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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1 2 3 4 IN THE UNITED STATES DISTRICT COURT 5 FOR THE NORTHERN DISTRICT OF CALIFORNIA 6 7 JAMES JARDINE, 8 Plaintiff, 9 v. United States District Court For the Northern District of California 10 MARYLAND CASUALTY COMPANY, 11 Defendant. 12 13 JAMES JARDINE, 14 Plaintiff, 15 v. 16 ONEBEACON INSURANCE COMPANY, 17 18 Defendant. 19 20 21 I. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) 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 22 James Jardine ("Jardine") brings claims against insurance companies 23 Maryland Casualty Company ("Maryland") and OneBeacon Insurance 24 Company ("OneBeacon"). 25 Maryland's refusal to pay the policy amount after a wall in 26 Plaintiff's property was allegedly damaged. 27 ("10-3319") involves Maryland's refusal to pay after a fire damaged 28 the same property. Case Number 10-3318 ("10-3318") involves Case Number 10-3319 Case Numbers 10-3335 and 10-3336 concern 1 OneBeacon's refusal to pay out on a policy after the same wall and 2 fire damage allegedly occurred. 3 judgment in both 10-3318 and 10-3319; these Motions are fully 4 briefed. 5 ("10-3319 Opp'n"),1 41 ("10-3318 Opp'n"), 43 ("10-3319 Reply"), 44 6 ("10-3318 Reply").2 7 parties, the same legal standard, and many of the same facts, the 8 Court addresses them jointly in this Order. 9 reasons, the Court GRANTS Maryland's Motions for Summary Judgment United States District Court For the Northern District of California 10 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. 11 12 II. BACKGROUND Unless otherwise noted, the following facts are not in dispute 13 14 between Jardine and Maryland.3 15 commercial building located at 24800-24808 Mission Boulevard in 16 Hayward, California ("the Property"). 17 Decision") at 2.4 Jardine owned a multi-unit Maryland RJN Ex. A ("Tent. The Property was insured by Maryland under 18 1 22 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. 23 2 19 20 21 24 25 26 27 28 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. 3 The Court GRANTS the unopposed requests for judicial notice submitted by Maryland and Jardine. ECF. Nos. 37 ("Maryland RJN"); 42-2 ("Jardine RJN"). 4 Jardine filed a California State court action against Chavez and Serna for the wall damage, Jardine v. Chavez, et al., Alameda 2 1 Precision Portfolio Policy Number PAS 41569410. 2 Decl. Ex. K (the "Policy").5 3 sold the Policy to himself. 4 Plaintiff leased a portion of the Property to Martha Chavez 5 ("Chavez") and Luz Serna ("Serna"), who used it to operate a 6 business, Bridal & Beyond. 7 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 8 9 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 10 cinder blocks. 11 interacted negatively with the cinder, causing damage to the wall. 12 10-3318 Mot. at 10; 10-3318 Opp'n at 5-6. On October 28, 2006, Chavez and Serna sold their business and 13 14 assigned their lease to Raquel Pardo ("Pardo"). Ten. Decision at 15 3. 16 damage. 17 or repaired the wall. 18 spite of the wall damage, Pardo entered into a new lease with 19 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 20 21 a halogen light fixture in Pardo's unit set fire to some of her 22 dresses. 23 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, 24 25 26 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. 5 27 28 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."). 3 1 causing only a silver-dollar-sized burn mark on the carpet. 2 3319 Mot. at 6. 3 resulted in substantial fire and smoke damage. 4 Jardine testified that, due to the fire, he replaced some of the 5 ceiling tile, vacuumed and wiped down the Property, and ran a fan 6 to alleviate the "smoke smell," but did not keep track of his 7 expenses. Jardine disagrees, contending that the fire 10-3319 Opp'n at 5. 10-3319 Gross Decl. Ex. A at 109-110. 8 Jardine has testified that Pardo stopped paying rent in 9 September or October of 2007 and moved out around that time. 10 United States District Court For the Northern District of California 10- 3119 Gross Decl. Ex. A at 116. 11 plaster damage was a factor in Pardo's decision. 10- It is unclear whether the fire or Id. at 116-117. 12 On April 2, 2008, Jardine entered into a Policyholders 13 Settlement and Release Agreement with OneBeacon, Pardo's insurer, 14 concerning the fire damage. 15 ("Settlement Agreement"). 16 was "paid for fire damage repairs that may exceed the reasonable 17 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 18 19 the plaster and fire damage. 10-3318 Gross Decl. Ex. D; 20 10-3319 Gross Decl. Ex. E ("Jardine RFA Response") at 2.6 With 21 6 22 23 24 25 26 27 28 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. 4 1 respect to the plaster damage, a structural engineer hired by 2 Maryland concluded that the damage was caused by a sulfate attack 3 on the wall, resulting from a combination of moist conditions, the 4 application of the wrong type of plaster, and inadequate wall 5 preparation. 6 by Jardine, William Jones ("Jones"), agreed. 7 ultimately paid Jardine $46,225 for the plaster damage -- $25,000 8 as the actual cash value of the structure, $2,500 to repair 9 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 10 $4,175 for Jones' engineering services, and a $14,550 advance for 11 business income loss coverage. Id. Exs. N, O, P at 110-11. With respect to the fire damage, on August 28, 2008, an 12 13 independent adjustor prepared a repair estimate at Maryland's 14 request. 15 fire damage repairs on the Property would cost $10,727.97. 16 November 8, 2008, Maryland paid Jardine $10,227.97 (the amount of 17 the repair estimate less Jardine's $500 deductible). 18 Maryland and Jardine also agreed to hire VP Construction to prepare 19 another repair estimate. 20 December 3, 2008, VP Construction estimated that the repairs for 21 the fire damage would cost $34,423.20 and would take 60 days to 22 complete, as long as building code upgrades were not required. 23 3319 Gross Decl. Ex. F. 24 have cost an additional $59,446, but has presented no evidence 25 supporting this estimate. 26 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. 27 7 28 On Jardine submitted declarations in opposition to Maryland's Motions. ECF Nos. 40 ("10-3319 Jardine Decl."), 50 ("10-3318 Jardine Decl."). 5 1 In any event, it is undisputed that Jardine never performed the 2 code upgrades or any other major repairs. 3 3319 Opp'n at 9. 4 10-3319 Mot. at 13; 10- On September 10, 2009, the City of Hayward purchased the 5 Property from Jardine for approximately $1.3 million. 6 Gross Decl. Ex. S. 7 of the Route 238 Corridor Improvement Project. 8 9 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 10 Superior Court of California for Alameda County ("Superior Court"). 11 ECF No. 1-1. 12 10-3318 action as well as a complaint in his 10-3319 action for 13 payments allegedly due for the fire damage, both in Superior Court. 14 ECF No. 1-2 ("10-3318 Compl."); 10-3319 ECF No. 1 Ex. A ("10-3319 15 Compl."). 16 29, 2010 on diversity grounds. 17 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 18 contract; (2) breach of implied covenant of good faith and fair 19 dealing; and (3) violations of the Fair Claims Settlement Act as 20 set forth in California Insurance Code § 790.03 et seq. and 21 California Code of Regulations § 2695.1 et seq. 22 10-3319 Complaint. 23 10-3318 Complaint; In its 10-3318 Motion, Maryland argues that summary judgment 24 is appropriate because (1) no private right of action exists for 25 the statutory violation alleged in Jardine's third cause of action 26 (2) Jardine's plaster claim is barred under the Policy's 27 exclusions, (3) Jardine is not entitled to any further payments 28 under the Policy, and (4) Jardine is not entitled to any additional 6 1 coverages under the policy. 10-3318 Motion at 8-9. With respect 2 to its 10-3319 Motion, Maryland argues that summary judgment is 3 appropriate because (1) no private right of action exists for the 4 alleged statutory violations, (2) Jardine has been fully 5 compensated for his fire loss, (3) Jardine is not entitled to 6 coverage for code upgrades, and (4) Jardine is not entitled to 7 Business Income coverage. 10-3319 Motion at 5-6. 8 9 III. LEGAL STANDARD United States District Court For the Northern District of California 10 Entry of summary judgment is proper "if the movant shows that 11 there is no genuine dispute as to any material fact and the movant 12 is entitled to judgment as a matter of law." 13 56(a). 14 require a directed verdict for the moving party. 15 Liberty Lobby, Inc., 477 U.S. 242, 251 (1986). 16 mandates the entry of summary judgment . . . against a party who 17 fails to make a showing sufficient to establish the existence of an 18 element essential to that party's case, and on which that party 19 will bear the burden of proof at trial." 20 477 U.S. 317, 322 (1986). 21 believed, and all justifiable inferences are to be drawn in his 22 favor." 23 of a scintilla of evidence in support of the plaintiff's position 24 will be insufficient; there must be evidence on which the jury 25 could reasonably find for the plaintiff." 26 opposing parties tell two different stories, one of which is 27 blatantly contradicted by the record, so that no reasonable jury 28 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. 7 However, "[t]he mere existence Id. at 252. "When 1 facts for purposes of ruling on a motion for summary judgment." 2 Scott v. Harris, 550 U.S. 372, 380 (2007). 3 IV. 4 DISCUSSION A. Maryland's 10-3318 Motion 5 6 1. Fair Claims Settlement Practices Act Maryland moves for summary judgment on the third cause of 7 action in 10-3318 on the grounds that no private right of action 8 exists under California Insurance Code Section 790.03 et seq. and 9 California Code of Regulations Section 2695.1 et seq. 10-3318 Mot. United States District Court For the Northern District of California 10 at 25. Jardine does not object to the dismissal of his third cause 11 of action. 12 Maryland's 10-3318 Motion as to Jardine's third cause of action for 13 violation of the Fair Claims Settlement Practices Act. 14 15 10-3319 Opp'n at 22-23. 2. Accordingly, the Court GRANTS Policy Exclusions Maryland argues that Jardine's remaining claims for plaster 16 damage are barred by two policy exclusions: 17 faulty, inadequate, or defective renovation or remodeling under 18 section II.A.3 of the Policy ("renovation/ remodeling exclusion"); 19 and (2) the exclusion for loss or damage resulting from rust, 20 corrosion, or deterioration under section II.A.2 ("deterioration 21 exclusion"). 22 provides: 23 24 II. 10-3318 Mot. at 15-17. (1) the exclusion for Specifically, the Policy COVERED CAUSES OF LOSS 25 RISKS OF DIRECT PHYSICAL LOSS OR DAMAGE unless loss or damage is excluded or limited as described below: 26 A. 27 28 EXCLUSIONS . . . 2. We will not pay for loss or damage caused by or resulting from any of the following: 8 1 . . . c.(2)Rust, corrosion, fungus, deterioration, hidden or defect or any quality in that causes it to damage itself. 2 3 4 5 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. 6 7 8 . . . 9 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. 10 United States District Court For the Northern District of California decay, latent property or destroy 11 12 13 . . . 14 c. 15 16 Faulty, inadequate or defective: . . . (2) Design, specifications, workmanship, repair, construction, renovation, remodeling, grading, compaction; (3) Materials used in repair, construction, renovation or remodeling; . . . . 17 18 19 20 21 Or part or all of any property on or away from the "described premises". 22 Policy at 7-8, 10 (emphasis added). 23 Maryland argues that the renovation/remodeling exclusion 24 applies here because Chavez and Serna applied plaster to the walls 25 to renovate and remodel the Property. 10-3318 Mot. at 16. 26 Maryland contends the plaster application amounted to faulty, 27 inadequate, or defective renovation or remodeling because the walls 28 began to peel and blister after it was applied. 9 Id. Maryland 1 further argues that the deterioration exclusion applies because the 2 plaster application resulted in a "sulfate attack" which caused 3 Jardine's walls to deteriorate. Id. at 16-17. Jardine responds that neither exclusion applies. 4 Jardine 5 points out that, while the Policy does exclude loss or damage 6 resulting from defective renovation or remodeling, it also states: 7 "if an excluded Cause of Loss . . . results in a Covered Cause of 8 Loss, we will pay for the loss or damage caused by that Covered 9 Cause of Loss." 10-3318 Opp'n at 11. Jardine argues that because United States District Court For the Northern District of California 10 the plaster application resulted in a covered cause of loss, he is 11 entitled to compensation. 12 argues that the deterioration exclusion does not apply because the 13 damage to his wall was the result of a "specific event" that caused 14 the wall to degrade within a short period of time, not the result 15 of a "gradual decline." 16 the earlier determination by Maryland's claims adjustors that this 17 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. 18 Jardine is correct that the remodeling/renovation exclusion 19 bars only the replacement of the plaster, not the loss resulting 20 from its application.8 21 deterioration exclusion bars Jardine from recovering for the 22 resulting loss. 23 includes "slow-moving disintegration or corrosion of the [insured 24 material] because of external forces." 25 & Cas. Co., 217 Cal. App. 3d 210, 265 (Cal. Ct. App. 1989). 26 Ninth Circuit applied this principle in Berry v. Commercial Union 27 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 28 8 Maryland concedes as much in its Reply. 10 See 10-3318 Reply at 3. 1 before the court was whether damage to an insured's irrigation 2 pipes caused by a liquid fungicide was barred by an insurance 3 policy's "deterioration" exclusion. 4 flushed the fungicide through her pipes to combat potato and carrot 5 blight and discovered the damage two years later. 6 Circuit held that "a degradation that takes two years to manifest" 7 was "slow-moving" and therefore constituted "deterioration."9 8 at 389 n.3. Id. at 388. The insured had Id. The Ninth Id. The Court finds that the deterioration exclusion bars 9 United States District Court For the Northern District of California 10 Jardine's claim. Jardine concedes that the damage to his wall 11 "occurred over an approximate year and a half time," 10-3318 Opp'n 12 at 12, just short of the two-year timeframe at issue in Berry. 13 Such "slow-moving disintegration or corrosion" constitutes 14 deterioration. 15 deterioration exclusion does not apply because the plaster damage 16 was caused by the specific act of his tenants. 17 authority supporting his position, and the Ninth Circuit reached a 18 contrary conclusion in Berry. 19 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 20 9 21 22 23 24 25 26 27 28 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 11 The Court also rejects Jardine's contention that earlier 1 2 determinations by Maryland's adjustors that Jardine's claim was 3 covered should be binding on Maryland. 4 from a November 6, 2008 letter from Maryland adjustor Mitch Hammond 5 ("Hammond") stating that "the investigation into the cause and the 6 review of the policy does not show that the loss is excluded." 7 3318 Opp'n at 12, 13; 10-3318 Peck Decl. Ex E ("Olson Dep.") at 69- 8 70.11 9 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 11 intended to bind Maryland or offer a final determination on 12 Jardine's claim. 13 under the Policy throughout its handling of the claim. 14 Gross Decl. Ex. E at 12; 10-3318 Gross Supp. Decl. Ex. AA at 3. 15 The Hammond letter is also insufficient to raise a genuine dispute 16 of material fact because there is no indication of what facts 17 Hammond based his findings on and whether those facts contradict 18 the current record.12 In fact, Maryland repeatedly reserved its rights 10-3318 19 20 21 22 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 23 24 25 26 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 27 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 1 2 Policy's deterioration exclusion. 3 Maryland's Motion as to Jardine's claims for breach of contract and 4 breach of the implied covenant of good faith and fair dealing.13 5 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 7 8 third cause of action in 10-3319 for violations of the Unfair 9 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. 11 2. Fire Loss Coverage Maryland contends that Jardine has been fully compensated for 12 13 the property damage resulting from the fire. 10-3319 Mot. at 10- 14 12. 15 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 17 fire damage. 18 $30,781.25 payment was part of the Settlement Agreement between 19 Jardine and OneBeacon concerning the fire damage and that 20 Maryland's $10,227.97 payment was specifically intended to settle 21 Jardine's fire claim. Specifically, Maryland argues that Jardine has already 10-3319 Reply at 4. Maryland states that the Id. at 1-3. 22 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 16 17 18 19 20 21 22 23 24 25 26 27 28 21

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