Opinion
D069496
04-04-2017
JAHANGIR AHMADPOOR, Plaintiff and Appellant, v. TRUCK INSURANCE EXCHANGE, Defendant and Respondent.
David A. Kay for Plaintiff and Appellant. Haight Brown & Bonesteel and Vangi M. Johnson for Defendant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 37-2014-00005923) APPEAL from a judgment of the Superior Court of San Diego County, Richard E. L. Strauss, Judge. Affirmed. David A. Kay for Plaintiff and Appellant. Haight Brown & Bonesteel and Vangi M. Johnson for Defendant and Respondent.
This appeal arises from the trial court's order granting a defense summary judgment motion in an insurance coverage action. (Code Civ. Proc., § 437c.) Plaintiff and appellant Jahangir Ahmadpoor (Father), as the legal owner of an automobile repair business named European Coach (the business or Plaintiff), sued its commercial property insurance carrier, Farmers Insurance Company (Truck), on breach of contract theories. After a 2012 burglary at the business, Father asked his son, Syamack Ahmadpoor (Son or "Mack Poor"), the authorized operator of the family business, to file and pursue a claim for over $450,000 in policy proceeds for tools that were stolen and for lost profits due to business interruption. After investigation, Truck denied the claim on the basis that the business's representatives made several types of material misrepresentations during the processing of the claim, in breach of the policy terms. Truck's summary judgment motion contended this conduct voided the terms of the policy.
On appeal of the summary judgment, Plaintiff contends that triable issues of material fact remain for resolution on its theories of breach of contract and breach of the duty of good faith and fair dealing. For purposes of the motion, Truck had conceded that the business was burglarized and some tools were stolen. Plaintiff claims the trial court misapplied the analysis of Cummings v. Fire Ins. Exchange (1988) 202 Cal.App.3d 1407 (Cummings), which held that an insured's misrepresentation with respect to a claim is material if the "misrepresentation concerns a subject reasonably relevant to the insurer's investigation, and if a reasonable insurer would attach importance to the fact misrepresented." (Id. at pp. 1416-1417, italics omitted [insured's intent to defraud the insurer is necessarily implied from insured's willfully false material misrepresentations made during the claims process].) Plaintiff argues the trial court was unjustified in finding that certain misrepresentations relied on by Truck to deny the claim were properly relevant or material to the insurer's investigation, or to the ultimate disposition of the claim.
Specifically, in seeking policy coverage for lost profits, Plaintiff admitted to Truck, through Son, that it had underreported its income and cash flow to the Internal Revenue Service (IRS) when paying its taxes for several years before the burglary occurred. Father did not know anything about the business's taxes. In any event, since those representations about the business's income were made to a third party, not Truck, and also predated the claim, Plaintiff argues triable issues of fact must remain about liability. (See Leasure v. Msi Ins. Co. (1998) 65 Cal.App.4th 244, 247-248 (Leasure) [validity of insurance policy is not affected by concealment or misrepresentations that do not relate to material matters].)
In pursuing its claims for stolen property, Plaintiff supplied Truck with information that some of the stolen tools and equipment had been obtained by the business from other similar companies previously owned by Son, the business's operator. Although Son had declared a personal bankruptcy in 2008 and made filings and disclosures about some of these other companies he previously operated, he never disclosed his ownership of such tools in that bankruptcy action. The business now contends that during Truck's claims processing, the trial court should have ruled that those previous individual bankruptcy matters were irrelevant and could not have operated to mislead Truck about the business's alleged ownership of such property. Plaintiff further argues that triable material issues of fact remain about whether Truck displayed bad faith in the handling of the claim, by promptly sending it to a fraud investigation and by making negative references to the Iranian-American heritage of these and other business operators.
On de novo review of the record and in light of the rule that an appellant must show how legal error occurred, we cannot accept Plaintiff's unsupported theories. (See Byars v. SCME Mortgage Bankers, Inc. (2003) 109 Cal.App.4th 1134, 1140 (Byars).) The trial court properly granted Truck's motion for summary judgment by finding Truck justifiably declared the policy to be void, based on the business's breaches of policy requirements during the claims process. Plaintiff materially misrepresented to Truck the nature of its business income and its ownership of stolen property. Its bad faith cause of action likewise lacks merit and we affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
A. The Loss and Claim
In 2011, Truck issued an insurance policy to European Coach located on Miramar Place, to provide business personal property coverage with limits of $412,000, as well as $10,000 for employee owned tools. The policy included coverage for business interruption and valuable papers. A Truck salesman took photographs of some of the tools used at the business. In the event of loss or damage to covered property, the policy required Plaintiff to provide a sworn proof of loss document, containing inventories, costs, and values of the lost property and allowing inspection of property, books and records.
In its clause entitled "Concealment, Misrepresentation or Fraud," the policy provides that it becomes "void in any case of fraud by you as it relates to this policy at any time. It is also void if you or any other insured, at any time, intentionally conceal or misrepresent a material fact concerning: 1. This policy; 2. The Covered Property; 3. Your interest in the Covered Property; or 4. A claim under this policy."
The business had been operating for a few years when it was burglarized in April 2012. Numerous tools, equipment, invoices and records were stolen, as well as some personal items. On behalf of the business, Father directed Son to file a claim with Truck for the loss of those items, as well as lost profits from business interruption. The initial claim was for an estimated $469,142.95. Apparently, Plaintiff sent Truck a 160-page proof of loss document that included numerous photographs of tools taken by Son, handwritten lists of equipment with price estimates, and $68,814.36 in quotations from suppliers for tools similar to those the business was claiming were stolen. The quotation documents listed a different address for the business (Mission Gorge Road) than the one listed on the policy and in the complaint (Miramar Road).
Ultimately, the court granted Truck's evidentiary objection to Plaintiff's submission of the "complete" proof of loss document.
During its investigation, as will be more fully described in the discussion portion of this opinion, Truck initially took recorded statements from Father, Son, and an employee. Later, Truck conducted examinations under oath of the same people, two other employees, and Son's wife Galynne Ahmadpoor, who did paperwork for the business.
After a few months of investigation, Truck requested further information, and in October 2012, Plaintiff provided a supplemental proof of loss that included monthly estimates of the business interruption losses, from April 9 to October 9, totaling $257,825.
Truck denied Plaintiff's claim in writing on October 29, 2012, giving as reasons that the business and its principals had failed to fully cooperate with their duties under the policy, by misrepresenting and concealing material information during the presentation of the claim. Plaintiff had not supplied adequate information and documentation establishing the business's ownership of tools and equipment that were the subjects of the claim. Plaintiff had also failed to provide documentation to show the business and the principals' financial conditions, including cash transactions and revenue not documented through the tax returns and bank statements provided. Because of the misrepresentations and concealments of material information in the presentation of the claim, Truck declared the policy void due to breaches of the policy conditions.
B. Complaint and Summary Judgment Proceedings
Plaintiff's complaint against Truck was filed March 7, 2014, alleging causes of action for breach of contract and breach of the duty of good faith and fair dealing. Compensatory and punitive damages were sought. During the investigation, a Truck agent told Son that other Iranian-American owned businesses had been making claims against Truck, suggesting to it that the burglary was suspicious. The complaint alleged that subsequent to the burglary, some of the stolen property was recovered by police from various homes of known automotive burglars.
Truck filed its motion for summary judgment or adjudication, contending Plaintiff and its principals had made material misrepresentations, intentionally and knowingly, that operated to breach the "Concealment, Misrepresentation or Fraud" provision of the policy. Truck took the position that those actions voided the policy and justified its denial of the claim. In support of the motion, Truck provided partial copies of the sworn proof of loss documents, showing in part that some of the invoices for tools dated back to 2008 and were made out to Son personally at a time when he owned other businesses.
Truck also claimed that Plaintiff was seeking recovery for a Rolex watch that Son had owned since 2004 and that was taken from the business's safe. However, during his 2008 bankruptcy proceedings, Son had not declared that his assets included any jewelry. Plaintiff challenges any reference to the Rolex watch, stating it did not intend for that watch to be part of the insurance claim. We need not address that underlying dispute, as other issues are dispositive.
In support of the motion, Truck provided extensive deposition excerpts about how Son and Father handled the business receipts, taxes, and tool acquisition. According to Son's understanding of the business's income, "it's a family business so we don't, we don't sit down and mathematically calculate every nickel and dime that we do. So any kind of business that we do, cash transaction, we don't really report it. It's just something that I've never done. I don't know anyone that I know of that does, you know, sit down and report how much money, you know, the guy comes in and fixes his car and gives you the money. You take it and put it in your pocket."
Truck also filed a declaration from its claims representative team leader, David Wright, attaching exhibits documenting the investigation. Wright stated that the claim was denied after Truck concluded that the policy was voided due to material misrepresentations made by Plaintiff during the claims process, including Son's misrepresentations in his bankruptcy records, and ongoing questions about whether some of the stolen items were in fact property from Son's prior businesses that should have been declared in his bankruptcy petition. According to Wright, another reason for the denial was "the lack of records regarding cash sales and the profitability of the business. The tax records were also falsified."
In his 2008 bankruptcy petition, Son listed several defunct companies in which he had previously had an interest, Don't Buy a Lemon Auto Repair, DBL Auto Repair, Roman Industries and European Coach Auto Sales.
Plaintiff's opposition papers to the summary judgment motion included a compendium of exhibits, only some of which were authenticated by its attorney declarations or those of Father or Son. Its exhibits included the 160-page version of the proof of loss document, to argue that Truck had presented only a misleading excerpt (10 pages).
In Father's declaration and deposition, Plaintiff clarified that although the business was legally held in Plaintiff's name, it was considered a family business that was managed by Son, with profit sharing. In addition to disputing most of the 46 undisputed material facts set forth by Truck in its motion, Plaintiff supplied an additional set of undisputed material facts, stating that it only took a week for Truck to refer the claim to a fraud investigator, but it did not disclose that nature of that investigation to Plaintiff. In Son's declaration, he explained that he is a veteran of the United States Army, and did not feel the business was fairly treated by investigators because of the family's ethnicity and Truck's knowledge of other such insurance claims. Son stated that he did his own investigation and found some of the stolen property for sale on the Internet and reported it to police, but Truck failed to follow up on that lead.
Plaintiff filed evidentiary objections to Wright's declaration, e.g., hearsay and lack of personal knowledge. Plaintiff requested judicial notice of the bankruptcy order discharging Son as a debtor, and of a calendar showing the burglary had taken place on Easter weekend of 2012 (ultimately granted as requested).
In reply, Truck filed evidentiary objections to some of Plaintiff's opposing evidence, such as (1) the long version of the proof of loss document, and (2) a letter from the state Department of Insurance to Truck, notifying Truck that there would be no follow up on Truck's allegations that this was a false claim.
C. Ruling
The trial court addressed the evidentiary objections by overruling Plaintiff's first objection to the Wright declaration, then declining to rule on its others, for lack of compliance with the applicable rule of court. (Cal. Rules of Court, rule 3.1354.) The court overruled all of Truck's evidentiary objections, except for sustaining two for lack of foundation (i.e., Plaintiff's submission of the long version of the proof of loss document, and the Department of Insurance letter). The court declined to consider Plaintiff's offer of proof from a late designated expert, an opinion on insurance issues.
On the merits, the court first determined that the undisputed evidence showed that during the claims process, Plaintiff made material misrepresentations which were relevant to the insurer's investigation and which were significant to the ultimate disposition of the claim. In support of its claim of coverage, in an amount over the policy limits, Plaintiff had submitted falsified tax records and could not provide proof of ownership of the stolen tools. In explanation of its ruling, the court observed that the tax records did not accurately reflect the income of the business and were falsified as to the lost profits claim.
With respect to the claim for personal property, the court noted that Father had given conflicting responses when asked whether he had brought tools over from Son's prior business locations. Son had listed some of the prior business locations as assets in his 2008 bankruptcy, while stating that they had no inventory and were no longer in business. Some of the tool invoices submitted by Plaintiff had listed Son individually, or at another address, as the purchaser. The court then ruled that based on the contradictory information provided, the evidence supported the conclusion that Plaintiff made material misrepresentations in its claims for lost property. The motion for summary judgment was granted on Plaintiff's breach of contract claim, and the related cause of action and prayer for punitive damages likewise failed.
It is not clear from the record which of Son's other businesses may have purchased tools in 2008 before the burglary, since there are two copies of the proof of loss documents, but the more complete one was excluded from evidence for lack of authentication.
Plaintiff appeals.
DISCUSSION
I
STANDARD OF REVIEW
To obtain summary judgment, a moving defendant must show that the plaintiff's cause of action has no merit, e.g., that the plaintiff cannot establish one or more of the elements of his or her cause of action. (Code Civ. Proc., § 437c, subd. (p)(2); Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850 (Aguilar).) The burden then shifts to the plaintiff to show that there is an existing triable issue of material fact as to the cause of action or a defense. (Byars, supra, 109 Cal.App.4th 1134, 1140.)
"On appeal after a motion for summary judgment has been granted, we review the record de novo, considering all the evidence set forth in the moving and opposition papers except that to which objections have been made and sustained." (Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 334.) The appellant bears the burden of showing error occurred. (Byars, supra, 109 Cal.App.4th 1134, 1140.) The trial court's ruling to grant a summary judgment should be upheld only if no triable issue as to any material fact exists, and the moving party is entitled to judgment as a matter of law. (Aguilar, supra, 25 Cal.4th 826, 850.) A triable issue of fact exists if, "and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof." (Ibid.)
II
POLICY TERMS
A. Issues Presented and Applicable Standards
This action arose from Truck's decision to declare the policy void, based upon the insured's alleged violations of (1) the concealment and fraud clause, and (2) the duty to provide adequate documentation of loss. Plaintiff asserts that Truck's position is equivalent to asserting "that anyone who accepts cash without reporting it, or fails to include equipment in a bankruptcy schedule has no insurance coverage," for lack of overall credibility. To evaluate that broad argument, we outline basic standards for analyzing such claims for business interruption or lost profits, and documentation requirements when loss of personal property is claimed.
"A fraud and concealment clause in an insurance policy generally voids the policy upon the insured's attempts to deceive the insurer. [Citation.] Deceit may involve false representations to obtain insurance coverage or to obtain benefits after a claimed loss." (Leasure, supra, 65 Cal.App.4th 244, 248; Cummings, supra, 202 Cal.App.3d 1407, 1414-1415, fn. 7.) Material representations are those relating to the insurer's investigation to determine its obligations under the policy. (Id. at pp. 1416-1417.) In that situation, "[t]he materiality of the statement will be determined by the objective standard of its effect upon a reasonable insurer." (Id. at pp. 1414-1415, fn. 7; italics omitted.)
The situation before us (i.e., questionable statements made in an insured's claim) must be distinguished from other cases involving false statements made in applications for insurance (in which a subjective standard will apply for determining the effect on the insurer). (Cummings, supra, 202 Cal.App.3d at pp. 1414-1415, fn. 7; Ins. Code, § 359 ["If a representation is false in a material point, whether affirmative or promissory, the injured party is entitled to rescind the contract from the time the representation becomes false."].) --------
Using the objective approach, "materiality is determined by its prospective reasonable relevance to the insurer's inquiry." (Cummings, supra, 202 Cal.App.3d at p. 1417.) "[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., italics omitted.) In Cummings, the court found it to be beyond question that the insured's false statements, about the cause of a loss, were made with knowledge of falsity and an intent of defrauding the insurer. "First, plaintiff admits that she knew she was lying to the defendant and did so with the intent that defendant not find out the actual facts. Second . . . the intent to defraud the insurer is necessarily implied when the misrepresentation is material and the insured willfully makes it with knowledge of its falsity. Thus, plaintiff's intent to deceive was established as a matter of law." (Id. at pp. 1417-1418.) Further, "an insured's ulterior motive in misrepresenting material facts to the insurer is simply irrelevant in determining whether a fraud and concealment provision provides a defense to the insured's claim." (Id. at p. 1418.) That policy was deemed void based on that defense.
A contrasting situation arose in Leasure, supra, 65 Cal.App.4th 244, 248-249, in which it could be determined as a matter of law that the insureds' false representations, made after receipt of the policy proceeds (concerning who should endorse the insurer's checks), were not so material in nature as to void the insurance policy. There, the court reasoned that the representations, although false, postdated and did not relate to the insurer's investigation about its obligations under the policy. Whether a setoff might eventually be required was not then before the court. (Id. at p. 249.)
In Her v. State Farm Ins. Co. (E.D. Cal. 2015) 92 F.Supp.3d 957, 970-971 (Her), the court likewise considered whether the insureds had made materially false representations that voided the policy as a matter of law, when they provided declarations to the insurer containing incomplete or inaccurate information. Those insureds were claiming coverage for items claimed to be damaged or stolen, but they were only able to partially identify and estimate the current value of the subject property, "to the best of their ability." (Id. at p. 970.) The court concluded, "That Plaintiffs may have over valued an item does not mean that they did so deliberately or with knowledge of falsity." (Ibid.) Based on that showing, triable issues remained on whether the policy was voidable under the "fraud and concealment" clause, and summary judgment or adjudication of that portion of the action was denied. (Id. at p. 971; see Miller v. Fireman's Fund Ins. Co. of San Francisco (1907) 6 Cal.App. 395, 398-399 [mere discrepancies in a proof of loss do not create a presumption of fraud, where evidence instead supported conclusions they were honest mistakes].)
B. Claim For Lost Profits
As to any policyholder, the policy provides in its clause "Concealment, Misrepresentation or Fraud," that it shall become "void in any case of fraud by you as it relates to this policy at any time. It is also void if you or any other insured, at any time, intentionally conceal or misrepresent a material fact concerning: 1. This policy; 2. The Covered Property; 3. Your interest in the Covered Property; or 4. A claim under this policy."
Truck established in its moving papers that its practice in claims processing is to rely on the information submitted by the insured. During the investigation, Truck took recorded statements and also sworn examinations under oath from Father and from Son, as well as employees of the business. Father had provided the capital for the business and its taxes were filed as part of his personal taxes. Father was not sure whether or how often he met with the business's accountant, Michael Darodian, to go over its records, since he left it all to Son and his wife to handle, due to his own language barrier. Father stated that Son was authorized to communicate on behalf of Plaintiff with regard to all its business affairs, including the claim. Father reported that the cabinets containing the business's records were stolen, so no more records were available. In his examination under oath, Father stated that the business treated cash income the same as other forms of payment, such as credit or check, and the tax records were accurate as far as he knew.
Among the topics discussed by Son during the investigation were the accounting methods used by the business. In his recorded interview, he estimated that the business's gross income for 2011 was approximately $450,000, not including expenses and payroll. The net income was closer to $220,000 per year, but the business normally reported anywhere between $80,000-$150,000. The income varied a lot from year to year. The discrepancy was explained because the business collected from $5,000 to $20,000 or $30,000 per month in cash sales, but Son stated that the cash was not usually reported for tax purposes or recorded in their records. During his examination under oath, Son explained that the business had different cabinets for cash versus credit accounts, and if the business's bank records showed a shortage of resources, they might deposit some of the cash or use a credit card, but not really. Credit monthly receipts ranged around $40,000-$50,000. Son did not formally take a salary, but brought home about $10,000 per month income from the business.
Son admitted in his examination under oath that the business's 2009 and 2010 tax forms provided to Truck did not accurately reflect the business's income. Instead, he said, "Generally how it works is there's -- this is a business where there's multiple owners, there's multiple family members, there's multiple sources of income, there is multiple cash dealings. So basically these are the things that we basically cannot avoid. . . . [T]hese are the minimum reflection that we have to show for tax purposes, yes. But if you look at the bank accounts and the credit card charges, you would get a better understanding of what the actual business function was," regarding profitability.
According to Son's wife Galynne Ahmadpoor, when assisting with the business bookkeeping, she would normally take the invoices and expenses and combine them into summaries and turn them over to the accountant. For tax purposes, she gave the accountant all the sales receipts, unless the customer was nontaxable or it was a cash deal.
In explanation of its position on appeal, Plaintiff argues that its misrepresentations to the IRS about cash sales in 2009 and 2010 could not have materially influenced Truck, because they were made to a third party and therefore were not directly designed to defraud the insurer. Plaintiff believes that a failure to report cash transactions to the IRS would merely impair an insured's ability to prove and recover lost profits, and thus has little or nothing to do with a later investigation of stolen property. It was not disputed that there was stolen property. In fact, Plaintiff argues that Son, the managing agent, was candid in admitting to Truck that the business had withheld such income from the IRS, so the business should not be found to have withheld material information from Truck. Plaintiff goes on to argue that Father could not have been acting deceptively on this issue, because he admitted he did not read English or review the tax forms or reports.
Here, as in Cummings, supra, 202 Cal.App.3d at page 1418, "[t]he solicitation and receipt of plaintiff's statements were a proper and necessary part of defendant's reasonable investigation of plaintiff's claim which the defendant was required by law to make." Missing from Plaintiff's arguments on appeal is any recognition that it was relying on its own reports of its yearly income to support its business interruption claim. In Son's declaration signed in September 2015, he suggests that he did not intend to pursue a business interruption claim. However, the supplemental proof of loss provided in October 2012 listed a business interruption claim of monthly amounts for April through October 2012, averaging $42,000 per month. Even though the business's representatives admitted to misleading the IRS, they also impliedly admitted to misleading Truck on the amounts of losses being claimed, a material issue in the investigation. Their motive for doing so is irrelevant in this context. (Id. at pp. 1416-1417.)
In its order, the trial court concluded "The tax records are falsified because they do not accurately reflect the income of the business," and "[s]ince the tax information provided by Plaintiff was submitted in support of the claim for lost profits and was admittedly inaccurate, the information provided by Plaintiff constitutes a material misrepresentation which was relevant to the investigation and constitutes a valid basis for denial of coverage." This was a correct application of the rules interpreted in Cummings, supra, 202 Cal.App.3d 1407, 1416-1417, about the effect of an insured's admissions that he or she knew that a statement was false, when it directly concerned claimed obligations under the policy. (Her, supra, 92 F.Supp.3d 957, 970-971.) Plaintiff's deceptive representations were material in nature, and in contrast to the facts in Leasure, supra, 65 Cal.App.4th 244, they did occur during the claims process and before the claims were approved. (Id. at p. 248.)
On this record, the court properly determined that Plaintiff's misrepresentations about the level of the business's income during relevant time periods were, as a matter of law, material, because they were reasonably related to the claims being made for business interruption amounts. There is sufficient evidence in the record to support the finding that a reasonable insurer such as Truck would attach significance to the false statements made by Plaintiff regarding this aspect of the claim. (Cummings, supra, 202 Cal.App.3d at p. 1417.)
C. Claim For Lost Property
"Provisions of an insurance policy that require an insured to cooperate and meet various conditions are enforceable, and the violation of such provisions by an insured may be grounds for denying a claim." (See Her, supra, 92 F.Supp.3d 957, 971 [" 'In the context of cooperation that does not involve submission to an [examination under oath], California courts require a showing that the insurer was prejudiced in its investigation by the insured's failure to cooperate in order to void the policy.' "]; italics added.)
The policy provides that in the event of loss or damage to covered property, the insured must provide a sworn proof of loss document that includes inventories, costs, and values of the lost property, and must allow inspection of property, books and records. (See 1231 Euclid Homeowners Assn. v. State Farm Fire & Casualty Co. (2006) 135 Cal.App.4th 1008, 1018 [burden is on the insured to initiate and support a claim, and failure to comply with the proof of loss requirement amounts to insured's failure to meet a condition precedent].) Both in their documents and in their interviews, Plaintiff's representatives had to show its degree of "interest in the Covered Property," in pursuing the claim.
During his recorded interview, Father stated that when the business was started, the family had brought over some furniture and also tools from other business locations, without charge. He did not ask Son whether the items had come from Son's prior businesses. It was all stolen that weekend in 2012.
When Son's bankruptcy petition was filed in 2008, he included as his personal businesses Don't Buy a Lemon Auto Repair, DBL Auto Repair, Roman Industries, and European Coach Auto Sales. His petition represented that those businesses had no inventory and were defunct. Both versions of Plaintiff's proof of loss document include the sworn statement that $469,142.95 for the value of missing tools was being claimed as a loss, based on Plaintiff's estimate from receipts and pictures. Even though Plaintiff's lengthy version was not admitted into evidence, the copy attached to the summary judgment motion includes that dollar figure, as well as invoices that showed some tools had been purchased by Son individually in 2008, without any business name attribution as the customer.
Also with respect to the source of the missing tools, Son estimated in his recorded interview that the business had obtained about 10 to 20 percent of its smaller metal tools from his previous companies. At his examination under oath, he said all of those tools were not acquired until after the bankruptcy, and the tools had nothing to do with the bankruptcy. In his declaration, he said he had taken photographs of some of the business's tools at the time the policy was issued, which were mostly the same as the photographs taken by the insurance salesman. He did not further explain the source of the transferred tools or outline any chain of ownership for them.
Plaintiff attempts to characterize these inconsistent statements as simple misunderstandings about the questions during the investigation, that should create questions of fact for a jury on whether there was any intent on the part of the insured to defraud Truck. It argues that Truck prematurely decided there would be no exposure for payment of policy proceeds and referred the claim to a fraud investigator, but without sufficient cause. Plaintiff again fails to understand that misrepresentations on the same subject matter as the claim may be material to a decision on whether to honor the claim, even if they occurred at an earlier time and to a third party, when they have also been submitted to the insurer as part of the documentation of the claim being made. By making the claim under the business personal property coverage, Plaintiff was directly representing to Truck that it had an ownership interest in over $450,000 in tools and equipment, within the meaning of the concealment and fraud clause. However, when asked, it could not substantiate ownership of the tools that were stolen, instead presenting inconsistencies and misleading statements.
In the order, the court noted that in addition to its incomplete tax records, Plaintiff had supplied Truck with contradictory information about its ownership interest in different pieces of the stolen property. The trial court was correct in determining that Plaintiff had failed to comply with its obligations under the policy of supplying adequate documentation of the claimed losses, thus breaching its duties and justifying a decision to declare the policy void. The evidence supports the conclusion that the misrepresentations made in pursuing Plaintiff's claims for lost property were material. Plaintiff's false statements about the origin of the tools and its ownership interest in them, made in the current proceedings as contrasted to the earlier bankruptcy matter, concerned a subject that was "reasonably related" to Truck's investigation of Plaintiff's claim. The motive was irrelevant. A reasonable insurer such as Truck would attach importance to such false statements. (See Cummings, supra, 202 Cal.App.3d at p. 1417.) As a matter of law, the misrepresentations created a defense to the action, and Plaintiff has not shown any error occurred when the defense summary judgment was granted.
D. Remaining Claims
As outlined above, there were valid bases to void the policy and deny coverage. Plaintiff's allegations of bias against Iranian-American businesses, on the part of Truck's investigators, were not sufficiently substantiated so as to raise triable issues of fact on material issues. The motion for summary judgment was properly granted on the related cause of action for breach of the implied covenant of good faith and fair dealing and the prayer for punitive damages. (See Progressive West Ins. Co. v. Yolo County Superior Court (2005) 135 Cal.App.4th 263, 279 [no cause of action for breach of the covenant of good faith and fair dealing remains if no benefits are due].)
DISPOSITION
The judgment is affirmed. Costs on appeal are awarded to Respondent.
/s/_________
HUFFMAN, Acting P. J. WE CONCUR: /s/_________
O'ROURKE, J. /s/_________
AARON, J.