Judge: Shirley K. Watkins, Case: 20VECV01193, Date: 2022-12-15 Tentative Ruling

Case Number: 20VECV01193    Hearing Date: December 15, 2022    Dept: T

            [TENTATIVE] ORDER:  Defendant California Automobile Insurance Company’s Motion for Summary Judgment is GRANTED as to the statute of limitations defense.  The alternative motion for summary judgment and summary adjudication are MOOT.

Defendant California Automobile Insurance Company’s Request for Judicial Notice is GRANTED but not as to any hearsay or any facts in dispute.

Plaintiffs Gregory and Janice Love’s Request for Judicial Notice is DENIED.

Introduction

            Defendant/Doe 1 California Automobile Insurance Company (Defendant) moved for summary judgment (MSJ) and alternatively for summary adjudication (MSA) against Plaintiffs Janice and Gregory Love’s (Plaintiffs) First Amended Complaint (FAC.)  Defendant’s MSA moved only against Plaintiffs’ second cause of action (COA) for bad faith.  The FAC alleged three COAs: the first COA for breach of contract and the third COA for intentional infliction of emotional distress (IIED.) 

            Procedure

            Defendant argued a few procedural defects as to Plaintiffs’ opposition: failure to file a separate statement; untimely filing of declaration, exhibits and requests for judicial notice; and page limit violation.  As to the declaration of Plaintiff Janice Love, Plaintiffs filed two declarations[1].  Plaintiffs did not present argument against these procedural defects.  Defendant’s procedural arguments are merited.  However, Defendant does not show prejudice since they proceeded to address the merits of the opposition.  The Court considered all the briefs filed by Plaintiffs. 

            Plaintiffs requested judicial notice of weather charts (Exhibits 1-3) and a guide published by the Environmental Protection Agency (EPA) (Exhibit 4.)  As to the weather charts, the documents appear to be taken from the internet.  Judicial notice of Internet pages may be improper absent evidentiary foundation showing the following elements: 1) Author, 2) date of creation, 3) purpose, 4) reliability, and 5) veracity.  (Hartwell Corp. v. Superior Court (2002) 27 Cal.4th 256, 279 n. 12.)  Plaintiffs did not properly lay foundation for the webpages.  As to the EPA guide, there is insufficient showing that the facts and propositions in the Guide are of common knowledge or are not reasonably subject to dispute or are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy.  For these defects, Plaintiffs’ request for judicial notice is denied.

            Discussion 

            Defendant’s MSJ argued that there is no triable issue of material fact as to their statute of limitations (SOL) affirmative defense.  Defendant’s SOL argument is based upon the one-year SOL expressly within the insurance policy.  The preliminary issue is whether the three COAs are all “on the policy.”  Defendant’s “fact” to support this contention is inadmissible evidence because it is an improper legal conclusion.  (Defendant’s Separate Statement of Facts (DSSF) 16.)  However, determining whether Plaintiffs’ allegations are “on the policy” requires a review of the allegations in the FAC. 

Bad faith is predicated on the insurance policy and arises out of the contractual relationship between the parties but the duty of good faith and fair dealing is not strictly a contractual obligation.  It is an obligation imposed by law which governs the discharging of contractual responsibilities.  Arising out of a contract and being “on the policy” are significantly different.  (Gruenberg v. Aetna Ins. Co. (1973) 9 Cal.3d 566, 573-574.)  The determination of whether the claims are “on the policy” requires a review of the allegations and not the title of the COA.  (Lawrence v. Western Mutual Insurance Co. (1988) 204 Cal.App.3d 565, 575; Velasquez v. Truck Insurance Exchange (1991) 1 Cal.App.4th 712, 719-720.)  Plaintiffs’ bad faith COA alleged breaches are for mishandling and improper denial of the claim.  (FAC par. 57.)  Plaintiffs’ IIED incorporated the allegations in the previous paragraphs and alleged that the Defendant wrongfully failed to pay their claim.  (FAC par. 62-63.)  These allegations show that the claims are based upon the mishandling of the claims and wrongful denial of policy benefits.  Plaintiffs are seeking their policy benefits.  (FAC pars. 58, 59, and 61.) Because Plaintiffs are seeking policy benefits, the COAs are “on the policy.”  Plaintiffs argued that these two COAs cannot be “on the policy” because the claims could only accrue after the claim was denied.  However, Plaintiffs’ argument as to accrual relies upon the statutory SOL whereas Defendant provided that the policy agreed upon a separate contractual SOL accruing at the “date of loss.”   Plaintiffs’ reliance on statutory accrual is inapplicable.  Further, determining whether the allegations are “on the policy” is not based upon accrual or even when the misconduct occurred.  “[W]here the bad faith action is based on allegations relating to the handling of a claim or the manner in which it is processed, it is an action “on the policy” and, therefore, subject to the limitations bar.”  (Velasquez v. Truck Insurance Exchange, supra, 1 Cal.App.4th at p. 719.)  Plaintiffs’ reliance upon the statutory SOL’s accrual is unpersuasive.  Plaintiffs’ allegations show that the claims are “on the policy” and the policy provides for its own accrual – the date of loss.

            The next issue is to determine if the action was filed in violation of the one-year time bar.  The policy provided that the SOL accrued at the “date of loss.”  Date of loss can be defined as

“that point in time when appreciable damage occurs and is or should be known to the insured, such that a reasonable insured would be aware that his notification duty [i.e., duty to notify the insurer of a covered loss] under the policy has been triggered.”  (Prudential-LMI Commercial Insurance v. Superior Court (1990) 51 Cal.3d 674, 687.)  Defendant's evidence showed that Plaintiffs reported that they noticed the loss either on October 12, 2019, or October 21, 2019.  (DSSF 7.)  The date of loss would be either of the two dates.  The SOL is also equitably tolled from the time the insured gives notice of the loss until the insurer formally denies coverage in writing.  (Prudential-LMI Commercial Insurance v. Superior Court (1990) 51 Cal.3d 674, 687.)  Defendant provided evidence that the loss was reported on October 31, 2019.  (DSSF 6.)  Defendant provided that the claim was denied by letter on January 24, 2020.  (DSSF 9.)  The SOL was equitably tolled for 86 days.  The one-year SOL, including the 86 day tolling period, would have expired either on January 5, 2021, or January 12, 2021 (i.e. a year from October 12, 2019, plus 86 days or October 21, 2019, plus 86 days, respectively.)  On October 16, 2020, Plaintiffs filed the original Complaint against dismissed party Mercury Insurance Company (Mercury.)  (DSSF 13.)  Defendant was substituted into the action as a Doe Defendant on February 24, 2021.  (DSSF 14.)  Plaintiffs’ claim is time-barred since Defendant was substituted into the action after January 5, 2021, or January 12, 2021.  Defendant’s SOL argument is persuasive and the burden transfers to Plaintiffs.

            Plaintiffs argued the doctrine of equitable tolling to defend against the SOL.  To support the doctrine, Plaintiffs cite to Addison v. State of California (1978) 21 Cal.3d 313 (Addison).  However, the Addison case is distinguishable from the instant action.  Addison provided for equitable tolling when plaintiff is pursuing an alternative remedy in another forum (i.e., a federal case.)  Plaintiffs have not shown that they were seeking alternative remedies in another forum.  The Addison case is inapplicable.

In Plaintiffs’ argument applying equitable tolling, it would appear that Plaintiffs’ argument is grounded on Defendant’s fraud.  Plaintiffs’ argument presented facts showing that they believed Mercury was the insurer and for that reason filed the case against Mercury.[2]  “In articulating the doctrine, the courts have had as their purpose to disarm a defendant who, by his own deception, has caused a claim to become stale and a plaintiff dilatory.”  (Regents of Univ. of Calif. v. Superior Court (1999) 20 Cal.4th 509, 533.)  The elements of equitable tolling are: 1) fraudulent conduct by the defendant resulting in concealment of the operative facts that are the basis of the cause of action; 2) plaintiff's failure to discover the operative facts; and 3) due diligence by the plaintiff until discovery of those facts.  (Sagehorn v. Engle (2006) 141 Cal.App.4th 452, 460-461.)  Plaintiffs argued that Defendant’s identity was concealed.  Plaintiffs asserted that all correspondence referenced Mercury and included the Mercury banner.  However, Plaintiffs’ responsive separate statement lacks any citation to evidence.  The banner at the top of correspondence attached to Plaintiff Janice Love’s declaration does not show Defendant’s concealment insofar as it is alleged that Defendant is a subsidiary of Mercury Insurance Group (FAC par. 13.)  Plaintiff Janice Love’s declaration does not show that the concealment was on the part of Defendant in that all correspondence from Defendant’s adjuster, Nicholas Pope, is signed by Defendant.  Further, the declaration page expressly identifies Defendant, as the insurer.  (DSSF 1.)  The correspondence submitted by Plaintiffs shows that Defendant was the party adjusting Plaintiffs’ claim.  Plaintiffs did not meet their burden to show a triable issue of fact on the SOL defense.

            The MSJ based upon Defendant’s SOL argument is GRANTED. 

            Defendant’s MSJ separately argued that there is no triable issue of material fact as to the element of breach.  Defendant asserted that the claim falls under the Long-Term Leak Exclusion.  Defendant’s MSA alternatively argued that there is no triable issue of material fact as to the second COA for bad faith based upon the defense of the Genuine Dispute Doctrine.  These two arguments are MOOT based upon the review on the SOL argument above.