Farhad Yaghoubi v. Travelers Ins. Co.

• Court: Court of Appeals for the Ninth Circuit
• Decided: March 22, 2019
• Docket: 17-56618
• Status: Unpublished

Opinion

FILED NOT FOR PUBLICATION MAR 22 2019 UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

FARHAD YAGHOUBI, No. 17-56618

Plaintiff-Appellant, D.C. No. 2:16-cv-05770-SVW-AS v.

TRAVELERS CASUALTY INSURANCE MEMORANDUM* COMPANY OF AMERICA,

Defendant-Appellee.

Appeal from the United States District Court for the Central District of California Stephen V. Wilson, District Judge, Presiding

Argued and Submitted March 8, 2019 Pasadena, California

Before: SCHROEDER and OWENS, Circuit Judges, and CHRISTENSEN,** Chief District Judge.

Plaintiff Farhad Yaghoubi and defendant Travelers Casualty Insurance

Company of America (“Travelers”) dispute the scope of plaintiff’s replacement-

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable Dana L. Christensen, Chief United States District Judge for the District of Montana, sitting by designation. cost benefits under his fire-insurance policy. The dispute arose after a fire

destroyed plaintiff’s commercial warehouse. After the fire, instead of seeking

funds to rebuild the warehouse, plaintiff sought costs he expended in purchasing an

apartment complex. Travelers denied plaintiff’s request. Plaintiff then sued for

breach of contract and a breach of the implied covenant of good faith and fair

dealing. The district court granted summary judgment for Travelers, finding that

the policy’s replacement-cost provision did not authorize reimbursement for the

costs of a building that served a different purpose than the property insured.

Plaintiff appeals. We affirm.

On appeal, plaintiff argues that the policy conflicts with California Insurance

Code section 2051.5(a)(1). That section provides that in the case of property

destruction, replacement-cost coverage includes “the amount that it would cost the

insured to repair, rebuild, or replace the thing lost or injured[.]” Cal. Ins. Code

§ 2051.5(a)(1). Plaintiff contends that the term “replace” as used within this

section does not require that the replacement structure be “used for the same

purpose” as the insured structure, and that the policy’s same-use requirement

therefore conflicts with section 2051.5’s purpose. Reimbursement should be made,

plaintiff argues, for any structure he chose to build following the fire.

2 The statutory language limits the reimbursement to the costs to repair,

rebuild, or replace the property that was lost or injured. As the district court

recognized, the only relevant California authority supports Travelers’ position that

a replacement structure in this context must serve the same purpose as the original

structure. See Conway v. Farmers Home Mut. Ins. Co., 31 Cal. Rptr. 2d 883, 886

(Ct. App. 1994) (“[T]he term replace . . . includes the notion of substituting for an

original item another item which serves the same function as the original . . . .”).

Conway is consistent with the out of state authority on the same issue. Plaintiff has

cited no judicial authority that supports his position.

That both the insured structure and the new structure provided rental income

does not mean that the two structures served the same function within the meaning

of the policy or the statute.

AFFIRMED.