Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_18-cv-00994/USCOURTS-casd-3_18-cv-00994-1/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

Jensen Shirley and Karen Shirley,

Plaintiffs,

v.

Allstate Insurance Co.,

Defendant.

Case No.: 3:18-cv-0994-AJB-BGS 

ORDER GRANTING 

DEFENDANT'S MOTION FOR 

SUMMARY JUDGMENT 

During the Lilac Wildfire, Plaintiffs Jensen and Karen Shirley were evacuated from 

their home. After returning, they filed a claim with their home insurance company, 

Defendant Allstate Insurance Company, for damages related to the wildfires. Allstate now 

moves for summary judgment arguing there is no evidence showing any damage to the 

Shirleys’ home. In fact, four expert reports state as much. The Shirleys attempt to defeat 

the summary judgment motion by providing little contrary evidence and hypothetical 

questions contesting Allstate’s investigation. However, the Shirleys cannot win with 

rhetoric. Because they failed to show there is a triable issue of material fact, the 

Court GRANTS Allstate’s motion. (Doc. No. 23.)

I. BACKGROUND

Plaintiffs’ breach of contract and breach of implied convenient and fair dealing case 

concerns alleged damage done to their home from the 2017 Lilac Fire. (Doc. No. 1-3 ¶ 7.) 

After evacuating their home, Plaintiffs allege “the entire interior of the home, and all of its 

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contents, were severely smoke damaged.” (Id. ¶ 7.) Plaintiffs filed a claim with Allstate for 

damages, which was later denied. (Id. ¶¶ 8–9.) 

Defendants argue despite multiple stages of expert testing show no physical smoke 

damage, soot, ash, or char, was found in the Shirleys’ home, justifying their denial of 

Plaintiffs’ insurance claim. Plaintiffs dispute this, asserting that Allstate purposely 

narrowed the search of their home to soot, ash, and char in order to deny their claim. 

Plaintiffs also claim Allstate failed to test their furniture, clothing, or outside landscaping 

for damage as well.

II. LEGAL STANDARDS

Summary judgment is appropriate under Federal Rule of Civil Procedure 56 if the 

moving party demonstrates the absence of a genuine issue of material fact and entitlement 

to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A fact 

is material when, under the governing substantive law, it could affect the outcome of the 

case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute is genuine if a 

reasonable jury could return a verdict for the nonmoving party. Id. A party seeking 

summary judgment bears the initial burden of establishing the absence of a genuine issue 

of material fact. Celotex Corp., 477 U.S. at 323. 

The moving party can satisfy this burden in two ways: (1) by presenting evidence 

that negates an essential element of the nonmoving party’s case; or (2) by demonstrating 

the nonmoving party failed to establish an essential element of the nonmoving party’s case 

on which the nonmoving party bears the burden of proving at trial. Id. at 322–23. If the 

moving party carries its initial burden, the burden of production shifts to the nonmoving 

party to set forth facts showing a genuine issue of a disputed fact remains. Id. at 330. When 

ruling on a summary judgment motion, the court must view all inferences drawn from the 

underlying facts in the light most favorable to the nonmoving party. Matsushita Elec. 

Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).

III. DISCUSSION

The Shirleys’ complaint brings two causes of action for breach of contract and 

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breach of implied covenant of good faith and fair dealing. (Doc. No. 1-3 at 5–6.) The 

Shirleys also request punitive damages. (Id. at 7.) Allstate moves for summary judgment 

on the two causes of action and the punitive damages request. 

A. Breach of Contract 

There are two issues regarding the breach of contract claim. First, Allstate argues 

they did not breach the contract because no expert found evidence of wildfire 

contamination in the home. Second, Allstate argues the Shirleys never submitted a claim 

for landscaping damages, and although they try to improperly raise it later in the 

proceedings, it does not create a triable issue of material fact and the Court should grant 

summary judgment regarding these issues as well.

1. Evidence of Wildfire Contamination

Allstate asserts Plaintiffs have the burden of establishing “an event is a claim within 

the scope of basic coverage.” (Doc. No. 23-1 at 16 (quoting City of Vernon v. Southern 

Cal. Edison Co., 955 F.2d 1361, 1365 (9th Cir. 1992)).) Here, Allstate argues that means 

“the Shirleys had the burden in establishing that ‘physical loss to the property,’ defined as 

‘physical injury to or destruction of tangible property, including loss of its use resulting 

from such physical injury or destruction.’” (Id. at 17.) Allstate further asserts that under 

their insurance policy, the Shirleys “cannot meet that burden by alleging the existence of 

smoke ‘vapors, fumes’ and ‘contaminants or pollutants.’” (Id.) 

Here, Allstate states of the four different experts who ran tests on the Shirleys’ home, 

none found evidence their home suffered “ash or soot contamination from the wildfire.” 

(Id.) Several people—hired by both parties—inspected the home. The Shirleys hired 

several people to assist them with their insurance claim. First, they hired Marc Gross, an 

adjuster. Gross then hired Bill Hersum, a remediation contractor. The Shirleys also hired 

an environmental consulting firm, VERT Environmental. David Kelly, a VERT 

representative, inspected the property. Allstate, as a part of their internal process, sent an 

adjuster to inspect the Shirleys’ home, Andrew Ansardi. Allstate later hired an expert, 

RiskNomics LLC, to inspect the home after litigation commenced.

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Yet, of all the hired experts, no one found any wildfire contamination was present in 

the Shirleys’ home. Working for the Shirleys, EMSL Analytical analyzed materials VERT 

sent them and found no wildfire contamination. VERT’s report initially supported the 

Shirleys’ allegations that there were wildfire contaminants in their home. It stated VERT 

found char damage indicative of “a combustion by-product,” “as well as opaque dark 

particles (categorized as burnt rubber), and concluded by “confirm[ing] the presence of 

smoke contamination within the property.” (Doc. No. 23-4, Exhibit 2, 35–37). However,

both Missy Waldman—VERT’s employee who sent the email to Marc Gross with the 

purported findings—and Nathan Borsheim—the president of VERT—contradicted these 

initial findings. 

First, as to the char damage, Borsheim testified that he could not confirm that the 

two percent char finding came from the Lilac fire. (Borsheim Depo., Doc. No. 23-11 at 

26.) Second, as to the burnt rubber, both Borsheim and Waldman confirmed the burnt 

rubber finding was a mistake. (Borsheim Depo. at 25.) Burnt rubber is usually associated 

with combustion by-products, (id.), thus its presence would be indicative of wildfire 

contamination. However, Borsheim testified that the lab report erred and Waldman 

confirmed she mis-typed. (Id.) The correct finding was “rubber dust.” (Id.) 

Third, as to the soot and ash, VERT never confirmed there was ash or soot inside the 

Shirleys’ home. (Borsheim Depo. at 20.) Regarding the Shirleys’ claims regarding wildfire 

odor, Waldman confirmed that VERT never made a finding that any odors were from the 

wildfire and stated the company does not “do causation.” (Waldman Depo., Doc. No. 23-

11 at 45.) Finally, regarding VERT’s conclusions, Borsheim stated the report sent to Gross 

and the Shirleys was a “limited preliminary inspection,” and not a formal report. (Id. at 16–

17.) Borsheim stated VERT never made a determination whether the wildfire was the cause 

of the contamination. (Id. at 19.)

Moreover, Ansardi, Allstate’s adjuster, found no ash or soot was present in the home, 

nor did he smell any smoke inside the home. (Andrew Ansardi Decl., Doc. No. 23-14, ¶¶ 

4–5.) Hersum, the Shirleys’ remediation contractor, also found no evidence of soot or ash, 

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nor did he smell any smoke. (Bill Hersum Depo., Doc. No. 23-11 at 53; 54.) Allstate then 

hired a new expert, RiskNomics LLC, to inspect the property again. However, they found 

no evidence of wildfire contamination. (Doc. No. 23-10 at 5–6.) Mr. Shirley admits no 

expert could find ash or soot in his home. (Jensen Shirley Depo., Doc. No. 23-12 at 149.)

After the Shirleys brought this suit, RiskNomics against tested, and again found no 

contaminants in the home. (Doc. No. 23-13 at 75–130.)

Allstate argues that because no expert could find evidence of wildfire soot or ash 

contamination in the Shirleys’ home, Allstate did not breach its contract with the Shirleys 

by denying their insurance claim. Thus, Allstate requests the Court grant summary 

judgment on the breach of contract claim. The Shirleys argue that Allstate “continues to 

mischaracterize wildfire residue as involving only ‘soot,’ ‘ash,’ and ‘char,’” when it 

“includes a wide range of particulate material.” (Doc. No. 25 at 16.) The Shirleys charge 

that Allstate only tested for soot, ash, and char thus they could have never discovered if 

any other contaminants existed within the home from wildfire. (Id.) The Shirleys assert 

Allstate’s limiting tests were self-serving and “designed to withhold insurance policy 

benefits for damage caused by smoke contamination.” However, Allstate retorts that 

Plaintiffs’ own expert, Dan Baxter, testified that “the industry standard for determining 

whether wildfire residue exists requires the use of analytical testing.” (Doc. No. 26 at 3.) 

Further, the Shirleys’ never put forth any expert or other testimony challenging Allstate’s 

methods or suggesting what the testing standards should have been. Notably, the Shirleys’ 

own experts tested for the same byproducts as Allstates; while the Shirleys’ never hired 

one expert to test their hypothesis.

The Shirleys contend there was substantial evidence of contamination from an 

“interior smoke smell” and “the occupants’ inability to breathe.” (Id.) Whether or not these 

items can fit the definition of “contaminate,” the Shirleys argue, is a question of material 

fact that should be left to a jury to decide. (Id. at 17.) The debate arises when defining 

whether the contamination constitutes a physical injury and property damage under the 

policy. However, Allstate argues that detection of an odor is not an appropriate standard to 

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measure injury. (Doc. No. 26 at 5.) Both RiskNomics and MicroLab Northwest “have 

offered unrebutted expert testimony” reporting as such. (Id.) Allstate further argues that 

even if odors “were a proper industry standard, plaintiffs’ expert VERT could not 

determine the origin of the smells.” (Id.) 

Allstate asserts that to date, the Shirleys have provided no evidence of actual 

contamination. Through four experts and several adjusters, nothing has been confirmed 

showing contamination or physical injury, as required by the policy. The Shirleys’ 

presentation of rhetorical questions in their brief does not amount to evidence showing a 

genuine issue of material fact exists regarding this issue. For example, the Shirleys ask 

“[i]s there really a conceptual difference between harmful living conditions which result 

from smoke particles and which result from asbestos? They are both harmful irritants, and 

are both contaminants, and both can cause cancer.” (Doc. No. 25 at 18.) The Shirleys also 

ask “Did Mr. Ansardi’s investigation fall on its face when he looked for only soot and ash 

and not other contaminants?” (Id. at 23.) Although the framing of these questions sounds

persuasive, there are no tests that suggest smoke particles existed in the home and the 

Shirleys have presented no basis for suggesting Ansardi (or any of the other inspecting 

experts) were under any duty to look for any other types of contaminants.

Thus, the Court agrees with Allstate. Based on the evidence presented, the Shirleys 

did not carry their burden of establishing that there was physical damage to their property 

based on contaminants from the wildfire. There is no genuine dispute of a material fact as 

to whether there were any verifiable contaminants in the Shirleys’ home. Accordingly, the 

Court GRANTS summary judgment on the breach of contract issue.

2. Landscaping Claims

Allstate argues the Shirleys attempt to create a triable issue of material fact based on 

a belated assertion of burnt vegetation. (Doc. No. 23-1 at 27.) Allstate asserts the Shirleys 

“never made an insurance claim to Allstate for policy benefits for supposedly burnt 

vegetation.” (Id.) Moreover, Allstate notes the Shirleys did not mention any burnt 

vegetation in their complaint, did not reference damages from burnt vegetation in their 

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Rule 26 disclosures, or in their interrogatory responses. At the motion hearing, the Shirleys 

stated they sent Allstate a letter in March 2019 regarding this issue, nearly two months after 

both fact and expert discovery deadlines had passed.

The Shirleys argue that their “alleged failure” to claim this loss is just a diversion 

from Allstate’s inadequate investigation. (Doc. No. 25 at 21.) The Shirleys’ citation of case 

law suggests they are arguing Allstate failed to investigate evidence which would have 

shown there was burnt landscaping purposely to narrow their liability coverage and allow 

them to deny the claim. (Id. at 21–22.) The Shirleys propose another hypothetical question 

asking whether Ansardi’s investigation failed “when he never bothered to look for 

landscape (trees and bushes) fire damage?” (Id. at 23.) 

However, both a note in the claim notes by the adjuster and accompanying photos 

of the exterior of the Shirleys’ house suggest he inspected the exterior of the home and 

found no ash and/or soot damage. (Doc. No. 23-4, Ex. B, at 24.) Although the Shirleys’ 

claim they initiated a claim for these issues and that there was damage “in plain view,” the 

Shirleys provide no evidence to support either contention. (Doc. No. 25 at 23.) 

Again, a series of rhetorical questions designed to expose what Allstate could have 

done differently or better in hindsight do not amount to evidence. At this stage, the Shirleys 

have the burden to show there was physical damage to their property. Allstate has shown 

through its evidence there was not, thus the burden shifts to the Shirleys. They have not 

shown a triable issue of material fact exists regarding this claim, thus the Court GRANTS 

summary judgment as to this claim.

B. Bad Faith Claim

Allstate moves for summary judgment on the Shirleys’ bad faith claim against them 

regardless of how the Court rules on the breach of contract issue. (Doc. No. 23-1 at 19.) 

Allstate argues this claim fails to two separate reasons. First, because “there can be no bad 

faith where no benefits are owed.” (Id.) Second, “there is no evidence of bad faith.” (Id.) 

As to the first argument, case law is clear that when no benefits are owed, an insurer 

cannot be liable for bad faith. Love v. Fire Ins. Exch., 221 Cal. App. 3d 1136, 1151 (1990) 

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(“Where benefits are withheld for proper cause, there is no breach of the implied 

covenant.”). Here, because the Court found Allstate did not breach its contract in finding 

the Shirleys were not entitled to any policy benefits, their claim for bad faith fails.

Allstate also argues that their decision to deny benefits was reasonably made as there 

was a genuine dispute regarding whether there was contamination under the policy. In 

California, when there is a genuine dispute and the decision to deny coverage was 

reasonable—even if it was ultimately wrong—insurers are not liable “for breach of the 

covenant of good faith and fair dealing.” Morris v. Paul Revere Life Ins. Co., 109 Cal. App. 

4th 966, 97 (2003). Another case states even if the insurance company is liable for breach 

of contract, so long as there was a genuine dispute as to the existence of coverage liability, 

then there is no bad faith. Chateau Chamberay Homeowners Ass’n v. Associated Int’l Ins. 

Co., 90 Cal. App. 4th 335, 347 (2001). 

Here, Allstate argues that because four expert reports showing there was no 

contaminant damage. First, the Shirleys’ expert coordinator, Hersum, agreed with 

Allstate’s adjuster, Ansardi, that there was no soot or ash at the property. Second, other 

expert reports from RiskNomics and MicroLab Northwest confirmed there was no 

evidence of soot or ash at the property—claims which Allstate allowed the Shirleys to 

respond to or submit additional reports to, which they did not. 

The Shirleys allege Allstate’s actions were not mistaken, but rather were “a 

conscious and deliberate act which unfairly frustrates the agreed common purposes and 

disappoints the reasonable expectations of the other party thereby depriving that party of 

the benefits of the agreement.” (Doc. No. 25 at 24.) Without citing to any supporting 

evidence to prove their theory, the Shirleys once again posit a list of rhetorical questions 

in an attempt to create a genuine issue of material fact. They ask: 

Did Allstate unreasonably fail to investigate the Shirleys’ loss of 

Landscaping? Does Allstate continue to ignore it? Did Allstate unreasonably 

fail to investigate the Shirleys’ damage to clothing and other contents? . . . Did 

Allstate’s environmental experts, RiskNomics and Mr. Prater, unreasonably 

ignore the smell of smoke and look only for soot, ash, and char particles and 

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no other indicia of smoke contaminants? And did Allstate unreasonably rely 

on such narrowly scoped test results? 

(Id.) 

However, as previously stated, simply asking these questions does not rebut 

Allstate’s contentions—namely that they had enough evidence to reasonably rely on when 

denying coverage. The Shirleys have not set forth any facts showing a genuine issue of 

material fact remains. Thus, the Court GRANTS Allstate’s motion for summary judgment 

on this claim

C. Punitive Damages

Finally, Allstate moves for summary judgment on the Shirleys’ claim for punitive 

damages based largely on the same arguments as the bad faith claim. Allstate notes that 

even proving bad faith does not amount to a punitive damages claim. (Doc. No. 23-1 at 24 

(citing Beck v. State Farm Mut. Auto Ins. Co., 54 Cal. App. 3d 347, 355–56 (1976) (“Proof 

of a violation of the duty of good faith and fair dealing does not establish that the defendant 

acted with the requisite intent” required for punitive damages).) Further, at the summary 

judgment stage, a Court is required to look at punitive damages through the clear and 

convincing standard. Basich v. Allstate Ins. Co., 87 Cal. App. 4th 1112, 1118–21 (2001). 

Allstate argues the Shirleys cannot meet these standards because there is no evidence 

to show Allstate acted with bad faith, yet alone “clear and convincing evidence of malice, 

oppression, or fraud.” (Doc. No. 23-1 at 25.) Allstate also notes that a third party, Pilot, 

adjusted the claim and that no Allstate employee was involved with the coverage decision. 

(Id. at 25–26.) 

The Shirleys respond by arguing that Ansardi and Allstate’s other representatives 

unreasonably narrowed the scope of their investigation and consciously disregarded the 

Shirleys’ health and safety. (Doc. No. 25 at 25.) The Shirleys claim this despite the fact 

they have no evidence to support it, not even a declaration. The Shirleys then argue “a 

triable issue of material fact exists as to whether or not Allstate’s behavior rises to the level 

of Malice or Oppression contemplated by the law.” (Id.) 

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Yet, as the Court has stated throughout, rhetorical questions and conclusory 

assertions are not enough to survive summary judgment. The case is no longer at the 

pleading stage. The Shirleys needed to provide some scintilla of evidence showing 

“conscious disregard” other than allegations stating as such. Because the Shirleys have not 

shown a genuine issue of material fact exists as to whether punitive damages are warranted, 

the Court also GRANTS Allstate’s motion for summary judgment on this claim. 

IV. CONCLUSION

Allstate persuasively presented a case disputing the Shirleys’ claim that smoke 

damaged their home. Four experts, some hired by Plaintiffs themselves, could not show 

there was any physical damage to the home or any smoke particles in the home. Although 

the Shirleys accuse Allstate of limiting their testing to soot, ash, and charring, the Shirleys 

have not asserted any other industry standard for testing smoke damage from a wildfire, 

nor presented any expert testing confirming their theory. 

There is simply no competing evidence showing that Allstate breached its contract 

in denying coverage to the Shirleys regarding their claim that smoke from the wildfire 

damaged their home. Further, the Shirleys have not shown beyond conclusory accusations 

that Allstate acted in bad faith or in a way worthy of punitive damages. While the Shirleys 

have a lot of rhetorical questions, they have no answers, evidence, or facts to support their 

theories—a critical defect to their case. 

Accordingly, the Court GRANTS Allstate’s motion for summary 

judgment. (Doc. No. 23.) As this resolves all the claims in the Shirley’s complaint, (See

Doc. No. 1-3 at 3, 5–7), the Court VACATES all scheduling dates previously set. 

The Court also DIRECTS the Court Clerk to enter judgment in favor of the 

Defendant and against the Plaintiffs and each of them and close the case.

IT IS SO ORDERED.

Dated: August 12, 2019

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