Judge: Theresa M. Traber, Case: 20STCV16189, Date: 2023-03-28 Tentative Ruling

Case Number: 20STCV16189    Hearing Date: March 28, 2023    Dept: 47

Tentative Ruling

Judge Theresa M. Traber, Department 47

HEARING DATE:     March 28, 2023                      TRIAL DATE: September 5, 2023

CASE:                         Gary Peterson et al. v. State Farm General Ins. Co. et al.

CASE NO.:                 20STCV16189           

MOTION FOR SUMMARY ADJUDICATION

MOVING PARTY:               Defendant State Farm General Insurance Co.

RESPONDING PARTY(S): Plaintiffs Gary Peterson and Robin Barton-Peterson

CASE HISTORY:

·         04/28/20: Complaint filed.

·         06/26/20: First Amended Complaint filed.

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

            This is a breach of contract and negligence case. Plaintiffs contend that Defendants failed to pay the entirety of Plaintiffs’ insurance claims following the loss of their home in the Woolsey Fire, and mishandled Plaintiffs’ insurance coverage.

Defendant State Farm General Insurance Co., Inc. moves for summary adjudication on a single issue of duty.

TENTATIVE RULING:

Defendant’s Motion for Summary Adjudication is DENIED.

DISCUSSION:

Defendant State Farm General Insurance Co., Inc. moves for summary adjudication on a single issue of whether it had a duty to pay for Additional Living Expense costs not actually incurred under Plaintiffs’ insurance policy.

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Legal Standard

The function of a motion for summary judgment or adjudication is to allow a determination as to whether an opposing party can show evidentiary support for a pleading or claim and, if not, to enable an order of summary dismissal without the need for trial. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) Code of Civil Procedure Section 437c(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.)  “The function of the pleadings in a motion for summary judgment is to delimit the scope of the issues; the function of the affidavits or declarations is to disclose whether there is any triable issue of fact within the issues delimited by the pleadings.” (Juge v. County of Sacramento (1993) 12 Cal.App.4th 59, 67, citing FPI Development, Inc. v. Nakashima (1991) 231 Cal.App.3d 367, 381-82.)

As to each claim as framed by the complaint, the defendant moving for summary judgment must satisfy the initial burden of proof by presenting facts to negate an essential element, or to establish a defense. (Code Civ Proc. § 437c(p)(2); Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1520.) Courts “liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.” (Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389.) The lack of opposition by a plaintiff is not grounds to grant a motion for summary judgment if a defendant cannot meet their initial burden of proof. (See Thatcher v. Lucy Stores, Inc. (2000) 79 Cal.App.4th 1081, 1087.)

            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 that cause of action or a defense thereto. To establish a triable issue of material fact, the party opposing the motion must produce substantial responsive evidence. (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 166.)

Plaintiffs’ Evidentiary Objections

            No. 1: OVERRULED. Hearsay is not a valid objection in this context, given that nonhearsay evidence supporting the statements to which Plaintiffs object could be offered at trial. (Sweetwater Union High School Dist. v. Gilbane Building Co. (2019) 6 Cal.5th 931, 947-948.) Remaining objections go to weight, not admissibility.

Defendant’s Evidentiary Objections

            Nos. 1-5: OVERRULED. Hearsay is not a valid objection in this context, given that nonhearsay evidence supporting the statements to which Defendant objects could be offered at trial. (Sweetwater Union High School Dist. v. Gilbane Building Co. (2019) 6 Cal.5th 931, 947-948.) Remaining objections go to weight, not admissibility.

Defendant’s Response to Separate Statement

            Defendant filed a document entitled “Response to Plaintiffs’ Separate Statement.” No such filing is authorized either by the Code of Civil Procedure or by the California Rules of Court. This filing is wholly improper, and the Court refuses to consider it further.

Procedural Defect

            Plaintiffs raise the procedural argument in opposition that this motion is defective because the relief sought would not dispose of an entire issue of duty, as required by Code of Civil Procedure section 437c(f)(1). Plaintiffs contend that Defendant is improperly subdividing the issue of duty to pay for covered claims raised in the operative Complaint by seeking summary adjudication only on the issue of whether Defendant had a duty to pay additional living expenses that were not yet incurred. However, as Defendant states in reply, this argument was expressly rejected by the Court of Appeal in Linden Partners v. Wilshire Linden Associates (1998) 62 Cal.App.4th 508, 518-19.) The Court of Appeal held in that case that the existence of a specific contractual obligation is an issue of duty on which a court may rule under section 437c. (Id.) The Linden court further held that a court may rule on that specific issue of duty so long as it completely disposes of that issue, even if it has no dispositive impact on other issues. (Id. at 519-20.)

            Plaintiff’s contention that Defendant is seeking to insert its own claims and duties into Plaintiffs’ pleadings is not well-taken, nor is the citation to Ion Equipment Corp v. Nelson. Unlike that case, where the issues raised in the demurrer were not present in the pleading (Ion Equipment Corp v. Nelson (1980) 110 Cal.App.3d 868, 881), here, Defendant’s alleged refusal to pay Plaintiffs’ claims under the Additional Living Expenses provision of their policy is the entire basis for this action. (See FAC ¶¶ 19, 21-39.) Plaintiffs’ argument that this motion is seeking to foreclose a category of damages is also not well-taken, as the issue of damages is not before the Court on this motion. Plaintiff’s cited case is therefore inapposite. (Paramount Petroleum Corp. v. Super Ct. (2014) 227 Cal.App.4th 226, 243.) The Court therefore rejects Plaintiff’s procedural objection to this motion.

Contract Interpretation

            Defendant contends that it has no legal duty to cover additional living expenses not actually incurred under the terms of the Additional Living Expenses provision of Plaintiffs’ insurance policy. This provision states:

Additional Living Expense. When a Loss Insured causes the residence premises to become uninhabitable, we will cover the necessary increase in cost you incur to maintain your standard of living for up to 24 months. Our payment is limited to incurred costs for the shortest of: (a) the time required to repair or replace the premises; (b) the time required for your household to settle elsewhere; or (c) 24 months. This coverage is not reduced by the expiration of this policy.

(Defendant’s Separate Statement of Undisputed Material Fact No. 2.)

The Court of Appeal for the Second District described the “well established” rules for interpreting a contract in the context of a summary judgment motion, as follows:

“The interpretation of a contract is a judicial function. [Citation.] In engaging in this function, the trial court ‘give[s] effect to the mutual intention of the parties as it existed’ at the time the contract was executed. [Citation.] Ordinarily, the objective intent of the contracting parties is a legal question determined solely by reference to the contract's terms. [Citation.]” (Wolf v. Walt Disney Pictures & Television (2008) 162 Cal.App.4th 1107, 1125-1126, 76 Cal.Rptr.3d 585 (Wolf).)

“The court generally may not consider extrinsic evidence of any prior agreement or contemporaneous oral agreement to vary or contradict the clear and unambiguous terms of a written, integrated contract. [Citations.] Extrinsic evidence is admissible, however, to interpret an agreement when a material term is ambiguous. [Citations.]” (Wolf, supra, 162 Cal.App.4th at p. 1126, 76 Cal.Rptr.3d 585; see also Pacific Gas & Electric Co. v. G.W. Thomas Drayage & Rigging (1968) 69 Cal.2d 33, 39-40, 69 Cal.Rptr. 561, 442 P.2d 641 [if extrinsic evidence reveals that apparently clear language in the contract is, in fact, “susceptible to more than one reasonable interpretation,” then extrinsic evidence may be used to determine the contracting parties’ objective intent].)

“The interpretation of a contract involves ‘a two-step process: First the court provisionally receives (without actually admitting) all credible evidence concerning the parties’ intentions to determine “ambiguity,” i.e., whether the language is “reasonably susceptible” to the interpretation urged by a party.  If in light of the extrinsic evidence the court decides the language is “reasonably susceptible” to the interpretation urged, the extrinsic evidence is then admitted to aid in the second step – interpreting the contract. [Citation.]’ [Citation.]” (Wolf v. Superior Court (2004) 114 Cal.App.4th 1343, 1351, 8 Cal.Rptr.3d 649 (Wolf II); [citations].)

“When there is no material conflict in the extrinsic evidence, the trial court interprets the contract as a matter of law. [Citations.] This is true even when conflicting inferences may be drawn from the undisputed extrinsic evidence [citations] or that extrinsic evidence renders the contract terms susceptible to more than one reasonable interpretation. [Citations.] If, however, there is a conflict in the extrinsic evidence, the factual conflict is to be resolved by the jury. [Citations.]” (Wolf, supra, 162 Cal.App.4th at pp. 1126-1127, 76 Cal.Rptr.3d 585; see id. at p. 1134, 76 Cal.Rptr.3d 585 [“that extrinsic evidence may reveal an ambiguity subjecting a contract to more than one reasonable interpretation does not mean resolution of that ambiguity is necessarily a jury question. Absent a conflict in the evidence, the interpretation of the contract remains a matter of law”].)

(Brown v. Goldstein (2019) 34 Cal.App.5th 418, 432-33.) 

“When a dispute arises over the meaning of contract language, the first question to be decided is whether the language is ‘reasonably susceptible’ to the interpretation urged by the party.  If it is not, the case is over.  If the court decides the language is reasonably susceptible to the interpretation urged, the court moves to the second question: what did the parties intend the language to mean? ... Thus, where contract language is clear and explicit and does not lead to absurd results, we ascertain intent from the written terms and go no further. If the contract is capable of more than one reasonable interpretation, it is ambiguous, and we apply the standard rules of interpretation in order to give effect to the mutual intention of the parties.  In sum, courts must give a reasonable and commonsense interpretation of a contract consistent with the parties' apparent intent.”  (Department of Forestry & Fire Protection v. Lawrence Livermore National Security, LLC (2015) 239 Cal.App.4th 1060, 1066 [internal quotation marks, ellipses, and citations omitted].)

In a case where the party moving for summary adjudication requests a ruling that adopts its contract interpretation over that of the opposing party, the Court’s first inquiry is whether the contract at issue is reasonably susceptible to the interpretations urged by the opposing party – here, Plaintiffs.  (Brown v. Goldstein, supra, at p. 434.) Here, the central dispute is whether the phrase “costs you incur” applies only to definite costs actually billed to Plaintiffs and submitted to Defendant, or if, as Plaintiffs claim, it extends to indefinite but inevitable costs arising from the loss of Plaintiffs’ home. An insurer's duties are measured by the nature and kind of risks covered by the policy. (Waller v. Truck Ins. Exch., (1995) 11 Cal.4th 1, 19.) An insurer has the right to limit coverage, and when it does so the limitation must be respected. (Pacific Employers Ins. Co. v. Superior Court (1990) 221 Cal.App.3d 1348, 1358-1359.) A policy cannot be rewritten for purposes of public policy or any other reason. (Rosen v. State Farm Genl. Ins. Co., (2003) 30 Cal.4th 1070, 1077; Aerojet-General Corp. v. Transport Indem. Co., (1997) 17 Cal.4th 38, 75 [“as a general matter at least, we do not add to, take away from, or otherwise modify a contract for ‘public policy considerations’”].)

Plaintiffs urge the Court to adopt the interpretation that the phrase “costs you incur” encompasses costs which they were “subject to.” Plaintiffs’ theory is that they “incurred’ costs because they wished to rent property within a certain price range beyond what Defendant was willing to cover. Put differently, Plaintiffs contend that the plain meaning of the word “incur” should be extended to encompass foreseeable costs, an interpretation which, as Plaintiffs admit, the ordinary meaning of the word “incur,” as “to become liable for or subject to” does not reach. (E.g. Chubb Custom Ins. Co. v. Space Sys./Loral Inc. (9^th Cir. 2013) 710 F.3d 946, 961.) Thus, under the plain language of this contract provision, the Court would be inclined to conclude that, as a matter of law, Defendant had no duty to provide additional living expenses not actually incurred by Plaintiffs. However, Plaintiffs raise defenses on the facts of this case which may bar Defendant from asserting that it did not have such a duty.

Equitable Estoppel

Plaintiffs argue that, even under Defendant’s interpretation of the policy, Defendant is equitably estopped from asserting the effect of the ALE provision as a defense because Defendant actively interfered with Plaintiffs’ ability to comply with the condition precedent of incurring those costs.

            An insurer may be equitably estopped from asserting a condition precedent if it actively interferes with the covered party’s efforts to comply with that provision. (City of Hollister v. Monterey Ins. Co. (2008) 165 Cal.App.4th 455, 490-91.)

            In support of their position, Plaintiffs contend, among other allegations not relevant to this matter, that Defendant improperly appraised Plaintiffs’ residence to calculate a lower expected standard of living, (Statement of Additional Facts Nos. 43-49), and refused to approve the rental properties identified by Plaintiffs (SAF Nos. 64-65, 71-72.) Thus, Plaintiffs argue, Defendant interfered with Plaintiffs’ capacity to incur costs under the plain meaning of the policy provision, and therefore should be estopped from asserting that condition precedent as a defense. Defendant does not address the merits of this contention in its reply brief, arguing only that it is irrelevant as this issue is not before the Court. The Court disagrees. Plaintiffs have offered evidence of Defendant’s active interference with their ability to incur costs to maintain their standard of living. Thus, Plaintiffs have demonstrated a triable issue of fact as to whether Defendant should be estopped from asserting a condition precedent because it actively interfered with compliance with that condition.

Waiver

            Plaintiffs also argue, in the alternative, that Defendant may not assert a condition precedent as a bar to liability because they waived the condition by advancing ALE payments before the costs were incurred. Plaintiffs cite no law in support of this position, and the Court therefore declines to consider it further.

CONCLUSION:

            Accordingly, Defendant’s Motion for Summary Adjudication is DENIED.

            Moving Party to give notice.

IT IS SO ORDERED.

Dated:  March 28, 2023                                  ___________________________________

                                                                                    Theresa M. Traber

                                                                                    Judge of the Superior Court

            Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept47@lacourt.org by no later than 4:00 p.m. the day before the hearing. All interested parties must be copied on the email. It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.