APPEAL from a judgment of the Superior Court of Los Angeles County, Judith A. Vander Lans, Judge. Affirmed. (Los Angeles County Super. Ct. No. NC037014).
The opinion of the court was delivered by: Croskey, J.
Opinion following rehearing
CERTIFIED FOR PUBLICATION
Superior Dispatch, Inc. (Superior), appeals a summary judgment in favor of its insurer, Insurance Corporation of New York (Inscorp). The trial court granted summary judgment based on a one-year contractual limitations provision in the policy and concluded that Inscorp's failure to notify Superior of the provision did not support an equitable estoppel to assert the provision. Superior's principal contention on appeal is that Inscorp had a duty to notify Superior of the contractual limitations provision under a Department of Insurance regulation (Cal. Code Regs., tit. 10, § 2695.4, subd. (a)),*fn1 and that Inscorp is equitably estopped from asserting the limitations period because it failed to provide the required notice. Superior also challenges the sustaining of a demurrer to its fraud count.
We conclude that section 2695.4, subdivision (a) requires an insurer to notify its insured claimant of contractual limitations provisions and other policy provisions that may apply to the claim, regardless of whether the insured is represented by counsel. An insurer's failure to notify its insured of a contractual limitations provision establishes an equitable estoppel to rely on the provision if the insured had no actual knowledge of the provision and the insured's failure to discover the provision by other means was reasonable. Inscorp failed to show the absence of a triable issue of fact as to equitable estoppel and therefore is not entitled to summary judgment based on the contractual limitations period.
We conclude further, however, that Inscorp is entitled to summary judgment based on another ground asserted in its motion. Undisputed evidence of a material misrepresentation made in the application for insurance invalidates the policy and supports a judgment in favor of Inscorp. We also conclude that Superior has shown no prejudicial error in the sustaining of the demurrer to its fraud count. We therefore affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
Superior is a trucking company that provides drayage and other short-haul services. RSI Insurance Brokers, Inc. (RSI), acting on behalf of Superior, submitted an application for insurance to Crump Underwriting Services, Inc. (Crump), acting on behalf of Inscorp. The application stated that Superior was a common carrier, identified the commodities hauled as "P[r]oduce," "food goods & canned foods beer/wine," "textiles," and "paper products," and listed the percentage of each, totaling 100 percent.
Inscorp, through Crump, issued an insurance policy to Superior in August 2002. A "Motor Truck Cargo Owners and Truckmens Form" (Cargo Coverage Form) in the policy provided liability coverage relating to loss of or damage to cargo in transit. It also provided optional property damage coverage, but that option was not selected. The coverage form stated: "This policy covers the legal liability of the Insured as a common or contract carrier under tariff documents, bills or [sic] lading or shipping receipts issued by the Insured, for direct loss or damage caused by any of the perils specified herein to lawful goods and merchandise consisting principally of CONTAINERIZED FREIGHT, PRODUCE, CANNED GOODS, BEER & WINE, PAPER PRODUCTS, TEXTILES in transit while loaded for shipment in or on vehicles described herein. . . ." The capitalized language was typed onto blank lines on the printed form. The policy conditions included a one-year contractual limitations provision.*fn2
A provision in the Cargo Coverage Form stated, "This entire policy shall be void if, whether before or after a loss the insured has concealed or misrepresented any material fact or circumstance concerning this insurance or the subject thereof, or the interest of the Insured therein, or in the case of any fraud or false swearing by the Insured relating thereto."
Matson Navigation Company (Matson) hired Superior to carry freight by truck from a terminal at the Port of Los Angeles to another location. The freight included a dump truck on a flat rack trailer. The cab of the dump truck struck an overpass on July 10, 2003, while the trailer was passing under the bridge. Matson notified Superior that its customer had rejected the dump truck and demanded payment from Superior for its full value pursuant to the terms of its contract with Superior.
Superior submitted a claim to Inscorp on July 17, 2003. Inscorp's claims adjuster, Fleming & Hall Administrators, Inc. (F & H), sent a letter to Superior on November 5, 2003, stating that there was no coverage under the terms of the policy and that the claim was denied. Superior did not receive the letter at that time, apparently because it was misaddressed. F & H sent a copy of the letter by fax to RSI on November 21, 2003, and Superior received the letter on that date. The letter did not notify Superior of the one-year contractual limitations provision.
Superior retained legal counsel. Danh T. Luu, an attorney, sent a letter to F & H on January 7, 2004, challenging the claim denial and alleging that the denial was in bad faith. RSI also corresponded with Inscorp on January 13, 2004, urging it to reconsider the denial.
Raul L. Martinez, as counsel for Inscorp, sent a letter to Luu on February 11, 2004. The letter stated: "We have reviewed the coverage position taken by our client on this claim, as well as your letter of January 7, 2004. However, please be advised that we concur with our client's determination that there is no coverage under the policy for this loss." The letter stated that counsel was "prepared to defend our client's position on coverage regarding this claim," and that Inscorp had instructed counsel to file a declaratory relief action, if necessary. The letter did not refer to the one-year contractual limitations provision. Luu never responded to the letter.
3. Complaint, Demurrer, and Motion to Strike
Superior filed a complaint against Inscorp and RSI on May 20, 2005, and filed its fourth amended complaint in December 2006. Superior alleges that it became contractually liable to Matson for damage to "containerized freight" that it was carrying for Matson when part of the load struck a bridge. It alleges that the Cargo Coverage Form provides coverage for its liability, that Inscorp failed to adequately investigate the claim, and that the denial of its claim was wrongful and in bad faith. It also alleges that Inscorp failed to provide notice of the one-year contractual limitations provision at any time, that Superior had no actual knowledge of the provision, that Inscorp is equitably estopped from relying on the provision, and that the contractual limitations period was equitably tolled.
Superior also alleges that the insurance application submitted by RSI "did not accurately describe [Superior's] business" and that Superior did not review or approve the contents of the application. Superior alleges that the information listed on the application concerning the commodities hauled was "false." Superior alleges that RSI initially submitted an unsigned application to Crump and later obtained ...