Caro v. State Farm Ins.

Filed 12/1/05 Heydari 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NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 977.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

MEHDI HEYDARI et al., Plaintiffs and Appellants, v. STATE FARM FIRE AND CASUALTY COMPANY, Defendant and Respondent.

2d Civil No. B179465 (Super. Ct. No. SC031573) (Ventura County)

Plaintiffs Medhi and Fariba Heydari appeal from a summary judgment entered in favor of defendant State Farm Fire and Casualty Company (State Farm). They argue that State Farm breached its contractual obligation to fully compensate them for earthquake damage covered by their homeowner's insurance policy. The trial court concluded that plaintiffs did not raise a triable issue of material fact because they made no showing sufficient to rebut State Farm's evidence that it had paid them for their actual cost of repair. We affirm.

BACKGROUND

Plaintiffs own a house on Blue Ridge Court in Westlake Village. The home was insured under a State Farm policy that included earthquake coverage. The policy had a $270,000 coverage limit for damage to the dwelling with a $13,500 deductible for earthquake losses.

Under the terms of the policy, covered losses to a building are settled as follows: "4. Loss Settlement. . . . [¶] c. Buildings under Coverage A at replacement cost at the time of loss 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; [¶] (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. [¶] (2) We will pay the actual cash value of the damage to the building, up to the policy limit, until actual repair or replacement is completed. [¶] (3) 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.

Plaintiffs submitted a claim under the policy after their home was damaged in the February 1994 Northridge earthquake. State Farm prepared a repair estimate totaling $82,716.07. In May 1994, after subtracting $3,123.95 for depreciation and $13,500 for the deductible, it paid plaintiffs $66,092.12 for the damage to the structure. (See Community Assisting Recovery, Inc. v. Aegis Security

Ins. Co. (2001) 92 Cal.App.4th 886, 894.)^[1] State Farm advised plaintiffs in writing that they might be entitled to additional funds if they elected to repair the home and could in that event recoup the amount deducted for depreciation.

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. It presented evidence that it had paid plaintiffs $66,092.12 for earthquake damage to the home, based on a repair estimate of $82,716.07. This amount had been based on estimates by MVI Construction, The Chimney Sweeper and plaintiffs. State Farm also presented evidence that plaintiffs could not demonstrate that they had spent more than the amount it had paid to make the necessary repairs. In his deposition, Mehdi Heydari had testified that he could only produce receipts for $6,926.82 and did not know whether he had spent more than the $66,092.12 paid by State Farm.

In opposition to summary judgment, plaintiffs presented the declaration of contractor James Smart, who opined that the cost of repair was significantly greater than State Farm had estimated. Smart had complied a detailed estimate based on the damages described in the State Farm Estimate, and concluded that the cost of repair was $229,337.56.

The trial court granted summary judgment in favor of State Farm. It concluded that Smart's declaration raised no triable issue of fact as to whether State Farm's estimate covered the cost of repair when plaintiffs could not prove that what they had spent on repairs exceeded the payment from State Farm.

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.)

Plaintiffs' action against State Farm was predicated on the theory that State Farm had breached the insurance contract by giving them less money on their 1994 claim than was necessary to make the repairs to their 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 by further showing that plaintiffs could not show the amount spent on repairs had exceeded this amount. Having made this showing, it was incumbent upon plaintiffs to present some evidence that State Farm's estimate did not cover the cost of repairing the damage or did not take into account certain damage to the property.

Plaintiffs relied exclusively on the declaration of James Smart, a contractor who opined the "cost of repair of earthquake damages at the Heydari property are [sic] in excess of the amount of $66,092.12 State Farm paid to the Heydari parties for earthquake damages to their residence." In essence, Smart's declaration proves 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 plaintiffs have not shown, and have not attempted to show, that the repairs were not made or were made for an amount greater than the State Farm estimate.

Plaintiffs suggest that Code of Civil Procedure section 340.9 entitles them 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 plaintiffs filed their claim too late; it was granted because they failed to make any showing that State Farm had underpaid their claim.

In assessing the rights of the parties before us, we cannot simply look to the two different estimates (State Farm's 1994 estimate versus Smart's 2004 estimate) and say there is a triable issue of fact as to the repair costs because the experts disagree. The fact is, repairs have been made and plaintiffs bear the ultimate burden of showing that those repairs cost more than the amount paid by State Farm. The insurance policy allowed them to receive payment for the cash value of the damage to their home, subject to an additional payment within 180 days if the actual cost of repairs was greater. They were not entitled to recover more than the actual repair costs, and have failed to make any showing as to what those repair costs actually were. State Farm has demonstrated that an essential element of plaintiffs' case cannot be satisfied. Summary judgment was properly entered in State Farm's favor.

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 Plaintiffs and Appellants.

Crandall, Wade & Lowe, James L. Crandall, Edwin B. Brown, Michael J. McGuire, Matthew F. Batezel; Robie & Matthai, James R. Robie; LHB Pacific Law Partners and Clarke B. Holland, 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.) Plaintiffs never disputed the methodology of the insurance estimate or requested an appraisal, and they do not now argue that the use of a fair market value approach would have yielded greater compensation.