Court Opinion

ID: 9384386
Source: CourtListenerOpinion
Date Created: 2023-04-03 18:04:17.763238+00
Date Added: 2024-06-11T17:17:53.102905
License: Public Domain

Filed 4/3/23 Kling v. Fire Insurance Exchange 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   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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has not been certified for publication or ordered published for purposes of rule 8.1115.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

MARY J. KLING et al.,                                          B316880

         Plaintiffs and Appellants,                            (Los Angeles County
                                                               Super. Ct. No. 19STCV41594)
         v.

FIRE INSURANCE
EXCHANGE,

     Defendant and
Respondent.

     APPEAL from a judgment of the Superior Court of Los
Angeles County, Maureen Duffy-Lewis, Judge. Affirmed.

      Kling Law Firm, Anthony N. Kling; Law Office of David
Knieriem and David Knieriem for Plaintiffs and Appellants.

     Woolls Peer Dollinger & Scher, Gregory B. Scher,
H. Douglas Galt and Sander Alvarez for Defendant and
Respondent.
                                    _________________________
       A neighbor’s tree fell on appellant Mary Kling’s residence.1
Respondent Fire Insurance Exchange (Fire) insured the
residence. It paid approximately $21,000 to cover the damage to
the residence and filed a separate subrogation action against the
neighbors to recoup what it had paid. However, Kling made a
separate and final claim for damages totaling approximately
$800,000. Fire declined to pay most of the larger amount after it
concluded the impact of the fallen tree did not cause the alleged
additional damage.
       Kling and Clifford, LLC sued for breach of contract and bad
faith failure to pay on the insurance contract. In this opinion we
hereinafter refer to both appellants as Kling. The trial court
agreed with Fire that the evidence of lack of causation was
undisputed and granted summary judgment in favor of Fire. We
affirm.
                         BACKGROUND
       Respondent Fire issued a homeowners policy for the
premises located at 160 N. Cliffwood Avenue in Los Angeles.
Kling made a claim on the policy when a neighbor’s tree fell on
the residence on December 9, 2018. On December 12, 2018, Fire’s
insurance adjuster inspected the property and paid $1,700 to
remove the tree and $750 to tarp a portion of the roof to mitigate
potential water intrusion. On December 13, 2018, Fire paid
$5,636.86 (after subtracting the $1,000 deductible) for repairs to
the interior and exterior of the impacted laundry room, a portion
of the roof, a portion of a fence and a gate. Kling claimed
additional damages to electrical wiring and exterior lights

1      Title to the residence is held by Clifford, LLC. Mary Kling
is Clifford, LLC’s assignee for insurance purposes.

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($1,600) and damage to security cameras and wiring ($5,764)
which Fire also paid.
      In January 2019, Kling submitted a request for
$322,197.60 for repairs to the residence and $480,000 for six
months of temporary housing pending the completion of the
repair work on the new claim. Documenting this claim were a
repair estimate from contractor John P. Ingram, Jr. & Associates,
Inc. and an entry in the multiple listing service showing a 9,775
square foot home for lease at $80,000 per month.
      Fire retained the ProNet Group, Inc. (ProNet) to evaluate
Kling’s claims for additional damages. ProNet inspected the
property on March 25, 2019 and submitted a report dated April 8,
2019. ProNet concluded there was no structural damage to the
residence caused by the fallen tree. There were pre-existing
cracks observed in the stucco exterior walls of the residence
which were not caused by the impact of the neighbor’s fallen tree
but were exacerbated by it. Based on the report Fire paid an
additional $4,514.45 for more repairs. On April 19, 2019, Fire
advised Kling that it would pay no more and it closed the claim.
      In November 2019, Kling filed a civil action against Fire for
breach of contract and bad faith failure to investigate and pay the
entire claim. Kling propounded no discovery and did not respond
to Fire’s discovery requests. Kling took the deposition of Fire’s
insurance adjuster who testified he relied on a software program
called Xactware to calculate repair costs. He did not know how
Xactware calculates repair costs.
      Fire moved for summary judgment contending Kling could
not establish that the fallen tree caused all the additional
damages of $800,000.

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      The trial court agreed, granted summary judgment in favor
of Fire, and entered a judgment of dismissal. This appeal
followed.
                          DISCUSSION
I.    Standard of Review
      The party moving for summary judgment bears the burden
of persuasion that there is no triable issue of material fact, and
that the moving party is entitled to judgment as a matter of law.
(Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.)
Where summary judgment is granted, we review the trial court’s
ruling de novo. (Gonzalez v. Mathis (2021) 12 Cal.5th 29, 39.)
We consider all the evidence that was presented by the parties
in connection with the motion (except that which the trial court
properly excluded) and all the uncontradicted inferences that the
evidence reasonably supports. (Merrill v. Navegar, Inc. (2001)
26 Cal.4th 465, 476.) In conducting our de novo review, we
liberally construe the evidence in support of the party opposing
summary judgment, and we resolve any doubts concerning the
evidence in favor of that party. (Yanowitz v. L’Oreal USA, Inc.
(2005) 36 Cal.4th 1028, 1037.) We affirm summary judgment
only where it is shown there is no triable issue of material fact
and the moving party is entitled to judgment as a matter of law.
(Code Civ. Proc., § 437c, subd. (c).)
II.   Causes of Action –Breach of Contract
      Kling’s first two causes of action allege breach of contract
and breach of the contractual duty to pay a covered claim based
on Fire’s refusal to pay all the additional damages of $800,000.
In support of its contention that all the additional damages were
not caused by the fallen tree and therefore were not covered

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under the policy, Fire submitted ProNet’s structural report that
had arrived at the same conclusion, but also determined that
some additional damage of $4,514.45 was covered by the policy.
In total, Fire paid Kling $21,109.81 minus the $1,000 deductible
under the policy.
       The elements of a breach of insurance policy contract are
1) a loss; 2) the amount of the loss; 3) the policy coverage of the
loss; and 4) notice to the insurer along with proof of loss. (CACI
No. 2300.) Kling argued that the repair estimate prepared by
John Ingram, Jr. & Associates established that the additional
damage was caused by the fallen tree and therefore Fire was
obligated to pay for it as a covered loss.
       The trial court succinctly summarized its ruling: “The
underlying issue is one of causation, not damages. Defendant
Fire Insurance Exchange takes the position that the additional
damages were not caused by the tree and provides expert opinion
in support. . . . [¶] Plaintiff only argues that Fire Insurance
Exchange is in the wrong because it did not pay for all the
additional damages. Plaintiff ignores the causation issue.
Plaintiff does not present any evidence in the form of an expert
declaration with regard to causation and coverage flowing
therefrom. [¶] Given plaintiff’s lack of evidence as to the issue of
causation and as plaintiff does not dispute defendant’s expert
opinion that the additional damage was not caused by the tree,
summary adjudication is granted.”
       We agree with the trial court that Ingram’s repair estimate
did not purport to opine on causation of the additional damages.
The report contains the subject header, “Tree Damage Main
House” and then lists multiple items that would benefit from
repair. Unlike the ProNet report, the repair estimate includes no

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photos and no text analyzing the cause of the damage to the 100-
year-old Spanish Revival residence. (The photos in the ProNet
report appear to show aged and cracked stucco on the exterior
and interior walls and ceilings, some of which with previously
patched seams.) The estimate sets out, among other things,
replacement of a cracked concrete driveway, restuccoing and
painting of five rooms, including woodwork, and replacement of
sink, toilet, washer, dryer, blinds and drapes. There is not one
word in the estimate about how this damage was caused. Nor
was there a declaration from anyone on the issue of causation.
       Although we are bound to liberally construe Kling’s
evidence, we cannot conclude that the contractor’s repair
estimate validly constitutes evidence establishing a triable issue
of material fact as to whether the fallen tree caused the
additional damage.
III.   Causes of Action for Breach of the Implied Covenant
       of Good Faith and Fair Dealing and Bad Faith
       Failure to Properly Investigate the Claim
      Kling argues Fire acted in bad faith in declining to pay the
entire $800,000 claim and failing to conduct an adequate
investigation into the claim. To establish bad faith, it must be
shown that insurer acted unreasonably or without proper cause.
(Dalrymple v. United Services Auto Assn. (1995) 40 Cal.App.4th
497, 520 (Dalrymple).) Where there is a genuine issue as to the
insurer’s liability under the policy for the claim asserted by the
insured, there can be no bad faith liability imposed on the insurer
for advancing its side of that dispute. (Ibid; Wilson v. 21st
Century Ins. Co. (2007) 42 Cal.4th 713, 723–724 (Wilson);
Chateau Chamberay Homeowners Assn. v. Associated Internat.
Ins. Co. (2001) 90 Cal.App.4th 335, 345 (Chateau Chamberay)

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[the “genuine dispute” rule protects an insurer from liability in
bad faith even though it might be liable for breach of contract].)
       Bad faith implies unfair dealing rather than mistaken
judgment. The ultimate test of bad faith liability in the first
party cases is whether the refusal to pay policy benefits or the
alleged delay in paying was unreasonable. (Chateau Chamberay,
supra, 90 Cal.App.4th at p. 346.) While the reasonableness of an
insurer’s claims-handling conduct is ordinarily a question of fact,
it becomes a question of law where the evidence is undisputed
and only one reasonable inference can be drawn from the
evidence. (Paulfrey v. Blue Chip Stamps (1983) 150 Cal.App.3d
187, 196.) In that situation, it is for the court, not a jury, to
decide whether the insurer had “proper cause.” (Dalrymple,
supra, 40 Cal.App.4th at pp. 516–517.) While an insurer’s
reliance on the advice and opinion of experts may be a basis for
invoking the doctrine, ultimately a case-by-case analysis is
required. (Zubillaga v. Allstate Indemnity Co. (2017)
12 Cal.App.5th 1017, 1028.)
       We conclude the undisputed evidence supports only one
reasonable inference, to wit, that Fire genuinely disputed the
additional claim of $800,000 in damages to the residence. We
arrive at this conclusion for several reasons. First, Fire promptly
paid the initial damage claims. Second, when faced with the
additional claim, it contracted with an independent company,
ProNet, to evaluate the alleged additional damage and
recommend whether it arose from the impact of the fallen tree.
Third, when ProNet suggested that at least a small part of the
additional damage was covered under the policy, Fire again
promptly paid the recommended amount. Fourth, Fire provided
the ProNet structural report to Kling and invited feedback from

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her on the report’s conclusions. (Kling provided no feedback
other than to file suit.) In sum, there is no evidence that Fire
acted unreasonably or unfairly in the way it handled Kling’s
additional claim for damages. Instead, Fire raised a genuine
coverage dispute it was entitled to pursue and resolve before it
paid out the requested $800,000.
       Similarly, there is no evidence Fire acted precipitously in
closing the claim investigation when it did, despite Kling’s
request to keep it open. Kling provided no evidence for Fire to
further investigate and did not respond to Fire’s invitation to
critique or comment on the ProNet structural report except to
provide her contractor’s estimate. The “genuine dispute rule”
does not relieve an insurer of its obligation to thoroughly and
fairly investigate, process, and evaluate the insured’s claim.
(Wilson, supra, 42 Cal.4th at p. 723.) Here, however, Kling gave
Fire nothing more to investigate and never anything substantive
that Fire chose to ignore.
       Finally, Kling’s bad faith claims arise from the asserted
breach of contract claims. In other words, there cannot be bad
faith in failing to pay on the contract or investigate the contract
claim if no benefits are due under the policy. (Brehm v. 21st
Century Ins. Co. (2008) 166 Cal.App.4th 1225, 1235.) If the
breach of contract claim fails, so does the claim for breach of the
implied covenant of good faith and fair dealing. (Waller v. Truck
Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 36.)
       Because Kling failed to establish a triable issue of fact as to
causation and coverage and did not refute Fire’s report that all
the additional damages were not caused by the impact of the tree,
the causes of action alleging bad faith do not survive.

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IV.   Motion for a New Trial and To Vacate the Judgment
        After the court granted summary judgment, Kling learned
that Fire had brought a subrogation action against the neighbors
to recoup from them what it had paid Kling under the policy.
Kling moved to vacate the judgment and for a new trial. Kling
accused Fire of deliberately misleading the court and the parties
when it failed to voluntarily disclose the complete subrogation
case file. Kling claimed prejudice from the nondisclosure of the
subrogation action because documents from that action could
have been used to oppose the summary judgment motion.
        The trial court made short shrift of the contention. “The
subrogation action was filed to recoup the payout from the owner
of the tree. Now the subrogation action, from this court’s view,
doesn’t have any bearing or regard to the claim of excessive
damages in this action nor in the summary judgment; therefore,
the evidence from the subrogation is not and was not material to
the summary judgment [and] can’t be used as a basis for a new
trial.”
        We agree. The subrogation action sought to recoup money
Fire actually paid out, that is, $21,109.81, minus the $1,000
deductible. Documentation relevant to that action would have
confirmed what Fire actually paid out. Kling’s complaint was not
about what Fire had paid; it was about what Fire refused to pay,
an issue completely irrelevant to the subrogation action. Kling’s
contention that Fire should have paid more to its insured would
not have been relevant to Fire’s affirmative subrogation case or to
the neighbor’s defense of the case. The failure to disclose
documents from that action does not warrant a new trial or
vacatur of the summary judgment.

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                          DISPOSITION
     The judgment of dismissal is affirmed. Respondent is
awarded costs on appeal.

     NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

                                        STRATTON, P. J.

We concur:

             GRIMES, J.

             WILEY, J.

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