Henley v. Safeco Insurance Company of America

Opinion

1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 NORTHERN DISTRICT OF CALIFORNIA 9 EVA JO HENLEY, et al., 10 Case No. 21-cv-04243-RS Plaintiffs, 11 v. ORDER GRANTING MOTION FOR 12 PARTIAL SUMMARY JUDGMENT SAFECO INSURANCE COMPANY OF 13 AMERICA, 14 Defendant.

15 16 I. Introduction 17 In this insurance dispute, Defendant Safeco Insurance Company of America (“Safeco”) 18 brings a motion for partial summary judgment. Plaintiff Joe Henley (“Henley”) brings this lawsuit 19 in his capacity as the representative of the estate of his late mother, Eva Jo Henley (“Eva Jo”). 20 Henley avers that Safeco, his mother’s homeowner’s insurer, owes additional plan benefits 21 following a water loss at her home. Safeco moves for partial summary judgment. For each of the 22 challenged claims, Henley fails to set forth “facts that might affect the outcome of the suit under 23 the governing law[.]” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Partial summary 24 judgment is therefore granted to Defendant as to the coverage of additional living expenses, the 25 breach of the implied covenant of good faith and fair dealing claim, and the financial elder abuse 26 claim. As summary judgment is granted to Defendant for the only claims for which punitive 27 damages and treble damages could apply, summary judgment is also granted to Defendant as to 1 II. Factual and Procedural Background 2 Safeco issued a homeowners’ policy to Eva Jo Henley for the period from October 29, 3 2020 to October 29, 2021 for a home at 4074 Forestview Ave., Concord, California 94521. On 4 February 28, 2020, Eva Jo’s daughter Sue Joyal contacted Safeco about a water loss at the 5 property. Following inspection by a Safeco adjuster, Christina Reid, on March 6, 2020, Safeco 6 issued a payment and coverage letter in the amount of $26,474.21. Over the coming months, 7 Henley requested coverage for purported damage to other parts of the home. While Safeco 8 approved some additional coverage—namely removal of lower kitchen cabinets and some kitchen 9 drywall—it did not approve all of the requested coverage, as Safeco disputed whether water 10 damage to certain areas stemmed from earlier leaks, and whether parts of the home were damaged 11 at all. 12 Safeco also issued payments of $4,420 per month under the policy’s Loss of Use coverage, 13 as Safeco believed Eva Jo moved into an assisted living facility following the damage to her 14 home. This monthly payment represented the cost of a monthly short term rental in the area. On 15 October 30, 2020, Reid discovered an online newsletter from Eva Jo’s assisted living facility 16 which stated that she had been living in the facility as early as November 2019, three months 17 before the leak. Safeco initiated a stop payment on a pending claim payment check and initiated an 18 investigation. On December 16, 2020, Safeco issued the claim payment check that had been 19 stopped during the investigation, but subtracted previously-paid Loss of Use coverage that Safeco 20 believed was improperly issued. 21 In April 2021, Eva Jo filed this lawsuit in Contra Costa Superior Court, and Safeco 22 removed the case to federal court in June 2021. Following Eva Jo’s death, Henley was substituted 23 as plaintiff, in his capacity as the personal representative of Eva Jo’s estate. In the operative 24 complaint, Plaintiff brought four causes of action: (1) declaratory relief that the policy covers 25 losses incurred by Eva Jo and her additional living expenses; (2) breach of the implied covenant of 26 good faith and fair dealing; (3) breach of the contractual duty to pay a covered insurance claim; 27 and (4) financial elder abuse. Among other forms of relief, Plaintiff seeks punitive and treble 1 damages. Safeco now brings this motion for partial summary judgment. 2 III. Legal Standard 3 Summary judgment is proper “if the movant shows that there is no genuine dispute as to 4 any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). 5 The purpose of summary judgment “is to isolate and dispose of factually unsupported claims or 6 defenses[.]” Celotex v. Catrett, 477 U.S. 317, 323-24 (1986). The moving party “always bears the 7 initial responsibility of informing the district court of the basis for its motion, and identifying 8 those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, 9 together with the affidavits, if any, which it believes demonstrate the absence of a genuine issue of 10 material fact.” Id. at 323 (internal quotation marks omitted). If it meets this burden, the moving 11 party is then entitled to judgment as a matter of law when the non-moving party fails to make a 12 sufficient showing on an essential element of the case with respect to which it bears the burden of 13 proof at trial. Id. at 322-23. 14 To preclude the entry of summary judgment, the non-moving party must bring forth 15 material facts, i.e., “facts that might affect the outcome of the suit under the governing law[.]” 16 Anderson, 477 U.S. at 248. The opposing party “must do more than simply show that there is 17 some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio, 18 475 U.S. 574, 586 (1986). The trial court must “draw all justifiable inferences in favor of the 19 nonmoving party, including questions of credibility and of the weight to be accorded particular 20 evidence.” Masson, 501 U.S. at 520. 21 IV. Discussion1 22 Defendant’s motion for partial summary judgment addresses four aspects of the 23 Complaint. First, Defendant challenges Plaintiff’s ability to recover for additional living expenses. 24 This argument is construed as applying to portions of the first and third causes of action, which 25

26 1 Plaintiff and Defendant also bring various objections to each other’s proffered evidence. As the Court does not rely on the disputed pieces of evidence to reach its conclusions, resolution of these 27 objections is not necessary. 1 concern declaratory relief and breach of a contractual duty. Second, Defendant challenges the 2 entirety of the second cause of action, breach of the implied covenant of good faith and fair 3 dealing. Third, Defendant challenges the entirety of the fourth cause of action, for financial elder 4 abuse. Fourth, Defendant challenges Plaintiff’s ability to recover punitive and treble damages. 5 Each of these issues is addressed in turn. 6 A. Additional Living Expense Benefits 7 The section of the insurance policy entitled “Coverage D – Loss of Use” states “[i]f a loss 8 is covered under this Section makes that part of the residence premises where you reside 9 uninhabitable we cover Additional Living Expense, meaning any necessary increase in living 10 expenses you incur so that your household can maintain its normal standard of living.” Safeco has 11 advanced evidence that Eva Jo moved into Carlton Senior Living in November 2019, and left the 12 facility in September 2020 to live with Joyal, her daughter, when her medical condition required 13 someone to be with her at all times. 14 Devoting just five sentences to this claim in his opposition, Henley argues without citing 15 any caselaw that whether or not additional living expenses are owed is a question for the jury. The 16 only evidence he advances is his own declaration, in which he states that his mother “always 17 wanted to return home” and that her wish “was unable to be fulfilled as a result of Safeco’s failure 18 to process this claim in good faith[.]” Declaration of Joe Henley, ¶¶ 4-5. This wish, however, does 19 nothing to refute the evidence Safeco has put forth that Eva Jo was not residing at the home 20 covered by the policy at the time of the damage, and thus was not entitled to additional living 21 expense coverage. Plaintiff has failed to bring forth “facts that might affect the outcome of the suit 22 under the governing law,” Anderson, 477 U.S. at 248, and summary judgment is therefore granted 23 to Safeco as to the issue of whether Plaintiff is owed or may recover for additional living 24 expenses. 25 B. Breach of the Implied Covenant of Good Faith and Fair Dealing 26 In the insurance context, establishing a claim for breach of the implied covenant of good 27 faith and fair dealing requires showing (1) benefits due under a policy were improperly withheld, 1 and (2) the withholding was unreasonable or without proper cause. CalFarm Ins. Co. v. 2 Krusiewicz, 131 Cal.App.4th 273, 286 (2005). “[T]he withholding of benefits due under the policy 3 is not unreasonable if there was a genuine dispute between the insurer and the insured as to 4 coverage or the amount of payment due.” Rappaport-Scott v. Interinsurance Exchange of Auto. 5 Club, 146 Cal.App.4th 831, 837 (2007). Liability requires a finding that “the insurer [] engage[d] 6 in ‘a conscious and deliberate act, which unfairly frustrate[d] the agreed common purposes and 7 disappoints the reasonable expectations of the other party thereby depriving that party of the 8 benefits of the agreement.” Nieto v. Blue Shield of California Life & Health Ins. Co., 181 9 Cal.App.4th 60, 86 (2010), quoting Chateau Chamberay Homeowners Ass’n v. Associated Intern. 10 Ins. Co., 90 Cal.App.4th 335, 346 (2001). 11 Plaintiff asserts that Safeco violated the implied covenant of good faith and fair dealing in 12 the following ways: “(1) refusing to fully defend and/or indemnify Plaintiff for covered liabilities, 13 as defined in the Policy, without regard to relevant insurance policy language; (2) interpreting the 14 terms and conditions of the Policy in an unreasonable manner solely in an effort to avoid 15 providing Plaintiff with coverage to which it is entitled under the Policy; (3) refusing to conduct a 16 reasonable claim investigation; and (4) failing to consider Ms. Henley’s interests as much as its 17 own in handling the claim.” Opposition to Motion, p.9. 18 The only evidence Plaintiff attempts to advance in support of these allegations is that 19 Safeco authorized $172,167.95 for the claim and failed to tell Plaintiff of this amount. Plaintiff 20 argues this failure to disclose “creates a triable issue of material fact as to whether such refusal to 21 inform or pay the valued amount was unreasonable and therefore bad faith.” Id. The $172,167.95 22 amount, however, was not a valuation of the amount due to be paid to Plaintiff, but rather an 23 estimate that included both costs it later determined were not owed, and payments that were made 24 directly to third parties. For example, the total included $75,140 in additional living expenses 25 Safeco later determined were not appropriate and $36,573.92 in mitigation work that Safeco had 26 already paid directly to a mitigation contractor hired by Joyal. Further, that Safeco had authorized 27 payments up to that total—in part based on estimates of work to be done, rather than real cost— 1 does nothing to demonstrate unreasonableness or bad faith. Plaintiff fails to cite to any authority 2 for his proposition that a failure to inform the insured of the total authorized amount demonstrates 3 bad faith, and does not argue that the authorization shows that Safeco originally planned to cover 4 certain repairs it later decided not to cover. Once again, Plaintiff has failed to bring forth “facts 5 that might affect the outcome of the suit under the governing law,” Anderson, 477 U.S. at 248, and 6 summary judgment is therefore granted to Safeco as to this claim. 7 C. Financial Elder Abuse 8 A claim for financial elder abuse under Section 15610.30 of the California Welfare and 9 Institutions Code requires showing the defendant took or retained the elder’s property “for a 10 wrongful use or with intent to defraud” or with “undue influence.” The plaintiff must establish that 11 the defendant “knew or should have known that [its] conduct is likely to be harmful to the elder[.]” 12 Cal. Welf. & Inst. Code § 15610.30(b). “In the context of a deprivation of property due an elder 13 under an insurance contract,” the plaintiff must “show more than an incorrect denial of policy 14 benefits.” Davis v. Sentinel Ins. Co., 17-CV-1845 W (JLB), 2018 WL 5084789, at *3 (S.D. Cal. 15 Oct. 18, 2018). 16 Plaintiff has failed to put forth evidence that this insurance dispute involves anything more 17 than an incorrect denial of policy benefits. In the section discussing this claim, Plaintiff makes a 18 general reference to the entire deposition of Safeco employee Rughda Daas, without specifying 19 any particular facts supporting his claim. Plaintiff also points to his statement of facts for evidence 20 of bad faith by Safeco. In that section, however Plaintiff states the following: “Safeco has refused 21 to fully pay for the repairs that are necessary for Ms. Henley’s residence as required by the policy, 22 despite being under the policy limits for this claim. This alone evidences bad faith.” Opposition to 23 Motion, p.5. This theory of bad faith, and the facts which Henley says supports that theory, cannot 24 amount to anything more than an incorrect denial of policy benefits. Summary judgment is 25 therefore granted to Defendant as to the financial elder abuse claim. 26 D. Punitive and Treble Damages 27 The claims for punitive damages and treble damages are predicated on the violation of the 1 implied covenant of good faith and fair dealing claim and the financial elder abuse claim, and 2 || Plaintiff provides no argument that these types of damages are available in the absence of those 3 two claims. As summary judgment is granted to Defendant on those substantive claims, the claims 4 || for punitive and treble damages fail as well. 5 V. Conclusion 6 Defendant’s motion for partial summary judgment is granted. Summary judgment is 7 granted to Defendant as to the breach of the implied covenant of good faith and fair dealing claim 8 and the financial elder abuse claim. Summary judgment is also granted as to the issue of whether 9 Plaintiff is owed or may recover for additional living expenses. Finally, summary judgment is 10 || granted to Defendant as to the availability of punitive and treble damages. 11 12 || ITISSO ORDERED.

14 |] Dated: July 7, 2022 Ya □□ ( | v □ 15 RICHARD SEEBORG = 16 Chief United States District Judge = 17 18 19 20 21 22 23 24 25 26 27 98 ORDER GRANTING MOTION FOR PARTIAL SUMMARY JUDGMENT _ CASE No. 21-cv-04243-RS