Judge: Stephen P. Pfahler, Case: 21STCV38437, Date: 2024-02-27 Tentative Ruling


Case Number: 21STCV38437    Hearing Date: March 6, 2024    Dept: 68

Dept. 68

Date: 3-6-24 c/f 1-31-24

Case # 21STCV38437

Trial Date: 5-13-24

 

SUMMARY JUDGMENT/SUMMARY ADJUDICATION

 

MOVING PARTY: Defendant, National General Insurance Company, et al.

RESPONDING PARTY: Plaintiffs, Pamela and Clifford Cole

 

RELIEF REQUESTED

Motion for Summary Judgment/Summary Adjudication

·         1st Cause of Action: Breach of Contract

·         2nd Cause of Action: Breach of Duty of Good Faith and Fair Dealing

·         Claim for Punitive Damages

·         8th Affirmative Defense: Insured Property

 

SUMMARY OF ACTION

Plaintiffs Pamela and Clifford Cole own certain real property located at 28913 Medea Mesa Rod., Agoura Hills, CA. Plaintiffs maintain an active fire insurance policy with defendants National General Insurance Company, National General Premier Insurance Company, and Integon Insurance Company, at all relevant times.

 

On November 9, 2018, Plaintiffs home sustained damage during the Woolsey Fire. Plaintiffs specifically identify damage to a retaining wall abutting a tributary of Malibu Creek, and a deck at least partially over the retaining wall. Plaintiffs allege the wall constitutes a covered item under the “other structure” provision of the policy, with a coverage amount of up to $226,522, and potentially doubled in case of a brush fire to $453,044. Plaintiffs also allege a “code upgrade” provision in the policy, whereby any reconstruction/repair requiring an update to current code provisions, an entirely new concrete structure in this case, are covered. Plaintiffs maintain Defendants improperly refuse to pay the contractually due amount for wall repair and update, as well as for replacement of the damaged deck.

 

On October 19, 2021, Plaintiffs filed a complaint for Breach of Contract, Tortious Breach of the Covenant of Good Faith and Fair Dealing, and Violation of Business and Professions Code section 17200. On February 24, 2022, Plaintiffs filed their first amended complaint. On April 27, 2022, the court sustained the demurrer with 10 days leave to amend. On June 17, 2022, Plaintiffs filed a second amended complaint for Breach of Contract, and Tortious Breach of the Covenant of Good Faith and Fair Dealing. Defendants answered the second amended complaint on July 19, 2022.

 

RULING: Denied in Part/Granted in Part.

Request for Judicial Notice: Granted.

The court takes judicial notice of the second amended complaint, but cannot take judicial notice of the content of the pleading for the truth of the matter asserted.

 

Defendants National General Insurance Company, National General Premier Insurance Company, and Integon Insurance Company (Integon) move for summary judgment, or in the alternative summary adjudication on the breach of contract, breach of covenant of good faith and fair dealing, punitive damages claim, and eighth affirmative defense. National General Insurance Company, and National General Premier Insurance Company, contend neither entity issued nor adjusted the underlying claims. As for insurer Integon, it maintains full payment for the cash value of the damaged retaining wall and deck occurred, thereby satisfying the obligations on the policy, and undermining any claims for breach of contract or bad faith. Integon also denies any obligation for code upgrade replacement, based on the purported designation of retaining wall zone as part of a Los Angeles Department of Water and Power floodway and encroachment into the neighboring property.

 

Plaintiffs in opposition concede to the resolution of all property claims with the exception of the retaining wall following the filing of the operative complaint. Plaintiffs maintain they obtained a permit for wall reconstruction notwithstanding the floodway and encroachment issues; the wall must be brought up to code, rather than replaced with the original material; and, the refusal to provide code upgraded concrete replacement of the retaining wall constitutes a wrongful denial of benefits.

 

Defendants in reply reiterate the “other structures” terms for adjusting said claims. Defendants maintain Integon properly paid the cash replacement value without upgrades, as provided in the clause. Without a breach of contract, the bad faith and punitive damages claims also fail.

 

The pleadings frame the issues for motions, “since it is those allegations to which the motion must respond. (Citation.)”  (Scolinos v. Kolts (1995) 37 Cal. App. 4th 635, 640-641; FPI Development, Inc. v. Nakashima (1991) 231 Cal.App.3d 367, 382-383; Jordan-Lyon Prods., LTD., v. Cineplex Odeon Corp. (1994) 29 Cal.App.4th 1459, 1472.) The purpose of a motion for summary judgment or summary adjudication “is to provide courts with a mechanism to cut through the parties’ pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute.”  (Aguilar v. Atl. Richfield Co. (2001) 25 Cal.4th 826, 843.)  “Code of Civil Procedure section 437c, subdivision (c), requires the trial judge to grant summary judgment if all the evidence submitted, and ‘all inferences reasonably deducible from the evidence’ and uncontradicted by other inferences or evidence, show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law.”  (Adler v. Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.) 

 

“On a motion for summary judgment, the initial burden is always on the moving party to make a prima facie showing that there are no triable issues of material fact.”  (Scalf v. D.B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1519.)  A defendant moving for summary judgment “has met his or her burden of showing that a cause of action has no merit if the party has shown that one or more elements of the cause of action . . . cannot be established.”  (Code Civ. Proc., § 437c, subd. (p)(2).)  “Once the defendant . . . has met that burden, the burden shifts to the plaintiff . . . to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto.”  (Ibid.) 

 

“When deciding whether to grant summary judgment, the court must consider all of the evidence set forth in the papers (except evidence to which the court has sustained an objection), as well as all reasonable inference that may be drawn form that evidence, in the light most favorable to the party opposing summary judgment.” (Avivi v. Centro Medico Urgente Medical Center (2008) 159 Cal.App.4th 463, 467; see also Code Civ. Proc., § 437c, subd. (c).)  “An issue of fact can only be created by a conflict in the evidence.  It is not created by speculation, conjecture, imagination or guesswork.”  (Lyons v. Security Pacific National Bank (1995) 40 Cal.App.4th 1001, 1041 (citation omitted).) 

 

National General Insurance Company and National General Premier Insurance Company contend neither issued the policy nor adjusted the claims. The argument solely depends on the policy declaration page and the declaration of Meghan Jauhar, whereby the entities are described as “brand names” under the National General Management Corp. umbrella. [Declaration of Meghan Jauhar; Declaration of William Stroka, ¶ 4, Compendium of Evidence, Ex. 1: Policy.] Plaintiffs in opposition submit the declaration of Clifford Cole which relies on a direct denial of the assertion regarding Integon as the sole insurer, with reference to the policy. Neither party submits any legally supported argument.

 

Plaintiffs offer no dispute to the existence of the policy presented with the motion. The policy shows a letterhead from “Nat Gen Premier,” with the underwriter identified as “Integon National Insurance Company.” The policy also identifies “National General Insurance.” A December 3, 2019, letter from Nat Gen Premier identifies “National General Insurance Company” as the “Writing Company.” [Cole Decl., Ex. B.]

 

The court finds moving defendants insufficiently establish a basis for dismissal of National General Insurance Company and National General Premier Insurance Company based on a copy of the policy, and a declaration of corporate counsel without any additional legally supported argument. The court declines to address unmade arguments or make the arguments for Defendants. The motion is denied as to National General Insurance Company and National General Premier Insurance Company. (Code Civ. Proc., § 437c, subd. (p)(2).)

 

1st Cause of Action: Breach of Contract

Defendants concede to coverage for damage to the retaining wall, but maintain full payment under the terms of the policy was made. All parties agree that the “other structures” section of the policy applies to the retaining wall. The court reviews the relevant sections.

 

“B. Coverage B – Other Structures

1. We cover other structures on the ‘residence premises’ set apart from the dwelling by clear space. This includes structures connected to the dwelling by only a fence, utility line, or similar connection. 2. We do not cover: a. Land, including land on which the other structures are located; b. Other structures rented or held for rental to any person not a tenant of the dwelling, unless used solely as a private garage; c. Other structures from which any ‘business’ is conducted; or d. Other structures used to store ‘business’ property. However, we do cover a structure that contains ‘business’ property solely owned by an ‘insured’ or a tenant . . .”

 

An “other structures endorsement” identified as Endorsement SH 04 91 01 04 Coverage B-Other Structures Away from the Residence Premises continues:

 

“B. Coverage B — Other Structures

The following is added to Paragraph 1.: We also cover other structures which are owned by you and located away from the “residence premises”, if used by you in connection with the “residence premises”. . . . Paragraph 3. is deleted and replaced by the following: 3. The limit of liability for other structures on or away from the “residence premises” will not be more than 10% of the limit of liability that applies to Coverage A. Use of this limit does not reduce the Coverage A limit of liability.”

 

“SECTION I — CONDITIONS C. Loss Settlement With respect to structures covered under this endorsement, Condition C. Loss Settlement is deleted and replaced by the following: Covered losses will be settled at actual cash value at the time of loss, but not more than the amount required to repair or replace.

 

“SECTION I - EXCLUSIONS A. We do not insure for loss caused directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss. These exclusions apply whether or not the loss event results in widespread damage or affects a substantial area.

 

“1. Ordinance Or Law Ordinance Or Law means any ordinance or law: a. Requiring or regulating the construction, demolition, remodeling, renovation or repair of property, including removal of any resulting debris. This Exclusion A.1.a. does not apply to the amount of coverage that may be provided for in E.11. Ordinance Or Law under Section I Property Coverages; b. The requirements of which result in a loss in value to property; . . .

11. Ordinance Or Law a. You may use up to 10% of the limit of liability that applies to Coverage A for the increased costs you incur due to the enforcement of any ordinance or law which requires or regulates: (1) The construction, demolition, remodeling, renovation or repair of that part of a covered building or other structure damaged by a Peril Insured Against; (2) The demolition and reconstruction of the undamaged part of a covered building or other structure, when that building or other structure must be totally demolished because of damage by a Peril Insured Against to another part of that covered building or other structure; or (3) The remodeling, removal or replacement of the portion of the undamaged part of a covered building or other structure necessary to complete the remodeling, repair or replacement of that part of the covered building or other structure damaged by a Peril Insured Against. b. You may use all or part of this ordinance or law coverage to pay for the increased costs you incur to remove debris resulting from the construction, demolition, remodeling, renovation, repair or replacement of property as stated in a. above.”

 

“‘While insurance contracts have special features, they are still contracts to which the ordinary rules of contractual interpretation apply.’ (Citation.) ‘The principles governing the interpretation of insurance policies in California are well settled. “Our goal in construing insurance contracts, as with contracts generally, is to give effect to the parties' mutual intentions.”’ (Citation.) “‘Such intent is to be inferred, if possible, solely from the written provisions of the contract. (Citation.) The “clear and explicit” meaning of these provisions, interpreted in their “ordinary and popular sense,’ unless ‘used by the parties in a technical sense or a special meaning is given to them by usage’ (Citation), controls judicial interpretation. (Citation.)’” (Citation) “‘If contractual language is clear and explicit, it governs.’”

 

“‘If the terms are ambiguous [i.e., susceptible of more than one reasonable interpretation], we interpret them to protect “‘the objectively reasonable expectations of the insured.’” (Citation.) This rule stems from the principle that “‘[i]f the terms of a promise are in any respect ambiguous or uncertain, it must be interpreted in the sense in which the promisor believed, at the time of making it, that the promisee understood it.’” (Citation.) “‘Only if these rules do not resolve a claimed ambiguity do we resort to the rule that ambiguities are to be resolved against the insurer....’ The ‘tie-breaker’ rule of construction against the insurer stems from the recognition that the insurer generally drafted the policy and received premiums to provide the agreed protection.” (Citation.) “[L]anguage in a contract must be interpreted as a whole, and in the circumstances of the case, and cannot be found to be ambiguous in the abstract.... Courts will not strain to create an ambiguity where none exists. [¶] ‘The insured has the burden of establishing that a claim, unless specifically excluded, is within basic coverage, while the insurer has the burden of establishing that a specific exclusion applies.’ (Citation.) The principles of contractual interpretation, as applied to insurance policies ‘do not include using public policy to redefine the scope of coverage.’” (Inns-by-the-Sea v. California Mutual Ins. Co. (2021) 71 Cal.App.5th 688, 697–698.)

 

The court finds the endorsement language for coverage of “structures ... owned by you and located away from the ‘residence premises’ if used by you in connection with the ‘residence premises,’” including prior language regarding “structures connected to the dwelling by only a fence, utility line, or similar connection” presents a basis of coverage for the retaining wall as part of the entire residential property appurtenance. The “other structures” clause therefore governs the coverage. As quoted above, the Ordinance or Law section provides coverage for “increased costs...due to the enforcement of any ordinance or law...”

 

Defendants concede to the plain language of the policy, but maintain a legal limit applies to the replacement cost of the property at the time of damage, due to the type of issued policy. Plaintiff cites to the plain language of the policy allowing for replacement pursuant to code requirements, rather than the sought after adjustment based on disallowed repair. The court therefore considers the type of policy issued.

 

The parties both agree the terms constitute an open policy: “An open policy is one in which the value of the subject matter is not agreed upon, but is left to be ascertained in case of loss.” (Ins. Code, § 411.) The parties dispute two governing sections addressing open policies.

 

“a) Under an open policy, the measure of indemnity in fire insurance is the expense to the insured of replacing the thing lost or injured in its condition at the time of the injury, the expense being computed as of the time of the commencement of the fire.

(b) Under an open policy that requires payment of actual cash value, the measure of the actual cash value recovery, in whole or partial settlement of the claim, shall be determined as follows:

(1) In case of total loss to the structure, the policy limit or the fair market value of the structure, whichever is less.

(2) In case of a partial loss to the structure, or loss to its contents, the amount it would cost the insured to repair, rebuild, or replace the thing lost or injured less a fair and reasonable deduction for physical depreciation based upon its condition at the time of the injury or the policy limit, whichever is less. In case of a partial loss to the structure, a deduction for physical depreciation shall apply only to components of a structure that are normally subject to repair and replacement during the useful life of that structure.”

 

(Ins. Code, § 2051.)

 

The above quoted section was in effect at the time of the issuance of the relevant policy (effective January 1, 2005 to December 31, 2019). The section was amended, which now states effective January 1, 2020:

 

(a) Under an open policy, the measure of indemnity in fire insurance is the expense to the insured of replacing the thing lost or injured in its condition at the time of the injury, the expense being computed as of the time of the commencement of the fire.

(b) Under an open policy that requires payment of actual cash value, the measure of the actual cash value recovery, in whole or partial settlement of the claim, for either a total or partial loss to the structure or its contents, shall be the amount it would cost the insured to repair, rebuild, or replace the thing lost or injured less a fair and reasonable deduction for physical depreciation based upon its condition at the time of the injury or the policy limit, whichever is less. A deduction for physical depreciation shall apply only to components of a structure that are normally subject to repair and replacement during the useful life of that structure.”

 

(Ins. Code, § 2051.)

 

Even assuming the difference constitutes a material distinction, neither party addresses the which rule governs. Defendants instead emphasizes Insurance Code section 2071 as superseding Insurance Code section 2051. (Breshears v. Indiana Lumbermens Mut. Ins. Co. of Indianapolis, Ind. (1967) 256 Cal.App.2d 245, 250-251.)

 

Fire policies, including open policies, are governed by a standard form. “All fire policies on subject matter in California shall be on the standard form, and, except as provided by this article shall not contain additions thereto. No part of the standard form shall be omitted therefrom ...” (Ins. Code, § 2070.) The standard form reads in relevant part: “to the extent of the actual cash value of the property at the time of loss, but not exceeding the amount which it would cost to repair or replace the property with material of like kind and quality within a reasonable time after the loss, without allowance for any increased cost of repair or reconstruction by reason of any ordinance or law regulating construction or repair...against all loss.” (Ins. Code, § 2071.)

 

The statutory language directly references actual cash value policies, rather than a policy providing value protection, which includes coverage for code upgrades upon reconstruction. (Fire Ins. Exchange v. Superior Court (2004) 116 Cal.App.4th 446, 462, 470.) Defendants properly cite to the “other structures” endorsement language as an actual cash value policy. “Loss Settlement With respect to structures covered under this endorsement, Condition C. Loss Settlement is deleted and replaced by the following: Covered losses will be settled at actual cash value at the time of loss, but not more than the amount required to repair or replace (emphasis added).”

 

Plaintiffs offer no fundamental challenge to the specific language identifying the “actual cash value” and instead interpret the term as one for value or upgrade protection when read in conjunction with the “Ordinance Or Law” section: “You may use up to 10% of the limit of liability that applies to Coverage A for the increased costs you incur due to the enforcement of any ordinance or law which requires or regulates: (1) The construction, demolition, remodeling, renovation or repair of that part of a covered building or other structure damaged by a Peril Insured Against...(3) The remodeling, removal or replacement of the portion of the undamaged part of a covered building or other structure necessary to complete the remodeling, repair or replacement of that part of the covered building or other structure damaged by a Peril Insured Against...”

 

The court considers the context of the language. The policy section relied upon by Defendants indisputably conforms to Insurance Code section 2071. Fire, the identified peril under the regulations, constitutes the undisputed covered event.

 

“Actual cash value,’ as used in section 2071 of the Insurance Code, is synonymous with ‘fair market value.’” (Jefferson Ins. Co. v. Superior Court (1970) 3 Cal.3d 398, 402.) A prior case interpreting “like kind and quality” or “equivalent construction” arguably offers insight into the term. In reviewing the policy, the court stated the purpose of the insurance policy was “to compensate for the actual loss sustained, not to place the insured in a better position than he or she was before the fire.” (McCorkle v. State Farm Ins. Co. (1990) 221 Cal.App.3d 610, 614–615.) Because of “replacement cost” language in a policy, a later reviewing court specifically limited the prior court holdings on actual cash value or “fair market value” holding based on an ambiguity of policy terms. (Fire Ins. Exchange v. Superior Court, supra, 116 Cal.App.4th at p. 464.)

 

The retaining wall constitutes an integral part of the property integrity. [Cole Decl., ¶¶ 18-26.] The retaining wall cannot be rebuilt with prior materials, and requires code compliant concrete construction. [Id., ¶ 51.]

 

Defendants’ interpretation of the policy provides an estimated actual cash value for a one-half destroyed retaining wall that cannot be repaired or replaced with original materials. [Declaration of Thomas Schaefer, ¶¶ 15-19.] Notwithstanding the inability to functionally utilize the remaining wall or original materials, Defendants’ interpretation of the policy logically conforms with the requirement to provide an “amount which it would cost to repair or replace the property with material of like kind and quality ... without allowance for any increased cost of repair or reconstruction by reason of any ordinance or law regulating construction or repair...against all loss.”

 

Plaintiffs emphasize the language of Insurance Code section 2051: “(b) Under an open policy that requires payment of actual cash value, the measure of the actual cash value recovery, in whole or partial settlement of the claim, shall be determined as follows: ... (2) In case of a partial loss to the structure, or loss to its contents, the amount it would cost the insured to repair, rebuild, or replace the thing lost or injured less a fair and reasonable deduction for physical depreciation based upon its condition at the time of the injury or the policy limit, whichever is less. In case of a partial loss to the structure, a deduction for physical depreciation shall apply only to components of a structure that are normally subject to repair and replacement during the useful life of that structure.” The court finds both sections 2051 and 2071 harmonize based on a cash equivalent valuation regardless of actual reconstruction feasibility.

 

The practical result causes concern under public policy guidelines for interpreting insurance policies. Given the inability to replace the wall with original materials, the payment for an unavailable replacement effectively renders the property subject to potential further failure from the remaining compromised wall if Plaintiffs are unable to pay for the additional costs. In other words, while the “loss” sustained appears as the value of the wall itself, a potential inability to repair and replace a functioning retaining wall presents an ongoing threat and undermines the purpose of insurance to protect against catastrophic losses within the scope of coverage agreed upon by the parties.

 

A contextual review of the entire policy supports a finding of potential, additional coverage. The plain language of the “ordinance or law” section specifically allows for up to 10% of the liability limit in order to account for “increased costs” from ordinance enforcement, including “repair and replacement of that part of the covered building or other structure damaged by a Peril Insured Against.” Again, the fire peril remains a covered event. The plain language of this section specifically accounts for increased costs due to ordinance enforcement.

 

Thus, while part of the policy limits recovery to cash value, another portion of the policy clearly provides for code required repair and replacement costs. The court finds no support for the logical conclusion that cash value for an illegal replacement sufficiently complies with the statutory and case law rules. The court disagree with the argument that the cash value provision governs over the ordinance or law provision. (San Francisco Taxpayers Assn. v. Board of Supervisors (1992) 2 Cal.4th 571, 577; Jane D. v. Ordinary Mutual (1995) 32 Cal.App.4th 643, 651.) The court therefore finds ambiguity in the policy terms based on conflicting interpretations of the policy. (Fire Ins. Exchange v. Superior Court, supra, 116 Cal.App.4th at p. 466.)

 

Furthermore, Plaintiff specifically states an intention to acquire an insurance policy with value protection in mind. [Cole Decl., ¶¶ 28-29.] The terms of the policy support a finding for this conclusion. (Fire Ins. Exchange v. Superior Court, supra, 116 Cal.App.4th at p. 470.) The court therefore finds triable issues of material fact as to whether the policy terms limit coverage to actual cash value of an otherwise irreplaceable wall relying on valuation of previously used, but now illegal materials; whether such payment actually compensates Plaintiffs for the total loss given the potential instability caused by the compromised wall if Plaintiffs remain unable to fix the wall due to the shortcomings on the payment; and, whether the policy provides for an upgrade to current code compliance standards under the “replacement” language and ordinance standards. The motion is therefore denied.

 

2nd Cause of Action: Breach of Duty of Good Faith and Fair Dealing

Defendants depends on the breach of contract cause of action for the argument that Plaintiff also lacks a valid bad faith claim in that the denial of the claim on the interpretation of contractual terms and determination of the cause constituted a reasonable decision. (Love v. Fire Ins. Exchange (1990) 221 Cal.App.3d 1136, 1151.) Plaintiffs counter that the disputed terms, in and of themselves support triable issues. To the extent Sate Farm unsuccessfully challenges the breach of contract cause of action on the interpretation of the terms, the court also finds a lack of support for the argument against a valid bad faith claim. (Carma Developers (Cal.), Inc. v. Marathon Dev. California, Inc. (1992) 2 Cal.4th 342, 373; Chateau Chamberay Homeowners Ass'n v. Associated Intern. Ins. Co. (2001) 90 Cal.App.4th 335, 347; McMillin Scripps North Partnership v. Royal Ins. Co. (1993) 19 Cal.App.4th 1215, 1222; Racine & Laramie, Ltd. v. California Dept. of Parks & Rec. (1992) 11 Cal.App.4th 1026, 1031-1032; Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1395; Love v. Fire Ins. Exchange (1990) 221 Cal.App.3d 1136, 1153.) Triable issues of material fact on the same basis as the breach of contract claim. The motion is denied.

 

Punitive Damages

Defendants lastly challenges the basis of punitive damages. Plaintiff counters that the circumstances demonstrate support for punitive damages.

 

Civil Code section 3294, subdivision (c) authorizes punitive damages upon a showing of malice, oppression, or fraud, which are defined as follows:

 

(1) “Malice” means conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.

(2) “Oppression” means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights.

(3) “Fraud” means an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.

 

“[Simple breach of contract, no matter how willful and hence tortious, is not a ground for punitive damages. Such damages are accessible only upon a showing that the defendant ‘act[ed] with the intent to vex, injure, or annoy.’” (Citation.) [¶] Punitive damages for failure to pay or properly administer an insurance claim are ordinarily, as in this case, based on ‘malice’ or ‘oppression,’ rather than on the third possible ground for the award, ‘fraud.’ Both ‘malice’ and ‘oppression’ are defined in Civil Code section 3294 as involving ‘despicable conduct, which in the case of malice ‘is carried on by the defendant with a willful and conscious disregard of the rights or safety of others,’ and as to oppression is ‘conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person's rights.’” [¶] “[I]t is significant that the Legislature amended Civil Code section 3294 in 1987 to add the requirement that punitive damages be proved by ‘clear and convincing evidence.’” (Tomaselli v. Transamerica Ins. Co. (1994) 25 Cal.App.4th 1269, 1286–1287; Shade Foods, Inc. v. Innovative Products Sales & Marketing, Inc. (2000) 78 Cal.App.4th 847, 909–910.)

 

While triable issues remain on the bad faith claim, the circumstances fail to meet the demonstrate oppressive or malicious conduct under heightened factual standard required for punitive damages. Defendants clearly demonstrate its reasonable reliance on the conclusions of the investigation. The dispute over the policy language demonstrates a genuinely valid dispute over disputed contractual terms and circumstances for a covered event. The motion for summary adjudication on the punitive damages claim is therefore granted.

 

 

In summary, the motion for summary judgment, and alternative motions for summary adjudication on the breach of contract and bad faith causes of action, as well as to the individual claims of National General Insurance Company, National General Premier Insurance Company  are DENIED. The motion for summary adjudication on the punitive damages claim is GRANTED.

 

Trial remains set for May 13, 2024.

 

Moving party to give notice.