Low, Ball & Lynch's

WEEKLY LAW RESUME

Issue February 5, 2004 By: Raymond Coates

Property Insurance - Examination Under Oath - Failure to Attend

California Fair Plan Association v. Superior Court

Court of Appeal, Second District

(January 23, 2004)

An Examination Under Oath is commonly used to investigate claims made under a property insurance policy. This case examines whether the failure of the insured to submit to such examination bars the claim.

Barbara Darwish attempted to insure property of which she was a trustee. She was advised that California Fair Plan Association (Fair Plan) would not insure real property owned by a trust. She then assigned a one-tenth of one percent interest in the property to Maurice Rivera, who applied for coverage without telling Fair Plan he was an assignee and owned only a small portion of the property. Fair Plan issued a policy to Rivera.

The property suffered a vandalism loss, and Rivera filed a claim. Rivera was asked by Fair Plan to attend an Examination Under Oath and to produce documents and records to determine the claim. He failed to comply. As a result, Fair Plan denied the claim.

Darwish sued Fair Plan seeking to recover the amount of the loss. Fair Plan moved for summary judgment. The trial court denied the motion. A petition for writ of mandate was filed in the Court of Appeal.

The Court granted the writ and ordered the trial court to grant the summary judgment. The Court noted that California law has established that an insurance policy may provide that an insured must submit to Examination Under Oath as a condition precedent to the collection of benefits. An insurer has a right to refuse to pay benefits where an insured has failed to comply with this requirement. The Legislature, through Insurance Code section 2071, has set forth the terms of a standard fire insurance policy in California. The Code section sets forth that the insured may be required to submit to Examinations Under Oath. While the insured attempted to raise the specter of bad faith, the Court noted there was no evidence in the record that the refusal to submit to the Examination Under Oath was due to any conduct by Fair Plan or any of its agents.

Darwish contended that she had reasonable cause for not having Rivera submit to the Examination Under Oath. This allegedly was based upon reliance on her former attorney. The Court noted, however, that when Rivera filed the property claim, the insurance adjusters requested Rivera to provide documentation to show he had an insurable interest in the property. Rivera did not respond. Fair Plan then requested that Rivera submit to an Examination Under Oath. Rivera did not respond to this request. Finally, Fair Plan sent a letter to Rivera warning that the failure to submit to the Examination could result in the denial of the claim. Having still received no response from Rivera, Fair Plan mailed to Rivera a fourth letter notifying him that the claim was denied. It was thus undisputed that Rivera refused to submit to the Examination Under Oath.

Since the Examination Under Oath was a condition precedent to suit in the policy, the trial court erred in denying the summary judgment to Fair Plan. The peremptory writ ordered the trial court to grant the motion.

COMMENT

While this case upholds the right of an insurer to insist upon an Examination Under Oath, the Court was clear in recognizing that there may be occasions for an exception. This case presented no such exception since the insured simply refused to submit to the Examination. ____ To order a printed version of this analysis, or change your subscription information, reply to this transmission. Information regarding this and other WEEKLY LAW RESUME TM articles is available from Raymond Coates at

(650) 366-4000, RCoate[email protected] or at WWW.LOWBALL.COM. The WEEKLY LAW RESUME TM is published fifty-two times a year, and is a complimentary publication of LOW, BALL & LYNCH, Attorneys at Law, a Professional Corporation, with offices in San Francisco, Redwood City and Monterey, California.