Metropolitan Wines LLC et al v. Allied World Assurance Company Inc. et al

**at 9:30 a.m.** Metropolitan Wines LLC et al v. Allied World Assurance 24CV000739 Company Inc. et al

PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT OF ALLIED WORLD ASSURANCE COMPANY (U.S) INC’S SECOND AMENDED CROSS COMPLAINT FOR RESCISSION, SUMMARY ADJUDICATION OF PLAINTIFF’S SECOND AFFIRMATIVE DEFENSE TO THE RESCISSION CAUSE OF ACTION, AND SUMMARY ADJUDICATION OF ALLIED’S FIFTH THROUGH SEVENTH AFFIRMATIVE DEFENSES TO PLAINTIFF’S BAD FAITH CAUSE OF ACTION

TENTATIVE RULING: The motion is DENIED.

The moving party failed to include in the notice of this motion proper notice of the Court’s tentative ruling system as required by Local Rule 2.9. Moving party is directed to immediately provide, by telephone call AND email, the missing notice to opposing party/ies forthwith. The requirements for requesting oral argument under Local Rule 2.9 remain in effect. However, the Court may grant belated requests for oral argument or continuance of hearing, made by any party who represents it did not timely receive the required notice, regardless of whether or not moving party is present at the hearing.

A. PRELIMINARY MATTERS

1. Nature of Motion

Plaintiff and Cross-Defendant Metropolitan Wines LLC (Metropolitan) moves, pursuant to Code of Civil Procedure §437c, for: (1) summary judgment on the Second Amended Cross- Complaint for Rescission (SACC) filed by Defendant and Cross-Complainant Allied World Assurance Company (U.S.) Inc. (AWAC); (2) summary adjudication on Metropolitan’s Second Affirmative Defense to the SACC; and (3) summary adjudication on AWAC’s Fifth through Seventh Affirmative Defenses to Metropolitan’s cause of action for insurance bad faith against Allied.

2. Nature of the Pleadings

The gravamen of the operative Third Amended Complaint (TAC) is that Metropolitan has been injured as a result of decisions made by AWAC regarding insurance coverage for damage to property, located in St. Helena California, stemming from the 2020 Glass Fire.

Through its Answer, AWAC asserts and alleges, as a Fifth Affirmative Defense, that “Plaintiff’s claims are barred in whole or in part because Plaintiff has alleged it suffered loss of business personal property (‘BPP’) at 773 Sunnyside Road, St. Helena, CA in the Glass Fire and has stated in verified discovery responses attached hereto as Exhibit A that this BPP loss exceeded $200,000, but misrepresented in its application for the Allied World Policy that the value of BPP at this location was $0.” (Answer to TAC at 2:26-3:4.) Through its Sixth Affirmative Defense, AWAC asserts and alleges that “[c]overage under the Allied World Policy

is void because Plaintiff concealed or misrepresented values in the Statement of Values (‘SOV’) submitted on behalf of Plaintiff as part of the application for the Allied World Policy.” (Id. at 3:7-9.) Through its Seventh Affirmative Defense, AWAC asserts and alleges that “Plaintiff has no right to recover damages in this action based in whole or in part on the Allied World Policy because Plaintiff concealed or misrepresented values in the SOV submitted on behalf of Plaintiff as part of the application for the Allied World Policy.” (Id. at 3:20-22.)

The gravamen of the SACC is that, through its application for the subject insurance policy, Metropolitan misrepresented, omitted, and/or concealed material information. AWAC asserts two causes of action; one for rescission of the policy ab initio, and the second for reimbursement of all payments made by AWAC to Metropolitan under that policy.

Through its Answer, Metropolitan generally denies the allegations of the SACC. It also asserts, as a Second Affirmative Defense, that “AWAC’s ability to recover anything on its Second Amended Cross-Complaint is limited by its agreements in the insurance policies issued to Metropolitan beginning in or about 2013 and continuing up through 2020. The Parties entered into an express agreement in each of the insurance policies during that time that provided that Metropolitan would agree to pay any additional premium for any error or omission Metropolitan made in determining the values provided to AWAC.

The insurance policy drafted by AWAC expressly provides that any error or omission that was made by Metropolitan in determining or reporting values or in describing the covered property or covered location shall not void or impair coverage provided to Metropolitan. The insurance policy further provides that the limits of the insurance policy shall be increased by an additional $100,000.” (Answer to SACC at 2:17- 27.)

3. Evidentiary Objections

The Court rules on AWAC’s evidentiary objections as follows.

Objection No. 1-2: Each of these purported objections asserts legal argument and not evidentiary objection.

Objection No. 3-5: Discussed below.

Objection No. 6, 8-9: The Court declines to rule on the Objection as its subject matter is not relevant to the Court’s resolution of the issues raised by the Motion. (See Code Civ. Proc., § 437c, subd. (q) [“In granting or denying a motion for summary judgment or summary adjudication, the court need rule only on those objections to evidence that it deems material to its disposition of the motion. Objections to evidence that are not ruled on for purposes of the motion shall be preserved for appellate review.”]

Objection No. 7: OVERRULED. Where the contents of the document state the author(s) thereof, authentication may be established merely by a showing that the documents were produced by the opposing party through discovery. (See Landale-Cameron Court, Inc. v. Ahonen (2007) 155 Cal.App.4th 1401, 1409.)

B. LEGAL BACKGROUND

1. Summary Judgment Based on an Affirmative Defense

“A party may move for summary judgment in an action or proceeding if it is contended that the action has no merit....” (Code Civ. Proc., § 437c, subd. (a)(1).) The party moving for summary judgment bears the burden of persuasion that there is no triable issue of material fact. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850 (Aguilar).) “‘Material facts’ are facts that relate to the cause of action . . . that is the subject of the motion and that could make a difference in the disposition of the motion.” (Rules of Court, rule 3.1350, subd. (a)(2).)

The moving party also bears an initial burden of production. A moving defendant may satisfy this burden by making a prima-facie showing sufficient to support every element of an affirmative defense. “The burden on a defendant moving for summary judgment based upon the assertion of an affirmative defense is different than the burden to show that one or more elements of the plaintiff’s cause of action cannot be established. Instead of merely submitting evidence to negate a single element of the plaintiff’s cause of action, or offering evidence such as vague or insufficient discovery responses that the plaintiff does not have evidence to create an issue of fact as to one or more elements of his or her case . . . ‘the defendant has the initial burden to show that undisputed facts support each element of the affirmative defense’ . . ..

If the defendant does not meet this burden, the motion must be denied. [Citation.]” (Consumer Cause, Inc. v. Smilecare (2001) 91 Cal.App.4th 454, 467-68.)

“In ruling on the motion, the trial court views the evidence and inferences therefrom in the light most favorable to the opposing party.” (Collin v. CalPortland Co. (2014) 228 Cal.App.4th 582, 588.)

2. Summary Adjudication, by Plaintiff of Defendant’s Affirmative Defenses

“A party may move for summary adjudication as to . . . one or more affirmative defenses . . . if the party contends . . . that there is no merit to an affirmative defense as to any cause of action . . .. A motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty.” (Code Civ. Proc., § 437c, subd. (f)(1).)

C. LEGAL ANALYSIS

Metropolitan advances the same argument in support of each of the forms of relief sought by the Motion. Metropolitan concedes that “[a]n insurer may seek the to [sic] rescind an insurance policy if an insured makes a material misstatement in an insurance application.” (Support Memo at 6:25-26 citing Mitchell v. United National Ins. Co. (2005) 127 Cal.App.4th 457, 468.) Metropolitan argues that the policy at issue here contains a “safeguard” provision reflecting an agreement between AWAC and Metropolitan to contract around AWAC’s right to rescind based on the material misstatements and/or omissions alleged to have been made in the application for the policy at issue. (See id. at 7:5-14.) The subject policy provision states, “[a]ny unintentional error or omission you make in determining or

reporting values or in describing the covered property or covered location shall not void or impair coverage provided by this Coverage Form.” (See Declaration of Dylan Schaffer, Section III, subd. (29)(a), at p. 17 of 28.) Specifically, while Metropolitan concedes that its application for the subject insurance policy contained omissions, it contends that the omission was inadvertent. (See, e.g., Support Memo at 10:25-11:1.)

It appears uncontroverted that operation of the subject “savings clause” is conditioned on any omission being unintentional. The Court finds that Metropolitan fails to carry its initial burden, on the instant Motion, of making a prima facie showing that the omission of values from the application was unintentional.

The only evidence submitted on this point is the Declaration of Brian Fleury at paragraphs 4-10 (Fleury Decl.). Mr. Fleury specifically declares that “I was primarily responsible for working with our insurance agent, Malloy Imrie & Vasconi Insurance Services (Malloy) to obtain property insurance for the business” and that “I do not specifically recall providing valuations for wine stock, business personal property, or buildings, to Malloy as part of the 2020 renewal process.” (Id. at ¶¶ 4-5.) He then declares that he “believe[s] the values provided by Malloy to Allied were based on information received from me.” (Id. at ¶ 8.

Italics added) He further declares that “[t]o the extent the valuations provided to Allied by Malloy in the renewal process for wine stock, business personal property, or buildings were wrong, the error was likely due to incorrect information I provided to Malloy.” (Id. at ¶ 9.) In the context of his declared lack of memory of the events (see id. at ¶ 5), the Court does not find that the conclusory statement “I did not intentionally provide Malloy erroneous valuations for wine stock, business personal property, or buildings” is adequately supported. (Id. at ¶ 10.)

Put another way, since Mr. Fleury declares that he does not recall providing valuations, there is insufficient evidence to show that he has personal knowledge to support his assertion that any error contained in those valuations – valuations that he “believe[s]” Malloy received from him – was unintentional.

Even assuming, arguendo, that the foregoing evidence were sufficient to make a prima facie showing that the subject omissions were unintentional, the Court finds that AWAC has produced evidence sufficient to create a triable question of fact on the issue. (See Declaration of David C. Capell at: Exh. 9, 45:15-47:10; Exhs. 11-13.) Specifically, given that the only evidence that the omission was unintentional is in the form of an unsupported conclusory statement to that effect by Mr. Fleury, the evidence attacking his veracity is sufficient to create a triable question of fact.

Based on the foregoing, the Motion is DENIED.

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