Judge: Virginia Keeny, Case: 20VECV01432, Date: 2023-04-28 Tentative Ruling
Case Number: 20VECV01432 Hearing Date: April 28, 2023 Dept: W
LEROY SANCHEZ v. MID-CENTURY INSURANCE
COMPANY, et al.
Defendants Mid-Century Insurance Company and Farmers
Insurance Company Fire Insurance Exchange’s motion for summary judgment or, in
the alternative, summary adjudication
Date of Hearing: April 28, 2023 Trial
Date: None
set.
Department: W Case No.: 20VECV01432
Moving
Party: Defendants
Mid-Century Insurance Company and Farmers Insurance Company Fire Insurance
Exchange
Responding
Party: Plaintiff Leroy Sanchez
BACKGROUND
Plaintiff alleges Defendants denied
Plaintiff’s insurance claim in bad faith. Plaintiff contends in 2010, Plaintiff
installed a ‘small wind energy system’ on his property. After the wind turbine
collapsed in 2019, Plaintiff contacted Defendants to present his claim.
Plaintiff alleges Defendants’ claim representative, Ms. Anderson, represented
and advised Plaintiff over the telephone that the claim was approved and that
he would be receiving the maximum amount covered for “Separate Structures”,
which was approximately $50,500.00. However, Plaintiff alleges Ms. Anderson
later sent Plaintiff a follow-up letter stating that the loss would not be
covered, even though, previously, on numerous occasions, Defendants represented
and assured Plaintiff that the loss would be covered. Plaintiff claims Anderson
attempted to argue that “wind chargers” and “windmills” were not covered for
windstorm damage.
On April 6, 2023, Plaintiff filed a Second
Amended Complaint against Defendants Mid-Century Insurance Company and Farmers
Insurance Company, Inc. asserting causes of action for (1) Breach of
Contractual Duty to Pay a Covered Claim; (2) Breach of Implied Obligation of
Good Faith and Fair Dealing; (3) Breach of Fiduciary Duty; (4) Invasion of
Privacy; and (5) Negligence. Plaintiffs named Angelica
Macias Debaca Insurance Agency, Inc. as Defendant Doe 1 and Carmen Maria
Loya-Marroquin as Defendant Doe 2.
[Tentative] Ruling
Defendants Mid-Century Insurance Company
and Farmers Insurance Company Fire
Insurance Exchange’s Motion for Summary
Judgment is GRANTED.
EVIDENTIARY
OBJECTIONS
Defendants Mid-Century Insurance Company
and Farmers Insurance Company Fire
Insurance Exchange submit evidentiary
objections to Plaintiff’s evidence submitted in opposition to its Motion for
Summary Judgment.
Sanchez Declaration – Objections Nos. 1 – 10 are OVERRULED.
Gomez Declaration – Objection No. 11 is OVERRULED.
DISCUSSION
Defendants Mid-Century Insurance Company
and Farmers Insurance Company Fire Insurance Exchange move this court for an
order granting summary judgment in favor of Defendants and against Plaintiff on
the grounds that no triable issue of material fact requiring trial on the
merits exists and Defendants are entitled to judgment as a matter of law. Defendants
Angelica Macias Debaca Insurance Agency, Inc. and Carmen Maria Loya-Marroquin
(“Agent Defendants”) filed Notice of Joinder on February 1, 2023.[1]
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 Ritchfield 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. Minor
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).
As to each claim as framed by the complaint, the party moving for
summary judgment must satisfy the initial burden of proof by presenting facts
to establish an essential element or to negate a defense. (CCP §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.)
Once the moving party has met that burden, the burden shifts to the
non-moving party 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.)
Double Recovery
Defendants first argue Plaintiff was
fully compensated for the damage to his windmill by the manufacturer and as a
result, may not be entitled to double recovery from Defendants.
In opposition, Plaintiff notes
Defendants never raised double recovery as an affirmative defense. Furthermore,
the only premise upon which Defendants based their Affirmative Defense of “No
Damages” was “plaintiff sustained no loss or damage of any nature or kind
whatsoever as the result of any acts or omissions on the part of these
answering Defendants.” (Plaintiff’s Exh. 7.)
The court agrees. Upon review of
Defendants’ answer, Defendants do not raise the issue of double recovery.
Defendants’ Sixth Affirmative Defense is limited to no damages proximately
caused by Defendants’ actions or omissions and not because such a recovery
would otherwise result in duplicative recovery. As a result, Defendants’ are
precluded from raising double recovery in summary judgment when they did not
raise the issue in their answer. (See Kendall v. Walker (2009) 181
Cal.App.4th 584, 598 holding a defendant may not obtain summary judgment by
raising an unpled affirmative defense.)
Express Terms
Defendants next move for summary
judgment on the grounds Plaintiff’s claim is excluded under the express terms
of the Mid-Century Policy. Plaintiff’s policy provides:
26.
Windstorm or Hail.
We do
not insure loss or damage directly or indirectly caused by, arising out of or resulting
from windstorm or hail:
***
c. to
cloth awnings, greenhouses and their contents, radio and television towers,
masts and antennas, including lead-in wiring, and wind chargers and windmills.
The parties dispute whether Plaintiff’s
“small wind energy system” falls within the definition of windmill, which is excluded
under the express terms of the Mid-Century Policy. Defendants contend words
used in an insurance policy are to be understood by their common usage or
meaning. (Civ. Code § 1644.) As defined by Merriam Webster’s Online Dictionary,
a windmill is defined as “1 a : a mill or machine operated by the wind usually
acting on oblique vanes or sails that radiate from a horizontal shaft
especially a wind-driven water pump or electric generator...” Based on this
definition, Plaintiff’s “small wind energy system” falls within the exclusion.
In opposition, Plaintiff argues a small
wind energy system and windmill are not the same. Plaintiff contends the
California Energy Commission has described the type of wind turbine Plaintiff
built as follows:
[A]
small wind energy system is defined as a wind turbine, a tower, and associated
control or conversion electronics that has a rated capacity of up to 50
kilowatts (kW). Small wind energy systems are designed to be installed at
homes, farms, and small businesses to offset utility power and reduce electric
bills. Wind turbines are classified by size: small (less than 50 kW),
intermediate (50 to 500 kW), and large (above 500 kW).
The term “windmill”, on the other hand,
refers to the wheel of the structure using the wind energy. In addition, a
“wind charger” is a generator driven by a windmill and used to charge storage
batteries. As a result, Plaintiff contends their wind turbine cannot fall
within the definition of windmill or wind charger. Because “the language of a
contract should be interpreted most strongly against the party who caused the
uncertainty to exist[]”, Plaintiff contends the contract should be interpreted
against Defendants. (See Civ. Code §1654.)
“A policy provision is ambiguous when it
is susceptible to two or more reasonable constructions. [Citation.] Language in
an insurance policy is ‘interpreted as a whole, and in the circumstances of the
case, and cannot be found to be ambiguous in the abstract.’ [Citation.] ‘The
proper question is whether the [provision or] word is ambiguous in the context
of this policy and the circumstances of this case. [Citation.] “The provision
will shift between clarity and ambiguity with changes in the event at hand.”
[Citation.]’ [Citation.] Ambiguity ‘ “ ‘is resolved by interpreting the
ambiguous provisions in the sense the [insurer] believed the [insured]
understood them at the time of formation. [Citation.] If application of this
rule does not eliminate the ambiguity, ambiguous language is construed against
the party who caused the uncertainty to exist. [Citation.]’ ‘This rule, as
applied to a promise of coverage in an insurance policy, protects not the
subjective beliefs of the insurer but, rather, ‘the objectively reasonable
expectations of the insured.” ‘” [Citation.] “Any ambiguous terms are resolved
in the insureds' favor, consistent with the insureds' reasonable expectations.”’
[Citation.]” (E.M.M.I. Inc. v. Zurich American Ins. Co. (2004) 32
Cal.4th 465, 470–471.)
Accordingly, when interpreting the
policy, the court interprets the policy most favorably to Plaintiff. And although Plaintiff and Defendants interpret the
policy language differently, this does not automatically render the policy
exclusion ambiguous. Because Plaintiff’s policy did not provide definitions for
the terms within the policy exclusion, the court relies on the definition from Merriam-Webster
as the plain and ordinary meanings of the terms. As noted by Defendant, a
“windmill” is defined as “a mill or machine operated by the wind usually acting
on oblique vanes or sails that radiate from a horizontal shaft; especially: a
wind-driven water pump or electric generator.” Additionally, a “windcharger” is
defined as “a generator driven by a windmill and used to charge storage
batteries.”
Plaintiff contends their wind turbine
does not meet this definition as Plaintiff’s wind turbine was used to
immediately consume the energy, or to release it to the electric grid for the
benefit of other users of electricity. However, the court finds this definition
falls within the definition of “windmill”. Both the Merriam-Webster definition
and Plaintiff’s interpretation involve converting wind energy into electricity.
Accordingly, Plaintiff’s wind turbine is
a windmill subject to Defendant’s policy exclusion.
Other Provisions
Next, Defendants argue Plaintiff’s claim
is also precluded under other provisions of the policy. Defendants contend the
Mid-Century policy excludes damage resulting from “Inherent Vice or Latent
Defect,” “Wear and Tear, Deterioration or Mechanical Breakdown,” and “Faulty,
Inadequate, Defective ... Manufacture or Construction[.]” Moreover, discovery
and investigation has determined that Plaintiff’s windmill was warranted by the
manufacturer to withstand winds of up to 135 mph, but failed in winds of only
50 mph and the manufacturer replaced the defective windmill under its warranty.
As a result, there was an obvious defect in the design and is therefore,
excluded under the policy.
In opposition, Plaintiff argues Defendants
fail to show any particular defect in either product or workmanship. The court
agrees. Defendants have not established no triable issue of material fact exists
as to whether there was any defect in Plaintiff’s wind turbine or workmanship
of the installers. The manufacturer replacing the windmill does not equate a
“Inherent Vice or Latent Defect,” “Wear and Tear, Deterioration or Mechanical
Breakdown,” and “Faulty, Inadequate, Defective ... Manufacture or
Construction[.]”
Defendants also argue the policy is
excess to any warranty. Defendants point to Section I - Property Conditions,
which provides “this insurance is excess of any other insurance covering the
property.” (DUMF, Exh. 6.) Defendants do not point to other insurances that
could have been exhausted.
Breach of the Covenant of Good Faith and
Fair Dealing
Defendants argue in the absence of a
breach of contract, there can be no claim for bad faith. The court agrees. “A
cause of action for a breach of the implied contractual covenant of good faith
and fair dealing cannot be stated in the absence of a valid contract to which
the covenant appertains.” (Pacific States Enterprises, Inc. v. City of
Coachella (1993) 13 Cal.App.4th 1414, 1425.) Accordingly, Plaintiff’s
derivative claim for breach of the covenant of good faith and fair dealing fails.
Breach of Fiduciary Duty
Defendants seek summary adjudication of
Plaintiff’s cause of action for invasion for breach of fiduciary duty on the
grounds Defendants are not fiduciaries.
“Breach of ¿duciary duty is a tort that
by de¿nition may be committed by only a limited class of persons.” (1-800
Contacts, Inc. v. Steinberg (2003) 107 Cal.App.4th 568, 592.) “The elements
of a cause of action for breach of fiduciary duty are: (1) existence of a
fiduciary duty; (2) breach of the fiduciary duty; and (3) damage proximately
caused by the breach.”¿(Gutierrez v. Girardi (2011) 194 Cal. App. 4th
925, 932.)¿A fiduciary relationship requires that a relation existing between
parties to a transaction wherein one of the parties is duty bound to act with
the utmost good faith for the benefit of the other party.¿ (Wolf v. Superior
Court (2003) 107 Cal.App.4th 25, 29 [internal citations omitted].)¿A
relationship ordinarily exists when “a con¿dence is reposed by one person in
the integrity of another, and . . . the party in whom the con¿dence is reposed,
if he voluntarily accepts or assumes to accept the con¿dence, can take no
advantage from his acts relating to the interest of the other party without the
latter’s knowledge or consent.’” (Ibid.)¿
Under California law, “an insurer is not
a fiduciary, and owes no obligation to consider the interests of its insured
above its own.” (Morris v. Paul Revere Life Ins. Co. (2003) 109 Cal.
App. 4th 966, 973; see Love v. Fire Ins. Exch. (1990) 221 Cal.App.3d
1136, 1148; Ahern v. Dillenback (1991) 1 Cal. App. 4th 36, 42 [unless
the insurer engages in conduct “consistent with assuming broader duties,” its
duties are limited to those arising out of the insurance contract].)
Defendants argue under these principles,
Defendants did not owe a fiduciary duty to Plaintiff.
In opposition, Plaintiff argues Glenesha
Anderson, Farmers’ employee, testified that she considered herself a fiduciary
in relationship with Mr. Sanchez and an insurance agent may also assume a
greater duty toward his insured by misrepresenting the policy's terms or extent
of coverage. (See Paper Savers, Inc. v. Nacsa (1996) 51 Cal.App.4th
1090, 1096-1097.) Plaintiff also cites to Vu v. Prudential Property &
Casualty Ins. Co. (2001) 26 Cal. 4th 1142 for the proposition “[c]ases have
referred to the relationship between insurer and insured as a limited fiduciary
relationship[.]” (Vu v. Prudential Property & Casualty Ins. Co.
(2001) 26 Cal.4th 1142, 1150.)
However, Vu was noting cases that
described the insurer-insured relationship as “akin to fiduciary relationship”
or involved the “qualities of decency and humanity inherent in the
responsibility of a fiduciary” but went on to find “[t]he insurer-insured
relationship, however, is not a true ‘fiduciary relationship’ in the same sense
as the relationship between trustee and beneficiary, or attorney and client. [Citation.]
It is, rather, a relationship often characterized by unequal bargaining power [Citation]
in which the insured must depend on the good faith and performance of the
insurer [Citations]. This characteristic has led the courts to impose “special
and heightened” duties, but “[w]hile these ‘special’ duties are akin to, and
often resemble, duties which are also owed by fiduciaries, the fiduciary-like
duties arise because of the unique nature of the insurance contract, not
because the insurer is a fiduciary.” [Citations.]” (Vu v. Prudential
Property & Casualty Ins. Co. (2001) 26 Cal.4th 1142, 1150–1151.)
Here, Plaintiff has not alleged any
broader duties assumed by Defendants. Moreover, the Supreme Court of California
explicitly found an insurer “is in a legally recognized special relationship
with plaintiff, and it has duties that clearly encompass forthright and
affirmative disclosure of available policy limits. However, ‘[a]n insurer is
not a fiduciary, and owes no obligation to consider the interests of its
insured above its own. [Citation.]’ (Village Northridge Homeowners Assn. v.
State Farm Fire & Casualty Co. (2010) 50 Cal.4th 913, 929.)
Based on the foregoing, Plaintiff has
not demonstrated a triable issue of material fact and Defendants’ motion for
summary adjudication on this claim is GRANTED.
Punitive Damages
Because the court finds Plaintiff has
not established a triable issue of material fact as to their causes of action
against Defendants, the court need not reach Defendants’ punitive damages
argument.
Invasion of Privacy
Defendants seek summary adjudication of
Plaintiff’s fourth cause of action for invasion for privacy.
“An actionable claim [for invasion of
privacy] requires three essential elements: (1) the claimant must possess a
legally protected privacy interest; (2) the claimant’s expectation of privacy
must be objectively reasonable; and (3) the invasion of privacy complained of
must be serious in both its nature and scope.” (County of Los Angeles
v. Los Angeles County Employee Relations Commission (2013) 56 Cal.4th 905,
926, citations omitted.) The common law cause of action for invasion of
privacy based upon intrusion has two elements: (1) intentional intrusion into a
private place, conversation or matter, (2) in a manner highly offensive to a
reasonable person. (March v. MGM/UA Telecommunications, Inc. (2003)
113 Cal.App.4th 415, 431.) “The statute of limitations in which to commence an
action for invasion of privacy is one year.”
(Ion Equipment Corp. v. Nelson (1980) 110 Cal.App.3d 868, 880.)
Defendant argues Plaintiff’s invasion of
privacy cause of action is barred by the statute of limitations. Plaintiff
alleges he learned that “conversations with him were recorded for the first
time on March 18, 2022, when Defendants produced audio recordings, including
conversations with Plaintiff.” (SAC ¶¶50, 96.) Defendant presents evidence,
however, Plaintiff admitted that he knew the phone call was being recorded. Plaintiff
testified that “So since you all tell me everything's being recorded, well then
I hope all them recordings -- are being saved as well, cause …” (Greer Decl.,
Exh. 13.) Accordingly, Defendants contend Plaintiff had “discovered” that all
of his phone conversations with the Debaca Agency were recorded as of no later
than December 23, 2019. Defendants further argue
In opposition, Plaintiff argues when
Plaintiff received calls from Angelica Macias Debaca Insurance Agency, Inc., he
was not advised that his call may or would be recorded. Plaintiff contends Defendants’
claim that Plaintiff discovered or should have discovered recordings of his
conversations with their agents when he learned about one particular conversation
being recorded is a stretch. Contrary to Defendants’ claims, no warnings that
the calls may be recorded were produced in responses to the discovery.
Plaintiff does not present any authority
that each separate recording is its own violation. As a result, the court finds
the statute of limitations began to run once Plaintiff discovered his phone
calls were being recorded. On the last recording between Plaintiff and Ms.
Marroquin, Ms. Marroquin states all their calls are recorded and Plaintiff even
requested the recordings. (Greer Decl. Exh. 13, 10:16-20, 27:5-10.) Even
assuming each recording is its separate violation, this conversation occurred
on the last phone call – December 2019. Because Plaintiff discovered the
recordings at the latest in December 2019, the statute of limitations expired
December 2020. Plaintiff filed their invasion of privacy claim in 2022.
Based on the foregoing, Plaintiff has
not demonstrated a triable issue of material fact and Defendants’ motion for
summary adjudication on this claim is GRANTED.
Negligence
Defendants argue Plaintiff has no
evidence Defendants owed him any duty and the allegations of the fifth cause of
action are demonstrably false.
“[A]n insurance agent has an ‘obligation
to use reasonable care, diligence, and judgment in procuring the insurance
requested by an insured.’ [Citation.] The law is well established in California
that an agent's failure to deliver the agreed-upon coverage may constitute
actionable negligence and the proximate cause of an injury. [Citations.]”
(Butcher, supra, 77 Cal.App.4th at p. 1461, 92 Cal.Rptr.2d 521.) Moreover, the
insurer may be held vicariously liable for the negligence of the agent.” (R
& B Auto Center, Inc. v. Farmers Group, Inc. (2006) 140 Cal.App.4th
327, 337.)
Defendants contend Ms. Marroquin did not
“challenge” Ms. Webb’s coverage decision in any manner and the recorded phone
call between Ms. Marroquin and Ms. Webb show Ms. Marroquin told Ms. Webb that
she was happy that Mid-Century was covering the loss, as she had initially
heard from a local adjuster, that the damage to the windmill would have been
denied due to an exclusion in the policy for windstorm or hail. (UMF 29.) Moreover,
Plaintiff claims that Ms. Marroquin breached a duty owed to Plaintiff by
inadvertently disclosing material information to Mid-Century; however, there
cannot be a duty requiring an agent to conceal material information from his or
her principle.
In opposition, Plaintiff argues Ms.
Marroquin assumed a duty over Plaintiff when Ms. Marroquin represented to
Plaintiff that she will consult with an agent with a superior knowledge and
after doing so, assured Plaintiff that his claims was covered and filed his
claim. Plaintiff cites to Paper Savers, Inc. v. Nacsa (1996) 51
Cal.App.4th 1090 to support his contention Ms. Marroquin and therefore,
Defendants, can assume a special duty toward Plaintiff by misrepresenting the
policy terms.
However, the facts here differ from Papers
Savers, Inc. and the cases it relies on. In Plaintiff’s complaint,
Plaintiff contends Defendants breached their duty when Ms. Marroquin “negligently,
carelessly, recklessly, and/or unlawfully challenged Ms. Webb’s decision that
Plaintiff’s claim was covered.” (SAC ¶114.) None of the cases provide that the
agent breached their duty by informing the insurer the claims should not be
covered. Although Ms. Marroquin might have misrepresented the policy to
Plaintiff, upon discovering the claim was not covered, Ms. Marroquin informed
Plaintiff of such. (See Free v. Republic Ins. Co. (1992) 8 Cal.App.4th
1726, 1729 holding once an insurer or its agent elects to respond to an
insured's questions about coverage, a special duty arises which requires them
to use reasonable care to provide accurate information.) Based on the evidence
provided, Defendants and their agents swiftly informed Plaintiff his claim
would not be covered upon discovering the exclusion in his policy.
Based on the foregoing, Plaintiff has
not demonstrated a triable issue of material fact and Defendants’ motion for
summary adjudication on this claim is GRANTED.