Opinion
Plaintiff and appellant Sergio Brizuela (Brizuela) appeals from the trial court’s entry of summary judgment in favor of defendant and respondent CalFarm Insurance Company (CalFarm) in Brizuela’s action against CalFarm for breach of contract and breach of the implied covenant of good faith
FACTUAL AND PROCEDURAL BACKGROUND 1
In July 1998, Brizuela entered escrow to purchase the El Toro de San Juan Market (El Toro). During escrow, Brizuela obtained a business owner’s insurance policy from CalFarm Insurance Company (CalFarm) with limits of $500,000 on personal property. His wife, Karina Brizuela, was also an insured under the policy. Escrow closed on February 1, 1999. Just over one month later, on March 18, a fire destroyed the market. Brizuela hired a public adjuster to assist with his insurance claim.
Brizuela reported the loss to CalFarm, and CalFarm assigned one of its employees, Jack Hosford, to investigate the claim. The CalFarm investigator took recorded statements from Brizuela, his wife, and an El Toro employee. CalFarm subsequently learned that Brizuela had a felony conviction for receipt of stolen property; that Brizuela had been denied transfer of the alcohol license for El Toro; that beer and wine sales had accounted for a substantial portion of El Toro’s business; that the purchase price for the business was less than the amount Brizuela claimed; and that laboratory tests of the premises showed the presence of gasoline, an accelerant commonly used in arson fires.
CalFarm submitted a “Suspected Fraud Claim Referral” to the Department of Insurance and a request to the district attorney that criminal charges for arson and insurance fraud be filed against Brizuela. The Department of Insurance concluded thеre was insufficient information to support a criminal investigation, and the record contains no evidence that any criminal charges were filed against Brizuela. There is no indication in the record as to when Brizuela became aware of CalFarm’s submissions to the Department of Insurance and district attorney.
On April 23, 1999, Brizuela’s adjuster faxed CalFarm 33 pages of documents, including alarm company information, checks and checking account statements, and documents related to the purchase of the business. On May 27, 1999, CalFarm’s counsel sent a letter to Brizuela’s adjuster advising him that CalFarm had scheduled examinations under oath for Brizuela and Brizuela’s wife on June 16, 1999, at that counsel’s offices in Marina del Rey, Californiа. The insurance policy CalFarm issued to Brizuela included a provision allowing CalFarm to “examine any insured under oath” in the event of a claim. In the May 27, 1999 letter, CalFarm’s counsel asked that Brizuela produce certain documents by June 10, 1999, and confirm the examination date by June 11, 1999. Brizuela’s adjuster responded by requesting copies of recorded statements that Brizuela and his wife had given to CalFarm shortly after reporting the claim. CalFarm’s counsel denied this request.
Neither Brizuela nor his adjuster confirmed the proposed examination date, and on June 14, 1999, CalFarm’s counsel offered to reschedule the examination and extend the time to produce documents. Brizuela’s adjuster responded by reiterating the request for copies of the recorded statements, and CalFarm’s counsel again denied the request.
On June 17, 1999, CalFarm’s counsel wrote to Brizuela’s adjuster stating: “We
Brizuela then retained counsel, who wrote to CalFarm’s counsel on June 24, 1999, complaining at length about CalFarm’s refusal to provide the Brizuelas’ previously recorded statements. Brizuela’s counsel wrote that “[t]he only purpose served by refusing to provide the transcripts would be the interest of the insurance carrier and its counsel to trick and confuse the insured to establish a basis for denial.” Brizuela’s counsel offered no dates for the examination under oath; instead he wrote that “[w]e will contact you directly to discuss time, dates and places for proceeding with the Examination Under Oath as demanded.”
On July 6, 1999, CalFarm’s counsel sent Brizuela’s counsel a letter reiterating CalFarm’s denial of Brizuela’s request for the previously recorded statements and requesting proposed dates for the examination under oath. Brizuela’s counsel responded by letter the next day accusing CalFarm of having “no interest to act fairly in this matter” by putting Brizuela “through an exercise to allow CalFarm to take advantage of its insured and subsequently deny the claim.” But in that letter, Brizuelа’s counsel proposed no dates for the examination. On July 9, 1999, CalFarm’s counsel sent another request for examination dates and asked Brizuela’s counsel to respond by July 16, 1999. Brizuela’s counsel then sent two letters, dated July 20, 1999, and July 27, 1999, suggesting no dates for the examination but instead asking CalFarm’s counsel to provide dates.
Shortly thereafter, counsel for Brizuela and CalFarm had a telephone conversation during which CalFarm’s counsel said he would be unavailable for three weeks in August 1999, and the parties discussed proposed dates for the examination. On August 18, 1999, CalFarm’s counsel sent a letter to Brizuela’s counsel stating, “[w]hen we last spoke, several weeks ago, several proposed dates for your client’s examinаtion under oath were exchanged: We have heard nothing from your offices since that time.” CalFarm’s counsel requested that “a date certain for the examination and the production of documents requested in our initial letter be supplied to our offices on or before the close of business on Wednesday, August 25, 1999,” noting that CalFarm would reach a decision on the claim “based on the available information to date” if no examination under oath occurred. On August 20, 1999, Brizuela’s counsel responded by stating that his client had been available during the first three weeks of August and that “[w]e will contact you with available dates now that we know you have surfaced from your Trial matter.” There is no suggestion in this letter as to Brizuelа’s availability for an examination under oath at any particular date or period of time.
On November 15, 1999, Brizuela’s counsel wrote CalFarm’s counsel requesting proposed dates “immediately inasmuch as we are set to commence to Trial on December 13.” There was no indication of the length of the trial. On November 24, 1999, CalFarm’s counsel responded by noting that he had himself had “been involved in answering ready for trial and appearing for trial” and that he would continue to be so involved “into the new year.” CalFarm’s counsel then stated: “As a result, we have the following available dates for the completion of the examination under oath of Mr. Brizuela: The available dates include December 20, 21, 22, 23, 27 and 28.” It was not until January 6, 2000, that Brizuela’s counsel communicated his complaint that he received CalFarm’s letter “after Thanksgiving” and determined that the proposed dates were “neither reasonable nor practical.” The next day, Brizuela’s counsel received a letter from CalFarm denying the claim. The letter stated, “Sergio and Karina Brizuela have failed to cooperate in the scheduling of an examination under oath. As such, this constitutes a breach of not only the сontract provisions, but also of a condition precedent to coverage.” CalFarm also reserved the right to assert other terms and provisions contained in the policy as necessary, “due to the insureds’ refusal to cooperate and appear for their examinations under oath and to produce supporting documentation.” Brizuela had never proposed a date for the examination under oath, and no examination ever occurred.
Brizuela sued CalFarm for breach of contract and for tortious bad faith breach of an insurance contract. CalFarm filed a motion for summary judgment, and the trial court granted the motion. In so doing, the trial court concluded that Brizuela’s attendance at an examination under oath requested by CalFarm was a condition precedent to obtaining benefits under the policy; that Brizuela had the burden of satisfying a condition precedent to the insurance contract before attempting to sue on the contract; that Brizuela was obligated to attend the examination under oath CalFarm had initially scheduled in June 1999; and that Brizuela’s failure to attend the examination precluded his action on the contract. The trial court ruled that Brizuela had no valid contract claim against CalFarm and that absent a valid contract claim, Brizuela could not maintain a bad faith claim against CalFarm. Brizuela timely appealed.
DISCUSSION
A. Standard of Review
Summary judgment is granted when a moving party establishes the right to the entry of judgment as a matter of law.
A defendant moving for summary judgment meets its burden of showing that there is no merit to a cause of action if that party has shown that one or more elements of the cause of action cannot be established or that there is a complete defense to that cause of action. (Code Civ. Proc., § 437c, subd. (o)(2).) Once the defendant has made such a showing, the burden shifts to the plaintiff to show that a triablе issue of one or more material facts exists as to that cause of action or as to a defense to the cause of action.
(Aguilar v. Atlantic Richfield Co., supra,
On appeal from a summary judgment, an appellate court makes “an independent assessment of the correctness of the trial court’s ruling, applying the same legal standard as the trial court in determining whether there are any genuine issues of material fact or whether the moving party is entitled to judgment as a matter of law.”
(Iverson v. Muroc Unified School Dist.
(1995)
B. The Breach of Contract Cause of Action
1. Policy Requirement of Examination Under Oath
CalFarm’s insurance policy issued to Brizuela imposed certain requirements on the insureds, including the duty to submit to an examination under oath. The policy also imposed upon the insureds the separate requirement to “[cjooperate with us in the investigation or settlement of the claim.”
An insured’s compliance with a policy requirement to submit to an examination under oath is a prerequisite to the right to receive benefits under the policy.
(Hickman v. London Assurance Corp.
(1920)
2. Insured Did Not Comply With Requirement For Examination
Under Oath
Brizuela contends he never “refused” to submit to an examination under oath. He does not dispute, however, that he failed to appear at the examination initially scheduled for June 16, 1999. Brizuela’s only response was a request sent by his adjuster on June 16, 1999, for copies of recorded statements Brizuela and his wife had given CalFarm shortly after Brizuela made his claim.
After Brizuela failed to comply with CalFarm’s initial demand for an examination under oath, it became incumbent upon him to fulfill the requirement of being examined “by оffering to submit to such an examination at a later time.”
(Bergeron v. Employers’ Fire Ins. Co.
(1931)
Brizuela contends that there is a triable issue of fact as to whether CalFarm’s conduct in scheduling the examination was unreasonable so as to excuse his failure to submit to an examination.
(Hickman, supra,
Here, the facts are undisputed that Brizuela failed to attend an examination under oath scheduled by CalFarm in June 1999. Brizuela did not contend that illness or some other incapacity excused his attendance on June 16, 1999, nor did he object at that time on the ground that CalFarm’s scheduling of the examination was unreasonable.
(Hickman, supra,
Brizuela complained at length about the alleged unreasonableness of CalFarm’s conduct without ever agreeing to submit to examination on any date. CalFarm’s refusal to provide Brizuela with copies of previously-recorded statements was not justification for his actions. It was not unreasonable for CalFarm to reject Brizuela’s request for copies of his previously recorded statement. There is no authority for the proposition that an insurer is under a legal obligation to provide an insured with a copy of the insured’s previously recorded statements taken before a civil action has been filed and discovery commenced. If an insured seeks the statement to refresh a recollection at an examination under oath, the insurer’s refusal to provide the statement may affect the insured’s ability to provide information at the examination. But that normally is the insurer’s choice. Even if there might be circumstances when it might be unfair or unreasonable for an insurer to demand an examination under oath without complying with an insured’s request for an earliеr recorded statement, here, Brizuela has given no reason why CalFarm’s refusal to provide the statement was unfair or unreasonable.
Brizuela’s failure, six months after CalFarm’s initial request for the examination, to propose any dates for an examination, to respond in a timely manner to CalFarm’s proposed dates, and to submit to an examination constituted a refusal to submit to examination under oath.
(See, e.g., Rosenthal
v.
Prudential Property & Casualty Co.
(2d Cir. 1991)
Brizuela contends that what is in effect a forfeiture of policy benefits is too severe a sanction to impose for his failure to schedule an examination under oath during the six months following CalFarm’s initial demand. He analogizes his inability to agree with CalFarm upon a date certain for the examination to a discovery dispute and claims that the trial court’s imposition of the equivalent of terminating sanctions was inapрropriate. This is not,
however, a discovery dispute, and the range of sanctions that may be imposed in discovery disputes is not available here. Both the terms of the policy and the relevant case authority make clear that a claim for policy benefits may be denied as a consequence of failing to submit to a policy condition for examination under oath.
3. No Showing of Prejudice Was Required
Brizuela argues that CalFarm was not entitled to deny his claim based on the failure to cooperate in the scheduling of an examination under oath unless CalFarm demonstrated that it was prejudiced by that failure.
2
An insurer must demonstrate that it has been “substantially prejudiced” by an insured’s breach of the contractual duty to cooperate in the investigation of a claim, when the insurer is asserting such breach as a defense to an action on the policy.
(Campbell v. Allstate Ins. Co.
(1963)
In
Robinson v. National Auto, etc. Ins. Co., supra,
The purpose of the examination under oath is to enable the insurer to obtain the information necessary to process the claim: “ ‘As the facts with respect to the amount and circumstances of a loss are almost entirely within the sole knowledge of the insured, ... it is necessary that it [the insurer] have some means of cross-examining, as it were, upon the written statement and proofs of the insured, for the purpose of getting at the exact facts before paying the sum claimed of it. Such considerations justify the provision . . . requiring the insured as often as demanded to submit to an examination under oath touching all matters material to the adjustment of the loss, and provisions of that character are held to be reasonable and valid.’ ” (Hickman, supra, 184 Cal. at pp. 529-530.) An insured’s failure to comply with the policy requirement for examination under oath deprives the insurer of a means for obtaining information necessary to process the claim. The inability to obtain such information is prejudicial, absent extraordinary circumstances.
4. The Availability of a Deposition in Litigation is Irrelevant
Brizuela suggests that CalFarm’s failure to take his pretrial deposition in the action excused his breach of the examination under oath requirement. CalFarm’s election to forgo discovery in Brizuela’s bad faith action did not excuse Brizuela’s breach of the policy requirement. An examination under oath and a pretrial deposition “serve vastly different purposes.”
(Goldman v. State Farm Fire Gen. Ins. Co.
(Fla. Dist. Ct. App. 1995)
C. The Bad Faith Cause of Action
Brizuela contends that even if the trial court properly found that Brizuela’s refusal to submit to an examination under oath barred a breach of contract action, he should not have been precluded from pursuing a claim against CalFarm for a bad faith breach of the implied covenant of good faith and fair dealing. The gravamen of a claim for brеach of the covenant of good faith and fair dealing, which sounds in both contract and tort, is the insurer’s refusal, without proper cause, to compensate the insured for a loss covered by the policy.
(Hickman, supra,
at pp. 533-534;
Waters v. United Services Auto Assn.
(1996)
Brizuela cites
Gruenberg, supra, 9
Cal.3d 566, as support for the proposition that he can maintain a bad faith action against CalFarm
notwithstanding his lack of a breach of contract claim. In
Gruenberg,
the insured alleged that the defendant insurers willfully and maliciously conspired to deprive him of benefits under fire insurance policies by encouraging the filing of criminal charges against him; falsely implying that he had a motive to commit arson; and, knowing that the insured would not appear for an examination scheduled during the pendency of criminal proсeedings against him, use his failure to appear at an examination as a pretense for denying liability under the policies. The insured in
Gruenberg
refused to appear for an examination under oath scheduled by the insurers while criminal charges were pending, and the insurers denied the claim on that basis. When criminal charges ultimately were dismissed, the insured advised the insurers that he was prepared to submit to examination; however, the insurers reaffirmed their denial of the claim based on the insured’s failure to appear for examination. The trial court dismissed the insured’s complaint against the insurers for their allegedly bad faith conduct, concluding under
Hickman, supra,
Gruenberg, supra, 9
Cal.3d 566, is distinguishable from the instant case because
Gruenberg
did not involve an insured’s
unexcused
failure to attend an examination under oath. As the court in
Gruenberg
noted, “the allegations of the complaint demonstrate that plaintiff’s failure to appear was induced by defendants’ conduct, in breach of their duty of good faith and fair dealing. Therefore, plaintiff’s obligation to appear may be seen as excused by defendants’ alleged breach.”
(Gruenberg, supra, 9
Cal.3d at p. 578, fn. 9.) As discussed in part B.2.,
ante,
Brizuela’s failure to submit to examination under oath was not excused. Unlike
Gruenberg,
“this case does not involve allegations that the insurer rejected an insured’s claim based on trumped up charges by the insurer.”
(California Fair Plan Association v. Superior Court,
supra,
Although there is language in
Gruenberg, supra, 9
Cal.3d at page 578, that suggests that the existence of a bad faith claim may be independent of and untethered to the insurance contract, the
Gruenberg
court’s holding is much narrower. The court held that “nonperformance” of a contractual duty—in that case an excused nonperformance
(id.
at fn. 9)—does not preclude a.claim for a breach of the duty of good faith and fair dealing. And, more recently, in
Waller
v.
Truck Ins. Exchange, Inc.
(1995)
Some authorities have suggested hypothetical circumstances in which an insurance company might be liable for bad faith despite the insured’s lack of a contract right to benefits under the insurance policy. (Ashley, Bad Faith Actions Liability and Damages (2d ed. 1997), § 5A:02, p. 5A-10 [insurer might be liable for bad faith if, instead of investigating a non-covered claim, insurer embarked on campaign to
D. Dismissal of Brizuela’s Action
Brizuela contends that the trial court should not have dismissed his action, but rather, pending the scheduling of the examination under oath, should have deferred or postponed a determination of the claim on the merits. Brizuela never submitted or agreed to submit to examination under oath. After six months of Brizuela’s unfulfilled promises to provide dates certain for the examination, CalFarm was legally entitled to deny coverage, thereby precluding Brizuela’s claim, and the trial court properly dismissed Brizuela’s action. 5
Brizuela argues that dismissal of his action was improper because his- failure to appear for examination was not willful. Under New York law, summary judgment dismissing an insured’s complaint because of the insured’s failure to submit to examination under oath has been held to be inappropriate without affording the insured a last opportunity to comply, unless tiie insured’s failure to appear was willful.
(See, e.g., 232 Broadway Corp.
v.
Calvert Ins. Co.
(1989)
DISPOSITION
The judgment is affirmed. Each party shall bear his or its own costs.
Turner, P. J., and Armstrong, J., concurred.
Appellant’s petition for review by the Supreme Court was denied June 19, 2004. Kennard, J., was of the opinion that the petition should be granted.
Notes
In accordance with the summary judgment standard of review, we state the uncontradicted facts and the reasonable inferences that can be drawn from them.
(Hersant
v.
Department of Social Services
(1997)
In asserting this position, Brizuela focuses upon language in CalFarm’s January 7, 2000 letter denying the claim in which CalFarm states: “It is the determination of CalFarm Insurance Company that Sergio and Karina Brizuela have failed to cooperate in the scheduling of an examination under oath.” (Italics added.) The letter also refers, however, to “the insureds’ refusal to coоperate and appear for their examinations under oath.” (Italics added.)
As to possible instances of unreasonableness in connection with a demand for an examination under oath, see Gruenberg, supra, 9 Cal.3d at p. 566.
Plaintiff also relies upon
Pruyn v. Agricultural Ins. Co.
(1995)
Globe Indemnity Co. v. Superior Court, supra,
This is not to say that the trial court may not exercise its discretion under Code of Civil Procedure section 437c, subdivision (e).