Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County No. LC075218 Bert Glennon, Jr., Judge.
Nevers, Palazzo, Maddux & Packard and Michael S. Wildermuth for Plaintiff and Appellant.
Hollins Schechter, Andrew S. Hollins and Sheila K. McDonald for Defendant and Respondent.
PERLUSS, P. J.
Selma Schimmel appeals from the judgment entered after the trial court granted summary judgment in favor of her insurer, Fire Insurance Exchange (the Exchange), a member of the Farmer’s Insurance Group, on her claims for breach of written contract (insurance policy) and breach of the implied covenant of good faith and fair dealing. The court determined both claims were barred by the one-year limitations period contained in her insurance policy. Schimmel contends triable issues of material fact exist as to whether the limitations period was tolled and whether the Exchange was equitably estopped from asserting the limitations defense. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
1. The Accident
Schimmel is the owner of a condominium unit located in Encino, California. In September 2003 she purchased a townhouse/condominium owner’s insurance policy from the Exchange for her unit, effective September 15, 2003 through September 15, 2004. On December 26, 2003 the piping for a whirlpool spa that Schimmel had installed a few years earlier failed after she pressed the reset button. Schimmel was unable to turn off the water and had to enlist the help of the local fire department. Finding the water supply line to the unit inoperable, responding firefighters had to shut off the water to the entire condominium complex. In the meantime, the front entry, living room, staircase and basement of Schimmel’s unit sustained water damage.
2. Schimmel’s Insurance Claim
On December 26, 2003, the date of the accident, Schimmel contacted the Exchange and made a claim for damages to real and personal property. On December 30, 2003 the Exchange’s claims representative, Irene Bernando, inspected Schimmel’s unit along with a plumber retained by the Exchange and concluded the damage resulted from the faulty installation of the whirlpool spa. On January 5, 2004 the Exchange wrote Schimmel and denied in its entirety her claim for $25,782.93 for damages to personal and real property based on a policy term excluding coverage for faulty or defective workmanship. The January 5, 2004 denial-of-coverage letter informed Schimmel that the decision to deny the claim in its entirety was “unequivocal” and that, pursuant to the policy terms, any lawsuit “on or arising out of this policy must be brought within one year after the loss occurs.” The letter also informed Schimmel that “under California law,” “the time spent by an insurance company in investigating and processing of a claim may not count toward the one-year period within which the insured may file a lawsuit against the insurance company.”
Schimmel promptly retained legal counsel (the law firm of Nevers, Palazzo, Maddux & Packard (NPMP)) to assist her in disputing the denial. On January 12, 2004 Michael Wildermuth, an attorney with NPMP (and Schimmel’s trial and appellate counsel in this lawsuit), sent a letter to the Exchange arguing, by reference to various provisions of the policy, that the claimed water damage resulting from the “sudden and accidental discharge of water” was covered under the policy. In response the Exchange informed NPMP in writing that it had retained the law firm of Bissell & Associates (Bissell) to “assist in the evaluation” of Schimmel’s claim and would be sending NPMP further correspondence with regard to the handling of the claim.
On February 10, 2004 John Federle, an attorney with Bissell, informed NPMP the Exchange had been unable to obtain a copy of the condominium complex homeowners association’s insurance policy issued by State Farm Insurance Companies (State Farm). Federle requested Wildermuth provide his firm with a copy as soon as possible. Federle also requested that Wildermuth provide additional documentation of Schimmel’s damages. Schimmel promptly provided the requested damages documentation but informed the Exchange State Farm had refused her request to provide a copy of the homeowners association’s insurance policy.
Sometime between February and April 2004 Bissell learned Schimmel had made a claim with State Farm for the same structural damages that were the subject of her claim with the Exchange. Noting its repeated and unsuccessful requests to obtain the homeowners association’s insurance policy, Bissell advised NPMP it was submitting its final recommendation to the Exchange, which would notify Schimmel of its coverage decision soon.
3. The Exchange’s April 22, 2004 “Final Position” Letter
On April 22, 2004 the Exchange informed Schimmel in writing it would pay her $310 for her personal property damages (and included a check made payable to Schimmel in that amount) but “decline[d] to issue payment for structural improvements at this time” on the ground the “policy includes no coverage for building damages.” For this reason, the Exchange explained, it “cannot extend coverage for the structural portion of this claim.” The letter also added, “Property insured in the Association’s insurance policy is not covered under this policy” and suggested that any claim for structural damage “be filed with the Homeowners Association master carrier.” In addition, the April 22, 2004 letter informed Schimmel its coverage determination was its “final position” on this claim and reminded Schimmel of the one-year limitations period in the policy.
4. Additional Correspondence Between Schimmel and the Exchange Following the Exchange’s Final Position Letter
On May 25, 2004 Schimmel (through her counsel) informed the Exchange that State Farm had denied her third party claim; and on June 9, 2004 informed it State Farm had also denied her first party claim. On June 9, 2004 Bissell responded that, although the Exchange “welcomes any additional information and documentation” Schimmel wishes to submit, “this claim will remain closed unless you are otherwise notified in writing that it has been reopened. As such, [the] one-year period during which a policyholder may bring suit against the Exchange has been running since the date of the Exchange’s final position and continues to run at this time.”
On August 9, 2004 Bissell sent another letter to NPMP advising it still had not received any documentation that demonstrated the first party claim with State Farm Insurance had been filed and ultimately declined, and as such, would continue to hold the “file in abeyance.” Bissell reiterated, although it welcomed additional documentation, the matter “remain[ed] closed” and the limitations period had again commenced running on April 22, 2004, the date of the Exchange’s final position letter.
On April 25, 2005, following a change in membership on the condominium homeowners association board, NPMP finally obtained a copy of the association’s master policy and sent it to the Exchange, repeating its request that it pay Schimmel’s claim and advising it that Schimmel would pursue legal action if the claim was not resolved in her favor. On July 27, 2005 Bissell responded that the claim was not covered under the policy issued by the Exchange and, in any event, any lawsuit was now time-barred under the policy’s one-year limitations period.
5. The Instant Lawsuit
Schimmel filed the instant lawsuit against the Exchange on July 14, 2006, alleging causes of action for breach of contract and breach of the implied covenant of good faith and fair dealing. On November 10, 2006 the Exchange moved for summary judgment or, in the alternative, summary adjudication, contending each of the claims was barred by the one-year limitations period in the insurance policy. In opposition to the motion, Schimmel argued triable issues of material fact existed as to whether the limitations period was tolled from January 22, 2004 to July 27, 2005 and whether the Exchange, by its conduct, including repeated requests for the homeowners association’s master policy, was equitably estopped from asserting the limitations defense. On March 12, 2007 the trial court granted summary judgment, agreeing with the Exchange that both contract claims were barred by the one-year limitations period in the insurance policy.
DISCUSSION
1. Standard of Review
We review the trial court’s grant of summary judgment de novo and decide independently whether the parties have met their respective burdens and whether facts not subject to triable dispute warrant judgment for the moving party as a matter of law. (Intel Corp. v. Hamidi (2003) 30 Cal.4th 1342, 1348; Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 334; Code Civ. Proc., § 437c, subd. (c).)
2. The Trial Court Properly Granted Summary Judgment on the Ground Schimmel’s Contract Claims Were Time-barred
An insurance company may contractually limit the time in which an insured may file suit on an insurance policy, provided the limitations period “‘is not so unreasonable as to show imposition or undue advantage.’” (Prudential-LMI Com. Insurance v. Superior Court (1990) 51 Cal.3d 674, 683 (Prudential-LMI). “‘“One year [is] not an unfair period of limitation.”’” (Ibid.; see also Ins. Code, § 2701 [standard fire insurance policy requires suit be filed within 12 months after inception of loss].)
Any cause of action based on allegations relating to the handling of a claim or the manner in which it is processed is “an action on the policy” subject to the policy limitations clause. (Velasquez v. Truck Ins. Exchange (1991) 1 Cal.App.4th 712, 720-722.) “A bad faith action based on denial of a claim in the underlying policy is an action on the policy.” (Id. at p. 722; accord, 20th Century Ins. Co. v. Superior Court (2001) 90 Cal.App.4th 1247, 1280.)
a. The doctrine of equitable tolling
The contractual limitations period in an insurance policy begins to run when the insured first discovers, or should have discovered, the damage for which the claim is made. (Prudential-LMI, supra, 51 Cal.3d at p. 678; Migliore v. Mid-Century Ins. Co. (2002) 97 Cal.App.4th 592, 604; Kapsimallis v. Allstate Ins. Co. (2002) 104 Cal.App.4th 667, 673.) However, once the insured reports the claim to the insurer, the running of the limitations period is equitably tolled until the insurer unequivocally denies the claim in writing. (Prudential-LMI, at p. 690-692; Migliore, at p. 604; Prieto v. State Farm Fire & Casualty Co. (1990) 225 Cal.App.3d 1188, 1195.)
This doctrine of equitable tolling serves several purposes: “First, it allows the claims process to function effectively, instead of requiring the insured to file suit before the claim has been investigated and determined by the insurer. Next, it protects the reasonable expectations of the insured by requiring the insurer to investigate the claim without later invoking a technical rule that often results in an unfair forfeiture of policy benefits. Although an insurer is not required to pay a claim that is not covered or to advise its insureds concerning what legal arguments to make, good faith and fair dealing require an insurer to investigate claims diligently before denying liability. [Citation.] Third, a doctrine of equitable tolling will further our policy of encouraging settlement between insurers and insureds, and will discourage unnecessary bad faith suits that are often the only recourse for indemnity if the insurer denies coverage after the limitation period has expired. [Citation.] [¶] Equitable tolling is also consistent with the policies underlying the claim and limitation periods -- e.g., the insurer is entitled to receive prompt notice of a claim and the insured is penalized for waiting too long after discovery to make a claim.” (Prudential-LMI, supra, 51 Cal.3d at p. 692; see also Doheny Park Terrace Homeowners Assn., Inc. v. Truck Ins. (2005) 132 Cal.App.4th 1076, 1088 [rule of equitable tolling is justified “on the ground that it would be ‘unconscionable’ to permit the limitations period to run while the insured is pursuing its rights in the claim process, as required by the policy”].)
b. Equitable tolling of Schimmel’s claim ceased on April 22, 2004 when the Exchange issued its final position letter
Schimmel, who filed her suit on July 14, 2006, nearly two and one-half years after the loss occurred, argues her lawsuit is timely because the limitations period was tolled from December 26, 2003 (when she filed her claim with the Exchange) to January 5, 2004 (when the Exchange “unequivocally denied” her claim) and again from January 22, 2004 (when the Exchange apparently “reopened” the claim for investigation following her letter disputing the denial) to July 27, 2005 (when the Exchange sent a letter to Schimmel’s counsel explaining the claim was not covered and, in any event, was time-barred).
Although the parties dispute whether the Exchange actually reopened the claim on January 22, 2004 after it had unequivocally denied it January 5, 2004, any disagreement in that regard is immaterial. Whatever applicability the doctrine of equitable tolling may have during the period from January 22, 2004 to April 22, 2004, it is clear that by April 22, 2004, the date of the Exchange’s “final position letter,” the Exchange had unequivocally denied Schimmel’s claim for damages in writing (save only for $310 for personal property damage), warning Schimmel in its denial-of-coverage letter that its resolution was its final determination on the matter. (See Prudential-LMI, supra, 51 Cal.3d at p. 678 [tolling ends upon insured’s receipt of unequivocal denial in writing]; Aliberti v. Allstate Ins. Co. (1999) 74 Cal.App.4th 138, 146, 148-149; cf. Hydro-Mill Co., Inc. v. Hayward, Tilton & Rolapp Ins. Associates, Inc. (2004) 115 Cal.App.4th 1145, 1163 [oral denials of claim insufficient to stop equitable tolling].) This was unequivocal language that no further payment on the claim would be made.
Schimmel concedes that, if the April 22, 2004 final position letter is considered an unequivocal denial, equitable tolling ceased at that time and her claim is time-barred. However, she argues the final position letter was not unequivocal. Although it included a check for what it characterized as the full amount of Schimmel’s personal property damage and denied in its entirety Schimmel’s claim for structural damage, Schimmel insists the Exchange did not rule out paying for other damages under other provisions in the policy, such as emergency repair costs and alternate living expenses. Even more significantly, she argues, the letter’s reference to the homeowners association’s master policy implied that coverage would be forthcoming if, in fact, the loss was not covered by the association’s master policy issued by State Farm.
Under the section entitled “Coverage D Loss of Use,” the policy provides, “If a covered property loss makes the residence premises unfit to live in, we cover the necessary increase in living expense incurred by you so that your household can maintain its normal standard of living. . . .” Under the section entitled “Additional Coverages,” the policy provides, “We pay the cost you incur for necessary emergency repairs made solely to protect covered property from further damage if a loss covered under SECTION 1-PROPERTY causes the damage. . . .”
Contrary to Schimmel’s contention, neither the cited language nor anything else in the April 22, 2004 final position letter remotely suggested the Exchange was still considering possible claims for “loss of use” or “emergency repairs,” both of which are covered under the policy only if the structural loss itself is covered. Nor did the letter suggest coverage would be forthcoming if, in fact, the loss was not covered by the association’s master policy issued by State Farm. To the contrary, the letter unequivocally stated it represented the Exchange’s “final position” on the claim and admonished Schimmel that tolling had ceased and the limitations period would again begin to run. Neither the Exchange’s reference to other insurance policies nor its later request for additional information related to the loss alters the unequivocal nature of the denial. (See Migliore v. Mid-Century Ins. Co., supra, 97 Cal.App.4th at p. 605 [following unequivocal denial, neither an invitation for further documentation nor arguments by the insured disputing the determination extends period of equitable tolling]; see also Singh v. Allstate Ins. Co. (1998) 63 Cal.App.4th 135, 147-148 [insured’s repeated requests for reconsideration following unequivocal denial do not trigger equitable tolling; “once an unequivocal denial has been made, the insured’s later requests for reconsideration do not serve the purposes of and do not extend the period of equitable tolling”].)
c. Schimmel failed to raise any triable issues of material fact concerning her claim of equitable estoppel
Even if her lawsuit is not timely through application of the doctrine of equitable tolling, Schimmel contends the Exchange is equitably estopped from asserting the one-year contractual limitations period as a defense. The doctrines of equitable tolling and equitable estoppel are distinct, each arising under different rationales and distinct predicates: “‘“Tolling, strictly speaking, is concerned with the point at which the limitations period begins to run and with the circumstances in which the running of the limitations period may be suspended. . . . Equitable estoppel, however, . . . comes into play only after the limitations period has run and addresses . . . the circumstances in which a party will be estopped from asserting the statute of limitations as a defense to an admittedly untimely action because his conduct has induced another into forbearing suit within the applicable limitations period.”’” (Lantzy v. Centex Homes (2003) 31 Cal.4th 363, 383.) Unlike equitable tolling, the doctrine of equitable estoppel “‘“is wholly independent of the limitations period itself and takes its life . . . from the equitable principle that no man [may] profit from his own wrongdoing in a court of justice.”’” (Ibid.; accord, Cordova v. 21st Century Ins. Co. (2005) 129 Cal.App.4th 89, 96; Ashou v. Liberty Mutual Fire Ins. Co. (2006) 138 Cal.App.4th 748, 758, fn. 3.)
Estoppel can arise even in the absence of any intent to mislead. “‘To create an equitable estoppel, “it is enough if the party has been induced to refrain from using such means or taking such action as lay in his power, by which he might have retrieved his position and saved himself from loss.” . . . “. . . Where the delay in commencing action is induced by the conduct of the defendant it cannot be availed of by him as a defense.”’” (Vu v. Prudential Property & Casualty Ins. Co. (2001) 26 Cal.4th 1142, 1152-1153; see also Lantzy v. Centex Homes, supra, 31 Cal.4th at p. 384; Ginns v. Savage (1964) 61 Cal.2d 520, 524-525.) In other words, “‘[a]n insurer is estopped from asserting a right, even though it did not intend to mislead, as long as the insured reasonably relied to its detriment upon the insurer’s action.’” (Vu, at p. 1153.)
The insured bears the burden of showing the insurer is equitably estopped from asserting the limitations defense. (State Farm Fire & Casualty Co. v. Jioras (1994) 24 Cal.App.4th 1619, 1628.) To establish an estoppel, the insured must show (1) the party to be estopped knew the facts; (2) that party either intended his or her conduct be acted upon or acted in a manner that reasonably led the party asserting the estoppel to believe it was so intended; (3) the party asserting the estoppel was ignorant of the true state of facts; and (4) he or she must have reasonably relied upon the conduct to his or her detriment. (Spray, Gould & Bowers v. Associated Internat. Ins. Co. (1999) 71 Cal.App.4th 1260, 1268.)
In arguing equitable estoppel defeats the Exchange’s limitations defense, Schimmel cites the following conduct by the Exchange’s representatives as inducing her to refrain from filing suit: (i) On April 30, 2004 and again on June 9, 2004 Federle wrote to Wildermuth requesting a copy of the homeowners association’s policy or other documentation, “which demonstrates that the first-party claim [with State Farm] was filed and ultimately declined so that we may address this issue with our client.” (ii) On June 19, 2004 Federle told Wildermuth during a telephone conversation the Exchange would pay Schimmel’s claim in its entirety if the association’s policy did not cover the loss. (iii) On August 9, 2004 Federle again requested documentation from Wildermuth establishing State Farm had denied Schimmel’s claim.
According to Schimmel, Federle’s repeated requests for the association’s master policy with State Farm, coupled with his suggestion the Exchange would pay the claim if it was not covered by that policy, induced Schimmel to delay filing a lawsuit against the Exchange. At the very least, she argues, a reasonable trier of fact could find she was so induced, thereby precluding summary judgment. (See Platt Pacific, Inc. v. Andelson (1993) 6 Cal.4th 307, 319 [application of equitable estoppel is ordinarily a question of fact; however, it is properly resolved as a matter of law when only “one inference may be reasonably drawn” from the material facts].)
Here, there is no material factual dispute for a jury to decide because nothing in the actions of Federle as identified by Schimmel supports application of equitable estoppel. To the contrary, in each piece of correspondence following the April 22, 2004 final position letter, Federle reminded Wildermuth the one-year period for filing suit was running and would continue to run unless Wildermuth was notified in writing that the claim had been reopened. Furthermore, in each of his letters to Wildermuth, Federle reiterated that his requests for additional information concerning the homeowners association’s insurance policy with State Farm were not tantamount to reopening an investigation of the claim and would not impact the running of the contractual limitations period.
Wildermuth’s declaration testimony Federle told him during a telephone conversation on June 9, 2004 that the Exchange would pay the claim for structural damage if it was not covered under the association’s policy with State Farm is a disputed issue of fact, but it is not material to the applicability of equitable estoppel and does not defeat summary judgment. Simply put, even if Federle made such a representation, it cannot have reasonably induced forbearance to file suit: Nothing in the conversation Wildermuth described in his declaration contradicted or in any way undermined Federle’s written communications to Wildermuth that the claim had been unequivocally denied and that the limitations period was running and would continue to run unless Schimmel (or her counsel) was notified in writing the claim had been reopened. (See Platt Pacific, Inc. v. Andelson, supra, 6 Cal.4th at p. 320 [defense attorney’s representation he would attempt to reschedule a settlement conference “did not modify the provision in the parties’ contract that any demand for arbitration be made within a specific period”; accordingly, doctrine of equitable estoppel not implicated by defense attorney’s representation]; see also Lantzy v. Centex Homes, supra, 31 Cal.4th at p. 384, fn. 18 [the insurer’s “statement or conduct must amount to a misrepresentation bearing on the necessity of bringing a timely suit; defendant’s mere denial of legal liability does not set up an estoppel”]; Vu v. Prudential Property & Casualty Ins. Co., supra, 26 Cal.4th at p. 1152 [denial of liability based on representation that claim is not covered does not implicate estoppel].) Because there is no factual dispute presented that, if resolved in Schimmel’s favor, would properly estop the Exchange from asserting a limitations defense, the trial court did not err in concluding, as a matter of law, the claims for breach of contract and the implied covenant of good faith and fair dealing were time-barred.
DISPOSITION
The judgment is affirmed. Fire Insurance Exchange is to recover its costs on appeal.
We concur: WOODS, J., ZELON, J.