Campanelli v. Allstate Life Ins. Co.
| Decision Date | 03 March 2003 |
| Docket Number | No. 00-57080.,No. 00-55957.,No. 00-55466.,No. 00-55468.,00-55466.,00-55468.,00-55957.,00-57080. |
| Citation | 322 F.3d 1086 |
| Parties | Vito CAMPANELLI; Peggy Campanelli; John Caudillo; Barbara Caudillo; Neil Damrow; Gayle Damrow; Nancy Durrant; Garfield Ecung; Debra Ecung; George Giakoumakis; Mary Lou Giakoumakis; Donald Huner; Tommie Jenkins; Carrie Jenkins; Brenda Kalosh; Donald Menck; Florence Menck; Cheryl Mondheim; William Noah; Terry Noah; Roy Rosenblatt; Lorraine Rosenblatt; Darla Severn; Loyal Smith; Mildred Stafford; Marilyn Taber, Plaintiffs, and James House; Pat House, Plaintiffs-Appellants, v. ALLSTATE LIFE INSURANCE COMPANY, an Illinois Corporation, Defendant-Appellee, and Shadowbrook Design Group, Inc., a California Corporation; W.S.C., a California Corporation, dba Western States Construction, dba Western States Geotechnical, aka Western States Companies, Defendants. Vito Campanelli; Peggy Campanelli; John Caudillo; Barbara Caudillo; Neil Damrow; Gayle Damrow; Nancy Durrant; Garfield Ecung; Debra Ecung; George Giakoumakis; Mary Lou Giakoumakis; James House; Pat House; Donald Huner; Tommie Jenkins; Carrie Jenkins; Brenda Kalosh; Donald Menck; Florence Menck; William Noah; Terry Noah; Roy Rosenblatt; Lorraine Rosenblatt; Darla Severn; Loyal Smith; Mildred Stafford; Marilyn Taber, Plaintiffs, and Cheryl Mondheim, Plaintiff-Appellant, v. Allstate Life Insurance Company, an Illinois Corporation, Defendant-Appellee, and Shadowbrook Design Group, Inc., a California Corporation; W.S.C., a California Corporation, dba Western States Construction, dba Western States Geotechnical, aka Western States Companies, Defendants. Vito Campanelli; Peggy Campanelli; John Caudillo; Barbara Caudillo; Neil Damrow; Gayle Damrow; Nancy Durrant; Garfield Ecung; Debra Ecung; James House; Pat House; Tommie Jenkins; Carrie Jenkins; Brenda Kalosh; Donald Menck; Florence Menck; Cheryl Mondheim; William Noah; Terry Noah; Roy Rosenblatt; Lorraine Rosenblatt; Darla Severn; Loyal Smith; Mildred Stafford; Marilyn Taber; Donald Huber, Plaintiffs, and George Giakoumakis; Mary Lou Giakoumakis; Plaintiffs-Appellants, v. Allstate Life Insurance Company, an Illinois Corporation, Defendant-Appellee. Vito Campanelli; Peggy Campanelli; John Caudillo; Barbara Caudillo; Neil Damrow; Gayle Damrow; Nancy Durrant; Garfield Ecung; Debra Ecung; George Giakoumakis; Mary Lou Giakoumakis; James House; Pat House; Donald Huner; Tommie Jenkins; Carrie Jenkins; Brenda Kalosh; Donald Menck; Florence Menck; Cheryl Mondheim; Roy Rosenblatt; Lorraine Rosenblatt; Darla Severn; Loyal Smith; Mildred Stafford; Marilyn Taber, Plaintiffs, and William Noah, Terry Noah, Plaintiffs-Appellants, v. Allstate Life Insurance Company, an Illinois Corporation, Defendant-Appellee, and Shadowbrook Design Group, Inc., a California Corporation; W.S.C., a California Corporation, dba Western States Construction, dba Western States Geotechnical, aka Western States Companies, Defendants. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Norman J. Watkins, Lynberg & Watkins, Los Angeles, CA, for plaintiffs-appellants.
Peter H. Klee, Luce, Forward, Hamilton & Scripps, San Diego, CA, for the defendant-appellee.
Anne Michelle Burr, Deputy Attorney General, San Francisco, CA, for amicus curiae Bill Lockyer, Attorney General of the State of California, urging reversal.
Stephanie Rae Williams, Horvitz & Levy, Encino, CA, for amici curiae 21st Century Insurance Company and Truck Insurance Exchange, urging affirmance.
Appeals from the United States District Court for the Central District of California; Robert J. Kelleher, District Judge, Presiding. D.C. No. CV 98-7185 RJK.
Before: BRIGHT,* GOODWIN, and TASHIMA, Circuit Judges.
These are appeals from the district court's grant of summary judgment in favor of appellee, Allstate Insurance Company ("Allstate"), based upon a limitations-period defense. We reverse.
Appellants William and Terry Noah, James and Patricia House, Cheryl Mondheim, and George and Mary Lou Giakoumakis (collectively, the "Homeowners") all own homes, insured by Allstate, that were damaged on January 17, 1994, by the Northridge earthquake. Within the next year, all of the Homeowners made claims to Allstate for the earthquake damage to their homes. All of them received payments for the damage and their claims were closed by Allstate over the next two years.
Sometime in May 1998, the Homeowners learned that there were questions regarding the authenticity of the engineering reports they had received from Allstate during the claims adjustment process. The "engineering" reports that each Homeowner received were purportedly signed, stamped, and certified to contain the signing engineer's opinion of the extent of the earthquake damage based upon the engineer's personal inspection of the home. The Homeowners allege that, in fact, the reports were not prepared by engineers engineers never inspected their homes, and that, as a result, their insurance claims were undervalued, causing the Homeowners to receive less than complete compensation for the damage to their homes.
On September 2, 1998, the Homeowners joined 20 other plaintiffs in a suit against Allstate. In their complaint, they alleged the following causes of action against Allstate: (1) violation of the Racketeer Influenced and Corrupt Organization Act ("RICO"), 18 U.S.C. §§ 1961-68, based on mail fraud; (2) negligence; (3) negligent misrepresentation; (4) intentional misrepresentation; (5) breach of the covenant of good faith and fair dealing; and (6) breach of contract.
Allstate filed separate summary judgment motions against each of the Homeowners, asserting that their claims were barred by the one-year limitations period of their insurance contracts. The district court granted all of these motions. See Campanelli v. Allstate Ins. Co., 119 F.Supp.2d 1073 (C.D.Cal.2000); Campanelli v. Allstate Ins. Co., 97 F.Supp.2d 1211 (C.D.Cal.2000); Campanelli v. Allstate Ins. Co., 85 F.Supp.2d 980 (C.D.Cal. 2000).
All of the Homeowners appealed, contending that their claims were not timebarred. The Homeowners base their appeals on several grounds, including: (1) that the limitations period did not begin to run until they discovered the fraudulent nature of the engineering reports; (2) that Allstate is equitably estopped from asserting the limitations period as an affirmative defense; and (3) that their claims were revived by California Code of Civil Procedure § 340.9, which became effective on January 1, 2001, while these appeals were pending.
The Homeowners' argument based on § 340.9 is their strongest and, if upheld, would favorably resolve these appeals. Allstate, however, challenges the constitutionality of § 340.9. "A fundamental and longstanding principle of judicial restraint requires that courts avoid reaching constitutional questions in advance of the necessity of deciding them." Lyng v. Northwest Indian Cemetery Protective Ass'n, 485 U.S. 439, 445-46, 108 S.Ct. 1319, 99 L.Ed.2d 534 (1988). Therefore, we will address the constitutionality of § 340.9 only if none of the Homeowners' other grounds would resolve all of these appeals in the Homeowners' favor. See id. at 446, 108 S.Ct. 1319.
The district court granted summary judgment against the Homeowners on all of their claims, finding that the one-year limitations period under their contracts, which conformed to California Insurance Code § 2071, had expired. Section 2071 is not technically a statute of limitations. Rather than directly imposing a limitations period on certain causes of action, § 2071 provides a standard insurance contract for all insurance policies that include fire coverage. This contract must include the following limitations period provision:
No suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity unless all the requirements of this policy shall have been complied with, and unless commenced within 12 months next after inception of the loss.
Cal. Ins.Code § 2071. Under this provision, any claim that is "on the policy" must be brought within 12 months of the "inception of the loss" or it is time-barred.
The Homeowners argue that their claims are not barred by the expiration of the one-year limitations period because the period did not begin to run until the Homeowners discovered that Allstate had hidden the true extent of the damage to their homes. We cannot agree. Under California law, the one-year limitations period begins to run at the time of the inception of the loss, which is "that point in time when appreciable damage occurs and is or should be known to the insured, such that a reasonable insured would be aware that his notification duty under the policy has been triggered." Prudential-LMI Commercial Ins. v. Superior Court, 51 Cal.3d 674, 274 Cal.Rptr. 387, 798 P.2d 1230, 1232 (1990). The inception of the loss occurs when the insured should have known that appreciable damage had occurred, not when the homeowner learned the true extent of the damage. See id.
In these cases, the inception of the loss occurred when the Homeowners realized that their homes had been damaged by the Northridge earthquake. All of the Homeowners clearly realized that they had suffered sufficient damage to warrant contacting Allstate, because they did, in fact, contact Allstate. As a result, the inception of the loss in this case was January 17, 1994, the date of the Northridge earthquake, and the one-year limitations period began to run on that date. The Homeowners' complaint was filed on September 2, 1998. Even taking into consideration the fact that the limitations period was tolled during Allstate's processing of the claims, the one-year limitations period had expired for those claims that were covered by that limitations...
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