Greene v. Farmers Insurance Exchange

Filed 11/18/25 Greene v. Farmers Insurance Exchange CA2/4

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(a). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115(a).

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FOUR

SANDRA GREENE,

Plaintiff and Appellant, v.

FARMERS INSURANCE

EXCHANGE,

Defendant and Respondent.

B341223

(Los Angeles County Super. Ct. No.

23STCV15790)

APPEAL from a judgment of the Superior Court of Los Angeles County, Jon R. Takasugi, Judge. Reversed. Law Office of Stefon A. Jones, Stefon A. Jones for Plaintiff and Appellant.

Tharpe & Howell, Eric B. Kunkel for Defendant and Respondent.

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In 2023, Sandra Greene's home suffered water damage from rainwater that penetrated the roof of her home. Greene made a claim under her Smart Plan Home policy, which was underwritten and issued by defendant Farmers Insurance Exchange (Farmers). Farmers denied the claim, concluding the damage was caused by wear and tear to the roof, which the policy did not cover.

Greene sued Farmers, asserting claims for breach of contract and breach of the implied covenant of good faith and fair dealing, and requested an award of punitive damages. Farmers moved for summary judgment, and the trial court granted the motion, concluding there was no coverage under the policy as a matter of law.

We reverse. Farmers did not meet its initial burden on summary judgment to demonstrate that one or more elements of Greene's claims could not be established. Moreover, even if it did meet its burden, there are triable issues of fact regarding whether the rainwater entered the home due to wear and tear to the roof or through an opening that was first caused by the direct force of a windstorm—which is undisputably a covered loss under the policy.

BACKGROUND

In December 2022, Greene purchased homeowner's insurance from Farmers for her property on Degnan Boulevard in Los Angeles for the period of December 1, 2022 to December 1, 2023. Under the policy, Farmers generally agreed to insure

"accidental direct physical loss or damage" to the property. Of relevance here, the policy further provided for limited water coverage "for accidental, direct, distinct and demonstratable, physical water damage of covered property from direct contact

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with water, but only if the water results from . . . hail, rain, snow, or sleet entering through an opening in the roof or wall of a building structure, and only if the opening is first caused by damage from the direct force" of a windstorm or hail. If rainwater entered the home from an opening that was not first caused by a windstorm or hail (or other forces not relevant here), the resulting damage is not covered under the policy. The policy further states that Farmers does not insure "loss or damage which is wear and tear[.]"

On March 10, 2023, rainwater entered Greene's home through the roof, causing water damage to the family room, a bedroom, a ceiling and walls. Greene made a claim for water damage under the policy on March 17. Farmers then assigned the claim to its claims representative, Rodrigo Morales. Greene hired David Glover of Kleen Inspection, a home inspection company, to inspect her roof and assess the damage. Glover inspected the property on March 24, 2023, and later prepared two written reports, which included photographs.¹The

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Kleen report stated that the inspector "found that the roof has a number of leaks in the different areas of the valley of the roof structure." It was later discovered that Glover was not a licensed roofer or contractor.

Morales spoke to Glover by phone on March 30. Farmers' claim file states, in relevant part, that Morales spoke to Glover, and Glover confirmed that the water damage was from wear and tear to the roof. The notes further state that Glover confirmed there was "no opening to the roof as a result of wind." Farmers also received the Kleen report prepared by Glover. Based on "the information at hand" Farmers determined the water damage was not the result of water entering the roof through a windstorm- created opening. It therefore sent a letter to Greene denying coverage. The letter stated that, according to Glover, "no opening to the roof was found as a result of wind" and "[u]nfortunately, wear and tear and water damage caused by rain are uninsured and excluded under the terms of the policy."²

Following the denial of her claim, Greene filed this action against Farmers for breach of contract and breach of the implied through [sic] because of the wind storm related openings that caused the damage to the roof." The second version also added additional commentary to one of the pictures. Farmers only cites to the first version of the report, without acknowledging the second version. Neither party objected below to either version of the report. We refer to both versions of the report collectively as the "Kleen report" unless otherwise indicated.

2 Farmers asserts that it received a second claim on April 4,

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covenant of good faith and fair dealing. Greene also sought punitive damages.

Farmers moved for summary judgment or, in the alternative, summary adjudication of issues. Farmers argued it did not breach the contract because the evidence does not demonstrate the rainwater entered the roof through an opening first caused by a windstorm and, therefore, the damage is not covered under the policy. It further argued that, even assuming there is coverage for the loss, Greene's bad faith cause of action fails as a matter of law because the undisputed facts demonstrate Farmers acted reasonably in denying coverage. Greene opposed the motion, arguing material issues of fact exist regarding whether the damage to the property is covered under the policy, and whether Farmers acted reasonably in denying coverage. Following a hearing, the trial court issued a written order granting Farmers' motion. As to Greene's claim for breach of contract, the trial court found Farmers met its initial burden, and Greene's evidence was insufficient to create disputed facts. In so doing, although Farmers did not object to the Kleen report, the trial court concluded it was inadmissible on the grounds that Glover did not submit a declaration to authenticate his report or his findings, and he was not a licensed contractor. With respect to Greene's claim for bad faith, the trial court determined that the "only reasonable inference supported by the evidence" is that Farmers made every effort to inspect the roof but was turned away or ignored and, based on Farmers discussions with Glover and a review of the Kleen report, Farmers concluded there was no evidence of a windstorm created opening in the roof. It therefore granted summary judgment in favor of Farmers.

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Greene timely appealed from the court's order granting summary judgment.³

DISCUSSION

I. Standard of Review

A party is entitled to summary judgment only if there is no triable issue of material fact and the party is entitled to judgment as a matter of law. (Code Civ. Proc., § 437c, subd. (c).) A defendant moving for summary judgment must show that one or more elements of the plaintiff's cause of action cannot be established or that there is a complete defense. (Id., subd. (p)(2).) A defendant meets its initial burden by presenting affirmative evidence that negates an essential element of the plaintiff's claim, or by submitting evidence that demonstrates "the plaintiff does not possess, and cannot reasonably obtain, needed evidence"

to prove an essential element of the plaintiff's claim. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 855 (Aguilar).)

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If the defendant meets this burden, the burden shifts to the plaintiff to present evidence creating a triable issue of material fact. (Code Civ. Proc., § 437c, subd. (p)(2).) A triable issue of fact exists if the evidence would allow a reasonable trier of fact to find the fact in favor of the party opposing summary judgment. (Aguilar, supra, 25 Cal.4th at p. 850.)

We review the trial court's ruling on a summary judgment motion de novo, liberally construe the evidence in favor of the party opposing the motion, and resolve all doubts concerning the evidence in favor of the opponent. (Miller v. Department of Corrections (2005) 36 Cal.4th 446, 460.)

II. The Trial Court Erred by Granting Summary Judgment in Favor of Farmers

A. Breach of Contract

To establish a breach of an insurance contract, a policyholder must show he or she is entitled to a benefit that the insurer refused to pay. (Behnke v. State Farm General Insurance Co. (2011) 196 Cal.App.4th 1443, 1468.) It is undisputed that Greene's policy provides coverage for accidental and direct physical water damage of property from direct contact with water, but only if: (i) the water results from rain entering through an opening; and (ii) the opening was first caused by, as relevant here, direct force of the windstorm. Otherwise, water damage is excluded.

Farmers moved for summary adjudication of Greene's breach of contract claim on the ground that there is no coverage under the policy for the damage to Greene's home. It argued that there is no evidence, and Greene could not present any evidence, demonstrating the rain entered through an opening "first caused by damage from the direct force of a windstorm."

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In support of its motion, Farmers primarily relied on the claim file notes. As explained below, however, the trial court abused its discretion by admitting the notes, which constitute two levels of hearsay (i.e., the claims representative's statements about what Glover purportedly told him).

Farmers attached the claim file notes to the declaration of Tom Olivo, Farmers' Territory Property Manager. Olivo declared that, based on his review of the claim file notes, the notes "reflect that based on [Morales's] conversation with [ ] Glover, [ ] Morales understood that there was no opening to the roof as a result of wind and that the cause of loss was from wear and tear to the roof that allowed rainwater to enter the interior of the home."

The claim file notes, on which Olivo relied, state in relevant part:

Morales spoke with Glover; Glover confirmed that the water damage is from wear and tear to the roof; and Glover confirmed there was no opening to the roof as a result of wind. Farmers urges that the claim file notes are admissible under the business records exception to the hearsay rule. Under that exception, "[e]vidence of a writing made as a record of an act, condition, or event is not made inadmissible by the hearsay rule"

if it meets certain requirements, including that the "sources of information and method and time of preparation were such as to indicate its trustworthiness." (Evid. Code, § 1271 subd. (d), italics added.) We are unpersuaded that claim file notes written by a claims representative employed by Farmers qualify as a business record, especially here, where the notes do not merely consist of verifiable facts (i.e., the date and time of a phone call) but rather contain the claims representative's impressions of a conversation he purportedly had with an inspector. Recording

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such impressions does not amount to recording "an act, condition, or event."

The party offering the evidence also bears the burden of establishing the foundational requirement of trustworthiness. (People v. Hovarter (2008) 44 Cal.4th 983, 1011.) Farmers has not even attempted to meet that burden. Instead, its argument is limited to asserting Olivo "was qualified to identify the claims file documents as business records." Even if true, that alone is insufficient to meet the requirements of Evidence Code section

1271.

Moreover, the fact a document may qualify as a business record does not mean everything in the document is admissible. When multiple hearsay is offered, an exception for each level of hearsay must be found for the evidence to be admissible. (Evid. Code., § 1201; People v. Alexander (2010) 49 Cal.4th 846, 876.) Here, the statements Glover allegedly made to Morales (i.e., the water damage was a result of wear and tear to the roof and there was no opening to the roof as a result of wind) are also hearsay. Farmers argues these statements qualify as adoptive or authorized admissions under Evidence Code sections 1221 and 1222 because Greene permitted Glover to speak on her behalf. The evidence Farmers cites does not, however, demonstrate that Greene, "by words or other conduct manifested [her] adoption or [her] belief in [the statement's] truth" (Evid. Code, § 1221) or that she authorized Glover to make such statements to Morales (Evid. Code, § 1222). In fact, the claim file notes appear to reflect the opposite in that Glover merely "took the phone from the customer." Glover's alleged statements to Morales, therefore, cannot be taken for the truth of the matter asserted.

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Farmers also claims the photographs taken by Glover show there was no "opening" in the roof. We are unpersuaded. Nothing in the pictures definitively shows either that there is no opening at all, or that the opening was not caused by wind. Because Farmers' evidence is not sufficient to demonstrate, as a matter of law, that coverage does not exist for Greene's claim, the burden never shifted to Greene to demonstrate a triable issue of material fact on this issue. Even if the burden shifted, however, material issues of fact exist. Although not a model of clarity, the Kleen report states the "windstorm related openings" caused "damage to the roof."⁴This creates a dispute as to the dispositive coverage issue, i.e., whether an opening in the roof was first created by a windstorm.

Further, assuming the claim file notes are admissible, they are inconsistent on two key, related points. Morales noted that Glover called him and stated, Glover "did not say this was wear/tear to the roof." (Italics added.) The claim file notes, if admissible, thus create triable issues of fact as to what Glover said to Morales and whether there was wear and tear to the roof. Accordingly, we conclude Farmers has failed to demonstrate that no coverage exists under the policy for Greene's

4 In determining whether triable issues of fact exist, the trial court ruled that Greene could not rely on the Kleen report because it was not authenticated and Glover is not a licensed contractor. As noted above, however, Farmers did not object to the authenticity of either version of the report. And the fact Glover is not a licensed contractor goes to the weight of the evidence, not its admissibility. By permitting Farmers to rely on the report and the opinions of Glover, but prohibiting Greene from doing the same, the trial court abused its discretion.

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claim as a matter of law. It is, therefore, not entitled to summary adjudication of Greene's cause of action for breach of contract.

B. Breach of the Implied Covenant of Good Faith

Farmers contends that even if we conclude material issues of fact exist regarding coverage, the genuine dispute doctrine

"precludes the finding of bad faith and in turn any claim for punitive damages." We disagree.

"[A]n insurer cannot be held liable for bad faith when it has acted to deny or delay policy benefits with proper cause. One of the ways an insurer can negate an insured's claim that it has acted unreasonably or without proper cause is to demonstrate the existence of a 'genuine dispute' regarding coverage." (Jordan v. Allstate Ins. Co. (2007) 148 Cal.App.4th 1062, 1072 (Jordan).)

"A genuine dispute exists only where the insurer's position is maintained in good faith and on reasonable grounds." (Wilson v. 21st Century Ins. Co. (2007) 42 Cal.4th 713, 723.) Our Supreme Court explained that, before granting summary judgment on a claim for bad faith, the court must determine that it " 'is undisputed or indisputable that the basis for the insurer's denial of benefits was reasonable—for example, where even under the plaintiff's version of the facts there is a genuine issue as to the insurer's liability under California law. [Citation.] . . . On the other hand, an insurer is not entitled to judgment as a matter of law where, viewing the facts in the light most favorable to the plaintiff, a jury could conclude that the insurer acted unreasonably.' " (Id. at p. 724.)

Here, Farmers argues it acted reasonably by relying on the conclusions of its claims representatives, and Greene failed to permit Farmers to inspect her roof until after it had been

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repaired even though she was obligated under the policy to allow an inspection. But these facts are disputed. Greene submitted a declaration in support of her opposition stating that she was contacted by an inspection company retained by Farmers to schedule an inspection date; she selected a date in April; and the inspection was later cancelled because the claim was denied on March 30. Greene also declared she never denied access to her property, and never stated she did not feel it was necessary to have someone inspect her property.⁵Greene further declared that she did not repair her roof until April 24, 2023— approximately three-and-a-half weeks after her claim was denied.

Moreover, we cannot say that, as a matter of law, Farmers' claims representative acted reasonably by relying on Glover's purported statement that the water damage was from wear and tear to the roof, when his report says the damage was "because of the wind storm related openings" and other claim file notes state Glover called Farmers again and stated "he did not say this was wear/tear to the roof."

On this record, viewing the facts most favorable to Greene, a jury could conclude Farmers acted unreasonably in denying coverage. Farmers is therefore not entitled to summary adjudication of its bad faith claim.

We reach the same conclusion with regard to punitive damages. Punitive damages are recoverable if Greene can prove Farmers not only denied or delayed the payment of policy

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benefits unreasonably, but, in doing so, was guilty of malice, oppression or fraud. (Jordan, supra, 148 Cal.App.4th at p. 1080.)

"The acts constituting such malice, oppression or fraud must be proven by clear and convincing evidence." (Ibid.) The record before us does not contain obvious evidence that such clear and convincing evidence of malice, oppression, or fraud exists. The burden is first on Farmers, however, to show that Greene cannot prove that Farmers acted with malice. (See Fadeeff v. State Farm General Ins. Co. (2020) 50 Cal.App.5th 94, 109 [the burden shifts to the insured to establish evidence supporting punitive damages with the clear and convincing standard of proof only if the insurer initially meets its burden to show that the insured cannot prove the insurer acted with malice].)

Farmers has not met its burden. That Farmers spoke to Glover who purportedly confirmed the water damage was from wear and tear to the roof (in contradiction to his written report), and that it reviewed photographs taken by Glover of the roof before denying coverage, does not shift the burden to Greene to rebut a showing of no malice by Farmers. As discussed above, Farmers denied coverage before physically examining the property. And although Farmers claims it was denied access to the property to conduct an investigation, Greene disputes this fact. Thus, Farmers is not entitled to summary adjudication of Greene's punitive damages claim.⁶

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DISPOSITION

The summary judgment in favor of Farmers is reversed. Greene is awarded her costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

TAMZARIAN, J.

We concur:

ZUKIN, P. J.

COLLINS, J.

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