Summary
granting summary judgment in favor of insurer on bad faith claim
Summary of this case from Bafford v. Travelers Cas. Ins. Co. of Am.Opinion
No. C 98-4093 SI
March 27, 2000
ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
On March 24, 2000, this Court heard argument on defendant Allstate Insurance Company's motion for summary judgment. Having carefully considered the arguments of the parties and the papers submitted, the Court hereby GRANTS defendant's motion for summary judgment.
BACKGROUND
1. Procedural history
On September 24, 1998, plaintiff Bertrams Osajindu filed in the Superior Court in and for the County of Alameda a complaint against defendant Allstate Insurance Company ("Allstate") for breach of contract, bad faith refusal to settle a claim and violation of his civil rights. On October 26, 1998, defendant removed the action to United States District Court for the Northern District of California. The Court dismissed plaintiff's cause of action for violation of plaintiff s civil rights.See Order Granting Defendant's Motion to Dismiss Third Cause of Action (June 7, 1999). Now before the Court is defendant's motion for summary judgment, or, in the alternative, partial summary judgment.
2. Factual history
On April 24, 1997, plaintiff Osajindu reported to the BART police department that he had parked his 1986 Mercedes 300E in the Northeast parking lot of the Fremont BART Station earlier that day. See Vehicle Report at 1, attached as Exh. A to Declaration of Robert Ushana ("Ushana Decl."). He stated that when he returned to the parking lot, the Mercedes was missing. See id. Plaintiff asserted that he had accounted for all of his keys, and he had not given anyone permission to use his car. See id. at 2. Subsequently, plaintiff submitted a claim to defendant Allstate pursuant to his automobile insurance policy (No. 699659243). See Declaration of Bertrams Osajindu ¶¶ 2, 8. Thereafter, Allstate requested and plaintiff provided details regarding, among other things, the value of the car and the circumstances surrounding plaintiff's acquisition of the vehicle.
Osajindu's policy covered both his 1986 Mercedes sedan and his 1987 Toyota van. See Decision Letter, attached as Exh. O to Ushana Decl. Plaintiff's car was recovered on April 29, 1997. See id.
On Allstate's "Affidavit of Automobile Total Theft/Vandalism," Osajindu stated that the car had not been "completely repainted," had "other major repairs," nor had the tires been replaced. Affidavit at 1, attached as Exh. C to Ushana Decl. Plaintiff did, however, claim that the car had been in an accident, resulting in a "minor dent on [the] rear bumper driver side." Id.: see also Transcript of Osajindu Statement (June 10, 1997) ("Transcript") at 9, attached as Exh. D to Ushana Decl. During a recorded interview, plaintiff asserted that there was little wrong with the vehicle when he purchased it, except that it was damaged "on the rear driver, sorry, on the rear passenger side, close to the, uh, trunk." Transcript at 6-7, attached as Exh. D to Ushana Decl. However, at his June 17, 1999 deposition, Osajindu recounted much more extensive damage at purchase, stating that "the hood was damaged" so that the hood was "folded up," "the front tires were damaged, the quarter panel was damaged," as was the front fender and the trunk. Osajindu Depo. at 71:23 — 73:15, attached as Exh. A to Declaration of Michael Barnes ("Barnes Decl."). Additionally, plaintiff stated that the entire car was repainted. See id. at 85:16-17, attached as Exh. A to Barnes Decl.
Despite these statements, Osajindu had reported to the BART police department on the day of the theft that the car had not been involved in an accident prior to the theft. See Vehicle Report at 2, attached as Exh. A to Ushana Decl. Moreover, plaintiff asserted that he had repainted the vehicle and replaced all four the tires. See Osajindu Depo. 85:16-17, attached as Exh. A to Barnes Decl; Osajindu Decl., attached as Exh. M to Ushana Decl.
Plaintiff also provided information about how he obtained the vehicle and about the vehicle's purchase price. Osajindu testified that he bought the car with a cashier's check from an auction in Pittsburg in 1994.See Transcript at 3-5, attached as Exh. D to Ushana Decl. Plaintiff noted that there were two avenues by which to gain admission to an automobile auction: by presenting an auctioneer's license or by paying an admission fee. See Transcript at 5-6, attached as Exhibit D to Ushana Decl. He stated that he paid the admission fee. See id at 6.
Plaintiff also recalled that, at the time of purchase in 1994, the car had "less than 100,000 miles on it," and he paid just over $5000. Transcript at 3-5, attached as Exh. D to Ushana Decl.; Osajindu Examination Under Oath ("Osajindu EUO") at 44:10-11, attached as Exh L to Ushana Decl. (stating that plaintiff purchased the car for $5000 — $6000). Moreover, plaintiff asserted that he bought the car directly from the auction. See id. at 50:1. However, the bill of sale stated that plaintiff purchased the car in February 1995 from Universal Investment Network ("Universal") for $2000. See Bill of Sale, attached as Exhibit 4 to Osajindu EUO, Exh. L. Plaintiff was unable to explain why the bill of sale was inconsistent with his previous assertions. However, plaintiff stated that his girlfriend had registered the car with the Department of Motor Vehicles, and speculated that perhaps she confused the price he paid for the car with the amount of money plaintiff spent on parts. See id 51:11 — 52:12.
Plaintiff also claimed that he did not know whether Universal was a business or by whom it was operated. See id. at 44:25-26 — 45:1-5. However, Department of Motor Vehicles records indicated that plaintiff's Mercedes was in fact purchased by Universal.See Exh. 3, attached to Osajindu Depo. Plaintiff then stated that he "may have used [Universal's] license to buy the car. You got to have a license to buy from an auction." Osajindu EUO at 45:18-20. Plaintiff speculated that he might "have gone with the guys that's been operating with that license," but he could not remember their names. Osajindu EUO at 46: 4-14. However, plaintiff could not recall whether or not he purchased the car in his own name or in the name of someone else. See Osajindu EUO at 44:12-16.
Osajindu also asserted that he had done significant repair work on the car subsequent to purchasing it. See Transcript of Second Osajindu Statement ("Transcript II") at 9, attached as Exh. J to Ushana Decl.; Transcript at 7-8. He claimed that he bought "parts for the damage area . . . the left passenger side, close to the hood." Transcript at 7-8, attached as Exhibit D to Ushana Decl. Plaintiff also asserted that he bought "a lot of parts" and spent a great deal of money. Transcript II at 9. He stated that he bought the parts from a Mercedes dealership in Alameda. However, he could neither remember the name of the dealership nor the amount he spent. See Transcript II at 8-9. Overall, plaintiff stated that he "spent close, between eighteen and twenty thousand dollars on that car to put it on the road." Transcript II at 9. However, he was able to provide documentation for less than $3500 of repairs and parts.See Ushana Decl., Exh M.
Moreover, though plaintiff had testified that all or some of the parts purchased were new factory parts, when the parts listed on the receipt from Traders Paradise were inspected, Allstate concluded that the parts were in fact used, not new. See Osajindu Depo. at 148:6-24, attached as Exh. A to Barnes Decl; Osajindu EOU at 55:6-7, attached as Exh. L to Ushana Decl.; Declaration of Bob White ¶ 6 (declaring that the parts were worn and had "VIN numbers [Vehicle Identification Numbers]," which are not found on factory replacement parts).
Osajindu also stated that his car was towed to and repaired at "Edwardo Body Shop" in Vallejo after plaintiff purchased it in 1994. See Osajindu Decl., attached as Exh. M to Ushana Decl. (at p. 2). However, the owner at the address provided by plaintiff testified that he neither does business as "Edwardo Body Shop" nor repairs Mercedes. See Edwardo Mancanero Deposition ("Mancanero Depo.") at 11:18-14:22, 18:2-19:5, attached as Exh. D. to Gardner Decl.
Finally, as to the value of the Mercedes, plaintiff stated on the BART police report that his car was valued at $16,000. See Ushana Decl., Exh. A. However, Allstate determined that the car was in fact valued at $6854. See Ushana Decl. ¶ 10.
Based on information gathered in the course of its investigation, on December 18, 1997, Allstate denied plaintiff's claim under the policy.See Decision Letter, attached as Exh. O to Ushana Decl.
LEGAL STANDARD
The Federal Rules of Civil Procedure provide for summary adjudication when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c).
In a motion for summary judgment, "[if] the moving party for summary judgment meets its initial burden of identifying for the court those portions of the materials on file that it believes demonstrate the absence of any genuine issues of material fact," the burden of production then shifts so that "the non-moving party must set forth, by affidavit or as otherwise provided in Rule 56, `specific facts showing that there is a genuine issue for trial.'" T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Assn., 809 F.2d 626, 630 (9th Cir. 1987) (citingCelotex Corp. v. Catrett, 477 U.S. 317, 106 S. Ct 317 (1986)).
In judging evidence at the summary judgment stage, the Court does not make credibility determinations or weigh conflicting evidence, and draws all inferences in the light most favorable to the nonmoving party.See T.W. Electric, 809 F.2d at 630-31 (citing Matsushita Elec. Indus. Co. Ltd. v. Zenith Radio Corp., 475 U.S. 574, 106 So. Ct. 1348 (1986)); Ting v. United States, 927 F.2d 1504, 1509 (9th Cir. 1991). The evidence presented by the parties must be admissible. Fed.R.Civ.P. 56(e). Conclusory, speculative testimony in affidavits and moving papers is insufficient to raise genuine issues of fact and defeat summary judgment. See Falls Riverway Realty. Inc. v. City of Niagara Falls, 754 F.2d 49 (2d Cir. 1985); Thornhill Publg. Co. Inc. v. GTE Corp., 594 F.2d 730, 738 (9th Cir. 1979). Hearsay statements found in affidavits are inadmissible. See,e.g., Fong v. American Airlines. Inc., 626 F.2d 759, 762-63 (9th Cir. 1980).
DISCUSSION
1. Material misrepresentations can void plaintiff's policy claim
Defendant argues that, as a matter of law, a material misrepresentation by a policy claimant is an "absolute defense" to an insurance claim, whether or not an actual loss occurred. Plaintiff does not contest this argument. Thus, the insurer's confirmation of a material misrepresentation made by a plaintiff would entitle the insurer to summary judgment.
Plaintiff Osajindu's Allstate policy contained a standard "Fraud and Concealment" provision which states that
This policy will not apply to any claim in which an insured person has concealed or misrepresented any material fact or circumstance.
Amendment of Policy Provisions, attached as Exh. P to Ushana Decl. A fact or circumstance is "material" if it "concerns a subject reasonably relevant to the insurer's investigation, and . . . a reasonable insurer would attach importance to the fact misrepresented." See Cummings v. Fire Ins. Exch., 202 Cal.App.3d 1407, 1417 (1988). Furthermore, the intent of the claimant to deceive the insurer may be implied from a claimant's false statement. See id at 1417-19;Baldwin v. Bankers Shippers Ins. Co., 222 F.2d 953, 954 (9th Cir. 1955). Such a misrepresentation may invalidate coverage under an insurance policy. See Perovich v. Glens Falls Ins. Co., 401 F.2d 145, 147 (9th Cir. 1968) (claim invalid where claimant misrepresented the value of stolen property); Hyland v. Millers Nat. Ins. Co., 91 F.2d 735, 741-43 (9th Cir. 1937) (an insured's misrepresentation of the amount of property damaged voided coverage);Cummings, 202 Cal.App.3d at 1415-17 (holding that insurer did not breach policy by denying coverage when claimant materially misrepresented identity of vandal); Safeco Ins. Co. of America v. Bass, 1994 WL 238300 *3 (N.D. Cal. (May 19, 1994)) (misrepresentations regarding improvements to attic that was destroyed by fire voided policy). Though materiality is a mixed question of law and fact, it may be decided on summary judgment "if reasonable minds could not disagree on the materiality of the misrepresentations."Cummings, 202 Cal.App.3d at 1417.
2. Plaintiff made material misrepresentations
Defendant asserts that Osajindu made several misrepresentations both in presenting his claim to Allstate and during the investigation of the claim. Moreover, defendant argues that plaintiff's statements were material to the investigation of Osajindu's claim, thereby voiding his claim for coverage. Specifically, defendant argues that plaintiff 1) consistently gave false and contradictory statements pertaining to the value of his vehicle, an issue defendant contends is particularly material and 2) attempted to conceal his knowledge of and association with individuals who were later convicted of insurance fraud.
Plaintiff responds that he has given comparable facts throughout the insurance investigation. Plaintiff argues that any inconsistencies in the information he has provided are the result of a misunderstanding on his part regarding the information requested of him, his inability to remember many details, or a lack of interest by defendant in obtaining accurate data.
a. Investment in and repairs to the vehicle
Defendant asserts that Osajindu "grossly overstated" the resources he expended in order to repair his Mercedes after he purchased the car. Dft's Mtn. for Summ. Judgmt at 9. Plaintiff asserts that he did not exaggerate the repairs that were performed. The Court concludes that plaintiff's representations to Allstate regarding the repairs to his car were false, or widely inconsistent at best. Furthermore, because plaintiff's statements regarding the $18,000 to $20,000 that he invested in his car, and therefore the vehicle's value, are relevant to the defendant's investigation of plaintiff s claim, the Court finds that these misrepresentations were material.
Allstate asserts that plaintiff presented false information regarding the condition of the parts used to repair his vehicle. Plaintiff stated that he believed that the auto parts that he purchased to repair his Mercedes were factory parts. See Osajindu Depo. at 148:6-24, attached as Exh. A to Barnes Decl. However, at another time, plaintiff stated that only most of the parts were new factory parts while some were in fact used. See Osajindu EOU 55:6-7, attached as Exh. L to Ushana Decl. On behalf of Allstate, Mr. Bob White inspected plaintiff's vehicle. Mr. White concluded that all of the parts listed on the available Traders Paradise receipts were in fact used parts at the time of installation. This conclusion was based both on the fact that the parts were in poor condition, as well as "the fact that [the parts] have VIN numbers [Vehicle Identification Numbers]," which are not listed on factory replacement parts. White Decl. ¶ 6.
Additionally, plaintiff's account of where he purchased the replacement parts, as well as where and by whom the vehicle was repaired, is unsubstantiated. For example, Osajindu maintains that the car was towed to and repaired at "Edwardo Body Shop" in Vallejo after plaintiff purchased it in 1994. See Osajindu Decl., attached as Exh. M to Ushana Decl. (at p. 2). However, Edwardo Mancanero, the owner at the address provided by plaintiff, testified that he does not do business as "Edwardo Body Shop," has never repaired a Mercedes, and had never met Mr. Osajindu. See Mancanero Depo. at 11:18-14:22, attached as Exh. D. to Gardner Decl. Nor did he recognize photographs of plaintiff s vehicle as it would have appeared upon purchase from the auction. See id. at 12:11-17. Mr. Mancanero also testified that he had only recently heard the name "Traders Paradise," the business from which plaintiff claims to have ordered and shipped parts for Edwardo Body Shop. See id. at 14:18-20.
Furthermore, plaintiff reported in his "Affidavit of Automobile Total Theft/Vandalism" that, to his knowledge, the tires on his vehicle had not been replaced and the car had not been repainted. See Affidavit at 1-2. However, plaintiff later indicated that he had the entire car repainted after he purchased it, see Osajindu Depo. 85:16-17, attached as Exh. A to Barnes Decl., and that he purchased four new tires for the vehicle, see Osajindu Decl., attached as Exh. M to Ushana Decl. Plaintiff has not provided evidence that he did not make the statements at issue.
The Court finds the inconsistencies mentioned above are pertinent to a fair assessment of the value of the plaintiff's Mercedes and would therefore be deemed important by the insurer. See Cummings, 202 Cal.App.3d at 1417. Accordingly, the Court finds that these misrepresentations were material.
b. Current market value of the vehicle
Defendant further asserts that plaintiff falsely stated the Mercedes' mileage at the time that plaintiff purchased it, as well as the vehicle's value at the time of the theft. Plaintiff argues that, when asked how much his car was worth, he simply provided the amount for which the car was insured.
Plaintiff asserted that the car had "less than 100,000 miles on it" when he purchased it. Transcript at 5, attached as Exh. D to Ushana Decl. However, records show that at the time of the auction the odometer read 114,023. See Ushana Decl., attached as Exh. 3 to Exh. L. Plaintiff does not dispute that his statement regarding the vehicle's mileage was incorrect.
Additionally, plaintiff reported to the BART police that, at the time it was stolen, the car had a value of $16,000. See Ushana Decl., Exh. A. Allstate later determined that the car was in fact valued at $6854. See Ushana Decl. ¶ 10. Plaintiff argues that $16,000 was the value of his insurance policy, and that his calculation of $16,000 was "reasonably" based on the "purchase price, value of repairs and improvements," as well as depreciation. Bertrams Decl. ¶ 18; see also Plff's Oppo. at 11. However, plaintiff was unable to produce documentation to substantiate his assertion that he had invested from $18,000 to $20,000 in repairs and services. See Transcript II at 6, 9 (plaintiff asserted that he bought "a lot of parts" and "spent close, between eighteen and twenty thousand dollars on that car to put it on the road"). Plaintiff was also unable to provide materials which would show that his income could support the cost of such repairs. See Ushana Decl. ¶ 24 and Exh. 4 (showing that in 1996 plaintiff's income was $600 a month); Transcript at 6. Moreover, though plaintiff argues that he calculated the value of his car by reference to his $16,000 insurance policy, plaintiff inconsistently asserts that his coverage limit was in fact $30,000.See Osajindu Decl. ¶ 5. Finally, though plaintiff argues that his calculation of the car's value was based on, among other things, the purchase price, there are also marked discrepancies in plaintiff's representations of how much he paid for the vehicle. See infra subsection c.
The Court finds that plaintiff's representations regarding the vehicle's mileage and worth are relevant to the value of the car. Misrepresentations about these issues are material, and are grounds for denying coverage. See, e.g., Baldwin v. Bankers Shippers Ins. Co., 222 F.2d 953, 954 (9th Cir. 1955) (affirming denial of claim because claimant was unable to "produce invoices to support the claim").
c. Purchase price, and place and manner of purchase
Defendant also contends that plaintiff made material misrepresentations regarding how and when he purchased the vehicle, the purchase price, and from whom he purchased the car. Plaintiff counters that he testified truthfully to these matters and that documents in the record are consistent with his testimony. However, the Court finds the record replete with inconsistencies regarding how much Osajindu paid for the Mercedes, as well as from whom, by what method, and at what time he purchased the car.
Osajindu initially testified that he bought the Mercedes with a cashier's check from an auction in Pittsburg in 1994. See Transcript at 3-5, attached as Exh. D to Ushana Decl. Plaintiff claimed that he paid an admission fee to enter the auction. See id. at 6. Plaintiff recalled that the purchase price was a little over $5000. See Transcript at 3-5, attached as Exh. D to Ushana Decl.; Osajindu EUO at 44:10-11 (stating that plaintiff purchased the car for $5000 — $6000). Moreover, plaintiff asserted that he bought the car directly from the auction. See Osajindu EUO at 50:1, attached as Exh. L to Ushana Decl. However, when confronted with evidence that the Department of Motor Vehicle's Bill of Sale stated that Universal Investment Network ("Universal") sold the car to plaintiff in 1995 for $2000, plaintiff stated that he "may have used [Universal's] license to buy the car. You got to have a license to buy from an auction." Osajindu EUO at 45:18-20; see also Bill of Sale, attached as Exh. 4 to Osajindu Depo., Exh. L.; Application for Original Registration, attached as Exh. 5 to Osajindu Depo. Moreover, plaintiff speculated that he might "have gone with the guys that's been operating with that license." Osajindu EUO at 46: 4-14. However, plaintiff could not remember the names of the individuals with whom he attended the auction. See id. Moreover, earlier plaintiff had in fact claimed that he knew no one who worked at Universal.See Osajindu EUO at 51:2-25, attached as Exh. A to Barnes Decl. Nor did he know whether Universal was a business or by whom it was operated. See Osajindu Depo. at 44:25-26-45:1-5. Finally, plaintiff could not recall whether or not he purchased the car in his own name or in the name of someone else. See Osajindu EUO at 44:12-16.
Plaintiff did, however, state that his girlfriend registered the car with the Department of Motor Vehicles, and perhaps she confused the price he paid for the car with the amount of money he spent on parts. See Osajindu EUO at 51:11-52:12.
The Court finds that it is clear that the information which plaintiff provided regarding the purchase of his vehicle was extremely inconsistent. Such widely varied information could understandably cause an insurer to doubt plaintiff's representations regarding the true purchase price and value of the car, a fact that is relevant to the insurer's investigation of a claim of loss. Accordingly, plaintiff's misrepresentations regarding the purchase of the Mercedes were material and could provide adequate reason for denial of coverage.
d. Accident history and extent of the damage to the vehicle
Defendant claims that plaintiff also offered false information regarding the vehicle's collision history and the extent of any damage to the car. Defendant asserts that this data is material, because it is pertinent to the car's value. Plaintiff argues that the information he has offered to Allstate has been consistent. Specifically, plaintiff argues that, when asked whether the car had been an accident, he believed defendant was requesting information on collisions subsequent to plaintiff's purchase of the car.
On the day of the theft, plaintiff reported that the car had not been involved in an accident prior to being stolen. See Vehicle Report, at 2, attached as Exh. A to Ushana Decl. At a later date, however, plaintiff stated that the car had been in fact been in an accident resulting in a "minor dent on [the] rear bumper driver side." Affidavit at 1, attached as Exh. C to Ushana Decl.; see also Transcript at 9, attached as Exh. D to Ushana Decl.
Plaintiff had also asserted that there was little wrong with the vehicle when he purchased it, except that it was damaged "on the rear driver, sorry, on the rear passenger side, close to the, uh, trunk." Transcript at 6-7, attached as Exh. D to Ushana Decl. However, it is apparent from photographs of the Mercedes, as it appeared at the auction, that the damage to the vehicle was much more extensive than plaintiff's explanation implied. See Exh. A. to Mancanero Depo., attached as Exh. C to Declaration of Sonia Martin. Moreover, at his June 17, 1999 deposition, Osajindu recounted a much longer list of damage to the vehicle. See Osajindu Depo. at 71:23 — 74:15, attached as Exh. A to Barnes Decl.
Accordingly, the Court finds that plaintiff's accounts of the existence and extent of damage to the Mercedes, both before and after its purchase, are inconsistent. Moreover, because the extent of damage to the car is relevant to a determination of its value, the Court concludes that plaintiff's misrepresentations were material.
e. Intent to deceive
Intent to deceive may be implied from the presence of misrepresentations. See Cummings, 202 CaLApp.3d 1417-19. The Court finds ample reason to believe that the discrepancies in plaintiff's narrative were not merely the result of a memory clouded by the passage of time or of mistakes regarding the requested information. Allstate has presented evidence that Universal Investment Network is a company owned and/or operated by plaintiff's brother, Ogugua "Innocent" Osajindu, and by plaintiff's childhood friend Chinoye Onyemelukwe. See Responses to Requests for Admissions, attached as Exh. B to Martin Decl.; Osajindu Depo. at 149:2-13, 166:2-5; Osajindu EOU at 15:4-17 (stating plaintiff's brother's address) and attached Exh. 3 (stating same address for Universal Investment Network); Dft's Request for Judicial Notice, Exh. A. This Court grants defendant's request for judicial notice that both plaintiff's brother and friend have pled no contest to charges of insurance fraud. See Dft's Request for Judicial Notice, Exh. A. Plaintiff offered extremely evasive answers in response to questioning regarding his knowledge of Universal's owners, as well as the reason that Universal was listed as both the buyer of plaintiff s car at auction and the entity that sold the car to plaintiff. Defendant could reasonably infer that plaintiff was attempting to distance himself from any criminal activity. Whether plaintiff was actually involved in any such possible criminal activity is, however, largely irrelevant to the Court's analysis. As stated in Claflin v. Commonwealth Ins. Co., 110 U.S. 81, 3 S.Ct. 507 (1884):
. . . it does not detract from this conclusion that the purpose of Murphy in making these false statements was not to deceive and defraud the companies, . . . but for the purpose of preventing an exposure of the false statement previously made to the commercial agency in order to enhance his credit. . . . In any view, there was a fraud attempted . . . and it not lessened because the motive that induced it was something in addition to the possible injury to them. . . .See also Cummings, 202 Cal.App.3d at 1413 n. 3.
Here, it appears that plaintiff may have in fact had a motive for his misstatements. Nonetheless, the most relevant issue is the existence of the misrepresentations and their materiality to plaintiff's claim. The Court finds that plaintiff misrepresented material facts in connection with his claim of vandalism. Plaintiff has failed to present evidence sufficient to establish a genuine issue of material fact regarding the inconsistencies in the information provided in the course of reporting his theft and vandalism claim. Therefore, defendant was not required to provide coverage under plaintiff's policy. Accordingly, defendant's motion for summary judgment as to plaintiff's claim for breach of contract is GRANTED.
3. Bad faith and punitive damages claims
Defendant asserts that because plaintiff misrepresented material facts, it was not obligated to pay plaintiff's claim. Without such an obligation to provide coverage, defendant argues that plaintiff's claim for bad faith denial of coverage is also inadequately supported by law. Defendant also contends that plaintiff has not presented evidence that defendant's denial of coverage meets the standard required for an assessment of punitive damages.
Plaintiff counters that Allstate did not in fact investigate plaintiff's claim until after plaintiff commenced the present lawsuit. Plaintiff asserts that defendant's denial of coverage was based on "gossip" and Allstate's "bigoted bias and attitude." Dft's Oppo. at 14.
Under California law, where there is no obligation to defend an action, "there can be no action for breach of the implied covenant of good faith and fair dealing because the covenant is based on the contractual relationship between the insured and the insurer." Waller v. Truck Ins. Exh., 11 Cal.4th 1, 36 (1995) (citing Love v. Fire Ins. Exch., 221 Cal.App.3d 1136, 1151-1153 (1990)). Similarly, defendant's duty to provide coverage is based upon the contract between Allstate and Osajindu. Because plaintiff's material misrepresentations to defendant voided defendant's obligation to pay the claim under the policy, plaintiff's assertion that his claim was denied in bad faith fails as a matter of law. See Waller, 11 Cal.4th at 36.
Furthermore, in order for a denial of coverage to be in "bad faith," the insurer's denial must be "unreasonable" or "without proper cause."Aceves v. Allstate Ins. Co., 68 F.3d 1160, 1166 (9th Cir. 1995); California Shoppers. Inc. v. Royal Globe Ins. Co., 175 Cal.App.3d 1,55 (1985). However, given the circumstances surrounding plaintiff's claim for coverage, defendant's denial was neither without proper cause nor unreasonable. In particular, Franklin Clarke Walker, former Chief Investigator of the California Department of Insurance Fraud Bureau, noted that many of the circumstances present in plaintiff's case would serve as "red flags," or "elements of insurance claims which are known throughout the industry to be common to fraudulent claims." Declaration of Franklin Clarke Walker ("Walker Decl.") ¶ 12. Examples of such red flags include the fact that plaintiff's brother, who was affiliated with the company from which plaintiff appears to have purchased his car, was identified in the National Insurance Crime Bureau ("NICB") database as a member of an insurance fraud ring; items of value, such as the stereo, airbags, and personal property, which are usually taken from a vehicle were intact when the car was recovered; and details offered by plaintiff regarding where he purchased the car, how much he paid for it, and what condition it was in were vague and inconsistent.See id. ¶ 14. Plaintiff has failed to submit any evidence to show that such circumstances are not generally cause for suspicion within the insurance industry. Moreover, given the volume of contrary data in the record, plaintiff's claim that defendant did not investigate his claim until 1998 is unfounded.
In light of these facts, as well as the invalidation of coverage caused by plaintiff's material misrepresentations, the Court finds that Allstate's denial of coverage was neither unreasonable nor without proper cause. Therefore, this Court GRANTS defendant's motion for summary judgment on plaintiff's claim of bad faith denial of coverage.
Furthermore, plaintiff may not recover on his request for punitive damages. There must be evidence of "bad faith" and "malice, oppression or fraud" to justify an award of punitive damages See Tibbs v. Great American Ins. Co., 755 F.2d 1370, 1375 (citing Fleming v. Safeco Ins. Co., 160 Cal.App.3d 31, 44 (1984)). The Court has found that plaintiff's claim for bad faith denial of coverage fails as a matter of law. Therefore, plaintiff is not entitled to punitive damages.See id.
CONCLUSION
For the foregoing reasons, the Court GRANTS defendant's motion for summary judgment in its entirety.IT IS SO ORDERED.