Kennedy v. United States Liab. Ins. Co.

• Decision Date: 12 January 2023
• Docket Number: LA CV22-05738 JAK (MRW)
• Parties: Brian Kennedy v. United States Liability Insurance Company, et al.
• Court: U.S. District Court — Central District of California

Brian Kennedy
v.
United States Liability Insurance Company, et al.

No. LA CV22-05738 JAK (MRW)

United States District Court, C.D. California

January 12, 2023

Present Honorable JOHN A. KRONSTADT, UNITED STATES DISTRICT JUDGE.

CIVIL MINUTES - GENERAL

Proceedings: (IN CHAMBERS) ORDER RE PLAINTIFF'S MOTION TO REMAND (DKT. 13) JS-6

I. Introduction

On July 29, 2020, Brian Kennedy (“Kennedy” or “Plaintiff”) filed this action in the Los Angeles Superior Court against United States Liability Insurance Company, Inc. (“USLI”) and Schifrin Gagnon & Dickey, Inc. (“SGD,” or together with USLI, “Defendants”). Dkt. 1-1 at Ex. 2 (the “Complaint”). The Complaint advanced three causes of action against USLI: (1) declaratory relief as to insurance coverage; (2) breach of contract; and (3) breach of the covenant of good faith and fair dealing. Id. The Complaint advanced a single cause of action against SGD -- negligent misrepresentation. Id.

On August 12, 2022, USLI removed the action on the basis of diversity jurisdiction. Dkt. 1. On September 12, 2022, Kennedy moved to remand the action. Dkt. 13 (the “Motion”). On September 26, 2022, USLI opposed Kennedy's motion. Dkt. 15 (the “Opposition”). On October 3, 2022, Kennedy filed a reply brief in support of the Motion. Dkt. 16 (the “Reply”).

A hearing on the Motion was held on November 21, 2022, and it was taken UNDER SUBMISSION. For the reasons stated in this Order, the Motion is GRANTED. The action is remanded to the Los Angeles Superior Court.

II. Factual Background

It is alleged that Plaintiff owned certain commercial real property in Van Nuys, CA 91406. Complaint at 18. It is alleged that the property was leased to an automobile dealership, but that it vacated the property in or about August 2019. Id. at 19. Plaintiff alleges that, because of concern that the vacant property could be vandalized or otherwise damaged by an unlawful entry, he obtained insurance coverage (the “Policy”) from USLI for “direct physical loss of or damage to Covered Property at the premises described in the Declarations caused by or resulting from any Covered Cause of Loss.” Id.

The Complaint alleges that, during the term of the Policy, someone unlawfully entered the property and caused damages to it. Id. at 19-20. Plaintiff obtained estimates for the necessary repairs that totaled more than $1.5 million. Id. at 20. After the incident, it is alleged that Plaintiff timely made a claim to

1

USLI, which acknowledged receipt around December 30, 2019. Id.

USLI hired SGD as an independent loss adjuster in connection with the claim. Id. Plaintiff then provided photographs of the damaged areas of the property as well as copies of the estimates to repair it to both USLI and SGD. Id. It is alleged that Dorcey, an employee of SGD, inspected the property, but declined to inspect certain areas due to the presence of biohazardous waste. Id. SGD requested that Plaintiff arrange to have these areas cleaned so that they could be inspected. Id. Plaintiff spent $5500 on that process. Id.

Prior to the second inspection, USLI paid $48,509.40 to Plaintiff for the “undisputed” loss at the property, but stated that certain claimed costs were not covered under the Policy due to its exclusions for “Asbestos Material,” “Lead Contamination,” “Absolute Pollution,” and “Mold, Fungus, Bacteria, Virus or Organic Pathogen.” Id. at 20-21. It is alleged that, on February 6, 2020, Berardi and Carlson, who were associates of Plaintiff, spoke to Dorcey, who told them “that this was only a preliminary estimate and a preliminary step in the process, and that she would be re-inspecting the Property once the cleanup she had specified was complete, at which point USLI[] would complete its coverage analysis and issue a further payment.” Id. at 21.

On February 15, 2020, Dorcey conducted the second inspection. Id. A letter from Dorcey to Plaintiff and Berardi, which was dated February 21, 2020, stated that she had “reported regarding the additional inspection and forwarded a revised estimate for the insurance carrier's consideration.” Id. The letter also stated that Plaintiff and Berardi “will be contacted directly by the insurance examiner regarding the resolution of this claim.” Id. Plaintiff alleges that he relied on these statements about USLI. Id. Plaintiff did not arrange for any repairs to the property pending further communication from USLI. Id.

It is alleged that USLI declined to renew the policy on February 24, 2020. Id. at 22. It is alleged that Berardi followed up with Dorcey in May 2020. Id. On May 15, 2020, Berardi received an e-mail from another SGD employee stating that Plaintiff's “claim has been paid and closed.” Id. As part of its communications with Plaintiff about no further payments, USLI stated that the Policy did not cover either the loss of copper, or damage resulting from the theft or attempted theft of copper, which were allegedly components of Plaintiff's claim. Dkt. 1-10 at 173-74. USLI claims that, in the application for the Policy, Plaintiff stated that the plumbing in the property was made of copper. Dkt. 1-10 at 171.

Plaintiff's negligent misrepresentation claim against SGD is based on its alleged statements “that Plaintiff needed to clean the Property before the Property could be inspected and before Plaintiff's loss could be adjusted.” Dkt. 1-1 at 27. This claim is also based on SGD's alleged statements that “its initial estimate of the loss was preliminary, that the loss would be revised, and that USLI[] would be in contact with Plaintiff when it reached a final resolution of the claim.” Id.

USLI was served with the Complaint on August 14, 2020, and SGD was served on August 17, 2020. Id. at 147, 151. Both filed timely answers on September 30, 2020. Id. at 178-95. Discovery then proceeded. Defendants filed their first sets of discovery requests on January 21, 2021. Dkts. 14-1, 14-2. Plaintiff filed his first sets of discovery requests on January 29, 2021. Dkt. 14-3.

On November 8, 2021, USLI moved to compel further discovery responses from Plaintiff. Dkt. 1-1 at 247. USLI argued that Plaintiff had failed to produce documents relating to a fire that occurred on or

2

about December 18, 2020, as well as those that reflected communications between Plaintiff and prospective insurers. Id. at 252-54. USLI argued that Plaintiff had failed to produce certain documents for more than six months. Id. at 254. USLI also objected to Plaintiff's position that the definition of the term “incident” in its interrogatories was vague and ambiguous. Id. at 255-56. It was alleged that Plaintiff also provided inconsistent responses regarding the amount of his claim for lost rental income. Id. at 256-57.

As a result of these discovery disputes, the Superior Court ordered the parties to participate in an informal discovery conference. Dkt. 1-2 at 87. They did so in January 2022. At the informal discovery conference, Plaintiff agreed to produce additional documents by January 31, 2022, the parties agreed to a protective order, and USLI agreed to produce unredacted documents by January 31, 2022. Id. at 124.

Another discovery dispute arose later in 2022. USLI again sought an informal discovery conference. Id. at 141. USLI claimed that, at Berardi's deposition, he testified that certain documents responsive to Defendants' initial discovery requests had not been produced. Id. at 141-42. They included a copy of a citation from the City of Los Angeles regarding the condition of the property. Id. at 200. They also included draft lease agreements exchanged regarding the property, emails regarding monthly rental amounts, and communications with prospective tenants. Id. at 201. Berardi also testified about a potential communication with an insurance broker regarding other insurance companies who had declined to insure the property. Id. USLI argued that no corresponding documents were produced. It also claimed that text messages between Berardi and Carlson regarding Plaintiff's claim were not produced. Id. It also claimed that photographs of the fire damage were not produced. Id. at 202.

Another dispute arose concerning the instructions by Plaintiff's counsel during the deposition of Berardi that he not answer certain questions. Id. at 142. Those questions concerned whether Plaintiff incurred unreimbursed costs for debris removal and cleanup, whether Berardi was aware of certain provisions in the insurance policy, whether Berardi had any more information that would support the allegation that USLI's denial of his claim was unreasonable and in bad faith, whether the alleged losses were caused by USLI's denial of his claim, and whether Berardi knew whether Plaintiff was unable to rent or otherwise use the premises. Id. at 170-76. USLI claimed that, two days prior to Plaintiff's deposition, Plaintiff's counsel informed Defendants that Plaintiff would not appear and offered no alternative dates. Id. at 142.

The Superior Court determined that Plaintiff had not “show[n] a good faith effort to meet and...