Minkin v. State Farm Gen.
Ins. Co.
Filed 1/14/14 Minkin v. State Farm Gen. Ins. Co. CA1/5
OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a),
prohibits courts and parties from citing or relying on opinions not certified
for publication or ordered published, except as specified by rule
8.1115(b). This opinion has not been
certified for publication or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION FIVE
INSURANCE COMPANY et al.,
A136421
(
Super.
Plaintiff Ronald D. Minkin
(plaintiff) appeals from a judgment entered in favor of defendants State Farm
General Insurance Company (State Farm) and Britannia, Inc. (Britannia) after
the trial court granted a motion in limine
to exclude the testimony of plaintiff’s designated construction repair expert based
on a violation of the discovery statutes.
Plaintiff argues the court’s ruling amounted to an unauthorized summary
judgment in favor of the defense and was an unreasonable use of a “terminating
sanction.†We affirm.
BACKGROUND
name="_ftnref1" title="">[1]
Plaintiff purchased a custom home in
Burlingame in 2000, which was insured at all relevant times by a State Farm
homeowners insurance policy. In May
2007, plaintiff noticed water dripping from the
rainstorm. In October 2007, he reported
the water intrusion to State Farm. A
visual inspection conducted by a State Farm investigator revealed staining and
warping of window molding, wood flooring and sheetrock in the family
room/kitchen and in the library below. Plaintiff secured a repair estimate totaling
$119,000 from Diodati Construction, which identified the source of the leak as
defects or deterioration in the tiling of the patio roof deck above the
kitchen/living room.
State Farm claim representative
Letitia Wong agreed the interior water damage was a covered loss under the
policy, but estimated the cost of repair to be only $18,454. The large discrepancy between the two
figures arises largely from a disagreement as to whether it was necessary to
completely redo the interior of the paneled library. Subtracting plaintiff’s $5,000 deductible,
Wong sent plaintiff a check for $13,455 on February 19, 2008,
and closed the file.
Unsatisfied with the amount paid by
State Farm, plaintiff retained public adjuster James Nevins to negotiate the
claim. Nevins inspected the property and
concluded the cause of the leak was not the roof tile decking, but clogged
downspouts adjacent to the deck, which had overflowed and allowed water to back
up into inadequately constructed scuppers and leak down into the house and wall
interior. Nevins hired American Air
Testing, Inc., to perform mold testing,
which issued a report in October 2008 indicating “elevated levels of toxigenic
molds†in the kitchen wall behind the cabinetry . He had commissioned the testing in the hopes
of proving substantial water intrusion inside the wall, not because mold itself
was a cause of concern. Though Nevins
did not provide a complete copy of the mold report to State Farm, he mentioned
the testing to Wong, who advised him mold would not be covered under the
policy.
At the time of the conversation, Nevins
was not contending mold itself was a form of damage that needed to be repaired
or remediated.
Nevins’s repair estimate totaled $319,450. It did not include an allowance for mold
remediation, but called for extensive repairs in the family room and kitchen as
well as complete replacement of the paneled library interior and hardwood
floors. State Farm hired Britannia, a
general contractor, to evaluate the claim, and Britannia prepared a repair
estimate of $25,429, based on a much more limited scope of work. On December 15, 2008, Wong sent plaintiff a check for $8,684 (to cover the additional
costs listed in Britannia’s estimate) and again closed the file.
On February 17, 2009, plaintiff filed a civil complaint naming State Farm and Britannia
as defendants. It alleged State Farm had
breached the insurance contract by failing to pay the full amount of the loss
and had breached the implied covenant of good faith and fair dealing by failing
to fully investigate the claim. Britannia
was alleged to have aided and abetted this conduct by State Farm.
A jury trial was initially set for June 1, 2010. On February 12, 2010, State Farm served a timely demand for an exchange of expert
witnesses, including discoverable reports and writings made by each expert, to
be completed by April 12, 2010. (Code Civ. Proc., §§ 2034.210 - 2034.240.)
On August 9, 2010 (after the trial date
had been continued to Sept. 27, 2010), plaintiff served defendants with an
expert witness designation that identified Michael Sterling as a licensed
general contractor who would provide expert testimony as to the nature of the
damage to plaintiff’s home and the reasonable cost of repairing that
damage. (§ 2034.210.) The designation included a declaration by
plaintiff’s counsel stating Sterling “will be sufficiently familiar with the pending action to submit to
a meaningful oral deposition concerning the specific testimony, including any
opinions and the bases therefore, that he is expected to give at trial.†Nevins was not identified as an expert.
State Farm noticed Sterling’s
deposition for August 23, 2010. Plaintiff’s counsel sent an email to State
Farm’s counsel advising him Sterling’s report would not be completed by August 23, and asking him to
move the deposition to September 8, 2010. State Farm’s counsel declined due to scheduling
conflicts, the need to depose other witnesses in this case, and the upcoming
trial date in this case.
Sterling appeared
for his deposition on August 23, 2010. He testified he had inspected plaintiff’s
house and found previously undetected water damage in the library and in a
crawl space under the library that had not been accessed during earlier
inspections. Based on his observations, Sterling believed
the walls of the family room and library had a significant amount of hidden
water damage, including mold and other microbial contamination, though he did
not believe it would be necessary to replace the entire library interior, as
Nevins had suggested. Sterling had
reviewed a preliminary mold air sampling report obtained by Nevins in 2008 and
believed mold remediation under containment would also be required in the
kitchen and downstairs bedroom. Sterling could not
provide any estimate of the cost of repairs because he had not completed, and
in some cases had not begun, his analysis of various components. He planned to perform additional inspections
of the property and arrange for further mold testing, after which he would
prepare a report on the necessary scope and cost of repairs. Sterling estimated his report would be completed sometime “between now and
the time of trial[.]â€
On September 7, 2010, State Farm asked for an opportunity to conduct another inspection
of plaintiff’s house in light of the newly claimed evidence of water damage. Plaintiff refused to permit the inspection. The trial date was continued to March 28, 2011,
and a mandatory settlement conference
was held March 11, 2011. In correspondence
between counsel near the time of the settlement conference, State Farm indicated
it would seek the exclusion of Sterling’s testimony at trial, and plaintiff offered to make Sterling available
for further deposition. State Farm
declined, noting plaintiff had refused to permit a further inspection of
plaintiff’s home following Sterling’s disclosure of new water damage at his deposition. After this round of correspondence, Sterling prepared a
report and repair estimate dated March 19, 2011, and plaintiff
forwarded this report to State Farm the following day, a week before the
then-scheduled trial date. The report
estimated repair costs to be $386,864, a figure that included the complete
replacement of the interior of the library (even though Sterling had opined at
his deposition that less drastic repairs would suffice) and mold
remediation. The report also indicated
additional mold testing had been conducted in September and October 2010.
The trial date was ultimately
continued to November
21, 2011. The parties submitted a number of motions in
limine to the court, including one by State Farm (Motion in Limine No. 2) seeking
to exclude Sterling’s testimony and repair estimate on the ground it had not
been timely provided and was “markedly different†from previous estimates. The motion noted Sterling had been deposed in
August 2010, but had not at that time conducted the investigation necessary to
prepare a repair estimate; that additional mold tests were conducted after the
deposition, though the reports were never provided to State Farm; that
Sterling’s written report and estimate were not provided until March 20, 2011,
on the eve of the trial date that was then scheduled; and that plaintiff had
not referred to Sterling or his estimate at the March 2011 settlement conference,
but had instead indicated that special damages were set forth in the repair
estimate prepared by Nevins. Britannia
joined in State Farm’s motion.
name="_ftnref4" title="">[4]
The trial court conducted a hearing
under Evidence Code section 402, at which it considered documentary evidence,
deposition transcripts, and the testimony of Wong, Nevins and Thomas Halpin of
Britannia. The trial court ruled in
favor of State Farm on its motion to exclude Sterling’s testimony and, based on
the lack of any expert testimony on the issue of the scope and cost of repairs,
ordered the case dismissed. In its written
statement of decision, the court explained:
“[Plaintiff]’s failure of disclosure
here was serious, even egregious, and a clear violation of the expert
disclosure requirements of [] sections 2034.260 and 2034.270. Although Sterling’s expert disclosure was
supported by the required declaration of counsel verifying his full
preparedness for deposition [record citation], Sterling instead appeared for
the deposition without any new repair scope or cost estimate, or any meaningful
information about what it would involve or amount to. Nothing was then heard from Sterling or
[plaintiff]’s counsel for months, though it is now known that Sterling in that
interim conducted extensive further air monitoring and mold testing at the
house — all of it undisclosed to State Farm — while [plaintiff] refused to
allow State Farm, Britannia, or any of their consultants access to re-inspect
the house themselves. [¶] The Court
finds that the Sterling repair estimate includes a major new mold claim, which
was never presented to State Farm during the course of its extended claim
investigation and adjustment, and which the Company accordingly never had any
fair opportunity to investigate or adjust. In this regard, the Court finds particularly
significant the deposition testimony of Nevins, in which he explained that none
of his communications or interactions with State Farm or its claims
representatives was intended to raise a claim or coverage issue regarding mold
damage. [Record citation.] As noted above, Mr. Nevins was [plaintiff]’s own
adjuster here. [¶] . . . . [¶] Under the circumstances, State Farm
would suffer extreme prejudice if forced to defend itself at trial against
liability for both coverage and bad faith based on a new repair cost estimate,
including a major new mold coverage claim that it was never given any notice of
prior to litigation — or indeed prior to the eve of trial and long past close
of all discovery. . . . The Court is always reluctant to impose discovery
sanctions in a trial context, recognizing the importance of trying claims and
defenses on their merits. But
fundamental fairness dictates that [plaintiff] here be foreclosed from
proceeding at trial on the basis of the Sterling repair estimate.â€
name="_ftnref5" title="">[5]
The statement of decision explained
that exclusion of Sterling’s testimony required dismissal of the case: “The effect of this
exclusionary ruling on [plaintiff]’s prima facie case against State Farm is, in
practical terms, dispositive. Sterling is the
only expert witness, retained or non-retained, disclosed by [plaintiff] to
support his claimed repair scope and cost estimate for the allegedly covered
but unpaid water damage. [Record
citation.] [Plaintiff] did not disclose
Nevins as an expert in this area, or as an expert for any other purpose. Moreover, [plaintiff]’s counsel made clear in
pre-trial correspondence that Nevins was not to be considered as an expert
witness for trial purposes. [Record
citation.] There is no question that
[plaintiff]’s claimed scope of repair and repair cost estimate must be
supported by expert opinion from someone, given its technical nature. . . . [¶] For these reasons, [plaintiff] has
insufficient remaining evidence to challenge State Farm’s determination of
coverage and thus cannot maintain a claim for breach of contract. In addition, and in the absence of coverage
owed, [plaintiff] cannot maintain a claim of bad faith as a matter of law.â€
The trial court also noted the
absence of other evidence suggesting a breach of contract by State Farm in
advising plaintiff (through Nevins) that mold was not covered. It observed that both Nevins and State Farm
had agreed the water damage was the product of a design defect and lack of
maintenance, two excluded causes under the policy, which meant that “State
Farm’s determination of the scope of coverage for this claimed loss appears
reasonable[.]†Despite this apparent
lack of coverage for purposes of determining the reasonableness of State Farm’s
conduct, the court allowed plaintiff to pursue his mold claim: “The dismissal
of State Farm is issued on condition that the Company re-open its claim file
and consider the results of the mold testing as conducted by [plaintiff]’s
experts and air monitoring consultants.
Following this reconsideration, State Farm must determine what further
investigation, if any, is needed regarding any continuing claim for mold damage
and remediation, and State Farm must further adjust the claim as appropriate in
light of its evaluation.â€
On July 27, 2012, the court entered judgment in favor of State Farm and Britannia,
entitled “Judgment of Equitable Dismissal.â€
The judgment dismissed plaintiff’s complaint with prejudice, except with
respect to the mold claim, which was dismissed without prejudice with
directions that plaintiff “re-submit his mold claim to State Farm and fully
cooperate in disclosing all information reasonably required by State Farm as
necessary to a fair adjustment of that mold claim, including inspection of the
premises involved as reasonably requested by State Farm. Defendant State Farm
shall reopen its claim file, consider [plaintiff]’s mold claim, and make a fair
determination of the claim as appropriate under the terms and conditions of
[plaintiff]’s homeowner insurance policy.
Said adjustment of the mold claim to be completed no later than December 31st, 2012.†The court retained
jurisdiction over this aspect of the judgment.
Plaintiff appeals, arguing the court
erred in excluding Sterling’s testimony and in dismissing the complaint with prejudice. Plaintiff also argues the trial court
erroneously ruled that mold was not a covered loss under the insurance
policy. State Farm filed a cross-appeal,
which it dismissed before briefing.
DISCUSSION
The procedure for exchanging expert
witness information during discovery is governed by section 2034.010 et seq. The purpose of these provisions “is to give
fair notice of what an expert will say at trial.†(Bonds
v. Roy (1999) 20 Cal.4th 140, 146.) “This allows the parties to assess whether to
take the expert’s deposition [and] to fully explore the relevant subject area
at any such deposition. . . .†(
The expert witness exchange is
triggered by a timely written demand made by any party after the initial trial
date is set. (§ 2034.220.) Section 2034.260 sets forth the general
requirements for the exchange and the information to be provided, which
includes a list of the names and addresses of the experts (2034.260, subd.
(b)(1)) and a declaration by the party’s attorney setting forth the expert’s
qualifications (2034.260, subd. (c)(1)), the expected nature of the testimony (2034.260,
subd. (c)(2)), and “[a] representation that the expert will be sufficiently
familiar with the pending action to submit to a meaningful oral deposition
concerning the specific testimony, including any opinion and its basis, that
the expert is expected to give at trial†(2034.260, subd. (c)(4)).
A party demanding an expert witness
exchange “may also include a demand for the mutual and simultaneous production
for inspection and copying of all discoverable reports and writings, if any,
made by any expert . . . in the course of preparing that expert’s opinion.†(§ 2034.210, subd. (c).) When a demand for documents is made, “all
parties shall produce and exchange, at the place and on the date specified in
the demand, all discoverable reports and writings, if any, made by any
designated expert. . . .â€
(§ 2034.270.)
Failure to comply with these
requirements can have drastic consequences.
Section 2034.300 provides, “[O]n objection of any party who has made a
complete and timely compliance with Section 2034.260 [concerning method and
content of exchange], the trial court shall exclude from evidence the expert
opinion of any witness that is offered by any party who has unreasonably failed
to do any of the following: [¶] . .
. [¶] . . . [¶] (c) Produce reports
and writings of expert witnesses under Section 2034.270. [¶] (d)
Make that expert available for a
deposition. . . .†We review a trial court’s exclusion of expert
testimony under the deferential abuse of discretion standard. (Tesoro
del Valle Master Homeowners Assn. v.
Inc. (2009) 170 Cal.App.4th 936, 950 (
Here, plaintiff responded to State
Farm’s timely demand for an exchange of expert information by designating Sterling as a
construction repair expert. Counsel
submitted a declaration which, as required by statute, represented that Sterling would be sufficiently
familiar with the case to submit to a meaningful deposition. (§ 2034.260,
subd. (c)(4).) But when Sterling was
deposed, he was still in the process of investigating the damage and had not
yet prepared a repair estimate. Sterling
went on to perform additional inspections and to secure two more mold tests
after the deposition in the months that followed, but plaintiff never provided
State Farm with corresponding mold reports, and Sterling did not even prepare his
own report regarding the scope and cost of repairs until March 2011, some six
months after the deposition. Plaintiff
offered to make Sterling available for a second deposition, but refused to allow State Farm
to reinspect the property so it could prepare for that deposition.
Given this sequence of events, the
court did not abuse its discretion in concluding plaintiff violated the
disclosure requirements of sections 2034.060 and 2034.070, or in excluding Sterling’s
testimony under section 2034.300. Sterling
was not prepared at his deposition to offer an opinion on the subject on which
he was designated — the scope and cost of repair — even though counsel had
declared under section 2034.060, subdivision (c)(4) that he was ready to submit
to a meaningful deposition. (See McCoy
v. Gustafson (2009) 180 Cal.App.4th 56, 96-97 (McCoy); Jones v.
opinions that go beyond those expressed by expert at the deposition].) And, while expert witnesses are not
absolutely precluded from creating new or additional reports after the date
specified for disclosure, “section 2034.300 empowers the court to exclude the
expert opinion of any witness offered by a party who has unreasonably failed to produce expert reports and writings as
required by section 2034.270.
(§ 2034.300, subd. (c).) If
the trial court concludes that a party intentionally manipulated the discovery
process to ensure that expert reports and writings were not created until after
the specified date, it may find the failure to produce the reports and writings
was unreasonable and exclude the expert’s opinions. Accordingly, a party who fails to instruct
its expert to create all reports and writings before the specified date does so
at its own risk.†(Boston, supra, 170
Cal.App.4th at p. 952.)
Plaintiff argues there was no
manipulation of the discovery process in this case, because the parties agreed Sterling would be
deposed again, and it was State Farm’s obligation to make the necessary arrangements. We disagree.
After it became clear at the deposition that Sterling was unable
to offer a meaningful opinion about the scope and cost of remediation, counsel
for State Farm indicated he was not formally concluding the examination and
would meet and confer with plaintiff’s counsel regarding rescheduling. In the meantime, State Farm requested
permission to inspect plaintiff’s home again, based on Sterling’s
deposition testimony about previously undiscovered water damage and mold, but
this request was denied. In light of
this denial, counsel for State Farm concluded it would be unproductive to
depose Sterling a second time and elected not to do so.
The circumstances as a whole support
the trial court’s implicit conclusion plaintiff acted unreasonably in failing
to promptly provide State Farm with the results of the mold testing performed
in September and October 2010 and in allowing Sterling to wait until March 2011
to prepare his report and estimate, all while precluding State Farm from conducting
an additional inspection of the property.
No good reason was given for this delay, and pointing the finger at
State Farm for failing to schedule a second deposition (when Sterling was
unprepared for the first and did not even prepare a written estimate until six
months later) is of no avail. “Any party
shall be entitled as a matter of right to complete discovery proceedings
pertaining to [an expert witness] on or before the 15th day, and to have
motions concerning that discovery heard on or before the 10th day, before the
date initially set for the trial of the action.†(§ 2024.030; cf. Stanchfield v. Hamer Toyota, Inc. (1995) 37 Cal.App.4th 1495,
1503-1504 [no abuse of discretion in denying motion to exclude expert who
indicated at deposition he needed 16 hours to prepare the opinions to be
offered at trial, apparently because he needed time to review testimony of
opposing expert deposed earlier that day; slight delay would not have
compromised purpose of discovery statutes].)
Having concluded the trial court did
not abuse its discretion in excluding Sterling’s
testimony, we consider whether it should have nonetheless allowed the case to
proceed to trial. We find no error in
the court’s entry of the dismissal order, based on plaintiff’s inability to
prove the asserted causes of action in the absence of expert testimony.
Although case law has cautioned against
using motions in limine to examine the sufficiency of the evidence or as a
substitute for dispositive motions prescribed by the Code of Civil Procedure, trial
courts do “have inherent power, separate from any statutory authority, to
control the litigation before them and to adopt any suitable method of
practice. . . .†(Amtower v. Photon Dynamics, Inc. (2008) 158 Cal.App.4th 1582, 1595.)
When an order granting a motion in
limine excludes evidence essential to a cause of action, we review the order de
novo as we would the granting of a motion for nonsuit after opening statement,
viewing the inferences and conflicts in the evidence most favorably to the
nonmoving party. (See
Sterling’s
testimony was excluded as a discovery sanction, an order that was within the
trial court’s province and effectively left plaintiff without any expert
witness who could testify about the necessary scope and cost of repairs to the
house. “If the matter in issue is one
within the knowledge of experts only
and not within the common knowledge of lay[people], it is necessary for the
plaintiff to introduce expert opinion evidence in order to establish a prima
facie case.†(Miller v. Los Angeles County Flood Control Dist. (1973) 8 Cal.3d
689, 702 [expert testimony required to establish negligence in constructing
home and construction defects; homebuilding is “complicated activity†and
laypersons do not possess the specialized knowledge necessary to determine
whether structure was built with requisite skill and in accordance with
industry standards].) Plaintiff does not
dispute that expert testimony was required to establish the scope and cost of
repairs. (See ibid.; LeBrun v. Richards
(1930) 210 Cal. 308, 319-320 [homeowner could testify to value of the property,
but not cost of repair, a proper subject of expert testimony];
388-389 [estimated cost of repairs to equipment required expert testimony].)
Sterling was the
only expert plaintiff designated on the scope and cost of repairs. His exclusion as a witness meant plaintiff
would be unable to present any evidence regarding that issue. Without such evidence, plaintiff could not
establish a prima facie case for breach of the insurance contract, because the breach
was based on State Farm’s alleged underpayment of the claim and underpayment
could only be established if plaintiff presented evidence showing the damage
caused by the covered loss would be more expensive to fix than the amount State
Farm had already paid on the claim.
Moreover, plaintiff could not establish the amount State Farm did pay
was unreasonable and in bad faith. (
(2006) 136 Cal.App.4th 1241, 1250 [“to establish an implied covenant tortious
breach, an insured must show first, that benefits were due under the policy,
and second, that the benefits were withheld without proper causeâ€].)
Plaintiff argues the trial court
erroneously viewed the mold noted by Sterling as a new
claim whose tardiness would prejudice State Farm, even though Nevins had
advised Wong of the presence of mold in 2007 and Wong had informed him such
damage was not covered. Plaintiff also
argues the trial court erred in concluding mold losses were excluded under the
policy. We conclude any error in this
regard was harmless for two reasons.
First, the order excluding Sterling’s testimony,
which we have upheld, precluded plaintiff from proving the scope and cost of
repairs, whether those repairs were related to mold remediation or some other
type of damage. Dismissal of the
complaint was appropriate because in the absence of expert testimony on this
subject, plaintiff could not establish a prima facie case of breach of contract
or bad faith, even if we assume some aspect of the mold claim was covered under
the policy.
Second, regardless of the merits of
the court’s mold coverage analysis, which was made in the context of explaining
why State Farm’s position on that issue was not an independent basis for a bad
faith claim, the judgment specifically allows plaintiff to pursue his mold
claim against State Farm. Plaintiff
argues this remedy is insufficient because the court’s statement that the mold
damage is not covered will operate as collateral estoppel in any future
lawsuit. However, collateral estoppel
applies only to issues that were “‘necessarily
decided’†in a previous proceeding.
(Henderson v. Newport-Mesa Unified School Dist. (2013) 214 Cal.App.4th 478, 503.)
Factual or legal conclusions unnecessary to the court’s judgment have no
collateral estoppel effect because they were not necessarily decided. (See County
of Santa Clara v. Deputy Sheriffs’ Assn. (1992) 3 Cal.4th 873, 879, fn.
7.) Because the policy’s coverage of the
mold claim was unnecessary to the court’s conclusion that the exclusion of Sterling’s
testimony made it impossible for plaintiff to establish a prima facie case on
his breach of contract and bad faith claims, it will not have preclusive effect
in subsequent proceedings.
name="_ftnref6" title="">[6]
DISPOSITION
The judgment is affirmed. Ordinary costs on appeal are awarded to respondents State Farm and
Britannia.
_________________________
Needham, J.
We concur:
_________________________
Jones, P.J.
_________________________
Bruiniers, J.
name="_ftn1" title=""> [1] Because this case was dismissed before trial,
the facts are taken from the hearing on the defense motion in limine to exclude
plaintiff’s expert, as well as documents and exhibits in the superior court
file.
name="_ftn2" title=""> [2] The policy contained a standard mold
exclusion, although it provided coverage of up to $5,000 for mold damage that
was caused by a covered loss. Wong took
the position that because the water intrusion was caused by lack of maintenance
and design defects, which were not covered losses, there was no coverage for
any resulting mold damage. According to
State Farm’s counsel, the water damage other than mold was covered under an
ensuing loss provision of the policy, even though the defect and lack of
maintenance themselves were not.
