Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County Super. Ct. No. BC 373495 Jerry K. Fields, Judge.
The Dodell Law Corporation, Herbert Dodell and Gerald J. Miller for Plaintiffs and Appellants.
Kinsell Weitzman Iser Kump & Aldisert, Michael J. Kump and Jeremiah Reynolds for Defendants and Respondents.
Retired Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
Two companies in the business of renovating and managing residential buildings suffered water damage to an electrical vault at a project under construction. After their insurance company denied coverage because it had received late notice of the claim, the companies sued their insurance brokers for negligence. The trial court sustained the brokers’ motion for judgment on the pleadings on the ground that the suit was barred by the two-year statute of limitations for professional negligence. The companies appeal, and we reverse the judgment.
BACKGROUND
P.E. Lofts, LLC, and Ico Properties (hereinafter P.E. Lofts), both California corporations, build, renovate, and manage residential properties. In February 2004, P.E. Lofts bought a multiple coverage insurance policy from Great American Insurance Group (Great American). P.E. Lofts purchased the insurance through Christopher Rodenfels, an account executive at Barry Merritt Insurance of Southern California, an insurance broker. The policy covered P.E. Lofts’s business premises, including a construction jobsite at 600-614 South Main Street in Los Angeles, where P.E. Lofts was refurbishing an old building into loft apartments and retail space on the ground floor, with a basement and underground parking.
During a series of heavy rainstorms on January 4, 2005, water leaked into a recently installed electrical vault on the property and damaged the electrical equipment. P.E. Lofts began repair work on the vault, delaying construction and eventually requiring P.E. Lofts to pay the living expenses of third parties who had agreed to lease the lofts under renovation.
Shortly after the water damage occurred and while repair work was underway, P.E. Lofts notified Rodenfels of the loss. Rodenfels told P.E. Lofts to report the loss to the general contractor and to seek coverage under the general contractor’s insurance policy. Rodenfels did not report the loss to Great American, instead assuring P.E. Lofts that if the general contractor’s insurance denied coverage, Rodenfels would then report the loss to Great American, and that such a claim would be viable even if filed late.
P.E. Lofts tendered a claim to the general contractor’s insurance company, which denied coverage. Repair work on the vault continued until it was completed in March 2005. P.E. Lofts sustained a loss of approximately $468,000, the repairs cost approximately $70,000, and P.E. Lofts also suffered “soft losses” and lower rental values, caused by construction delays, of approximately $2,500,000.
P.E. Lofts notified Great American of the loss on April 27, 2005. The company denied coverage in a letter dated November 14, 2005, stating “the Insured failed to comply with the prompt notice provision in the policy and Great American was prejudiced by the late notice.” Several exclusions in the policy also barred coverage and so there was no coverage for soft costs or loss of rental value. The letter stated that P.E. Lofts had until July 21, 2007, to file a suit against Great American under the policy.
P.E. Lofts filed a complaint on June 28, 2007, naming as defendants Rodenfels, Barry Merritt Insurance, and Great American. The complaint alleged that Rodenfels, the agent of Barry Merritt Insurance, was negligent in advising P.E. Lofts to file a claim with the general contractor’s insurance company, in failing to give prompt notice of the loss to Great American, and in advising P.E. Lofts that even a late claim for loss would be a viable claim. The complaint attached as exhibit A the November 14, 2005 letter from Great American denying coverage.
The complaint also alleged breach of contract and breach of the covenant of good faith and fair dealing against Great American. Those claims against the insurer are pending in the trial court and are not in issue in this appeal in the action against the insurance broker.
In late 2007 Rodenfels filed a motion for judgment on the pleadings, arguing that the action was time-barred by Code of Civil Procedure section 339, which provides a two-year statute of limitations for actions alleging professional negligence. The court granted the motion, concluding that the statute of limitations began to run when P.E. Lofts had received a reservation of rights letter dated May 3, 2005. The trial court entered judgment on the pleadings, and this appeal followed.
DISCUSSION
“In the trial court, ‘“A defendant is entitled to judgment on the pleadings if the plaintiff’s complaint does not state a cause of action. In considering whether a defendant is entitled to judgment on the pleadings, we look only to the facts of the pleading under attack.... All facts alleged in the complaint are admitted for purposes of the motion, and the court determines whether those facts constitute a cause of action. The court also may consider matters subject to judicial notice. [Citations.]” [Citations.]’ On appeal, ‘Review of a judgment on the pleadings requires the appellate court to determine, de novo and as a matter of law, whether the complaint states a cause of action. [Citation.] For purposes of this review, we accept as true all material facts alleged in the complaint. [Citation.]’ [Citation.]” (Third Eye Blind, Inc. v. Near North Entertainment Insurance Services, LLC (2005) 127 Cal.App.4th 1311, 1317.)
P.E. Lofts’s claim of professional negligence against Rodenfels, the company’s insurance broker, and his employer, Barry Merritt Insurance, is governed by Code of Civil Procedure section 339, subdivision 1, which applies a two-year statute of limitations to “[a]n action on a contract, obligation or liability not founded upon an instrument of writing.” (Hydro-Mill Co., Inc. v. Hayward, Tilton & Rolapp Ins. Associates, Inc. (2004) 115 Cal.App.4th 1145, 1154.) “‘A cause of action for professional negligence does not accrue until the plaintiff (1) sustains damage and (2) discovers, or should discover, the negligence.’” (Id. at p. 1161.) The question before us therefore is “when did [P.E. Lofts] know, or when should it have known, about [the broker’s] wrongful conduct and the resulting harm.” (Ibid.) P.E. Lofts asserts that it suffered harm from the broker’s negligence when Great American denied coverage by its letter of November 14, 2005, and that the complaint filed June 28, 2007 was therefore within the limitations period. The trial court concluded, however, that a reservation of rights letter sent by Great American on May 3, 2005, apprised P.E. Lofts of the harm, so that the complaint filed in June 2007 was filed more than two years later and was therefore barred.
We must confine our review “‘“only to the face of the pleading under attack.”’” (Third Eye Blind, Inc. v. Near North Entertainment Insurance Services, LLC, supra, 127 Cal.App.4th at p. 1317.) The complaint alleges that Great American notified P.E. Lofts on November 14, 2005, that it was denying the claim on the grounds of late notice, and attaches a copy of the denial letter as exhibit A, the sole exhibit. The complaint does not allege that Great American sent a reservation of rights letter dated May 3, 2005. The only reference to the May 3, 2005 letter is one paragraph in the 10-page denial letter, which states: “On May 3, 2005, I sent a reservation of rights letter to [P.E. Lofts], stating that the Insured’s repair of the damage and late notice of the claim may have prejudiced Great American’s investigation; citing various potentially applicable exclusions policy conditions; and requesting documents and information.”
The sum total of information about the May 3, 2005 letter is this one-sentence reference in an exhibit to the complaint, which describes the letter as stating that the repair and late notice “may have prejudiced Great American’s investigation.” With nothing more than the exhibit’s one-sentence description of the May 3, 2005 letter, we cannot agree with the trial court that the letter put P.E. Lofts “on notice that it was possible, it was probably even likely, that the company would deny the claim based upon the late notice to the company” (italics added). The May 3, 2005 letter was not submitted to the court below and we do not speculate on its contents. (See Sahadi v. Scheaffer (2007) 155 Cal.App.4th 704, 723 [appellate court will disregard matters not filed or lodged in superior court].) The brief reference to the May 3, 2005 letter is not sufficient to support a conclusion that because of the content of that letter, as of May 3, 2005, P.E. Lofts knew that its broker’s negligent advice had resulted in late notice of its claim for the damage to the vault and that P.E. Lofts had sustained damage because of the late notice. To draw that conclusion would be to go beyond the material facts alleged in the complaint, which we may not do in the context of a motion for judgment on the pleadings.
Because we conclude that the May 23, 2005 letter was not before the trial court in the motion for judgment on the pleadings, we do not address P.E. Lofts’s contention that the statement in the denial letter referencing the May 3, 2005 letter is inadmissible on other grounds.
“In order for the bar of the statute of limitations to be raised by [a motion for judgment on the pleadings], the defect must clearly and affirmatively appear on the face of the complaint; it is not enough that the complaint shows that the action may be barred.” (Marshall v. Gibson, Dunn & Crutcher (1995) 37 Cal.App.4th 1397, 1403.) Because the complaint does not show on its face that P.E. Lofts’s professional negligence claim is barred by the statute of limitations, we reverse the trial court’s entry of judgment on the pleadings.
DISPOSITION
The judgment is reversed. Respondents shall bear costs of the appeal.
We concur: MALLANO P. J., ROTHSCHILD, J.