Nicholson v. Allstate Ins. Co.

Decision Date18 October 2013
Docket NumberNo. 2:11–CV–03018–TLN–KJN.,2:11–CV–03018–TLN–KJN.
PartiesAlexandra NICHOLSON, Plaintiff, v. ALLSTATE INSURANCE COMPANY, Defendant.
CourtU.S. District Court — Eastern District of California

OPINION TEXT STARTS HERE

Ralph Eldon Laird, MacKenroth & Laird, LLP, Roseville, CA, for Plaintiff.

Cynthia L. Mellema, Jeffry Butler, Megan Lynn Barker, Dentons U.S., LLP, San Francisco, CA, for Defendant.

ORDER

TROY L. NUNLEY, District Judge.

This matter is before the Court on Defendant Allstate Insurance Company's (Defendant) Motion for Summary Judgment or Alternatively Summary Adjudication (ECF No. 28). Plaintiff Alexandra Nicholson (Plaintiff) has filed an opposition to Defendant's motion. ( See Pl.'s P & A Opp'n to AllState Ins. Co.'s Mot. Summ. J. or Alternatively Summ. Adjudication, ECF No. 34.) The Court has carefully considered Defendant's motion and reply as well as the arguments presented in Plaintiff's opposition. For the reasons set forth below, Defendant's Motion for Summary Judgment is DENIED.

I. FACTUAL BACKGROUND1

Plaintiff owns the home located at 8975 Los Lagos Circle in Granite Bay, California.At all relevant times, Defendant insured Plaintiff's home under a Deluxe Plus Homeowner's Policy.

A. Insurance Policy Coverage

The Policy contains two sections, A and B. Section A is entitled “Dwelling Protection.” (ECF No. 28–2 at 5.) Section B is entitled “Other Structures Protection.” (ECF No. 28–2 at 5.) Additionally, the policy contains a section that sets out exclusions to the coverage provided under sections A and B. This Exclusion section contains the following applicable policy exclusions:

14. Vapors, fumes, acids, toxic chemicals, toxic gasses, toxic liquids, toxic solids, waste material or other irritants, contaminants or pollutants.

15. e) contamination, including, but not limited to the presence of toxic, noxious, or hazardous gasses, chemicals, liquids, solids or other substances at the residence premises or in the air, land or water serving the residence premises.

22. Planning, Construction or Maintenance, meaning faulty, inadequate or defective:

a) planning, zoning, development, surveying, siting;

b) design, specifications, workmanship, repair, construction, renovation, remodeling, grading, compaction;

c) materials used in repair, construction, renovation or remodeling; or

d) maintenance;

of property whether on or off the residence premises by any person or organization.

(ECF No. 28–2 at 17–18.)

B. The 2006 Claim

In Plaintiff's sworn declaration she states that she occasionally noticed bats flying around her property between 1993 and 2006. (Nicholson Decl., ECF No. 39 at ¶ 4.) In June 2006, Plaintiff began to hear noises coming from her bedroom wall, behind her headboard. (ECF No. 39 at ¶ 7.) Plaintiff went outside to explore the cause of the noise and saw bats flying out of the top of her home where the exterior brick wall meets the eaves. (ECF No. 39 at ¶ 8.) Approximately five days later, Plaintiff noticed an odor inside the property. She subsequently obtained estimates to exclude bats from the property. (ECF No. 39 at ¶ 9.) Plaintiff alleges that she retained and paid an individual named Mark DeMontes $4250 to remove the bats and make the necessary repairs. 2 (ECF No. 39 at ¶ 12.) Plaintiff alleges that the bats had vacated the house prior to Mr. DeMontes beginning his repairs and that Plaintiff did not observe any bat activity until 2009. (ECF No. 39 at ¶ 16–17.)

Plaintiff filed an insurance claim and Defendant reimbursed Plaintiff for her expenses in the amount of $3841, pursuant to her policy.

C. The 2010 Claim

At some point in 2009, Plaintiff began noticing bats gathering in the east area of her property. However, it was not until July 2010, that she again began hearing noises in her bedroom wall. At around 10 p.m., Plaintiff ventured outside with a flashlight to investigate and saw that bats had returned to the same general area of her property that they had inhabited in 2006. Plaintiff described the scene as bats “swarming and crawling and flying” around the eastern eave of the property. (ECF No. 39 at ¶ 20.) Plaintiff stated that she did not observe an odor at this time, but “about five days after I first noticed the bats in July 2010, a horrendous smell of dead animals began to permeate the house. There had been no smell of dead animals in the house since 2006.” (ECF No. 39 at ¶ 22.)

After discovering that the bats had returned, Plaintiff tried to contact Mr. DeMontes, but was unable to reach him. Consequently, Plaintiff contacted Western Bat Specialists to come and inspect the property. Ken Clacher of Western Bat Specialists inspected the property on July 14, 2010. He prepared a report estimating the repair at $4500. Mr. Clacher testified that he observed the bats entering the property through gaps at the top exterior brick walls and proposed sealing the area to prevent re-entry.

Plaintiff contacted Defendant to file a claim 3 and Defendant assigned adjuster Jess Molina to handle the claim. Mr. Molina and his manager, Frank Iaccino, met with Plaintiff at the property on November 4, 2010. Plaintiff walked both of them around the property and showed them where she had observed the bats. (ECF No. 39 at 7.) During the visit, Mr. Molina verbally denied coverage because “the policy does not cover damage caused by rodents, and [ ] ‘bats are rodents.’ (ECF No. 39 at ¶ 28–30.) He also informed Plaintiff that the 2006 payment was an error and that claim, therefore, should have been denied. (ECF No. 39 at ¶ 31.) On November 6, 2010, Defendant issued a written denial letter with respect to the claim that is the subject of the instant matter. (ECF Nos. 35 at ¶ 15; 39 at ¶ 34.) The letter listed “BAT DAMAGE TO DWELLING” as the reason for declining policy coverage for the damages and enumerated Exclusions 14 and 15 in the policy as reasons for the denial. (ECF No. 28–24 at 8–9.) Due to a clerical mistake, the text of Exclusion 14 as listed in the letter is actually Exclusion 22 from Plaintiff's policy. Mr. Molina alleges that he intended to include the text of Exclusion 14 in the letter and not that of Exclusion 22. (ECF No. Molina Depo., ECF No. 28–4 at 76:19–77:25.)

D. Repair of the Property

In May 2011, Mr. Clacher and Tyler Rhoades of Western Bat Specialists performed a bat exclusion 4 on Plaintiff's property. (ECF no. 35 at ¶ 16.) Mr. Clacher and Mr. Rhoades testified that during the exclusion, they noticed areas where the person who did the prior exclusion had: (1) not installed exclusion mesh (thus leaving exposed the gaps at the top of the bricks); (2) installed mesh, but left gaps around the rafters allowing bats to get in; or (3) left “buckles” in the mesh that also allowed bats to enter. (Clacher Depo., ECF No. 28–4 at 108:23–109:6, 109:16–110:12, 111:13–20, 112:8–15, 113:13–114:2, 120:14–121:2; Rhoades Depo., ECF No. 28–4 at 130:13–131:5, 133:10–25, 134:16–22, 135:4–14, 137:7–14, 138:16–23, 142:4–12.) Mr. Rhoades described an area of “about 26 to 30 feet” where no exclusion screening had been previously installed. (ECF No. 28–4 at 136:4–13.) In light of these issues Clacher admitted that, in his view, the prior exclusion was not properly performed. (ECF No. 28–4 at 113:20–114:23.) Further, Rhoades testified that it “looked like somebody had attempted to do an exclusion badly” and with respect to an area around the garage, Rhoades noted that whomever did the prior exclusion “really goofed up.” (ECF No. 28–4 at 128:24–129:19, 133:15–19.) Clacher and Rhoades both saw evidence that bats had entered the gap behind the brick in at least some of the areas where they found the problems with the prior exclusion. (ECF No. 28–4 at 109:16–20, 139:21–140:7, 140:17–142:3.)

Plaintiff refutes Mr. Rhoades and Mr. Clacher's testimony that the prior exclusion work was faulty. In her sworn declaration, Plaintiff states that after she discovered that bats were getting trapped in the walls of her house, she decided to remove some of the mesh wire screens to let them out. Plaintiff explained as follows:

Obviously I wanted the bats out, and I certainly did not want bats trapped and dying inside the walls of my house, so I decided to remove some of the wire mesh screens to let them out. Using a ladder, I climbed up to areas I could reach with my hands under the eaves to remove some of the wire mesh screening, which were set in between the rafters and along the top of the walls. I did this around my garage and the west side of house just outside my bedroom. Some of the screens would not come off, and so I fastened a metal hook on the end of an old painter's extension pole that I had at the house. When fully extended, the pole with the hook was about 16 feet long. Using the extension pole and hook, I was then able to remove the screens more easily. Using a ladder and the extension pole, I was then also able to reach and remove screens at the second floor level of eaves. I was unable to remove some of the screens, and I ended up bending or breaking some of the screens. I did not attempt to remove all the screens. I was trying to let the bats escape so they would not be trapped, and so they would not die inside the walls of my house. I did this work over the course of several days in late August and early September 2010.

(ECF No. 39 at 6.)

E. The Current Action

Plaintiff repeatedly attempted to reach an agreement with Defendant concerning her claim. ( See generally ECF No. 39.) On August 26, 2011, Plaintiff sued Defendant in Placer County Superior Court in connection with the claim denial, and Defendant subsequently removed the action to this Court. Plaintiff asserts claims against Defendant for breach of contract, bad faith and declaratory relief. In addition, Plaintiff is seeking punitive damages. (ECF No. 1 at 6–11.)

Defendant filed a motion for summary judgment on all of Plaintiff's causes of action. (ECF No. 28.) In the alternative, Defendant moves for summary adjudication of Plaintiff's claim for breach of the covenant of...

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