Filed 12/18/13 Villafana v. Farmers Ins. CA2/8 NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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 EIGHT

ESTEBAN VILLAFANA et al.,

Plaintiffs and Appellants,

v.

FARMERS INSURANCE COMPANY et al.,

Defendants and Respondents. B246421

(Los Angeles County Super. Ct. No. BC 473974)

APPEAL from a judgment of the Superior Court for the County of Los Angeles. Deirdre Hill, Judge. Affirmed.

Jeffrey D. Nadel for Plaintiffs and Appellants.

Woolls & Peer, Gregory B. Scher a nd Katy A. Nelson for Defendant and Respondent Mid-Century Insurance Company.

.

___________________ _________________2 SUMMARY The defendant insurer sought and obtai ned summary judgment on two grounds. One basis for the grant of summary judgment was that the insured plaintiffs failed to file suit within the one-y ear limitation period in the insurance policy. We find no material disputed fact that the one-year contractual limitations period expired before plaintiffs filed suit, and affirm the judgment. 1

THE COMPLAINT AND THE UNDISPUTED FACTS Defendant Mid-Century Insurance Comp any issued an insurance policy to plaintiffs Esteban and Irma Villafana, coveri ng accidental direct physical loss or damage to two residences on plaintiffs’ property in Sy lmar. The policy provid ed that “[s]uit on or arising out of the Section I – Property Coverage of this polic y must be brought within one year after inception of the loss or damage.” From November 14 to November 20, 2008, a severe wildfire known as the Sayre fire burned in Sylmar, about two miles from plaintiffs’ property. According to their complaint, plaintiffs “suffere d significant property damage , including wildfire debris interior and exterior damage of the two sepa rate properties, the ma in house and the ranch

house . . . . The Plaintiffs al so lost personal property situated inside the premises.” The policy “had effective dates of coverage wh ich should have compensated Plaintiffs for their damages sustained in the Wildfire . . . .” Plaintiffs did not notify defendant of th e damage until April 22, 2009, 153 days after the fire was extinguished (November 20, 2008). Defendant’s claims file showed (in notes recorded on April 23, 2009) that “insur ed reports: hom[e] has smoke damage,” and “[c]all from the insured this was from fire of 11/13-2008. The insured advised that he

had out Verizon Home who smell strong smoke smell in attic area. Insured also has noticed smoke smell in [c]lothing.”

1 Defendant moved for summary judgment on two grounds: that the contractual limitation period in the policy expi red long before suit was filed, and that plaintiffs could not demonstrate they sustaine d “direct physical loss to their property at all – no covered claim exists.” We do not address the second ground in this opinion, having found no material dispute that the complaint was time-barred.3 Defendant investigated the cl aim. Disputes arose over the resolution of plaintiffs’ claims. The time line of the pertinent ev ents and correspondence is as follows: Within five days of receiving notice of the claim, on April 27, 2009, defendant explained the claims process and asked plain tiffs to complete a notarized proof of loss form with supporting documentation. A few days later, representatives of defendant and its environmental expert, Clark Seif Clark (CSC ), did a site inspection of key areas in the newer of the two residences on the property. On May 26, 2009, CSC sent a “Lim ited Smoke Contamination Assessment Report” to defendant, cont aining its conclusions and cl eaning recommendations for plaintiffs’ home and furnishings “[b]ased on the visual observations and the results of the laboratory analyses . . . to return the home to a pre-loss condition.” On June 23, 2009, plaintiffs hired a pub lic adjuster, Eugene Twarowski, to handle

their claim. Mr. Twarowski asked defendant fo r various documents relevant to the claim, including proof of loss forms acceptable to defendant. On July 7, 2009, defendant provided documents, including the CSC report and a proof of loss form. Defendant asked for co mpletion of the proof of loss form, and also asked for an appointment to inspect the prope rty, “to better define the scope of the loss based on the expert report findings and reco mmendations,” and for a recorded statement from plaintiffs, to “assist us in our evaluation of the claimed damage.” On September 8, 2009, Mr. Twarowski pr ovided defendant with an expert report from Environmental Management & Engineer ing, Inc. (EME) and a cleaning estimate from Caldecon, Inc., for $68,787.66. Pa t Moffett, who authored the EME report, criticized CSC’s report as incomplete, citing its remediation protoc ol, limited sampling and incomplete investigation of smoke contamination. On October 9, 2009, plaintiffs provided a notarized proof of loss in the amount of $68,787.66. On October 26, 2009, defendant sent a letter to Mr. Twarowski, advising that defendant had completed its adjustment of the claim and enclosing a check for $13,415.10. The letter drew plaintiffs’ attent ion to the policy’s time limitation for a “Suit4 against us,” quoting the provis ion in full, and advising that “this ‘Suit Against Us’ time period is exclusive of the time your claim is open.” The letter further stated, “If after reviewing this letter and reading the policy language, you believe there is additional information that would apply to your claim, please provide us with those facts for consideration. I am closing your file at this time.”

Mr. Twarowski then wrote numerous lette rs objecting to the amount defendant paid, and defendant responded with letters and three supplemental paym ents, as follows. On November 19, 2009, responding to a November 4, 2009 letter from Mr. Twarowski, defendant revised its esti mates and issued the first supplemental payment of $4,772.13. This letter again drew plaintiffs’ attention to the one-year time limitation for suit, and stated th at “[b]y law, the time spent by the insurer investigating and processing the claim does not count towa rd the one-year pe riod within which a lawsuit regarding the loss must be commenced.” Nothing was said in this letter about the file having been closed. On March 4, 2010, defendant responded to two more letters from Mr. Twarowski, and advised it “must respectfully decline appr aisal in this matte r.” Defendant again quoted the policy provision on the time lim itation for suit, noted that time spent investigating and processing the claim does not count toward the one-year period, and stated that “your clients’ claim re mains closed at this time.” On May 12, 2010, de fendant again revised its estimate, because the estimate was “missing some items that you clarified and we corrected.” Defendant issued the second supplemental payment of $732.49. Defenda nt again cited the time limitation on suit and the exclusion of investigating and processing time, and again stated that “your clients’

claim remains closed at this time.” Lette rs from defendant dated July 27, 2010, and August 13, 2010, said the same thing.

On a date not shown in the record, plaintiffs filed a co mplaint with the Department of Insurance seeking mediation. (Ins. Code , § 10089.71.) A mediation occurred, and on January 14, 2011, the parties executed a stipulation for settlement (the settlement). Defendant agreed to make a $1,500 payment for “c leaning of exteri or and ventilation5 system.” The parties agreed, among other th ings, that “[o]nce cl eaning occurs and is supported by evidence of payment, the insured will have the right to contact insurer to notify of odor and/or presence of materials that would require add itional consideration,” and would have “60 days to submit additional tests, repor ts or findings related to the presence of smoke particulates at the insured location.” The settlement stated it was “intended to be binding and ad missible in Court” and “may be enforced pursuant to Code

of Civil Procedure sections 1285, 1285.4, 1286 and 1287.4 by way of Application to the Court for the entry of Judgment based upon the acknowledgment of th e parties that this Stipulation for Settlement is the legal and f actual equivalent of an Arbitration Award.” But defendant did not make the $1,500 paym ent. Instead, on January 17, 2011, three days after signing the sti pulation for settlement, defendant informed plaintiffs that it “ ‘exercised [its] right to withdraw our assent from the proposed “Stipulation and Settlement,” ’ and that ‘we will not be issuin g any disputed payment that may have been discussed during the mediation.’ ” The mediator assigned by the Department of Insurance sent an email on January 17, 2011, to all parties advising that defendant exercised its right to withdraw assent to the stipulation for settlement. Plaintiffs dispute

that defendant was entitled to withdraw assent but not that defendant asserted the right to do so. Plaintiffs did not apply to the court for entry of judgment on the stipulation for

settlement. On February 22, 2011, defe ndant wrote plaintiffs “tha t we have determined to issue a supplemental undisputed payment for th e cost to clean the mattresses, in the amount of $665.14,” and enclosed a check fo r that amount. Defendant’s letter did not repeat the previously conv eyed information about the time limitation or the claim remaining closed. On March 18, 2011, CSC provided defendan t with an opinion letter on plaintiffs’ expert reports (the EME/Pat Moffet repor ts), concluding CSC’s initial findings and recommendations “appear to still be most acc urate.” Plaintiffs’ expert had inspected plaintiffs’ property again in January 2011, and EME had made a second report to plaintiffs on February 1, 2011.6 Plaintiffs continued to object that defend ant owed more benefits. On April 12, 2011, defendant wrote explaining that it had i ssued payment for the undisputed portion of the claimed loss, had explained its determinat ion with specific responses to information Mr. Twarowski provided, and “[a]s such, the cl aim remains closed at this time.” The

substance and tone of this le tter made plain that defendant did not intend to pay more on the claim and the parties had taken anta gonistic positions: defendant noted its disagreement “with your vague and unfounded accusations and mischaracterizations of

the true facts.” The letter stated defenda nt had “fully responded ” to Mr. Twarowski’s letter of January 25, 2011, “a nd your continued allegations to the contrary merit no

further comment.” On May 3, 2011, responding to an Apr il 18, 2011 letter from Mr. Twarowski, defendant repeated the statemen ts in its April 12, 2011 le tter. The May 3, 2011 letter described Mr. Twarowski’s correspondence as containing “self-serving, inflammatory, and obstructionist allegations” an d as “so vague and devoid of verifiable information that it is not reasonably possible to ev aluate or respond to them.” Defendant also stated it had “appropriately exercised its right of rescission regarding the stipula tion for settlement” so

that the settlement “does not exist” and M r. Twarowski’s “continued references to it are both unprofessional and improper.” On December 2, 2011, plaintiffs filed th is lawsuit for breach of contract and breach of the covenant of good faith and fair dealing. 2 Plaintiffs’ complaint alleged facts relati ng to the policy and the Sayre fire, and alleged plaintiffs suffered significant damage to both houses and to personal property. The complaint alleged defendant breached its obligations un der the policy because CSC’s report was incomplete and inaccurate, and defendants used it to provide a “grossly underestimate of Plaintiffs’ loss at $12,391.2 7.” The complaint alleged facts concerning plaintiffs’ retention of EME, EME’s inspection and reports on the wildfire damages, and the Caldecon, Inc., cost estimate; the facts surrounding the mediati on and settlement; that

2 Plaintiffs sued Farmers In surance Group as well as Mid-Century Company, but dismissed their complaint as to Farmers Insurance Group.7 defendant informed them of its withdrawal of assent to the settlement; and that plaintiffs

suffered losses of more than $68,000. The complaint alle ged defendant inadequately investigated the claim and unreasonably denied benefits. On November 9, 2012, the trial court granted defendant’s summary judgment motion. Plaintiffs filed a notice of appeal on January 8, 2013, an d judgment was entered on January 29, 2013. We treat the appeal as having been taken from the subsequent judgment. ( Aguilar v. Universal City Studios, Inc. (1985) 174 Cal.Ap p.3d 384, 387, fn. 1.)

DISCUSSION

1. The Standard of ReviewThe standard of review of an order granting summary judgment is wellestablished. Our review is de novo. ( Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 334.) We independently review the entir e record, except as to evidence to which objections were timely made and sustained, in the same manner as the trial court. ( Ibid .) A defendant moving for su mmary judgment must show “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 Ci v. Proc., § 437c, subd. (p)(2).) “In performing our de novo review, we must view the eviden ce in a light favorable to plaintiff as the losing party [citation], liberally construing [his or] her evidentiary submission while strictly scrutinizing [defendant’s] own showi ng, and resolving any evidentiary doubts or ambiguities in plaintiff’s favor.” ( Saelzler v. Advanced Group 400 (2001) 25 Cal.4th 763, 768.) Summary judgment is appropriate where “all the papers submitted show that there is no triable issue as to any material fact and that the movi ng party is entitled to a judgment as a matter of law.” (§ 437c, subd. (c).)

2. The Statute of Limitations The standard one-year limitation period in a homeowners insurance policy “begins to run on the date of inception of the loss, de fined as that point in time when appreciable damage occurs and is or should be known to the insured . . . .” ( Prudential-LMI Commercial Insurance v. Superior Court (1990) 51 Cal.3d 674, 678 ( Prudential-LMI ).)8 This limitation period “s hould be equitably tolled from the time the insured files a timely

notice . . . to the time the insurer form ally denies the claim in writing.” ( Ibid. ) Thus, “the insurer is entitled to receive prompt notice of a claim and the insured is penalized for waiting too long after discovery to make a cl aim. For example, if an insured waits 11 months after discovering the lo ss to make his claim, he w ill have only 1 month to file

his action after the claim is denied before it is time-barred under [Insurance Code] section 2071.” ( Id. at p. 692.)

3. This Case In this case, there is no dispute over the da te of inception of the loss. Plaintiffs asserted in their comp laint that they should have been compensated for “their damages sustained in the Wildfire of November 13, 20 08.” The parties agree that the fire burned until November 20, 2008, and pl aintiffs notified defendant of the loss on April 22, 2009. It is undisputed that at least 153 days of the one-year limitation period ran (November 20 to April 22) before notificati on to the insurer, so plaintiffs had 212 days remaining in

which to file a lawsuit after defendant’s formal written denial of the claim. Thus the only pertinent issue is the date on which defendant “formally denie[d] the claim in writing.” ( Prudential-LMI, supra, 51 Cal.3d at p. 678.) Defendant says that date was October 26, 2009, the date on which defendant sent a letter to Mr. Twarowski, advising that defendant had completed its ad justment of the claim and enclosing a check for $13,415.10. Alternatively, “giving [plain tiffs] every benefit of the doubt,” defendant says it formally denied the claim in writing no t later than February 22, 2011, the date on which defendant made its last supplemental payment. We do not agree that the tolling period ended on October 26, 2009, because, after defendant “closed the file” on that date, defend ant continued to adjust plaintiffs’ claims and issued two supplemental payments on N ovember 19, 2009, and May 12, 2010. The parties also agreed to go to a Department of Insurance mediation in January 2011, at which the insurer agreed to pay another $1,500 and to give plaintiffs more time to submit more information in support of additional payments. Howeve r, only a few days after the mediation, the insurer withdrew from the sti pulated settlement and made its last payment9 on February 22, 2011. Since defendant had made two previous supplemental payments in November 2009 and May 2010, we disagree that February 22, 20 11, was indisputably

the date on which defendant denied the clai m, because plaintiffs may have reasonably inferred that defendant might once again be persuaded to make another supplemental payment. But it cannot reasonably be disputed that the tolling period en ded not later than defendant’s letter of April 12, 2011, which was plainly writte n for litigation purposes and conveyed there would be no more claim adjustment. In that letter, defendant noted its disagreement “with your vague and unfounded accusations and mischaracterizations of

the true facts.” The letter stated defenda nt had “fully responded ” to Mr. Twarowski’s letter of January 25, 2011, “a nd your continued allegations to the contrary merit no further comment.” Further: “[Defendant] ha s issued payment to your clients for the undisputed portion of the claimed loss. [Defendant] has explained its claim determination in writing, including specifi c response to the estimates and other information you have provided. As such, the claim remains clos ed at this time.” Defendant’s April 12, 2011 letter cannot be construed as anything other than a formal denial, in writing, of plaintiffs’ claims. (See Prudential-LMI, supra, 51 Cal.3d at p. 678.) After the April 12, 2011 denial, 2 34 days passed before pl aintiffs filed this lawsuit on December 2, 2011. This period, plus the 153 days that passed before plaintiffs notified defendant of the claim, totals 387 days, over the one-year limitation period. After receiving defendant’s April 12, 2011 denial, Mr. Twarowski apparently wrote to defendant yet again on April 18, 2 011, and defendant replied on May 3, 2011, again stating the claim remain ed closed. While plaintiffs were certainly free to ask defendant for reconsideration, a request for reconsideration of a claim does not extend the equitable tolling period. ( Singh v. Allstate Ins. Co. (1998) 63 Cal.App.4th 135, 141-142 [policy reasons for equitable tolling – in cluding encouraging the insurer’s diligent investigation and avoiding the ha rsh consequences to the insu red of requiring him or her to file a lawsuit before the investigation is complete –“are absent, once the carrier has initially denied the claim”]; see also Ashou v. Liberty Mutual Fire Ins. Co. (2006) 13810 Cal.App.4th 748, 762 [“equitable tolling s hould only apply—in the context of a previously denied claim—when the insurer has agreed to reopen and reinvestigate the claim”].) Construing Mr. Twarow ski’s April 18 letter favorably to plaintiffs as a request for reconsideration, it was denied in no uncer tain terms in defendant’s letter of May 3, 2011, and did not operate to extend the tolling period. ( Singh, supra, at p. 142 [the plaintiffs “were aware of the right to sue, an d of potential grounds, before any request for reconsideration”].) Indeed, even if the limitation period were tolled until May 3, 2011 – and we find it was not – the one-year limita tion period would have expired on Thursday, December 1, 2011, the day before pl aintiffs filed their complaint. Plaintiffs do not argue about these dates on appeal. Instead, they contend the January 14, 2011 settlement wa s final and enforceable and co uld not be disavowed, and it contained no limitations provision. They ar gue the one-year limitation period is not applicable to the obligations in the settlement, which “modifi ed the parties’ obligations vis-à-vis the claim pursuant to the insurance policy,” and “co ntemplates future action by both parties with respect to the claim.” Furt her, they contend that even if the one-year limitation period were applicable , defendant should be estopped from asserting it, citing City of Hollister v. Monterey Ins. Co. (2008) 165 Cal.App.4th 455, 488 ( Hollister ). We find no merit in plaintiffs’ arguments. First, contrary to plaintiffs’ argument, we find nothing in the settlement operates to amend the insurance policy; the parties simply agreed to re solve disputed claims on the

terms described in the settlement. We fail to see how that settlement could be deemed to change or vitiate the terms of the policy, a nd plaintiff cites no legal authority for that conclusion. It may be, as plai ntiffs contend, that defendan t was not entitled to rescind the settlement, but, properly or not, it is undi sputed that defendant withdrew from the settlement, made a final payment to plaintiffs on February 22 , 2011, and told plaintiffs repeatedly – and in no uncertain terms in the April 12, 2011 letter – that plaintiffs’ claim

was closed. Plaintiffs had legal remedies for contesti ng defendant’s conduct. They could sue to enforce the settlement, and they could sue for breach of the insurance contract and bad11 faith. Plaintiffs chose the latter course, and were required to bring that suit within the time period specified in the policy. That time period expired before plaintiffs filed their

suit for breach of contract and bad faith. We express no opinion on whether plaintiffs may still have a viable claim for breach of the settlement agreement, or on what statute of limitations may apply to any such claim. Second, Hollister provides no basis for estopping defendant from asserting that plaintiffs’ suit is time-barred. In Hollister , the court described esto ppel in the insurance context. “[E]stoppel may arise from a variet y of circumstances in which the insurer’s conduct threatens to unfairly impose a forfeiture of benefits upon the insured. . . . Thus an insurer may be estopped to assert a contractual limitations period if its conduct ‘ “induces the belated filing of the action.” ’ Such a result does not require affirmative conduct or fraudulent intent by the insurer; rather it is predi cated on the insurer’s failure to speak when in law or equity it is bound to so—a s where it . . . fails to comply with a regulatory requirement that it notify the in sured of the limitations period . . . .” ( Hollister, supra, 165 Cal.App.4th at p. 4 88, citations omitted.) Nothing of the sort happened here. Defendant’s conduct could not have “ ‘induce[d] the belated filing of the action’ ” ( Hollister, supra, 165 Cal.App.4th at p. 488), because defendant, prop erly or not, made its intenti ons perfectly clear. Plaintiffs insist the settlement demonstrated that plain tiffs’ claim was not closed, as it provided for additional payments and “allowed plaintiffs another 60 days to submit additional test[s], reports and findings related to the presence of smoke at the insured location.” That was true, until defendant withdrew fr om the settlement. At that point, there was no basis for plaintiffs to claim the insure r “wrongfully induce[d] the insured to be lieve an amicable adjustment of his claim [would] be made . . . .” Accordingly, there is no basis in equity for estopping defendan t from relying on the contractua l limitations period, and that period expired before plain tiffs filed their complaint.12 DISPOSITION The judgment is affirmed. Defenda nt shall recover its costs on appeal.

GRIMES, J.

We concur:

BIGELOW, P. J.

RUBIN, J.