Zhang v. Safeco Insurance Company of America et al

Filing 37

ORDER GRANTING DEFENDANTS 26 MOTION FOR SUMMARY JUDGMENT; DENYING PLAINTIFFS 35 MOTION FOR ADMINISTRATIVE RELIEF. Signed by Judge Claudia Wilken on 5/1/2013. (ndr, COURT STAFF) (Filed on 5/1/2013)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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YANTING ZHANG,

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No. C 12-1430 CW

Plaintiff,

ORDER GRANTING
DEFENDANT’S MOTION
FOR SUMMARY
JUDGMENT (Docket
No. 26); DENYING
PLAINTIFF’S MOTION
FOR ADMINISTRATIVE
RELIEF (Docket No.
35)

v.
SAFECO INS. CO. OF AMERICA, INC.
and LEONARD BAINES,
Defendants.
________________________________/

United States District Court
For the Northern District of California

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Plaintiff brought this action against Defendant Safeco
Insurance Company for breach of contract, breach of the covenant
of good faith and fair dealing, and intentional
misrepresentation.1
claims.

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Plaintiff opposes the motion and moves for miscellaneous

administrative relief.

After considering the parties’ submissions

and oral argument, the Court grants Defendant’s motion and denies
Plaintiff’s motion.
BACKGROUND

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Defendant moves for summary judgment on all

The following facts are undisputed except where otherwise
noted.

In February 2009, Plaintiff purchased an insurance policy

from Safeco for a residential property that she had recently
acquired in Richmond, California.

Declaration of Francis Doherty,

Ex. A, Deposition of Yanting Zhang 14:2-:7; Declaration of Ronda
Ives, Ex. 2, Safeco Policy No. OX5809698, at SAFE00798-99.

The

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Plaintiff also initially asserted a claim against Leonard Baines
for intentional infliction of emotional distress. The Court dismissed
this claim in its May 23, 2013 order. Docket No. 15, at 9.

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policy covered any “direct physical loss to [the] property,”

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subject to certain conditions.

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Ives Decl., Ex. 2, at SAFE00821.

On June 16, 2009, Plaintiff contacted Safeco to report that
the property had been vandalized and file a claim under the

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policy.

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on June 19, Safeco sent a claims examiner, Leonard Baines, to

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inspect the property and assess the damage from the vandalism.

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Id. ¶ 4.

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the property.

Id., Ex. 1, June 2009 Repair Estimate, at

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United States District Court
For the Northern District of California

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SAFE00619-30.

On July 6, 2009, Safeco sent Plaintiff a copy of

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Baines’ report and a check for $30,744 to cover the estimated cost

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of repairs minus Plaintiff’s deductible ($1000) and the cost of

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recoverable depreciation ($1108).

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McCurdy, Ex. 1, Zhang Depo. 107:12-108:19; Ives Decl. ¶ 5.

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Declaration of Leonard Baines ¶¶ 2-3.

Three days later,

Baines estimated that it would cost $32,852 to repair

Declaration of Kevin G.

Unbeknownst to Safeco, on the same day that Baines conducted

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his inspection, Plaintiff finalized a sale of the property to

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Jianqin Xie.

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Deed, at SAFE00337.

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June 11, four days before the vandalism, she did not record the

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grant deed until the morning of June 19.

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Plaintiff asserts that, when she first called to file a claim, she

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notified Safeco that the property was in escrow at the time of the

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vandalism.

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Zhang Depo. 51:10-52:10; Doherty Decl., Ex. B, Grant
Although Plaintiff had initiated the sale on

Grant Deed at SAFE00337.

Zhang Depo. 51:10-52:10; Grant Deed at SAFE00765.

On July 10, 2009, Plaintiff called Safeco with questions

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about Baines’ repair estimate.

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Specifically, she wanted to know why Baines’ estimate did not

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account for the cost of cleanup and debris removal.

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complained that her contractors thought Baines’ estimate was too

Ives Decl. ¶ 6, Ex. 3.

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Id.

She also

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low.

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claim, Ronda Ives, told Plaintiff to contact Baines directly to

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discuss her concerns.

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reimburse her for the cost of debris removal when she submitted

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receipts for this service from a licensed contractor.

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Id.

The Safeco representative assigned to Plaintiff’s

Id.

Ives also told her that Safeco would

Id.

On September 3, 2009, Plaintiff contacted Safeco again, this

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time seeking compensation for lost rental income.

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She did not disclose during this conversation that she no longer

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owned the property and had no authority to rent it to tenants.

United States District Court
For the Northern District of California

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Id.

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of lost rental income beginning on June 15, 2009.

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Id. ¶ 7, Ex. 4.

Safeco sent Plaintiff a check for $5100 covering three months
Id.

Three months later, on December 3, 2009, Plaintiff contacted

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Safeco to report that the property had been vandalized again.

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¶ 8.

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she hired to inspect the property estimated that it would now cost

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roughly $60,000 to repair all of the damage.

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Plaintiff’s contractor did not provide a written estimate of the

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repair costs, Safeco -- still unaware that the property had been

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sold -- sent Baines to conduct another inspection of the property

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on December 6.

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that Plaintiff had not made any repairs to the property since the

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first vandalism.

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SAFE00597.

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vandalism would cost an additional $32,230 to repair.

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Id.

Speaking with Ives, Plaintiff asserted that the contractor

Id.; Baines Decl. ¶ 7.

Id.

Because

His inspection revealed

Id., Ex. 2, December 2009 Repair Estimate, at

He concluded that the new damage from the second
Id.

On December 17, 2009, shortly after Baines completed his

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second repair estimate, a Safeco investigator interviewed

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Plaintiff at her home about the vandalism.

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Dunn ¶¶ 2-3.

Declaration of Michael

Plaintiff told the investigator that she owned the
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property and conceded that she had not made any repairs to it

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since the June 2009 vandalism occurred.

Id. ¶¶ 4-5, Ex. 1.

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Three weeks after the interview, on January 7, 2010,

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Plaintiff contacted Safeco to report that the property had been

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vandalized a third time.

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on January 12, Plaintiff reported additional damage from a fourth

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vandalism.

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either of these conversations that she had sold the property.

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¶ 12.

Ives Decl. ¶ 9, Ex. 6.

Id. ¶ 10, Ex. 7.

Five days later,

Plaintiff did not disclose during
Id.

United States District Court
For the Northern District of California

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On February 1, 2010, Ives wrote a letter to Plaintiff

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informing her that Safeco would only cover her losses resulting

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from the first occurrence of vandalism in June 2009.

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Ex. 8.

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policy, Safeco was not required to cover losses resulting from

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“vandalism and malicious mischief” when “the dwelling has been

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vacant for more than 30 consecutive days immediately before the

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loss.”

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since June 2009, when the first vandalism occurred, Safeco

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asserted that it was not required to cover the subsequent

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incidents of vandalism.

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Decl., Ex. 8, at 2.

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specifically rejected Plaintiff’s view that her initial claim

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should be expanded to cover the three subsequent vandalism

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incidents, as well; rather, under Safeco’s interpretation of the

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policy, Plaintiff needed to file a separate claim for each

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incident.

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Id. ¶ 11,

The letter explained that, under the terms of Plaintiff’s

Id., Ex. 8, at 2.

Because the property had been vacant

McCurdy Decl., Ex. 1, 83:12-:15; Ives

In reaching this conclusion, Safeco

Id.

On March 4, 2010, Plaintiff called Ives to discuss Safeco’s
decision to deny her coverage for any property damage that
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occurred after June 2009.

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Plaintiff disclosed for the first time that she had sold the

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property in June 2009.

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that she would speak with Xie, the new owner of the property, to

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determine whether Xie’s insurance policy would cover the losses

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that occurred after June 2009.

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Id. ¶ 12.

During this conversation,

Id. ¶ 12, Ex. 9.

Plaintiff also indicated

Id., Ex. 9.

More than five months later, in August 2010, Plaintiff sent

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Safeco a repair estimate prepared by Har-Bro of Northern

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California, a contractor that she hired to examine the property.

United States District Court
For the Northern District of California

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Id. ¶ 13; Zhang Depo. 90:12-:23.

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August 12, 2010 and estimated that it would cost $155,790 to

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repair all of the damage.

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at 27-29.

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Har-Bro’s repair estimate did not distinguish how much of the

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property damage was attributable to the June 2009 vandalism and

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how much was attributable to subsequent incidents.

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Ex. 3, Deposition of William Keith Durden, Jr. 15:8-:17.

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Plaintiff testified during her deposition that she believes she

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gave Har-Bro pictures of the damage caused by the earlier

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incidents of vandalism, Zhang Depo. 91:7-:16, Durden says that he

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never received any such pictures, Durden Depo. 14:12-:17.

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Plaintiff stated at her deposition that she no longer has these

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pictures.

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Har-Bro examined the property on

Doherty Decl., Ex. F, Har-Bro Estimate,

According to Har-Bro’s project manager, Keith Durden,

McCurdy Decl.,
Although

Zhang Depo. 91:17-:24.

In March 2011, Safeco sent a letter to Plaintiff’s then-

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attorney, Gary Kwasniewski, stating that it was denying

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Plaintiff’s claim for additional repair damages based on the Har-

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Bro estimate.

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Plaintiff had already received payment for the damage caused by

Ives Decl. ¶ 13, Ex. 10.

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The letter explained that

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the initial vandalism in June 2009 even though Plaintiff had

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violated several terms of her policy.

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these terms required Plaintiff to “protect the property from

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further damage, make reasonable and necessary repairs to protect

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the property, and keep an accurate record of repair expenditures.”

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Id., at 2-3.

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“intentionally concealed or misrepresented any material fact or

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circumstance relating to this insurance.”

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Id., Ex. 10, at 4.

One of

Another term voided the policy if Plaintiff

Id.

The letter concluded by inviting Plaintiff to submit any

United States District Court
For the Northern District of California

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additional information that might provide a basis for

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reconsideration.

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have responded to this invitation, filed this lawsuit one year

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later.

Id. at 4.

Plaintiff, who does not appear to

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LEGAL STANDARD

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Summary judgment is properly granted when no genuine and

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disputed issues of material fact remain, and when, viewing the

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evidence most favorably to the non-moving party, the movant is

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clearly entitled to prevail as a matter of law.

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P. 56; Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986);

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Eisenberg v. Ins. Co. of N. Am., 815 F.2d 1285, 1288-89 (9th Cir.

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1987).

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Fed. R. Civ.

The moving party bears the burden of showing that there is no

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material factual dispute.

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true the opposing party’s evidence, if supported by affidavits or

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other evidentiary material.

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815 F.2d at 1289.

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in favor of the party against whom summary judgment is sought.

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Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,

Therefore, the court must regard as

Celotex, 477 U.S. at 324; Eisenberg,

The court must draw all reasonable inferences

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587 (1986); Intel Corp. v. Hartford Accident & Indem. Co., 952

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F.2d 1551, 1558 (9th Cir. 1991).

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Material facts which would preclude entry of summary judgment

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are those which, under applicable substantive law, may affect the

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outcome of the case.

The substantive law will identify which

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facts are material.

Anderson v. Liberty Lobby, Inc., 477 U.S.

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242, 248 (1986).

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of proof on an issue at trial, the moving party may discharge its

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burden of production by either of two methods:

United States District Court
For the Northern District of California

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Where the moving party does not bear the burden

The moving party may produce evidence negating an
essential element of the nonmoving party’s case, or,
after suitable discovery, the moving party may show that
the nonmoving party does not have enough evidence of an
essential element of its claim or defense to carry its
ultimate burden of persuasion at trial.
Nissan Fire & Marine Ins. Co., Ltd., v. Fritz Cos., Inc., 210 F.3d
1099, 1106 (9th Cir. 2000).
If the moving party discharges its burden by showing an
absence of evidence to support an essential element of a claim or
defense, it is not required to produce evidence showing the
absence of a material fact on such issues, or to support its
motion with evidence negating the non-moving party’s claim.

Id.;

see also Lujan v. Nat’l Wildlife Fed’n, 497 U.S. 871, 885 (1990);
Bhan v. NME Hosps., Inc., 929 F.2d 1404, 1409 (9th Cir. 1991).

If

the moving party shows an absence of evidence to support the nonmoving party’s case, the burden then shifts to the non-moving
party to produce “specific evidence, through affidavits or
admissible discovery material, to show that the dispute exists.”
Bhan, 929 F.2d at 1409.

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If the moving party discharges its burden by negating an

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essential element of the non-moving party’s claim or defense, it

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must produce affirmative evidence of such negation.

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F.3d at 1105.

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burden then shifts to the non-moving party to produce specific

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evidence to show that a dispute of material fact exists.

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Nissan, 210

If the moving party produces such evidence, the

Id.

If the moving party does not meet its initial burden of

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production by either method, the non-moving party is under no

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obligation to offer any evidence in support of its opposition.

United States District Court
For the Northern District of California

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Id.

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ultimate burden of persuasion at trial.

This is true even though the non-moving party bears the

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Id. at 1107.

DISCUSSION
I.

Defendant’s Motion for Summary Judgment

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A.

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Plaintiff contends that Safeco breached its insurance

Breach of Contract

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contract by failing to compensate her adequately for losses

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resulting from the repeated incidents of vandalism that occurred

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between June 2009 and January 2010.

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to produce evidence to support this allegation, Safeco is entitled

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to summary judgment on this claim.

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Because Plaintiff has failed

Plaintiff’s insurance policy plainly states that Safeco will

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not be liable to Plaintiff “for more than the amount of the

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insured’s interest [in the property] at the time of loss.”

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Decl., Ex. 2, at SAFE00824.

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ceased to have an insurable interest in the property after June

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19, 2009, when the grant deed transferring ownership of the

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property was recorded.

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Warner v. Fire Ins. Exchange, 230 Cal. App. 3d 1029, 1033 (1991)

Ives

Plaintiff does not dispute that she

See Doherty Decl., Ex. B, at SAFE00337;

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(“[A] seller does not have an insurable interest in property after

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he or she sells it.”).

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date -- including any resulting from the December 2009 and January

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2010 vandalism incidents -- are not covered under the policy.

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While Plaintiff has offered evidence that she had an

Thus, any losses that occurred after that

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insurable interest in the property when it was first vandalized in

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June 2009,2 she has not offered evidence that Safeco failed to

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compensate her for the damage resulting from that incident.

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Indeed, Plaintiff admitted during her deposition that Safeco sent

United States District Court
For the Northern District of California

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her a check for roughly $30,000 in July 2009 to cover the

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estimated cost of repairs.

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admitted that she never formally disputed Safeco’s repair estimate

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by submitting a conflicting estimate from a licensed contractor,

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despite Safeco’s invitation to do so.

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Zhang Depo. 109:12-:16.

She also

Id. 69:20-70:2.

Although Plaintiff contends that Har-Bro’s August 2010 cost

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estimate offers proof that Safeco’s payment was inadequate, the

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Har-Bro estimate is insufficient to satisfy Plaintiff’s summary

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judgment burden.

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year after the initial vandalism and several months after the

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subsequent vandalism incidents.

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manager expressly stated during his deposition that Har-Bro did

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not attempt to determine how much damage was caused by each

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incident of vandalism.

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review Baines’ June 2009 damage estimate, he made clear that Har-

Har-Bro issued its estimate more than a full

Furthermore, Har-Bro’s project

In fact, when Plaintiff asked him to

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Plaintiff cites several cases to argue that a property owner
maintains his or her insurable interest in a property, even when that
property is held in escrow. The Court does not discuss or rely on these
cases here because “Safeco does not seek summary judgment on the ground
that [P]laintiff had no insurable interest in the Property at the time
of the first vandalism in June 2009.” Reply 1.

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Bro’s estimate differed from Safeco’s because the property was in

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a different condition than when Baines inspected it.

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16:19-17:3.

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dispute of fact concerning the accuracy of Safeco’s June 2009 cost

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estimate.3

Durden Depo.

Thus, the Har-Bro estimate does not create a genuine

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Because Plaintiff has not offered any other evidence that

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Safeco underpaid her for her June 2009 claim or otherwise violated

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its insurance policy, Safeco is entitled to summary judgment on

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Plaintiff’s breach of contract claim.

United States District Court
For the Northern District of California

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B.

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Plaintiff asserts that Safeco breached the covenant of good

Breach of the Covenant of Good Faith and Fair Dealing

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faith and fair dealing by unreasonably withholding payment for

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damages caused by the series of vandalism incidents.

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The Supreme Court of California has held that, if an insurer

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does not breach its insurance contract, “there can be no action

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for breach of the implied covenant of good faith and fair dealing

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because the covenant is based on the contractual relationship

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between the insured and the insurer.”

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Exchange, 11 Cal. 4th 1, 36 (1995); see also Love v. Fire Ins.

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Exchange, 221 Cal. App. 3d 1136, 1151-52 (1990) (holding that the

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“threshold requirement” for establishing that an insurer breached

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the covenant of good faith and fair dealing is that “benefits due

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under the policy must have been withheld”).

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Plaintiff has not provided evidence to support her breach of

Waller v. Truck Ins.

Accordingly, because

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In her opposition brief, Plaintiff refers to a “written estimate”
that she provided to Safeco in November 2009. Opp. 10. This appears to
be an error. The record does not contain any evidence of a November
2009 estimate and, at the hearing, Plaintiff failed to identify any
evidence that such an estimate exists, let alone that she provided a
copy of it to Safeco.

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contract claim, she cannot maintain an action for breach of the

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implied covenant of good faith and fair dealing.

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for summary judgment is therefore granted with respect to this

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claim, as well.

Safeco’s motion

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C.

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Plaintiff’s intentional misrepresentation claim is based on

Intentional Misrepresentation

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the same allegations as her other claims.

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essence, that Safeco misrepresented the nature of its insurance

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coverage by withholding coverage for the property damage caused by

United States District Court
For the Northern District of California

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She alleges, in

the various incidents of vandalism.

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To establish liability for intentional misrepresentation, a

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plaintiff must show “(1) a misrepresentation, (2) with knowledge

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of its falsity, (3) with the intent to induce another’s reliance

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on the misrepresentation, (4) justifiable reliance, and

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(5) resulting damage.”

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Cal. 4th 1244, 1255 (2009).

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evidence of a misrepresentation here, intentional or otherwise.

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Indeed, Plaintiff does not even mention the intentional

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misrepresentation claim in her opposition brief.

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even if Plaintiff had offered evidence of misrepresentation, she

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has not offered evidence that she suffered damages as a result:

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Plaintiff received more than $30,000 to repair a property that she

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no longer owned and, ultimately, declined to use that money to

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make any repairs.

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show that she was harmed by Safeco’s conduct.

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entitled to summary judgment on Plaintiff’s intentional

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misrepresentation claim.

Conroy v. Regents of Univ. of Cal., 45
Plaintiff here has not provided any

What’s more,

In short, she has not offered any evidence to

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Safeco is therefore

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II.

Plaintiff’s Motion for Administrative Relief
On April 25, 2013, Plaintiff filed an administrative motion

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requesting a continuance of the trial date, leave to take several

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depositions, and leave to file a supplemental declaration in

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opposition to Defendant’s summary judgment motion.

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Plaintiff’s request to continue the trial date is denied as

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moot in light of Defendant’s successful summary judgment motion.

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Plaintiff’s request for leave to take additional depositions is

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denied because Plaintiff has not explained adequately why she was

United States District Court
For the Northern District of California

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unable to take these depositions during the designated fact

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discovery period, which ended more than a month before she filed

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this motion.

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supplemental declaration in opposition to summary judgment is

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denied because Plaintiff fails to identify the proposed content or

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purpose of such a declaration.

Finally, Plaintiff’s request for leave to file a

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CONCLUSION

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For the reasons set forth above, Defendant’s motion for

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summary judgment (Docket No. 26) is GRANTED and Plaintiff’s motion

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for administrative relief (Docket No. 35) is DENIED.

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shall enter judgment accordingly and close the file.

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The clerk

IT IS SO ORDERED.

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Dated: 5/1/2013

CLAUDIA WILKEN
United States District Judge

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