This case was last updated from Los Angeles County Superior Courts on 08/26/2020 at 01:34:41 (UTC).

BELL CANYON ASSOCIATION INC ET AL VS RSUI INDEMNITY COMPANY

Case Summary

On 05/17/2018 BELL CANYON ASSOCIATION INC filed a Contract - Insurance lawsuit against RSUI INDEMNITY COMPANY. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The case status is Pending - Other Pending.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    ****6639

  • Filing Date:

    05/17/2018

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Contract - Insurance

  • Court:

    Los Angeles County Superior Courts

  • Courthouse:

    Stanley Mosk Courthouse

  • County, State:

    Los Angeles, California

 

Party Details

Plaintiffs, Petitioners and Appellants

WOLF ERIC

BELL CANYON ASSOCIATION INC.

KENT STEVEN

CARNIGLIA PETER

WOLFU ERIC

Defendants and Respondents

HOFFMAN BROWN COMPANY

RSUI INDEMNITY COMPANY

DOES 1-50

Not Classified By Court

NATIONWIDE LEGAL LLC

CARRILLO FELIPE

Attorney/Law Firm Details

Plaintiff and Petitioner Attorneys

POMERANCE DREW E. ESQ.

FALK BURTON ELLIOTT

POMERANCE EDWARD DREW

Defendant and Respondent Attorneys

TARTAGLIO DAVID A. ESQ.

COLLINS COLLINS MUIR & STEWART LLP

LIEBER MEGAN KATHLEEN

TARTAGLIO DAVID ANTHONY

HOFFMAN DANIEL DAVID

HUMMEL REBECCA SHARALYNN

WITZMANN JUSTIN D.

 

Court Documents

Minute Order - MINUTE ORDER (HEARING ON MOTION FOR SUMMARY ADJUDICATION BY PLAINTIFFS BELL...)

8/24/2020: Minute Order - MINUTE ORDER (HEARING ON MOTION FOR SUMMARY ADJUDICATION BY PLAINTIFFS BELL...)

Brief - BRIEF PLAINTIFFS APPENDIX OF EVIDENCE IN SUPPORT OF PLAINTIFFS OPPOSITION TO HOFFMAN BROWNS MOTION FOR SUMMARY JUDGMENT

7/21/2020: Brief - BRIEF PLAINTIFFS APPENDIX OF EVIDENCE IN SUPPORT OF PLAINTIFFS OPPOSITION TO HOFFMAN BROWNS MOTION FOR SUMMARY JUDGMENT

Separate Statement

7/21/2020: Separate Statement

Minute Order - MINUTE ORDER (COURT ORDER RE CONTINUANCE OF HEARING DATE)

7/31/2020: Minute Order - MINUTE ORDER (COURT ORDER RE CONTINUANCE OF HEARING DATE)

Certificate of Mailing for - CERTIFICATE OF MAILING FOR (COURT ORDER RE RESCHEDULING OF HEARING DATE) OF 05/15/2020

5/15/2020: Certificate of Mailing for - CERTIFICATE OF MAILING FOR (COURT ORDER RE RESCHEDULING OF HEARING DATE) OF 05/15/2020

Minute Order - MINUTE ORDER (COURT ORDER RE RESCHEDULING OF HEARING DATE)

5/15/2020: Minute Order - MINUTE ORDER (COURT ORDER RE RESCHEDULING OF HEARING DATE)

Separate Statement

11/20/2019: Separate Statement

Brief - BRIEF APPENDIX OF EVIDENCE IN SUPPORT OF PLAINTIFFS' MOTION FOR SUMMARY ADJUDICATION OF ISSUES AGAINST HOFFMAN BROWN

11/21/2019: Brief - BRIEF APPENDIX OF EVIDENCE IN SUPPORT OF PLAINTIFFS' MOTION FOR SUMMARY ADJUDICATION OF ISSUES AGAINST HOFFMAN BROWN

Minute Order - MINUTE ORDER (CASE MANAGEMENT CONFERENCE)

9/25/2019: Minute Order - MINUTE ORDER (CASE MANAGEMENT CONFERENCE)

Notice of Ruling - NOTICE OF RULING AT TRIAL SETTING CONFERENCE

6/21/2019: Notice of Ruling - NOTICE OF RULING AT TRIAL SETTING CONFERENCE

Minute Order - MINUTE ORDER (TRIAL SETTING CONFERENCE)

6/21/2019: Minute Order - MINUTE ORDER (TRIAL SETTING CONFERENCE)

Minute Order - MINUTE ORDER (HEARING ON EX PARTE APPLICATION FOR AN ORDER NUNC PRO TUNC TO...)

5/17/2019: Minute Order - MINUTE ORDER (HEARING ON EX PARTE APPLICATION FOR AN ORDER NUNC PRO TUNC TO...)

Response - RESPONSE PLAINTIFFS RESPONSE TO RSUIS SEPARATE STATEMENT OF UNDISPUTED MATERIAL FACTS

3/21/2019: Response - RESPONSE PLAINTIFFS RESPONSE TO RSUIS SEPARATE STATEMENT OF UNDISPUTED MATERIAL FACTS

Objection - OBJECTION AND MOTION TO STRIKE EVIDENCE SUBMITTED BY PLAINTIFFS IN OPPOSITION

3/29/2019: Objection - OBJECTION AND MOTION TO STRIKE EVIDENCE SUBMITTED BY PLAINTIFFS IN OPPOSITION

Request for Judicial Notice

1/14/2019: Request for Judicial Notice

Declaration - Declaration of Lindsay McGhee in support of RSUIs MSJ/MSA

1/14/2019: Declaration - Declaration of Lindsay McGhee in support of RSUIs MSJ/MSA

Case Management Statement

11/14/2018: Case Management Statement

PROOF OF SERVICE SUMMONS -

6/1/2018: PROOF OF SERVICE SUMMONS -

105 More Documents Available

 

Docket Entries

  • 11/30/2020
  • Hearing11/30/2020 at 09:00 AM in Department 39 at 111 North Hill Street, Los Angeles, CA 90012; Post-Mediation Status Conference

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  • 11/30/2020
  • Hearing11/30/2020 at 09:00 AM in Department 39 at 111 North Hill Street, Los Angeles, CA 90012; Trial Setting Conference

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  • 08/24/2020
  • Docketat 09:30 AM in Department 39; Trial Setting Conference - Held - Continued

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  • 08/24/2020
  • Docketat 09:30 AM in Department 39; Post-Mediation Status Conference - Held - Continued

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  • 08/24/2020
  • Docketat 09:30 AM in Department 39; Hearing on Motion for Summary Judgment (by Defendant Hoffman Brown) - Held

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  • 08/24/2020
  • Docketat 09:30 AM in Department 39; Hearing on Motion for Summary Adjudication (by Plaintiffs Bell Canyon Association, Inc., Eric Wolf, Steven Kent, and Peter Carniglia) - Held

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  • 08/24/2020
  • DocketOrder Appointing Court Approved Reporter as Official Reporter Pro Tempore

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  • 08/24/2020
  • DocketMinute Order ( (Hearing on Motion for Summary Adjudication by Plaintiffs Bell...)); Filed by Clerk

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  • 08/24/2020
  • DocketCertificate of Mailing for ((Hearing on Motion for Summary Adjudication by Plaintiffs Bell...) of 08/24/2020); Filed by Clerk

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  • 08/04/2020
  • Docketat 10:30 AM in Department 39; Post-Mediation Status Conference - Not Held - Advanced and Continued - by Court

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153 More Docket Entries
  • 05/31/2018
  • DocketProof-Service/Summons

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  • 05/31/2018
  • DocketPROOF OF SERVICE OF SUMMONS

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  • 05/22/2018
  • DocketOSC-Failure to File Proof of Serv; Filed by Clerk

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  • 05/22/2018
  • DocketORDER TO SHOW CAUSE HEARING

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  • 05/22/2018
  • DocketNOTICE OF CASE MANAGEMENT CONFERENCE

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  • 05/22/2018
  • DocketNotice of Case Management Conference; Filed by Clerk

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  • 05/17/2018
  • DocketSUMMONS

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  • 05/17/2018
  • DocketPLAINTIFFS' COMPLAINT FOR: (1) BREACH OF CONTRACT; ETC

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  • 05/17/2018
  • DocketSummons; Filed by Plaintiff/Petitioner

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  • 05/17/2018
  • DocketComplaint; Filed by Bell Canyon Association, Inc. (Plaintiff); Eric Wolfu (Plaintiff); Steven Kent (Plaintiff) et al.

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Tentative Rulings

Case Number: BC706639    Hearing Date: August 24, 2020    Dept: 39

[Tentative] Ruling:  

1.  The court grants Plaintiffs’ motion for summary adjudication and finds that Defendant Hoffman Brown owed an affirmative duty to disclose to Plaintiffs the existence and terms of the Builder/Developer Exclusion contained in the 2015-16 and 2016-17 Renewal Policies. 

2.  The court denies Defendant’s motion for summary judgment.

Background

This action arises in connection with a Directors and Officers (“D&O”) insurance policy that defendant Hoffman Brown Company (“Hoffman Brown” or “Defendant”) procured on behalf of Plaintiff Bell Canyon Association, Inc. (“BCA” or “Plaintiff”) through Defendant RSUI Indemnity Company (“RSUI”), with initial dates of coverage from February 28, 2014 to February 28, 2015 (“the 2014-15 Renewal Policy”).  Plaintiff BCA alleges it paid all premiums due and otherwise fully performed all conditions required of it under this policy.

According to Plaintiffs, RSUI mailed to Hoffman Brown and BCA a “Notice of Policy Conditional Renewal” on or about December 19, 2014, that was fatally defective under California law because it failed to specify any “change in limits,” “change in type of coverage,” “reduction in coverage,” or other change to the policy.  RSUI inserted a “Builder/Developer exclusion” (“BDE”) in the renewal policy, which was intended to preclude coverage for losses arising from disputes with a “converter, builder, developer or contractor.”

Plaintiff BCA agreed to renew RSUI’s D&O policy, for the effective dates of coverage of February 28, 2015 to February 1, 2016 (“the 2015-16 Renewal Policy”), and paid all premiums due and otherwise fully performed all conditions required of it under this policy.  According to BCA, RSUI failed to provide notice of the changes when it came time to renew coverage for the 2016 policy (“the 2016-17 Renewal Policy”), and BCA allegedly agreed to a renewal of the policy without having been made aware of the BDE.

On or about September 19, 2016, Nissim David-Chai filed a lawsuit, on behalf of himself and certain legal entities he owned or controlled, against plaintiff BCA and plaintiffs Eric Wolf (“Wolf”), Steven Kent (“Kent”), and Peter Carniglia (“Carniglia”) (collectively with BCA, “Plaintiffs”), in a civil action styled Nissim David-Chai v. Bell Canyon Association, Inc., Case no. 56-206-00486775, in the Superior Court for Ventura County (the “David-Chai Action”).  Plaintiffs Wolf, Kent, and Carniglia are BCA’s directors and members of its Architectural Committee.

Upon filing of the David-Chai Action, Plaintiffs tendered the claim to RSUI for defense and indemnity.  RSUI denied coverage and disclaimed its duty to defend and indemnify, citing the BDE.  In their Complaint in this action, Plaintiffs allege four causes of action for: (1) breach of contract against RSUI; (2) tortious breach of the implied covenant of good faith and fair dealing against RSUI; (3) declaratory relief against RSUI; and (4) negligence against Hoffman Brown.

Plaintiffs and RSUI filed cross motions for summary judgment that came to hearing on April 4, 2019, at which time the court granted RSUI’s motion for summary judgment, or, in the alternative, summary adjudication and denied Plaintiffs’ motion.  Defendant Hoffman Brown is the only remaining defendant in this action. 

Plaintiffs now move for summary adjudication against Hoffman Brown on two issues of duty pursuant to Code of Civil Procedure § 437c(f)(1):

1. Whether Defendant Hoffman Brown owed an affirmative duty to disclose to Plaintiffs the existence and terms of the BDE contained in the 2015-16 Renewal Policy issued by RSUI to BCA before BCA accepted the terms of that policy, because there is no triable issue of material fact that Hoffman Brown (1) had superior knowledge about the BDE that it never disclosed to Plaintiffs, and (2) issued an insurance proposal to Plaintiffs that disclosed other endorsed exclusions, but omitted any reference to the BDE.

2. Whether Hoffman Brown owed an affirmative duty to disclose to Plaintiffs the existence and terms of the BDE contained in the 2016-17 Renewal Policy issued by RSUI to BCA before BCA accepted the terms of that policy, because there is no triable issue of material fact that Hoffman Brown (1) had superior knowledge about the BDE that it never disclosed to Plaintiffs, and (2) issued an insurance proposal to Plaintiffs that disclosed other endorsed exclusions, but omitted any reference to the BDE.

Defendant Hoffman Brown moves for summary judgment on the ground that there are no triable issues of material fact on Plaintiffs’ single cause of action for negligence. 

These motions now come to hearing. 

Evidentiary Objections

The court will rule only as to objections that are relevant to its rulings.  (Code Civ. Proc., § 437c(q).)  

I. Plaintiffs’ Motion for Summary Adjudication

A. Defendant’s Objections to the Declaration of Diane Rossiter (“Rossiter”) In Support of Plaintiffs’ Motion for Summary Adjudication (“Pl. Mot. Rossiter Decl.”)

Objections 1 through 6 are overruled.

B. Plaintiffs’ Evidentiary Objections to Defendant’s Separate Statement of Undisputed Material Facts In Support of Defendant’s Motion for Summary Judgment

Objections 1, 2, and 4 through 10 are overruled.

(NB: Plaintiffs’ evidentiary objections do not conform to the format established by California Rule of Court 3.1354(b).  The court expects the parties to comply with all statutory requirements and court rules.)

II. Defendants’ Motion for Summary Judgment

A. Defendants’ Objections to the Declaration of Diane Rossiter In Support of Plaintiffs’ Opposition to Defendant’s Motion for Summary Judgment (“Rossiter Decl. ISO Opp. to Def. Mot.”)

Objections 2 through 8, 10 through 13, and 15 are overruled. Objection 9 is sustained.

B. Defendant’s Objections to the Declaration of Eric Wolf In Support of Plaintiffs’ Opposition to Defendant’s Motion for Summary Judgment (“Wolf Decl. ISO Opp. to Def. Mot.”)

Objections 1 and 2 are overruled.

Analysis

I. Legal Standard

“The purpose of the law of summary judgment is to provide courts with a mechanism to cut through the parties’ pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute.”  (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.)  Pursuant to Code of Civil Procedure, section 437c, subdivision (a):

A party may move for summary judgment in any action or proceeding if it is contended that the action has no merit or that there is no defense to the action or proceeding.  The motion may be made at any time after 60 days have elapsed since the general appearance in the action or proceeding of each party against whom the motion is directed or at any earlier time after the general appearance that the court, with or without notice and upon good cause shown, may direct….  The motion shall be heard no later than 30 days before the date of trial, unless the court for good cause orders otherwise.  The filing of the motion shall not extend the time within which a party must otherwise file a responsive pleading.

(Code Civ. Proc., § 437c, subd. (a).)  A motion for summary judgment may be granted “if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.”  (Code Civ. Proc., § 437c, subd. (c).) 

(1) A party may move for summary adjudication as to one or more causes of action within an action, one or more affirmative defenses, one or more claims for damages, or one or more issues of duty, if the party contends that the cause of action has no merit, that there is no affirmative defense to the cause of action, that there is no merit to an affirmative defense as to any cause of action, that there is no merit to a claim for damages, as specified in Section 3294 of the Civil Code, or that one or more defendants either owed or did not owe a duty to the plaintiff or plaintiffs.

(Code Civ. Proc., § 437c, subd. (f)(1).)  “A motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty.”  (Id.

“The motion shall be supported by affidavits, declarations, admissions, answers to interrogatories, depositions, and matters of which judicial notice shall or may be taken.  The supporting papers shall include a separate statement setting forth plainly and concisely all material facts that the moving party contends are undisputed.  Each of the material facts stated shall be followed by a reference to the supporting evidence.  The failure to comply with this requirement of a separate statement may in the court’s discretion constitute a sufficient ground for denial of the motion.”  (Code Civ. Proc., § 437c, subd. (b)(1); see also Cal. Rules of Court, rule 3.1350(c)(2) & (d).) 

In analyzing motions for summary judgment, courts must apply a three-step analysis: “(1) identify the issues framed by the pleadings; (2) determine whether the moving party has negated the opponent’s claims; and (3) determine whether the opposition has demonstrated the existence of a triable, material factual issue.”  (Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294.)  The court must “view the evidence in the light most favorable to the opposing party and accept all inferences reasonably drawn therefrom.”  (Hinesley, 135 Cal.App.4th at p. 294; Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389 [Courts “liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.”].) 

A motion for summary judgment must be denied where the moving party’s evidence does not prove all material facts, even in the absence of any opposition (Leyva v. Superior Court (1985) 164 Cal.App.3d 462, 475) or where the opposition is weak (Salasguevara v. Wyeth Labs., Inc. (1990) 222 Cal.App.3d 379, 384, 387). 

II. Plaintiffs’ Motion for Summary Adjudication

1. An insurer’s duty to an insured

A party may move for summary adjudication as to one or more issues of duty if it completely disposes of the issue of duty.  (Code Civ. Proc., § 437c, subd. (f)(1).) 

As an initial matter, Defendant Hoffman Brown contends that Plaintiffs’ motion is improper because Plaintiffs’ issues would not completely dispose of an issue of duty.  Defendant argues that Plaintiffs are not asking for a determination of whether Hoffman Brown owed Plaintiffs a duty but are asking whether Hoffman Brown had a duty to perform a specific action above and beyond the limited duty owed by insurance brokers to use reasonable care, diligence, and judgment in procuring the insurance requested by the insured.  (Opp. to Pl. Mot. at pp. 2, 5-6.)  According to Defendant, this is a factual issue that is merely phrased as a legal issue that goes to the issue of breach, not duty.  (Opp. to Pl. Mot. at p. 6.)  The court disagrees. 

Whether a duty of care exists is a question of law for the court.  (Jones v. Grewe (1987) 189 Cal.App.3d 950, 954 (Jones).)  “Ordinarily, an insurance agent assumes only those duties normally found in any agency relationship.  This includes the obligation to use reasonable care, diligence, and judgment in procuring the insurance requested by an insured.  [Citation.]  The mere existence of such a relationship imposes no duty on the agent to advise the insured on specific insurance matters.”  (Id.)  “An agent may, however, assume additional duties by an express agreement or a holding out.”  (Jones, id.

The duty to exercise reasonable care includes a “duty to inform the insured of his rights and obligations under the policy, particularly when an insured’s apparent lack of knowledge may result in a loss of benefits or a forfeiture of rights.  [Citations.]  This obligation is included in the implied duty of good faith and fair dealing which an insurer owes its insured.”  (Jones, supra, 189 Cal.App.3d at p. 955; see also Eddy v. Sharp (1988) 199 Cal.App.3d 858, 866 [holding that where an insurance broker undertakes to prepare an insurance proposal for the insured’s review prior to the purchase of a policy of insurance, the broker bears a duty of care to accurately inform the insured of the policy’s provisions].)  California courts have identified at least three circumstances in which this general duty applies, namely where: “(a) the agent misrepresents the nature, extent or scope of the coverage being offered or provided …, (b) there is a request or inquiry by the insured for a particular type or extent of coverage …, or (c) the agent assumes an additional duty by either express agreement or by ‘holding himself out’ as having expertise in a given field of insurance being sought by the insured … .”  (Fitzpatrick v. Hayes (1997) 57 Cal.App.4th 916, 927.)

Plaintiffs ask the court to adjudicate whether Defendant owed Plaintiffs a duty to disclose the existence of the BDE.  The existence of a duty is a question of law and is an appropriate issue for the court to determine on summary adjudication.  (See Code Civ. Proc., § 437c, subd. (f)(1).)  The existence of factual disputes is alone insufficient to demonstrate that this issue is inappropriate for summary adjudication, since the court views all evidence in the light most favorable to the non-moving party.  (See Hinesley, 135 Cal.App.4th at p. 294.)  Defendant’s first argument, thus, fails. 

The court now turns to the parties’ arguments regarding the existence of a duty.     

2. Defendant’s affirmative duty to disclose the BDE

Plaintiffs contend Hoffman Brown had an affirmative duty to disclose the BDE to Plaintiffs in 2015 and again in 2016.  Plaintiffs rely on Westrick to argue that “a disparity of knowledge may impose an affirmative duty of disclosure.”  (Pl. Mot. at p. 8, quoting Westrick v. State Farm Ins. (1982) 137 Cal.App.3d 685, 692.) 

Defendant, in turn, argues that it did not bear any duty to advise Plaintiffs on specific matters or to ensure that Plaintiffs had adequate coverage to protect against all eventualities.  (Opp. to Pl. Mot. at pp. 6-7.)  Defendant relies on Paper Savers for the proposition that “the onus is … squarely on the insured to inform the agent of the insurance he requires.”  (Opp. to Pl. Mot. at p. 7, citing Paper Savers, Inc. v. NACSA, (1996) 51 Cal.App.4th 1090, 1095.)  According to Defendant, this is because it is the insured, not the broker, who is in the best position to know exactly what his coverage needs are and the amount of risk he is willing to bear.  (Opp. to Pl. Mot. at p. 7, citing Jones v. Grewe (1987) 189 Cal.App.3d 950, 956.) 

The court will address the parties’ arguments as to each issue in turn. 

a. Defendant’s duty to disclose the existence and terms of the BDE contained in the 2015-16 Renewal Policy    

Plaintiff presents a copy of BCA’s 2013-14 Renewal Policy as Exhibit A to the Declaration of Diane Rossiter (“Rossiter Declaration”).  The 2013-14 Renewal Policy contained the following three exclusions: 1) Amended Bodily Injury and Property Damage, 2) Prior and or Pending Litigation Backdated, and 3) Specific Litigation.  It did not include a Builder/Developer Exclusion.  (Pl. Mot. Pl. Evid. Ex. A, at p. RSUI03467.)  Similarly, the 2014-15 Renewal Policy included the same three exclusions as the prior policy.  (Pl. Mot. Pl. Evid. Ex. C.) 

On January 8, 2015, Martha De La Torre (“De La Torre”), one of Defendant’s insurance brokers, e-mailed BCA’s General Manager, Rossiter, to ask her to complete the D&O renewal application that RSUI requested for the upcoming renewal of the BCA D&O policy.  (Def. Evid. ISO Opp. to Pl. Mot., Ex. 1 at p. HB00001.)  Rossiter responded asking if any other company would quote.  (Id.)  In particular, she stated she was “not impressed with RSUI, its coverage (or lack of it) and the deductible.”  (Id.)  Defendant’s Vice President, Terry M. Koplan (“Koplan”), responded stating that they would provide BCA with options for the renewal but that most carriers would decline due to BCA’s loss history.  (Id.

On January 22, 2015, Julio Ramos (“Ramos”) of Kevin Davis Insurance e-mailed Defendant a three-page insurance proposal for an RSUI D&O policy to cover BCA from February 28, 2015 to February 1, 2016.  (Pl. Sep. State. ISO Pl. Mot. (“Pl. Mot. PSS”) ¶ 17.)  This proposal listed five exclusions: (1) “Exclusion – Amended Bodily Injury and Property Damage,” (2) “Exclusion – Builder Developer,” (3) “Exclusion – Prior and/or Pending Litigation Backdated – as expiring,” (4) “Exclusion – Specific – Liens, super liens or foreclosures of any kind,” and (5) “Exclusion – Specific Litigation – as expiring.”  (Id.)  Ramos e-mailed De La Torre stating: “Please note, the changes are due to changes to RSUI’s underwriting appetite for this class of business.  [¶]  A specific exclusion for  liens, super lien and foreclosure was added, as well as Builder developer exclusion.”  (Pl. Mot. PSS ¶ 19.)  The January 22, 2015 e-mail also attached a copy of RSUI’s proposed 2015-16 Renewal Policy, the last page of which included the full text of the proposed BDE.  (Pl. Mot. PSS ¶ 20.) 

On January 29, 2015, Koplan sent Rossiter an e-mail stating: “The D & O does not renew for a couple of weeks, but we have gotten all the responses we are going to get so we included a separate renewal summary for the D & O.  [¶]  The crime policy premium is lower this year.  Coverage is slightly lower, but the premium rate is definitely down.  There are a couple of questions on the attached crime application that need to be completed … .”  (Pl. Mot. Pl. Evid. Ex. D, at p. BCA-NOV2018-0000971; Def. Evid. ISO Opp. to Pl. Mot., Ex. 2 at p. HB00081.)  The attached summary lists three “Major Exclusions (Including but not limited to)”: “Prior and/or Pending Litigation Exclusion,” “Specific Litigation Exclusion: Theresa & Raymond Schaerf Loss,” and “Bodily Injury/Property Damage.”  (Pl. Mot. Pl. Evid. Ex. D, at p. BCA-NOV2018-0000975; Def. Evid. ISO Opp. to Pl. Mot., Ex. 2 at p. HB00104.)  Neither Koplan’s email nor the attached summary mentioned the two new exclusions added to the policy renewal.  (Id.)

On February 12, 2015, Koplan sent Rossiter an e-mail with an invoice for the total premium due of $80,401 for five policy renewals.  (Def. Evid. ISO Opp. to Pl. Mot., Ex. 3.)  This e-mail also included, as an attachment, a binder for the 2015-16 Renewal Policy, which listed the “Exclusion – Builder Developer” among the list of forms and endorsements.  (Id., Ex. 3 at p. HB00167.)  The e-mail also stated that “[a]ll policies, once received, will be reviewed for accuracy and forwarded to you via email in their entirety.”  (Id., Ex. 3 at p. HB00153.)    

An insurer has an obligation to deliver the agreed-upon coverage.  (Paper Savers, supra, 51 Cal.App.4th at p. 1099, citing Desai v. Farmers Ins. Exchange (1996) 47 Cal.App.4th 1110, 1119.)  An insurer’s general duty includes a “duty to inform the insured of his rights and obligations under the policy, particularly when an insured’s apparent lack of knowledge may result in a loss of benefits or a forfeiture of rights.”  (Jones, supra, 189 Cal.App.3d at p. 955, citing Westrick, supra, 137 Cal.App.3d at p. 692.) 

The Court of Appeal’s decision in Eddy is instructive in the context of the aforementioned factsThere, the plaintiffs spoke to an insurance agent to obtain coverage for real property similar to coverage provided under the plaintiffs’ existing policy with the Safeco Insurance Company.  (Eddy, supra, 199 Cal.App.3d at p. 862.)  In response to this inquiry, the insurance agent’s employee sent the plaintiffs an insurance proposal accompanied by a cover letter.  (Id.)  The cover letter described the coverage under the offered “Safepak” policy as “‘All Risk’ subject to All Risk Property Coverage Exclusion list attached for reference.”  (Id.)  The exclusion list contained eight exclusions, but did not list an exclusion for loss due to water backing up through drains or sewers.  (Id.)  Nothing in the cover letter, the description of coverage in the proposal list, or the exclusion list informed plaintiffs that the policy had other exclusions not contained in the exclusion list.  The proposal was accompanied by a disclaimer: “This proposal is prepared for your convenience only and is not intended to be a complete explanation of policy coverage or terms.  Actual policy language will govern the scope and limits of protection afforded.”  (Id.)  After reading the proposal, the plaintiffs purchased the Safepak policy.  They did not read the policy once it was delivered. 

The Eddy plaintiffs’ property was subsequently damaged after the city sewer system adjacent to the property became clogged during a rainstorm and sewage drained into their two basement apartments.  (Id. at pp. 862-63.)  The insurer refused to cover the resulting losses because of an exclusion in the policy for “loss … caused by, resulting from, contributed to or aggravated by … water which backs up through sewers or drains …,” and the plaintiffs initiated suit against the insurer and the insurance agent.  (Id. at p. 863.)  

The insurance agent eventually moved for summary judgment, including on a cause of action for negligent misrepresentation.  (Id.)  The trial court granted the motion and entered judgment in favor of the agent.  (Id.)  The Court of Appeal reversed, recognizing that the insurance agent owed the plaintiffs a duty of due care to accurately inform the plaintiffs of the policy’s provisions under agency principles.  (Id. at pp. 864-66.)

The facts at hand are analogous to those of Eddy.  Here, the January 8 and 29, 2015 letters demonstrate that Defendant undertook to prepare an insurance proposal for a renewal policy for BCA’s D&O coverage and that BCA’s representative, Rossiter, expressed concern regarding the limited scope of the D&O policy that BCA had in place at the time.  The January 22, 2015 e-mail from Ramos establishes that Defendant was made aware that RSUI’s offered 2015-16 Renewal Policy included a BDE that had not previously been present in BCA’s policy. 

As Defendant was expressly notified that the renewal policy offered by RSUI included less coverage than BCA had had under the prior policy because of additional endorsements including the BDE, Defendant owed Plaintiffs a duty of care to accurately inform Plaintiffs of the policy’s provisions and the new reduction in coverage.  (See Eddy, supra, 199 Cal.App.3d at p. 866; see also Jones, supra, 189 Cal.App.3d at p. 955 [“it is an insurer’s duty to inform the insured of his rights and obligations under the policy, particularly when an insured’s apparent lack of knowledge may result in a loss of benefits or a forfeiture of rights”].)  The court notes that the issue of the duty owed by Defendant to Plaintiffs is separate from the question of whether Hoffman Brown breached that duty — an issue that is not before the court on Plaintiffs’ motion. 

Defendant argues Eddy is distinguishable because the proposal provided by the insurance broker did not include a disclaimer that the listed exclusions were not exhaustive in the proposal.  (Opp. to Pl. Mot. at p. 15.)  The court disagrees.  The Eddy court specifically noted that the proposal contained the following disclaimer: “This proposal is prepared for your convenience only and is not intended to be a complete explanation of policy coverage or terms.  Actual policy language will govern the scope and limits of protection afforded.”  (Eddy, supra, 199 Cal.App.3d at p. 862.)  Although the Eddy court held that there was a triable issue of fact as to whether the disclaimer was sufficient to override and nullify the list of identified exclusions, that portion of the court’s analysis focused on whether the insurance broker negligently misrepresented the terms of the policy to the insured—not whether the broker had a duty in the first instance.  (See id. at p. 866.)

Defendant also argues it did not assume any additional duty to ensure that Plaintiffs’ 2015-16 Renewal Policy included coverage for claims brought by a builder, developer, or contractor arising out of a construction dispute.  (Opp. to Pl. Mot at p. 12.)  Defendant relies on Fitzpatrick v. Hayes (1997) 57 Cal.App.4th 916, 927, to argue that while an agent’s misrepresentation about the scope of an insured’s coverage can constitute actionable negligence, only specific misrepresentations directed toward an insured’s targeting inquiries are actionable.  (Opp. to Pl. Mot. at 9.)  The issue in Fitzpatrick was whether an insurance broker had a duty to inform the insured of the availability of additional coverage; it did not address whether an insurance broker bore a duty to inform the insured of reduced coverage upon a policy renewal.  (See Fitzpatrick, 57 Cal.App.4th at pp. 920, 927-28.) 

The issue here is not whether Defendant had a duty to procure or recommend different or additional coverage from what BCA requested, but whether Defendant had a duty to disclose that the terms of the 2015-16 Renewal Policy differed from the prior policies Defendant had procured for Plaintiff so as to result in a reduction of coverage.  Having prepared the insurance proposal for BCA to review, Defendant had an obligation to accurately inform Plaintiffs of their rights and obligations, including the reduction in coverage, under the new policy Defendant obtained, as part of its general duty to use reasonable care, diligence, and judgment in procuring the insurance requested by Plaintiffs.  (See Jones, supra, 189 Cal.App.3d at p. 955.) 

As discussed above, the factual record in this case demonstrates that Plaintiffs sought a renewal policy for an existing D&O policy and that Rossiter expressed her unhappiness with RSUI’s existing coverage and the deductible.  (Def. Evid. ISO Opp. to Pl. Mot., Ex. 1, at p. HB00001.)  Defendant does not present any evidence to suggest that Plaintiffs requested a reduction of coverage or the exclusion of coverage against builder, developer, or contractor claims.  Like Desai and unlike Jones, this action does not concern whether Defendant failed to recommend additional or different coverage.  Rather, it involves whether Defendant failed to deliver the agreed-upon expected coverage.  (See Desai, supra, 47 Cal.App.4th at p. 1119.)  As such, Defendant’s arguments regarding its limited scope of duty fail.   

Lastly, Defendant argues it provided Plaintiffs sufficient notice of the BDE, after the exclusion was added to the 2015-16 Renewal Policy, because Defendant sent BCA a two-page summary of the coverage listing all exclusions, including the BDE.  (Opp. to Pl. Mot. at p. 13.)  Defendant’s argument speaks to whether it breached its duty to accurately inform Plaintiffs of the policy’s reduction in coverage and not whether Defendant owed Plaintiffs a duty in the first instance.

Accordingly, the court finds that Defendant Hoffman Brown owed Plaintiffs an affirmative duty to disclose the existence and terms of the BDE in the 2015-16 Renewal Policy, and the court grants summary adjudication as to this issue.

b. Defendant’s duty to disclose the existence and terms of the BDE contained in the 2016-17 Renewal Policy   

Plaintiffs argue Defendant owed them a duty to disclose the BDE in the 2016-17 Renewal Policy because of the disparity of knowledge with respect to this policy renewal since Defendant was well aware that RSUI had added the BDE to the 2015-16 Renewal Policy, had never disclosed or discussed the existence of the BDE with BCA, and had provided BCA with an insurance proposal in 2015 that disclosed other exclusions but omitted the BDE.  (Pl. Mot. at p. 13.)  Defendant, in turn, contends it put Plaintiffs on notice of the BDE for a full year prior to the renewal of the 2016-17 policy.  (Opp. to Pl. Mot. at pp. 12-14.) 

For the reasons set forth above, the court finds that Defendant owed Plaintiffs an identical duty with respect to the 2016-17 Renewal Policy – namely, a duty to disclose the existence of the BDE and the corresponding reduction in coverage.  (See Jones, supra, 189 Cal.App.3d at p. 955.)  As above, Defendant’s argument is inapposite as it goes to whether it breached its duty rather than the existence of the duty. 

3. Conclusion

Accordingly, the court finds that Plaintiffs have met their burden of demonstrating that Defendant owed BCA a duty to affirmatively disclose the existence of the BDE prior to the renewal of the 2015-16 and 2016-17 Renewal Policies, and grants summary adjudication regarding this issue.  The court declines to determine whether Defendant breached its duty to Plaintiffs.

III. Defendant’s Motion for Summary Judgment

1. Existence of a duty

Defendant contends, as a matter of law, that it had a limited duty to use reasonable care, diligence, and judgment to procure a D&O policy for Plaintiff BCA and that Defendant did not have any duty to obtain coverage for claims brought by a builder, developer, or contractor arising out of a construction dispute.  (Def. Mot. at pp. 9-11.)

As discussed above in connection with Plaintiffs’ motion, because the 2015-16 and 2016-17 Renewal Policies were for renewal of existing coverage and there is no evidence BCA requested or the parties discussed a reduction of coverage, Hoffman Brown owed Plaintiffs duties to use reasonable care, diligence, and judgment to procure a renewal policy that contained the same coverage or to inform Plaintiffs of any reduction in coverage in the renewal policies.  Defendant’s argument regarding a lack of duty thus fails. 

2. Defendant’s alleged breach of its duty to Plaintiffs is a material issue of fact subject to dispute

Defendant next argues it did not breach any duty of care owed to Plaintiffs because it notified Plaintiffs of the BDE in February 2015, prior to the inception of the 2015-16 Renewal Policy and a year before the 2016-17 Renewal Policy went into effect.  (Def. Mot. at p. 17, citing Def. Mot. Def. Sep. State. (“Def. Mot. DSS”) ¶ 6; Def. Mot. Def. Evid. Ex. 3.)  Defendant further contends Plaintiffs received additional notice when they received a full copy of the 2015-16 Renewal Policy several months before Plaintiffs purchased the 2016-17 Renewal Policy.  (Def. Mot. at p. 17, citing Def. Mot. DSS ¶ 7.) 

Defendant relies on Hadland v. NN Investors Life Insurance Co. (1994) 24 Cal.App.4th 1578, 1586 and Hackethal v. National Casualty Co. (1987) 189 Cal.App.3d 1102, 1112 for the proposition that the insured bears the duty of reading its policy.  (Def. Mot. at pp. 5-6.)  According to Defendant, Hackethal held that an insured’s reliance on a broker’s statements was unjustifiable as a matter of law where the insured received a copy of his policy but failed to analyze the document.  (Def. Mot. at p. 6.) 

The Court of Appeal addressed this issue and the aforementioned cases in Paper Savers, stating: “We do not agree with the insurers’ contention [that] the facts in the present case point unerringly to unreasonable reliance as a matter of law.  Essentially, the issue whether an insured has a duty to read his policy and whether in not reading his policy he is, nonetheless, bound by its terms, is a complex one and not one that can be stated baldly without an analysis of the surrounding facts.”  (Paper Savers, supra, 51 Cal.App.4th at p. 1104 [holding that the defendant broker could be held liable for negligence if he held himself out as an advisor to the plaintiff insured and interpreted the coverage in a way different from what the language of the policy indicated].)  Moreover, Westrick, Eddy¸ and Desai, supra, make clear that “the extent of an insurance agent’s duty depends on the nature of the interaction between the agent and the insured and the representations the agent made regarding coverage when discussing the policy.”  (Id. at p. 1104.) 

In addition, the facts in Hackethal are distinct from those in the instant cause.  There, the insured, Dr. Hackethal, received a brochure that was published by the insurer’s predecessor company and which made certain representations regarding benefits to a physician for days spent in court as a defendant in a professional negligence action.  (Hackethal, supra, 189 Cal.App.3d at p. 1106.)  The front of the brochure stated: “Protect yourself from loss of income with a Defendants Reimbursement Policy up to $ 5,000.00 per Trial only $ 30.00 a Year,” and a prominent caveat warned: “This brochure briefly outlines the insurance plan.  Complete details and provisions of the insurance are contained in the policy.”  (Id., italics omitted.)  The broker told Dr. Hackethal that the policy would cover any suit filed against him, even on matters other than malpractice; however, the plaintiff admitted that nothing was discussed about coverage for hearings before administrative agencies with the power to discipline physicians.”  (Id. at p. 1107.)  The plaintiff subsequently filled out the application portion of the brochure and received the policy in the mail along with a letter stating he would be covered if he were a defendant in a case, and he provided renewal payments for each of the nine years thereafter.  (Id.

In 1976, California’s Attorney General, acting on behalf of the Board of Medical Quality Assurance (“BMQA”), filed an accusation against Dr. Hackethal charging him with gross negligence and incompetence in the practice of medicine and with acts of moral turpitude, dishonesty, and corruption.  (Hackethal, 189 Cal.App.3d at p. 1108.)  Dr. Hackethal tendered a claim to the insurer for the time he spent away from his medical practice during those administrative hearings.  The insurer denied the claim, stating that BMQA administrative proceedings were not covered by the policy.  (Id.)  Dr. Hackethal sued and the jury rendered a verdict in his favor at trial.  (Id. at p. 1105.)  The insurer moved for a directed verdict, which the trial court granted in-part and denied in-part.  (Id.)

On both parties’ cross-appeals of the trial court’s directed verdict, the Court of Appeal held that the trial court had erred in denying the insurer a directed verdict on the issue of whether the insurer had committed fraud.  (Id. at pp. 1110-11.)  The court held that the brochure had not contained any misrepresentations and had placed Dr. Hackethal on notice that the terms of the policy controlled the extent of his coverage.  (Id. at pp. 1111-12.) 

Defendant argues that the facts in Hackethal are analogous to those here and that Defendant cannot be held liable for any breach of duty because Plaintiffs were required to read the terms of the 2015-16 and 2016-17 Renewal Policies.  The court disagrees.  Importantly, the insurer in Hackethal did not have a preexisting relationship with the insured before making the statements at issue in that case.  Moreover, Hackethal did not involve an insurance broker’s duties regarding a long-standing client’s renewal coverage or the degree of communication between the broker and the insured regarding the insurer’s decision to reduce coverage in a renewal policy.

Here, Plaintiffs have presented evidence that Defendant had previously obtained D&O policies for BCA from RSUI that did not contain a BDE.  (Pl. Evid. ISO Opp. to Def. Mot., Exs. A, C.)  On January 8, 2015, De La Torre e-mailed Rossiter a renewal application for the RSUI D&O policy and a copy of the existing policy and asked her to complete and return the application along with updated information.  (Def. Mot. Def. Evid. Ex. A.)  When Rossiter asked if there were any other companies which would be willing to provide a quote on coverage, Koplan responded that the premium was high because BCA did not have a clean loss history and most carriers would decline to extend coverage.  (Id.)  Koplan added that Defendant would provide BCA with additional options for the renewal.  (Id.)  Nothing in this correspondence suggests that the RSUI renewal policy would require a reduction of coverage through new exclusions.  (See id.

On January 22, 2015, Ramos of Kevin Davis Insurance e-mailed Defendant a three-page insurance proposal for an RSUI D&O policy to cover BCA from February 28, 2015 to February 1, 2016.  (Pl. Sep. State. ISO Pl. Opp. to Def. Mot. (Def. Mot. PSS) ¶ 16.)  This proposal included 18 exclusions, including “Exclusion – Builder-Developer.”  (Id.)  Ramos specifically informed De La Torre in writing as follows: “Please note, the changes are due to changes to RSUI’s underwriting appetite for this class of business.  [¶]  A specific exclusion for  liens, super lien and foreclosure was added, as well as [a] Builder developer exclusion.”  (Def. Mot. PSS ¶ 18.)  Ramos’ e-mail included a copy of RSUI’s proposed 2015-16 Renewal Policy as an attachment along with the full text of the proposed BDE.  (Id.)  Neither De La Torre nor Koplan provided Plaintiffs a copy of this correspondence or the proposed 2015-16 Renewal Policy before BCA’s renewal of the policy. 

On January 29, 2015, Koplan sent Rossiter an e-mail stating: “The D & O does not renew for a couple of weeks, but we have gotten all the responses we are going to get so we included a separate renewal summary for the D & O.  [¶]  The crime policy premium is lower this year.  Coverage is slightly lower, but the premium rate is definitely down.  There are a couple of questions on the attached crime application that need to be completed ….”  (Def. Evid. ISO Opp. to Pl. Mot., Ex. 2 at p. HB00081.)  The attached summary lists three “Major Exclusions (Including but not limited to)”: “Prior and/or Pending Litigation Exclusion,” “Specific Litigation Exclusion: Theresa & Raymond Schaerf Loss,” and “Bodily Injury/Property Damage.”  (Def. Evid. ISO Opp. to Pl. Mot., Ex. 2 at p. HB00104.)  Neither Koplan’s email nor the attached summary mentioned the two new exclusions RSUI had added to the policy renewal.  (Id.

On February 12, 2015, Koplan sent Rossiter an e-mail with an invoice for the total premium due of $80,401 for five policy renewals.  (Def. Evid. ISO Opp. to Pl. Mot., Ex. 3.)  This e-mail included, as an attachment, a binder for the 2015-16 Renewal Policy, which listed the “Exclusion – Builder Developer” among the list of forms and endorsements.  (Id., Ex. 3 at p. HB00167.)  The e-mail stated that “[a]ll policies, once received, will be reviewed for accuracy and forwarded to you via email in their entirety.”  (Id., Ex. 3 at p. HB00153.)  Defendant did not send Plaintiffs a copy of the 2015-16 Renewal Policy before it incepted.  (Pl. Resp. to Def. Mot. Def. Sep. State. (Def. Mot. PRS) ¶ 7.)

Unlike Hackethal, Defendant’s January 8 and 29, 2015 communications do not disclose RSUI’s addition of the BDE or include a copy of the full policy.  (See Def. Mot. Def. Evid. Exs. 1, 2.)  Nothing in these two communications would suggest to Plaintiffs that the 2015-16 Renewal Policy contained less coverage than the preexisting policy.  To the contrary, Defendant’s proposal for the 2015-16 Renewal Policy only lists the same three exclusions that were present in BCA’s prior D&O policies with RSUI.  (Cf. Def. Mot. Def. Evid. Ex. 2, at p. HB00104 with Pl. Evid. ISO Opp. to Def. Mot. Ex. B at p. BCA-FEB2019-0000005, Ex. D at BCA-NOV2018-0000975.) 

Although Defendant listed the two new exclusions among the list of forms and endorsements attached to the February 12, 2015 e-mail, there was nothing in the body of the e-mail to suggest to BCA that the renewal policy differed from prior policies and contained less coverage as a result of the two new exclusions.  (See Def. Evid. ISO Opp. to Pl. Mot., Ex. 3.)  Viewing the evidence in the light most favorable to Plaintiffs, a triable issue of fact exists as to whether the February 12, 2015 e-mail was sufficient for Defendant to meet its duty to use reasonable care, diligence, and judgment to inform Plaintiffs that the renewal policy would provide less coverage than the prior policy.  (See Eddy, supra, 199 Cal.App.3d at p. 866.) 

Similarly, a triable issue of fact exists with respect to the 2016-17 Renewal Policy.  Defendant argues Plaintiffs could not have reasonably relied on representations by Defendant because Defendant provided Plaintiffs with notice of the BDE and a copy of the policy before BCA purchased the 2016-17 Renewal Policy.  (Def. Mot. at p. 7.)  

As mentioned, the February 12, 2015 e-mail did not include any discussion of the contents of the 2015-16 Renewal Policy and only stated, in relevant part: “Attached is our invoice for the total premium due of $80,401 for the following February renewals: … 5. Directors & Officers with RSUI Indemnity – Binder is attached. …  All policies, once received, will be reviewed for accuracy and forwarded to you via email in their entirety.”  (Def. Mot. Def. Evid. Ex. C, at p. HB00153.)  This e-mail did not mention the BDE or state that the attached Binder listed different coverage and additional exclusions than BCA’s prior RSUI-issued D&O policies.  (See id.)  As such, a triable issue of fact exists as to whether this e-mail was sufficient for Defendant to meet its duties of care to Plaintiffs. 

Similarly, while it is undisputed Defendant provided Plaintiffs with a copy of the 2015-16 Renewal Policy before BCA purchased the 2016-17 Renewal Policy, Defendant does not present any evidence it ever explicitly informed Plaintiffs the 2015-16 Renewal Policy contained exclusions that had not been present in prior versions of the D&O policy or that the parties had ever discussed reducing the scope of BCA’s D&O coverage.  Viewing the evidence in the light most favorable to Plaintiffs, a triable issue of fact exists as to whether Defendant breached its duties to Plaintiffs to use reasonable care, diligence, and judgment in procuring the requested renewal and to inform Plaintiffs of their rights and obligations under the renewed policies.  (See Jones, supra, 189 Cal.App.3d at p. 955.)

Accordingly, the court rejects Defendant’s assertion that Plaintiffs’ receipt of a full copy of the 2015-16 Renewal Policy is sufficient, as a matter of law, to establish that Defendant cannot be liable for a breach of the duty of care and finds that Defendant has failed to meet its burden to demonstrate the non-existence of triable issues of fact as to whether it breached its duty of reasonable care, diligence, and judgment to obtain the renewal policy requested by Plaintiffs or to inform Plaintiffs that the scope of coverage of the renewal policies was less than prior policies.

3. Conclusion

For these reasons, the court denies Defendant’s motion for summary judgment.