Opinion
Review Granted Oct. 30, 1990.
Previously published at 222 Cal.App.3d 1492
Anthony Marsh and Morgan, Ruby, Schoefield, Franich & Fredkin, San Jose, for plaintiff and appellant.
Susan M. Popik, Linda R. Koenig, and Rogers, Joseph, O'Donnell & Quinn, San Francisco, for defendant and respondent.
PREMO, Associate Justice.
Plaintiff Joyce Jekot ("insured") appeals from a summary judgment entered in favor of her homeowner's policy insurer, State Farm Fire and Casualty Company ("insurer"). The trial court found this action against insurer barred because insured did not file it within one year after her property damage occurred, as the policy required. On appeal, insured contends that the policy's limitations period commenced only when she discovered or should have discovered the cause of the property damage and not merely the damage itself. She also argues this policy provision is ambiguous and insurer has waived it. For the reasons stated below, we reject these arguments and affirm the judgment.
The Supreme Court has granted review in two companion cases considering whether similar insurance policy provisions contemplate a discovery rule. (Prudential-LMI Commercial Insurance v. Superior Court (1989) 211 Cal.App.3d 1131, 260 Cal.Rptr. 85, review granted September 21, 1989 (S011415); Fire Ins. Exchange v. Superior Court (1989) 212 Cal.App.3d 39, 260 Cal.Rptr. 299, review granted September 21, 1989 (S011489).)
In view of our conclusions regarding the contractual limitations period, we do not consider additional evidence and argument about whether summary judgment was proper because the policy excluded coverage for the loss at issue here.
"Since a summary judgment motion raises only questions of law regarding the construction and effect of the supporting and opposing papers, we independently review them on appeal, applying the same three-step analysis required of the trial court." (AARTS Productions, Inc. v. Crocker National Bank (1986) 179 Cal.App.3d 1061, 1064, 225 Cal.Rptr. 203.)
1. Pleadings
Insured predicated several causes of action on the following facts alleged in her first amended complaint:
She obtained a homeowner's all-risk policy from insurer in January 1981. In September 1982, she observed that the floors of her house were shifting and the ceiling Insurer attempted to reduce insured's coverage by a policy renewal in January 1984, without adequate notice.
Insured learned for the first time in July 1985 that the house had serious problems resulting from negligent construction on fill. She reported these problems to insurer on July 17, 1985. Insurer inadequately investigated her claim before denying coverage because the problems resulted from either earth movement or water damage, both excluded causes.
Insurer is estopped to invoke any contractual limitations period for several reasons: the contract is vague; consistent with its practice, insurer waived this provision by not denying coverage on this basis; insured's damages were continuing; insurer failed to advise her timely that her claim was covered.
Insured requested declaratory relief and alleged breach of contract, breach of the implied covenant of good faith and fair dealing, violation of Insurance Code section 790.03, breach of fiduciary duty, and intentional and negligent misrepresentation.
Insurer's original answer filed May 29, 1986, and its subsequent answer asserted, among other defenses, insured's complaint is barred by the policy's one-year limitations period.
2. Undisputed Facts
A. The Insurance Policies
Insured first obtained insurance from insurer effective January 2, 1981, under policy form FP-7103.1. The insurance generally provided coverage for "all risks of physical loss to" "the dwelling on the residence premises" with various exceptions irrelevant here. (Emphasis omitted.) The eighth condition of this policy is captioned "Suit Against Us" and states: "No action shall be brought unless there has been compliance with the policy provisions and the action is started within one year after the occurrence causing loss or damage." The policy instructed insured: "In case of a loss to which this insurance may apply, you shall see that the following duties are performed: [p ] a. give immediate notice to us or our agent.... [p ] [ ] e. submit to us, within 60 days after the occurrence, your signed, sworn proof of loss which sets forth, to the best of your knowledge and belief: [p ] (1) the time and cause of loss...."
From January 2, 1984 to January 2, 1985, insured was covered under policy form FP-7173, which contained identical "Suit Against Us" and proof of loss provisions. From January 2, 1985 to January 2, 1987, insured was covered under policy form FP-7183, which contained identical proof of loss provisions. The "Suit Against Us" provision in FP-7183 stated: "No action shall be brought unless there has been compliance with the policy provisions. The action must be started within one year after the occurrence causing loss or damage."
B. Discovery of Loss and Commencement of Action
When insured first inspected the house before buying it in late 1980, she noticed a crack in the ceiling of the master bedroom and two unlevel doorways. She mentioned these items to her brother-in-law, an engineer who was "in real estate." Walt Pollock, a contractor, inspected the house for insured before escrow closed, as her brother-in-law and real estate agent had recommended. After buying the house, insured replaced the roof and patched the crack in the master bedroom. In November 1982, she had Pollock inspect another crack in the master bedroom, a crack over a doorway leading to the patio, and exterior cracks outside of the living room and kitchen. It did not occur to her to make an insurance claim. Pollock's opinion was that the patio was causing stress on the house and needed to be cut away. Once the job was done, insured could see it was not the solution.
Insured contacted her brother-in-law in July or August 1983, to obtain advice from other contractors. More cracks were appearing She got a letter from Soil Engineering Construction in the fall of 1983 suggesting her house had a foundation settlement problem. Her brother-in-law said it was just a form letter and they had not adequately inspected the property.
In 1984, insured had three other contractors look at her house. Two of them suggested there was a foundation problem without looking underneath the house. The third looked underneath the house and said the foundation needed some leveling.
Bill McMorrow, another contractor, inspected insured's house in July 1985, and suggested its problems were covered by homeowner's insurance. Insured first notified insurer of damage to her house and garage by letter from her attorney dated July 17, 1985. In August 1985, McMorrow gave insured a written report saying the house seemed to have a foundation problem requiring further soil testing, a liquid level survey, and major repairs.
In September 1985, insurer undertook to investigate insured's claim, advising her in a letter dated September 8 that the policy did not cover earth movement or water damage. This non-waiver letter requested insurer to investigate insured's claim of loss and purported to identify coverage questions. Engineers reported to insurer by letter dated November 4, 1985, "that the house has experienced significant differential settlement caused by the consolidation of poorly compacted fills that were placed at the site prior to the development of the residence."
Insurer denied coverage by letter to insured signed by William Gordon dated February 18, 1986, because the damage resulted from earth movement and water damage and nothing else. The letter expressly disclaimed waiving any other policy provisions not mentioned by it. Insurer offered to pay for whatever damage to the bedroom ceiling was caused by a worker stepping on it. Neither letter mentioned the one-year limitations period.
Gordon began advising insureds of the contractual limitations period in non-waiver letters after October 1985, when insurer decided to start exercising that provision. He intended the denial letter to insured to include all grounds of denial.
The original unverified complaint was filed April 10, 1986. Insured alleged that on August 1, 1982, she "discovered significant structural and physical damage which had occurred to her home and property...." The first amended complaint alleged that insured first learned in July 1985 "that the damages to her house were significant in nature...."
3. Validity and Purpose of Contractual Limitations Period
Generally an action on a written contract must be brought within four years of its breach. (Code Civ.Proc., § 337, subd. 1.) Contracting parties can agree to a shorter limitations period if it is not unreasonable. (Tebbets v. Fidelity and Casualty Co. (1909) 155 Cal. 137, 138, 99 P. 501; see Annot. (1966) 6 A.L.R.3d 1197.) It is reasonable for an insurance policy to require commencement of an action within one year of a loss (C & H. Foods Co. v. Hartford Ins. Co. (1984) 163 Cal.App.3d 1055, 1064, 211 Cal.Rptr. 765; see Fageol T. & C. Co. v. Pacific Indemnity Co. (1941) 18 Cal.2d 748, 753, 117 P.2d 669), particularly considering that such a provision is statutorily authorized for California fire insurance policies. Since 1950, Insurance Code section 2071 has provided for the following standard fire insurance policy terms: "... No suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity unless all the requirements of this policy shall have been complied with, and unless commenced within 12 months next after inception of the loss...." (Stats.1950, First Ex.Sess., ch. 5, § 1, at p. 437.) Policies covering fire and other perils like the one in issue need not contain the statutory language so long as the fire coverage is equivalent We explained the purpose for a homeowner's insurance policy provision identical to the one in issue in State Farm Fire & Casualty Co. v. Superior Court (1989) 210 Cal.App.3d 604, 258 Cal.Rptr. 413. " '[L]imitation periods on suits are designed to promote justice by preventing surprises through revival of stale claims, to protect defendants and courts from handling matters in which the search for truth may be impaired by loss of evidence, to encourage plaintiffs to use reasonable and proper diligence in enforcing their rights, and to prevent fraud.' [Citations.]" (Id. at p. 612, 258 Cal.Rptr. 413.)
Further statutory references are to the Insurance Code unless otherwise specified.
4. Alleged Ambiguity of Policy Language
Insured contends that the policy language, unlike section 2071, is ambiguous and should be construed in her favor. The policies require suit to be filed within one year of "the occurrence causing loss or damage." Insured asserts: "With a progressive loss to a house, where it gradually cracks and deteriorates over time from slowly settling improperly compacted fill, there is no single date of occurrence." Insured views such a situation as a continuing occurrence.
The meaning of "occurrence" is settled in California insurance law. "Remmer v. Glens Falls Indem. Co. (1956) 140 Cal.App.2d 84[, 88] [295 P.2d 19] ... sets forth the general rule in this state that the 'occurrence' of an accident is the time when the complaining party is actually damaged, rather than when the wrongful act was committed." (California Union Ins. Co. v. Landmark Ins. Co. (1983) 145 Cal.App.3d 462, 470, 193 Cal.Rptr. 461.) The occurrence of continuing property damage is when the damage first becomes visibly manifest though the cause is hidden. (Cf. Home Ins. Co. v. Landmark Ins. Co. (1988) 205 Cal.App.3d 1388, 1392-1393, 253 Cal.Rptr. 277; California Union Ins. Co., supra, 145 Cal.App.3d at pp. 473, 476, 193 Cal.Rptr. 461.)
Section 2071 provides for the limitations period running from the "inception of the loss" rather than the "occurrence causing loss." In State Farm Fire & Casualty Co. cursorily dismissed any difference between these phrases as "trivial." (210 Cal.App.3d at p. 610, 258 Cal.Rptr. 413.) On further reflection, we recognize that "inception of the loss" has been given a different meaning than "occurrence." Zurn Engineers v. Eagle Star Ins. Co. (1976) 61 Cal.App.3d 493, 500, 132 Cal.Rptr. 206, concluded: " 'inception of the loss,' as the phrase is used in Insurance Code section 2071, means the point after a physical loss has occurred when the insured has had a reasonable opportunity to comply with conditions precedent to suit upon the policy in the form of notice to the insurer and the filing of a proof of loss covered by the policy." Zurn Engineers thus aligned California with a minority view in interpreting this phrase. (See Annot. (1969) 24 A.L.R.3d 1007, § 16, p. 1059.)
Home Ins. Co. disagreed with California Union Ins. Co. on another ground, namely the apportionment of liability between consecutive insurers. (205 Cal.App.3d at pp. 1394-1396, 253 Cal.Rptr. 277.)
5. Applicability of Discovery Rule
Insured contends that the commencement of the contractual limitations period, like many statutory limitations periods, In Lawrence v. Western Mutual Ins. Co. (1988) 204 Cal.App.3d 565, 251 Cal.Rptr. 319, a homeowner's lawsuit against his insurer was barred because it was not "commenced within 12 months next after inception of the loss." (Id. at p. 569, 251 Cal.Rptr. 319 [language identical to § 2071].) Damage first appeared in the house by 1975. The insured improved the drainage in 1975 after retaining an engineer who identified the problem as faulty drainage. (Id. at p. 568, 251 Cal.Rptr. 319.) More damage appeared in 1983. In December 1983, another engineer reported to the insured that the damage resulted from improperly compacted fill. The insured undertook further repairs, but did not file an insurance claim until July 1985 or a lawsuit until January 1986, after speaking to an attorney who suggested there might be insurance coverage. (Id. at pp. 569-570, 251 Cal.Rptr. 319.)
The Lawrence opinion states the lawsuit was filed in January 1985 (204 Cal.App.3d at p. 570, 251 Cal.Rptr. 319), but the date must be a typographical error. Otherwise the insured filed a lawsuit against his insurer before learning from his attorney about the possibility of insurance coverage. From the chronology otherwise provided in that opinion, we assume the lawsuit was filed in 1986, after the insurer denied the insured's claim of coverage.
Lawrence read Zurn Engineers, as defining "inception of the loss" to be when the cause of action against the insurer accrued. (204 Cal.App.3d at p. 572, 251 Cal.Rptr. 319.) The latest date of accrual was December 1983, when the insured received an engineer's report suggesting third-party negligence was responsible for his loss. (Id. at pp. 572-573, 251 Cal.Rptr. 319.) The court stated: "The so-called 'discovery rule' does not apply to render the date of the 'inception of the loss' the date in July of 1985 when Lawrence learned from his attorney that the loss might be covered by his insurance policy...." (Id. at p. 573, 251 Cal.Rptr. 319.) The court reasoned that even the discovery rule delays a limitations period only until the occurrence of some cognizable event but not until a party learns of a legal theory of recovery. (Ibid.)
Insured mischaracterizes Zurn Engineers, supra, 61 Cal.App.3d 493, 132 Cal.Rptr. 206, as a case applying the discovery rule. The issue there was simply the meaning of "inception of the loss." (See ante, fn. 4.)
In Abari v. State Farm Fire & Casualty Co. (1988) 205 Cal.App.3d 530, 252 Cal.Rptr. 565, a homeowner's lawsuit against his insurer was barred because it was not "commenced within 12 months next after inception of the loss." (Id. at p. 533, 252 Cal.Rptr. 565 [language identical to § 2071].) Cracks in the house appeared in 1979. The insured returned to the house in September 1984, after renting it out, to discover the existing cracks had worsened and new cracks had appeared. He also learned that insurance coverage was available. In January 1985, the insured filed both an insurance claim and the lawsuit against insurer. (Id. at pp. 532-533, 252 Cal.Rptr. 565.) Without defining "inception of the loss," the court concluded: "Because a cause of action under the discovery rule accrues when the plaintiff discovers or should have discovered all facts essential to the cause of action [citation], Abari's status as an absentee landlord until 1984 does not toll accrual." (Id. at p. 535, 252 Cal.Rptr. 565, fn. omitted.) The record demonstrated that the insured "was on notice In State Farm Fire & Casualty Co., a homeowners' lawsuit against their insurer was barred because it was not "started within one year after the occurrence causing loss or damage." (210 Cal.App.3d at p. 607, 258 Cal.Rptr. 413, emphasis omitted [language identical to policy at issue].) The insureds noticed cracking and settling of their house in late 1982. They were advised of the cause and significance of their problems by a report in July 1985. They filed a claim with their insurer in August 1985. Coverage was denied in January 1986. They filed the lawsuit in March 1987. (Id. at pp. 607-608, 258 Cal.Rptr. 413.) We observed: "it appears that suit was filed more than one year after (a) occurrence of the loss[,] (b) awareness of the loss[,] and (c) denial of the claim by State Farm." (Id. at p. 608, 258 Cal.Rptr. 413.) After summarizing Lawrence and Abari (at pp. 608-609, 258 Cal.Rptr. 413), we stated: "a case more than 40 years old holds that the insured's cause of action accrues at the latest upon the date of unconditional denial, and concealment of legal rights will not toll the period. (Neff v. New York Life Ins. Co. (1947) 30 Cal.2d 165, 170, 172 [180 P.2d 900]." (Id. 210 Cal.App.3d at p. 609, 258 Cal.Rptr. 413.) It is unclear from the opinion in State Farm Fire & Casualty Co. whether the insureds sought to invoke the discovery rule.
Neff involved an attempt to extend the four-year limitations period for breach of a written policy due to the insurer's alleged fraudulent concealment of a cause of action by simply denying the insured's claim. (30 Cal.2d at pp. 169-173, 180 P.2d 900.)
In Magnolia Square Homeowners Assn., a homeowners' association's lawsuit against its insurer was barred because it was not commenced "within one year after the loss occurs." (221 Cal.App.3d at p. 1054-1055, 271 Cal.Rptr. 1.) The insured noticed some construction defects in its condominium complex in 1978 and obtained an expert's report in 1981, leading to a lawsuit filed in 1982 against defendant other than its insurer. Further defects were discovered during repair attempts in 1982. A number of construction defects were itemized in a first amended complaint dated July 1985. In May 1986, the insured discovered other construction defects after experts cut into its walls. The insured notified the insurer of damage in August 1986. The insurer filed a declaratory relief action in February 1987, to which the insured responded by answer and cross-complaint against the insurer in April 1987. (Id. at pp. 1054-1055, 271 Cal.Rptr. 1.) The insured argued for delayed accrual, claiming it did not discover its loss until May 1986. We held that the loss occurred at the latest in July 1985, when insured was able to make detailed allegations of damage. By then, the insured was chargeable with notice of what it could have discovered through the exercise of reasonable diligence. (Id. at pp. 1059-1060, 271 Cal.Rptr. 1.)
We do not understand any of these cases as definitely reading a discovery rule into insurance policy provisions for a limitations period. In each, the insureds' lawsuits were too late even if the discovery rule applied. In Lawrence and State Farm Fire & Casualty Co., the insureds did not sue within a year of receiving professional advice about the cause of residential damage. In Abari, notice of the existence of damage was implicitly treated as constructive notice of its cause. (Civ.Code, § 19.) In Magnolia Square Homeowners Assn., the insured did not file suit for over a year after discovering construction defects. It went without saying in those cases that the lawsuits were too late if the contract did not postpone the limitations period until discovery of the cause of the property damage. This precedent leaves open the question whether the policies contemplated such a discovery rule.
Insured desires a discovery rule like that in Leaf v. City of San Mateo (1980) 104 Cal.App.3d 398, 163 Cal.Rptr. 711, which reached the following conclusion about a Property owners in Leaf were not chargeable with knowledge of their neighbor's possible responsibility for differential settlement of their residence when they first noticed cracks in the building or unlevel floors or even when they retained engineers who reported a different cause of the problem. The court commented: "Where, as in this case, plaintiffs consulted with professional engineers as to the source of their injury, they were entitled to rely upon that advice." (104 Cal.App.3d at p. 408, 163 Cal.Rptr. 711.) The neighbor's responsibility first came to light when a cave-in during a repair attempt revealed improper compacting on the neighbor's property. (Id. at pp. 403-404, 409, 163 Cal.Rptr. 711.)
As the trial court observed here, Leaf simply did not involve "construction of insurance policy provisions." Leaf illustrates that the discovery rule is often invoked to preserve the rights of a blameless victim against a wrongdoer. Different considerations pertain to an insurance policy's limitations period. The insurer is not a wrongdoer, but is simply a party who has promised to compensate another for the other's loss.
At oral argument, insured cited the recent decision in Love v. Fire Insurance Exchange (1990) 221 Cal.App.3d 1136, 271 Cal.Rptr. 246. There, the insureds' lawsuit against their insurer was barred by various statutes of limitations despite application of the discovery rule. Cracks in their house appeared in 1980. In 1981, the insureds received an engineer's report suggesting third party negligence had damaged their house. The insureds made claims to their insured in early 1981 and again in late 1985, but did not file suit until January 1988. (Id. at p. 1141-1142, 271 Cal.Rptr. 246.) The court reasoned: "Where an insured observes abnormal damage, hires an engineering firm to investigate, and obtains a report stating earth movement and third party negligence are causes of the damage, his causes of action against the insurer accrue on receipt of such report (Lawrence [, supra, ] 204 Cal.App.3d 565, 571-573 [251 Cal.Rptr. 319]), because the statute of limitations commences when a party knows or should know the facts essential to his claim [citation]." (Id. 221 Cal.App.3d at p. 1143, 271 Cal.Rptr. 246.) Love applied the discovery rule to various limitations statutes (id. at p. 1144, fn. 4, 271 Cal.Rptr. 246) and did not address the policy's limitations provisions (id. at p. 1142, fn. 2, 271 Cal.Rptr. 246).
Insured claims the burden of discovering the cause of the property damage in order to benefit from a rule postponing accrual until she discovered or should have discovered the cause. Such an obligation is not contemplated by the insurance policy. An insured is contractually obliged timely to notify the insurer of a loss and to submit a proof of loss. Since insured only had 60 days to file a proof of loss, the policy imposed on insured only a limited obligation to investigate the loss. Once the insured's claim is submitted, the burden shifts to the insurer to promptly and thoroughly investigate the claim. (Egan v. Mutual of Omaha Ins. Co. (1979) 24 Cal.3d 809, 818-819, 169 Cal.Rptr. 691, 620 P.2d 141; § 790.03, subds. (h)(3), (h)(4); accord Garvey v. State Farm Fire & Casualty Co. (1989) 48 Cal.3d 395, 406, 257 Cal.Rptr. 292, 770 P.2d 704.)
In construing an instrument, a court's function is "not to insert what has been omitted, or to omit what has been inserted...." (Code Civ.Proc., § 1858.) Insured would have us read the following bracketed language into her policy: "No action shall be brought unless ... the action is started within one year after [discovery of the We interpret the policy to mean what it says. The action should have been filed within one year of the loss occurring, which is when it first became visibly apparent. Even if the 1981 property damage was unrelated to the 1983 property damage, filing this action in April 1986 was not within one year of the 1983 loss. The insurance policy's limitations period does not provide for a discovery rule.
In her reply brief, insured suggests that at least her claim of "improper claims handling" arose after the property damage occurred. She relies on Frazier v. Metropolitan Life Ins. Co. (1985) 169 Cal.App.3d 90, 103-104, 214 Cal.Rptr. 883 and Associates Nat. Mortgage Corp. v. Farmers Ins. Exchange (1990) 217 Cal.App.3d 562, 266 Cal.Rptr. 56. (Cf. Lawrence, supra, 204 Cal.App.3d at pp. 574-575, 251 Cal.Rptr. 319; Abari, supra, 205 Cal.App.3d at p. 536, 252 Cal.Rptr. 565; State Farm Fire & Casualty Co., supra, 210 Cal.App.3d at p. 609, 258 Cal.Rptr. 413.) We note that the Associates Nat. Mortgage Corp. case was ordered unpublished when review was denied on April 26, 1990. It would be unfair to insurer for us to consider this argument raised for the first time in a reply brief without a showing of good cause. (Balboa Ins. Co. v. Aguirre (1983) 149 Cal.App.3d 1002, 1010, 197 Cal.Rptr. 250.)
6. Waiver
Insured contends there is a triable issue of fact about whether insurer implicitly waived the policy limitations provision. As evidence of waiver, insured points to insurer's failure to mention the limitations provision in either its nonwaiver letter of September 8, 1985, or its coverage denial letter of February 18, 1986. We observe the later letter expressly disclaimed waiving any unmentioned policy provisions and insurer raised the limitations defense as soon as the lawsuit was filed.
Insurer's summary judgment motion could have been strengthened by a declaration denying its intent to waive the limitations provision.
" 'Waiver is a voluntary relinquishment, expressly or impliedly, of a known right and depends upon the intention of one party only.' " (Elliano v. Assurance Co. of America (1970) 3 Cal.App.3d 446, 450, 83 Cal.Rptr. 509, citation omitted.) In Becker v. State Farm Fire and Cas. Co. (N.D.Cal.1987) 664 F.Supp. 460, the insurer was held not to have waived a contractual one-year limitations period identical to the one at issue by failing to mention it when denying the insureds' claim. The court reasoned: "An insurer waives any defense that a reasonable investigation would have uncovered. ( [Citation]; Egan[, supra, ] 24 Cal.3d 809, 819 [169 Cal.Rptr. 691, 620 P.2d 141]....) The rationale is that a waiver rule gives the insurer incentive to investigate claims before denying them. The defenses subject to the waiver rule go to whether the claimed loss is covered by the policy. Here, the twelve-month limit for bringing suit is unrelated to any investigation of whether the claimed loss is covered by the policies. Also, the time limit had expired long before plaintiffs ever contacted State Farm about their loss. State Farm did not waive the time limit provision by failing to warn plaintiffs before they filed suit that their right to sue had expired." (Id. at pp. 461-462.) Becker was followed in Zumbrun v. United Services Auto. Ass'n (E.D.Cal.1989) 719 F.Supp. 890, 896, and cited with approval by this court in Magnolia Square Homeowners Assn., supra, 221 Cal.App.3d at p. 1063, 271 Cal.Rptr. 1.
Insured vainly attempts to distinguish Becker as involving "more of an inadvertent omission as opposed to a conscious waiver." That opinion does not reveal the insurer to have been unaware of the policy limitations period when it denied the insureds' claim.
Insured relies on Ruffino v. Queen Ins. Co. (1934) 138 Cal.App. 528, 33 P.2d 26, where the insurer was held to have waived a policy provision requiring the insureds to file proof of loss within 60 days. After promptly notifying the insurer of the loss, the insureds spoke with an adjuster and frequently asked if there was anything more they could do. Insurer's agent advised them no. (Id. at pp. 534-537, 33 P.2d 26.) In Elliano, supra, 3 Cal.App.3d at pp. 450-455, 83 Cal.Rptr. 509, the insurer was Ruffino and Elliano both involved misleading conduct by the insurer. We see no parallels with insurer's conduct here. The coverage denial letter expressly disclaimed attempting to state all grounds for denying insured's claim. The non-waiver letter was concerned with identifying coverage questions, not all possible legal defenses. Without suggesting an insurer is unable to waive a policy's limitations period after it expires (cf. Magnolia Square Homeowners Assn., supra, 221 Cal.App.3d 1049, 271 Cal.Rptr. 1), we conclude as a matter of law the facts present here do not establish a triable issue about insurer's intent to do so.
DISPOSITION
The judgment is affirmed.
CAPACCIOLI, Acting P.J., and ELIA, J., concur.
Under this view, the loss occurs before its inception. This difference in meaning between the phrases does not render either one ambiguous. Moreover, on the facts of State Farm Fire & Casualty Co. described in part 5 below, insureds' lawsuit was still too late if the loss did not occur until its inception.
In Magnolia Square Homeowners Assn. v. Safeco Ins. Co. of America (1990) 221 Cal.App.3d 1049, 1059 fn. 3, 271 Cal.Rptr. 1, relying on State Farm Fire & Casualty Co., supra, 210 Cal.App.3d 604, 258 Cal.Rptr. 413, we observed that the difference between "inception of loss" and "loss occurs" was equally as trivial as the difference between "inception of the loss" and "occurrence causing loss." That observation was unnecessary to determining the issues in that case.
The recent decision of Mara v. Farmers Group, Inc. (1990) 222 Cal.App.3d 590, 271 Cal.Rptr. 620, seems to be in accord. The court held that the occurrence of property damage to a residence had "happened" in the policy language when minor cracks appeared, though the insureds were unaware of their significance. The appellate court characterized this as an "unmanifested continuing loss" and a loss "which had not yet become apparent," presumably because the full extent of the loss was not yet manifest. The cracks were a visible manifestation of some damage, however. (Id. at p. 595, 271 Cal.Rptr. 620.)
At oral argument, insurer also mischaracterized Mara as applying the discovery rule. The issue there was simply application of a policy provision requiring an action to be "commenced within twelve months next after inception of the loss" (language identical to § 2071), which the insurer conceded only barred actions filed more than one year after the damage became apparent. (Mara, supra, 222 Cal.App.3d at p. 596, 271 Cal.Rptr. 620.) Though minor cracks were observed many years earlier, the appellate court determined that the insureds' loss was not apparent until they were refused a loan due to the property's condition, apparently within a year of the action being filed. (Id. at p. 595-596, 271 Cal.Rptr. 620.) We say "apparently" because the opinion does not say when the action was filed.