Cummings v. Fire Ins. Exchange

• Decision Date: 22 July 1988
• Docket Number: No. B027690,B027690
• Citation: 202 Cal.App.3d 1407,249 Cal.Rptr. 568
• Court: California Court of Appeals Court of Appeals
• Parties: Mary L. CUMMINGS, Plaintiff and Appellant, v. FARMERS INSURANCE EXCHANGE, etc., et al., Defendants and Respondents.

Page 568

249 Cal.Rptr. 568

202 Cal.App.3d 1407

Mary L. CUMMINGS, Plaintiff and Appellant, v. FARMERS INSURANCE EXCHANGE, etc., et al., Defendants and Respondents.

No. B027690.

Court of Appeal, Second District, Division 3, California.

July 22, 1988.

Bernard Grossman, Granada Hills, and Walter Krauss, Van Nuys, for plaintiff and appellant

Ronald P. Kaplan, Los Angeles, Berger, Kahn, Shafton & Moss, Craig S. Simon and

Julia A. Mouser, Irvine, for defendants and respondents.

CROSKEY, Associate Justice.

Plaintiff Mary L. Cummings, ("plaintiff"), appeals from a summary judgment granted to defendant Fire Insurance Exchange, ("defendant") ¹ on her complaint seeking damages from defendant for its failure to pay a property damage claim and its allegedly malicious instigation of an unsuccessful criminal prosecution of plaintiff. Because the record demonstrates (1) that plaintiff knowingly and wilfully filed a false claim on a casualty policy issued by the defendant and (2) that defendant had a reasonable basis for believing that plaintiff had violated the law in so doing, we affirm the judgment.

FACTUAL BACKGROUND

In her complaint, plaintiff alleged claims for breach of contract, false imprisonment, malicious prosecution, tortious breach of contract (which also included an allegation of a violation of Insurance Code section 790.03, subdivision (h)(5)) and intentional infliction of emotional distress. Each of these alleged causes of action arises from a claim which plaintiff made against a casualty insurance policy issued to plaintiff by defendant. Her claim was for damages sustained when her home and its contents were vandalized. The policy contains a provision (hereinafter sometimes referred to as the "fraud and concealment" provision) which states: "We do not cover an insured who has concealed or misrepresented any material fact or circumstance relating to this insurance, before or after the loss." ²

The vandalism occurred May 1, 1983 and plaintiff reported it to defendant the next day. Within a month, plaintiff's premises had been almost completely repaired. Defendant expended $18,146 for repairs and $800 for living expenses for plaintiff.

On May 17, 1983, defendant received a call from one of plaintiff's neighbors, a Mr. Wiley. He stated that another neighbor, Mr. Rodriguez, had told him that on the day the vandalism occurred, plaintiff's son was in the premises and there was screaming, commotion and things being broken. In order to determine the facts, defendant retained an investigator. On May 24, 1983, the investigator interviewed plaintiff and recorded her statement concerning the events of May 1. In her statement, plaintiff gave a false version of those events. ³ The next day, the investigator interviewed Mr. Wiley who gave him Mr. Rodriguez' account of the incident. Mr. Wiley also indicated that plaintiff's son was living with plaintiff.

Thereafter, on August 25, 1983, defendant examined plaintiff under oath. During that examination, she initially repeated the false version of what occurred; however, when she was confronted with the information which defendant's investigation had uncovered, she changed her story and finally Based on plaintiff's admitted misrepresentations, ⁴ defendant denied further payments on her claim and reported the matter to the criminal authorities. Plaintiff was arrested for violation of Insurance Code section 556, which makes it a crime to knowingly present a false claim for payment of a loss. ⁵ She was bound over for trial at her preliminary hearing but the charges were later dismissed when the superior court granted her Penal Code section 995 motion (although it is not clear from the record before us upon what ground(s) the motion was granted).

gave a true accounting of the vandalism to her home.

CONTENTIONS ON APPEAL

Plaintiff contends on appeal that issues of fact existed with respect to the materiality of the alleged misrepresentation and defendant's reliance thereon and that the trial court erred in determining that, as a matter of law, plaintiff could assert no claims for malicious prosecution, false imprisonment or emotional distress. She argues that summary judgment was therefore improper.

DISCUSSION

"Summary judgment is properly granted only when the evidence in support of the moving party establishes that there is no triable issue of fact and that the moving party is entitled to a judgment as a matter of law. [Citations.]" (Isaacs v. Huntington Memorial Hospital (1985) 38 Cal.3d 112, 134, 211 Cal.Rptr. 356, 695 P.2d 653.) Thus, issue finding and not issue resolution characterizes a hearing on a motion for summary judgment. All doubts about granting such a motion must be resolved against the moving party, who bears the burden of producing evidence which establishes the invalidity of the claims of the adverse party. (Mann v. Cracchiolo (1985) 38 Cal.3d 18, 35-36, 210 Cal.Rptr. 762, 694 P.2d 1134, and cases cited therein.) Our review of the record convinces us that the defendant has met its burden on all of plaintiff's causes of action.

1. Breach of Contract (Including the "Tortious Breach" Claim)

Plaintiff's first and fourth causes of action, for breach of contract and tortious breach of contract, ⁶ allege a wrongful refusal by defendant to pay plaintiff's entire claim. Defendant's answer asserts as an affirmative defense that the insurance policy was voided, in accordance with its fraud and concealment provision, because plaintiff made material concealments and misrepresentations in the processing of her claim. The motion for summary judgment focused on this affirmative defense. ⁷ In On appeal plaintiff asserts that the trial court erred in granting summary judgment on the breach of contract causes of action because certain factual issues are still unresolved. She contends that whether she lied as to any material facts, whether she intended to defraud defendant and whether defendant relied on her misrepresentations are all issues which a trial court cannot properly resolve in a motion for summary judgment because they are for a jury's consideration. However, these arguments ignore the body of law which has developed during the past 100 years with respect to the "fraud and concealment" provisions found in most property insurance policies.

neither her [202 Cal.App.3d 1415] opposition to that motion nor in her briefs on appeal does plaintiff deny that she misrepresented to defendant the facts surrounding the vandalism of her property.

Our review of that law begins with a United States Supreme Court case, Claflin v. Commonwealth Insurance Co. (1884) 110 U.S. 81, 3 S.Ct. 507, 28 L.Ed. 76. Claflin involved one William Murphy, assignee of the original owner of certain dry goods and the policies of insurance issued by defendant insurance companies on those dry goods. Plaintiffs in the case were in turn assignees of Mr. Murphy, who had assigned the policies and his claims under them to plaintiffs after the dry goods were damaged by fire. The policies all contained fraud and concealment provisions similar to the one in the instant case.

The evidence in Claflin showed that when Murphy appeared for examination by defendants' agent concerning his loss and claim, he gave false information relating to the consideration he paid his assignor for that stock. He did so not to deceive defendants but rather to make a statement which would be consistent with the one he had previously made to a commercial agency in hopes of securing commercial credit. The answer filed by defendants alleged that the sale to Murphy was ficticious, that he never gave consideration for it and that consequently he had no insurable interest in the goods. At trial, plaintiff requested a jury instruction to the effect that even if Murphy's false statements were made on a material matter, they would not constitute a defense to plaintiff's action if Murphy made them for the purpose of protecting himself against the statement he had made to the credit agency and not for the purpose of deceiving and defrauding defendants. The trial court refused the instruction and defendants received a verdict in their favor. (Claflin v. Commonwealth Insurance Co., supra, 110 U.S. at pp. 84-86, 3 S.Ct. at pp. 512-514.)

The Supreme Court affirmed the judgment, saying "The object of the provisions in the policies of insurance, requiring the assured to submit himself to an examination ... was to enable the company to possess itself of all knowledge, and all information as to other sources and means of knowledge, in regard to the facts, material to their rights, to enable them to decide upon their obligations, and to protect them against false claims. And every interrogatory that was relevant and pertinent in such an examination was material, in the sense that a true answer to it was of the substance of the obligation of the assured. A false answer as to any matter of fact material to the inquiry, knowingly and wilfully made, with intent to deceive the insurer, would be fraudulent.... And if the matter were material and the statement false, to the knowledge of the party making "...

it, and wilfully made, the intention to deceive the insurer would be necessarily implied, for the law presumes every man to intend the natural consequences of his acts.

"The fact whether Murphy had an insurable interest in the merchandise covered by the policy was directly in issue between the parties. By the terms of the contract he was bound to answer truly every question put to him that was relevant to that inquiry. His answer to every question pertinent to that point was material, ... so that every false statement on that subject, knowingly made, was intended to deceive and was fraudulent.

"And it does not detract from this conclusion to suppose that the purpose of Murphy in making these false statements was not to deceive and defraud the companies, ... but for the purpose of preventing an exposure of the false statement...