Haghighi owns a two-story, four-unit apartment building in Barstow, California. According to Haghighi, someone vandalized the property on August 3, 2016. At the time, only one of the units was rented out, and that tenant had been out of town on that date. Haghighi had managed the property himself beginning in January 2016, and he testified that from that time he stayed in a second unit two or three days a week, when he came to the property from his home in Los Angeles. According to Haghighi, the damage from the August 3, 2016 vandalism was profound. In addition to substantial breakage and theft, the vandals caused flooding, including by stealing dishwashers and copper pipes for the water heater, leaving water “spewing all over the place.” The flooding caused, among other things, the ceiling of one of the lower units to collapse.

Haghighi reported the damage and filed a claim with Mercury on September 29, 2016. Mercury, based on an inspection by an adjuster it hired, concluded most of the claimed damage was not from a single incident of vandalism, but instead “long term water damage, incomplete repairs, and wear and tear.” It found no evidence that Haghighi in fact resided at the property, meaning that the policy’s vacancy provision probably applied, such that no payments for damages from vandalism were required under the policy. Nevertheless, Mercury initially made a payment to Haghighi of $11,004.66. Haghighi objected, demanding $258,962, based on an estimate he obtained. Although that estimate was purportedly for repairs needed “to return” the property to a “pre vandalism state,” the adjuster viewed the estimate as representing a “complete renovation” of the property, including improvements. After a reinspection with another general contractor hired by Mercury—Haghighi was invited to also bring a contractor of his own to the reinspection, but he did not do so—Mercury made an additional payment to Haghighi, bringing the total payment to $19,330.98. Haghighi later provided Mercury with a second estimate by a different company, for $238,850. Mercury was not persuaded to make any additional payments on the claim, and Haghighi brought this lawsuit.