Hollingsworth
v. Lincoln General Ins.
Filed
10/15/13 Hollingsworth
v. Lincoln General Ins. CA2/5
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 This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115.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
FIVE
GERALD V. HOLLINGSWORTH, Jr. et
al.,
Plaintiffs and Appellants,
v.
LINCOLN GENERAL INSURANCE
COMPANY et al.,
Defendants and Respondents.
B240536
(Los
Angeles County
Super. Ct.
No. BC442363)
APPEAL from
judgments of the Superior Court of Los
Angeles County, Michael Johnson, Judge.
Affirmed.
Law Offices
of Gary Hollingsworth, Gary Hollingsworth for Plaintiffs and Appellants.
Charlston,
Revich & Wollitz, Robert D. Hoffman, for Defendant and Respondent Lincoln
General Insurance Company.
Murchison
& Cumming, Jean M. Lawler, Nancy N. Potter, for Defendant and Respondent
Powers & Effler Insurance Brokers, Inc.
>
INTRODUCTION
Plaintiffs
and appellants Gary and Ivy Hollingsworth contracted with general contractor
Baker Brothers Construction, Inc. (BBCI) to remodel their house. Dissatisfied with BBCI’s performance,
plaintiffs “rescinded and terminated†the contract. BBCI brought an action against plaintiffs for
breach of contract,
and plaintiffs filed a cross-complaint against BBCI for negligence and breach
of contract (BBCI Action). BBCI tendered
the defense of the cross-complaint to its insurer, defendant and respondent
Lincoln General Insurance Company (Lincoln), which denied a defense and indemnity
to BBCI. Thereafter, BBCI and plaintiffs
settled the BBCI Action, which settlement included BBCI’s assignment to
plaintiffs of any claims or causes of action BBCI had against Lincoln or BBCI’s
insurance broker, defendant and respondent Powers & Effler Insurance
Brokers, Inc. (Powers), in connection with the disputed insurance coverage for
the BBCI Action. Plaintiffs then brought
an action against Lincoln for
failing to defend and indemnify BBCI in the BBCI Action and against Powers for
failing to procure for BBCI insurance that would have covered the allegations
in plaintiffs’ cross-complaint in the BBCI Action (Coverage Action).
In their first amended complaint in
the Coverage Action, plaintiffs asserted causes of action for breach of
contract, breach of the covenant of good faith and fair dealing, and fraud
against Lincoln, and breach of
contract and negligence
against Powers. The trial court granted Lincoln’s
motion to strike plaintiffs’ punitive damages claim in connection with the
breach of the covenant of good faith and fair dealing cause of action. It sustained, without leave to amend,
Lincoln’s demurrer to the fraud cause of action and found moot Lincoln’s motion
to strike an accompanying claim for punitive
moved for summary judgment. Plaintiffs
appeal from the order sustaining Lincoln’s
demurrer, a purported order striking the punitive damages claim, the orders
granting summary judgment, and an order denying certain motions to compel
discovery responses. We affirm.
BACKGROUND
name="_ftnref1" title="">[1]
I. Lincoln’s Summary Judgment Motion
Background
Plaintiffs
owned a home on Cumberland Road
in the City of San Marino (City). In
2007, they contracted with Sash & Door Specialty, Inc. dba JCC Door
Specialty (JCC) to remodel their home (JCC Project). The plans and specifications for the JCC
Project (Original Plans) called for the addition of a second floor. Certain parts of the home were not involved
in the project, including two rear bedrooms, an adjoining bathroom in the east
wing, and a study in the west wing. The
City approved the plans on November
28, 2006.
The JCC
Project involved “limited demolition work†of “a small portion of the structure
where the living room and second-story addition were to be constructed.†On December
10, 2007, plaintiffs terminated JCC for failing adequately to
prosecute work on the JCC Project. Plaintiffs
believed that JCC had conducted “excessive and improperly sequenced demolitionâ€
of their house and that JCC caused damage to their house that “was so extensive
that the remainder of the structure, with the exception of the 4 car garage and
circular driveway, was beyond repair.â€
In January
2008, plaintiffs entered into negotiations with BBCI to “repair, rebuild, and
complete construction of the Property.â€
Plaintiffs provided BBCI with copies of the Original Plans and a second
set of plans (Revised Plans), not approved by the City, that added an
additional 614 square feet to the house (together Plans).
According
to plaintiffs, BBCI conducted extensive inspections of their home, reviewed the
Plans, and recommended to plaintiffs that the remainder of their damaged home
be demolished. Curtis Baker
costly to demolish the entire structure—excluding the foundation and the
four-car garage—rather than trying to salvage any part of the home. Plaintiffs pointed out to Curtis that neither
the Original Plans nor the Revised Plans called for complete demolition and
expressed concern about whether the City would require an additional permit for
the complete demolition that he recommended.
Curtis told plaintiffs that he had an excellent relationship with the
City and knew its rules. In his
experience, a permit was not required for demolition. Curtis reassured plaintiffs that “even the extra
demolition work was required, the work would still be within the perimeters of
the approved plans, which were the plans he would follow in this whole
project.†In January and February 2008,
BBCI sent proposed contracts to plaintiffs to perform the work at their home.
On March 13, 2008, plaintiffs sent a fax
to Curtis. The fax stated in part, “Hi
Curt, the attached is some more corrections that need to be incorporated into
the final version. The actual site
inspection which shows discrepancy with both sets of plans provided to you, mainly,
the over demolition and the needs to tear down both remaining side wings, etc.,
need to be emphasized to account for the basis of the total contract
price. This is most important but was
left out in yesterday’s memo. We
appreciate your kind consideration and apologize for any inconvenience
caused. [¶]—[¶] 2) Pg 1, ‘The Owner has requested the
Contractor to begin work on the project’—here please add: ‘by first cleaning up the job site, picking
up the remaining work left by the previous contractor, including completing the
demolition work, and particularly removing the remaining framing, poles, ducts,
both side wings structure before actual construction work starts.’ [¶]
‘In order to avoid any further delay and to mitigate damages, the Owner
has requested the Contractor to begin work without the Owner having secured the
City of San Marino approval for the new modification and addition of the 614
sq. ft. per the set plan dated 1/2/08. The Contractor agrees to do his best to
co-ordinate the technical procedures and scheduling of work to begin work
within the perimeters of the first set of approved plans dated 11/28/06 pending
the final approval of the new modifications.’
[¶] Then continue with the rest,
‘The Contractor has advised the Owner of the risk involved with this request .
. . . [¶] . . . [¶] 4) Also, in the same
paragraph A of Addendum ‘A’, please add the following to account for the basis
of the total contract price and price breakdown: [¶]
The total contract price of $421,200.00 is based on all the requirements
called for in the building plans dated 1/2/08, which incorporates the original
plans dated 11/28/06. In addition, the
total contract price is also based on the actual site inspection by the
Contractor in the months of January and February, 2008. The Contractor noticed several discrepancy
between the current job site situation and the requirements called for in the
plans dated 11/28/06: [¶] Firstly, the plans did not call for extensive
demolition of the dry wall in the living room facing Cumberland Road, those
facing the back yard, and the side wing facing Gainsborough, for approximately
_____ ft (insert number per knowledge).
Additional dry walls need to be set up on top of what the plans
specified. [¶] Secondly, the east side wing consisting of
two bedrooms and one bathroom in between are supposed to stay intact per the
plans. This side wing needs to be
completely demolished and rebuilt due to water damages which will give rise to
future mold problems if not replaced.
[¶] Thirdly, the kitchen side
wing only had frame structure remain (please add in your own description, such
as from cost point of view, to explain the need of completely demolishing the
remaining structure)[.] [¶] The need to remove the remaining structure
per the above and to set up new framing and drywall was not intended or
specified in the original set of plans dated 11/28/06 and the modifications plans dated 1/2/08, but rather, made necessary due
to the actual site inspection.â€
On March 18, 2008, BBCI and plaintiffs
entered into a “Contract Agreement†(BBCI Agreement) for “construction work†at
plaintiffs’ home. The BBCI Agreement
provided, in part, “In order to avoid any further delay and to mitigate
damages, the Owner has requested the Contractor to begin work on the Project
without the Owner having secured City of San Marino approval on the
modifications and additional 614 square feet contained in the Primary Set of
Plans for this Project. The Owner has
requested the Contractor to begin by first cleaning up the job site and picking
up the remaining work left by the previous contractor. This includes completing the demolition work
and particularly removing the remaining framing, plumbing, ducting, electrical,
plaster and stucco on both remaining wings of the structure and what little remains
of the main middle area of the structure.
This work is to be completed before the actual build back construction
begins. The Contractor has advised the
Owner of the risk involved with this request.
The Owner accepts all liability and responsibility regarding this
request. The owner will be solely
financially responsible for any changes that may arise from the design
process. The Contractor reserves the
right to review whatever is changed from the bid set of plans that has been
identified above and was the sole source of information used to compile all
prices, allowances and ultimately this contract agreement. If upon completing their review of whatever
is changed by the design process the Contractor feels the need to change any
prices they will do so with an Extra Work Order (see item #9 in the Contract
Agreement). The Owner agrees to pay for
all additional work that the design procedure with the City of San Marino
creates. Baker Brothers Construction,
Inc. is not responsible for the financial or legal problems that may arise from
the Owner’s decision to begin work prior to the City of San Marino
approval. Baker Brothers Construction,
Inc. advice to the Owner is contrary to the Owner’s final decision.
“[¶] . . .
[¶]
“The Owner
has requested the Contractor to begin work on the Project without the Owner
having secured the City of San Marino approval.
The Contractor has advised the Owner of the risk involved with this
request. The Owner accepts all liability
and responsibility regarding this request.
The Owner will be solely financially responsible for any changes that
may arise from the design process. The
Contractor reserves the right to review whatever is changed from the bid set of
plans that has been identified above and was the sole source of information
used to compile all prices, allowances and ultimately this contract
agreement. If upon completing their
review of whatever is changed by the design process the Contractor feels the
need to change any prices they will do so with an Extra Work Order (see item #9
in the Contract Agreement). The Owner
agrees to pay for all additional work that the design procedure with the City
of San Marino creates. Baker Brothers Construction,
Inc. is not responsible for the financial or legal problems that may arise from
the Owner’s decision to begin work prior to the City of San Marino
approval. Baker Brothers Construction,
Inc. advice to the Owner is contrary to the Owner’s final decision.â€
The “Scope
of Work†section in the BBCI Agreement provided:
“The job
site condition was contrary to work required in the Original Set of Plans. The project had received more demolition than
was required in the main middle area of the structure (living room). Framing, stucco, interior plaster,
electrical, hardwood flooring and finish carpentry was removed that should have
been left in place. Only a few floor
joints remained in this main middle area.
The east and west wings of the Project had received extensive water
damage due to the fact that the roofing had been removed and insufficient or no
temporary waterproofing had been installed to protect these areas. The water damage had ruined the interior
plaster, the hardwood flooring, the electrical, cabinetry, finish cabinetry and
paint. With mold and future health
issues a concern, all of the problems above required more demolition. The need to remove what remains of the
existing structure was never intended or specified in the Original Remodel Set
of Plans. All of this increased scope of
demolition is included in the Contractors complete scope of work even though it
is not specified on any plans or documents.â€
The BBCI
Agreement included the following provision regarding the “scope of work for the
demolition phase of construction on this project†which provided, in part:
“Complete
the demolition on what remains of the house structure - $6,500.00
“Includes
and is limited to the following: Baker
Brothers Construction, Inc. will be responsible for removing what remains of
the house structure. This will include
all stucco, siding plaster, drywall, framing, plumbing, electrical, flooring
and roofing. The existing foundation
will not be removed. It will be used to
rebuild the house on as per your building plans. The garage will have the roofing and stucco
only removed. New roofing and stucco
will be installed to match the new finishes on the rebuilt residence at the
appropriate time.â€
Work under
the BBCI Agreement was to commence on March
20, 2008, and to be substantially completed on or before March 20, 2009. In response to an interrogatory, plaintiffs
stated that BBCI conducted work on their property between March 20, 2008, and March 26, 2008.
They described the work as demolition of the remaining structure, which
work was outside of the approved plans for their remodel.
BBCI hired
subcontractor Pennhall Company to perform the demolition work referred to in
the BBCI Agreement. On March 26, 2008, the City’s Planning
and Building Department issued a stop work order for plaintiffs’ remodel. The stop work order stated, “No work beyond
the scope of permitted remodel work is allowed.
Obtain addition permits for demo and nearly complete new structure. This notice shall act as a Stop Work Order
for all unpermitted activities on site.
Clean Street. Note: Only foundation remains.†As of the date of the stop work order,
plaintiffs’ house had been demolished down to the foundation. According to Mrs. Hollingsworth, in April
2008, Curtis acknowledged to plaintiffs that he did not check with the City
before demolishing the remainder of their house because he believed the
existing permit covered the demolition work.
According
to plaintiffs, after the City issued the stop work order, it voided the
previously approved building permit for plaintiffs’ remodel and required
plaintiffs to submit new plans for new construction rather than for a
remodel. That is, because the entire
house had been demolished, the remodel project was no longer an addition to an
existing structure, but the construction of a new house.
On September 4, 2008, plaintiffs faxed a
letter to BBCI that stated that they “declared rescinded and terminated†the
BBCI Agreement. On February 24, 2009, BBCI filed a complaint for
breach of written contract, quantum meruit, and unjust enrichment against
plaintiffs in the BBCI Action. BBCI
alleged, among other things, that plaintiffs failed to pay for lumber that had
been delivered to their house for the remodel.
On April 23, 2009, plaintiffs filed a
cross-complaint for negligence and breach of contract against BBCI. The cross-complaint alleged, “As a result of
the damage caused by JCC and the unapproved demolition performed by Baker
Bros., [plaintiffs’] family home has now been reclassified from a remodel to new
construction. The new classification
means that the new construction must comply with current setback requirements,
which will result in [plaintiffs] having to demolish and rebuild the only
portions of their original home that still exist—the . . . 4 car garage, and the circular driveway
. . . .â€
In the
negligence cause of action, the cross-complaint alleged, among other things,
that BBCI breached its duty to exercise ordinary care and skill in performing
its construction work on the remodel by “negligently advising [plaintiffs] to
proceed with the demolition of the structures all at one time, contrary to the
plans and specifications, the existing building permit, and City building
ordinances, codes, and policies, contrary to the contract documents.†It further alleged that BBCI negligently
failed to advise plaintiff of the potential consequences of demolishing their
house all at once contrary to the building plans, the City permit, and City
building ordinances; negligently failed to coordinate demolition of the house
with the City; and failed to cancel the lumber order.
In their
breach of contract cause of action, the cross-complaint alleged, among other
things, that the BBCI Agreement “required [BBCI] to perform its work in
accordance with the plans and specifications and the existing building permit,
and to coordinate with and obtain approval for all of its work by the relevant
governmental authorities, including the City of San Marino.†BBCI breached the BBCI Agreement, the
cross-complaint alleged, when it “performed complete demolition of the entire
remaining structures at one time contrary to the plans and specifications and
the building permit, and without consulting with or coordinating with the City
prior to doing so. Furthermore, [BBCI] failed
to subsequently cancel the lumber order and reverse the lumber charges,
contrary to their agreement to do so.â€
BBCI
tendered the defense and indemnity of plaintiffs’ cross-complaint to Lincoln
under its commercial general liability policy (policy number 6350001737
(Lincoln Policy)). Pursuant to the
Lincoln Policy, Lincoln agreed to
“pay those sums†that BBCI becomes “legally obligated to pay as damages because
of . . . ‘property damage’ to which this insurance applies.†The insurance applied to “property damageâ€
caused by an “occurrence.†The policy
defined an “occurrence†as “an accident, including continuous or repeated
exposure to substantially the same general harmful conditions.†“Property damage†was defined as “a. Physical injury to tangible property,
including all resulting loss of use of that property. All such loss of use shall be deemed to occur
at the time of the physical injury that caused it; or [¶] b. Loss
of use of tangible property that is not physically injured. All such loss of use shall be deemed to occur
at the time of the ‘occurrence’ that caused it.â€
On August 12, 2009, Lincoln
declined the tender of the defense and indemnity of plaintiffs’ cross-complaint
against BBCI asserting that there was “no possibility for coverage under the
policy.†Lincoln’s stated reasons were
that the “demolition of [plaintiffs’] residence did not result from an
‘occurrence’ under the policy, and even if the unintended reclassification of
the reconstruction project somehow constituted an ‘occurrence,’ the resulting
damages flowing from the reclassification do no[t] involve any covered
‘property damage’ under the policy.â€
Plaintiffs’ claim for loss of use of their house was precluded by the
policy’s Impaired Property exclusion.
In June
2010, plaintiffs and BBCI settled the BBCI Action. As part of the settlement, BBCI assigned to
plaintiffs its rights under the Lincoln Policy and any cause of action it had
against Lincoln or any other insurer or insurance broker based on the failure
to defend and indemnify BBCI or to provide BBCI with insurance BBCI requested
or that was adequate to meet BBCI’s needs.
The BBCI Action was dismissed with prejudice.
On July 26, 2010, plaintiffs filed the
Coverage Action against Lincoln and Powers concerning insurance coverage issues
in the BBCI Action. As against Lincoln,
the complaint in the Coverage Action asserted causes of action for breach of
contract, breach of the covenant of good faith and fair dealing, and
fraud. On November 9, 2010, plaintiffs filed a first amended
complaint in the Coverage Action. In the
first amended complaint, plaintiffs’ breach of contract cause of action against
Lincoln alleged, in part, that
under the terms of the Lincoln Policy, Lincoln
had a duty to defend and indemnify BBCI in the BBCI Action which duty it violated
when it denied coverage. The breach of
the implied covenant of good faith and fair dealing cause of action alleged, in
part, that Lincoln wrongfully
refused to defend BBCI in the BBCI Action, and “unreasonably and narrowly
interpreted the Policies in a manner calculated to deny benefits.†The trial court granted Lincoln’s
motion to strike plaintiffs’ punitive damages claim in connection with the
breach of the covenant of good faith and fair dealing.
Plaintiffs’
fraud cause of action alleged, in part, that Lincoln represented to BBCI,
plaintiffs, and the general public that they provided full and complete
insurance coverage for contractors in California. Such representations were made through
advertisements, the media, and publications to BBCI including a certificate of
liability insurance Lincoln provided to BBCI that Lincoln “knew or should have
known would be provided by [BBCI] to its customers or potential customers,
including the Plaintiffs herein, with the purpose of providing evidence that
[BBCI] carried commercial general liability insurance. The certificate specifically stated that
Plaintiffs were the ‘certificate holder.’
The certificate stated that [BBCI] was covered by ‘commercial general
liability’ insurance, by which statement [Lincoln] intended to convey to [BBCI]
and the general public the representation that [Lincoln] had agreed to provide
commercial general liability insurance as commonly understood, which would
provide coverage for the claims made in [the BBCI Action].†The representations were knowingly false, and
Lincoln did not intend to defend or
indemnify BBCI for claims arising from BBCI’s negligence, including for
plaintiffs’ claims in the BBCI Action.
Based on the false representations, the cause of action alleged, plaintiffs
contracted with BBCI for construction work on their home. The trial court granted Lincoln’s
motion to strike plaintiffs’ punitive damages claim in connection with the
breach of the covenant of good faith and fair dealing cause of action. The trial court sustained without leave to
amend Lincoln’s demurrer to
plaintiffs’ fraud cause of action and ruled that Lincoln’s
motion to strike the claim for punitive damages on the fraud cause of action
thus was moot.
With
respect to their remaining causes of action against Lincoln, plaintiffs
described in discovery responses the “property damage†they claimed the Lincoln
Policy covered as “the demolition by BBC of all the remaining structure on
Plaintiffs’ property . . . which work was outside of the approved
plans for the remodeling of the property.â€
In another discovery response, plaintiffs described the “property
damage†that they contended was “a result of an OCCURRENCE relating to any WORK
performed by BBCI at the PROPERTY†as “[d]emolition of all the remaining
structure on Plaintiffs’ property . . . which work was outside of the approved
plans for the remodel of Plaintiffs’ property.â€
In response to additional discovery, plaintiffs stated that Lincoln had
a duty to defend BBCI, in part, because BBCI breached the BBCI Agreement by
advising plaintiffs that demolition was a standard procedure in construction
that the City did not have to approve, by demolishing the remainder of
plaintiffs’ house without City approval, by not following the two sets of plans
referred to in the BBCI Agreement, and by negligently performing work on
plaintiffs’ property that was not in compliance with the two set of plans and
not approved by the City.
Background
Lincoln
moved for summary judgment or summary adjudication of plaintiffs’ breach of
contract and breach of the covenant of good faith and fair dealing causes of
action on the grounds that the causes of action had no merit as there was no
property damage caused by an occurrence and thus no potential for coverage
under the Lincoln Policy, and because the causes of action came within the
scope of the policy’s Work Product and Impaired Property exclusions. The trial court granted Lincoln’s
motion on the grounds asserted.
II. Facts Underlying Powers’s Summary
Judgment Motion
Background
Powers
procured a commercial general liability policy for BBCI from Lincoln (policy
number 6340001714) and assisted BBCI in renewing that policy (renewed policy
number 6350001737 (Lincoln Policy)) prior to October 2007. The policy period for the Lincoln Policy was October 15, 2007, to October 15, 2008. According to Julie, BBCI did not request that
Powers procure an insurance policy that provided coverage for “all claims that
could be made as a result of BBCI’s construction operations.†Powers never told Julie that under the
policies it obtained for BBCI “everything would be covered,†or that “the
Policy would provide full coverage for all claims made for damages occurring
during BBCI’s construction operations.â€
Powers never told Curtis that the Lincoln Policy “would provide full
coverage for all claims made for damages occurring in [his] construction
business.â€
The Lincoln
Policy was issued before Curtis met plaintiffs.
Neither Julie nor Curtis spoke with Powers about the need for insurance
for plaintiffs’ house remodel. When
Curtis received the Lincoln Policy, he read it and did not tell Powers that
“there was anything in the policy that was not as [he] had requested.†To the best of his knowledge, Curtis believed
that the Lincoln Policy was the same policy that BBCI had always had, although
he did not compare the Lincoln Policy with the prior policy. According to Curtis, because the Lincoln
Policy contained more exclusions than “inclusions,†“we†typically read the
exclusions to make sure that BBCI was not going to be engaged in work covered
by an exclusion, and “we†were able to understand the exclusions.
Pursuant to
the BBCI Agreement, BBCI was to procure and maintain certain insurance,
including commercial general liability insurance. In a declaration, Mrs. Hollingsworth stated
that Curtis told plaintiffs that “his liability insurance policy would cover
anything that went wrong in the project.â€
He never described to plaintiffs the circumstances that the Lincoln
Policy would not cover. Curtis told Mrs.
Hollingsworth that he would have his insurance broker send plaintiffs a
“Certificate of General Liability Insurance†to prove coverage and that
plaintiffs’ names “as owners of the property†would be listed on the
certificate as “third party beneficiaries†under the policy.
BBCI
provided to plaintiffs a Certificate of Liability Insurance.
as “Certificate Holder[s].†The
certificate stated, “This certificate is issued as a matter of information only
and confers no rights upon the certificate holder. This certificate does not amend, extend or
alter the coverage afforded by the policies below.†The certificate included a “Disclaimer†that
provided, “The Certificate of Insurance on the reverse side of this form does
not constitute a contract between the issuing insurer(s), authorized
representative or producer, and the certificate holder, nor does it
affirmatively or negatively amend, extend or alter the coverage afforded by the
policies listed thereon.â€
Lincoln
denied a defense or indemnity to BBCI for plaintiffs’ cross-complaint in the
BBCI Action. On June 17, 2010, as part of a settlement of
plaintiffs’ cross-action against BBCI, BBCI assigned to plaintiffs all of its
rights against Lincoln and any
insurance broker that procured insurance coverage for BBCI “in connection with
the failure and refusal to defend and indemnify [BBCI]†in plaintiffs’
cross-action.
In the
Coverage Action, the first amended complaint asserted causes of action for
breach of contract and negligence against Powers. Plaintiffs’ breach of contract cause of
action alleged that “Prior to the issuance of the [Lincoln] Policy as alleged
herein, [BBCI] specifically advised Powers . . . that [BBCI] sought insurance
coverage that would insure and indemnify [BBCI] against any and all liability
that [BBCI] may incur during the operation of [BBCI]’s construction business,
including insurance coverage that would cover the claims made in the [BBCI]
Action.†Powers “agreed to obtain
insurance coverage which met those needs†and advised BBCI that it had obtained
such coverage. Powers breached its
agreement because the Lincoln Policy did not provide the insurance coverage
BBCI requested. Plaintiffs’ negligence
cause of action against Powers alleged that Powers breached its duty to use
reasonable care in procuring the type of coverage that BBCI requested—i.e, an
“insurance policy which would defend and indemnify [BBCI] against all claims made
as a result of [BBCI]’s construction operations . . . .â€
Background
Powers
moved for summary judgment of plaintiffs’ breach of contract and negligence
causes of action on the ground that plaintiffs could not show that Powers, as
BBCI’s insurance broker, failed to obtain the insurance coverage that BBCI
requested. The trial court granted the
motion.
DISCUSSION
I. Lincoln’s Summary Judgment Motion
Plaintiffs
argue that the trial court erred in granting Lincoln’s
motion for summary judgment. The trial
court did not err.
title="">[4]
provides a potential for coverage . . . , we are guided by the principle that
interpretation of an insurance
policy is
a question of law. [Citation.]†[Citation.]’
(Powerine Oil Co., Inc. v. Superior Court (2005) 37 Cal.4th 377,
390 [33 Cal.Rptr.3d 562, 118 P.3d 589].)
‘“We apply a de novo standard of review to an order granting
when, on undisputed facts, the order is based on the
or application of the terms of an insurance policy.†[Citations.]’ (Ibid.)†(Federal Ins. Co. v. Steadfast Ins. Co.
(2012) 209 Cal.App.4th 668, 679.)
“‘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 . . . . [¶] “‘While insurance contracts have special
features, they are still contracts to which the ordinary rules of contractual
interpretation apply.’ [Citations.] ‘The fundamental goal of contractual
interpretation is to give effect to the mutual intention of the parties.’ [Citation.]
‘Such intent is to be inferred, if possible, solely from the written
provisions of the contract.’
[Citation.] ‘If contractual
language is clear and explicit, it governs.’
[Citation.]†[Citation.]’ (Powerine Oil Co., Inc. v. Superior Court,
supra, 37 Cal.4th at p. 390, accord, TRB Investments, Inc. v. Fireman’s
Fund Ins. Co. (2006) 40 Cal.4th 19, 27 [50 Cal.Rptr.3d 597, 145 P.3d
472].)†(Federal Ins. Co. v. Steadfast Ins. Co., supra, 209 Cal.App.4th at
p. 679.)
of Relevant Principles
“[A]
liability insurer owes a broad duty to defend its insured against claims that
create a potential for indemnity.†(Horace
Mann Ins. Co. v. Barbara B. (1993) 4 Cal.4th 1076, 1081.) Whether an insurer owes its insured a duty to
defend is made, in the first instance, by comparing the allegations in the
complaint with the policy’s terms. (
(1995) 11 Cal.4th 1, 26.) If there is no
potential for coverage under an insurance policy’s terms, an insurer acts
properly in denying a defense. (
If there is any doubt about whether there is a duty to defend, the
matter is resolved in the insured’s favor.
(Horace Mann Ins. Co. v. Barbara B., supra, 4 Cal.4th at p.
1081.) The duty to defend is broader
than the duty to indemnify. (
An insurer’s duty to indemnify extends to claims that are actually
covered by the policy. (Buss v.
Superior Court (1997) 16 Cal.4th 35, 45-46; Risely v. Interinsurance
Exchange of the Automobile Club (2010) 183 Cal.App.4th 196, 208.)
The duty to indemnify arises only after liability has been
established. (Buss v. Superior Court, supra, 16 Cal.4th at p. 46.)
An assignee
of an insured’s rights under an insurance policy stands in the shoes of the
insured and is subject to any defenses the insurer could have asserted against
the insured. (Smith v. State Farm Mut. Auto.
Ins. Co. (1992) 5 Cal.App.4th 1104, 1111; Woolett v. American
Employers Ins. Co. (1978) 77
Cal.App.3d 619, 625.) Thus, as BBCI’s
assignees, plaintiffs stand in the shoes of BBCI and are subject to any
defenses that Lincoln could have
asserted against BBCI. (Smith
v. State Farm Mut. Auto. Ins. Co., supra, 5 Cal.App.4th at p. 1111;
supra, 77 Cal.App.3d at p. 625.)
The Lincoln
Policy obligated Lincoln to “pay
those sums†that BBCI became “legally obligated to pay as damages because of .
. . ‘property damage’ to which this insurance applies.†The insurance applied to “property damageâ€
caused by an “occurrence.†Under the
policy, an “occurrence†was “an accident, including continuous or repeated
exposure to substantially the same general harmful conditions.â€
The
term “accident†in an insurance policy “is given a commonsense interpretation
that it is an unintentional, unexpected, chance occurrence. [Citation.]
[¶] An accident does not occur when the insured
performs a deliberate act unless some additional, unexpected, independent, and
unforeseen happening occurs that produces the damage. [Citation.]
[¶]
all of the acts that resulted in the victim’s injury, the event may not be
deemed an ‘accident’ merely because the insured did not intend to cause
injury.†(Fire Ins. Exchange v. Superior Court (2010) 181 Cal.App.4th 388,
392.) “[A]n injury-producing event is
not an ‘accident’ within the policy’s coverage language when all of the acts,
the manner
and the objective accomplished occurred as intended by the actor.†(Delgado
v. Interinsurance Exchange of Automobile Club of
47 Cal.4th 302, 311-312.)
The trial
court did not err in finding that the demolition of the remaining parts of
plaintiffs’ house was not an “accident†within the meaning of Lincoln
Policy. In their March 13, 2008, fax to Curtis, plaintiffs
specifically requested that the final BBCI Agreement state that the remainder
of plaintiffs’ house was to be demolished and that such demolition was not
called for in the Original or Revised Plans.
The final BBCI Agreement provided that plaintiffs requested that BBCI
demolish the remainder of plaintiffs’ house before plaintiffs obtained City
approval of the Revised Plans. The
agreement expressly acknowledged that BBCI advised plaintiffs of the risk
involved in plaintiffs’ request, and that plaintiffs accepted “all liability
and responsibility†for their request.
Pursuant to the agreement, BBCI was “not responsible for the financial
or legal problems that may arise from [plaintiffs’] decision to begin work
prior to the City of San Marino approval.â€
The agreement further provided, “The need to remove what remains of the
existing structure was never intended or specified in the Original Remodel Set
of Plans. All of this increased scope of
demolition is included in [BBCI’s] complete scope of work even though it is not
specified on any plans or documents.â€
These
provisions in the BBCI Agreement indisputably establish that plaintiffs
retained BBCI in part to demolish the remainder of their house, that BBCI
intended to demolish the remainder of the house, and that such demolition thus
was not an “accident†within the provisions of the Lincoln Policy. (Delgado
v. Interinsurance Exchange of Automobile Club of Southern California, supra,
47 Cal.4th at pp. 311-312; Fire Ins.
Exchange v. Superior Court, supra, 181 Cal.App.4th at p. 392.) Accordingly, because there was no “accidentâ€
under the Lincoln Policy’s provisions and no potential for coverage, Lincoln
properly denied BBCI a defense and indemnity in the BBCI Action. (Waller
v. Truck Ins. Exchange, Inc., supra, 11 Cal.4th at p. 26;
Cal.4th at p. 46; Risely v. Interinsurance Exchange of the Automobile Club, supra, 183 Cal.App.4th at p. 208.)
Plaintiffs
contend that demolition not in accordance with the approved plans was never
intended. They argue that the resulting
stop work order, order for new construction, and loss of “grandfathering
benefits†were unexpected injuries resulting from BBCI’s demolition. Thus, plaintiffs conclude, BBCI’s demolition
was an “accident†under the Lincoln Policy.
Plaintiffs are mistaken. The BBCI
agreement plainly demonstrates that plaintiffs and BBCI intended to demolish
the remainder of plaintiffs’ house even though such demolition was not in
accordance with the approved plans, the agreement providing, “The need to
remove what remains of the existing structure was never intended or specified
in the Original Remodel Set of Plans.
All of this increased scope of demolition is included in [BBCI’s]
complete scope of work even though it is not specified on any plans or documents.†Moreover, in deciding whether the demolition
was an “accident†we look to the insured’s acts and not the resulting
injury. (Fire Ins. Exchange v. Superior Court, supra, 181 Cal.App.4th at p.
392 [“Where the insured intended all of the acts that resulted in the victim’s
injury, the event may not be deemed an ‘accident’ merely because the insured
did not intend to cause injuryâ€]; Shell Oil Co. v. Winterthur Swiss Ins. Co.
(1993) 12 Cal.App.4th 715, 750 [“[T]he term ‘accident’ does not apply to an
act’s consequences, but instead applies to the act itself. [Citation.]]; Quan v. Truck Ins. Exchange
(1998) 67 Cal.App.4th 583, 596 [“‘An intentional act is not an “accidentâ€
within the plain meaning of the word.
[Citations.] The same roadblock
at the definition of “accident†halts any argument claiming the [insured]
intended his act but not the resulting harm.’
[Citation.]â€].)
II. Lincoln’s Demurrer to Plaintiffs’ Fraud
Cause of Action
Plaintiffs
contend that the trial court erred in sustaining without leave to amend Lincoln’s
demurrer to their fraud cause of action.
demurrer.
A. Standard of Review
“On appeal
from a judgment dismissing an action after sustaining a demurrer without leave to amend, the
standard of review is well settled. We
give the complaint a reasonable interpretation, reading it as a whole and its
parts in their context. (Zelig v. County
of Los Angeles (2002) 27
Cal.4th 1112, 1126 [119 Cal.Rptr.2d 709, 45 P.3d 1171].) Further, we treat the demurrer as admitting all material
facts properly pleaded, but do not assume the truth of contentions, deductions
or conclusions of law. (Ibid.; Aubry
v. Tri–City Hospital Dist. (1992) 2 Cal.4th 962, 966–967 [9 Cal.Rptr.2d 92,
831 P.2d 317] (Aubry).) When a
sustained, we determine whether the complaint states facts sufficient to
constitute a cause of action. (Zelig,
supra, 27 Cal.4th at p. 1126.)
And when it is sustained without leave to amend, we decide whether there
is a reasonable possibility that the defect can be cured by amendment: if it can be, the trial court has abused its
discretion and we reverse. (Ibid.)†(City of Dinuba
v. County of Tulare
(2007) 41 Cal.4th 859, 865.)
Allegations
In their
fraud cause of action, plaintiffs alleged that Lincoln
represented to BBCI, through advertisements, the media, and publications, that
it provided full and complete insurance coverage to contractors. Specifically, plaintiffs alleged that Lincoln
provided to BBCI the certificate of liability insurance that Lincoln “knew or
should have known would be provided by [BBCI] to its customers or potential
customers, including the Plaintiffs herein, with the purpose of providing
evidence that [BBCI] carried commercial general liability insurance. The certificate specifically stated that
Plaintiffs were the ‘certificate holder.’
The certificate stated that [BBCI] was covered by ‘commercial general
liability’ insurance, by which statement [Lincoln] intended to convey to [BBCI]
and the general public the representation that [Lincoln] had agreed to provide
commercial general liability insurance as commonly understood, which would
provide coverage for the claims made in [the BBCI Action].†Plaintiffs alleged that the representations
were knowingly false, and Lincoln
did not intend to defend or indemnify BBCI for claims arising from BBCI’s
negligence, including for plaintiffs’ claims in the BBCI Action. If plaintiffs knew the truth—i.e., that Lincoln
would not defend or indemnify BBCI, they would not have contracted with BBCI
for construction work on their home.
of Relevant Principles
“‘The elements of fraud, which give rise to
the tort action for deceit, are (a) misrepresentation (false representation,
concealment, or nondisclosure); (b) knowledge of falsity (or “scienterâ€); (c)
intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e)
resulting damage.’ [Citations.]†(Lazar v. Superior Court (1996) 12
Cal.4th 631, 638.) “In California,
fraud must be pled specifically; general and conclusory allegations do not
suffice. (Stansfield v. Starkey
(1990) 220 Cal.App.3d 59, 74 [269 Cal.Rptr. 337]; Nagy v. Nagy (1989)
210 Cal.App.3d 1262, 1268 [258 Cal.Rptr. 787]; 5 Witkin, Cal. Procedure (3d ed.
1985) Pleading, § 662, pp. 111–112.)
‘Thus “‘the policy of liberal construction of the pleadings . . . will
not ordinarily be invoked to sustain a pleading defective in any material
respect.â€â€™ [Citation.] [¶]
This particularity requirement necessitates pleading facts which
show how, when, where, to whom, and by what means the representations were
tendered.’ (Stansfield, supra,
220 Cal.App.3d at p. 73, italics in original.)â€
(Id. at p. 645.)
A
certificate or verification of insurance is provided as evidence of insurance
in lieu of an actual copy of an insurance policy. (See Ins. Code, § 384, subd. (a).) That is, “[a] certificate of insurance is
merely evidence that a policy has been issued.
(Ins. Code, § 384.) It is not a
contract between the insurer and the certificate holder. [Citations.])†(Empire
Fire & Marine Ins. Co. v. Bell (1997) 55 Cal.App.4th 1410, 1423, fn.
25.) Because a certificate of insurance
is merely evidence that an insurance policy has been issued, and plaintiffs’
first amended complaint alleged that Lincoln
issued to BBCI the liability insurance policy identified in the certificate of
liability insurance, the certificate of liability insurance, by plaintiffs’ own
allegations, did not contain a misrepresentation. (Ibid.) Accordingly, the trial court did not err in
sustaining Lincoln’s demurrer.
Plaintiffs
do not argue that their non-specific allegations that Lincoln made
representations to BBCI through advertisements and the media about the
insurance coverage it provided for contractors stated a cause of action for
fraud independent from their fraud claim based on the representations in the
certificate of insurance. (Lazar v.
Superior Court, supra, 12 Cal.4th at p. 645.) Nor do plaintiffs claim that they can amend
their fraud cause of action to cure its defects. (City of Dinuba v. County of Tulare,
supra, 41 Cal.4th at p. 865.)
III. Powers’s Summary Judgment Motion
Plaintiffs
argue that the trial court erred in granting Powers’s summary judgment motion
because they established that they were third party beneficiaries of the
Lincoln Policy, there was a factual dispute about whether Powers explained and
BBCI understood the exclusions in the Lincoln Policy, the Lincoln Policy was
not a “genuine†liability policy, and Powers admitted that plaintiffs were
additional insureds under the Lincoln Policy.
The trial court did not err.
Party Beneficiaries
Plaintiffs
contend that the trial court erred in disregarding their status as third party
beneficiaries. They cite
Specialties London Limited (2005) 135 Cal.App.4th 165, 168-169 (
proposition that Powers owed them a duty of care to procure insurance that
adequately protected BBCI. Plaintiffs’
reliance is misplaced.
In
Cal.App.4th 165, Business to Business Markets, Inc. (B2B) hired Tricon Infotech (Tricon),
a software company in India, to write a
computer program for B2B’s business. (
errors and omissions insurance policy to compensate B2B if Tricon did not
deliver usable software. (
B2B contacted Hoyla, an insurance broker, and informed it of Tricon’s
insurance needs. (Ibid.) B2B told Hoyla that
Tricon was based in India. (Ibid.)
Hoyla contacted
Professional Liability Insurance Services, Inc. (PLIS) to place the insurance
policy and provided PLIS with the information it had received from B2B. (Business
to Business, supra, 135 Cal.App.4th at p. 167.) PLIS contacted Zurich Specialties London
Limited (Zurich Specialties), which issued an insurance policy to Tricon that
contained a coverage exclusion for claims that arose or related to work
performed in India. (
B2B sued
to deliver usable software. (
Tricon’s defense or to indemnify Tricon against B2B’s claim based on the policy
exclusion for work done in India. (Ibid.)
Tricon
defaulted in B2B’s action, and a judgment of $922,480 was entered against
it. (Business
to Business, supra, 135 Cal.App.4th at p. 168.) Without insurance coverage, B2B’s judgment
against Tricon was uncollectible, and B2B sued PLIS for negligence in procuring
a policy that did not cover work done in India. (Ibid.) The trial court sustained PLIS’s demurrer
without leave to amend on the ground that PLIS had no direct dealings with B2B
and did not owe it a duty of care. (
PLIS
appealed, and the court of appeal reversed.
(Business to Business, supra,
135 Cal.App.4th at p. 168.) In deciding
whether PLIS owed a duty of care to B2B even though they had no direct contact
with each other, were not in privity of contract, and B2B was not named on the
insurance policy, the court of appeal considered the following factors: (1) the extent to which the transaction was
intended to affect B2B, (2) the foreseeability of harm to B2B, (3) the degree
of certainty that B2B suffered injury, (4) the moral blame attached to PLIS’s conduct, and (5) the policy of preventing future
harm. (Ibid.)
Cal.App.4th 165 is distinguishable from the case before us on the first,
essential factor. In
policy was acquired specifically to protect the interests of an identified
third party—B2B—against an indentified risk—Tricon’s failure to deliver usable
software. In the instant case, the
insurance policy Powers obtained for BBCI was not obtained to protect the
interests of identified third parties—plaintiffs—against an identified
risk—damages resulting from BBCI’s work on plaintiffs’ remodel. Instead, Powers simply renewed BBCI’s
existing liability insurance policy several months before BBCI even had contact
with plaintiffs. Accordingly, plaintiffs
have not established that they are third party beneficiaries under the Lincoln
policy.
Moreover,
if meritorious, plaintiffs’ third party beneficiary argument would not require
reversal of the judgment in Powers’s favor.
Powers owed BBCI a duty of care in procuring the insurance BBCI
requested. (Travelers Property Casualty Co.
of America
Superior Court (2013) 215
Cal.App.4th 561, 578.) BBCI assigned to
plaintiffs its rights against Powers. As
BBCI’s assignees, plaintiffs stand in the shoes of BBCI (Cates v. Chiang (2013) 213 Cal.App.4th 791, 825) and
thus can recover for Powers’s breach of its duty of care, if any. Plaintiffs fail to explain how any right to
recover they claim they have against Powers is different if they prosecute the
action as third party beneficiaries rather than as assignees.
Lincoln
Plaintiffs
contend that the trial court ignored the factual dispute about whether Powers
explained and BBCI understood the exclusions in the Lincoln Policy. That is, the trial court ignored Curtis’s
deposition testimony that when BBCI received a new insurance policy he read the
exclusions to make sure that BBCI was not going to be engaged in work covered
by an exclusion. Such testimony,
plaintiffs contend, is inconsistent with an understanding of the exclusions in
the Lincoln Policy, which the trial court found applied to the claims in the
BBCI Action. That is, according to
plaintiffs, if Curtis understood that the exclusions would apply to his work on
plaintiffs’ remodel, he would have had Powers procure different insurance. The trial court did not ignore the evidence
concerning the knowledge of the Lincoln Policy exclusions.
Plaintiffs
in their breach of contract cause of action against Powers alleged that BBCI
told Powers that it sought insurance coverage that would indemnify it against
“against any and all liability†it might incur during the operation of its
construction business including coverage for the claims plaintiffs made in the
BBCI Action. They alleged that Powers
agreed to obtain, and told BBCI that it had obtained, such coverage and
breached its agreement by failing to obtain the coverage BBCI requested. Plaintiffs’ negligence cause of action
against Powers also relied on Powers’ asserted failure to obtain the “all
claims made†insurance BBCI allegedly requested.
The trial
court granted Powers’s summary judgment motion on the ground that plaintiffs
could not show and did not show that Powers did not obtain for BBCI the scope
of coverage it requested. That is, BBCI
asked Powers to obtain general liability insurance, it did not ask Powers to
procure insurance that would cover any and all claims of liability, and Powers
never told BBCI that it would procure a policy that provided full coverage for
all damages that occurred during BBCI’s construction business. BBCI knew that the policy Powers procured did
not cover every kind of claim—i.e., that the policy contained exclusions. Plaintiffs’ evidence did not create a triable
issue of fact about whether Powers procured the requested insurance.
Failure to Obtain a “Genuine†Liability Policy
Plaintiffs
contend that Powers failed to obtain a “genuine†liability policy. Plaintiffs’ contention is unclear and appears
to be a restatement of its argument that Powers did not advise BBCI about the
exclusions in the Lincoln Policy. To the
extent that plaintiffs claim that the Lincoln Policy is not a real insurance
policy, the claim fails because plaintiffs have raised it for the first time on
appeal. (Baugh v. Garl (2006) 137
Cal.App.4th 737, 746.)
“Admission†that Plaintiffs Were Additional Insureds Under the
Plaintiffs
note that Powers stated in opposition to a discovery motion, “Simply put,
Powers has admitted that it issued a Certificate of Insurance which showed
Plaintiffs as an additional insured on Baker Brothers’ insurance policy.†Powers states that its counsel made a mistake
when responding to the discovery.
Plaintiffs do not explain the import of Powers’s statement. Contrary to plaintiffs’ assertion, the
Certificate of Liability Insurance does not indicate that they are “third party
beneficiaries,†and contrary to Powers’s discovery response, the Certificate of
Insurance does not establish plaintiffs as “additional insured[s].†As we explained above, “[a] certificate of
insurance is merely evidence that a policy has been issued. (Ins. Code, § 384.) It is not a contract between the insurer and
the certificate holder.
[Citations.])†(
supra, 55 Cal.App.4th at p. 1423, fn. 25.)
IV. Plaintiffs’ Discovery Motions
Plaintiffs
contend that the trial court erred in denying four motions to compel additional
discovery responses from Lincoln. Because plaintiffs failed on appeal to
present a cogent factual and legal analysis of their contention, we deem this
contention forfeited.
“The burden
of affirmatively demonstrating error is on the appellant. This is a general principle of appellate
practice as well as an ingredient of the constitutional doctrine of reversible
error. [Citation.]†(Fundamental Investment etc. Realty Fund
v. Gradow (1994) 28 Cal.App.4th 966, 971.)
“An appellant must provide an argument and legal authority to support
his contentions. This burden requires
more than a mere assertion that the judgment is wrong. ‘Issues do not have a life of their own: If they are not raised or supported by
argument or citation to authority, [they are] . . . waived.’ [Citation.]
It is not our place to construct theories or arguments to undermine the
judgment and defeat the presumption of correctness. When an appellant fails to raise a point, or
asserts it but fails to support it with reasoned argument and citations to
authority, we treat the point as waived.â€
(Benach v. County of Los Angeles (2007) 149 Cal.App.4th 836, 852;
People Ex Rel. Dept. of Alcoholic Beverage Control v. Miller Brewing Co.
(2002) 104 Cal.App.4th 1189, 1200 [“It is an established rule of appellate
procedure that an appellant must present a factual
and legal authority on each point made or the argument may be deemed
waived. [Citations.]â€].)
Plaintiffs
filed four motions to compel numerous supplemental responses to discovery. The trial court denied the motions. Plaintiffs’ argument on appeal consists
essentially of a compilation of short notations about the propounded
discovery. The argument is factually
incomprehensible and relies on almost no legal authority or analysis. Moreover, the argument fails to explain how
any of the discovery sought is relevant to the issue upon which we affirmed
Lincoln’s summary judgment—i.e., BBCI’s demolition of the remaining parts of
plaintiffs’ house was not covered by the Lincoln Policy because the policy did
not provide coverage for intentional acts.
Accordingly, plaintiffs have not met their burden on appeal of
demonstrating error (Fundamental Investment etc. Realty Fund v. Gradow,
supra, 28 Cal.App.4th at p. 971), and have forfeited review of this
contention (Benach v. County of Los Angeles, supra, 149 Cal.App.4th at
p. 852; People ex rel. Dept. of Alcoholic Beverage Control v. Miller Brewing
Co., supra, 104 Cal.App.4th at p. 1200).
DISPOSITION
The
judgments are affirmed. Lincoln and
Powers are awarded their costs on appeal.
NOT TO BE
PUBLISHED IN THE OFFICIAL REPORTS.
| Description | Plaintiffs and appellants Gary and Ivy Hollingsworth contracted with general contractor Baker Brothers Construction, Inc. (BBCI) to remodel their house. Dissatisfied with BBCI’s performance, plaintiffs “rescinded and terminated†the contract. BBCI brought an action against plaintiffs for breach of contract, quantum meruit, and unjust enrichment, and plaintiffs filed a cross-complaint against BBCI for negligence and breach of contract (BBCI Action). BBCI tendered the defense of the cross-complaint to its insurer, defendant and respondent Lincoln General Insurance Company (Lincoln), which denied a defense and indemnity to BBCI. Thereafter, BBCI and plaintiffs settled the BBCI Action, which settlement included BBCI’s assignment to plaintiffs of any claims or causes of action BBCI had against Lincoln or BBCI’s insurance broker, defendant and respondent Powers & Effler Insurance Brokers, Inc. (Powers), in connection with the disputed insurance coverage for the BBCI Action. Plaintiffs then brought an action against Lincoln for failing to defend and indemnify BBCI in the BBCI Action and against Powers for failing to procure for BBCI insurance that would have covered the allegations in plaintiffs’ cross-complaint in the BBCI Action (Coverage Action). In their first amended complaint in the Coverage Action, plaintiffs asserted causes of action for breach of contract, breach of the covenant of good faith and fair dealing, and fraud against Lincoln, and breach of contract and negligence against Powers. The trial court granted Lincoln’s motion to strike plaintiffs’ punitive damages claim in connection with the breach of the covenant of good faith and fair dealing cause of action. It sustained, without leave to amend, Lincoln’s demurrer to the fraud cause of action and found moot Lincoln’s motion to strike an accompanying claim for punitive damages. Thereafter, Lincoln and Powers successfully moved for summary judgment. Plaintiffs appeal from the order sustaining Lincoln’s demurrer, a purported order striking the punitive damages claim, the orders granting summary judgment, and an order denying certain motions to compel discovery responses. We affirm. |
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