1 Filed 10/30/14 Fait v. American States Ins. CA3 NOT TO BE PUBLISHED

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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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
THIRD APPELLATE DISTRICT (Sacramento)

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DONNA FAIT et al., Plaintiffs and Appellants,

v. AMERICAN STATES INSURANCE COMPANY, Defendant and Respondent. C074549 (Super. Ct. No. 3420100089783 CUBCGDS)

Plaintiffs Donna Fait and the Glenn Fa it 2005 Trust (collectively Fait) sued
defendant American States In surance Company, alleging Fait was entitled to recovery under an insurance policy after the demolition of a building Fait’s predecessor sold, with a retained security interest. The trial court granted summary judgment on the ground the2 intentional demolition of the building was not a covered loss under the policy. Fait timely appealed from the ensuing judgment. We shall affirm. 1
BACKGROUND The policy terms and historic facts are not disputed. Briefly, “we determine with respect to each cause of action whether th e defendant seeking summary judgment has conclusively negated a necessary element of the plaintiff’s ca se, or has demonstrated that under no hypothesis is there a material issue of fact that re quires the process of a trial.” ( Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 334.) As stated in our prior opinion, “The ow ner of a parcel of real property with a building on it demolishes the building to make way for new developmen t. Unfortunately, the owner is unable to complete the develo pment and ends up defa ulting on a purchase money promissory note secured by a deed of tr ust on the property. The holder of the note and deed of trust [Fait] exer cises the power of sale under th e deed of trust and buys the property back at a foreclos ure sale for less than the amount due under the note.” ( Fait , supra , 207 Cal.App.4th at p. 289.) Because the owner (collectively, New Faze) failed to maintain insurance as required, after “num erous requests,” Fait bo ught insurance for the property. After the destructi on of the building, when Fait acquired the property through foreclosure, Fait made a claim against the pol icy for the deficiency. Defendant denied the claim, in part alleging no coverage under the policy.
The named insured under the policy in effect at the tim e of the 2006 demolition is “Fait 1990 Trust [¶] Barbar a & Glenn Fait, Trustees.” Donna Fait and the Glenn Fait
2005 Trust are successors in in terest to the Fait 1990 Trust. Glenn Fait, individually, is

1 A separate case arising out of the demolition of the building was prev iously before this court. ( Fait v. New Faze Development, Inc. (2012) 207 Cal.App.4th 284 ( Fait ).) That case apparently awaits retrial. Safeco In surance Company of America, originally a defendant herein, was dismissed by Fait. Cert ain other defendants in this action are not parties to this appeal.3 sole trustee of both trusts. A “Lender Lo ss Payee Clause” lists the owners (New Faze, etc.) as loss payees. Under “Coverage” the policy states: “We will pay for direct physical loss of or damage to Covered Property at the premises described in the Declarations caused by or resulting from any Covered Cause of Loss.” Un der an applicable “Cause of Loss-Special Form,” “Covered Causes of Loss means Risks of Direct Ph ysical Loss,” with exceptions
not relevant. Because Fait admitted the building was intentionally destroyed, defendant argued no covered loss occurred, because inte ntional destruction of a building is not a
“fortuitous” risk. In opposition, Fait argued Fa it should have been treated as a “loss payee” under the policy, not an insured. Fait did not ra tify demolishing the building. Fait conceded that in October 2005, Glenn Fait read a Sacramento Bee article in which New Faze announced the building was “slated to be torn down,” and received a letter from New Faze stating it was planning to “demolish” the building and theref ore was terminating extant leases. The building was demolished in October 2006. Th e trust conveyed the property to Fait in April 20 07, but Fait did not learn abou t the demolition un til July 2007. In reply, defendant argued Fait was not a “loss payee” and had not asked to be, and in any event, stood by with actual know ledge of the planned de struction and took no steps to ensure it would not be done before the note was paid off, other than relying on the owners’ good faith, demonstrated by decl arations filed by Glenn Fait (beneficially interested in, but not a pa rty to, this case) in the Fait case (see fn. 1, ante ) and tendered in this case, stating: “It never occurred to me that the owners . . . would consider demolishing the building prior to paying off the note, as to do so would violate the terms
of the trust deed and the law.” Fait filed a similar declaration in opposition to summary judgment in this case. In his depos ition, Glenn Fait testified nothing in the Sacramento
Bee stated New Faze was not pl anning to pay off the note first, and that he had no4 discussions with New Faze on that subject. He admitted the demo lition of the building
“was intentional.” In relevant part, the trial court found as follows:
“[Fait] ha[s] failed to demonstrate a tria ble issue of material fact that the demolition was not fortuitous and not a co vered loss. Glenn admitted that New Faze intentionally demolishe d the [building]. [Fait] ’s argument that the demolition was wrongful and in violation of the deed of tr ust is not relevant here as such allegations relate to New Faze ’s actions, not those of Defendant. Additionally, Glenn knew that New Faze intended to demolish the property. While he may not have know n of the exact timing of the demolition, he was well aware of New Faze’s intent.”
DISCUSSION
I
Fortuitous Loss “Insurance is a contract whereby one unde rtakes to indemnify another against loss, damage, or liability arising from a contingent or unknown event .” (Ins. Code, § 22, emphasis added.) “ ‘Property insurance . . . is an agreement, a contract, in which the insurer agrees to indemnify th e insured in the event that th e insured property suffers a covered loss. Coverage, in turn, is comm only provided by referenc e to causation, e.g., “loss caused by . . . ” certain enumerated pe rils. [¶] The term “perils” in traditional property insurance parlance refers to fortuitous, active, physic al forces such as lightning, wind, and explosion, which bring about the loss.’ ” ( Garvey v. State Farm (1989) 48 Cal.3d 395, 406.) “ ‘Risk’ is commonly defined to me an ‘the chance of injury, damage, or loss; dangerous chance; hazard’ [cita tion] or ‘exposure to the chance of injury or loss; a hazard or dangerous condition.’ ” ( Doheny West Homeowners’ Assn. v. American Guarantee & Liability Ins. Co . (1997) 60 Cal.App.4th 400 , 405, fn. 4; accord Jernigan v. Nationwide Mutual Ins. Co . (2006) 2006 U.S. Dist. LEXIS 9571, pp. *23-25 [no coverage, “the de molition of the building was not a ‘covered cause of loss’ ”].)5 Accordingly, “[t]he concept of ‘fortuity’ is basic to insurance law. Insurance typically is designed to protec t contingent or unknown risk s of harm (Ins. Code, §§ 22, 250), not to protect against harm which is certain or expected. [Citation.] Insurance protects against risks of loss, not certainties of loss.” ( Chu v. Canadian Indemnity Co. (1990) 224 Cal.App.3d 86, 94-95.) Fait does not quarrel with this basic rule. Obviously, there was nothing contingent
or unknown about New Faze’s decision to dest roy the building, but Fait maintains that Fait, as a mortgagee, had nothing to do with that act, and therefore as to Fait , the consequence was a fortuitous loss covered by the policy. At oral argument in this court,
Fait’s counsel conceded there was no claim Fait was misled about the timing of the demolition, and agreed that Fait had kn owledge of the impe nding demolition, but
contended Fait had no knowle dge this would impair Fa it’s security interest. The principal authority relied on by Fait, Home Savings of Amer ica v. Continental
Ins. Co. (2001) 87 Cal.App.4th 835, proves inapposite when read carefully. There, the purchaser--the named insured under a prope rty policy--defaulted. The property was
transferred without notice to the lender, and then destroyed. The lender, a named loss payee, sought recovery for the deficien cy, claiming the loss was due to theft or vandalism. ( Id

. at pp. 839-840.) The trial court upheld summary judgment, finding
intentional demolition is not fortuitous. ( Id . at pp. 840-841.) But the Home Savings court went on to explain that “the demolition of th e residence was entirely fortuitous from [the lender’s] point of view. There is nothing in the record to show that Home Savings was aware of the plans to tear down the residence.” ( Id . at p. 851.) “Given the absence of any evidence showing that Home Savings appr oved or ratified the destruction of the residence, we conclude the loss was fo rtuitous as to Home Savings.” ( Id . at p. 852; see Wilson v. Farmers Ins. Exchange (2002) 102 Cal.Ap p.4th 1171, 1175 ( Wilson ) [“the demolition (in Home Savings ) was accomplished . . . by a third party entirely without the bank’s knowledge ,” emphasis added].)6 In contrast, in this case, well before the demolition, Glenn Fait read about the demolition proposal in the Sacramento Bee , yet took no steps to protect the Fait interest in the property. While Fait did not ratify demolition, Fait knew neither Fait nor the trust had been listed as mortgagees or loss payees, ratified Fait’s status as a named insured, and stood by without protecting Fa it’s interest, without even asking New Faze about its financial plans, with knowle dge of the planned demolition

. At oral argument in this court, Fait’s counsel conceded Glenn Fait “did not care” ab out the demolition, as he had no reason to believe it impaired Fait’s secu rity interest, and argued knowledge of the
demolition did not make Fait’s loss un fortuitous. However, it is cr itical to recall that the policy protected the building against “direct physical loss of or damage to” the building , and did not purport to protect Fait’s beneficial interest therein. Glenn Fait--a lawyer since 19 72, with real estate expe rience, the general counsel to McGeorge School of Law, and former mayo r of Folsom--wrote to the insurance broker in early 2006, stating “you can have [the ow ners] named [as] the ow ners with me as an additional insured.” Fait never sought to be included as a mortgagee or loss payee, despite a prior letter from the broker, dated Octobe r 31, 2005, suggesting that “there should really be a policy written in [the names of the owners] and showing you as a
mortgagee .” (Emphasis added.) Glenn Fait’s de claration shows this exchange began
when he contacted the broker to point out that th e prior year’s policy “erroneously listed
the 1990 Trust as named insured.” Yet Glenn Fait did not explain why, if the prior policy was erroneous, he acquiesced in the trust being a named insured in the next policy, rather than mortgagee or loss payee. The loss as to Fait was not through “fortuity .” Therefore, the trial court properly granted summary judgment on this ground. 2

2 Fait argues Fait is an innocent co-insured and should not be ba rred by the willful acts of New Faze. (See Ins. Code, § 533; Century-National Ins. Co. v. Garcia (2011) 51 Cal.4th 564, 568-569.) But th is claim is based on an exclusion for willful acts, not7 II
Leave to Amend As we have emphasized before, the pleadings outline the perimeter of materiality for purposes of assessing a summary judgment motion. ( FPI Development, Inc. v.
Nakashima (1991) 231 Cal.App.3d 367, 381-382.) In the complaint, a nd in opposition to a demurrer, Fait claimed to be an insured under the policy, as th e policy shows, listing in all caps, “Fait 1990 Trust [¶] Barbara & Glenn Fait, Trustees.” In opposition to summary judgment Fait claimed to be a loss payee , however, no leave to amend the complaint was sought. “[T]he term ‘loss pa yee’ shall include, but not be limited to, any mortgagee of the insured real property.” (Ins. Code, § 572.) Leave to amend was not sought until oral argument in the trial court. 3
The trial court acted within its discreti on in denying leave to amend because this theory was not outlined in the complaint, and no reques t for leave to amend was made until the hearing on the motion. (See Melican v. Regents of University of California (2007) 151 Cal.App.4th 168, 175-17 6 [“[i]t would be patently un fair to allow plaintiffs to defeat [the] summary judgment motion by a llowing them to present a ‘moving target’ unbounded by th e pleadings”]; Falcon v. Long Beach Genetics, Inc. (2014) 224 Cal.App.4th 1263, 1280; Van v. Target Corp. (2007) 155 Cal.App.4th 1375, 1387, fn. 2.) Accordingly, the trial court properly denied the belated motion to amend. 4

whether the loss otherwise falls within policy coverage prior to any exclusions. As we explained in Fait , there are triable issues of fact in Fait’s suit against New Faze for waste and impairment of security. (See Fait , supra , 207 Cal.App.4th at pp. 299-303.)

3 We do not have the transcript of the su mmary judgment hearing, but we presume the trial court accurately recited wh at happened in its ruling incorporated in to the judgment. (See, e.g., Sutter Health Uninsured Pricing Cases (2009) 171 Cal.A pp.4th 495, 498.)

4 Because the granting of su mmary judgment is supported by the grounds set forth by the trial court, we need not address the parties briefing of issues rega rding grounds on which the trial court denied summary judgment. (See Live Oak Publishing Co. v. Cohagan8 DISPOSITION The judgment is affirmed. Defendant shall recover from Fait reasonable costs incurred on appeal. (Cal. Rule s of Court, rule 8.278(a)(1).)

DUARTE , J.

We concur:

BUTZ , Acting P. J.

MAURO , J.

(1991) 234 Cal.App.3d 1277, 12 87.) However, the parties were prudent to brief those issues. (See Wilson , supra , 102 Cal.App.4th at p. 1174, fn. 2.)