Alexander-Koger v. State Farm Fire and Casualty

Filed 12/1/05 Alexander-Koger v. State Farm Fire and Casualty CA2/6

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SIX

BETSY ALEXANDER-KOGER, Plaintiff and Appellant, v. STATE FARM FIRE AND CASUALTY COMPANY, Defendant and Respondent.

2d Civil No. B178129 (Super. Ct. No. SC031511) (Ventura County)

Plaintiff Betsy Alexander-Koger appeals from a summary judgment entered in favor of defendant State Farm Fire and Casualty Company (State Farm). She argues that State Farm breached its contractual obligation to fully compensate her for earthquake damage covered by her rental dwelling insurance policy. The trial court concluded that plaintiff did not raise a triable issue of material fact because she made no showing sufficient to rebut State Farm's evidence that it had paid her for the actual cost of repair. We affirm.

BACKGROUND

Plaintiff owns a house on Bianca Circle in Simi Valley and rented it to different tenants from 1987 to 1998. She carried a State Farm rental dwelling insurance policy that included coverage for earthquake damage. The policy had a $256,200

coverage limit for damage to the dwelling with a 10 percent deductible for earthquake losses.

Under the terms of the policy, covered losses to a building are settled as follows: "3. Loss Settlement. . . . c. Buildings under Coverage A at replacement cost without deduction for depreciation, subject to the following: [¶] . . . [¶] (2) 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; [¶] (b) the replacement cost of that part of the building 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. [¶] (3) We will pay the actual cash value of the damage to the building, up to the policy limit, until the actual repair or replacement is completed. [¶] (4) You may disregard the replacement cost loss settlement provisions and make claim under this policy for loss or damage to buildings on an actual cash value basis and then make claim within 180 days after loss for any additional liability on a replacement cost basis." The policy provides that any lawsuits under its provisions must be brought within one year of the loss or damage for which relief is sought.

On January 17, 1994, the Bianca Circle house was damaged in the Northridge earthquake. The tenants who then resided at the property reported minor damage. Plaintiff submitted a claim to State Farm, but said she doubted the amount of her loss would exceed her deductible. She retained a structural engineer, Tom Harris, who noted cracking drywall and stucco, doorjambs out of alignment, fallen tiles in the pool and unstable block wall fences. A State Farm adjustor inspected the property and estimated the actual cash value of the damaged property to be $30,076.57, utilizing a "replacement cost less depreciation" formula. (See Community Assisting Recovery, Inc. v. Aegis Security Ins. Co. (2001) 92 Cal.App.4th 886, 894.)^[1] After subtracting $2,712.07 in depreciation and $25,620 for the 10 percent deductible applicable to earthquake damage, State Farm issued plaintiff a check for $1,744.50. It advised plaintiff in writing that she would be entitled to recover any cost of repairs exceeding the original estimate and could recoup the amount deducted for depreciation so long as the actual cost of making repairs was equivalent to that estimate.

Within six months of the earthquake, plaintiff had made all of the repairs recommended by Tom Harris at an actual cost of $21,517.56. This amount was less than either plaintiff's deductible or the cash value of the damage as calculated by State Farm. Plaintiff did not contact State Farm again for several years and the time for bringing suit under the then-applicable limitations period expired.

Code of Civil Procedure section 340.9 became effective on January 1, 2001, and revived certain time-barred claims arising from the Northridge earthquake. Subdivision (a) of that section provides in part, "Notwithstanding any other provision of law or contract, any insurance claim for damages arising out of the Northridge earthquake of 1994 which is barred as of the effective date of this section solely because the applicable statute of limitations has or had expired is hereby revived and a cause of action thereon may be commenced provided that the action is commenced within one year of the effective date of this section." On December 31, 2001, plaintiff filed suit against State Farm for breach of contract and breach of the covenant of good faith and fair dealing. The complaint alleged that State Farm had underpaid plaintiff's earthquake claim in 1994.

State Farm filed a motion for summary judgment. In addition to the facts recited above, it presented as evidence the report of Exponent Failure Analysis Associates and the declaration of Ashkay Gupta, its managing civil engineer. Engineers from Exponent inspected the property in its current state and reviewed the previous reports regarding the 1994 damage. Exponent concluded: (1) the Northridge earthquake did not cause any structural damage to plaintiff's property; (2) the non-structural damage caused by the earthquake was adequately addressed by State Farm's 1994 scope of work estimate; and (3) State Farm's scope of work estimate reasonably and accurately identified all damage to the property that was attributable to the earthquake.

Plaintiff did not directly dispute Exponent's conclusions in her opposition to the summary judgment motion. She presented the declaration of Jeff Sjobring, a general contractor and licensed public adjustor who had reviewed the claim file and inspected the property in its current condition. Sjobring did not render an opinion regarding the cause of the damage to plaintiff's home in 1994, but he was critical of State Farm's adjustment of the claim. He opined that State Farm had failed to properly estimate the cost of repairs to the drywall, parquet flooring, carpeting, roof, exterior stucco, pool area and concrete driveway. He stated that had he been involved in 1994, he would have performed some of the repairs in a different manner than was assumed by the State Farm adjustor in arriving at the repair estimate. Sjobring did not dispute that the earthquake damage noted in the State Farm estimate had been repaired.

The trial court granted summary judgment in favor of State Farm. It concluded that Sjobring's declaration raised no triable issue of fact as to whether State Farm's estimate covered the cost of repair when it was undisputed that the necessary repairs had been made for less than the estimated cost.

DISCUSSION

Summary judgment is appropriate when no triable issue exists as to any material fact and the moving party is entitled to judgment as a matter of law. A defendant seeking summary judgment has the burden of establishing through admissible evidence a complete defense to the action or the absence of an element essential to plaintiff's case. We independently review the motion on appeal to determine the effect of the supporting declarations and evidence. (Code Civ. Proc., § 437c, subds. (c) & (f)(1); Rosenblum v. Safeco Ins. Co. (2005) 126 Cal.App.4th 847, 856.)

When the moving party makes a prima facie showing that it is entitled to summary judgment, the burden shifts to the opposing party to show that a triable issue of fact exists. (Code of Civ. Proc., § 437c, subd. (n)(1).) "An issue of fact becomes one of law and loses its 'triable' character if the undisputed facts leave no room for a reasonable difference of opinion." (Rosenblum v. Safeco Ins. Co., supra, 126 Cal.App.4th at pp. 856-857.)

Plaintiff's action against State Farm was predicated on the theory that State Farm had breached the insurance contract by giving her less money on her 1994 claim than was necessary to make the repairs to her property. As the party seeking summary judgment, State Farm bore the initial burden of making a prima facie showing that it was entitled to judgment as a matter of law. It carried this burden by presenting evidence that it had based its estimate on the damage actually caused by the earthquake and that the noted damage had been repaired for an amount that was less than the estimate.

Having made this showing, it was incumbent upon plaintiff to present some evidence that the estimate did not cover the cost of repairing the damage. She presented the declaration of Sjobring, who opined that State Farm had "failed to identify substantial items of damage in its inspection of the subject property, and had underestimated many other items of damage" in an amount totaling over $90,000. Sjobring gave the following specific examples:

(1) State Farm's estimate had called for one-half inch drywall for the repair of interior walls when the drywall on those walls is five-eights of an inch. (2) The estimate called for the parquet flooring to be re-nailed, but did not include an allowance for removing the wooden floor tiles to investigate damage to the concrete slab beneath it. (3) The estimate called for carpeting on the second story to be cleaned and deodorized to remove glass and other debris, but did not provide for replacement of the carpeting throughout that floor to maintain "line of sight." (4) The estimate should have called for the complete removal and replacement of the exterior stucco rather than patching the cracks caused by the earthquake. (5) The estimate did not include an allocation for repairs to the roof, on which the tar paper base sheet should have been replaced. (6) The estimate did not include an allowance for removing the exterior wall and concrete driveway. (7) The estimate called for the replacement of a window that stopped operating after the earthquake, but did not include the replacement cost of all of the rest of the windows for "line of sight purposes." (8) The estimate did not include the cost of draining the swimming pool to replace some fallen tile.

Nothing in this declaration rebuts State Farm's evidence that its estimate covered the cost of repair for damages caused by the earthquake. Although Sjobring opines that State Farm underestimated several repair costs (e.g. giving an allowance for patching the exterior stucco rather than completely replacing it), he does not state that the repairs actually made to the property were ineffective to correct that damage or that the total cost of those repairs exceeded the estimate. As to Sjobring's statements that State Farm made no allocation for repairing the roof or driveway, he states at the beginning of his declaration that he had no opinion about the cause of any damage to the home. Consequently, the evidence does not show that the earthquake caused damage to those portions of the home for which no repair allocations were made.

In essence, Sjobring states that he would have recommended different a different method of accomplishing some of the repairs and would have charged more for those repairs if he had done the work himself. But it is undisputed the repairs were made, at a cost that was less than State Farm's 1994 estimate and less than the amount of the earthquake coverage deductible.

Plaintiff suggests that Code of Civil Procedure section 340.9 entitles her to file a supplemental claim under the insurance contract with State Farm. Section 340.9 eliminates an insurance company's statute of limitations defense in certain circumstances, but it does not affect the substantive rights of the parties to an insurance contract. (Rosenblum v. Safeco Ins. Co., supra, 126 Cal.App.4th at p. 858; 20th Century Ins. Co. v. Superior Court (2001) 90 Cal.App.4th 1247, 1270.) Summary judgment was not granted because plaintiff filed her claim too late; it was granted because she failed to make any showing that State Farm had underpaid her claim.

Under the terms of the contract, plaintiff was entitled to recover no more than the actual cost of repairs. Another provision of the policy allowed her to receive payment for the actual cash value of the damage to the building, subject to an additional payment within 180 days if it turned out that the repairs cost more. Plaintiff was paid under this second provision and made the repairs for less than the amount of her deductible. Accordingly, she made no additional claim to recover actual repair costs. She has been full compensated and is not entitled to additional payment.

The judgment is affirmed. Costs on appeal are awarded to respondent State Farm.

NOT TO BE PUBLISHED.

COFFEE, J.

We concur:

GILBERT, P.J.

YEGAN, J.

Thomas J. Hutchins, Judge

Superior Court County of Ventura

______________________________

Jeffrey D. Diamond for Plaintiff and Appellant.

LHB Pacific Law Partners, Clarke B. Holland and Lisa L. Kirk, Robie & Matthai, James R. Robie, Crandall, Wade & Lowe, Michael J. McGuire for Defendant and Respondent..

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^[1] In the absence of an agreement between the insurer and the insured, the actual cash value of the loss is synonymous with fair market value, or "'the price that a willing buyer would pay a willing seller'" without accounting for depreciation. (Jefferson Ins. Co. v. Superior Court (1970) 3 Cal.3d 398, 402.) Nothing prevents an insured from agreeing to a valuation based on replacement cost less depreciation, which may be more advantageous to the insured. (Community Assisting Recovery, Inc. v. Aegis Ins. Co., supra, 92 Cal.App.4th at p. 894; Cheeks v. California Fair Plan Assoc. (1998) 61 Cal.App.4th 423, 428.) Plaintiff never disputed the methodology of the insurance estimate or requested an appraisal, and she does not now argue that the use of a fair market value approach would have yielded greater compensation.