Opinion
B156577.
7-29-2003
NATEL ENGINEERING COMPANY, INC., Plaintiff and Appellant, v. GENERAL INSURANCE CONSULTANTS, INC. et al., Defendants and Appellants.
Brown, Winfield & Canzoneri, Inc., Thomas F. Winfield III, and Richard J. Sestak; Jeffer, Mangels, Butler & Marmaro, Julia K. Rider, Katherine J. Kunberger and Genevieve C. Nadeau, for Plaintiff and Appellant. Wilson, Kenna & Borys, Timothy W. Kenna and Holly M. Brett, for Defendants and Appellants General Insurance Consultants and Donald Sawyer.
The trial court granted defendant insurance brokers motion for summary judgment. The court also denied plaintiff insureds motions for leave to amend the complaint, for reconsideration of the summary judgment motion, and for new trial. On plaintiffs appeal, we affirm the judgment and orders. We dismiss defendants cross-appeal as moot.
BACKGROUND
This action involves an insured (plaintiff Natel Engineering Company, Inc.), an insurance broker (defendants General Insurance Consultants, Inc., or "GIC," and GICs senior account executive, Donald Sawyer), an insurance provider (Association International Insurance Company, or "AIIC"), and an insurance agent (Swett and Crawford, or "S&C," and S&Cs broker, Michael Annese).
Natel suffered business property losses as a result of the Northridge earthquake on January 17, 1994. Natel received $ 7 million for sprinkler damage from another insurer, the Chubb Group of Insurance Companies, leaving a balance of $ 5.7 million to be settled under its AIIC earthquake policy. On March 12, 1999, Natel settled with AIIC for an amount that, because the policy provided for valuation at actual cost value (as opposed to replacement cost value) and excluded inventory coverage, left Natel with unreimbursed damages of $ 1.7 million.
On March 10, 2000, Natel filed the present action seeking to recover the $ 1.7 million settlement shortfall from Natels broker (GIC and Sawyer). Natel alleged that the broker had failed to obtain adequate coverage from AIIC. The AIIC policy was first issued in January 1992, and was renewed in 1993. In December 1993, several weeks before the AIIC policy was to expire on January 5, 1994, the broker applied for a 1994 policy. Consistent with the brokers promise to Natel to obtain inventory and replacement cost value coverage, the broker submitted an application requesting inventory and replacement cost value coverage. After Natel made the first premium payment for the 1994 policy period, the earthquake occurred on January 17, 1994, and Natel suffered losses as a result. On February 14, 1994, nearly a month after the earthquake, AIIC purported to renew Natels policy by endorsement. The renewal endorsement contained terms, which allegedly were added to the policy, that excluded inventory and limited AIICs liability to actual cost value.
Natel claimed that as a result of the brokers alleged malfeasance in obtaining the 1994 policy, the AIIC settlement failed to include inventory and replacement cost value coverage, resulting in the $ 1.7 million settlement shortfall. Natel alleged causes of action for breach of contract, professional negligence, intentional and negligent misrepresentation, and fraud and deceit. Natel contended that the broker: (1) breached its contract with Natel by failing to obtain the requested inventory and replacement cost value coverage that the broker had promised to obtain; and (2) misrepresented to Natel that the requested inventory and replacement cost value coverage had been obtained from AIIC.
A. Summary Judgment Motion
On February 8, 2001, the broker moved for summary judgment based on its affirmative defense that the evidence was insufficient to show it had breached any duty owed to Natel. The broker contended the evidence was insufficient to show a breach of duty in that: (1) in late 1993, the broker submitted the earthquake insurance application to AIICs agent (S&C) on Natels behalf for the policy period of January 5, 1994, to January 5, 1995; (2) as Natel had requested, the application included a request for inventory and replacement cost value coverage; (3) in response to the application, on January 10, 1994, S&Cs broker Annese issued Property Binder No. 3805 (with effective dates of January 5, 1994, to March 5, 1994), and the binder contained no notation excluding the requested inventory and replacement cost value coverage; (4) according to common industry practice, "if an insurer was not willing to provide a coverage that an insured applied for, the exception would be noted in [the] binder"; (5) in this case, the only exclusions or exceptions noted on the binder were for seepage, pollution and contamination, asbestos, and theft; and (6) after the earthquake, Annese, who signed the binder for S&C, wrote to AIIC questioning why Natels claim was being settled for actual cost value when the application had "requested Replacement Cost Value in January of 1992. This policy was renewed by certificate in 1993 and 1994. The Accord application in each of those year[]s requested Replacement Cost. I would appreciate your response to this soon." In other words, the broker contended it could not be held liable, as a matter of law, for the settlement shortfall because the broker had obtained a binder from AIIC (through AIICs agent S&C/Annese) that provided Natel with the requested inventory and replacement cost value coverage during the time of the loss.
The broker also moved, unsuccessfully, for summary judgment on statute of limitations grounds. The broker has filed a protective cross-appeal from that portion of the summary judgment rejecting the statute of limitations defense. Given our affirmance of the summary judgment on other grounds, we dismiss the brokers cross-appeal as moot.
In opposition to the brokers summary judgment motion, Natel contended triable issues of fact remained concerning the brokers failure to disclose the binders existence to Natel before Natels settlement with AIIC in March 1999. Natel contended: "Had [the broker] or [S&C] advised or discussed with Natel the existence, purpose or effect of Insurance Binder No. 3805, Natel would not have settled with AIIC on the basis which it did."
In its opposition to the summary judgment, Natel claimed it first had learned of the binder in December 2000, during Anneses deposition. Natel also questioned Anneses authority to issue the binder. In addition, Natel disputed whether, as a matter of law, the binder was consistent with the application such that it actually provided inventory and replacement cost value coverage. Natel conceded, however, that it was the customary industry practice to note on the binder any differences or exceptions to the coverage sought in the application. Natel also failed to dispute that Annese had testified that he believed the policy provided replacement cost value coverage.
The record shows, however, that Natel knew of the binders existence much earlier. The binder was mentioned in GICs cross-complaint of April 19, 2000, and was attached as an exhibit to a discovery request served on September 15, 2000. The trial court nevertheless assumed, for purposes of the summary judgment motion, that Natel first learned of the binder at Anneses deposition on December 13, 2000.
In reply to the opposition to summary judgment, the broker contended Natel had failed to provide any legal argument in opposition to its theory that the binder provided the requested higher level of coverage. The broker argued that plaintiff could not avoid summary judgment by asserting the existence of a triable issue of material fact regarding the brokers failure to disclose the binder, when that theory of liability was not pled in the complaint, citing Tsemetzin v. Coast Federal Savings & Loan Assn. (1997) 57 Cal.App.4th 1334, 1342-1343.
"The burden of a defendant moving for summary judgment only requires that he or she negate plaintiffs theories of liability as alleged in the complaint. A moving party need not ". . . refute liability on some theoretical possibility not included in the pleadings." [Citation.] (Cochran v. Linn (1984) 159 Cal. App. 3d 245, 250, 205 Cal. Rptr. 550 . . . .) "[A] motion for summary judgment must be directed to the issues raised by the pleadings. The [papers] filed in response to a defendants motion for summary judgment may not create issues outside the pleadings and are not a substitute for an amendment to the pleadings." [Citation.] (Nash v. Fifth Amendment (1991) 228 Cal. App. 3d 1106, 1116, 279 Cal. Rptr. 465 . . . .)" (Tsemetzin v. Coast Federal Savings & Loan Assn., supra, 57 Cal.App.4th at pp. 1342-1343.)
B. Motion for Leave to Amend
After granting the brokers summary judgment motion, the court heard Natels motion for leave to amend the complaint. In support of its motion, Natel again contended it first had learned of the binders existence at Anneses deposition on December 13, 2000, and would not have settled with AIIC for actual cost value had it known of the binders existence. Natel sought to add S&C as a defendant and to add claims against the broker for failing to advise Natel of the binders existence before Natels settlement with AIIC.
In opposition to the motion to amend, the broker disputed the timeliness of the motion. The broker contended, contrary to Natels claim that it was unaware of the binders existence until Anneses deposition in December 2000, that Natel knew about the binder much earlier. The broker pointed out it had cited the binder in its cross-complaint, filed on April 19, 2000, against S&C and AIIC for equitable indemnity and apportionment, declaratory relief, and negligence. The theory pled in the cross-complaint was that Natel had received replacement cost value coverage through the binder as follows: (1) the broker obtained Natels first earthquake policy from AIIC in 1992; (2) the 1992 policy, which was renewed in 1993 and 1994, provided replacement cost value coverage; (3) in response to the 1994 renewal application, S&C issued a binder (which was in effect during the earthquake) renewing Natels policy "without any additional changes or endorsements except as necessitated by changes in property values. Exclusions noted were seepage, pollution and contamination, asbestos and theft." In short, the cross-complaint alleged that because the policy issued in 1992 and renewed in 1993 and 1994 provided replacement cost value coverage as requested in the respective applications, the binder, which was in effect during the earthquake, also provided replacement cost value coverage by virtue of its failure to specifically exclude such coverage.
The cross-complaints allegation, based on information and belief, that the 1992 policy included inventory and replacement cost value coverage is factually incorrect. The 1992 policy specifically excluded coverage of inventory and provided coverage at actual cost value only.
As noted earlier, the 1992 policy did not provide inventory or replacement cost value coverage.
On November 21, 2001, the trial court denied the motion to amend, finding in part: "GIC has established the Motion to Amend is not timely and would prejudice it. Natel had knowledge of the claim and/or the facts in support of the claim six to eleven months ago."
C. Motion for Reconsideration
On March 22, 2001, Natel moved for reconsideration of the order granting the summary judgment motion. For the first time, Natel argued that the original 1992 policy issued by AIIC excluded inventory and provided only actual cost value coverage. According to the motion for reconsideration, the policy that was expiring on January 5, 1994, did not provide inventory and replacement cost value coverage (contrary to the erroneous allegation in the complaint and the brokers cross-complaint).
The policy declaration page specifically excludes "stock, materials and supplies." Paragraph 30, titled "Valuation," states that AIIC "shall not be liable for more than actual cash value of the property at the time any loss or damage occurs . . . ."
The complaint alleged: "On or about January 4, 1994, GENERAL INSURANCE [the broker] provided NATEL with a Proposal of Insurance, (hereinafter Agreement) outlining NATELs Earthquake insurance coverage. The Agreement specifically provided that NATEL had obtained . . . replacement-cost valuation ( RCV); that is, such coverage permitted an insured to replace the value of any earthquake-damaged item at the then prevailing market cost. In addition, the Agreement provided that both NATELs business personal property and inventory were covered. . . . This coverage was the same as NATEL had previously been provided by [AIIC through] Hamilton Brewart Insurance Agency [Sawyers previous employer]." (Italics added.)
The cross-complaint alleged: "In 1992, The Hamilton Brewart Insurance Agency placed Natels insurance, including Natels property and DIC [difference in condition] coverage, through Swett acting as agents of AIIC & Chubb. Cross-Complainants are informed and believe and allege thereon that Swett quoted, bound and issued the property and DIC policies to Natel on behalf of its principals, AIIC and Chubb, containing difference in conditions/replacement cost coverage."
Significantly, the complaint alleged that the replacement cost value and inventory coverage promised to Natel in its Agreement with GIC "was the same as NATEL had previously been provided by Hamilton Brewart Insurance Agency." Given the undisputed evidence that Sawyer had brought the Natel account with him to GIC upon leaving Hamilton Brewart in August 1993, we reasonably read the complaint to allege that the expiring policy included both inventory and replacement cost value coverage. In its motion for reconsideration, however, Natel contended that the expiring policy excluded inventory and provided only actual cost value coverage. Natel, however, did not seek to amend its complaint on this point, or attempt to explain the discrepancy between its pleading (which alleged the expiring policy included inventory and replacement cost value) and the policy (which excluded inventory and provided only actual cost value coverage).
Based on its new factual theory (in contradiction of its own complaint) that the expiring policy excluded inventory and provided actual cost value coverage, Natel now contended that the broker, by seeking and obtaining a renewal of the expiring policy, had failed to secure the promised increased coverage for inventory and replacement cost value. Natel asserted summary judgment should have been denied because the broker, having obtaining a renewal of a policy that excluded inventory and provided actual cost value coverage, had breached its duty to Natel to obtain the requested higher coverage.
In support of this theory, Natel supplied the court with communications between the broker (Sawyer) and AIICs agent (S&Cs Annese), and between Annese and AIIC, which indicated the binder provided a renewal of the expiring policy, which did not provide inventory or replacement cost value coverage as promised by the broker.
The new evidence supplied by Natel included the following.
The broker sent Annese the application (requesting inventory and replacement cost value coverage) for the 1994 policy period. Annese forwarded the application to AIICs underwriter, Pattie Evans, together with a transmittal sheet filled out by Annese requesting renewal of the expiring policy. Evans understood the application to be a request for renewal of the expiring policy.
On January 6, 1994, Evans faxed Annese a policy quote that, in essence, agreed to renew the expiring policy. On the policy quote sent to Annese, Evans did not mark the box for replacement cost value coverage. Evans policy quote referenced "Natel Engineering," "IM 309054," which was the expiring policy number, and stated, "Will be renewed by endorsement." Evans also requested that Annese obtain from Sawyer a signed application.
On January 10, 1994, Annese prepared a written binder based on the policy quote received from Evans. Annese sent the binder to Sawyer, but Sawyer did not send the binder to Natel. Annese testified that "the binder that was issued is in response to what [AIIC] quoted. It reflects only those terms." The binder listed the effective dates of January 5, 1994, to March 5, 1994. The binder did not state whether replacement cost value coverage would be provided, or whether inventory would be covered. The binder also contained different terms than those requested in Natels application: "(i.e., flood coverage where none was requested; no earthquake sprinkler coverage provided where it was requested; a deductible of 5% for all insured items at Location # 1, where a 10% deductible had been requested for the Building only; a 10% deductible for all items at Location # 2, where none had been requested; and a $ 5,000,000 policy limit where none had been identified on the application)."
The binder referenced the expiring policy number IM309054, and cautioned: "Please inspect this binder carefully as the coverages bound may deviate from those requested in your original application." Annese, consistent with his erroneous belief that the original policy provided replacement cost value coverage, believed the 1994-1995 policy also provided replacement cost value coverage.
In opposition to the motion for reconsideration, the broker argued its summary judgment motion was not based on the theory that it had obtained (or had been told to obtain) a renewal of the expiring lower-coverage policy. The broker contended the only notation on the binder that conceivably indicates the expiring policy was being renewed was the binders reference to the original policy number. The policy number alone, the broker argued, is not a clear indication that the binder was meant to renew the expiring policy.
In reply, Natel argued that Sawyer (who had been Natels broker since the 1980s) had never read the expiring policy. Had Sawyer read the expiring policy, Natel contended, he would have realized that it excluded inventory and provided only actual cost value coverage. Also in its reply, Natel claimed, for the first time, that the application submitted by Sawyer for the 1994 policy period had understated the value of Natels property at $ 6.5 million, whereas Natel had provided Sawyer with property valuation information totaling $ 20 million. . Natel pointed out that due to the applications 90% co-insurance requirement, the listing of property values at below 90% of actual value would result in actual cash value coverage only. Natel contended that in response to AIICs inquiry regarding the applications under valuation of property values, Sawyer had provided an amended application with the correct valuation figures but failed to inform Natel of the error.
The trial court agreed with Natel that the evidence demonstrated a triable issue of material fact regarding the scope of the coverage provided by the binder, stating: "This evidence would, if considered, create a disputed issue of material fact." But the court refused to reverse its summary judgment ruling, stating that the evidence was not really "new evidence" because Natel could have obtained it earlier. The court found that "Natel has been on notice of [the] existence of the Binder for at least six months, and possibly as long as nearly a year. Natel has no excuse for not investigating the terms of the Binder in determining whether or not the coverage was provided."
Following the denial of Natels motion for reconsideration, the trial court entered summary judgment for the broker. Natel then moved for a new trial.
D. Motion for New Trial
For the first time, Natel contended in its new trial motion that the summary judgment ruling (premised on a determination that the binder, by failing to mention inventory and replacement cost value coverage, provided coverage for both as requested in the application) was inconsistent with the courts January 29, 2001, order approving the good faith settlement with AIIC at actual cost value under the policy. Natel also argued the broker was bound by its judicial admission in its cross-complaint that it had sought a renewal of a policy that, in actuality, excluded inventory and provided actual cost value coverage. (The cross-complaint, however, alleged that the expiring policy provided replacement cost value coverage.) Because the original policy excluded inventory and provided actual cost value coverage (contrary to the allegations of the complaint and cross-complaint), Natel contended it was entitled to a new trial.
In January 2001, AIIC moved under Code of Civil Procedure section 877.6 to confirm the good faith of its March 8, 1999, settlement agreement with Natel under its policy, which excluded inventory and provided actual cost value coverage. AIIC stated that due to its good faith settlement, "neither GIC nor S&C have viable claims for contribution or indemnity against AIIC." The amount of the AIIC settlement, according to the agreement, was over $ 3.2 million. The amount of the AIIC policy limits was $ 5 million. No opposition was submitted against the good faith settlement motion. On January 29, 2001, the trial court granted AIICs motion and dismissed AIIC as a party to this action.
Natel sought to explain its delay in fully investigating the possibility of coverage under the binder by alleging it had been misled by the brokers attorney to believe the summary judgment motion would only address statute of limitations issues. The brokers attorney, however, refuted this allegation in his declaration.
Natel also contended the trial court may have been misled by the brokers statement of undisputed facts to believe that the binder was in all manner consistent with the application. Natel pointed out that because the binder contained terms that differed from those in the application, the binder and the application were not consistent.
After the trial court denied the motion for new trial, Natel appealed from the judgment and order denying the motion for new trial. The broker cross-appealed from the adverse portion of the judgment rejecting its statute of limitations defense.
DISCUSSION
A. The Summary Judgment Ruling
Summary judgment is appropriate only where no material issue of fact exists or where the record establishes as a matter of law that a cause of action asserted against a party cannot prevail. After examining the facts before the trial judge on a summary judgment motion, an appellate court independently determines their effect as a matter of law. (Nicholson v. Lucas (1994) 21 Cal.App.4th 1657, 1664.)
The theory and evidence before the trial court on the summary judgment motion quite obviously differed from what was submitted later in support of Natels motions for leave to amend, reconsideration, and new trial. At the summary judgment motion hearing, the court was unaware that the original 1992 policy, which was renewed in 1993 and 1994, excluded inventory and provided actual cost value coverage. The court was also unaware that the policy quote prepared by Evans purported to renew the policy without adding inventory or replacement cost value coverage.
Viewed from the perspective of the record before the court at the summary judgment hearing, the ruling properly exonerated the broker of liability as pled in the complaint, as a matter of law. Based on the record before the court, the broker is not liable because: (1) the complaint alleged (albeit erroneously) that the expiring policy provided inventory and replacement cost value coverage; (2) it was undisputed that the broker submitted an application in 1994 requesting inventory and replacement cost value coverage; (3) it was undisputed that according to common industry practice, "if an insurer was not willing to provide a coverage that an insured applied for, the exception would be noted in [the] binder"; and (4) although the binder noted some exclusions and exceptions, it did not mention inventory or actual and/or replacement cost value coverage. Whether the broker violated a duty to Natel by failing to inform Natel of the existence of the binder is a separate issue not raised by the complaint. (See Tsemetzin v. Coast Federal Savings & Loan Assn., supra, 57 Cal.App.4th at pp. 1342-1343.)
A binder is a temporary insurance contract that may arise from completion of an insurance application and payment of the first premium "if the language of the application would lead an ordinary lay person to conclude that coverage was immediate. [Citation.]" (Ahern v. Dillenback (1991) 1 Cal.App.4th 36, 47.) "[A] binder is an independent contract, separate and distinct from the permanent insurance policy. It is intended to give temporary protection pending the investigation of the risk by the insurer and until issuance of a formal policy or rejection of the insurance application by the insurer. . . . [A] binder evidences that the policy has not yet been issued since the binder is effective until one of two events: the insurance application is rejected or the policy is issued." (Id. at p. 48, fn. omitted.)
When the Northridge earthquake occurred, AIIC had not yet renewed the policy by endorsement. As the loss in this case occurred before the renewal of the policy, AIIC "would have been liable under the binder for the type of coverage extended by the binder . . . ." (Eliopulos v. North River Ins. Co. (1963) 219 Cal. App. 2d 845, 852, 33 Cal. Rptr. 449.)
In this case, it was undisputed that according to common practice, "if an insurer was not willing to provide a coverage that an insured applied for, the exception would be noted in [the] binder." The exclusions or exceptions noted on the binder including seepage, pollution and contamination, asbestos, and theft did not include inventory or replacement cost value coverage. In light of the above and given that (1) the expiring policy was alleged to provide inventory and replacement cost value coverage, (2) the application specifically requested inventory and replacement cost value coverage, (3) Sawyer told Natel that the 1994 policy would provide inventory and replacement cost value coverage, (4) Natel paid the first payment due under the 1994 policy, (5) Annese issued a binder that failed to exclude inventory and replacement cost value coverage, and (6) Annese believed the policy provided replacement cost value coverage, we conclude, as a matter of law based on the summary judgment record, the ordinary lay person in Natels position would have believed the binder provided inventory and replacement cost value coverage. (See Ahern v. Dillenback, supra, 1 Cal.App.4th at p. 47.)
"The rationale for enforcing contracts of temporary insurance or binders is to effect the reasonable expectations of the ordinary applicant. The laypersons expectation of complete and immediate coverage upon payment of a premium has been held to be so strong that if the insurer wishes to avoid the obligation of providing temporary coverage, it must both use clear and unequivocal language evidencing its intent to limit coverage pending approval of the policy, and call any limiting condition to the attention of the applicant. In the absence of proof by the insurer that it satisfied both of these requirements, the coverage provided under a temporary contract is that which the ordinary layman, acting in the ordinary course of business, reasonably may expect by virtue of that transaction." (2 Cal. Ins. Law & Pract. (Matthew Bender 2003) § 8.03[3][e], pp. 8-24 - 8-25; quoting Smith v. Westland Life Ins. Co. (1975) 15 Cal.3d 111, 123; fns. omitted, 123 Cal. Rptr. 649, 539 P.2d 433.)
Natel contends the record lacks evidence to show that the binder was consistent with the application in all aspects. While there were some inconsistencies between the application and binder, none of the inconsistencies are relevant to the issues before us. They did not concern inventory or replacement cost value coverage.
Natel also contends the record fails to support a finding that S&C was authorized to issue the binder on AIICs behalf. The binder, however, states: "This binder is issued with the authority of the Insurer(s) . . . ." There is no evidence in the record to refute that representation. Given the general rule that "an agent has authority to bind the carrier, and may execute a binder on a policy without prior authorization from the carrier" (5 Cal. Ins. Law & Pract. (Matthew Bender 2003) § 61.02[1], p. 61-15, fn. omitted), we reject Natels unsupported contention.
Natel contends the summary judgment ruling must be reversed because the brokers answer failed to raise the binder as an affirmative defense. The answer, however, raised the affirmative defense of insufficient evidence. We know of no authority, and Natel has failed to cite any, that would preclude the court from considering the binder as evidence to support the brokers insufficient evidence defense.
While Natel contends the broker is bound by its judicial admission that it had sought to renew, as is, Natels expiring policy, Natel failed to raise that issue in opposition to the summary judgment motion. Having neglected to cite the judicial admission in its separate statement, Natel is precluded from asserting it as a ground for reversal on appeal. (See North Coast Business Park v. Nielsen Construction Co. (1993) 17 Cal.App.4th 22, 31.)
Based on the evidence before the trial court on the summary judgment motion, we conclude, as a matter of law, that the broker may not be held liable under the theories alleged in the complaint.
B. Motion to Amend
Natel sought to amend its complaint to bring in another defendant (S&C) and add claims against the broker for failing to disclose the binders existence. Natel contended: "Had [the broker] or [S&C] advised or discussed with Natel the existence, purpose or effect of Insurance Binder No. 3805, Natel would not have settled with AIIC on the basis which it did."
The trial court denied the motion to amend, finding: "GIC has established the Motion to Amend is not timely and would prejudice it. Natel had knowledge of the claim and/or the facts in support of the claim six to eleven months ago."
We review the trial courts ruling under an abuse of discretion standard, keeping in mind the liberal policy of permitting amended pleadings. (Honig v. Financial Corp. of America (1992) 6 Cal.App.4th 960, 965.)
In this case, a dispute arose shortly after the 1994 earthquake regarding inventory and replacement cost value coverage. Natel retained counsel soon after the earthquake for assistance in obtaining the disputed coverage. Given that (1) the broker specifically requested inventory and replacement cost value coverage in the 1994 application, (2) the binder did not mention inventory or replacement and/or actual cost value coverage, and (3) Natel made the first premium payment for the 1994 policy, we believe Natels counsel should have investigated, at least by the time the cross-complaint was filed (if not sooner), the possibility of coverage under a binder. Nevertheless, Natels attorney apparently failed to investigate that possibility until after the broker moved for summary judgment. The attorneys delay in exploring the binder issue, which Natel failed to explain to the trial courts satisfaction, was fatal to its motion for leave to amend the complaint.
Given the lengthy, unexplained delay in researching and raising the binder issue, the trial court reasonably concluded that the broker would be prejudiced by the tardy amendment. At this point, nine years have elapsed since the binder was issued. Natel must offer some coherent explanation for the delay to establish that the trial court abused its discretion in denying leave to amend. (See Magpali v. Farmers Group, Inc. (1996) 48 Cal.App.4th 471, 487 [no abuse of discretion in denying a motion to amend where there was inexcusable delay and probable prejudice to the opposing party].) While Natel contended it had been misled by the brokers attorneys representations to believe the summary judgment motion would only address statute of limitations issues, the trial court reasonably rejected this explanation based on the brokers attorneys declaration. We conclude that any misrepresentation regarding the scope of the summary judgment motion would not explain why, in the years preceding that motion, Natels attorney failed to investigate the binder issue. Even assuming the broker had failed to inform Natel that the binder had been issued, there is no explanation as why Natels attorney failed to conduct an independent inquiry on that point.
C. Motions for Reconsideration and New Trial
Natel moved for reconsideration and new trial based on its purportedly new factual theory (in contradiction of its own complaint) that the expiring policy excluded inventory and provided only actual cost value coverage. Natel now contended that the broker, by obtaining a renewal of the expiring policy (that actually excluded inventory and provided for only actual cost value coverage), had failed to secure the requested coverage for inventory and replacement cost value. Natel also pointed out that the broker, having erroneously understated Natels property values on the application, had failed to apply properly for replacement cost value coverage. Natel again claimed there were irregularities in the proceedings, caused by the brokers attorneys misrepresentation that the summary judgment motion would be limited to statute of limitations issues.
As the broker argued below, however, its summary judgment motion was not based on the theory that, having obtained a renewal of the expiring policy, Natel had automatically obtained coverage for inventory and replacement cost value. Although the cross-complaint alleged (erroneously) that the expiring policy provided replacement cost value coverage, the summary judgment motion was silent on that point. Instead, the summary judgment motion relied upon the undisputed common practice that "if an insurer was not willing to provide a coverage that an insured applied for, the exception would be noted in [the] binder." Here, the broker argued that because the binder was silent as to inventory and replacement cost value coverage, it gave the ordinary lay person the impression that the requested coverage was provided.
Although the trial court found the motion for reconsideration raised a triable issue of material fact regarding the extent of the coverage provided by the binder, the court also found Natel had "no excuse for not investigating the terms of the Binder in determining whether or not the coverage was provided." The trial court did not abuse its discretion in making this determination and rejecting the motion for reconsideration. (Mink v. Superior Court (1992) 2 Cal.App.4th 1338, 1342 [" The party seeking reconsideration must provide not only new evidence but also a satisfactory explanation for the failure to produce that evidence at an earlier time. [Citation.]"].)
In support of its new trial motion, Natel presented the following theory of liability: (1) the expiring policy did not cover inventory and provided for only actual cost value coverage; (2) Annese sent a transmittal asking AIIC to renew the existing policy; (3) the policy quote prepared by Evans was intended to renew the existing policy without providing inventory and replacement cost value coverage (the box for replacement cost value coverage was not marked); and (4) according to Annese, the binder he signed was intended to provide only the coverage reflected in the policy quote prepared by Evans. In short, Natel now contended the new evidence showed the binder did not provide for inventory and replacement cost coverage, notwithstanding the binders failure to mention inventory and replacement cost coverage.
Again, we conclude the lengthy, unexplained delay in researching and raising the binder issue precluded Natel from prevailing on the new trial motion. The brokers alleged failure to inform Natel of the binders issuance does not resolve the issue of Natels counsels failure to discover the binders existence at an earlier date.
Similarly, Natels new trial motion failed to explain its delay in discovering the alleged inconsistency between the summary judgment ruling (premised on a determination that the binder, by failing to mention inventory and replacement cost value coverage, provided coverage for both as requested in the application) and the courts January 29, 2001, order approving the good faith settlement with AIIC at actual cost value under the policy. Given that the binder was mentioned in GICs cross-complaint of April 19, 2000, and was attached as an exhibit to a discovery request served on September 15, 2000, Natels counsel knew of the binders existence well before the brokers summary judgment motion was filed in February 2001.
Accordingly, the trial court did not abuse its discretion in denying the motions for reconsideration and new trial.
DISPOSITION
On Natels appeal, we affirm the summary judgment and orders denying the motion for leave to amend, reconsideration, and new trial. Respondents are awarded costs.
We dismiss the brokers cross-appeal as moot. The parties are to bear their own costs on the cross-appeal.
We concur: VOGEL (Miriam A.), J., MALLANO, J.