Filed 8/31/15 Benham v. First American Home Buyers Protection CA1/2

                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS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
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              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
                                       FIRST APPELLATE DISTRICT
                                                  DIVISION TWO



ALICE J. BENHAM,
     Plaintiff and Appellant,                                           A141034
     v.
FIRST AMERICAN HOME BUYERS
PROTECTION CORPORATION,                                                 (Contra Costa County
                                                                        Super. Ct. No. MSC1102389)
     Defendant and Respondent.


         Alice J. Benham had a home warranty plan with First American Home Buyers
Protection Corporation (First American). Benham’s furnace, which was covered by the
plan, failed. She rejected the contractor selected by First American and hired her own
contractor to replace her furnace. She filed a lawsuit against First American when it
refused to reimburse her for the total amount she paid to replace the furnace.
Subsequently, First American paid Benham the sum she had demanded, and Benham
filed a first amended complaint against First American for breach of contract, breach of
the covenant of good faith and fair dealing, and violation of the unfair competition law
(UCL; Bus. & Prof. Code, § 17200 et seq.). First American moved for summary
judgment, which the trial court granted.
         Benham appeals and contends, among other things, that the home protection plans
are insurance, First American violated various regulations, and she suffered emotional
distress damages. We decline to decide whether home protection plans are insurance


                                                             1
because such a determination is not necessary to our holding. Benham cannot show any
damages on her breach of contract claim. The evidence shows as a matter of law that
First American acted reasonably when complying with the terms of the contract,
defeating Benham’s breach of the covenant of good faith and fair dealing claim. Finally,
Benham suffered no economic injury and has no standing to bring a UCL claim.
Accordingly, we affirm.
                                    BACKGROUND
       Benham purchased a home in the City of Richmond in 2010. Her real estate
broker purchased for her benefit a home warranty plan with First American (First
American’s home warranty plan), with an effective date of August 6, 2010. Such plans
typically cover the major systems and appliances in a customer’s home. Benham
acknowledged receiving this plan, but stated she did not read it when she received it.
First American’s letter with the First American home warranty plan advised her to review
it.
       First American’s home warranty plan provided that it “covers only the items
mentioned as covered and excludes all other.” It stated that First American “will not
reimburse you for services performed without approval.” With certain exclusions, First
American’s home warranty plan covered heating.1
       A provision in First American’s home warranty plan under the heading of “Limits
of Liability” stated: “The Company will not be responsible for any corrections, repairs,
replacements, upgrades, inspections or other additional costs to comply with federal, state
or local laws, utility regulations, zoning or building codes. . . . The Company will not be
responsible for alterations or modifications made necessary by existing equipment or




       1  Under coverage for heating, the home warranty plan specified radiators; heating
elements; vent blower assembly; baseboard convectors; gas, electrical, oil furnaces;
switches, wiring and relays; gas valve; heat pump refrigerant recharging; motors; printed
circuit boards; burners; hydronic circulating pumps; heat exchangers; heat pump;
thermostats and thermostat sub-base.

                                             2
installing different equipment except where noted in the Central Air Conditioning
(Ducted) section of this contract. . . .”
       One paragraph in First American’s home warranty plan under the heading of
“Customer Service” read: “Homeowner and Company may agree on payment of cash in
lieu of repair or replacement. Payment will be made based on Company’s negotiated
rates with its suppliers, which may be less than retail.”
       On October 18, 2010, the furnace in Benham’s home failed. She called Atlas
Heating & Air Conditioning (Atlas), and an Atlas technician came to her home the
following day. After meeting with Atlas, Benham called First American and reported
that her furnace was not functioning. First American set up a work order for California
Express Enterprises to inspect the furnace on October 20, 2010. The technician arrived at
10:30 a.m., on October 20, but Benham was not there.
       Benham requested a new contractor, and First American sent SA Heating & Air
Conditioning (SA Heating) to her home on October 21, 2010. SA Heating inspected the
furnace and reported several problems, including a cracked heat exchanger, a carbon
monoxide leak, and an incorrect thermostat. SA Heating recommended replacement of
the furnace and First American agreed to replace it. SA stated that a number of
modifications would be required to install a replacement furnace. On October 22, 2010,
First American placed a purchase work order with Goodman Distribution for a
replacement furnace at 90 percent efficiency for the pre-tax price of $472.00. First
American had a contract with SA Heating to provide service to its customers for a flat fee
of $155.00.
       On October 22, 2010, First American sent Benham a letter stating that it had
authorized SA Heating to replace the heater. The letter stated: “The price of the heater is
$472.00[,] the tax is $46.02, and the labor rate is $155.00 to install. We do deduct the
time into the job which is $55 and that totals your cash out to $618.00.” It specified that
Benham would have to pay a total of $1,200 for costs not covered in the home warranty
plan, which included, among other things, electrical and gas modifications and haul away
and thermostat costs.

                                              3
       Benham wrote First American asking it to explain the non-covered costs, and First
American responded that her home protection plan excluded the costs for alterations or
modifications necessary to install different equipment or to correct prior improper
installations. First American advised that she could receive $618.02 in lieu of the furnace
replacement. Benham disputed these non-covered costs. On October 26, 2010, Benham
sent an e-mail to First American telling it to send a copy of all future correspondence to
her attorney, Robert F. Campbell.
       On November 9, 2010, Benham received an estimate from SA Heating to install a
95 percent efficiency brand furnace for the price of $2,750. Benham notified First
American of this estimate. Benham received a proposal from Atlas to replace her furnace
with a Goodman 92.1 percent efficiency furnace for $4,795.00. According to Benham,
the market rate cost to replace her furnace was between $3,000 and $3,200.
       On November 15, 2010, First American sent a check for $618.02 to Benham.
Above the signature line on the back of the check, it stated: “Endorsement of this check
constitutes full release of First American Home Buyers Protection from making future
repairs or replacement to your furnace.” Benham did not cash this check.
       Campbell wrote a letter dated February 3, 2011, on behalf of Benham to First
American. The letter stated that Benham had obtained an estimate from a licensed
heating and air-conditioning company indicating that the reasonable cost to install a
comparable replacement furnace was $4,976.00. Deducting the uncovered costs of
$1,200.00 from this estimate, First American, according to Campbell, owed Benham a
minimum of an additional $3,157.98. On February 15, 2011, First American refused to
pay the additional money requested. It stated that it “consider[ed] this claim closed.”
       On October 18, 2011, Benham sued for breach of contract and breach of the
covenant of good faith and fear dealing. Benham requested compensatory and punitive
damages.
       On October 31, 2012, counsel for First American sent a check to Benham in the
amount of $6,000.000 to settle the case ($4,976 for the alleged replacement cost plus
$1,023.83 in interest). The letter stated: “To be clear, First American pays this amount

                                             4
to fully compensate Plaintiff’s claim for benefits under her First American [c]ontract,
including interest, at the legal rate, solely in order to minimize the expense of this case,
which has been disproportionate to the actual amount at issue. First American does not
admit any claims or allegations. First American does not make this payment conditional
upon release of Plaintiff’s alleged claims for attorneys’ fees, damages for ‘humiliation,
mental anguish and emotional distress,’ punitive damages or costs. By acknowledging
Plaintiff’s claims, First American does not admit them.” (Bold in original.) This sum,
according to Benham, went into her attorney’s trust account after she endorsed the check;
her attorney disbursed money to her from this trust account.
       On June 4, 2013, Benham filed a first amended complaint for breach of contract,
breach of the covenant of good faith and fair dealing, and violation of the UCL (Bus. &
Prof. Code, § 17200 et seq.).2 She requested punitive damages and injunctive relief under
the UCL. Benham alleged that First American is an insurer and that it, among other
things, “wrongly delayed payment of benefits of the” home warranty “policy.”
       First American moved for summary judgment arguing that it was not an insurer
and the home warranty plan is not an insurance contract. On December 6, 2013, the trial
court issued its order granting First American’s motion for summary judgment. The
court concluded that California Code of Regulations, title 10, section 2695.9,3 which
Benham contended First American violated, did not apply to home protection companies
or to home protection plans. It further ruled that First American did not breach its
contract and Benham had no damages. The court denied Benham’s breach of the implied
warranty of good faith and fair dealing claim because of its determination that home
protection plans are not insurance contracts and its conclusion that Benham had an



       2 The caption in both Benham’s original complaint and her first amended
complaint includes a claim for negligence, but neither pleading sets forth a separate cause
of action for negligence.
       3 All references and citations to Regulations refer to sections in title 10 of the
California Code of Regulations.

                                              5
adequate contract remedy. The court found that Benham did not have standing to bring
the UCL claim as she did not suffer any economic injury.
       On February 4, 2014, the trial court filed its notice of entry of judgment,
dismissing Benham’s lawsuit against First American. Benham filed a timely notice of
appeal.
                                        DISCUSSION
                  I. Summary Judgment Rules and Standard of Review
       A motion for summary judgment “shall be granted if all the papers submitted
show that there is no triable issue as to any material fact and that the moving party is
entitled to a judgment as a matter of law.” (Code Civ. Proc., § 437c, subd. (c).) A
defendant moving for summary judgment has the initial burden of showing either that
one or more elements of the cause of action cannot be established or that there is a
complete defense. (Id., § 437c, subd. (p)(2).) If that initial burden is met, the burden
shifts to the plaintiff to show the existence of a triable issue of fact with respect to that
cause of action or defense. (Ibid.; see Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th
826, 850-853.)
       On appeal, “ ‘we take the facts from the record that was before the trial court when
it ruled on that motion. [Citation.] “ ‘We review the trial court’s decision de novo,
considering all the evidence set forth in the moving and opposing papers except that to
which objections were made and sustained.’ ” [Citation.] We liberally construe the
evidence in support of the party opposing summary judgment and resolve doubts
concerning the evidence in favor of that party. [Citation.]’ [Citation.]” (Wilson v. 21st
Century Ins. Co. (2007) 42 Cal.4th 713, 716-717 (Wilson).)
            II. Home Protection or Warranty Plans and the Insurance Code
       Benham contends that home protection or warranty plans are insurance. First
American acknowledges that home protection plans and companies issuing them are
regulated by the Department of Insurance (see, e.g., Ins. Code, §§ 12744 [must have a




                                               6
license issued by Department of Insurance]; 12752),4 but maintains they do not constitute
insurance contracts. Whether these home protection plans are insurance is significant
because, although all contracts have a covenant of good faith and fair dealing, tort
remedies are generally not available for breaches of noninsurance contracts. (Foley v.
Interactive Data Corp. (1988) 47 Cal.3d 654, 669-700; Rattan v. United Services
Automobile Assn. (2000) 84 Cal.App.4th 715, 722.)
       The Insurance Code defines a home protection plan as “a contract or agreement
whereby a person, other than a builder, seller, or lessor of the home which is the subject
of the contract, undertakes for a specified period of time, for a predetermined fee, to
repair or replace all or any part of any component, system or appliance of a home
necessitated by wear and tear, deterioration or inherent defect, arising during the effective
period of the contract . . . . [¶] Such contract shall provide for a system of service for
effectuating such repair or replacement and shall not include protection against
consequential damage from the failure of any component, system or appliance.”
(§ 12740, subd. (a).) First American is a “ ‘[h]ome protection company’ ” under section
12740, subdivision (b), which defines such a company as “any person licensed pursuant
to this part which issues home protection contracts.” (§ 12740, subd. (b).)
       The question whether a home protection or warranty plan is an insurance contract
has not been addressed by any published California state court opinion. A federal district
court has stated in dicta that they are “analogous” to insurance contracts. (Campion v.
Old Republic Home Protection Co., Inc. (S.D.Cal. 2012) 861 F.Supp.2d 1139, 1145
(Campion).) The issue before the Campion court was whether a plaintiff could bring a
claim against the seller of home warranty plans under California’s Consumer Legal
Remedies Act (CLRA), which prohibits unfair or deceptive acts that “result[] in the sale
or lease of goods or services to any consumer . . . .” (Civ. Code, § 1770.) The court
concluded that home warranty plans are not service contracts and thus are not covered by
the CLRA. (Campion, at p. 1146.)


       4   All further unspecified code sections refer to the Insurance Code.

                                              7
       In concluding that home protection plans are like insurance contracts, the Campion
court cited section 22, which defines “[i]nsurance” as “a contract whereby one undertakes
to indemnify another against loss, damage, or liability arising from a contingent or
unknown event.” (§ 22; see also § 23 [defining an insurer as “[t]he person who
undertakes to indemnify another by insurance”].) The Campion court concluded that
“home warranty plans provide for a transfer of risk . . . and the relationship between [the
company offering the home protection plan] and its plan holders and their respective
obligations are consistent with the concept of ‘insurance,’ as it is defined in the Insurance
Code.” (Campion, supra, 861 F.Supp.2d at p. 1146, fn. omitted.)
       Our Supreme Court has interpreted section 22 as requiring two elements: “(1) a
risk of loss to which one party is subject and a shifting of that risk to another party; and
(2) distribution of risk among similarly situated persons.” (Metropolitan Life Ins. Co. v.
State Bd. of Equalization (1982) 32 Cal.3d 649, 654.) Although the Campion court ended
its analysis with the conclusion that home protection plans resemble insurance contracts
because they shift the risk to another party, the California Supreme Court has clarified
that a contract can satisfy the two elements in section 22 and still not be an insurance
contract. “ ‘[T]he mere fact that a contract contains these two elements [shifting and
distribution of risk of loss] does not necessarily mean that the agreement constitutes an
insurance contract for purposes of statutory regulation.’ [Citation.] Rather than simply
look to whether the contract involves an assumption of a risk, we will instead ask
‘ “whether that [assumption of risk] or something else to which it is related in the
particular plan is its principal object and purpose.” ’ [Citations.]” (Title Ins. Co. v. State
Bd. of Equalization (1992) 4 Cal.4th 715, 726.)
       First American claims that home protection plans are not insurance because they
are not indemnity contracts. It notes that section 22 provides that insurance is “a contract
whereby one undertakes to indemnify another against loss,” and then cites Civil Code
section 2772 as defining “[i]ndemnity [as] a contract by which one engages to save
another from a legal consequence of the conduct of one of the parties, or of some other
person.” (Italics added.) It concludes that a home protection plan is not an insurance

                                              8
contract because, as made clear in section 12740, subdivision (a), home protection
policies do not protect a person from the legal consequences of a party’s conduct.
       First American’s reliance on Civil Code section 2772 is misplaced. Civil Code
section 2772 applies to contracts of indemnity, and courts have consistently considered
indemnity agreements (Civ. Code, § 2772 et seq.) to be outside the insurance context.
(See, e.g., California Physicians’ Service v. Garrison (1946) 28 Cal.2d 790, 803-804;
Crawford v. Weather Shield Mfg. Inc. (2008) 44 Cal.4th 541, 567, fn. 15.) As already
noted, the California Supreme Court does not use Civil Code section 2772 to interpret
section 22 in the Insurance Code. (See, e.g., Metropolitan Life Ins. Co. v. State Bd. of
Equalization, supra, 32 Cal.3d at p. 654.)
       The statutes are not clear what is intended when they use the terms insured,
insurer, or insurance. Section 12743, subdivision (j) defines a home protection company
as an insurer, the contract holder as the insured, and states that a “ ‘[p]olicy’ or
‘insurance’ shall mean home protection contract.” Regulation 2695.2, subdivision (i),
defines “ ‘[i]nsurer’ [to] mean[] a person licensed to issue or that issues an insurance
policy . . . . The term ‘insurer’ for purposes of these regulations includes non-admitted
insurers, . . . home protection companies as defined under California Insurance Code
Section 12740, and any other entity subject to California Insurance Code Section 790.03[,
subdivision] (h).” (Italics added.) Under subdivision (j), it provides that “ ‘[i]nsurance
policy’ means the written instrument in which any certificate of group insurance, contract
of insurance, or non-profit hospital service plan is set forth. . . . For the purposes of these
regulations the term insurance policy or policy includes a home protection contract . . . .”
(Italics added.) Thus this Regulation indicates that a provision may use the term
“insurance” to include non-insurance contracts.
       The Insurance Code does not specifically characterize home protection plans as
insurance; nor does it definitively exclude them from being insurance. A home
protection contract is not identified as a class of insurance under section 100, although
this statute includes the catchall classification of “[m]iscellaneous.” However, home
protection is identified as a class of insurance in Part 7 of Division 2 of the Insurance

                                               9
Code. (§ 12740 through 12745; see, e.g., § 12742 [“Home protection contracts and home
protection companies, and all matters incident to or concerned with such contracts and
companies, shall be exclusively subject to and regulated by the provisions of this part
and, except as provided in Section 12743, shall not be governed by any other provision of
this code”].) Section 12743 subjects home protection plans to specific provisions of the
Insurance Code, including section 790 et seq., relating to unfair practices. (§ 12743,
subd. (d)(7).)
       Further complicating the issue, the Insurance Code does not exempt from its
provisions in Part 7 of Division 2 home protection plans, while it does exempt from these
provisions service contracts by builders and “[a]ny service contract, guarantee, or
warranty intending to guarantee or warrant the repairs or service of a home appliance,
system or component, provided such service contract, guarantee, or warranty is issued by
a person who has sold, serviced, repaired or provided replacement of that appliance,
system or component at the time of, or prior to issuance of the contract, guarantee, or
warranty; and, provided, further, that the person issuing the service contract, guarantee,
or warranty does not engage in the business of a home protection company.” (§ 12741,
subds. (a) & (b).) This indicates an intent to treat home protection plans differently than
other warranty contracts.
       No California statute or judicial decision has created a bright line test to determine
whether a home protection policy or plan is insurance and we cannot discern any clear
legislative intent from the abovementioned statutes.5 We, however, decline to address


       5  First American requested that we take judicial notice under Evidence Code
section 452, subdivisions (b) and (c), and section 453, of a consumer information guide
entitled, Residential Insurance: Homeowners and Renters (rev. May 2011), published by
the California Department of Insurance. (<http://www.insurance.ca.gov/01-consumers/
105-type/95-guides/03-res/res-ins-guide.cfm#homewarranties> [as of Aug. 31, 2015].)
Under the heading of “Home Warranties,” this guideline states in relevant part:
“Traditionally, home warranties have protected homeowners from repair costs that aren’t
covered by homeowners insurance. . . . [¶] . . . [¶] It is important to note that a home
warranty is not an insurance policy. However, for the protection of consumers, these
companies are regulated by the [California Department of Insurance] and must be
                                             10
this issue because, for the reasons discussed below, Benham’s claims fail no matter
whether First American’s home warranty plan is insurance or simply a contract regulated
by the Department of Insurance.
                                  III. Breach of Contract
       The undisputed evidence established that First American asked Benham whether
she wished to have her furnace replaced by SA Heating or receive payment in lieu of
replacement. Benham refused to have SA Heating replace the furnace and First
American paid her $618.02. First American submitted undisputed evidence that it had
placed a purchase work order with Goodman Distribution for a replacement furnace for
the sum of $472.00 plus $46.02 in tax and that SA Heating had agreed to replace the
furnace for $155. Thus, the payment of $618.92 to Benham satisfied the provision in
First American’s home warranty plan that stated First American could make a “payment
of cash in lieu of repair or replacement” and that the payment would be based on its
“negotiated rates with its suppliers, which [might] be less than retail.”
       Benham does not allege that First American breached any provision in First
American’s warranty plan, but insists that this plan did not comply with Regulation
2695.9. She argues that under this Regulation, First American had to inform her that she

licensed by our Department. These warranties, sometimes described as service contracts,
typically last one year, and cover the repair or replacement of major home systems and
appliances that break down due to normal wear and tear. Home warranties don’t overlap
or replace the homeowners insurance policy. For example, if your hot water heater burst
and destroyed a wall in your home, the warranty would repair the water heater and your
insurance company would pay to fix the wall and any floor damage. . . .”
       This guide is, at best, an informal interpretation of home protection plans.
Although this guide has limited, if any, relevance, we take judicial notice of it under
Evidence Code section 452, subdivision (h) (judicial notice may be taken of “[f]acts and
propositions that are not reasonably subject to dispute and are capable of immediate and
accurate determination by resort to sources of reasonably indisputable accuracy”).
       Benham cites the Historical Statutory Notes to Insurance Code section 12740,
which cited an Attorney General opinion issued on May 3, 1978, stating that companies
offering home protection contracts were transacting insurance, and the lack of any
regulations had created uncertainty for the beneficiaries of the contracts and for those
engaged in or related to this industry.

                                             11
had a right to select her own contractor, could not require her to have the furnace repaired
by a specific individual or entity, and could not limit her benefits to less than local retail
rates. She maintains that the provisions in First American’s warranty plan that provided
for payment based on First American’s negotiated rates, which could be less than retail,
were illegal, unenforceable, and severable.
       As the trial court found, Regulations 2695.1 through 2695.7 “articulates generally
applicable regulations and applies to home protection companies.” Regulations 2695.8
through 2695.11 provide additional regulations governing particular classes of insurance,
and the plain language of Regulation 2695.9 clarifies that it applies only “to first party
residential and commercial property insurance policies.”
       Section 10087, subdivision (a) provides: “As used in this chapter, ‘policy of
residential property insurance’ shall mean a policy insuring individually owned
residential structures . . . . A policy that does not include any of the perils insured against
in a standard fire policy shall not be included in the definition of ‘policy of residential
property insurance.” Section 2071 delineates the terms of a standard fire policy while
section 12762 specifies the information that must be included in a home protection plan.
       Benham argues that section 10087’s definition is limited to “this chapter,” which
is earthquake insurance. She maintains it has no relevance to the definition of residential
property insurance as it is used in the Regulations.
       The basic principles of statutory construction require that we “ascertain the intent
of the Legislature so as to effectuate the purpose of the law.” (Dyna-Med, Inc. v. Fair
Employment & Housing Com. (1987) 43 Cal.3d 1379, 1386, superseded by statute on
another issue.) In doing so, we turn “first to the words of the statute themselves, giving
to the language its usual, ordinary import and according significance, if possible, to every
word, phrase and sentence,” avoiding a construction that would render some words
surplusage. (Id. at pp. 1386-1387.) “The words of the statute must be construed in
context, keeping in mind the statutory purpose, and statutes or statutory sections relating
to the same subject must be harmonized, both internally and with each other, to the extent


                                              12
possible. [Citations.] Where uncertainty exists consideration should be given to the
consequences that will flow from a particular interpretation. [Citation.]” (Id. at p. 1387.)
       Section 10087 requires insurers to offer coverage for loss or damage from an
earthquake when issuing or delivering residential property insurance, and it provides a
definition of what a residential property insurance policy is. Statutes in other chapters in
the Insurance Code have used this definition of residential property. (See §§ 396, subd.
(f); 790.03l; 1763.1; 1625.5; 10104, subd. (a).) Thus, the definition for residential
property provided in section 10087 has been used in other provisions, unrelated to
earthquake insurance. Additionally, the nomenclature “home protection companies” or
“home protection plans,” is used elsewhere in the Regulations. (See, e.g., Regs. 2570.04;
2570.06; 2570.02; 2570.03; 2570.01; 2570.08; 2570.09; 2695.1, subd. (d), 2695.2, subds.
(i) & (j); 2278.50; 2696.22, subd. (f); 2698.30, subd. (j)(7).) No regulation or statute
defines residential property insurance to include home protection plans. Applying the
principles of statutory construction and harmonizing the provisions in the Insurance Code
with the relevant regulations, it is clear that Regulation 2695.9 has no application to a
home protection plan.
       Furthermore, even if Regulation 2695.9 applies or First American failed to comply
with some other regulation, Benham cannot prevail on her claim for breach of contract.
It is axiomatic that a plaintiff alleging a cause of action for breach of contract must allege
that he or she suffered damages caused by the defendant’s wrongful conduct. (See, e.g.,
Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821 [elements of breach of
contract are “(1) the existence of the contract, (2) plaintiff’s performance or excuse for
nonperformance, (3) defendant’s breach, and (4) the resulting damages to the plaintiff”].)
Here, First American paid Benham $6,000, and it is undisputed that this sum equaled the
amount Benham spent to replace her furnace plus interest.
       Benham does not contend that First American owes her additional money under
the contract but claims she suffered emotional distress due to Benham’s delay in paying
her the money owed. When asked at her deposition how she was damaged, Benham
responded: “I have been damaged in terms of lost time. I have been angry, frustrated,

                                              13
chagrinned, disappointed, and spent a considerable amount of time . . . arguing over
something that could have been settled for $3,000.” She also was upset that First
American characterized her as being engaged in a “shakedown.” She stated that she had
not been reimbursed for the time and energy she was forced to devote to try to get
reimbursed for the cost of the heater. She admitted that she had not sought any medical,
psychological or psychiatric counseling, or treatment from any other healthcare
professional in connection with First American’s handling of her claim. She also had not
spent any money for medications or prescriptions as a result of First American’s
treatment of her claim.
       Benham cites various cases to support her claim that emotional damages may be
sought in a breach of contract claim where “ ‘the terms of a contract relate to matters
which concern directly the comfort, happiness, or personal welfare of one of the parties,
or the subject matter of which is such as directly to affect or move the affection, self-
esteem, or tender feelings of that party.’ ” (Wynn v. Monterey Club (1980) 111
Cal.App.3d 789, 800; see also State Farm Mutual Auto. Ins. Co. v. Allstate Ins. Co.
(1970) 9 Cal.App.3d 508, 527-528 [upheld emotional distress damages from a breach of
the duty to defend]; Frazier v. Metropolitan Life Ins. Co. (1985) 169 Cal.App.3d 90, 102-
103 [plaintiff awarded damages for emotional distress against a life insurance company
that refused to pay to plaintiff an accidental death benefit for the death of her husband].)
This is a correct statement of the law, but she does not explain how a home protection
plan falls into this category.
       Damages for mental suffering and emotional distress are generally not recoverable
in an action for breach of contract except in those cases where emotional concerns are the
essence of the contract. (Erlich v. Menezes (1999) 21 Cal.4th 543, 559 [“Cases
permitting recovery for emotional distress typically involve mental anguish stemming
from more personal undertakings the traumatic results of which were unavoidable”].)
The Ehrlich court reversed an award of damages for emotional distress for negligent
construction of the plaintiffs’ house. (Ibid.) The evidence showed defects in the roof,
exterior stucco, windows and waterproofing, and serious errors in the construction of the

                                             14
home’s structural components, and the homeowners testified that they suffered emotional
distress as a result of the defective condition of the house and the invasive and
unsuccessful repair attempts. (Id. at pp. 548-549.)
        Home protection plans that involve the repair or replacement of one system or
appliance in the home have much less impact on the comfort, happiness, or personal
welfare on the beneficiary of the plan than contracts involving construction of an entire
home; home protection plans do not fall within the category of contracts that directly
affect the happiness, comfort, or personal welfare of the insured. Moreover, in the
absence of physical injury, courts have never allowed recovery of damages for emotional
distress arising solely from property damage or economic injury to the plaintiff. (Erlich
v. Menezes, supra, 21 Cal.4th at pp. 557-558; see also Waters v. United Services Auto.
Assn. (1996) 41 Cal.App.4th 1063, 1070; Maxwell v. Fire Insurance Exchange (1998) 60
Cal.App.4th 1446, 1450-1451.)
        It is not disputed that Benham received the sum she claimed was due under the
First American home warranty plan. She never alleged or provided any evidence that she
suffered any physical injury as a result of the delay in receiving payment. Benham failed
to submit evidence of damages and the trial court properly granted summary judgment
against her breach of contract claim.
              IV. Breach of the Covenant of Good Faith and Fair Dealing
        California law recognizes in every contract an implied covenant of good faith and
fair dealing. (Wilson, supra, 42 Cal.4th at p. 720.) In the insurance context, the implied
covenant requires the insurer to refrain from injuring its insured’s right to receive the
benefits of the insurance agreement. (Egan v. Mutual of Omaha Ins. Co. (1979) 24
Cal.3d 809, 818.) Thus, even if we treat First American’s home warranty plan as an
insurance contract, as Benham urges, she still cannot prevail. As already noted, she
rejected First American’s offer to have SA Heating replace her furnace and she received
the cash due her in lieu of replacement as set forth in First American’s home warranty
plan.


                                             15
       Moreover, even if we were to accept Benham’s argument that she was entitled to
the sum it cost her to have Atlas replace the furnace, she still could not prevail on this tort
claim. First American did pay Benham this additional amount, and Benham must
establish that its delay in paying her was unreasonable under all the circumstances.
“[B]efore an insurer can be found to have acted tortiously (i.e., in bad faith), for its delay
or denial in the payment of policy benefits, it must be shown that the insurer acted
unreasonably or without proper cause. [Citations.] However, where there is a genuine
issue as to the insurer’s liability under the policy for the claim asserted by the insured,
there can be no bad faith liability imposed on the insurer for advancing its side of that
dispute. [Citations.]” (Chateau Chamberay Homeowners Assn. v. Associated Internat.
Ins. Co. (2001) 90 Cal.App.4th 335, 347, disapproved on other grounds in Wilson, supra,
42 Cal.4th at p. 724, fn. 7.) Whether a delay in paying an insurance claim is an
“unreasonable” delay is a question of fact, but it becomes a question of law where the
only one inference can be drawn from the evidence. (Paulfrey v. Blue Chip Stamps
(1983) 150 Cal.App.3d 187, 194-196.)
       Here, as a matter of law, we conclude that it was reasonable for First American to
rely on the clear language in its home warranty plan.6 Benham has not alleged or
submitted evidence to indicate that First American’s warranty plan did not comply with
section 12762, which specifies the information that must be included in a home
protection plan. There is no evidence that First American did not fulfill its duty to act
fairly and in good faith in discharging its contractual responsibility to Benham; it did not
withhold any payments due under its plan. In the absence of any judicial decision or

       6 Benham argues that she presented evidence that First American was involved in
a scheme with a contractor to charge high “non-covered costs” in exchange for an
extremely low installation charge of $155. Steve Wheeler, a licensed heating contractor,
provided a declaration estimating the cost to replace the furnace at Benham’s home as
being significantly higher than $155. This declaration does not show that First American
was involved in a scheme to charge high “non-covered costs”; nor does it show that it
was unreasonable for First American to perform pursuant to the terms of the contract.
Furthermore, Benham did not allege in her first amended complaint that she was injured
because the “non-covered costs” were excessive.

                                              16
statute making it clear that provisions in First American’s warranty plan were invalid, any
delay in paying Benham more than it was obligated to pay under its plan was reasonable
as a matter of law.
                                     V. UCL Violation
       In Benham’s third cause of action, she requested injunctive relief and alleged that
First American violated the UCL (Bus. & Prof. Code, § 17200) by violating various
Regulations (e.g., Reg. 2695.9).
       The UCL prohibits, and provides civil remedies for, unfair competition, which it
defines as “any unlawful, unfair or fraudulent business act or practice.” (Bus. & Prof.
Code, § 17200.) “In 2004, the electorate substantially revised the UCL’s standing
requirement; where once private suits could be brought by ‘any person acting for the
interests of itself, its members or the general public’ [citation], now private standing is
limited to any ‘person who has suffered injury in fact and has lost money or property’ as
a result of unfair competition [citations]. The intent of this change was to confine
standing to those actually injured by a defendant’s business practices and to curtail the
prior practice of filing suits on behalf of ‘ “clients who have not used the defendant’s
product or service, viewed the defendant’s advertising, or had any other business dealing
with the defendant . . . .” ’ [Citations].” (Clayworth v. Pfizer, Inc. (2010) 49 Cal.4th 758,
788.) A plaintiff must “(1) establish a loss or deprivation of money or property sufficient
to qualify as injury in fact, i.e., economic injury, and (2) show that the economic injury
was the result of, i.e., caused by, the unfair business practice . . . .” (Kwikset Corp. v.
Superior Court (2011) 51 Cal.4th 310, 322.)
       Benham argues that her acceptance of $6,000, which First American gave her after
she filed this lawsuit, did not prevent her from filing a UCL claim. She contends that she
“is not deprived of standing because [First American] mitigated Benham’s replaced cost
damages” and she cites Clayworth v. Pfizer, Inc., supra, 49 Cal.4th 758.
       In Clayworth v. Pfizer, Inc., supra, 49 Cal.4th 758, the court concluded that retail
pharmacies had standing to assert UCL claims against pharmaceutical companies that had
allegedly engaged in price fixing even though the retail pharmacies were able to pass on

                                              17
any overcharges to their customers. (Id. at p. 788.) The court rejected the
pharmaceutical companies’ argument the pharmacies ultimately “suffered no
compensable loss because they were able to mitigate fully any injury by passing on the
overcharges,” explaining “[t]he doctrine of mitigation, where it applies, is a limitation on
liability for damages, not a basis for extinguishing standing. [Citation.] This is so
because mitigation, while it might diminish a party’s recovery, does not diminish the
party’s interest in proving it is entitled to recovery.” (Id. at p. 789.)
       Benham’s argument makes little sense. First American had no duty to mitigate;
the duty to mitigate or the rule of mitigation applies to the injured party, not to the party
committing the legal wrong. The present case is not a situation where Benham had no or
reduced damages because she was able to pass off her costs to another party or was
otherwise able to mitigate them.
       First American did delay paying Benham the $6,000, which was the retail cost to
replace the furnace. However, Benham submitted no evidence that this delay caused her
any economic injury.
       The only other damages Benham claims she suffered were emotional distress
damages. Emotional distress damages do not satisfy the requirement that she suffered a
loss of money or property.
       The trial court correctly found that Benham was not injured and that she had no
standing to claim a violation of the UCL.
                                       DISPOSITION
       The judgment is affirmed. Benham is to pay the costs of appeal




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                                 _________________________
                                 Kline, P.J.


We concur:


_________________________
Richman, J.


_________________________
Miller, J.




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