Huamani v. State Farm General Insurance Co.

The FAC alleges causes of action against State Farm for (1) breach of contract and (2) breach of duty of good faith and fair dealing. Plaintiff alleges that “[o]n or about May 3, 2023, Plaintiff suffered an insurable loss of his jewelry kept inside his locked 2015 BMW automobile which was stolen at his gym” and that, at the time of Plaintiff’s loss, Plaintiff was covered under a Personal Articles Policy under a contract with defendant State Farm. (FAC ¶ 7.) Plaintiff alleges he made a claim to State Farm, and that the claim was wrongly denied. (FAC ¶ 16.)

Issue No. 1: Plaintiff’s first cause of action for breach of contract has no merit because Plaintiff misrepresented or concealed material information in the presentation of the claim.

“To prevail on a cause of action for breach of contract, the plaintiff must prove (1) the contract, (2) the plaintiff’s performance of the contract or excuse for nonperformance, (3) the defendant’s breach, and (4) the resulting damage to the plaintiff.” (Richman v. Hartley (2014) 224 Cal.App.4th 1182, 1186).

It is undisputed that on May 4, 2023, Plaintiff made a claim to State Farm for personal property that was in the vehicle when it was stolen. (UMF 3.) The claimed personal property included an Audemars Pigeut (“AP”)

watch, a diamond chain, a 14-karat gold chain, a cross, two rings, and a bracelet. (UMF 4.) In effect on the date of the loss was Personal Articles Policy no. 75-KC-S273- 7, for scheduled jewelry items (the “Policy”). (UMF 25.) The Policy includes the following condition: “2. Concealment or Fraud. This entire policy will be void if, whether before or after a loss, you have intentionally concealed or misrepresented a material fact or circumstance relating to this insurance.” (UMF 26.) On January 10, 2024, State Farm denied Plaintiff’s claim due to material misrepresentations in the presentation of the claim. (UMF 23.)

“[M]ateriality is a mixed question of law and fact that can be decided as a matter of law if reasonable minds could not disagree on the materiality of the misrepresentations.” (Ibid. (citing Woods v. Independent Fire Ins. Co. (11th Cir. 1985) 749 F.2d 1493, 1496; Long v. Insurance Co. of North America (10th Cir. 1982) 670 F.2d 930, 934) (emphasis in original).)

In the context of insurance investigations, “a question and answer are material when they relate to the insured’s duty to give to the insurer all the information he has as well as other sources of information so that the insurer can make a determination of its obligations. Thus, materiality is determined by its prospective reasonable relevance to the insurer's inquiry.” (Cummings v. Fire Ins. Exchange (1988) 202 Cal.App.3d 1407, 1416–1417.) Accordingly, “if the misrepresentation concerns a subject reasonably relevant to the insured’s investigation, and if a reasonable insurer would attach importance to the fact misrepresented, then it is material. (Id. at 1417.)

Here, there are triable issues of fact as to whether Plaintiff intentionally concealed or misrepresented a material fact or circumstance relating to this insurance. State Farm contends, essentially, that Plaintiff did not provide satisfactory evidence to demonstrate his purchase of each of the pieces of jewelry at issue (UMF 6-9, 14); that Plaintiff falsely stated that he reported the loss of his jewelry to the police at the time he initially

reported the theft of his vehicle (UMF 10-11, 13-19, 22); and that he falsely stated that he kept his jewelry, except for a cross and yellow gold, in a safe deposit box when not wearing it (UMF 20-21).

Whether the documentation and other evidence submitted by Plaintiff to State Farm to support his claim constitutes an intentional misrepresentation involves credibility determinations that are inappropriate for summary adjudication. Plaintiff has submitted his declaration explaining, for example, that he acquired the Audemars Piguet watch by trading a Cartier and Rolex watch, along with some other jewelry for the AP watch. (Huamani Decl. ¶ 13.) Plaintiff also submits two declarations from Davide Bromelli, who coowns the Renee de Paris jewelry store where Plaintiff alleges he made the trade for the AP watch. Bromelli’s declarations corroborate Plaintiff’s declaration about the trade. (See Exhs. B, H, Bromelli Decls.)

While State Farm also contends that Plaintiff’s submission of wire transfers and appraisal reports were insufficient to substantiate his claims, State Farm’s evidence in this regard does not unequivocally demonstrate a misrepresentation or concealment by Plaintiff.

As to Plaintiff’s statements regarding his storage of jewelry in a safe deposit box and whether he initially reported the jewelry theft to the police, the materiality of those statements to the investigation is for a trier of fact to determine.

Accordingly, summary adjudication is DENIED as to Plaintiff’s first issue.

Issue No. 2: Plaintiff’s second cause of action for breach of the implied covenant of good faith and fair dealing has no merit because Plaintiff cannot prove that State Farm breached the policy contract.

State Farm contends there was no coverage for the alleged loss due to Plaintiff’s misrepresentation and concealment of material information in the presentation

of the claim and no benefits were owed under the Policy. (Mtn. at 14:8-10.)

Summary adjudication as to this issue is DENIED for the same reasons discussed above regarding Issue No.

1.

Issue No. 3: Plaintiff’s second cause of action for breach of the implied covenant of good faith and fair dealing has no merit because State Farm’s handling of Plaintiff’s claim was not unreasonable.

Implied in every insurance contract is an implied covenant of good faith and fair dealing that requires the insurer to refrain from injuring its insured’s right to receive the benefits of the agreement. (Brehm v. 21st Century Ins. Co. (2008) 166 Cal.App.4th 1225, 1235.) “While an insurance company has no obligation under the implied covenant of good faith and fair dealing to pay every claim its insured makes, the insurer cannot deny the claim ‘without fully investigating the grounds for its denial.’ [Citation.] To protect its insured’s contractual interest in security and peace of mind, ‘it is essential that an insurer fully inquire into possible bases that might support the insured's claim’ before denying it.” (Wilson v. 21st Century Ins. Co. (2007) 42 Cal.4th 713, 720–721.)

The linchpin of a bad faith claim, a claim that an insurer violated the implied covenant of good faith and fair dealing, is that the denial of coverage was unreasonable. (McCoy v. Progressive West Ins. Co. (2009) 171 Cal.App.4th 785, 793.) A trier of fact may determine an insurer acted unreasonably if it denied a claim on a basis unsupported by the facts known to it or contradicted by those facts. (Wilson, supra, 42 Cal.4th at pp. 720–721.) A trier of fact also may find an insurer acted unreasonably if it ignores evidence supporting the insured’s claim or conducts an inadequate investigation. (McCoy, supra, 171 Cal.App.4th at p. 793.)

An insurer acts reasonably if it denies a claim based on a “genuine dispute” with the insured over coverage. (Chateau Chamberay Homeowners Assn. v. Associated Internat. Ins. Co. (2001) 90 Cal.App.4th 335, 347.)

Therefore, “[w]here there is a genuine issue as to the insurer’s liability under the policy for the claim asserted by the insured, there can be no bad faith liability imposed on the insurer for advancing its side of that dispute,” even if its coverage decision ultimately was wrong. (Ibid.)

Whether an insurer acted in bad faith “is generally for the trier of fact to resolve, unless, ‘from uncontroverted evidence, a reasonable man following the law can draw but one conclusion on the issue.’ [Citation.]” (Hedayati v. Interinsurance Exchange of the Automobile Club (2021) 67 Cal.App.5th 833, 843.) The same is true of whether an insurer denied a claim based on a genuine dispute over coverage. “ ‘[A] court can conclude as a matter of law that an insurer’s denial of a claim is not unreasonable, so long as there existed a genuine issue as to the insurer's liability.’ ” (Fraley v. Allstate Ins. Co. (2000) 81 Cal.App.4th 1282, 1292.)

The FAC alleges that State Farm breached its obligations to act fairly and in good faith by: (a) unreasonably and without proper cause refusing to promptly pay the benefit owed under the Policy; (b) failing to adequately investigate Plaintiff’s claim; (c) failing to timely investigate Plaintiff’s claim; (d) making unreasonable demands regarding the investigation of Plaintiff’s claim; and (e) cancelling Plaintiff’s insurance policy for no justifiable reason to cover up their mistakes in handling Plaintiff’s Personal Articles Insurance Policy. (FAC ¶ 31.)

State Farm has met its moving burden by providing evidence of a thorough investigation of the claims, which appears to have been undertaken in a prompt and reasonably timely manner. (See UMF 55-87.) Further, State Farm submits the declaration of its expert who has reviewed the claim file and opines that State Farm’s handling of the claim was reasonable. (UMF 87.) The evidence submitted shows there was a genuine dispute with the insured over coverage, given numerous factors cited by State Farm.

In opposition, Plaintiff presents various objections within his responsive separate statement. Objections raised in this manner violate CRC 3.1354 and, further, it is unclear which piece of evidence each objection pertains to. Nonetheless, it appears that the objections are primarily targeted at the State Farm claim file (Exhs. 7 and 14) and the report of State Farm’s expert, Lola Hogan, which relies heavily on the claim file (Exh. 2). Plaintiff’s objections are overruled. The claim file has been authenticated by State Farm’s Team Manager, Karen Gillespie, as a business record. Expert Hogan may rely on the contents of the business records for the non-hearsay purpose of showing the effect on State Farm and its decisions in the handling of the claim.

Plaintiff also attempts to raise triable issues of fact. As part of its evidence that its investigation was reasonable, State Farm contends that its investigation revealed multiple prior claims by Mr. Huamani to State Farm and other insurers, including prior claims to State Farm for theft of his jewelry while at a gym. (UMF 60.) In opposition Plaintiff submits evidence that the theft of jewelry while at a gym was investigated by the Cobb County D.A. in Georgia, which resulted in a conviction and another still pending case. (Pl. Response to UMF 60.) However, the cited evidence (Exh. P) is dated August 29, 2024, which is long after the January 19, 2024 denial of Plaintiff’s claim. (UMF 83.) Thus, this does not raise a triable issue of fact as to the reasonableness of State Farm’s investigation at the time it was undertaken.

Plaintiff also attempts to submit evidence to rebut State Farm’s evidence that, at his Examination Under Oath (“EUO”), Plaintiff could not state whether the documentation he submitted reflected his purchase of the claimed jewelry. (UMF 71.) Plaintiff attempts to submit evidence that, although he was unable to state whether the documentation reflected his purchase of the claimed jewelry at the time of the EUO, he has since been able to piece together most of his purchases with the documentation submitted. (Pl.’s Response to UMF 71.) The evidence is Plaintiff’s declaration in which he states “I reasonably believe that the wire transfers for

$11,000.00 (Exhibits "R" and "X") and one of the transfers for $9,000.00 wires (Exhibits "T", "U" "Z" and "AA") may have been payments for the 14k 25-inch handmade Miami Cuban Link chain, which was purchased on or about December 15, 2022 (Exhibit "K"). The other $9,000.00 wires may have been for the whit gold rings since they were after the date of purchase of the rings, on December 2, 2022.” (Huamani Decl. ¶32.) State Farm has objected to these statements for lack of foundation and because the statements are based on speculation and conjecture. These objections are sustained, as Plaintiff provides no explanation whatsoever for his newly found belief as to what each of these wire transfers represent.

Plaintiff also attempts to raise a triable issue of fact by contending that he provided receipts, appraisals and wire transfers and bank statements reflecting the purchase of the claimed stolen jewelry. (Pl. Response to UMF 64.) However, examination of Plaintiff’s evidence shows that there are no receipts. The only receipt provided is for repair of the AP watch.

Finally, Plaintiff attempts to raise a triable issue of fact by submitting evidence that he acquired the AP watch by trading several pieces of jewelry, “including a Rolex and possibly the Cartier watch, but couldn’t remember” and that he owned the AP watch on March 23, 2023 because it was repaired on that date. (Pl.’s Response to UMF 72.) This does not raise a triable issue of fact as to whether State Farm acted in bad faith, as the evidence does not definitively show that Plaintiff was the owner of an AP watch. State Farm already acknowledged in UMF 72 that Plaintiff claimed to have acquired the AP watch by trading a Cartier watch for it, and that this factor was considered in rejecting the claim. Plaintiff’s evidence only further emphasizes that there was a genuine dispute regarding State Farm’s liability under the policy for this item.

Summary adjudication of State Farm’s third issue is GRANTED.

Issue No. 4: Plaintiff’s claim for punitive damages has no merit because Plaintiff cannot establish by clear and convincing evidence that State Farm’s handling of Plaintiff’s claim was malicious, fraudulent, or oppressive.

Civil Code section 3294 provides that “In an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant.”

Here, because the Court grants summary adjudication as to the second cause of action for breach of implied covenant of good faith and fair dealing, and because the only other remaining claim is for breach of contract (a claim for which punitive damages are not available), the Court also GRANTS summary adjudication as to Issue No.

4.

Defendant’s objection No. 1 to Exh. A (Huamani Declaration, ¶ 32) is SUSTAINED for lack of foundation, and because it is based on speculation and conjecture.

Plaintiff’s objections are OVERRULED as discussed above. Plaintiff’s objection to the Orange Police Department report as hearsay is OVERRULED because the report is used for a non-hearsay purpose of showing the effect on State Farm’s state of mind.

The Court declines to rule on the remainder of Defendant’s objections as they are not material to the disposition of this motion. (CCP §437c(q).)

Plaintiff’s request for judicial notice of the indictment and judgment against Jonathan Nathaniel Malave, Jr. is GRANTED pursuant to Evid. Code § 452(d).

Defendant to give notice.