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FILE
Superior Court of Galiforni:
County of San Francisco
SEP 12 2019
CLERWOF THE COURT
BY: wa Cen Bene —
Deputy Clerk
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF SAN FRANCISCO, CIVIC CENTER COURTHOUSE
HANFORD FREUND & COMPANY, a
California corporation, and POWELL
STREET PARTNERS, LLC, a California
Limited Liability Company,
Plaintiffs,
v.
HOMELAND INSURANCE COMPANY
OF NEW YORK, a Minnesota corporation,
HUB INTERNATIONAL INSURANCE
SERVICES, INC., a California
corporation, DOROTHY
MCCORKINDALE, a California resident,
KRISTIN KOKETSU, a California
resident, and DOES 1 through 10,
inclusive,
Defendants.
Case No. CGC-18-568623
The Hon. Ethan P. Schulman
Dept. 302
ORDER GRANTING PLAINTIFFS’
MOTION FOR SUMMARY.
ADJUDICATION
Date: August 28, 2019
Time: 9:30 a.m.
Dept.: 302
-l-
ORDER GRANTING PLAINTIFFS’ MOTION FOR SUMMARY ADJUDICATION—
oe ert nun FF WB WY
10
ORDER
Plaintiffs Hanford Freund & Company and Powell Partners, LLC’s motion for
summary adjudication is granted. The court concludes that provision 2.b of the Loss
Occurrence Limit of Liability Endorsement to the policy is not effective because the
defendant failed to provide plain, clear and conspicuous notice to plaintiffs of the potential
reduction in coverage stemming from that portion of the endorsement.
The court rejects plaintiffs’ argument that the endorsement changed the policy into
a “valued” policy. Under the Insurance Code, a policy is either “open” or “valued.” (Ins.
Code § 410; see George v. Automobile Club of Southern Calif. (2011) 201 Cal.App.4th
1112, 1129 [rejecting argument that automobile policy that did not show on its face an
agreement to value insured vehicle at $25,000, but instead left the value to be ascertained
in case of loss, was valued policy].) An “open policy” is one in which the value of the
insured property is “left to be ascertained in a case of loss,” and thus is not determined
until after a loss occurs. (Ins. Code § 411; see Doan v. State Farm Gen. Ins. Co. (2011)
195 Cal.App.4th 1082, 1093 fn. 7.) A “valued policy” is one “which expresses on its face
an agreement that the thing insured shall be valued at a specified sum.” (Ins. Code § 412).
Here, the endorsement provides that recovery “will not exceed the lesser of” four
separate formulas to calculate the loss. Such language shows that the value would not be
determined until after the loss. Therefore, the policy is open and Insurance Code §§ 2052,
2053, and 2056 do not apply to this case. (See George v. Automobile Club of Southern
California, 201 Cal.App.4th at 1129; Elliano v. Assurance Co. of America (1975) 45
Cal.App.3d 170, 180 [policy which did not contain clause stating that parties had fixed the
value of insured’s interest in insured building or structure was not a valued policy]; Nat’
Union Fire Ins. Co. of Pittsburgh, Pa. v. California Cotton Credit Corp. (9th Cir. 1935) 76
F.2d 279, 286 [“the term ‘not exceeding’ in a policy of insurance denotes that uncertainty
of amount which is the chief characteristic distinguishing an open from a valued policy”].)
2-
ORDER GRANTING PLAINTIFFS” MOTION FOR SUMMARY ADJUDICATIONoOo errr Dn nH F&F Ww NH
Yb NY NY NY N NY WY a a a ie
It is a long-standing general principle applicable to insurance policies that an
insurance company is bound by a greater coverage in an earlier policy when a renewal
policy is issued but the insured is not notified of the specific reduction in coverage.
[citations]... “[A]n insurer when renewing a policy may not change the terms of the
policy, without first notifying the insured ....” (Fields v. Blue Shield of California (1985)
163 Cal.App.3d 570, 579 [insurer’s failure to notify insured “by a clear, conspicuous
notice in an expected place that coverage he originally had was now totally withdrawn”
required granting insured’s motion for directed verdict as to compensatory damages];
Davis v. United Services Auto. Assn. (1990) 223 Cal.App.3d 1322, 1333 [insurer failed to
provide plain, clear and conspicuous notice of its intent to exclude losses caused by
contractor negligence]; see also Al/state Ins. Co. v. Fibus (9th Cir. 1988) 855 F.2d 660,
663 [reversing summary judgment for insurer where amendatory endorsement replacing
language in “Limits of Liability” section of policy did not conspicuously notify insured of
a reduction in coverage].) Defendants have not cited any authority that limits this renewal-
notification rule to situations where the insured is an unsophisticated individual consumer
rather than, as here, a commercial party represented by an insurance broker.
Insureds are even less likely to read renewal policies than original policies.
Therefore, it is not enough that the new exclusion is “plain and clear” and appears in a
“conspicuous” place in the renewal policy. Some form of specific notice separate from the
policy is required to direct the insured’s attention to the change. (See Sorensen v. Farmers
Ins. Exch. (1976) 56 Cal.App.3d 328, 334.) “But neither the prevalence of endorsements
in the industry nor our recognition that they may validly modify an insurance policy
diminishes an insurer’s burden in notifying insureds of reductions in otherwise reasonably
expected coverage.” (Haynes v. Farmers Ins. Exchange (2004) 32 Cal.4th 1198, 1208.)
In this case, plaintiffs demonstrate that neither plaintiffs nor HUB was given plain,
clear, and conspicuous notice that the endorsement was being added, thereby potentially
reducing the amount of coverage available under the excess policy. (Falvey Dec., 5;
3.
ORDER GRANTING PLAINTIFFS’ MOTION FOR SUMMARY ADJUDICATIONoO Ont KH nH F&F WN
No Ww ON Bw Ye ee Be eB ee ek
BRRBRRBBRRSESCFERABEBHEAS
McCorkindale Dec., {{ 9-16.) The documents that defendant adduces fail to show such
notice. (See McCorkindale Dec., Ex. 3 at 52 and Ex. 4 at 59; Miles Dec., Ex. 1 at 7, Ex. 2
at 15, Ex. 3 at 27, Ex. 4 at 39 and Ex. 5 at 50.)
IT IS SO ORDERED.
parep.Sepr. (I, Zol 4 Pca p Gof’ ———
At ETHAN P. SCHULMAN
JUDGE OF THE SUPERIOR COURT
4.
ORDER GRANTING PLAINTIFFS’ MOTION FOR SUMMARY ADJUDICATIONCm XA Ane wN Ee
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SUPERIOR COURT OF CALIFORNIA
COUNTY OF SAN FRANCISCO
HANFORD FREUND & COMPANY, et al., Case No. CGC-18-568623
Plaintiffs,
CERTIFICATE OF MAILING
v.
(CCP 1013a (4) )
HOMELAND INSURANCE COMPANY, et
al.,
Defendants.
I, Sean Kane, Deputy Clerk of the Superior Court of the County of San Francisco, certify that I am
not a party to the within action.
On September 12, 2019, I served the attached ORDER GRANTING PLAINTIFFS’ MOTION FOR
SUMMARY ADJUDICATION by placing a copy thereof in a sealed envelope, addressed as follows:
Philip L. Pillsbury, Esq. Richard Randal Crispen, Esq.
Eric K. Larson, Esq. SHEPPARD, MULLIN, RICHTER
PILLSBURY & COLEMAN LLP & HAMPTON LLP
600 Montgomery Street, Suite 3100 : 501 West Broadway, 19" Floor
San Francisco, CA 94111 San Diego, CA 92101-3598
Bruce T. Smyth, Esq. Randy M. McElvain, Esq.
Jeffrey A. Charlston, Esq. WESTON & MCELVAIN LLP
CHARLSTON, REVICH & WOLLITZ LLP 1960 East Grand Avenue, Suite 400
1925 Century Park East, Suite 320 E] Segundo, CA 90245
Los Angeles, CA 90067Co eo YN DH FF BW HY
no N NN Be Be Be Be ee ee eB
BeRERRBKRRSERWAARTSRAS
and, I then placed the sealed envelopes in the outgoing mail at 400 McAllister Street, San Francisco, CA 94102
on the date indicated above for collection, attachment of required prepaid postage, and mailing on that date
following standard court practices.
Dated: September 12, 2019 T. Mag (ln?
By:
Séah Kane, Deputy Clerk