homestead insurance company
INTRODUCTION Appellant Homestead Insurance Company moved to compel an appraisal of two properties for the purpose of determining replacement cost value and to stay trial proceedings until completion of the process insurance for shipping containers. The court granted the motion “only as to the amount of loss as stated in the policy and not the amount of loss covered by the insurance.” Appellant appeals from the denial of its motion as to replacement cost. We modify the order to include an appraisal of replacement cost and affirm as modified. STATEMENT OF FACTS Respondent Unetco Industries (Unetco) owned two adjacent mansions in Beverly Hills.
The mansions sustained significant damage in the January 17, 1994 earthquake, during the Homestead policy coverage period. The policy provided $6 million in coverage. For earthquake damage, there was a deductible of 10 percent “of the total values, as defined in the valuation clause(s).” The valuation clause provides Homestead “shall not be liable for more than the actual cash value of the property at the time any loss or damage occurs․” The policy contained an appraisal clause, providing in pertinent part: “If the insured and the company fail to agree as to the amount of loss, each shall, on the written demand of either, made within sixty (60) days after receipt of proof of loss by the company, select a competent and disinterested appraiser, and the appraisal shall be made at a reasonable time and place.
The appraisers shall then appraise the loss, stating separately the actual cash value at the time of loss and the amount of loss, and failing to agree shall submit their differences to the umpire. An award in writing of any two shall determine the amount of loss․” An endorsement to the insurance policy provides that the term “replacement cost (without deduction for depreciation)” shall be substituted for the term “actual cash value,” wherever the latter term is used in the policy. Homestead's “liability for loss on a replacement cost basis” was limited to the smallest of the following: “A. The amount of the policy applicable to the damaged or destroyed property; [¶] B.The amount actually and necessarily expended in repairing or replacing said property or any part thereof.” Unetco tendered its loss to Homestead on January 20, 1994 and was instructed by Homestead to solicit bids to repair the earthquake damage. Unetco obtained three bids estimating the cost of repair: $948,000, $1,175,100 and $1,890,334. Unetco also obtained three appraisals of the replacement cost of the properties. These were $4,775,000, $4,861,860 and $4,550,000. Homestead rejected Unetco's repair cost bids and obtained its own repair cost estimates. On April 11, 1994, Kenco Construction Inc.
79. On June 9, it revised its estimate to $465,434.79. On November 29, it revised its estimate again, to $1,044,591.07. In December 1994, Unetco submitted a sworn statement in proof of loss.
03, subdivision (h). Homestead's attorney wrote back in January 1995, noting it appeared the parties “have not been able to agree as to the value of the insured policy for purposes of assessing a deductible under the policy.” He stated that Homestead was rejecting Unetco's sworn statement in proof of loss, disagreeing with the figures contained therein. He enclosed a supplemental sworn statement in proof of loss to be submitted, a check in the amount of $57,442.72, representing the undisputed amount owed by Homestead to Unetco, and a partial release and subrogation receipt to be completed. The attorney also invoked the appraisal provision of the insurance policy, nominating as Homestead's appraiser Robert M. Ellis (Ellis) of Construction Technology and Data Corporation.
He indicated Unetco's appraiser, Ron Green, had contacted Ellis in an effort to begin the appraisal process. However, the appraisers needed further instruction as to the scope of the appraisal. Unetco's attorney believed “[t]he only task for the appraisers in the appraisal process is to determine the replacement cost value of the subject properties.” The attorneys met with the appraisers in March 1996 and agreed to reduce to writing the issue to be determined by the appraisers. They had agreed the issue was to be the replacement cost of the properties. Unetco's attorney wrote to Homestead's attorney in April 1996 regarding Homestead's proposed instructions for the appraisal procedure. He stated that on further examination of the policy, he had concluded that Homestead was not entitled to appraisal of the replacement cost of the properties, but only of the amount of loss.
Unetco's attorney later wrote that this was unnecessary, in that Unetco was interested in completing an appraisal. However, it would reserve its right to challenge Homestead's right to appraisal, in part based upon its position that the policy did not provide a right to appraisal of replacement cost. The attorney also noted Unetco had submitted to Homestead documentation of the amounts expended to repair the properties. Unetco was still waiting to hear whether Homestead would contest these figures.
DISCUSSION The issue presented to this court is whether the trial court correctly interpreted the language of the parties' insurance contract. In general, an insurance policy is interpreted in the same manner as any other contract. (Bank of the West v. Superior Court (1992) 2 Cal.
Rptr.2d 538, 833 P.2d 545; see, e.g., Waller v.
Exchange, Inc. (1995) 11 Cal.4th 1, 18, 44 Cal.Rptr.
Rptr.2d 370, 900 P.2d 619.) This intention should be inferred, if possible, from the language of the policy. (Civ.
18, 44 Cal.Rptr.2d 370, 900 P.2d 619.(Civ.Code, § 1644; Waller, supra, at p. 18, 44 Cal.Rptr.
2d 619.) The policy should be interpreted as a whole, with all parts given effect. (Civ.Code, § 1641; Waller, supra, at p. 18, 44 Cal.
4th at p. 18, 44 Cal.Rptr.2d 370, 900 P.
v. Lawyers' Mutual Ins. Co. (1993) 5 Cal.4th 854, 867, 21 Cal.Rptr.2d 691, 855 P.
) Where the language is clear and unambiguous, the court will not give it a strained interpretation in order to create an ambiguity. (Ibid.; Pacific Employers Ins. Co.
Superior Court (1990) 221 Cal.App.3d 1348, 1354, 270 Cal.Rptr. 779.) However, where the policy language is ambiguous, the policy will be interpreted according to the reasonable expectations of the insured.Co. v. Superior Court (1990) 51 Cal.3d 807, 822, 274 Cal.Rptr.
2d 1253.) Arbitration-and similarly appraisal (see Code Civ. Proc., § 1280, subd. (a); Safeco Ins.
v. Sharma (1984) 160 Cal.App.3d 1060, 1063, 207 Cal.
Rptr. 581, 673 P.2d 251; Engineers & Architects Assn. v.
” (Ericksen, Arbuthnot, McCarthy, Kearney & Walsh, Inc., supra, at p. 323, 197 Cal.Rptr. 581, 673 P.
Arista Films, Inc. v. Gilford Securities, Inc. (1996) 43 Cal.
(1995) 37 Cal.App.4th 775, 788, 43 Cal.Rptr.
) Nonetheless, any “doubts concerning the scope of arbitrable issues [or matters submitted for appraisal] must be resolved in favor of arbitration [or appraisal].” (Ericksen, Arbuthnot, McCarthy, Kearney & Walsh, Inc., supra, at p. 323, 197 Cal.
Rptr.2d 370, 900 P.2d 619.) The determination as to whether a particular matter falls within an appraisal clause is also a question of law, subject to independent review.
4th at p. 501, 51 Cal.Rptr.2d 35; see Engineers & Architects Assn.
Community Development Dept., supra, 30 Cal.App.4th at pp.
Rptr.2d 800.) One of the first questions to be determined is whether the policy at issue is a standard form fire insurance policy as defined in Insurance Code section 2071. If so, interpretation of the policy may be circumscribed by the requirements of that section. Insurance Code section 102, subdivision (a), provides that “[f]ire insurance includes ․ [i]nsurance against loss by fire, lightning, windstorm, tornado, or earthquake.” Clearly, pursuant to this section, earthquake coverage may be included in a fire insurance policy. There is no similar defining provision for “earthquake insurance”; such insurance is not listed in Insurance Code section 100 as one of the classes of insurance.
” (Ibid., subd. (20).) “Miscellaneous insurance includes insurance against loss from damage done, directly or indirectly by lightning, windstorm, tornado, earthquake ․ and any insurance not included in any of the foregoing classes, and which is a proper subject of insurance.” (Id., § 120, italics added.
) In other words, a fire insurance policy must insure against loss by fire and lightning; if it does not, it is not a fire insurance policy. The other perils listed in Insurance Code section 102 may be covered by the policy, but section 2071 provides that such insurance “shall be by endorsement in writing hereon or added hereto.” If an insurance policy insures against one of the other perils which may be covered by a fire insurance policy pursuant to Insurance Code section 102, but not fire and lightning, it is a miscellaneous insurance policy. Insurance Code section 2071 would not apply to it. The policy at issue here specifically excluded fire insurance, stating it was not a standard form fire insurance policy. Therefore, it is a miscellaneous insurance policy, not a fire insurance policy; Insurance Code section 2071 does not apply.
NCR Corp., supra, 37 Cal.App.4th at p.
“Appraisal” is defined as “an act of estimating or evaluating,” “a valuation of property by the estimate of an authorized person.” To “appraise” is “to set a value on” or “estimate the amount of,” “to judge and analyze the worth.” An “appraisal clause” is defined as “the provision in fire and certain other insurance policies for a procedure to be followed in determining the amount of loss when the insurer and insured cannot agree.” (Webster's Third New Internat.
3d 14, 24, 127 Cal.Rptr. 154, 544 P.2d 1354; Freeport-McMoran Resource Partners v.
App.4th 634, 642, 16 Cal.Rptr.2d 428.
The appraisers found the replacement cost of the fire loss was $90,721 but the actual cash value of the property destroyed was $76,279.44.” In GTE Sprint Communications Corp. v. County of Alameda (1994) 26 Cal.4th 992, 1000, 32 Cal.Rptr.2d 882, “[t]he appraisers ․ calculated the value of the tangible property in California at its replacement cost.” Since a determination of replacement cost may be submitted for appraisal, there is no impediment to its being done here. Moreover, in view of the endorsement which limits appellant's liability for the loss to the smallest of three figures, including replacement cost and repair cost, it is logical that an appraisal of the loss include appraisal of both the replacement cost and the amount of loss-or cost of repair.
Interpreting the policy as a whole, it is clear the parties intended that both figures be subject to appraisal when a dispute arose as to the amount of loss. (Civ.Code, §§ 1636, 1641; Waller v. Truck Ins., supra, 11 Cal.4th at p. 18, 44 Cal.Rptr.2d 370, 900 P.2d 619.
Code, § 1636; Waller, supra, at p. 18, 44 Cal.Rptr.2d 370, 900 P.
4. Aside from this bare claim, it makes no argument on the matter. This waives the issue. (People v. Turner (1994) 8 Cal.