Judge Upinder S. Kalra, Case Number: 23STCV14194, Date: 2025-03-14 Tentative Ruling

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1. Summary Judgment in Defendant Houston Specialty Insurance Company’s favor; or

2. Summary Adjudication in Defendant Houston Specialty Insurance Company’s favor of the First, Second, Third, and Fourth Causes of Action as well as Summary Adjudication as to punitive damages.

On June 20, 2023, Plaintiff Eddie Scott (Plaintiff) filed a Complaint against Defendants Houston Specialty Insurance Company and Devoted Insurance Agency, LLC (Defendants) with five causes of action for: (1) Breach of Contract, (2) Breach of Implied Covenant of Good Faith and Fair Dealing, (3) Reformation, (4) Declaratory Judgment, and (5) Professional Negligence.[1]

According to the Complaint, Plaintiff obtained a judgment against non-party GC Landscaping and General Construction, Inc. (GCL) for $750,000 plus assignment of GCL’s first party claims. Plaintiff further alleges that GCL provided defective construction services at their property located at 1288 Linda Vista Ave., Pasadena, California (the Property) and that Defendants failed to cover the resulting insurance claim.

On July 25, 2023, Defendant Houston Specialty Insurance Company (Houston) filed an Answer.

On September 27, 2023, default was entered against Defendant Devoted Insurance Agency, LLC (Devoted).

On October 17, 2024, Houston filed the instant motion for summary judgment, or alternatively summary adjudication (the MSJ).

On November 15, 2024, Plaintiff moved ex parte to continue the hearing on the MSJ to March 10, 2025. The court granted the ex parte application and kept the MSJ hearing date as a motion setting date.

The function of a motion for summary judgment or adjudication is to allow a determination as to whether an opposing party cannot show evidentiary support for a pleading or claim and to enable an order of summary dismissal without the need for trial.¿(Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843 (Aguilar).) In analyzing such motions, courts must apply a three-step analysis: “(1) identify the issues framed by the pleadings; (2) determine whether the moving party has negated the opponent's claims; and (3) determine whether the opposition has demonstrated the existence of a triable, material factual issue.”¿(Hinesley¿v.¿Oakshade¿Town Center¿(2005) 135 Cal.App.4th 289, 294).¿Thus, summary judgment or summary adjudication is granted when, after the Court’s consideration of the evidence set forth in the papers and all reasonable inferences accordingly, no triable issues of fact exist, and the moving party is entitled to judgment as a matter of law.¿(CCP § 437c(c);¿Villa v.¿McFarren¿(1995) 35 Cal.App.4th 733, 741.)¿

A triable issue of material fact exists where “the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof.” (Aguilar, supra, at p. 850.)¿

As to each claim as framed by the complaint, the party¿moving for summary judgment or summary adjudication must satisfy the initial burden of proof by presenting facts to negate an essential element.¿(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.) A motion for summary judgment or summary adjudication must be denied where the moving party's evidence does not prove all material facts, even in the absence of any opposition or where the opposition is weak.¿(See¿Leyva v. Superior Court (1985) 164 Cal.App.3d 462, 475;¿Salesguevara¿v. Wyeth Labs., Inc. (1990) 222 Cal.App.3d 379, 384, 387.)¿¿¿¿

Once the¿moving¿party has met the burden, the burden shifts to the opposing party¿to show via specific facts that a triable issue of material facts exists as to a cause of action or a defense thereto.¿(CCP § 437c(o)(2).)¿ When¿a¿party¿cannot¿establish an essential element or defense, a court must grant a motion for summary judgment or summary adjudication.¿(CCP § 437c(o)(1)-(2).)¿¿

The court GRANTS Houston’s request for judicial notice as to Exhibits O, M, N, and P. (Evid. Code § 452(d), (h); See Kalnoki v. First American Trustee Servicing Solutions, LLC (2017) 8 Cal.App.5th 23,37.) However, the court only takes judicial notice of the foregoing documents only as to “the existence, content and authenticity of public records and other specified documents”; it does not take judicial notice of the truth of the factual matters asserted in those documents. (Dominguez v. Bonta (2022) 87 Cal. App. 5th 389, 400.)¿¿

1. Objections to the Declaration of Carrie Ulrich (Objection Nos. 1-4): OVERRULED

2. Objections to the Declaration of Kristina A. Fretwell (Objection Nos. 5-7): SUSTAINED

1. Objections to the Declaration of Blake J. Lindemann (Objection Nos. 2, 4): OVERRULED

2. Objections to the Declaration of Blake J. Lindemann (Objection No. 1, 3): SUSTAINED Relevance and hearsay

3. Objections to the Declaration of Eddie Scott (Objection Nos. 5-10): SUSTAINED Lacks foundation, inadmissible opinion evidence and calls for legal conclusion.

Plaintiffs contend that the court should deny the motion because Houston failed to set forth each issue and the facts to support each issue in violation of Cal. Rules of Court 3.1350(d).

“(1) The Separate Statement of Undisputed Material Facts in support of a motion must separately identify:49

(A) Each cause of action, claim for damages, issue of duty, or affirmative defense that is the subject of the motion; and

(B) Each supporting material fact claimed to be without dispute with respect to the cause of action, claim for damages, issue of duty, or affirmative defense that is the subject of the motion.

(2) The separate statement should include only material facts and not any facts that are not pertinent to the disposition of the motion.

(3) The separate statement must be in the two-column format specified in (h). The statement must state in numerical sequence the undisputed material facts in the first column followed by the evidence that establishes those undisputed facts in that same column. Citation to the evidence in support of each material fact must include reference to the exhibit, title, page, and line numbers.”

CCP 437c(b)(1) states in pertinent part: “The supporting papers shall include a separate statement setting forth plainly and concisely all material facts that the moving party contends are undisputed. Each of the material facts stated shall be followed by a reference to the supporting evidence. The failure to comply with this requirement of a separate statement may in the court's discretion constitute a sufficient ground for denying the motion.”

The court disagrees with Plaintiff’s contention that it must deny the motion due to faulty Separate Statement. Indeed, the code provides such a response when there is no Separate Statement filed with the MSJ. Here, Houston provided a Separate Statement of the material facts upon which it relies to support its motion.

The court previously granted a request to continue the motion that was originally scheduled for January 31, 2025. The court, thereafter, presided over several conferences to ensure that discovery that was material to the MSJ was completed. Only after the parties had demonstrated that relevant discovery was completed did the court set a hearing date. Now, Plaintiff concludes their opposition with a request to continue the hearing on the MSJ to conduct additional discovery. (Opp. 18:20-19:2.) (CCP § 437c(h).) Plaintiff has insufficiently stated facts justifying a continuance. Accordingly, the court DENIES Plaintiff’s request for a continuance.

As to all causes of action, Plaintiff argues there are triable factual disputes concerning an agency relationship between Houston (purported principal) and Devoted (purported agent). Devoted is in default. Plaintiff contends that this agency relationship is not included in Houston’s notice or motion and, as a basis of liability, can be developed by Plaintiff at trial. (Opp. 13:17-14:15.) The court rejects this argument and declines to develop it further.

Houston contends that summary judgment is proper because there are no disputed facts that the policy at issue, Policy No. TEN-19333, (the Policy) has an express exclusion for residential properties and the Property was residential. Houston further contends that Plaintiff is estopped from arguing that the Property was not his residence.[2]

Plaintiff argues that there is a triable fact as to why Houston denied coverage based on deposition testimony that Houston denied coverage not because the Property was a “dwelling” but because it was “residential or tract housing project.”[3] Alternatively, Plaintiff argues the Policy language is unenforceable as illusory, that the water intrusion could be a covered loss, that Houston failed to establish the insured agreed to the exclusion.

Houston replies that Plaintiff misstates the deposition testimony and provides no evidence of a factual dispute as to the meaning of the residential exclusion.[4]

To state a claim for breach of contract, a plaintiff must allege sufficient facts to establish (1) a contract between the parties, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) damages to the plaintiff from the breach. (Wall Street Network, Ltd. v. New York Times Co. (2008) 164 Cal.App.4th 1171, 1178.)¿“As damages are an element of a breach of contract cause of action [citation], a plaintiff cannot obtain judgment on a breach of contract cause of action in an amount of damages to be determined later.” (Paramount Petroleum Corp. v. Superior Court (2014) 227 Cal.App.4th 226, 241 (Paramount Petroleum).)

The element at issue here is breach and it hinges on the Residential Exclusion. The Residential Exclusion provides:

“This insurance does not apply to and the Company will have no obligation to provide indemnity or defense against any ‘occurrence,’ ‘bodily injury,’ ‘property damage,’ incidents or ‘suits’ arising from any work or operations performed by you or any contractors or subcontractors working directly or indirectly on your behalf in connection with any condominium or townhome, single family dwelling, multifamily dwelling, or other residential or tract housing project.”

(Separate Statement of Undisputed Material Facts (SSUMF) No. 17; see also, Ulrich Decl. ¶ 5, Exhibit C.)

“When interpreting a policy provision, we give its words their ordinary and popular sense except where they are used by the parties in a technical or other special sense.” (Haynes v. Farmers Ins. Exchange (2004) 32 Cal.4th 1198, 1204.) “[A]ny provision that takes away or limits coverage reasonably expected by an insured must be conspicuous, plain and clear.” (Ibid. [quotations omitted].) “Thus, any such limitation must be placed and printed so that it will attract the reader's attention. Such a provision also must be stated precisely and understandably, in words that are part of the working vocabulary of the average layperson.” (Ibid.)

Here, Houston met its burden to show no material factual dispute that there was no breach because the Residential Exclusion applied. First, it is undisputed that the Residential Exclusion is conspicuous because it was a separate page of the policy, included a large heading that stated “Exclusion,” and states limiting language. (See SSUMF No. 17, Exhibit A; see also Haynes, supra, 32 Cal.4th at p. 1205 [noting that the language of that policy had “nothing . . . to alert a reader that it limits permissive user coverage, nor anything in the section to attract a reader’s attention to the limiting language.”] Second, it is undisputed that the Property is zoned as “single family residential,” that it is listed as a “single family residence” on LA County tax records, and that Plaintiff lived there from August 2013 to January 2017 and again from March 2019 to July 2019. (SSUMF Nos. 32, 33, 35, 36, and 37; see also Scott Decl. ¶ 3.)[5] In other words, the subject property meets the requirements of the exclusion because it is either a single-family dwelling, a multifamily dwelling, or other residential or housing project. Thus, the burden shifts.

Plaintiff did not meet his burden to establish a triable fact. Indeed, the only fact dispute proposed by Plaintiff is that the Property was not a single-family dwelling because he did not live at the Property after January 3, 2017 (when he retained GCL) and did not intend to live at the Property after January 3, 2017. (Scott Decl. ¶¶ 5-6.) However, there is no authority before the court that intent to live at what is zoned, taxed, and actually used as a dwelling is required.[6] Accordingly, the court rejects Plaintiff’s attempt to re-write the policy and create a disputed issue of fact where none exists.

Accordingly, the court GRANTS Houston’s motion for summary judgment as to the First Cause of Action.[7]

Second Cause of Action – Breach of the Implied Covenant of Good Faith and Fair Dealing

Houston contends that summary judgement is proper because there is no requisite breach of contract and that Houston’s denial of coverage was unreasonable or without proper cause. Houston further contends that punitive damages fail because they are rooted in this cause of action.

Plaintiff’s argument here is the same as for the first cause of action. As to punitive damages, Plaintiff adds that there are ample grounds to award punitive damages and the a jury must evaluate this issue.

“ ‘The [implied] covenant of good faith and fair dealing [is] implied by law in every contract.’ [Citation.] The covenant is read into contracts and functions ‘as a supplement to the express contractual covenants, to prevent a contracting party from engaging in conduct which (while not technically transgressing the express covenants) frustrates the other party’s rights to the benefits of the contract.’ [Citation.] The covenant also requires each party to do everything the contract presupposes the party will do to accomplish the agreement’s purposes. [Citation.] A breach of the implied covenant of good faith is a breach of the contract [citation], and ‘breach of a specific provision of the contract is not…necessary’ to a claim for breach of the implied covenant of good faith and fair dealing [citation].” (Thrifty Payless, Inc. v. The Americana at Brand, LLC (2013) 218 Cal.App.4th 1230, 1244.) (Emphasis in original.) Plaintiff’s allegations must show “that the conduct of the defendant, whether or not it also constitutes a breach of a consensual contract term, 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. Just what conduct will meet this criteria will depend on the contractual purposes and reasonably justified expectations of the parties.” (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1395.)¿

“The prerequisite for any action for breach of the implied covenant of good faith and fair dealing is the existence of a contractual relationship between the parties, since the covenant is an implied term in the contract.” (Smith v. City and County of San Francisco (2002) 225 Cal.App.3d 48-49.)¿¿

In light of the ruling above, the court GRANTS Houston’s motion for summary judgment as to the Second Cause of Action.

Houston contends that summary judgment is proper because Plaintiff failed to establish that GC Landscaping and Houston intended the Policy to cover the work at the Property. Plaintiff argues they have a preponderance of the evidence standard, that the insured testified they did ask for residential property coverage, and the difference is the result of mutual mistake or inequitable conduct. Houston replies that Plaintiff provided the incorrect legal standard and failed to provide evidentiary support.

A claim for reformation requires: 1. Fraud, or mutual mistake of the parties, or a mistake of one party known or suspected by the other; 2. Form of agreement pled verbatim or generally according to legal effect; and 3. The contract does not express the parties’ actual intent. (Civ. Code § 3399; George v. Auto. Club of So. Cal. (2011) 201 Cal.App.4th 1112, 1132.) A party seeking relief must prove the true intent by clear and convincing evidence. (Shupe v. Nelson (1967) 254 Cal.App.2d 693, 700.)

Here, Houston met its burden that it and GCL intended the Policy to cover commercial work only. First, GCL applied for a commercial insurance policy with Houston. (SSUMF No. 8.) Second, GCL’s application for insurance states they perform commercial work.[8] (SSUMF Nos. 9, 10, 11.) Third, Houston issued the Policy and renewed it annually through April 28, 2020. (SSUMF Nos. 15, 16.) While not stated, it follows that GCL paid premiums to keep the Policy active. Finally, and as discussed above, the Policy contains the clear Residential Exclusion. (SSUMF No. 17.) The burden shifts.

Plaintiff did not meet his burden. First, he applies the incorrect legal standard. Second, Plaintiff provides no admissible evidence that GCL intended for the Policy to cover residential work.

Accordingly, the court GRANTS Houston’s motion for summary judgment as to the Third Cause of Action.

Houston contends that summary judgment is proper because Plaintiff has failed to demonstrate that the Residential Exclusion does not apply to the Property.

Plaintiff argues that they have a viable claim for declaratory judgment because there are triable factual disputes concerning the first, second, and third causes of action.

In light of the rulings above, the court GRANTS Houston’s motion for summary judgment as to the Fourth Cause of Action.

[1] The first four causes of action apply to Houston.

[2] The court declines to address the estoppel argument because it was not necessary for its conclusion.

[3] Plaintiff’s supplemental opposition proposes that physical occupancy plus intent to live at the property are relevant factors to determine dwelling. Plaintiff cites Diaz v. Kosmala, 547 B.R. 329, 335 (B.A.P. 9th Cir. 2016); Tromans v. Mahlan (1896) 111 Cal. 646; Ellsworth v. Marshall (1961) 196 Cal.App.2d 471, 474; and Lakas v. Archambault (1918) 38 Cal.App.365. The court is not persuaded that these authorities apply. For example, Ellsworth concerned foreclosure proceedings where the plaintiffs unsuccessfully invoked homestead protection that failed because they did not live at the property. (Ellsworth, supra, 196 Cal.App.2d at p. 474-477.) The court is unaware of authority applying terms used in bankruptcy and foreclosure proceedings as replacements for plain language in an insurance contract.

[4] The court disregards Houston’s reply to separate statement. (Nazir v. United Airlines, Inc. (2009) 178 Cal.App.4th 243, 252 [noting that “T[t]here is no provision in the statute” for a reply separate statement.”])

[5]While Plaintiff did not dispute these facts, Plaintiff contends they are not material to this motion. The court disagrees.

[6] Black’s Law Dictionary defines “dwelling-house” as “The house or other structure in which one or more people live; a residence or abode.” (Black’s Law Dictionary, 11^th ed., pg. 641.) Merriam-Webster defines it as “a shelter (such as a house) in which people live.” (Merriam-Webster, https://www.merriam-webster.com/dictionary/dwelling [last accessed March 11, 2025.])

[7] As a result, the court need not address the punitive damages argument.

[8] The court notes that GCL applied for insurance with Houston after it had contracted with Plaintiff to work on the Property. (SSUMF Nos. 1, 8.)