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Roberta Brafman v. Nationwide Mutual Insurance Company & Its Affiliates

November 2, 2011

ROBERTA BRAFMAN,
PLAINTIFF,
v.
NATIONWIDE MUTUAL INSURANCE COMPANY & ITS AFFILIATES, DEFENDANT.



The opinion of the court was delivered by: Morrison C. England, Jr. United States District Judge

MEMORANDUM AND ORDER

Plaintiff Roberta Brafman ("Plaintiff") filed this action challenging Defendant Nationwide Mutual Insurance Company's ("Defendant") denial of insurance benefits allegedly owed to her under her homeowner's insurance policy. Presently before the Court is Defendant's Motion to Dismiss Plaintiff's Complaint as untimely. For the following reasons, Defendant's Motion is granted with leave to amend.*fn1

BACKGROUND*fn2

Plaintiff is the owner of a small ranch property located in Sacramento, California (the "Property"). Plaintiff has both a home (the "Dwelling") and a rental unit (the "Rental") on the Property. Plaintiff purchased insurance coverage on both structures via a Farm Policy of Insurance (the "Policy"), which included homeowner's insurance coverage. The Policy provided "all perils" coverage for the Property and the structures unless the cause of any claimed loss was otherwise excluded from coverage. Losses caused by "fungus" were specifically excluded under the terms of the Policy.

Plaintiff alleges, however, that Defendant induced her to purchase an additional endorsement to the Policy, namely a Limited Fungi or Bacteria Coverage Endorsement (the "Endorsement"). Plaintiff believed, based on Defendant's representations in the Endorsement and on her own reading of the Policy that the Endorsement extended coverage under the Policy to her buildings for losses caused by mold.

In August 2009, Plaintiff began to feel the effects of what turned out to be exposure to toxic mold in the Dwelling. The mold purportedly attacked Plaintiff's respiratory system, and she was subsequently hospitalized. On the way to the hospital, Plaintiff stopped breathing and had to be resuscitated.

On September 1, 2009, Plaintiff made a claim under the Policy for structural damage and personal property loss to the Dwelling. Just over two months later, on November 5, 2009, Defendant denied Plaintiff's claim, asserting that the mold was caused by "dampness of atmosphere," which was not a covered cause of loss under the Policy or the Endorsement. Plaintiff nonetheless renewed her claim to Defendant on December 15, 2009. Defendant again denied Plaintiff's requested benefits on January 8, 2010.

Also in January 2010, Plaintiff became aware of separate mold problems in the Rental. She then made an independent claim on the Policy to Defendant pertaining to those losses. According to Plaintiff, she thereafter "became engaged in coverage issues with defendant respecting the mold burdening the rental and related claims from February, 2010 through the end of June, 2010." Complaint, ¶ 38. Plaintiff alleges that "Defendant's bad faith conduct and resulting controversy in handling [the Rental] claim consumed the plaintiff's resources and attention for the next six months and had the effect of impeding the plaintiff's ability to pursue investigation of defendant's bad faith conduct in the mold loss claim to [the Dwelling]." Id., ¶ 52.

More specifically as to the Rental coverage dispute, Plaintiff expected that the full amount of damage to that building, approximately $25,020, would be covered under the Policy.

On March 4, 2010, however, Defendant explained it would pay $7,041 for the portion of the claim covering loss due to mold from rain, but that it would not cover the remaining $17,979 because, as with the Dwelling claim, that portion of the Rental claim arose out of mold that had been caused by "dampness of atmosphere."

Eventually, in July 2010, after failing to reach a settlement with Defendant as to her Rental claim, Plaintiff returned her attention to her Dwelling claim. In August 2010, Plaintiff hired her own expert to evaluate the condition of the Dwelling. On October 14, 2010, Plaintiff's expert issued an investigative report finding that the cause of the mold was a failure/breakage of the hot water pipe delivery system, not "dampness of atmosphere." Over two months later, on December 23, 2010, Plaintiff forwarded Defendant her expert's report and supporting documentation seeking to have Defendant revisit her claim. On January 6, 2011, Defendant reiterated its denial of Plaintiff's request for benefits.

Plaintiff's Policy includes a one-year limitations provision stating, "No one may bring a legal action against us under this Coverage Form unless...[t]he action is brought within 1 year after the date on which the direct physical loss or damage occurred." Complaint, Exh. A, p. 33-34. Each time Defendant denied coverage to Plaintiff, Defendant reminded Plaintiff in writing about this limitations provision.

On May 12, 2011, Plaintiff initiated the instant action seeking to recover from Defendant pursuant to two claims for fraudulent inducement (First and Second Causes of Action), a claim for fraudulent and deceitful claims practices as to the Dwelling (Third Cause of Action), a claim for fraudulent and deceitful claims practices as to the Rental (Fourth Cause of Action), a claim for breach of the implied covenant of good faith and fair dealing (Fifth Cause of Action), and a claim for declaratory relief (Sixth Cause of Action). Defendant ...


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