Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County No. BC 255967. Wendell Mortimer, Jr., Judge.
The Kick Law Firm, Taras Kick, G. James Strenio and Thomas A. Segal for Plaintiffs and Appellants Gary A. Paller, Randee S. Paller, Paller & Co. Realtors, Affiliates Financial, Inc., Paller & Company, Inc., and ARI Property Management Corporation.
LHB Pacific Law Partners, Clarke B. Holland, Anne M. Master; Robie & Matthai, James Robie; Crandall, Wade & Lowe and Michael J. McGuire for Defendant and Respondent.
ROTHSCHILD, J.
Gary Paller, Randee S. Paller, and their real estate businesses sued State Farm Fire and Casualty Company (State Farm) for breach of contract, insurance bad faith, and related causes of action arising from State Farm’s handling of a claim for damages caused by the Northridge earthquake. The trial court granted summary judgment in favor of State Farm, and we affirm.
BACKGROUND
On January 17, 1994, the day of the Northridge earthquake, the Pallers were the named insureds on a State Farm business office policy insuring property located in Thousand Oaks, California (the Property). The Pallers owned and operated several real estate-related businesses at the Property.
The Pallers’ policy included an earthquake endorsement. The policy also covered “the actual loss of ‘business income’ [the insureds] sustain due to the necessary suspension of [their] ‘operations’ during the ‘period of restoration’.” The “period of restoration” begins on “the date of accidental direct physical loss caused by an insured loss” and ends on the date that repairs should be completed if undertaken with reasonable diligence.
The deductible under the policy was $84,816.90. The policy provided for the valuation of covered losses on the basis of either replacement cost (without a deduction for depreciation) or actual cash value (which includes such a deduction). The policy further provides that State Farm “will not pay for any loss on a replacement cost basis until the lost or damaged property is actually repaired or replaced” and will not pay more, on a replacement cost basis, than “the amount [the insureds] actually spend that is necessary to repair or replace the lost or damaged property[.]” The policy also allows the insureds both to seek payment on an actual cash value basis initially and to seek replacement cost for the same claim later (though double recovery is not allowed).
On or about June 7, 1994, the Pallers made a claim under the policy for damage caused to the Property by the Northridge earthquake. The parties do not dispute that State Farm ultimately paid the Pallers a total of $160,464.61 on their claim for damage to the Property. They also do not dispute that State Farm paid the Pallers replacement cost, not actual cash value. In addition, the parties do not dispute that the Pallers spent no more than $154,979.90 on repairs.
We derive that figure by adding up the amounts that State Farm undisputedly paid to the Pallers on their property damage claim, namely, (1) the October 4, 1995, payment of $44,296.76; (2) the November 22, 1995, payment of $55,443.80; (3) the September 3, 1996, payment of $48,945.21 (representing overhead, profit, and replacement cost); and (4) the June 5, 1998, payment of $11,778.84. In their response to State Farm’s separate statement of undisputed material facts, plaintiffs conceded that all of those facts were undisputed except the last. But the only dispute concerning the $11,778.84 payment was that plaintiffs denied that the payment was based on the report of a particular inspector. Plaintiffs do not dispute the fact that State Farm made a payment in that amount on that date, or that the payment was for their property damage claim.
In both their memorandum of points in authorities in opposition to summary judgment and their briefs on appeal, plaintiffs contend that State Farm paid them only actual cash value. Plaintiffs base that contention on the undisputed fact that State Farm initially made certain payments to plaintiffs on the basis of actual cash value. But plaintiffs’ contention ignores that (1) State Farm later requested additional documentation from plaintiffs so that State Farm could pay replacement cost benefits to supplement the actual cash value that it had already paid, and (2) State Farm did later pay replacement cost benefits to plaintiffs. In their response to State Farm’s separate statement of undisputed material facts, plaintiffs conceded that both of those facts are undisputed.
We derive that figure by adding up the amounts stated in State Farm’s undisputed facts numbers 162 through 176 and giving plaintiffs the benefit of the doubt on every dispute. Both in the trial court and on appeal, plaintiffs have not pointed to any evidence of any additional repair costs.
The Pallers also made a claim for loss of business income. In connection with that claim, State Farm paid the Pallers $137,314.04 to cover the costs of leasing and moving to a temporary location while the earthquake damage was being repaired. By their own admission, the Pallers never in fact moved any of their businesses to a temporary location. State Farm made no other payments to the Pallers in connection with the claim for loss of business income, because State Farm asserted that the Pallers had not sufficiently documented the loss. The Pallers vigorously disagreed, claiming that they had provided documentation of a covered loss of $1.4 million. The only record evidence that the earthquake caused a partial or total suspension of the operation of the Pallers’ businesses is the declaration of Gary Paller, which states that as a result of the earthquake damage, “there was no business at all transacted” at the Property on the day of the earthquake or on the following day. Plaintiffs introduced no evidence that that putative two-day suspension caused a loss of income.
The Pallers and their businesses filed suit against State Farm, alleging causes of action for breach of contract, bad faith, unfair business practices, and intentional and negligent infliction of emotional distress. State Farm moved for summary judgment. The trial court granted the motion. The court ruled that in view of the undisputed facts that (1) the policy had a deductible of “$84,817,” (2) State Farm paid plaintiffs replacement cost benefits totaling over $160,000, and (3) plaintiffs actually spent no more than $160,000 on repairs, it followed that “[t]he amounts paid by State Farm plus the deductible include more than enough to compensate plaintiffs for” the additional property damage that plaintiffs claimed existed, which totaled $40,565.73. As regards the business income claim, the court ruled that “plaintiffs never ceased operations during 1994-2005” and that “there is no competent evidence that any loss of business was caused by physical damage to the building.”
The trial court entered judgment on April 20, 2006. Plaintiffs timely appealed.
STANDARD OF REVIEW
We review the trial court’s ruling on a motion for summary judgment de novo. (Buss v. Superior Court (1997) 16 Cal.4th 35, 60.)
DISCUSSION
First, plaintiffs argue that the trial court erred when it ruled against them on their breach of contract cause of action concerning their property damage claim. We disagree. The parties do not dispute that State Farm paid over $160,000 in replacement cost benefits, and that the policy provides for replacement cost benefits only for repairs that are completed. The parties do not dispute that the Pallers spent less than $160,000 on repairs. Accordingly, State Farm overpaid by more than $84,816.90, the amount of the deductible. Assuming for the sake of argument that plaintiffs were never paid for $40,565.73 in property damage that was not included in any of State Farm’s estimates, plaintiffs were still overpaid by more than $40,000 (i.e., the deductible minus the alleged unpaid amount). It is therefore undisputed that plaintiffs were not damaged by the alleged breach.
Second, plaintiffs argue at length that the policy provides coverage for lost business income that results from a partial or a total suspension of operations. Assuming for the sake of argument that plaintiffs are right, they would still have to introduce evidence of a loss of income caused by a partial or total suspension in order to defeat State Farm’s motion for summary judgment. But the only evidence of any suspension of plaintiffs’ business operations, whether partial or total, is Gary Paller’s statement in his declaration that “there was no business at all transacted” at the Property on the day of the earthquake or on the following day. Because plaintiffs introduced no evidence that that putative suspension of operations caused any loss of business income, we agree with the trial court’s determination that plaintiffs introduced no evidence of a covered loss of business income.
Third, plaintiffs argue that there are disputed issues of material fact on their breach of contract claim because State Farm breached the implied covenant of good faith and fair dealing by engaging in an “unlawful scheme to use claims handling as a profit center, which impacted the handling of [p]laintiffs’ claim.” We disagree. The implied covenant of good faith and fair dealing imposes on insurers a duty not to withhold benefits unreasonably. (See, e.g., Gruenberg v. Aetna Ins. Co. (1973) 9 Cal.3d 566, 573-574.) Because plaintiffs have not introduced evidence that State Farm withheld any benefits to which plaintiffs were entitled, plaintiffs have not introduced evidence that State Farm breached the implied covenant. (Cf. Love v. Fire Ins. Exchange (1990) 221 Cal.App.3d 1136, 1151-1152.)
Insofar as plaintiffs argue that State Farm committed bad faith by initially “low balling” the claim or otherwise delaying payment, the argument fails because plaintiffs cite no evidence to support it. Some of the relevant undisputed facts are: (1) Plaintiffs first notified State Farm of their claim on or about June 7, 1994; (2) State Farm inspected the property on June 13, 1994; (3) State Farm retained an engineering firm that inspected the property on June 28, 1994; (4) the engineering firm requested a further inspection involving a partial tear in, and the firm conducted the further inspection on August 20, 1994; (5) on or about September 26, 1994, State Farm received the engineering firm’s report; (6) on or about September 27, 1994, State Farm provided the report to plaintiffs; (7) State Farm again inspected the property on October 13, 1994; (8) by letter dated November 7, 1994, State Farm provided plaintiffs with State Farm’s repair estimate of $43,138, which was less than the deductible; (9) from November 1994 to May 1995 (when State Farm again inspected the property along with plaintiffs’ contractor), plaintiffs did not provide State Farm with any estimates of their own in response to State Farm’s $43,138 estimate. Plaintiffs have proffered no evidence that State Farm failed to move expeditiously and in good faith to investigate and adjust the claim, that the engineering firm’s inspection and report were improper or unduly delayed, or that State Farm’s $43,138 estimate was not a good faith estimate based on the information available to State Farm at the time. In general, the undisputed facts show that State Farm diligently investigated the claim and responded promptly—by conducting further investigations and issuing additional payments—whenever plaintiffs provided them with new information. Plaintiffs proffered no evidence to the contrary.
Our resolution of the foregoing issues makes it unnecessary for us to address plaintiffs’ remaining arguments. In particular, we need not address plaintiffs’ arguments concerning the trial court’s exclusion of evidence, because none of the excluded evidence would affect our conclusions that (1) the overpayment on the property claim exceeds the alleged underpayment, (2) Gary Paller’s declaration is the only evidence of a partial or total suspension of operations, and (3) there is no evidence that State Farm withheld benefits unreasonably, so there is no evidence of bad faith.
DISPOSITION
The judgment is affirmed. Respondent shall recover its costs on appeal.
We concur: MALLANO, Acting P. J., VOGEL, J.