Kerry Moriarty v. Integon National Insurance Company

O [7] 8 United States District Court 9 Central District of California [10] 11 KERRY MORIARTY, Case № 2:19-cv-03619-ODW (RAOx) 12 Plaintiff and Counter-Defendant, ORDER GRANTING IN PART 13 v. MOTION FOR SUMMARY JUDGMENT [35] 14 INTEGON NATIONAL INSURANCE COMPANY, [15] Defendant and Counter-Claimant, [16] v. [17] 18 SERVIS ONE, INC. DBA BSI FINANCIAL SERVICES, [19] Counter-Defendant. [20] 21 I. INTRODUCTION 22 On September 27, 2017, Defendant/Counter-Claimant Integon National 23 Insurance Company’s (“Integon”) issued a flood insurance policy (the “Policy”) to 24 Plaintiff/Counter-Defendant Kerry Moriarty and Counter-Defendant Servis One, Inc. 25 dba BSI Financial Services (“BSI”). (Def.’s Separate Statement of Uncontroverted 26 Facts (“DSUF”) 2, ECF No. 35-2; Pl.’s Statement of Genuine Issues of Material Fact 27 (“PSF”) 2, ECF No. 38-1.) After Integon denied a claim by Moriarty for coverage 28 under the Policy, Moriarty initiated this action against Integon asserting two causes of 1 action for (1) breach of contract based on the Policy, and (2) breach of the implied 2 duty of good faith and fair dealing. (Compl., ECF No. 1.) Integon filed a 3 Counterclaim against Moriarty and BSI, seeking a declaration that Moriarty’s 4 insurance claims are not covered under the Policy. (Def.’s Answer & Counterclaim 5 (“Counterclaim”) ¶¶ 56–58, ECF No. 11.) 6 Now, Integon moves for summary judgment on Moriarty’s two causes of action 7 and its own Counterclaim. (Mem. P. & A. ISO Mot. Summ. J. (“Motion” or “Mot.”), 8 ECF No. 35-1.) The Motion is fully briefed. (See id.; Opp’n to Mot. (“Opp’n”), ECF 9 No. 38; Reply ISO Mot. (“Reply”), ECF No. 39.) For the following reasons, the 10 Motion is GRANTED in part.1 11 II. BACKGROUND 12 The Policy provides coverage for “all direct physical loss or damage to covered 13 property by and from the peril of ‘Flood’ as defined [in the Policy].” (Decl. of Kerry 14 Moriarty (“Moriarty Decl.”), Ex. 2 (“Policy”) 6, ECF No. 38-2.)2 The Policy then 15 lists a number of excluded perils, including “[l]oss caused by . . . fire.” (Id.) 16 On December 16, 2017, the Thomas Fire burned the Santa Ynez Mountains, 17 denuding the landscape. (PSF 11.) Shortly thereafter, on January 9, 2018, a rainstorm 18 fell upon the same region, generating debris flows that damaged hundreds of homes, 19 including Moriarty’s property. (Id. 12, 34–35.) Then, on January 29, 2018, Moriarty 20 filed a claim with Integon for his loss under the Policy. (Id. 5.) 21 Upon receiving the claim, Integon requested an independent adjuster visit 22 Moriarty’s property to inspect the damages. (Id. 42.) Integon also retained a 23 geotechnical engineer to conduct another independent investigation and analysis of the 24 main cause of the damage. (Id. 13–18.) On April 2, 2018, Moriarty received an email [25] 26 1 After carefully considering the papers filed in connection with the Motion, the Court deemed the matter appropriate for decision without oral argument. Fed. R. Civ. P. 78; C.D. Cal. L.R. 7-15. [27] 2 Integon submitted numerous objections to Plaintiff’s supporting declaration. The Court need not 28 resolve those objections, as the evidence to which Integon objects is unnecessary to the resolution of the Motion. 1 from The Roth Law Firm, stating it had been retained for “the investigation and 2 resolution” of Moriarty’s claim. (PSF ¶ 50; Def.’s App’x of Exs. (“Def.’s App’x”) 13, 3 ECF No. 35-10.) Attached to the email was a twelve-page letter (“the Letter”) stating 4 that Integon determined the Policy did not cover damages to Moriarty’s property 5 because the Thomas Fire caused Moriarty’s loss and the Policy excluded losses caused 6 by fire. (Id. at 14–25; Def.’s Reply to PSF ¶ 50, ECF No. 39-1.) The independent 7 geotechnical report Integon had commissioned was also included with the Letter. (See 8 Def.’s App’x 26–33.) That same day, April 2, 2018, Moriarty called The Roth Law 9 Firm expressing his disappointment. (Def.’s Supp. App’x of Exs. (“Def.’s Supp. 10 App’x”) 4, ECF No. 39-4.) Moriarty then filed the present action against Integon on 11 April 30, 2019. (See Compl.) 12 III. LEGAL STANDARD 13 A court “shall grant summary judgment if the movant shows that there is no 14 genuine dispute as to any material fact and the movant is entitled to judgment as a 15 matter of law.” Fed. R. Civ. P. 56(a). The burden of establishing the absence of a 16 genuine issue of material fact lies with the moving party, see Celotex Corp. v. Catrett, [17] 477 U.S. 317 , 322–23 (1986), and the court must view the facts and draw reasonable 18 inferences in the light most favorable to the nonmoving party, Scott v. Harris, [19] 550 U.S. 372, 378 (2007). A disputed fact is “material” where the resolution of that 20 fact might affect the outcome of the suit under the governing law, and the dispute is 21 “genuine” where “the evidence is such that a reasonable jury could return a verdict for 22 the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). 23 Conclusory or speculative testimony in affidavits is insufficient to raise genuine issues 24 of fact and defeat summary judgment. Thornhill Publ’g Co. v. GTE Corp., 594 F.2d 25 730, 738 (9th Cir. 1979). Although the court may not weigh conflicting evidence or 26 make credibility determinations, there must be more than a mere scintilla of 27 contradictory evidence to survive summary judgment. Addisu v. Fred Meyer, Inc., [28] 198 F.3d 1130, 1134 (9th Cir. 2000). 1 Once the moving party satisfies its burden, the nonmoving party cannot simply 2 rest on the pleadings or argue that any disagreement or “metaphysical doubt” about a 3 material issue of fact precludes summary judgment. Matsushita Elec. Indus. Co., Ltd. 4 v. Zenith Radio Corp., 475 U.S. 574, 586 (1986); see Celotex, 477 U.S. at 322–23. 5 Nor will uncorroborated allegations and “self-serving testimony” create a genuine 6 issue of material fact. Villiarimo v. Aloha Island Air, Inc., 281 F.3d 1054 , 1061 7 (9th Cir. 2002). The court should grant summary judgment against a party who fails 8 to demonstrate facts sufficient to establish an element essential to the case when that 9 party will ultimately bear the burden of proof at trial. See Celotex, 477 U.S. at 322 . 10 Pursuant to the Local Rules, parties moving for summary judgment must file a 11 proposed “Statement of Uncontroverted Facts and Conclusions of Law” that should 12 set out “the material facts as to which the moving party contends there is no genuine 13 dispute.” C.D. Cal. L.R. 56-1. A party opposing the motion must file a “Statement of 14 Genuine Disputes” setting forth all material facts as to which it contends there exists a 15 genuine dispute. C.D. Cal. L.R. 56-2. “[T]he Court may assume that material facts as 16 claimed and adequately supported by the moving party are admitted to exist without 17 controversy except to the extent that such material facts are (a) included in the 18 ‘Statement of Genuine Disputes’ and (b) controverted by declaration or other written 19 evidence . . . .” C.D. Cal. L.R. 56-3. 20 IV. DISCUSSION 21 Integon seeks summary judgment on both of Moriarty’s causes of action, as 22 well as on its own Counterclaim. The Court addresses each claim in turn. 23 A. Moriarty’s Breach of Contract Claim 24 Integon contends that Moriarty’s breach of contract claim is barred by a one25 year contractual limitations clause set forth in the Policy. Under California law, 26 contractual limitations periods of one year in insurance policies are regularly enforced. 27 See C & H Foods Co. v. Hartford Ins. Co., 163 Cal. App. 3d 1055, 1064 (1984); 28 Keller v. Fed. Ins. Co., 765 Fed. App’x 271, 273–74 (9th Cir. 2019), Niagara Bottling, 1 LLC v. Zurich Am. Ins. Co., No. ED CV 19-113 PA (KKx), 2019 WL 6729756 , at *5 2 (C.D. Cal. Oct. 5, 2019). 3 California law also recognizes some exceptions that might delay or negate a 4 limitations period, such as delayed discovery, equitable tolling, or equitable estoppel. 5 Under the delayed discovery rule, a limitations period may not begin running until 6 inception of the loss, which is defined as the point in time when damages are or 7 should be known to the insured, so long as the insured is diligent in the face of 8 discovered facts. Prudential-LMI Com. Insurance v. Superior Court, 51 Cal. 3d 674 , 9 687–88 (1990). Equitable tolling may likewise postpone the running of a limitations 10 period where an insurer has notice of the loss and investigates, so that the period 11 begins to run once the insurer’s coverage determination is complete. Id. at 687–91. 12 And equitable estoppel may negate application of a limitations period where some 13 conduct by the insurer, relied upon by the insured, induces a late filing of the action. [14] Id. at 689–90. 15 Here, it is clear the one-year contractual limitations period expired before 16 Moriarty filed suit. The undisputed evidence shows the loss occurred on January 9, 17 2018, and Moriarty filed suit on April 30, 2019, more than one year later. (PSF 4; 18 Def.’s Reply to PSF 8.) 19 Neither the delayed discovery rule nor equitable tolling render Moriarty’s suit 20 timely. The undisputed evidence shows that Moriarty made a claim under the Policy 21 on January 29, 2018. (Def.’s Reply to PSF 4–5.) The parties do not dispute when 22 Moriarty discovered the damage, but in any event, it must have happened by 23 January 29, 2018. It is also undisputed that Integon’s investigation concluded by the 24 time it denied coverage on April 2, 2018. (Id. 5–6.) So under the equitable tolling 25 rule, the limitations period may have been tolled until April 2, 2018. Regardless, 26 Moriarty filed his Complaint on April 30, 2019. (PSF 8.) Thus, one-year limitations 27 period had run, even after accounting for legal extensions. [28] 1 Equitable estoppel does not apply either. “In California, an insurer may be 2 estopped to assert a policy provision limiting the time to sue where it has caused the 3 insured to delay filing suit until after the expiration of the time period.” Doheny Park 4 Terrace Homeowners Ass’n, Inc. v. Truck Ins. Exchange, 132 Cal. App. 4th 1076 , 5 1090 (2005). However, “an insurer (who conceals no facts) is not estopped to assert 6 statute of limitations because denial of claim was at most, an incorrect interpretation 7 of the terms of the policy.” Love v. Fire Ins. Exch., 221 Cal. App. 1136 , 1146 (1990) 8 (internal quotation marks and brackets omitted); see also Vu v. Prudential Prop. & 9 Cas. Ins. Co., 26 Cal. 4th 1142, 1152 (2001) (“[A] denial of coverage, even if phrased 10 as a ‘representation’ that the policy does not cover the insured’s claim, or words to 11 that effect, offers no grounds for estopping the insurer from raising a statute of 12 limitations defense.”); Neff v. NY Life Ins. Co., 30 Cal. 2d 165, 172 (1947) (“[N]o 13 mere denial of liability . . . should be held sufficient, without more, to deprive the 14 insurer of its privilege of having the disputed liability litigated within the period 15 prescribed by the statute of limitations.”). 16 In this case, Moriarty contends equitable estoppel applies because the Letter 17 “falsely informed him that the damage to his property was the result of fire, not flood, 18 and that his homeowner’s carrier would assume responsibility for the damage to his 19 property.” (Opp’n 9; Moriarty Dec. ¶¶ 14–18.) However, the Letter merely states, 20 “Based upon [the geotechnical engineer’s] investigation and resulting report which 21 concluded in his professional opinion that the efficient proximate cause of your loss 22 was the Thomas fire, . . . there is no potential for coverage under the Policy.” (Def.’s 23 App’x 24.) Indeed, Moriarty admits “it was clear from [the L]etter that Integon 24 believed that the primary cause of the damage to the Property was . . . the Thomas 25 Fire.” (Moriarty Decl. ¶ 16.) The Letter also recommends, “[I]f you have a 26 homeowners’ policy of insurance, you should immediately tender a request for 27 coverage benefits under that homeowners’ policy to the insurer who issued that 28 policy.” (Id.) These statements do not amount to misrepresentations of fact, so they 1 do not give rise to equitable estoppel. See Neff, 30 Cal. 2d at 172 (“Defendant, 2 concealing no fact from the insured, was free to take this position. The insured, 3 knowing all the facts which were known to defendant, was then free to litigate the 4 issue of the liability which defendant had denied.”). 5 Accordingly, Integon is entitled to summary judgment with respect to 6 Moriarty’s first claim for breach of contract. 7 B. Moriarty’s Bad Faith Claim 8 Next, Integon contends that Moriarty’s second claim for bad faith is similarly 9 barred by the contractual limitations period. Indeed, “[w]here denial of the claim in 10 the first instance is the alleged bad faith and the insured seeks policy benefits, the bad 11 faith action is on the policy[,] and the limitations provision applies.” Velasquez v. 12 Truck Ins. Exch., 1 Cal. App. 4th 712, 721 (1991). 13 Examining Moriarty’s bad faith claim, it is clearly tied to the policy and, thus, 14 the limitations period. Moriarty alleges, “Integon has breached its duty of good faith 15 and fair dealing” by “[u]nreasonably withholding benefits[,] . . . [f]ailing to apply 16 pertinent policy provisions, and intentionally and unreasonably applying inapplicable 17 policy provisions.” (Compl. ¶ 14.) Moriarty also alleges Integon “[u]nreasonably 18 compell[ed] Plaintiff to institute litigation to recover benefits due under the policy” 19 and “[i]nterpret[ed] indisputable policy language and California Law in such a manner 20 as to avoid paying a valid claim.” (Id.) In other words, it was Integon’s steadfast 21 denial of the claim, not any additional act, which Moriarty portrays as bad faith. 22 Moriarty does seek damages aside from what he believes he is owed under the 23 Policy, but those damages are directly connected to the denial, not any additional act 24 by Integon. See Velasquez, 1 Cal. App. 4th at 722 . As such, “[n]one of the actions 25 alleged . . . as bad faith relate to events subsequent to initial policy coverage so as to 26 convert [the bad faith claim] from one on the policy to one which is not.” Id. 27 Thus, Moriarty’s bad faith claim is similarly barred by the limitations period as 28 discussed above, and summary judgment is appropriate as to this claim as well. 1] C. Integon’s Counterclaim 2 The final matter for consideration is whether summary judgment is appropriate 3 || for Integon’s Counterclaim. Again, Integon bears the burden of proving it is entitled 4|| to summary judgment. See Fed. R. Civ. P. 56(a). Here, Integon does not devote any 5 || argument or establish any facts showing the appropriateness of summary judgment for 6 || its Counterclaim. (See generally Motion, Reply.) Moreover, Moriarty’s causes of 7 || action fail because they are barred by the one-year contractual limitations period in the 8 | Policy, but Integon secks a broader declaration “confirming there is no coverage under 9 || the Policy for... Moriarty’s [insurance] claims, [and] that. . . Integon owes no duties 10 || or obligations to either [Moriarty or BSI] under the Policy.” (Counterclaim 4 58.) 11 || Although the Counterclaim now appears moot, summary judgment is not appropriate. 12 Vv. CONCLUSION 13 In conclusion, Integon’s Motion for Summary Judgment is GRANTED in 14|| part. (ECF No. 35.) As to both causes of action in Moriarty’s Complaint, summary 15 || judgment is GRANTED in favor of Integon. As to the Counterclaim, summary 16 || judgment is DENIED. 17 Integon is ORDERED to SHOW CAUSE, in writing, no later than March 25, 18 | 2021, for why the Counterclaim should not be dismissed as moot. Alternatively, 19 || Integon may file a dismissal of the Counterclaim that complies with Rule 41(a) by that date. Failure to timely respond to this Order shall result in dismissal of the 21 |} Counterclaim. Upon resolution of the Counterclaim, the Court will issue judgment. [22] 23 IT IS SO ORDERED. Ye We op 25 March 18, 2021 YY if OTIS D. WRIGHT, II 7 UNITED STATES DISTRICT JUDGE