Filed 1/29/20 Estrada v. State Farm General Insurance Co. CA2/2

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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 TWO
LUIS ESTRADA et al.,

Plaintiffs and Appellants,

v.

STATE FARM GENERAL INSURANCE COMPANY,

Defendant and Respondent.

B293962

(Los Angeles County

Super. Ct. No. BC586743)

APPEAL from a judgment of the Superior Court of Los Angeles County. Michelle Williams Court, Judge. Affirmed.

Law Offices of Eric Bryan Seuthe & Associates, Eric Bryan Seuthe and Terrence I. Swinson for Plaintiffs and Appellants.

Pacific Law Partners, Michael J. McGuire and Anne M. Master for Defendant and Respondent.

Plaintiffs and appellants Luis Estrada, Maria Leticia Estrada, Maria G. Jain, Irma M. Estrada, Carmen Esparza, Maria Teresa Estrada, and Robert Estrada (collectively, plaintiffs) appeal from the summary judgment entered in favor of defendant and respondent State Farm General Insurance Company (State Farm) in this action for breach of contract and breach of the covenant of good faith and fair dealing. We affirm the judgment.

BACKGROUND

The parties

Plaintiffs are the successors-in-interest to decedent Teresa Estrada, who owned a home located at 6223 Holmes Avenue in Los Angeles (the property). Estrada owned the property as a joint tenant with Jose Murillo. Estrada and Murillo were not married.

Estrada and Murillo were named insureds under a homeowner’s insurance policy issued by State Farm for the period November 5, 2011 to November 5, 2012 (the policy).

The policy

As a condition to coverage, the policy imposes certain duties on the named insureds following a loss. These duties include producing documents to support a claim and submitting to an examination under oath (EUO) if requested by State Farm. The policy provides, in relevant part:

SECTION I – CONDITIONS

“1. [¶] . . . [¶]

“2. Your Duties After Loss. After a loss to which this insurance may apply, you shall see that the following duties are performed:

“[¶] . . . [¶]

“c. prepare an inventory of damaged or stolen personal property. Show in detail the quantity, description, age, replacement cost and amount of loss. Attach to the inventory all bills, receipts and related documents that substantiate the figures in the inventory;

“d. as often as we reasonably require:

“[¶] . . . [¶]

“(2) provide us with records and documents we request and permit us to make copies;

“(3) submit to and subscribe, while not in the presence of any other insured:

“(a) statements; and

“(b) examinations under oath; and

“(4) produce employees, members of the insured’s household or others for examination under oath to the extent it is within the insured’s power to do so.”

The policy defines “You” and “your” as the “named insured” shown in the Declarations, and the named insured’s spouse if resident in the household. The policy defines an “insured” as “you and, if residents of your household: [¶] a. your relatives; and [¶] b. any other person under the age of 21 who is in the care of a person described above.”

The claims

On April 4, 2012, the property was damaged by fire. Estrada died four days later from injuries she suffered in the fire.

Murillo submitted a claim to State Farm for damage to the home and to personal property. By December 21, 2012, State Farm had paid $125,023.45 for damage to the home. State Farm paid Murillo an additional $11,708.80 for damaged personal property.

In March 2013, plaintiffs provided State Farm with an inventory of Estrada’s personal property lost or damaged in the fire. The value of the claimed personal property totaled $44,500 and included $3,000 in clothing, $6,000 of furniture, $7,500 in jewelry, and $20,000 in U.S. currency.

On April 1, 2013, plaintiffs’ attorney, Eric Bryan Seuthe, sent State Farm a letter listing Estrada’s personal property items lost or damaged in the fire. The value of the claimed property increased from $44,500 to $80,000 and included $10,000 in clothing, $25,000 of furniture, $15,000 of jewelry, and $20,000 in U.S. currency. Seuthe’s letter informed State Farm that plaintiffs intended to file a wrongful death action against Murillo.

State Farm responded to Seuthe’s letter on April 29, 2013, by requesting evidence substantiating the $80,000 personal property claim, including the age of the lost or damaged items, receipts, bank statements, and photos. Seuthe replied in a May 21, 2013 letter stating that the “damaged items were of varying ages, since they were ‘household’ items in nature.” He attached copies of cashier checks that Estrada had purportedly cashed before her death.

State Farm informed plaintiffs in writing on August 29, 2013, that the policy’s terms and conditions required them to provide supporting documentation for the claimed jewelry and currency, including receipts, photographs, and bank statements, and additional information concerning the other damaged items, including their approximate age and where they were located at the time of the fire. State Farm asked that the requested documents and information be provided within 60 days. Plaintiffs provided no additional information or documentation.

On September 18, 2013, State Farm asked plaintiffs to provide an inventory of the damaged property and documentation supporting ownership and value of that property. State Farm reiterated its request for information and supporting documentation in letters dated February 3, 2014 and February 25, 2014.

On March 2, 2014, plaintiffs sent State Farm a letter that listed the claimed personal property. The total value of plaintiffs’ claim increased from $80,000 to $140,100. The listed items included a “bone China” set valued at $25,000, jewelry valued at $50,000, and clothing valued at $50,000. Plaintiffs demanded payment of $80,000 within five days.

State Farm informed plaintiffs on March 6, 2014, that it could neither accept nor decline their claim because there was insufficient documentation to verify the ownership or the value of the claimed items. State Farm reiterated the policy conditions that plaintiffs had to satisfy before any payment could be made on their claim. Plaintiffs responded in a March 14, 2014 letter that “people generally do not keep receipts for coffee tables, shoes, and other miscellaneous items” and suggested that State Farm ask Murillo for information about the claimed items.

On March 28, 2014, State Farm asked plaintiffs to provide a recorded statement by the person most knowledgeable among Estrada’s heirs. Seuthe responded on April 17, 2014, stating that there was no single most knowledgeable person but that several of Estrada’s daughters had information. Seuthe offered to make Estrada’s daughters available for a recorded statement in his office.

State Farm’s attempts to take examinations under oath

On April 23, 2014, State Farm informed plaintiffs that it lacked sufficient information as to the existence, ownership, and value of the claimed personal property and that it had retained an attorney, Steve Huchting, to take EUOs of the persons who had prepared the inventory of the claimed property. Huchting wrote to Seuthe on May 1, 2014, confirming his engagement by State Farm and suggesting a telephone call to schedule the EUOs.

On May 8, 2014, Huchting wrote to Seuthe, offering to take two EUOs on May 23, 2014, in Seuthe’s offices. On May 19, 2014, Seuthe agreed to the May 23, 2014 date for the EUOs. Huchting responded that same day, confirming that he intended to take the EUOs of two of Estrada’s heirs on May 23, 2014, in Seuthe’s office. Huchting asked Seuthe to provide an inventory of the claimed items and any documents that plaintiffs thought State Farm should consider.

On May 20, 2019, Seuthe wrote to Huchting, accusing him of refusing to conduct the EUOs in Seuthe’s office. Seuthe stated that plaintiffs “will consider your right to conduct the examinations, under oath, concluded and will proceed forward with litigation in this matter.” Seuthe refused to engage in any further email or telephonic communications with Huchting.

Huchting responded by letter the next day, May 21, 2014, disputing Seuthe’s accusation that he had refused to conduct the EUOs at Seuthe’s office. Huchting referred to his May 8, 2014 and May 19, 2014 letters in which he had previously agreed to take the EUOs at Seuthe’s office. Huchting reiterated his intent to proceed with the EUOs on May 23, 2014, in Seuthe’s office. Seuthe responded the next day, stating he had been ordered to appear at a settlement conference on May 23, 2014, but that his clients would appear for their EUOs at his office on June 6, 2014. Huchting wrote back on May 27, 2014, to confirm the June 6, 2014 date for the EUOs in Seuthe’s office.

On June 2, 2014, Seuthe unilaterally changed the date of the scheduled EUOs from June 6 to June 20, 2014. Huchting responded on June 3, 2014, informing Seuthe he was not available on June 20, but offering several alternative dates. The following day, Seuthe informed Huchting that because of State Farm’s refusal to schedule the EUOs on reasonably convenient dates, plaintiffs intended to sue. Huchting made a final attempt on June 18, 2014, by offering to schedule the EUOs at Seuthe’s office on a mutually convenient date. Huchting asked Seuthe to contact him if plaintiffs were willing to proceed. Seuthe did not respond.

On August 18, 2014, State Farm advised Seuthe in writing that it was denying plaintiffs’ claim because they had failed to provide documentation substantiating their claim and had failed to appear for the requested EUOs.

The wrongful death action

Plaintiffs commenced a wrongful death action against Murillo on April 2, 2013. State Farm defended Murillo in that action.

In response to document requests propounded by Murillo in January 2014, plaintiffs produced an itemization of Estrada’s personal property and a video of the interior of the house.

Murillo noticed plaintiffs’ depositions. In an October 22, 2014 letter to Murillo’s counsel, Seuthe asked whether plaintiffs’ depositions and the EUOs State Farm had previously requested in connection with plaintiffs’ personal property claim could take place at the same time.

In 2015, Seuthe sent Huchting a letter informing him that plaintiffs were being deposed in the wrongful death action and inviting him to participate in the depositions. Hutching determined that his participation would not be appropriate because a deposition and an EUO were “completely different things” and because Seuthe’s offer came “too late.”

The current action

Plaintiffs commenced this action against State Farm on July 1, 2015, for breach of contract and breach of the covenant of good faith and fair dealing. State Farm moved for summary judgment, arguing that the undisputed facts showed that EUOs were warranted and that plaintiffs had refused to attend. Plaintiffs opposed the motion, claiming they were not obligated to submit to EUOs because they were not named insureds under the policy. Plaintiffs further claimed that State Farm had unreasonably refused to combine their EUOs with depositions in their wrongful death action against Murillo. Appellants argued that State Farm’s request for EUOs was a pretext for denying their claim and that State Farm had not properly investigated Murillo’s claim before paying his personal property loss claim.

The trial court granted the summary judgment motion, and judgment was subsequently entered in State Farm’s favor. This appeal followed.

DISCUSSION

I. Summary judgment: legal principles and standard of review

Summary judgment is granted when a moving party establishes the right to entry of judgment as a matter of law. (Code Civ. Proc., § 437c, subd. (c).) “The purpose of the law of summary judgment is to provide courts with a mechanism to cut through the parties’ pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute. [Citation.]” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843 (Aguilar).)

A defendant moving for summary judgment bears the initial burden of proving that there is no merit to a cause of action by showing that one or more elements of the cause of action cannot be established or that there is a complete defense to that cause of action. (Code Civ. Proc., § 437c, subd. (p)(2); Cucuzza v. City of Santa Clara (2002) 104 Cal.App.4th 1031, 1038.) Once the defendant has made such a showing, the burden shifts to the plaintiff to show that a triable issue of one or more material facts exists as to that cause of action or as to a defense to the cause of action. (Aguilar, supra, 25 Cal.4th at p. 849.) If the plaintiff does not make such a showing, summary judgment in favor of the defendant is appropriate. In order to obtain a summary judgment, “all that the defendant need do is to show that the plaintiff cannot establish at least one element of the cause of action . . . . [T]he defendant need not himself conclusively negate any such element.” (Id. at p. 853.)

On appeal from a summary judgment, an appellate court makes “an independent assessment of the correctness of the trial court’s ruling, applying the same legal standard as the trial court in determining whether there are any genuine issues of material fact or whether the moving party is entitled to judgment as a matter of law. [Citations.]” (Iverson v. Muroc Unified School Dist. (1995) 32 Cal.App.4th 218, 222.)

II. Breach of contract

State Farm met its burden of showing that plaintiffs’ refusal to submit to the requested EUOs was a complete defense to their breach of contract cause of action. The policy imposes on its insureds the duty to submit to EUOs reasonably required by State Farm. “The right to require the insured to submit to an examination under oath concerning all proper subjects of inquiry is reasonable as a matter of law.” (Globe Indemnity Co. v. Superior Court (1992) 6 Cal.App.4th 725, 731.) The contractual duty to pay policy proceeds does not arise until the insured provides information necessary to determine whether a loss is covered under the terms of the policy. (Ibid.) An insured’s compliance with a policy requirement to submit to an EUO is therefore a prerequisite to the right to receive benefits under the policy. (Brizuela v. CalFarm Ins. Co. (2004) 116 Cal.App.4th 578, 587 (Brizuela), citing Hickman v. London Assurance Corp. (1920) 184 Cal. 524, 534.) “‘[A]n insured materially breaches an insurance policy by failing to submit to an examination under oath, as often as may reasonably be required. . . .’ [Citation.]” (Abdelhamid v. Fire Ins. Exchange (2010) 182 Cal.App.4th 990, 1001, citing 13 Couch on Insurance (3d ed. 1999) § 196:24, p. 196-32.)

The undisputed facts show that plaintiffs repeatedly refused to submit to EUOs requested by State Farm and that such refusal was the basis for State Farm’s denial of their claim on August 18, 2014. The facts here are materially indistinguishable from those in Brizuela, in which the court held that an insured’s repeated failure to comply with the insurer’s demand for an EUO was a breach of the policy provisions, resulting in a forfeiture of coverage and relieving the insurer of its obligation to pay policy benefits. (Brizuela, supra, 116 Cal.App.4th at pp. 588-590.) That Seuthe offered, after State Farm had already denied plaintiffs’ claim, to make plaintiffs available for EUOs during depositions in their wrongful death action against Murillo raises no triable issue as to whether plaintiffs materially breached their obligations under the policy. (See Cook v. Allstate Ins. Co. (2004 C.D. Cal.) 337 F.Supp.2d 1206, 1215-1216 [insured’s offer to submit to EUO after insurer’s denial of claim insufficient to raise triable issue as to whether insured breached policy requirement to submit to EUO as a prerequisite to policy benefits].)

We reject plaintiffs’ argument that they were not obligated to submit to EUOs because the policy imposes that duty only on a “named insured,” and they are not “named insureds” as defined in the policy. The sole basis for plaintiffs’ claim is that they are entitled to policy benefits as successors to Estrada’s interest in the insurance policy. (Ins. Code, § 303.) As successors to Estrada’s interest in the policy, plaintiffs are bound by the policy’s terms and conditions, including the duty to submit to an EUO reasonably requested by State Farm. (See Low v. Golden Eagle Ins. Co. (2003) 110 Cal.App.4th 1532, 1534, 1547 [insured’s successor-in-interest breached policy condition prohibiting voluntary payments, thereby relieving insurer of obligation to pay settlement expenses].)

Plaintiffs raise no triable issue as to whether State Farm’s stated reason for denying their claim was pretextual. To support their pretext argument, plaintiffs cite deposition testimony by a State Farm claims adjuster explaining why plaintiffs’ claim was denied:

“One, we had already paid a large portion of the amount of items that were being claimed. We had information that was inconsistent with what our policy holder had explained to us and the information that we got at the very earliest part of the claim. And also for failure to appear for EUO’s as required under the terms of the policy.”

The cited testimony does not demonstrate pretext, and raises no triable issue regarding plaintiffs’ failure to submit to the requested EUOs.

The trial court did not err by summarily adjudicating plaintiffs’ breach of contract claim.

III. Breach of the covenant of good faith and fair dealing

“The gravamen of a claim for breach of the covenant of good faith and fair dealing, which sounds in both contract and tort, is the insurer’s refusal, without proper cause, to compensate the insured for a loss covered by the policy. [Citations.]” (Brizuela, supra, 116 Cal.App.4th at p. 592.) There can be no cause of action for breach of the covenant of good faith and fair dealing if the insured has no contractual right to benefits under the policy. (Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 36; Brizuela, at p. 594.)

Plaintiffs cite Gruenberg v. Aetna Ins. Co. (1973) 9 Cal.3d 566 (Gruenberg) as support for their argument that their breach of the insurance contract does not relieve State Farm from bad faith liability. That case, however, is distinguishable.

The insured’s claim in Gruenberg arose from a fire at his premises. The insured was arrested and charged with arson. The insurer requested that the insured submit to an EUO, but the insured’s attorney asked that the EUO be delayed until the criminal case was resolved. The insurer refused to delay the EUO, and when the insured failed to appear, denied his claim. The Supreme Court held that even if the insurance contract entitled the insurer to deny the insured’s claim for failing to appear at the EUO, the insurer’s refusal to accommodate the insured might constitute a breach of the covenant of good faith and fair dealing. (Gruenberg, supra, 9 Cal.3d at p. 578.) The court stated: “We conclude, therefore, that the duty of good faith and fair dealing on the part of defendant insurance companies is an absolute one. At the same time, we do not say that the parties cannot define, by the terms of the contract, their respective obligations and duties. We merely say that no matter how those duties are stated, the nonperformance by one party of its contractual duties cannot excuse a breach of the duty of good faith and fair dealing by the other party while the contract between them is in effect and not rescinded.” (Ibid.)

Gruenberg is factually distinguishable from this case. Allstate did not refuse any request by plaintiffs to delay or reschedule their EUOs. The undisputed facts show that State Farm attempted, for nearly a year, to obtain from plaintiffs evidence substantiating their claim. When that evidence was not forthcoming, State Farm requested that plaintiffs submit to EUOs. After the parties agreed on a date and location for the EUOs, State Farm accommodated plaintiffs’ requests to reschedule them for another date. Plaintiffs’ counsel then unilaterally changed the agreed upon date for the rescheduled EUOs and refused to respond to State Farm’s written request for several alternate dates.

Gruenberg is also procedurally distinguishable, as it involved dismissal of a complaint following a demurrer. The court in Gruenberg underscored the significance of that procedural posture by stating: “We emphasize that we are passing only upon the sufficiency of these allegations which of course must be sustained by proper proof.” (Gruenberg, supra, 9 Cal.3d at pp. 575-576.) This case, in contrast, involves a summary judgment based on plaintiffs’ unexcused failure to submit to an EUO before Allstate denied their claim.

Plaintiffs’ refusal to submit to EUOs required under the policy resulted in the forfeiture of any right to benefits under the policy. (Brizuela, supra, 116 Cal.App.4th at p. 587.) They accordingly cannot maintain a cause of action for breach of the covenant of good faith and fair dealing. (Id. at p. 594.)

DISPOSITION

The judgment is affirmed. State Farm is awarded its costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.

____________________________, J.

CHAVEZ

We concur:

__________________________, P. J.

LUI

__________________________, J.

HOFFSTADT