Charles Cheever v. State Farm General Insurance Company

LINE CASE NO. CASE TITLE TENTATIVE RULING 9:00 22CV404448 Dennis House vs. Plaintiff moves this court to strike Defendant’s answer. According to Defendant’s 1 Vanderhall Motor opposition brief, Defendant has agreed to take motion off calendar. Works, Inc.,et.al. 9:00 22CV408165 Andrew Mo vs. See below, Line items 2-3 2-4 Samsung Research America, Inc. Line Item No.4: Defendant petitions this court to compel Plaintiff for production of 3rd set of documents and 3rd Set of Special Interrogatories.

This court finds that Defendant’s RFP Production No. 40 is overbroad. Petition to compel production NO.40 of Defendants 3rd set of documents is DENIED. With regards to Special Interrogatories Set 3 No. 67, this court finds that Plaintiff complied with request. Petition to Compel Special Interrogatory No. 67, Set 3 is DENIED. All other RFP from Defendant’s Request for Production of Documents, Set 3 is GRANTED—Plaintiff is ordered to produce a privilege log. All other Requests for Special Interrogatories Set 3 is GRANTED—Plaintiff is ordered to produce a privilege log.

Plaintiff is ordered to produce documents within seven days. Monetary sanctions is GRANTED—Court requests argument as to the amount. 9:00 22CV409123 Esmeralda Guzman, Defendants move this court to bifurcate trial. Defendant argues that bifurcation 5 et.al. vs. Paula would increase judicial economy and serve the interests of justice. This court is Arroyo, et.al. not in agreement that such bifurcation is appropriate in this case. The facts related to the various issues Defendant suggests bifurcating involve the same witnesses and related legal issues.

Defendants’ motion is DENIED. 9:00 23CV424190 AI Technology & Case is off calendar. 6 Systems vs. Renesas Electronics America 9:00 24CV434917 Darcel Stoner vs. SCA Plaintiff moves this court to quash subpoenas served by Defendant. Plaintiff filed 7 of CA, LLC, et.al. suit claiming racial discrimination and emotional distress upon Defendant’s reassigning Plaintiff from Palo Alto to Dublin. Defendant’s subpoenas encompass past employment records that appear relevant to fully investigating Plaintiff’s claims.

Plaintiff’s motion is DENIED subject to limiting the discovery to attorney’s eyes only and to nonprivileged information.

9:00 25CV457159 Shengsheng Guan vs. Plaintiff moves this court to compel further responses to Plaintiff’s form 8 Tong Liu interrogatories and request for production of documents. Defendant responded one day before this motion was filed. Defendant complied with Plaintiff’s discovery requests. Plaintiff’s motion is DENIED. Plaintiff’s motion for sanctions is DENIED. 9:00 25CV462532 Anil Jain vs. Ashwini Civil bench warrant was issued to order Defendant to court. 9 Kumar 9:00 25CV486237 David Wu vs. Karina Plaintiff petitions this court to compel Defendant to respond to form interrogatories 10 Duarte and a request to produce documents. Defendant has failed to do so. Plaintiff’s petition is GRANTED. Plaintiff’s motion for monetary sanctions is GRANTED. 9:00 26CV486237 Martha Pulido vs. See below. 11-12 FCA US 9:00 26CV490199 Charles Cheever vs. See below. 13 State Farm General Insurance

Nor does the economic loss rule bar the FAC’s sixth cause of action. The Court of Appeal in Dhital held that the economic loss rule does not bar a cause of action for fraudulent inducement by concealment. (Dhital, supra, 84 Cal.App.5th at pp. 840-841; FAC, ¶¶ 64-77.) FCA argues that the FAC fails to demonstrate that FCA’s conduct “violated a duty that is independent of the duties and rights assumed by the parties when they entered the contract” and that FCA’s conduct caused injury to persons or property “that was not reasonably contemplated by the parties when the contract was formed.” (MPA, citing Rattagan, supra, 17 Cal.5th at pp. 20-21.)

Rattagan concerned fraud that allegedly occurred during a contractual relationship, not fraud in the inducement of a contract. (Rattagan, supra, 17 Cal.5th at p. 41, fn. 12.) Where fraudulent inducement is alleged, the fraud occurs prior to the formation of the contract and is independent from the contract. (Dhital, supra, 84 Cal.App.5th at pp. 840-841.)

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Case Name: Charles Cheever v. State Farm General Insurance Company Case No.: 26CV490199

Petitioner Charles Cheever (“Cheever”) filed this action against respondent State Farm General Insurance Company (“State Farm”) based on a dispute regarding water damage to Cheever’s condominium located at 101 Alma Street, Apt. 101, Palo Alto, California (the “Condo”).

I. Petition to Compel Arbitration

A.

Legal Standard

Fire insurance policies on California properties are required to use standard language specified by the Legislature. (Ins. Code, § 2070; Mahnke v. Superior Court (2009) 180 Cal.App.4th 565, 572.) “An agreement to conduct an appraisal included in a standard fire insurance policy constitutes an ‘agreement’ within the meaning of Code of Civil Procedure section 1280, subdivision (a), and thus is considered to be an arbitration agreement subject to the statutory contractual arbitration law.” (Kirkwood v. California State Automobile Assn. Inter-Ins.

Bureau (2011) 193 Cal.App.4th 49, 57 (Kirkwood), internal citation omitted; see also Louise Gardens of Encino Homeowners’ Assn., Inc. v. Truck Ins. Exchange, Inc. (2000) 82 Cal.App.4th 648, 658 (Louise) [“An agreement to conduct an appraisal contained in a policy of insurance constitutes an ‘agreement’ within the meaning of section 1280, subdivision (a), and therefore is considered to be an arbitration agreement subject to the statutory contractual arbitration law.”], internal citation omitted; Lambert v. Carneghi (2008) 158 Cal.App.4th 1120, 1131 [“[I]n general, ‘appraisal proceedings are subject to the rules governing contractual arbitration proceedings.’”], internal citation and quotation marks omitted.)

Among other policy provisions, in the event the insurer and the insured disagree about the amount of the loss, Insurance Code section 2071 requires the parties to participate in an informal appraisal proceeding. (Doan v. State Farm General Ins. Co. (2011) 195 Cal.App.4th 1082, 1092-1093 (Doan).) “Under standard policy provisions required by Insurance Code section 2071, when there is a disagreement between the insurer and the insured as to the amount of the loss, then either party may demand an appraisal.

Once that demand has been made, then each party shall select a ‘competent and disinterested appraiser’ and then they shall select a ‘competent and disinterested umpire.’ The appraisers shall appraise the loss. If they cannot agree, then they will submit their differences to the umpire. An award agreed to by any two of the three ‘shall determine’ the amount of the loss. This procedure is mandated by the statute.” (Louise, supra, 82 Cal.App.4th at p. 652, emphasis original.)

B.

Discussion

According to Cheever’s petition, Cheever purchased a condominium unit owners insurance policy issued by State Farm for the Condo (the “Policy”). (Petition to Compel Arbitration (“Petition”), p. 3:16-18.) On or about June 5, 2025, the Condo sustained water damage that resulted in damage to the Condo’s flooring and other building components of the residence. (Id. at pp. 3:19-4:2.) On the same date, Cheever made a claim to State Farm. (Declaration of Charles Cheever in Support of Petition (“Cheever Decl.”), ¶ 3.) In

June 2025, State Farm inspected the Condo and generated an estimate for the repair cost in the approximate amount of $22,547.09 Actual Cash Value and $22,149.00 RCV in September 2025. (Id. at ¶ 4.) On October 6, 2025, Cheever submitted an estimate from his construction consultant in the amount of $52,088.55 representing the cost to repair the property to its pre-loss condition. (Id. at ¶ 5.) On October 9, 2025, in response to Cheever’s estimate, State Farm sent an updated estimate in the amount of $22,607 ACV, approximately $30,000 less than Cheever’s estimate. (Id. at ¶ 6.)

On October 11, 2025, Cheever “demanded that the amount of loss be set by an appraisal and appointed Bill Hedden as [his] appraiser.” (Cheever Decl., ¶ 7.) “On or about October 23, 2025, State Farm rejected [Cheever’s] request for appraisal of the amount of loss, stating that the policy required itemization of the disputed amounts before appraisal could proceed.” (Id. at ¶ 8.)

Neither party disputes the validity of the Policy’s appraisal language. The Policy provides that:

If you and we fail to agree on the amount of loss, either party can demand that the amount of the loss be set by appraisal. Only you and we may demand appraisal. A demand for appraisal must be in writing. You must comply with SECTION I – CONDITIONS, Your Duties After Loss before making a demand for appraisal. At least 10 days before demanding appraisal, the party seeking appraisal must provide the other party with written, itemized documentation of a specific dispute as to the amount of the loss, identifying separately each item being disputed.

(Cheever Decl., Ex. E at pp. 5-6, emphasis original; see also Declaration of Andy Ewnetu in Support of State Farm’s Opposition, Ex. 1 at p. 21.)

State Farm opposes Cheever’s petition on the grounds that it is premature because Cheever failed to comply with the language above, namely that Cheever “issued a bare demand for appraisal without identifying any disputed items, distinguishing areas of agreement, or providing supporting documentation.” (Opposition to Petition (“Opposition”), p. 4:15-16.)

State Farm further argues that the Petition “expands appraisal beyond its permissible scope.” (Opposition, p. 5:3-4.) According to State Farm, any damage to the Condo can be addressed through partial replacement of the Condo’s flooring, whereas Cheever’s construction consultant concluded that flooring needed to be replaced throughout the entire Condo. (Id. at p. 5:7-9.) State Farm contends that appraisers have no authority to decide coverage, legal questions, or other contractual issues, but rather an appraiser is limited to determining the “amount of loss of each item in dispute.” (Id. at p. 5:4-5.)

The court is not convinced that State Farm’s concern that Cheever “improperly seeks to have appraisers decide . . . an issue that implicates scope and coverage rather than simple valuation” requires the court to preclude appraisal here. (Opposition, p. 2:6-9.) The court acknowledges that an appraiser’s authority is restricted to determining the actual cash value or amount of loss of the specific items submitted for their consideration. (Doan, supra, 195 Cal.App.4th at p. 1094 [“It is certainly not their function to resolve questions of coverage and interpret provisions of the policy.”], internal citations omitted.) “Matters of statutory construction, contract interpretation and policy coverage are not encompassed within the ambit of a section 2071 appraisal.” (Kirkwood, supra, 193 Cal.App.4th at p. 53.)

However, the existence of disputed issues regarding coverage does not necessarily preclude an appraisal. (Devonwood Condominium Owners Assn. v. Farmers Ins. Exchange (2008) 162 Cal.App.4th 1498, 1507, fn. 4 (“[A] judgment after confirmation of an appraisal award fixing the cash value of loss does not preclude further litigation on other issues between parties to an insurance policy.”) An “appraisal panel may assign a value to items as to

which coverage is disputed with the disclaimer that the award does not establish coverage or the insurer’s liability to pay. The issue of whether the loss is covered under the policy is a separate legal issue that must be resolved outside the appraisal process.” (Lee v. California Capital Ins. Co. (2015) 237 Cal.App.4th 1154, 1170 (Lee).)

“If an appraisal were limited to items of loss that the parties agree are covered, but there is disagreement as to whether certain items are covered, the parties would still be required to litigate whether the disputed items are covered. In that case, because there would be no appraised value for disputed items that subsequently may be determined to be covered, the parties would be required to engage in a further attempt to appraise the items that were omitted in the first appraisal. Plainly, it is more efficient to value all items of loss, including disputed items, at the time an appraisal is performed. If it is determined there is no coverage for certain items, those items can simply be struck from the award without requiring a further referral to an appraisal panel.” (Lee, supra, 237 Cal.App.4th at p. 1170.)

Nor is the court convinced by State Farm’s argument that Cheever “failed to comply with the Policy’s requirement that, before demanding appraisal, the insured provide written, itemized documentation identifying each disputed component of the loss.” (Opposition, p. 4:12-14.) Fire policies are governed by a standard form:

All fire policies on subject matter in California shall be on the standard form, and, except as provided by this article shall not contain additions thereto. No part of the standard form shall be omitted therefrom except that any policy providing coverage against the peril of fire only, or in combination with coverage against other perils, need not comply with the provisions of the standard form of fire insurance policy or Section 2080; provided, that coverage with respect to the peril of fire, when viewed in its entirety, is substantially equivalent to or more favorable to the insured than that contained in such standard form fire insurance policy.

(Ins. Code, § 2070.)

The language emphasized by State Farm in its opposition is not “substantially equivalent to” to the language contained in the standard form fire insurance policy, which does not include any requirement that “before demanding appraisal, the insured provide written, itemized documentation identifying each disputed component of the loss.” (Opposition, p. 4:13-14; see Ins. Code, § 2071.) Nor does this language appear “more favorable to the insured.” (Ins. Code, § 2070.) Ultimately, under “the statutorily mandated appraisal provision, the parties are required to participate in an informal appraisal proceeding in the event there is a disagreement about the actual cash value or the amount of the loss and the insurer or insured makes a written request for an appraisal.” (Lee, supra, 237 Cal.App.4th at p. 1166, footnote omitted.) That is what appears to have occurred here.

Moreover, the court notes that it appears that State Farm presented an estimate of repairs to Cheever, Cheever rejected “State Farm’s estimate for the water damage repairs” to the Condo, and thereafter Cheever sent State Farm a repair estimate prepared by a “construction consultant” that included a line-item review of repair estimates. (Cheever Decl., ¶¶ 4-7, Exs. A-D.) With this in mind, the court is inclined to agree with Cheever’s point that Cheever “identified the dispute by submitting his own estimate and challenging the entirety of State Farm’s valuation of the loss.” (Petition, p. 8:7-8.)

State Farm requests that if the court is inclined to grant Cheever’s petition, the court should “carefully tailor” any order to “ensure the process remains within its permissible scope.” (Opposition, p. 6:2-4.) The court notes that the “function of appraisers is to determine the amount of damage resulting to various items submitted for their consideration. It is certainly not their function to resolve questions of coverage and interpret provisions of the policy.” (Kirkwood, supra, 193 Cal.App.4th at pp. 58-59, internal citations and quotation marks omitted.)

“Under section 2071, an appraiser has authority to determine only a question of fact, namely the actual cash value or amount of loss of a given item.” (Id. at p. 59, internal citation omitted.) An “appraisal panel may assign a value to items as to which coverage is disputed with the disclaimer that the award does not establish coverage or the insurer’s liability to pay.” (Lee, supra, 237 Cal.App.4th at p. 1170.) “When an appraisal panel exceeds its powers by deciding coverage issues, and the award cannot be corrected without affecting the merits of the decision, the decision must be vacated.” (Kacha v. Allstate Ins. Co. (2006) 140 Cal.App.4th 1023, 1033, internal citation and footnote omitted.)

The court GRANTS Cheever’s petition to compel arbitration.

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