Cherewick v. State Farm Fire & Cas.

578 F.Supp.3d 1136

Randolf CHEREWICK, an individual, Plaintiff,

v.STATE FARM FIRE AND CASUALTY, an Illinois Corporation; and, Does 1-50, Defendant.

Case No.: 3:20-cv-00693-BEN-MSB

United States District Court, S.D. California.

Signed January 7, 2022

Jason Edward Goldstein, Katrina N. Neumann, Buchalter Nemer, Irvine, CA, for Plaintiff.

GailAnn Yurkanin Stargardter, Mokri Vanis & Jones LLP, Newport Beach, CA, for Defendant State Farm Fire and Casualty.

ORDER:

(1) GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT;

(2) OVERRULING BOTH PARTIES’ EVIDENTIARY OBJECTIONS;

(3) GRANTING DEFENDANT'S REQUEST FOR JUDICIAL NOTICE

[ECF Nos. 23, 24, 25, 26]

ROGER T. BENITEZ, United States District Judge

I. INTRODUCTION

Plaintiff RANDOLF CHEREWICK ("Plaintiff") brings this action against Defendant STATE FARM FIRE AND CASUALTY, an Illinois corporation ("Defendant") for its alleged bad faith refusal to provide benefits which Plaintiff alleges were due and owing to him under his Boatowners Policy. See Complaint, ECF No. 1-2 ("Compl.") at 2.

Before the Court is Defendant's Motion for Summary Judgment (the "Motion"). ECF No. 23. The Motion was submitted on the papers without oral argument pursuant to Civil Local Rule 7.1(d)(1) and Rule 78(b) of the Federal Rules of Civil Procedure. ECF No. 27. After considering the papers submitted, supporting documentation, and applicable law, the Court GRANTS Defendant's Motion because no genuine issue of material fact exists as to whether there was coverage for Plaintiff's boat, meaning Defendant is entitled to summary judgment in its favor as to all of Plaintiff's claims. The Court also OVERRULES both parties’ evidentiary objections but GRANTS Defendant's Request for Judicial Notice.

II. BACKGROUND

This case arises from two claims submitted by a boat owner to his insurance carrier. The principal controversy is bound up in the first claim which raises an issue of first impression: Does a boatowners insurance policy cover an accident arising during a sea trial—which is essentially the maritime equivalent of a car mechanic's test drive, or does it fall under the repair exclusion as part of the repair process? This Court finds that damage arising during a sea trial is excluded under a repair exclusion.

A. Statement of Facts ¹

In 2008, Plaintiff purchased a new 27-foot Boston Whaler, which was named the "Artemis" (the "Vessel"). Compl. at 5, ¶ 10; Mot. at 9:3-4; Oppo. at 10:9-11 (citing Declaration of Randolf Cherewick, ¶ 4).

1. Plaintiff's Boatowners Policy

Defendant issued a Boatowners Policy Number 47-BJ-R419-1 to Plaintiff for the period December 31, 2014 through December 31, 2015 (the "Policy"). Mot. at 7:5-7, 17:5-6; Exhibit 1 to Complaint, Renewal Certificate, ECF No. 1-2 at 19 ; Oppo. at 16:16-18. The Policy was renewed for the policy period from December 31, 2015 through December 31, 2016. Mot. at 17:6-8 (citing ECF No. 1-2 at 19-45 ); Oppo. at 16:16-18; see also Compl. at 7, ¶ 20 (pleading that Defendant issued the Policy to Plaintiff on December 31, 2015 and attaching and incorporating the Policy by reference).

The Policy² states that it "cover[s] the boats, motors, boat trailers, and boat equipment described in the Declarations." See Policy at 35. It insures "accidental direct physical loss to the property described in Coverage A, except as provided in SECTION I—LOSS NOT INSURED ." Compl. at 8, ¶ 26. Section I of the Policy, covering "LOSSES NOT INSURED," sets forth the applicable exclusions from coverage under the Policy. Policy at 36-37. It states that Defendant will "not insure for loss to the property ... either consisting of, or directly and immediately caused by," inter alia ," (1) "wear, tear, marring, scratching, denting, deterioration, inherent vice, latent defect, mechanical breakdown, corrosion, electrolysis," or (2) "repairing, renovating, servicing, or maintenance." Id. ; see also Compl. at 9, ¶ 28 (acknowledging that losses caused by "repairing, renovating, servicing or maintenance" are not covered).

Paragraph 2 of Section I of the Policy also states that it does not cover "any loss which would not have occurred in the absence of .... neglect of the insured to use all reasonable means to save and preserve property at and after the time of loss, or when property is endangered." Policy at 36-37. It elaborates that a loss arising from the insured's neglect will not be covered "regardless of: (a) the cause of the excluded event; (b) other causes of loss; or (c) whether other causes acted concurrently or in any sequence with the excluded even to produce the loss." Id. The Policy also states that it will not "insure for loss described in paragraphs 1. and 2. immediately above regardless of whether" the loss is caused by (a) "conduct, act, failure to act, or decision of any person ... whether intentional, wrongful, negligent, or without fault" or (b) a "defect, weakness, inadequacy, fault or unsoundness in: (1) design, specifications, workmanship, construction; (2) "materials used in construction or repair; or (3) maintenance; of any property," which "directly or indirectly cause[s], contribute[s] to or aggravate[s] the loss," or "occur[s] before, at the same time, or after the loss or any other cause of the loss." Policy at 36-37.

"Section I—CONDITIONS" sets out the insured's "Duties After Loss," by providing that "[a]fter a loss to which this insurance may apply, [the insured] shall see that" he or she (1) give[s] immediate notice to [the carrier] or [its] agent" and (2) "protect[s] the property from further damage or loss, make reasonable and necessary repairs required to protect the property, and keep an accurate record of repair expenditures." Policy at 37. Finally, the Policy states that "[n]o action shall be brought unless there has been compliance with the policy provisions." Id. at 38. It also requires such an "action [to] be started within one year after the date of loss or damage." Id.

2. The Vessel is Brought in for Repair

From the time Plaintiff purchased the Vessel through June 2015, the Vessel had not been involved in any accidents and was in good condition. Oppo. at 10:12-23. Shortly before July 2015, however, the Vessel's engine began overheating. Id. at 10:12-16. In early July 2015, Plaintiff took the Vessel to Oceanside Marine Center ("OMC") and Butch Hainsworth ("Mr. Hainsworth") for inspection and repair of three Honda outboard engines. Mot. at 9:4-5; Oppo. at 7:10-12, 10:19-21; Reply at 6:4-7; Compl. at 5, ¶ 11. At the time Plaintiff brought the Vessel to OMC, the engines were overheating; one engine ran poorly; one engine would not start; and its two main engines, the auxiliary engine and the generator were plugged up with salt water. Mot. at 9:6-9 (citing Declaration of GailAnn Y. Stargardter in Support of Motion, ECF No. 23-2 ("Stargardter Decl.") at 1-2, ¶ 2; Exhibit 1 to Stargardter Decl., March 9, 2021 Deposition of Harold L. "Butch" Hainsworth, ECF No. 23-3 ("Hainsworth Dep.") at 7-9, 20:23-25; 21:24-25; 22:1-8; 19, 72:8-14); Compl. at 5, ¶ 11. Plaintiff appointed Sean Keating, who Plaintiff believed to be a yacht broker, as his agent in fact to handle the repairs to the Vessel due to Plaintiff's busy schedule. Mot. at 9:9-13; Oppo. at 12:1-3. Accordingly, Plaintiff executed a power of attorney in favor of Mr. Keating, so OMC could relay information to Mr. Keating relative to the Vessel. Oppo. at 12:3-6 (citing Declaration of Randolf Cherewick, ECF No. 24-3 at 1-15 ("Cherewick Decl.") ¶ 13). While OMC was repairing the Vessel, Plaintiff also agreed with OMC's recommendations for additional work on the Vessel, which included but was not limited to repairing the Vessel's Kohler generator. Oppo. at 10:28-11:3. Plaintiff prepaid $17,000.00 for this work. Id. at 11:3-5; Compl. at 5, ¶ 13.

3. The Vessel is Damaged in an Allision During the Sea Trial

On November 18, 2015, after some repairs were made, the Vessel entered the water for a sea trial. Mot. at 7:14-16, 9:14-16; Oppo. at 11:9-12; Compl. at 5, ¶ 14. According to Mr. Hainsworth, the reason for the sea trial was to "test[ ] the repairs that had been made to the [V]essel" and determine whether "any additional repairs need[ed] to be made to the [V]essel." Mot. at 9:16-18 (citing Hainsworth Dep. at 10-11, 29:16-30:1-7; 15, 36:9-17; 22, 82:13-18). As the Vessel was traveling approximately three to five miles per hour and being docked after the sea trial, the electronic controls malfunctioned, causing the port side bow of the Vessel to allide³ with a concrete piling that holds the dock in place, causing a 12" x 3" gouge that was one inch deep. Mot. at 7:15-18, 9:19-24 (citing Hainsworth Dep. at 12, 32:2-18; 13, 33:8-24; 20, 74:12-25; 21, 75:1-7). While OMC was moving the Vessel out of the water into the Travelift⁴ to take it to the yard to repair the damage from the allision, it further damaged the Vessel when the port aft side of the bow got caught on a protruding screw, resulting in a three to four-foot-long scratch in the gel coat, approximately ¹/₁₆ inch deep at the water line. Mot. at 9:25-10:2 (citing Hainsworth Dep. at 14, 34:5-17; 16, 41:10-25).

4. Plaintiff Receives Notice of the Allision

On November 18, 2015, Mr. Hainsworth of OMC e-mailed Plaintiff to inform him that (1) the shift cable on the port side needed replacement; (2) the starboard side had an electronic issue; and (3) during the last sea trial, "while coming into dock, with stbd in forward gear (no throttle) the amber display lights on controls started flashing, then throttle increased on its own," causing them to "bump[ ] the dock which cause[d] minor damage." Mot. at 7:18-21, 10:3-7; see also ECF No. 23-3 at 25 ; Oppo. at 7:14-17, 11:9-12; Reply at 6:5-7; Compl. at 5, ¶ 14; see also Exhibit 2 to Exhibit 2 to Stargardter Decl., ECF No. 23-3 at 25 (attaching the November 18, 2015 e-mail from Mr. Hainsworth to Plaintiff). However, he said that OMC would "be taking care of the minor repairs at our cost." Mot. at 10:5-6; Oppo. at 11:9-12; ECF No. 23-3 ...