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PETERSEN v. HARTFORD INSURANCE CO.

United States District Court, Northern District of California


April 9, 2003

MURRAY B. PETERSEN, PLAINTIFF
v.
HARTFORD INSURANCE CO., DEFENDANT

The opinion of the court was delivered by: Charles R. Breyer, United States District Judge

ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
This is an insurance coverage dispute involving an insurance claim filed by the former dean of the Oakland College of Law ("OCL") for coverage of property that was allegedly stolen from his office at OCL. Hartford denied the claim because plaintiff could not prove that he had an insurable interest in the allegedly stolen property because it belonged to OCL. Hartford seeks summary judgment on collateral estoppel grounds, arguing that it was determined in a previous lawsuit that the property at issue did not belong to plaintiff. For the reasons stated herein, Hartford's motion will be granted.

BACKGROUND

Plaintiff was the dean of the Oakland College of Law. In 1997, the board of OCL voted to replace plaintiff as dean. The board then asked plaintiff to return all records and property belonging to the school.

When plaintiff did not comply to the board's satisfaction, OCL's acting interim dean and a moving crew went to plaintiff's office on August 23, 1997 to retrieve any remaining school property. The landlord met the new dean at plaintiff's office but was unable to open the door because plaintiff had installed a new lock. A locksmith was called to open the door. While the moving crew was removing books and records from plaintiff's office, plaintiff arrived and called the police. The police declined to intervene.

In July 1998, plaintiff filed suit against OCL in state court in Alameda, claiming that OCL and its board took property belonging to him, defamed him, and breached various contracts. See Petersen v. The Oakland College of Law Foundatiow et al., No. 801106-0 (Cal. Super. Ct. filed July 8, 1998). The court dismissed plaintiffs claims for illegal break-in and breach of the duty of good faith and fair dealing. OCL moved for summary judgment and/or adjudication of the remaining claims in April 2000. Among other arguments, OCL maintained that it was entitled to summary judgment on plaintiffs cause of action for conversion because plaintiff could not prove ownership of the allegedly converted property. The court granted summary adjudication of that claim on June 14, 2000. Following summary adjudication, plaintiff voluntarily dismissed the two remaining claims with prejudice.

In October 1997, plaintiff sent a letter to his insurance agent stating a claim for property that he alleged was stolen from his office by OCL. He attached police reports and included an inventory of property that was allegedly stolen. Plaintiff forwarded this inventory to a representative of Hartford Insurance Company as well. In December 1997, plaintiff submitted to Hartford a "Sworn Statement of Proof of Loss" that was virtually identical to a "Sworn Statement of Proof of Loss" that plaintiff appended to the complaint in his civil suit against OCL.

In the course of its investigation of plaintiff's claim, Hartford was advised by OCL's acting dean that the property taken from plaintiff's office belonged to OCL. In subsequent correspondence between plaintiff and Hartford, plaintiff conceded that "[t]he only difference between the claims that have been made against Hartford and against the defendants in [his civil action against OCL], is that the claim made to Hartford was limited to the loss of insured personal property, whereas the Superior Court action was for redress of a much broader scope of grievances." Def's Ex. 10 (Letter from Pl. to Def. Counsel, Feb. 3, 2000).

Hartford denied plaintiff's claim on April 7, 2000. The denial letter stated in part that plaintiff had

failed to discharge his burden of proving that the property, the loss of which he claims, is property that is covered by his insurance with Hartford, because the evidence that he has presented to date to prove his ownership is equivocal, and contradicted by evidence from the parties that he accuses of theft. . . . Mr. Peterson has conceded that he has entrusted the resolution of that very question to a pending civil suit that he is pursuing against the College and dean Knecht.
Def.'s Ex. 11.

Plaintiff filed suit against Hartford and various other defendants in Contra Costa Superior Court in August 2001. After the other defendants were dismissed from the case, Hartford removed to federal court on June 12, 2002 on diversity grounds. Plaintiff filed an amended complaint on January 8, 2002. That complaint asserts causes of action for breach of contract, breach of the implied covenant of good faith and fair dealing, fraud, and declaratory judgment. Plaintiff seeks recovery of the property that he alleges was stolen from him. The items that he seeks to recover are the same items that he claimed, in his previous suit, that OCL converted. The same list of items that was appended to plaintiff's complaint against OCL is appended to plaintiff's complaint in this case.

Hartford has moved for summary judgment on the grounds that plaintiff's claims are barred by collateral estoppel.

DISCUSSION

A. Legal Standard for Summary Judgment

Although the party moving for summary judgment bears the initial burden of pointing to portions of the pleadings and discovery that establish the absence of a genuine issue of material fact, this burden can be satisfied by "pointing out to the district court . . . that there is an absence of evidence to support the nonmoving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986); see also Devereaux v. Abbey, 263 F.3d 1070, 1076 (9th Cir. 2001).

Here, an essential element of the nonmoving party's case is ownership of the property that was allegedly stolen. See Aydin Corp. v. First State Ins. Co., 18 Cal.4th 1183, 1188 (1998) (insured bears burden of proving that claim is covered by insurer). If plaintiff cannot show that he owned the property, then the property was not covered by plaintiff's insurance policy and the insurer committed no wrongdoing by denying plaintiff's claim.*fn1 It follows that summary judgment is appropriate if the Court is satisfied that there is an absence of evidence to support plaintiff's claim of ownership.

B. Collateral Estoppel of Plaintiff's Contract Claims

1. Breach of Contract

Defendant argues that plaintiff's cause of action for breach of contract (i.e., denial of plaintiff's claim) is barred by collateral estoppel. Specifically, defendant maintains that the issue of plaintiff's ownership of the allegedly stolen property has already been litigated and decided in the context of plaintiff's lawsuit against OCL. Since the superior court granted summary ajudication of plaintiff's cause of action for conversion on the grounds that plaintiff did not own the property that was allegedly converted, and since it is the very same property that plaintiff now contends is covered by his Hartford insurance policy, defendant argues that plaintiff cannot prevail on his breach-of-contract claim as a matter of law.

The doctrine of collateral estoppel precludes a party from relitigating an issue that he has previously litigated in a prior proceeding. "A prior determination by a tribunal will be given collateral estoppel effect when (1) the issue is identical to that decided in a former proceeding; (2) the issue was actually litigated and (3) necessarily decided; (4) the doctrine is asserted against a party to the former action or one who was in privity with such a party; and (5) the former decision is final and was made on the merits." Kelly v. Vons Cos., 67 Cal.App.4th 1329, 1339 (1998).

The first, second, third, and fourth factors in this analysis are clearly satisfied here. The issue of property ownership raised by this litigation is the same as the issue that was summarily adjudicated in the OCL litigation. Indeed, the list of items is identical.

With respect to the fifth factor, defendant cites to the Restatement Second of Judgments, which states that a "final judgment" for purposes of issue preclusion (i.e., collateral estoppel) is "any prior adjudication of an issue in another action that is determined to be sufficiently firm to be accorded conclusive effect." Def.'s Memo at 14 (quoting Rest.2d Judgments § 13). Here, the superior court's summary adjudication that plaintiff was not the owner of the property at issue was "sufficiently firm" to be given such effect. Although plaintiff subsequently agreed to dismiss the case with prejudice, the court's ruling on plaintiff's conversion claim would have precluded plaintiff from pursuing that claim even if he had not dismissed the case. See Cal-Vada Aircraft, Inc. v. Super. Ct., 179 Cal.App.3d 435, 446-47 (1986) (issues that have been summarily adjudicated "shall be deemed established" and cannot be relitigated).

Plaintiff argues that Hartford's collateral argument is misplaced because the settlement agreement in the OCL litigation contained a provision stating that neither party would use that settlement as evidence in any future litigation. Since it is the summary adjudication rather than the settlement agreement that is the basis for defendant's collateral estoppel argument, plaintiff's argument is unavailing.

Plaintiff further argues that the superior court's summary adjudication does not have preclusive effect because it was entered "during the pendency of an appeal and motion for stay of trial court proceedings."*fn2 Pl.'s Supp. Opp. at 2. Since the record contains no indication that a final judgment on the merits of any of plaintiff's claims had been entered in the OCL litigation prior to the summary adjudication filed on June 14, 2000, plaintiff's

contention that an appeal was pending at the time the superior court entered summary adjudication of his conversion claim appears to be incorrect. In any event, plaintiff's voluntary dismissal of his case against OCL occurred before any such appeal was taken up. As such, the summary adjudication was a final ruling on all claims to which it applied.

Accordingly, plaintiff is precluded from relitigating the subject of the ownership of the property that is allegedly covered by his Hartford insurance policy. Since that property has been found not to belong to him, defendent was under no obligation to cover plaintiff's insurance claim. Summary judgment will therefore be entered in defendant's favor with respect to plaintiff's cause of action for breach of contract.

2. Breach of the Implied Covenant of Good Faith

There can be no violation of the implied covenant of good faith and fair dealing when there has been no violation of the underlying insurance contract. See San Diego Housing Comm'n v. Indus. Indem. Co., 68 Cal.App.4th 526, 544 (1998). Thus, summary judgment of this claim will be entered in defendant's favor as well.

3. Declaratory Judgment

Plaintiff's demand for a declaratory judgment that his contractual rights were violated is redundant of his substantive breach-of-contract claims. Since plaintiff cannot prevail on the substantive claims, he is not entitled to the declaratory judgment he seeks.

C. Fraud

Plaintiff's only remaining cause of action is for fraudulent misrepresentation. Specifically, plaintiff alleges that Hartford fraudulently represented that it is "a responsible insurer which would promptly and fairly respond to claims made for the payment of covered losses suffered by plaintiff" Am. Compl. at 5. Fraud requires, inter alia, a false representation. See Hobart v. Hobart Estate Co., 26 Cal.2d 412, 422 (1945). Since plaintiff did not suffer a "covered loss," there is no genuine issue of material fact concerning the fraudulence of this representation. The Court will therefore enter summary judgment in defendant's favor on this claim as well.

CONCLUSION

The doctrine of collateral estoppel precludes plaintiff from arguing that the allegedly stolen property belonged to him. As a result, he cannot prevail on any of his claims as matter of law. Defendant's motion for summary judgment is hereby GRANTED.

IT IS SO ORDERED.


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