Shadi Bishara v. Century Surety Company et al, No. 5:2009cv01745 - Document 40 (C.D. Cal. 2011)
Court Description: ORDER GRANTING DEFENDANTS MOTION FOR SUMMARY JUDGMENT by Judge Virginia A. Phillips: The Court: GRANTS Defendant's Motion; DISMISSES Plaintiff's Complaint against Defendant Century Surety Corp. WITH PREJUDICE; and DISMISSES Plaintiff's Complaint against Defendants Century Insurance Group and Procentury Corp WITHOUT PREJUDICE. 19 (am)
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Shadi Bishara v. Century Surety Company et al Doc. 40 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 SHADI BISHARA, an individual dba HAVANA 12 SPORT BAR AND GRILL, Case No. EDCV 09-01745-VAP (JCx) 13 ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT 14 15 16 17 18 ) ) ) ) Plaintiff, ) ) v. ) ) CENTURY SURETY COMPANY; ) CENTURY INSURANCE GROUP; ) PROCENTURY CORPORATION, ) and DOES 1 to 30, ) Inclusive, ) ) Defendants. ) ________________________ 19 20 Before the Court is a Motion for Summary Judgment 21 ("Motion") filed by Defendant Century Surety Company 22 ("Defendant"). After consideration of the papers in 23 support of, and in opposition to, the Motion, the Court 24 GRANTS Defendant's Motion. 25 26 27 I. PROCEDURAL HISTORY On August 11, 2009, Plaintiff "Shadi Bishara d.b.a. 28 Havana Sport [sic] Bar and Grill" ("Bishara" or Dockets.Justia.com 1 "Plaintiff") filed a Complaint ("Complaint") in the 2 California Superior Court for the County of San 3 Bernardino, asserting claims for (1) declaratory relief; 4 (2) breach of contract, (3) bad faith denial of an 5 insurance claim, and (4) breach of the implied covenant 6 of good faith and fair dealing, arising out of an 7 insurance coverage dispute. 8 Removal), Ex. A.) (See Doc. No. 1 (Not. of On September 14, 2009, Defendant 9 removed the action to this Court on the basis of the 10 Court's diversity jurisdiction. (See id., ¶ 3.) 11 12 On December 17, 2010, Defendant filed its Motion for 13 Summary Judgment for Partial Summary Judgment. 14 19.) (Doc. No. In support of its Motion, Defendant attached the 15 following documents and exhibits: 16 1. Statement of Uncontroverted Facts ("SUF"); 17 2. Declaration of H. Douglas Galt ("Galt 18 19 Declaration"); 3. 20 21 Declaration"); 4. 22 23 24 Declaration of Michael C. Phillips ("Phillips Declaration of Rande L. Kaufman ("Kaufman Declaration"); 5. Contract for Sale of Personal Property ("Ex. 1"); 25 26 27 28 2 1 6. 2 3 2"); 7. 4 5 Articles of Incorporation for Havanas Inc.1 ("Ex. Statement of Information (Havanas Inc.) ("Ex. 3"); 8. 6 Application for Seller's Permit (Havanas Inc.) ("Ex. 4"); 7 9. 8 10. Advanced Analysis, Inc., Report ("Ex. 6"); 9 11. Commercial Insurance Application on ACORD Form 10 11 Rialto Fire Department Report ("FIR"); 128 ("Ex. 7" or "ACORD Form"); 12. Century Surety Group Liquor Liability 12 Application ("Ex. 8" or "LLA"); 13 13. Restaurant/Bar/Tavern/Nightclub Supplemental 14 Questionnaire ("Ex. 9" or "Supplemental 15 Questionnaire"); 16 14. Century Surety Co., Policy No. CCP 55947 ("Ex. 17 10" or "Policy"); 18 15. Sworn Proof of Loss from October 5, 2008, Fire2 19 16. November 14, 2007, Richdon Metals Invoices ("Ex. 20 12"); 21 1 The parties' references to "Havanas" are inconsistent, and alternate between "Havana," "Havanas," 23 "Havana's," and "Havanas'." Accordingly, where the Court refers to a document, the spelling used is the spelling 24 from the referenced document. 22 2 Defendant inadvertently attached the wrong proof of loss as Exhibit 11. The attached proof of loss is dated 26 May 2, 2006, and pertains to the theft of car and home audio equipment from a different address. Accordingly, 27 on January 31, 2011, Defendant filed a notice of errata attaching the proper Proof of Loss ("Ex. 11."). (See 28 Doc. No. 27 (Not. of Errata re: Ex. 11), at 1-2.) 25 3 1 17. January 12, 2010, letter to Mr. Witsoe, attorney 2 for Bishara ("Ex. 13"); 3 18. July 21, 2010, letter to Bishara ("Ex. 14"); 4 19. July 21, 2010, letter to Havana's Inc. ("Ex. 5 15"); 6 20. Deposition of Ashraf Swidan given in Swidan v. 7 Allied Insurance Company on September 23, 2008 8 ("Swidan Dep."); 9 21. Ashraf Swidan Examination under Oath given on 10 11 December 4, 2009 ("Swidan EUO"); 22. Shadi Bishara Examination under Oath given on 12 13 April 9, 2009 ("Bishara April EUO"); 23. Shadi Bishara Examination under Oath given on 14 15 December 4, 2009 ("Bishara December EUO"); and 24. April 2, 2010, Deposition of Richard Ragsdale 16 ("Ragsdale Dep.") 17 18 On February 10, 2011, by stipulation of the parties, 19 the Court permitted Plaintiff to file an Opposition by 20 March 7, 2011, and Defendant to file a Reply no later 21 than March 14, 2011. (Doc. No. 31.) 22 Plaintiff filed his Opposition. On March 7, 2011, (Doc. No. 35.) In 23 support of his Opposition, Plaintiff submitted the 24 following documents and exhibits: 25 26 1. "Statement of Response to Uncontroverted Facts" ("SGI"); 27 28 4 1 2. 2 3 Declaration"); 3. 4 5 4. 5. 6. Page 4 of the ACORD Form, bearing Bates label CS 02557;5 7. 12 13 Restaurant/Bar/Tavern/Nightclub Supplemental Questionnaire;4 10 11 Century Surety Group Liquor Liability Application;3 8 9 Declaration of D. Scott Mohney ("Mohney Declaration"); 6 7 Declaration of Shadi Bishara ("Bishara Notice of Cancellation, dated November 26, 2008 ("Ex. D"); and 8. Page 50 of the Swidan EOU. 14 15 On March 14, 2011, Defendant filed its Reply. (Doc. 16 No. 37.) 17 18 19 II. LEGAL STANDARD A motion for summary judgment shall be granted when 20 there is no genuine issue as to any material fact and the 21 moving party is entitled to judgment as a matter of law. 22 Fed. R. Civ. P. 56(c); Anderson v. Liberty Lobby, Inc., 23 477 U.S. 242, 247-48 (1986). The moving party must show 24 25 26 27 3 Included as Defendant's Ex. 8. 4 Included as Defendant's Ex. 9. 5 The ACORD Form Plaintiff attaches is also included 28 as page 5 of Defendant's Ex. 7. 5 1 that "under the governing law, there can be but one 2 reasonable conclusion as to the verdict." Anderson, 477 3 U.S. at 250. 4 5 Generally, the burden is on the moving party to 6 demonstrate that it is entitled to summary judgment. 7 Margolis v. Ryan, 140 F.3d 850, 852 (9th Cir. 1998); 8 Retail Clerks Union Local 648 v. Hub Pharmacy, Inc., 707 9 F.2d 1030, 1033 (9th Cir. 1983). The moving party bears 10 the initial burden of identifying the elements of the 11 claim or defense and evidence that it believes 12 demonstrates the absence of an issue of material fact. 13 Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). 14 15 When the non-moving party has the burden at trial, 16 however, the moving party need not produce evidence 17 negating or disproving every essential element of the 18 non-moving party's case. Celotex, 477 U.S. at 325. 19 Instead, the moving party's burden is met by pointing out 20 there is an absence of evidence supporting the non-moving 21 party's case. Id. 22 23 The burden then shifts to the non-moving party to 24 show that there is a genuine issue of material fact that 25 must be resolved at trial. Fed. R. Civ. P. 56(e); 26 Celotex, 477 U.S. at 324; Anderson, 477 U.S. at 256. The 27 non-moving party must make an affirmative showing on all 28 6 1 matters placed in issue by the motion as to which it has 2 the burden of proof at trial. Celotex, 477 U.S. at 322; 3 Anderson, 477 U.S. at 252; see also William W. Schwarzer, 4 A. Wallace Tashima & James M. Wagstaffe, Federal Civil 5 Procedure Before Trial, 14:144. 6 light one. "This burden is not a The non-moving party must show more than the 7 mere existence of a scintilla of evidence." In re Oracle 8 Corp. Securities Litigation, 627 F.3d 376, 387 (9th Cir. 9 2010) (citing Anderson, 477 U.S. at 252). "The 10 non-moving party must do more than show there is some 11 'metaphysical doubt' as to the material facts at issue." 12 In re Oracle, 627 F.3d at 387 (citing Matsushita Elec. 13 Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 14 (1986)). 15 16 A genuine issue of material fact exists "if the 17 evidence is such that a reasonable jury could return a 18 verdict for the non-moving party." 19 248. Anderson, 477 U.S. at In ruling on a motion for summary judgment, the 20 Court construes the evidence in the light most favorable 21 to the non-moving party. Barlow v. Ground, 943 F.2d 22 1132, 1135 (9th Cir. 1991); T.W. Elec. Serv. Inc. v. Pac. 23 Elec. Contractors Ass'n, 809 F.2d 626, 630-31 (9th Cir. 24 1987). 25 26 27 28 7 1 III. FACTS 2 A. Uncontroverted Facts 3 The following material facts are supported adequately 4 by admissible evidence and are uncontroverted. They are 5 "admitted to exist without controversy" for the purposes 6 of Defendant's Motion.6 See L.R. 56-3. 7 8 1. 9 Havana's Sports Bar and Restaurant ("Restaurant") was Havana's Sports Bar and Restaurant 10 owned by Ashraf Swidan ("Swidan") since late 2005. 11 (Swidan Dep. 13:6-21; Swidan EUO 21:8-9.) Swidan held a 12 Liquor License, number 434322, in his own name. 13 2; SGI ¶ 2.) (SUF ¶ From late 2005 until at least October 5, 14 2008, the Restaurant operated under the Liquor License. 15 (SUF ¶ 3; SGI ¶ 3.) 16 17 In a contract dated October 1, 2007, Swidan agreed to 18 sell the Restaurant to Plaintiff for $150,000.00. 19 (Bishara April EUO 27:25-28:5; Swidan EUO 43:24-45:2; Ex. 20 1; SUF ¶ 4; SGI ¶ 4.) Under the terms of the contract, 21 Plaintiff was required to make two payments of $75,000.00 22 each; Plaintiff made the first payment of $75,000.00 to 23 Swidan in cash. (SUF ¶ 5; SGI ¶ 5.) Swidan did not give 24 25 6 To the extent any proposed uncontroverted facts are not mentioned here, the Court has not relied on them in 26 reaching its decision. The Court independently has 27 considered the admissibility of the evidence underlying the SUF, and has not considered irrelevant or 28 inadmissible evidence. 8 1 Plaintiff a receipt for the cash, and neither Plaintiff 2 nor Swidan have written records evidencing the cash 3 transaction. (SUF ¶ 5; SGI ¶ 5.) The parties dispute 4 whether Plaintiff paid the remaining $75,000.00 he owed 5 Swidan under the sale contract. 6 infra.) (See Section III.B., Nevertheless, the uncontroverted evidence 7 demonstrates that at the time of the October 5, 2008, 8 fire, Plaintiff had not paid Swidan the second $75,000.00 9 he owed under the sale contract. (Swidan EOU 50:10-13.) 10 11 In approximately January or February 2008, a person 12 broke into the Restaurant, poured gasoline on the floor, 13 and ignited a fire. 14 SGI ¶ 8.) (Bishara April EUO 92:4-21; SUF ¶ 7; In June or July 2008, another person broke 15 into the Restaurant and stole a plasma television. 16 ¶ 8; SGI ¶ 8.) (SUF When the arson and the burglary occurred, 17 the Restaurant was not insured. (SUF ¶ 9; SGI ¶ 9.) 18 19 2. 20 On March 18, 2008, the California Secretary of State Havanas Inc. 21 filed the Articles of Incorporation for "Havanas Inc.," 22 ("Havanas") which listed Swidan as the agent for service 23 of process. 24 11.) (Swidan EUO 37:20-25; Ex. 2; SUF ¶ 11; SGI ¶ On April 17, 2008, the California Secretary of 25 State filed a "Statement of Information," which listed 26 Plaintiff as the Secretary of Havanas and Swidan as the 27 28 9 1 Chief Executive Officer and Chief Financial Officer. 2 (SUF ¶ 11; SGI ¶ 11.) 3 4 On April 22, 2008, the State of California Board of 5 Equalization processed an Application for Seller's 6 Permit, which identified the applicant as Havanas and 7 stated sales would begin on May 1, 2008. 8 ¶ 12; Ex. 4.) (SUF ¶ 12; SGI The Application for Seller's Permit 9 identifies Swidan as the President, and Plaintiff as the 10 Secretary. (Ex. 4.) The Application for Seller's Permit 11 contains a "Certification" portion, which requires the 12 names and signatures of "All Corporate Officers, LLC 13 Managing Members, Partners, or Owners." (Id.) Both 14 Swidan and Bishara are listed as signatories in the 15 Certification portion. (Ex. 4 at 2.) 16 17 Plaintiff and Swidan testified under oath that 18 Havanas was formed for the purpose of holding the 19 Restaurant's assets. (SUF ¶ 13; SGI ¶ 13.) Although the 20 Restaurant operated under Havanas' Seller's Permit issued 21 on April 22, 2008, the lease, Liquor License, and other 22 assets of the Restaurant were never transferred to either 23 Havanas or Plaintiff. (SUF ¶ 13; SGI ¶ 13.) 24 25 In September 2008, and through the time of the fire, 26 Swidan worked four to five days a week at the 27 Restaurant, helping to manage it. 28 10 (SUF ¶ 14; SGI ¶ 14; 1 Swidan Dep. 22:12-17; Swidan EUO 74:6-75:14.) Swidan 2 also holds between twenty and fifty percent of Havanas's 3 stock.7 4 5 3. 6 From the time Swidan began running the Restaurant in The Insurance Policy 7 late 2005 until July 2008, it was uninsured. 8 Dep. 13:6-21; Swidan EUO 21:8-9, 59:6-18.) (Swidan On August 7, 9 2008, Defendant received an application for insurance 10 ("Insurance Application") to cover the Restaurant. 11 ¶ 23; SGI ¶ 23.) (SUF The Insurance Application consisted of: 12 (1) the ACORD Form; (2) a Liquor Liability Application 13 ("LLA"); and (3) a Restaurant/Bar/Tavern/Nightclub 14 Supplemental Questionnaire ("Supplemental 15 Questionnaire"). (SUF ¶ 23; SGI ¶ 23.) 16 17 The ACORD Form, dated August 7, 2008, lists the 18 applicant as "Havanas." (Ex. 7.) A separate page of the 19 ACORD Form, however, lists the applicant as "Shadi N 20 Bishara dba Havanas Bar." 21 24.) (Id. at 270; SUF ¶ 24; SGI ¶ In response to question 18 on the ACORD Form, 22 asking: "have any crimes occurred or been attempted on 23 24 25 7 The percentage of Havana's Swidan owns is unclear. Plaintiff asserts Swidan owns 50%; Swidan's testimony, 26 however, indicates he owns 20%. (Compare Bishara's April EUO 32:13-18 with Swidan Dep. 14:5-10.) Nevertheless, it 27 is undisputed that Swidan owned a portion of Havana's 28 stock. 11 1 your premises within the last three years," The box 2 marked "no" is checked. (Id. at 269; SUF ¶ 27; SGI ¶ 27.) 3 4 The LLA, dated August 7, 2008, asks for the "Name of 5 Applicant (include dba)." (Ex. 8; SUF ¶ 24; SGI ¶ 24.) 6 The applicant listed is "Shadi N Bishara / Havana Bar & 7 Restaurant." (Ex. 8.) 8 as a "corporation." The LLA describes the applicant (Id.) Question 21 on the LLA form 9 asks for the "liquor liability insurer(s) for past three 10 (3) years;" the phrase "new adventure" (sic) is the hand11 written response. (Id.) 12 13 The Supplemental Questionnaire lists the "insured" as 14 "Shadi N Bishara / Havana Bar & Restaurant." (Ex. 9.) 15 The Supplemental Questionnaire asks for the "number of 16 years this business has been in operation"; the response 17 is "new." (Id.; SUF ¶ 26; SGI ¶ 26.) Similarly, the 18 Supplemental Questionnaire asks for the financial 19 information for the past three years; the response is 20 "new." (Id.) 21 22 In reliance on the Insurance Application, including 23 the ACORD Form, LLA, and Supplemental Questionnaire, 24 Defendant issued insurance policy number CCP 559467 25 ("Policy"), for the period of August 7, 2008, through 26 August 7, 2009. (SUF ¶ 28; SGI ¶ 28.) The Policy lists 27 the named insured as "Havana's Sports Bar & Restaurant," 28 12 1 and describes the business as an "Organization (Other 2 than Partnership, LLC or Joint Venture)." 3 29; SGI ¶ 29). (Ex. 10; SUF ¶ Plaintiff's name does not appear anywhere 4 in the Policy or the Policy's declarations page. (SUF ¶ 5 30.)8 6 7 Under the Policy, Defendant agrees to "pay for direct 8 physical loss of or damage to Covered Property at the 9 premises described in the Declarations caused by or 10 resulting from any Covered Cause of Loss." 11 334.) (Policy at Under "Causes of Loss - Special Form," the Policy 12 excludes 13 14 15 16 17 18 19 loss or damage caused by or resulting from . . . [a] [d]ishonest or criminal act by you, any of your partners, members, officers, managers, employees (including leased employees), directors, trustees, authorized representatives or anyone to whom you entrust the property for any purpose: (1) Acting alone or in collusion with others; or (2) Whether or not during the hours of employment. This exclusion does not apply to acts of destruction by your employees (including leased employees); but theft by employees (including leased employees) is not covered. 20 21 (Policy at 351-52.) 22 23 24 25 8 Plaintiff disputes this fact, contending his name appears repeatedly in the Insurance Application. (SGI ¶ 26 30.) Whether or not Plaintiff's name appears in the 27 Insurance Application does not controvert whether his name appears in the Policy itself. Accordingly, the 28 Court deems this fact admitted without controversy. 13 1 The Policy also provides that the coverage 2 is void in any case of fraud by you as it relates to this Coverage Part at any time. It is also void if you or any other insured, at any time, intentionally conceal or misrepresent a material fact concerning: 1. This Coverage Part; 2. The Covered Property; 3. Your interest in the Covered Property; or 4. A claim under this Coverage Part. 3 4 5 6 7 (Policy at 331.) 8 9 4. The October 5, 2008, Fire 10 On October 5, 2008, Plaintiff left the 11 restaurant at about 2:15 a.m. (SUF ¶ 15; SGI ¶ 15.) 12 Between 2:25 a.m. and 2:50 a.m., Swidan set the alarm 13 to the Restaurant and left the building. (Swidan EUO 14 79:24-81:16; FIR at 15; SUF ¶ 15; SGI ¶ 15.) At the 15 time Plaintiff left the building, all of the 16 Restaurant's windows and doors were closed and 17 locked. (Bishara's April EUO 100:11-23; SUF ¶ 15; 18 SGI ¶ 15.) 19 20 According to the Rialto Fire Department's Fire 21 Investigation Report, at 2:50 a.m., six minutes after 22 Swidan left the Restaurant, a motion detector inside 23 the Restaurant was set off; a second motion detector 24 was set off four minutes later, at 2:54 a.m. 25 17; SGI ¶ 17; FIR at 15.)9 (SUF ¶ The fire was reported at 26 27 28 9 The FIR does not contain independent page numbers. (continued...) 14 1 3:17 a.m. (FIR at 15.) The Rialto Fire Department 2 responded to the fire at 3:27 a.m., and found all of 3 the doors and windows locked and secured when they 4 arrived. (SUF ¶ 19; SGI ¶ 19; FIR at 37-38.) 5 6 The Rialto Fire Department investigated the 7 fire, and concluded that Swidan intentionally set 8 fire to the inside of the Restaurant. 9 ¶ 21; FIR at 41.) (SUF ¶ 21; SGI The Rialto Fire Department based 10 its conclusion on, inter alia: 11 1. Swidan was the last person seen leaving the 12 building on October 5, 2008; ten minutes 13 after he leaves, smoke is seen coming from 14 inside the building; 15 2. No one was seen entering the building on 16 video surveillance cameras after Swidan left 17 the building, and the Rialto Fire Department 18 found no indications that someone tried to 19 force open the doors or windows; and 20 3. 21 All accidental and natural ignition sources were ruled out. 22 (FIR at 41.) 23 24 25 26 9 (...continued) Accordingly, for ease of reference, the Court cites to 27 the continuous page number on the bottom right-hand 28 corner of Defendant's exhibits. 15 1 Advanced Analysis, Inc., a private investigation 2 company Defendant hired, reached a similar 3 conclusion, finding "that [Plaintiff] and Joe Swidan 4 conspired and intentionally set fire to the 5 [Restaurant]." (SUF ¶ 20; Ex. 6 at 31; Kaufman Decl. 6 ¶ 8.)10 7 8 5. 9 On an unspecified date, Plaintiff submitted a Claim for Coverage 10 claim for coverage ("Coverage Claim") as a result of 11 the fire. (SUF ¶ 34; SGI ¶ 34; Ex. 11.) As part of 12 Plaintiff's Coverage Claim, Plaintiff represented 13 that at the time of the loss, no one other than 14 Plaintiff had an interest in the property. (SUF ¶ 15 34; SGI ¶ 34; Ex. 11.) 16 17 To support the amount Plaintiff requested in his 18 Coverage Claim, he submitted two invoices to 19 Defendant from Richdon Metals, dated November 14, 20 21 22 23 24 25 26 27 28 10 Plaintiff disputes this fact, contending that he did not intentionally set fire to the Restaurant. (SGI ¶ 20.) In support of this contention, Plaintiff submits his declaration stating that he was not involved in the fire. (Bishara Decl. ¶ 6.) Whether Plaintiff was actually involved in setting the fire is a distinct question from whether Advanced Analysis, Inc., reached a conclusion that Plaintiff was involved in the fire. Plaintiff offers no evidence controverting Defendant's adequately-supported fact that Advanced Analysis, Inc., reached the conclusion that Plaintiff was involved in the fire. Accordingly, the Court deems the fact admitted without controversy. See L.R. 56-3. To be clear, the Court does not reach the issue of whether Plaintiff was involved in the fire. 16 1 2007. (SUF ¶ 35.)11 The Richdon Metals documents 2 appear to be invoices reflecting purchases made by 3 "Havana's Sports Bar & Grill." (Ex. 12.) When 4 deposed, Richard Ragsdale admitted he prepared the 5 Richdon Metals invoices after the fire "so 6 [Plaintiff] could have invoices to give to the 7 insurance company for payment." 8 21:1.) (Ragsdale Dep. 20:4- Mr. Ragsdale also stated that Plaintiff did 9 not purchase the items on the invoices from Richdon 10 Metals. (Ragsdale Dep. 25:13-26:16.) 11 12 B. Disputed Facts 13 The parties dispute whether Plaintiff was the 14 sole owner of the Restaurant. Defendant contends 15 Plaintiff never paid Swidan the balance of $75,000.00 16 he owed under the Sale Contract. 17 April EOU 29:11-17.) (SUF ¶ 6; Bishara's Plaintiff contends, however, 18 that he paid Swidan in full. (SGI ¶ 6; Swidan EOU 19 50:10-17, Bishara Decl. ¶ 3.) 20 21 The parties also dispute whether Plaintiff was a 22 party to the Policy. Defendant contends that because 23 Plaintiff is not listed explicitly on the Policy, he 24 25 11 Plaintiff attempts to dispute this fact, contending "the documents were not 'invoices' but 26 estimates re-created to show valuations of destroyed 27 fixtures and equipment." Plaintiff offers no evidence supporting his contention. Accordingly, the Court deems 28 the fact admitted without controversy. See L.R. 56-3. 17 1 is not a party to it. (See Ex. 10; SUF ¶ 29.) 2 Defendant contends further that the "Policy is a 3 contract between [Defendant] and Havana's Inc." 4 (Mot. at 7.) According to Plaintiff, however, he is 5 a party to the Policy because his name is listed as 6 the applicant in the Insurance Application. 7 Exs. 7-9; Opp'n at 7.) (See Alternatively, Plaintiff 8 contends that if the entity insured under the Policy 9 was a corporation, then Plaintiff qualifies as an 10 insured. (Opp'n at 7.) 11 12 IV. DISCUSSION 13 A. Parties to the Insurance Contract 14 On a motion for summary judgment, the Court 15 construes the evidence and all justifiable inferences 16 in the non-moving party's favor. Eastman Kodak Co. 17 v. Image Tech. Servs., Inc., 504 U.S. 451 (1992); 18 T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors 19 Ass'n, 809 F.2d 626, 630-31 (9th Cir. 1987). Here, 20 there exists a genuine dispute as to whether 21 Plaintiff is a party to the Policy. 22 23 Defendant contends that because the Policy lists 24 the named insured as "Havana's Sports Bar & 25 Restaurant," and describes the business as an 26 "Organization (Other than Partnership, LLC or Joint 27 Venture)," Plaintiff is not a Party to the Policy. 28 18 1 (Ex. 10; SUF ¶ 29; SGI ¶ 29). Defendant contends 2 further that Plaintiff lacks standing to bring his 3 claim because the Policy is a contract between 4 Defendant and Havana's Inc. (Mot. at 7.) 5 6 Plaintiff asserts, however, that he is a party 7 to the Policy because he is referred to as the 8 applicant in the Insurance Application documents. 9 (Opp'n at 7.) Plaintiff contends further that even 10 if the Policy is between Defendant and Havana's Inc., 11 Plaintiff still has standing because he is an 12 "insured" under the Policy. (Id.) 13 14 Defendant first contends that because the Policy 15 lists the named insured as "Havana's Sports Bar & 16 Restaurant," and not Plaintiff, he has no standing to 17 bring a claim under the Policy. Here, it is unclear 18 which person or entity is insured under the Policy. 19 20 The Policy identifies the insured entity as 21 "Havana's Sports Bar & Restaurant." (Policy at 280.) 22 Although several of the parties' exhibits reference 23 "Havana's Bar & Restaurant," there are no documents 24 before the Court other than the Policy that provide 25 any evidence of "Havana's Sports Bar & Restaurant's" 26 corporate existence or its relationship to any of the 27 entities or parties in this action. 28 19 Referring to 1 Plaintiff's Insurance Application does not clarify 2 which person or entity is the insured party, as: 3 • 4 5 Havanas Bar" as the applicant; • 6 7 The ACORD Form lists "Shadi N Bishara dba The LLA lists "Shadi N Bishara / Havana Bar & Restaurant" as the applicant; and • The Supplemental Questionnaire lists the 8 "insured" as "Shadi N Bishara / Havana Bar & 9 Restaurant." 10 (See Exs. 7-9.) Notably, none of the Insurance 11 Application documents identify the purportedly12 insured entity, "Havana's Sports Bar & Restaurant," 13 as the applicant to be insured. (See id.) Thus, as 14 there is no evidence indicating the involvement of, 15 or existence of an entity called "Havana's Sports Bar 16 & Restaurant," the insured party under the Policy is 17 unclear. 18 19 Defendant contends further the insured is 20 "Havana's Inc.," and because Plaintiff is not the 21 named insured, he has no standing to bring a claim 22 under the Policy. (Mot. at 7; Reply at 3.) Here, 23 the evidence does not indicate clearly whether 24 "Havana's Inc." is the named insured. There is 25 evidence supporting Defendant's contention that the 26 named insured was intended as "Havana's Inc." 27 Specifically, 28 20 1 • The Policy states that the named insured is 2 an "Organization (Other than Partnership, 3 LLC or Joint Venture)"; 4 • 5 6 The ACORD Form lists the applicant as "Havanas"; and • 7 The LLA lists the applicant as a Corporation. 8 (See Exs. 7-9.) 9 10 There is, however, also evidence supporting 11 Plaintiff's contention that he was an insured under 12 the Policy. Specifically, as stated above, the ACORD 13 Form and LLA include Plaintiff as the applicant, and 14 the Supplemental Questionnaire indicates Plaintiff is 15 the insured. (See Exs. 7-9.) Indeed, the applicant 16 name on the ACORD Form is nearly identical to the 17 literal name of the Plaintiff here. (Compare ACORD 18 Form at 270 (listing applicant as "Shadi N Bishara 19 dba Havanas Bar") with Compl. at 1 (listing the named 20 Plaintiff as "Shadi Bishara, an individual dba Havana 21 Sport Bar and Grill").) Moreover, in the signature 22 block for the LLA and Supplemental Questionnaire, the 23 only applicant listed is "Shadi N. Bishara."12 24 LLA at 274; Supp. Questionnaire at 277.) (See There is no 25 12 The signature block in the ACORD Form does not contain an entry for the name of the applicant, but only 27 the applicant's signature. (See ACORD Form at 266.) Accordingly, the Court cannot discern who signed the 28 ACORD Form. 26 21 1 indication he signed the documents on behalf of a 2 corporate entity. 3 4 Drawing all justifiable inferences in 5 Plaintiff's favor, the Court finds that as the 6 Insurance Application includes numerous references to 7 Plaintiff, and as the Insurance Application documents 8 make no reference to "Havana's Sports Bar & 9 Restaurant," Plaintiff demonstrates sufficiently the 10 name on the Policy may be the result of a scrivener's 11 error, and therefore disputes sufficiently whether he 12 was a party to the Policy. 13 14 Finally, even if Defendant demonstrated 15 sufficiently that Plaintiff was not a named party to 16 the Policy, such a demonstration would not 17 necessarily bar Plaintiff from bringing a suit under 18 the Policy. See Lighting Fixture & Elec. Supply Co. 19 v. Cont'l Ins. Co., 420 F.2d 1211, 1214-15 (5th Cir. 20 1969) ("[W]e believe that when an insurer and its 21 customer agree that the insurer is to insure the 22 owner of specified property against fire loss, it 23 would be no less unconscionable to allow the insurer 24 to avoid its obligation under their contract because 25 the owner, whose particular identity is of no 26 particular concern to the insurer, is incorrectly 27 named in that contract than to allow such avoidance 28 22 1 because the insurer in preparing the policy acted 2 unmindful of facts it either knew or should have 3 known."); Gills v. Sun Ins. Office, Ltd., 238 Cal. 4 App. 2d 408, 413-14 (1965) (affirming trial court's 5 reformation and interpretation of insurance contract 6 where the trial court concluded the policy covered a 7 parcel of property, but specified the insured as an 8 entity that did not exist at the time the policy was 9 issued); Capital Glenn Min. Co. v. Indus. Acc. 10 Comm'n, 124 Cal. App. 79, 86 (1932) ("When an 11 insurance company, through its own fault, issues a 12 policy to an assured under a wrong name, and accepts 13 and retains premiums in payment therefor, it will be 14 estopped from denying that the real [party] was 15 insured by the terms of the policy . . . ."). 16 17 Accordingly, as Plaintiff offers evidence 18 sufficient to dispute whether he was a party to the 19 Policy, the Court finds Defendant's contention that 20 Plaintiff does not have standing because he was not a 21 Party to the Policy lacks merit. 22 23 B. Plaintiff's Declaratory Relief and Breach of 24 Contract Claims 25 Defendant contends that Plaintiff cannot recover 26 on his declaratory relief and breach of contract 27 claims because Swidan's possible involvement in the 28 23 1 October 5, 2008, Fire barred coverage under the 2 Policy, thus making proper Defendant's decision to 3 deny Plaintiff's Coverage Claim. (Mot. at 10.) 4 Under "Causes of Loss - Special Form," the Policy 5 excludes 6 7 8 9 10 11 loss or damage caused by or resulting from . . . [a] [d]ishonest or criminal act by you, any of your partners, members, officers, managers, employees (including leased employees), directors, trustees, authorized representatives or anyone to whom you entrust the property for any purpose: (1) Acting alone or in collusion with others; or (2) Whether or not during the hours of employment. (Policy at 351-52.)13 12 13 The uncontroverted evidence demonstrates the 14 Policy did not provide coverage for the October 5, 15 2008, Fire. Here, Swidan was an employee of 16 Plaintiff, and thus any "dishonest or criminal act" 17 he committed that caused a loss or damage to the 18 Restaurant was not covered under the Policy. (SUF ¶ 19 14; SGI ¶ 14; Policy at 351.) 20 21 13 The Policy continues, stating "[t]his exclusion 22 does not apply to acts of destruction by your employees (including leased employees); but theft by employees 23 (including leased employees) is not covered." (Policy at 352.) Neither party addresses whether this provision is 24 applicable here. Nevertheless, it appears the provision is inapplicable here, as the alleged acts would, if true, 25 constitute a "criminal act," specifically arson. See Cal. Penal Code § 451 ("[a] person is guilty of arson 26 when he or she willfully and maliciously sets fire to or burns or causes to be burned . . . any structure . . . 27 ."); People v. Morse, 116 Cal. App. 4th 1160 (2004) ("The statute . . . requires only an intent to do the act that 28 causes the harm."). 24 1 The uncontroverted facts further establish that 2 on the night of the October 5, 2008, Fire, Plaintiff 3 left the restaurant at about 2:15 a.m. 4 SGI ¶ 15.) (SUF ¶ 15; After Plaintiff left the Restaurant, at 5 approximately 2:44 a.m., Swidan set the alarm to the 6 Restaurant and left the building. 7 81:16; SUF ¶ 15; SGI ¶ 15.) (Swidan EUO 79:24- At the time Plaintiff 8 left the building, all of the Restaurant's windows 9 and doors were closed and locked. (Bishara's April 10 EUO 100:11-23; SUF ¶ 15; SGI ¶ 15.) At 2:50 a.m., 11 six minutes after Swidan left the Restaurant, a 12 motion detector inside the Restaurant went off; a 13 second motion detector went off four minutes later, 14 at 2:54 a.m. (SUF ¶ 17; SGI ¶ 17; FIR at 15.)14 The 15 Rialto Fire Department responded to the fire, and 16 found all the doors and windows locked and secured 17 when they arrived. (SUF ¶ 19; SGI ¶ 19; FIR at 37- 18 38.) 19 20 The Rialto Fire Department investigated the 21 fire, and concluded that Swidan intentionally set 22 fire to the inside of the Restaurant. 23 ¶ 21; FIR at 41.) (SUF ¶ 21; SGI The Rialto Fire Department based 24 its conclusion on, inter alia, the following facts: 25 26 14 The FIR does not contain independent page numbers. Accordingly, for ease of reference, the Court 27 cites to the continuous page number on the bottom right28 hand corner of Defendant's exhibits. 25 1 1. Swidan was the last person seen leaving the 2 building on October 5, 2008; ten minutes 3 after he leaves, smoke is seen coming from 4 inside the building; 5 2. No one was seen entering the building on 6 video surveillance cameras after Swidan left 7 the building, and the Rialto Fire Department 8 found no indications that someone tried to 9 force open the doors or windows; and 10 11 3. All accidental and natural ignition sources were ruled out. 12 (FIR at 41.) Advanced Analysis, Inc., a private 13 investigation company Defendant hired, also concluded 14 "that . . . Joe Swidan . . . intentionally set fire 15 to the [Restaurant]." (SUF ¶ 20; Ex. 6 at 31; 16 Kaufman Decl. ¶ 8.) 17 18 Thus, because the uncontroverted evidence 19 indicates Swidan intentionally set fire to the 20 Restaurant, Defendant has satisfied its burden of 21 establishing an absence of evidence that Defendant 22 denied Plaintiff's Coverage Claim improperly. 23 24 To be clear, the Court does not opine or make 25 any findings as to whether Swidan actually set fire 26 to the Restaurant. Rather, the Court finds only that 27 the uncontroverted evidence satisfies Defendant's 28 26 1 burden of demonstrating there is an absence of 2 evidence establishing Defendant breached the Policy 3 by refusing to approve Plaintiff's Coverage Claim. 4 As Defendant has satisfied its initial burden of 5 demonstrating an absence of evidence, the burden 6 shifts to Plaintiff to demonstrate that there is a 7 genuine issue of material fact that must be resolved 8 at trial. Fed. R. Civ. P. 56(e); Celotex, 477 U.S. 9 at 324; Anderson, 477 U.S. at 256. 10 11 Here, Plaintiff offers no testimonial or 12 documentary evidence demonstrating Swidan was not 13 involved in the October 5, 2008, fire. Although 14 Plaintiff submits a declaration from Bishara denying 15 any involvement, Plaintiff offers no evidence 16 rebutting Defendant's evidence of Swidan's 17 involvement in the fire. Accordingly, Plaintiff has 18 not satisfied his burden of demonstrating there is a 19 genuine issue of material fact as to whether 20 Defendant denied his Coverage Claim properly. The 21 Court therefore GRANTS Defendant's Motion as to 22 Plaintiff's Declaratory Relief and Breach of Contract 23 claims. 24 25 C. Plaintiff's Bad Faith Denial of Coverage Claim 26 "California law is clear, that without a breach 27 of the insurance contract, there can be no breach of 28 27 1 the implied covenant of good faith and fair dealing." 2 Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 3 1025, 1034 (9th Cir. 2008); see also Waller v. Truck 4 Ins. Exch., 11 Cal. 4th 1, 36 (1995) ("a bad faith 5 claim cannot be maintained unless policy benefits are 6 due is in accord with the policy in which the duty of 7 good faith is [firmly] rooted." (citing Love v. Fire 8 Ins. Exch., 221 Cal. App. 3d 1136, 1153 (1990)). 9 Here, as discussed above, Plaintiff was not entitled 10 to coverage under the Policy; Defendant therefore did 11 not breach the Policy when it denied Plaintiff's 12 Coverage Claim. Accordingly, as there were no 13 contractual benefits owed under the Policy, Plaintiff 14 cannot recover under his Second Claim for relief, bad 15 faith denial of coverage. 16 17 Moreover, even if Defendant owed Plaintiff 18 contractual benefits under the Policy, Plaintiff's 19 Second Claim for relief would still fail. 20 21 22 23 24 [U]nder California law, a plaintiff must show (1) benefits due under the policy were withheld, and (2) the reason for withholding benefits was unreasonable or without proper cause. [citation] Because the key to a bad faith claim is whether denial of a claim was reasonable, a bad faith claim should be dismissed on summary judgment if the defendant demonstrates that there was 'a genuine dispute as to coverage.' 25 Feldman v. Allstate Ins. Co., 322 F.3d 660, 669 (9th 26 Cir. 2003) (citing Guebara v. Allstate Ins. Co., 237 27 F.3d 987, 992 (9th Cir. 2001) (citing Love, 221 Cal. 28 28 1 App. 3d at 1151)). Assuming Plaintiff could 2 demonstrate the benefits due under the policy were 3 withheld improperly, Plaintiff's Second Claim for 4 relief would still fail as there is a genuine dispute 5 as to the coverage for the October 5, 2008, Fire. 6 7 Here, Defendant's reliance on the Rialto Fire 8 Department and Advanced Analysis Reports was 9 reasonable. Both reports examined thoroughly the 10 potential cause of the October 5, 2008, fire, and 11 reached detailed conclusions based on the extensive 12 investigations. Additionally, both of the 13 investigations reached the same conclusion: Swidan 14 intentionally caused the October 5, 2008, fire. (SUF 15 ¶ 20-21; SGI ¶ 21; FIR at 41; Ex. 6 at 31; Kaufman 16 Decl. ¶ 8.) Moreover, although Defendant hired 17 Advanced Analysis, there is no evidence that it was 18 not independent; and, furthermore, there is no 19 evidence indicating that the Rialto Fire Department's 20 report, which echoed Advanced Analysis's report, is 21 biased. (See Kaufman Decl. ¶ 8 (indicating Defendant 22 retained Advanced Analysis, Inc., to investigate the 23 October 5, 2008, fire).) 24 25 "[U]nder existing case law, a single, thorough 26 report by an independent expert is sufficient, all 27 other things being equal, to support application of 28 29 1 the 'genuine dispute' doctrine." Adams v. Allstate 2 Ins. Co., 187 F. Supp. 2d 1207, 1215 (C.D. Cal. 2002) 3 (citing Chateau Chamberay Homeowners Ass'n v. 4 Associated Int'l Ins. Co., 90 Cal. App. 4th 335, 346 5 (2001)). Accordingly, as Defendant's reliance on the 6 Rialto Fire Department's report is sufficient to 7 support application of the genuine dispute doctrine 8 here, Defendant's denial of Plaintiff's Coverage 9 Claim was reasonable as a matter of law.15 10 11 As Plaintiff cannot demonstrate that Defendant 12 withheld benefits due under the Policy or that the 13 reason for withholding benefits was unreasonable or 14 without proper cause, the Court GRANTS Defendant's 15 Motion as to Plaintiff's Bad Faith Denial of Coverage 16 Claim. 17 18 19 20 21 15 Despite the exhaustive investigations and 22 detailed conclusions of both the Rialto Fire Department and Advanced Analysis, Plaintiff nevertheless contends it 23 was unreasonable for Defendant to deny Plaintiff's claim "when no charges or indictments [of Plaintiff or Swidan] 24 have been made by ay [sic] authority." (Opp'n. at 14.) Whether or not the District Attorney decided to file 25 criminal charges against Plaintiff or Swidan is of no consequence in this civil suit filed by Plaintiff. See Arneson v. Fox, 28 Cal. 3d. 440, 455 (1980) ("Of course, 26 if acquitted, because of the difference in the burdens of 27 proof in a civil and criminal case, the acquittal would be of no evidentiary benefit to him."). Accordingly, 28 Plaintiff's argument lacks merit. 30 1 D. Plaintiff's Punitive Damages Request 2 To prevail on a request for punitive damages, a 3 plaintiff must establish: (1) that the insurer 4 breached the policy, warranting contract damages; (2) 5 that the insurer breached the implied covenant of 6 good faith and fair dealing; and (3) that the breach 7 constituted fraud, oppression, or malice warranting 8 punitive damages under California Civil Code section 9 3294(a). Griffin v. Northern Ins. Co., 176 Cal. App. 10 4th 172, 194-95 (2009). Here, as discussed above, 11 Plaintiff can not establish that Defendant breached 12 the Policy, nor that he is entitled to damages for 13 Defendant's purported bad faith denial of his 14 Coverage Claim. Accordingly, Plaintiff cannot 15 demonstrate he is entitled to punitive damages under 16 Civil Code section 3294(a). The Court therefore 17 GRANTS Defendant's Motion as to Plaintiff's Punitive 18 Damages Claim. 19 20 E. Federal Rule of Civil Procedure 4(m) 21 Defendant removed this action on September 14, 22 2009. Plaintiff has not, however, filed proofs of 23 service for Defendants Century Insurance Group or 24 Procentury Corp. Accordingly, the Court dismisses 25 Plaintiff's Complaint against Defendants Century 26 Insurance Group and Procentury Corp. for failure to 27 prosecute. 28 31 1 V. CONCLUSION 2 For the foregoing reasons, the Court: 3 1. GRANTS Defendant's Motion; 4 2. DISMISSES Plaintiff's Complaint against 5 Defendant Century Surety Corp. WITH 6 PREJUDICE; and 7 3. DISMISSES Plaintiff's Complaint against 8 Defendants Century Insurance Group and 9 Procentury Corp WITHOUT PREJUDICE. 10 11 12 13 Dated: 14 April 6, 2011 VIRGINIA A. PHILLIPS United States District Judge 15 16 17 18 19 20 21 22 23 24 25 26 27 28 32
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