Stockton Mariposa, LLC v. W. Am. Ins. Co.

585 F.Supp.3d 1241

STOCKTON MARIPOSA, LLC, Plaintiff,

v.WEST AMERICAN INSURANCE COMPANY, Defendant.

Case No. CV 20-6936-DMG (SKx)

United States District Court, C.D. California.

Signed February 14, 2022

Sassoon Sales, Law Office of Sassoon Sales, Encino, CA, for Plaintiff.

Jeffrey Neal Gesell, William S. Hoang, Jones Turner LLP, Irvine, CA, for Defendant.

ORDER RE DEFENDANT WEST AMERICAN INSURANCE COMPANY'S MOTION FOR PARTIAL SUMMARY JUDGMENT [43]

DOLLY M. GEE, UNITED STATES DISTRICT JUDGE

This matter is before the Court on Defendant West American Insurance Company's Motion for Partial Summary Judgment ("MSJ"). [Doc. # 43.] The motion is fully briefed. [Doc. ## 44, 45, 49.] The Court held a hearing on this motion on February 11, 2022. For the reasons stated herein, West American's MSJ is GRANTED .

I.FACTUAL AND PROCEDURAL BACKGROUND

The following facts are undisputed unless otherwise noted.¹

A. The Claim

Plaintiff Stockton Mariposa, LLC owns property located at 2180 E. Mariposa Road, Stockton, CA (the "Property"), which from the 1970s until early 2019 was occupied by and operated as a Kmart store. SUF 1-2.² The Property was insured by West American under a policy numbered BKW (20) 57 10 74 98 (the "Policy"), which was in effect from January 3, 2019 through January 3, 2020. SUF 4. On March 15, 2019, Kmart closed its store and vacated the Property. SUF 3. Although the Property remains vacant, a successor entity to Kmart, Transform Lease Co., LLC, remains the lessee and has continued to pay rent. Nobel Decl. ¶ 3 [Doc. # 44-2].

On April 19, 2019, the City of Stockton issued a Notice of Violation directing Plaintiff to "remove the graffiti from the property (buildings, fences, garages, etc.)" and ordering that the Property "must be kept secure from intrusion from unauthorized persons at all times." SUF 7; see also April 19, 2019 Notice of Violation [Doc. # 43-16]. The Notice of Violation prompted Plaintiff's owner, Dr. Sion Nobel, to visit the Property in mid to late April 2019. SUF 8. Dr. Nobel and a handyman, Antonio Salazar, boarded up a door in the rear loading dock that Dr. Nobel later said had been "violated" by vandals. SUF 9. Mr. Salazar went inside the loading dock area and told Mr. Nobel it was "a mess," with lots of debris and broken furniture. SUF 10. Mr. Nobel interpreted Mr. Salazar's description to mean that the Property had been vandalized. SUF 10. Mr. Salazar testified at his deposition that he had seen pieces of copper pipe and "things like that" in the loading area, which he imagined vandals had cut from the Property. SUF 11. He did not see the full extent of the damage to the interior of the Property, though, because he only accessed a portion of the rear loading dock. SUF 23. Mr. Salazar is the only person either party has identified who personally accessed the interior of the Property between March 15, 2019 and May 14, 2019. SUF 21-22. In August 2019, a code enforcement officer for the City of Stockton inspected the Property in response to notice that the Property was unsecured. SUF 20. The officer found the Property had been heavily vandalized. Id.

Plaintiff's insurance broker reported a claim on July 22, 2019. SUF 12; see also Gebhardt Decl. ¶ 5 [Doc. # 43-4]. The claim initially reported that theft and vandalism losses began occurring around July 8, 2019. Gebhardt Decl. ¶ 5. On July 24, 2019, West American asked Dr. Nobel for access to the Property so West American could conduct an inspection. SUF 13. Dr. Nobel told West American's claims adjuster he could not provide access to the Property at that time. Craig Decl. ¶ 5. On July 24, 2019, West American emailed Dr. Nobel requesting access to the Property to inspect it. SUF 14. On August 2, 2019, West American sent Plaintiff a Reservation of Rights letter. In the letter, West American noted it was unable to access the Property for an inspection, requested a timeline of when Kmart vacated the Property and when Plaintiff discovered the vandalism, and quoted from policy provisions including the requirement to give prompt notice. West American also noted it was investigating the loss under a reservation of rights. August 2, 2019 Letter [Doc. # 43-19]. In September, October, and November of 2019, West American sent letters reiterating its request for access to the Property to inspect it. SUF 15.

Dr. Nobel states in a declaration that he wrote to Transform to try to obtain access to the Property, but received no response. Nobel Decl. ¶ 5 [Doc. # 44-2]. Dr. Nobel says the contact information for the individuals with whom he had previously communicated no longer worked. Id. Dr. Nobel declares he therefore retained counsel to obtain access to the building and after several months, in November 2019, Dr. Nobel's counsel was able to obtain the code to a lock on the building. Id. at ¶ 6. Dr. Nobel states two code officers from the City of Stockton had to use a wrench in addition to the code to access the building. Id. at ¶ 7.³ In January 2020, West American's counsel emailed Plaintiff's counsel to say he had communicated with counsel for Transform, and that Transform's counsel had "confirmed that [Transform] is, in fact, in control of access to the interior of the building." January 20, 2020 Email [Doc. # 44-4].⁴

West American's November 5, 2019 letter informed Plaintiff that if it did not provide requested information by November 29, 2019, the claim for Plaintiff's file would be closed. SUF 16. On November 14, 2019, West American inspected the Property. SUF 18. The inspection revealed the Property had been badly damaged. SUF 19.⁵ On November 18, 2019, the City issued another Notice of Violation, stating "the building has sustained extensive damage to its structure, electrical, mechanical, plumbing, and venting systems." November 18, 2019 Notice of Violation [Doc. # 43-25].

On June 16, 2020, Plaintiff filed a complaint in Los Angeles County Superior Court, asserting claims for breach of contract and breach of the implied covenant of good faith and fair dealing for West American's failure to pay Plaintiff's claim. [Doc. # 1-1.] West American filed its Answer on July 30, 2020. [Doc. # 1-7.] On July 31, 2020, West American removed the action to this Court, asserting subject matter jurisdiction based on 28 U.S.C. section 1332. [Doc. # 1.] On June 28, 2021, the Court approved the parties’ joint stipulation to dismiss Plaintiff's claims in its prayer for relief for mental and emotional distress and punitive damages and providing that West American agreed not to bring a motion for summary judgment on Plaintiff's bad faith claim. [Doc. # 28.]

Plaintiff's expert, Michael Villalba, conducted an inspection of the Property on September 10, 2021. See Villalba Expert Report at 5 [Doc. # 43-30].⁶ In his report, Villalba opines that the damage to the building "occurred during the theft of [...] copper wire, copper plumbing, HVAC and electrical equipment [... T]he perpetrators knew exactly what they were looking for and where to get it." Id. at 7. Villalba also opines that "it is impossible for anyone to determine the timeframe when the building was damaged and all of the copper components were stolen." Id. ; see also SUF 27. Another expert retained by Plaintiff estimated the total cost of repairs at more than $9 million. Bogart Expert Report at 2 [Doc. # 43-33].

On November 11, 2021, West American denied Plaintiff's claim. See SUF 29. West American's denial letter explains that "West American's claim investigation was delayed and impeded by Stockton Mariposa's late notice of the claim, by Stockton Mariposa's delays in making the Property available for site inspections and by Stockton Mariposa's repeated failure to respond to West American's reasonable requests for information and documentation." See Denial Letter at 2 [Doc. # 43-31]; see also SUF 29.

B. The Policy

Plaintiff's insurance policy contains the following vacancy provision (hereinafter the "vacancy exclusion"):

If the building where loss or damage occurs has been vacant for more than 60 consecutive days before that loss or damage occurs: (1) We will not pay for any loss or damage caused by any of the following even if they are Covered Causes of Loss: (a) Vandalism; [...] (e) Theft.

SUF 5. The Policy contains the following provisions regarding the insured's duties in the event of loss or damage:

You must see that the following are done in the event of loss or damage to Covered Property: (1) Notify the police if a law may have been broken. (2) Give us prompt notice of the loss or damage. Include a description of the property involved. [...] (8) Cooperate with us in the investigation or settlement of the claim.

SUF 6. The Policy contains the following provision regarding control of the property (hereinafter the "Control Clause"):

Any act or neglect of any person other than you beyond your direction or control will not affect this insurance.

Policy at 85 [Doc. # 43-13].

II.LEGAL STANDARD

Summary judgment should be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a) ; accord Wash. Mut. Inc. v. United States , 636 F.3d 1207, 1216 (9th Cir. 2011). Material facts are those that may affect the outcome of the case. Nat'l Ass'n of Optometrists & Opticians v. Harris , 682 F.3d 1144, 1147 (9th Cir. 2012) (citing Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ). A dispute is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Liberty Lobby , 477 U.S. at 248, 106 S.Ct. 2505.

The moving party bears the initial burden of establishing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the moving party has met its initial burden, Rule 56(c) requires the nonmoving party to "go beyond the pleadings and by her own affidavits, or by the ‘depositions,...