Imperial Casualty & Indemnity Co. v. Sogomonian

• Decision Date: 04 February 1988
• Docket Number: No. B022012,B022012
• Citation: 243 Cal.Rptr. 639,198 Cal.App.3d 169
• Court: California Court of Appeals Court of Appeals
• Parties: IMPERIAL CASUALTY AND INDEMNITY, COMPANY, Plaintiff and Respondent, v. Levon SOGOMONIAN and Elichka Sogomonian, Defendants and Appellants. and Related Cross-Actions.

Page 639

243 Cal.Rptr. 639

198 Cal.App.3d 169

IMPERIAL CASUALTY AND INDEMNITY, COMPANY, Plaintiff and Respondent, v. Levon SOGOMONIAN and Elichka Sogomonian, Defendants and Appellants and Related Cross-Actions.

No. B022012.

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

Feb. 4, 1988.

As Modified Feb. 23, 1988.

Review Denied April 21, 1988.

[198 Cal.App.3d 173] Rafael Chodos, Santa Monica, for defendants and appellants.

Burns, Palumbo, Milam & Baronian and Bruce Palumbo, Pasadena, for plaintiff and respondent.

CROSKEY, Associate Justice.

Defendants Levon and Elichka Sogomonian (herein "defendants") appeal from a summary judgment entered in favor of plaintiff Imperial Casualty Insurance Company (herein "Imperial") on both Imperial's complaint and defendants' cross-complaint.

FACTUAL AND PROCEDURAL BACKGROUND

On July 14, 1982, Imperial issued a homeowner's policy to defendants which provided casualty and fire insurance protection for defendants' home. On or about October 9, 1982, defendants' home was destroyed by fire. Following an investigation, Imperial concluded that certain misrepresentations and a number of omissions had been made by the defendants in their application for the policy which they had submitted to Imperial on June 7, 1982. Based thereon, Imperial filed this action on August 15, 1983, seeking:

1. Rescission of the policy ab initio, together with the judgment of the court so declaring; and

2. Repayment, with interest, of advance payments (against the then anticipated fire insurance proceeds) of $30,300 which Imperial made to the defendants on or about November 18, 1982. ¹

On November 30, 1983, defendants filed a cross-complaint which sought compensatory and punitive damages allegedly arising from Imperial's breach of the insurance policy contract, breach of the covenant of good faith and fair dealing implied therein and violation of the provisions of Insurance Code section 790.03, subdivision (h).

In its motion for summary judgment Imperial produced evidence that the defendants, in responding to questions in the policy application, (1) specifically denied (for the immediately preceding three years) any loss history and any policy cancellations or renewal refusals and (2) failed to include the following facts:

1. That in February of 1980 (within three years of their application to Imperial) defendants suffered landslide damages to their property which resulted in a legal action for $500,000 in damages filed against them by a downhill neighbor. This claim was submitted by the defendants to their then insurance carrier, Equitable General Insurance Company;

2. That in early 1981 defendants suffered an uninsured loss by theft of precious stones exceeding $100,000 in value;

3. That on December 12, 1981, Underwriters Insurance Company had cancelled a homeowner's policy which it had previously issued on the same property here involved;

4. That on March 29, 1982, defendants had presented a water damage claim to Blue Ridge Insurance Company with respect to this same property;

5. That, on April 5, 1982, over two months prior to the submission of the application to Imperial, the defendants had been notified by Blue Ridge Insurance Company of the non-renewal of the homeowner's insurance policy which that company had theretofore issued. Subsequently, on July 19, 1982, just a few days after the issuance of Imperial's policy, defendants were informed that the reason for such non-renewal was substandard property maintenance by defendants of the same property here involved. Defendants did not ever provide such information to Imperial;

6. That at the time of the application, there was pending a lawsuit with Equitable 7. That at the time the application was made to Imperial defendants had a second mortgage on their property with Alliance Bank (the existence of a first mortgage with American Savings & Loan Association was disclosed; however, the total owed on the home was approximately $425,000 of which nearly one-half, or $200,000, was secured by the undisclosed second trust deed).

Life Assurance Society, wherein that company sought to rescind a health policy on the grounds that defendants had made material misrepresentations and omissions in the application for that policy;

Imperial also offered the deposition testimony of one of its former underwriters who was responsible for making the decision to issue the subject policy. She testified that she relied on defendants' application and had she known the "true facts" she would not have approved the issuance of the policy.

In their response to the summary judgment defendants did not dispute that the aforesaid statements in the application were untrue or incomplete and they effectively conceded that the described omissions had occurred. ² However, they contended that such statements and omissions were either irrelevant or immaterial, or claimed that the "true facts" were known to Derian who, defendants claim, was the agent of Imperial rather than defendants. In short, defendants presented no serious dispute as to the accuracy of Imperial's factual claims. Indeed, in their brief before this court defendants make clear that, apart from their arguments on materiality, there is no real dispute as to the truth of Imperial's claim of concealment. Based on this record, the trial judge granted summary judgment on both the complaint and defendants' cross-complaint. ³ This appeal followed.

CONTENTIONS ON APPEAL

Defendants first contend that entry of summary judgment was improper. They assert essentially two arguments in support of their position:

1. That while no dispute may exist as to the fact that defendants omitted certain matters from their application, ⁴ there are disputed factual issues as to Derian's agency and whether the omissions were material; and

2. That even if the trial court was correct in concluding that Imperial was entitled to rescission, it was error to grant a judgment against defendants on their cross-complaint. Defendants contend that that pleading raised issues of fact not addressed by Imperial's motion which related to alleged violations by Imperial of its statutory obligations under Insurance Code section 790.03, subdivision (h). ⁵

In addition, defendants contend that the judgment is defective in that it is not clear just what relief has been granted to Imperial or that all issues between the parties have been resolved. For example, has Imperial received a judgment of rescission ab initio, or is the rescission effective We conclude that the first two arguments are without merit and that a summary resolution of Imperial's rescission claim and defendants' cross-complaint was proper. However, we agree, at least in part, with the defendants' objections to the fact and form of the judgment which was entered. We therefore reverse, but with directions as to certain limited further proceedings.

                as of some other date?   Are defendants liable for monetary damages and, if so, in what amount
                

DISCUSSION

1. The Information Which Defendants Failed to Disclose was Material and Summary Resolution of Imperial's Rescission Claim Was Proper.

Summary judgment is properly granted only when the evidence in support of the motion establishes that there is no triable issue of material fact and that the moving party is entitled to judgment as a matter of law. (Isaacs v. Huntington Memorial Hospital (1985) 38 Cal.3d 112, 134, 211 Cal.Rptr. 356, 695 P.2d 653.) This circumstance exists when the evidence in support of the moving party would be sufficient to sustain a judgment in his favor and the opposing party has not presented any facts which give rise to a triable issue of material fact. (Kallen v. Delug (1984) 157 Cal.App.3d 940, 948, 203 Cal.Rptr. 879; Sebastian International, Inc. v. Peck (1987) 195 Cal.App.3d 803, 807, 240 Cal.Rptr. 911.) This is such a case.

In their brief, defendants effectively conceded that of the established material issues of fact claimed by Imperial, they only really disputed three: ⁶

a. Defendants deny that Blue Ridge Insurance Company had refused to renew their previous homeowner's policy. However, they do not dispute that a non-renewal notice was received by Derian prior to the submission of defendants' application to Imperial and that the reason Blue Ridge subsequently gave for such non-renewal was defendants' substandard maintenance of their property (a fact which they did not report to Imperial). Defendants argue that Derian had, on their behalf, already sent (several weeks earlier) a notice of cancellation of the policy to Blue Ridge. Defendants therefore conclude that the non-renewal notice was a nullity and did not need to be mentioned in the application. Apart from the fact this is a little like the face saving rejoinder of the discharged employee ("you can't fire me, I quit"), it does not raise a triable issue with respect to Imperial's claim that the fact of the receipt of the notice was not disclosed as requested by the application form;

b. Defendants argue that Derian (who they acknowledged they had "trusted ... to handle all my insurance needs with respect to homeowner's insurance for many years prior to my getting the Imperial policy") was not their agent when he helped them prepare the application, but rather he was acting as the agent of Imperial. Defendants offer only a conclusionary assertion in their declaration that they believed that Derian was Imperial's agent. Imperial filed objections to this evidentiary submission by defendants ⁷ and pointed to Derian's declaration in which he expressly stated that he prepared the application based upon "information supplied by the defendants." In his deposition testimony c. While defendants concede that they were aware that their property had suffered from earth movement and subsidence as claimed by Imperial, they argue that these were tiny "popouts" or had occurred so far from the house that they were not significant, and therefore...