Procedural Posture

Appellant insured, a homeowners association, withdrew a claim to respondent insurer for damages resulting from the Northridge earthquake after an inspection by both parties revealed that any damage was below the deductible. After eight years, the insured sued the insurer, invoking Code Civ. Proc., § 340.9. The Superior Court of Los Angeles County, California, granted summary judgment for the insurer, and the insured appealed.

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In affirming summary judgment for the insurer, the court found that the insurer did not breach its contractual obligations because the association withdrew its claim and thus did not comply with the notice and submission conditions of the policy. The association effectively never submitted a claim on which the insured was required to act. The voluntary withdrawal of a damage claim by an insured arguably had the same legal consequence as the failure to file any claim at all or, after filing a claim, the failure or refusal to provide to the insurer the information necessary to adjust the claim. Further, the withdrawal effectively resolved the original claim. The record did not support an allegation of investigative failure because the insurer justifiably concluded that the association independently determined that any damage did not exceed the policy deductible. The court also found that the insurer would have sustained substantial prejudice from the resurrection of the lawsuit after nearly eight years. Finally, the insurer’s failure to pay benefits could not serve as a basis for a claim of bad faith because the insurer was not in breach of contract and owed no policy benefits.



The court affirmed the judgment.