NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
LINDA TAYLOR; RAYMOND MAGEE,

Plaintiffs

- Appellants,

v. GARRISON PROPERTY AND CASUALTY INSURANCE COMPANY; DOES, 1 through 50, inclusive,

Defendants

- Appellees. No. 18

- 55687
D.C. No. 2:17

- cv - 07550

- RGK

- GJS

MEMORANDUM *

Appeal from the United States District Court for the Central District of California R. Gary Klausner, District Judge, Presiding Argued and Submitted November 14, 2019

Pasadena, California Before: FERNANDEZ, M. SMITH, and MILLER, Circuit Judges. Linda Taylor and her husband, Raymond Magee, appeal from the district court’s grant of summary judgment in favor of their insurer, Garrison Property and Casualty Insurance Company . Taylor and Magee sued Garrison for breach of
contract and breach of the duty of good faith and fair dealing after Garrison denied

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36

- 3. 

# FILED

DEC 19 2019 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS2

coverage for f

ire

- related damage to a detached structure behind their home. We have jurisdiction under 28 U.S.C. § 1291. We affirm in part , reverse in part , and
remand for further proceedings

. 1. Taylor and Magee created genuine issue s of fact material to whether
Garrison breached any express or implied contractual duties with respect to their
claims for lost rental income and personal property . Magee testified that on the night of the fire, he called Garrison’s claims representative and reported that the studio apartment they rented out for $900 per month had been destroyed along with Taylor’ s art collection and other personal property. According to Magee, the claims representative explained that because Taylor had been operating her business out of the detached structure, their coverage was limited to lost rent al
income and $10,000 in personal property. A tr anscript of this call and a claims report support Magee’s testimony that he notified Garrison of those losses

. Garrison counters that Magee’s call was insufficient to make a claim because Taylor and Magee did not submit an inventory list detailing each loss. But

u nder the terms of the policy, i t was Garrison ’s duty to investigate the claim s and to request a n inventory list if it believed one was needed

. See Waller v. Truck Ins. Exch., Inc

. , 900 P.2d 619, 639 (Cal. 1995) (“‘[D]elayed payment based on inadequate or tardy investigations

. . . may breach the implied covenant because’ [ it ] frustrate[s] the insured ’s right to receive the benefits of the contract

. . . . ”3

( quoting Love v. Fire Ins. Exch. , 271 Cal. Rptr. 3d 1136, 1153 (Cal. Ct. App. 1990) ) ); see also Cal. Ins. Code § 790.03(h)(2) (prohibiting an insurer’s “[f]ail[ure] to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies”). Garrison made no such request. The district court noted that Garrison’s claims denial letter “did not deny a claim for lost rent or personal property.” That is true, but the fact remains that Garrison has not paid any such claims. We reverse the district court’s order in part
and remand for further proceedings to determine whether Garrison breached a
contractual duty or an implied duty of good faith and fair d ealing by failing to investigat e , delaying payment for, or effectively denying Taylor and Magee’s
claims for lost rental income and personal property

. 2. We reject Taylor and Magee’s challenge to the policy’s business

- use exclusion under the California Insurance Code . Taylor and Magee’s policy i s a mixed

- peril policy , so it “ need not comply with the provisions o f the standard form of fire insurance policy

. . . ; provided, that coverage with respect to the peril of fire, when viewed in it s entire ty, is substantially equivalent to or more favorable to the insured than that contained in [the] standard form.” Cal. Ins. Code § 2070. Taylor and Magee’s policy meets this standard. The standard form does not contain
use exclusion s , but at least one California court has upheld them

. See Rizzuto v. Nat’l Reserve Ins. Co. , 206 P.2d 431 , 431

– 3 3 (Cal. Ct. App. 1949) (upholding a4

fire insuranc e policy provision covering the insured’s building “while occupied only for barber shop purposes”). C alifornia c ourts have also emphasized that a n insurance company “ has the unquestioned right to select those whom it will insure and to rely upon [the insured] for such information as it desires as a basis for

. . . selecting its risks.” Mitchell v. United Nat’l Ins. Co. , 25 Cal. Rptr. 3d 627, 633

– 34 (Cal. Ct. App. 2005) (quoting Robinson v. Occidental Life Ins. Co. , 281 P.2d 39, 42 (Cal. Ct. App. 1955))

. The policy’s business

- use exclusion merely reflects the character of risk that Garrison agreed to assume : t o cover fire

- related damage to Taylor and Magee’s home , not their business . It does not impermissibly reduce statutorily mandated coverage

. 3. Nor should Garrison be estopped from enforcing the policy’s
business

- use exclusion. E ven assuming that Garrison understood at the time of
issuance that Taylor was operating a business out of the detached structure, there is
no evidence that Taylor and Magee justifiably relied on Garrison’s alleged
omissions . T hey had a duty to read the policy and discover the business

- use exclusion , yet they apparently failed to do so

. See Granco Steel, Inc. v. Workmen’s Comp. App. Bd. , 436 P.2d 287 , 295 (Cal. 1968) ( concluding t hat to apply the estoppel doctrine , the insured must be “ ignorant of the true state of facts ” and must detrimentally rel y on the insurer’s conduct ) ; see also Hadland v. NN Inv ’ rs Life
Ins. Co. , 30 Cal. Rptr. 2d 88, 94

– 95 & 94 n.9 (Cal. Ct. App. 1994) (holding that an5

insurer was not liable for misrepresenting its policy because the insureds never
read it and thus failed to discover that the insurer’s representations were a t odds
with the policy’s terms )

. In the absence of any showing of justifiable reliance by Taylor and Magee, we cannot rewrite the policy to include a risk that the parties agreed to exclude.
4. The district court held that Taylor and Magee were not entitled to punitive damages because they failed to raise genuine issues of fact material to
their claim for breach of the duty of good faith and fair dealing

. B ecause we reverse and remand that claim with respect to lost rental income and personal property , we also vacate the district court’s punitive

- damages determination . W e express no opinion on whether Taylor and Magee are entitled to such damages

. AFFIRMED in part , REVERSED in part , and REMANDED

. The parties shall bear their own costs.