Court of Appeal Rules:
Equitable Estoppel May Revive Northridge Earthquake Claims
By KENNETH OFGANG, Staff Writer/Appellate Courts
A suit against an insurer for not paying a claim related to the Northridge earthquake may be timely under the doctrine of equitable estoppel, even if not filed within either the contractual limitations period or the one-year period for revival of such claims adopted by the Legislature, the Court of Appeal for this district ruled yesterday.
Div. Three, overturning a contrary ruling by Los Angeles Superior Court Judge Carl West, reinstated a suit by the Doheny Park Terrance Homeowner’s Association against Truck Insurance Exchange.
The suit grew out of claims submitted by the association, representing owners of 21 condominium units in Beverly Hills, following the earthquake on Jan. 17, 1994. Truck concluded that the property sustained nearly $36,500, which was less than the applicable deductible, so the claim was denied.
Nine Years Later
The association took no action until nine years later, when, according to its complaint, it was advised by an expert that the earthquake damage was more extensive than Truck had determined. In April 2003, the association sued for breach of contract, bad faith, fraud, and unfair competition, although the last cause of action was voluntarily dismissed.
The association said that as a lay organization, it necessarily relied on Truck’s investigation and assessment of the damage.
“Had [Doheny Park] known that [Truck] could not be trusted, that [Truck] looked out for its own interests above the interests of its policyholders, and that [it] had a pattern and practice of misrepresenting the amount of earthquake damage to insureds, then [Doheny Park] would not have relied on [Truck’s] representation as to the cost to repair [the] condominium complex,” the association alleged.
“In reliance on [Truck’s] representation, [Doheny Park] did not hire professionals to inspect the property to determine the true cost to repair the earthquake caused damage,” the complaint continued. “At no time between [Truck’s] denial of the insurance claim and January 2003 did [Doheny Park] learn, or believe, that [Truck] had misled [Doheny Park] about the extent of earthquake damage and the cost to repair [such] damage.”
In sustaining Truck’s demurrer, West ruled that the action was barred by a two-year contractual limitations period and by Code of Civil Procedure Sec. 340.9. The statute revived time-barred Northridge earthquake claims as to which the insured contacted the insurance company prior to Jan. 1, 2000, giving such insureds until Dec. 31, 2001 to bring suit on the revived claims.
Justice Walter Croskey, writing for the Court of Appeal, said the trial judge was correct in ruling that the complaint was untimely under the two-year limitations clause of the policy. In doing so, he rejected the association’s contentions that there were triable issues with regard to delayed discovery or equitable tolling.
Delayed discovery could not apply, Croskey said, because the association was on notice of the fact that its premises had been damaged and was obligated to make known to the insurer the extent of the damage at that time. Nor could equitable tolling apply, he said, once the insurer made an unequivocal denial of coverage.
No Absolute Deadline
But equitable estoppel might apply, the justice reasoned, rejecting the contention that the Legislature intended to create an absolute deadline for Northridge earthquake suits by enacting Sec. 340.9.
The Legislature, the justice said, was aware of the doctrine of equitable estoppel and could have expressly barred its application to Northridge earthquake cases if it had wished to do so.
Turning to the allegations of the complaint, Croskey said they were sufficient to plead equitable estoppel. Truck’s contention that the nine-year delay was unreasonable, the justice said, cannot be weighed on demurrer.
“Whatever difficulty [Doheny Park] may or may not have in proving such allegations at trial, it is enough to survive Truck’s demurrer,” the justice said.
The association was represented in the Court of Appeal by David C. Parisi and Suzanne Havens Beckman of the Parisi Law Firm and Bernie Bernheim and Joshua Haffner of the Law Offices of Bernie Bernheim. Truck was represented by Lisa Perrochet and Lisa R. Jaskol of Horvitz & Levy and Jeffrey J. Leist of Shea Stokes & Carter.
The case is Doheny Park Terrace Homeowners Association, Inc. v. Truck Insurance Exchange, B174036.
Copyright 2005, Metropolitan News Company