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Richard Hall et al v. United Services Automobile Association

November 9, 2011


(Super. Ct. No. SC20080024)

The opinion of the court was delivered by: Raye , P.J.

Hall v. USAA



California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

In 2004 appellants sought insurance for their planned retirement home in Hawaii. Appellant husband expressed concern that there be sufficient coverage to rebuild the house in the event of loss, and respondent's representative assured him that respondent had the expertise to calculate the replacement value of the home based on information provided by appellant. Though evidence indicates that the replacement cost of the home in 2004 was actually $531,000, respondent calculated the replacement cost at only $285,000 and thereafter issued a policy in the amount of $253,000. The policy, which included a cost of living increase rider, was renewed annually and, at the time of the 2007 fire that destroyed the residence, had a limit of $280,000, though the replacement cost was $687,000. Appellants sued, asserting the insurer was negligent in calculating the replacement cost. The trial court granted summary judgment, finding no evidence supported a finding of duty or misrepresentation. We conclude that appellants' declaration in opposition to summary judgment raised triable issues as to whether USAA undertook a special duty to provide an accurate cost estimate and breached that duty. We reverse.


The facts can be briefly stated because the disposition of this appeal turns on a few paragraphs in the insured's declaration. Nevertheless, we provide a short lead-up to the pertinent paragraphs.

In June 2004 the insureds, Richard and Nancy Hall, purchased a homeowner's insurance policy from United Services Automobile Association (USAA) for their retirement home in Hawaii. They provided the agent the following information about the home: it was built in 1953, it was about 2,073 square feet, and it was valued at $89,000. At the insured's request, the insurer calculated the replacement cost for the home at $285,691.96. The insurer issued a policy effective August 2, 2004, through August 2, 2005, with a dwelling policy limit of $253,000. Renewal policies were issued for three subsequent policy periods until a fire occurred at the Hawaii property on August 27, 2007. At the time of the fire, the policy limit was $280,000 with a $2,800 deductible. The insurer paid the policy limit after the fire. There is evidence that the cost of replacement in 2004 would have been $531,000. The cost of replacement after the fire was $687,000.

The insureds stated a cause of action for general negligence that survived demurrer, alleging that the insurance policy limits were less than the replacement cost due to the insurer's negligence in calculating the replacement cost. According to the insureds, "USAA specifically adopted a special duty to [them] when it processed physical information about the subject residence and then provided calculations as to replacement value based upon a computer program designed for that purpose."

The insurer filed a motion for summary judgment. In a declaration filed in opposition to the motion, Mr. Hall asserted:

"2. On or about June 2004, I contacted USAA for the purpose of obtaining insurance for my home in Honolulu, Hawaii, located [at] 3802 Mariposa.

"3. When I contacted USAA, I was asked for information about my home, such as the purchase price, square footage and other physical descriptions pertaining to my home. I provided all the answers to the best of my ability and was told that this information would be used to assist USAA in their evaluation of the cost needed to replace the structure. I was assured by the USAA representative that they had the experience and expertise to accurately, adequately and professionally insure my home.

"4. Upon providing the information requested, the USAA representative told me that USAA had the experience, expertise, and the ability to calculate the replacement value of the subject residence so that we could calculate the amount of insurance coverage for my home. I specifically expressed that there be enough coverage to rebuild the house, as this was to be my retirement home and I am looking forward to this stage of my life. For this purpose I also purchased insurance to rebuild to ...

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