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Siriphone v. Acceptance Indemnity Insurance Co.

August 24, 2009


The opinion of the court was delivered by: M. James Lorenz United States District Court Judge


Vilay Siriphone ("Siriphone" or "plaintiff") filed his complaint on July 18, 2007, asserting claims for breach of contract and breach of the covenant of good faith and fair dealing based upon defendant Acceptance Indemnity Insurance Company's ("Acceptance") adjustment and resolution of a claim for first-party coverage benefits arising out of a theft of tools at plaintiff's business.

Defendant motion for summary judgment has been fully briefed and the Court considers the motion on the papers submitted and without oral argument pursuant to Civil Local Rule 7.1(d)(1).

A. Background

Siriphone owned and operated an auto repair shop, Ike's Transmission & Clutch. On May 12, 2005, plaintiff's business was broken into and tools and equipment were taken. The next day, plaintiff reported the theft to law enforcement authorities and to his insurance agent, Hal Rice. Defendant Acceptance had issued a commercial insurance policy to Siriphone for his business located at 3629 Euclid Avenue, San Diego, California.

Upon receipt of Rice's report, defendant began an investigation of plaintiff's claim. After the exchange of information concerning the value of standing inventory, the submission of inventories of claimed loss, and discussion of available coverage under the policy, the parties entered into a settlement agreement in June 2007. Thereafter, plaintiff filed this action in the Superior Court of the State of California, County of San Diego and defendant removed the action on the basis of diversity jurisdiction. Defendant now moves for summary judgment or alternatively for summary adjudication on plaintiff's breach of contract claim and prayer for punitive damages.*fn1

B. Summary Judgment Standard

Federal Rules of Civil Procedure 56 governs the parties' burdens on summary judgment. Rule 56(c) empowers the court to enter summary judgment on factually unsupported claims or defenses, and thereby "secure the just, speedy and inexpensive determination of every action." Celotex Corp. v. Catrett, 477 U.S. 317, 325, 327 (1986). Summary judgment is appropriate if "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." FED. R. CIV. P. 56(c); see also Arpin v. Santa Clara Valley Transp. Agency, 261 F.3d 912, 919 (9th Cir. 2001). When a defendant moves for summary adjudication of plaintiff's claims, as is the case here, the moving party can meet its burden by pointing out the absence of evidence from the nonmoving party. See Celotex, 477 U.S. at 325; see also Garneau v. City of Seattle, 147 F.3d 802, 807 (9th Cir. 1998). If the movant meets his burden, the burden shifts to the non-movant to show summary adjudication is not appropriate. Celotex, 477 U.S. at 317, 324. The non-movant must go beyond the pleadings to designate specific facts showing there are genuine factual issues which "can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986).

A "genuine issue" of material fact arises if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248. "Disputes over irrelevant or unnecessary facts will not preclude a grant of summary judgment." T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass 'n, 809 F.2d 626, 630 (9th Cir. 1987). When ruling on a summary judgment motion, the court cannot engage in credibility determinations or weighing of the evidence; these are functions for the jury. Anderson, 477 U.S. at 255; Playboy Enters., Inc. v. Welles, 279 F.3d 796, 800 (9th Cir. 2002). The court must view the evidence in the light most favorable to the nonmoving party, and draw all reasonable inferences in favor of the non-movant. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Gibson v. County of Washoe, Nev., 290 F.3d 1175, 1180 (9th Cir. 2002), cert. denied, 537 U.S. 1106 (2003).

In opposition to defendant's motion for summary judgment, plaintiff filed a responsive memorandum; exhibits consisting of excerpts from the depositions of Hank Slonecker and Robert Hughes and a letter dated April 11, 2006, drafted by plaintiff's counsel Andy Van Le to Hank Slonecker; and the declaration of counsel Van Le. Defendant objects to portions of the Van Le declaration because they lack foundation, are speculative, and/or are inadmissible hearsay. Plaintiff did not respond to defendant's objections. Having reviewed the Van Le declaration, the Court sustains defendant's objections and will not take into account those portions of the declaration in considering the motion for summary judgment. In addition to defendant's objections, the Court notes that a party's counsel's declaration is not an appropriate vehicle for arguing the party's position. Much of Van Le's declaration is nothing more than additional unsupported argument that should have been presented, if at all, in the memorandum of points and authorities. As a result, the Court disregards arguments made by counsel Van Le in his declaration.

C. Breach of Contract

Plaintiff's first cause of action is for breach of contract. In California, "[a] cause of action for breach of contract requires proof of the following elements: (1) existence of the contract; (2) plaintiff's performance or excuse for nonperformance; (3) defendant's breach; and (4) damages to plaintiff as a result of the breach." CDF Firefighters v. Maldonado, 158 Cal. App.4th 1226, 1239 (2008).

It is undisputed that the parties entered into a settlement of plaintiff's claim. Assurance never refused to pay plaintiff's claim and did, in fact, make payment under the insurance contract for plaintiff's loss. Plaintiff accepted defendant's payment under the contract.

Recognizing that "his breach of contract claim cannot succeed to the extent it relies exclusively on Acceptance's failure to pay him full value for the loss he incurred, " plaintiff contends that the breach of contract claim remains viable because "Acceptance engaged in multiple acts which constitute a breach of its insurance contract." (Opp. at 5. (emphasis in original.)) Plaintiff's contention is without merit. The acts plaintiff recites as forming a cause of action for breach of contract, e.g., defendant failed to conduct a full and complete investigation, are properly asserted in a cause of action for breach of the implied covenant of good faith and fair dealing. Plaintiff's misguided attempt to conflate a breach of contract and a breach of the implied covenant of good faith and fair dealing claim must fail.

Because the parties entered into a settlement of their dispute in which defendant paid plaintiff for his loss under the terms of the policy, defendant did not breach the contract. Defendant is entitled ...

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