Mills v. AAA Northern California, Nevada & Utah Insurance Exchange

Filed 9/20/16
CERTIFIED FOR PARTIAL PUBLICATION*
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE DISTRICT
(Sacramento)
----
TRENT MILLS, an Incompetent Person, etc., C072644
Plaintiff and Appellant, (Super. Ct. Nos.
34-2009-00048359-CU-BC-
v. GDS &
34-2010-00085311-CU-IC-
AAA NORTHERN CALIFORNIA, NEVADA AND GDS)
UTAH INSURANCE EXCHANGE,
Defendant and Respondent.
APPEAL from a judgment of the Superior Court of Sacramento County, David I.
Brown, Judge. Affirmed.
Farmer Smith & Lane and Blane A. Smith for Plaintiff and Appellant.
Coddington, Hicks & Danforth, R. Wardell Loveland and Carrie Dupic Huynh for
Defendant and Appellant.
* Pursuant to California Rules of Court, rules 8.1105 and 8.1110, this opinion is certified
for publication with the exception of parts III and IV.
1
Defendant insurance company denied uninsured motorist coverage to a third party
beneficiary injured in an automobile accident because it had cancelled the policy before
the accident occurred. The third party sued, and the insurer sought summary judgment.
The third party opposed, contending the cancellation was invalid because a written notice
seeking information sent by the insurer to the insureds prior to cancellation was
unreasonable as a matter of law, and disputed facts existed as to whether the insurer had
mailed the notice of cancellation and actually cancelled the policy. The trial court
granted summary judgment, and we affirm.
FACTS AND PROCEDURAL HISTORY
California law grants an insurer the right to cancel an automobile insurance policy
prior to its expiration due to ―a substantial increase in the hazard insured against.‖ (Ins.
Code, § 1861.03, subd. (c)(1).)
A ―substantial increase in the hazard insured against‖ occurs when, among other
events, the insured refuses or fails to provide the insurer, ―within 30 days after reasonable
written request to the insured, information necessary to accurately underwrite or classify
the risk.‖ (Cal. Code Regs., tit. 10, § 2632.19(b)(1).) The written request for information
must inform the insured ―his or her failure to provide the requested information within
the time required may result in the cancellation or nonrenewal of his or her policy.‖
(Ibid.)
Defendant AAA Northern California, Nevada and Utah Insurance Exchange
(AAA) issued an auto insurance policy to plaintiffs Jeff and Denise Fields for an annual
period commencing March 18, 2004. The policy identified Jeff Fields, Denise Fields,
and their daughter, plaintiff Krystal Fields, as the insured drivers. It granted AAA the
right to cancel the policy for any reason permitted by California law by mailing notice to
the Fieldses no less than 20 days prior to the date of cancellation.
2
On February 5, 2005, Jeff and Denise Fields‘s son, Patrick, collided with a parked
vehicle while driving one of the cars insured under the policy. Patrick was not listed as
an insured driver on the policy at that time.
AAA renewed the policy on March 18, 2005, for one year. However, by letter
dated March 23, 2005, AAA informed Jeff and Denise Fields it sought information it
claimed was necessary to underwrite their policy accurately. It offered them the
opportunity to exclude Patrick from coverage by completing and returning an enclosed
form. Alternatively, if they wanted to add Patrick to the policy or if they had other
questions, they were to call AAA. The letter stated that if the Fieldses did not respond by
April 22, 2005, AAA would cancel their policy. We address the letter in greater detail
below.
AAA received no response to its request for information from the Fieldses.
By letter dated April 28, 2005, AAA notified the Fieldses it was cancelling their
policy effective May 28, 2005. The decision to cancel the policy was ―based on the
refusal or failure to provide necessary information to accurately underwrite your policy
following the request for the same.‖ AAA again received no response from the Fieldses.
On July 6, 2005, plaintiff Krystal Fields and her passenger, plaintiff Trent Mills,
were injured in an automobile accident. Krystal was driving a car her parents had insured
under their AAA policy. An uninsured motorist drove the other car. Mills suffered
severe injuries, including traumatic brain injury and multiple fractures. He was in a coma
for six weeks and suffered permanent cognitive impairments.
Krystal tendered an uninsured motorist claim to AAA under her parents‘ policy.
AAA denied the claim because it had cancelled the policy prior to the accident.
Mills filed a complaint for personal injuries against the driver and registered
owner of the other uninsured vehicle as well as Krystal and her parents. The Fieldses
tendered the suit to AAA for defense and indemnity. AAA denied the tender because the
policy was not in effect at the time of the accident.
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Mills dismissed Jeff and Denise Fields from his action prior to trial, and the court
found in favor of Krystal. However, the court granted Mills a default judgment in excess
of $12.7 million against the driver and owner of the other uninsured vehicle. Mills
requested uninsured motorist benefits from AAA and demanded AAA arbitrate his claim
against the Fieldses‘ policy. AAA denied the demand, again because it had canceled the
policy before the accident occurred.
In consolidated actions, the Fieldses and Mills sued AAA. Krystal Fields and
Mills alleged AAA breached its insurance policy with the Fieldses when it denied their
claims for uninsured motorist coverage. Jeff, Denise, and Krystal Fields alleged AAA
breached its insurance policy by refusing to defend them against Mills‘s action. All
plaintiffs alleged AAA breached the implied covenant of good faith and fair dealing. All
plaintiffs sought punitive damages.
AAA filed for summary judgment. It contended it lawfully cancelled the Fieldses‘
policy prior to the accident due to the Fieldses‘ failure to provide necessary information
AAA had requested in order to underwrite the policy accurately. AAA introduced
evidence showing it forwarded the March 23 request for information and the April 28
notice of cancellation to the Fieldses, those notices complied with all statutory
requirements imposed on them, and it acted reasonably in compliance with the implied
covenant of good faith and fair dealing.
Plaintiffs opposed the motion for summary judgment, and they also filed a motion
for summary adjudication against AAA‘s affirmative defense that it lawfully cancelled
the insurance policy prior to the accident. They contended AAA had not lawfully
cancelled the policy because AAA‘s request for information and notice of cancellation
failed to comply strictly with statutory requirements, the request for information was not
a ― ‗reasonable written request‘ ‖ because it did not actually request any information, and
AAA had not established any facts showing there had been a substantial increase in the
hazard insured against. Plaintiffs further claimed they did not receive AAA‘s letters, and
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contested facts existed as to whether AAA had actually mailed the letters and cancelled
the policy. Alternatively, plaintiffs asked the court to deny AAA‘s motion or continue
the hearing to allow them time to conduct further discovery on their punitive damages
claim, as AAA had allegedly obstructed plaintiffs‘ attempts to depose AAA personnel
over a period of 17 months.
The trial court granted summary judgment in favor of AAA and denied plaintiffs‘
motion for summary adjudication. It ruled that undisputed facts demonstrated AAA
lawfully cancelled the insurance policy prior to the accident. AAA requested information
from the Fieldses it claimed it needed in order to underwrite the insurance policy, the
written request was reasonable, and the Fieldses did not respond to it. The court found no
disputed issues of material fact regarding the adequacy of the request for information and
whether AAA actually mailed the notice of cancellation and cancelled the policy.
Because there was no breach of contract, the court found there could be no breach of the
implied covenant. The court also refused to continue its consideration of the motion
pending further discovery on the issue of punitive damages.
Only plaintiff Mills appeals from the trial court‘s judgment. He contends the court
erred in its judgment because:
1. The March 23, 2005, written request for information was not, as a matter of
law, a reasonable written request to secure information necessary for AAA to underwrite
the risk accurately;
2. Triable issues of material fact exist regarding whether AAA actually sent
the notice of cancellation and whether the policy was actually cancelled as of the date of
the accident;
3. Triable issues of material fact exist regarding AAA‘s alleged breach of the
implied covenant; and
5
4. The trial court abused its discretion by not continuing the hearing on the
punitive damages claim as AAA had obstructed all of plaintiffs‘ attempts to depose
witnesses.
DISCUSSION
I
Standard of Review
Our scope of review is the same as the trial court‘s, and we exercise our
independent judgment. (Guz v. Bechtel National, Inc. (2000) 24 Cal. 4th 317, 334;
(Starzynski v. Capital Public Radio, Inc. (2001) 88 Cal. App. 4th 33, 37.) A trial court
must grant summary judgment ― ‗if all the papers submitted show‘ that ‗there is no triable
issue as to any material fact‘ ([Code Civ. Proc.,] § 437c, subd. (c))—that is, there is no
issue requiring a trial as to any fact that is necessary under the pleadings and, ultimately,
the law [citations]—and that the ‗moving party is entitled to a judgment as a matter of
law‘ (Code Civ. Proc., § 437c, subd. (c)). . . . In ruling on the motion, the court must
‗consider all of the evidence‘ and ‗all‘ of the ‗inferences‘ reasonably drawn therefrom
([Code Civ. Proc.,] § 437c, subd. (c)), and must view such evidence [citations] and such
inferences [citations], in the light most favorable to the opposing party.‖ (Aguilar v.
Atlantic Richfield Co. (2001) 25 Cal. 4th 826, 843.)
In determining whether there is a triable issue of material fact, we consider all the
evidence set forth by the parties except that to which objections have been made and
properly sustained. (Code Civ. Proc., § 437c, subd. (c); Guz v. Bechtel National, Inc.,
supra, 24 Cal.4th at p. 334.)
II
Reasonableness of the Request for Information
Mills argues the trial court erred in granting summary judgment because the
request for information, contrary to governing regulation, was not a reasonable request
that sought information necessary for AAA to underwrite the risk accurately. He
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contends the request was not a reasonable request as a matter of law because it did not
request any specific information, and, in particular, it did not request any information
AAA actually needed to determine its risk. We disagree with Mills‘s contention. The
request for information was a reasonable request.
In 1988, voters passed Proposition 103, which made ―numerous fundamental
changes in the regulation of automobile and other types of insurance.‖ (Calfarm Ins. Co.
v. Deukmejian (1989) 48 Cal. 3d 805, 812, fn. omitted.) One of those changes prohibited
an auto insurer from cancelling an insurance policy prior to its expiration date except on
certain limited grounds. As already mentioned, one of those grounds allows an insurer to
cancel an auto insurance policy due to ―a substantial increase in the hazard insured
against.‖ (Ins. Code, § 1861.03, subd. (c)(1).) The Insurance Code does not define what
constitutes ―a substantial increase in the hazard insured against.‖
A regulation promulgated by the Department of Insurance defines what constitutes
a ―substantial increase in the hazard insured against.‖ Such an increase occurs when,
among other events, the insured refuses or fails ―to provide to the insurer, within 30 days
after reasonable written request to the insured, information necessary to accurately
underwrite or classify the risk.‖ (Cal. Code Regs., tit. 10, § 2632.19(b)(1) (hereafter
section 2632.19).) Other than to require the written request to inform the insured in
English and Spanish that ―his or her failure to provide the requested information within
the time required may result in the cancellation or nonrenewal of his or her policy,‖
(ibid), the regulation imposes no requirement on what a request for information must
contain or request in order to be considered reasonable. The parties have not found any
other authority directly on point, and neither have we.
To determine what a ―reasonable written request‖ is, we rely first on the
regulation‘s plain language. (Butts v. Board of Trustees of the California State University
(2014) 225 Cal. App. 4th 825, 835 (Butts).) The term ―reasonable‖ has many meanings,
but those most appropriate here are: ―Within the limits of what it would be rational or
7
sensible to expect; not extravagant or excessive; moderate. . . . [I]n accordance with
reason; not irrational, absurd, or ridiculous; just, legitimate; due, fitting. . . . Sufficient,
adequate, or appropriate for the circumstances or purpose; fair or acceptable in amount,
size, number, level, quality, or condition.‖ (Oxford English Dict. (3d ed. 2009) at
http://www.oed.com/view/Entry/159072?redirectedFrom=reasonable#eid [as of Sept. 20,
2016].)
The term ―reasonable‖ has so many meanings, we also look to the voters‘ intent
for the statutory scheme to define the term‘s meaning in section 2632.19. (See Butts,
supra, 225 Cal.App.4th at p. 838.) The voters enacted Proposition 103 ―to protect
consumers from arbitrary insurance rates and practices, to encourage a competitive
insurance marketplace, to provide for an accountable insurance commissioner, and to
ensure that insurance is fair, available, and affordable for all Californians.‖ (Prop. 103,
§ 2, Stats. 1988, p. A-276, italics added.) The initiative states it ―shall be liberally
construed and applied in order to fully promote its underlying purposes.‖ (Prop. 103, § 8,
Stats. 1988, p. A-290.)
Thus, to be a ―reasonable‖ written request for information necessary to underwrite
or classify the risk accurately, the request must be rational, appropriate for the
circumstance, and necessary to the insurer‘s ability to evaluate the risk of offering the
policy. The request cannot be arbitrary or unrelated to the insurer‘s need to reevaluate
the risk it incurs.
With these concepts in mind, we turn to the written request for information AAA
sent to the Fieldses. The body of the request reads in full:
―It has been brought to our attention that we do not have the necessary information
to list a driver who resides in your household or has regular use of your vehicle(s).
―All licensed operators in your household or who have regular usage of your
vehicle(s) are potential exposures, and we must ask for certain underwriting information
8
to accurately underwrite your automobile policy to determine the qualification and rating
of your policy.
―We do not have all the information necessary to accurately underwrite your
automobile insurance policy. We are required to advise you in writing that if you fail to
provide the necessary information requested within 30 days of the above date, your
policy will be cancelled.
―No hemos obtenido toda la informacion necesaria para subscribir adecuadamente
la poliza de seguro de su automovil. Nuestra empresa esta obligada a notificarle por
escrito que, de no suministrar los datos requiridos antes del termino de 30 dias a partir de
la fecha arriba indicada, su poliza sera cancelada.
―If you choose not to provide the information, you can exclude the driver from
your policy.
―To exclude PATRICK FIELDS (son), sign, date, and return the enclosed form in
the envelope provided. Please read the endorsement carefully. There is no coverage
afforded under the policy while any motor vehicle is being used or operated by an
excluded person.
―If the required information or the exclusion is not provided to us by 04/22/2005
your policy will be mid term cancelled due to a substantial increase in the hazard insured
against.
―If you choose to add the driver or have any questions, please contact the
Sacramento – Madison District Office at (916) 331-7610 or the Member Service Center
at 800-922-8228.‖
9
Included with the letter was a form for the Fieldses to use if they chose to exclude
Patrick from their policy.
This letter was a reasonable written request for information necessary to
underwrite or classify AAA‘s risk. There is no evidence showing the letter was arbitrary
or unrelated to AAA‘s needs. It arose from having a car AAA insured incur damage in
an accident by a family member who was not named on the policy. It was reasonable for
AAA to attempt to seek information to determine whether Patrick would be a regular
driver of a family vehicle or, if not, to seek to have Patrick excluded from coverage.
Mills contends the written request is unreasonable because it does not contain a
request for the information Mills claims AAA needed in order to evaluate its risk from
Patrick‘s use of the family vehicles. He argues the insurance policy authorized AAA to
cancel the policy if the driver‘s license of any operator who either lives in the insured‘s
household or customarily operates the insured‘s autos is suspended or revoked. Thus,
Mills argues, in order to evaluate its risk regarding Patrick under the terms of the policy,
AAA had to know only whether Patrick resided with his parents, held a driver‘s license,
and regularly used their cars. He claims the written request was not reasonable because it
did not specifically ask for that information. Indeed, he asserts the request does not
request any specific information at all.
We disagree with Mills‘s assertion. Section 2632.19 does not require a written
request to contain certain questions or identify specific information requested. Rather, it
requires the written request to be reasonable, and the request here satisfies that
requirement. The writing asks if the Fieldses intend to include or exclude Patrick from
coverage. If the Fieldses were willing to exclude Patrick from coverage, AAA would not
likely need any additional information, as its risk would remain unchanged. If, however,
the Fieldses were not willing to exclude Patrick from coverage, AAA would need
additional information. Hence, AAA asked the Fieldses to call AAA to include Patrick in
their coverage or ask other questions. Had the Fieldses made that call, AAA then could
10
request the additional information Mills suggests it would need to determine whether to
continue underwriting the policy.
Mills also asserts AAA‘s use of the letter somehow failed to comply strictly with
Insurance Code provisions that govern cancellation of insurance policies. Mills correctly
states that policy cancellation ―can only be accomplished by strict compliance with the
terms of any statutory provisions applicable to cancellation‖ (Mackey v. Bristol West Ins.
Service of Cal., Inc. (2003) 105 Cal. App. 4th 1247, 1258), and with the terms of the
policy itself. (Lee v. Industrial Indemnity Co. (1986) 177 Cal. App. 3d 921, 924.)
However, as shown above, there are no statutory or regulatory requirements imposed on
the written request for information except that it be reasonable, and Mills has not alleged
AAA‘s written request somehow violated the terms of AAA‘s policy with the Fieldses.
Based on the undisputed facts, we cannot say AAA sent the letter for an arbitrary
purpose or sought irrelevant or unnecessary information unrelated to its analysis of risk
under the particular circumstances. The letter was a reasonable written request within the
meaning of section 2632.19, and the trial court did not err in finding so as a matter of
law.
III
Issues of Fact as to the Notice of Cancellation’s Mailing and the Status of Cancellation
Mills contends the trial court erroneously granted summary judgment because
contested issues of material fact exist as to whether AAA actually mailed the April 28
notice of cancellation and whether the cancellation became effective. We disagree, as
uncontested facts establish AAA sent the notice of cancellation to the Fieldses and later
cancelled their policy.
A. Notice of cancellation
We address first the facts indicating AAA mailed the notice of cancellation to the
Fieldses. To prove it mailed the notice of cancellation, AAA introduced the sworn
declarations of three employees. Tina Tang declared she printed 10 notices of
11
cancellation from AAA‘s mechanized letter request system. She inserted each of the 10
letters into 10 separate AAA envelopes, each addressed to 10 different insureds; one of
which was the Fieldses at the address listed in the policy. After she inserted each
cancellation letter ―into a properly addressed envelope,‖ she placed each of the 10
envelopes in a special mail bin for cancellation letters. She also prepared and placed in
the same bin a document known as a Proof of Mailing – Report Listing for April 28, 2005
(proof of mailing), which listed the names and addresses of each of the insureds whose
policy was being cancelled. The Fieldses were listed on the proof of mailing.
A second employee, Douang Rintharamy, declared she used a machine to seal and
affix the correct postage amount on each of the 10 envelopes. She cross-referenced the
addressed envelopes with the list on the proof of mailing. One of those envelopes was
addressed to the Fieldses. She then affixed a postage meter stamp reflecting the total
postage for all of the envelopes onto the proof of mailing.
A third employee, Calvin Huey, declared he took the envelopes and the proof of
mailing to the United States Post Office at Fox Plaza in San Francisco. There, the post
office clerk took the envelopes, reviewed the proof of mailing, and ―round-date stamped‖
the report to note receipt of the envelopes.
Certain rules determine whether the facts show the notice of cancellation was
mailed. First, ―[p]roof of mailing of notice of cancellation . . . to the name insured at the
address shown in the policy or to the named insured‘s latest known address, shall be
sufficient proof of notice.‖ (Ins. Code, § 664.) AAA‘s policy with the Fieldses also
provided that ―[p]roof of mailing a notice is proof of notice.‖ Second, ―[t]he affidavit of
the person who mails the notice, stating the facts of such mailing, is prima facie evidence
that the notice was thus mailed.‖ (Ins. Code, § 38.) To prove the notice was mailed, the
witness‘s affidavit must describe the following steps: ―(1) the witness placed a notice of
cancellation of the subject policy in an envelope, (2) the envelope was addressed to [the
insured] at the declared address, (3) the envelope was affixed with the proper postage,
12
and (4) placed in the United States mail at a certain location.‖ (Preis v. American
Indemnity Co. (1990) 220 Cal. App. 3d 752, 759-760 (Preis).) AAA‘s employee
declarations satisfied the Preis requirements.
Mills contends AAA‘s employee declarations do not satisfy Preis because Tang
did not testify that she matched the name and address on each letter with the envelope
that bore the same name and address. Tang testified she inserted each cancellation letter
into a ―properly addressed envelope.‖ This indicates she inserted each letter into its
corresponding envelope.
AAA‘s evidence satisfied the Preis requirements and shifted the burden onto Mills
to dispute these material facts with competent evidence. Mills submitted the declarations
of Jeff and Denise Fields, who both declared they did not receive either the March
request for information or the April notice of cancellation. However, neither Jeff nor
Denise made their declarations under penalty of perjury. (See Code Civ. Proc., § 2015.5;
Kulshrestha v. First Union Commercial Corp. (2004) 33 Cal. 4th 601, 612 [declarations
not made subject to perjury law are defective].) AAA objected to both declarations, and
the trial court sustained the objections. We, too, do not consider the unsworn
declarations.
Mills also submitted copies of electronic notes placed in AAA‘s underwriting file
for the Fieldses that concerned the adjustment of the claims made on the policy after the
accident. The notes indicate the policy cancellation was entered on June 8, 2005, and the
records reflect a pro-rata credit was given to the Fieldses on the same day. Darold
Cornell, a field casualty specialist assigned to adjust plaintiffs‘ claims, and Kenneth
Daack, a litigation examiner, both wrote file notes indicating that from their review of the
file, the Fieldses had been sent a request dated March 23, 2005, advising the Fieldses to
exclude Patrick, and had been sent a notice of cancellation dated April 28, 2005, advising
the policy would be cancelled on May 28, 2005. Cornell wrote the notice of cancellation
13
had been sent by certified mail. He spoke with another employee who said she had proof
of service because the Fieldses had signed for the letter.
A few days later, Cornell noted there was a document in the file from Miguel
Hernandez at the Sacramento records center that states ―no cancellation letter sent out,‖
followed by a ledger with several claim numbers, and ― ‗this claim‘ not being one of
them.‖ Cornell was also informed that AAA does not mail cancellation notices by
certified mail or receive proof of receipt from the recipient. AAA is required only to
show proof of mailing, and Cornell received the proof of mailing that showed the
cancellation notice had been sent to the Fieldses. Cornell believed there was a
discrepancy between Hernandez‘s notes and the proof of mailing he received from
personnel in underwriting. He called Hernandez and underwriting and asked them to
contact each other to clarify the mailing of the cancellation letter and to let him know
their conclusion. The record does not indicate whether that occurred. However, the
record does indicate AAA denied the Fieldses‘ claim 16 days after Cornell asked
Hernandez and underwriting to contact each other.
We agree with the trial court that no disputed issue of material fact exists
concerning whether AAA mailed the notice of cancellation to the Fieldses. The cryptic
note found by Cornell and attributed to Hernandez does not create a triable issue over
whether AAA mailed the notice of cancellation to the Fieldses. The three people who
actually mailed the notice of cancellation attested to their actions under oath and penalty
of perjury. There is no evidence in the record addressing the accuracy of what Cornell
said he found written by Hernandez. That the notes were true and correct copies of what
was in AAA‘s file does not establish the notes‘ contents were true, particularly when
opposed by the sworn testimony of the three percipient witnesses. Mills thus failed to
introduce competent evidence disputing whether AAA mailed the notice of cancellation
to the Fieldses.
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B. Status of cancellation
Mills also claims disputed facts exist concerning whether the insurance policy was
actually cancelled as of the date of the accident. He cites to a policy declarations page
issued by AAA and dated May 2, 2005, that states the policy period is from May 5, 2005,
to March 18, 2006. Of course, the policy declarations page was issued before the
cancellation became effective, and nothing in the document suggests cancellation was
either made or rescinded. The policy declarations page does not establish the policy was
in effect as of the date of the accident.
Mills also introduced a billing statement dated March 16, 2006. The statement
indicates that as of June 2, 2005, there was a pending cancellation notice. Mills correctly
argues that, according to the statement, this cancellation notice was rescinded on June 6,
2005. However, the statement also indicates the policy was in fact cancelled. It lists the
―cancel date‖ as May 28, 2005. It also shows that on June 8, 2005, two days after the
―rescindment‖ emphasized by Mills, there was a ―Pro-Rate Cancellation,‖ resulting in a
credit to the Fieldses in the amount of $3,310.00. A finance charge remained past due as
of June 24, 2005, and someone paid that in full at a AAA office on July 8, 2005, two days
after the accident. That the finance charge remained past due after the accident occurred
is no evidence that AAA had not cancelled the policy on May 28, or June 8, 2005. An
insurer‘s acceptance of premiums after issuing a notice of cancellation does not affect the
cancellation‘s validity. (Adams v. Explorer Ins. Co. (2003) 107 Cal. App. 4th 438, 447-
448.) Mill‘s evidence thus establishes the insurance policy was in fact cancelled as of the
date of the accident.
Because we conclude the written request for information was reasonable and no
triable issues of material fact exist regarding the mailing of the notice of cancellation and
the status of cancellation at the time of the accident, we conclude the policy was
cancelled as of the date of the accident, and Mills cannot recover on his breach of
contract claim. Furthermore, because no benefits are due Mills under the policy, his
15
claim for breach of the implied covenant of good faith and fair dealing also fails as a
matter of law. (Schwartz v. State Farm Fire & Casualty Co. (2001) 88 Cal. App. 4th
1329, 1335.)
IV
Decision Not to Continue the Hearing
Mills contends the trial court erred when it refused to continue the hearing to allow
him time to seek additional discovery on the issue of punitive damages. He argues the
court should have continued the hearing because he established that essential evidence, in
the form of Cornell and Hernandez‘s potential testimony about the notice of cancellation,
may have existed but could not have been presented because of AAA‘s obstruction. His
counsel and AAA‘s counsel were never able to agree to deposition dates of AAA
employees and former employees, including Cornell, because AAA‘s counsel asserted
over a period of 17 months they were unavailable to attend those depositions. Mills filed
a motion for a protective order to compel production of the witnesses, but he later
withdrew the motion upon the trial court‘s continuing the trial date and the discovery cut-
off date. He asserts the court should have continued the hearing to allow him to obtain
that evidence, as it related to punitive damages.
Mills submitted his withdrawn motion and its attachments as evidence of AAA‘s
obstruction in support of his request for a continuance. AAA objected to the evidence as
hearsay, and the trial court sustained the objection. Mills does not challenge the court‘s
evidentiary ruling. Thus, the evidence Mills submitted to show AAA‘s obstruction and
his diligence in seeking discovery was not before the trial court, nor is it before us.
Mills admits it appears the trial court considered the issue of punitive damages as
moot after it found no breach of contract. We find the issue moot as well. Because there
was no breach of the insurance policy‘s implied covenant of good faith and fair dealing,
there can be no award of punitive damages. (Civ. Code, § 3294; Cates Construction, Inc.
v. Talbot Partners (1999) 21 Cal. 4th 28, 43-44.)
16
DISPOSITION
The judgment is affirmed. Costs on appeal are awarded to defendant AAA. (Cal.
Rules of Court, rule 8.278(a).
NICHOLSON , Acting P. J.
We concur:
MURRAY , J.
DUARTE , J.
17