Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Naff v. State Farm General Insurance Co.

United States District Court, E.D. California

July 1, 2016

HALONDA NAFF, et al, Plaintiffs,
v.
STATE FARM GENERAL INSURANCE COMPANY, Defendant. AND RELATED COUNTERCLAIM

          PRETRIAL ORDER

          JENNIFER L. THURSTON UNITED STATES MAGISTRATE JUDGE

         In this action, the plaintiffs claim State Farm improperly refused to pay on their homeowner’s policy after the contents of their home were destroyed in a fire. They bring various causes of action including breach of contract, breach of the covenant of good faith and fair dealing and infliction of emotional distress.

         State Farm has filed a counterclaim in which it seeks declaratory relief that the policy was voided due to fraud, that the Naffs have failed to satisfy conditions precedent to State Farm’s obligation to pay insurance proceeds and for a determination of the amount of proceeds that should have been paid to the Naffs and the amount State Farm has overpaid to them.

         A. JURISDICTION/ VENUE

         The Court has diversity jurisdiction over the claims in this action pursuant to 28 U.S.C. § 1332. Further, the plaintiff’s claims arise out of events that occurred in Kern County, California. Accordingly, venue is proper in the United States District Court for the Eastern District of California sitting in Bakersfield. See 28 U.S.C. § 1391.

         B. JURY TRIAL

         The trial will be by jury. The Court intends to seat eight jurors. Each side will have four peremptory challenges.

         C. UNDISPUTED FACTS

         a. HALONDA NAFF and JARVIS NAFF are owners of the home located at 331 Donna Avenue, Bakersfield, California.

         b. STATE FARM issued to HALONDA NAFF as named insured, Homeowners’ Policy 87-BX-Q354-5, with a policy period of May 1, 2012 to May 1, 2013 providing coverage for the NAFFS’ interest in a personal residence and its contents at 331 Donna Avenue, Bakersfield, California. The Policy provided coverage, subject to its stated terms, conditions, limitations, and exclusions, for losses to real and personal property at the premises. A true and correct copy of the Policy is attached as Exhibit “A” to the Counterclaim.

         c. On December 26, 2012, a fire damaged said home and personal property belonging to NAFFS.

         d. The NAFFS timely reported the claim to STATE FARM e. On or about May 30, 2013, NAFFS presented an inventory of personal property they claim was damaged by the December 26, 2012 fire and requested financial compensation for the lost and damaged personal property.

         f. Thereafter, NAFFS submitted a revised loss inventory to STATE FARM on August 15, 2013.

         g. The NAFFS, on request, appeared for an examination under oath on March 18, 2014. h. On December 5, 2014, STATE FARM advised NAFFS that the claim was denied and that NAFFS policy was void as a result of the material misrepresentation and concealment in connection with the claim.

         D. DISPUTED FACTS

         All other facts in this case remain in dispute including but not limited to all facts relating to the following:

a. Whether the NAFFS had personal property losses consistent with the inventory of personal property submitted to STATE FARM;
b. Whether the NAFFS cooperated in the investigation of the claim;
c. Whether the NAFFS complied with policy conditions with respect to the claim;
d. Whether NAFFS made material misrepresentations of facts and concealment of documents in the investigation of the claim;
e. Whether there is coverage under the Policy for any portion of the claim;
f. Whether STATE FARM conducted an adequate and/or fair investigation of the Plaintiffs’ claim;
g. Whether STATE FARM wrongfully denied the Plaintiffs’ claim and voided the policy;
h. Whether STATE FARM’s conduct was in conscious disregard of the rights of Plaintiffs and was the result of malice and oppression.

         E. DISPUTED EVIDENTIARY ISSUES

         Those set forth in the motions in limine to be filed.

         F. SPECIAL FACTUAL INFORMATION - CONTRACT ACTION

         Plaintiffs’ position

         (a) In May 2012, Defendant State Farm issued Policy No. 87-BX-Q354-4, which was supposed to provide insurance coverage in the amount of $154, 300 for the dwelling, $15, 430 for the dwelling extension, and $115, 725 for personal property in the event such property was lost and/or destroyed, including in the event of a fire. In exchange, the Naffs agreed to pay their premiums, which they did in a timely manner.

         (b) The terms and conditions of the insurance agreement between the parties were set forth in State Farm’s Insurance Policy No. 87-BX-Q354-4.

         (c) None by Plaintiffs. State Farm misrepresented that it would provide the insurance coverage but failed to do so.

         (d) Defendant State Farm breached the terms of the contract by refusing to provide coverage for the contents of the home which were indisputably destroyed by a horrific fire. In addition, Defendant unreasonably delayed and/or failed to conduct a reasonable or fair investigation into the claim and instead designed a scheme to deny the claim and void the policy altogether.

         (e) Defendant State Farm is estopped from relying on the Plaintiffs’ prior bankruptcy as a basis for denying the claim as it was not one of the reasons provided by State Farm for denying the Plaintiffs’ claim and voiding the insurance policy. See Code of Regulations, Title 10, Chapter 5, Subchapter 7.5, section 2695.7(b)(1); Spray, Gould & Bowers v. Associated International Ins. Co., 71 Cal.App.4th 1260, 1268-1269 and 1271-1272 (1999); City of Hollister v. Monterey Insurance Company, 165 Cal.App.4th 455, 489, 492, and 500 (2008); Superior Dispatch v. Insurance Corporation of New York, 176 Cal.App.4th 12, 17-21, 24-27 (2009). The basis for estoppel can be found in a party’s silence “when he is under a duty to speak.” Dittamanto v. Lompoc Union High School District, 143 Cal.App.2d 715, 721 (1956); Chapis v. County of Monterey, 97 Cal.App.3d 249, 262 (1979); Drennan v. Oliver, 24 Cal.App.3d 571, 581 (1972); Inter-Corp v. Hartford Accident & Indemnity Co., 952 F.2d 1551, 1559 (9th Cir. 1991); B & E Convalescent Center and State Compensation Ins. Fund, 8 Cal.App.4th 78, 86, fn 7 (1992); Phoenix Ins. Co., v. United States Fire, 189 Cal.App.3d 1511, 1527 (1987); Miller v. Elite, 100 Cal.App.3d 739, 754 (1980); Wetherbee v. United Insurance Company of America, 18 Cal.App.3d 266, 270 (1971); Mullen v. Glens Falls Insurance Co., 73 Cal.App.3d 163, 173 (1977); Austero v. National Casualty Company, 84 Cal.App.3d 1, 32 (1978); Amato v. Mercury Casualty, 53 Cal.App.4th 825 (1997); Filipino Industries v. Sun Insurance Co., 74 Cal.App.4th 1429, 1441 (1999).

         In addition, State Farm waived any position of judicial estoppel by failing to raise it as an affirmative defense. See Fed. R. Civ. P 8(c).

         Additional waiver and unclean hands exist because the Defendant knew about the bankruptcy petition but still advanced a partial payment for personal property loss.

         (f) In terms of their breach of contract claim, Plaintiffs seek to recover the full benefits owed for the loss of personal property damage ($115, 725) plus interest accrued from the date of the loss, general damages including pain and suffering and emotional distress, attorney’s fees and costs, and punitive damages as a result of State Farm’s bad faith.

         (g) Plaintiffs seek to recover the full benefits owed for the loss of personal property damage ($115, 725) plus interest accrued from the date of the loss, general damages including pain and suffering and emotional distress, attorney’s fees and costs, and punitive damages as a result of State Farm’s bad faith.

         Defendant’s position

         (a) State Farm issued to Halonda Naff as named insured Homeowners’ Policy 87-BX-Q354-5, with a policy period of May 1, 2012 to May 1, 2013 providing coverage for the Naffs’ interest in a personal residence and its contents at 331 Donna Avenue, Bakersfield, California. The Policy provided coverage, subject to its stated terms, conditions, limitations, and exclusions, for losses to real and personal property at the premises. The parties have stipulated that policy states, in part:

         SECTION I - CONDITIONS

2. Your Duties After Loss. After a loss to which this insurance may apply, you shall see that the following duties are performed:
c. prepare an inventory of damaged or stolen personal property. Show in detail the quantity, description, age, replacement cost and amount of loss. Attach to the inventory all bills, receipts and related documents that substantiate the figures in the inventory; d. as often as we reasonably require:
(2) provide us with records and documents we request and permit us to make copies;
6. Suit Against Us. No action shall be brought unless there has been compliance with the policy provisions. The action must be started within one year after the date of loss or damage.
SECTION I AND SECTION II - CONDITIONS
2. Concealment or Fraud. This policy is void as to you and any other insured, if you or any other insured under this policy has intentionally concealed or misrepresented any material fact or circumstance relating to this insurance, whether before or after a loss.
(b) There were no oral or written modifications or collateral agreements.
(c) State Farm submits that the misrepresentation of material facts pertaining to the insurance voided the policy by their conduct as follows:
a. Intentionally discarding, and therefore concealing from STATE FARM, documents, including financial documents pertaining to the personal property on the loss inventories submitted which were requested for purposes of evaluating the claim;
b. Misrepresentation and concealment concerning the existence and amount of inventory which was purportedly damaged; and grossly inflating the value and quantity of items allegedly damaged.

         When faced with manifest overvaluation of a claim a court is justified in inferring that the overstatement was deliberate, voiding a claim on the fraud provision of the policy. Hyland v. Millers National Insurance Company, 91 F.2d 735, 743 (9th Cir. 1937.)

         (d) State Farm submits that Plaintiffs voided the contract with their fraudulent misrepresentations. In the alternative, State Farm submits that Plaintiffs breached their duties of cooperation in the contract by failing to provide material documentation pertaining to their claim for damages to personal property required by the language of the policy. The provisions of the insurance policy and California case law require a claimant to provide the insurer with adequate information in order to fully process, investigate and evaluate a claim. Globe Indem. Co. v. Superior Court (Los Angeles), 6 Cal.App.4th 725, 731 (1992). Indeed, the contractual obligation to provide policy proceeds does not arise until the claimant provides the insurer with adequate and sufficient information to support a claim. Id.

         (e) As set forth in its Motion for Summary Judgment State Farm submits that Plaintiffs are judicially estopped from presenting evidence inconsistent with their bankruptcy petition.

         (f)(g) Relief sought: As set forth in greater detail in §7b, infra, State Farm seeks recovery of the $169, 088.12 already paid to or on behalf of the Naffs in connection with the claim, as well as an additional $31, 005.05 of unnecessary investigation expenses incurred as a result of the factually false claim.

         G. RELIEF SOUGHT

         Plaintiff seeks compensatory damages, in the form of economic and noneconomic losses and punitive damages. They seek also attorney’s fees, costs, prejudgment and post judgment interest.

         On their counterclaim, State Farm seeks reimbursement for payments made pursuant for the dwelling repair and additional living expenses, as well as the advance payments made for personal property. State Farm also seeks reimbursement for the cost for investigating the “factually false claim.”

         H. POINTS OF LAW

         Set forth in the joint statement

         I. ABANDONED ISSUES

         None.

         J. WITNESSES

         The following is a list of witnesses that the parties expect to call at trial, including rebuttal and impeachment witnesses. NO WITNESS, OTHER THAN THOSE LISTED IN THIS SECTION, MAY BE CALLED AT TRIAL UNLESS THE PARTIES STIPULATE OR UPON A SHOWING THAT THIS ORDER SHOULD BE MODIFIED TO PREVENT “MANIFEST INJUSTICE.” Fed.R.Civ.P. 16(e); Local Rule 281(b)(10).

         No later than July 8, 2016, counsel for the defendant will notify counsel for the plaintiffs whether all employees/contractors of State Farm will be produced without need for a subpoena. Plaintiffs will produce themselves and their children at trial without need for a subpoena. Counsel will meet and confer to schedule witnesses so they can be timely produced without disrupting the flow of the trial.

         Plaintiffs’ Witness List:

         1. Halonda Naff (as plaintiff, percipient witness and expert)

         2. Jarvis Naff

         3. Jalasia Naff

         4. Jarvis Naff Jr.

         5. Jeremy King

         6. Joshlyn Naff

         7. Sharon Endsley

         8. David Coston

         9. Rodney Woods

         10. James Smith

         11. James Stemler

         12. Jill Petrarca

         13. Michael Avery

         14. Michael Byrum

         15. Thomas Collier

         16. Scott Johnson

         17. Jean Daly

         18. Jennifer Molina

         19. Curtis Floyd

         20. Henry Pacheo

         21. Person Most Knowledgeable from State Farm regarding its financial condition

         22. David Peterson (expert)

         Plaintiffs reserve the right to call any and all witnesses identified by Defendant and any witnesses for impeachment purposes.

         Defendants’ Witness List:

         1. Defendant’s list includes all of the witnesses identified by the plaintiffs and also includes[1]:

         2. Person Most Knowledgeable/Custodian of Records from AAA Mini Storage

         3. PMK/COR Kern Medical Center

         4. PMK/COR Owens Valley Career Development Center

         5. PMK/COR Kern Federal Credit Union

         6. PMK/COR Curran Middle School/Bakersfield City School District

         7. PMK/COR Kern High School District 8. PMK/COR Scott’s Youth Facility 9. PMK/COR PCL Industrial Services, Inc.

         10. PMK/COR Chase Bank

         11. PMK/COR Kay Jewelers

         12. PMK Bakersfield Police Department

         13. Christopher Peck

         14. James Jones

         15. ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.