Metropolitan News-Enterprise


Friday, October 20, 2006


Page 3


C.A.: Declaration Referencing Future Evidence Does Not Save Suit


By Tina Bay, Staff Writer


The declaration of plaintiff’s counsel in an insurance bad faith lawsuit stating that forthcoming expert deposition testimony would provide evidence in support of his client’s loss claims was insufficient to defeat the insurer’s summary judgment motion, this district’s Court of Appeal has ruled.

In an opinion filed Sept. 20 and ordered published yesterday, Div. Seven affirmed a summary judgment order by Los Angeles Superior Court Judge Wendell Mortimer Jr. and dismissed a local homeowner association’s lawsuit over property damage losses from the 1994 Northridge earthquake.

Cheviot Vista Homeowners Association, representing residents of a 22-unit Palms condominium complex, sued State Farm Fire and Casualty Company in 2001 pursuant to Code of Civil Procedure Sec. 340.9, which briefly revived otherwise time-barred Northridge quake claims where the insured contacted the insurer prior to January, 1 2000.

The association had contacted State Farm in January 1994, a week after the temblor, claiming earthquake coverage under its policy for the building, common areas, and various individual units. 

Under the policy, coverage was limited to $2.6 million with a $261,239, or 10 percent, deductible.

After inspecting the property, State Farm in April sent the association a cost-of-repair estimate of $112,977.80.  It explained that no structural damage was found—as the city Department of Building and Safety also previously determined—and that a coverage payment would not be made because the estimated cost of repairs fell below the deductible.

The association subsequently solicited bids from contractors ranging from $77,255 to $83,490 for complete earthquake-related repairs.  It ultimately contracted with a construction company in October for $36,110 to perform only the most critical repairs on the building.

After seven years of non-communication with State Farm, the association filed a complaint alleging breach of contract and insurance bad faith, and asserting the company intentionally underestimated earthquake damage to its property in 1994.

State Farm pointed out in its summary judgment motion that the association’s estimates for complete repairs were consistent with, and indeed less than, State Farm’s estimates, and both fell short of the policy’s deductible.  Further, the company argued, actual repair costs amounted to even less than the requisite amount and the association was thus not entitled to benefits for the 1994 earthquake damage.

In opposition, the association submitted a declaration by its counsel, Sherman Oaks attorney Glenn T. Rosen of Loewenthal, Hillshafer & Rosen, stating:

“As trial is scheduled for August 9, 2005, experts, including experts who will offer testimony regarding the [Homeowners] Association’s earthquake damages and State Farm’s breach of contract and bad faith, will not be designated until June 1, 2005.  A key element of the experts’ depositions will be the differences between and the impact upon [the Homeowners Association’s] allegations of bad faith stemming from [its] cost of repair estimate in the amount of $1,009,406.88 versus State Farm’s repair estimate in the amount of $136,603.14.”

Rosen’s declaration did not identify or attach a copy of the cost estimate or other information pertinent to the alleged loss amount.

Mortimer held the association never showed evidence that repair costs came near to the deductible.

Perluss, writing for Div. Seven, agreed.

“Counsel’s passing reference to a $1 million cost-of-repair estimate is not a basis to defeat summary judgment,” he said.

The justices also ruled that Mortimer did not abuse his discretion in failing to continue the summary judgment motion so the association could complete outstanding discovery and designate and depose expert witnesses.

“Nothing, other than perhaps questionable tactics, prevented the Homeowners Association from relying on its own expert evidence in opposing summary judgment if crucial to create a triable issue of material fact,”  Perluss wrote.  “Indeed, to suggest a summary judgment motion could not be granted because experts had yet to be designated or deposed would render the entire summary judgment procedure meaningless, given a summary judgment motion must be filed no less than 105 days prior to trial and expert disclosure generally does not occur until 50 days before trial.”

Clark B. Holland, one of State Farm’s attorneys, told the MetNews that publication of the court’s decision was important to clarify that “there are plenty of situations when procedural issues do not impact the validity of the granting of summary judgment.”

“This was a case where clearly there wasn’t sufficient evidence,” he said.

Rosen did not immediately return calls seeking comment.

The case is Cheviot Vista Homeowners Association v. State Farm Fire & Casualty Company, B182575


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