Antonopoulos v. Mid-Century Ins. Co.

63 Cal.App.5th 580

277 Cal.Rptr.3d 801

Ted ANTONOPOULOS et al., Plaintiffs and Respondents,

v.MID-CENTURY INSURANCE COMPANY, Defendant and Appellant.

A160360

Court of Appeal, First District, Division 2, California.

Filed April 27, 2021

Attorney for Plaintiffs and Respondents, Ted Antonopoulos et al.: Pillsbury & Coleman, LLP, Philip L. Pillsbury, Jr., Eric K. Larson

Attorneys for Defendant and Appellant, Mid-Century Insurance Company: Hansen, Kohls, Sommer & Jacob, LLP, Daniel V. Kohls, Leighton R. Koberlein; BHC Law Group, LLP, Susan P. Beneville, Julie Hayashida

Richman, Acting P.J. Plaintiffs Ted and Susie Antonopoulos lost their Santa Rosa home in the 2017 Tubbs fire. They promptly submitted a claim under their homeowner's insurance policy to defendant Mid-Century Insurance Company (Mid-Century), which denied the claim on the ground that the policy had been canceled for nonpayment of premium six days before the fire. Plaintiffs immediately paid the past due premium, and the policy was reinstated. Mid-Century continued to deny the claim, however, taking the position that reinstatement did not retroactively cover the loss that occurred when the policy was out of force.

Plaintiffs sued for breach of contract and breach of the implied covenant of good faith and fair dealing, and the parties filed cross-motions for summary judgment or summary adjudication. Mid-Century argued the undisputed facts showed it did not owe plaintiffs a duty to cover their loss and thus did not breach the insurance contract or the implied covenant of good faith and fair dealing and could not be liable for exemplary damages. Plaintiffs argued the undisputed facts showed that Mid-Century reinstated the policy without a lapse in coverage and thus owed them a duty to cover their loss. The trial court agreed with plaintiffs, concluding the undisputed facts showed that Mid-Century waived forfeiture of the policy and reinstatement was retroactive with no lapse in coverage. Accordingly, the court granted summary adjudication for plaintiffs on the issue of Mid-Century's duty to provide coverage and denied Mid-Century's motion in its entirety. Pursuant to a stipulation by the parties, judgment was then entered for plaintiffs.

Mid-Century appeals, asserting two fundamental arguments: (1) the loss-in-progress rule precludes coverage for a known loss, so Mid-Century could not, as a matter of law, reinstate the policy retroactively to provide coverage for the loss that occurred while the policy was out of force; and (2) even if Mid-Century could have reinstated the policy without a lapse in coverage, the undisputed facts show it did not do so and that it reinstated the policy subject to a lapse of nine days that included the date plaintiffs lost their home.

We reject Mid-Century's first argument. Its second argument hinges on its intent when it reinstated the policy, and as to this, there exists a triable issue of material fact. Thus, we conclude Mid-Century's motion was properly denied but plaintiffs’ motion was improperly granted. We therefore affirm in part and reverse in part.

BACKGROUND

The Policy, Its Cancellation, and Plaintiffs’ Claim

In 2001, plaintiffs Ted and Susie Antonopoulos purchased a home on Vintage Circle in Santa Rosa.¹ They obtained a homeowner's insurance policy from Mid-Century (the policy) and subsequently renewed the policy on an annual basis for the next 16 years. Since the inception of the policy, plaintiffs had paid their annual premium in two installments. Susie handled the bills for the household and was responsible for paying the premium. She had a history of paying it in an untimely fashion, often allowing the policy to expire and then making a payment at or near the last possible day to maintain the policy without a lapse in coverage.

In February 2017, Mid-Century offered plaintiffs a renewal of the policy, as it had done every year since the policy's inception. The premium was $1,109.02 for the policy term April 8, 2017, to April 8, 2018. The attached declaration page identified the Vintage Circle property as the property insured, with property coverage that included the dwelling, separate structures, and personal property, as well as liability coverage. As in the past, plaintiffs maintained the two-installment option for the renewed policy, with the first installment due on April 8, 2017 and the second installment due four months later, on August 8.

Paragraph 7 of the policy governed cancellation and provided in pertinent part:

"c. We may cancel this policy by mailing or delivering written notice to you, pursuant to the Policy Notices condition. The mailing or delivery of it will be sufficient proof of notice.

"We may cancel this policy only for the following reasons:

"(1) non-payment of premium, whether payable to us or our agent. We may cancel at any time by notifying you at least 10 days before the date cancellation takes effect ...."

On March 9, 2017, Mid-Century sent plaintiffs a bill for the first installment, indicating that $554.51 was due on April 8. April 8 came and went without Mid-Century receiving payment from plaintiffs. Accordingly, on April 17, Mid-Century sent them an "Important Expiration Notice" advising that the policy had expired on April 8 due to nonpayment of premium but that they could maintain coverage beyond the expiration date by paying the past due amount by April 25. The notice also advised that per the two-installment payment plan, the second installment of $559.51 was due on August 8.

On April 25, 2017, plaintiffs paid the first installment.

On July 19, 2017, Mid-Century sent plaintiffs a bill for the second installment, which bill stated in multiple places that payment was due on August 8. Again, the due date came and went without Mid-Century receiving payment from plaintiffs. In her deposition, Susie acknowledged she did not make the payment by August 8. When asked, "What got in the way of making that payment?" she answered, "Cash flow. Like if I—I didn't think it was due that early, and I didn't have extra money." She added that she believed the second installment was due October 25—six months after she paid the first installment.

On August 21, 2017, Mid-Century mailed plaintiffs a "Notice of Cancellation of Insurance for Non-Payment of Premium." The notice identified October 3 as the date of cancellation and stated, "We are cancelling this policy. Your insurance will cease on the Date of Cancellation shown above. [¶] The reason for cancellation is non-payment of premium. [¶] This is the only notice you will receive." The notice advised that plaintiffs could void the cancellation by paying $559.51, plus a $10.00 late fee, by September 11, a due date referenced five times in the notice of cancellation.² Again, September 11 came and went without Mid-Century receiving payment from plaintiffs.

On October 3, 2017, with plaintiffs having failed to pay the second installment, the policy was cancelled.

On October 9, six days after the policy cancellation, plaintiffs’ Vintage Circle home was destroyed in the Tubbs fire. Either that day or the next, plaintiffs reported the loss to Mid-Century. Over the next few days, they spoke with multiple individuals at Mid-Century and were told their loss was not covered because their policy had been canceled.

By letter dated October 12, 2017, Mid-Century formally acknowledged receipt of plaintiffs’ claim and informed them: "We have completed our coverage investigation and have determined your policy [was] cancelled for non-payment of premium effective October 3, 2017. Therefore, since the policy was not active at the time of this loss, we must respectfully disclaim coverage for this loss."

That same day, plaintiffs made a $569.51 electronic payment to Mid-Century. According to Susie, no one at Mid-Century told them that if they paid the premium at that time, they would receive retroactive coverage for the October 9 loss, but they "believed that was true" based on "[r]ight and wrong." Mid-Century retained the premium and never returned it.

On October 17, 2017, Mid-Century sent plaintiffs a "Home Insurance Reinstatement." It listed the same policy number as the policy cancelled on October 3, but identified the policy's effective date as October 12, 2017, and its expiration date as April 17, 2018—nine days after the original expiration date of the policy. It also listed a prorated premium of $567.82 for the period October 12, 2017, to April 17, 2018. The only change noted in the "Summary of changes" was the renewal date, listing April 8, 2018, as the previous renewal date and April 17, 2018, as the new renewal date.

The attached declaration page also identified October 12, 2017, as the effective date of the policy and April 17, 2018, as the expiration date. It identified the property insured as plaintiffs’ Vintage Circle home, listing the same property coverage—including the dwelling, separate structures, and personal property—as the policy renewed on April 8, 2017.

On November 10, 2017, Mid-Century issued a "Home Insurance Policy Reprint." It identified the effective date of the policy as November 9, 2017, the expiration date as April 17, 2018, and a premium of $1,109.02. The reprint asked plaintiffs to "Please take a moment to review the policy documents you have requested," which included a "Declaration page—a summary of your insurance coverages, limits, and deductibles." Unlike the declaration page attached to the October 17 reinstatement notice—and critical to plaintiffs’ claim that Mid-Century reinstated the policy without a lapse—the declaration page attached to the reprint listed April 17, 2017, as the effective date and April 17, 2018, as the expiration date. It again identified the property insured as plaintiffs’ Vintage Circle home and listed the same property coverage—the dwelling, separate structures, and personal property—as the policy renewed on April 8, 2017.

Unlike the October 17 reinstatement, the policy reprint attached the policy, which contained an...