross-complainant’s property, because Mercury’s approved agent and vendor Servicemaster converted cross-complainant’s property.  [UMF No. 58; Response to UMF No. 58].  First, there is no evidence cited in support of this argument that Servicemaster was Mercury’s agent.   The Response to Separate Statement evidently cites as the evidence supporting its response to this undisputed fact, “Cross-complainant.”  This reference may be a typographical error.  In any case, to the extent it is intended to cite as evidence the cross-complaint itself, which cross-complainant elsewhere does, this is improper.   

Under CCP § 437c(b)(2), in connection with opposition to a motion for summary judgment:

“The opposition, where appropriate, shall consist of affidavits, declarations, admissions, answers to interrogatories, depositions, and matters of which judicial notice shall or may be taken.” 

Under CCP § 437c(p)(2), once a cross-defendant has met its initial burden on a motion for summary judgment, the burden shifts to cross-complainant to show that a triable issue of one or more material facts exists.  The statute expressly states:

“The…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.”  

In College Hospital, Inc. v. Superior Court (1994) 8 Cal.4th 704, the California Supreme Court stated:

It is generally understood, for instance, that a party cannot rely on the allegations of his own pleadings, even if verified, to make or supplement the evidentiary showing required in the summary judgment context. (Parker v. Twentieth Century Fox-Film Corp. (1970) 3 Cal.3d 176, 181 [89 Cal.Rptr. 737, 474 P.2d 689, 44 A.L.R.3d 615]; Coyne v. Krempels (1950) 36 Cal.2d 257, 262 [223 P.2d 244]; Orsetti v. City of Fremont (1978) 80 Cal.App.3d 961, 966 [146 Cal.Rptr. 75]; 2 Cal. Civil Procedure Before Trial (Cont.Ed.Bar 1993) § 43.13, p. 43-10; Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 1994) P 10:19 p. 10-6.) The basic purpose of summary judgment is to provide a means by which the court determines whether the “triable issues apparently raised by [the complaint and answer] are real or merely the product of adept pleading.” (Coyne v. Krempels, supra, 36 Cal.2dat p. 262.) Hence, the moving party must demonstrate the presence or absence of a genuine triable issue by “affidavit” or other competent means. (§ 437c, subds. (b), (c) & (d).)

College Hospital, at 720, n. 7.

Here, to the extent cross-complaint relies on the allegations in the pleading, which, in this case, is unverified, to support the agency argument, the court may rely only on actual evidence cited or submitted. 

Under Civil Code section 2338, a “principal is responsible to third parties for the negligence of his agent in the transaction of the business of the agency, including wrongful acts committed by such agent in and as a part of the transaction of such business.”  

Civil Code § 2295 provides:

“An agent is one who represents another, called the principal, in dealings with third persons. Such representation is called agency.”

Under Civil Code § 2298, “An agency is either actual or ostensible.” 

There does not appear to be any actual agency here, as there is no evidence that Servicemaster was actually employed as an agent by Mercury, and the Work Authorization is made by Sawhney as “client” authorizing Servicemaster Restoration by EMT to proceed, and expressly states, “Client agrees that ServiceMASTER is an independent emergency mitigation repair company and is not the representative, agent, or employee of any insurance company.”  [See Motion, Ex. B, Cross-Complainant’s Responses to Request for Production of Documents, Response to Request No. 1, Ex. A]. 

With respect to ostensible agency, Civil Code § 2300 provides:

“An agency is ostensible when the principal intentionally, or by want of ordinary care, causes a third person to believe another to be his agent who is not really employed by him.”

The burden of establishing the existence of ostensible agency is on plaintiffs.  See South Sacramento Drayage Co. v. Campbell Soup Co. (1963) 220 Cal.App.2d 851, 857-858:

“Under the circumstances shown by this record, it is proper to apply the principle stated in 1 Mechem on Agency, second edition, page 527: ". . . It is therefore declared to be a fundamental rule, never to be lost sight of and not easily to be overestimated, that persons dealing with an assumed agent, whether the assumed agency be a general or special one, are bound at their peril, if they would hold the principal, to ascertain not only the fact of the agency but the nature and  extent of the authority and in case either is  controverted, the burden of proof is upon them to establish it."

The foregoing was quoted and applied by our Supreme Court in Original M. & M. Co. v. San Joaquin etc. Corp., 220 Cal. 152, at page 162 et seq. [30 P.2d 47].”

Sacramento Drayage, at 857-858.

Cross-complainant here has made no legal argument, and the Response to Separate Statement cites no evidence, which would meet cross-complainant’s burden of proof to establish actual or ostensible agency with respect to the conversion claim here.  The motion accordingly is granted as to the second cause of action for conversion.      

ISSUE 3: There is no merit to cross-complainant’s third cause of action for breach of the covenant of good faith and fair dealing because no genuine triable issue of material fact exists upon which a finding of breach of the covenant of good faith and fair dealing could be based. 

It is recognized that “Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.”  Carma Developers (Cal.), Inc. v. Marathon Development California, Inc. (1992) 2 Cal.4th 342, 371, quoting Restatement 2nd Contracts, §205. 

To establish breach of the implied covenant in the insurance context, plaintiffs must establish the following elements:

“(1) Benefits due under the policy must have been withheld, and 

(2) the reason for withholding benefits must have been unreasonable or without proper cause.”

Love v. Fire Insurance Exchange (1990) 221 Cal.App.3d 1136, 1151.  

Before an insured can successfully assert a claim for bad faith in handling a claim, the insured must demonstrate that benefits due under the policy have been withheld.  Love, at 1151; see, also, Jordan v. Allstate Ins. Co.  (2007, 2nd Dist.) 148 Cal.App.4th 1062, 1078. 

As discussed above, Mercury has sufficiently shown that it has not breached the insurance policy by failing to pay benefits which were due.  Again, in response to the separate statement, the opposition does not dispute those benefits were paid both under the tenant improvement coverage, and the business income loss coverage.  [UMF Nos. 117 and 119, and evidence cited; Response to UMF Nos. 117 and 119, “Undisputed.”].  The only fact disputed is the same fact discussed in connection with the breach of contract claim, that a work order was entered between cross-complainant and Servicemaster, based on the same argument and testimony in the Sawhney Declaration that the work order was between Mercury and its agent and approved vendor, such that Mercury agreed to approve and pay all invoices.   [See UMF No. 64, and evidence cited, Ex. B to motion, and Response to UMF No. 64, and evidence cited].  This showing is insufficient to raise triable issues with respect to whether benefits were wrongly withheld.  The motion as to this cause of action accordingly is granted. 

Mercury also primarily argues that even if cross-complainant can raise triable issues concerning whether policy benefits were withheld, it will be unable to establish that the reason for the withholding of the benefits was without proper cause. 

Mercury relies on the theory that the withholding of benefits here was not unreasonable, as there was a “genuine dispute” as to coverage.  

Mercury relies on Chateau Chamberay Homeowners Assn. v. Associated Int. Ins. Co. (2001) 90 Cal.App.4th 335, in which the Second District affirmed the trial court’s granting of summary judgment in favor of the insurer on insureds’ bad faith claim based on the existence of a genuine dispute as to the existence of coverage liability.   Chateau Chamberay involved an insurance claim on an earthquake policy following the Northridge earthquake brought by the homeowners’ association of a 66-unit condominium complex for damage to the complex common areas.  In that case, there was no dispute concerning the facts of the insurer’s handling of the claim and the investigation and negotiations concerning the benefits due under the policy.    The insurer had paid benefits piecemeal as its investigation proceeded, but the matter was ultimately arbitrated concerning some details of coverage, including whether the claim included losses for which the insurer was not at risk (i.e. damage sustained to non-common areas), whether the claim included sums to perform upgrades to current building codes or correct preexisting design defects not covered by the policy, whether the amounts exceeded those reasonably necessary to replace damaged property with comparable materials, and whether the professional fees for emergency repairs exceeded those reasonably required.  Chateau Chamberay, at 343. 

The Second District set forth the following standards with respect to the genuine dispute doctrine:

“The mistaken [or erroneous] withholding of policy benefits, if reasonable or if based on a legitimate dispute as to the insurer's liability under California law, does not expose the insurer to bad faith liability." ( Tomaselli v. Transamerica Ins. Co. (1994) 25 Cal. App. 4th 1269, 1280-1281 [31 Cal. Rptr. 2d 433]; Nager v. Allstate Ins. Co. (2000) 83 Cal. App. 4th 284, 288 [99 Cal. Rptr. 2d 348]; Opsal v. United Services Auto. Assn., supra, 2 Cal. App. 4th at p. 1205.) Without more, such a denial of benefits is merely a breach of contract. Moreover, the reasonableness of the insurer's decisions and actions must be evaluated as of the time that they were made; the evaluation cannot fairly be made in the light of subsequent events that may provide evidence of the insurer's errors. (Cf. Filippo Industries, Inc. v. Sun Ins. Co. (1999) 74 Cal. App. 4th 1429, 1441 [88 Cal. Rptr. 2d 881].)”

Chateau Chamberay, at 346-347.

The Second District set forth the standards to be applied where there is some question concerning the sufficiency of the evaluation of the claim:

“Thus, before an insurer can be found to have acted tortiously (i.e., in bad faith), for its delay or denial in the payment of policy benefits, it must be shown that the insurer acted unreasonably or without proper cause. ( Dalrymple v. United Services Auto. Assn. (1995) 40 Cal. App. 4th 497, 520 [46 Cal. Rptr. 2d 845]; Opsal v. United Services Auto. Assn., supra, 2 Cal. App. 4th at p. 1205.) However, where there is a genuine issue as to the insurer's liability under the policy for the claim asserted by the insured, there can be no bad faith liability imposed on the insurer for advancing its side of that dispute. ( Dalrymple, supra, at p. 520; Opsal, supra, at pp. 1205-1206.) While an insurer must give as much consideration to the interests of its insured as it does to its own ( Egan v. Mutual of Omaha Ins. Co., supra, 24 Cal. 3d at pp. 818-819), "it is not required to disregard the interests of its shareholders and other policyholders when evaluating claims. . . ." ( Love v. Fire Ins. Exchange (1990) 221 Cal. App. 3d 1136, 1148-1149 [271 Cal. Rptr. 246]; accord, Austero v. National Cas. Co. (1978) 84 Cal. App. 3d 1, 30 [148 Cal. Rptr. 653], disapproved on other point in Egan v. Mutual of Omaha Ins. Co., supra, 24 Cal. 3d at p. 824, fn. 7.) In other words, an insurer is entitled to give its own interests consideration when evaluating the merits of an insured's claim. ( Tomaselli v. Transamerica Ins. Co., supra, 25 Cal. App. 4th at p. 1281.)”

Chateau Chamberay, at 347, italics in original. 

The court noted that this issue “may be resolved as a matter of law in a proper case.”   Chateau Chamberay, at 347.   The Second District noted that:

“While the reasonableness of an insurer's claims-handling conduct is ordinarily a question of fact, it becomes a question of law where the evidence is undisputed and only one reasonable inference can be drawn from the evidence. ( Paulfrey v. Blue Chip Stamps (1983) 150 Cal. App. 3d 187, 196 [197 Cal. Rptr. 501].)

Chateau Chamberay, at 346. 

The Second District reviewed case authority on the matter and noted that there are several circumstances where a bad faith claim based on a biased investigation “should go to the jury:

“(1) the insurer was guilty of misrepresenting the nature of the investigatory proceedings (see Tomaselli v. Transamerica Ins. Co., supra, 25 Cal. App. 4th 1269, 1281 [allowing a bad faith claim to go to the jury where an insurance company without any evidence of fraud forced an insured to submit to an examination under oath, dissuaded the insured from having an attorney present, and misled the insured about the purpose of the examination]); (2) the insurer's employees lied during the depositions or to the insured; (3) the insurer dishonestly selected its experts; (4) the insurer's experts were unreasonable; and (5) the insurer failed to conduct a thorough investigation. ( Guebara v. Allstate Ins. Co., supra, 237 F.3d at p. 996.)”

Chateau Chamberay, at 348-349, italics in original. 

The Second District then found that in the case before it there was no factually supported suggestion that any of these circumstances had occurred.  Chateau Chamberay, at 349.     

Here, Mercury submits extensive evidence showing Mercury promptly addressed the claim, advised the insured that the repairs could be made by a contractor of the insured’s choice and that only the insured could authorize a contractor to proceed with work, and that Mercury retained an independent adjuster to assist in investigation of the loss, and retained an expert to evaluate the loss of business claim.  [UMF Nos. 61-69, and evidence cited; Response to UMF Nos. 61-69, and evidence cited].  There is detailed evidence, supported by documentation, showing that the insurer regularly made and advanced payments, and that Mercury and its insurance agent understood the policy to not provide coverage for damage to the building itself, which was discussed with cross-complainant and Servicemaster, and handled the matter in good faith until it was agreed between Mercury and the insured’s counsel that the end date for the period of restoration would be January 31, 2019 and that the insured was not making any additional claims against Mercury, which was confirmed by Mercury and the file closed.  [UMF Nos. 70- 101, and evidence cited; Response to UMF Nos. 70-101, “Undisputed.”]. 

Cross-complainant in opposition disputes only the nature of the Work Order agreement, without pointing to or submitting any evidence showing Mercury engaged in the types of conduct amounting to unreasonableness as cited in the case law.  Cross-complainant has failed to submit evidence sufficient to support a reasonable inference that Mercury acted unreasonably here and has failed to raise triable issues of material fact.  The motion is granted as to the third cause of action for breach of the covenant of good faith and fair dealing as well.  

ISSUE 4: There is no merit to cross-complainant’s fourth cause of action for quantum meruit because no genuine triable issue of material fact exists upon which a finding of quantum meruit could be based.

ISSUE 5: There is no merit to cross-complainant’s fifth cause of action for unjust enrichment because no genuine triable issue of material fact exists upon which a finding of unjust enrichment could be based.

“To recover on a claim for the reasonable value of services under a quantum meruit theory, plaintiff must establish both that he or she was acting pursuant to either an express or implied request for services from the defendant and that the services were intended to and did benefit the defendant.”  

Ochs v. PacifiCare of California (2004, 2nd Dist.) 115 Cal.App.4th 782, 794, citing Day v. Alta Bates Medical Center (2002) 98 Cal.App.4th 243, 248.  

Unjust enrichment is a variety of constructive trust recovery, based on the principle that “a person who has been unjustly enriched at the expense of another is required to make restitution to the other.”  Restatement of Restitution, section 1.    The cause of action requires some relationship between the parties; some unjust enrichment at the direct expense of the plaintiff.   See Kossian v. American Nat’l Ins. Co. (1967) 254 Cal.App.2d 647, 649.  

 

Mercury argues that these common count causes of action are improper given the allegations in this matter of breach of an express agreement.   Mercury relies on 4 Witkin, Cal. Proc. 6th Pleading section 563, in which it is stated:

“Actions based on express contract may not be pleaded by common count in the following situations:…

(2) Where the plaintiff seeks either damages for breach, or specific performance. (See Willett & Burr v. Alpert (1919) 181 C. 652, 659, 185 P. 976 [buyer's action for damages for partial failure to deliver goods after full payment of price]; Weitzenkorn v. Lesser (1953) 40 C.2d 778, 793, 256 P.2d 947; King v. San Jose Pac. Bldg. & Loan Assn. (1940) 41 C.A.2d 705, 708, 107 P.2d 442.)”

The issue at this stage is not really a pleading issue, but the matter has now reached a point where an election between the alternate theories would be appropriate, which would essentially require cross-complainant to show some reason why the express contract, the policy, is not enforceable or should not be enforced.   

Cross-complainant in opposition does not dispute that the cross-complaint alleges a cause of action for breach of express contract.   [UMF No. 102, Response to UMF No. 102, “Undisputed.”].   Cross-complainant has also conceded it is undisputed that the restaurant was insured by the subject policy, and that the policy’s terms were as specified in the moving papers, as set forth above.  [UMF Nos. 104-106, and evidence cited; Response to UMF Nos. 104-106, “Undisputed.”].   The Response to Separate Statement indicates that every fact supporting the motion as to the quantum meruit cause of action is “Undisputed.” [See UMF Nos. 102-110; Response to UMF Nos. 102-110, “Undisputed.”].  As to the cause of action for unjust enrichment, only one fact, UMF No. 116, is designated “Disputed,” without reference to any evidence.  The other facts are conceded as “Undisputed.”  [UMF Nos.  111-115, 117-119; Response to UMF Nos. 111-115, 117-119]. 

The bare designation of a fact as “disputed” is insufficient in response to a summary judgment motion.  

Under CCP § 437c(b)(3):

“The opposition papers shall include a separate statement that responds to each of the material facts contended by the moving party to be undisputed, indicating whether the opposing party agrees or disagrees that those facts are undisputed.  The statement shall also set forth plainly and concisely any other material facts that the opposing party contends are disputed.  Each material fact contended by the opposing party to be disputed shall be followed by a reference to the supporting evidence.  Failure to comply with this requirement of a separate statement may constitute a sufficient ground, in the court’s discretion, for granting the motion.” 

(Emphasis added).  

Under CRC Rule 3.1350 (f):

“The Separate Statement in Opposition to Motion must be in the two-column format specified in (h).

(1) Each material fact claimed by the moving party to be undisputed must be set out verbatim on the left side of the page, below which must be set out the evidence said by the moving party to establish that fact, complete with the moving party's references to exhibits.

(2) On the right side of the page, directly opposite the recitation of the moving party's statement of material facts and supporting evidence, the response must unequivocally state whether that fact is “disputed” or “undisputed.” An opposing party who contends that a fact is disputed must state, on the right side of the page directly opposite the fact in dispute, the nature of the dispute and describe the evidence that supports the position that the fact is controverted. Citation to the evidence in support of the position that a fact is controverted must include reference to the exhibit, title, page, and line numbers.”

(Emphasis added).

Cross-complainant has failed to follow the disputed fact by a reference to evidence and has failed to describe the evidence that supports the position that such a fact is controverted at all, let alone with the specificity required.  

In any case, the undisputed facts are sufficient to establish that cross-complainant is owed nothing by Mercury, under any theory, and cross-complainant has failed to submit legal argument or evidence to raise triable issues with respect to the validity of the causes of action.  The motion accordingly is granted as to the fifth and sixth causes of action as well.  

ISSUE 6: There is no merit to cross-complainant’s sixth cause of action for contribution and equitable indemnity because no genuine triable issue of material fact exists upon which a finding of contribution and equitable indemnity could be based.

The right of contribution is generally set forth in CCP § 875, which provides, in pertinent part:

“(a) Where a money judgment has been rendered jointly against two or more defendants in a tort action there shall be a right of contribution among them as hereinafter provided.”

To establish a claim for equitable indemnity, cross-complainants must establish:

1) Each cross-defendant is liable to the third-party claimant in whole or in part for the injuries, if any, suffered by the claimant; and 

2) Each cross-defendant should be required to pay a share of the claimant’s judgment which is in proportion to the comparative negligence of that defendant in causing the claimant’s injuries.

Li v. Yellow Cab Co. (1979) 13 Cal.3d 804, 828-829. 

Indemnity means "the obligation resting on one party to make good a loss or damage another party has incurred."  Rossmoor Sanitation, Inc. v. Pylon, Inc. (1975) 13 Cal. 3d 622, 628.

Mercury argues that it is not subject to any contribution or indemnity claims here, as such a claim requires that Mercury be a joint tortfeasor with either cross-complainant or with its co-cross-defendant Travelers.   Mercury argues that it is not a joint tortfeasor with cross-complainant, pursuant to Kardly v. State Farm Mut. Auto. Ins. Co. (1989) 207 Cal.App.3d 479, in which the court of appeal found that the trial court had erred in finding that the insurer of personal injury plaintiffs in an automobile accident case was a joint tortfeasor with the driver of the opposing vehicle, Short, with respect to a claim for insurance bad faith against the insurer, State Farm, which prevented plaintiffs from invoking the collateral source rule.   The court of appeal reasoned:

“Short bears no potential liability for State Farm's fraud and for its breach of its fiduciary duty to act in good faith and deal fairly with the Kardlys, its insureds. The Kardlys' recovery from Short for her negligent driving bears no relationship to the potential liability of State Farm in this suit. The Kardlys' claim fortuitously provided State Farm with the opportunity to commit fraud and to breach its covenant of good faith and fair dealing it owed the Kardlys under their contract. That nexus is too tenuous to support an offset of any recovery the Kardlys may obtain against State Farm under the collateral source rule.”

Kardly, at 486.  

Mercury argues that cross-complainant here is in the position of the other driver in Kardly and cannot establish status with Mercury as joint tortfeasors.  In addition, as discussed above, Mercury has submitted evidence showing that it did not engage in any tort in this matter whatsoever, and cross-complainant has again failed to raise triable issues of material fact which would support a reasonable inference that Mercury has engaged in any wrongdoing at all.

Mercury also argues that as a matter of law, it cannot be considered a joint tortfeasor with co-cross-defendant Travelers, because case law establishes two insurance companies providing separate policies of insurance to the same insured cannot be joint tortfeasors with regard to a claim brought by the insured based upon the insurance carriers’ alleged failure to pay benefits under the separate policies of insurance.  Hartford Accident & Indemnity Co. v. Superior Court (1994) 29 Cal.App.4th 435. 

The court of appeal in Hartford reasoned:

“Hartford and Landmark are not jointly liable to their common insured. Instead, each insurer's defense and indemnification liabilities, if any, are several and depend on the terms and conditions of the policy of each, neither being liable for the policy obligations owed by the other. (See, e.g., 8A Appleman, Insurance Law and Practice (1981) § 4908, p. 381.) Since neither Hartford nor Landmark is liable to pay the contractual obligations of the other, both are severally (rather than jointly) liable for their respective breaches of contract. Nor are they joint tortfeasors. Even if Hartford or Landmark committed the tort of breach of the implied covenant of good faith, the bad faith of either would depend solely on its own several conduct. Because their torts would be severable, and neither would be liable for the extracontractual damages (such as emotional distress) caused by the other's bad faith (Civ. Code, § 1431.2), they are in no sense “joint tortfeasors” to which the provisions of section 877.6 might apply. (See, e.g., Carr v. Cove (1973) 33 Cal.App.3d 851, 853-856 [109 Cal.Rptr. 449] [defendants not joint tortfeasors, and statutes for contribution among joint tortfeasors inapplicable where a defendant's conduct is separate and has caused distinct, divisible injuries].)”

Hartford, at 441, italics in original.   

Here, Mercury submits evidence that on the date of the incident, cross-complainant’s restaurant was insured by two separate policies of insurance by Mercury and Travelers.  [UMF No. 121, and evidence cited; Castillo Decl., paras. 25-27, 44, 45].  Cross-complainant in Response has conceded that this fact is “Undisputed.”  [Response to UMF No. 121].   No triable issues of material fact remain, and the motion as to the sixth cause of action for contribution and equitable indemnity is granted.    

ISSUE 7: There is no merit to cross-complainant’s claim for punitive damages because no genuine triable issue of material fact exists upon which a finding of malice, fraud or oppression could be based. 

Mercury also seeks to summarily adjudicate cross-complainant’s claim for punitive damages.  As the motion will be granted as to each of the causes of action asserted against Mercury, this issue is moot, as there is no basis for liability, so no basis for an award of punitive damages.  Under Civil Code § 3294 (a):

“(a) In an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant.”

As discussed above, Mercury has established that it is not liable for damages under each of the causes of action asserted against it, including those not arising from contract, and cross-complainant has failed to raise triable issues of material fact.   Cross-complainant has also failed to submit evidence supporting a finding that Mercury acted with oppression, fraud or malice, and has, in response to the Separate Statement, designated as “Undisputed” the facts that Mercury’s handling of the claim was not motivated by ill will or personal animosity, Mercury did not act with an intent to injure the cross-complainant, and there were no representations made to cross-complainant by Mercury which were false, or constituted fraud. [See UMF Nos. 167-169, and evidence cited; Response to UMF Nos. 167-169, “Undisputed.”] 

Summary judgment is appropriately granted in favor of moving cross-defendant Mercury on the entire cross-complaint, which would include any claims for punitive damages.  

Travelers’ Motion

Procedural

There have been no timely opposition papers filed in response to this motion. 

CCP §437c(b)(3) sets forth the specific requirements for opposition papers in connection with a motion for summary judgment, including the requirement of the filing of a separate statement of material facts.   This subdivision provides: “Failure to comply with this requirement of a separate statement may constitute a sufficient ground, in the court’s discretion, for granting the motion.”  The motion is granted on the ground cross-complainant has failed to file separate statement.   

Substantive

Cross-Defendant Travelers Property Casualty Company of America argues that Carrows cannot prove one or more elements of each of the causes of action alleged against Travelers in Carrows’ cross-complaint for damages.   

ISSUE 1: Carrows’ Second Cause of Action for conversion has no merit and fails as a matter of law as to Travelers because Carrows does not allege and cannot prove (a) that Travelers disposed of Carrows’ property rights or converted Carrows’ property by wrongful act or (b) the existence of an agency or other relationship between Travelers and Plaintiff/Cross-Defendant Nextgen Associates, Inc. dba Servicemaster Restoration By EMT (“Servicemaster”) sufficient to hold Travelers liable for any conversion of Carrows’ property by Servicemaster.

Again, to establish a cause of action for conversion, cross-complainant must plead and prove the following elements: Ownership, or right to possession of property; wrongful disposition of property right; and damages.  Imperial Valley Land Co. v. Globe Grain & Milling Co. (1921) 187 Cal.352, 354.  

Travelers argues that the cause of action for conversion is not based on any act or omission by Travelers but is premised on Servicemaster’s refusal to return kitchen equipment and property removed from the restaurant as part of Servicemaster’s services.  As noted above, the second cause of action in the cross-complaint appears to be limited to the conduct of Servicemaster in refusing to return kitchen utensils, and its exit from the jobsite before completing the fire restoration services allegedly contracted by cross-complainant’s insurance carrier.  [See Cross-Complaint, paras. 42, 41].  There is no mention in the cause of action of any conversion conduct by Travelers, only that the responsibility to pay unpaid invoices so that Servicemaster would release the personal property “solely lies with Cross-Defendants Mercury Insurance and/or Travelers Ins.”  [Cross-complaint, para. 39 (Ex. 4 to RFJN)].  The pleading indicates that the unlawful conduct of “Defendants SMET, and Roes 1 to 100, and each of them, constitutes the civil wrong of Conversion…”  [Cross-complaint, para. 39].  The pleading does not allege acts of conversion on the part of Travelers.  

Travelers submits evidence that it did not receive possession of any business property of Carrows removed from the property by Servicemaster.  [UMF No. 16, and evidence cited, Dietrich Decl., para. 8].  Specifically, Travelers’ AVP of Property Claims, Steven Dietrich, who participated in Travelers’ investigation of the claim for benefits related to the subject building, states that Travelers “did not receive possession of any business property of Carrows removed from the Property by Servicemaster.”  [Dietrich Decl. para. 8]. 

Travelers also points out that there are no allegations in the pleading that Servicemaster was the agent of Travelers.  Travelers argues that it is well-settled that the burden of proving agency rests with the person alleging it.   See South Sacramento Drayage Co. v. Campbell Soup Co. (1963) 220 Cal.App.2d 851, 857-858, discussed above; Brooks v. Johnson (1937) 22 Cal.App.2d 618, 621 (“The burden of proving agency rests on the party alleging it.”)   Travelers also submits evidence that Travelers did not enter into a contract with Servicemaster related to the loss, Travelers did not retain Servicemaster to perform services at the property, and Travelers did not direct or control Servicemaster in the performance of its work at the property.  [UMF No. 16, and evidence cited, Dietrich Decl., para. 8].

This showing is sufficient to establish that cross-complainant will be unable to establish the essential element of the conversion cause of action that Travelers converted any property of cross-complainant.   The burden accordingly shifts to cross-complainant to raise triable issues of material fact.  Cross-complainant has failed to file opposition to the motion, so has failed to meet this burden.  The motion as to the second cause of action for conversion accordingly is granted. 

ISSUE 2: Carrows’ Fifth Cause of Action for unjust enrichment has no merit and fails as a matter of law as to Travelers because Carrows does not allege and cannot prove (a) that Travelers disposed of Carrows’ property rights or converted Carrows’ property by wrongful act, (b) the existence of an agency or other relationship between Travelers and Servicemaster sufficient to hold Travelers liable for any conversion of Carrows’ property by Servicemaster or (c) the receipt by Travelers of any benefit as a result of any conversion of Carrows’ property by Servicemaster.

Travelers argues that under the law of restitution, a party may be required to make restitution if the party is unjustly enriched at the expense of another, and that “a person is enriched if he receives a benefit at another’s expense.” Ghirardo v. Antonioli (1996) 14 Cal.4th 39, 51.  

Travelers argues that this cause of action fails as cross-complainant cannot establish that Travelers received any benefit at cross-complainant’s expense.   Travelers points out that the cross-complaint alleges that the purported benefit received by the cross-defendants, including Travelers, was the “unlawful retention of Cross-Complainant’s kitchen equipment, utensils and property acquired by Cross-Defendants SMEMT and Roes 1 to 100.”  [Cross-Complaint, para. 55 (RFJN, Ex. 4)].  Travelers is not one of those identified cross-defendants.   

Travelers submits evidence that Traveler did not receive any of the business property.  [UMF No. 16, and evidence cited, Dietrich Decl., para. 8]. 

This is sufficient to establish that cross-complainant will be unable to establish the essential element of the unjust enrichment cause of action that Travelers received any benefit at the expense of cross-complainant.  The burden accordingly shifts to cross-complainant to raise triable issues of material fact.  Cross-complainant has failed to file opposition to the motion, so has failed to meet this burden.  The motion as to the fifth cause of action for unjust enrichment accordingly is granted. 

ISSUE 3: Carrows’ Sixth Cause of Action for contribution has no merit and fails as a matter of law because Carrows does not allege and cannot prove that Carrows paid any portion of the amount claimed by Servicemaster for unpaid restoration services. 

ISSUE 4: Carrows’ Sixth Cause of Action for equitable indemnity has no merit and fails as a matter of law because Carrows does not allege and cannot prove that Carrows paid any portion of the amount claimed by Servicemaster for unpaid restoration services. 

The sixth cause of action is for contribution and equitable indemnity.  

With respect to contribution, Civil Code section 1432 provides that, with exceptions not applicable here, “a party to a joint, or joint and several obligations, who satisfies more than his share of the claim against all, may require a proportionate contribution from all parties joined with him.” 

Travelers argues that the “law in California is well settled that an obligor who has paid nothing on the obligation cannot recover from his co-obligors for their proportionate share of the debt.”   Hosking v. Spartan Properties, Inc.  (1969) 275 Cal.App.2d 152, 157.  

Travelers argues that Carrows does not allege in the cross-complaint that it paid some portion of the $66,623.56 claimed by Servicemaster for restoration services provided at the property but alleges that it has no contractual or legal obligation to pay the unpaid invoices, and also fails to state it made any such payment in response to Traveler’s Special Interrogatory No. 7, asking for all facts supporting the contribution cause of action.  [Cross-Complaint; UMF Nos. 20-22, and evidence cited, Ashley Decl., paras. 1, 2; Exs. 5, 6, Interrogatories and Responses, pp. 161, 162]. 

Travelers also submits evidence that Carrows is not Travelers’ insured, the insured is TSL, and Carrows has no basis to suggest that Travelers and Carrows could be jointly liable to Servicemaster since Travelers did not contract with Servicemaster.  [UMF Nos. 10-12, 16, and evidence cited, Dietrich Decl., para. 5, Ex. 1, pp. 5, 8, 13, 91-92; para. 8]. 

With respect to equitable indemnity, Travelers argues that these facts also establish that such a claim has not accrued because cross-complainant cannot show that he has suffered loss through payment of an adverse judgment or settlement.  Travelers argues that the failure of Carrows to allege or produce evidence in discovery that it has paid the claim of Servicemaster also defeats this theory of liability, and, again, that Carrows is not insured by Travelers, so that there is no basis to transfer any alleged liability to Travelers.   

This showing, specifically that Travelers engaged in no conduct for which it would be liable to cross-complainant, is sufficient to establish that cross-complainant will be unable to establish the cause of action for contribution or equitable indemnity.  The burden accordingly shifts to cross-complainant to raise triable issues of material fact.  Cross-complainant has failed to file opposition to the motion, so has failed to meet this burden.  The motion as to the sixth cause of action for contribution and equitable indemnity will accordingly be granted.  

RULING:

Mercury Insurance Company Motion 

Motion for Summary Judgment, or in the Alternative, for Summary Adjudication of Issues is GRANTED. 

Motion for Summary Judgment is GRANTED. 

Cross-Defendant Mercury Insurance Company has submitted evidence establishing that cross-complainant Carrows will be unable to establish one or more elements of each of its causes of action alleged against cross-defendant in its cross-complaint.  

Specifically, Mercury has established that as to the first cause of action for breach of contract, cross-defendant will be unable to establish that Mercury breached the insurance policy it issued to cross-defendant but performed all of its obligations under the policy.  [UMF Nos.43, 46, 50, 52, 53, 54, and evidence cited; Ex. BB, pp. 6, 33-34 (Motion pp. 640, 667-668)].   As to the second cause of action for conversion, Mercury has established that it did not engage in the acts of conversion claimed by plaintiff, but the purported conversion was carried out by Servicemaster.  [UMF Nos. 55, 56, and evidence cited].  Mercury has also established that Servicemaster was not acting as an agent of Mercury, so that Mercury has no responsibility for its acts, as the Work Authorization is made by Sawhney as “Client” authorizing Servicemaster Restoration by EMT to proceed, and expressly states, “Client agrees that ServiceMASTER is an independent emergency mitigation repair company and is not the representative, agent, or employee of any insurance company.”  [See Motion, Ex. B, Cross-Complainant’s Responses to Request for Production of Documents, Response to Request No. 1, Ex. A].  As to the third cause of action for breach of implied covenant of good faith and fair dealing, Mercury has established that cross-complainant will be unable to show that Mercury withheld policy benefits, as established in connection with the first cause of action, and that Mercury did not act unreasonably in the handling of cross-complainant’s claim.  [UMF Nos. 61-101, and evidence cited].   As to the fourth cause of action for quantum meruit and the fifth cause of action for unjust enrichment, Mercury has established that the claims against it arise out of an express contract, and that in any case, no payment is due from Mercury to cross-complainant as alleged.  [UMF Nos. 102-110, 111-115, 117-119, and evidence cited].  As to the sixth cause of action for contribution and equitable indemnity, Mercury has established that cross-complainant cannot establish facts under the circumstances under which Mercury would be considered a joint tortfeasor with cross-complainant or cross-defendant Travelers; as discussed above, the facts do not show that Mercury engaged in tortious conduct, and, further, no joint tort can be shown.   [See UMF No. 121, and evidence cited, Castillo Decl., paras. 25-27, 44, 45; Kardly v. State Farm Mut. Auto. Ins. Co. (1989) 207 Cal.App.3d 479; Hartford Accident & Indemnity Co. v. Superior Court (1994) 29 Cal.App.4th 435.]   

This showing is sufficient to shift the burden to cross-complainant to raise triable issues of material fact. 

In response to the motion, cross-complainant has failed to submit a memorandum of points and authorities, as required under CRC Rule 1350 (e).  Cross-complainant has submitted a Response to Separate Statement and a Declaration.   The Response to Separate Statement concedes that critical facts are in fact undisputed, and the evidence submitted fails to raise triable issues of material fact. 

  

Specifically, with respect to the first cause of action for breach of contract, cross-complainant concedes as “Undisputed” the policy of insurance issued by Mercury, as well as the terms of that policy upon which Mercury relies to establish its performance.  [See Response to UMF Nos. 48, 49, “Undisputed.”].   The opposition concedes that Mercury made payments to cross-complainant under those terms of the policy, through the time the parties agreed would be the end date for the period of restoration, and of the obligations of Mercury. [Response to UMF Nos. 43, 44, 52, 54, “Undisputed.”]  Cross-complainant fails to make any factual showing that there was any tenant improvement or betterments to the property or business personal property which was subject to the policy and that Mercury did not pay for the cost of repair or damage.   Cross-complainant makes no legal argument concerning what the policy language would encompass, by reference to any specific damage for which cross-complainant’s claim was not paid.   To the extent the opposition argues that the work order executed by cross-complainant with Servicemaster was with Mercury and its approved vendor, cross-complainant has failed to submit evidence or refer to any payment on work performed which was not made and has failed to explain how Carrows’ purported understanding that all claims would be paid, rather than claims covered by the subject policy, is enforceable.  [See Response to UMF No. 51, and evidence cited].  The declaration submitted does not state that Mercury is responsible for any particular failure to pay, but states that “Mercury and/or Travelers” have failed to pay, conceding that the responsibility may be on Travelers, and not on Mercury.  [Sawhney Decl., para. 11]. This is insufficient to raise triable issues. 

As to the second cause of action for conversion, cross-complainant does not submit any evidence that Mercury itself engaged in conversion, and the response to the Separate Statement cites no evidence in support of the single disputed fact, evidently referring to the allegations of the cross-complaint, which is not appropriate on summary judgment. To the extent cross-complainant appears to argue that there was an agency relationship between Mercury and Servicemaster, cross-complainant has submitted no evidence to meet its burden of establishing such an agency relationship and fails to address the written Agreement’s express statement that there was no such agency.  To the extent the opposition seems to argue that Mercury converted insurance benefits, this is not alleged in the cross-complaint, which is limited to the conduct of Servicemaster, and, in any case, as discussed above, cross-complainant has failed to raise triable issues with respect to moving defendant having withheld policy benefits which were in fact due.  

[See Response to UMF No.  57; Cross-Complaint, paras. 39 (alleging the unlawful conduct of “Defendants SMET, and Roes 1 to 100, and each of them, constitutes the civil wrong of Conversion”), 42, 41].   Cross-defendant has failed to raise triable issues of material fact which would support a reasonable inference that moving defendant engaged in actionable conversion.

As to the third cause of action for breach of implied covenant of good faith and fair dealing, the opposition fails to raise triable issues which would support a finding that insurance benefits were withheld, as discussed in connection with the first cause of action above. [See Responses to UMF Nos. 117, 119, 61-69].  Cross-complainant also fails to raise triable issues with respect to whether the conduct of Mercury with respect to cross-complainant’s claim was unreasonable to support a bad faith claim.  [Response to UMF Nos. 70-101, “Undisputed.”]. 

As to the fourth cause of action for quantum meruit and fifth cause of action for unjust enrichment, cross-complainant has failed to dispute the facts presented by Mercury, other than one fact, which is designated “Disputed,” with no citation to evidence to permit the Court to conclude that the fact is legitimately controverted, and, in any case, as discussed above, no facts have been raised which would support a reasonable inference that cross-complainant is entitled to payment from Mercury.  [Response to UMF Nos. 102-115, 117-119, “Undisputed;” Response to UMF No. 116, “Disputed.”]   No triable issues have been raised.  

With respect to the sixth cause of action for contribution and equitable indemnity, cross-defendant has failed to submit facts supporting a reasonable inference that Mercury engaged in tortious conduct, as discussed above in connection with the second and third causes of action and has failed to address the legal authority under which Mercury argues it cannot in any case be considered a joint tortfeasor with the other parties to this matter.   No triable facts remain. 

Since the motion disposes of the entire cross-complaint against the moving defendant, summary judgment is appropriately awarded.  

Cross-defendant Mercury Insurance Company is ordered to submit appropriate judgment for the signature of the Court. 

The Court notes that on September 22, 2022, six days late, and on the date timely reply to opposition was due, cross-complainant filed an “Opposition” to Mercury Insurance’s Motion, an “Amended” Response to Mercury’s Separate Statement, and a Separate Statement of Disputed Facts.   These documents were served by e-mail on September 21, 2022, by electronic mail, five days late, and only one court day before timely reply was due. 

CCP section 437c(b)(2) provides with respect to opposition to a motion for summary judgment:

“Any opposition to the motion shall be served and filed not less than 14 days preceding the noticed or continued date of hearing, unless the court for good cause orders otherwise.”

Under Rule 3.1300(d), the Court may, in its discretion, refuse to consider a late-filed paper, so long as it so indicates in its minutes or order. 

  

These documents are untimely and deprived the moving party of the full statutory time within which to reply to the opposition, to the prejudice of the moving party.  Moving party Mercury in its timely reply has objected to the Court considering these untimely additional documents.  Cross-complainant did not seek leave of Court to file these untimely and “amended” pleadings, but simply filed and served them well after the time to file and serve them had expired.  The pleadings filed on September 22, 2022 accordingly are not considered by the Court. 

The Court also notes that the “Opposition” is not designated a memorandum of points and authorities, and cites only one legal authority, the summary judgment statute, so does not comply with the statutory provisions the Court’s tentative ruling notes had been violated. The newly submitted Response to Separate Statement makes entirely new designations, which is improper.  The newly submitted Separate Statement of Disputed Facts was required to have been timely filed and served with the original opposition papers and appears to attach purported evidence without any declaration submitted which would authenticate that evidence.  The newly filed and served materials also do not appear to present any matter of law or fact which could not have been presented by the deadline to file opposition to the motion.   These observations provide further justification for the Court refusing to consider such late-filed pleadings.  

 

Travelers’ Motion

Cross-Defendant Travelers Property Casualty Company of America’s UNOPPOSED Motion for Summary Judgment, or Alternatively, Summary adjudication of Issues Against Defendant/Cross-complainant OM ABS, Inc. dba Carrows Restaurant is GRANTED, procedurally, and on its merits. 

Procedurally, the Court finds that cross-complainant has failed to file any papers opposing this motion and has failed to comply with the statutory requirement of filing a separate statement addressing each material fact raised in the moving papers.  Pursuant to CCP §437c(b), the motion is granted.   

On its merits, cross-defendant Travelers has presented uncontroverted evidence establishing that cross-defendant will be unable to establish its causes of action against Travelers. 

Specifically, as to the second cause of action for conversion and fifth cause of action for unjust enrichment, Travelers has established that the cross-complaint fails to allege and direct conduct of conversion by Travelers, or of its receipt of any benefit to establish unjust enrichment.  [See RFJN, Ex. 4, Cross-Complaint, paras. 39, 42, 41, 55].  Travelers has also submitted evidence establishing that it did not receive possession of any business property of Carrows removed from the property by Servicemaster.  [UMF No. 16, and evidence cited, Dietrich Decl., para. 8].  Travelers has submitted uncontroverted evidence showing that cross-complainant will be unable to establish any theory that Servicemaster acted as an agent for Travelers, including evidence that Travelers did not enter into a contract with Servicemaster related to the loss, Travelers did not retain Servicemaster to perform services at the property, and Travelers did not direct or control Servicemaster in the performance of its work at the property.  [UMF No. 16, and evidence cited, Dietrich Decl., para. 8]. 

As to the sixth cause of action for contribution and equitable indemnity, Travelers has submitted additional evidence showing that Carrows is not Travelers’ insured, the insured is TSL, and Carrows has no basis to suggest that Travelers and Carrows could be jointly liable to Servicemaster since Travelers did not contract with Servicemaster.  [UMF Nos. 10-12, 16, and evidence cited, Dietrich Decl., para. 5, Ex. 1, pp. 5, 8, 13, 91-92; para. 8].  

This showing is not disputed by cross-complainant.  Without appropriate allegations and evidence establishing that Travelers converted property belonging to cross-complainant, benefited from any alleged unjust enrichment, or is otherwise responsible for any damages suffered, cross-complainant will be unable to establish any of its causes of action against Travelers.  

Since the motion disposes of each cause of action in the cross-complaint against the moving defendant, summary judgment is appropriately awarded.  

Cross-defendant Travelers Property Casualty Company of America is ordered to submit appropriate judgment for the signature of the Court.  

UNOPPOSED Request for Judicial Notice in Support of Cross-Defendant Travelers Property Casualty Company of America’s Motion for Summary Judgment, or, Alternatively, Summary Adjudication of Issues Against Defendant/Cross-complainant OM ABS, Inc. dba Carrows Restaurant is GRANTED.

The Court notes that on September 26, 2022, 2022, ten days late, and on the date timely reply to opposition was due, cross-complainant filed opposition papers to Travelers’ Motion, consisting of Cross-Complainant’s Opposition to Cross-Defendant Travelers Property Casualty Company of America’s Motion, and Cross-Complainant’s Separate Statement of Disputed Facts in Opposition to Travelers Insurance’s Motion.   These opposition papers were served on September 23, 2022, by electronic mail, which was seven days late, and on a court holiday falling just before the date timely reply was due.  

CCP section 437c(b)(2) provides with respect to opposition to a motion for summary judgment:

“Any opposition to the motion shall be served and filed not less than 14 days preceding the noticed or continued date of hearing, unless the court for good cause orders otherwise.”

Under Rule 3.1300(d), the Court may, in its discretion, refuse to consider a late-filed paper, so long as it so indicates in its minutes or order. 

  

These documents are untimely, and the untimeliness deprived the moving party of the full statutory time within which to reply to the opposition, to the prejudice of the moving party.  Moving party Travelers in its timely reply has objected to the Court considering these untimely documents.  Cross-complainant did not seek leave of Court to file these untimely pleadings, but simply filed them well after the time to file and serve them had expired.  Travelers in its reply cites Bozzi v. Nordstrom, Inc. (2010) 186 Cal.App.4th 755, in which the Second District found the trial court had properly refused to consider late-filed papers in opposition to a motion for summary judgment which plaintiff had filed on the date of the hearing, consisting of a “surrebuttal” brief and a supplemental expert declaration.  

The Second District noted that in that case:

“Plaintiff never made a request to continue the hearing pursuant to Code of Civil Procedure section 437c, subdivision (h), on the ground that she could not have presented the supplemental declaration with her opposition brief.  She never sought leave of court to file he “surrebuttal” brief or supplemental declaration.”

Bozzi, at 765.  

The Second District observed:

“We review the trial court's refusal to consider plaintiff's “surrebuttal” brief for an abuse of discretion. A trial court has broad discretion under rule 3.1300(d) of the Rules of Court to refuse to consider papers served and filed beyond the deadline without a prior court order finding good cause for late submission. (Hobson v. Raychem Corp. (1999) 73 Cal.App.4th 614, 623, 86 Cal.Rptr.2d 497, disapproved on other grounds in Colmenares v. Braemar Country Club, Inc. (2003) 29 Cal.4th 1019, 1031, fn. 6, 130 Cal.Rptr.2d 662, 63 P.3d 220; accord, Lerma v. County of Orange (2004) 120 Cal.App.4th 709, 715–716, 15 Cal.Rptr.3d 609 [trial court has broad discretion to refuse to continue hearing where affidavit did not establish Code Civ. Proc., § 437c, subd. (h) conditions].)

We cannot find any reason to conclude the trial court abused its discretion. Defendants followed all the rules and were entitled to expect the trial court to enforce them. Plaintiff did not invoke any of the available procedures to obtain a court order permitting her to file late papers.”

Bozzi, at 765. 

Here, cross-defendant also similarly followed all the rules in connection with seeking summary judgment and is entitled to expect this Court to enforce them.   Cross-complainant has failed to seek a continuance of the hearing under the summary judgment statute, or to invoke any of the available procedures to obtain a court order permitting cross-complainant to file late papers, or to present any facts to this Court which would permit the Court to find that it would be in the interests of justice to permit the late filing.   The pleadings filed on September 26, 2022 accordingly are not considered by the Court.   To the extent cross-complainant intended to have the court consider any documents filed in connection with the Mercury opposition on September 22, 2022 in connection with the Travelers motion, those untimely documents are also not considered.   To the extent the opposition appears to incorporate by reference the timely opposition papers in connection with the Mercury motion, no authority is cited under which this type of incorporation would be proper.   The Court has accordingly considered the motion unopposed.

 GIVEN THE CORONAVIRUS CRISIS, AND TO ADHERE TO HEALTH GUIDANCE THAT DICTATES SAFETY MEASURES, DEPARTMENT D IS ENCOURAGING AUDIO OR VIDEO APPEARANCES

Please make arrangement in advance if you wish to appear via LACourtConnect/Microsoft Teams by visiting www.lacourt.org to schedule a remote appearance.  Please note that LACourtConnect/Microsoft Teams offers free audio and video appearance. Counsel and parties (including self-represented litigants) are encouraged not to personally appear.  With respect to the wearing of face masks, Department D recognizes that currently, the Los Angeles Department of Public Health strongly recommends masks indoors, especially when interacting with individuals whose vaccination status is unknown; for individuals who have a health condition that puts them at higher risk for severe illness; individuals who live with someone who is at higher risk; and for individuals who are around children who are not yet eligible for vaccines.  In accordance with this guidance, it is strongly recommended that anyone personally appearing in Department D wear a face mask.  The Department D Judge and court staff will continue to wear face masks.  If no appearance is set up through LACourtConnect/Microsoft Teams, or otherwise, then the Court will assume the parties are submitting on the tentative.