Filed 7/17/13 Sanzaro v. United Service Auto. Assn. CA4/2

                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS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(b). This opinion has not been certified for publication
                                     or ordered published for purposes of rule 8.1115.


             IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                   FOURTH APPELLATE DISTRICT

                                                 DIVISION TWO


MICHAEL SANZARO et al.,

         Plaintiffs and Appellants,                                      E054546

v.                                                                       (Super.Ct.No. HEC020316)

UNITED SERVICES AUTOMOBILE                                               OPINION
ASSOCIATION,

         Defendant and Respondent.



         APPEAL from the Superior Court of Riverside County. John Vineyard, Joan F.

Burgess and Patricia Rich,* Judges. Affirmed.

         Michael Sanzaro and Deborah Sanzaro, in pro. per., for Plaintiffs and Appellants.

         Daniels, Fine, Israel, Schonbuch & Lebovits, Maureen M. Michail and Bernadette

C. Brouses for Defendant and Respondent.




         *
         Joan F. Burgess and Patricia Rich are temporary judges pursuant to California
Constitution, article VI, section 21.

                                                             1
                                              I

                                    INTRODUCTION

        Plaintiffs Deborah Sanzaro and Michael Sanzaro were insured under a renter’s or

homeowner’s insurance policy issued by defendant United Services Automobile

Association. This appeal involves plaintiffs’ claims for insurance coverage for several

thefts from their home in December 2004, April 2005, and February 2006.

        Plaintiffs appeal from a judgment entered on September 14, 2011, after an order

granting a summary judgment motion (MSJ) in favor of defendant. Plaintiffs are

representing themselves in propria persona. We have given full consideration to their

contentions and we affirm the judgment.

                                             II

                   FACTUAL AND PROCEDURAL BACKGROUND

A. The August 2006 MSJ on the Original Complaint

        The original verified complaint was filed individually by one plaintiff, Michael

Sanzaro, in November 2005. The original complaint involved a claim for losses

occurring from a burglary in April 2005. Defendant filed a general denial in January

2006.

        Various proceedings occurred, which involved a proposed first and second

amended complaint. Finally, on June 6, 2006, according to the parties’ stipulation, the

court ordered that the original complaint was the operative complaint and that it be

amended to include a request for damages in excess of $25,000.

        On May 12, 2006, defendant filed a motion for summary judgment. Defendant’s

                                             2
motion and plaintiff’s pending motion to file a second amended complaint (SAC) were

set for hearing on the same date, August 9, 2006. The basis for the motion was plaintiff’s

failure to submit to an examination under oath (EUO) as required by the insurance policy

and California law. Plaintiff opposed the summary judgment motion.

        On August 15, 2006, the superior court issued its written ruling granting

defendant’s motion for summary judgment–which it treated as a motion for judgment on

the pleadings–but also granting plaintiff’s motion to amend the complaint for other losses

than those incurred in April 2005.1 The court found: “It is undisputed that plaintiff

refused to submit to an examination under oath and answer the questions asked.

Plaintiff’s compliance with the policy requirement of submitting to an examination under

oath is a prerequisite to the right to receive benefits under the policy as stated in Brizuela

v. Cal. Farms Ins. Co. (2004) 116 Cal.App.4th 578.”

B. Demurrers to the SAC and the TAC

        In September 2006, both plaintiffs, Michael Sanzaro and Deborah Sanzaro, filed

their verified SAC seeking recovery for losses occurring in December 2004 and February

2006.

        Defendant filed a demurrer and motion to strike to the SAC. The court sustained

the demurrer with leave to amend.

        Plaintiff Deborah Sanzaro individually filed a separate action in March 2007,

claiming recovery for the April 2005 losses. Defendant again prevailed on a summary

        1 Plaintiff filed an appeal of the court’s order granting summary judgment but
plaintiff dismissed that appeal (E041664) in April 2007.

                                              3
judgment motion based on plaintiff’s failure to submit to an EUO.2

        Both plaintiffs filed their verified third amended complaint (TAC) in March 2007.

Defendant again filed a demurrer and motion to strike. On June 18, 2007, the court

sustained the demurrer without leave to amend on the first through eighth causes of

action and overruled the demurrer on the ninth cause of action for declaratory relief as to

benefits claimed for loss of property in February 2006. The motion to strike was deemed

moot.

C. The August 2011 MSJ on the Ninth Cause of Action

        Defendant filed its verified answer to the TAC on July 17, 2007.3 In May 2011,

defendant filed a third summary judgment motion. Plaintiffs did not oppose the motion.4

The court granted the motion on August 30, 2011, and entered final judgment on

September 14, 2011.

        In its order, the court ruled that: “. . . the subject USAA insurance policy is void

as to all insureds, and that USAA has an absolute and complete affirmative defense to

plaintiffs’ sole remaining cause of action for declaratory relief in their Third Amended

Complaint. Specifically, there is no triable issue of material fact on plaintiffs’

declaratory relief cause of action, and USAA is entitled to judgment thereon as a matter

of law, because Mr. Sanzaro intentionally concealed or misrepresented material facts or

        2   We grant defendant’s request for judicial notice filed June 25, 2012.

        3
        After further proceedings–including a second motion for summary judgment,
which was denied–and a dismissal, the case was reinstated in October 2010.
        4   The motion is not included in the record on appeal.

                                               4
circumstances; engaged in fraudulent conduct; and made false statements relating to this

insurance, after reporting the February 2006 alleged theft to USAA, which voids the

policy by its terms and California law.”

       In September 2011, plaintiffs filed a notice of appeal from the order entered on

August 30, 2011, and the judgment entered after the order granting summary judgment.

                                              III

                                        DISCUSSION

       In summarizing their appeal, plaintiffs ask this court (1) to reverse the superior

court’s order on August 15, 2006, granting summary judgment, and (2) to reverse the

superior court’s order sustaining defendant’s demurrer without leave to amend to the

first, second, third, fourth, seventh, and eighth causes of action of the TAC. As set forth

in their notice of appeal, plaintiffs also appeal from the final judgment entered in

September 2011 after the superior court granted summary judgment on the remaining

ninth cause of action. Defendant tries to argue that the appeal is limited to challenging

the August 2006 order and the order sustaining the demurrer. In our view, however, a

fair reading of plaintiffs’ notice of appeal and plaintiffs’ appellate briefs indicates that

plaintiffs’ appeal from the final judgment incorporates all three matters, including the

final judgment in September 2011.

A. The August 2006 Summary Judgment

       We conduct an independent review of an order granting summary judgment. As

stated by this court: “On appeal from the trial court’s grant of defendants’ motion for

summary judgment, ‘. . . we review the trial court’s decision de novo, applying the rule

                                               5
that “[a] defendant is entitled to summary judgment if the record establishes as a matter

of law that none of the plaintiff’s asserted causes of action can prevail. [Citation.] To

succeed, the defendant must . . . demonstrate that under no hypothesis is there a material

issue of fact that requires the process of a trial.” [Citation.]’ (Flatt v. Superior Court

(1994) 9 Cal.4th 275, 279.)” (Miscione v. Barton Development Co. (1997) 52

Cal.App.4th 1320, 1324-1325; Brizuela v. CalFarm Ins. Co., supra, 116 Cal.App.4th at

p. 586.)

       The following material facts were undisputed in the August 2006 MSJ. Defendant

issued a homeowner’s insurance policy to plaintiffs that was in effect from February 10,

2005, to February 10, 2006. In May 2005, Michael Sanzaro gave a recorded statement,

making a claim for personal property taken in the home robbery in April 2005, including

a 60-inch television, large appliances, and furniture.

       The policy required the insured to participate in an EOU if the insurer so elects. In

November 2005, when defendant’s representative attempted to conduct an EOU with

Michael Sanzaro, he terminated the examination after about 45 minutes and declined to

complete it.5 In opposition, plaintiffs asserted that Michael Sanzaro had terminated the

EOU because the examiner was asking irrelevant questions and repeating questions that

had already been asked in the recorded statement from May 2005. However, the

recorded statement from May 2005 was not a sworn statement and was not an EOU, as

plaintiffs persistently and incorrectly assert. As the examiner explained to Michael


       5   In oral argument, plaintiff conceded that he “blew up and got mad.”

                                              6
Sanzaro, the EUO was a separate examination from the recorded statement. Therefore, it

is not subject to dispute that plaintiffs refused to complete an EOU in November 2005.

       Under Insurance Code section 2071, an insurance provision requiring an EOU is

valid. The failure to comply means an insured cannot bring a legal action:

       “In West v. State Farm Fire and Cas. Co. (9th Cir. 1989) 868 F.2d 348, the

insured refused to answer questions before a court reporter because he had previously

given an informal statement. Applying California law, the West court held the insurer’s

request that its insured submit to examination under oath was entirely reasonable and

affirmed the granting of summary judgment to the insurer holding the insurer could not

properly process the claim until the insured complied with the terms of the policy. (Id. at

p. 351.)” (Globe Indemnity Co. v. Superior Court (1992) 6 Cal.App.4th 725, 731;

California Fair Plan Assn. v. Superior Court (2004) 115 Cal.App.4th 158, 161-162, 167.)

       More recently, in Brizuela v. CalFarm Ins. Co., supra, 116 Cal.App.4th at pages

582-585, the insurer, as part of an arson investigation first obtained the insured’s

recorded statement. Then the insured delayed and refused to complete an EOU. After

the insured sued the insurer, the trial court granted the insurer’s summary judgment

motion because the insured had not completed the requested EOU. (Id. at pp. 585-586.)

The appellate court affirmed.

       The foregoing cases are exactly like the present case in which plaintiffs argue that

they did not have to complete an EOU because Michael Sanzaro had already given a

statement and defendant was using the EOU to find a reason to deny coverage. Plaintiffs’

refusal to complete an EOU effected a forfeiture of their rights under the insurance

                                              7
policy. (Brizuela v. CalFarm Ins. Co., supra, 116 Cal.App.4th at p. 590, Robinson v.

National Auto. & Casualty Ins. Co. (1955) 132 Cal.App.2d 709, 712-714.) Plaintiffs

could not maintain their claim for breach of the insurance contract or the related

dependent claim for breach of the implied covenant of good faith and fair dealing.

(Brizuela, at pp. 594-595.) The superior court properly granted summary judgment on

the original complaint involving the April 2005 loss. (Id. at pp. 587, 590.)6

B. Demurrer to the TAC

       In their TAC, plaintiffs focused their claims on their losses in December 2004 and

February 2006. Plaintiffs alleged that defendant misrepresented to them that

“‘replacement cost coverage,’ means that [defendant] would replace or pay [plaintiffs]

the cost to replace the property of like kind and quality without deduction for

depreciation. [Defendant] did not [disclose] to plaintiffs that plaintiffs would only get

actual cash value, that plaintiffs would have to use their own money to replace the

property and then resubmit a claim for reimbursement of plaintiffs’ expenditures.”

       Defendant evaluated the gross value of plaintiffs’ December 2004 claim at

$26,124.07, deducted depreciation of $7,327.31, and paid plaintiffs a net amount of

$18,796.76. In connection with that loss, plaintiffs alleged four causes of action for

breach of contract, fraud, and breach of the duty of good faith and fair dealing.

       Plaintiffs then suffered another loss from a burglary in February 2006 and

submitted to an EOU on that claim. In connection with that loss, plaintiffs alleged five


       6   The same outcome occurred in Deborah Sanzaro’s separate case.

                                             8
causes of action for denial of coverage including breach of the duty of good faith and fair

dealing, breach of contract, intentional and negligent infliction of emotional distress, and

declaratory relief.

       We conclude the lower court properly sustained the demurer without leave to

amend on the first through eight causes of action. As to the first cause of action,

defendant was entitled, under the terms of the insurance policy, to withhold depreciation

and not pay replacement cost coverage until the subject property was replaced. (Fraley v.

Allstate Ins. Co. (2000) 81 Cal.App.4th 1282, 1287, 1289-1291; Ins. Code § 2015.5,

subd. (a).) Plaintiffs never alleged they replaced the subject property. Instead, they

object to the procedures legally authorized by the insurance policy. The first cause of

action, however, fails to state a cause of action as a matter of law. Similarly, the failure

of the first cause of action means there was no foundation for the related claims made in

the second, third, and fourth causes of action, all of which depend on plaintiffs’

unsustainable contention that replacement cost coverage was an illegal provision.

       We recognize that plaintiffs expressly do not appeal the court’s order on the fifth

and sixth causes of action but we discuss these causes of action because they have a

bearing on the seventh, eighth, and ninth causes of action. The fifth and sixth causes of

action alleged breach of contract and bad faith because defendant did not pay plaintiffs’

claims within 30 days of receiving proof of the February 2006 loss. The insurance policy

does not provide for payment on that basis and plaintiffs did not allege that defendant

wrongly withheld benefits or refused to pay benefits unreasonably or without cause.

Therefore, plaintiffs did not sufficiently allege breach of contract or bad faith. (Love v.

                                              9
Fire Ins. Exchange (1990) 221 Cal.App.3d 1136, 1151-1152; Opsal v. United Services

Auto. Assn. (1991) 2 Cal.App.4th 1197, 1205.) Plaintiffs’ related eighth cause of action

for negligent infliction of emotional distress also fails because it depends on the contract

claims to survive. (Marlene F. v. Affiliated Psychiatric Medical Clinic, Inc. (1989) 48

Cal.3d 583, 588.)

       Finally, plaintiffs failed to allege a sufficient claim for intentional infliction of

emotional distress because they did not allege conduct “‘so extreme as to exceed all

bounds of that usually tolerated in a civilized community” (Ricard v. Pacific Indemnity

Co. (1982) 132 Cal.App.3d 886, 895) and specifically calculated to cause mental distress

of a very serious kind. (Christiansen v. Superior Court (1991) 54 Cal.3d 868, 903.)

Instead, plaintiffs protest how defendant handled their claim. Plaintiffs do not

specifically allege the required outrageous conduct. (Soto v. Royal Globe Ins. Co. (1986)

184 Cal.App.3d 420, 430, citing Schlauch v. Hartford Accident & Indem. Co. (1983) 146

Cal.App.3d 3d 926, 936.) Additionally, the court’s ruling on the August 2011 MSJ,

discussed below, would preclude any recovery by plaintiffs for the February 2006 claim.

       In view of the deficiencies in the first through eight causes of action of the TAC,

the trial court did not abuse its discretion by sustaining defendant’s demurrer without

leave to amend. (Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081.)

C. The August 2011 MSJ on the Ninth Cause of Action

       The August 2011 MSJ concerning the ninth cause of action for declaratory relief

was not opposed by plaintiffs and the only part of the motion that appears in the appellate

record is the court’s written ruling granting the motion. The ninth cause of action sought

                                               10
a declaration that plaintiffs were entitled to coverage under the insurance policy for their

February 2006 loss. As already noted, the court found that the insurance policy was void

because Michael Sanzaro had intentionally concealed and misrepresented material facts

and committed insurance fraud. Because they did not oppose the motion in the trial

court, plaintiffs cannot challenge these findings on appeal.

                                             IV

                                      DISPOSITION

       The trial court properly granted the 2006 and 2011 motions for summary judgment

involving plaintiffs’ claims for the April 2005 and February 2006 losses. The court also

properly sustained defendant’s demurrer without leave to amend on the TAC involving

the December 2004 and February 2006 losses.

       We affirm the judgment. In the interests of justice, we order the parties to bear

their own costs on appeal.

       NOT TO BE PUBLISHED IN OFFICIAL REPORTS

                                                                CODRINGTON
                                                                                               J.

We concur:


McKINSTER
                 Acting P. J.


KING
                             J.




                                             11
