Love v. Fire Ins. Exchange

• Citation: 221 Cal.App.3d 1136,271 Cal.Rptr. 246
• Decision Date: 28 June 1990
• Docket Number: No. D009984,D009984
• Court: California Court of Appeals Court of Appeals
• Parties: Denis LOVE et al., Plaintiffs and Appellants, v. FIRE INSURANCE EXCHANGE, Defendant and Respondent.

Page 246

271 Cal.Rptr. 246

221 Cal.App.3d 1136

Denis LOVE et al., Plaintiffs and Appellants, v. FIRE INSURANCE EXCHANGE, Defendant and Respondent.

No. D009984.

Court of Appeal, Fourth District, Division 1, California.

June 28, 1990.

Review Denied Sept. 13, 1990.

[221 Cal.App.3d 1141] William J. Brown, III, Santa Monica, for plaintiffs and appellants.

Law Offices of Kenneth N. Greenfield, Horvitz & Levy, Barry R. Levy and Mitchell C. Tilner, Encino, for defendant and respondent.

FROEHLICH, Associate Justice.

Appellants Denis Love and Sharon Love appeal from a judgment in favor of Fire Insurance Exchange (FIE) following the granting of FIE's motion for summary judgment based on the statute of limitations. The Loves contend (1) FIE's conduct estops it from relying on the statute of limitations; (2) they have independent causes of action for bad faith which are not

time barred; and (3) the numerous triable issues of fact preclude entry of summary judgment.

1. Factual Background

The Loves have resided in their home since 1969. They had insured the home through FIE at all relevant times. In late 1980 Mr. Love discovered cracks in the foundation and filling of the home, "strange" cracks in the ground adjacent to the home, separations, sticking doors and a broken framing member in and around the home. On February 3, 1981, the Loves hired a geotechnical engineering firm to inspect the home. The geotechnical engineering firm conducted the inspection and thereafter advised the Loves the damage was related to earth movement and the negligence of the home builders. The firm further advised the Loves the cracked slab was caused by expansion and contraction of the soils beneath the home.

Also in February of 1981 Mr. Love telephoned his insurance agent, Oliver Crocker, and made a claim for the damages described above. Crocker, FIE's agent and representative, denied the claim indicating there was no coverage under the Loves' policy because the claimed damages were an "act of god." The Loves took no further steps to pursue the denied claim.

In December of 1985 Mr. Love was told by an acquaintance the damage to his home (which had worsened over time) was common to homes in the area and that other insurance companies had compensated other owners for similar damages. On December 30, 1985, Mr. Love again contacted Crocker to resubmit his claim for the above described damages. By a letter dated January 21, 1986, FIE acknowledged receipt of the renewed claim and informed the Loves it would undertake an investigation of their claim, without waiver of any defenses then available to FIE. The Loves acknowledged receipt of the letter, understanding that FIE was not waiving any of its rights. After conducting an investigation, FIE denied the Loves' claim on May 29, 1987.

On January 21, 1988, the Loves filed an action against FIE alleging, among others, causes of action for breach of the covenant of good faith and fair dealing, breach of statutory duties, breach of contract, fraud and intentional infliction of emotional distress. ¹ FIE subsequently moved for summary judgment on the grounds the claims were time barred by both the policy provisions ² and governing statutes of limitations. The court concluded the action was barred by the statutory limitation periods and granted FIE's motion. Following entry of judgment, this appeal was undertaken.

2. Standard of Review

The purposes and standards for summary judgment are well established. "The purpose of the summary procedure is to penetrate through evasive language and adept pleading and ascertain the existence or absence of triable issues. [Citations.]" (Chern v. Bank of America (1976) 15 Cal.3d 866, 873, 127 Cal.Rptr. 110, 544 P.2d 1310.) The trial judge determines whether triable issues exist by examining the affidavits and evidence before him, including any reasonable inferences which may be drawn from the facts before him. (People v. Rath Packing Co. (1974) 44 Cal.App.3d 56, 61-64, 118 Cal.Rptr. 438.) While "... the affidavits of the moving party are to be strictly construed and those of the opponent liberally construed ... [citation], ... a party opposing a motion for summary judgment which is supported by affidavits or declarations sufficient to sustain the motion, has the burden of showing that triable issues of fact exist." (Chern v. Bank of America, supra, 15 Cal.3d at p. 873, 127 Cal.Rptr. 110, 544 P.2d 1310.)

Where the operative facts are undisputed, the question of the application of the statute of limitations is a matter of law

                (Wells Fargo Bank v. [221 Cal.App.3d 1143] Superior Court (1977) 74 Cal.App.3d 890, 895, 141 Cal.Rptr. 836), and summary judgment is proper where the facts show the action is time barred as a matter of law (Jolly v. Eli Lilly & Co.  (1988) 44 Cal.3d 1103, 1112, 245 Cal.Rptr. 658, 751 P.2d 923).   We conclude the trial court correctly determined there were no triable issues of material fact and the claims were barred by the statute of limitations. 3
                

3. Loves' Causes of Action Are Barred by the Statute of Limitations

All of the Loves' claims for payments due under the policy (and their causes of action based on wrongful denial of said claims) accrued in 1981, when they were notified by their geotechnical firm the home was suffering damages from subsidence problems caused by third party negligence in constructing the home. Where an insured observes abnormal damage, hires an engineering firm to investigate, and obtains a report stating earth movement and third party negligence are causes of the damage, his causes of action against the insurer accrue on receipt of such report (Lawrence v. Western Mutual Ins. Co. (1988) 204 Cal.App.3d 565, 571-573, 251 Cal.Rptr. 319), because the statute of limitations commences when a party knows or should know the facts essential to his claim (Gutierrez v. Mofid (1985) 39 Cal.3d 892, 897-898, 218 Cal.Rptr. 313, 705 P.2d 886).

An insured who is aware of the essential facts cannot toll the statute of limitations by contending he only belatedly discovered his policy might provide coverage (Abari v. State Farm Fire & Casualty Co. (1988) 205 Cal.App.3d 530, 535-536, 252 Cal.Rptr. 565), because knowledge of the facts, rather than knowledge of the available legal theories or remedies, starts the statute of limitations (Gutierrez v. Mofid, supra, 39 Cal.3d at p. 898, 218 Cal.Rptr. 313, 705 P.2d 886). Accordingly, the Loves' causes of action accrued not later than February of 1981, because Loves were aware of the factual predicate to their suit and were aware their claim had been unconditionally denied. (Cf. State Farm Fire & Casualty Co. v. Superior Court (1989) 210 Cal.App.3d 604, 258 Cal.Rptr. 413 [knowledge of facts and unconditional denial of claim start statute of limitations].)

The Loves' complaint was filed in January of 1988, almost seven years after their claims were alleged to be wrongfully denied. Although the different causes of action carry different periods of limitation, ⁴ all periods expired well before the complaint was filed.

4. FIE's Conduct Does Not Estop It from Relying on the Statute of Limitations Defenses

The Loves seek to avoid the time bar by arguing FIE is estopped to assert the statute of limitations. The Loves contend because FIE stood in a fiduciary relationship with them, it had an obligation to disclose that where third party negligence was a proximate cause of the injury, an otherwise excluded loss was a covered loss. FIE denied the 1981 claim without disclosing this alternative legal theory of coverage. Instead, the Loves argue, FIE fraudulently concealed such legal theory. They urge such fraudulent concealment and failure to disclose should operate to estop FIE from relying on the statute of limitations. We reject their argument for several reasons.

First, we are unaware of any authority holding that an insurer is estopped to plead the statute of limitations merely because when it denied a claim it failed to inform its insured of pertinent laws or legal theories upon which the insured could rely in a later lawsuit challenging denial of the claim. To the contrary, on facts similar to the instant case, our Supreme Court in Neff v. New York Life Ins. Co., supra, 30 Cal.2d 165, 180 P.2d 900 concluded an insurer's denial of a claim started the statute of limitations running. In Neff an insured, possessing both the operative facts upon which his claim was based and the policy defining his rights, submitted a claim. The insurer unequivocally rejected the claim on the grounds the claim was not covered by the policy; and the insured failed to pursue the matter. In a later lawsuit the insured argued insurer was estopped from relying on the statute of limitations, contending the insurer's denial of the claim was a "misrepresentation" which caused insured's failure to pursue the claim. Citing the rule that an insurer must deal with his insured in good faith and take no unfair advantage, insured claimed the denial of the claim amounted to concealing a "fact" (i.e., of coverage) sufficient to estop reliance on the statute of limitations.

The Neff court rejected this contention. It reasoned that if an insurer was held to have concealed facts sufficient to estop reliance on the statute of limitations merely because it denied a claim without disclosing potential legal theories or grounds for coverage, an insurer would rarely be entitled to litigate claims disputes within the limitation periods, as such periods would be indefinitely suspended until the insured sought and obtained legal advice indicating the grounds to challenge the insurer's decision. (Id. at p. 172, 180 P.2d 900.) The Neff court instead concluded that, because the insured possessed both the facts and his policy, the insurer could deny the claim without concomitantly waiving the statute of limitations:

"... Defendant [insurer], concealingno fact from the insured, was free to take this position. The insured, knowing all...