STOCK 24 2020 v. ALLSTATE INSURANCE COMPANY (2025)

MEMORANDUM AND ORDER RE:

(1) PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT AS TO COUNTS ONE AND FOUR OF PLAINTIFFS’ FIRST AMENDED COMPLAINT [DKT. NO. 105]

(2) DEFENDANT ALLSTATE INSURANCE COMPANY'S MOTION FOR SUMMARY JUDGMENT AS TO FIRST AND SECOND CAUSES OF ACTION; MOTION FOR PARTIAL SUMMARY JUDGMENT AS TO CONTRACT CLAIM; SECOND, THIRD, AND FOURTH CAUSES OF ACTION; PUNITIVE DAMAGES [DKT. NO. 106]

INTRODUCTION

This lawsuit arises from Defendant Allstate's denial of insurance coverage of Plaintiffs’ claim under a homeowners insurance policy. Before the Court for decision in this insurance coverage lawsuit are the parties’ cross-motions for summary judgment, or, in the alternative, partial summary judgment. Having thoroughly reviewed the parties’ briefing, evidence, and argument, and for the reasons outlined below, the Court DENIES Plaintiffs’ Motion for Partial Summary Judgment as to Counts One and Four of the First Amended Complaint. (Dkt. No. 105.) The Court GRANTS, Defendant's Motion for Summary Judgment as to the First and Second Causes of Action. (Dkt. No. 106.)

THE PARTIES’ CROSS-MOTIONS

(1) Plaintiffs’ initial filings:

a. Plaintiffs’ Motion for Partial Summary Judgment as to Counts One and Four of Plaintiffs’ First Amended Complaint, filed on January 3, 2025 (“Pltfs’ Motion”) (Dkt. No. 105);

b. In support of their Motion, Plaintiffs timely filed Plaintiffs’ Statement of Uncontroverted Facts (“PSUF”) (dkt. no. 105-1); Plaintiffs’ Supporting Evidence, including the Declaration of Reg K. Browne, Professional Engineer and related exhibits (dkt. no. 105-2).

(2) Defendant's initial filings:

a. Defendant Allstate Insurance Company's Notice of Motion and Motion for Summary Judgment, as to First and Second Causes of Action, Notice of Motion and Motion for Partial Summary Judgment as to Contract Claim, Second, Third and Fourth Causes of Action, Punitive Damages, and Related Exhibits; (“Deft's Motion”), filed on January 3, 2025 (Dkt. No. 106);

b. Defendant's Amendment to Notice of Motion and Motion for Summary Judgment as to First and Second Causes of Action; Notice of Motion and Motion for Partial Summary Judgment as to Contract Claim; Second, Third and Fourth Causes of Action; Punitive Damages; Amended Separate Statement of Uncontroverted Facts, filed on January 3, 2025 (together, Dkt. No. 107);

c. Amendment to Notice of Motion and Motion for Summary Judgment as to First and Second Causes of Action; Notice of Motion and Motion for Partial Summary Judgment as to Contract Claim; Second, Third, and Fourth Causes of Action; Punitive Damages; with CORRECTED Amended Separate Statement of Uncontroverted Facts in Support of Allstate's Motion for Summary Judgment or, in the Alternative, Partial Summary Judgment and Proposed Order; Notice of Errata and Declaration re Clerical Errors, filed on January 22, 2025 (Dkt. No. 114).1

Defendant, with its Motion, submitted a Memorandum (dkt. no. 106-1); a Separate Statement of Uncontroverted Facts (dkt. no. 106-2); a Notice of Filing of Exhibits 1-29 (dkt. nos. 106-3-11); the Declaration of Patrick Axtell (dkt. no. 106-11); Declaration of Thomas Byron (dkt. no. 106-13); and Declaration of Nathan S. Arrington (dkt. no. 106-12). As noted above, on January 3, 2025, Defendant filed an Amended Separate Statement of Uncontroverted Fact (“DASSUF”). (Dkt. No. 107.) In resolving Defendant's Motion, the Court refers to Defendant's amended submissions.

On March 18, 2025, Plaintiffs Lawrence Michael Stock, Adrienne Lee Stock and Georgienne Bradley, (together “Plaintiffs” or “Stock”) filed an Opposition to Defendant's Motion (dkt. no. 119), along with a Declarations of R. Browne (“Brown Decl.” (dkt. no. 119-1)); D Ardi (“Ardi Decl.” (dkt. no. 119-2)); and L. Stock (“L. Stock Decl.” (dkt. no. 119-3)); the Allstate Coverage Denial Letter (dkt. no. 119-4); email correspondence dated May 7, 2004 (dkt. no. 119-5); and Plaintiffs’ Response to Allstate's Amended Separate Statement of Uncontroverted Facts (dkt. no. 119-6). On March 25, 2025, Allstate filed its Reply in support of the Motion (dkt. no. 126), along with its response to Plaintiffs Objections to Evidence, and Motion to Strike Declarations of Patrick Axtell and Thomas Byron (dkt. no. 126-1); Objections to Plaintiffs’ Evidence in Opposition to Allstate's Motion for Summary Judgment or Partial Judgment (dkt. no. 126-2); and a Proposed Order re: Objections to Plaintiffs evidence in Opposition to Allstate Motion for Summary Judgment or Partial Judgement (dkt. no. 126-3).

On March 18, 2025, Allstate also filed its Opposition to Plaintiffs’ Motion (dkt. no. 121); a Response and Opposition to Plaintiffs’ Statement of Uncontroverted Facts (dkt. no. 121-1); Objections to Plaintiffs’ Evidence in Support of Their Motion for Partial Summary Judgment (dkt. no. 121-2); a Proposed Order on Allstate's Objections to Plaintiff Evidence (dkt. no. 121-3); and a Proposed Order Denying Plaintiffs’ Motion for Partial Summary Judgment (dkt. no. 121-4).

On April 4, 2025, the Court vacated the hearing on the parties’ respective Motions and took the matters under submission for decision. (Dkt. No. 127.)

SUMMARY JUDGMENT STANDARD

Summary judgment is appropriate when the evidence, viewed in the light most favorable to the nonmoving party, demonstrates that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). The moving party bears the initial burden of offering proof of the absence of any genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the moving party's burden is met, the opposing party is required to go beyond the pleadings and, by the party's own affidavits or by other evidence, designate “specific facts showing that there is a genuine issue for trial.” Fed. R. Civ. P. 56(e); Miller v. Glenn Miller Prods., Inc., 454 F.3d 975, 987 (9th Cir. 2006). The party opposing the motion must submit evidence sufficient to establish the elements that are essential to that party's case, and for which that party will bear the burden of proof at trial. Celotex Corp., 477 U.S. at 322, 106 S.Ct. 2548.

The Court must “view the facts in the light most favorable to the non-moving party and draw reasonable inferences in favor of that party.” Scheuring v. Traylor Bros., Inc., 476 F.3d 781, 784 (9th Cir. 2007). Where different ultimate inferences reasonably can be drawn, summary judgment is inappropriate. Miller, 454 F.3d at 988. At summary judgment, “the court does not make credibility determinations or weigh conflicting evidence.” Porter v. California Dept. of Corrections, 419 F.3d 885, 891 (9th Cir. 2005) (citation omitted). A factual dispute is “genuine” only if there is a sufficient evidentiary basis upon which a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A factual dispute is “material” only if it might affect the outcome of the lawsuit under governing law. Id.

“Evidence may be offered to support or dispute a fact on summary judgment only if it could be presented in an admissible form at trial.” S. Cal. Darts Ass'n v. Zaffina, 762 F.3d 921, 925-26 (9th Cir. 2014) (citation and internal quotation marks omitted); see also Fonseca v. Sysco Food Servs. of Ariz., Inc., 374 F.3d 840, 846 (9th Cir. 2004) (“Even the declarations that do contain hearsay are admissible for summary judgment purposes because they ‘could be presented in an admissible form at trial.’ ”) (citations omitted). Purported evidence which “sets out mere speculation for the critical facts, without a showing of foundation in personal knowledge[ ] for the facts claimed to be at issue” is insufficient. John M. Floyd & Assocs., 550 F. App'x at 360 (9th Cir. 2013). Conclusory statements are insufficient to defeat summary judgment. Comite de Jornaleros de Redondo Beach v. City of Redondo Beach, 657 F.3d 936, 950 n.9 (9th Cir. 2011) (en banc).

To establish the existence of a factual dispute, an opposing party need not establish an issue of fact conclusively in its favor; it is enough that “the claimed factual dispute be shown to require a jury or judge to resolve the parties’ differing versions of the truth at trial.” First Nat'l Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 290, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968). Thus, the “purpose of summary judgment is to ‘pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial.’ ” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (quoting Fed. R. Civ. P. 56(e) advisory committee's note on 1963 amendments); Int'l Union of Bricklayers v. Martin Jaska, Inc., 752 F.2d 1401, 1405 (9th Cir. 1985).

The Court exercises original jurisdiction over this action based on the complete diversity of the parties. 28 U.S.C. ¶ 1332(a)(1). Accordingly, in addressing the merits of the Motion, the Court applies the substantive law of the State of California.

ALLEGATIONS IN THE FIRST AMENDED COMPLAINT

Plaintiffs Carl Nathan (“Nate”) Stock, Adrienne Lee Stock and Georgienne Bradley, as Trustee of the Stock Defective Trust u/t/d/ November 24, 2020 (“Trustee Bradley”), commenced this action on October 18, 2023. (Dkt. No. 1.) Plaintiffs filed the operative First Amended Complaint (“FAC”) on September 18, 2024. (Dkt. No. 64.) Defendant filed an Answer to the FAC and a Jury Demand on October 2, 2024. (Dkt. No. 87.) Subject matter jurisdiction is proper based on complete diversity of the parties.

The FAC outlines that Plaintiff Lawrence Nate Stock died on November 18, 2023, and Lawrence M. Stock is Special Administrator of the Estate of Carl Nathan Stock. (FAC at ¶ 1.) Trustee Bradley is a citizen of California, and in her capacity as Trustee has owned the house and real property located at 19108 Pacific Coast Highway in Malibu, California (the “Property”). (FAC at ¶ 2.) Defendant Allstate “is an Illinois domestic stock company and Illinois is the state in which Allstate maintains its principal place of business and headquarters[.]” (Id. at 3.)

According to the FAC, Nate and Adrienne Stock,² as husband and wife and California citizens, resided at the Property until mid-December 2021 when “the partial and ongoing collapse of the Property as the result of hidden decay within the house and the weight of its contents forced them to evacuate” and move to temporary residences until “the completion of the necessary repairs and rebuilding of their house.” (Id. at ¶ 7.) According to Plaintiffs, in 2021, Nate and Adrienne Stock “were insured under “deluxe Plus Homeowners Policy – AP337 number 034018984, issued by [Allstate] for the one-year period beginning January 24, 2021 (the ‘Policy’).” (Id. at ¶ 8.) The Policy provided coverage for the Property identified in the Policy as the “Dwelling” and in addition to “Dwelling Protection” and other coverages, provided “coverage with Extended Limits of 150% of the stated limit of liability, for Additional Living Expense.” (Id., and see Policy Declarations, FAC, Ex. A). Plaintiffs assert the “loss and damages were reported to Defendant and Defendant acknowledged the notice of loss. (Id. at ¶ 9.)

As alleged in the FAC, “Defendant requested and was granted an opportunity to inspect the Property as soon as considerations of safety allowed visitation and Defendant's agent did an extensive examination of the Property and took photographs to his satisfaction.” (Id. at ¶ 10.) Plaintiffs further allege that the Policy “is an all-risk policy covering sudden and accidental direct physical loss to the property or dwelling” and that the “Property suffered from sudden and accidental direct physical loss within the meaning of Defendant's Policy.” (Id. at ¶¶11-12.)

The Policy included enumerated descriptions of what it does not cover, commonly referred to as “Exclusions.” (Id. at ¶ 13.) According to Plaintiffs, Exclusion No. 12 in the Policy purports to remove coverage for Collapse subject to an exception to the Exclusion, Plaintiffs’ loss falls within the exception to the Exclusion, and by its terms, the Exclusion does not extend to “the ‘Collapse’ of part of Plaintiffs’ Property and the direct physical loss to covered property caused by such collapse, as defined in ‘Section I, Additional Protection under item 12, Collapse.’ ” (Id.) As alleged in the FAC, under Section I, Additional Protection, item 12, “Defendant undertook to cover Collapse as follows:

We will cover:

a) The entire collapse of a covered building structure,

b) The entire collapse of part of a covered building structure; and

c) Direct physical loss to covered property caused by a) or b) above

****

For coverage to apply, the collapse of a building structure specified in a) or b) must be a sudden and accidental direct physical loss caused by one of more of the following

***

b) hidden decay of the building structure**

Weight of persons, animals, equipment or contents ․

(Id. at ¶ 14.)

Plaintiffs contend that under the Policy's “Section I, Additional Protection, item 1, Additional Living Expense,” Defendant was obligated to pay “the reasonable increase in living expenses necessary to maintain your normal standard of living when a direct physical loss we cover makes your residence premises uninhabitable.’ ” (Id.) Based on this provision in the Policy, the FAC alleges that the Stocks “were forced to evacuate their home due to the dangerous condition caused by the collapse of a part of it and incurred covered Additional Living Expense.” (Id. at ¶ 15.) Plaintiffs assert that pursuant to Declarations in the Policy, “defendant increased the coverage applicable to the Property or dwelling to 150% of the $989,848 Limit of Liability applicable to the building structure for Dwelling Protection.” (Id. at ¶ 16.) Based on the plain language of the Policy, Plaintiffs maintain that the insured property is a “Dwelling” and therefore, a “structure” within the meaning of the Policy. (Id.) Plaintiffs assert that the Policy “either clearly provides coverage for the Plaintiffs’ loss or, is ambiguous and must be construed against Defendant in favor of Plaintiffs.” (Id. at ¶ 17.) According to Plaintiffs, in either case, the Policy covers the losses Plaintiffs sustained. (Id.)

Plaintiffs further allege that Defendant breached the insurance contract by failing and refusing to pay the covered losses under the Policy and by refusing to “affirm or deny coverage within a reasonable time, and by failing to make a reasonable settlement of its insureds’ claim.” (Id. at ¶¶ 18-19.) This conduct, according to Plaintiffs, “violated the covenant of good faith and fair dealing implied in every contract.” (Id. at ¶ 19.)

Plaintiffs also allege that Defendant violated the California Unfair Claims Settlement Practices Act, California Insurance Code § 790.3, and the regulations issued by the California Commissioner of Insurance pursuant to the Code, by “misrepresenting pertinent insurance policy provisions relating to the coverage at issue ․ failing to promptly investigate and process its insureds’ claim, ․ by failing to attempt, in good faith, to effectuate prompt, fair and equitable settlements of its insureds’ claim even though it knew that its liability had become reasonably clear.” (Id. at ¶ 20.) Plaintiffs assert that having inspected the Property, Defendant “had a duty to affirm coverage within a reasonable time, but “failed to make reasonable and timely payment of the Plaintiffs’ claim,” despite knowing that “the Property had suffered covered damage in the nature of a collapse of part of it which necessitated evacuation of the insured from the property, immediate shoring to prevent total collapse, and repair and replacement of the damaged areas[.]” (Id. at ¶ 20.)

Based on these allegations, Plaintiffs assert four causes of action: Count One for breach of contract; Count Two for breach of the covenant of good faith and fair dealing; Count Three “for common law bad faith as evidenced by Defendant's conduct [and] engaging in unfair claims settlement acts and practices”; and Court Four for a declaration that Allstate's Policy “provides coverage for the collapse loss sustained by the dwelling in question and the additional Extended Coverage limits of 150% of the Coverage A protection, and that Allstate's coverage denial is in bad faith, entitling Plaintiffs to punitive damages and counsel fees.” (Id. at 22.)

Against this backdrop, the Court turns to the evidence offered by the parties in connection with their respective motions.

UNCONTROVERTED MATERIAL FACTS 3

Nate and Adrienne Stock, as husband and wife and California citizens, resided at the real property located at 19108 Pacific Coast Highway in Malibu, California (the “Property”) until mid-December 2021. Lawrence Nate Stock died on November 18, 2023, and Lawrence M. Stock is Special Administrator of the Estate of Carl Nathan Stock. In July 2024, the Court appointed Lawrence Stock as Guardian ad Litem for plaintiff Adrienne Lee Stock.

Defendant Allstate Insurance Company insured the Property under its “Deluxe Plus Homeowners Policy – AP337” number 034018984, issued by Allstate for the one-year period beginning January 24, 2021 (the “Policy”). PSUF 6.

The Policy provides primary coverage for the Property as stated in relevant part:

Losses We Cover Under Coverages A and B: We will cover sudden and accidental Direct physical loss to property described in Coverage A – Dwelling Protection and Coverage B – Other Structures Protection except as limited or excluded in this policy.

***

Section I – Your Property

Coverage A

Dwelling Protection

Losses We Do Not Cover Under Coverages A and B:

We do not cover loss to the property ․ consisting of or caused by:

***

12. Collapse, except as specifically provided in Section I – Additional Protection under item 12, “Collapse.”

***

We do not cover loss consisting of or caused by any of the following:

15) a) wear and tear, aging, ․ deterioration ․;

***

d) rust or other corrosion ․;

(DSUF 1, 2; Ex. 1, 3 (Policy at 5, 7).)

The Policy provided additional coverage for policyholders under a section entitled “Additional Protection,” the text of which states, in relevant part:

Additional Protection

***

12. Collapse

We will cover:

a) the entire collapse of a covered building structure;

b) the entire collapse of part of a covered building structure; and

c) direct physical loss to covered property caused by (a) or (b) above.

For coverage to apply, the collapse of a building structure specified in (a) or (b) above must be sudden and accidental direct physical loss caused by one or more of the following:

a) a loss we cover under Section I, Coverage C – Personal Property Protection;

b) hidden decay of the building structure;

c) hidden damage to the building structure caused by insects or vermin;

d) weight of persons, animals, equipment or contents;

e) weight of rain or snow which collects on a roof;

f) defective methods or materials used in construction, repair, remodeling or renovation, but only if the collapse occurs in the course of such construction, repair, remodeling or renovation.

(Id.)

In December 2021, Plaintiffs engaged a licensed Professional Engineer, Reg K. Browne, to inspect the oceanfront Property. (PSUF 1.) In his declaration, Browne states that he visited the Property in “December 2021 and [on] subsequent visits, and personally observed “that the steel beam had failed.”⁴ (Browne Decl. at ¶ 11.) Browne opined that “[i]n engineering terms, the word ‘failure’ is synonymous with collapse or inability of a structural element to perform its intended function which is to support the load it is designed to carry.” (Id.) Browne concluded that “there was a failure of the steel beam on the west side of the house because the steel beam was no longer able to perform its intended function. Because the steel beam was part of the house, this part of the structure completely failed or completely collapsed.” (Id. at ¶ 12.) Based on his observations, Mr. Browne told Nathan and Adrienne Stock that they had to immediately evacuate the Property. (PSUF 2; Brown Decl. ¶¶16, 17.) The Stocks moved out of the Property and tendered a claim to Defendant under the Policy.

Months after being notified of the claim, Allstate's retained counsel, Thomas P. Byron sent a letter dated May 29, 2024 (the “Allstate Coverage Disclaimer Letter”) stating, “it is Allstate's opinion that there is no coverage for collapse as defined by the Allstate Policy and California Caselaw.” PSUF 7. Allstate's coverage Disclaimer Letter stated that it identified and analyzed two separate issues to decide if there was coverage for Plaintiffs’ claim: (1) was there an entire collapse of the residence; and (2) was there a partial collapse of the residence. PSUF 9. Allstate's Coverage Disclaimer Letter acknowledged that the two issues were related but stated that they involved “distinct coverage issues that were analyzed separately.” (Id.) Allstate does not dispute that the Disclaimer Letter expresses Allstate's coverage opinion. PSUF 8.

EVIDENTIARY OBJECTIONS

The Court may only consider admissible evidence when resolving a motion for summary judgment. Fed. R. Civ. P. 56. A party may object that the material used to “dispute a fact cannot be presented in a form that would be admissible in evidence.” Fed. R. Civ. P. 56(c)(2). A court must rule on material evidentiary objections. Norse v. City of Santa Cruz, 629 F.3d 966, 973 (9th Cir. 2010).

Here, Defendant submitted objections to certain evidence offered by Plaintiffs both in support of Plaintiffs’ own motion and in opposition to Allstate's. (See Allstate's Objections to Plaintiffs’ Evidence in Support of Their Motion for Partial Summary Judgment (dkt. no. 121-2); and Allstate's Objections to Plaintiffs’ Evidence in Opposition to Allstate's Motion for Summary Judgment Or, In the Alternative, Partial Summary Judgment (dkt. no. 126-2).) In addition, Plaintiffs, in responding to Defendant's separate statement of facts, moved to strike the Declarations of Patrick Axtell and Thomas Byron and objected to several photographs purportedly taken at the Property as irrelevant and lacking foundation. (See dkt. no. 119 at 16-21.)

As Defendant points out, however, Plaintiffs’ Motion to Strike and other evidentiary objections embedded in their response to Defendant's separate statement of facts are improper and directly contravene this Court's order directing the parties not to argue objections to evidence in the separate statement of facts. (See Deft's Response to Plaintiffs’ Objections to Evidence and Motion to Strike, Dkt. No. 126-1 at 2, n. 1 (citing Dkt. No. 12, p. 15).) Accordingly, Plaintiffs’ Motion to Strike is denied. Further, in resolving the parties’ cross-motions, the Court has only considered admissible evidence. Where this Order cites evidence to which a party has objected, the objection is impliedly overruled.

THE PARTIES’ CROSS-MOTIONS

I. PLAINTIFFS’ MOTION

A. Plaintiffs Dispute Allstate's Coverage Denial

Plaintiffs maintain that Allstate's opinion, as stated in its Coverage Disclaimer Letter, “is not a correct reading of the policy.” (Pltf's Motion at 4.) As an initial matter, Plaintiffs point out that “the term ‘collapse’ is not defined in the Policy.” (Id.) Further, Plaintiffs argue that a “collapse ․ caused by certain conditions and resulting in physical loss, are covered.” (Id. at 4-5.) Specifically, Plaintiffs maintain that the Additional Protection Coverage section of the Policy does not require that “the collapse” be sudden and accidental, because the Policy provides coverage for “collapses caused by ‘hidden decay’ thus necessarily covering collapses that happen gradually over time, and merely requires that such a collapse result in a sudden and accidental loss.” (Id.; and see id. at 21-22; 25-26.)

Plaintiffs argue that Allstate's Coverage Disclaimer Letter “concedes that coverage is to be determined under the Additional Protection section of the [P]olicy,” therefore, the Court need not engage in the traditional burden shifting analysis used under California law to determine coverage disputes. (Id. at 5 n.2.) Plaintiffs represent that although Coverage A of the Policy provides for certain “Dwelling Protection,” Coverage A is not relevant here because “the Allstate Coverage Disclaimer Letter concedes that coverage must be analyzed under the Additional Protections section.” (Id. at 9 n.9.) Indeed, Plaintiffs assert that “because coverage is transferred from Coverage A to the Additional Protection section, any exclusions in Coverage A that might have been applied, are either expressly deleted, or effectively inapplicable due to ambiguity and contradiction.” (Id. at 10; 24-26.)

Thus, according to Plaintiffs’ interpretation of the Policy's provisions, the issues to be resolved here are “whether the Additional Protection section of the [P]olicy covers the collapse of any part of the Plaintiffs’ dwelling that resulted in a sudden and accidental direct physical loss, where that collapse was caused by hidden decay or by the weight of the house and its contents.” (Id. at 8-9.) Framing the issues in this fashion, Plaintiffs maintain that their loss “fits squarely within the language of the Allstate policy” and argue that the contract claims at issue are suitable for summary judgment and, as a matter of law, “entirely for the Court to decide.” (Id. at 9 (citing MacKinnon v. Truck Ins. Exchange, 31 Cal.4th 635, 641, 3 Cal.Rptr.3d 228, 73 P.3d 1205 (2003).)

B. Plaintiffs Argue that the Additional Protection Section Provides Coverage for the Property

Plaintiffs urge that item 12 of the Additional Protection section of the Policy provides coverage for “a covered building structure” if the collapse of a building structure that is a “sudden and accidental direct physical loss caused by one or more of the following ․ (b) hidden decay of the building structure ․ (d) weight of persons ․ equipment or contents” ․ but “collapse does not include settling, cracking, shrinking, or building or expansion.” (Id. at 11 (citing Policy).)

1. Plaintiffs Contend the Policy Language is Ambiguous

According to Plaintiffs, “subpart (b) cannot be read to mean the same as subpart (a), which requires a collapse of the dwelling structure, itself, because doing so would render subpart (b) redundant and meaningless.” (Id.) Plaintiffs insist that “not only is a collapse of the whole house covered, but a collapse of any part of the house is covered if it is caused by ‘hidden decay’ or by the ‘weight of persons ․ equipment or contents.” (Id.) Plaintiffs posit that this is the only interpretation of the Policy's Additional Coverage provisions that avoids making coverage illusory. (Id. at 21.)

Plaintiffs further argue that Allstate's position, by contrast, would result in a contradiction in the Policy whereby a collapse is covered under the Additional Protection provision “if it is caused by ‘hidden decay,’ but not covered unless it is sudden and accidental.” (Id.; citing Jordan v. Allstate Ins. Co., 116 Cal. App. 4th 1206, 11 Cal.Rptr.3d 169 (2004)) (“Jordan I”.) According to Plaintiffs, the Policy does not require that the “collapse” be sudden and accidental, only that the “resulting loss be sudden and accidental.” (Id.) This, according to Plaintiffs, would also make coverage illusory because “[r]ust and corrosion are forms of decay” and the resulting damage “was hidden from view.” (Id.) Plaintiffs assert that “[t]here is no dispute that as the beam deteriorated, there was a sudden and accidental loss of support of the weight of the house.” (Id.) Plaintiffs maintain that the result is “conflicting policy language that creates ambiguity that must be resolved against Allstate.” (Id. at 24.)

Plaintiffs also argue that because Allstate's Coverage Disclaimer Letter states only two grounds for its coverage decision, Allstate has waived or is estopped from raising any other grounds for its coverage decision that are not stated in the Coverage Disclaimer Letter. (Id. at 22-24.) According to Plaintiffs, Coverage A's exclusions for “collapse” caused by “wear and tear, aging, ․ deterioration” and for “rust or other corrosion” is eviscerated by the exception transferring coverage to the Additional Protection section if the collapse fits within “the scope of item 12 of that section.” (Id. at 24.) Plaintiffs insist that Allstate cannot rely on the Policy's “Coverage A” exclusions because of the alleged ambiguity discussed above and because Allstate did not rely on those exclusions in its denial of coverage. (Id. at 25.)

Finally, Plaintiffs insist that Allstate cannot rely on a claim that the “collapse was not sudden and accidental” because, according to Plaintiffs, the Additional Protection section of the Policy “does not require that the collapse itself be ‘sudden and accidental,’ only that a collapse result in ‘a sudden and accidental’ loss.” (Id. (emphasis in original).) Plaintiffs reiterate their argument that it would be a contradiction in terms for the Policy to cover “a collapse caused by hidden decay which perforce includes rust or other corrosion which takes place[ ] over time, and at the same time to require a ‘sudden and accidental’ collapse.” (Id.)

2. Plaintiffs’ Evidence: The Declaration of Engineer Reg K. Browne

In support of their Policy analysis, Plaintiffs rely on the declaration of professional engineer, Reg K. Browne, who inspected the Property in December 2021. Browne's firm, Pacific Engineering Group, specializes in, among other areas, “coastal engineering and coastal structures, coastal residential development, and coastal engineering studies,” with a concentration specifically in Malibu, California. (Id. at 12, Browne Decl. ¶¶ 3-5.) Browne, who inspected and took photographs of the Property, opined that he observed that “the steel beam had failed.” Id. According to Browne, “[i]n engineering terms, the word ‘failure’ is synonymous with collapse or inability of a structural element to perform its intended function which is to support the load it is designed to carry.” (Id., Browne Decl. ¶11.)

Browne describes “the specific collapsing” as evidenced in the “yielding, deformation, twisting and deflection of the steel beam which made it useless for its intended function of carrying the load of the house” and “the wooden nailer attached to the beam also collapsed because it was crushed and ended up in failure.” (Id. at 13, Browne Decl. ¶14.) Browne goes on to observe that “the entire Stock House was in danger of collapsing and would have to be lifted so that the load could be additionally supported on the newly built concrete columns.” (Id.) He further observed that “[p]ortions of the steel beam were covered and hidden from view by wooden lagging, and it was only after [a general contractor] exposed the beam, that the concealed decay and degradation could be observed.” (Id., Browne Decl. ¶ 15.) Browne further opines that “the collapse of the steel beam ․ put the entire house at risk of a total collapse. In fact, the entire house was in the process of collapsing and it was necessary to support it and eventually use hydraulic jacks to lift the entire structure so that it could be supported by newly installed concrete columns.” (Id., Browne Decl. ¶16.) Browne goes on to describe what he observed at the Property as “impending serious risk of total collapse.” (Id.; Browne Decl. ¶17.) Browne opines that “the collapse of the steel cap-beam was caused by a combination of hidden decay from corrosion and the increasing inability of the beam to sustain the weight of the house and its contents.” (Id. at 14-16; Browne Decl. ¶18.) Browne describes his assessment of the “ongoing degradation of the beam” and engineering remediation work that was performed on the Property based on his findings. (Id. at 14-16; Browne Decl. ¶19.)

Plaintiffs further argue that because the facts outlined by Mr. Browne “are undisputed” and “Allstate has no contrary evidence,” “the loss is covered by the Allstate policy and Plaintiffs are entitled to summary judgment.” (Id. at 19.) According to Plaintiffs, the only way to give “full effect” to the whole of the contract, as California law requires, is to understand that the “phrasing of item 12 of the Policy, subparagraph (b), which refers to the ‘entire collapse of part of a building structure’ must mean that if any part, however small, of the structure has collapsed ‘due to hidden decay’ or ‘the weight of persons ․ equipment, or contents’ and this causes a physical loss, the policy covers such loss.” (Id. at 20.)

3. Plaintiffs Argue That a Covered “Collapse” Occurred

Plaintiffs represent that Allstate has not offered “admissible evidence in its expert disclosure to dispute that there was a collapse.” (Id. at 26.) Plaintiffs emphasize that “[t]he policy does not contain a definition of ‘collapse.’ ” (Id.) Plaintiffs also point out that although Allstate's coverage denial stated that there was no “substantial evidence of an entire collapse of any part of the residence,” the Policy does not contain a “substantial evidence” standard and insist because “this case involves an actual collapse of part of the building structure,” the loss is covered. (Id. at 26-27.) Plaintiffs insist that Allstate's position is unreasonable. (Id. at 27.)

4. Plaintiffs Maintain the Stocks Suffered a “Sudden and Accidental” Loss Within the Meaning of the Policy

Plaintiffs also attempt to knock down other arguments that they posit Allstate may attempt to make. Specifically, Plaintiffs reject Allstate's conclusion that Mr. Hartwell's assessment that “support beams and cross-beams were deflecting and twisting from the weight of the house” is insufficient evidence to support “an entire collapse of part of the residence” and likewise does not support “an entire collapse of any part of the residence.” (Id.) Plaintiffs consider Allstate's position to be “absurd,” insisting that “to say that there has been a ‘partial collapse of the house’ is to say that a part of the house has collapsed.” (Id.) Relying entirely on the declaration of Professional Engineer Browne, Plaintiffs contend that the evidence shows that “there has been an ‘entire’ collapse of a part of the house”; “a sudden and accidental direct physical loss to the house, of the house, or to the insureds.” (Id.)

Plaintiffs also offer an anticipatory response if Allstate contests the cost of repairs that Plaintiffs made at the Property, arguing that because Allstate did not cite the cost of repairs as grounds for denying the claim, Allstate cannot raise any such objection now. (Id.) Thus, taking these arguments together and relying almost exclusively on the Browne Declaration, Plaintiffs argue they are entitled to summary judgment on Counts One and Four of the Complaint, namely: (1) breach of contract (Count One); and (2) “for declaration that Allstate's Policy provides coverage for the collapse loss sustained by the dwelling in question and the additional Extended Coverage limits of 150% of the Coverage A protection, and that Allstate's coverage denial is in bad faith, entitled Plaintiffs to punitive damages and counsel fees” (Count Four). (See FAC, Dkt. No. 64 at 22.).

II. Defendant's Opposition

a. Count One – Breach of Contract

Allstate presents three primary arguments in support of its position that Plaintiffs’ breach of contract claim (Count One) is fatally deficient. First, Allstate maintains that the plain language of the Policy precludes coverage because Plaintiffs have not presented any evidence that the Property, or any part of the Property, suffered an “entire collapse.” (Deft.’s Opp'n at 1, 3-5.)

Second, Allstate argues that Plaintiffs’ evidence of long-term rust and excessive corrosion to the steel I-beams under the residence cannot establish coverage based on a “sudden and accidental” loss under the “Additional Protection” section of the Policy because undisputed evidence and testimony offered by Plaintiffs establishes that any decay from rust and corrosion to the Property's support beams occurred gradually over time and was not concealed. (Id. at 8-11.)

Third, Allstate argues that Plaintiffs cannot establish a breach of contract claim because Plaintiffs failed to fulfill their duty to cooperate with the insurer by: (1) refusing to allow inspection of the Property before repairs were completed; (2) refusing to provide the insurer with engineering and contractor documents, including photos and engineering reports, despite multiple demands from Allstate; (3) failed to provide the necessary documentation evidencing any actual cash value (“ACV”) of their claim; and (4) filed this lawsuit before providing the engineering reports about the condition of the Property and the remediation work done at the Property that was completed before Allstate was eventually permitted to inspect the Property on March 28, 2023. (Id. at 4-7.)

As to Count One, Allstate urges that the case can be readily resolved through summary judgment because Plaintiffs are not entitled to coverage under the Policy unless the Property suffered “an ‘entire collapse’ caused by ‘hidden decay.’ ” (Opp'n at 1.) Allstate does not dispute that the ocean deck steel I-beams at the Property “suffered from decades of untreated rust.” (Id.) But Allstate maintains that Plaintiffs’ Motion is fatally flawed because the undisputed evidence demonstrates that Plaintiffs cannot establish they are entitled to coverage under the plain language of the applicable Policy provisions. Allstate emphasizes that “Plaintiffs do not even allege the property ‘entirely’ collapsed under the proper definition of that term.” (Id. (emphasis in original).)

Allstate also argues that Plaintiffs’ Motion fails because Plaintiffs cannot meet their burden to show a “sudden and accidental” loss. (Id.) Allstate rejects Plaintiffs’ contention that coverage for the failing I-beam at the Property is available under the “Additional Protection” section of the Policy. (Id.) Pointing to the analysis in Jordan I, 116 Cal. App. 4th at 1210, 11 Cal.Rptr.3d 169, Allstate maintains that Plaintiffs cannot read the “Additional Coverage” section of the Policy “in isolation without considering the insuring loss provision.” (Id.) Furthermore, Allstate argues, “even if the Court accepted that argument, the Additional Protection section repeats the same requirement – the collapse must be ‘sudden and accidental.’ ” (Id.) Allstate rejects Plaintiffs’ argument that the Policy's coverage provision is somehow ambiguous because, according to Plaintiffs, a “collapse” cannot be both “sudden and accidental” and at the same time “caused by hidden decay.” (Id. at 11.) According to Allstate, Plaintiffs’ failure to establish a “sudden and accidental loss” is fatal to Plaintiffs’ Motion. (Id. at 8-11.) Finally, Allstate insists that because Plaintiffs have no evidence of a “sudden and accidental” physical loss, Plaintiffs have failed to meet their burden of providing that the claim comes within the “sudden and accidental exception under the Policy.” (Id. at 12 (citing Aydin Corp. v. First State Ins. Co., 18 Cal. 4th 1183, 1194, 77 Cal.Rptr.2d 537, 959 P.2d 1213 (1998)).)⁵

b. Declaratory Relief (Count Four)

In light of its arguments about the deficiencies of Plaintiffs’ substantive claims, Allstate, relying on the plain language of the Policy, urges that Plaintiffs’ Declaratory Relief claim must fail as a matter of law. (Id. at 22-23.) Allstate emphasizes that “declaratory relief is improper where, as here, plaintiffs have other means of obtaining a determination of their rights,” and because declaratory relief operates prospectively, and the procedure cannot be used in situations such as here where “the rights of the complaining party have crystallized into a cause of action for past wrongs, all relationship between the parties has ceased to exist, and there is no conduct of the parties subject to regulation by the court.” (Id. at 22 (internal citation omitted).)

III. Plaintiffs’ Reply

Plaintiffs respond that Allstate's construction of its own policy is incorrect. According to Plaintiffs, Allstate's denial of Plaintiffs’ claim was “made without a full, fair and thorough investigation of all the bases of the claim that was presented” constitutes a breach of the insurer's duty of good faith and fair dealing, and, therefore, adequately establishes Plaintiffs’ bad faith claim. (Reply at 1.) Plaintiffs challenge Allstate's reliance on Jordan I, arguing that the decision the California Court of Appeal “left no doubt that an ambiguous policy MUST be construed in favor of the policyholder.” (Id. (emphasis in original).) Indeed, Plaintiffs maintain that Allstate misstates the holdings of both Jordan I and Jordan II and accuses Allstate of a “deliberate attempt to mislead the Court” as the meaning of the Policy provisions. (Id. at 2.)

Plaintiffs emphasize that their claim is not for rust or corrosion, “but a claim for a complete collapse of part of the insured home caused by ‘hidden delay’ or ‘weight of persons, animals, equipment or contents, as the steel beam collapsed and was no longer able to bear the load it was designed to carry.’ ” (Id. at 3.) Plaintiffs insist that the Policy does not require that the “collapse be ‘sudden’ and ‘accidental.’ ” (Id.) Plaintiffs point out that under Additional Protection, Item 12, the Policy states:

For coverage to apply, the collapse of [part of] a building structure must be a sudden and accidental direct physical loss caused by ․ hidden decay ․ [and/or] weight of persons, animals or equipment or contents.

(Id.) According to Plaintiffs, the Policy only requires that the “loss” be sudden and accidental, not the collapse. Moreover, Plaintiffs argue that the coverage language in the Additional Protection part of the Policy is not the same as the language in Coverages A and B, which, Plaintiffs contend, requires the “sudden and accidental direct physical loss to property.” (Id. at 3 (emphasis in original).) As to the Stock residence, Plaintiffs emphasize that “[o]ne day, suddenly, the elderly Stocks were told they needed to immediately evacuate their home and this was a direct loss of use of the physical structure of their home and a direct physical loss of protection their home afforded them.” (Id. at 3.) Thus, according to Plaintiffs, the need to “immediately evacuate” the Property “established a sudden and accidental loss as required by the Policy” because the Stocks “lost the use of their home, they lost the physical possession of their home, and it was a loss to them.” (Id. at 4 (emphasis in original).)

Plaintiffs reject Allstate's reliance on the analysis in Shell Oil v. Winterthur, 12 Cal. App. 4th 715, 15 Cal.Rptr.2d 815 (1993), regarding the meaning of “sudden” loss to establish that rust is not a “sudden” occurrence. (Id. at 5.) Plaintiffs acknowledge that Allstate's interpretation of the Policy language is plausible, but maintain that under controlling California law, “the interpretation that favors the insured controls.” (Id.) Plaintiffs insist that their claim “is not for rust/corrosion,” but a “claim for a complete collapse of a part of the structure.” (Id. at 7.) Plaintiffs reiterate their argument that “the Policy simply does not state that that the ‘collapse’ has to be ‘sudden’ and ‘accidental’, but rather that the ‘loss’ resulting from the hidden decay inducing the collapse must be a ‘sudden and accidental loss.’ ” (Id. at 7 (citing Policy, Additional Protection, Item 12, Page 14).)

Plaintiffs insist that the Browne Declaration offers uncontroverted dispositive evidence that a “collapse” occurred at the Property that is covered by the Policy.⁶ (Id. at 9-10.) Plaintiffs argue that the word “collapse” is undefined in the Policy, therefore, “Allstate's failure to specify what it meant creates doubt or ambiguity in the Policy that must be construed against Allstate.” (Id. at 10.) In response to Allstate's argument that portions of the I-Beam that were affected by corrosion and rust were not concealed, Plaintiffs point to the photographic evidence that Allstate included with its Opposition to argue that the photograph “does show holes in the I-beam that collapsed that were caused by rust,” and Plaintiffs emphasize that “this portion of the I-beam was entirely concealed by wood lagging until the lagging was removed by Plaintiffs’ contractor.” (Id. at 10.)

Plaintiffs reject Allstate's arguments that Plaintiffs breached various Policy provisions by failing to cooperate with Allstate's efforts to investigate the claim. (Id. at 11.) Plaintiffs point to evidence offered in their Opposition to Allstate's Amended Motion for Summary Judgment to argue that Allstate waived any noncooperation claim because it denied liability to Plaintiffs under the Policy. (Id. 11-12.) Indeed, Plaintiffs point to Attorney Byron's May 7, 2024 email as representing an “express waiver that is fatal to its defenses of noncooperation and the like.” (Id. at 13.)

DISCUSSION AND ANALYSIS RE: PLAINTIFFS’ MOTION

A. CALIFORNIA LAW RE: INSURANCE CONTRACT INTERPRETATION

Under California law, when interpreting insurance contracts, “ordinary rules of contractual interpretation apply.” Palmer v. Truck Ins. Exchange, 21 Cal. 4th 1109, 1115, 90 Cal.Rptr.2d 647, 988 P.2d 568 (1999) (citing Bank of the West v. Sup. Court, 2 Cal. 4th 1254, 1264, 10 Cal.Rptr.2d 538, 833 P.2d 545 (1992) (“Bank of the West”)). If the language of the policy “is clear and explicit, it governs.” Bank of the West, 2 Cal. 4th at 1265, 10 Cal.Rptr.2d 538, 833 P.2d 545. When interpreting a policy provision, courts give its terms their “ ‘ordinary and popular sense,’ unless ‘used by the parties in a technical sense or a special meaning is given to them by usage.’ ” Palmer v. Truck Ins. Exchange, 21 Cal. 4th at 1115, 90 Cal.Rptr.2d 647, 988 P.2d 568 (internal citation omitted). Terms must be interpreted “in context” to give effect “to every part” of the policy with “each clause helping to interpret the other.” Id. (citing Cal. Civ. Code § 1641). The California Supreme Court has emphasized that with insurance contracts, as with all contracts, “[t]he fundamental goal of contractual interpretation is to give effect to the mutual intent of the parties.” La Jolla Beach & Tennis Club, Inc. v. Indus. Indem. Co. 9 Cal.4th 27, 37, 36 Cal.Rptr.2d 100, 884 P.2d 1048 (1995) (internal citations omitted).

Where, as here, coverage is disputed, the insured bears the initial burden “to prove its claim falls within the scope of potential coverage.” Waller v. Truck Ins. Exchange, Inc., 11 Cal. 4th 1, 16, 44 Cal.Rptr.2d 370, 900 P.2d 619 (1995). If the insured establishes that there is at least the potential of coverage under the policy, then the burden shifts to the insurer, in this case Allstate, to show that Plaintiffs’ claim falls within one of the policy's exclusions. Id. Policy exclusions are strictly construed. MacKinnon, 31 Cal. 4th at 648, 3 Cal.Rptr.3d 228, 73 P.3d 1205. Exclusions to exceptions are broadly construed in favor of the insured. Aydin Corp., 18 Cal. 4th at 1192, 77 Cal.Rptr.2d 537, 959 P.2d 1213. When interpreting insurance contracts, doubts are resolved in favor of the insured. Bank of the West, 2 Cal. 4th at 1266, 10 Cal.Rptr.2d 538, 833 P.2d 545. Coverage clauses are typically construed broadly, while exclusionary clauses are interpreted narrowly against the insurer. Consolidated American Ins. v. Mike Soper Marine Svcs., 951 F.2d 186, 188-89 (9th Cir. 1991).

At issue here is whether the Plaintiffs have presented sufficient evidence to establish that the Property suffered a “sudden and accidental collapse” within a provision of the Policy that covers “collapse” and is not subject to an exclusion under the Policy. Thus, both parties’ respective Motions present questions of contract interpretation. Because interpretation of an insurance policy is a question of law, this coverage dispute is uniquely situated for disposition on summary judgment. Waller, 11 Cal. 4th at 18, 44 Cal.Rptr.2d 370, 900 P.2d 619.

B. PLAINTIFFS’ COUNT ONE: BREACH OF CONTRACT

Plaintiffs’ complaint alleges a claim for breach of contract. Under California law, the elements of a breach of contract claim in an insurance coverage dispute are: (1) the existence of a policy; (2) Plaintiffs’ performance under the policy or excuse for nonperformance; (3) Defendant's breach; and (4) resulting damages suffered by the Plaintiffs. Oasis W. Realty, LLC v. Goldman, 51 Cal. 4th 811, 821, 124 Cal.Rptr.3d 256, 250 P.3d 1115 (2011). “The burden is on the insured to establish that the occurrence forming the basis of its claim is within the basic scope of insurance coverage.” Aydin Corp., 18 Cal. 4th at 1188, 77 Cal.Rptr.2d 537, 959 P.2d 1213.

The existence of the Policy and its enforceability is undisputed. Nate and Adrienne Stock purchased insurance coverage for the Property under a Deluxe Plus Homeowners Policy issued by Allstate, Policy Number 034 018 984, with a policy effective date of January 24, 2021, for a Policy period beginning January 24, 2021, through January 24, 2022, at 12:01 a.m. Pacific time, and continuing until cancelled.⁷ (PSUF 6, Dkt. No. 121-1 at 12; and see Dkt. No. 106-4 at 6-7.) That said, the parties’ respective performance under the Policy is vigorously disputed. Plaintiffs maintain that Allstate breached its obligations under Policy “by wrongfully disclaiming coverage and refusing to pay for claims covered by the policy[.]” (Pltfs.’ Motion at 2.) Allstate acknowledges that Plaintiffs reported a claim, but argues that Plaintiffs’ loss does not fall within in the Policy's coverage provisions and Plaintiffs breached their obligations under the Policy as insureds to “fully cooperate with Allstate's investigation before filing a lawsuit.” (Deft.’s Opp'n at 4.)

The undisputed evidence establishes that between April and June 2022, Allstate made five requests for documents from Hartwell Brothers Construction and/or Pacific Engineering and five times asked if the residence could be made available for inspection. (Id. at 4-5 (citing NOFE, e-mail correspondence Exs. 8-10 and Stock Depo. 163:9-15; 18:1:1-21).) In March 2023, when repairs at the Property were “mostly complete,” Allstate was permitted to inspect the Property. (Id. at 6.) Despite multiple requests by Allstate, Plaintiffs did not, prior to repairs at the Property, provide any photos or expert reports of “what the [P]roperty looked like at the time of the loss[ ]”. (Id.)

Allstate emphasizes that between April 4, 2023, and May 8, 2023, Allstate asked six times for any photos of the Property at the time of the loss, but Plaintiff represented on May 8, 2023, that there were no photographs “of the damage prior to the completion of repairs,” a statement that Mr. Lawrence Stock later acknowledged was not true. (Deft.’s Opp'n at 6 (citing NOFE Ex. 25, Stock Depo. 220:11-22; 139:21-140:5).) Further, Mr. Stock admitted under oath that he did not provide the materials relating to the vendor who worked on repairing the Property until 2024. (Id. (citing NOFE Ex. Ex. 17, Stock Depo. 227:18-228:25; 229: 10-18).) Thus, in light of this evidence, Allstate insists that Plaintiffs breached their obligations under the Policy by failing to cooperate with Allstate's efforts to investigate the claim. (Id. at 5.)

To resolve Plaintiffs’ Motion, the Court must assess the trial admissible evidence to determine whether either party breached its obligations under the Policy; whether Allstate acted in bad faith in denying Plaintiffs’ claim; and whether Plaintiffs are entitled to declaratory relief. Therefore, as outlined above, the Court reviews the language of the Policy applying settled principles of insurance contract interpretation under California law. California rules of construction regarding insurance policies require that any ambiguities in the Policy must be resolved in favor of the insured. Baker v. Centennial Ins. Co., 970 F.2d 660, 661 (9th Cir. 1992) (citing Reserve Ins. Co. v. Pisciotta, 30 Cal. 3d 800, 180 Cal.Rptr. 628, 640 P.2d 764 (1982)).

a. The Policy Provisions at Issue

i. Coverage A and B

The following sections of the Policy's coverage provisions are directly relevant to the parties’ Motions. In the Definitions section, the Policy defines “Building structure” as meaning “a structure with walls and a roof.” (Dkt. No. 106-4 at 13.) The Policy specifies the following “losses” covered under Coverages A and B:

We will cover sudden and accidental direct physical loss to property described in Coverage A—Dwelling Protection and Coverage B—Other Structures Protection except as limited or excluded in this policy.

․

Losses We Do Not Cover Under Coverages A and B:

12. Collapse, except as specifically provided in Section I — Additional Protection under item 12, “Collapse.”

(Dkt. No. 106-4 at p. 17 (bold in original).)

ii. Additional Protection

As relevant here, Plaintiffs’ Policy provided the following Additional Protection

1. Additional Living Expense

a. We will pay the reasonable increase in living expenses necessary to maintain your normal standard of living when a direct physical loss we cover makes your residence premises uninhabitable.

Payment for covered additional living expense will be limited to the least of the following:

(1) The time period required to repair or replace the property we cover, using due diligence and dispatch; or

(2) If you permanently relocate, the shortest time for your household to settle elsewhere;

(3) 12 months.

(Id. at p. 23 (bold in original.)

iii. Collapse

12. Collapse

We will cover:

a. The entire collapse of a covered building structure:

b. The entire collapse of a part of a covered building structure; and

c. Direct physical loss to covered property caused by (a) or (b) above.

For coverage to apply, the collapse of a building structure specified in (a) or (b) above must be a sudden and accidental direct physical loss caused by one or more of the following:

a. A loss we cover under Section I, Coverage C – Personal Property Protection;

b. Hidden decay of the building structure;

c. Hidden damage to the building structure caused by insects or vermin;

d. Weight of persons, animals, equipment or contents;

e. Weight of rain or snow which collects on a roof;

f. Defective methods or materials used in construction, repair, remodeling or renovation, but only if the collapse occurs in the course of such construction, repair, remodeling or renovation.

(Dkt. No. 106-4 at p. 14 (bold in original).)

b. Plaintiffs Have Not Met Their Burden to Establish a “Entire Collapse” As Required Under the Policy

Plaintiffs contend that they are entitled to summary judgment on their breach of contract claim (Count One) because Allstate breached the insurance contract by “wrongfully disclaiming coverage and refusing to pay for claims covered by the policy.” (Pltfs.’ Motion at 2.) According to Plaintiffs, the Property suffered a “total collapse” caused by a steel support cap-beam underpinning the residence that had become degraded by concealed corrosion. (Id. at 12-13.) Plaintiffs rely largely on the Declaration of Professional Engineer, Reg K. Browne, who inspected the Property in December 2021 at the request of the Stocks. (PSUF 1-3; Plaintiffs’ Supporting Evidence (“PSE”) at 2-3 (Browne Decl. ¶¶ 11-13).)

Mr. Browne offered, inter alia, the following opinions, based upon his “personal observations starting in December 2021 and subsequent visits,”

• “there was a failure of the steel beam on the west side of the [Stocks’] house be cause the steel beam was no longer able to perform its’ intended function. Because the steel beam was part of the house, this means that this part of the structure completely failed or completely collapsed.”

• “From an engineering standpoint, the terms ‘failure’ and collapse’ are synonymous.”

• “specific collapsing was seen in the yielding, deformation, twisting, and deflection of the steel beam which made it useless for its intended function of carrying the load of the house that it was designed and intended to carry.”

• “the wooden nailer attached to the beam also collapsed because it was crushed and ended up in failure.”

• “the entire Stock House was in danger of collapsing ․”

(PSUF 3-5; PSE at 2 (Browne Decl. ¶¶ 11-13 (emphasis added)).) Browne further opined that “the collapse of the steel beam, in turn, put the entire house at risk of a total collapse,” the “entire house was in the process of collapsing,” and because there was “impending serious risk of a total collapse of the entire structure,” Browne advised the Stocks that they should immediately vacate the house. (PSUF 2; PSE at 3 (Browne Decl. ¶¶ 16-17 (emphasis added)).)

Whether Plaintiffs characterize the deterioration of the steel support beam at the Stocks’ residence as a “covered building structure” or a “part of a covered building structure,” the Policy unambiguously states that coverage is provided for an “entire collapse of a covered building structure” or the “entire collapse of a part of a covered building structure.” (Dkt. No. 106-4 at p. 14 (bold in original).) Plaintiffs, through the opinions of their engineering expert, urge that the Court need not read the Policy language literally, and to ignore the word “entire” that modifies the word “collapse” in the Additional Coverage provisions. Plaintiffs maintain that the Court can, instead, adopt a meaning of “entire collapse” as used “in the engineering sense” or assume that evidence of the possibility of “imminent collapse,” as described by Mr. Browne, is sufficient to trigger coverage under the Policy's provisions. Not so. Plaintiffs’ interpretation would have the Court contravene well settled statutory principles of contract interpretation. Reserve Insurance Co., 30 Cal. 3d at 807, 180 Cal.Rptr. 628, 640 P.2d 764 (“Words used in an insurance policy are to be interpreted according to the plain meaning which a layman would ordinarily attach to them.”).

c. Plaintiffs Fail to Establish a Triable Issue of Fact as to a “Sudden and Accidental” Loss Within the Meaning of the Policy

In the Opposition, Allstate makes several arguments related to Plaintiffs’ alleged failure to cooperate with the insurer in its efforts to inspect the property and investigate the claim. (Opp'n at 4-7.) These arguments, however, are not relevant to or dispositive of the fundamental coverage dispute. On the coverage question, Allstate's primary argument is that Plaintiffs’ Motion fails because Plaintiffs have not and cannot establish the occurrence of a “sudden and accidental loss” to the Property that is within the coverage provisions of the Policy. (Opp'n at 8-17.)

As noted above, under California law, the interpretation of a contract must give effect to the ‘mutual intention’ of the parties. Such intent is to be inferred, if possible, solely from the written provisions of the contract. MacKinnon, 31 Cal. 4th at 647, 3 Cal.Rptr.3d 228, 73 P.3d 1205 (citing Cal. Civ. Code § 1636). Insurance policy exclusions are strictly construed and “the burden rests upon the insurer to phrase exceptions and exclusions in clear and unmistakable language.” Id. at 648, 3 Cal.Rptr.3d 228, 73 P.3d 1205 (internal citation omitted). Here, the admissible evidence does not support Plaintiffs’ contentions either as to a “total collapse” of any part of the Property or as to a “sudden and accidental” loss of any part of the Property resulting from the degraded cap-beam. Moreover, the Court finds no ambiguity in the Policy language as to “entire collapse” or “sudden and accidental”.

Coverage A and B expressly exclude any “collapse” event, “except as specifically provided in Section I — Additional Protection under item 12, “Collapse”, which states:

We will cover:

a. The entire collapse of a covered building structure:

b. The entire collapse of a part of a covered building structure; and

c. Direct physical loss to covered property caused by (a) or (b) above.

For coverage to apply, the collapse of a building structure specified in (a) or (b) above must be a sudden and accidental direct physical loss caused by one or more of the following:

a. A loss we cover under Section I, Coverage C – Personal Property Protection;

b. Hidden decay of the building structure;

c. Hidden damage to the building structure caused by insects or vermin;

d. Weight of persons, animals, equipment or contents;

e. Weight of rain or snow which collects on a roof;

f. Defective methods or materials used in construction, repair, remodeling or renovation, but only if the collapse occurs in the course of such construction, repair, remodeling or renovation.

(Dkt. No. 106-4 at 14 (italics added; bold in original).) Because Coverage A and B expressly exclude any coverage for “collapse” except as provided in the Additional Coverage language of the Policy, the provision in Additional Protection, item 12, is the only provision that could potentially be the source of coverage for any loss arising from a “collapse.” Plaintiffs acknowledge as much. (Pltfs.’ Motion at 5.)

Where, as here, the parties dispute the meaning of an insurance policy's terms, courts regularly look to the dictionary to determine the ordinary meaning of language in an insurance policy. See Scott v. Continental Ins. Co., 44 Cal. App. 4th 24, 29, 51 Cal.Rptr.2d 566 (1996) (collecting cases). The Concise Oxford English Dictionary defines “collapse,” when used as a verb, as: “(of a structure) suddenly fall down or give way ․ fall suddenly and completely,” and when used as a noun, “sudden failure or breakdown.” Indeed, the Ninth Circuit, interpreting the “Additional Coverage” language in an Allstate homeowner policy with language requiring ‘actual’ collapse, expressly rejected the notion that a condition of “imminent collapse” is sufficient to meet the policy's requirement. Jordan I, 116 Cal. App. 4th at 1221, 11 Cal.Rptr.3d 169 (“If the collapse portion of the ‘additional coverage’ provision is read to require an ‘actual’ collapse, then a state of ‘imminent’ collapse would not support Jordan's claims.” (internal citations omitted).)

Notably, Jordan I involved, as here, an expert who opined that a portion of the Jordan policyholder's floor at her residence was at risk of “imminent collapse.” Id. But the Ninth Circuit emphasized:

It seems self-evident that the policy's use of the term entire collapse necessary must refer to an actual, not an imminent collapse. For a building or a portion thereof to sustain an entire collapse must mean that it has entirely collapsed, that is wholly, completely, or fully. Put another way, to constitute an entire collapse, there must be a total collapse. It would make no sense to apply such a description to a collapse that was merely imminent. Whether a potential collapse that is properly described as imminent will result in an entire or total collapse or something less, or no collapse at all, is a matter of pure speculation unless and until such collapse actually occurs

(Id. (italics in original, internal quotation marks omitted (citing Webster's Third New International Dictionary (1966)).) In Jordan I, the Ninth Circuit concluded that the factual record on the issue had not been adequately developed in the district court. (Id.) That is not the case here. On the record before this Court, Plaintiffs offer no evidentiary support that establishes an “entire collapse” of all or part of the Stock residence.

Plaintiffs insist that, because Mr. Browne opined that the steel beam “was no longer able to perform its intended function,” that opinion is sufficient to establish that the Property suffered an “entire collapse” of the structure of part of the structure. Not so. Mr. Browne's professional opinion cannot re-write the plain language of the Policy. While the record indicates that the Property suffered damage as a result of the cap-beam's long term corrosion and deterioration, the evidence presented with the parties’ summary judgment motions in this case is more than sufficiently developed to establish that the Stock residence at no time evidenced an “entire” collapse of the structure or a part of the structure as required under the express language in the Additional Coverage provision of the Policy.

The plain language in the Policy's Additional Coverage provision required not only an “entire collapse,” but the Additional Coverage provision, item 12 (a) or (b), expressly state that “the collapse of a building structure specified in (a) or (b) above must be a sudden and accidental direct physical loss ․” (Dkt. No. 106-4 at 14 (italics added).) There is no evidence, admissible or otherwise, before the Court to satisfy the “sudden and accidental” requirement under the applicable language of the Policy.

Lawrence Stock testified at his deposition that between October 1, 2021, and December 31, 2021, other than rust particles, he did not see any other building materials that had become completely detached or completely fallen off of the property in any area. (NOFE, Ex. 25, Stock Depo. Nov. 5, 2024, at 54:2-10 (Dkt. No. 106-10 at 73).) Mr. Browne states that he inspected the Stock residence in December 2021, where he was able to walk under the residence and personally observed the weakened, but still standing, steel cap-beam support and posited that a “collapse likely occurred in October 2021.” (Pltfs.’ Supporting Evidence (“PSE”) Dkt. No. 105-2 at 3; Browne Decl. ¶¶ 9-10, 19 (emphasis added).) Taking Mr. Browne's testimony at face value, as the Court must, there is no evidence that demonstrates, or even suggests, either a “sudden” or “accidental” occurrence caused by the steel cap-beam's long-term deterioration. Corrosion due to rust in an ocean front residence such as the Stocks’ is by definition a process that manifests over time. Indeed, Plaintiffs’ own expert, Mr. Browne, based on his professional engineering experience and training, opined that the deterioration of the cap beam was the result of gradual deterioration/corrosion over time. (Pltfs.’ Reply, Ex. A, Browne Decl. ¶ 18 (stating “․ this beam had over time gradually disintegrated into pieces”) (Dkt. No. 124-1).)

In an effort to avoid the fatal absence of evidence, Plaintiffs attempt to re-write the plain language of the Policy, arguing that the Policy:

does not state that the ‘collapse’ must be ‘sudden’ and ‘accidental.’ Rather, the Policy states, “for coverage to apply, the collapse of [part of] a building structure must be a sudden and accidental direct physical loss caused by ․ hidden decay ․ [and/or] weight of persons, animals, equipment or contents.

(Reply at 3.) This argument is unavailing. Plaintiffs’ reading of the Policy's “sudden and accidental” language is inconsistent with fundamental principles of contract interpretation, which require that words in the Policy be given “the plain meaning which a layman would ordinarily attach to them.” Reserve Insurance Co., 30 Cal. 3d at 807, 180 Cal.Rptr. 628, 640 P.2d 764.

Plaintiffs further argue that summary judgment in their favor is appropriate here because “the elderly Stocks suffered the sudden and accidental loss of their home when they were abruptly required to vacate the premises.” (Plfts.’ Motion at 22.) According to Plaintiffs, when “[o]ne day, suddenly, the elderly Stocks were told to immediately to evacuate their home,” this unexpected departure “was a direct loss of the physical structure of their home and a direct physical loss of the protection their home afforded them.” (Plfts.’ Reply at 3.) Thus, according to Plaintiffs, the Stocks’ sudden departure from the home was sufficient to trigger Allstate's coverage obligation under the Policy pursuant to the Additional Coverage provision for “sudden and accidental direct physical loss[.]” (Id. at 3-4.) Plaintiffs insist that Allstate fails to acknowledge the distinction between “physical loss to property” and “physical loss simpliciter,” pointing to exceptions in Coverages A and B sections of the Policy for “theft” as demonstrating that “the Policy covers more than direct physical loss.” (Id.) But Plaintiffs’ attempt to create an ambiguity in the Policy by analogizing from the Coverage A and B exceptions is unavailing.

Under the Policy's plain language, any coverage for a “sudden and accidental” collapse of the structure or a part of the structure arises from the Additional Protection section of the Policy. (Dkt. No. 106-4 at 25, (Policy at 14).) Plaintiffs’ argument for coverage by analogy related to a different section of the Policy goes against settled principles of insurance contract interpretation under California law. Indeed, Plaintiffs cite no authority, in this Circuit or beyond, that has construed similar policy language consistent with the interpretation that Plaintiffs urge.

Plaintiffs contend that because the Stocks lost physical possession of their home during repairs to the Property, this was a “loss to them” that the “Policy clearly covers ․ by virtue of the difference in language in the collapse coverage of the Additional Protection Part from the limiting language of Coverage A on which Allstate mistakenly relies.” (Id. at 4.) Once again, Plaintiffs’ reading of the Policy language contravenes settled principles of contract interpretation. The California Supreme Court has emphasized that while ambiguities in an insurance policy must be resolved in favor or the insured, “courts will not adopt a strained or absurd interpretation in order to create an ambiguity where none exists.” Reserve Ins. Co., 30 Cal. 3d at 807, 180 Cal.Rptr. 628, 640 P.2d 764. This Court, despite Plaintiffs fervent urging, declines to do so here.

Indeed, Plaintiffs cannot change the plain language of the Policy to bring the damage that occurred at the Property resulting from the corroded cap-beam within the Policy's coverage provisions for an “entire collapse” resulting from a “sudden and accidental” occurrence. Plaintiffs’ failure to offer admissible evidence to establish that Allstate was required to provide coverage under the Policy is fatal to Plaintiffs’ breach of contract claim.

Thus, the Court concludes that Plaintiffs fail to present evidence that raises a triable issue of fact as whether the Property suffered an “entire collapse” of the structure or part of the structure that was “sudden and accidental” as the plain language of Policy required.

Consequently, Plaintiffs’ Motion for Partial Summary Judgement as to Breach of Contract as alleged in Count One is DENIED.

C. PLAINTIFFS’ COUNT FOUR: DECLARATORY RELIEF

Plaintiffs also seek summary judgment on Count Four of the FAC, which asserts a claim for declaratory relief. (FAC at 22.) When, as here, a federal court sits in diversity, it must apply the substantive law of the forum state. See Griffin v. Green Tree Servicing, LLC, 166 F. Supp. 3d 1030, 1059 (C.D. Cal. 2015) (citing, inter alia, Erie R.R. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938).) Thus, as emphasized in Griffin, “Federal courts have consistently applied California Code of Civil Procedure § 1060 to assess the validity of a declaratory relief claim rather than the federal Declaratory Judgment Act when sitting in diversity.” Id. Therefore, because California law applies in this case, the Court must apply California's declaratory relief statute to Plaintiffs’ claims.

California Code of Civil Procedure section 1060 provides:

Any person interested under a written instrument ․ or under a contract, or who desires a declaration of his or her rights or duties with respect to another, or in respect to, in, over or upon property ․ may, in cases of actual controversy relating to the legal rights and duties of the respective parties, bring an original action ․ for a declaration of his or her rights and duties[.]

Cal. Code Civ. Proc. § 1060.

In their Reply, Plaintiffs state that their Motion “asks, at this time, for a declaratory judgment stating only that the Policy covers the losses that Plaintiff suffered.” (Pltfs.’ Reply at 13.) But Plaintiffs have failed to meet their burden to present evidence sufficient to establish the existence of an element essential to Plaintiffs’ breach of contract claim, namely that Allstate breached the Policy provisions. The unambiguous language of the Policy excludes the losses suffered by the Property due to the long-term degradation and corrosion of the cap-beam. Further, Plaintiffs fail to present evidence to show that there are disputed issues of fact that warrant a trial on the issue. Accordingly, Plaintiffs’ claim for declaratory judgment also fails. See Javaheri v. JPMorgan Chase Bank, N.A., No. 2:10-cv-08185-ODW (FFMx), 2012 WL 6140962, at *8 (C.D. Cal. Dec. 11, 2012).

For all the reasons outlined above, Plaintiffs’ Motion for Partial Summary Judgment as to Declaratory Relief as alleged in Count Four is DENIED.

DEFENDANT'S MOTION

Allstate brings its own motion for full or partial summary judgment on the breach of contract claims for at least four separate reasons: (1) Plaintiffs cannot meet their burden to establish that long term rust problem at the oceanfront Property was a “sudden” and “accidental” occurrence – a condition precedent for coverage under the Policy; (2) Plaintiffs cannot establish a covered collapse; (3) Plaintiffs failed to cooperate “with Allstate's investigation by failing to provide access to the property before they completed repairs and by failing to provide documents, including engineering reports and property photographs – before suing”; and (4) the Stocks did not provide the ACV of a covered loss, which prejudiced Allstate because, under the Policy Allstate only owed the ACV of the loss. (Deft.’s Motion at 1.)

In its Amended Motion, Allstate articulates each of the separate issues on which it seeks complete or partial relief as follows:

Motion for Complete Summary Judmgent:

(a) Issue No. 1 – Plaintiffs’ “breach of contract” fails because Plaintiffs cannot meet their burden in establishing a “sudden” and “accidental” loss;

(b) Issue No. 2 – Plaintiffs’ “breach of contract” cause of action fails because Plaintiffs cannot establish a “sudden” and “accidental” collapse;

(c) Issue No. 3 – alternatively, Plaintiffs’ breach of contract cause of action fails because Plaintiffs cannot establish a breach of any payment provision within the Policy;

(d) Issue No. 4 – alternatively, Plaintiffs’ breach of contract cause of action fails because Plaintiffs breached their cooperation duties under the Policy;

(e) Issue No. 5 – alternatively, Plaintiffs’ breach of contact cause of action fails because Plaintiffs failed to comply with the Policy provisions for claiming Policy benefits before suing Allstate, “including the failure to provide ‘a detailed list of the damaged [or] destroyed ․ property, showing the quantity, cost, [ACV] and the amount of loss claimed.’ ”

Motion for Partial Summary Judgment:

(a) Issue No. 1: Allstate has no duty to pay dwelling repair benefits because Plaintiffs failed to comply with the Policy provisions for claiming Policy benefits before suing Allstate, “including the failure to provide ‘a detailed list of the damaged [or] destroyed ․ property, showing the quantity, cost, [ACV] and the amount of loss claimed.’ ” For all these reasons, Allstate maintains the undisputed evidence establishes it did not breach the contract;

(b) Issue No. 2: Plaintiffs’ breach of contract cause of action fails because Plaintiffs cannot establish that they are entitled to additional living expenses:

(c) Issue No. 3: Plaintiffs second cause of action for “breach of the implied covenant of good faith and fair dealing” lacks merit because: Allstate had a right to withhold policy benefits until Plaintiffs complied with the policy terms; there was a genuine dispute over coverage, and there is no evidence of bad faith;

(d) Issue No. 4: Plaintiffs’ second cause of action for breach of the implied covenant of good faith and fair dealing” lacks merit because “Allstate reasonably relied upon the advice of counsel in denying Plaintiffs’ claim”;

(e) Issue No. 5: Plaintiffs’ third cause of action for “bad faith based on unfair or deceptive acts or practices constituting unfair claims settlement practices and common law bad faith” fails because this cause of action is duplicative of the second cause of action; Allstate had a right to withhold policy benefits until Plaintiffs complied with the Policy; there is a genuine dispute concerning coverage; there is no evidence of bad faith; and Allstate reasonably relied on the advice of counsel in denying Plaintiffs’ claim;

(f) Issue No. 6: Plaintiffs’ fourth cause of action for declaratory judgment lacks merit because Plaintiffs cannot establish a “sudden” and “accidental” entire collapse; cannot establish a breach of any payment provision within the Policy; breached their duty of cooperation under the Policy; failed to satisfy the Policy tests for claiming covered benefits; the declaratory relief claims fail because Plaintiffs “cannot establish the absence of a legal remedy to be able to assert an equitable claim for declaratory relief; and Plaintiffs cannot establish “ongoing conduct to support a claim for declaratory relief because the claim has been denied”; and

(g) Issue No. 7: Plaintiffs claim for punitive damages lacks merit because Plaintiffs cannot establish by clear and convincing evidence that “Allstate acted maliciously, fraudulently, or oppressively or present evidence of ratification by a ‘managing agent.’ ”

(Deft.’s Amended Motion at 3-4.)

 Plaintiffs’ Opposition

Plaintiffs respond first by noting that Allstate filed an initial motion for summary judgment on January 3, 2025 (dkt. no. 106) that raised four issues for complete summary judgment and, in the alternative, six issues for partial summary judgment; and then filed the Amended Motion on January 16, 2025 (dkt. no 113) that rases five “issues for complete summary judgement and added “a new ‘Issue’ for partial summary judgment.” (Pltfs.’ Opp'n at 1.) Thus, according to Plaintiffs, Allstate's Amended Motion presents twelve separate motions. (Id.) Plaintiffs further contend that the Amended Motion “lacks any new or amended memorandum of point and authorities” and does not “specifically reference any corresponding discussion in the [Memorandum] Allstate filed with its January 3, 2025 filing. (Id.) Based on that, Plaintiffs initially oppose Allstate's motion on the grounds that Allstate's filings are a “disjointed, confusing, unclear mess,” and all of Allstate's motions should be denied on that basis alone. (Id.)

Plaintiffs object that Allstate cannot rely on its counsel's opinions or those of its claims personnel “because their opinions are irrelevant and play no role in analyzing the meaning of the Policy.” (Pltfs’ Opp'n at 2 (citing National Auto Casualty Ins. Co. v. Stewart, 223 Cal. App. 3d 452, 458-59, 272 Cal.Rptr. 625 (1990)).) Plaintiffs urge the Court to “ignore counsel's proffered interpretations of the Policy and those of its claims personnel and coverage counsel ․ and to strike the affidavits of Pat Axtell and Thomas Byron[.]” (Id.)

Plaintiffs further assert that because Allstate “did not retain a licensed professional engineer or construction contractor to inspect the damage and offer expert testimony,” Plaintiffs’ evidence in the Declaration of Reg K. Browne is unchallenged. (Id. at 4.) Further, Plaintiffs insist the determination by their engineer and contractor that steel beams at the Property had “failed” is synonymous with “collapsed.” (Id.) In sum, Plaintiffs contend that Allstate's reliance on coverage counsel's opinion as to the engineering and construction related facts at issue, topics on which Plaintiffs argue Allstate's counsel “was not qualified to opine,” is itself sufficient evidence that Allstate acted in bad faith. (Id. at. 5) (citing Guebara v. Allstate Ins. Co., 237 F.3d 987, 995 (9th Cir. 2001).)⁸

Plaintiffs respond to each of the issues raised in Allstate's Motion, largely repeating the arguments made in Plaintiffs’ own Motion. On Issues Nos. 1 and 2, concerning Plaintiffs’ failure to establish a “sudden” and “accidental” loss or “sudden and accidental” collapse within the meaning of the Policy's coverage terms, Plaintiffs insist that Allstate has mischaracterized Plaintiffs’ claim. (Id. at 6.) Plaintiffs emphasize that their claim “is that part of their home (a steel beam and a wooden ‘nailer’) collapsed due to ‘hidden decay,” which Plaintiffs insist includes rust. (Id.) But, Plaintiffs also insist their “claim is not for rust/corrosion, it is a claim for a complete collapse of a part of the structure.” (Id. at 6 (emphasis added).) Here, too, Plaintiffs rely heavily on their expert Reg K. Browne's opinion that “the actual collapse probably occurred within a month or two of October 2021 when Dr. Stock contacted Harwell Brothers and Mark Harwell called me to assess the situation which I did in December 2021 ․ [.]” (Id. at 7.)

Plaintiffs argue that Allstate “mischaracterizes its own Policy” because the Policy neither defines “sudden and accidental,” nor requires that the cause of a loss be “sudden and accidental.” (Id. at 9 (emphasis in original).) Here, Plaintiffs reiterate the contention made in their own motion for summary judgment, that the Policy did not require a “sudden and accidental” loss to property, but the Stocks “loss of use” and “physical loss of the protection of their home” was a loss sufficient to trigger coverage under the Policy. (Id. at 9-10.)

Plaintiffs also contend that the rust from the steel beam that fell to the ground at the Property was enough of the steel to establish “that the beam failed, i.e., collapsed in engineering terms” and this, according to Plaintiffs, “is precisely what the Policy covers.” (Id. at 10.) Plaintiffs argue that the Policy does not make “sudden and accidental” a condition precedent to coverage. (Id.) Alternatively, Plaintiffs posit, in a rather convoluted fashion, that “even if the exclusion for corrosion does apply, it would preclude coverage only for the cost of the corroded steel beam and not for a collapse of a part of the structure which is expressly brought back into coverage by virtue of the exception.” (Id. at 10-11.)

 Allstate's Reply

Allstate responds to Plaintiffs’ arguments by emphasizing that the Stocks’ opposition ․ ignores the plain language of the policy and controlling California and Ninth Circuit authorities.” (Deft.’s Reply at 1.) Additionally, Allstate objects that Plaintiffs rely on improper evidence in the form of “testimony of an undisclosed witness; and declarations that contradict prior sworn testimony.” (Id.) This evidence, Allstate maintains, cannot be used to “create a triable issue of fact.” (Id. at 2.)

Allstate reemphasizes that Allstate is entitled to full summary judgment because: (1) the Stocks produced no evidence of a sudden and accidental loss and Plaintiffs’ own expert's testimony confirms that steel I-beams never “instantaneously” collapse; (2) Plaintiffs’ assertion of coverage based on loss of use of the home is inconsistent with the Policy and California law; (3) Plaintiffs present no evidence of a “covered ‘collapse” under the proper definition of that term”; (4) the Stocks breached their cooperation duties under the Policy; (4) the Stocks did not comply with the Policy payment conditions; (5) Plaintiffs’ declaratory relief claim fails because there is an adequate legal remedy and “the alleged wrong involves a past event”; and (6) Plaintiffs’ punitive damages claim fails because “the Stocks offer no evidence of malice, oppression, fraud or ratification by a managing agent” to support this claim. (Id. at 2.)

DISCUSSION

As an initial matter, the Court notes that Defendant's evidence and argument in support of its affirmative Motion mirrors, in large part, the arguments and evidence that Defendant offered in opposing Plaintiffs’ Motion. The disputed issues are also largely, but not entirely, identical. The Court addresses the issues articulated in the Defendant's Amended Motion as presenting multiple, related issues. The Court declines to adopt Plaintiffs’ characterization that Defendant's filing should be treated as twelve separate motions.

A. Breach of Contract

Despite Plaintiffs’ effort to create disputed issues of fact by arguing there are a dozen separate motions for the Court to resolve, Plaintiffs fail to present evidence sufficient to raise a triable issue of fact to defeat Defendant's cross-motion for summary judgment. The undisputed evidence, for the reasons outlined above in the Court's discussion of Plaintiffs’ Motion, demonstrates that the Property did not suffer a covered loss within the plain language of the Policy. Moreover, the Court concludes that the Policy's coverage provisions that require an “entire collapse,” as well as the exceptions for incidents caused by “rust or corrosion,” are unambiguous.

1. No Evidence of “Entire Collapse” Or “Sudden and Accidental” Occurrence Within the Policy's Coverage Provisions

Although Plaintiffs in their own Motion rely heavily on their own expert Reg K. Browne's opinions that the damage resulting from the failing cap-beam at the Property satisfied the Policy's definition of “collapse,” in opposing Defendant's Motion, Plaintiffs argue that the Court should strike affidavits provided by Pat Axtell, claims personnel, and Thomas Byron, coverage counsel in support of Defendant's Motion. (Pltfs’ Opp'n at 2.) The Court declines to do so but gives little weight to these affidavits to the extent they purport to opine as a matter of law regarding the meaning of Policy coverage terms.

Plaintiffs also argue that Defendant's understanding of the Policy provisions “means something quite different from what its insured could reasonably have expected the Policy to mean and indeed quite different from what the Policy actually states.” (Id. at 3.) This argument too is unavailing. As detailed in the Court's analysis and discussion of Plaintiffs’ Motion above, the plain language of the Policy controls and the Court found no ambiguity in the Policy terms. Therefore, the Court need not, and does not, look to any other source to ascertain the meaning of the Policy terms either as to “entire collapse” or the requirement that for coverage to apply to “hidden decay” under the Additional Coverage section of the policy, any such hidden decay must cause a “sudden and accidental direct physical loss.” There is no evidence before the Court to demonstrate that either of these conditions precedent to coverage occurred at the Property. Indeed, Plaintiffs’ own engineering expert, Reg K. Browne, opined that the Stocks’ residence “was in danger of collapsing” because the steel beam “was no longer able to perform its intended function.” (Dkt. No. 119-1; Browne Decl. ¶¶ 12-14.) Browne opined that “the wooden nailer attached to the beam also collapsed because it was crushed and ended up in failure,” which, according to Browne, meant that “the entire Stock House was in danger of collapsing[.]” (Id. at ¶ 14.) Browne goes on to state that “the entire house was in the process of collapsing” and the conditions he observed posed “impending serious risk of a total collapse[.]” (Id. at ¶ 16.) At best, Browne's observations establish a weakening of the steel beam. Nowhere does the record evidence establish an actual “entire collapse” of the structure or part of the structure as expressly required under the Policy.

The parties also dispute whether long term rust and corrosion in the support beam was “hidden decay” or an unconcealed condition. (See Pltfs’ Response to Deft.’s SUF, No. 13, Dkt. No. 119-6 at 14-20.) But this dispute is immaterial because the Policy nevertheless required that even “hidden decay” must cause an “entire collapse” of the structure or part of the structure, and there is simply no evidence of any such collapse occurring as required to trigger coverage under the Policy.

2. Interplay Between Exclusions under Coverage A and B and the Exceptions Under Additional Coverage

Plaintiffs, relying on Glaviano v. Allstate Ins. Co., 35 Fed. Appx 493 (9th Cir. 2002), seek to avoid the clear absence of evidence of “an entire collapse” or a “sudden and accidental” event as required under the Policy, by arguing that the occurrence of “corrosion” in the steel beam was sufficient to trigger coverage under the Policy. Plaintiffs insist that the “corrosion” in this case is analogous to “dryrot” that was the focus of the analysis in Glaviano. (Reply at 11.) Not so. Glaviano offers no basis in law or fact to defeat Defendant's motion for complete summary judgment on the contract claim. (Pltfs’ Opp'n at 11.)

In Glaviano, the district court granted summary judgment for the insurer and the Circuit Court affirmed the district court's conclusion that a “dry rot” provision excluded coverage for Poria fungus damage that was the subject of the policyholders’ claim, but concluded that the lower court erred by not determining “whether the ‘dry rot’ exclusion was limited by the policy's exception to its ‘collapse’ exclusion.” Id. at 495. The appellate court found that the “ ‘dry rot’ exclusion and ‘collapse’ exception together create[d] an ambiguity that should be construed in favor to the insured to provide coverage.” Id. Thus, the Ninth Circuit remanded in part for the district court to determine if and how that policy's general exclusion for “dry rot” interfaced with the policy's exception to the “collapse” exclusion that afforded coverage for collapses caused by dry rot, “even if non-collapse damages caused by dry rot is excluded.” Id. at 496.

Here, by contrast, Plaintiffs argue that the “collapse that resulted in Plaintiffs’ ‘sudden and direct physical loss’ of the use of their house operates by means of the Additional Protection coverage as an exception to the exclusion for collapse in Coverage A.” (Pltfs’ Opp'n at 11.) On this point, Plaintiffs are correct, but that is not dispositive. Covered losses under Coverages A and B expressly exclude “Collapse, except as specifically provided in Section 1-Additional Protection under item 12. “Collapse.” ” (Deft.’s NOFE, Ex. 1, Policy at 6 (emphasis added), Dkt No. 106-4).) The Policy expressly states, “we do not cover loss consisting of or caused by any of the following: (d) rust or other corrosion, mold, wet or dry rot.” (Id., Policy at 7.)

The Additional Protection provisions in Section 12 concerning “Collapse,” states: “We will cover: a) the entire collapse of a covered building structure; b) the entire collapse of part of a covered building structure; and c) direct physical loss to covered property caused by (a) or (b) above. For coverage to apply, the collapse of a building structure specified in (a) or (b) above must be a sudden and accidental direct physical loss.” (Id., Policy at 25 (emphasis added).) Here, the undisputed evidence establishes that the damage to the Property resulting from the long-term corrosion to the steel cap-beam did not result in an “entire collapse” within the meaning of the Policy. As Allstate emphasizes, the Policy explicitly refers to “direct physical loss to covered property.” (Deft.’s Reply at 3 (emphasis added).)

Allstate, citing settled analysis by the California Court of Appeal, underscores that “the Stocks’ assertion that they suffered a ‘loss of use’ of their home is irrelevant to their property claims under Section I, which requires a sudden and accidental ‘physical loss’ as distinguished from ‘property damage.’ ” (Id. (citing Wong v. Stillwater Ins. Co., 92 Cal. App. 5th 1297 n.6, 309 Cal.Rptr.3d 908 (2023) (internal citation omitted).) Allstate emphasizes that the Policy excludes “Collapse” except as specifically outlined in the Additional Protection section under item 12, where the Additional Protection Section 12 “gives back limited ‘collapse’ coverage.” (Deft.’s Reply at 3-4.)

Moreover, the plain language of the Policy requires that the “collapse of a building structure must be sudden and accidental direct physical loss caused by one or more of the following ․ (b) hidden decay to the building structure.” The the undisputed evidence establishes that the damage to the steel beam was caused by rust and/or “corrosion” over time that was neither a “sudden” nor “accidental” occurrence and did not cause an entire collapse within the Policy provisions. Indeed, Lawrence Stock's own deposition testimony confirms as much. When asked if he observed “any building materials that had become completely detached and had fallen off of the Property in October 2021, Lawrence Stock testified: “The rust from the steel ․ was falling to the beach.” (Stock Depo. 40:18-41:1; Deft.’s NOFE Ex. 25 at 472-73.) Further, Stock confirmed that he personally did not know whether rust particles had been slowly falling off of the I-beams at the Property over time prior to October 2021. (Stock Depo. 42:16-20; Deft.’s NOFE Ex. 25 at 475.) Lawrence Stock confirmed that between October 1, 2021, and December 31, 2021, he did not see “any other building materials that had become completely detached or completely fallen off of the property in any area.” (Stock Depo. 54:5-10; Deft.’s NOFE Ex. 25 at 479.)

Accordingly, the Court concludes that the record evidence raises no triable issue of fact as to whether the damage to the Stock residence was an incident within the Policy's coverage provisions. Therefore, Allstate is entitled to complete summary judgment on Plaintiffs’ breach of contract claim. Because the Court finds that summary judgment is appropriate, the Court does not reach Allstate's argument that the rust and corrosion in the steel beam were not concealed and, thus, did not constitute “hidden decay.”

3. Noncooperation With Allstate's Efforts to Investigate the Claim

Based on its own reservation of rights and Plaintiffs’ purported admissions, Allstate separately moves for summary judgment arguing that Plaintiffs breached their duty to cooperate with the insurer. (Deft.’s Motion at 12-13.) As outlined in the Policy, the insureds were required to cooperate with Allstate's requests for records and property inspections. (Id. at 12, citing Policy, Section 3 subsections (d)(f) at 15 (Dkt. No. 106-4, Ex. 1 at 26).) The Policy states:

In the event of a loss to any property that may be covered by this policy, you must: ․ d) give us all accounting records, bills, invoices and other vouchers, or certified copies, which we may reasonably request to examine and permit us to make copies; ․ f) as often as we reasonably require: 1) show us the damaged property; ․

(Id.) As Allstate points out, California courts have long recognized that policy conditions requiring the insured's cooperation and assistance are “material to the risk and of the utmost importance in a practical sense.” (Deft.’s Motion at 12 (citing Belz v. Clarendon America Ins., 158 Cal. App. 4th 615, 626, 69 Cal.Rptr.3d 864 (2007)).) That said, the insurer must also show that it was prejudiced by the insured's lack of cooperation. (Id. at 13.) Allstate argues that actual prejudice is established as a matter of law because “it is now impossible to determine whether Plaintiffs’ loss was covered.” (Id.)

Allstate contends that it repeatedly requested to inspect the Property close to the time the claim was submitted and asked for documents and photographs relating to the claim, including reports from the Stocks’ contractor, Harwell Brothers Construction, and their engineer, Pacific Engineering Group, at least five different times. (Deft.’s NOFE, Exs. 7, 8 (Dkt. No. 106-11.) Allstate maintains that Plaintiffs failed to respond to those requests; did not provide their Alternative Living Expense (“ALE”) lease agreements; “denied Allstate access to the property until the repairs were mostly completed;” and Lawrence Stock denied “that photos and expert documents existed.” (Id.) Finally, Allstate argues Plaintiff did not present the ACV of their loss. (Id.) Allstate maintains that this lack of cooperation warrants summary judgment in Allstate's favor. (Id. at 15.)

Plaintiffs maintain that Allstate waived any objections as to these procedural requirements, arguing, as an initial matter, that Allstate's Coverage Disclaimer Letter dated May 29, 2004, does not state “lack of cooperation” as a basis for the coverage denial. (Pltfs’ Opp'n at 16.) Second, Plaintiffs counter Allstate's arguments that Plaintiffs failed to provide documents related to their claim by pointing to email correspondence from Allstate's counsel, dated May 7, 2024, stating “the Pacific Engineering file that you forwarded to me has provided me with all of the information that I need to draft my coverage opinion letter to Allstate.” (Pltfs’ Opp'n at 16, citing Ex. E.) Finally, Plaintiffs contend that even if Allstate's assertions of noncooperation were true, which Plaintiffs’ vigorously dispute, Allstate fails to demonstrate prejudice. (Id.)

Plaintiffs point to their evidence that before Allstate denied the claim, Plaintiffs, through their counsel, provided numerous documents concerning the condition of the property, including “many photographs of the damaged part of the house, many documents showing amounts paid for repairs,” and the fact that Plaintiffs allowed Allstate to send an independent adjuster to view the Property on March 28, 2023. (Id. at 17-18.) Plaintiffs also contend that “[b]oth before and after the March 28, 2023 inspection, all the damage was plainly visible from the beach. [ ] Allstate could have inspected from there.” (Id. at 18 (citing Ardi Decl. ¶ 4.) Plaintiffs also argue that Allstate points to no language in the Policy that specifically requires Plaintiffs’ cooperation as a condition precedent to filing suit and does not tie its noncooperation argument to any discussion in Allstate's Motion. (Plfts.’ Opp'n at 19.)

The evidence the parties offer on both the adequacy of Plaintiffs’ cooperation and Allstate's purported “waiver” of this defense plainly present disputed issues of fact that foreclose summary adjudication on the issue. But because the Court finds that Plaintiffs fail, as an initial matter, to establish a covered incident under the Policy, the disputes regarding Plaintiffs’ cooperation, or lack thereof, and any alleged waiver by Allstate are not sufficient to preclude summary judgment on the fundamental coverage issue at the center of this lawsuit.

4. Plaintiffs’ Bad Faith Declaratory Relief, and Punitive Damages Claims

Finally, Allstate alternatively requests partial summary judgment on Plaintiffs’ two bad faith claims, declaratory relief, and punitive damages claims. (Deft.’s Motion at 15-21.) These claims all fail as a matter of law in light of the Court's finding that Plaintiffs present no disputed issue of fact as to a covered occurrence within the plain meaning of the Policy.

CONCLUSION

For the reasons outlined above, Allstate's Motion for Summary Judgment is GRANTED in its entirety. Because the Court has granted Allstate's Motion in entirety, the Court need not reach Allstate's alternative arguments for partial summary judgment.

A separate judgment will be entered accordingly.

IT IS SO ORDERED.

FOOTNOTES

1.   Defendant's Notice of Errata represents that Allstate's summary judgment motion papers, filed on January 3, 2025 “contained inadvertent clerical errors that do not impact the substance of Allstate's motion,” including a misnumbered Partial Summary Judgment issue that should have been numbered as Issue 7 rather than Issue 6 in Defendant's Amended Separate Statement. (Dkt. No. 114-2 at 1.) Further, Defendant argues these “clerical errors did not cause any prejudice” to Plaintiffs. (Id. at 4.)

2.   On July 11, 2024, this Court appointed Lawrence Stock as Guardian ad Litem for Plaintiff Adrienne Lee Stock. (Dkt. No. 45.)

4.   Defendant objects to the Browne Declaration offered in support of Plaintiffs’ Motion as unsigned and unauthenticated. (Deft's Response to PSUF 1 (dkt. no. 121-1 at 2).) However, as noted above, the Court may consider evidence that could be presented in admissible form at trial. Here, because Mr. Browne could testify at trial about his observations of the condition of the Property as contained in his Declaration, the Court overrules Defendant's objections to the Browne Declaration and considers that evidence in resolving the Motions.

5.   In Aydin Corp. v. First State Ins. Co., the California Supreme Court held that once the insurer carries it burden to prove that an exception applies, “the insured bears the burden of proving that a claim comes within the ‘sudden and accidental’ exception.” Id. at 1183, 1194, 77 Cal.Rptr.2d 537, 959 P.2d 1213.

6.   Plaintiffs respond to Allstate's objection that the Brown Declaration is not competent evidence because it was unsigned and undated by explaining that the declaration was signed and dated, but that a “quirk” in the Court's CM/ECF platform caused the date and signature on the uploaded document to be “scrambled and partially missing.” (Id. at 8, n.1.) Plaintiffs state that they were “able to fix the issue” and the signature and date clearly appear on the document submitted as an Exhibit to Plaintiffs’ Opposition to Allstate's Amended Motion to Summary Judgment. (Id.) The Court declines to strike the Browne Declaration based on what appear to have been technical issues with the CM/ECF platform. Moreover, insofar as Mr. Browne's testimony could be presented in admissible form at trial, the Court treats the Browne Declaration as admissible evidence for purposes of the resolving the instant Motion.

7.   There is no evidence before the Court or any suggestion by the parties that the Policy was ever cancelled prior to the events that gave rise to this lawsuit.

8.   Plaintiffs expressly withdrew “all claims for bad faith, or unfair or deceptive acts, for practices constituting unfair claims settlement practices and common law bad faith that are or would be based on Allstate's conduct prior to the issuance of the May 29, 2024 Coverage Denial Letter.” (Opp'n at 24, Dkt. No. 119.)

KAREN L. STEVENSON, CHIEF UNITED STATES MAGISTRATE JUDGE