St. Mary & St. John Coptic Orthodox Church v. SBC Ins. Svcs, Inc.

Filed 11/23/20
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION FOUR
ST. MARY & ST. JOHN COPTIC
ORTHODOX CHURCH,
Plaintiff and Appellant, A156085
v. (Alameda County
SBC INSURANCE SERVICES, Super. Ct. No. RG16825041)
INC.,
Defendant and Respondent.
This professional negligence dispute involves the interpretation of a
vacancy provision in a commercial property insurance policy that states the
insurer will not pay for losses resulting from specified perils if the building
where the loss occurs was vacant for more than 60 consecutive days before
the loss.
St. Mary & St. John Coptic Orthodox Church (St. Mary) experienced
water damage 57 days after escrow closed on a residence it had purchased.
St. Mary’s insurance broker, SBC Insurance Services (SBC), had procured
commercial property insurance for the residence with Philadelphia Indemnity
Insurance Company (Philadelphia). Philadelphia denied St. Mary’s claim
under the policy’s vacancy provision, but the parties entered into a
settlement and loan receipt agreement whereby St. Mary gave Philadelphia
the right to control litigation in St. Mary’s name against SBC or third parties
who might be liable for the loss in exchange for a loan of money to repair and
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remediate the residence; the loan was to be repaid out of any recovery St.
Mary obtained against SBC or other third parties.
Following a bench trial in St. Mary’s suit against SBC for professional
negligence, the court found that SBC had breached its duty of care, but that
St. Mary suffered no damages because the loss was covered under the
Philadelphia policy. The court found the vacancy provision to be ambiguous,
and concluded that, interpreted according to the reasonable expectations of
the insured, the provision did not include time before the insured owned the
residence. The court also ruled that St. Mary had not satisfied its factual
burden of showing the residence was vacant under the policy’s definition. St.
Mary challenges these findings on appeal, and we reverse the judgment.
I. FACTUAL AND PROCEDURAL BACKGROUND
SBC is an insurance brokerage firm. St. Mary is a Coptic orthodox
church. Wahid Tadros’s parents were the driving force behind the founding
of St. Mary, and Tadros served as a representative and board member of St.
Mary. The Tadros family used SBC or its predecessor company to obtain
insurance for their properties and businesses for decades, and, when St. Mary
formed, Tadros’s mother used SBC to obtain insurance for St. Mary.
A. The Commercial Property Policy
For the time period relevant to the loss underlying this dispute, SBC
procured a commercial lines insurance policy for St. Mary with Philadelphia
that contained, among other things, “all-risk” coverage for property damage,
effective October 26, 2014 to October 26, 2015 (the policy).
The policy is subject to the Commercial Property Conditions, Common
Policy Conditions, and the applicable Loss Conditions and additional
Conditions in the Commercial Property Coverage Forms. Under the “Loss
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Conditions” section of the Commercial Property Coverage Form, the policy
states:
E. Loss Conditions
***
6. Vacancy
If the “building” where “loss” occurs has been vacant for
more than 60 consecutive days before that “loss,” we will:
a. Not pay for any “loss” caused by any of the following even if
they are Covered Causes of Loss:
***
(4) Water damage;
***
“Buildings” are vacant when they do not contain enough
business personal property to conduct customary operations.
The policy also provides that “ ‘[b]uildings’ means buildings or
structures.”
B. The Purchase of the Residence
In the fall or winter of 2014, the Pope of the Coptic Church, who resides
in Egypt, requested that St. Mary purchase a house to be used as his papal
residence in the western United States. St. Mary also intended to use the
residence to accommodate visiting bishops. St. Mary set up a committee to
find a suitable residence. In April 2015, the committee asked Tadros to look
at a residence on Via Di Salerno in Pleasanton, California (the residence).
When Tadros viewed the residence in April 2015, it appeared empty of
furnishings and contained no tables, chairs, sofas, beds, or furniture of any
kind.
An April 17, 2015 appraisal report reflects the house as being vacant.
Attached to the report are photographs of the residence furnished with only
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one chair, which is consistent with the condition of the residence when
Tadros viewed it.
Late on the afternoon of May 27, 2015, Tadros, who assumed
responsibility for procuring insurance for the residence, called Erika
Berumen, SBC’s commercial account manager, to obtain insurance coverage
as required by St. Mary’s mortgage lender. Tadros told Berumen that St.
Mary purchased a residence and needed to get insurance for the house.
Berumen inquired whether the residence was for the priest to live in, and
Tadros responded, “[N]o, that the house was to be used as a papal residence
in the western United States, and sometimes to be used by visiting bishops.”
Tadros and Berumen discussed that the Coptic Pope was set to visit in
October 2015. Berumen did not ask when the first visit by a bishop or priest
would occur. After her call with Tadros, Berumen exercised broad discretion
in procuring insurance for the residence, including placing the residence
under St. Mary’s existing commercial policy rather than a homeowner’s
policy, and she filled out and submitted an insurance application without
Tadros’s review.
St. Mary purchased the Via di Salerno residence following the close of
escrow on May 29, 2015. Philadelphia extended coverage for the residence
under the policy, effective May 28, 2015.
C. The Loss and Coverage Denial
On July 24, 2015, Tadros learned that water was coming from the
inside of the residence. He called SBC’s commercial lines manager, Greg
Kapphahn, to report the damage, and Kapphahn inquired about the damage
to the residence and furnishings. Tadros replied that there were no
furnishings, as no one was living in the residence and it was empty.
Kapphahn said, “Do you mean the house was vacant?” He told Tadros there
4
may be a problem because the policy had a vacancy clause, and Tadros
inquired what a vacancy clause was.
SBC reported the water damage (the loss) to Philadelphia, counting 57
days between policy inception and the date of the loss. Philadelphia denied
the claim, stating the policy afforded no coverage for water damage where the
residence was vacant for 60 consecutive days before the loss. St. Mary
challenged the denial and also indicated that it would seek to hold SBC
liable. St. Mary asserted in a letter to Philadelphia: 1) the residence was not
vacant and contained enough “business personal property”—a refrigerator,
range/oven, dishwasher, disposal, microwave, washer/dryer, full HVAC
system, window treatments, plants, a chair, and toilet paper—to conduct
customary operations of periodic visitation of clergy and to sell the home; and
2) the condition of the residence prior to St. Mary’s ownership could not be
considered in assessing vacancy.
Around mid-July 2016, St. Mary and Philadelphia entered into an
agreement in compromise of the disputed claim. Philadelphia agreed to loan
St. Mary $49,543.80 to remediate the damage to the residence, $372,215.44 to
repair the residence, and $40,000 to cover loss of use of the residence, subject
to the express understanding that the payments were not payments under
the policy. In exchange, St. Mary consented to Philadelphia’s pursuit of a
lawsuit against SBC at Philadelphia’s sole expense in St. Mary’s name. The
loan was repayable solely to the extent of any net recovery from SBC or any
third party related to the loss. The loan was set to expire on June 6, 2017,
but a number of months later, the parties agreed to extend the date
retroactively to February 28, 2018.
5
D. The Litigation and Judgment
St. Mary filed this litigation against SBC, and the case proceeded to a
bench trial. Following posttrial briefing, the trial court issued a proposed
statement of decision in favor of SBC. St. Mary submitted objections, which
the court overruled, and the court issued a statement of decision.
The trial court found that SBC owed St. Mary a duty of care, breached
that duty, and SBC’s actions were a substantial factor giving rise to
Philadelphia’s coverage denial and damages. 1 The court found St. Mary’s
damages from the loss were $49,543.80 for remediation, $40,000 for loss of
use, and $372,215.44 for repairs, and it found that Philadelphia had loaned
this money to St. Mary.
For a number of reasons, however, the court concluded that St. Mary
could not recover damages from SBC because St. Mary’s claim was covered
under the policy. First, the trial court found that St. Mary had not satisfied
its burden to show the residence was vacant during the 60-day vacancy
period. Second, the trial court found the vacancy exclusion was ambiguous as
applied with respect to the 60-day vacancy period. Specifically, the court
found that nothing in the vacancy provision informed St. Mary that the
vacancy provision could include days that elapsed when St. Mary did not own
the residence, and the reasonable expectations of the insured dictated that it
could not. Thus, the court concluded that St. Mary’s claim was covered under
the policy. The court also rejected St. Mary’s attempt to establish additional
loss of use damages, finding that its evidence was too speculative and that St.
Mary did not provide sufficient evidence of such damages. The court entered
1 SBC does not challenge the court’s findings that SBC owed St. Mary a
fiduciary duty and breached that duty, so we do not provide a detailed
discussion of the facts or law supporting the court’s rulings on these issues.
6
judgment in favor of SBC on December 21, 2018, and St. Mary timely
appealed.
II. DISCUSSION
St. Mary raises a number of issues in this appeal, including whether
the policy’s vacancy provision unambiguously counts backwards from the
date of the loss, regardless of property ownership; whether the trial court
erred in concluding St. Mary failed to establish vacancy for the 60 days before
the loss and placed a heightened burden of proof on St. Mary; and whether
St. Mary adequately established additional loss of use damages. SBC
contends that St. Mary is wrong on each of the issues it raises. SBC also
asserts a number of additional arguments in support of the judgment,
including that the vacancy exclusion is not conspicuous; it must be applied
prospectively from the date of policy issuance under California’s standard
form fire policy provisions, Insurance Code sections 2070 and 2071 2; the loan
receipt agreement between St. Mary and Philadelphia was actually payment
under the policy and made St. Mary whole; the doctrine of superior equities
bars a claim against SBC; and the loan agreement violates public policy. We
address each of these arguments below.
A. The 60-Day Period
Vacancy provisions are “premised upon the recognition that unoccupied
properties face an increased risk of damage, whether from property-related
crime such as theft or vandalism or from building damage or loss related to
neglect.” (TRB Investments, Inc. v. Fireman’s Fund Ins. Co. (2006) 40 Cal. 4th
2All further statutory references are to the Insurance Code unless
otherwise stated.
7
19, 22 (TRB Investments).) 3 The policy here states the insurer will not pay
for loss caused by water damage if the building in which the loss occurs “has
been vacant for more than 60 consecutive days before that ‘loss.’ ” St. Mary
contends that it established damages from SBC’s professional negligence
because this language counts backwards from the date of the loss, regardless
of property ownership, and excludes the loss. SBC counters that the loss was
covered because, in calculating the 60-day time period, days during which St.
Mary did not own and have an insurable interest in the residence cannot be
counted. We review de novo the question of policy interpretation posed by the
parties, and well-established interpretive rules guide our review.
“ ‘Interpretation of an insurance policy is a question of law and follows
the general rules of contract interpretation. [Citation.] “The fundamental
rules of contract interpretation are based on the premise that the
interpretation of a contract must give effect to the ‘mutual intention’ of the
parties. ‘Under statutory rules of contract interpretation, the mutual
intention of the parties at the time the contract is formed governs
interpretation. [Citation.] Such intent is to be inferred, if possible, solely
from the written provisions of the contract. [Citation.] The “clear and
explicit” meaning of these provisions, interpreted in their “ordinary and
popular sense,” unless “used by the parties in a technical sense or a special
meaning is given to them by usage” [citation], controls judicial
interpretation.’ ” ’ ” (TRB Investments, supra, 40 Cal.4th at p. 27.) Coverage
clauses are interpreted broadly in favor of the insured, and exclusionary
3SBC argues the only purpose of a vacancy provision is to protect
against loss caused by malfeasance, but, as the Supreme Court clearly
recognized, vacant buildings also pose a risk of property damage related to
neglect.
8
clauses and limitations on coverage are interpreted narrowly against the
insurer. (Ibid.)
A policy provision will be considered ambiguous when it is capable of
two or more reasonable constructions. (TRB Investments, supra, 40 Cal.4th
at p. 27.) Contract language cannot be found ambiguous in the abstract.
(Ibid.) Courts must consider the disputed policy language in the context of
the policy as a whole, as well as “the circumstances of the case in which the
claim arises and ‘common sense.’ ” (Nissel v. Certain Underwriters at Lloyd’s
of London (1998) 62 Cal. App. 4th 1103, 1112.) If the terms are ambiguous,
they must be interpreted in accordance with the insured’s “objectively
reasonable expectations,” and, if this does not eliminate the ambiguity,
ambiguous language is construed against the party who caused the
uncertainty to exist. (AIU Ins. Co. v. Superior Court (1990) 51 Cal. 3d 807,
822.) Ambiguities in an insurance contract are generally to be resolved in
favor of coverage. (Ibid.) However, “where the policy is clear and
unequivocal, the only thing the insured may ‘reasonably expect’ is the
coverage afforded by the plain language of the mutually agreed-upon terms.”
(TIG Ins. Co. of Michigan v. Homestore, Inc. (2006) 137 Cal. App. 4th 749,
755.)
Vacancy provisions like the one at issue, which bar coverage for loss
occurring in a property that is vacant for a certain period of time “before that
loss or damage occurs,” have been found to be clear and unambiguous in
specifying that they apply retrospectively from the time of loss rather than
prospectively from policy inception. In Travelers Property Casualty Co. of
America v. Superior Court (2013) 215 Cal. App. 4th 561 (Travelers), the court
interpreted a vacancy exclusion stating, “We will not pay for any loss or
damage . . . if the building where loss or damage occurs has been ‘vacant’ for
9
more than 60 consecutive days before that loss or damage occurs. . . .” (Id. at
p. 575.) There, a property investor (who had purchased the condominium
developer’s construction loan) submitted a claim after theft and vandalism at
the vacant condominium development, and the insurer denied the claim
under the policy’s vacancy provision. (Id. at p. 565.) The trial court found the
loss was not excluded because the 60-day period ran from the date of policy
inception and 60 days had not run between the inception date and the date of
the loss. (Id. at pp. 575–576.) The appellate court reversed. Contrasting
vacancy provisions that are triggered if the property is vacant “ ‘beyond a
period of sixty days,’ ” which is prospective-looking language commencing at
or after policy issuance, the policy language was clearly and unambiguously
backward-looking from the date of the loss, irrespective of when the policy
issued. (Id. at p. 576, italics added; accord Gas Kwick, Inc. v. United Pacific
Ins. Co. (11th Cir. 1995) 58 F.3d 1536, 1539 (Gas Kwick).) 4
Travelers and Gas Kwick are not on all fours, however, as neither case
addressed a situation where the insured did not own the property for the full
vacancy period. Nonetheless, their interpretation of similar policy language
is persuasive, as they recognize that the policy language at issue does not
implicitly impose limitations not set forth in the provision. The courts in
Travelers and Gas Kwick rejected policy interpretations that would impose on
4 Cases involving policies with prospective language include Old Colony
Insurance Company v. Garvey (4th Cir. 1958) 253 F.2d 299, 300 [limitation
for vacancy “beyond a period of sixty consecutive days”]; United States
Fidelity & Guaranty Company v. Board of Education of Fairfield (N.D.Ala.
1972) 339 F. Supp. 315, 317 [same]; Bledsoe v. Farm Bureau Mutual
Insurance Co. (Mo. App. 1960) 341 S.W.2d 626, 629 [same]; Pappas
Enterprises, Inc. v. Commerce & Industry Insurance Co. (1996) 661 N.E.2d 81,
82 [same]; Estate of Higgins v. Washington Mutual Fire Insurance Co. (Pa.
Super. 2003) 838 A.2d 778, 781 [same]; Kolivera v. Hartford Fire Insurance
Co. (1972) 360, 290 N.E.2d 356 [relying on same language].
10
the vacancy provisions a limitation that the 60-day period commenced only at
or after policy issuance. (Travelers, supra, 215 Cal.App.4th at p. 576 [“there
is no limitation in the [vacancy] clause” stating that the 60-day period “must
commence at or after policy inception”]; Gas Kwick, supra, 58 F.3d at p. 1538
[vacancy provision excluded coverage where property was vacant for more
than 60 days “before that loss or damage”; rejecting insured’s argument that
provision was limited to period running after policy inception date].) In this
case, SBC asserts that the vacancy provision is limited such that the 60-day
period commences only upon the insured’s ownership of the property. But
the policy language does not contemplate or impose such a limitation, instead
excluding coverage for losses resulting from water damage “[i]f the building
where loss or damage occurs has been vacant for more than 60 consecutive
days before that loss or damage occurs.” When a loss occurs, the sole inquiry
is whether the building has been vacant for the prior 60 consecutive days.
This language unambiguously counts backwards without regard to
ownership. (See West Bend Mutual Ins. Co. v. New Packing Co. (Nov. 30,
2012, Ill. App. Ct., No. 1–11–1507) 2012 Ill. App. Unpub. Lexis 2908, **15–17
[vacancy provision denying coverage for certain perils where building was
vacant more than “60 consecutive days before that loss or damage occurs”
clearly counted backwards and included days the building sat vacant in
11
escrow; however, insurer with the opportunity to inspect the building could
not rely on the vacancy provision].) 5
Contrary to SBC’s position, this interpretation of the policy does not
violate the insurable interest requirement of section 280. Under that statute,
“If the insured has no insurable interest, the contract is void.” “ ‘The simple
rule that one cannot insure for his own benefit the property of another in
which he has no interest still governs.’ ” (Napavale, Inc. v. United Nat’s
Indem. Co. (1959) 169 Cal. App. 2d 119, 124.) However, the Insurance Code
clearly sets forth that an insurable interest in property “must exist when the
insurance takes effect, and when the loss occurs, but need not exist in the
meantime.” (§ 286.) These requirements were satisfied here.
We also reject SBC’s argument that sections 2070 and 2071 require the
60-day vacancy period to apply prospectively from the policy’s inception date.
Section 2071 provides a standard form for fire policies in California, and
states in relevant part, “Conditions suspending or restricting insurance[:] [¶]
Unless otherwise provided in writing added hereto this company shall not be
liable for loss occurring . . . while a described building, whether intended for
5 We requested supplemental briefing on whether the policy’s “control
of property” condition affects the interpretation of the vacancy provision. The
“control of property” provision states, “[a]ny act or neglect of any person other
than you beyond your direction or control will not affect this insurance.”
While we may affirm a judgment on any legal basis, St. Mary’s supplemental
briefing pointed out that the parties’ purchase agreement and escrow
instructions may bear on the question of control, and these documents were
not before the trial court. Because the factual issues of “direction and
control” under the “control of property” provision were not raised below, our
request appears to implicate a factual situation open to controversy of which
the parties were not on full notice. (See Eisenberg et al., Cal. Practice Guide:
Civil Appeals and Writs (The Rutter Group 2001) § 8:240.) We therefore
decline to consider this issue.
12
occupancy by owner or tenant, is vacant or unoccupied beyond a period of 60
consecutive days . . . .” Section 2070 states that “all fire policies on subject
matter in California shall be on the standard form,” and “[n]o part of the
standard form shall be omitted therefrom except that any policy providing
coverage against the peril of fire only, or in combination with coverage
against other perils, need not comply with the provisions of the standard
form of fire insurance policy . . . provided, that coverage with respect to the
peril of fire, when viewed in its entirety, is substantially equivalent to or
more favorable to the insured than that contained in such standard form fire
insurance policy.” (italics added.) The loss here resulted from water damage,
so section 2070’s requirement that coverage “with respect to the peril of fire”
be substantially equivalent or more favorable than the provisions of the
standard form fire insurance policy is inapplicable.
B. The Residence Was Vacant During the 60-Day Period
Under the policy, “ ‘buildings’ are vacant when they do not contain
enough business personal property to conduct customary operations.” The
trial court found that “business personal property” and “customary
operations” should have been defined if the insurer intended to rely on their
plain meaning. It criticized Philadelphia’s coverage position that the
residence would need to look like a normal furnished residence and stated
that whether the residence contained enough business personal property to
conduct customary operations depended on the residence’s intended use as a
residence for visiting clergy. With respect to the three days before escrow
closed, the trial court found that St. Mary did not produce evidence showing
the residence’s condition or its customary operations. The court cited
Tadros’s testimony that he did not know whether anyone moved items in and
out of the residence before escrow closed, and testimony from another witness
13
that Philadelphia did not contact the seller to inquire about the condition of
the residence in these days. The court also found that the residence was not
vacant during this time because its customary operations were that of a
residence for sale. Finally, the court relied on admissions by St. Mary in a
coverage dispute letter to the effect that the residence contained sufficient
business personal property such that it was not “vacant” before and after the
close of escrow. For those reasons, the trial court concluded that St. Mary did
not carry its burden of proof to show the residence was vacant as defined by
the policy.
In a case where the trier of fact has determined that the party with the
burden of proof did not carry its burden and that party appeals, “it is
misleading to characterize the failure-of-proof issue as whether substantial
evidence supports the judgment.” (In re I. W. (2009) 180 Cal. App. 4th 1517,
1528; Sonic Manufacturing Technologies, Inc. v. AAE Systems, Inc. (2011)
196 Cal. App. 4th 456, 466.) Instead, “where the issue on appeal turns on a
failure of proof at trial, the question for a reviewing court becomes whether
the evidence compels a finding in favor of the appellant as a matter of law.”
(In re I. W., at p. 1528.) Specifically, we ask “whether the appellant’s
evidence was (1) ‘uncontradicted and unimpeached’ and (2) ‘of such a
character and weight as to leave no room for a judicial determination that it
was insufficient to support a finding.’ ” (Ibid.) St. Mary contends that the
trial court erred, and the evidence compels the conclusion that the residence
did not contain enough personal property to conduct operations as a residence
in the western United States for the Coptic Pope and visiting clergy or the
prior owner. We agree.
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Policy Interpretation
St. Mary argues the policy’s definition of a vacant building is clear and
unambiguous. SBC argues generally that the vacancy provision is
ambiguous, but SBC does not offer an alternative construction of “vacant”
other than a brief assertion for the first time on appeal that the provision
does not apply to residences. 6 The vacancy provision suspends coverage for
loss due to water damage “[i]f the ‘building’ where ‘loss’ occurs has been
vacant for more than 60 consecutive days before that ‘loss’ . . . .” Under the
policy, “ ‘[b]uildings’ ” are defined as “buildings and structures.” As
residences are a type of building, the total exclusion of residences would defy
the policy’s plain meaning.
Many courts have found that provisions defining vacancy by whether a
building was used to conduct “customary operations” are unambiguous when
interpreted in context, and have likewise found that the term “customary
operations” refers to the customary operations for which a property was
insured or those of a lessee who operates at the property. In Imperial Beach
Palm, LLC v. Travelers Property Casualty Company of America (S.D. Cal.
July 8, 2015, No. 14CV639) 2015 WL 11401349 at *3, for example, where a
building was “vacant” unless at least 31 percent of its total square footage
was “rented to a lessee or sub-lessee and used by the lessee or sub-lessee to
conduct its customary operations,” and “customary operations” was not
6 SBC makes this brief assertion in the midst of arguing that St. Mary
did not carry its burden to show vacancy for 60 days, but it goes on to apply
the policy definition in arguing that St. Mary did not show the residence
lacked “enough business personal property to conduct customary operations.”
SBC argued below that the policy definition applied, and St. Mary failed to
show the residence lacked sufficient business personal property to conduct St.
Mary’s customary operations and the customary operations as a residence for
sale.
15
defined, the court looked to the ordinary meaning. (Id. at **2–3.)
“ ‘Customary’ ” meant “ ‘commonly practiced, used, or observed,’ ” and
“ ‘[o]perations’ ” meant “ ‘an activity of a business or organization.’ ” (Id.
at *3.) Where the property was insured for “mercantile use” and the lessee
sold shellfish traps and fishing equipment, the term “customary operations”
meant the lessee’s customary business activities. (Ibid.)
In Keren Habinyon Hachudosh D'Rabeinu Yoel v. Philadelphia
Indemnity Ins. Co (2nd Cir. 2012) 462 Fed. Appx. 70, 72, a building was
“vacant” “unless at least 31 percent of its total square footage [was] . . . [u]sed
by the building owner to conduct customary operations.” The policy did not
define “customary operations,” but the court concluded that, where the
insured operated a school, the term “customary operations” could only refer to
the commonly practiced activity of operating a school. (Id. at p. 73.) A one-
day event during the vacancy period where 25 teachers met while students
played on the roof did not constitute “customary operations” of the insured.
(Ibid; see also Saiz v. Charter Oak Fire Ins. Co. (10th Cir. 2008) 299 Fed.
Appx. 836, 839–840 [use of a basement office did not constitute “customary
operations” at a building insured as a restaurant].)
As applied, the terms “customary operations” and “business personal
property” were not ambiguous merely because the policy did not define them.
(See Bay Cities Paving & Grading, Inc. v. Lawyers’ Mutual Ins. Co. (1993)
5 Cal. 4th 854, 866 [term that was undefined was not necessarily ambiguous];
Brown v. Mid-Century Ins. Co. (2013) 215 Cal. App. 4th 841, 858 [undefined
term did not render a policy unclear].) St. Mary was insured as a religious
organization, and it planned to use the “building” where the loss occurred as
a residence for the Coptic Pope in the western United States and for visiting
clergy. Thus, the residence was vacant if it lacked sufficient personal
16
property to conduct operations as a residence for the Coptic Pope and for
these clergy. Further, for the three days before escrow closed, the residence
was vacant if it did not contain enough personal property to operate in
accordance with its customary use as a residence. 7
With respect to the 58th, 59th, and 60th days before the loss, we reject
the trial court’s interpretation that the residence was not vacant because its
customary operations were that of a residence for sale rather than a normal
residence. On this issue, we find the out-of-state authorities cited by St.
Mary persuasive. In Oakdale Mall Assocs. v. Cincinnati Ins. Co. (8th Cir.
2012) 702 F.3d 1119, 1121, the insured suffered a loss at a shopping mall it
owned, and the insurer denied coverage due to a vacancy provision. (Ibid.)
The mall was deemed vacant unless at least 31 percent of its total square
footage was “rented to a lessee or sub-lessee and used by them to conduct
their customary operations; or used by the building owner to conduct
customary operations.” (Ibid.) At the time of the loss at issue, the mall had
only four tenants open for business occupying less than 31 percent of its
7 Even if the policy’s definition of “vacant” does not apply to the specific
factual situation covering the three days before close of escrow, under the
plain meaning of the word, a residence that is almost entirely empty with the
exception of certain appliances, one chair, some window treatments, and
toilet paper is vacant. (See Travelers, supra, 215 Cal.App.4th at p. 577, fn. 18
[stating that the court would have applied the plain meaning of “vacant” to
find an unoccupied condominium complex to be vacant if the policy’s vacancy
definition did not apply to the facts of the case]; Foley v. Sonoma County
Mutual Fire Ins. Co. (1941) 18 Cal. 2d 232, 234 [under a clause excluding
coverage for fire losses where a building was “vacant or unoccupied,” “vacant”
is associated with lack of inanimate objects and “unoccupied” is associated
with abandonment of a dwelling as a customary abode]; Merriam-Webster
Online Dictionary [as
of November 20, 2020] [“vacant” means “being without content or occupant”];
see infra, section II(B)(2).)
17
square footage. (Id. at p. 1122.) Nonetheless, the insured owner argued that
because it was actively seeking tenants to occupy the space and had posted a
“for lease” sign, it was using the property “to conduct normal business
operations.” (Id. at p. 1124.) The court rejected this argument, explaining
that if it were accepted, a mall that was completely vacant with a large sign
outside saying “for lease” would be deemed not vacant, which would be an
absurd result. (Ibid.; see also 7th & Allen Equities v. Hartford Cas. Ins. Co.
(E.D. Pa. Nov. 2, 2012, No. 11–cv–01567) 2012 WL 5392167 *6 [insured did
not conduct its customary operations of leasing buildings at the property;
merely showing the property to prospective tenants does not establish the
insured’s use for its customary operations]; Travelers, supra, 215 Cal.App.4th
at p. 577, fn. 19 [although a building’s units were offered for sale, “customary
operations” were not being conducted at the building where no one engaged
in the business of selling units from within the building].)
In Sorema North American Reinsurance Co. v. Johnson (2002) 258 Ga.
App. 304, 305–306, the insured, a company engaged in lending, asset
management, marketing, and liquidation, suffered a loss at a building the
insurer determined was vacant under a provision stating a building is
“vacant when 70 percent or more of its square footage: (i) [i]s not rented; or
(ii) [i]s not used to conduct customary operations.” The insured had
purchased the building at a foreclosure sale and had begun selling off the
inventory left by the prior owner and marketing the building for sale. (Ibid.)
Recognizing that the vacancy exclusion was “intended to protect the insurer
from the higher risk of loss associated with property that is not attended,” the
court rejected the argument that the property was not vacant because the
insured used it as an asset in the insured’s asset management operations.
(Id. at p. 306.) As did the courts in these cases, we reject the contention that
18
the residence was not vacant under the policy because it was being held out
for sale.
Application of Policy to Evidence at Trial
We next analyze whether the trial court erred in its determination that
St. Mary did not carry its burden of proving that the residence was vacant in
light of the policy definition and the facts presented at trial. On the question
of what constitutes sufficient personal property to operate a building as a
residence, Belgrade v. National American Ins. Co. (1962) 204 Cal. App. 2d 44 is
instructive. Under the policy there, loss caused by certain perils was not
covered if the property was vacant more than thirty days preceding the loss,
and “[a] building intended for residence by human beings shall be deemed to
be vacant within the meaning of this policy unless such building contains the
furnishings ordinarily contained therein to enable the use of said building for
the purpose for which it is adapted . . . .” (Id. at pp. 45–46.) The loss
occurred in a two-story, ten-room house listed for sale. (Id. at p. 46.) The
house contained a chaise lounge, two mattresses on the floor, sheets, pillow
cases and pillows, six blankets, two suits, shirts, underwear, bath towels,
hand towels, toiletries, toothbrushes, dental floss, soap, a breakfast room
table and four chairs, a kitchen stool, a captain’s chair, a folding chair, pots,
pans, an electric hot plate, a built-in soda fountain, silverware, plates, cups,
glasses, dishes, a radio, a vacuum cleaner, dust mops, brooms, brushes and
garden implements. (Ibid.) All utilities and phones were connected, and the
owners were in the home as early as 8 a.m. and left as late as midnight.
(Ibid.) The trial court found that the premises were vacant within the
policy’s meaning because “the dwelling . . . did not contain furnishings
ordinarily contained in such a building to enable the use of said
building . . . as a place of “ ‘residence by human beings.’ ” (Id. at p. 47.) The
19
appellate court affirmed, stating, “In view of the evidence . . . of how sparsely
the house was furnished, it is obvious that the record amply supports such
determination of the trial court.” (Ibid.)
On the undisputed evidence presented at trial, the residence here did
not contain enough personal property to operate as a residence for the Coptic
Pope in the western United States and for visiting clergy. With the exception
of a single chair, the multiple-room residence was entirely unfurnished.
There were some appliances, an HVAC system, some window treatments, a
plant, and toilet paper, but these limited items were not sufficient to operate
the building as a residence even for those who would only stay there
temporarily. (Cf. Hehemann v. Michigan Millers Mut. Ins. Co. (Ct. App. Fl.
1970) 240 So. 2d 851, 853–854 [concluding as a matter of law that a house
with only drapes and built-in kitchen appliances was vacant under a
homeowner’s policy that did not define the term]; American Mut. Fire Ins. Co.
v. Durrence (11th Cir. 1989) 872 F.2d 378, 378–379 [home that was empty
except for a refrigerator, stove, washing machine, and a table “lacked
amenities minimally necessary for human habitation” and was vacant as a
matter of law under a home insurance policy that did not define the term].)
Regarding the 58th, 59th, and 60th days before the loss, while St. Mary
did not produce direct evidence of the residence’s condition during these days
or testimony from the seller regarding his or her customary use of the
property, the evidence compels a finding that it was more likely than not the
residence was customarily used as a residence, and it was vacant—in other
words, it did not contain enough personal property to operate as a
residence—during those three days. (Masellis v. Law Office of Leslie F.
Jensen (2020) 50 Cal. App. 5th 1077, 1093 [the preponderance of the evidence
standard requires proof that something is “more likely than not”].)
20
Uncontradicted evidence established that the building was a residence. The
residence had been up for sale before Tadros visited it in early April 2015.
Tadros testified that during his visit, the residence was empty of furniture
and it would have been apparent to someone looking in the windows that no
one lived there.
St. Mary purchased the residence following an escrow period. The
April 17, 2015 appraisal report for the residence and photographs attached
thereto reflect that, with the exception of a refrigerator, range/oven,
dishwasher, disposal, microwave, washer/dryer, an HVAC system, one chair,
some window treatments, plants, and toilet paper, the residence was empty
and unfurnished. Tadros confirmed that the appraisal photographs reflected
the condition of the residence when he viewed it. Further, the three days at
issue were the last three days before close of escrow, and the court
acknowledged that sellers typically remove any furnishings they may have in
a house before close of escrow. This uncontroverted evidence is sufficient to
compel the conclusion that it is more likely than not the property was
customarily used as a residence and its condition three days before escrow
closed was as reflected in the appraisal report. The residence lacked enough
personal property to function as a residence and St. Mary was therefore
entitled to a finding that the property was vacant. (In re I.W., supra,
180 Cal.App.4th at p. 1528.)
The letter St. Mary wrote to Philadelphia during their coverage dispute
does not change our conclusion. Out of court admissions of fact by a party are
admissible against that party. (Evid. Code, § 1220.) St. Mary admits in the
letter that, during the relevant period, the residence was as portrayed in the
April 2015 appraisal report with a refrigerator, range/oven, dishwasher,
disposal, microwave, washer/dryer, an HVAC system, a chair, window
21
treatments, plants, and toilet paper. The letter goes on to assert the
residence was not vacant for the three days before escrow closed because this
personal property was sufficient to conduct the customary operations of the
prior owner to sell the residence, conceding that if the customary operations
were a full-time residence, Philadelphia may have an argument for vacancy.
The letter also asserts the personal property in the residence was sufficient to
conduct St. Mary’s customary operations as a residence for visiting clergy
because it was everything a visitor may need. The statements in the letter
must be construed in light of the facts admitted as to the items of property in
the residence. Items such as the chair and appliances were undisputedly
present, but regardless of St. Mary’s contentions in its letter seeking
coverage, their presence does not show the residence contained sufficient
personal property to operate as a residence, for visitors or full-time residents.
C. The Vacancy Provision Was Sufficiently Conspicuous
To be enforceable, any insurance provision that takes away or limits
coverage reasonably expected by an insured must be “ ‘conspicuous, plain and
clear.’ ” (Haynes v. Farmers Ins. Exchange (2004) 32 Cal. 4th 1198, 1204
(Haynes).) Citing Haynes, SBC argues that the vacancy provision violates
this rule because of its location in the commercial insurance policy as a
whole. Whether an exclusion or limitation is “conspicuous, plain and clear” is
a question of law. (Sprinkles v. Associated Indemnity Corp. (2010)
188 Cal. App. 4th 69, 77; Croskey et al., Cal. Practice Guide: Insurance
Litigation (The Rutter Group 2020) ¶ 4:491.)
In Haynes, a provision limiting coverage for permissive automobile
users was not conspicuous where it appeared in an endorsement on the 24th
page of the policy, and where the declarations page showed much higher
limits and listed endorsements only by an alphanumeric sequence with no
22
explanation as to their subject matter. (Haynes, supra, 32 Cal.4th at pp.
1202–1204.) The policy’s definition of “insured” at the outset of the liability
section indicated that permissive users were included. (Id. at p. 1208.) The
endorsement at issue (denominated “S9064”) modified language that
appeared earlier in the policy under the heading “Other Insurance.” (Id. at
p. 1203.) The Supreme Court found that the heading “Other Insurance” did
nothing to alert the reader that it limited permissive user coverage, and
further noted that there was nothing in the section that attracted a reader’s
attention to the limiting language. (Id. at p. 1205.) Nor was the limitation in
endorsement S9064 set forth in a manner that would attract the reader’s
attention; instead, it was on the 24th page of the policy, buried in 19 lines of
fine print, surrounded by language that had nothing to do with exclusions or
limitations. (Id. at p. 1206.)
The vacancy provision here does not suffer from the same deficiencies.
The policy consists of multiple coverage parts. The forms that comprise the
commercial property coverage part are listed after the commercial property
declarations, including the “Commercial Property Conditions” and the
“Property Coverage Form.” The “Commercial Property Conditions” form
begins, “This Coverage Part is subject to the following conditions, the
Common Policy Conditions and applicable Loss Conditions and Additional
Conditions in the Commercial Property Coverage Forms.” A few pages later,
the Property Coverage Form begins and states, “Various provisions in this
policy restrict coverage. Read this entire policy carefully to determine rights,
duties, and what is and is not covered.” Section A of the Property Coverage
Form sets forth “Coverage,” and Section E sets forth the “Loss Conditions” in
bold font. Each “loss condition,” including “Vacancy,” is in bold font, and the
size of the font and spacing is consistent throughout. Unlike the provisions
23
in Haynes, this language is sufficiently conspicuous to be enforceable as a
limitation on coverage.
In sum, we find that when the vacancy provision is properly interpreted
and applied to the undisputed evidence at trial, there was no coverage for the
loss under the policy.
D. The Loan Receipt Agreement
As SBC does not dispute the trial court’s finding that it breached its
duty to St. Mary, and in light of our determination that there was no
coverage for this loss due to the vacancy provision, we turn next to SBC’s
argument that the loan receipt agreement between Philadelphia and St.
Mary bars recovery against SBC.
As previously discussed, Philadelphia and St. Mary entered into a loan
receipt agreement whereby the parties agreed to compromise St. Mary’s
claim on the following terms: Philadelphia loaned St. Mary $461,759.24
subject to the understanding the loan was not payment under the policy; St.
Mary allowed Philadelphia to pursue a lawsuit against SBC at Philadelphia’s
sole expense in St. Mary’s name; and the loan was repayable solely to the
extent of any net recovery against SBC or any third party related to St.
Mary’s loss. SBC argues that the doctrine of superior equities in Meyers v.
Bank of America (1938) 11 Cal. 2d 92 (Meyers) and American Alliance Ins. Co.
v. Capital Nat. Bank of Sacramento (1946) 75 Cal. App. 2d 787 (American
Alliance) prohibit this loan agreement and bar St. Mary or Philadelphia from
recovering against SBC. 8 We disagree.
8We requested supplemental briefing regarding what remedy would be
appropriate if we determined the loan receipt agreement to be invalid. To the
extent SBC used this briefing to reargue the invalidity of the loan receipt
agreement, we disregard these arguments.
24
Loan receipt agreements gained recognition in the admiralty case of
Luckenbach v. W. J. McCahan Sugar Refining Co. (1918) 248 U.S. 139.
There, a shipper transported goods with a carrier under a bill of lading that
provided the carrier would have the benefit of insurance effected by the
shipper on the property. (Id. at pp. 144–146.) The shipper obtained
insurance, but the policy exempted the insurer from liability for damage for
which the carrier might be liable. (Id. at p. 146.) The insurer was thus liable
contingently—it would have incurred liability to the shipper only after it was
determined that recovery against the carrier was impossible. (Ibid.)
Furthermore, if the insurer had paid the shipper before the carrier’s liability
was determined, the carrier would not have been liable to anyone. (Id. at
pp. 146–147.) In order to preserve its rights against the carrier and to secure
prompt payment to the shipper for the goods damaged during transport, the
insurer and shipper resorted to a loan receipt agreement that the United
States Supreme Court upheld as a valid loan that was “consonant both with
the needs of commerce and the demands of justice.” (Id. at pp. 148–149.)
Since Luckenbach, this type of agreement has been upheld where the liability
of the insurer who advances the money was not absolute and was in any way
contingent, conditional, excess, or undetermined. (16 Couch on Insurance
(3d. ed. June 2020 Update) § 222.85.)
In Meyers, supra, 11 Cal. 2d 92, a loan receipt agreement was not at
issue, and our Supreme Court addressed the doctrine of equitable
subrogation whereby an insurer who has paid an insured on a loss caused by
a third party is permitted to pursue its insured’s rights and remedies against
that party. (Croskey et al., Cal. Practice Guide: Insurance Litigation (The
Rutter Group 2020) ¶ 9:2.) The Supreme Court held that an indemnitor who
reimburses his indemnitee for a loss resulting from the negotiation of forged
25
checks by the indemnitee’s employee has no right of recovery from the
innocent bank that honored the forged checks. (Meyers, at pp. 102–103.) The
rationale of Meyers is as follows: An indemnitor has a contractual liability to
reimburse his indemnitee for the latter’s losses; although a bank that pays
out a depositor’s funds based on forged checks is liable to the depositor, the
depositor’s indemnitor will not be subrogated to the rights of the depositor
against the bank because subrogation is an equitable doctrine and the
equities of the indemnitor are no greater than the equities of the bank that
innocently paid out funds on a forged signature. (Id. at pp. 102–103.)
In American Alliance, supra, 75 Cal. App. 2d 787, the plaintiff’s
employee forged checks that the defendant bank honored. Thereafter, the
plaintiff’s indemnitor, a bonding company, reimbursed the plaintiff for its
losses on demand and took from the plaintiff a loan receipt agreement. (Id.
at pp. 789–790.) The appellate court determined that the agreement was a
mere sham in the circumstances where the surety’s liability was absolute,
and the money was in fact paid to the plaintiff in discharge of its liability
under the bonding company’s fidelity bond. (Id. at p. 796.) The court
therefore held: (1) the plaintiff had no right of recovery against the
defendant bank on its own account, for that would constitute double recovery;
and (2) the plaintiff could not recover on behalf of the bonding company
because, under Meyers, the bonding company had no enforceable right of
subrogation against the bank. (Id. at pp. 797–798.)
In contrast, Traner v. Crocker Anglo Nat’l Bank (1959) 173 Cal. App. 2d
779, 782–783 (Traner) upheld use of a loan receipt agreement, finding that it
was not invalid under Meyers and American Alliance. The plaintiff in Traner
was the president of a company whose employee forged the plaintiff’s
signature on a $3,500 check drawn on the plaintiff’s individual account. (Id.
26
at pp. 779–780.) The defendant bank honored the check, the plaintiff
demanded a credit, and the defendant refused. (Id. at p. 780.) The plaintiff
then demanded a surety indemnify his loss, but the surety denied this
request because the sole obligee under its bond was the plaintiff’s company.
(Ibid.) However, the surety advanced $3,500 to the plaintiff, who executed a
“Loan Receipt.” (Ibid.) The loan receipt documented a loan without interest,
repayable only in the event and to the extent of any net recovery the plaintiff
may make from any person or entity in connection with the forged check.
(Ibid.) The plaintiff agreed to cooperate with the surety and to prosecute
suits against potentially liable parties in his name at the surety’s expense
and control. (Id. at pp. 780–781.) The plaintiff sued the defendant bank, and
the court granted summary judgment for the defendant. (Id. at p. 781.)
On the plaintiff’s appeal, the defendant relied on Meyers and American
Alliance to argue the loan was not a loan and was instead reimbursement for
the plaintiff’s loss, and the plaintiff was thereby precluded from recovering
$3,500 from the defendant. (Traner, supra, 173 Cal.App.2d at pp. 781–782.)
The court reversed, finding the evidence did not show the existence of an
obligation of the surety to reimburse the plaintiff for his loss and that there
was no reason to refuse to recognize the transaction as a loan and deny the
plaintiff the right to pursue remedies against the defendant. (Id. at p. 783.)
The court distinguished the situation before it—where no absolute obligation
had been established—with those in Meyers and American Alliance where the
indemnitors had absolute, contractual obligations to make good the
indemnitees’ losses. (Id. at p. 782.)
Heuer v. Truck Ins. Exchange (1942) 51 Cal. App. 2d 497 (Heuer) also
upheld a loan receipt agreement. There, a driver operated a trucking
company and obtained insurance from the defendant with a provision
27
allowing third parties to proceed against the defendant after obtaining a
personal injury judgment against the driver. (Id. at pp. 498–499.) With
seven days’ notice, the defendant informed the driver that the policy would
cancel at the end of April 1938. (Id. at p. 499.) The driver hit the decedent
after the cancellation notice but before the end of April, and the defendant
claimed the policy had been cancelled. (Id. at pp. 499–500.) Meanwhile,
before the accident occurred but after the cancellation notice, the driver
obtained a second insurance policy from New York Casualty Company. (Id.
at p. 500.) New York Casualty declared its policy void because of a
misrepresentation by the driver’s agent in procuring the policy. (Ibid.)
The decedent’s heirs sued the driver and recovered a $3,500 judgment.
(Heuer, supra, 51 Cal.App.2d at p. 498.) New York Casualty, which defended
the driver and reserved its rights, entered into a loan receipt transaction with
the heirs with terms similar to the agreement here. (Id. at p. 501.) New
York Casualty disclaimed liability under its policy, and, for $1,750, the heirs
released it from all claims; in the event the heirs recovered any sum under
the judgment in excess of $1,750 from any third party other than the driver,
the heirs agreed to repay New York Casualty an amount equal to the excess
but in no event more than $1,750 with interest. (Id. at pp. 501–502.)
The heirs then sued the defendant. (Heuer, supra, 51 Cal.App.2d at
pp. 500–501.) After a bench trial, the court found that the defendant’s policy
had not been cancelled; the driver was negligent; the heirs had recovered a
final judgment against the driver that had not been satisfied in whole or in
part by the loan made by New York Casualty; New York Casualty’s policy
was void from inception due to misrepresentation; the defendant was liable to
the heirs for the judgment; and the heirs were the real parties in interest.
(Id. at p. 502.) On appeal, the appellate court rejected the defendant’s attack
28
on the loan receipt transaction, recognizing it as a valid loan and not a legal
subterfuge. (Id. at pp. 503–504.) In doing so, the court distinguished out-of-
state cases rejecting loan receipt agreements where the insurer’s liability to
the insured was absolute when the loss occurred. (Id. at p. 504.) Because
New York Casualty’s policy had been found void and unenforceable, “[t]here
was obviously no liability, absolute or otherwise, upon said company as in the
cases cited by defendant.” (Ibid.)
This case is more like Traner and Heuer than American Alliance. We
have determined St. Mary’s loss was not covered because of the vacancy
provision, and the trial court’s determination that SBC was negligent stands.
Thus, Philadelphia did not have an absolute contractual liability to St. Mary
and could enter into the loan receipt agreement without committing a legal
subterfuge. And because it was not a legal sham for payment of an
undisputed obligation under the policy, the agreement did not prevent St.
Mary from pursuing recovery against SBC. (Croskey et al., Cal. Practice
Guide: Insurance Litigation (The Rutter Group 2020) ¶ 9:55; Traner, supra,
173 Cal.App.2d at p. 783.)
Citing American Alliance, supra, 75 Cal. App. 2d 787, SBC also argues
the loan receipt agreement violates public policy because an insurer of a
covered loss may not pay an insured’s claim and then litigate a professional
negligence claim against a broker for procuring insurance that covered the
loss. But in American Alliance, the surety’s liability for the loss was absolute.
(American Alliance, at p. 796.) Here, St. Mary’s loss was not covered because
of the vacancy provision and SBC was negligent, so the factual premise of
SBC’s public policy argument fails.
Finally, SBC briefly asserts that the loan receipt agreement is invalid
because St. Mary had no obligation to repay the loan and the parties’
29
extension of the agreement was invalid for lack of consideration. But under
the loan receipt agreement, St. Mary had an obligation to repay the loan
should it recover against SBC. The loan receipt agreement also states, “Any
obligation to pay the Loan shall expire as of June 6, 2017. If Philadelphia
has been diligently pursuing SBC for repayment, then Saint Mary will
provide a reasonable extension of the obligation to pay the Loan.” The
parties thus bargained for the extension as part of the consideration
exchanged in the original agreement.
E. Additional Loss of Use Damages
St. Mary briefly argues that the trial court erred in denying
its claim for an additional $113,750 for the loss of use of the residence for 17
to 18 months, as calculated by the residence’s purported fair market rental
value. The trial court did not err.
Tadros testified that remediation on the residence took one month and
the repairs took four to five months to complete, but the repairs did not start
for approximately 12 months because St. Mary did not have the funds to
make the repairs. With respect to rental value, St. Mary’s counsel asked,
“Now, do you have an idea or understanding as to what the fair rental value
is for the Via Di Salerno house?” Tadros replied, “Yes. I would say it’s about
five to eight thousand a month. In that range.” Counsel continued, “And on
what basis do you have an understanding that the fair rental value of the Via
Di Salerno house was five to eight thousand dollars a month?” Tadros
responded, “I have some rental properties nearby, and I live in the
neighborhood. So I have a feel for what things go for around there, what a
house that size in that neighborhood would go for.”
The trial court did not err in finding that Tadros’s testimony was too
speculative to support an award of damages. Although Tadros testified at the
30
time of the 2018 trial that he lived in the same neighborhood as the
residence, this testimony did not establish his knowledge of the rental values
in that neighborhood, or that he had rental property in that neighborhood
during the 2015 to 2016 time period relevant to St. Mary’s damages. Tadros
further vaguely testified that his rental properties were “nearby,” but St.
Mary does not cite evidence establishing where these rental properties were
located or that Tadros’s home or rentals were comparable to the residence.
Meyer v. Benko (1976) 55 Cal. App. 3d 937 (Meyer), which St. Mary cites
for the first time in its reply brief, supports the ruling below. There, the
court reversed a judgment for a property seller after the trial court found the
parties did not have a contract, and the appellate court discussed remedies on
remand. (Id. at pp. 942, 947.) The court found the buyer could recover loss of
use damage measured by the fair market rental value of the property
although it was not income-producing. (Id. at p. 946.) However, “the only
evidence introduced concerning the fair rental value of [the] property was the
testimony of [the buyer as the equitable owner] who testified that he believed
the rental value was $300 a month.” (Ibid.) This testimony apparently
related to the rental value of the property at the time of trial, and, because
rental values may fluctuate tremendously, the court stated the rental value
should be assessed over the entire time of loss of use. (Ibid.) Even assuming
the remedy in Meyer is available in this case, as in Meyer, Tadros’s testimony
appears to refer to the rental value of the residence at the time of trial, but
St. Mary had resumed use of the residence by then.
III. DISPOSITION
The judgment is reversed, and the matter is remanded with directions
to enter judgment in favor of St. Mary for $461,759.24.
31
BROWN, J.
WE CONCUR:
POLLAK, P. J.
STREETER, J.
St. Mary & St. John Coptic Orthodox Church v. SBC Insurance Services (A156085)
32
Trial Court:Alameda County Superior Court
Trial Judge: Hon. Paul D. Herbert
Counsel:
Cummins & White, LLP, Larry M. Arnold, Margaret R. Miglietta, for
Plaintiff and Appellant.
Stone & Associates, APC, Colette F. Stone, Juliet M. Lompa; Hayes, Scott,
Bonino, Ellingson, Guslani, Simonson & Clause, LLP, Mark G. Bonino,
Emma B. Lloyd, for Defendant and Respondent.
33