Jardine v. Maryland Casualty Company

Filing 54

ORDER by Judge Samuel Conti granting (35) Motion for Summary Judgment; granting (36) Motion for Summary Judgment in case 3:10-cv-03318-SC (sclc1, COURT STAFF) (Filed on 10/4/2011)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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JAMES JARDINE,

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Plaintiff,

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v.

United States District Court

For the Northern District of California

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MARYLAND CASUALTY COMPANY,
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Defendant.

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JAMES JARDINE,

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Plaintiff,
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v.

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ONEBEACON INSURANCE COMPANY,

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Defendant.

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I.

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Case Nos. 10-3318 SC,
10-3319 SC
Related Cases: 10-3335 SC,
10-3336 SC

ORDER GRANTING MARYLAND'S
MOTIONS FOR SUMMARY JUDGMENT

INTRODUCTION
Before the Court are four related actions in which Plaintiff

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James Jardine ("Jardine") brings claims against insurance companies

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Maryland Casualty Company ("Maryland") and OneBeacon Insurance

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Company ("OneBeacon").

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Maryland's refusal to pay the policy amount after a wall in

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Plaintiff's property was allegedly damaged.

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("10-3319") involves Maryland's refusal to pay after a fire damaged

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the same property.

Case Number 10-3318 ("10-3318") involves

Case Number 10-3319

Case Numbers 10-3335 and 10-3336 concern

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OneBeacon's refusal to pay out on a policy after the same wall and

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fire damage allegedly occurred.

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judgment in both 10-3318 and 10-3319; these Motions are fully

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briefed.

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("10-3319 Opp'n"),1 41 ("10-3318 Opp'n"), 43 ("10-3319 Reply"), 44

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("10-3318 Reply").2

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parties, the same legal standard, and many of the same facts, the

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Court addresses them jointly in this Order.

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reasons, the Court GRANTS Maryland's Motions for Summary Judgment

United States District Court

For the Northern District of California

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Now Maryland moves for summary

ECF Nos. 35, ("10-3319 Mot."), 36 ("10-3318 Mot."), 39

Because these motions involve the same

For the following

in 10-3318 and 10-3319.

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II.

BACKGROUND
Unless otherwise noted, the following facts are not in dispute

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between Jardine and Maryland.3

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commercial building located at 24800-24808 Mission Boulevard in

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Hayward, California ("the Property").

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Decision") at 2.4

Jardine owned a multi-unit

Maryland RJN Ex. A ("Tent.

The Property was insured by Maryland under

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Maryland urges the Court to ignore the arguments in Jardine's 103319 Opposition because the brief was filed a day late under the
deadlines set forth in the Civil Local Rules. 10-3319 Reply at 1.
Jardine filed a Request for Extension of Time to File Opposition,
but this request did not conform to Civil Local Rules 6-2 and 6-3.
While the Court does not condone such violations of the Local
Rules, ignoring Jardine's Opposition would not further the
interests of justice.

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Maryland inadvertently filed its 10-3319 Motion and supporting
papers in 10-3318. ECF No. 48. Jardine also filed his 10-3319
Opposition in 10-3318. The Court construes these filings as
pertaining to 10-3319. Unless otherwise noted, all ECF numbers
refer to filings in the docket for 10-3318.
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The Court GRANTS the unopposed requests for judicial notice
submitted by Maryland and Jardine. ECF. Nos. 37 ("Maryland RJN");
42-2 ("Jardine RJN").
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Jardine filed a California State court action against Chavez and
Serna for the wall damage, Jardine v. Chavez, et al., Alameda
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Precision Portfolio Policy Number PAS 41569410.

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Decl. Ex. K (the "Policy").5

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sold the Policy to himself.

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Plaintiff leased a portion of the Property to Martha Chavez

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("Chavez") and Luz Serna ("Serna"), who used it to operate a

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business, Bridal & Beyond.

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May 15, 2005 to May 14, 2007.

Jardine is an insurance agent and
Id. Ex. A at 20, 25.

Ten. Decision at 2.

In May 2005,

The lease ran from

Id.

To improve the Property's appearance, Chavez and Serna applied

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10-3319 Gross

a plaster treatment to its walls, which were composed of painted

United States District Court

For the Northern District of California

Id.

The parties agree that the plaster treatment

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cinder blocks.

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interacted negatively with the cinder, causing damage to the wall.

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10-3318 Mot. at 10; 10-3318 Opp'n at 5-6.
On October 28, 2006, Chavez and Serna sold their business and

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assigned their lease to Raquel Pardo ("Pardo").

Ten. Decision at

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3.

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damage.

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or repaired the wall.

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spite of the wall damage, Pardo entered into a new lease with

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Jardine on April 25, 2007.

Around this time, Jardine and Pardo became aware of the wall
Id.

Jardine testified that he never removed the plaster
10-3318 Gross Decl. Ex A at 218-219.

In

Id. Ex. B.

The Property sustained additional damage on June 13, 2007 when

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a halogen light fixture in Pardo's unit set fire to some of her

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dresses.

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5.

10-3319 Gross Decl. Ex. B at 104-105; 10-3319 Opp'n at 4-

Maryland contends that the damage from the fire was minor,

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County Superior Court Case No. HG08-36624. A copy of the court's
Tentative Decision ("Ten. Decision") in that action was attached as
Exhibit A to Maryland's RJN.
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Jonathan Gross ("Gross"), counsel for Maryland, filed
declarations in support of Maryland's 10-3318 and 10-3319 motions
and replies. ECF No. 35-1 ("10-3319 Gross Decl."); 36-15 ("10-3318
Gross Decl."), 38 ("10-3318 Gross Supp. Decl."); 43-1 ("10-3319
Gross Reply Decl."); 44-1 ("10-3318 Gross Reply Decl.").
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causing only a silver-dollar-sized burn mark on the carpet.

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3319 Mot. at 6.

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resulted in substantial fire and smoke damage.

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Jardine testified that, due to the fire, he replaced some of the

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ceiling tile, vacuumed and wiped down the Property, and ran a fan

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to alleviate the "smoke smell," but did not keep track of his

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expenses.

Jardine disagrees, contending that the fire
10-3319 Opp'n at 5.

10-3319 Gross Decl. Ex. A at 109-110.

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Jardine has testified that Pardo stopped paying rent in

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September or October of 2007 and moved out around that time.

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United States District Court

For the Northern District of California

10-

3119 Gross Decl. Ex. A at 116.

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plaster damage was a factor in Pardo's decision.

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It is unclear whether the fire or
Id. at 116-117.

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On April 2, 2008, Jardine entered into a Policyholders

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Settlement and Release Agreement with OneBeacon, Pardo's insurer,

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concerning the fire damage.

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("Settlement Agreement").

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was "paid for fire damage repairs that may exceed the reasonable

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and necessary cost of repair."

10-3335 ECF No. 30, Cook Decl. Ex. F

Under the Settlement Agreement, Jardine

Id. at 1.

Two weeks later, Jardine notified Maryland of his claims for

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the plaster and fire damage.

10-3318 Gross Decl. Ex. D;

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10-3319 Gross Decl. Ex. E ("Jardine RFA Response") at 2.6

With

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Pursuant to Rule 36(a)(3) of the Federal Rules of Civil
Procedure, Maryland contends that its Requests for Admissions
("RFA") in 10-3319 and 10-3318 should be deemed admitted as
undisputed facts because Jardine failed to provide timely
responses. 10-3318 Mot. at 12; 10-3319 Mot. at 8. Jardine's
attorney claims that the RFAs in 10-3318 were not properly served
and that the parties reached an undocumented agreement to extend
the response deadline for the RFAs in 10-3319. ECF Nos. 42-1 ¶ 3,
40 ¶ 4. The Court is reluctant to deem Maryland's RFAs admitted as
there is a dispute concerning service and the existence of an
agreement extending the response deadline. Further, the default
admissions would contradict the positions Jardine has taken
throughout this litigation. Accordingly, the Court declines to
deem admitted Maryland's RFAs.

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respect to the plaster damage, a structural engineer hired by

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Maryland concluded that the damage was caused by a sulfate attack

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on the wall, resulting from a combination of moist conditions, the

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application of the wrong type of plaster, and inadequate wall

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preparation.

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by Jardine, William Jones ("Jones"), agreed.

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ultimately paid Jardine $46,225 for the plaster damage -- $25,000

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as the actual cash value of the structure, $2,500 to repair

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residual damage from the extraction of core samples from the walls,

10-3318 Gross Decl. Ex. E. at 4.

An engineer hired

Id. Ex. G.

Maryland

United States District Court

For the Northern District of California

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$4,175 for Jones' engineering services, and a $14,550 advance for

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business income loss coverage.

Id. Exs. N, O, P at 110-11.

With respect to the fire damage, on August 28, 2008, an

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independent adjustor prepared a repair estimate at Maryland's

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request.

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fire damage repairs on the Property would cost $10,727.97.

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November 8, 2008, Maryland paid Jardine $10,227.97 (the amount of

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the repair estimate less Jardine's $500 deductible).

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Maryland and Jardine also agreed to hire VP Construction to prepare

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another repair estimate.

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December 3, 2008, VP Construction estimated that the repairs for

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the fire damage would cost $34,423.20 and would take 60 days to

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complete, as long as building code upgrades were not required.

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3319 Gross Decl. Ex. F.

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have cost an additional $59,446, but has presented no evidence

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supporting this estimate.

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contends that such upgrades were unnecessary.

10-3319 Gross Decl. Ex. H.

The estimate concluded that

10-3319 Opp'n at 5.

Id.

Id. Ex. I.

In a letter dated

10-

Jardine declares that code upgrades would

10-3319 Jardine Decl. ¶ 7.7

Maryland

10-3319 Reply at 7.

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On

Jardine submitted declarations in opposition to Maryland's
Motions. ECF Nos. 40 ("10-3319 Jardine Decl."), 50 ("10-3318
Jardine Decl.").
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In any event, it is undisputed that Jardine never performed the

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code upgrades or any other major repairs.

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3319 Opp'n at 9.

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10-3319 Mot. at 13; 10-

On September 10, 2009, the City of Hayward purchased the

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Property from Jardine for approximately $1.3 million.

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Gross Decl. Ex. S.

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of the Route 238 Corridor Improvement Project.

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10-3318

The Property is to be used for the construction
Id.

On February 10, 2010, Jardine filed his 10-3318 action against
Maryland for payments allegedly due for the plaster damage in the

United States District Court

For the Northern District of California

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Superior Court of California for Alameda County ("Superior Court").

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ECF No. 1-1.

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10-3318 action as well as a complaint in his 10-3319 action for

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payments allegedly due for the fire damage, both in Superior Court.

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ECF No. 1-2 ("10-3318 Compl."); 10-3319 ECF No. 1 Ex. A ("10-3319

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Compl.").

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29, 2010 on diversity grounds.

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On March 9, 2010 he filed an amended complaint in the

Maryland removed both actions to federal court on July
ECF No. 1; 10-3319 ECF No. 1.

Both complaints allege three causes of action:

(1) breach of

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contract; (2) breach of implied covenant of good faith and fair

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dealing; and (3) violations of the Fair Claims Settlement Act as

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set forth in California Insurance Code § 790.03 et seq. and

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California Code of Regulations § 2695.1 et seq.

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10-3319 Complaint.

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10-3318 Complaint;

In its 10-3318 Motion, Maryland argues that summary judgment

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is appropriate because (1) no private right of action exists for

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the statutory violation alleged in Jardine's third cause of action

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(2) Jardine's plaster claim is barred under the Policy's

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exclusions, (3) Jardine is not entitled to any further payments

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under the Policy, and (4) Jardine is not entitled to any additional

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coverages under the policy.

10-3318 Motion at 8-9.

With respect

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to its 10-3319 Motion, Maryland argues that summary judgment is

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appropriate because (1) no private right of action exists for the

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alleged statutory violations, (2) Jardine has been fully

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compensated for his fire loss, (3) Jardine is not entitled to

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coverage for code upgrades, and (4) Jardine is not entitled to

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Business Income coverage.

10-3319 Motion at 5-6.

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III. LEGAL STANDARD

United States District Court

For the Northern District of California

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Entry of summary judgment is proper "if the movant shows that

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there is no genuine dispute as to any material fact and the movant

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is entitled to judgment as a matter of law."

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56(a).

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require a directed verdict for the moving party.

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Liberty Lobby, Inc., 477 U.S. 242, 251 (1986).

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mandates the entry of summary judgment . . . against a party who

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fails to make a showing sufficient to establish the existence of an

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element essential to that party's case, and on which that party

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will bear the burden of proof at trial."

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477 U.S. 317, 322 (1986).

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believed, and all justifiable inferences are to be drawn in his

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favor."

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of a scintilla of evidence in support of the plaintiff's position

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will be insufficient; there must be evidence on which the jury

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could reasonably find for the plaintiff."

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opposing parties tell two different stories, one of which is

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blatantly contradicted by the record, so that no reasonable jury

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could believe it, a court should not adopt that version of the

Fed. R. Civ. P.

Summary judgment should be granted if the evidence would
Anderson v.
Thus, "Rule 56[]

Celotex Corp. v. Catrett,

"The evidence of the nonmovant is to be

Anderson, 477 U.S. at 255.

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However, "[t]he mere existence

Id. at 252.

"When

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facts for purposes of ruling on a motion for summary judgment."

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Scott v. Harris, 550 U.S. 372, 380 (2007).

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IV.

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DISCUSSION
A.

Maryland's 10-3318 Motion

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1.

Fair Claims Settlement Practices Act

Maryland moves for summary judgment on the third cause of

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action in 10-3318 on the grounds that no private right of action

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exists under California Insurance Code Section 790.03 et seq. and

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California Code of Regulations Section 2695.1 et seq.

10-3318 Mot.

United States District Court

For the Northern District of California

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at 25.

Jardine does not object to the dismissal of his third cause

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of action.

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Maryland's 10-3318 Motion as to Jardine's third cause of action for

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violation of the Fair Claims Settlement Practices Act.

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10-3319 Opp'n at 22-23.

2.

Accordingly, the Court GRANTS

Policy Exclusions

Maryland argues that Jardine's remaining claims for plaster

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damage are barred by two policy exclusions:

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faulty, inadequate, or defective renovation or remodeling under

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section II.A.3 of the Policy ("renovation/ remodeling exclusion");

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and (2) the exclusion for loss or damage resulting from rust,

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corrosion, or deterioration under section II.A.2 ("deterioration

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exclusion").

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provides:

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II.

10-3318 Mot. at 15-17.

(1) the exclusion for

Specifically, the Policy

COVERED CAUSES OF LOSS

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RISKS OF DIRECT PHYSICAL LOSS OR DAMAGE unless loss
or damage is excluded or limited as described below:

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A.

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EXCLUSIONS
. . .
2.

We will not pay for loss or damage caused
by or resulting from any of the following:

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. . .
c.(2)Rust, corrosion, fungus,
deterioration, hidden or
defect or any quality in
that causes it to damage
itself.

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3
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But if an excluded cause of loss that is
listed in 2.c.(1) through (6) results in .
. . . a "specified cause of loss," we will
pay for . . . the loss or damage caused by
that specified cause of loss.

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. . .

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3.

We will not pay for loss or damage caused
by or resulting from any of the following.
But if an excluded Cause of Loss that is
listed in 3.a. through 3.c. results in a
Covered Cause of Loss, we will pay for the
loss or damage caused by that Covered
Cause of Loss.

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United States District Court

For the Northern District of California

decay,
latent
property
or destroy

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. . .

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c.
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Faulty, inadequate or defective:

. . .
(2)

Design, specifications, workmanship,
repair, construction, renovation,
remodeling, grading, compaction;

(3)

Materials used in repair,
construction, renovation or
remodeling; . . . .

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Or part or all of any property on or away
from the "described premises".

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Policy at 7-8, 10 (emphasis added).
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Maryland argues that the renovation/remodeling exclusion
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applies here because Chavez and Serna applied plaster to the walls
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to renovate and remodel the Property.

10-3318 Mot. at 16.

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Maryland contends the plaster application amounted to faulty,
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inadequate, or defective renovation or remodeling because the walls
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began to peel and blister after it was applied.
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Id.

Maryland

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further argues that the deterioration exclusion applies because the

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plaster application resulted in a "sulfate attack" which caused

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Jardine's walls to deteriorate.

Id. at 16-17.

Jardine responds that neither exclusion applies.

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Jardine

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points out that, while the Policy does exclude loss or damage

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resulting from defective renovation or remodeling, it also states:

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"if an excluded Cause of Loss . . . results in a Covered Cause of

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Loss, we will pay for the loss or damage caused by that Covered

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Cause of Loss."

10-3318 Opp'n at 11.

Jardine argues that because

United States District Court

For the Northern District of California

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the plaster application resulted in a covered cause of loss, he is

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entitled to compensation.

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argues that the deterioration exclusion does not apply because the

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damage to his wall was the result of a "specific event" that caused

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the wall to degrade within a short period of time, not the result

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of a "gradual decline."

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the earlier determination by Maryland's claims adjustors that this

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was a covered claim should be binding on Maryland.

10-3318 Opp'n at 11.

Id. at 12.

Jardine also

Finally, Jardine contends that

Id.

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Jardine is correct that the remodeling/renovation exclusion

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bars only the replacement of the plaster, not the loss resulting

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from its application.8

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deterioration exclusion bars Jardine from recovering for the

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resulting loss.

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includes "slow-moving disintegration or corrosion of the [insured

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material] because of external forces."

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& Cas. Co., 217 Cal. App. 3d 210, 265 (Cal. Ct. App. 1989).

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Ninth Circuit applied this principle in Berry v. Commercial Union

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Ins. Co., 87 F.3d 387 (9th Cir. 1996).

Therefore, the key question is whether the

California courts have found that deterioration

Brodkin v. State Farm Fire
The

In Berry, the question

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Maryland concedes as much in its Reply.
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See 10-3318 Reply at 3.

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before the court was whether damage to an insured's irrigation

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pipes caused by a liquid fungicide was barred by an insurance

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policy's "deterioration" exclusion.

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flushed the fungicide through her pipes to combat potato and carrot

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blight and discovered the damage two years later.

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Circuit held that "a degradation that takes two years to manifest"

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was "slow-moving" and therefore constituted "deterioration."9

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at 389 n.3.

Id. at 388.

The insured had

Id.

The Ninth

Id.

The Court finds that the deterioration exclusion bars

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United States District Court

For the Northern District of California

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Jardine's claim.

Jardine concedes that the damage to his wall

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"occurred over an approximate year and a half time," 10-3318 Opp'n

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at 12, just short of the two-year timeframe at issue in Berry.

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Such "slow-moving disintegration or corrosion" constitutes

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deterioration.

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deterioration exclusion does not apply because the plaster damage

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was caused by the specific act of his tenants.

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authority supporting his position, and the Ninth Circuit reached a

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contrary conclusion in Berry.

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use of liquid fungicide -- caused the deterioration.10

The Court rejects Jardine's contention that the

Jardine cites no

In that case, a specific act -- the

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The Ninth Circuit ultimately found in favor of the insured
because the fungicide manufacturer's failure to warn about the
corrosive effects of its product was the "proximate efficient
cause" of the damage. Berry, 387 F.3d at 393. The court found
that this constituted a peril covered by the insured's policy. Id.
Jardine has not argued that Chavez and Serna's negligence was the
proximate efficient cause of his loss. Even if that issue was
before the Court, the Policy's renovation/remodeling exclusion
would bar Jardine from recovering for faulty, inadequate or
defective renovation or remodeling.
10

The Court also rejects Jardine's contention that the "policy
states that even if this were simple deterioration, the claim is
covered under the policy if it is a Covered Cause of Loss." 103318 Opp'n at 12. The Policy actually states: "if an excluded
cause of loss [including deterioration] results in . . . a
'specified cause of loss,' we will pay for . . . the loss or damage
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The Court also rejects Jardine's contention that earlier

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determinations by Maryland's adjustors that Jardine's claim was

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covered should be binding on Maryland.

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from a November 6, 2008 letter from Maryland adjustor Mitch Hammond

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("Hammond") stating that "the investigation into the cause and the

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review of the policy does not show that the loss is excluded."

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3318 Opp'n at 12, 13; 10-3318 Peck Decl. Ex E ("Olson Dep.") at 69-

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70.11

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findings of an insurance adjustor are binding on the insurance

Jardine points to language

10-

Jardine offers no authority suggesting that the preliminary

United States District Court

For the Northern District of California

10

company.

Further, nothing in Hammond's statement indicates that he

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intended to bind Maryland or offer a final determination on

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Jardine's claim.

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under the Policy throughout its handling of the claim.

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Gross Decl. Ex. E at 12; 10-3318 Gross Supp. Decl. Ex. AA at 3.

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The Hammond letter is also insufficient to raise a genuine dispute

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of material fact because there is no indication of what facts

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Hammond based his findings on and whether those facts contradict

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the current record.12

In fact, Maryland repeatedly reserved its rights
10-3318

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20
21
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caused by the 'specified cause of loss.'" Policy at 8-9. The
Policy defines "specified cause of loss" to mean fire, lightning,
explosion, and a variety of other things. Id. at 26. The wall
damage claimed by Jardine does not fall within any of the
categories set forth by the Policy. See id.
11

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25
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Ronald G. Peck ("Peck"), Jardine's attorney, submitted
declarations in support of Jardine's Opposition to Maryland's
Motions in 10-3318 and 10-3319. ECF Nos. 51 ("10-3318 Peck
Decl."); 10-3319 ECF No. 28 ("10-3319 Peck Decl."). Attached as
Exhibit E to the 10-3318 Peck Declaration is a portion of the
deposition transcript of John Olson ("Olson"), Maryland's executive
general adjuster on Jardine's claim.

12

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28

Jardine has not submitted a copy of the Hammond letter to the
Court. Instead, he relies on portions of the Olson deposition in
which Olson testifies about the contents of the Hammond letter.
Olson's testimony does not describe how Maryland reached its
preliminary determination on Jardine's claim.
12

The Court finds that Jardine's 10-3318 claim is barred by the

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2

Policy's deterioration exclusion.

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Maryland's Motion as to Jardine's claims for breach of contract and

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breach of the implied covenant of good faith and fair dealing.13

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B.

Maryland's 10-3319 Motion
1.

6

Accordingly, the Court GRANTS

Fair Claims Settlement Practices Act

As in 10-3318, Jardine does not object to the dismissal of his

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8

third cause of action in 10-3319 for violations of the Unfair

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Insurance Practices Act.

United States District Court

For the Northern District of California

10

Accordingly, the Court GRANTS Maryland's

10-3319 Motion as to Jardine's third cause of action.

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2.

Fire Loss Coverage

Maryland contends that Jardine has been fully compensated for

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13

the property damage resulting from the fire.

10-3319 Mot. at 10-

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12.

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received $41,099.22 in insurance proceeds -- $30,781.25 from

16

OneBeacon14 and $10,227.97 from Maryland -- to repair $34,423.20 in

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fire damage.

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$30,781.25 payment was part of the Settlement Agreement between

19

Jardine and OneBeacon concerning the fire damage and that

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Maryland's $10,227.97 payment was specifically intended to settle

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Jardine's fire claim.

Specifically, Maryland argues that Jardine has already

10-3319 Reply at 4.

Maryland states that the

Id. at 1-3.

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23
24
25

13

Because the Court finds that Jardine's 10-3318 claim is barred
by the Policy's exclusions, it need not address Maryland's
arguments that Jardine is not entitled to any further payments or
any additional coverages under the Policy.

14

26
27
28

In its Motion, Maryland contended that OneBeacon paid Jardine
$39,781.25 for fire damage repairs. 10-3319 Mot. at 11. In its
Reply, Maryland concedes that only $30,781.25 of OneBeacon's
payment was for fire damage, and the remainder was for loss of
rent. 10-3319 Reply at 3. Maryland claims that it changed its
figure after discovering new evidence. Id.

13

Jardine concedes that the estimated cost to repair the fire

1
2

damage was $34,423.20, plus the cost of code upgrades.15

3

Opp'n at 7.

4

purpose of the payments from OneBeacon and Maryland.

5

at 7.

6

repairs but "was paid as part of [an] effort to obtain a release

7

from me for many other things."16

8

Jardine further declares that he "never was fully clear what

9

[Maryland's $10,227.97] payment was for," but he understood it to

10-3319

However, he contends that there is a dispute about the
10-3319 Opp'n

Jardine declares that the OneBeacon payment was not for fire

10-3319 Jardine Decl. ¶ 5.

United States District Court

For the Northern District of California

10

be an advance towards his claim for the plaster damage and lost

11

rent.

Id. ¶ 10.
Jardine's threadbare and self-serving declaration is blatantly

12
13

contradicted by the record.

14

which Jardine signed, states that Jardine was "being paid for

15

damage repairs that may exceed the reasonable and necessary cost of

16

repair of the fire and damage and also constitutes a replacement

17

cost payment before said fire damage repair work is completed."

18

Settlement Agreement ¶ 2.

19

and one of OneBeacon's adjustors concerning the settlement, which

20

included an itemized list of the components of the Settlement

21

Agreement, shows that Jardine could have no reason to believe that

22

15

23
24
25
26
27
28

The OneBeacon Settlement Agreement,

Further, correspondence between Jardine

The issue of whether Jardine was entitled to payment for the
cost of code upgrades under his Building Ordinance or Law Coverage
is addressed below.

16

Jardine also contends that the Court has already found that
there was a substantial conflict in evidence concerning the purpose
of this payment. 10-3319 Opp'n at 7. The Court rejects this
argument. The Court previously held that there was a genuine
dispute of material fact concerning whether the Settlement
Agreement barred Jardine's 10-3335 action against OneBeacon;
however, the Court did not make any findings about the purpose of
the payments made pursuant to the Settlement Agreement. See 10-3335
ECF No. 42.

14

1

the $30,781.25 was for anything but fire damage repairs.

See 10-

2

3319 Gross Decl. Ex F.

3

that the purpose of the OneBeacon payment was for anything other

4

than compensation for the fire damage.

Accordingly, no reasonable juror could find

Nor is there a genuine dispute of material fact as to the

5
6

purpose of Maryland's $10,227.97 payment.

7

that the payment was an advance towards his plaster claim and lost

8

rent is directly contradicted by the record.

9

2008 repair estimate found fire damage of $10,727.97 on the

Maryland's August 28,

10

United States District Court

For the Northern District of California

10-3319 Gross Decl. Ex. H.

Jardine's declaration

Property.

11

"replacing the suspended ceiling tile in the main area, cleaning

12

the grid, painting the wall, replacing the carpet and a few

13

fluorescent light fixtures."

14

Maryland shows that the company later paid Jardine $10,227.97, the

15

cost of repairs less Jardine's $500 deductible, for his June 13,

16

2007 fire loss.17

17

no evidence to rebut these documents other than his own

18

declaration, which is devoid of any specific factual allegations.

19

Jardine's declaration is insufficient to create a genuine dispute

20

of material fact concerning the purpose of Maryland's $10,227.97

21

payment.

Id.

The estimate called for

Other documentation provided by

10-3319 Gross Decl. Ex. I.

Jardine has offered

Accordingly, the Court finds that Jardine was more than fully

22
23

compensated for the $34,423.20 repair costs resulting from his fire

24

loss.

25

///

26

///

27

17

28

Additionally, a July 28, 2009 letter to Jardine from an adjustor
writing on behalf of Maryland, states that "Maryland Casualty has
previously paid you $10,727.97 [less your deductible] to repair
damage from the fire." 10-3319 Gross Reply Decl. Ex. E at 9.
15

1

3.

Building Ordinance or Law Coverage

2

In addition to repair costs, Jardine claims that he is

3

entitled to at least $59,446 for code upgrades under the Building

4

Ordinance or Law provisions of the Policy.

5

The Building Ordinance or Law coverage pays for increased costs to

6

repair, reconstruct, and/or remodel damaged and undamaged portions

7

of a property "when the increased cost is the consequence of

8

enforcement of building, zoning or land use ordinance law."

9

at 15.

Jardine's policy states:

10-3319 Opp'n at 7.

Policy

"If you do not repair or replace

United States District Court

For the Northern District of California

10

the damaged building, we will pay only to demolish and clear the

11

site of the undamaged portions of the building."

Id.

Maryland argues that Jardine is not entitled to Building

12
13

Ordinance or Law coverage for two independent reasons.

14

Mot. at 12-13.

15

the express terms of the policy bar windfall payments in such

16

situations.

17

enforcement of an ordinance or law affecting Jardine's repairs.

18

Maryland points to Jardine's interrogatory response that he "was

19

required to do some of the repairs without formal determination by

20

the building department what the legally required up-grades might

21

be."

22

10-3319

First, Jardine never repaired the fire damage and

Id.

Second, Maryland contends that there never was an

Mot. at 13.
In his Opposition, Jardine responds to both points.

First, he

23

argues that he intended to repair the fire damage but failed to do

24

so because he lacked the funds and Maryland refused to advance the

25

cost of repairs.

26

Jardine declares that his contractor could not know what code up-

27

grades were required until it applied for a building permit, but it

28

was later determined that the upgrades would cost approximately

10-3319 Opp'n at 10; 10-3319 Jardine Decl. ¶ 13.

16

1

$59,446.

2

should not be punished for Maryland's refusal to pay for repairs.

3

10-3319 Opp'n at 10.

4

Hayward never enforced the building codes and required code

5

upgrades because Maryland refused to pay Jardine's contractor and,

6

consequently, the contractor did not apply for the building permit

7

to do the work.

8

not be permitted to take advantage of its refusal to pay for

9

repairs.

United States District Court

Id.

Jardine argues that he

Second, Jardine argues that the City of

Again, Jardine maintains that Maryland should

Id.

The Court agrees with Maryland.

10
For the Northern District of California

10-3319 Jardine Decl. ¶¶ 6-7.

Jardine's policy states that

11

Maryland will pay "only to demolish and clear the site of the

12

undamaged portions of the building" where repairs are not

13

performed.

14

performed any code upgrades after the fire.

15

13.

16

Jardine never will perform any code upgrades on the Property.

17

Jardine's argument that he would have performed the repairs had

18

Maryland advanced him the money is unpersuasive.

19

not require Maryland to advance money for speculative upgrades, and

20

Jardine points to no authority which would require Maryland to

21

provide such an advance.

22

will never be performed would amount to the kind of windfall

23

payment that is expressly foreclosed by his policy.

24

Policy at 15.

Jardine does not dispute that he never
Jardine Decl. at 12-

Further, as the property has been sold to the City of Hayward,

His policy does

Awarding Jardine funds for repairs that

Moreover, it is unclear whether code upgrades were even

25

necessary.

Jardine declares that "code up-grades would cost

26

approximately $59,446," but fails to provide any evidence to

27

support that figure.

28

deposition testimony of his contractor, Gary Fair ("Fair"),

See Jardine Decl. ¶ 7.

17

Jardine also submits

1

purportedly showing that code upgrades were required due to the

2

fire damage.

3

is so vague that it is unclear whether he believed upgrades were

4

required at all.

5

do substantial upgrades to any building . . ., the new codes kick

6

in and comply and require that you bring up the building to code

7

standard."

8

"substantial upgrades."

9

whether Fair is referring to upgrades resulting from Jardine's fire

United States District Court

For the Northern District of California

10

Id.

Id.

Fair testified:

However, Fair's testimony

"When you get a permit to

Fair does not say whether Jardine needed to do

or plaster damage.

Further, it is unclear from the testimony

Id.

For these reasons, the Court finds that Jardine is not

11
12

10-3319 Peck Decl. Ex. B.

entitled to Building Ordinance or Law coverage.
4.

13

Business Income Coverage

Jardine also claims that he is entitled to Business Income

14
15

coverage because his tenant moved out as a result of the fire.

16

3319 Opp'n at 11-12.

17

the actual loss of 'business income' you sustain due to the

18

necessary suspension of 'operations' during the 'period of

19

restoration,' but not to exceed 12 consecutive months."

20

13.

21

occurring at the described premises."

22

restoration" commences on "the date of direct physical loss or

23

damage caused by or resulting from any Covered Cause of Loss."

24

The period ends on the earlier of "the date when the property at

25

the 'described premises' should be repaired, rebuilt or replaced

26

with reasonable speed or similar quality" or "[t]he date when

27

business is resumed at the new location."

28

Jardine's policy provides:

10-

"We will pay for

Policy at

The policy defines operations as "your business activities
Id.

The "period of

Id.

Maryland argues that Jardine is not entitled to Business

18

Id.

1

Income coverage because he did not cease his operations as landlord

2

during the period of restoration.

3

contends that the period of restoration commenced on June 13, 2007,

4

when the fire occurred, and ended sixty days later since the VP

5

Construction estimate stated that repairs could be completed in

6

sixty days.

7

not suspend business operations during this time because Jardine

8

continued to rent the premises to Pardo for four months after the

9

fire.

United States District Court

For the Northern District of California

10

10-3319 Mot. at 14.

10-3319 Mot. at 14.

Maryland

Maryland argues that Jardine did

10-3319 Mot. at 14-15; 10-3319 Reply at 10.
Jardine responds that the estimate provided by VP Construction

11

indicated that fire repair work would take sixty days only if no

12

building code upgrades were required.

13

Jardine contends that because code upgrades were required, the

14

period of restoration should be longer than sixty days, though he

15

does not specify how much longer.

16

is entitled to recover lost income because Pardo moved out as a

17

result of the fire damage, which would have been repaired earlier

18

if Maryland had not refused to pay the repair costs.

Id.

10-3319 Opp'n at 11.

Jardine also argues that he

Id. at 11-12.

19

The Court finds that Jardine has failed to make a showing

20

sufficient to establish that he is entitled to Business Income

21

coverage under the Policy.

22

stopped paying rent in September or October 2007, three to four

23

months after the fire.

24

Thus, at trial, Jardine would bear the burden of proving that the

25

period of recovery, i.e., the time it would have taken to repair

26

the Property with reasonable speed or similar quality, exceeded

27

three to four months.

28

evidence before the Court bearing on the period of recovery --

Jardine has testified that Pardo

See 10-3119 Gross Decl. Ex. A at 116.

The VP Construction estimate -- the only

19

1

indicates that Jardine's repairs would have taken approximately

2

sixty days.

10-3319 Gross Decl. Ex. F.

3

The evidence does not support Jardine's contention that code

4

upgrades would have extended the period of recovery past the date

5

when Pardo ceased paying rent.

6

unclear whether code upgrades were necessary.

7

upgrades were necessary, Jardine has failed to offer any evidence

8

that they would have taken more than three to four months to

9

complete.

First, as discussed above, it is
Second, even if code

Jardine points to language in the VP Construction

United States District Court

For the Northern District of California

10

estimate stating that "Building Code compliance and Upgrades may

11

result in project exceeding 60 days."

12

bear the burden of proving that upgrades were required and that

13

completing the upgrades would have required at least three to four

14

months.

15

both of these points, no reasonable jury could conclude that he is

16

entitled to Business Income coverage.18

Id.

At trial, Jardine would

Given, the paucity of the evidence offered by Jardine on

17

The Court also rejects Jardine's contention that he is

18

entitled to Business Income coverage because repairs were delayed

19

due to Maryland's refusal to pay and, as a result, Pardo moved out

20

before repairs could be started.

21

that the period of recovery starts to run on the date of the loss,

22

not on the date when repairs could have or should have commenced.

23

Policy at 13.

24

repairs to Maryland until April 16, 2008, approximately six to

25

seven months after Pardo stopped paying rent and ten months after

26

18

27
28

The Policy expressly provides

Moreover, Jardine did not tender his claim for

Moreover, Jardine has failed to offer any evidence concerning
how much income he would have lost during the period of recovery.
Without such evidence, the court cannot determine whether the
amount in controversy for his sole remaining claim for Business
Income coverage would exceed the jurisdictional minimum of $75,000.
See 28 U.S.C. § 1332(a).
20

1

the fire.

Jardine RFA Response at 2.

The Court finds that Jardine has failed to raise a genuine

2
3

dispute of material fact concerning whether he is entitled to any

4

further compensation under the Policy.

5

GRANTS Maryland's 10-3319 Motion.

Accordingly, the Court

6
7
8
9

United States District Court

For the Northern District of California

10

V.

CONCLUSION
For the forgoing reasons, the Court GRANTS Defendant Maryland

Casualty Company's Motions for Summary Judgment against Plaintiff
James Jardine in Case Numbers 10-3318 and 10-3319.

11
12
IT IS SO ORDERED.
13
14
Dated: October 4, 2011
15
UNITED STATES DISTRICT JUDGE
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21