Griffin v. Allstate Ins. Co., CV-95-2537-KMW (RMCx).

• Decision Date: 01 March 1996
• Docket Number: No. CV-95-2537-KMW (RMCx).,CV-95-2537-KMW (RMCx).
• Court: U.S. District Court — Central District of California
• Parties: Darrell GRIFFIN and Deborah Griffin, Plaintiffs, v. ALLSTATE INSURANCE COMPANY, et al., Defendants.

920 F. Supp. 127

Darrell GRIFFIN and Deborah Griffin, Plaintiffs, v. ALLSTATE INSURANCE COMPANY, et al., Defendants.

No. CV-95-2537-KMW (RMCx).

United States District Court, C.D. California.

March 1, 1996.

A. Clifton Hodges, Michael S. Preis, Taylor & Hodges, Glendale, CA, for Darrell P. Griffin and Deborah M. Griffin.

Peter H. Klee, Robert H. Roe, Luce, Forward, Hamilton & Scripps, San Diego, CA, for Allstate Insurance Company and John Jacques (erroneously sued as Jeffery S. Jacques).

MEMORANDUM OF OPINION

WARDLAW, District Judge.

Darrell and Deborah Griffin sued Allstate Insurance Co. ("Allstate"), and its agent, John Jacques, alleging that an Allstate homeowner's insurance policy obligates it to pay for damages that their home sustained during the Northridge earthquake. Defendants moved for summary judgment; the Griffins did not file any written opposition.¹ The court heard oral argument on February 12, 1996. It found that the moving papers are sufficient to support the motion and do not reveal a genuine issue of material fact and, further, that they show (1) this cause of action belongs to Darrell Griffin's bankruptcy estate, so the Griffins do not have standing to sue and (2) the policy had lapsed when the earthquake occurred, so Allstate is not liable for damages to the Griffins' home. Therefore, it GRANTS Defendants' motion.

I. BACKGROUND

A. Uncontroverted Facts

Allstate issued an Allstate Deluxe Homeowners Policy (the "Policy") to the Griffins. It did not receive the December 1993 premium payment when it was due. Lang Decl. ¶ 2. Thus, on December 17, 1993, it sent them a Notice of Cancellation, stating that it would cancel the Policy if it did not receive the December premium payment by January 2, 1994. Darrell Griffin received and read this letter. Darrell Griffin Depo. at 15:12-16. However, he ignored it because Mrs. Griffin told him that she had mailed the premium payment. Id. at 15:21-23.

Allstate canceled the policy on January 2, 1994 because it did not receive a December premium payment. On January 7, 1994, it sent a Notice of Cancellation to Great Western Bank, which held a mortgage on the Griffins' home. Lang Decl. ¶ 4. The Griffins maintain that they mailed the December premium to Allstate before January 2. Deborah Griffin Depo. at 12:5-9. However, they have never produced a canceled check, bank statement, or check register to prove that they paid the premium by January 2. Darrell Griffin Depo. at 17:5-8 (stating that although the Griffins requested bank statements, they have "not ... been able to find the canceled check".)

On January 24, Allstate received a check from the Griffins for the January premium; allowing two days for mailing, it reinstated the Policy effective January 22. Jacques was the Allstate agent responsible for servicing the Griffins' policy in January 1994.

B. The Lawsuit

On January 17, 1994, the Northridge earthquake damaged the Griffins' home. Allstate refused to pay for the damages because the Policy lapsed before the earthquake occurred.

On January 17, 1995, the Griffins sued Allstate for breach of contract and both Allstate and Jacques for breach of the implied covenant of good faith and fair dealing, breach of fiduciary duties, and punitive damages.

C. Bankruptcy Filing

On May 16, 1995, Darrell Griffin filed a Chapter 13 bankruptcy petition. The bankruptcy court converted his bankruptcy to a Chapter 7 liquidation on July 31, 1995. The Chapter 7 trustee, Edward M. Wolkowitz, has not abandoned the Griffins' cause of action against Allstate and Jacques.²

D. The Instant Motion

Allstate and Jacques now move this Court for summary judgment, arguing that (1) the Griffins do not have standing to sue and (2) their insurance coverage lapsed before the earthquake occurred. The Griffins have not filed any opposition to this motion.

II. ANALYSIS

A. The Standard for Summary Judgment

Under Rule 56 of the Federal Rules of Civil Procedure, summary judgment is proper if there are not genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Fed. R.Civ.P. 56(c). A party resisting summary judgment has an affirmative obligation to bring forward evidence "on which the jury could reasonably find for the non-moving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 2512, 91 L.Ed.2d 202 (1986). A mere scintilla of evidence will not suffice. "Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no `genuine issue for trial.'" Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). The non-moving party must "go beyond the pleadings and show `by her own affidavits, or by the depositions, answers to interrogatories, or admissions on file' that a genuine issue of material fact exists." Hopkins v. Andaya, 958 F.2d 881, 885 (9th Cir.1992) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986)).

B. Standard of Evaluation When Motion is Unopposed

Under Local Rule 7.9, "papers not timely filed by a party including any memoranda or other papers required to be filed under this rule will not be considered and may be deemed by the Court consent to the granting or denial of the motion, as the case may be." C.D.Cal. Local Rule 7.9. The Ninth Circuit has held that a district court can grant an unopposed motion for summary judgment if the moving papers are sufficient to support the motion and do not reveal a genuine issue of material fact. Henry v. Gill Indus., 983 F.2d 943, 949 (9th Cir.1993).

C. Standing

1. Darrell Griffin

The filing of a bankruptcy petition "creates an estate which is comprised of ... all legal or equitable interests of the debtor in property as of the commencement of the case." 11 U.S.C. § 541(a)(1). "The scope of section 541 is broad, and includes causes of action." Sierra Switchboard Co. v. Westinghouse Elec. Corp., 789 F.2d 705, 707 (9th Cir.1986). Lawsuits remain part of the bankruptcy estate unless the bankruptcy trustee abandons them. 11 U.S.C. § 554(d).

Under the Federal Rules of Civil Procedure, "every action must be prosecuted in the name of the real party in interest." Fed.R.Civ.P. 17(a). Because the bankruptcy trustee controls the bankruptcy estate, it is the real party in interest in the suits that belong to the estate. See Sierra Switchboard, 789 F.2d at 708 n. 1; see also Mele v. First Colony Life Ins. Co., 127 B.R. 82, 84 (D.D.C.1991).

Mr. Griffin's cause of action against Allstate and Jacques accrued by January 17, 1995 when he filed suit against them. He filed his bankruptcy petition on May 16, 1995. Thus, the cause of action accrued before he filed his petition and is part of his bankruptcy estate. Because the bankruptcy trustee has not abandoned the claim to him, he is not the real party in interest and does not have standing to sue.

2. Deborah Griffin

Nor does Deborah Griffin have standing to sue. The Policy was community property because the Griffins paid the premiums with community funds. Deborah Griffin Depo. at 37:23-25, 39:23 — 40:7; Estate of Mendenhall, 182 Cal.App.2d 441, 444, 6 Cal. Rptr. 45, 47 (1960). Community property assets and their proceeds become part of the bankruptcy estate of the first spouse to file a bankruptcy petition. In re Bartlett, 24 B.R. 605, 607 (Bankr. 9th Cir.1982).

Because proceeds of and the contractual rights arising from the Policy are property of the bankruptcy estate, Mrs. Griffin has no standing to pursue a breach of contract action to obtain Policy proceeds. Furthermore, the implied covenant of good faith and fair dealing supplements express contractual rights. Waller v. Truck Ins. Exchange, Inc., 11 Cal.4th 1, 35-36, 44 Cal. Rptr.2d 370, 900 P.2d 619 (1995). It does not have an existence independent of its contractual underpinnings. Id. Thus, if a plaintiff cannot sue for breach of contract, she cannot sue for breach of the implied covenant of good faith and fair dealing. Id. Because Mrs. Griffin cannot pursue a breach of contract action against Allstate, she cannot sue it or its agent, Jacques, for breach of the implied covenant.

Although Mrs. Griffin arguably has standing to pursue the breach of fiduciary duty action, California law does not allow an insured to sue an insurer or its agent for breach of fiduciary duty. See infra Part II.D.3 (citing case law holding that under California law, an insurer and its agent do not owe a fiduciary duty to the insured).

D. Griffins' Causes of Action

Even if the Griffins had standing to sue, Defendants would be entitled to summary judgment.

1. Breach of Contract

The insurance contract between Allstate and the Griffins lapsed on January 2, 1994 because they failed to make a premium payment. Thus, Allstate had no contractual duty to pay for losses that the Griffins sustained in the January 17, 1994 earthquake.

Although no written opposition was filed, at oral argument the Court inquired of Plaintiffs' counsel as to whether there was any arguable genuine issue of material fact in the case. Plaintiffs' counsel argued that Mrs. Griffin claims to have mailed the December premium payment, urging that this fact precludes summary judgment. Even if true, however, this fact does not create a genuine issue of material fact that would forestall summary judgment. Whether the Griffins actually mailed the December payment is irrelevant to this determination. The Griffins had received a Notice of Cancellation and knew that their Allstate policy would lapse as of January 2, unless they took some action. They did not take any action until they mailed the check received by Allstate on January 24. Therefore the Policy was not in effect during the period January 2, 1994 to January 22, 1994. Thus, when the earthquake struck on January 17, 1994, the Griffins were not covered by the Policy.

Based on the Hodges and Preis declarations, plaintiffs'...