Roberson v. Allstate Insurance Company, A118683 (Cal. App. 4/25/2008)

• Decision Date: 25 April 2008
• Docket Number: A118683
• Court: California Court of Appeals
• Parties: WILLIE ROBERSON et al., Plaintiffs and Respondents, v. ALLSTATE INSURANCE COMPANY, Defendant and Appellant

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WILLIE ROBERSON et al., Plaintiffs and Respondents, v. ALLSTATE INSURANCE COMPANY, Defendant and Appellant

A118683

Court of Appeals of California, First Appellate District, Division Five

April 25, 2008

NOT TO BE PUBLISHED

Appeal from the Alameda County, Super. Ct. No. RG 06264446.

STEVENS, J.^*

Willie and Maggie Roberson filed a bad faith insurance action against Allstate Insurance Company and also sued several inspectors and contractors who were involved in the repair of their home after a fire. Allstate filed a petition to compel appraisal of the amount of the Robersons' loss. The trial court granted the petition but indefinitely stayed the appraisal and denied a stay of the court action. We affirm.

BACKGROUND

Willie and Maggie Roberson (Robersons) sued Allstate Insurance Company (Allstate) for damages arising out of a fire in their home. In a second amended complaint filed May 22, 2007, the Robersons identified the defendants as Allstate, related Allstate companies,¹ and several building inspectors or contractors (Paul Davis Restoration, A-1 Remediation, Dominion Environmental and P.W. Stephens.).² According to the amended pleading, both the fire and the fire department's suppression measures damaged the Roberson's home and personal property. The Robersons reported the incident to Allstate, their homeowner insurer, which arranged for Paul Davis Restoration to repair the fire and water damage, and for P.W. Stephens to remove asbestos. While P.W. Stephens carried out repairs, it left the home unlocked and the home was burglarized. Meanwhile, Paul Davis Restoration did not begin work on the home for weeks and this delay caused extensive mold contamination. The company failed to remediate the contamination and its other repair work was performed below industry standards. Allstate retained Dominion Environmental to inspect the home for mold and identify necessary remediation work, but the inspection failed to identify the full extent of the mold contamination. Allstate next retained A-1 Remediation to remediate the mold damage; however, the company performed its work negligently. Allstate refused to pay the full cost of the mold remediation, claiming without supporting evidence that some of the mold predated the fire. Allstate also declined to pay the Robersons' temporary housing costs beyond the 12-month limit in the policy.

The Robersons' pleading contained causes of action against Allstate for breach of contract, breach of the implied covenant of good faith and fair dealing, intentional infliction of emotional distress, fraud, negligent misrepresentation, and negligence. They also sued the related Allstate companies for fraud, negligent misrepresentation, and negligence; Paul Davis Restoration for breach of contract, intentional infliction of emotional distress, fraud, negligent misrepresentation, and negligence; and A-1 Remediation, Dominion Environmental, and P.W. Stephens for negligence.

Allstate filed a petition to compel appraisal pursuant to the insurance policy it had issued to the Robersons. The appraisal provision in the policy read:

"If you and we fail to agree on the amount of loss, either party may make written demand for an appraisal. Upon such demand, each party must select a competent and impartial appraiser . . . . The appraisers will select a competent and impartial umpire. . . . [¶] The appraisers shall then determine the amount of loss, stating separately the actual cash value and the amount of loss to each item. If the appraisers submit a written report of an agreement to you and to us, the amount agreed upon shall be the amount of the loss. If they cannot agree, they will submit their differences to the umpire. A written award agreed upon by any two will determine the amount of loss. [¶] Each party will pay the appraiser it chooses, and equally bear expenses for the umpire and all other appraisal expenses."

This provision complies with Insurance Code sections 10082.3 and 2071, which require residential and fire insurance policies to contain substantially equivalent appraisal provisions. Allstate also requested a stay of the court action pending completion of the appraisal. The Robersons opposed the petition and two defendants, Paul Davis Restoration and P.W. Stephens, filed notices of non-opposition to the petition.

On July 20, 2007, the court granted the petition but stayed the appraisal "until the other issues [in the court action] are determined or until such earlier time as the court specifies." At the same time, Allstate's request for a stay of the court action was denied. The court explained, "[T]he appraisal provision only applies to disputes between Allstate and Plaintiffs . . . regarding the actual cash value or the amount of loss. [Citations.] There are other issues between Allstate and Plaintiffs that are not subject to appraisal and which are the subject of this pending action, and a determination of such issues may also resolve the issues encompassed by the appraisal. (See C.C.P. § 1281.2(c).) [¶] Further, the remaining defendants in this action are not a party to the appraisal agreement. Plaintiffs' claims against the remaining defendants arise out of the same transactions or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact. (See C.C.P. § 1281.2(c).)" Allstate filed a notice of appeal of the court's July 20 order "effectively denying Allstate's petition to compel appraisal and motion to stay the action."

The Robersons filed new motions in the trial court to compel discovery responses. Allstate took the position that its appeal had effected an automatic stay of all trial court proceedings as they related to Allstate, including discovery proceedings. On August 28, 2007, the trial court rejected a blanket stay of trial court proceedings, but granted Allstate leave to renew its argument as to particular proceedings. The court ordered Allstate to respond to the Robersons' discovery motions and scheduled a hearing on the motions.

Allstate next filed a writ petition challenging the court's August 28, 2007 order. On September 14, this court granted a temporary stay of the order. On the same date, we issued an order in this appeal (A118683) directing the parties to file supplemental briefs on the appealability of the trial court's July 20 order on the appraisal petition. Allstate then filed a protective writ petition challenging the July 20 order in the event this court ultimately ruled the order was not appealable (A119113).

We subsequently held that the trial court's July 20, 2007 order granting but staying the appraisal was an appealable order. And on November 30, we denied the two pending writ petitions (A119062, A119113), dissolved the temporary stay that had been granted in case number A119062, and denied the Robersons' motion for sanctions. After Allstate asked this court to clarify the scope of the automatic stay in action A118693, we issued the following order: "Counsel's letter acknowledges that the superior court has devised a mechanism for resolving disputes concerning the scope of the stay, and this court presumes that such issues will be resolved appropriately."

Discussion

An appraisal provision in an insurance policy is an agreement to arbitrate within the meaning of Code of Civil Procedure section 1280, subdivision (a), and is governed by California's contractual arbitration law (Code Civ. Proc., § 1280 et seq.).³ (Louise Gardens of Encino Homeowners' Assn., Inc. v. Truck Ins. Exchange, Inc. (2000) 82 Cal.App.4th 648, 658.) Under section 1281.2, a court must order parties to arbitrate a dispute if it determines an agreement to arbitrate the dispute exists, unless it concludes, as relevant here, that "[a] party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party, arising out of the same transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact." (§ 1281.2, subd. (c) [hereafter, § 1281.2(c)].) If the court determines section 1281.2(c) applies, "the court (1) may refuse to enforce the arbitration agreement and may order intervention or joinder of all parties in a single action or special proceeding; (2) may order intervention or joinder as to all or only certain issues; (3) may order arbitration among the parties who have agreed to arbitration and stay the pending court action or special proceeding pending the outcome of the arbitration proceeding; or (4) may stay arbitration pending the outcome of the court action or special proceeding." (§ 1281.2.) Here, the trial court stayed appraisal of the amount of the Robersons' loss pursuant to section 1281.2(c) (and apparently also pursuant to subsection (4), although that subsection was not expressly cited by the court).⁴

An order staying or denying appraisal under section 1281.2(c) is ordinarily reviewed for abuse of discretion. (Whaley v. Sony Computer Entertainment America, Inc. (2004) 121 Cal.App.4th 479, 484 (Whaley).) Where issues of statutory interpretation are raised, review is de novo. (Ibid.)

I. Applicability of Section 1281.4

Allstate argues the court had no choice but to grant its petition to compel appraisal because appraisal was statutorily mandated in the circumstances. The court in fact expressly "granted" the petition, but indefinitely stayed the appraisal. According to Allstate, once the court granted its petition, it was required by section 1281.4 to stay the court action, rather than the appraisal. These arguments raise questions of statutory interpretation that we review de novo. (Whaley, supra, 121 Cal.App.4th at p. 484.)

A. Whether Appraisal was Statutorily Mandated

We do not agree with Allstate's first contention, namely that the trial court had no choice but to order appraisal because appraisal was statutorily mandated.

California law mandates only that residential and fire...