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The Meat Market, Inc., Dba State Center Foods v. the American Insurance Co.; and Does 1 Through 50

March 19, 2013

THE MEAT MARKET, INC., DBA STATE CENTER FOODS, PLAINTIFF,
v.
THE AMERICAN INSURANCE CO.; AND DOES 1 THROUGH 50, INCLUSIVE,
DEFENDANTS.



ORDER RE: MOTION FOR SUMMARY JUDGMENT OR SUMMARY ADJUDICATION (Doc. 28)

I. INTRODUCTION

Defendant The American Insurance Company (hereinafter referred to as "Defendant" or "AIC") has filed a motion for summary judgment or summary adjudication in the alternative pursuant to Federal Rule of Civil Procedure 56. For reasons discussed below, the motion shall be denied.

II. FACTS AND PROCEDURAL BACKGROUND

On April 15, 2011, plaintiff The Meat Market, Inc., dba State Center Foods (hereinafter referred to as "Plaintiff" or "Meat Market") filed its complaint in Fresno County Superior Court against AIC and Does 1 through 50, inclusive, asserting causes of action for breach of contract and breach of the implied covenant of good faith and fair dealing. In the complaint, Meat Market alleged as follows:

"Prior to April, 2009, plaintiff, MEAT MARKET, was insured under a commercial policy and endorsements issued by defendant which included perishable stock and equipment breakdown coverage for plaintiff's business property and perishable stock, including wine merchandise, retained in storage at MEAT MARKET's facility located at 454 West Alluvial, Fresno, California. Said policy and endorsements shall hereinafter be referred to collectively as 'THE POLICY.' "

Meat Market further alleged:

"In late April, 2009, MEAT MARKET began experiencing mechanical problems with the refrigeration system that maintained controlled temperature for a storage container holding plaintiff's vintage wine collection at 454 West Alluvial, Fresno, California. Plaintiff accordingly contacted Valley Transportation Refrigeration ('VTR') to inspect and evaluate the problems with the refrigeration system. It was determined by VTR that the refrigeration system was not properly cooling the container due to a breakdown of the system's microprocessor. Because of the breakdown of the microprocessor, it was removed for repairs and a new microprocessor was ordered. [¶] On or about May 5, 2009, VTR received and installed the replacement microprocessor. At that time, the VTR mechanic performed a comprehensive check of the refrigeration system, and found that the unit had shut down under high pressure. The mechanic found that another component part of the refrigeration system, a rectifier, had malfunctioned, and a replacement rectifier was installed at that time."

Meat Market further alleged:

"During the time frame that the refrigeration system's microprocessor was malfunctioning, the wine in the storage container was exposed to varying temperatures; once the microprocessor was removed, malfunction occurred to associated and inter-related component parts of the refrigeration system, exposing the wine to high temperatures. These temperature changes resulted in degradation of the corks in the wine bottles, and irreparable damage to a substantial portion of plaintiff's vintage wine collection, valued in excess of $570,000.00."

Meat Market further alleged:

"Shortly after the loss, plaintiff notified [AIC] of the damages. [AIC] conducted a purported investigation and subsequently issued contradictory reports concluding that

(1) the damage to plaintiff's perishable stock was not caused by a mechanical breakdown of the covered equipment; and (2) there was a mechanical breakdown but plaintiff had not properly mitigated its loss by protecting the product. [AIC] has denied plaintiff's claim for damage to its perishable wine stock under THE POLICY based on an asserted position that there is no causal connection between the mechanical breakdown of the refrigeration system, and plaintiff's damages." Meat Market further alleged:

"Under the express terms of THE POLICY, [AIC] is obligated to pay for the losses plaintiff suffered as a result of the mechanical breakdown of the refrigeration system for its wine storage unit. [¶] Despite MEAT MARKET's repeated requests that [AIC] comply with its contractual, legal, statutory and regulatory duties to provide plaintiff with the full and complete benefits to which plaintiff was and is entitled to under THE POLICY, [AIC] has repeatedly and continuously refused to comply with its obligations. Instead, [AIC] has engaged in conduct designed to harass, annoy, injure and otherwise frustrate plaintiff by unreasonably denying plaintiff's covered claim, in the hopes that plaintiff would abandon its claim and thereby allow [AIC] to profit from its improper, unreasonable and illegal conduct."

On June 14, 2011, AIC removed the action to this Court pursuant to 28 U.S.C. ยง 1332. On January 25, 2013, AIC filed a motion for summary judgment or summary adjudication in the alternative pursuant to Federal Rule of Civil Procedure 56, contending there are no triable issues of material fact and AIC is entitled to judgment as a matter of law. On February 11, 2013, Meat Market filed ...


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