Filed 10/22/26 Liu v. Pacific Specialty Ins. Co. CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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has not been certified for publication or or dered published for purposes of rule 8.1115.
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
JIE LIU et al., D087133
Plaintiffs and Appellants,
v. (Super. Ct. No. CIVSB2308628)
PACIFIC SPECIALTY INSURANCE
COMPANY,
Defendant and Respondent.
APPEAL from a judgment of the Superior Court of San Bernardino
County, Khymberli S. Apaloo, Judge. Affirmed.
Shaver Legal, Cody J. Shaver; McCathern, Evan Selik, and Christine
Zaouk for Plaintiffs and Appellants.
Burton Kelley, Michelle L. Burton, Rachael K. Kelley, Michael Vachon,
Samantha Yu, and Devin Shoecraft for Defendant and Respondent.
Appellants Jie Liu and his wife, Wei Xia, own a rental home insured by
Pacific Specialty Insurance Company. Unbeknown to Appellants, their
tenant grew marijuana in the house and damaged every room.
Appellants filed an insurance claim, but Pacific Specialty denied it
under a grow house exclusion in the policy. Pacific Specialty also rejected
Appellants’ argument that the damage was covered as vandalism.
Appellants sued Pacific Specialty for breach of contract and breach of
the implied covenant of good faith and fair dealing. The superior court
granted summary judgment, finding the grow house exclusion precluded
coverage.
On appeal, Appellants argue the court (1) misapplied the holding in
Mosley v. Pacific Specialty Ins. Co. (2020) 49 Cal.App.5th 417, another grow
house case; (2) created ambiguity by applying a definition of vandalism of
unknown origin; and (3) failed to address the “innocent insured doctrine.”
We conclude the policy did not cover the damage to Appellants’ rental
house because the grow house exclusion applied. Appellants also failed to
demonstrate the policy afforded vandalism coverage applicable to this
situation. And we are not persuaded Mosley or any other authority cited by
Appellants otherwise requires coverage for innocent insureds outside of the
specific statutory requirements for claims of loss due to fire. Accordingly, we
find no error in the superior court’s granting of summary judgment and
affirm the judgment.
I.
Because Appellants’ opening brief challenges only the superior court’s
ruling on their breach of contract claim, we focus on that cause of action.
A.
In 2014, Appellants rented their property to a tenant named Wen Yong.
Liu inspected the property yearly until 2018 or 2019, when he stopped
visiting due to the COVID-19 pandemic.
2
Yong stopped paying rent in June 2022. In August, Liu posted a notice
about the unpaid rent on the door of the home. While there, he heard fans
blowing inside and noticed “metal fences” had been installed around the
windows. The next day he posted a notice that he would inspect the home
24 hours later. The following day, no one answered. Liu had not approved
the window fences and suspected Yong was growing something inside the
house, so he asked a friend to call the police. The responding officers
inspected the residence and informed Liu there was marijuana growing
inside.
The officers removed marijuana plants before allowing Liu inside to
view the home. The City, a public adjuster hired by Liu, and a representative
from Pacific Specialty subsequently inspected the property. Pacific
Specialty’s investigator found large trays for growing plants, holes cut in the
walls and ceiling to accommodate the installation of growing lights and
ventilation tubes, damage to the electrical system including new subpanels
and wiring, damage and stains in the bathtubs consistent with chemicals
used in grow operations, damage and stains on the flooring, and mold in the
ceiling.
Pacific Specialty denied Appellants’ claim for coverage of the damage,
citing the policy provision excluding damage resulting from operation of a
grow house. The letter denying the claim also noted the policy did not cover
“[c]ontinuous or repeated seepage or leakage of water,” wear and tear, or
mold. Appellants’ adjuster disputed the denial, arguing the damage should
be covered as vandalism, but Pacific Specialty did not alter its position.
B.
Appellants sued Pacific Specialty for breach of the insurance contract
and breach of the implied covenant of good faith and fair dealing. Pacific
3
Specialty filed a motion for summary judgment or summary adjudication.
Pacific Specialty argued both claims lacked merit and there was no evidence
supporting Appellants’ request for punitive damages.
The superior court granted Pacific Specialty’s motion for summary
judgment. It concluded the policy did not cover damage from operating a
grow house and there was no triable issue of material fact that all the
damage to the house resulted from the marijuana grow house activity. The
court further explained that the damage did not fit the definition of
vandalism because “in order for it to be a vandalism, it has to be wrongful
and intentional, having no justification, malicious and destructive
defacement and malicious toward the property. And that’s not what I’m
hearing happened. What I’m hearing happened is that the intent was to
grow marijuana.” “Even if the grow activity damage can be considered
‘vandalism,’ [Appellants] have not cited to any authority the grow house
exclusion does not apply in this case.” The court found Mosley inapplicable
because Appellants did not experience loss due to fire, as the appellants did
in that case.
Although the holding is not reflected in the court’s order or the
judgment, the court determined at the hearing that because there was an
actual dispute as to whether the claim should be paid, Pacific Specialty did
not act in bad faith in not paying the claim.
4
II.
Appellants contend the court erred by misreading and misapplying the
holding of Mosley, applying a vandalism definition of unknown origin, and
failing to address the “innocent insured doctrine.” We are not persuaded.
A.
A summary judgment motion serves to “cut through the parties’
pleadings in order to determine whether, despite their allegations, trial is in
fact necessary.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826,
843.) A defendant moving for summary judgment has the initial burden to
present evidence sufficient to establish either (1) the plaintiff cannot prove at
least one element of each cause of action as alleged in the complaint or
(2) there is a complete defense to that cause of action. (Code Civ.
Proc., § 437c(p)(2); Aguilar, at pp. 850, 853.) If the defendant does so, the
burden shifts to the plaintiff to provide evidence demonstrating a triable
issue of material fact. (§ 437c(p)(2); Aguilar, at p. 850.) Summary
judgment is proper if no triable issue of material fact exists and the moving
party is entitled to judgment as a matter of law. (§ 437c(c).)
“On appeal, we examine the record de novo, viewing the evidence in the
light most favorable to the plaintiff as the losing party and resolving any
evidentiary doubts or ambiguities in [the plaintiff’s] favor.” (Bailey v. San
Francisco Dist. Attorney’s Office (2024) 16 Cal.5th 611, 620.) We will
affirm summary judgment “if it is correct on any ground that the parties had
an adequate opportunity to address in the trial court, regardless of the trial
court’s stated reasons.” (Securitas Security Services USA, Inc. v. Superior
Court (2011) 197 Cal.App.4th 115, 120.)
5
B.
An insurer seeking summary judgment based on a policy exclusion
bears the burden of proving the claims fall within the exclusion. (Medina v.
GEICO Indemnity Co. (2017) 8 Cal.App.5th 251, 259.) “To satisfy its burden,
an insurer need not ‘disprove every possible cause of the loss’ and once the
insurer establishes the claim is excluded, the burden shifts to the insured to
show a triable issue of material fact exists.” (Roberts v. Assurance Co. of
America (2008) 163 Cal.App.4th 1398, 1406.)
Here, Pacific Specialty provided undisputed evidence with its summary
judgment motion supporting its denial of Appellants’ insurance claim. The
policy covering the house expressly excludes “loss resulting from any
manufacturing, production or operation engaged in . . . [t]he growing of
plants; or . . . [t]he manufacture, production, operation or processing of
chemical, biological, animal, or plant materials.” It also excludes mold
damage under the policy terms and two endorsements, as well as wear and
tear. To support its assertion of such an excluded loss, Pacific Specialty
presented photographs showing extensive tubing running along and through
the walls and ceiling; installation of electrical subpanels and modifications to
the electrical system; significant amounts of equipment; rooms filled with
plants at all stages of growth; and mold on the ceiling. Its inspector provided
a declaration opining the modifications to the electrical and ventilation
systems were done to facilitate the needs of a grow operation. And Pacific
Specialty asserted as an undisputed fact: “[Appellants] are unable to point to
any damage to the Property which is not related to the marijuana grow
operation or to wear and tear/hard living.” In support, it cited to Liu’s and
Xie’s depositions where both indicated they did not know of damage
unrelated to the marijuana growing operation.
6
Collectively, this evidence constituted a prima facie showing that the
damage was not covered under the policy and a defense against Appellants’
breach of contract claim. Appellants provided no other physical cause for the
damage aside from the marijuana growing project, which the policy excluded
as a plant growing operation. The burden, therefore, shifted to Appellants to
demonstrate a triable issue of material fact. (§ 437c(p)(2).)
Appellants did not meet this burden. They neither disputed that the
grow house operation caused the damage to the home nor offered evidence of
any other cause. Even on appeal they acknowledge “it is undisputed that the
damage to the Property was and is occasioned by the renter who turned the
Property into an unauthorized grow house without Appellants’ knowledge
and consent.” More importantly, Appellants did not respond at all in their
opposition to Pacific Specialty’s assertion that the plant growing exclusion
precluded coverage.
Instead, Appellants argued the damage fell under policy coverage for
vandalism and malicious mischief. During oral argument before the superior
court, Appellants added without citing authority that even if the policy
excluded damage resulting from the growing of plants, the damage caused by
the creation of the grow house (e.g., drilling holes in the walls and modifying
the electrical system) should be covered as vandalism. We are not persuaded.
First, Appellants have not demonstrated the policy contains applicable
vandalism coverage. As they did below, Appellants argue in their opening
brief that Endorsement No. PM30 (Ed. 1) affords coverage for vandalism. It
does not. As Pacific Specialty explained, although the policy includes
descriptions of all the endorsements a policy holder potentially can include in
a policy, including Endorsement No. PM30 (Ed. 1) (which provides
“Vandalism or Malicious Mischief Coverage for Vacant Homes”), only those
7
endorsements listed in the declarations are part of the policy. In bold letters,
the policy states: “ATTENTION [¶] This booklet contains endorsements that
are applicable to your policy only if the endorsement number appears on your
Declarations page. Not all endorsements are necessarily applicable to your
policy. Review your Declarations page to see which ones apply.”
Endorsement No. PM30 is not listed on the declarations page for Appellants’
policy. Therefore, the policy did not provide this coverage. Appellants do not
grapple with this language and appear to concede in their reply brief that
this endorsement does not provide coverage by instead pointing to different
policy language discussing vandalism.
But Appellants have not established the policy’s second purported
source of coverage for vandalism and malicious mischief applies, either. In
their own asserted undisputed facts, Appellants acknowledged that under the
“perils insured against” section of the policy, it covers “sudden and accidental
direct physical loss.” Within this section is a provision excluding
“[v]andalism or malicious mischief, if the dwelling is unoccupied at the time of
loss.” (Italics added.) Appellants maintain that because the property was
occupied, the policy covered losses due to vandalism and malicious mischief.
The insured bears the burden of showing the claim falls within the
scope of the policy’s basic coverage to demonstrate a triable issue of material
fact as to coverage, even where the insurer moves for summary judgment
(Mosley, 49 Cal.App.5th at p. 423), and Appellants have not provided
authority or argument demonstrating this provision provides applicable
vandalism coverage. Thus, the single essential question remains whether
general coverage under the policy is eliminated by the growing plants
exclusion. As a matter of law, the answer to that question is “yes.”
8
Second, Appellants’ argument that vandalism coverage should cover all
or part of the loss (i.e. the “creation” of the grow house) presupposes that
vandalism is a different cause or peril, as opposed to just constituting an
alternate characterization of “loss resulting from any . . . operation engaged
in . . . the growing of plants.” Courts may be required to resolve factual
issues to determine the “efficient proximate cause” (meaning the
“predominating cause”) of a loss when there are two separate and distinct
causes for a loss, one of which is covered and the other excluded. (See Garvey
v. State Farm Fire & Casualty Co. (1989) 48 Cal.3d 395, 402–404.) But the
efficient proximate cause doctrine does not apply when only one peril caused
the loss (De Bruyn v. Superior Court (2008) 158 Cal.App.4th 1213, 1223), and
“[a]n insured may not avoid a contractual exclusion merely by affixing an
additional label or separate characterization to the act or event causing the
loss.” (Chadwick v. Fire Ins. Exchange (1993) 17 Cal.App.4th 1112, 1117.)
In Pieper v. Commercial Underwriters Ins. Co. (1997) 59 Cal.App.4th
1008, part of the insured’s fine art collection was destroyed by a brush fire.
(Id. at p. 1012.) When the insurer denied the claim under the brush fire
exclusion, the insured argued the cause of the loss was arson. (Ibid.) On
appeal, the court disagreed, pointing out that a brush fire cannot occur
without an ignition source, and that labeling it an arson fire does not make it
a separate peril from a brush fire. (Id. at p. 1020.) In its view, holding
otherwise would “fl[y] in the face of common sense and the mutual intention
of the parties.” (Ibid.)
The same is true here. A grow house operation cannot exist without
someone modifying the house to facilitate growing plants indoors. It is
undisputed a grow house operation existed in the house, which is an excluded
peril regardless of how Appellant characterizes the steps involved in creating
9
it. “If every possible characterization of an action or event were counted an
additional peril, the exclusions in all-risk insurance contracts would be
largely meaningless.” (Chadwick, 17 Cal.App.4th at p. 1118.) Thus,
Appellants have not raised a triable issue of fact as to whether a vandalism
provision provides coverage for the loss despite the grow operation exclusion.
Absent any showing the policy covered vandalism and that the loss was
not excluded, we need not address Appellants’ arguments that the superior
court failed to specify the source of its vandalism definition and created
ambiguity with said definition. We also decline Appellants’ invitation to
adopt the reasoning of Bowers v. Farmers Ins. Exchange (Wash.Ct.App. 2000)
991 P.2d 734, because, unlike here, the insurance policy in that case
specifically covered losses caused by vandalism or malicious mischief and did
not expressly exclude grow houses. (Id. at p. 45.)
C.
We also are not persuaded the superior court misapplied Mosley or
erred by not addressing the “innocent insured doctrine” purportedly
established by Century-National Ins. Co. v. Garcia (2011) 51 Cal.4th 564. In
our view, neither case established protection for innocent insureds
untethered from Insurance Code section 2071, which relates to fire coverage
and losses due to fire.
Like Appellants, the Mosleys suffered damage from a marijuana grow
operation. (Mosley, 49 Cal.App.5th at p. 420.) But unlike here, the grow
operation caused a fire. (Ibid.) The appellate court concluded the loss was
excluded under a plant growing exclusion like the one in Appellants’ policy.
(Id. at p. 424.) The Mosleys nonetheless asserted the insurer’s refusal to
cover the fire loss violated Insurance Code section 2070, which requires “any
policy providing coverage against the peril of fire only, or in combination with
10
coverage against other perils,” to provide “coverage with respect to the peril
of fire” that is “substantially equivalent to or more favorable to the insured
than that contained in such standard form fire insurance policy” contained in
Insurance Code section 2071. (Id. at pp. 421, 425; Ins. Code, § 2070.)
Because the undisputed evidence did not show the policy provided
“substantially equivalent” fire coverage, Mosley reversed the grant of
summary judgment. (Mosley, at p. 432.)
The present case did not involve a claim for fire damage, and we do not
read Mosley as applying outside the context of such claims. Mosley continued
beyond its initial conclusion that the plant growing exclusion barred coverage
because the Mosleys’ claim was due at least in part to the “peril of fire” and
the court had to evaluate whether the policy’s fire protection was
substantially equivalent to Insurance Code section 2071. (Mosley,
49 Cal.App.5th at pp. 424–425.) The court likewise only considered whether
the Mosleys knew of the grow operation because section 2071 provides that
“an insurer ‘shall not be liable for loss occurring . . . while the hazard is
increased by any means within the control or knowledge of the insured.’” (Id.
at p. 425.) Where, as here, there is no claim for fire damage, Insurance Code
section 2070 does not apply, and no question of the insured’s knowledge or
control arises under section 2071. Nor is the policy rendered void as to other
claims for other kinds of damage—such as that present here—just because
the policy might theoretically be found partially void if the insured filed a
fire-related claim.
Appellants next argue Century-National “effectively alter[ed] all
California fire insurance policies to protects innocent insureds.” We do not
interpret Century-National so broadly.
11
There, Garcia and his wife filed an insurance claim after their adult
son set fire to his room and caused substantial damage to the home.
(Century-National, 51 Cal.4th at p. 566.) All three of them qualified as
insureds. (Ibid.) Their insurer denied the claim, citing the exclusion of “any
loss arising out of any act committed by or at the direction of any insured
having the intent to cause a loss.” (Id. at pp. 567, 571.)
The court concluded the Garcias could not recover under the policy as
written, even if the parents were innocent of wrongdoing. (Century-National,
51 Cal.4th at p. 568.) But because the result was a fire insurance policy that
did not provide coverage substantially equivalent to the standard fire
insurance policy under sections 2070 and 2071, the court concluded the
intentional acts exclusion barring losses to innocent insureds was invalid.
(Id. at p. 573.) In reaching this conclusion, Century-National stated,
“[b]ecause our analysis concerns a fire policy subject to the requirements of
sections 2070 and 2071, it should not be read as necessarily affecting the
validity of clauses that deny coverage for the intentional acts of ‘any’ insured
in other contexts.” (Id. at p. 573, fn. 8.)
Here, Yong was not a coinsured. And given our high court limited its
holding to fire policies, Appellants have not convinced us Century-National
intended any principles it discussed to broadly apply to non-fire claims not
subject to the requirements of sections 2070 and 2071.
D.
On a final note, we decline to reach Appellants’ belated assertions in
their reply brief that the superior court failed to rule on Pacific Specialty’s
summary adjudication motion with respect to the genuine dispute doctrine
relevant to Appellants’ second cause of action and their request for punitive
damages. Fairness mitigates against addressing arguments raised for the
12
first time in a reply brief. (United Grand Corp. v. Malibu Hillbillies,
LLC (2019) 36 Cal.App.5th 142, 158.)
Although Appellants contend it is undisputed Pacific Specialty, among
other things, ignored and refused to consider facts and fabricated conditions
of the policy, Appellants’ opening brief fails to cite to these facts in the record.
An appellant’s opening brief “must . . . [p]rovide a summary of the significant
facts limited to matters in the record” (Cal. Rules of Court, rule
8.204(a)(2)(C)) and must “[s]upport any reference to a matter in the record by
a citation to the volume and page number of the record where the matter
appears” (id., rule 8.204(a)(1)(C); Pierotti v. Torian (2000) 81 Cal.App.4th 17,
29). It is logical to place these burdens on appellants because “[i]t is not our
place to comb the record seeking support for assertions parties fail to
substantiate.” (Howard v. American National Fire Ins. Co. (2010)
187 Cal.App.4th 498, 534.)
Appellants also forfeited their punitive damages argument by not
supporting their claim of error “with meaningful argument and citation to
authority.” (Allen v. City of Sacramento (2015) 234 Cal.App.4th 41, 52.)
13
III.
We affirm. Pacific Specialty is entitled to its costs on appeal.
CASTILLO, J.
WE CONCUR:
DATO, Acting P. J.
KELETY, J.
14