Judge: Upinder S. Kalra, Case: 21STCV25966, Date: 2023-01-18 Tentative Ruling

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Case Number: 21STCV25966    Hearing Date: January 18, 2023    Dept: 51

Tentative Ruling

 

Judge Upinder S. Kalra, Department 51

 

HEARING DATE:   January 18, 2023                                

 

CASE NAME:           Hiendrick Vartani v. Interinsurance Exchange of the Automobile Club

 

CASE NO.:                21STCV25966

 

DEFENDANT’S MOTION FOR SUMMARY JUDGMENT, OR ALTERNATIVELY SUMMARY ADJUDICATION

 

MOVING PARTY: Defendant Interinsurance Exchange of the Automobile Club

 

RESPONDING PARTY(S): Plaintiff Hiendrick Vartani

 

REQUESTED RELIEF:

 

1.      An order granting summary judgement, or alternatively, summary adjudication, as to the 1st and 2nd causes of action as well as to punitive damages

TENTATIVE RULING:

 

1.      Motion for Summary Adjudication is DENIED, as to 1st and 2nd causes of action.

2.      Motion for Summary Adjudication is GRANTED, as to punitive damages.

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

 

On July 14, 2021, Plaintiff Hiendrick Vartani (“Plaintiff”) filed a complaint against Defendnat Interinsurance Exchange of the Automobile Club (“Defendant.”) The complaint alleged two causes of action: (1) Breach of Contract and (2) Breach of Duty of Good Faith and Fair Dealing – Bad Faith. The complaint alleges that Plaintiff had an insurance policy with Defendant, which was to provide coverage to Plaintiff. Plaintiff made an insurance claim based on damage to the underside of Plaintiff’s vehicle, but Defendant failed to properly inspect the vehicle and denied the claim.

 

On September 13, 2021, Defendant filed an Answer.

 

On November 4, 2022, Defendant filed a Motion for Summary Judgment, or in the alternative, Summary Adjudication. Plaintiff’s Opposition was filed on January 4, 2023.

EVIDENTIARY OBJECTIONS 

The court rules on Plaintiff’s evidentiary objections as follows:

 

Declaration of Kevin Lane:

The court overrules Objections Nos. 2-13, 15-28, 30-35

 

The court rules on Defendant’s evidentiary objections as follows:

 

Declaration of Hiendrick Vartani:

The court sustains Objections Nos. 8, 13

The court overrules Objections Nos. 2-7 9-12

 

Declaration of Eileen Keusseyan

The court sustains Objections Nos. 9-10, 22-23, 27-29

The court overrules Objections Nos. 1-9, 11-21, 24-26

 

Declaration of Jack Sapunjian

The court overrules Objections Nos. 1-6

 

Declaration of Mitch Sanders

The court sustains Objections Nos.

The court overrules Objections Nos. 1-8

 

Declaration of Richard Mumper

The court overrules Objections Nos. 1-13

 

LEGAL STANDARD:

 

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. Atlantic 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 or cross-defendant moving for summary judgment or summary adjudication “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, or that there is a complete defense to the cause of action.”  (Code Civ. Proc., § 437c, subd. (p)(2).)  “Once the defendant or cross-defendant has met that burden, the burden shifts to the plaintiff or cross-complainant to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto.”  (Code Civ. Proc., § 437c, subd. (p)(2).)  “If the plaintiff cannot do so, summary judgment should be granted.”  (Avivi v. Centro Medico Urgente Medical Center (2008) 159 Cal.App.4th 463, 467.)  “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 inferences that may be drawn from that evidence, in the light most favorable to the party opposing summary judgment.”  (Id. at p. 467; Code Civ. Proc., § 437c, subd. (c).)

 

 

ANALYSIS:

 

Defendant moves for summary judgment, or alternatively, for summary adjudication, on the grounds that there are not triable issues of material fact as to each of the causes of action as well as the claim for punitive damages. 

 

1.      First Cause of Action for Breach of Contract

 

Defendant argues that the first cause of action for breach fail as the facts indicate that there was no breach of contract. Under the policy that Plaintiff had with Defendant, coverage is available to damage that is “not direct and accidental.” (UMF 2.) However, based on the inspection from Shideh Engineering, there was no damage to other portions of the Vehicle, which indicated that the alleged damage was manually inflicted, not the result of driving over a rock. (Motion 13: 15-23, UMF 31, 47.) Defendant further argues that Plaintiff’s expert, Richard Mumper, did not inspect the vehicle until 15 months after the damaged allegedly occurred. However, when the inspection took place, the Vehicle had been stored and the engine had been replaced. (UMF 42.) Thus, because the damage was not direct and accidental, there was no breach of the policy.

 

Plaintiff argues that there are triable issues of material fact as to the first cause of action. First, it is undisputed that the parties had a contract: the automobile policy. (UMF 1.) Second, Plaintiff made monthly payments. (PUMF 2.) Third, Defendant breached the contract when it denied the claim, failing to “pay for Plaintiff’s claim and intentionally elected not to conduct a proper investigation of the claim.” (Opp. 11: 7-9.)

 

“A cause of action for damages for breach of contract is comprised of the following elements: (1) the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to plaintiff.”  (Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1173.)

 

The court finds that Defendant has met [his or her] burden of showing that the first cause of action for breach of contract has no merit because Defendant has shown that an element of the cause of action, Defendant’s breach of the contract, cannot be established. Here, Defendant inspected the vehicle, determined it was inconsistent the alleged damage, and hired an expert, Shideh Engineering, to determine the cause of the damage. (UMF 31, 47.) Shideh Engineering determine that a rock could not have caused the damage as reported. (UMF 24-31.) Therefore, Defendant denied the claim based on an expert’s opinion, which determined that the damage was not accidental or direct, but rather manually inflicted. (UMF 31-32.)

 

Once a moving defendant has met its initial burden, the burden shifts to the Plaintiff. “Generally, a party opposing a motion for summary judgment may use declarations by an expert to raise a triable issue of fact on an element of the case provided the requirements for admissibility are established as if the expert was testifying at trial.” (Towns v. Davidson (2007) 147 Cal.App.4th 461, 472.) Here, the court finds that Plaintiff has met their burden to show that a triable issue of material fact exists as to the element of Defendant’s breach of the contract. In response to Shideh’s report, Plaintiff retained an expert – Richard Mumper, who is a registered professional mechanical engineer. (Dec. Mumper ¶ 2.) The declaration from Richard Mumper states that the damage under the car was caused by a rock. (PUMF 20-31.)

 

In Kelley v. Trunk, summary judgment in a medical negligence case was not proper when the declaration of an expert was conclusory and did not explain the basis for the opinion. The Court further stated that even if the expert’s “opinion standing alone had been sufficient to support summary judgment, in this case a well-credentialed expert presented an opposing opinion, giving rise to a material issue of fact for trial: which expert opinion was correct?” (Kelley v. Trunk (1998) 66 Cal.App.4th 519, 524.) Like here, there are two conflicting opinions from two individuals with expertise in mechanics. Whether a rock hit the underside of the car, damaging the oil pan, is disputed. Therefore, a triable issue of fact exists.

 

Defendant’s Motion for Summary Adjudication as to the First Cause of Action for Breach of Contract is DENIED.

 

2.       Second Cause of Action: Bad Faith

Defendant argues that the bad faith claim fails because, as stated above, there was no breach of the insurance contract. (See above.) Additionally, Defendant did not unreasonably withhold the policy because Defendant inspected the vehicle and took Plaintiff’s statement (UMF 5-8, 17-23), noted an inconsistency both with the how the damaged occurred and with the odometer (UMF 9-14), retained an expert to inspect the vehicle (UMF 15-16), and based on that expert opinion, denied the claim (UMF 24-32). (Motion 19: 12-20.) Moreover, due to the Genuine Dispute Doctrine, Plaintiff’s cause of action is barred. Specifically, in Chateau Chamberay Homeowners Ass’n v. Assoc. Int'l. Ins. Co., (2001) 90 Cal.App.4th 335, when a genuine dispute as to whether a claim should have been accepted, an insurer is not liable for bad faith. (Id. at 347.) Because there was a genuine dispute as to whether the damage to Plaintiff’s vehicle was caused by rocks or by an individual, Defendant is not liable for denying the claim.

 

            Plaintiff argues that there are triable issues of material fact. First, Defendant unreasonably delayed Plaintiff’s claim and did not pay the policy benefits. Specifically, Plaintiff’s counsel attempted to communicate with Defendant’s claim representatives, but continually failed to respond to Plaintiff. (Opp. 13: 9-19; Keusseyan Dec. ¶ 11, 12, 15, 16.) Plaintiff argues that Defendant’s investigation was flawed as it ignored evidence from Plaintiff’s expert. (Opp. 14: 5-8.) Second, Plaintiff contends that the genuine dispute doctrine does not apply because Defendant’s investigation was not reasonable.

 

“[T]here are at least two separate requirements to establish breach of the implied covenant: (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.” (Mosley v. Pac. Specialty Ins. Co., (2020) 49 Cal.App.5th 417, 435.) “The insured must show the insurer's conduct “demonstrates a failure or refusal to discharge contractual responsibilities, prompted not by an honest mistake, bad judgment or negligence but rather by a conscious and deliberate act, which unfairly frustrates the agreed common purposes and disappoints the reasonable expectations of the other party thereby depriving that party of the benefits of the agreement.” (Id. at 36.)

 

The court finds that Defendant has met its burden to show that a triable issue of material fact exists as to the second requirement, whether the withholding of benefits was reasonable. Here, initially, Defendant denied the claim based on the initial expert’s report. (UMF 32.) “Accordingly, “an insurer does not act in bad faith when it mistakenly withholds policy benefits, if the mistake is reasonable or is based on a legitimate dispute as to the insurer's liability.” (Mosley, supra, 49 Cal.App.5th at 436.) Again, once the Defendant meet its initial burden, the burden shifts to the Plaintiff. The court finds that there remains triable issue of material fact. Similar to above, Plaintiff’s expert provided a contrary opinion, indicating that the evidence demonstrated that a rock caused damage, not a tool. Thus, even after this report, Defendant denied the claim again. (UMF 54.) Thus, there is a triable issue of fact as to whether the second denial of the claim was reasonable in light of the other expert testimony.

 

Moreover, under the genuine dispute doctrine, “The genuine issue rule in the context of bad faith claims allows a [trial] court to grant summary judgment when it is undisputed or indisputable that the basis for the insurer's denial of benefits was reasonable—for example, where even under the plaintiff's version of the facts there is a genuine issue as to the insurer's liability under California law. [Citation.] ... On the other hand, an insurer is not entitled to judgment as a matter of law where, viewing the facts in the light most favorable to the plaintiff, a jury could conclude that the insurer acted unreasonably.” (Wilson v. 21st Century Ins. Co. (2007) 42 Cal.4th 713, 724.) Here, a reasonable juror could conclude that the Defendant acted unreasonably when it was provided with another expert’s opinion and still denied the payment.

 

Defendant’s Motion for Summary Adjudication as to the Second Cause of Action for Breach Duty of Good Faith and Fair Dealing – Bad Faith is DENIED.

 

3.      Punitive Damages

Lastly, Defendant argues that Plaintiff is not entitled to punitive damages as a matter of law. First, without tort damages, punitive damages cannot be awarded. Here, Defendant argues that because Plaintiff cannot recover any damages for bad faith, punitive damages are inapplicable. Second, Defendant argues that no evidence exists establishing punitive damages as Plaintiff cannot prove malice, oppression, or fraud.

 

Plaintiff argues that Defendant engaged in a systematic bad faith and handling this claim was malicious and fraudulent. Specifically, Plaintiff argues that Defendant’s decisions were based on “information that was intentionally inadequate and they purposefully directed, manipulated and misrepresented the facts in order to minimize the value of Plaintiff’s claim.” (Opp. 16: 27 – 17: 2.)

 

Civil Code § 3294(a) states, “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.” A defendant must act with the intent to vex, injure or annoy, or with a conscious disregard of the plaintiff's rights.” (Silberg v. California Life Ins. Co. (1974) 11 Cal.3d 452, 462.)

 

“If the plaintiff is going to prevail on a punitive damages claim, he or she can only do so by establishing malice, oppression or fraud by clear and convincing evidence. Thus, any evidence submitted in response to a motion for summary adjudication must necessarily meet that standard.” (Basich v. Allstate Ins. Co. (2001) 87 Cal.App.4th 1112, 1121.) Under Civil Code § 3294, ““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. “Oppression” means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person's rights. “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.”

 

The Court finds that while there are triable issues of material fact as to whether Defendant breached the contract and the implied covenant of good faith and fair dealing, no evidence exists that would allow for punitive damages. While Defendant may have breached the contract by denying the claim, Plaintiff has failed to prove by clear and convincing evidence that Defendant acted with a conscious disregard of the rights of others, subjected an individual to curle and unjust hardship, or intentionally misrepresented of concealed a material fact. (Civ. Code § 3294(c).) The evidence as stated does not rise to the level required for punitive damages.

 

Thus, Defendant’s Motion for Summary Adjudication as to Punitive Damages is GRANTED.

 

CONCLUSION:

 

For the foregoing reasons, the Court decides the pending motion as follows:

 

            Motion for Summary Adjudication is DENIED, as to 1st and 2nd causes of action.

            Motion for Summary Adjudication is GRANTED, as to punitive damages.

 

Moving party is to give notice.

 

IT IS SO ORDERED.

 

Dated:             January 18, 2023                     __________________________________                                                                                                                Upinder S. Kalra

                                                                                    Judge of the Superior Court