Guebara v. Allstate Ins. Co.

• Decision Date: 12 January 2001
• Docket Number: Nos. 98-55458,98-5549,s. 98-55458
• Citation: 237 F.3d 987
• Parties: (9th Cir. 2001) LANA GUEBARA, Plaintiff-Appellant Cross-Appellee, v. ALLSTATE INSURANCE COMPANY, Defendant-Appellee Cross-Appellant
• Court: U.S. Court of Appeals — Ninth Circuit

Page 987

237 F.3d 987 (9th Cir. 2001)

LANA GUEBARA, Plaintiff-Appellant Cross-Appellee, v. ALLSTATE INSURANCE COMPANY, Defendant-Appellee Cross-Appellant.

Nos. 98-55458, 98-5549

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Argued and Submitted October 7, 1999

Filed January 12, 2001

Alan L. Geraci, Frantz & Geraci, San Diego, California, for the plaintiff-appellant-cross-appellee.

Charles A. Bird, Luce, Forward, Hamilton & Scripps, San Diego, California, counsel for the defendant-appellee-cross appellant.

Appeal from the United States District Court for the Southern District of California Rudi M. Brewster, District Judge, Presiding. D.C. No.CV 96-01683-RMB

Before: Betty B. Fletcher, Dorothy W. Nelson, and Melvin Brunetti, Circuit Judges.

Opinion by Judge D.W. Nelson; Dissent by Judge B. Fletcher

D.W. NELSON, Circuit Judge:

The issue this case presents is whether the district court violated California law in dismissing appellant Lana Guebara's bad faith claims because there were genuine issues as to coverage. Guebara argues that the "genuine issue" rule should be limited to disputes over contractual language and California insurance law. We hold that the district court did not err in applying the genuine issue rule to this case, and we affirm.

I. FACTUAL BACKGROUND

On May 17, 1995, Lana Guebara's house burned down. The one-story house in Niland, California, was appraised at $35,000 as of April 7, 1995. Guebara was attempting to sell the house (although it needed considerable electrical and structural work), in which she owned a 50 percent interest. The house was insured by Allstate under a "Deluxe Homeowners Insurance" policy, which contains a "fraud and concealment" provision that says:

This policy is void if it was obtained by misrepresentation, fraud, or concealment of material facts or if you intentionally conceal or misrepresent any mate rial fact or circumstance, before or after loss . . . . If it is determined that this policy is void, all premiums paid will be returned to you since there has been no coverage under this policy.

Guebara contacted Allstate on the day of the fire, which killed four of her dogs and destroyed most of her belongings. Allstate immediately advanced Guebara $3000 for living expenses. A week after the fire, Allstate referred her claim to its Special Investigations Unit because independent fire investigators believed that Guebara had overstated the quantity and value of her personal property allegedly destroyed by the fire. Investigators also continued to probe the cause of the blaze.

On May 18, 1995, the day after the fire, Allstate's claims adjuster, Joel Alba, interviewed Guebara. When Alba asked Guebara about appliances in the house at the time of the fire, she mentioned a washer, dryer, refrigerator, and stove. Alba also asked her about television and stereo equipment:

Q: Okay, what about the, do you have any TVs or anything like that?

A: I had a console TV.

* * *

Q: Any stereo systems or anything like that?

A: No, I had an antique dresser that was about 100 years old.

Q: Okay, and any other electronic equipment or appliances that I did not, major appliances?

A: Oh, a microwave.

Four days later, Guebara and her daughter, Karen Dixon, provided Allstate with a formal list of personal property destroyed by the fire. The list was several pages long and contained items valued at $18,000, including a stereo, a VCR, $350 worth of video cassettes, and $1000 worth of camping equipment.

Allstate's investigators returned to the scene of the fire on May 25, 1995 with Guebara's list in hand. Dave Johnson, an independent fire investigator hired by Allstate, inspected every room of the house along with the Niland Fire Department's Chief Mike Aleksick and Captain Lynn Mara. ¹ Johnson found remains of about only 20 percent of the items on Guebara's list and found no trace of the following: VCR, one of the ceiling fans, stereo, cassette deck, turntable, pressure cooker, luggage, jewelry boxes, camping equipment, coin collection, Kirby vacuum cleaner, electric broom, rug shampooer, headboards, Singer sewing machine, night stand, video cassettes, video games, Polaroid camera, 35 mm camera, first aid kits, crock pots, or crystal glass. Johnson's report filed with Allstate in late May indicated that most of these items, if they were in the house at the time of the fire, should have left some type of residue.

On May 25, 1995, Dixon called Allstate in order to express concern about the fire department taking additional pictures of the home. Dixon informed Alba that she and a friend had gone through the house and moved debris around while trying to identify damaged items. Dixon did not mention that she had removed anything from the scene. On May 26, 1999, Guebara's sister and co-owner of the property, Sharon Jensen, informed Allstate that Guebara was in the process of taking a $28,000 loan on the property in order to repair the house and to repay Jensen. That same day, Allstate referred the case to its Special Investigations Unit and informed Dixon that the investigation would be completed in 30 days. The Niland Fire Department was still investigating the fire's cause. On June 5, 1995, Allstate informed Guebara that no further payment would be made until the investigation was completed.

On June 21, 1995, Allstate confronted Guebara with inconsistencies between the contents list and the experts' investigation. During an examination under oath (EUO), Guebara was asked why she had not mentioned anything about a stereo or a VCR during her initial interview and why fire investigators did not find remnants of these items. Guebara eventually withdrew the VCR from the contents list, explaining that Dixon had removed it from the house in 1994. Guebara never mentioned that Dixon and Dixon's friend had removed any items from the house after the fire. Guebara claimed that the missing contents burned up in the heat of the fire.

On July 17, 1995, Guebara's attorney notified Allstate that Dixon had removed some items from the house during a "scavenger hunt" following the fire. On September 8, 1995, Allstate took the statements of Dixon and her friend, Suska Brandon. They stated that they had rummaged through the remains of the house on May 20 and 21, 1995. Dixon said that she found nonsalvageable items such as the sewing machine, describing them as "blobs." She said that she removed the items in order to show her children what fire could do so they would not play with matches. Dixon said that she took the items in three garbage bags back to their motel, but she threw them away because they smelled bad. Guebara later testified that Dixon's children were at the house during the scavenger hunt. Dixon eventually added to her transcript that she removed the items in order to help her mother cope with the loss. Brandon said Dixon had made a list of the items that they found. Dixon, however, testified that she did not make a list.

On October 23, 1995, Dixon requested a copy of the audiotape of her recorded statement. Upon being asked to review, correct and sign her transcript, Dixon claimed that her transcript did not reflect her actual interview. Allstate mailed Dixon and Brandon their audiotapes on November 20, 1995. Allstate again inquired on February 14, 1996 why Dixon and Brandon had not signed and corrected their transcripts. Two weeks later, Allstate's counsel received signed copies of the transcripts. On March 4, 1996, the co-owners of the house accepted Allstate's $17,500 offer for one-half of the actual cash value of the structure. On April 3, 1996, Allstate sent Guebara a letter stating that it was not conducting an arson investigation. Yet Allstate indicated that it was continuing to investigate Guebara's contents claim.

The opinions of Allstate's independent experts contradicted Dixon's and Brandon's explanations about the missing items. Johnson said that he had been at the site on three different days and saw no signs that anyone had been rummaging through the debris. On April 12, 1996, Johnson issued a report after reviewing all of the testimony from Guebara, the fire chiefs, and Guebara's witnesses. Johnson concluded that the physical evidence did not support Guebara's claims of loss of contents:

Ms. Dixon stated that on May 20 and 21, 1995 she, her mother (Ms. Guebara) and Ms. Brandon visited the fire scene . . . . During the visits they went through the rubble in an effort to find salvageable items . . . . Ms. Dixon described most of the items in vague terms, i.e., blobs, melted plastic, torched, etc. It is difficult to understand how the untrained eye of Ms. Dixon was able to identify so many items.

The investigator visited the scene on three occasions, May 18, 20 and 25, 1995. There were no significant changes in the fire scene between the May 18 and 25 visits. If any salvageable items remained in the house they would have been small items in areas that would have been protected, i.e., in the lower portion of dresser drawers and cabinets, under linens, etc. In order to retrieve these items considerable excavation would have been required. There was no evidence of that having occurred.

Chief Aleksick confirmed Johnson's conclusions that there were no signs of excavation. Although Aleksick concluded that the fire started on the kitchen stove, he stated no exact conclusions regarding his suspicions of arson.²

On June 7, 1996, Allstate received a letter from Guebara's attorney indicating that he had been dismissed from the case. The letter also informed Allstate of other witnesses who had seen the items before they were allegedly lost in the fire. Allstate subsequently interviewed those witnesses. On June 25, 1996, Guebara informed Allstate that she had re-hired her attorney. On September 6, 1996, Allstate sent Guebara a letter denying her contents claim on the grounds of misrepresentation as to the personal property allegedly destroyed by the fire.

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