Judge: Stephen P. Pfahler, Case: 22STCV04178, Date: 2025-04-07 Tentative Ruling

Case Number: 22STCV04178    Hearing Date: April 7, 2025    Dept: 68

Dept. 68

Date: 4-7-25 c/f 4-2-25 c/f 12-10-24 c/f 4-25-24

Case # 22STCV04178

Trial Date: 1-13-25 c/f 6-10-24 c/f 3-4-24

SUMMARY JUDGMENT/SUMMARY ADJUDICATION

MOVING PARTY: Defendant, State Farm General Insurance Company

RESPONDING PARTY: Plaintiffs, Vanessa Moriel, et al.

RELIEF REQUESTED

Motion for Summary Judgment/Summary Adjudication

·         1^st Cause of Action: Breach of Contract

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

SUMMARY OF ACTION

On February 23, 2021, the home of plaintiffs Vanessa Moriel and Nicolai Wiest located at 6225 Busch Drive, Malibu, suffered damage as a result of the Woolsey Fire on November 18, 2018. Plaintiff submitted an insurance claim on the homeowner policy with defendant State Farm General Insurance Company for repairs and relocation costs pending repairs and restoration. Plaintiffs allege delays and denials on said claims, and ultimately unreasonable compensation offers for repairs and restoration.

On February 2 and 9, 2022, Plaintiffs filed a complaint and first amended complaint for Breach of Duty of Good Faith and Fair Dealing, Breach of Contract, Negligence, Negligent Misrepresentation, Fraud, and Unfair Competition. On August 30, 2022, the court entered the parties’ stipulation for leave to file a second amended complaint. On the same date, Plaintiffs filed a second amended complaint for Breach of Contract, Breach of Covenant of Good Faith and Fair Dealing, Fraud – Intentional Misrepresentation, and Fraud – Negligent Misrepresentation.

On December 6, 2022, the court sustained the demurrer of state Farm General Insurance Company and Trish Bowe to both fraud causes of action in the second amended complaint with 20 days leave to amend. The court also granted the motion to strike the claims for punitive damages, attorney fees, and prejudgment interest. Plaintiff agreed to withdraw the claim for general damages.

On January 31, 2023, Plaintiff dismissed Trish Bowe without prejudice. On January 9, 2023, Plaintiffs filed their third amended complaint against State Farm General Insurance Company for Breach of Contract, and Breach of Covenant of Good Faith and Fair Dealing. State Farm General Insurance Company answered the third amended complaint on February 2, 2023.

RULING: Denied.

The motion was originally scheduled for April 25, 2024. On April 3, 2024, the court continued the hearing to December 10, 2024. On November 18, 2024, the court entered the stipulation of the parties, whereby the motion for summary judgment was continued to April 2, 2025. The motion was again continued to April 7, 2025.

Request for Judicial Notice: Granted.

·         The court takes judicial notice of the existence of the complaint, but not the content for the truth of the matter asserted. The court also takes judicial notice of the dismissal of Trish Bowe for its legal effect on the action.

Evidentiary Objections: Overruled.

·         State Farm presents significant address of hearsay, yet only submits one hearsay objection to Exhibit A within the Declaration of Vanessa Moriel (see objection number 17). The court need not consider the content of the exhibit for purposes of any truth of the matter asserted regarding valuations, and otherwise finds Moriel qualified to testify as to the state of the claim process and disparity in valuations. As cited below, the court finds more than one source of admissible information supporting triable issues of material fact regarding valid disputed investigation and coverage practices.

Defendant State Farm General Insurance Company (State Farm) moves for summary judgment/Summary adjudication on the complaint of Plaintiffs Vanessa Moriel, Nicolai Wiest, and MPAC, LLC, on the Breach of Contract and Breach of Duty of Good Faith and Fair Dealing. State Farm moves for summary judgment/summary adjudication on grounds of an inability to establish breach of contract or bad faith arising due to insufficient payment of policy benefits. Plaintiff in opposition maintain State Farm improperly denied the claim due to inadequate investigation/appraisal, lack of good faith investigation into the claims, and failure to adhere to the California Fair Claims Act. State Farm in reply reiterates compliance with the policy terms and basis for denial, challenges Plaintiff’s interpretation for any covered loss, and therefore denies any liability for bad faith. State Farm also relies on the evidentiary objections as part of the basis for the challenge to the lack of any triable issues of material fact. State Farm also appears to even challenge whether the home even suffered any documented proof of casualty as a result of the Woolsey Fire. State Farm concludes with a reiteration regarding the lack of evidence of unreasonable conduct.

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).) 

State Farm provides context to the dispute. Following the Woolsey fire, Plaintiffs submitted their claims. The claims were reviewed by at least three different adjusters. State Farm made both initial payments and supplemental payments during the process. Following an alleged failure to follow-up on certain items, State Farm admittedly closed the claims. On December 17, 2019, Plaintiffs sold the property for almost five million dollars, and presented additional requests for coverage based on lost value to the home in that the home in an “as is” transaction. The sale prevented any further inspections of the property, thereby requiring Plaintiffs to rely on photos and reports in support. State Farm again denied any further payment of benefits on the real property. A later inspection of personal property taken from the home, led to the issuance of additional payments. State Farm represents total payments of $321,419.89 articulated as follows: Coverage A, $128,240.30, Coverage B, $82,494.58, and Coverage C, $110,685.01. State Farm also represents no application of the $10,000 deductible towards the payment. State Farm maintains the costs incurred by Plaintiff to repair the property in no way exceeds the payments on the policy, due to lack of evidence and uncovered items. State Farm denies coverage for certain items in that “almost half” of the claims were not related to the Woolsey Fire, and instead the result of mold, termites and chimney repairs. Thus, the purported “loss” on the sale also falls below the amount paid on the policy and lacks any evidentiary support.

1^st Cause of Action: Breach of Contract

State Farm challenge the Breach of Contract cause of action on grounds of lack of evidence of any losses beyond the $128,240.30 previously paid on the claim. State Farm preemptively challenges any reliance on Plaintiffs’ hired public adjuster, and relies on the lost opportunity to inspect the property following the sale to a third party. State Farm also maintains the damages comprises a speculative amount based on the represented “as is” reduced sale value. Policy payment is not based on reduced value of the property, but on the covered loss(es).

Plaintiffs in opposition opens their opposition with three categories of dispute: failure to apprise Plaintiff insureds of all applicable coverages, failure to investigate in good faith, and failure to adhere to the California Fair Claims Act. The opposition appears to exclusively focus on the bad faith claim with the breach of contract subsumed within the overall investigation and adjustment of the claim.

The court declines to consider this apparently new position in reply, whereby State Farm undisputably paid on the claim caused by fire damage, and now seemingly appears to proceed on a claim of no fire damage or any valid basis for the claim at all. Any dispute as to the scope of the claim, as State Farm may actually intend, again, is addressed in the discussion regarding the scope of coverage.

“‘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 terms of the policy and exclusions remain undisputed. The operative exclusion provisions state in part:

“We do not insure for any loss to the property described in Coverage A which is caused by one or more of the items below, regardless of whether the loss occurs suddenly or gradually, involves isolated or widespread damage, arises from natural or external forces, or occurs as a result of any combinations of these: … g. wear, tear, marring, scratching, deterioration, inherent vice, latent defect or mechanical breakdown; h. Corrosion, electrolysis or rust; … j. contamination; … l. settling, cracking, shrinking, bulging, or expansion of pavements, patios, foundation, walls, floors, roofs or ceilings; However, we do insure for any resulting loss from items a. through m. unless the resulting loss is itself a Loss Not Insured by this Section. *** 4.We do not insure under any coverage for any loss which is caused by one or more of the items below, regardless or whether the event occurs suddenly or gradually, involves isolated or widespread damage, arises from natural or external forces, or occurs as a result of any combination of these: … d. Neglect, meaning neglect of the insured to use all reasonable means to save and preserve the property at and after the time of a loss, or when property is endangered. ... 5. We do not insure for loss described in paragraphs 2., 3. and 4. immediately above regarding of whether one or more of the following: (a) directly or indirectly cause, contribute to or aggravate the loss; or (b) occur before, at the same time, or after the loss or any other cause of the loss: a. conduct, act, failure to act, or decision or any person, group, organization or governmental body whether intentional, wrongful, negligent, or without fault; b. defect, weakness, inadequacy, fault or unsoundness in: (1) planning, zoning, development, surveying, siting; (2) design, specifications, workmanship, construction, grading, compaction; (3) materials used in construction or repair; or (4) maintenance. of any property (including land, structures, or improvements of any kind) whether on or off the residence premises; … However, we do insure for any resulting loss from items., a., b. and c. unless the resulting loss is itself a Loss Not Insured by this Section.”

State Farm also cites to the “Duties After Loss” section regarding the requirements of the claimant(s):

“2. Your Duties After Loss. After a loss to which this insurance may apply, you shall see that the following duties are performed: a. give immediate notice to us or our agent… b. protect the property from further damage or loss, make reasonable and necessary temporary repairs required to protect the property, keep an accurate record or repair expenditures; c. prepare an inventory of damaged or stolen personal property. Show in detail the quantity, description, age, replacement cost and amount of loss. Attach to the inventory all bills, receipts and related documents that substantiate the inventory. d. as often as we reasonably require: (1) Exhibit the damaged property; (2) provide us with records and documents we request and permit us to make copies. . . . e. submit to us, within 60 days after the loss, your signed proof of loss which sets forth, to the best of your knowledge and belief: (1) the time and cause of loss; (2) the interest of the insured and all others in the property involved and all encumbrances on the property;… (4) changes in title or occupancy of the property during the term of this policy; (5) specifications of any damaged building and detailed estimates for repair of the damage; (6) an inventory of damages or stolen personal property described in 2.c.; (7) receipts for additional living expenses incurred and records supporting he fair rental value loss; and…”

Also Undisputed, the “Loss Settlement” section: “1. A1 – Replacement Cost Loss Settlement – Similar Construction. We will pay up to the applicable limit of liability shown in the Declarations, the reasonable and necessary cost to repair or replace with similar construction and for the same use on the premises shown in the Declarations, the damaged part of the property covered under SECTION 1 – COVERAGES, COVERAGE A – DWELLING. …”

State Farm presents an extensive yet mostly undisputed narrative regarding the adjustment process, with Plaintiffs noting material distinctions as to potential distinctions between the source of certain claimed exclusions as a maintenance or upkeep issue as opposed to post-fire damage exposure to the elements. The property sold for $4,960,000 on December 19, 2019, before the conclusion of the adjustment process, thereby precluding further inspection on the property on said disputed exclusion findings. The parties dispute the qualitative sufficiency of the information presented for purposes of further adjusting the claim.

In the first part of the motion, State Farm challenges the ability of Plaintiffs to establish breach of contract based on full payment for all damages, and alleged failure of Plaintiffs to present sufficient documentation. The damages claim is therefore speculative. Plaintiffs counter with their own declarations regarding the process of cooperating with the adjusters, and citation to their production of documents. [Declarations of Nicolai Wiest, Vanessa Moriel, & David Dorenfeld, Ex. 1: Verified Responses to Defendants Supplemental Request for Production & Ex. 2: Deposition of the State Farm PMQ.]

The categorical disputes between arising from the plain language of the undisputed coverage provisions and exclusions establish triable issues of material fact as to the existence of covered losses or a valid exclusion. [Moriel Decl., Dorenfeld Decl., Ex. 1: Responses to Supplemental Request for Production, Ex. O-Q & Ex. 2: Deposition of Jean Choi.] To the extent State Farm relies on a claim of speculative damages or lack of foundation, again, the court finds the declarations of Plaintiffs and the information presented in support establishes valid triable issues of material fact as to the sufficiency of the claims. The court finds no specific means for granular distinction of the claims simply based on the determinations of the many identified State Farm adjusters as to the validity and sufficiency of the documentation, even if caused in part by the lack of access to the property following the sale, thereby providing the court support in making a determination as to no valid breach of damages claims as a matter of law. The motion for summary judgment and summary adjudication on the breach of contract cause of action is therefore DENIED.

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

State Farm 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 adjustment process in and of itself supports triable issues. To the extent Sate Farm unsuccessfully challenges the breach of contract cause of action on the basis of both the covered items and lack of damages claim, the court also finds a lack of support for the argument against a valid bad faith claim. (Cal. Code Regs., tit. 10, § 2695.9; 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.4^th 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.

In summary, the motion for summary judgment, and alternative motions for summary adjudication on the breach of contract and bad faith causes of action are DENIED. Final Status Conference and Trial remain set for May 22 and June 2, 2025, respectively.

State Farm to give notice.