Kossian v. American Nat. Ins. Co.

• Decision Date: 22 September 1967
• Citation: 254 Cal.App.2d 647,62 Cal.Rptr. 225
• Court: California Court of Appeals Court of Appeals
• Parties: Peter KOSSIAN, Plaintiff and Appellant, v. AMERICAN NATIONAL INSURANCE CO., Defendant and Respondent. Civ. 757.

Page 225

62 Cal.Rptr. 225

254 Cal.App.2d 647

Peter KOSSIAN, Plaintiff and Appellant, v. AMERICAN NATIONAL INSURANCE CO., Defendant and Respondent.

Civ. 757.

Court of Appeal, Fifth District, California.

Sept. 22, 1967.

Hearing Denied Nov. 15, 1967.

Fullerton, Lang & Richert and William T. Richert, Fresno, for plaintiff and appellant.

Walter H. Condley, Bakersfield, for defendant and respondent.

STONE, Associate Justice.

On February 19, 1964, fire destroyed a portion of the Bakersfield Inn, owned by one Reichert. At the time, the property was subject to a first deed of trust in which defendant was the beneficiary. Pursuant to the requirements of the deed of trust, defendant's interest in the property was protected by policies of fire insurance. On March 16, 1964, Reichert, as owner in possession, entered into a written contract with plaintiff whereby plaintiff agreed to clean up and remove the debris from the fire damaged portion of the Inn for the sum of $18,900. Defendant had no knowledge of the execution of the agreement between plaintiff and Reichert.

Plaintiff commenced work in the middle of March 1964, and completed it in early April. During the entire time work was in progress Reichert was in possession of the premises as owner, although defendant caused a notice of Reichert's default under the deed of trust to be filed four days after the contract for demolition was entered into between plaintiff and Reichert. The record does not reflect that plaintiff had actual knowledge of the notice of default until after the work was completed.

Some time after plaintiff had fully performed the contract, Reichert filed a petition in bankruptcy. The trustee in bankruptcy abandoned the premises comprising the Bakersfield Inn, together with any interest in the four fire insurance policies up to the amount of $424,000. Each policy contained a provision insuring against the cost of cleaning up and removing debris caused by fire damage.

Following abandonment of the policies by the trustee in bankruptcy, Reichert and his wife assigned their interest in them to defendant in accordance with the terms of the deed of trust. Defendant submitted proofs of loss, claiming a total of $160,000, including the sum of $18,000 as the estimated cost for removing and cleaning up debris. These claims were rejected by the carriers; negotiations followed; the compromise figure of $135,620 was agreed upon and this amount paid to defendant. We do not have an itemization of the adjusted claims of loss upon which the compromised loss settlement was made, so that the record is not clear as to what part of the $18,900 cost of debris removal defendant received. It is clear, however, that the insurance payment included at least a part of the cost of debris removal and demolition.

Defendant demonstrates, by a careful analysis of the facts, that there was no direct relationship between plaintiff and defendant in regard to either the work performed on the property after the fire or in relation to the fire insurance policies. The contract for debris removal was between plaintiff and Reichert, and defendant did not induce plaintiff, directly or indirectly, to enter into that contract. Plaintiff had no lien against the property resulting from his work, and if he had such a lien it would have been wiped out by defendant's foreclosure of its first deed of trust.

Had the circumstances been simply that defendant, by foreclosure, took the property improved by plaintiff's debris removal, there would be a benefit conferred upon defendant by plaintiff, but no unjust enrichment. (See Griffith Co. v. Hofues, 201 Cal.App.2d 502, 19 Cal.Rptr. 900.) It is the additional fact that defendant made a claim to the insurance carriers for the value of work done by plaintiff that is the nub of the case.

Defendant argues that plaintiff was not a party to the insurance contracts, while defendant had a contract right to collect indemnity for losses resulting from the fire, including the debris removal cost. This contract right was embodied in the insurance policies. Defendant relies upon Russell v. Williams, 58 Cal.2d 487, at page 490, 24 Cal.Rptr. 859, at page 861, 374 P.2d 827, at page 829 where it is said:

'It is a principle of long standing that a policy of fire insurance does not insure the property covered thereby, but is a personal contract indemnifying the insured against loss resulting from the destruction of or damage to his interest in that property. (Citations.) This principle gives rise to the supplemental rule that, in the absence of a special contract, the proceeds of a fire insurance policy are not a substitute for the property the loss of which is the subject of indemnity.'

Defendant says it made no agreement, express or implied, with plaintiff that it would pay for the debris removal or that any part of the insurance proceeds would be applied for that purpose. Therefore, conclude defendant, there being no privity of relationship between it and plaintiff, and no fraud or deceit alleged or proved, defendant has the right to the property benefited by plaintiff's work and labor expended in removing the debris and to the insurance payments as well.

Plaintiff makes no claim to the insurance 'fund' upon the ground he relied thereon similar to the reliance of a mechanic or materialman that forms the basis of an equitable claim to a building fund. (Smith v. Anglo-California Trust Co., 205 Cal. 496, 271 P. 898; Pacific Ready...