APPEAL from a judgment of the
Coddington, Hicks & Danforth,
Relevant Policy Provisions
The policy's declarations page set out the following coverages in section I:
The endorsement further provides: "Coverage is limited to the amount reasonably necessary to repair or replace the dwelling and other 'building structures,' but does not include any costs required to replace, rebuild, stabilize or otherwise restore or protect the land." Thus, the policy limits for repair or replacement of the dwelling and other structures was increased to
The policy's loss settlement provisions relating to repair or replacement of the dwelling and other structures provide:
"Covered property losses are settled as follows: [
] . . . [
"b. 'Building structures' under Coverage A or B at 'replacement cost' without deduction for depreciation, subject to the following:
"(1) . . . we will pay the cost of repair or replacement, without deduction for depreciation, but not exceeding the smallest of the following amounts:
"(a) The limit of liability under this policy applying to the 'building structure';
"(b) The 'replacement cost' of that part of the 'building structure' damaged for equivalent construction and use on the same premises; or
"(c) The amount actually and necessarily spent to repair or replace the damaged 'building structure.' "
Paragraph 4 of this subdivision further provides that CSAA would "pay no more than the 'actual cash value' of the damage until actual repair or replacement is completed and costs incurred."
Additional relevant policy provisions will be set forth in the discussion portion of this opinion. For now, we simply note the policy also covered loss of "trees, shrubs, plants or lawns" up to "5% of the limit of liability that applies to the dwelling," as well as "the reasonable expense incurred" by the policyholder for debris removal.
CSAA's Initial Handling of Baltar's Claim
About a week later, CSAA paid Baltar the balance of the policy limit for loss of personal property. Additional loss of use payments (totaling six months of rent, minus the amount advanced for the security deposit) were made in October.
Thus, about a month after the loss of her home, Baltar was paid the policy limit of
Competing Reconstruction Estimates
CSAA also consulted with Cronic Disaster Services (Cronic), a licensed general contractor located in
About a week later, CSAA paid Baltar an additional
Ellenberg submitted the estimate to CSAA in
The following month, Baltar and various other policyholders retained counsel to assist them in recovering under their respective policies. Baltar's attorney and CSAA agreed to a tolling of the statute of limitations to allow the company "to continue working with Unity Adjustments to resolve the claims instead of escalating . . . immediately to a litigation posture."
Meanwhile, CSAA reviewed the Romero estimate internally but did not inform Baltar or Ellenberg that it had done so. In an
Completion of the New Home and Payment of Actual Construction Costs
The house was completed and a certificate of occupancy was issued in
Williams also spoke with someone at Unity Adjustments on
This letter stated: "We believe the rebuild of the insured's home has been completed. At your earliest convenience, please provide us with the verification of the completed rebuild, including but not limited to; paid permit fees, paid architect, engineering and plan fees, photos of both the interior and exterior of the home showing the status of the rebuild, a signed Certificate of Completion from the contractor and insured, and a final paid invoice showing the amount the insured paid for the work done on the home."
Receiving no response from Ellenberg, Williams sent follow-up letters requesting the same information on
Based on the information provided by
These amounts were paid on
No outstanding issues were identified by Baltar until
No additional outstanding issues were identified by Baltar until
The Lawsuit and Summary Judgment Motion
As previously mentioned, Baltar sued CSAA for breach of contract and breach of the implied covenant of good faith and fair dealing, seeking punitive damages for the latter alleged breach. Her operative second amended complaint was filed in
CSAA moved for summary judgment in
Turning to Baltar's bad faith cause of action, CSAA argued it "acted reasonably in the handling of [her] claim," noting it paid her the policy limit for the personal property and the other structures coverages, and further paid all amounts submitted by Baltar for loss of use. With respect to the dwelling coverage, CSAA explained it initially paid Baltar the estimated actual cash value of the destroyed house, then supplemented that amount based on the Cronic estimate of the replacement cost value, and further supplemented that amount when Baltar finally revealed the amount she "actually and necessarily spent to replace the building structure." CSAA argued: "If [Baltar] thought some aspect of her claim had not been paid, CSAA had no idea because [she] and her representatives accepted CSAA's payments and have not requested additional payment. Indeed, when [Baltar] was deposed in this lawsuit, she testified that certain landscaping expenses had not been reimbursed. When CSAA was informed of that testimony, it reviewed those invoices and issued payment within 30 days. Nothing further has been submitted to CSAA for review or consideration."
CSAA additionally argued that even if it was found to have breached the insurance contract, it did not do so in bad faith as a matter of law because there was a "genuine dispute" over the existence of coverage or the amount owed. Nor, CSAA argued, was Baltar entitled to punitive damages, there being no oppression, fraud, or malice as a matter of law.
Baltar's Summary Adjudication Motion and Opposition Filing
About a week after CSAA's summary judgment motion was filed, Baltar filed a motion for summary adjudication of five identified issues of duty. These can be condensed to the following: (1) whether CSAA had a duty to advise Baltar of the all available coverage under the policy, including the full amount of replacement cost coverage available under the policy based on CSAA's estimate of the replacement cost; and (2) whether CSAA had a duty to adjust any replacement cost estimate submitted on Baltar's behalf and provide that adjusted estimate to Baltar, notifying her of any increase in the replacement cost coverage available under the policy.
Baltar also filed an opposition to CSAA's motion for summary judgment, arguing "CSAA breached the policy and acted in bad faith in at least three major respects: (A) CSAA deprived . . . Baltar of the benefits of the contract by insisting on an unreasonable lowball estimate of the cost to replace [her] lost home; (B) CSAA failed to pay the amounts due under the separate landscaping . . . coverage in the Policy until
With respect to the first claimed breach, Baltar argued the Cronic estimate was so "unreasonably low" that she was required to retain Unity Adjustments to prepare a more accurate replacement cost estimate, and "[w]hen CSAA would not acknowledge the full amount of available coverage, [she] was forced to economize on the rebuild because she could not afford to fully replace her house." Baltar argued CSAA's handling of the replacement cost estimate "breached the contract and also amounted to bad faith" because CSAA "failed to establish an agreed on scope of loss[,] . . . deprived [her] of benefits under the Policy[, and] . . . violated industry standards and [title] 10 [California Code of Regulations] [section] 2695.4[ subdivision ](a) [and] . . . [title] 10 [California Code of Regulations] [section] 2695.9."
With respect to the delayed payment of landscaping costs, Baltar argued CSAA had sufficient information from which to determine the total amount of her landscaping loss in
Baltar additionally argued the genuine dispute doctrine did not shield CSAA from bad faith liability, and CSAA's bad faith entitled her not only to punitive damages, but also damages for emotional distress, attorney fees, public adjuster fees, costs of bringing the lawsuit, and interest.
In reply, CSAA argued Baltar did not set forth specific facts showing a triable issue of material fact with respect to either of her causes of action. Noting that Baltar was not entitled to more than the actual cash value of the destroyed house until she replaced it, CSAA argued Baltar neither alleged nor offered any evidence to show she did not receive an appropriate actual cash value amount immediately after the loss. Nor did Baltar offer any evidence disputing the fact that she thereafter received the full amount actually spent to replace the house. Addressing Baltar's argument that she was forced to build a less expensive house than the one she could have built had CSAA adjusted the Romero estimate and provided her with that adjusted replacement cost amount, CSAA responded by noting Baltar testified in her deposition "that the home she had before the fire was essentially the same as the home that she rebuilt." CSAA also noted the new house "was larger than her previous home by over 500 square feet" and characterized her arguments that CSAA "forced down the cost and quality of [her] rebuild" such that "she did not and could not rebuild what she had before the fire" as "disingenuous."
With respect to landscaping and debris removal, CSAA argued these expenses were not owed until they were incurred and brought to CSAA's attention. CSAA argued the receipts Baltar submitted for landscaping "were unclear, and CSAA's request for clarification was ignored." "At worst," the company argued, "the landscaping expenses were inadvertently overlooked, and paid by CSAA once the oversight was brought to the adjuster's attention." With respect to the
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1/ Baltar passed away in
2/ There is no assertion these conditions were not met in this case.
3/ The same day, CSAA paid Baltar an additional
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View full opinion at https://www.courts.ca.gov/opinions/documents/C089534.PDF