Filed 7/30/20 Madrid v. Cal. Fair Plan Assn. CA2/1

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION ONE

CARLOS MADRID et al.,

Plaintiffs and Appellants,

v.

CALIFORNIA FAIR PLAN ASSOCIATION et al.,

Defendants and Respondents.

B285583, B287632

(Los Angeles County

Super. Ct. Nos. BC593925,

BC649991)

APPEALS from judgments of the Superior Court of Los Angeles County. Rafael A. Ongkeko, Judge. Affirmed in part and reversed in part.

WLA Legal Services, Steven Zelig for Plaintiffs and Appellants.

Lewis Brisbois Bisgaard & Smith, Raul L. Martinez, Elise D. Klein, Celia Moutes-Lee for Defendant and Respondent California Fair Plan Association.

Hollingshead & Associates, Patrick J. Campbell for Defendants and Respondents Larry Warne and Larry H. Warne Construction.

______________________________

Carlos Madrid managed property owned by Pacfic Ocean Properties, Inc. (hereafter Pacfic, pronounced PACK-fick). The property suffered damage on three occasions, and Madrid made three claims on an insurance policy issued by California FAIR Plan Association (Fair Plan), the first of which was paid and the second and third denied.

Madrid sued Fair Plan and Larry Warne, a contractor who repaired the property, alleging breach of contract, negligence, elder abuse, and related causes of action predicated on Fair Plan’s denial of policy benefits and Warne’s substandard repairs. Madrid settled the lawsuit with Warne, and the trial court granted summary judgment to Fair Plan on the ground that the lawsuit was barred by a one-year limitations provision in the policy.

In a second lawsuit, Pacfic sued Warne under basically the same causes of action as Madrid had asserted in the first lawsuit. The trial court dismissed the action on the ground that Madrid’s settlement with Warne in the first suit was binding on Pacfic in the second.

Madrid and Pacfic filed separate appeals, which we consolidated. Madrid contends the court erred in granting summary judgment to Fair Plan in the first lawsuit. Pacfic contends the court erred in dismissing Warne in the second. We disagree with Madrid but agree with Pacfic, and thus affirm in part and reverse in part.

BACKGROUND

We take our facts from the pleadings and admissible evidence submitted in support of and opposition to Fair Plan’s motion for summary judgment. As the first lawsuit was resolved by summary judgment on a timing issue and the second by dismissal before trial, none of the following facts has been established.

A. First Claim

Pacfic owned property in Tehachapi, California. Madrid, Pacfic’s sole shareholder, who is elderly and disabled, managed the property from his home in Torrance, over 100 miles away.

In September 2011, Madrid applied for insurance on the Tehachapi property through Christopher Gordon, an insurance broker. Gordon obtained the requested insurance from Fair Plan, a last-resort insurer mandated by Insurance Code section 10089, which issued policy No. CFP 2372999 naming Madrid, not Pacfic, as the insured. The policy was renewed year-to-year, and was in effect at all pertinent times from September 2, 2012 to March 30, 2015.

The policy was a standard form fire policy, only one provision of which is pertinent to these appeals. It stated: “Suit Against Us. No action can be brought [against Fair Plan] unless the action is started within one year of the date of loss.”

In January 2012, the Tehachapi property suffered wind damage, a covered peril. Madrid submitted a claim to Fair Plan, which retained Harold Marsh to adjust the claim. Marsh obtained a damage estimate, met with Madrid, and agreed on behalf of Fair Plan to pay for the estimated repairs. Madrid retained Ken’s Roofing to effect the repairs.

On July 27, 2012, after repairs were completed, Marsh sent Madrid a check made out to “Carlos Madrid and Ken’s Roofing, Inc.,” enclosing it in a letter that stated: “Enclosed is check number 87401 in the amount of $4,197.99 which represents full and final payment on the claim . . . [¶] . . . [T]he roof has been completed at your property. Therefore this will serv[e] as the full and final payment on the claim.” Madrid cashed the check and considered the claim resolved.

In November 2013, Madrid retained Eugene Twarowski, a public adjuster (a person licensed to aid insureds in resolving claims), to inspect the Tehachapi property. Twarowski discovered that the repairs performed by Ken’s Roofing were substandard, resulting in extensive later water damage. Twarowski requested that Madrid’s claim be reopened, but Fair Plan refused.

B. Second Claim

In February 2014, the Tehachapi property suffered damage in a windstorm, exacerbated by the prior substandard repairs.

Madrid again submitted a claim to Fair Plan, which again retained Marsh. Marsh retained Warne to inspect the damage.

During the inspection, at which Twarowski was present, Marsh directed Warne to cut and remove portions of a protective roof wrap that Madrid had had installed after the February 2014 windstorm. Warne allegedly failed to restore the wrap.

Fair Plan denied Madrid’s claim and refused to repair the damaged wrap.

C. Third Claim

In March and April 2014, the property suffered more wind and rain incursion, which the now-damaged protective wrap failed to prevent. Madrid submitted a claim to Fair Plan, which was denied on June 20, 2014.

D. First Lawsuit

1. Original Complaint and Warne Settlement

On September 9, 2015, Madrid sued Warne, Larry H. Warne Construction, Inc. (collectively “Warne”), Fair Plan, and others in Superior Court case No. BC593925, asserting causes of action for breach of contract and covenant, interference with contract, fraud, negligence, elder abuse, violation of the Unruh Civil Rights Act, intentional infliction of emotional distress (IIED), and violations of the Penal Code.

On February 15, 2017, Madrid accepted Warne’s settlement offer in the amount of $5,000, and dismissed him from the lawsuit on April 13, 2017.

2. Operative Complaint and Amendment Attempt

Substantial law and motion practice saw all other defendants but Fair Plan dismissed, and Madrid’s complaint trimmed to eight causes of action: (1) Breach of Contract; (2) breach of the implied covenant of good faith and fair dealing; (3) fraud; (4) negligent misrepresentation; (5) elder abuse; (6) violations of the Unruh Civil Rights Act; (7) negligence; and (8) IIED.

During the law and motion practice, a dispute arose as to whether Madrid, who did not own the Tehachapi property, held an insurable interest in it. To curtail the dispute, Madrid requested leave to amend to (1) add Pacfic as a plaintiff and (2) seek reformation of the policy to add Pacfic as an insured. The request was denied.

3. Summary Judgment

On June 14, 2017, Fair Plan moved for summary judgment on the grounds that the policy provision limiting inception of a lawsuit to within one year from the date of loss barred each cause of action, and each also failed on the merits.

In support of the motion, Estee C. Natale, Fair Plan’s Vice President of Claims, authenticated exhibits and described claim procedures in general and the handling of Madrid’s claims specifically.

Celia Moutes-Lee, Fair Plan’s attorney, authenticated several exhibits, including deposition transcripts and letters between various parties.

Madrid’s deposition testimony indicated that he received payment on his first claim. Fair Plan also produced the July 27, 2012 letter it sent with payment, which stated the enclosed check represented “full and final payment on the claim,” and a copy of the negotiated check. Madrid testified that he never complained about the amount paid, and paid nothing out of pocket.

Two letters from Marsh to Twarowski, copied to Natale, indicated that Fair Plan denied Madrid’s second and third claims and notified him of the policy’s one-year limitation. Twarowski admitted in his deposition that he received the letters.

Fair Plan adduced further evidence to the effect that Madrid had been unable in his deposition to identify any false representation made to him; any communication or evidence concerning Fair Plan’s knowledge of or reliance on his age, ethnicity, or disability; or any evidence concerning Fair Plan’s supervision or control of repairs to the Tehachapi property; and had admitted that he alone hired Ken’s Roofing and Warne to effect repairs, albeit upon Marsh’s recommendation.

On August 15, 2017, four days before Madrid’s opposition was due, Fair plan filed a notice of errata indicating that a two-page letter set forth in exhibits W and X had been intended to occupy only exhibit W. The notice also provided seven pages from Madrid’s deposition transcript, exhibit N, which had been inadvertently omitted from an exhibit. Neither of these exhibits was ultimately material to the trial court’s ruling.

On August 14, 2017, Madrid opposed summary judgment on the grounds that the policy’s time limit provision was unlawful. Even if it was valid, Fair Plan was estopped from relying on the time limit because it had failed to provide notifications required by the Insurance Code. Aside from the timing issue, Madrid contended each of his causes of action was meritorious.

In support of the opposition, Twarowski declared that Marsh had failed adequately to assess the scope of repairs needed to “the interior elevations” of the Tehachapi structure in addition to the roof; the roof repairs were themselves inadequate in scope, consisting only of a new layer of roofing rather than removal and replacement of all old layers, and the repairs “were done very badly and in an unworkmanlike manner,” such that the new roof failed after two years rather then the expected twenty. Twarowski opined that Marsh and Ken’s Roofing “were working together on the claim, to the detriment of Mr. Madrid.” Twarowski further declared that he witnessed Marsh and Warne damage the emergency wrap that Madrid had installed atop the repairs effected by Ken’s Roofing.

Madrid declared that he discussed his disability with Marsh several times in the way of explaining why he could not visit the Tehachapi property himself.

On September 25, 2017, the court granted summary judgment. It found that the policy’s one-year limitations provision applied to and barred all causes of action “on the policy,” i.e., causes of action predicated only on denial of policy benefits, which included those for breach of contract and breach of the covenant of good faith and fair dealing, as well as any count on any other cause of action (e.g., elder abuse and IIED) that was predicated solely on denial of policy benefits. Regarding causes of action and counts not “on the policy,” the court found that no evidence suggested Fair Plan made any misrepresentation or gave inadequate notice of the policy’s time limitation, that it victimized Madrid based on his age or disability, or that it had controlled the conduct of Warne or Ken’s Roofing. The court found that Madrid had offered no opposition to Fair Plan’s evidence that neither Marsh, Ken’s Roofing, nor Warne were its agents, and had in fact admitted during his deposition that he independently hired the construction workers.

Madrid appealed from the order granting summary judgment, which we construe as an appeal from the resulting judgment itself, and was assigned appeal No. B285583.

E. Second Lawsuit

1. Complaint

On February 8, 2017, two weeks after the court denied Madrid leave to amend in the first action, Pacfic (named “Pacific” initially, but corrected in the first amended complaint, which is operative) filed a new lawsuit, assigned Superior Court case No. BC649991, asserting basically the same causes of action (including the Penal Code violations) against the same defendants (with the addition of Gordon, the original insurance broker) as had been asserted in the first lawsuit on Madrid’s behalf.

As stated above, on February 15, 2017, one week after Pacfic filed the second lawsuit, Madrid settled the first lawsuit as to Warne.

As with the first lawsuit, substantial law and motion practice trimmed the complaint of parties and causes of action, until ultimately Pacfic was the only plaintiff and Warne and Fair Plan the only defendants.

On May 26, 2017, Pacfic filed a first amended complaint, asserting as against Warne causes of action for fraud, negligence (two counts), violations of the Penal Code, and interference with contract.

2. Warne’s Motion to Dismiss

On July 3, 2017, Warne moved to dismiss Pacfic’s complaint against him, arguing the action was a sham because it wholly duplicated the previously dismissed matters and was barred under the doctrines of res judicata and accord and satisfaction. Warne argued that Pacfic was Madrid’s alter ego, and all causes of action asserted by Pacfic in the second lawsuit involved identical primary rights as had been asserted by Madrid in the first lawsuit, with identical transactions alleged and no greater or different damages.

The trial court agreed, and on August 10, 2017, dismissed the second lawsuit as to Warne.

Pacfic appealed. We consolidated Madrid’s and Pacfic’s appeals.

DISCUSSION

A. MADRID’S APPEAL

Madrid contends the trial court erred in finding no triable issue existed as to whether his claims are time-barred. He argues (1) the limit was unlawful; (2) Fair Plan was estopped from relying on it; (3) no admissible evidence established when the limit began running; and (4) no cause of action was subject to the time limit.

1. Legal Principles and Standard of Review

Insurance Code section 2070 requires that a homeowner’s policy include the standard provision set forth in Insurance Code section 2071: “No suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity unless all the requirements of this policy shall have been complied with, and unless commenced within 12 months next after inception of the loss.” A suit or action on the policy that is asserted beyond the 12-month limitations period is time-barred. (Velasquez v. Truck Ins. Exchange (1991) 1 Cal.App.4th 712, 718.)

“Summary judgment is appropriate only ‘where no triable issue of material fact exists and the moving party is entitled to judgment as a matter of law.’ ” (Regents of University of California v. Superior Court (2018) 4 Cal.5th 607, 618 (Regents) [“A defendant seeking summary judgment must show that the plaintiff cannot establish at least one element of the cause of action,” or that there is a complete defense to the claim]; Code Civ. Proc., § 437c, subds. (c), (o)(1) & (o)(2).) If the defendant makes such a showing, the plaintiff must then demonstrate the existence of one or more disputed issues of material fact as to the cause of action. (Code Civ. Proc., § 437c, subd. (p)(2).)

On appeal, we independently review the entire record that was before the trial court when it granted summary judgment, except any evidence “to which objections have been made and sustained.” (Regents, supra, 4 Cal.5th at p. 618.) We view evidence in a light most favorable to the opposing party, and resolve evidentiary doubts and ambiguities in that party’s favor. (Elk Hills Power, LLC v. Board of Equalization (2013) 57 Cal.4th 593, 606.)

Here, the policy stated: “Suit Against Us. No action can be brought [against Fair Plan] unless the action is started within one year of the date of loss.” This language varies somewhat from that set forth in the standard form as described by Insurance Code section 2071, which provides: “No suit or action on this policy for the recovery of any claim shall be sustainable in any court . . . unless commenced within 12 months next after inception of the loss.” (Italics added.) But it is substantially equivalent.

Undisputed evidence indicated that Madrid’s third loss occurred between March 25 and April 3, 2014, and Fair Plan denied his third claim on June 20, 2014. Pursuant to the policy’s time limitation, he therefore had until June 20, 2015, at the latest to file suit as to any cause of action “on the policy.” He filed the instant lawsuit on September 9, 2015, two months beyond the latest possible deadline. Therefore, no triable issue existed as to whether Madrid’s claims were time-barred.

2. The Policy’s Time Limitation was Enforceable

Madrid argues that the policy’s one-year time limitation was unenforceable because it diverged from what the Insurance Code requires. We disagree.

Insurance Code section 2070 generally requires that policies in California be on a standard form set forth in section 2071, but permits deviation from the form “provided, that coverage with respect to the peril of fire, when viewed in its entirety, is substantially equivalent to or more favorable to the insured than that contained in such standard form fire insurance policy.” (Ins. Code, § 2070; Century-National Ins. Co. v. Garcia (2011) 51 Cal.4th 564, 567; California Fair Plan Assn. v. Garnes (2017) 11 Cal.App.5th 1276, 1290.) A policy exclusion is unenforceable to the extent it conflicts with requirements of the Insurance Code. (Ins. Code, § 2070; Julian v. Hartford Underwriters Ins. Co. (2005) 35 Cal.4th 747, 754.)

The standard form as set forth in Insurance Code section 2071 provides, in relevant part, that “No suit or action on this policy for the recovery of any claim shall be sustainable in any court . . . unless commenced within 12 months next after inception of the loss.” (Italics added.)

Here, the policy’s one-year limitation omitted the words “on this policy,” stating: “No action can be brought . . . unless the action is started within one year of the date of loss.”

Madrid argues that because the policy omitted “on the policy” from its time limitation, it could be interpreted in a way that conflicts with Insurance Code section 2071, rendering it unenforceable as to any cause of action even one on the policy. The argument is without merit.

Even if the policy’s time limitation was overbroad, it would be unlawful only to the extent of its overbreadth, i.e., to the extent the provision limited claims beyond the policy. (See Century-National Ins. Co. v. Garcia, supra, 51 Cal.4th at p. 569 [if a provision results in coverage not at least substantially equivalent to the level of protection available in the standard form, the provision is “to that extent” invalid].) The remedy would be to apply the provision only to causes of action on the policy. (See Samson v. Transamerica Ins. Co. (1981) 30 Cal.3d 220, 231 [any insurance policy that conflicts with pertinent statutes are nullified and superseded “to that extent”].)

Here, the trial court construed the time limit so as to conform to Insurance Code section 2071, i.e., to apply only to actions on the policy. This comported with section 2071.

3. Fair Plan is not Estopped From Relying on the Time Limit

Madrid argues Fair Plan cannot rely on the policy’s time limit because a triable issue exists as to whether the insurer gave notice of the limit as required by section 2695(f) of title 10 of the California Code of Regulations. The argument is without merit.

“Except where a claim has been settled by payment, every insurer shall provide written notice of any statute of limitation or other time period requirement upon which the insurer may rely to deny a claim.” (Cal. Code Regs., tit. 10, § 2695.7(f).) An insurer is estopped from asserting a limitations period if it failed to apprize the insured of “applicable claim time limits.” (Spray, Gould & Bowers v. Associated Internat. Ins. Co. (1999) 71 Cal.App.4th 1260, 1269.)

Here, Fair Plan’s evidence indicated that it settled Madrid’s first claim by payment: Fair plan produced a copy of the check it sent, which Madrid negotiated, and the letter accompanying it, which stated the check constituted “full and final payment on the claim.” Madrid admitted in deposition that he received and negotiated the check and never complained about the amount paid, and admitted he himself paid nothing out of pocket. If the first claim was settled by payment, the notice requirement set forth in the California Code of Regulations would not apply.

As to Madrid’s second and third claims, Fair Plan produced the letters by which it denied the claims, both of which set forth the policy’s one-year limitation.

Fair Plan’s evidence indicated that notice about the policy’s one-year limitations period was provided as to Madrid’s second and third claims and unnecessary as to his first, and Fair Plan was therefore not estopped from relying on the time limit.

This shifted the burden to Madrid to adduce rebutting evidence. He failed to do so, merely challenging the admissibility of Fair Plan’s evidence.

4. Admissible Evidence Established the Timing Parameters

Madrid submitted no written evidentiary objections below, and at the summary judgment hearing made only generalized oral objections about the state of the evidence. He repeats and elaborates on those objections on appeal. Fair Plan urges us to deem the objections forfeited (Null v. City of Los Angeles (1988) 206 Cal.App.3d 1528, 1534-1535 [failure to object or raise an issue at trial forfeits the issue on appeal]), but we will consider them.

Madrid argues that Moutes-Lee, Fair Plan’s attorney, whose declaration authenticated deposition transcripts and letters sent by Marsh, Ken’s Roofing, Twarowski, and Warne, had personal knowledge only about production of the transcripts, not the letters. Therefore, the letters, found in exhibits G, H, I, L, M, P, Q, T, U, W, and X, were inadmissible. Madrid argues that Estee Natale, Fair Plan’s Vice President in charge of claims, who authenticated the insurer’s business records, which contained the same letters as above, offered no foundation for her knowledge of the records or letters. Finally, Madrid argues the trial court erred in considering exhibits N, W, and X, because Fair Plan’s notice of errata correcting these exhibits was not served until four days before his opposition was due, giving him insufficient time to respond. Madrid asserts, without elaboration, that the inadmissibility of Fair Plan’s exhibits was fatal to all aspects of its motion for summary judgment. We disagree.

First, we are satisfied that Natale properly established her bona fides. She declared she was Fair Plan’s Vice President of Claims and had personal knowledge about the contents of the insurer’s records and the manner in which it adjusted claims. This sufficed. Madrid observes that Natale failed to explain when she began working for Fair Plan, but the point is irrelevant because a business record may be authenticated by any person having sufficient knowledge thereof, which does not require that the person be employed by the business when the record was generated.

Second, neither Natale nor Moutes-Lee purported to vouch for the truth of matters asserted in letters between individuals; they merely attested that the letters were kept in Fair Plan’s offices and produced during litigation. Thus authenticated, several of the letters, for example those sent or received by Fair Plan, were admissible on issues of notice, a key issue here. Moreover, several of the letters were independently authenticated by Madrid and Twarowski during their depositions. Whether Natale or Moutes-Lee could also authenticate them was irrelevant. For example, Madrid objects at length to the admissibility of letters Fair Plan sent to Twarowski denying Madrid’s second and third claims, arguing Natale as custodian of records had no personal knowledge of them, but he ignores the trial court’s finding that Natale was copied on the letters, and therefore had personal knowledge of them, and that Twarowski independently authenticated the letters during his deposition.

Third, Fair Plan’s notice of errata was immaterial. Exhibits X and W consisted of the first and second pages, respectively, of a letter sent by Warne to Marsh. Fair Plan’s notice of errata, which Madrid complains arrived too near the opposition due date to permit adequate reply, stated merely that both pages should have been in the same exhibit. Madrid makes no attempt to explain how he was prejudiced by being told belatedly that two exhibits he already possessed should have been one exhibit. The correction to exhibit N provided seven missing pages from the transcript of Madrid’s own deposition, in which he complained that Ken’s Roofing had delayed repairs to the Tehachapi property, an issue already known to Madrid and his attorney and wholly irrelevant to Fair Plan’s motion for summary judgment.

It does not suffice for Madrid simply to challenge an exhibit’s admissibility for general purposes, he must explain how the exhibit was used to support summary judgment and why it was inadmissible for that purpose. He makes no attempt to do so. Most of the letters to which he objects were immaterial to Fair Plan’s motion for summary judgment, were ignored by the trial court, and are irrelevant here.

We have independently examined each exhibit of which Madrid complains and the use made of it, and conclude, as did the trial court, that Madrid’s evidentiary objections, such as they were, were properly overruled.

5. All Claims Were On the Policy

Madrid argues that none of his claims were on the policy. We disagree.

a. Breach of Contract and Breach of Covenant

Madrid alleged Fair Plan breached the policy and its incorporated covenant of good faith and fair dealing in several respects. These causes of action were by definition on the policy.

b. Elder Abuse, Violation of the Unruh Civil Rights Act, and IIED

Madrid alleged that Fair Plan’s denial of policy benefits constituted financial elder abuse due to his age (Welf. & Inst. Code, § 15610.30), violated the Unruh Civil Rights Act due to his disability (Civ. Code, § 51 et seq.), and was so outrageous as to be designed to inflict, and actually inflict emotional distress.

We need not decide whether denial of policy benefits to a disabled elder may constitute elder abuse, violate the Unruh Act, or be so outrageous as to support a cause of action for intentional infliction of emotional distress. The only question today is whether a cause of action predicated on the denial is “on the policy” for purposes of the limitations period set forth expressly in Insurance Code section 2071 and impliedly in the policy.

A claim to recover “ ‘[d]amages for failure to provide benefits under [a] contract of insurance’ ” is “ ‘fundamentally a claim on the policy.’ ” (Magnolia Square Homeowners Assn. v. Safeco Ins. Co. (1990) 221 Cal.App.3d 1049, 1063.) Here, Madrid alleges only that Fair Plan denied him policy benefits. His claims are therefore on the policy even if denial of benefits also constitutes elder abuse, disability discrimination, or conduct so outrageous as to cause emotional distress, and are thus subject to the policy’s limitation period.

Madrid argues that an elder abuse claim should not be subject to a policy limitation period because the Legislature has stated that it “desires to direct special attention” to elders. (Welf. & Inst. Code, § 15600, subd. (b).) And he argues that a disabled person’s civil rights claim should not be time-limited because our Supreme Court has directed that the Unruh Civil Rights Act be “broadly” and liberally construed. (O’Connor v. Village Green Owners Assn. (1983) 33 Cal.3d 790, 795.) We have no quarrel with these sentiments, but neither indicates the Legislature or Court intended that the special attention afforded to elders and broad construction given to civil rights extend so far as to deliver them beyond the reach of Insurance Code section 2071. It is not our province to abrogate a clear statutory scheme that, with no exception made for elders or the disabled, permits an insurer to limit lawsuits.

Madrid relies upon Benun v. Superior Court (2004) 123 Cal.App.4th 113 (Benun), which he argues held that when medical malpractice also constitutes elder abuse, the statute of limitations set forth in the elder abuse law supersedes that applicable to medical and health care malpractice claims. The argument is without merit, and Benun actually cuts against Madrid’s position.

In Benun, the plaintiff alleged that medical professionals committed elder abuse by “recklessly or intentionally neglecting to provide adequate custodial care to” an elder. (Benun, supra, 123 Cal.App.4th at p. 116.) Relying on a Supreme Court case explaining the distinction between professional negligence and the “reckless neglect” necessary to establish elder abuse, Benun reasoned that “[i]f the legislative intent was that reckless or willful misconduct by health care providers elevates their exposure from mere negligence liability to the ‘heightened remedies’ of the act, . . . the more egregious nature of the misconduct would logically move them from the protection of the shorter statute of limitations to the functionally longer limitations statutes applicable to all others who commit custodial elder abuse.” (Id. at p. 126.) Benun thus did not hold that professional negligence against an elder constitutes elder abuse. Rather, the court observed the legislative distinction between professional negligence and elder abuse, and reasoned that the more egregious misconduct involved in the latter should logically be unprotected by the shorter limitations period applicable to the former.

Applying the same reasoning here, whether denominated breach of contract, elder abuse, or intentional infliction of emotional distress, the nature of Fair Plan’s conduct was the same: It denied Madrid policy benefits. No other action is alleged. Absent any legislative suggestion to the contrary, Fair Plan’s conduct should therefore enjoy the same protection provided by Insurance Code section 2071 to any insurer alleged to have wrongfully denied benefits. No principle or authority, and certainly not Benun, directs that an insurer should lose that protection simply because the insured was disabled or elderly.

c. Fraud and Negligent Misrepresentation

Madrid alleged that (1) Marsh falsified documents relating to “benefits due under the policy”; (2) Fair Plan and Marsh “concealed the existence of policy benefits”; (3) “Defendants concealed that Plaintiff was entitled to numerous other benefits under the policy”; (4) Fair Plan and Marsh “misrepresented that there was no coverage”; and (5) Fair Plan and Marsh “failed to take responsibility for damages caused by” Warne.

A cause of action based on an insurer’s misrepresentation about the scope of the policy is “on the policy,” and is thus subject to the policy’s time limitation. (Lawrence v. Western Mutual Ins. Co. (1988) 204 Cal.App.3d 565, 575 (Lawrence).) All the misrepresentations alleged by Madrid concerned the scope of coverage or benefits under the policy. All misrepresentation claims were accordingly subject to the one-year limitation.

Madrid argues that misrepresentations made during claim adjustment can constitute fraud. We agree, but a fraud cause of action predicated on those misrepresentations is fundamentally a claim on the policy, and is subject to policy time limits.

d. Negligence

Madrid alleged Fair Plan was vicariously liable for the negligence with which Warne and Ken’s Roofing repaired the Tehachapi property roof because Marsh, its agent, “stepped out of the role of insurer/adjuster and into the role of construction director, superintendent, overseer and supervisor,” and was “negligent in its supervision and overseeing of the work.”

“Under the doctrine of respondeat superior, an employer may be held vicariously liable for torts committed by an employee within the scope of employment. . . . The doctrine is a departure from the general tort principle that liability is based on fault. [Citation.] It is ‘ “a rule of policy, a deliberate allocation of a

risk” ’ . . . . based on ‘ “a deeply rooted sentiment” ’ that it would be unjust for an enterprise to disclaim responsibility for injuries occurring in the course of its characteristic activities.” (Mary M. v. City of Los Angeles (1991) 54 Cal.3d 202, 208.) “For the doctrine of respondeat superior to apply, the plaintiff must prove that the employee’s tortious conduct was committed within the scope of employment. [Citation.] ‘A risk arises out of the employment when “in the context of the particular enterprise an employee’s conduct is not so unusual or startling that it would seem unfair to include the loss resulting from it among other costs of the employer’s business. [Citations.] In other words, where the question is one of vicarious liability, the inquiry should be whether the risk was one ‘that may fairly be regarded as typical of or broadly incidental’ to the enterprise undertaken by the employer.” ’ ” (Id. at p. 209.) “Tortious conduct that violates an employee’s official duties or disregards the employer’s express orders may nonetheless be within the scope of employment. [Citations.] So may acts that do not benefit the employer [citation], or are willful or malicious in nature.” (Ibid.)

We will assume for purposes of argument that Madrid’s allegation that Marsh “stepped out of the role of insurer/adjuster” does not mean he stepped outside the scope of his employment for Fair Plan, which would preclude the insurer’s liability on a respondeat superior theory. We will also assume, contrary to Fair Plan’s argument, that an insurer may be held liable in tort for the omissions or errors of contractors engaged to provide repair and restoration services. (But see Rattan v. United Services Auto. Ass’n (2000) 84 Cal.App.4th 715, 723.)

The problem remains that any action on the policy would be time-barred. The question is whether Madrid’s negligence claim constitutes an action on the policy.

We conclude it does. To recover against Fair Plan for Marsh’s negligence on a theory of vicarious liability, Madrid must admit, contrary to his allegation, that Marsh functioned within the scope of his employment as Fair Plan’s adjuster. But the scope of that employment encompassed only the handling of Madrid’s insurance claim. An action based on allegations “relating to the handling of a claim or the manner in which it is processed . . . is an action ‘on the policy’ and, therefore, subject to the limitations bar.” (Velasquez v. Truck Ins. Exchange, supra, 1 Cal.App.4th at p. 719; see also Lawrence, supra, 204 Cal.App.3d at p. 575 [“Claims arising out of the contractual relationship are subject to the contractual limitations period contained in the insurance policy”].)

Madrid fails to explain, nor we to perceive, how Marsh’s conduct within the scope of claims adjustment could be deemed off the policy, nor how conduct outside the scope of insurance claim adjustment could subject Fair Plan to vicarious liability.

Relying on Murphy v. Allstate Ins. Co. (1978) 83 Cal.App.3d 38 (Murphy), Madrid argues that damages occurring subsequent to the loss, such as Marsh’s destruction of the Tehachapi property roof, are outside the policy.

Murphy is distinguishable. There, after the insureds’ home was damaged by fire, the insurer hired contractors to repair the damage, but they did so in a substandard fashion (in part due to the insurer’s underpaying them), further damaging the home. The insurer paid some of the policy benefits but then filed an interpleader action against the insureds and contractors. (Murphy, supra, 83 Cal.App.3d at pp. 42-43.) The insureds filed a bad faith action based on allegations that contractors retained by the insurer had caused further damage to the home, and the insurer had unjustifiably prosecuted its interpleader action, resulting in delay of payment on the policy. (Id. at p. 46.) The insurer prevailed on a summary judgment motion on the ground that the action was time-barred under the policy’s limitations clause. The appellate court reversed, holding that the insureds’ action was not on the policy because the insurer’s alleged wrongful conduct was “with respect to the repair and restoration of the damaged property and the employment of persons to do that work and the allegedly unjustified initiation and prosecution by [the insurer] of the interpleader action . . . .” (Id. at pp. 44, 46.)

Thus, in Murphy, the bad faith action related to activities by the insurer that had nothing to do with the initial insurance claim. Here, in contrast, Madrid’s negligence claim relates not to the activities of Fair Plan, but only to those of Marsh and Warne. No evidence suggests that Fair Plan hired Warne or in any way directed Marsh to conduct repairs on the Tehachapi property. On the contrary, undisputed evidence, Natale’s declaration, indicated that Fair Plan employed Marsh only as an independent adjuster, and only to determine what policy benefits were due to Madrid, if any. Any claim based on that employment would necessarily be on the insurance policy that occasioned Marsh’s employment. Any claim not based on that employment would necessarily be for conduct outside the employment’s scope, which would absolve Fair Plan of vicarious liability. Either way, Murphy offers Madrid no assistance.

6. Conclusion

We conclude that admissible evidence satisfied Fair Plan’s burden on summary judgment. Because Madrid presented no rebutting evidence, no triable issue exists as to whether the policy’s limitations provision was enforceable, whether Fair Plan was estopped from relying on it, or whether Madrid’s causes of action were subject to the limit. It being undisputed that Madrid filed his lawsuit more than a year after his three losses, no triable issue existed as to whether his causes of action were time-barred. Therefore, summary judgment was properly granted.

B. APPEAL AS TO WARNE

To briefly recap, on February 15, 2017, Madrid settled the first lawsuit as to Warne, and on April 13, 2017 dismissed him from the action. On May 26, 2017, Pacfic filed its first amended complaint in the second lawsuit, which named Warne as a defendant. On July 3, 2017, Warne moved to dismiss the complaint, arguing the action was a sham because it wholly duplicated the previously dismissed matters and was barred under the doctrines of res judicata and accord and satisfaction. Warne argued that Pacfic was Madrid’s alter ego, and all causes of action asserted by the corporation in the second lawsuit involved identical primary rights as had been asserted by Madrid in the first, with identical transactions alleged and no greater or different damages. The trial court agreed, and on August 10, 2017, dismissed the second lawsuit as to Warne.

Madrid contends the court erred in granting Warne’s motion to dismiss, arguing no California law authorizes such a motion, which on the merits was without merit.

We disagree that Warne’s motion was unauthorized, but agree it was meritless.

“In the absence of express statutory authority, a trial court may, under certain circumstances, invoke its limited, inherent discretionary power to dismiss claims with prejudice.” (Lyons v. Wickhorst (1986) 42 Cal.3d 911, 915; see also Del Junco v. Hufnagel (2007) 150 Cal.App.4th 789, 799.) This power may be invoked when “the complaint has been shown to be ‘fictitious or sham’ such that the plaintiff has no valid cause of action.” (Lyons, at p. 915.)

We review a court’s exercise of discretionary power for abuse of discretion. (Blank v. Kirwan (1985) 39 Cal.3d 311, 331.)

Madrid alleged in the first lawsuit that as owner of the Tehachapi property he was entitled to damages as a result of Warne’s negligence and participation in a scheme to defraud him with respect to property repairs. Madrid settled that claim.

In the second lawsuit, Pacfic alleged it was entitled as owner of the Tehachapi property to damages as a result of Warne’s negligence and participation in a scheme to defraud it with respect to property repairs. Pacfic admitted Madrid was its sole shareholder.

Whether Madrid or Pacfic claimed a right to recover for damage to the Tehachapi property, Warne allegedly committed negligence and fraud in only one set of transactions pertaining to it. He therefore, according to the complaints in the first and second lawsuits, violated only one set of primary rights.

But that does not mean those primary rights resided in Madrid. On the contrary, it seems likely that Madrid had no right to recover against Warne because he did not own the property, Pacfic did.

We fail to see how Pacfic’s causes of action for negligence and fraud constitute fictitious or sham pleadings. No authority to which we have been directed or have ourselves unearthed provides that a defendant’s settlement of one plaintiff’s unmeritorious claim extinguishes the allegedly viable claim of a different plaintiff in a different lawsuit.

Warne argues that Madrid and Pacfic are alter egos of one another, but he fails to explain why that would matter, even if true. His entire argument boils down to the following: Madrid and Pacfic are alter egos, and the essence of the alter ego doctrine is that justice be done. But that does not answer the pertinent question: Why would it be just to extinguish a claim asserted by one plaintiff based on its alter ego’s settlement? Warne’s answer is circular: Because they are alter egos.

That has not been established. “Under the standard alter ego doctrine, in appropriate circumstances the corporate form may be disregarded and the corporate veil pierced so that an individual shareholder may be held personally liable for claims against the corporation.” (Postal Instant Press, Inc. v. Kaswa Corp. (2008) 162 Cal.App.4th 1510, 1513.)

“The alter ego doctrine arises when a plaintiff comes into court claiming that an opposing party is using the corporate form unjustly and in derogation of the plaintiff’s interests. [Citation.] In certain circumstances the court will disregard the corporate entity and will hold the individual shareholders liable for the actions of the corporation . . . .” (Mesler v. Bragg Management Co. (1985) 39 Cal.3d 290, 300 (Mesler).) “The doctrine is applicable where some innocent party attacks the corporate form as an injury to that party’s interests. The issue is not so much whether the corporate entity should be disregarded for all purposes or whether its very purpose was to defraud the innocent party, as it is whether in the particular case presented, justice and equity can best be accomplished and fraud and unfairness defeated by disregarding the distinct entity of the corporate form.” (Communist Party v. 522 Valencia, Inc. (1995) 35 Cal.App.4th 980, 993.)

Here, it is unclear how the alter ego doctrine applies, because Warne does not seek to hold Madrid personally liable for his claims against Pacfic.

Warne offers no explanation why the doctrine should apply (other than it would be unjust not to apply it). Rather, he quotes the paragraph in Mesler immediately after the one we quote above, and argues that case law “does not differentiate between” who can and cannot rely on the doctrine. On the contrary, Mesler provides that “The alter ego doctrine arises when a plaintiff comes into court claiming that an opposing party is using the corporate form unjustly and in derogation of the plaintiff’s interests.” (Mesler, supra, 39 Cal.3d at p. 300.)

Even if the alter ego doctrine applied, there has been no showing that Madrid and Pacfic are in fact alter egos. Warne merely relies on Madrid’s allegations in the first and second lawsuits that he is Pacfic’s sole shareholder, that Pacfic was always “family run,” that Madrid derived income from and expended his own funds in managing the Tehachapi property, that Madrid acted on behalf of Pacfic in numerous capacities, and that Warne’s actions impacting Madrid correspondingly impacted Pacfic.

Alter ego status requires somewhat more. To determine whether the alter ego doctrine should be applied the court considers a number of factors, including: commingling of funds, identical equitable ownership, personal use of corporate offices, personal services performed for the principal by corporate employees, disregard of corporate formalities, and use of the corporation as a mere shell or conduit for the principal’s affairs. (Morrison Knudsen Corp. v. Hancock, Rothert & Bunshoft (1999) 69 Cal.App.4th 223, 249-250.)

Warne has made no showing on any of these factors, which are normally examined in the context of summary judgment or trial, not a motion to dismiss a complaint as a sham pleading.

Even if the alter ego doctrine applied in theory, and Warne established its requisites, it would not render Pacfic’s complaint a sham pleading. The doctrine merely permits a party to treat actions done ostensibly in a corporation’s name as done by the corporation’s controller. No authority permits a party to assert the doctrine to defend against the corporation’s own claims.

Citing no authority and providing no explanation, Warne argues Pacfic’s complaint was appropriately dismissed under the doctrines of res judicata and accord and satisfaction. We will just as summarily observe that neither doctrine applies, as there has been no accord or satisfaction of Pacfic’s claims, nor any adjudication of those (or any) claims on the merits.

In sum, the essence of the trial court’s ruling was that Warne paid Madrid for his alleged wrongful conduct, and should not also have to pay Pacfic for the same alleged misconduct. But Warne did not pay for his allegedly wrongful conduct, he merely settled Madrid’s claims predicated on it. When two plaintiffs allege the same misconduct, settlement with one does not extinguish the defendant’s liability to the other.

To be sure, fairness would suggest that any ultimate judgment against Warne on Pacfic’s claims be offset by its payment to Madrid. But unless Pacfic’s damages and Warne’s settlement were exactly the same, Pacfic’s complaint is not a sham pleading.

DISPOSITION

The judgment as to Fair Plan is affirmed. The judgment as to Warne is reversed. Fair Plan is to recover its costs on appeal B285583. Pacfic is to recover its costs on appeal B287632. Otherwise, those and other parties are to bear their own costs.

NOT TO BE PUBLISHED

CHANEY, J.

We concur:

ROTHSCHILD, P. J.

BENDIX, J.