Kupfer v. Mid-Century
Ins. Co.
Filed 4/8/13
Kupfer v. Mid-Century Ins. Co. CA1/5
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opinion has not been certified for publication or ordered published for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
FIRST
APPELLATE DISTRICT
DIVISION FIVE
KONSTANTIN KUPFER,
Plaintiff and
Appellant,
v.
MID-CENTURY
INSURANCE
COMPANY,
Defendant and Respondent.
A134732
(
Super.
The
trial court granted defendant Mid-Century Insurance Company’s (respondent)
motion for summary judgment in this
action brought by plaintiff Konstantin Kupfer (appellant) asserting causes of
action for breach of contract and breach
of the implied covenant of good faith and fair dealing. We affirm.
Background
In
December 2008, appellant submitted a claim to respondent for the theft of his
2006 Bentley (Vehicle). Although the
Vehicle was recovered, it had suffered substantial damage and was determined to
be a total loss. Appellant’s insurance
policy defined “replacement cost†as the cost to purchase the insured’s vehicle
or an equivalent on the local market.
Upon
receiving notice of the claim, respondent obtained estimates of the value of
the Vehicle by requesting Bid Enterprises to prepare an appraisal (Appraisal),
and by obtaining a “CCC Valuation Market Report†(Report). It appears the Report was generated based on
information about the Vehicle provided by respondent and a posttheft inspection
of the Vehicle by Bid Enterprises; the estimated value of the Vehicle was
$137,125. The Appraisal was based on
information provided by respondent; the estimated value of the Vehicle was
$139,981. Both the Report and Appraisal
purported to base their value estimates on comparisons to sales of comparable
vehicles.
In
February 2009, based on the Report and Appraisal, respondent sent appellant a
check for $136,125, which reflected appellant’s $1,000 deductible. Along with the check, respondent sent a
letter demanding an appraisal of appellant’s loss pursuant to an appraisal
provision in the insurance policy. That
provision states, “You or we may demand appraisal of the loss. Each will appoint and pay a competent and
disinterested appraiser and will notify the other of the appraiser’s identity
within 20 calendar days of the receipt of the written request. Each will equally share other appraisal
expenses. The appraisers, or a judge of
a court having jurisdiction will select an umpire to decide any
differences. Each appraiser will state
separately the actual cash value and the amount of loss. An award in writing by any two appraisers
will determine the amount payable, which shall be binding, subject to the terms
of this insurance.†Respondent’s letter
to appellant stated, “We have selected Bid Enterprises as our appraiser. Please call our office with the name, address
and phone number of your appraiser. We
will advise our appraiser and request they meet to resolve the matter.†The letter stated a final payment to
appellant would be made “based on the outcome of the appraisal process.â€
The
parties had disagreements regarding the appraisal process. In April 2009, appellant objected to the
selection of Dave Adams of Bid Enterprises as respondent’s appraiser; appellant
took the position that Adams was not disinterested because he had prepared the
original Appraisal and could be called as a witness at the appraisal
hearing. The parties also disagreed on
the selection of an umpire for the appraisal panel. The parties agreed to file a petition with
the San Mateo Superior Court requesting appointment of an umpire. Appellant filed the petition in September
2009. Prior to the decision on the
petition, the parties agreed on the appointment of Gene Roberts as umpire. In November 2009, the San Mateo Superior
Court approved the parties’ stipulation, appointed Roberts as umpire, and
ordered the parties to conduct an appraisal “pursuant to their contract
. . . with each other under Insurance Code [section] 2071 et seq. and
any other appropriate sections.â€
(Italics omitted.) In December
2009, the umpire informed the parties that Adams would likely be disqualified
from being a panel appraiser. In
February 2010, respondent agreed to the hearing procedures and to select a
different appraiser.
On
February 16, 2010, the appraisal hearing was conducted. Five weeks later, the appraiser panel issued
an award of $214,392, which was less than the amount requested by appellant but
considerably more than the amount paid by respondent in February 2009. Respondent promptly paid the balance due for
the loss, and appellant accepted the payment.
In
August 2010, appellant filed the present action for breach of contract and
breach of the implied covenant of good faith and fair dealing. In August 2011, respondent filed a motion for
summary judgment. In December 2011, the trial court granted the
motion, stating in part, “The undisputed facts establish that there was a
genuine dispute regarding the amount of [appellant’s] claim thereby precluding
liability for insurance bad faith.†This
appeal followed.
Discussion
I. Standard
of Review
“ ‘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 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.]â€
(Wilson v. 21st Century Ins. Co.
(2007) 42 Cal.4th 713, 720 (Wilson).) “ ‘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.] “ ‘We 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.]â€
(Id. at pp. 716-717.)
II. There
is No Triable Issue as to Appellant’s Bad Faith Claim
“California
law recognizes in every contract, including insurance policies, an implied
covenant of good faith and fair dealing.
[Citations.] In the insurance
context the implied covenant requires the insurer to refrain from injuring its
insured’s right to receive the benefits of the insurance agreement. [Citation.]
‘[T]he covenant is implied as a supplement to the express contractual
covenants, to prevent a contracting party from engaging in conduct that
frustrates the other party’s rights to the benefits of the agreement.’ [Citation.]â€
(Brehm v. 21st Century Ins. Co.
(2008) 166 Cal.App.4th 1225, 1235 (Brehm).) “ ‘[B]reach of a specific provision of
the contract is not a necessary prerequisite to a claim for breach of the
implied covenant of good faith and fair dealing. . . . [E]ven an insurer that pays the full limits
of its policy may be liable for breach of the implied covenant if improper
claims handling causes detriment to the insured.’ [Citations.]â€
(Id. at p. 1336.)
As
relevant to appellant’s claims in the present case, “an insurer’s obligations
extend beyond simply paying the benefits to which its insured is entitled: ‘[W]hen benefits are due an insured, “delayed
payment based on inadequate or tardy investigations, oppressive conduct by
claims adjusters seeking to reduce the amounts legitimately payable and
numerous other tactics may breach the implied covenant because†they frustrate
the insured’s right to receive the benefits of the contract in “prompt compensation
for losses.†’ [Citations.]†(Brehm,
supra, 166 Cal.App.4th at p. 1236;
see also Rappaport-Scott v.
Interinsurance Exchange of Automobile Club (2007) 146 Cal.App.4th 831, 837
(Rappaport-Scott) [“An insurer’s
obligations under the implied covenant of good faith and fair dealing with
respect to first party coverage include a duty not to unreasonably withhold
benefits due under the policy.
[Citation.]â€].)
Nevertheless,
the “genuine dispute rule†protects insurers who maintain positions with respect
to coverage in good faith. As the
Supreme Court has explained, “an insurer’s denial of or delay in paying
benefits gives rise to tort damages only if the insured shows the denial or
delay was unreasonable. [Citation.] As a close corollary of that principle, it
has been said that ‘an insurer denying or delaying the payment of policy
benefits due to the existence of a genuine dispute with its insured as to the
existence of coverage liability or the amount of the insured’s coverage claim
is not liable in bad faith even though it might be liable for breach of
contract.’ [Citation.]†(Wilson,
supra, 42 Cal.4th at p. 723; accord,
146 Cal.App.4th at p. 837.)
Nevertheless, “[t]he genuine dispute rule does not relieve an insurer
from its obligation to thoroughly and fairly investigate, process and evaluate
the insured’s claim. A
insurer’s position is maintained in good faith and on reasonable grounds. [Citation.]â€
(Wilson, at pp. 723-724, fn.
omitted.)
In
Wilson, the Supreme Court affirmed
the Court of Appeal’s decision reversing the trial court’s grant of summary
judgment to an insurer, holding the insured had demonstrated a triable issue as
to whether the insurer’s decision to deny her claim was made reasonably and in
good faith. (Wilson, supra, 42 Cal.4th
at p. 716.) Although the insurer
ultimately paid the full policy limits, the insured alleged she had been harmed
by the initial bad faith denial of benefits.
(Id. at pp. 719-720.) The insured had submitted medical evidence
indicating she suffered a neck injury in an accident involving an underinsured
motorist. (Id. at pp. 717-718.) Without
contacting the insured’s doctor or having its own physician review the medical
records, the insurer denied the underinsured motorist claim on the ground that
the insured’s pain was due to a preexisting condition. (Id.
at pp. 718-719.) Wilson concluded a jury could reasonably find that nothing in the
materials the claims examiner reviewed justified his conclusions (
issue of fact exists as to whether it was reasonable to deny [the insured’s]
claim on the grounds stated without further
at p. 723; see also Brehm,
stated, “ ‘an insurer is not entitled to judgment as a matter of law
where, viewing the facts in the light most favorable to the plaintiff, a jury
could conclude that the insurer acted unreasonably.’ [Citation.]
Thus, an insurer is entitled to summary judgment based on a genuine dispute
over coverage or the value of the insured’s claim only where the summary
judgment record demonstrates the absence of triable issues [citation] as to
whether the disputed position upon which the insurer denied the claim was
reached reasonably and in good faith.†(
The
present case is distinguishable from Wilson
because respondent did conduct a
meaningful investigation of appellant’s claim by obtaining two professional
value estimates. Appellant argues,
whether respondent “used like kind vehicles as comparables is in dispute,†the
fact that respondent “did not include extras in [appellant’s] car and valued it
at a lower condition illustrate this point,†and “a reasonable inference can be
drawn that [respondent] did not use like kind vehicles from the fact that
[respondent’s] original payout was only [60 percent] of the actual value of the
car.†However, appellant’s evidence does
not provide a reasonable basis for the jury to conclude respondent acted
unreasonably in obtaining the Report.
Appellant asserts respondent knew the Vehicle was “extremely rare†and in
“pristine†condition, but he cites only to evidence that he described the
Vehicle in that manner in submitting his claim.
Appellant does not explain why respondent was obligated to accept his
characterization of the condition of the vehicle. In any event, although the Report states
“Condition is 2: Average,†appellant cites to nothing in record explaining the
significance of that and any likely effect on the estimate of value. And appellant’s evidence does not suggest it
was unreasonable for respondent to rely on the Report to account for the rarity
of the Vehicle; the Report does state the Vehicle has the “Arnage Diamond
Edition Package.†Appellant also asserts
the Report does not account for the fact that the Vehicle was “equipped with an
updated engine and special mascots.†But
appellant’s record citations only contain an assertion in his counsel’s
declaration that the Vehicle was so equipped; there are no record citations to
competent evidence on that point, nor is there any explanation with sufficient
detail to permit a jury to conclude the Report was inadequate in that regard.
Furthermore,
respondent did not rely on only the Report; it also requested the Appraisal
from Bid Enterprises. The estimated value in the Appraisal was similar to the
estimated value in the Report. Appellant
cites to no portion of the Appraisal that allegedly misrepresents the condition
or other characteristics of the Vehicle.
The Appraisal itself indicates that the appraiser conducted its own
“thorough inspection of the recovered remains of the [V]ehicle.†The Appraisal appears to be based on an
assumption that all parts of the Vehicle, including the sheet metal, paint, and
interior were in “excellent†condition.
It relied on three “currently advertised comparable vehicles†in making
an estimate of the value of the Vehicle.
It is true that “an expert’s testimony will not automatically insulate an insurer from a bad faith claim based on a
biased investigation†(Chateau Chamberay
Homeowners Assn. v. Associated Internat. Ins. Co. (2001) 90 Cal.App.4th
335, 348), but appellant has not presented facts from which a jury could
conclude respondent should have been aware the Appraisal was unreliable. (See also Bosetti
v. United States Life Ins. Co. in City of New York (2009) 175 Cal.App.4th
1208, 1239, fn. omitted (Bosetti)
[“When an insurer is subjectively aware that it has hired a biased expert, it
is simply not objectively reasonable to rely on that expert.â€].)
Although
it was ultimately determined at the hearing that the Report and Appraisal
undervalued the vehicle by approximately 60 percent, even viewing the facts in
the light most favorable to appellant, appellant has not presented evidence
from which a jury could conclude that respondent’s investigation “was in any
way biased, inadequate, superficial or otherwise unworthy of reliance by an
objectively reasonable insurer.†(
sufficient evidence for a jury to find†respondent’s initial payment was
“ ‘ “prompted not by an honest mistake, bad judgment or negligence
but rather by a conscious and deliberate act, which unfairly frustrates the
agreed common purposes and disappoints the reasonable expectations of the other
party thereby depriving that party of the benefits of the
agreement.†’ [Citation.]†(Wilson,
supra, 42 Cal.4th at p. 726.)
Neither
has appellant presented evidence demonstrating the existence of a triable issue
on his bad faith claim on the basis of delay.
Although more than a year passed between submission of appellant’s claim
and his receipt of the final payment following the appraisal proceeding,
appellant did not present evidence from which a jury could conclude the delay
resulted from unreasonable conduct on the part of respondent. For example, appellant did not present
evidence from which a jury could conclude that the positions taken by
respondent were frivolous, and he did not present evidence that the delay was
largely due to the positions taken by respondent, rather than other causes for
which respondent was not responsible.
Appellant’s evidence merely shows there were genuine disputes between
the parties regarding the appraisal and hearing process under the contract,
including the selection of the umpire and respondent’s appraiser for the
hearing. Those disputes caused some
delay, but the evidence does not demonstrate what portion of the delay was due
to positions taken by respondent.
Appellant fails to cite any authority supporting his argument that the
resulting delay, due to relatively routine procedural disputes between the
parties, can form the basis for his bad faith claim. The trial court properly concluded there was
no triable issue of fact as to whether respondent violated its duty of good
faith by causing delay.
III. There
is No Triable Issue as to Appellant’s Breach of Contract Claim
Appellant
contends that, even if respondent did not violate the implied covenant of good
faith and fair dealing, respondent’s conduct constituted breach of the
insurance contract. (See
Fund (1998) 63 Cal.App.4th 448, 455-456.)
However, appellant fails to identify the contractual provisions
allegedly breached by respondent. Instead,
appellant points to statements in respondent’s “Field Claims Service
Guidelines†identifying as “[u]nfair claims practices,†“[n]ot attempting in
good faith to effectuate prompt, fair, and equitable settlements of claims†and
“[f]ailing to settle claims promptly where liability has become apparent.†Appellant fails to explain how violation of
those internal guidelines would constitute a breach of contract. In any event, as explained previously, there
is no evidence in the record from which a jury could conclude respondent acted
in bad faith or caused unreasonable delay.
The trial court properly concluded there was no triable issue of fact as
to appellant’s breach of contract claim.
Disposition
The trial
court’s judgment is affirmed.
SIMONS,
J.
We concur.
JONES, P.J.
NEEDHAM, J.
granting respondent’s motion for summary judgment, we view the evidence in the
light most favorable to appellant. (
25 Cal.4th 826, 843.) Our factual
summary reflects this standard of review.
(See Pool v. City of Oakland
(1986) 42 Cal.3d 1051, 1056, fn. 1.)
