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Filed 4/23/15 First Mortgage v. Cal. Casualty Ins. CA4/2 

NOT TO BE PUBLISHED IN OFFICIAL REPORTS 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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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 

FOURTH APPELLATE DISTRICT 

DIVISION TWO 

FIRST MORTGAGE CORPORATION, 

 Plaintiff and Appellant, 

v. 

CALIFORNIA CASUALTY 

INSURANCE COMPANY et al., 

 Defendants and Respondents. 

 E059442 

 (Super.Ct.No. CIVRS1203622) 

 OPINION 

 APPEAL from the Superior Court of San Bernardino County. Thomas S. Garza, 

Judge. Affirmed. 

 Law Office of Robert E. Dougherty and Robert E. Dougherty for Plaintiff and 

Appellant. 

 Murtaugh Meyer Nelson & Treglia, Lawrence J. DiPinto and Thomas N. Fay for 

Defendants and Respondents. 
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I 

INTRODUCTION 

 Plaintiff First Mortgage Corporation (First Mortgage) appeals from a summary 

judgment granted in favor of defendant California Casualty.1 Defendant was the insurer 

of residential real property in which First Mortgage held a security interest. When the 

property was damaged by fire in January 2007, defendant issued a check to the property 

owner and to First Mortgage. The owner cashed the check and did not share the proceeds 

with First Mortgage. First Mortgage did not file its lawsuit against defendant until May 

2012. We hold First Mortgage’s claim was time-barred and we affirm the summary 

judgment. 

II 

FACTUAL AND PROCEDURAL BACKGROUND 

 As alleged in the complaint and set forth in defendant’s summary judgment 

motion, only one material fact was purportedly disputed as discussed below. 

 Defendant issued a fire insurance policy to a Sun City residence owned by Leslie 

Bollockus, the named insured. The mortgage lender on the property was First Mortgage. 

One condition of the policy was that an action against defendant be brought within two 

 1 Three companies are separate but related entities: California Casualty Insurance 

Company, California Casualty Management Company, and California Casualty 

Indemnity Exchange. For the purposes of this appeal, we treat them as a single 

defendant. 
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years of the date of loss. In its opposing separate statement, the only fact purportedly 

disputed by First Mortgage is the applicability of the two-year limitation period in the 

insurance policy. However, First Mortgage offered no evidence in support of its 

contention that the two-year limitation does not apply. All of First Mortgage’s arguments 

are based on legal issues. 

Bollockus reported a fire loss occurring on January 8, 2007. On August 24, 2007, 

defendant issued a settlement check in the amount of $179,025, payable to Bollockus and 

to First Mortgage, and mailed the check to Bollockus. Provident Bank cashed the check 

for Bollockus on August 28, 2007, without obtaining an endorsement from First 

Mortgage. 

 On February 7, 2008, First Mortgage learned about the loss and the issuance of the 

insurance check. Bollockus had died so the information was provided by her sister. First 

Mortgage did not confirm until October 8, 2009—more than two years after the date of 

loss of January 8, 2007—that the settlement check had been cashed. First Mortgage 

apparently expected that defendant would pursue a claim against Provident Bank. 

However, that claim expired three years after August 28, 2007, on August 28, 2010. 

First Mortgage contacted defendant again on September 29, 2011—more than four 

years after the date of loss and after the insurance check was cashed in August 2007. 

First Mortgage then filed its lawsuit on May 10, 2012—more than five years after the 

date of loss. 

The trial court granted summary judgment, based on the two-year limitations 
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period under the insurance policy and the four-year statute of limitations for breach of a 

written contract. (Civ. Code, § 337.) Additionally, the court granted summary judgment 

on the grounds that First Mortgage had received constructive possession of the settlement 

check and because Commercial Code section 3309 did not apply. 

III 

DISCUSSION 

1. Standard of Review 

Summary judgment was properly granted in this case if there were no triable 

issues of material fact and defendant was entitled to judgment as a matter of law: “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; Code Civ. Proc., § 437c, subd. (c).) 

Defendant was entitled to summary judgment if it established a complete defense 

to First Mortgage’s causes of action, or showed that one or more elements of each cause 

of action cannot be established. (Code Civ. Proc., § 437c, subd. (o); Aguilar v. Atlantic 

Richfield Co., supra, 25 Cal.4th at p. 849.) Once defendant met its initial burden of 

production, the burden shifted to First Mortgage to demonstrate a triable issue of material 

fact. (Code Civ. Proc., § 437c, subd. (p)(2); Aguilar, at pp. 850-851.) 

The trial court bases its determination on the issues as framed by the pleadings and 

on the evidence submitted by the parties: “In determining the propriety of a summary 
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judgment, the trial court is limited to facts shown by the evidentiary materials submitted, 

as well as those admitted and uncontested in the pleadings. [Citations.] The court must 

consider all evidence set forth in the parties’ papers, and summary judgment is to be 

granted if all the papers submitted show there is no triable issue of material fact in the 

action, thereby entitling the moving party to judgment as a matter of law. (Code Civ. 

Proc., § 437c, subd. (c).)” (Committee to Save the Beverly Highlands Homes Assn. v. 

Beverly Highlands Homes Assn. (2001) 92 Cal.App.4th 1247, 1261.) 

On appeal, we conduct a de novo review of the record: “We examine the evidence 

and independently determine its effect. [Citation.] We must uphold the judgment if it is 

correct on any ground, regardless of the reasons the trial court gave. [Citation.]” 

(Committee to Save the Beverly Highlands Homes Assn. v. Beverly Highlands Homes 

Assn., supra, 92 Cal.App.4th at p. 1261.) 

The same principles apply in the insurance context: “‘We apply a de novo 

standard of review to an order granting summary judgment when, on undisputed facts, 

the order is based on the interpretation or application of the terms of an insurance policy.’ 

[Citations.] [¶] In reviewing de novo a superior court’s summary adjudication order in a 

dispute over the interpretation of the provisions of a policy of insurance, the reviewing 

court applies settled rules governing the interpretation of insurance contracts.” (Powerine 

Oil Co., Inc. v. Superior Court (2005) 37 Cal.4th 377, 390.) 
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2. Interpretation of Insurance Contract 

Having independently reviewed the parties’ combined separate statements, we 

conclude there is no evidence of material facts in dispute. The uncontradicted evidence 

establishes that a fire loss occurred on January 8, 2007, and First Mortgage did not file its 

complaint against defendant until May 2012, more than five years after the loss. 

In view of the undisputed facts, our task is to apply the three-step process for 

interpretation of an insurance contract to decide whether there is coverage. (AIU Ins. Co. 

v. Superior Court (1990) 51 Cal.3d 807, 821-822.) The ordinary rules of contractual 

interpretation include the fundamental goal of giving effect to the mutual intention of the 

parties. When clear and explicit contractual language governs, intent is to be inferred 

solely from the written provisions of the contract if possible. (Powerine Oil Co., Inc. v. 

Superior Court, supra, 37 Cal.4th at p. 390, citing Bank of the West v. Superior Court

(1992) 2 Cal.4th 1254, 1264 and AIU Ins. Co., at pp. 821-822.) An insurer is entitled to 

limit its coverage to defined risks and, if it does so in clear language, courts will not 

impose coverage where none was intended. (National Ins. Underwriters v. Carter (1976) 

17 Cal.3d 380, 386.) Whether a clause is ambiguous and whether an insured has an 

objectively reasonable expectation of coverage in light of the insuring language are 

questions of law. (Schrillo Co. v. Hartford Accident & Indemnity Co. (1986) 181 

Cal.App.3d 766, 775-776.) 
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3. The Statute of Limitations 

 First Mortgage argues the “date of loss” was not January 8, 2007, and the two-year 

limitations period set forth in the insurance policy does not apply. Instead, First 

Mortgage contends the date of its actual injury is a material disputed fact. First Mortgage 

argues that its cause of action against defendant did not accrue until February 29, 2012, 

when defendant’s lawyer wrote a letter denying First Mortgage’s demand for payment. 

 The application of the statute of limitations is a question of law. (International 

Engine Parts, Inc. v. Feddersen & Co. (1995) 9 Cal.4th 606, 611-612.) The court may 

grant summary judgment based on the statute of limitations despite a challenge to the 

purported uncertainty of the accrual date. (Southland Mechanical Constructors Corp. v. 

Nixen (1981) 119 Cal.App.3d 417.) 

 In this case, it is not disputed First Mortgage discovered on February 7, 2008, that 

the fire had occurred on January 8, 2007. First Mortgage admittedly did very little 

investigation. When First Mortgage contacted defendant on October 8, 2009, it learned 

the insurance check had been cashed but the copy of check did not clearly show the date 

when it had been cashed. First Mortgage did not learn finally until September 29, 2011, 

that the actual date the check had been cashed was in August 2007. It is uncontradicted 

that First Mortgage did not file its lawsuit for more than five years after the loss occurred 

and more than four years after the insurance check was cashed. First Mortgage’s claims 

were barred by the two-year limitations period of the insurance contract. 
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First Mortgage’s claims were also barred by the four-year statutory limitation for a 

complaint based on a written contract. (Code Civ. Proc., § 337; Abari v. State Farm Fire 

& Casualty Co. (1988) 205 Cal.App.3d 530, 535, fn. 2.) First Mortgage offered no 

disputed facts at all to support its argument that the four-year period did not begin to run 

until there was a default in loan payments, apparently as of December 6, 2010. 

Nonpayment on the mortgage by Bollockus, or her estate, had nothing to do with 

payment of insurance proceeds. There are also no disputed facts submitted concerning 

First Mortgage’s legal assertion that its cause of action against defendant did not accrue 

until February 29, 2012, when defendant’s lawyer refused First Mortgage’s demand for 

payment. The refusal occurred more than five years after the loss and more than four 

years after defendant had paid the loss. First Mortgage’s belated demands could not 

revive an already stale claim. 

4. Equitable Estoppel or Tolling

 First Mortgage also improperly raises a new legal issue on appeal—equitable 

estoppel or tolling of the limitations period. (Mills v. Forestex Co. (2003) 108 

Cal.App.4th 625, 652; California Restaurant Management Systems v. City of San Diego

(2011) 195 Cal.App.4th 1581; Lantzy v. Centex Homes (2003) 31 Cal.4th 363, 370-371, 

379.) “An estoppel against a limitations defense usually ‘“arises as a result of some 

conduct by the defendant, relied on by the plaintiff, which induces the belated filing of 

the action.”’ [Citations.] [¶] ‘“Four elements must ordinarily be proved to establish an 

equitable estoppel: (1) The party to be estopped must know the facts; (2) he must intend 
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that his conduct shall be acted upon, or must so act that the party asserting the estoppel 

had the right to believe that it was so intended; (3) the party asserting the estoppel must 

be ignorant of the true state of facts; and, (4) he must rely upon the conduct to his 

injury.”’ [Citation.] [¶] Application of equitable estoppel against the assertion of a 

limitations defense typically arises through some misleading affirmative conduct on the 

part of a defendant.” (Spray, Gould & Bowers v. Associated Internat. Ins. Co. (1999) 71 

Cal.App.4th 1260, 1267-1268.) 

 Here defendant did not engage in any conduct intended to delay First Mortgage. 

First Mortgage cannot identify any evidence that defendant knew facts and, intended that 

its conduct should be acted upon, or acted so that First Mortgage had the right to believe 

it was so intended. Instead, even though defendant informed First Mortgage of the loss 

and the issuance of an insurance check, First Mortgage did not protect its interest in a 

timely way. Equitable estoppel or tolling does not apply under these circumstances. 

First Mortgage also accuses defendant of violating insurance regulations (Cal. 

Code Regs., tit. 10, § 2695.4, subd. (a)), by not disclosing “the benefits, coverages, time 

limits or other provisions” of the insurance policy, presumably the two-year limitation 

period. First Mortgage has supplied no facts to show it was a “first party claimant or 

beneficiary” as identified under the regulations. In fact, First Mortgage did not make any 

claim on the insurance policy until 2012. For that reason, there is also no basis to apply 

principles of estoppel. (Doheny Park Terrace Homeowners Assn., Inc. v. Truck Ins. 

Exchange (2005) 132 Cal.App.4th 1076, 1991, fn. 11.) 
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5. Commercial Code Section 3309 

Independent of its single cause of action for breach of an insurance contract, First 

Mortgage also argues it has a statutory right of recovery under Commercial Code section 

33092, which allows enforcement of a lost, destroyed, or stolen instrument. Notably, 

First Mortgage did not base its complaint on this statute. Nonetheless, we agree with the 

trial court that First Mortgage cannot assert a claim under Commercial Code section 

3309. In both state and federal cases, the courts have held section 3309 only applies 

where the insurance check was lost, destroyed, or stolen, (Bank of America Nat. Trust & 

Sav. Assn. v. Allstate Ins. Co. (C.D. Cal. 1998) 29 F.Supp.2d 1129, 1145), or where the 

endorsement may have been forged. (See Crystaplex Plastics, Ltd. v. Redevelopment 

Agency (2000) 77 Cal.App.4th 990, 1000 [Fourth Dist., Div. Two].) 

 2 Commercial Code section 3309: “(a) A person not in possession of an 

instrument is entitled to enforce the instrument if (1) the person was in possession of the 

instrument and entitled to enforce it when loss of possession occurred, (2) the loss of 

possession was not the result of a transfer by the person or a lawful seizure, and (3) the 

person cannot reasonably obtain possession of the instrument because the instrument was 

destroyed, its whereabouts cannot be determined, or it is in the wrongful possession of an 

unknown person or a person that cannot be found or is not amenable to service of 

process. 

“(b) A person seeking enforcement of an instrument under subdivision (a) shall 

prove the terms of the instrument and the person’s right to enforce the instrument. If that 

proof is made, Section 3308 applies to the case as if the person seeking enforcement had 

produced the instrument. The court may not enter judgment in favor of the person 

seeking enforcement unless it finds that the person required to pay the instrument is 

adequately protected against loss that might occur by reason of a claim by another person 

to enforce the instrument. Adequate protection may be provided by any reasonable 

means.” 
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Instead, the undisputed facts in this case demonstrate that Provident Bank accepted 

the check for payment to Bollockus without requiring an endorsement from First 

Mortgage. The check was not lost, stolen, or destroyed; the endorsement was not forged. 

The conduct by Provident Bank and Bollockus did not give First Mortgage the right to 

sue defendant many years after the loss was sustained and the check was negotiated. 

(Bank of America, at p. 1145.) 

IV 

DISPOSITION 

 The only material dispute identified by First Mortgage involved whether the twoyear limitation period applied. We have independently reviewed First Mortgage’s legal 

arguments and conclude the trial court properly granted summary judgment. We affirm 

the summary judgment and order defendant, as the prevailing party, to recover its costs 

on appeal. 

 NOT TO BE PUBLISHED IN OFFICIAL REPORTS 

CODRINGTON 

 J. 

We concur: 

RAMIREZ 

 P. J. 

HOLLENHORST 

 J.