Suit Gallery Five Star Men's Wear v. Granite State Ins.


Filed 3/9/11 Suit Gallery Five Star Men's Wear v. Granite State Ins. CA4/3





NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

THE SUIT GALLERY FIVE STAR MEN'S WEAR, INC., Plaintiff and Appellant, v. GRANITE STATE INSURANCE COMPANY, INC., Defendant and Respondent.

G042622 (Super. Ct. No. 07CC06029) O P I N I O N

Appeal from a judgment of the Superior Court of Orange County, Geoffrey T. Glass, Judge. Affirmed.
Wu & Cheung and Mark H. Cheung for Plaintiff and Appellant.
Lewis Brisbois Bisgaard & Smith, Ernest Slome, Lisa Willhelm Cooney and Celia Moutes-Lee for Defendant and Respondent.
* * *
Granite State Insurance Company (Granite State) insured Sam's Suit Gallery, Inc. (Sam's), a men's wear store. Following a burglary at the store, The Suit Gallery Five Star Men's Wear, Inc. (Five Star) made a $327,432.31 claim against the policy. Granite State rescinded the policy due to the insured's failure to disclose, in its insurance application, two prior burglaries at the store. Five Star filed suit against Granite State. The court sustained without leave to amend Granite State's demurrer with respect to the cause of action for breach of contract as asserted by Five Star in its capacity as a third party beneficiary of the policy. It also granted Granite State's motion for summary judgment, due to the material misrepresentation in the insurance application. Five Star appeals.
Five Star argues that the court erred in sustaining the demurrer and that Five Star should have been able to enforce the policy provisions and sue for breach of contract as a third party beneficiary of the policy. Five Star also contends that the court erred in granting summary judgment based on Granite State's right to rescind the policy. It asserts there was a triable issue of material fact as to whether the insurance application was completed by agents of Granite State, such that their failure to obtain a full loss history and disclose the prior burglaries should have been imputed to the insurer. In addition, Five Star maintains that Granite State's failure to comply with the policy provision requiring the insurer to act upon a claim within 30 days of receipt of a sworn statement of loss precludes it from rescinding the policy. Finally, Five Star maintains that public policy favors the denial of summary judgment.
Five Star failed to raise a triable issue of material fact precluding summary judgment. Given that the court properly granted summary judgment on the basis of Granite State's right to rescind the policy, we need not address Five Star's arguments with respect to the third party beneficiary issues and the demurrer. We affirm.


I
FACTS
Sam Abujoudeh, also known as Sam Joudeh or Sam Abu ,[1] incorporated Five Star in 2000 and is the president and sole shareholder. His men's wear store in Placentia was burglarized in January 2002 and again in February 2002. His insurer at the time, Zurich, cancelled the insurance policy for the business. Abujoudeh then began shopping for new insurance. He disclosed the prior burglaries to State Farm, because the State Farm agent asked about prior losses. Having learned about the loss history, State Farm was unwilling to issue insurance for the Placentia men's wear store without the payment of a top dollar premium. So, Abujoudeh met with Jay Lee of EG Insurance Agency about obtaining insurance. According to Abujoudeh, Lee did not ask him for much information or enquire about prior losses. Abujoudeh decided to go with Lee's suggested insurer, AIG, purportedly the parent company of Granite State.
Granite State issued to Sam's an insurance policy providing property and general liability coverage. The policy period was August 15, 2002 to August 15, 2003. However, at the time the policy was applied for and issued, Sam's was not actually registered either as a corporation or as a fictitious business name for Five Star.
On October 31, 2002, the men's wear store was burglarized again. Sam's filed a claim under the Granite State policy. By letter of May 31, 2003, Granite State rescinded the policy, due to the insured's failure to disclose the prior loss history when applying for the policy. Also in 2003, Granite State returned premiums to Sam's.
Sam's and Abujoudeh filed a lawsuit against Granite State, in April 2004 (Sam's Suit Gallery, Inc. v. Granite State Insurance Company (Super. Ct. Orange County, 2007, No. 04CC05436)) (Sam's Lawsuit). Five Star represents that Sam's Lawsuit was dismissed without prejudice on December 14, 2007.
Five Star did not file a fictitious business name statement for Sam's until May 14, 2007. Three days later, Five Star filed the within lawsuit. In its second amended complaint against Granite State, Five Star asserted three causes of action: (1) breach of contract; (2) breach of contract--third party beneficiary; and (3) reformation. Five Star alleged that Granite State provided insurance to it for the policy period of August 15, 2002 to August 15, 2003. It further alleged that it suffered two losses--$249,247.41 in stolen inventory and $78,184.90 in business interruptions, for a total of $327,432.31. Five Star asserted that it timely filed a claim, but that Granite State untimely denied the claim on or about May 21, 2003.
Five Star admitted that the policy did not name it as an insured. Therefore, it sought to enforce the insurance policy as a third party beneficiary and to reform the policy to correctly identify it as the insured.
Granite State filed a demurrer. The court sustained the demurrer without leave to amend only as to the second cause of action for breach of contract--third party beneficiary.
Granite State then filed a motion for summary judgment, or in the alternative, summary adjudication. The court granted Granite State's motion for summary adjudication as to the first cause of action for breach of contract. It found that Granite State had properly rescinded the insurance policy. It held that since no causes of action survived the rescission of the policy, Granite State was entitled to judgment. Summary judgment was entered accordingly. Five Star appeals.


II
DISCUSSION
A. Standard of Review:
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