Court Opinion

ID: 6104981
Source: CourtListenerOpinion
Date Created: 2022-01-20 01:01:56.457398+00
Date Added: 2024-06-11T08:53:45.999636
License: Public Domain

Filed 1/19/22 Kapnisis v. Colony Ins. Co. CA2/4
              NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication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 FOUR

KONSTANTINOS KAPNISIS,                                                B308056

         Plaintiff and Appellant,                                     (Los Angeles County
                                                                       Super. Ct. No. 19STCV13764)
         v.

COLONY INSURANCE
COMPANY,

         Defendant and Respondent.

         APPEAL from a judgment of the Superior Court of Los Angeles
County, Christopher K. Lui, Judge. Affirmed.
         Charlton Weeks, Rikka J. Fountain and Bradley T. Weeks for
Plaintiff and Appellant.
         Sheppard, Mullin, Richter & Hampton, Peter H. Klee, Samuel D.
Duimovich, Matthew G. Halgren and Marc J. Feldman for Defendant
and Respondent.
                             INTRODUCTION
      In this insurance coverage dispute, Konstantinos Kapnisis
(Kapnisis) appeals from the judgment entered following the trial court’s
order granting summary judgment in favor of Colony Insurance
Company (Colony).
      Kapnisis wanted to buy a restaurant called Big Oaks. The same
day Kapnisis signed the purchase agreement, he also signed a month-
to-month lease to rent Big Oaks pending the close of escrow. The lease
required him to pay Big Oaks’ insurance premium in order to operate
the restaurant. Colony subsequently issued a policy naming Big Oaks
as the insured. Two weeks later, a fire destroyed Big Oaks. Colony
issued checks payable to “Big Oaks” and sent payment to the mailing
address listed in the insurance policy.
      On appeal, Kapnisis challenges the trial court’s ruling on breach
of contract and breach of implied covenant of good faith and fair dealing
against Colony.1 Kapnisis contends Colony breached the insurance
policy by failing to pay him the insurance benefits. In addition,
Kapnisis argues Colony acted in bad faith because Colony refused to
pay him despite knowing he was the insured. We disagree and affirm
the judgment.

1     In his opening brief, Kapnisis requests that we reverse the trial court’s
order granting summary judgment “as to all causes” of action. However,
Kapnisis fails to address the merits of the unfair competition claim (Bus. &
Prof. Code, § 17200) and punitive damages. Therefore, we deem those claims
waived. (See Pfeifer v. Countrywide Home Loans, Inc. (2012) 211 Cal.App.4th
1250, 1282; Reyes v. Kosha (1998) 65 Cal.App.4th 451, 466, fn. 6.)

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          FACTUAL AND PROCEDURAL BACKGROUND2
Big Oaks
      Big Oaks was a restaurant located on land owned by the United
States Forest Service. In 2012, Hitendra Golakiea and his wife, Ila
Patel, purchased Big Oaks.
      Golakiea and Patel decided to sell, and Kapnisis offered to
purchase, Big Oaks for $220,000. On July 24, 2017, the parties signed a
Commercial Property Purchase Agreement and Joint Escrow
Instructions (Purchase Agreement). The Purchase Agreement stated,
among other things, that the offer was contingent upon Kapnisis
obtaining: (1) a special use permit from the United States Forest
Service; and (2) a permanent liquor license from the California
Department of Alcohol Beverage Control. The title of Big Oaks would
be conveyed through a grant deed “at the close of escrow.” Moreover,
the Purchase Agreement could only be amended in writing by both
parties. On July 27, 2017, escrow was opened.
      On the same day that he signed the Purchase Agreement,
Kapnisis signed a month-to-month Commercial Lease Agreement
(Lease) with Golakiea and Patel to lease Big Oaks. Kapnisis signed the
Lease in order to begin operating Big Oaks before the sale of the
property closed. The lease required Kapnisis, as the tenant, to pay the
operating expenses and utilities, insurance premiums, and real

2     “‘Because this case comes before us after the trial court granted a
motion for summary judgment, we take the facts from the record that was
before the trial court when it ruled on that motion. [Citation.]’” (Wilson v.
21st Century Ins. Co. (2007) 42 Cal.4th 713, 716–717 (Wilson).)

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property taxes. As of July 2017, Kapnisis managed Big Oaks and lived
on the property. On December 15, 2017, Golakiea died.
     Kapnisis never obtained either the special use permit from the
United States Forest Service or the requisite liquor license. Because of
his failure to obtain the required documents, escrow never closed.
Therefore, title to Big Oaks did not transfer to Kapnisis.

Insurance Policy
     Under the terms of the Lease, Kapnisis was responsible for paying
the insurance on Big Oaks. In June 2018, Kapnisis received a call from
Big Oaks’ insurance broker, Huntington Pacific Insurance Agency, and
learned that the insurance policy on Big Oaks was up for renewal.
Kapnisis began discussing renewal of Big Oaks’ policy with the broker.
     On June 17, 2018, the insurance broker, through an intermediary,
obtained a quote for Big Oaks from Colony. The quote included
$255,000 in building coverage and $100,000 in contents coverage, for a
premium of $4,145.54.
     In July 2018, Colony received an application for insurance for Big
Oaks, which was signed by Kapnisis. The only applicant listed was “Big
Oaks Lodge,” with a handwritten address of 33101 Bouquet Canyon
Road, Saugus CA 91390, which was the physical address of the
restaurant. Colony then issued Policy No. 101-PKG-0104275-00
(Policy), listing “Big Oaks” as the insured. The listed mailing address
was 2533 North Lamer Street, Burbank CA 91504 (the North Lamer

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address).3 This mailing address was also Patel’s residential address.
The Policy had the same limits and premiums as the June 17, 2018
quote and was effective from July 10, 2018, through July 10, 2019. It
did not cover the tenant’s property. The Lease obligated Kapnisis as
the tenant to buy his own insurance to cover any loss to personal
property and advised him to carry business interruption insurance.
         Kapnisis paid the insurance broker the premium of $4,125, and
received a receipt from the insurance broker with his name handwritten
on it.

The Fire
         Two weeks later, on August 11, 2018, a fire broke out at Big Oaks
and the entire building burned down. Kapnisis and Patel each made
claims with Colony for policy benefits as a result of the fire. Patel told
Colony that she was the owner of Big Oak and Kapnisis was the tenant.
Kapnisis also claimed he was the owner of Big Oaks; however, he did
not provide Colony with any documentation proving he owned Big Oaks
at the time of the fire.
         In September 2018, Colony issued a series of checks made payable
to “Big Oaks” for the fire loss. Colony paid a total of $335,368.76.
Colony sent the checks to the North Lamer address.

3    Colony’s insurance binder, submitted by Kapnisis in opposition to the
motion for summary judgment, listed Big Oaks as the insured and the North
Lamer address as the corresponding mailing address.

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     In June 2019, Kapnisis signed a joint escrow instruction canceling
the Big Oaks escrow.

The Lawsuit
     Kapnisis initiated this lawsuit against Colony for breach of
contract, breach of implied covenant of good faith and fair dealing,
unfair competition, negligence, and declaratory relief.4 He also sought
punitive damages against Colony. As relevant here, Kapnisis alleged
breach of contract for failing to pay him the insurance benefits under
the Policy. As to breach of implied covenant of good faith and fair
dealing, Kapnisis alleged Colony’s conduct was unreasonable, in bad
faith, and inimical to his receipt of those benefits.
     Kapnisis subsequently dismissed the negligence claim against
Colony. Thereafter, the trial court sustained Colony’s demurrer to the
declaratory relief cause of action, leaving the breach of contract, breach
of the implied covenant of good faith and fair dealing, and unfair
competition causes of action.
     As relevant here, Colony filed a motion for summary judgment or
summary adjudication, arguing that there was no breach of contract
because it complied with the express terms of the Policy by writing
checks to “Big Oaks” and mailing those checks to the address listed on
the Policy. Colony further argued that because Kapnisis was not
entitled to the Policy benefits and had no valid breach of contract claim,

4    Kapnisis also sued Argo Group US, Inc., Huntington Pacific Insurance
Agency, Inc., Mark David Heberden, and R.E. Chaix & Associates Insurance
Brokers, Inc., but they are not parties to this appeal.

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his cause of action for bad faith failed as well. Additionally, Colony
argued there was a genuine dispute over whether Kapnisis was entitled
to any insurance benefit. At the hearing, the trial court took the motion
under submission after argument from the parties. Following the
hearing, the court granted the summary judgment motion as to all
causes of action and entered judgment in favor of Colony. Specifically,
the court found there was no breach of contract because Colony mailed
the insurance proceeds to “Big Oaks,” the named insured on the Policy
at the address listed on the Policy. Because there was no breach of
contract claim, the corresponding breach of implied covenant of good
faith and fair dealing also failed. Furthermore, there was sufficient
evidence to demonstrate there was a genuine dispute as to whether
Kapnisis should have received the Policy benefits.
     Kapnisis filed a timely notice of appeal.

                              DISCUSSION
  I. Standard of Review
     On appeal from the grant of a summary judgment motion, “‘“‘[w]e
review the trial court’s decision de novo, considering all the evidence set
forth in the moving and opposing papers except that to which objections
were made and sustained.’” [Citation.] We liberally construe the
evidence in support of the party opposing summary judgment and
resolve doubts concerning the evidence in favor of that party.
[Citation.]’ [Citation.]” (Wilson, supra, 42 Cal.4th at p. 717.)
  “‘A trial court properly grants a motion for summary judgment only if
no issues of triable fact appear and the moving party is entitled to

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judgment as a matter of law. [Citations.] The moving party bears the
burden of showing the court that the plaintiff “has not established, and
cannot reasonably expect to establish,”’ the elements of his or her cause
of action. [Citation.]” (Wilson, supra, 42 Cal.4th at p. 720.)

  II. Argument
     Kapnisis contends the trial court erred in granting summary
judgment in favor of Colony on his breach of contract claim. We
disagree.
     The standard elements of a breach of contract claim are: (1) the
existence of a contract, (2) the plaintiff’s performance or excuse for
nonperformance, (3) the defendant’s breach, and (4) resulting damage to
the plaintiff. (Abdelhamid v. Fire Ins. Exchange (2010) 182 Cal.App.4th
990, 999.)
     The interpretation of an insurance policy is a question of law and
follows the general rules of contract interpretation. (Haynes v. Farmers
Ins. Exchange (2004) 32 Cal.4th 1198, 1204; Waller v. Truck Ins.
Exchange, Inc. (1995) 11 Cal.4th 1, 18 (Waller).) As our Supreme Court
instructs, “The rules governing policy interpretation require us to look
first to the language of the contract in order to ascertain its plain
meaning or the meaning a layperson would ordinarily attach to it.”
(Waller, supra, at p. 18; Bank of the West v. Superior Court (1992) 2
Cal.4th 1254, 1264 [“[i]f contractual language is clear and explicit, it
governs”].) “We recognize the principal that an insured’s ‘. . .
“objectively reasonable expectations” may be considered to resolve an

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ambiguous policy provision . . . but cannot be relied upon to create an
ambiguity where none exists.’ [Citation.]” (Lee v. Fidelity National
Title Ins. Co. (2010) 188 Cal.App.4th 583, 597 (Lee).)
     Kapnisis does not dispute that “Big Oaks” was the named insured
on the Policy and that the insurance proceeds were mailed to the
address listed on the Policy. It is further undisputed that neither
Kapnisis nor his address were listed on the Policy. We therefore agree
with the trial court that Colony satisfied its contractual obligations to
pay policy benefits to “Big Oaks” at the address listed on the Policy.
     Kapnisis repeatedly asserts that Colony paid Patel the insurance
proceeds. This claim is not supported by the record. Colony issued
checks addressed to “Big Oaks,” which was listed as the insured under
the Policy. None of the checks issued by Colony was made payable to
Patel. Colony sent those checks to the North Lamer address in the
Policy, which also happened to be Patel’s residential address. Colony
followed the express terms of the Policy and any dispute beyond that,
such as Patel’s authority to cash those checks, is not between Kapnisis
and Colony but potentially between Kapnisis and Patel. Similarly,
Kapnisis argues that “Big Oaks” was his trade name, Patel never used
the name, and therefore he was the intended insured under the Policy.
As discussed above, Colony complied with its contractual obligations to
pay the insurance proceeds to the listed insured and corresponding
address in the Policy. If “Big Oaks” was truly Kapnisis’s trade name,
that again raises a potential dispute between Kapnisis and Patel, not
Colony.

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     Despite his contention that the Policy’s terms are unambiguous,
Kapnisis relies on the application submitted to Colony to demonstrate
he is the intended insured under the Policy. Generally, a court may not
consider extrinsic evidence to vary or contradict the clear and
unambiguous terms of a written contract. (Wolf v. Walt Disney Pictures
& Television (2008) 162 Cal.App.4th 1107, 1126–1127.) “Big Oaks
Lodge” is listed as the applicant with a handwritten address of 33101
Bouquet Canyon Road, Saugus CA 91390. This is the physical address
of Big Oaks as well as Kapnisis’s residence at the time of the fire. In
the application, Kapnisis is identified as the contact person. Kapnisis
therefore argues that the North Lamer address listed on the Policy was
“due to a broker error.” By Kapnisis’s own admission, any dispute
arising out of this error is between Kapnisis and the insurance broker,
not Colony. Furthermore, the information on this application does not
change the fact that Kapnisis name and his address were not contained
in the Policy itself. And more importantly, Colony’s insurance binder,
submitted by Kapnisis in opposition to the motion for summary
judgment reflects that the named insured is “Big Oaks” with the North
Lamer address.
     Contrary to Kapnisis’s contention, Lee, supra, does not support his
breach of contract claim. That case concerned coverage under a title
insurance policy issued by an insurer to the plaintiffs. (Lee, supra, 188
Cal.App.4th at p. 587.) The insurer had issued a preliminary report
that repeatedly referred to two tax assessor parcel numbers but
included a legal description of only one parcel to be insured. (Id. at pp.
587–588.) The legal description of the one parcel was incorporated into

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the title insurance policy. Although the parcel number references were
not incorporated into the terms of the policy, the policy attached a map
depicting the two parcels. When the plaintiffs later discovered they did
not, in fact, own one of the assessed parcels and made a claim under the
policy, the insurer stood behind the legal description of one parcel in the
policy and denied coverage. In reversing summary judgment for the
breach of contract claim, the Court of Appeal held that the preliminary
report in this case could be reasonably construed as an offer to insure
both parcels. (Id. at pp. 595–597.) The court explained the buyer
generally sees only the preliminary report before closing and would
necessarily expect the subsequently delivered policy to conform to the
preliminary report. (Id. at p. 597.)
     Kapnisis contends the insurance application submitted to Colony
is relevant extrinsic evidence as to his reasonable expectation that he
was the insured under the Policy, and that the insurance benefits would
go directly to him. Unlike the preliminary report in Lee, the application
is not an offer by Colony to insure him. The application was wholly
completed by Kapnisis, not Colony or a Colony representative. Thus,
Colony made no representation in the application regarding the named
insured or the corresponding address. However, the insurance binder
reasonably could be construed as such an offer by Colony. Like a
preliminary report, the insurance binder serves as a placeholder until
the formal policy is issued by the insurance company. As noted, the
insurance binder lists Big Oaks as the insured with the North Lamer
address.

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      We conclude that Kapnisis has failed to submit evidence sufficient
to establish a triable issue of material fact as to Colony’s alleged breach
of contract. Absent a breach of contract, Colony did not breach the
implied covenant of good faith and fair dealing. (See Waller, supra, 11
Cal.4th at p. 36 [if the insurer did not breach the policy, it did not
breach the implied covenant]; see also Minich v. Allstate Ins. Co. (2011)
193 Cal.App.4th 477, 493 [where insurer granted judgment as a matter
of law on breach of contract claim, bad faith claim also fails].)
Therefore, it is unnecessary to address Kapnisis’s remaining argument
that the genuine dispute doctrine cannot support the summary
adjudication of the implied covenant of good faith and fair dealing cause
of action.

                             DISPOSITION
      The judgment in favor of Colony is affirmed. Colony is entitled to
costs on appeal.
      NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

                                          WILLHITE, Acting P. J.
      We concur:

      COLLINS, J.                         MICON, J.*

*Judge of the Los Angeles County Superior Court, assigned by the Chief
 Justice pursuant to article VI, section 6 of the California Constitution.

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