Pollock et al v. Federal Insurance Company

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United States District Court
Northern District of California
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
THOMAS POLLOCK, et al.,
Plaintiffs,
v.
FEDERAL INSURANCE COMPANY,
Defendant.
Case No. 21-cv-09975-JCS
ORDER RE:
1. DEFENDANT’S MOTION FOR
SUMMARY JUDGMENT
2. DEFENDANT’S MOTION TO
EXCLUDE TESTIMONY OF
PLAINTIFFS’ EXPERTS
3. PLAINTIFFS’ MOTION FOR
PARTIAL SUMMARY JUDGMENT
Re: Dkt. Nos. 214, 215, 225
I. INTRODUCTION
Plaintiffs Thomas Pollock and Eileen Tabios bring this action against Defendant Federal
Insurance Company (“Federal”) seeking compensation under a homeowners’ insurance policy
issued by Federal on their property in St. Helena, California, which was damaged in the 2020
Glass Fire. Presently before the Court are the following motions: 1) Federal’s Motion for
Summary Judgment, dkt. no. 214 (“Federal’s Summary Judgment Motion”); 2) Federal’s Omnibus
Motion to Exclude Testimony of Plaintiffs’ Experts, dkt. no. 215 (“Daubert Motion”); and 3)
Plaintiffs’ Motion for Partial Summary Judgment, dkt. no. 225 (“Plaintiffs’ Summary Judgment
Motion”). A hearing on the motions was held on February 18, 2026. The Court’s rulings are set
forth below.1
1 The parties have consented to the jurisdiction of a United States magistrate judge pursuant to 28
U.S.C. § 636(c).
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II. BACKGROUND
A. Factual Background2
1. The Policy3
According to Plaintiffs, Federal began insuring Plaintiffs’ property at 256 N. Fork Crystal
Springs Road (“the Property”) in 1999, when they purchased the Property. Declaration of
Christopher Nidel (“Nidel Decl.”), Exhibit IIII, dkt. no. 236-3 at ECF pp. 53-62 (McMinn &
Associates: Economic Analysis of Value Engineered Cost Repair, Replace or Rebuild of Insured
Buildings, Infrastructure, Land Stabilization and Landscaping Due to Damage Caused by Glass
Fire at 256 North Fork Crystal Springs Road, St. Helena, CA 94574 (“McMinn Report”)) at ECF
p. 54; see also Omnibus Declaration of Zachary Dekel (“Dekel Decl.”), Ex. 69 (dkt. no. 217 at
ECF pp. 1837-1847) at ECF p. 1846 (underwriting documents reflecting “effective date” of July
19, 1999). The policy at issue in this case was a “Deluxe House Coverage” policy and covered the
period July 19, 2020 to July 19, 2021. Compendium Vol. 1, Ex. A (“Policy”) at 6, dkt. no. 226 at
ECF p. 4. It provided for coverage of up to $9,447,000 for the house, $3,778, 800 for the contents
of the house, and $4,386,300 for other permanent structures on the Property. Id. at ECF pp. 20,
22.
The Policy covered “extended replacement cost.” Id., dkt. no. 226 at ECF p.20; see also
id., dkt. no. 226 at B-2, ECF p. 35 (providing that “[i]f the payment basis is extended replacement
2 The facts set forth below are undisputed unless otherwise stated. The Court has made every
effort to thoroughly review all of the thousands of pages of exhibits submitted by the parties in
support of the pending motions. This effort has been hampered by the manner in which these
documents were filed by both sides, including, but not limited to: exhibits that were entirely
gibberish or illegible; massive files containing scores of exhibits that were neither identified in the
docket entry nor individually hyperlinked; exhibits confusingly identified using six rounds of the
alphabet; and declarations filed without identifying the declarant in the docket entry (e.g. docket
no. 258). Going forward, every document in this case, whether it is the main document, a
supporting declaration or an exhibit to a supporting document, must be filed as a separate
document with its own hyperlink or bookmark and must be clearly identified in the
corresponding docket entry. Any document that has more than 26 exhibits attached to it
should use numbers rather than letters to identify those exhibits. In addition, citations to
declarations and exhibits in any future filings must identify the specific exhibit number or
letter and the declaration to which the exhibit is attached. The Court will strike any
document that does not adhere to these requirements.
3 To assist the reader, the Court has highlighted language in the Policy that is particularly salient to
the parties’ disputes.
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cost, we will pay the reconstruction cost even if this amount is greater than the amount of coverage
for your house as shown in the Coverage Summary or the amount of coverage for other permanent
structure as shown in the Coverage Summary.”); id., dkt. no. 226 at ECF p. 113 (“Extended
Replacement Cost coverage is intended to provide for the cost to repair or replace the damaged or
destroyed dwelling without a deduction for physical depreciation. Many policies pay only the
dwelling’s actual cash value until the insured has actually begun or completed repairs: or
reconstruction on the dwelling. Extended Replacement Cost provides additional coverage above
the dwelling limits up to a stated percentage or specific dollar amount.”).
Under the Policy, “a ‘covered loss’ includes all risk of physical loss to [the insureds’]
house or other property” “unless stated otherwise or an exclusion applies.” Id. at B-4, dkt. no. 226
at ECF p. 37.
In addition to the coverage of physical loss to the house, the Policy provided certain “Extra
Coverages.” Id. at B-5 to B-13, dkt. no. 226 at ECF pp. 38-46. Among the “Extra Coverages”
were “Additional living expenses” and “Extra living expenses.” Id. at B-6, dkt. no. 226 at ECF p.
39. These sections provide:
Additional living expenses
As described below, under certain conditions when your house or
other permanent structure cannot be lived in because of a covered loss
to your house or other permanent structure or, if applicable, its
contents, we provide coverage for additional living expenses which
consists of extra living expenses, loss of fair rental value, and forced
evacuation expenses. The maximum amount we will pay for all
additional living expenses combined for each occurrence is 50% of
the amount of house coverage as shown in your Coverage Summary
for the location at which the loss occurs. If at the time of a covered
loss, your coverage amount for your location is increased because of
the application of the extended replacement payment basis, the 50%
will be based on the increased amounts. There is no deductible for this
coverage.
"Contents" means personal property you, a family member, or a
domestic employee owns or possesses covered by us.
Extra living expenses. If a covered loss makes your house or other
permanent structure uninhabitable, we cover the reasonable increase
in your normal living expenses that is necessary to maintain your
household’s usual standard of living, including the boarding of
domestic animals not primarily owned or kept for business use. We
will pay for the boarding of your domestic animals displaced from
another permanent structure even when you have not been displaced
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by the covered loss. We cover these increases to your normal living
expenses for a period of time commencing with the date of loss and
ending with the earliest of the following:
• the reasonable amount of time required to restore your house or
other permanent structure to a habitable condition;
• the shortest amount of time required to settle elsewhere if you or
members of your household permanently relocate;
• the reasonable amount of time required to restore the house or
other permanent structure to the condition it was in prior to the
covered loss if you are newly constructing your house or other
permanent structure or constructing additions, alterations, or
renovations to your house or other permanent structure at the time
of a covered loss, but we will only cover the increase in your
norma1 living expenses incurred by you; or
• up to two years from the date of loss, or a later date if agreed to
by us.
However, you must inform us of your decision whether you intend to
repair, replace, or rebuild the house or other permanent structure, or
to permanently relocate, within 180 days from the date of loss, or a
later date if agreed to by us. If you do not inform us of your decision
by this date, the extra living expenses will cease in 30 days.
This period of time is not limited by the expiration of this policy.
Id.4 (emphasis added). “Forced evacuation expenses,” which are a component of ALE, are
governed by the following provision:
Forced evacuation expenses. If you evacuate your house or other
permanent structure due to a reasonable threat of a loss covered under
this policy, or you are forced to evacuate by a civil authority as a direct
result of a covered peril, we cover the reasonable increase in your
normal living expenses incurred by you that is necessary to maintain
your household’s usual standard of living, including the boarding of
domestic animals not primarily owned or kept for business use. We
also cover any loss in fair rental value if your house or other
permanent structure is usually held for rental, but we do not cover any
loss of rents due to cancellation of a lease or agreement.
However, if we determine after the threat of loss is over that there is
no covered loss to your house or other permanent structure that makes
it uninhabitable, this extra coverage will cease, unless a civil authority
prohibits you from use of your house or other permanent structure due
to a peril covered under this policy.
We cover these forced evacuation expenses for up to 30 consecutive
days, even if the policy period ends during that time.
Id. at B-7, dkt. no. 226 at ECF p. 40 (emphasis added).
4 Because “extra living expenses” are a component of “additional living expenses,” the Court
refers to these sections, together, as “the ALE provision,”
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The Policy also provided extra coverage for “Land[,]” providing as follows:
Land
Whenever there is a covered loss to your house or other permanent
structure and the related repair, replacement, or rebuilding requires
excavation, replacement or stabilization of land under or around your
house or other permanent structure, we will pay the necessary cost for
the excavation, replacement, or stabilization of the land. The amount
of coverage is 10% of the amount of the covered loss to your house
or other permanent structure, but not less than $10,000.
Id. (emphasis added).
In addition, the Policy provided extra coverage for “Rebuilding to Code.” Id. at B-8, B-9,
dkt. no. 226 at ECF pp. 41-42. The “Rebuilding to Code” section provides:
After a covered loss to covered property, we cover the necessary cost
of conforming to any law or ordinance that requires or regulates:
• the repair, replacement, or rebuilding of the damaged portion of your
house or other permanent structure made necessary by the covered
loss;
• the demolition, replacement, or rebuilding of the undamaged portion
of your house or other permanent structure necessary to complete the
repair, replacement, or rebuilding of the damaged portion of your
house or other permanent structure; or
• the demolition of the undamaged portion of your house or other
permanent structure when your house or other permanent structure
must be totally demolished.
However, we will not pay the cost you incur to conform to any law or
ordinance that is not a direct result of the covered loss.
If the loss is to your house only, or to your house and other permanent
structure(s), we will pay up to 100% of the amount of coverage for
the house as shown in your Coverage Summary. If the loss is to
another permanent structure(s) only on the grounds of your house, we
will pay up to 100% of the amount of coverage for other permanent
structures.
If at the time of a covered loss, your coverage amount for your house
or other permanent structures is increased because of the application
of the extended replacement cost payment basis, the 100% will be
based on the increased amounts.
If you have a covered total loss to your house and do not replace or
rebuild the house at the same location, this coverage will apply to the
house and other permanent structures up to the same, amounts of
coverage for your house and other permanent structures that would
have applied at your original location shown in your Coverage
Summary.
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Id.; see also id. at ECF p. 114 (stating that Policy includes “Building to Code Upgrade Coverage”
that “covers additional costs to repair or replace a dwelling to comply with the building codes and
zoning laws in effect at the time of loss or rebuilding” and noting that “[t]hese costs may
otherwise be excluded by your policy. Meeting current building code requirements can add
significant costs to rebuilding your home.).” Id.
The Policy also provides coverage for debris removal, providing as follows:
Debris Removal
Unless covered elsewhere under this policy; we cover the reasonable
expenses you incur made necessary by a covered loss to demolish
damaged covered property, if necessary, and remove debris, of the
covered loss including the property that caused a covered loss. We
will pay up to 30% of the amount of coverage for your house at this
location as shown in your Coverage Summary. If at the time of a
covered loss, your coverage amount for your house is increased
because of the application of the extended replacement cost payment
basis, the 30% will be based on the increased amounts.
Id.
The Policy allows the insured to rebuild at a different location, providing:
If you have a covered total loss to your house and do not replace or
rebuild the house at the same location, this coverage will apply to the
house and other permanent structures up to the same amounts of
coverage for your house and other permanent structures that would
have applied at your original location shown in your Coverage
Summary.
Id. at B-9, dkt. no. 226 at ECF p. 42.
Among the Policy’s exclusions were exclusions for “Gradual or sudden loss,”
“Contamination” and “Neglect.” Id. at B-13, B-15, dkt. no. 226 at ECF pp. 46, 48. Those
exclusions provide as follows:
Gradual or sudden loss. We do not provide coverage for the
presence of wear and tear, gradual deterioration, rust, bacteria,
corrosion, dry or wet rot, or warping, however caused, or any loss
caused by wear and tear, gradual deterioration, rust, bacteria,
corrosion, dry or wet rot, or warping. We also do not cover any loss
caused by inherent vice, latent defect or mechanical breakdown. But
we do insure ensuing covered loss unless another exclusion applies.
Contamination. We do not cover any loss caused by the discharge,
dispersal, seepage, migration or release or escape of pollutants. Nor
do we cover the cost to extract pollutants from land or water, or the
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cost to remove, restore or replace polluted or contaminated land or
water. A “pollutant” is any solid, liquid, gaseous or thermal irritant or
contaminant, including smoke, vapor, soot, fumes, acids. alkalis,
chemicals and waste.5 A “contaminant” is an impurity resulting from
the mixture of or contact of a substance with a foreign substance.
“Waste” includes materials to be disposed of, recycled, reconditioned
or reclaimed.
. . .
Neglect. We do not cover any loss caused by your failure to use all
reasonable means to protect property before, at, or after the time of a
loss.
Id. (emphasis added).
The Policy contains a provision entitled “Concealment or fraud[,]” which provides, “We
do not provide coverage if you or any covered person has intentionally concealed or
misrepresented any material fact relating to this policy before or after a loss.” Id. at Y-1, dkt. no.
226 at ECF p. 103 (“Fraud Provision”). The Policy also enumerates certain duties of the insured
after a loss, including a duty to “protect property” requiring the insured to “take all reasonable
means that are necessary to protect property from further loss or damage.” Id. at Y-4, dkt. no. 226
at ECF p. 106.
The Policy contains the following appraisal provision:
Appraisals
If you or we fail to agree on the amount of loss, you or we may
demand an appraisal of the loss. Each party will select a competent,
independent appraiser within 20 days after receiving written request
from the other. The two appraisers will select a third, competent
appraiser. If they cannot agree on a third appraiser within 15 days,
you or we may request that the selection be made by a judge of a court
having jurisdiction. Written agreement signed by any two of the three
appraisers shall set the amount of the loss. However, the maximum
amount we will pay for a loss is the applicable amount of coverage
even if the amount of the loss is determined to be greater by appraisal.
Each appraiser will be paid by the party selecting the appraiser. Other
5 A different definition of “pollutant” applies to the Contamination exclusion for “incidental
farming”, under the exclusion Business Pursuits. See Compendium Vol. 1, Ex. A (Policy) at T-16,
T-17. In that exclusion, “A ‘pollutant’ is any solid, liquid, gaseous or thermal irritant ,or
contaminant, including smoke (except smoke from a hostile fire), vapor, soot, fumes, acids, alkalis,
chemicals and waste.” Id. at T-17, dkt. no. 226 at ECF p. 84 (emphasis added). In their reply on
their summary judgment motion, Plaintiffs cited this definition in support of their argument that
the Contamination exclusion does not apply to VOCs in their house. Dkt. no. 244 at 8. At oral
argument, however, Plaintiffs stipulated that this definition is not applicable here and stated that
they had cited it in error.
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expenses of the appraisal and the compensation of the third appraiser
shall be shared equally by you and us. We do not waive our rights
under this policy by agreeing to an appraisal.
Id. at Y-5, dkt. no. 226 at ECF p. 107.
Malloy, Imre & Vaconi Insurance Services (“MIV”) is listed in the Policy as “producer”
and the Policy documents refer questions related to the Policy to MIV. See, e.g., id. at ECF. pp. 6,
8, 10, 16-18.6
2. The Glass Fire and Plaintiffs’ Claim
The Glass Fire occurred on September 27, 2020. Declaration of Thomas Pollack in
Support of Plaintiffs’ Motion for Partial Summary Judgment (“Pollack Decl.”), dkt. no. 225-2, ¶ 2.
The fire destroyed the guest house on the Property and, according to Plaintiffs’ experts, caused
damage to the main house due to smoke that enveloped the house. Id. ¶ 2; see also Dekel Decl.,
Ex. 30 (“Crimmins February 14, 2025 Expert Report”) at 9, dkt. no. 217 at ECF p. 995 (“The
Glass Fire . . . burned through the property and remained in the direct vicinity of the property for
eight days, reaching temperatures of 800 - 1,200° C (1,472 - 2,192 °F) at the guest house and
coming within feet of the main residence. The smoke lingered and continued to cause
damage for weeks.”) Plaintiffs also allege the fire destroyed landscaping and resulted in soil
contamination on the Property. Pollack Decl. ¶ 2. Plaintiffs subsequently notified Federal of a
loss under the Policy. Id. ¶ 3. In the years that followed, both sides conducted investigation and
testing on the Property to determine the extent of the damage. The adequacy of the investigations
and the reliability of the experts’ findings on both sides has been (and continues to be) the subject
of extensive dispute and much vitriol.
On October 26, 2020, Plaintiffs’ attorney sent Federal a letter that addressed, inter alia,
coverage under the Policy for alternative housing. Declaration of Kurt Brown, Esq. in Support of
6 Plaintiffs ask the Court to take judicial notice of information listed on the website of the
California Department of Insurance reflecting that MIV is a licensed insurance broker and is
“authorized to transact on behalf of[,]” inter alia, Chubb Indemnity Insurance Company, Chubb
National Insurance Company and Federal Insurance Company. Dkt. no. 235 (Request for Judicial
Notice) & Ex. RRRRR (screenshot of website pages). The Court GRANTS this request under
Rule 201 of the Federal Rules of Evidence only as to the fact that this information is reflected on
the Department of Insurance Website. See Rejoice! Coffee Co., LLC. v. Hartford Fin. Servs. Grp.,
Inc., No. 20-CV-06789-EMC, 2021 WL 5879118, at *11 (N.D. Cal. Dec. 9, 2021).
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Defendant Federal Insurance Company’s Opposition to Plaintiffs’ Motion for Partial Summary
Judgment (“Brown Decl.”), Ex. 13 (Oct. 26, 2020 Letter), dkt. no. 231 at ECF pp. 229-236 (“the
October 26, 2020 Letter”). Under the heading “Timeline for Permanent Housing,” counsel stated,
in part, as follows:
You have stated to me that it is Chubb’s expectation that your insureds
will be back in their home within a few months, which demonstrates
either a complete lack of awareness of the severity and extent of the
damage to your insureds’ property or Chubb’s unwillingness to make
a realistic assessment of the damage and the timeline for repairs. At
this point, your insureds believe that in the best case scenario, they
will reoccupy their residence in 1 to 1.5 years, and in the worst case,
it will be 4 years. Your insureds do not believe that a true assessment
of the scope and extent of damage will be known for 6 months. Once
that is known, Chubb and your insureds will need to agree on the
repairs to restore the main residence, guest house, other buildings,
landscaping, infrastructure, and property to its pre-fire, pristine
condition. . . . Once the extent and scope of the damage is known, it
will probably then take 6 months to prepare architectural plans and
obtain the necessary building permits. Only then can true restoration
and/or reconstruction begin. Because of the scale and scope of your
insureds’ property, that restoration and/or reconstruction process will
likely take between 1 and 3 years.
Id. at ECF p. 232.
The following year, Plaintiffs sent Federal a sworn Proof of Loss (“POL”) signed on
August 2, 2021 (“POL 4”) claiming loss in the amount of $85,305,580.40 to cover “the expenses
for re-building the insureds’ home and guest house.” Dkt. no. 229 at ECF p. 266; see also Dekel
Decl., Ex. 70, dkt. no. 217 at ECF pp. 1848-1856. A subsequent POL, signed on August 26, 2021
(“POL 5”), claimed a loss in the amount of $15,054,102 for alternative living expenses under the
Policy. Dkt. no. 229 at ECF pp. 274, 276; see also Dekel Decl., Ex. 67, dkt. no. 217 at ECF pp.
1807-1823.
The next month, Plaintiffs’ counsel sent a letter to Federal dated September 27, 2021 that
stated, in part, as follows:
Chubb has reports prepared by experts retained by your insureds,
including a collection of reports prepared by Kaizen Safety Solutions,
which explain in detail that soot, char, ash, and associated fire
residues (including chemicals, gases, particulates, and fungal spores)
have permeated every part of the main house, including the interstitial
spaces of the walls and the building materials themselves. Moreover,
laboratory analysis of the contaminated building materials by Kaizen
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Safety Solutions demonstrates that “cleaning” will not repair the
physical damage to these materials, nor can the contamination be
removed from the materials (where removal is even possible) without
causing significant additional damage. Therefore, because it is
Chubb’s obligation under the Policy to repair or replace/rebuild all
buildings, infrastructure, and landscaping to their pre-fire condition,
your insureds are entitled to total replacement of the physically
destroyed and/or contaminated buildings, infrastructure, and
landscaping.
Dkt. no. 229 at ECF p. 296 (“the September 27, 2021 Letter”).
3. The Appraisal Proceeding
On July 14, 2022, the Court ordered an appraisal “of the loss with respect to all manmade
structures on the Property, but . . . exclud[ing] soil, landscaping, contents, and loss of use.” Order
Granting Motion to Compel Arbitration, dkt. no. 47, at 22. A panel consisting of three appraisers
(“Appraisal Panel”) was appointed – with one appraiser selected by each side and the Court
appointing a neutral “umpire” appraiser. See dkt. nos. 69-70. On March 28, 2024, following a
five-day hearing, from June 20-24, 2023, an appraisal award (“Award”) issued. See dkt. no. 88-1.
In the Award, the Appraisal Panel found the “value of the claimed loss” to be $32,122,214 for the
“cost of repairs to return the Man-Made structures to their pre-loss condition as of the Date of
Loss” and the period of construction to be 36 months. Id. The Award included the following
disclaimer:
This appraisal award is made without consideration of any coverage
issues, policy limits, deductible amounts, prior payments, non-
covered items, or other provisions of the policy which might affect
the insurer’s liability. This appraisal award does not establish
coverage or the insurer’s liability to pay.
Id.
Federal subsequently brought a motion to vacate the Award, asserting that the Appraisal
Panel exceeded the scope of its authority by “making findings related to causation, namely, the
finding that certain damage was caused by the Glass Fire rather than by other causes.” Dkt. no.
134, Order Granting in Part and Denying in Part Defendant's Motion to Vacate Appraisal Award
and Granting Plaintiffs’ Motion to Dismiss (“Appraisal Award Order”) at 27. The Court rejected
that argument, reasoning as follows:
Here, the appraisal provision in the Policy provides for an appraisal
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to determine “the amount of loss.” Schaffer Arbitration Motion Decl.,
¶¶ 3-4, 7-14; dkt. no. 1-1 (Policy) at ECF p. 104, Y-5. As
Homeowners point out, references to a “loss” throughout the Policy
are linked to the occurrence of a specific event that occurred at a
particular time. See, e.g., dkt. no. 1-1 (Policy) at ECF p. 30 (defining
an “occurrence” as “a loss or accident to which this insurance applies
occurring within the policy period.”; id. at ECF p. 31 (under the
heading “Payment for a Loss[,]” providing that some coverage is
subject to a deductible that “applies to each occurrence”); id. at 32
(under the subheading “Payment Basis” in the “Payment for a Loss”
section, defining “reconstruction cost” as “the lesser of the amount
required at the time of loss to repair, replace, or rebuild, at the same
location, your house or any other permanent structure, using like
design, and materials and workmanship of comparable kind and
quality.”) (emphasis added). On the other hand, there is nothing in the
Policy that suggests that “loss” means damage to the Homeowner’s
insured property untethered to any specific event, as Federal
contends. Indeed, such an interpretation of the Policy language would
be nonsensical.
By extension, the appraisal panel could not have determined the
amount “of the loss with respect to all manmade structures on the
Property,” as it was charged by this Court to do, without identifying
the specific occurrence that gave rise to the damage it was appraising,
namely, the Glass Fire. Even assuming the panel’s appraisal implies
that it found that certain facts were true, e.g., that the damage at issue
was caused by the Glass Fire, the panel expressly disclaimed making
any such findings. In particular, as discussed above, the Appraisal
Award contains a disclaimer stating that the award “is made without
consideration or any coverage issues, policy limits, deductible
amounts, prior payments, non-covered items, or other provisions of
the policy which might affect the insurer’s liability” and “does not
establish coverage or the insurer’s liability to pay[.]” As the issue of
whether the damage the panel appraised was caused by a covered
occurrence or by some other cause is a coverage issue, the panel
disclaimed any such finding. Therefore, the findings of the panel do
not run afoul of California law. See Lee v. California Cap. Ins. Co.,
237 Cal. App. 4th at 1170 (“an appraisal panel may assign a value to
items as to which coverage is disputed with the disclaimer that the
award does not establish coverage or the insurer's liability to pay”).
Accordingly, the Court concludes that the panel did not act
improperly to the extent that it appraised the loss as the “[c]ost of
repairs to return the Man-Made structures to their pre-loss condition
as of the Date of Loss.”
Id. at 28-29.
Nonetheless, the Court recognized that “under California law, where there are disputes
about causation of loss in the context of insurance coverage case, the parties are entitled to have
those disputes resolved by the court.” Id. at 29. Therefore, the Court held that “the causation
findings that are embedded in the panel’s appraisal award may be challenged before this Court,
which is charged with deciding such issues . . . .” Id. at 31.
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The Court went on to reject Federal’s argument that the Panel exceeded the scope of its
authority with respect to its finding that the period of restoration (POR) was 36 months. Id. at 32.
In particular, it concluded that “[g]iven that the panel was charged with determining the amount of
the loss . . . and that amount turns, in part, on how long reconstruction will take, this finding does
not exceed the scope of the appraisers’ authority.” Id. The Court explained further that the
appraisal panel had the authority to make a POR finding for the following reasons:
Federal also contends Comprehensive Med. Ctr., Inc. v. State Farm
Mut. Auto. Ins., 690 F. Supp. 3d 1104 (C.D. Cal. 2023) “illustrates”
that POR is a question for the Court and not the appraisal panel. But
that case involved a question of how much coverage the insured
should receive for business loss and a dispute about the length of the
POR used to determine that amount. That case did not address,
however, whether an appraisal panel exceeds the scope of its authority
by determining, as a factual matter, the POR that should be used to
calculate reconstruction costs. The Court also finds unpersuasive
Federal’s fallback argument that “at minimum, the panel lacked the
authority to separately award a POR—an issue the parties never
agreed to arbitrate, and which Plaintiffs will deploy to support aspects
of their claim (such as living expenses) that likewise fall outside the
panel’s authority.” Reply at 15. Homeowners have not attempted to
rely on the POR to establish that they are entitled to any coverage that
was not at issue in the appraisal. Nor has either side cited any
authority that suggests that the panel’s POR finding has any
preclusive effect as to such coverage. Therefore, the Court concludes
Federal has failed to establish that the POR finding should be vacated.
Id. at 33.
4. The Coverage Determination Letter
Federal informed Plaintiffs of its coverage determination in a letter dated March 22, 2024.
Dekel Decl., Ex. 64 (“Coverage Letter”), dkt. no. 217 at ECF pp. 1781-90. It explained that its
review of Plaintiffs’ claim proceeded on “several tracks,” which its counsel described as follows:
(i) Federal's review of information provided by the Insureds through
the Claim adjustment process and regular correspondence with the
Insureds and their representatives, which began in fall 2020 and has
continued through this month, (ii) the exchange of information in the
litigation initiated by the Insureds, (iii) the exchange of information
during the 2023-2024 appraisal of the Insureds' alleged losses to
manmade structures on the Property, and (iv) Federal's independent
information gathering and reliance on experts.
Id. at 1, dkt. no. 217 at ECF p. 1781. Federal “determined that no coverage is afforded to the
Insureds for the Claim under [the Policy] for losses allegedly incurred to structures and contents . .
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. on the Property other than those related to the Insureds’ guest house, for which Federal has
already determined coverage and submitted payment[,]” rejecting the remaining losses asserted by
Plaintiffs in their proofs of loss. Id. It stated that its determination was based on a “thorough and
extensive investigation” into Plaintiffs’ claim that included the retention of “highly
credentialed experts in industrial hygiene, toxicology, chemistry, hydrogeology, environmental
science and risk, and related fields[.]” Id.
According to Federal, its experts “conducted extensive analysis of the Property and its
Contents, including a review of all testing conducted at the Property, hundreds of photographs of
the Property, and other material information” and “uniformly concluded” that
(i) the main residence does not require rebuilding, contrary to the
Insureds’ claims; (ii) any chemicals present in the Property are
consistent with “background” chemicals commonly found in
businesses and residences in Northern California; and (iii) any soot,
ash, or char deposited on surfaces or Contents at the Property could
have been safely cleaned in 2020 shortly after the Fire, and the
Insureds could have safely reoccupied their home.
Id. at 2, ECF p. 1782. Federal goes on to cite numerous exclusions in support of its coverage
determination, namely, the Neglect exclusion (based on failure to use the $250,000 paid by
Federal for remediation to clean the house and its contents), violation of the duty to “protect
property after a loss” (based on Plaintiffs’ alleged failure to “take any action to prevent further
damage to the Property”), the Gradual Loss Exclusion (based on the findings of Federal’s experts
that certain damage claimed by Plaintiffs to have been caused by the Glass Fire existed prior to the
Glass Fire and was the result of wear and tear), the Contamination exclusion (based on the
findings of Federal’s experts that “testing conducted at and of the insureds’ Property identified
chemicals commonly found in Northern California”), the exclusion for losses that manifest outside
of the policy period (based on the findings of Federal’s experts that “certain damages to the
Insureds’ Property were caused by wear and tear, neglects, or pre-existing contamination), and
breach of the implied covenant of good faith and fair dealing (based on the allegation that in their
proofs of loss and in their deposition testimony Plaintiffs inflated their losses by tens of millions
of dollars). Id. at 2-9.
In the Coverage Letter, Federal “reserve[d] its right to supplement its defenses and
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pleadings in this matter upon further discovery in the lawsuit currently pending in the Northern
District of California by adding a defense based on the Policy condition for Concealment or fraud,
found at page Y-1 of the Policy.” Id. at 9.
5. Post-Loss Remediation and Construction
Following its investigation, Federal paid Plaintiffs approximately $1.25 million to rebuild
the guest house, $250,000 for industrial cleaning of the unburned structures at the Property, and
more than $1 million to remediate contents. See Dekel Decl., Ex. 78, dkt. no. 218 at ECF pp. 141-
152 (June 2024 payment summary). Mr. Pollack testified that no efforts have been undertaken to
rebuild the guest house because the amount Federal paid was not “anywhere near the amount of
money it would take to rebuild the guest house.” Dekel Decl., Ex. 6 (T. Pollack Dep.) at 343. He
further testified that the only cleaning of the house that has been performed has been limited to
“test cleaning” by Plaintiffs’ experts. Id. at 131-132
6. Additional Living Expenses
According to an expert report prepared for Plaintiffs by Marie Ebersbacher, Federal owes
Plaintiffs $17,471,535 in unreimbursed ALE for the period October 1, 2020 through February 28,
2025 and monthly ALE beginning March 1, 2025 of $317,374. Dekel Decl., Ex. 34 (February 20,
2025 Report of Marie Ebersbacher), dkt. no. 217 at ECF pp. 1108-1116. These amounts were
based on estimates that for the period between October 1, 2020 and February 28, 2025, Plaintiffs’
fair rental value for the Property was $7,496,802, the cost to rent furniture was $621,238, the cost
to rent and install an art collection comparable to the one on the Property was $4,967,500, the cost
to replace Plaintiffs’ wine collection would be $821,759 and the cost of renting and curating a rare
book collection comparable to the one on the property would be $3,564,236. Id. Ebersbacher
deducted from her calculation gross rents paid by Federal in the amount of $978,698 for rent paid
between October 2020 and December 2023, as well as an additional $137,000 for rent payments
for the period December 15, 2023 through June 15, 2024. Id. at 5-6. Ebersbacher testified at her
deposition that she had not seen evidence that the unpaid ALE amounts were actually incurred by
the Pollacks. Id.., Ex. 21 (Ebersbacher Dep.), dkt. no. 217 at ECF pp. 679-709.
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B. Procedural Background
The operative complaint is Plaintiffs’ First Amended and Supplemental Complaint, dkt.
no. 180 (“FASC”). In the FASC, Plaintiffs assert the following claims: 1) “breach [of] the
contract of insurance by refusing and failing to pay benefits due under the Policy including, but
not limited to, payments (a) to repair or replace the Property in order to restore it to its pre-loss
condition, (b) to repair, replace, or pay the lost value of the contents, as required by the Policy, and
(c) for loss of use[;]” 2) declaratory relief seeking “a declaration of the parties’ rights and duties
under the Policy[;]” 3) breach of the implied covenant of good faith and fair dealing (“bad faith
claim”); 4) negligence based on Federal’s “inadequate reserve-setting practices” and “failure to
ensure adequate policy limits and proper coverage tailored to the Homeowners’ needs[;]” and 5)
Financial Elder Abuse.
On April 2, 2025, Federal filed its Amended Answer to First Amended and Supplemental
Complaint and Counterclaims, dkt. no. 198 (“Amended Answer”). In its Amended Answer,
Federal asserts sixteen affirmative defenses, including, as relevant here, defenses based on: 1)
failure to protect from further damage (Eighth Affirmative Defense); 2) “exclusions for losses
caused by wear and tear or gradual loss, neglect, mold, and contamination[,]” (Tenth Defense); 3)
lack of coverage for “losses manifested outside the applicable Policy period[,]” (Fourteenth
Defense); 4) Plaintiffs’ intentional misrepresentation and concealment of material facts in
violation of the Policy’s concealment or fraud provision,” (Fifteenth Defense); and 5) Plaintiffs’
fraud (Sixteenth Affirmative Defense). Federal also asserted counterclaims for breach of contract
and fraud. Dkt. no. 198.
Federal’s breach of contract counterclaim asserts that Plaintiffs violated the Policy’s
“concealment or fraud” provision and is based on the following alleged misrepresentations:
a. On or around October 26, 2020, Plaintiffs represented to Federal
that “because of the scale and scope of [their] property, [the]
restoration and/or reconstruction process will likely take between
1 and 3 years.”7
b. Plaintiffs submitted sworn statements in proof of loss on or around
7 Plaintiffs refer to this statement as the “Duration Statement.” Plaintiffs’ Summary Judgment
Motion at 15. The October 26, 2020 Letter can be found in the record at Brown Decl., Ex. 13, dkt.
no. 231 at ECF pp. 229-236.
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August 2, 2021 and August 26, 2021 seeking $100.3 million in
coverage, purportedly representing the claimed cost of
demolishing and replacing all the structures on the Property and
increased living expenses of $400k a month for a three-year
period.8
c. On or around September 27, 2021, Plaintiffs asserted Kaizen
Safety Solutions had concluded that the Glass Fire caused damage
that could not be repaired and thus Plaintiffs were entitled to the
total replacement of the structures and landscaping on the
Property.9
Dkt. no. 198 at ¶ 57; see also id., Counterclaim ¶ 21 (alleging that “on October 26, 2020,
Plaintiffs represented to Federal ‘that because of the scale and scope of [their] property, [the]
restoration and/or reconstruction process will likely take between 1 and 3 years.’ ”); id. ¶ 34
(alleging that “[i]n August 2021, approximately eleven months after the Glass Fire, Plaintiffs
submitted to Federal two sworn statements in proof of loss, signed by each of them, totaling more
than $100 million. Plaintiffs’ proofs of loss were premised on their claim that the entire
Property—including the main house, pavilion, and wine room—was so damaged by contamination
from smoke and thermal damage caused by the Glass Fire that Plaintiffs were entitled to (i) the
full replacement value of the Property—which Plaintiffs pegged at more than $85 million, and (ii)
more than $15 million to cover anticipated increases in their standard of living for three years’
time.”); id. ¶ 37 (alleging that “on September 27, 2021, Plaintiffs identified in correspondence to
Federal the purported basis for their $100.3 million ‘replacement value’ insurance claim: testing
and conclusions purportedly provided by an industrial hygienist at Kaizen Safety Solutions, Dawn
Bolstad-Johnson.”); id. ¶¶ 44-47 (alleging that Bolstad-Johnson testified at her deposition that she
“is not a fire or wildfire-remediation expert”; that she “does not have the background and
qualifications to determine whether the main home on the Property could be restored to its pre-fire
condition through cleaning and other remediation measures short of a teardown”; that she “never
recommended to Plaintiffs that the main house, pavilion, or wine room be completely replaced
8 Plaintiffs refer to these Proofs of Loss collectively as “Loss Statement.” Plaintiffs’ Summary
Judgment Motion at 15. Defendants refer to them as “POL 4” and “POL 5.” They can be found in
the record at dkt. no. 229 at ECF pp. 266 and 274; Dekel Decl., Exs. 67 (POL 5) and 70 (POL 4),
dkt. no. 217 at ECF pp. 1807-1823, 1848-1856.
9 Plaintiffs refer to this statement as the “Purported Counsel Statement.” Plaintiffs’ Summary
Judgment Motion at 15. It can be found in the record at dkt. no. 229 at ECF p. 296.
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because of Glass Fire damage”; and that she “never told Plaintiffs that the Glass Fire had caused
such severe damage that the Property could not be restored to its pre-loss condition through
cleaning and other remediation measures short of a demolition.”).
Federal alleges in its breach of contract counterclaim that it was “substantially damaged by
Plaintiffs’ conduct because Federal was forced to investigate Plaintiffs’ insurance claim, which
was fraudulently presented.” Id. ¶ 63. In particular, Federal alleges that “[t]he claim
required Federal to spend substantial sums to adjust improper claims (including hiring expert
consultants and directing those experts to conduct testing they otherwise would not have
conducted).” Id. It further alleges that Federal has been damaged by Plaintiffs’ conduct because it
“has issued Plaintiffs nearly $4 million in payments, including years of additional living expenses,
based on Plaintiffs’ fraudulent claims that they had a valid basis to believe the Glass Fire had
rendered their Property uninhabitable and that all the structures on the Property needed to be
completely replaced.” Id.
Similarly, in its fraud counterclaim, Federal alleges that Plaintiffs “falsely represented to
Federal that their replacement coverage theory was supported by expert testing and analysis by
Kaizen Safety Solutions.” Id. ¶ 69. Federal goes on to allege that it relied on Plaintiffs’ alleged
misrepresentations and was damaged as follows:
69. Federal justifiably relied on Plaintiffs’ misrepresentations and
omissions. . . . Federal was obligated under California law to conduct
an investigation into Plaintiffs’ contamination claim. Consistent with
these obligations, Federal accepted Plaintiffs’ representations at face
value and conducted a thorough investigation into Plaintiffs’ claim.
Federal learned only recently, during January 2025 depositions, that
Plaintiffs’ statements regarding their understanding of the alleged
inability to repair their Property were false.
70. Had Federal known that Plaintiffs’ 2021 insurance claim was not
supported by qualified expert conclusions and was, in fact, fraudulent,
Federal would have behaved differently. For example, Federal would
not have paid Plaintiffs’ post-August 2021 additional living expenses
based on Plaintiffs’ claim that the Property was uninhabitable. Federal
would have investigated Plaintiffs’ claim differently and would not
have conducted certain testing, such as multiple rounds of air quality
assessments, that were necessary to respond to Plaintiffs’ replacement
coverage theory. And Federal would have denied coverage earlier in
the claims adjustment because Plaintiffs’ fraud is a material breach of
the Policy’s concealment or fraud provision, which states that “[w]e
do not provide coverage if you or any covered person has
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intentionally concealed or misrepresented any material fact relating
to this policy before or after the loss.”
71. As alleged in more detail above, as a result of Plaintiffs’
misrepresentations and omissions, Federal has suffered resulting
damage, including because Federal was forced to investigate
Plaintiffs’ insurance claim, which was fraudulently presented, and
because Federal has issued Plaintiffs nearly $4 million in payments
on this insurance claim. But for Plaintiffs’ fraudulent conduct, Federal
would not have issued additional payments on Plaintiffs’ fraudulent
claims or spent additional sums continuing to adjust Plaintiff’s
improper claims.
72. Federal is entitled to restitution of the amounts it paid on
Plaintiffs’ fraudulent insurance claim under the Policy, which is now
void, including without limitation the amounts that Federal paid
Plaintiffs for additional living expenses between Plaintiffs’ August
2021 proofs of loss and Federal’s March 2024 coverage-position
determination.
73. Federal is also entitled to recover (i) the costs that it incurred after
August 2021 attempting to replicate and verify the testing conducted
by Kaizen Safety Solutions; and (ii) the costs that it incurred
investigating and adjusting Plaintiffs’ August and September 2021
claims that the Property could not be repaired and needed to be
completely replaced.
Id. ¶¶ 69-73.
In its Amended Answer, Federal seeks a declaration that: 1) coverage is not available
under the Policy for Plaintiffs’ claim because the Policy is null and void under the Fraud
Provision; and 2) Federal owes no further compensation to Plaintiffs. Id., Prayer for Relief.
Federal also seeks “restitution of amounts paid by Federal to Plaintiffs under the Policy” and
damages covering “(i) the costs that Federal incurred after August 2021 attempting to replicate and
verify the testing conducted by Kaizen Safety Solutions; and (ii) the costs that it incurred
investigating and adjusting Plaintiffs’ August and September 2021 claims that the Property could
not be repaired and needed to be completely replaced.” Id.
In its summary judgment motion, Federal asks the Court to grant summary judgment in its
favor on Plaintiffs’ claims for bad faith, negligence and Financial Elder Abuse. It also seeks partial
summary judgment on Plaintiffs’ breach of contract and declaratory relief claims. Plaintiffs, in
turn, bring a summary judgment motion seeking summary judgment in their favor on Federal’s
affirmative defenses based on failure to protect from further damage (Eighth Affirmative
Defense), exclusions for gradual loss, neglect and contamination (Tenth Affirmative Defense) and
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damage incurred outside of the Policy Period (Fourteenth Affirmative Defense). Plaintiffs also
seek summary judgment on Federal’s counterclaims for breach of contract and fraud, as well as on
the Fifteenth and Sixteenth Affirmative Defenses to the extent those defenses are based on the
same facts as the counterclaims.
Federal also brings a Daubert motion in which it asks the Court to exclude the testimony
of the following expert witnesses designated by Plaintiffs: (1) William Mills, in part; (2) Bernard
Crimmins, in part; (3) Dawn Bolstad-Johnson, in part; (4) Christopher Nutter, in part; (5) Randy
Mandel, in part; (6) Robert Harrison, in full; (7) David Michaels, in part; (8) John Verret, in full;
(9) Brian Carl, in full; (10) Kevin Cahill, in full; (11) Charles Miller, in full; and (12) Neal
Bordenave, in part.
III. DAUBERT MOTION
A. Legal Standards Under Rule 702 and Daubert
Under Rule 702 of the Federal Rules of Evidence, a witness may offer expert testimony if
the following requirements are met:
(a) the expert’s scientific, technical, or other specialized knowledge
will help the trier of fact to understand the evidence or to determine a
fact in issue;
(b) the testimony is based on sufficient facts or data;
(c) the testimony is the product of reliable principles and methods;
and
(d) the expert has reliably applied the principles and methods to the
facts of the case.
Fed. R. Evid. 702. In determining whether expert testimony meets the requirements of Rule 702,
courts follow the approach set forth in Daubert v. Merrell Dow Pharms., Inc., in which the
Supreme Court described the relevant inquiry as follows:
Faced with a proffer of expert scientific testimony, then, the trial
judge must determine . . . whether the expert is proposing to testify to
(1) scientific knowledge that (2) will assist the trier of fact to
understand or determine a fact in issue. This entails a preliminary
assessment of whether the reasoning or methodology underlying the
testimony is scientifically valid and of whether that reasoning or
methodology properly can be applied to the facts in issue.
509 U.S. 579, 590 (1993).
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With respect to the first requirement, that an expert must testify to “scientific knowledge,”
the Court in Daubert explained that “[t]he adjective ‘scientific’ implies a grounding in the
methods and procedures of science . . . [while] the word ‘knowledge’ connotes more than
subjective belief or unsupported speculation . . . [and] ‘applies to any body of known facts or to
any body of ideas inferred from such facts or accepted as truths on good grounds.’” Id. (quoting
Webster’s Third New International Dictionary 1252 (1986)). The Court declined to set forth a
definitive test but offered some “general observations” about the types of factors that might be
considered in determining whether this requirement is met. Id. at 593. These include: 1) whether
the methodology can be or has been tested; 2) whether the theory and technique has been
subjected to peer review; 3) if a “particular scientific technique” is involved, the known or
potential rate of error; and 4) the degree of acceptance in the relevant scientific community.
Daubert, 509 U.S. at 592-94.
The Ninth Circuit has noted that the “scientific knowledge” requirement is usually met by
“[e]stablishing that an expert’s proffered testimony grows out of pre-litigation research or that the
expert’s research has been subjected to peer review.” Daubert v. Merrell Dow Pharmaceuticals,
Inc., 43 F.3d 1311, 1318 (9th Cir. 1995) (“Daubert II”). However, when such evidence is not
available, the proponent’s experts may satisfy this requirement by “explain[ing] precisely how
they went about reaching their conclusions and point[ing] to some objective source – a learned
treatise, the policy statement of a professional association, a published article in a reputable
scientific journal or the like – to show that they have followed the scientific method, as it is
practiced by (at least) a recognized minority of scientists in their field.” Id. at 1319.
The second requirement under Rule 702, that expert testimony must “assist the trier of fact
to understand the evidence or to determine a fact in issue,” “goes primarily to relevance.” Id. at
591. This is a question of “fit,” and “is not always obvious.” Daubert, 509 U.S. at 591. The
Court cautioned that “scientific validity for one purpose is not necessarily scientific validity for
other, unrelated purposes.” Id. To meet this requirement there must be “a valid scientific
connection to the pertinent inquiry.” Id. In other words, the expert testimony must “logically
advance[ ] a material aspect of the proposing party’s case.” Daubert II, 43 F.3d at 1315. This
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requirement is more stringent than the relevancy requirement of Rule 402 of the Federal Rules of
Evidence, “reflecting the special dangers inherent in scientific expert testimony.” Jones v. U.S.,
933 F. Supp. 894, 900 (N.D. Cal. 1996) (citing Daubert, 509 U.S. at 591; Daubert II, 43 F.3d at
1321 n. 17). In particular, expert testimony “ ‘can be both powerful and quite misleading because
of the difficulty in evaluating it.’ ” Id. (quoting Daubert, 509 U.S. at 595 (citation omitted)).
Therefore, federal judges should exclude scientific expert testimony under the second prong of the
Daubert standard unless they are “convinced that it speaks clearly and directly to an issue in
dispute in the case.” Id. (quoting Daubert II, 43 F.3d at 1321 n. 17).
“[A] major principle underlying the Daubert gatekeeping function is that the trier of fact
should not be unduly prejudiced by testimony that is based on foreign concepts.” Volk v. United
States, 57 F. Supp. 2d 888, 896 (N.D. Cal. 1999); see also Stilwell v. Smith & Nephew, Inc., 482
F.3d 1187, 1192 (9th Cir. 2007) (“In Daubert and Kumho Tire Co. v. Carmichael, 526 U.S. 137
(1999), the Supreme Court described the district court’s ‘gatekeeping role,’ and required that ‘all
forms of expert testimony, not just scientific testimony’ survive scrutiny under Rule 702.”)
(quoting White v. Ford Motor Co., 312 F.3d 998, 1007 (9th Cir. 2002)).
B. Daubert Rulings10
1. William Mills
Dr. William Mills is an environmental scientist and certified industrial hygienist who
served an expert report dated April 18, 2025. Dekel Decl., Ex. 43 (“Mills April 18, 2025 Expert
Report”) at 1, dkt. no. 217 at ECF p. 1481. He offers the following opinions in his report:
1. The Tubbs fire had negligible, if any, impact on the Property.
2. The impact of other[ ] fires, prior to Glass Fire was minimal.
3. Air monitoring and other data shows the Property was heavily
impacted by the Glass Fire for at least 10 days.
4. Post-fire indoor air monitoring data of the house on the Property
indicates ongoing diurnal cycling of VOCs in 2022, consistent
10 A number of Plaintiffs’ experts retained for trial were also involved in investigating the damage
sustained by the Property as a result of the Glass Fire and therefore are both expert witnesses and
percipient witnesses. Federal proposed that “the parties agree that any witnesses who are both
litigation experts and fact witnesses [would] be deposed during the expert-discovery period as to
both their expert opinions and their percipient knowledge.” Plaintiffs’ Ex. LLL (Oct. 24, 2024
email from Federal’s counsel to Plaintiffs’ counsel). Plaintiffs agreed to that proposal. Plaintiffs’
Opposition to Daubert Motion, dkt. no. 239 at 5 n. 6.
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with absorption/adsorption of fire smoke components into porous
materials in the house.
5. Air monitoring data for the Napa Valley and the Property does not
show any significant events impacting the Property between
November 2020 and the Crystal Fire in June 2024.
6. The Crystal Fire in June 2024 impacted the Property. Air
monitoring data indicates concentrations of fire smoke on the
Property similar to those measured for the Marshall Fire in
Colorado in December 2022.
7. Determination of soot on surface samples using optical
microscopy is not a reliable method for determining this
parameter.
Id. at 4, ECF p. 1483.
At his deposition, Dr. Mills was asked by Federal’s counsel on direct examination to
answer several questions about cleaning indoor smoke particles by HEPA vacuuming. See, e.g.,
Plaintiffs’ Ex. CCC (Mills Dep.) at 80, 117, 206, 208; dkt. no. 236-2 at ECF pp. 218, 227, 250. On
re-direct, Plaintiffs’ counsel asked Dr. Mills to revisit the issue of HEPA cleaning. Dekel Decl.,
Ex. 16 (Mills Dep.) at 295-97; dkt. no. 217 at ECF pp. 451-53. Federal describes this questioning
by Plaintiffs’ counsel as an “ambush” and contends the opinions offered by Dr. Mills in response
to the questions posed by Plaintiffs’ counsel on re-direct should be excluded. Daubert Motion at 3.
Plaintiffs contend the questions were posed merely for “clarification and completeness” in light of
the questions asked on direct. Opposition at 5.
Federal Rule of Civil Procedure 26(a)(2) governs the disclosure of expert testimony. The
parties must make their expert disclosures “at the times and in the sequence that the court orders.”
Fed. R. Civ. P. 26(a)(2)(D). If a party fails to provide information as required by Rule 26(a) they
cannot use that information at trial “unless the failure was substantially justified or is harmless.”
Fed. R. Civ. P. 37(c)(1). However, “[u]nder the doctrine of curative admissibility, ‘the
introduction of inadmissible evidence by one party allows an opponent, in the court’s discretion,
to introduce evidence on the same issue to rebut any false impression that might have resulted
from the earlier admission.’ ” Nguyen v. Sw. Leasing & Rental Inc., 282 F.3d 1061, 1067 (9th Cir.
2002) (quoting United States v. Whitworth, 856 F.2d 1268, 1285 (9th Cir.1988) (citations
omitted)); see also GSI Tech., Inc. v. United Memories, Inc., No. 5:13-CV-01081-PSG, 2015 WL
12942201, at *7 (N.D. Cal. Oct. 14, 2015) (experts may “testify on matters not included in their
reports if [the other side] opens the door to such testimony during examination of their experts.”).
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Here, neither side disputes that the questions at issue elicited opinions that were beyond the
scope of the opinions offered by Dr. Mills in his report. Likewise, both sides appear to understand
that while experts are generally limited to offering testimony within the scope of their reports,
questions by opposing counsel may open the door to opinions not contained in an expert’s report.
The only dispute appears to be whether Federal’s questions on direct did, in fact, open the door to
the opinions offered on redirect. See Federal Reply at 3 (arguing that the opinions expressed on
redirect went beyond the scope of the “narrowly tailored” questions posed by Federal’s counsel on
direct). The Court declines to rule on this question at this time as it would require it to speculate as
to which of Dr. Mills’ opinions might be offered at trial and how they might be used. However,
the Court cautions Plaintiffs that at trial they will be permitted to question Dr. Mills only in
connection with the opinions disclosed in his expert report, except to the extent that Federal opens
the door to questioning on other issues at trial.11 Likewise, if Federal asks questions on issues that
go beyond the scope of the opinions offered by Dr. Mills in his expert report, the Court will permit
Plaintiffs to elicit opinions on that specific subject matter as is necessary for rebuttal.
2. Bernard Crimmins
Bernard Crimmins has a background in environmental analytical chemistry and holds a
Ph.D. in Marine Estuarine and Environmental Sciences with a specialization in atmospheric
chemistry. He testified at his deposition that his work is “centered on analytical chemistry, on
actual[ly] understanding the chemical profiles on individual matrices, which would include
water[.]” Dekel Decl., Ex.19 (Crimmins Dep.) at 245, dkt. no. 217 at ECF p. 591. His CV reflects
that his work has primarily focused on chemical profiles of water and fish. Id., Ex. 46 (Crimmins
CV), dkt. no. 217 at ECF pp. 1575-78. He has also conducted research in which he “assess[ed] the
sources of combustion aerosol, biomass burning, . . . two stroke engines, essentially, the aerosol
that was coming off the Indian subcontinent as part of the ‘Indowex’ experiment[,]” the goal of
which was “to look at PAH profiles, and try to distinguish between what the dominant PAH
source was.” Id., Ex.19 (Crimmins Dep.) at 40, dkt. no. 217 at ECF p. 515.
11 Of course, to the extent Dr. Mills testifies as a percipient witness, he may testify as to facts
within his personal knowledge regardless of whether they were included in his expert report.
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Crimmins does not consider himself a “wildfire remediation expert” but instead, describes
himself as an expert in “analytical environmental chemist[ry] [who] can help understand wildfire
chemistry” and who “understand[s] the chemical principles behind remediation.” Id. at 53-54, dkt.
no. 217 at ECF pp. 528-29. He testified at his deposition that apart from the work he has
performed for Plaintiffs, he has never been “brought inside a structure” and asked to “make some
recommendations on whether we need to remove or replace parts of [the] structure after exposure
to a wildfire.” Id. at 56, dkt. no. 217 at ECF p. 531. However, he has been asked to “assess the
air that is inside the structure” and to opine “what chemicals are actually in a structure.” Id. He
specifically testified that he had been retained on two occasions to assess the source of odors
inside structures that were “causing the occupants to get sick.” Id. at 38, ECF p. 513. In one of
those cases, the odor was coming from “the mixing of a phenol based mold removal solution . . .
and bleach.” Id.
Crimmins also testified that he worked in a contract laboratory in the 1990s where he
“looked at soil contamination” and that he has conducted research analyzing sediment
contamination. He explained that “sediments are essentially soil that have water. So the matrix is
very similar, and the work is very similar.” Id. at 19, ECF p. 72. Although he testified at his
deposition that he could not recall publishing any articles addressing both soil contamination and
remediation, his expert report cites a 2022 article he authored entitled “Semi-Volatile
Contaminants in Soils.” Dekel Decl., Ex. 30 (“Crimmins February 14, 2025 Expert Report”) at
21, dkt. no. 217 at ECF p. 1007.
Crimmins served an expert report dated February 14, 2025. Dekel Decl., Ex. 30
(“Crimmins February 14, 2025 Expert Report”) at 1, dkt. no. 217 at ECF p. 987. In his report,
Crimmins expresses the following opinions:
Opinion 1. Fire smoke from biomass and structural fuels contain[s]
hundreds of components that can negatively impact structures causing
damage.
Opinion 2. The property at 256 North Fork Crystal Springs Rd,
Helena, CA has unique characteristics that enhanced the damage
caused by the Glass Fire and resulting smoke.
Opinion 3. The Glass Fire produced harmful chemicals and caused
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Toxicological Damage to the property at 256 North Fork Crystal
Springs Rd, Helena, CA.
Opinion 4. Investigations for damage caused by wildfire smoke must
include an assessment of those constituents of smoke that are both
likely to be contained in the smoke (provided there is no source
testing) as well as those that are capable of causing Chemical
Damage.
Opinion 5. Chemicals produced by the Glass Fire have permeated the
structures at the property and permeated the components of those
structures (both interior and exterior) causing irreversible Chemical
Damage to the structures.
Id. at 2, ECF p. 988.
Federal asserts that in light of Crimmins’ “lack of particularized experience in wildfire
investigation or remediation, he is not qualified to offer opinions on these topics and these
opinions should be excluded.” Daubert Motion at 8 (citing Falcon v. State Farm Lloyds, 2014 WL
2711849, at *10 (W.D. Tex. June 16, 2014)). It further contends Crimmins lacks the
qualifications to offer the opinions about soil contamination found on page 21 of his expert report
or about damage to art, books and furniture, summarized in Opinion 5 and explained at pages 21-
22 of his expert report. Id. at 11-13. Federal also argues that Crimmins should be precluded from
offering testimony about cracking, observing that while Crimmins’ March 3, 2023 expert report
(produced before Crimmins was designated as an expert) addressed cracking, his more recent
report removed all opinions about cracking. Daubert Motion at 7 (citing Dekel Decl., Ex.
Ex. 29 (March 2023 Rep.) at 17-19; dkt. no. 217 at ECF pp. 963-983). Nonetheless, Crimmins
addressed cracking at his deposition in response to the question, “Have you identified any other
place on the Pollock-Tabios property, where you would say there is deterioration of surfaces that
you can attribute to the Glass Fire?” Plaintiffs’ Ex. LL (Crimmins Dep.) at 225, dkt. no. 236-1 at
ECF p. 123.
The Court declines to decide at this time whether Crimmins’ opinions related to cracking
are admissible. Whether his opinions are beyond the scope of his report or are, instead admissible
elaboration of his opinions (as Plaintiffs contend), will depend on the specific testimony Plaintiffs
seek to offer at trial and therefore, the Court will be in a better position to evaluate any objections
Federal may seek to assert as to these opinions at that time.
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The Court rejects Federal’s challenges to Crimmins’ qualifications to opine about wildfire
investigation, soil contamination and damage to the contents of Plaintiffs’ house. “The issue of
qualifications is governed by Federal Rule of Evidence 702 which contemplates a broad
conception of expert qualifications.” As the terms of the rule state, an expert may be qualified
either by “knowledge, skill, experience, training, or education.” Thomas v. Newton Int'l Enters., 42
F.3d 1266, 1269 (9th Cir. 1994). “Moreover, the advisory committee notes emphasize that Rule
702 is broadly phrased and intended to embrace more than a narrow definition of qualified
expert.” Id. The Court finds that Cummins has sufficient experience to offer the challenged
opinions and therefore DENIES Federal’s request to exclude them on the basis that Cummins is
not qualified to offer them.
3. Dawn Bolstad-Johnson
Dawn Bolstad-Johnson is an industrial hygienist who conducted site investigation at the
Property after the Glass Fire and produced a report for Kaizen Safety Solutions LLC dated
September 14, 2022. See generally, Plaintiffs’ Ex. CCCCCC (“Kaizen Report”), dkt. no. 278.
She has over 25 years’ experience sampling after fires and “was the first to publish a peer-
reviewed study on identifying and quantifying airborne toxins immediately after a fire is
extinguished.” Id. at 276-77, dkt. no. 278-2 at ECF pp. 127-28. She conducted testing at the
Property over a series of visits between December 11, 2020 and January 2, 2022 using a
GASMET device, testing “multiple locations and heights from every room, including closets.”
Dekel Decl. ¶ 2; Dekel Decl., Ex. 28 (Kaizen Report) at Pollock-Appraisal-000035, dkt. no. 217 at
ECF p. 940.12
The GASMET is a portable instrument used to detect gases and chemical hazards in the air
in real time. Dekel Decl., Ex. 28 (Kaizen Report) at Pollock-Appraisal-000034, dkt. no. 217 at
ECF p. 939. Bolstad-Johnson testified that the GASMET comes with library files for up to 50
chemicals that contain the “spectra absorption” of those chemicals. Dekel Decl., Ex. 25 (Bolstad-
Johnson Dep.) at 175, dkt. no. 217 at ECF p. 59. For every sample taken with the GASMET, a
12 Dekel lists the dates of Bolstad-Johnson’s visits based on the dates listed in her report.
Plaintiffs do not dispute the accuracy of this information
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“spectra file” is generated, which is like a “Polaroid picture of what was in the environment.” Id.
at 177, ECF p. 861. The spectra is then converted to an .SPE or .SPEX file using Calcmet
software. Id. at 181, ECF p. 865.
Bolstad-Johnson testified that her testing process involved repeatedly adjusting the
“analytes” in the library she tested for, turning some off and others on, depending on her results, to
come up with her final library of analytes. Plaintiffs’ Exhibit PP (Bolstad-Johnson Dep.) at 209-
211, dkt. no. 236-1 at ECF p. 407. She testified that she did not “keep a record of the time that
[she] turned off the analyte or added other analytes” but that “the data is completely reproducible
because you have the spectra files.” Id. at 201, ECF p. 407. The final analytes are listed in the
Kaizen Report. Dekel Decl., Ex. 28 (Kaizen Report) at Pollock-Appraisal-000034, dkt. no. 217 at
ECF p. 939. According to Plaintiffs, they produced to Federal “the raw data from
[Bolstad-Johnson’s] GASMET GT5000 Terra FTIR Ambient Air Analyzer (‘GASMET’) testing .
. . and produced hundreds of pages of analysis in conjunction with her final report, including .txt
files, excel spreadsheets background data, Aerotrak, P-Trak, and PID data.” Plaintiffs’ Opposition
at 2 (citing Plaintiffs’ Ex. EEEEEE, dkt. no. 236-5 at ECF p. 1316; id., Ex. DDDDDD, dkt. no.
236-5 at ECF p. 1313).
Federal contends all of Bolstad-Johnson’s opinions based on her GASMET testing should
be excluded because she did not “maintain the unaltered results tables and text files generated
based on the library—or any record of the ‘alterations that were made along the way.’” Daubert
Motion at 2 (citing Dekel Decl., Ex. 25 (Bolstad-Johnson Dep.) at 186, 199, dkt. no. 217 at ECF
pp. 870, 876). Citing its own expert, Federal asserts that it is “significantly prejudiced” by
Bolstad-Johnson’s failure to preserve these files because it “has no way to know which chemicals
Bolstad-Johnson tested for, but eliminated from her report and analysis—including whether those
test results showed certain chemicals at non-detectable levels or otherwise support Federal’s
experts’ opinions.” Id. (citing Que Hee Decl., dkt. no. 224, ¶ 14).
Federal further contends the Court should exclude an opinion expressed in Bolstad-
Johnson’s rebuttal report stating that she had “personally tested homes in Colorado both before
and after remediation efforts and found continued off-gassing of VOCs and other toxic
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substances.” Id. at 2-3 (quoting Dekel Decl., Ex. 42 (April 18, 2025 Expert Report of Dawn
Bolstad-Johnson) at 6, dkt. no. 217 at ECF p. 1474). Federal also suggests it is asking the Court to
exclude, more broadly, “Bolstad-Johnson’s opinions based on her investigations of other
properties.” Id. at 3. According to Federal, these opinions should be excluded because Bolstad-
Johnson refused to provide any specific information about these remediation efforts and testing
based on privacy concerns and therefore it has not been able to meaningfully cross-examine her as
to this opinion. Id.
The Court rejects Federal’s assertion that Bolstad-Johnson’s failure to preserve records of
the process by which she arrived at the final library of analytes requires exclusion of all of her
opinions relating to her GASMET data. It appears to be undisputed that the raw data for the
analytes in the library that was used to support Bolstad-Johnson’s conclusions in the Kaizen
Report, including the spectra, which cannot be altered, were produced to Federal. Federal’s
contention that it is prejudiced by Plaintiffs’ failure to produce data reflecting the preliminary
library files that were not used to support the findings of that report is not persuasive.
The Court declines to decide Federal’s second challenge, which it concludes is more
appropriately addressed by objection at trial. The Court notes that it is not clear whether Federal’s
objection is limited to a single opinion or is directed at a broader set of opinions. The Court will
be better able to evaluate Federal’s objection at trial.
4. Christopher Nutter
Christopher Nutter is a licensed architect with “extensive experience in forensic analysis of
defective construction, evaluation of architectural standard of care claims” who has “provide[d]
opinions in disputes involving water intrusion, mold, construction error, design error, [and]
product defect and performance[.]” Plaintiffs’ Ex. YYYYY (Feb. 20, 2025 Expert Report of
Christopher Nutter (“Nutter Expert Report”)), CV; dkt. no. 236-4 at ECF p. 961. He is a member
of the American Institute of Architects, a nationally certified architect through NCARB, licensed
in multiple states including California, and LEED accredited. Id.
Nutter was retained by Plaintiffs to review documentation of damage to the structures on
the Property, visit the Property and evaluate “the reasonableness and appropriateness of proposed
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cleaning and repair plans;” as well as to review and evaluate “the reasonableness of various scope
and cost proposals for reconstruction, repairs, and cleaning of damaged Project elements.” Id. at
1. Among the opinions he offers in his report are the following:
1. Fire consumed the guest house, burned in and around the un-
combusted structures, and heated the adjacent ground to
combustion temperatures.
2. Fire created combustion byproducts that circulated around and
engulfed the exterior of the Main House, the Pavilion, the Wine
Cellar, the Garage, the Outbuildings, and across the Project site,
which were then circulated through open vents and by the HVAC
system permeating habitable spaces, concealed areas, wall
cavities, and attics.
3. Damage has been documented throughout the interior and exterior
of all structures, and within the materials of each of the structures,
by experts working for the Insurer and the Homeowners.
4. Much of the damage is located in areas difficult or impossible to
access, including:
a. Within wall cavities, including the framing, insulation, drywall,
and sheathing
b. Within the electrical system, including fixtures, outlets,
equipment, and low voltage systems
c. Within HVAC equipment, ductwork, and vents
d. Behind and around built-in casework and shelving
e. Within small crevices, such as door hardware and small gaps
between building materials, both interior and exterior
f. Within any porous material itself, such as stone, plaster, wood,
gypsum, etc., both interior and the damage, leaving significant
demolition as the only viable solution for accessing and
addressing the damage.
5. Remediation cannot be achieved by simple surface cleaning due,
in part, to the inaccessibility of the damage, leaving significant
demolition as the only viable solution for accessing and
addressing the damage.
6. The Insurer’s cleaning protocols do not adequately address the
documented damage.
7. The Insurer’s cleaning protocols do not adequately address the
remediation called for by its own consultants.
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Id. at 4, ECF p. 931.
Federal contends Nutter is “unqualified to offer opinions on the extent of fire damage and
whether it can be remediated[,]” because he concedes that he is not a smoke or fire damage expert
or an industrial hygienists and that he “rel[ied] upon the designation by others that something
[was] damaged” by fire. Daubert Motion at 9 (citing Dekel Decl., Ex. 20 (Nutter Dep.) at 83-84,
176, dkt. no. 217 at ECF pp. 633-34, 650). In particular, Nutter testified that he relied on the
information provided by both Plaintiffs’ and Federal’s experts “who have all identified damage
and then [took] that information, relating it to the configuration and particulars of the . . .
structures[,]” based on his experience as an architect. Id. at 83-84, 90, ECF pp. 633-34, 640.
Federal also argues that Nutter’s opinions “regarding wildfire debris in ‘concealed spaces’
and ‘chases and wall cavities’ are unsound and lacking any basis[,]” citing Nutter’s testimony at
his deposition “that he is not aware ‘of any single [testing] sample . . . from within a wall cavity or
within a chase.’” Id. at 16 (citing Dekel Decl., Ex. 20 (Nutter Dep.) at 297-98, dkt. no. 217 at ECF
pp. 662-63). Federal also suggests Nutter’s opinions concerning wildfire debris in concealed
spaces is unreliable because he has testified that he had “no opinion as to ‘whether wildfire
byproduct can get [through] or pass through insulation in a . . . house or in an attic.”’ Id. at 16
(citing Dekel Decl., Ex. 20 (Nutter Dep.) at 297-98, dkt. no. 217 at ECF pp. 662-63).
The Court rejects Federal’s arguments. Nutter’s opinions as to whether the fire damage
can be remediated is based on his expertise related to the difficulties of cleaning vs. rebuilding
associated with the physical characteristic of the structures, a subject that is well within his
expertise. For example, he offers opinions relating to the likely ineffectiveness of cleaning the
ductwork in the house due to the fact that it has flexible ducts and “contains numerous folds and
small crevices due to the nature of the product’s flexibility, which provides areas for fire debris
and other combustion byproducts to settle.” Plaintiffs’ Ex. YYYYY (Nutter Expert Report) at 15,
dkt. no. 236-4 at ECF p. 944.
Likewise, Nutter’s testimony related to contamination in concealed spaces, including areas
of the HVAC system with insulation, was based on how contaminants flow within a structure. See
Dekel Decl., Ex. 20 (Nutter Dep.) at 298, dkt. no. 217 at ECF pp. 663 (testifying that there were
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gaps around the insulation that wildfire debris would have flowed around, following the “path of
least resistance”). While Federal is free to challenge Nutter on those opinions, it has not
established that they are unreliable for the purposes of Rule 702 and Daubert.
5. Randy Mandel
Randy Mandel specializes in “biodiversity and restoration ecology including with the
remediation of fire-impacted ecosystems, and has approximately 40 years experience in “plant
ecology, restoration, remediation, reclamation [and] revegetation.” Dekel Decl., Ex. 35 (Feb. 20,
2025 CTEH Technical Memorandum: Estimated Remediation Pricing For The Pollock-Tabios
Property In Response To The Glass Fire (“Mandel Report”)) at 2, dkt. no. 217 at ECF p. 1121;
Plaintiffs’ Ex. MM (Mandel Dep.) at 13, dkt. no. 236-1 at ECF p. 156. He was part of a team
from Ramboli U.S. Consulting, Inc. (“Ramboli”) that produced a May 2023 technical report
addressing fire effects and remediation of the Property. Dekel Decl., Ex. 35 (Mandel Report) at 1,
dkt. no. 217 at ECF p. 1120. He was subsequently retained by Plaintiffs to provide a report
addressing “the cost of implementing remediation recommendations proposed to address the
effects of the Glass Fire on the vegetated portions of the Property[,]” “consider[ing] the restoration
of the landscape areas and wildland areas of the Property independently due to the different
ecological composition of these areas because of past and current land.” Id.
Mandel offers opinions on a proposed restoration plan, which he opines is consistent with
the requirements of the Napa County Soil Standards for Private Debris and Ash Removal (DAR)
Cleanup, 2017 Napa Fire Complex. Id. The plan addresses “the issues of damaged vegetation,
slope instability, and soil contamination.” Id. at 12, dkt. no. 217 at ECF p. 1131. One of the
recommendations of Mandel’s report relates to soil removal:
Soil Removal. To help reduce the risk of further impact to health, the
surrounding environment, and groundwater, 12-inches of soil will be
removed from the landscape area. To permit the excavation of this
soil volume, the project will require a grading permit from Napa
County, which will include a grading plan as well as additional
planning documents such as an erosion and sediment control plan and
a stormwater management plan. CEQA and additional permits may
be required and will need to be confirmed through subsequent
iterations of the Property’s restoration/planting plan. Soil will be
transported and disposed of at an approved location, most likely
outside of the State of California (based on input from the client and
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his representatives). Per Napa County ordinance, soil removal can
only take place during six months of the year and will require
specialized equipment due to the narrow width of the surrounding
roads and the Property’s driveway, access points, and slope angles.
Post-excavation confirmatory soil sampling will be performed to
confirm that impacted soil above the regulatory standards has been
removed before importing topsoil. In the event it is determined that
impacted soil remains, excavation activities and confirmatory soil
sampling will continue until it can be verified that soil above
regulatory standards has been properly removed.
Id. at 14, dkt. no. 217 at ECF p. 1133.
Mandel further explains the basis for his assumption that 12 inches of soil needs to be
removed (rather than the 36-inch “worst-case scenario” assumption used by experts retained by
Plaintiffs whose remediation cost estimates were higher than Mandel’s), stating:
[G]iven the absence of a comprehensive sampling grid consistent with
the requirements of the guidance of the Napa County Soil Standards
for Private Debris and Ash Removal (DAR) Cleanup, 2017 NAPA
Fire Complex, the guidance provides an alternative to the removal of
36-inches. “The USACE has determined that fire debris related
impacts generally do not extend beyond 12” into the native soil. As
result of their determination, 12” of soil may be removed from the
entire impacted area with no confirmation sampling required.” As
such, 12” of soil removal will be used as the remediation guidance for
the Property, including both the Landscape and Wildland Areas Napa
County 2017.
Id. at 21, dkt. no. 217 at ECF p. 1140. Likewise, he testified at his deposition that he relied on the
opinions of other experts retained by Plaintiffs for their assessment of “human health risk and . . .
to tell [him] what's in [the soil], in other words, what the contamination is, the degree of that
contamination, and the spread of that contamination, [as well as] the nature of sampling” that was
conducted.” Plaintiffs’ Ex. MM (Mandel Dep.) at 113, dkt. no. 236-1 at ECF p. 181. But “the
bottom line,” according to Mandel, is “the requirements of the DAR . . . , and that is, if the site
has not been fully sampled, then it is very clear what that requirement is, and it’s the 12-inch
excavation.” Id. at 113-14, dkt. no. 236-1 at ECF p. 181-82; see also id. at 168, dkt. no. 236-1 at
ECF p. 194 (“when the rocks burn, when the trees burn, when the ashes formed, there is a
potential for contaminants to be both in the soil and in the sediment. And out of an abundance of
caution as well as, in this case, in compliance with the requirements of the DAR, it is typical to
have it removed.”).
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Federal contends Mandel should not be permitted to testify about soil contamination
because he concedes he is not a soil contamination expert. Daubert Motion at 10 (citing Dekel
Decl., Ex. 13 (Mandel Dep.) at 268, dkt. no. 217 at ECF p. 386). It also contends he is not
qualified to offer opinions about DAR regulations because he is not a regulatory expert. Id. The
Court does not find these argument persuasive. First, the primary basis for Mandel’s opinion that
12 inches of soil needs to be removed from the Property is the DAR regulations that call for
removal of 12 inches of soil when soil testing is incomplete; application of this requirement does
not require Mandel to be an expert in soil contamination. Furthermore, to the extent that his
opinions reference the findings of other experts in this case with respect to soil contamination,
Daubert makes clear that “[e]xperts working in specialized, scientific, and uncertain fields
regularly ‘extrapolate from existing data’ and generate novel hypotheses about complex issues.”
Elosu v. Middlefork Ranch Inc., 26 F.4th 1017, 1026 (9th Cir. 2022) (quoting Daubert, 509 U.S. at
592–93)). The fact that Mandel relies on data and opinions of other experts does not render his
principles and methodology invalid.13 Finally, Mandel does not need to be an expert in soil
removal regulations to opine about the implications of the DAR regulations for remediation of fire
impacts to the Property – an area in which Mandel is and expert. See Homyk v. ChemoCentryx,
Inc., No. 21-CV-03343-JST, 2025 WL 1547625, at *10 (N.D. Cal. May 30, 2025) (permitting
doctor to testify “about the medical significance of the FDA's observations and discussions—and
not about the regulatory context or implications of the FDA’s actions.”). Therefore, the Court
denies Federal’s request to exclude Mandel’s opinions on these grounds.
13 Of course, while “ ‘[a] testifying expert may rely on the opinions of non-testifying experts as a
foundation for the opinions within the testifying expert's field of expertise[,] Rule 703 . . . is not a
license for an expert witness to simply parrot the opinions of non-testifying experts.’” Woods v.
City of Hayward, No. 19-CV-01350-JCS, 2021 WL 4061657, at *19 (N.D. Cal. Sept. 7, 2021)
(quoting Villagomes v. Lab'y Corp. of Am., No. 2:08-cv-00387-RLH, 2010 WL 4628085, at *4 (D.
Nev. Nov. 8, 2010) (emphasis added); and citing Aquino v. Cty. of Monterey Sheriff's Dep't, No.
5:14-cv-03387-EJD, 2018 WL 3548867, at *4 (N.D. Cal. July 24, 2018) (“Accordingly, to the
extent that Dr. Roberts’ report contains opinions that require qualification as an expert, Defendants
cannot introduce them by parroting them through Dr. Levy.”)). Thus, while the Court denies
Federal’s request to exclude Mandel’s opinions, Federal may raise objections at trial if it believes
that Plaintiffs are attempting to improperly introduce the opinions of non-testifying experts
through Mandel.
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6. Robert Harrison
According to Plaintiffs, Harrison is a “board certified environmental and occupational
exposure physician.” Opposition at 23. Federal describes him as a “medical doctor.” Daubert
Motion at 14. Neither side cites any evidence of Harrison’s area of expertise and Harrison’s CV
does not appear to be in the record. Nor do the parties appear to have included Harrison’s expert
report, although it is referenced in his deposition. See Dekel Decl., Ex. 24 (Harrison Dep.) at 64,
dkt. no. 217 at ECF p. 781. Federal seeks to exclude Harrison’s opinion expressed at his
deposition that “there [is] probably an increased human health risk due to formaldehyde at this
property as compared to whatever human health risk existed due to formaldehyde before the fire.”
Daubert Motion at 14 (citing Dekel Decl., Ex. 24 at 135, dkt. no. 217 at ECF p. 604). It asserts
that the causation finding implicit in this opinion (that the Glass Fire caused an increased risk to
human health at the Property) is flawed for two reasons.
First, Federal contends, Harrison assumes that formaldehyde “detected in the house
between February and December 2021 is ‘probably’ from the Glass Fire” but he testified at his
deposition that he did not know if it was “scientifically plausible for formaldehyde from a
September 2020 fire to still be off-gassing from building materials 5 months to 1.3 years later.”
Id. at 15 (citing Dekel Decl., Ex. 24 at 202, dkt. no. 217 at ECF p. 821). Furthermore, Harrison
“conceded that he made no findings about formaldehyde levels in the house before the Glass
Fire[.]” Id. Second, Federal asserts, Harrison’s analysis is “not good science” because he “was
provided no information about the contents of the house even though he testified that elevated
formaldehyde levels could result from off-gassing by synthetic or other materials in the house.”
Id. (citing Dekel Decl., Ex. 24 at 126, 128, dkt. no. 217 at ECF pp. 797, 799).
Plaintiffs counter that there “are facts in the record from Dr. Crimmins that provide the
foundational basis for Dr. Harrison’s opinion that there is an increased risk of cancer from the
Glass Fire.” Opposition at 23 (citing Plaintiffs’ Ex. MMM (Crimmins Report) at 11, 18, dkt. no.
236-2 at ECF pp. 866, 873). They further assert that his methodology is sound. Id. In particular,
Harrison relied on findings of both Plaintiffs’ own experts and Federal’s experts indicating that
formaldehyde levels in the house after the Glass Fire were high and compared those to the levels
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of formaldehyde that are typically found in houses, as well as the level he would have expected in
a house like Plaintiffs’, in which no one was living at the time the measurements were taken. Id.
at 23-24 (citing Plaintiffs’ Ex. GGGGG (April 18, 2025 Expert Report of Dr. Shane Que Hee (Que
Hee Rebuttal Report) at 18–19, dkt. no. 236-4 at ECF pp. 279-80).
Because the parties have not supplied Harrison’s expert report, the Court declines to decide
this dispute at this time. Federal may renew its challenge in its pretrial filings or at trial.
7. David Michaels
David Michaels is an epidemiologist who has spent his career in public health. Dekel
Decl., Ex. 36 (February 20, 2025 Expert Report of David Michaels (“Michaels Report”)) at 1, dkt.
no. 217 at ECF p. 1145. He is a professor in the Departments of Environmental and Occupational
Health and Epidemiology, at the George Washington University Milken Institute School of
Public Health. Id. He served as Assistant Secretary for Environment, Safety and Health in the
U.S. Department of Energy in the Clinton administration and as Assistant Secretary for the
Occupational Safety and Health Administration (OSHA) in the U.S. Department of Labor in the
Obama administration. Id.
Michaels states that he has “expertise that is directly applicable to understanding the efforts
of [Federal], its attorneys, and its consultants in their attempts to create doubt about the impact of
smoke and ash on the Pollock and Tabios residence.” Id. In particular, he states:
I have written two books and numerous journal articles on how
polluters and manufacturers of hazardous products or materials
employ mercenary scientists and consulting firms to manufacture
uncertainty about the harms of these products. These scientists and
firms are often called “product defense” or “doubt science” firms
because they attempt to exonerate products which have been
implicated in causing damage to the public’s health or environment.
The objectives of the product defense efforts are to confuse the public,
delay public health and environmental regulation, and defeat
litigation pursued by individuals who believe they have been hurt by
these products. The studies produced by product defense scientists are
used to create doubt about scientific evidence base that serves as the
foundation of public health and environmental protections.
Id. The books Michaels has written on this subject are Doubt is Their Product: How Industry’s
Assault on Science Threatens Your Health, published by Oxford University Press in 2008, and The
Triumph of Doubt: Dark Money and the Science of Deception, published by Oxford University
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Press in 2020. Id. at 2, dkt. no. 217 at ECF p. 1146.
Michaels offers the following opinions in his report:
1) . . . there is vast epidemiological and toxicological information
indicating the components of wildfire smoke and combustion are
hazardous and that there is no credible basis on which to say that re-
occupation of a home that was engulfed in smoke during a WUI
fire is safe absent an assessment of the risk posed by those
constituents.
. . .
2) . . . it is neither appropriate nor valid to use OSHA and ACGIH
standards or recommendations to ascertain residential safety.
3) the reports and conclusions of [Federal] experts are examples of
“doubt science.”
Id. at 3, 5, 7, dkt. no. 217 at ECF pp. 1147, 1149, 1151. Federal challenges the last opinion.
In support of his opinion that Federal’s experts are practitioners of doubt science, Michaels
points to several specific examples. First, he cites Federal’s “Exponent Thermal Damage Report”
in which co-author Amir Jokar relied on a definition of “damage” drawn from California
Earthquake Authority Guidelines; Michaels opines it is inappropriate to use this definition in
“evaluation of thermal damage, or any damage resulting from exposure to fire or smoke[,]”
pointing to the “reference document given as the source of the definition.” Id. at 9, dkt. no. 217 at
ECF p. 1153. In particular, he asserts that the “reference document does not address structural or
any other type of damage caused by fires or thermal exposure; rather, it contains a clear warning
that this particular definition should only be applied to damage caused by earthquakes.” Id.
Second, Michaels challenges the opinion of Federal’s expert Michael Marsden, who
“concludes that the levels of toxic substances ‘do not exceed California’s screening levels and no
remediation is required based on relevant screening criteria.’” Id. at 10, dkt. no. 217 at ECF p.
1154. According to Michaels, Marsden compared screening levels published by the California
Department of Toxic Substances Control (DTSC) Human and Ecological Risk Office (HERO) for
individual substances but did “not sum all the levels to provide a more accurate estimation of the
risk from those materials[,]” even though “the DTSC asserts that these measurements should be
used for screening sites as a whole, not for ‘screening out’ individual chemicals.” Id.
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Third, Michaels points to the expert report from HRA Environmental Consultants, Inc., in
which he contends author Hamid Arabzadeh “makes a series of assertions for which he provides
no supporting evidence from the scientific literature.” Id. at 11, dkt. no. 217 at ECF p. 1155. In
particular, Michaels cites Arabzadeh’s opinions that “all wildfire related components at the
Property can be effectively cleaned” and that “[t]he Main Structure can be remediated through
cleaning and returned to its condition prior to the Glass Fire; there is no need to tear down and
rebuild.” Id. at 11-12, dkt. no. 217 at ECF pp. 1155-56. According to Michaels, “Mr. Arabzadeh
provides no published studies, or any studies at all, that support those conclusions. Rather, his
opinions rely on his mere assertion.” Id. at 12, dkt. no. 217 at ECF p. 1156.
Michaels goes on to opine that “[t]he business model of many of [Federal’s] doubt science
experts requires them to provide reports useful to the client – in this case [Federal].” Id.
According to Michaels:
This is the basic model of consulting firms that specialize in
“litigation support.” The consulting firms are hired not to produce
accurate scientific and technical work but rather to help the client
prevail in litigation. If any of these firms produced reports that
reached conclusions that contradicted the arguments the client needed
to make in court, the consulting firm would lose clients. If that
continued, it would likely go out of business.
Id. Michaels opines that “[l]itigation support is a component of the business model several of the
consulting firms hired by Federal],” including J.S. Held, Roux Associates and HRA
Environmental Consultants, Inc., “and it is a service they promote.” Id.
To support his opinion as to J.S. Held, Michaels points to the J.S. Held website, which
“advertises the firm’s skills at helping its clients succeed in commercial litigation[.]” Id. at 13,
dkt. no. 217 at ECF p.1157. As to Roux Associates, Inc., Michaels asserts that litigation support is
one of the “primary services Roux Associates offers its clients” and he points to the qualifications
of Michael Marsden, described by Roux as follows:
He has also worked over the years on numerous litigation cases. For
the past several years, Mr. Marsden has worked with many of the
major insurance companies such as AIG, CNA, Resolute, Hartford,
Great American, Chubb, and the London market evaluating
environmental claims at sites across the country. He works with both
carriers and counsel to evaluate various aspects of environmental
claims including sources and timing of contaminant releases, incurred
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and future cost, and cost allocation.
Id. (citation omitted). Similarly, he points to statements on the HRA Environmental Consultants’
website indicating that litigation support is one of its “primary services.” Id.
Federal contends Michaels does not have the “qualifications necessary to critique
Arabzadeh, Jokar, and Marsden.” Daubert Motion at 17-18. As to Jokar, it asserts that “Michaels
has no experience with the CEA guidelines and based his critique on a first-time review of the
publication.” Id. at 17, citing Dekel Decl., Ex. 12 (Michaels Dep.) at 276, dkt. no. 217 at ECF p.
314 (testifying that he reviewed the CEA guidelines for the first time when he evaluated Jokar’s
opinion). As to Marsden, Federal contends Michaels is unqualified to evaluate Marsden’s
application of DTSC standards because Michaels “is not a hydrologist and has no experience in
soil remediation or DTSC standards. Id. at 17-18 (citing Dekel Decl., Ex. 12 (Michaels Dep.) at
15, 247-48, dkt. no. 217 at ECF pp. 243, 287-88). As to Arabzadeh, Federal asserts Michaels does
not have the expertise to critique Arabzadeh’s conclusion that Plaintiffs’ home can be
effectively cleaned because “Michaels admits he is not an expert in, and has never assessed, how
to remediate a smoke-exposed structure; and he has never had any professional engagement
related to post-wildfire residential safety.” Id. at 17, dkt. no. 217 at ECF p. 243.
Federal also argues that Michaels’ opinion that “the reports and conclusions of [Federal’s]
experts are examples of ‘doubt science,’ because their employers’ business model ‘requires them
to provide whatever finding [is] needed by the client’ ” is not helpful to the trier of fact because it
invades the province of the jury by testifying about the credibility of witnesses. Id. at 18 (citing
Dekel Decl., Ex. 36 (Michaels Report) at 7-13, dkt. no. 217 at ECF pp. 1151-57). According to
Federal, the jury does “not need an expert to tell them that financial motives might influence a
witness’s opinions, and allowing Michaels to weigh the evidence for them would also be unhelpful
and substantially prejudicial under Rule 403.” Id.
Finally, Federal contends Michaels’ methodology is “slapdash[,]” “based on a review of
cherry-picked public information, [and] is unreliable and speculative.” Id. at 19-20.
Plaintiffs reject Federal’s challenge, arguing that Michaels’ opinions have “a solid
foundation in his expertise as an epidemiologist focused on public health as it applies to insurance
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companies downplaying wildfire.” Opposition at 17. Thus, they contend, he need not “be an
expert in multiple fields to opine on the lack of published studies supporting [Federal’s] experts.”
Id.
Plaintiffs further assert that Michaels can assist the trier of fact by educating the jury about
“insurance industry practices,” which are “directly relevant to Plaintiffs’ burden in [proving] a bad
faith claim.” Id. at 18. They contend Federal’s reliance on cases holding generally that experts
cannot opine on witness credibility are not applicable here, where Plaintiffs are seeking to
establish the insurer’s bias. Id. According to Plaintiffs, “[a]n ‘insurer’s bias may be shown’
where, for example, the ‘insurer dishonestly selected its experts’ or the ‘insurer’s experts were
unreasonable.’ ” Id. (citing Hangarter v. Provident Life & Acc. Ins. Co., 373 F.3d 998, 1010 (9th
Cir. 2004)). They contend the court in Hangarter “condoned expert testimony that an insurer was
biased” and that the testimony Michaels offers about Federal “downplaying the danger of
wildfire” is “no different.” Id. They also point to Pooshs v. Phillip Morris, in which “plaintiff’s
epidemiologist testified about Phillip Morris’s marketing and efforts to downplay the smoking
dangers.” Id. (citing Pooshs v. Phillip Morris USA, Inc., 287 F.R.D. 543, 553 (N.D. Cal. 2012)).
Finally, Plaintiffs contend Michaels’ opinions are reliable as he is a top authority on “doubt
science” and that Federal’s challenge goes to the weight of the evidence rather than its
admissibility. Id.
The Court concludes that while evidence of insurer bias may be proper where, as here,
insurance bad faith is alleged, Plaintiffs have not established that Michaels has the qualifications
to opine on that subject here or that his methodology with respect to the specific experts he
critiques is reliable.
“The key to a bad faith claim [under California law] is whether or not the insurer’s denial
of coverage was reasonable.” Hangarter v. Provident Life & Acc. Ins. Co., 373 F.3d 998, 1009–
10 (9th Cir. 2004) (quoting Amadeo v. Principal Mut. Life Ins. Co., 290 F.3d 1152, 1161 (9th Cir.
2002) (citations and quotation marks omitted)). The court may decide that an insurer’s actions in
denying the claim were reasonable as a matter of law “[w]here there is a genuine issue of an
insurer’s liability under a policy.” Id. at 1010 (citing Chateau Chamberay Homeowners Ass'n v.
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Associated Int'l Ins. Co., 90 Cal.App.4th 335, 346 (2001)). Such a “genuine dispute” will
“generally immunize an insurer from liability,” but “a jury’s finding that an insurer’s investigation
of a claim was biased may preclude a finding that the insurer was engaged in a genuine dispute,
even if the insurer advances expert opinions concerning its conduct.” Id. (citation omitted). An
insurer’s bias may be shown in a variety of ways, including by showing that “[t]he insurer
dishonestly selected its experts; . . .. The insurer’s experts were unreasonable; or . . . The insurer
failed to conduct a thorough investigation.” Id.
In Hangarter, for example, the Court of Appeals found that “the district court did not err in
determining that the jury had substantial evidence before it to find that the Defendants engaged in
a biased, and thus ‘bad faith,’ investigation[ ]” where the jury had been presented with evidence
that the defendants exhibited bias in selecting and retaining the doctor who conducted the
independent medical evaluation. Id. at 1011. In particular, evidence was presented to the jury that
the defendant had used the same doctor nineteen times in a five-year period and the plaintiff’s
expert testified that “when an insurer ‘use[s] the same [IME] on a continual basis,’ the medical
examiner becomes ‘biased’ because they ‘lose their independence.’” Id. The jury also was
presented with “evidence show[ing] that in thirteen out of thirteen cases involving claims for total
disability, [the doctor] rejected the insured’s claim that he or she was totally disabled.” Id. In
addition, there was evidence that the retention letter sent to the doctor by the defendant was
“written by an in-house medical consultant who had never examined Hangarter, [and] claimed that
there were no objective findings for a disabling injury.” Id. The plaintiff’s expert testified that
“this letter ‘bias[ed]’ and ‘predispos[ed] the doctor’ against finding disabling injuries by ‘telling
him [Defendants’] opinion.’ ” Id.
The Court agrees that Michaels’ opinions are similar to the evidence presented in
Hangarter. Rather than opining about the credibility of Federal’s expert witnesses, which would
improperly invade the province of the jury, see United States v. Candoli, 870 F.2d 496, 506 (9th
Cir. 1989) (“An expert witness is not permitted to testify specifically to a witness’ credibility or to
testify in such a manner as to improperly buttress a witness' credibility”), Plaintiffs offer Michaels’
testimony to establish bias, which is, in general permissible. The Court is concerned, however, that
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while Plaintiffs contend Michaels will educate the jury about “insurance industry practices,” his
expertise in the field of doubt science relates to its use by “polluters and manufacturers of
hazardous products or materials.” Plaintiffs have not established that Michaels’ background
makes him an expert with respect to the uses of doubt science in the insurance industry.
Furthermore, his methodology appears to rely excessively on the mere fact that the consultants
retained by Federal focus on their litigation services, without closely examining the specific facts
related to these consultants, such as whether they have consistently provided defense side services
and whether their opinions have consistently aligned with the position of the insurance company.
Therefore, the Court concludes that Plaintiffs have failed to establish that Michaels has the
expertise to offer the challenged “doubt science” opinions, which are excluded under Rule 702 and
Daubert.
8. John Verret, Brian Carl and Kevin Cahill
John Verret is an attorney, forensic accountant and former senior counsel and chief
economist for the U.S. House Financial Services Committee. Plaintiffs’ Ex. PPP (March 26, 2025
Expert Report of John Verret (“Verret Report”)) at 2, dkt. no. 236-2 at ECF p. 922. He was
retained to analyze whether Federal “has complied with [Generally Accepted Accounting
Principles (‘GAAP’)] with respect to its decision not to reserve for the [Pollacks’] claim and in
how the claim was handled, whether any related failure constitutes a ‘red flag’ indicator of a
potential compliance or accounting failure under the federal security laws and GAAP.” Id. Verret
reviewed various materials produced in discovery and concluded that there were “sufficient red
flags that suggest a possible failure on Chubb’s part to comply with accounting principles and
disclosure requirements with respect to Mr. Pollack’s claim and consistent with a potential internal
control failure[,]” warranting a “thorough investigation.” Id. at 10, dkt. no. 236-2 at ECF p. 930;
see also Dekel Decl., Ex. 14 (Verret Dep.) at 74, dkt. no. 217 at ECF p. 416 (“I'm opining with a
definitive conclusion that there’s sufficient red flags to begin an investigation. But I’m not opining
on the final results of that investigation.”).
Kevin Cahill and Brian Carl are consultants with FTI Consulting, Inc. Plaintiffs’ Ex. RRR
(March 26, 2025 Analysis of restoration costs associated with the Glass Fire and Economic
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analysis of Federal’s 2020 U.S. wildfire coverage and estimated exposure by FTI Consulting
(“FTI Report”)) at 2-3, dkt. no. 236-2 at ECF pp. 960-61. FTI Consulting “regularly provides
consulting and expert services related to economic loss analysis, insurance claim practices,
executive compensation structures, and financial reporting.” Id. at 2, dkt. no. 236-2 at ECF p. 960.
Cahill is an economist with a focus on applied econometrics and labor economics. Id. Carl is an
economist with an emphasis on finance. Id. at 3, dkt. no. 236-2 at ECF p. 961.
Cahill’s analysis and opinions are summarized in the FTI Report as follows:
12. Dr. Cahill applies standard economic approaches and publicly-
available data to reliably quantify a lower bound for the aggregate
restoration costs from the Glass Fire. He uses Geographic Information
System (GIS) data on the Glass Fire footprint overlayed with Sonoma
County and Napa County tax lot data to identify properties that have
been adversely affected by the fire . . . . For a control group, he uses
properties in these two counties that do not fall within the Glass Fire
boundary. A control group is necessary for this type of analysis
because it provides a mechanism to take into account confounding
factors, including changes in overall market trends.
13. Using pre- and post-fire sales data for both the treatment and
control group, Dr. Cahill estimates a difference-in-differences
hedonic regression model that quantifies the percentage reduction in
value for properties affected by the Glass Fire. This value takes into
account market-level supply and demand factors that extend beyond
each individual property. As such, the reduction in value represents a
lower-bound estimate of restoration costs.
14. Dr. Cahill estimates that the aggregate restoration costs for high-
value properties within the Glass Fire are at least $335 million.
Applying an estimate of Federal’s market share for high income
properties, and taking into account personal property, Federal’s share
of the restoration costs associated with the Glass Fire, based on lower-
bound estimates, is between $55.0 million and $131.1 million in 2024
dollars. Federal’s data on 33 claims associated with the Glass Fire
shows a total amount paid equal to $51.3 million . . . . Adjusting for
ALE and inflation, Federal’s payments for covered losses are lower
than what would be expected given actual losses from the Glass Fire.
Id. at 5, dkt. no. 236-2 at ECF p. 963. According to the FTI Report, Carl then “estimate[d]
Federal’s potential exposure from the 2020 Glass Fire and a subset of other 2020 wildfires to be
between $62.3 to $125.3 million in 2020 dollars, before accounting for Federal’s reinsurance
recoveries.” Id.
Federal contends the opinions of Verret, Cahill and Carl do not “logically advance[] a
material aspect” of Plaintiffs’ case and therefore should be excluded in their entirety under Rule
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702. Daubert Motion at 20-23 (quoting Daubert, 43 F.3d at 1315). They also contend these
opinions should be excluded under Rule 403 of the Federal Rules of Evidence. Plaintiffs, on the
other hand, contend Verret’s opinions related to “red flags” are relevant to their bad faith claim
and that Cahill and Carl’s opinions are relevant to their claim for punitive damages. Opposition at
20-21.
The Court finds that Verret’s opinion that there were “red flags” that warranted further
investigation will not assist the jury as it is of tangential relevance to Plaintiffs’ bad faith claim. In
addition, any limited relevance to bad faith will be outweighed by the prejudice that will result
from presenting Verret’s opinion to the jury. Therefore, Verret is precluded from testifying at trial
pursuant to Rules 403 and 702 of the Federal Rules of Evidence. The Court declines to rule on
Federal’s challenges to the opinions offered by Cahill and Carl at this time as it will be better able
to assess the relevance and potential prejudice of these opinions at trial. Should Plaintiffs seek to
introduce these opinions at trial, the Court will decide the question following a hearing outside of
the presence of the jury.
9. Neal Bordenave
Neal Bordenave has worked in the insurance industry since 1988. Dekel Decl., Ex. 32
(February 20, 2025 Insurance Expert Report by Neal Bordenave (“Bordenave Report”)), dkt. no.
217 at ECF p. 1032. He is currently the president and CEO of RiskPro Insurance Services, Inc., a
California Corporation operating in Chico, California that provides “commercial property and
casualty insurance sales, client services, claims services and risk management services.” Id. He
began his career in the insurance industry in 1988, when he was licensed as an insurance
agent/broker in California, id., and he has been an insurance agent “most of [his] career.” Dekel
Decl., Ex. 11 (Bordenave Dep.) at 37, dkt. no. 217 at ECF p. 207. In addition, between 2006 and
2022, he was on the faculty of the College of Business, at California State University-Chico,
where he taught courses in Risk Management & Insurance, Corporate Finance and Personal
Financial Planning. Dekel Decl., Ex. 32 (Bordenave Report), dkt. no. 217 at ECF p. 1032. He
has never worked as a claims adjuster. Dekel Decl., Ex. 11 (Bordenave Dep.) at 36, dkt. no. 217
at ECF p. 206. Nor has he ever been employed directly by an insurance company. Id.
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Plaintiffs retained Bordenave “as an insurance underwriting expert to evaluate the scope of
insurance coverage promised by Chubb Insurance Group through the insurance policy issued to
[Plaintiffs] . . . and the reasonable expectations of coverage based on Chubb’s specialization in
providing extraordinary insurance coverage for High Value Estate Property throughout the United
States.” Dekel Decl., Ex. 32 (Bordenave Report), dkt. no. 217 at ECF p. 1029. Among the
opinions he offers are the following:
. . .
2) With respect to the Pollocks' Napa Valley Estate, Chubb appraised
the property and set the Policy's limits based upon such appraisals. In
doing so, Chubb undertook an obligation to exercise a level of care in
appraising the property to ensure that the Policy limits were adequate
to fully insure the whole of the Pollocks' various property and
features at the Napa Valley Estate. In my opinion, if the Policy's limits
in each category of coverage were inadequate to fully insure the
Pollocks' property, including for the Glass Fire loss, that
underinsurance would be a consequence of Chubb's failure to
adequately underwrite and place appropriate insurance limits. In my
opinion, it would have been reasonable for the Pollocks to rely upon
Chubb and its agents to correctly appraise the Napa Valley Estate and
set Policy limits that were adequate to fully insure the whole of the
Pollocks' various property and features at the Napa Valley Estate.
3) Proper and timely pre-loss underwriting is required when the
insurance carrier assumes all responsibility for setting policy limits.
Here, Chubb performed nine separate appraisals including an
appraisal in 2011, yet Chubb appears to have underinsured the
Pollocks' main house (dwelling section A) by almost $10,000,000.
. . .
5) The Pollocks were, at all times following the Glass Fire loss,
entitled to ALE of at least $131,000 - $262,000 per month (i.e., ALE
limit divided by 36 months). In the alternative, Chubb had the option
to simply buy the Pollocks a house as a settlement of the ALE section
of the claim. In fact, the Pollocks made a similar proposal to Chubb:
Chubb should buy a like kind home, allow the Pollocks to live there
during the period of restoration, and then Chubb, not the Pollocks,
would own the property and could recover its investment (essentially
recapture the ALE liability). It is not unusual for insurance companies
acting in good faith to payout the ALE policy limits in full when, as
here, catastrophic insured events make full restoration of the insured
property within three years unlikely. It does not appear that Chubb
made payments of ALE consistent with either of these approaches.
6) It is insurance industry custom and practice to advance ALE funds
to cover all costs to provide like kind and quality living conditions for
the insured following a covered loss. At no time in a catastrophic loss
should an insured ever have to advance additional living costs and
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seek reimbursement from the insurer sometime in the future. Chubb
does not appear to have complied with this industry custom and
practice, and instead it appears to have required that the Pollocks
actually incur and pay ALE amounts before Chubb would consider
making requested ALE payments.
Id. at 1033-34.
Federal contends Bordenave is not qualified to offer Opinions 5 and 6 because he has
never worked as a claims adjuster or directly for an insurance company. Daubert Motion at 13-14
(citing Certain Underwriters at Lloyds, London v. Inlet Fisheries, Inc., 389 F. Supp. 2d 1145,
1154 (D. Alaska 2005), aff'd, 518 F.3d 645 (9th Cir. 2008); Saarman Constr., Ltd. v. Ironshore
Specialty Ins. Co., 2017 WL 10402392 (N.D. Cal. Jan 5, 2017); Chimney Homeowners Ass’n v.
Brent Ward Ins. Agency, Inc., 2018 WL 6252269, at *1 (Wash. Super. Aug. 20, 2018)). Plaintiffs
supply a declaration from Bordenave expanding upon his qualifications, see generally Plaintiffs’
Ex. TTTTT (Declaration of Neal Bordenave in Support of Plaintiffs’ Opposition to Defendant’s
Omnibus Motion to Exclude Testimony of Plaintiffs’ Experts (“Bordenave Decl.”), dkt. no. 236-4
at ECF pp. 660-664), and argue that Bordenave has “broad and extensive knowledge and training
about the insurance industry (including about personal/homeowners’ lines of insurance)” and
therefore is qualified to offer these opinions. Opposition at 14-15.
Federal also contends Bordenave impermissibly seeks to offer legal conclusions in opining
that: 1) “[t]he Pollocks were…entitled to ALE of at least $131,000 - $262,000 per month (i.e., the
ALE limit divided by 36 months)[,]” (Opinion 5); 2) “Federal undertook a duty to set certain
coverage limits by ‘apprais[ing] the property and set[ting] the Policy’s limits based upon such
appraisals[,]’ ” (Opinion 2); and 3) “Federal violated that duty—the ultimate issue for the jury—
and that ‘it would have been reasonable for the Pollocks to rely upon [Federal] and its agents to
correctly appraise the [property] and set Policy limits that were adequate to fully insure’ the
property.” Daubert Motion at 24. Similarly, it contends Bordenave improperly interprets the
Policy. Id. at 25.
The Court finds that Bordenave does not have expertise that qualifies him to offer
Opinions 5 and 6. As the court observed in Saarman Construction, Ltd, v. Ironshore Specialty
Insurance Company, “Bordenave is an insurance broker by training; he has never worked for an
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insurance company. . . . Thus, by definition, he has never performed or participated in claims
handling.” 2017 WL 10402392 (N.D. Cal. Jan. 5, 2017). In that case, Judge Tigar found that
Bordenave was not qualified to offer opinions about insurance company claims handling practices.
The Court agrees with Judge Tigar’s conclusion and likewise finds here that Bordenave’s many
years in the insurance industry as an agent does not qualify him to offer Opinions 5 and 6, which
concern insurance industry claims adjustment practices.
As to Bordenave’s opinions that are not excluded for lack of adequate expertise, discussed
above, the Court does not decide at this time whether Bordenave’s opinions are impermissible
because they constitute legal conclusions that must be excluded. In Hangarter, the Ninth Circuit
set forth the following principles that govern expert testimony regarding ultimate issues and legal
conclusions:
“It is well-established ... that expert testimony concerning an ultimate
issue is not per se improper.” Mukhtar v. Cal. State Univ., Hayward,
299 F.3d 1053, 1066 n. 10 (9th Cir.2002). Indeed, Fed.R.Evid. 704(a)
provides that expert testimony that is “otherwise admissible is not
objectionable because it embraces an ultimate issue to be decided by
the trier of fact.” That said, “an expert witness cannot give an opinion
as to her legal conclusion, i.e., an opinion on an ultimate issue of law.”
Mukhtar, 299 F.3d at 1066 n. 10. Similarly, instructing the jury as to
the applicable law “is the distinct and exclusive province” of the
court. United States v. Weitzenhoff, 35 F.3d 1275, 1287 (9th Cir.1993)
(citations and quotation marks omitted).
373 F.3d at 1016. Thus, in that case the Court held that an expert’s testimony that the defendant
insurance company had “deviated from industry standards” was not improper, even though that
testimony was offered to show that the insurer acted in bad faith, where the expert did not testify
that the defendant had “actually acted in bad faith.” Whether Bordenave’s testimony crosses the
line from opining about industry practices to offering impermissible legal conclusions is a
question that can be better assessed at trial.
10. Charles Miller
Charles Miller is an insurance expert. Dekel Decl., Ex. 37 (Expert Report of Charles
Miller) at 7, dkt. no. 275 at ECF p. 10. Federal contends Plaintiffs violated Rule 26 by producing
certain documents upon which he based his opinions just one day before Miller’s deposition and
asks the Court to exclude all of his opinions under Rule 37 of the Federal Rules of Civil Procedure
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as untimely. Daubert Motion at 5-6. Plaintiffs counter that the parties agreed to continue Miller’s
deposition and therefore Federal was not prejudiced by the late disclosure. Opposition at 6. The
Court DENIES Federal’s request for discovery sanctions as it has not established prejudice.
Federal also challenges Miller’s opinions on the basis that they constitute impermissible
legal conclusions. Daubert Motion at 25. The Court declines to reach this challenge for the same
reasons it defers ruling on Federal’s similar challenges with respect to Bordenave, discussed
above.
IV. SUMMARY JUDGMENT MOTIONS
A. Legal Standards Governing Summary Judgment
Summary judgment on a claim or defense is appropriate “if the movant shows that there is
no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of
law.” Fed. R. Civ. P. 56(a). In order to prevail, a party moving for summary judgment must show
the absence of a genuine issue of material fact with respect to an essential element of the non-
moving party’s claim, or to a defense on which the non-moving party will bear the burden of
persuasion at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
Once the movant has made this showing, the burden shifts to the party opposing summary
judgment to designate “‘specific facts showing there is a genuine issue for trial.’” Id. (citation
omitted); see also Fed. R. Civ. P. 56(c)(1) (“A party asserting that a fact . . . is genuinely disputed
must support the assertion by . . . citing to particular parts of materials in the record . . . .”). “[T]he
inquiry involved in a ruling on a motion for summary judgment . . . implicates the substantive
evidentiary standard of proof that would apply at the trial on the merits.” Anderson v. Liberty
Lobby Inc., 477 U.S. 242, 252 (1986). The non-moving party has the burden of identifying, with
reasonable particularity, the evidence that precludes summary judgment. Keenan v. Allan, 91 F.3d
1275, 1279 (9th Cir. 1996).
A party need not present evidence to support or oppose a motion for summary judgment in
a form that would be admissible at trial, but the contents of the parties’ evidence must be amenable
to presentation in an admissible form. See Fraser v. Goodale, 342 F.3d 1032, 1036−37 (9th Cir.
2003). Neither conclusory, speculative testimony in affidavits nor arguments in moving papers
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are sufficient to raise genuine issues of fact and defeat summary judgment. Thornhill Publ’g Co.,
Inc. v. GTE Corp., 594 F.2d 730, 738 (9th Cir. 1979). On summary judgment, the court draws all
reasonable factual inferences in favor of the non-movant, Scott v. Harris, 550 U.S. 372, 378
(2007), but where a rational trier of fact could not find for the non-moving party based on the
record as a whole, there is no “genuine issue for trial” and summary judgment is appropriate.
Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 587 (1986).
B. Legal Standards Governing Interpretation of the Policy
Interpretation of an insurance policy to determine whether it provides for particular
coverage is a question of law and follows the general rules of contract interpretation. Waller v.
Truck Ins. Exchange, Inc., 11 Cal.4th 1, 18 (1995). “The fundamental rules of contract
interpretation are based on the premise that the interpretation of a contract must give effect to the
‘mutual intention’ of the parties.” Id. “Under statutory rules of contract interpretation, the mutual
intention of the parties at the time the contract is formed governs interpretation.” Id. (citing Cal.
Civ. Code, § 1636). “Such intent is to be inferred, if possible, solely from the written provisions
of the contract.” Id. (citing Cal. Civ. Code § 1639). Thus, judicial interpretation of a contract is
controlled by the “clear and explicit” meaning of the provisions of the contract, interpreted in their
“ordinary and popular sense,” unless the contract language is “used by the parties in a technical
sense or a special meaning is given to them by usage.” Id. (citations omitted).
The California Supreme Court has cautioned that “[a]lthough examination of various
dictionary definitions of a word will no doubt be useful, such examination does not necessarily
yield the ‘ordinary and popular’ sense of the word if it disregards the policy’s context.”
MacKinnon v. Truck Ins. Exch., 31 Cal. 4th 635, 649 (2003), as modified on denial of reh'g (Sept.
17, 2003) (citing Bank of the West v. Superior Court, 2 Cal.4th 1254, 1265 (1992)). Instead, the
court “must attempt to put itself in the position of a layperson and understand how he or she might
reasonably interpret” the policy language. Id. (citation omitted).
“A policy provision will be considered ambiguous when it is capable of two or more
constructions, both of which are reasonable.” Waller, 11 Cal. 4th at 18 (citation omitted). “But
language in a contract must be interpreted as a whole, and in the circumstances of the case, and
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cannot be found to be ambiguous in the abstract.” Id. at 18 (citation omitted). “Courts will not
strain to create an ambiguity where none exists.” Id. at 18-19 (citation omitted).
C. Legal Standards Governing All-Risk Insurance Policies
“[I]n an action upon an all-risks policy . . . the insured does not have to prove that the peril
proximately causing his loss was covered by the policy.” Strubble v. United Servs. Auto. Assn., 35
Cal. App. 3d 498, 504 (1973). “This is because the policy covers all risks save for those risks
specifically excluded by the policy.” Id. Thus, the insurer “must prove the policy’s noncoverage
of the insured’s loss—that is, that the insured’s loss was proximately caused by a peril specifically
excluded from the coverage of the policy.” Id. “Whereas coverage clauses are interpreted
broadly so as to afford the greatest possible protection to the insured [citations], exclusionary
clauses are interpreted narrowly against the insurer.” Rsrv. Ins. Co. v. Pisciotta, 30 Cal. 3d 800,
808 (1982) (internal quotations and citations omitted). “[A]n insurer cannot escape its basic duty
to insure by means of an exclusionary clause that is unclear.” Id. Thus, “the burden rests upon the
insurer to phrase exceptions and exclusions in clear and unmistakable language.” Id. (internal
quotations and citations omitted).
D. Federal’s Summary Judgment Motion
1. Contentions of the Parties
a. Motion
Federal argues that partial summary judgment should be entered on Plaintiffs’ breach of
contract and declaratory relief claims as to three aspects of those claims. Federal’s Summary
Judgment Motion at 9-12. First, it contends Plaintiffs’ claims are barred as to Additional Living
Expenses (“ALE”) that Plaintiffs did not incur or have not yet incurred and further, that Plaintiffs’
ALE coverage is limited to expenses incurred within two years from the date of the loss. Id. at 9-
11. Second, Federal argues that Plaintiffs are not entitled to any “rebuilding to code” costs
because they have done no rebuilding. Id. at 11. Third, Federal argues that Plaintiffs are not
entitled to soil replacement costs because the Policy provides for “necessary” soil replacement
“require[d]” to rebuild or replace the house or other permanent structure and Plaintiffs have not
offered any evidence that soil replacement is “necessary” or “required” within the meaning of the
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Policy. Id. at 11-12.
Next, Federal argues that Plaintiffs’ “VOC damage theories” based on evidence of VOCs
in the air of the main house and in building materials in the house fail as a matter of law. Id. at 12-
16. First, to the extent Plaintiffs seek “to replace their house because of alleged loss caused by
VOCs in the air inside their main house and wine room[,]” Federal contends Plaintiffs’ claims fail
because the undisputed facts establish that the VOC levels in the main house are no higher than is
typical of VOC levels in residential homes. Id. at 12-13. Second, Federal asserts, Plaintiffs have
no evidence of VOC levels in the main house prior to the Glass Fire that would allow them to
establish that the Glass Fire caused those levels to increase. Id. at 13-14. Third, Federal contends
Plaintiffs’ claims are barred to the extent they are based on VOCs in the air of the main house
because VOCs are a “pollutant” under the Policy’s Contamination exclusion and therefore,
recovery for any damage caused by VOCs is barred under the Policy. Id. at 14. Finally, under
Another Planet Entertainment, LLC v. Vigilant Ins. Co., 15 Cal.5th 1106 (2024), the mere
presence of VOCs in the building materials of Plaintiffs’ home is not sufficient to establish
physical loss, according to Federal. Id. In particular, Federal contends, “Plaintiffs seek coverage
for the presence of VOCs and SVOCs in the ‘structural matrix’ of building materials without
identifying any corresponding ‘damage’ to the property[,]” and thus, their theory of loss fails
under Another Planet. Id. at 15.
Federal further asserts that it is entitled to summary judgment on Plaintiffs’ bad faith claim
under the “genuine dispute” doctrine, which provides that the court may rule as a matter of law
that an insurer’s denial of benefits was reasonable where there was “proper cause” for the
insurance company to take the position that it did. Id. (citing Chateau Chamberay Homeowners
Ass’n v. Associated Int’l Ins. Co., 90 Cal. App. 4th 335, 350 (2001); Brinderson-Newburg Joint
Venture v. Pac. Erectors, Inc., 971 F.2d 272, 282-83 (9th Cir. 1991)). According to Federal, the
undisputed evidence establishes that there was a genuine dispute over coverage because it relied
on the opinions of experts who reviewed the available evidence and concluded that Plaintiffs’
claim was “exaggerated, preexisting, and/or excluded from coverage.” Id. at 17 (quoting
Vanderloo v. Allstate Northbrook Indem. Co., 2025 WL 844414, at *10-11 (N.D. Cal. Mar. 17,
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2025)). Federal further contends that as a matter of law, its experts were qualified, its investigation
was “thorough and complete,” its “selection of experts was not biased or dishonest,” and that its
experts did not act unreasonably. Id. at 18-20.
Federal contends Plaintiffs’ Elder Abuse claim fails for the same reason its bad faith claim
fails because “[i]n the insurance context, an elder abuse claim ‘stands and falls’ on whether the
insurer denied plaintiff’s valid claim in bad faith.” Id. at 20 (quoting Enciso v. Jackson Nat’l Life
Ins. Co., 715 F. Supp. 3d 1286, 1294 (C.D. Cal. 2024), aff’d, 2025 WL 1444417 (9th Cir. May 20,
2025)).
Federal also seeks summary judgment as to Plaintiffs’ negligence claim, which is pled on
two theories: 1) the theory that Federal negligently failed to ensure that Plaintiffs had sufficient
coverage, thereby causing losses arising out of their under-insured status, see FASC ¶¶ 87-90; and
2) the theory Federal negligently failed to maintain adequate reserves, which resulted in delayed
payment and non-payments to Plaintiffs, id. ¶¶ 78-84. Motion at 22-25. As to the former, Federal
points to the undisputed fact that Plaintiffs purchased the Policy from MIV and had no direct
communication with Federal. Id. at 22. It contends that under California law, an insurer does not
have a “general duty to ensure a policyholder secures adequate coverage” unless it “holds itself
out” as an expert on the insurance sought by the policyholder, and the policyholder “reasonably
relies” on that expertise. Id. (citing Fitzpatrick v. Hayes, 57 Cal. App. 4th 916, 927 (1997)).
According to Federal, there is no evidence that it held itself out as an expert to Plaintiffs or that
Plaintiffs relied on it when they renewed the Policy. Id.at 22-23. Instead, Federal points out,
Plaintiffs alleged in their state court action against MIV that they relied on MIV’s “experience and
specialized knowledge” when they purchased the Policy. Id. at 23 (citing Pollock v. MIV Ins.
Servs. LLC, No. 22-cv-1144, Compl. ¶¶ 11, 26, 32, 34 (Cal. Sup. Ct. Napa Cty. Sept. 28, 2022)).
With respect to the theory that Federal failed to maintain adequate reserves, Federal asserts
that there is no private right of action to assert a claim to enforce the reserves requirements of the
Insurance Code and furthermore, that Fay Avenue Properties, LLC v. Travelers Property &
Casualty Company of America, 2014 WL 1333669 (S.D. Cal. Apr. 2, 2014), upon which the Court
relied in permitting Plaintiffs to amend their complaint, see dkt. no. 179 at 12, “merely deemed
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loss-reserve evidence discoverable because it was potentially relevant to the bad-faith claim in that
case” and did not “suggest[ ] California law imposes claim-specific reserve duties.” Id. at 24.
Federal also argues that this theory fails because Plaintiffs have offered “no evidence that
Federal’s purportedly inadequate reserves caused Plaintiffs’ alleged harm.” Id. (citing Soriano v.
Countrywide Home Loans, Inc., No. 09-CV-02415-LHK, 2011 WL 1362077, at *7 (N.D. Cal.
Apr. 11, 2011)).
Finally, Federal argues that Plaintiffs’ recovery for damage to manmade structures is
limited by the Appraisal Award and therefore is capped at $32,122,214.15. Id. at 25 (citing
Federal Arbitration Act, 9 U.S.C. § 12; Bernstein v. Travelers Ins. Co., 2006 WL 2567875, at *4
(N.D. Cal. Sept. 5, 2006)). It argues further that the Policy limits recovery for land to “10% of
the amount of the covered loss to your house or other permanent structure” and therefore,
“Plaintiffs’ recovery for land is . . . capped at 10% of any amount the jury determines is owed for
damage to manmade structures caused by the fire, with a ceiling of $3,212,221.42.” Id. (citing
Dekel Decl., Ex. 76 (Policy) at 47771 (B-7), dkt. no. 218 at ECF p. 53).
b. Opposition
Plaintiffs argue that Federal is not entitled to summary judgment on the ALE, “rebuilding
to code” or soil replacement costs they seek. Opposition at 3-12. As to whether ALE coverage
applies only to expenses that were actually incurred, Plaintiffs reject Federal’s suggestion that the
ALE they seek is “hypothetical,” arguing that the “undisputed facts” reflect that Plaintiffs “paid
approximately $1.2 million but roughly $250,000 was never reimbursed by Chubb: including, but
not limited to, utilities, furnishings, landscaping and irrigation supplies, dog walking services, AV
system components, supplies for repairs and maintenance to Plaintiffs’ temporary housing,
expenses related to art rentals, and expenses related to interior design work.” Id. at 4 (emphasis in
original) (citing Ex. JJJJJ (Feb. 20, 2025 Report of Marie Ebersbacher (“Ebersbacher Report”)) at
4–8, dkt. no. 236-4 at ECF pp. 391-95). In any event, Plaintiffs contend, the plain language of the
Policy provision governing extra living expenses clearly entitles them to “like-kind housing” and
does not require Plaintiffs to have actually incurred the extra living expenses as a prerequisite of
coverage. Id. at 4-7.
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Plaintiffs further assert that Federal is not entitled to summary judgment that their ALE
coverage is limited to two years under the Policy. Id. at 7-9. First, they contend Federal is barred
from asserting the two-year limit against Plaintiffs under the doctrine of equitable estoppel, as to
which there are factual disputes. Id. at 7-8. In particular, Plaintiffs assert Federal “knew that it
would only pay Plaintiffs ALE already paid for” but “delayed rejecting Plaintiffs’ Proofs of Loss
(‘POL’) in which non-incurred ALE was requested, told the Pollocks that those requests were
being considered, and sent mixed messages to Plaintiffs about whether it was issuing ‘advances,’
for ALE and did not inform Plaintiffs what they would need to do to receive the ALE benefits they
contracted for to secure their standard of living while temporarily displaced from their home.” Id.
at 7-8. As a result, Plaintiffs contend, they “waited in good faith for [Federal’s] approval,
rejection or further instruction, [while] their time to collect incurred ALE to maintain their true
standard of living was slipping away.” Id. at 8. According to Plaintiffs, had they “known the
truth, they could have found and paid for more suitable housing that was like-kind to their home,
as well as entered into contracts and begun paying to rent the books, art, and wine that are integral
to Plaintiffs’ standard of living.” Id.
Plaintiffs also contend that there are material disputes of fact as to whether the “prevention
doctrine” applies to the two-year limit. Id. According to Plaintiffs, “[t]he prevention doctrine
provides that where a party’s breach by non-performance contributes materially to the non-
occurrence of a [condition] of one of his/her duties, the non-occurrence is excused.” Id. (citing
Stephens & Stephens XII, LLC v Firemans’s Fund Ins. Co., 231 Cal.App.4th 1131, 1144 (2014)).
Plaintiffs argue that Federal’s “delayed response regarding whether it would approve Plaintiffs’
ALE requests, failure to assist the Pollocks in finding a like-kind home, and failure to inform the
Pollocks about any perceived defects in their ALE POLs prevented Plaintiffs from
benefiting from . . . the ALE provisions of their Policy” and therefore, “[a]ny ALE deadline should
be tolled.” Id. Plaintiffs assert that they should be paid ALE for “the next three years at a
minimum.” Id.
Second, Plaintiffs argue that the period for ALE coverage was extended to three years
under California Insurance Code § 2060(b)(1) (formerly § 2051.5(b)(2)) because a state of
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emergency was declared in Napa County following the Glass Fire and under that section, where
there is a covered loss related to a state of emergency,“[a]n insurer shall grant an extension of up
to 12 additional months, for a total of 36 months, if an insured acting in good faith and with
reasonable diligence encounters a delay or delays in the reconstruction process that are the result
of circumstances beyond the control of the insured.” Id. at 8-9. According to Plaintiffs, that
section applies because Federal “delayed reconstruction and thwarted Plaintiffs’ actions by
misrepresenting Policy benefits to Plaintiffs, failing to provide sufficient funds for rebuilding all
damaged structures, and ultimately denying the claim.” Id. at 9. Plaintiffs also assert they “put
forward evidence that they began working with licensed contractors almost immediately to
determine (1) the damage to the Main House, Guest House, and other Man-Made Structures,
(2) how to proceed with rebuilding, repair or replacement, on a least-cost basis, and later (3) work
needed to create an invitation to bid (‘ITB’) for rebuilding.” Id. at 9 (citing Plaintiffs’ Ex. B at
127–32, dkt. no. 226 at ECF p. 127-132 (Oct. 26, 2020 letter from Plaintiffs’ former counsel to
Federal re coverage); Ex. F at 156, dkt. no. 226 at ECF p. 156 (Jan. 8, 2021 letter from Plaintiffs’
former counsel to Federal re coverage)).
Plaintiffs also reject Federal’s assertion that they are not entitled to “rebuilding to code
costs” because they have not commenced rebuilding, asserting that the Policy provides for the
costs of code compliance not only for rebuilding but also demolition and does not limit coverage
based on whether or not the insured rebuilds following a loss. Id. In support of their position,
they point to the language of the Rebuilding to Code Provision, which “covers ‘the necessary cost
of conforming to any law or ordinance that requires or regulates: the repair, replacement, or
rebuilding of the damaged portion of your house or other permanent structure’ as well as
‘demolition’ of the house or any permanent structures.” Id. (quoting Policy at B-8, B-9, dkt. no.
226 at ECF pp. 41-42) (emphasis added by Plaintiffs). Plaintiffs point out that this provision also
specifically provides:
If you have a covered total loss to your house and do not replace
or rebuild the house at the same location, this coverage will apply
to the house and other permanent structures up to the same amounts
of coverage [] that would have applied at your original location.
Id. (quoting Policy at B-9, dkt. no. 226 at ECF pp. 42) (emphasis added by Plaintiffs). According
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to Plaintiffs, this language means that the Policy provides Rebuilding to Code coverage “even if
the Policyholder does not rebuild[.]” Id. (emphasis in original).
Plaintiffs assert that this reading of the Policy finds further support in California Insurance
Code § 2051.5(c)(1), which provides:
In the event of a total loss of the insured structure, a policy … shall
not contain a provision that limits or denies, on the basis that the
insured has decided to rebuild at a new location or to purchase an
already built home at a new location, payment of the building code
upgrade cost.
Cal. Ins. Code § 2501.5(c)(1). Likewise, Plaintiffs contend, the California Insurance Commission
“agrees that rebuilding and ‘incurring’ building code upgrade costs is not a prerequisite to
payment[,]” stating:
Rebuilding in Current Location or Rebuilding or Replacing in a New
Location: Existing law requires, in the event of a total loss of the
insured structure, that when a policyholder decides to rebuild at a new
location or to purchase an already built home at a new location, they
are due the full benefits that would have been payable had the
policyholder rebuilt the property at the loss location. [. . .] Existing
law also requires payment of building code upgrade benefits (also
known as building ordinance and law) associated with rebuilding
the property at the loss location even though building code
upgrade costs will not be "incurred" at the loss location.
Id. at 10 (quoting Cal. Ins. Comm. Bulletin 2025-2 at 3) (emphasis added by Plaintiffs).
Plaintiffs also reject Federal’s assertion that they must “have evidence of the costs of code
compliance to replace their structures, beyond ‘routine reconstruction.’ ” Id. at 10. According to
Plaintiffs, there is no such language in the Policy and it is enough that their guest house “burned to
the ground and needs to be rebuilt to current codes, and the Appraisal Panel found that Plaintiffs’
Main House, Garage and Wine Cellar likewise need full replacement.” Id. They also note that
they have “evidence of additional costs for code compliance.” Id. at 10-11 (citing Ex. IIII
(McMinn Report) at 31502–06, dkt. no. 236-3 at ECF pp. 58-62).
With respect to soil replacement, Plaintiffs argue that Federal “advances an artificially
narrow reading of the Policy to the detriment of their insureds.” Id. at 11. According to Plaintiffs,
both the Debris Removal and Rebuilding to Code provisions in the Policy entitle them to soil
replacement. Id. at 11-12. Furthermore, Plaintiffs contend they have evidence that soil
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replacement is required in order to:
(1) comply with required Napa County Soil Standards for Private
Debris and Ash Removal (DAR) Cleanup, 2017 NAPA Fire
Complex (hereinafter “DAR Regulations”) for rebuilding
structures on the Property (Ex. OOO at 1); (2) comply with
required SWPPP (Ex. IIII at 31506); (3) ensure the safety of all
individuals present, including the Pollocks, during rebuilding, by
preventing exposure to toxic contaminants in the soil (Ex. MMM
at 11); (4) to prevent the recontamination of the Main House and
Guest House during construction from the toxic elements in the
soil tracked in to the home.
Id. at 11.
Plaintiffs reject Federal’s arguments about their “VOC damage theories,” asserting that
they have no such damage theories but instead “have a breach of contract claim which is premised
in part on damage caused by the inundation of wildfire smoke for days and the resulting presence
of numerous toxic combustion-related contaminants found at the property, in the home, and off-
gassing from building materials.” Id. at 17. According to Plaintiffs, Federal’s narrow focus on
VOCs “ignore[s] the swath of evidence of smoke related chemical damage making the property
uninhabitable.” Id. This evidence is sufficient to establish a triable issue of fact as to whether
harmful chemicals, including VOCs, have rendered the house uninhabitable, Plaintiffs assert. Id.
at 18-19.
Furthermore, Plaintiffs assert, while it is undisputed that VOCs in the main house were not
measured pre-fire, they have offered evidence of causation through their expert, Dr. Crimmins,
who has opined, inter alia, that “[a]nions, VOCs, and acidic pH regions were widely distributed
throughout the house illustrating the dispersion of the smoke and components throughout the
home[]” and that “fire, heat, and smoke from the Glass Fire caused both visible, microscopic and
chemical damage to the property.” Id. (citing Plaintiffs’ Ex. MMM at 16, 23, dkt. no. 236-2 at
ECF pp. 871, 878).
Third, Plaintiffs contend Federal’s reading of Another Planet is overly restrictive and does
not bar Plaintiffs’ theory of loss. Id. Finally, Plaintiffs argue that Federal’s reliance on the
Contamination exclusion is misplaced as this Court has rejected the same argument in connection
with a similar exclusion, finding that “chemicals which are released as the byproduct of, or
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incidental to, hostile fires [were] covered by the fire coverage terms of the policy and [did] not
fall within the pollution exclusion which [was] limited to the release of pollutants in the context of
environmental contamination.” Id. at 22 (quoting Grow Grp., Inc. v. N. River Ins. Co., 1992 WL
672265, at *4 (N.D. Cal. Aug. 14, 1992)). Plaintiffs further contend the California Supreme Court
has found that the pollution exclusion only narrowly applies to “conventional environmental
pollution.” Id. at 22 (citing MacKinnon v. Truck Ins. Exch., 31 Cal. 4th 635, 650-53 (2003), as
modified on denial of reh'g (Sept. 17, 2003)).
Plaintiffs also reject Federal’s assertion that it is entitled to summary judgment on their bad
faith claim. Id. at 12-17. First, they assert that the Court cannot decide whether Federal’s
coverage position is reasonable as a matter of law because Federal “fails to articulate a consistent
coverage position.” Id. at 12. In particular, Plaintiffs contend the Coverage Letter is unclear
because on the first page, it states that “there is ‘no coverage…for losses…on the Property
other than those related to the Insureds’ guest house’ which it claims to have paid” but on page 8
of the letter Federal “assert[s] that there [is] ‘no coverage for [Plaintiffs’] Claim’, full stop.” Id.
(citing Dekel Decl., Ex. 64 (“Coverage Letter”) at 1, 8, dkt. no. 217 at ECF pp. 1781, 1788).
Plaintiffs also point to Federal’s current position, set forth in its amended answer, dkt. no. 198,
that Plaintiffs are not entitled to any coverage under the Policy’s Fraud Provision and must even
repay as restitution the amounts already paid to them under the Policy. Id.
Furthermore, Plaintiffs contend Federal cannot establish a genuine dispute as to its current
position – that the Policy is void due to fraud – because Federal “provides nothing indicating its
current coverage position of total non-coverage is supported by experts – or anything in its
investigation.” Id. at 13. Moreover, Plaintiffs assert, Federal’s position that there is no coverage
due to fraud fails because it is based on “statements that [Federal] cannot reasonably believe are
fraudulent[,]” two of which were validated by the Appraisal Panel. Id. They also contend Federal
did not rely on the statements in the September 27, 2021 Letter “because its cadre of experts had
already evaluated Kaizen’s reports before Chubb ever received the letter.” Id. Furthermore,
Plaintiffs assert, Federal “had documentation, before it filed its counterclaim for fraud, that
Plaintiffs and their attorneys had been informed by experienced construction experts, McMinn and
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Associates, that ‘the conclusion has been clear from immediately after the Glass Fire: repair is not
possible so the least cost solution is replace/rebuild (for this purpose it is one and the same).’ ” Id.
(citing Plaintiffs’ Ex. IIII (McMinn Report) at 31498, dkt. no. 236-3 at ECF p. 53).
Plaintiffs also assert that there is “ample evidence” that Federal acted unreasonably in
addressing Plaintiffs’ claim and therefore acted in bad faith. Id. at 13-16 (citing evidence). They
argue further that the “genuine dispute” doctrine does not shield Federal from liability and that
Federal’s reliance on Fraley v. Allstate Ins. Co., is misplaced because in that case, the court held
only that “even a substantial disparity in [expert] estimates…does not, by itself, suggest that the
insurer acted in bad faith.” Id. at 16 (quoting Fraley, 81 Cal. App. 4th at 1293) (emphasis added
by Plaintiffs). According to Plaintiffs, their bad-faith claims, in contrast, “are not predicated
exclusively, or even in substantial part, on differences of opinion between experts, whether it be as
to the value of loss or to coverage.” Id. Nor does “[t]he presence or employment of expert
testimony and investigation . . . ‘automatically insulate an insurer from a bad faith claim based on
a biased investigation[,]’ ” Plaintiffs assert. Id. (quoting Chateau Chamberay, 90 Cal. App. 4th at
348).
Plaintiffs argue that Federal’s request for summary judgment on their negligence claim
also should be denied. Id. at 22-23. As to the theory that they purchased a Policy that offered
inadequate coverage, Plaintiffs do not challenge Federal’s characterization of California law but
argue that Federal is liable because, as a factual matter, MIV acted as Federal’s agent in selling
Plaintiffs the Policy. Id. at 22-23. They point to California Department of Insurance records that
purportedly identify MIV as an agent for Federal Insurance Company since June 24, 2002. Id. at
22 (citing Request for Judicial Notice (“RJN”) and Ex. RRRRR, dkt. nos. 235 and 235-1).
As to the theory based on failure to maintain adequate reserves, Plaintiffs suggest this
theory is offered to support its bad faith claim rather than its negligence claim and argue that the
Court already rejected Federal’s argument. Id. at 23. They also assert, without citation to
evidence, that Federal’s “argument regarding the sufficiency of the reserves evidence also lacks
merit.” Id.
Finally, Plaintiffs reject Federal’s argument that the Appraisal Award caps the amount they
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may be awarded for any alleged damage to manmade structures and for land. Id. at 23-25. They
argue that Federal’s position is incorrect because the Appraisal Panel’s award was for actual cash
value (“ACV”) under California Insurance Code § 2701 whereas Plaintiffs are entitled to
replacement cost under the Policy. Id.
c. Reply
In its Reply, Federal reiterates its argument that the Policy covers only ALE that was
actually incurred, rejecting Plaintiffs’ plain language reading of the Policy language. Reply at 1-3.
It argues that Plaintiffs’ estoppel argument fails because it is undisputed that the Policy limits ALE
to two years and under California law, “[e]stoppel cannot be used to create coverage under an
insurance policy where such coverage did not originally exist.” Id. at 3-4 (quoting Miller v. Elite
Ins. Co., 100 Cal. App. 3d 739, 755 (1980)). Likewise, it contends the “conceptually equivalent”
prevention doctrine does not apply because that doctrine “should not give the insured a benefit
under the policy it never had in the absence of the dispute.” Id. at 4 (quoting Stephens & Stephens
XII, LLC v. Fireman’s Fund Ins. Co., 231 Cal. App. 4th 1131, 1145-46 (2014)). Furthermore,
Federal asserts, when Plaintiffs say they are entitled to ALE for the next three years, at a
minimum, they reveal that they are not “seeking ‘tolling’ or forgiveness for non-compliance with a
procedural condition; they are seeking years of supplemental and potentially limitless ALE.” Id.
According to Federal, ”[t]here is no precedent for that windfall . . . .” Id.
Nor can Plaintiffs rely on a factual dispute related to estoppel, Federal contends, because
the undisputed facts show that Plaintiffs were aware as early as December 2020 of Federal’s
position that ALE reimbursement required invoices showing expenses were actually incurred. Id.
(citing Dekel Supp. Decl., Ex. 127 at 2, dkt. no. 243 at ECF p. 99 (October 20, 2020 letter from
Plaintiffs’ counsel acknowledging Federal’s “position that [ALE] must be actually incurred”); id.,
Ex. 120 at 5, dkt. no. 243 at ECF p. 51 (December 17, 2020 letter with similar statements); id., Ex.
125 at 4, dkt. no. 243 at ECF p. 90 (March 12, 2021 letter with similar statements); id., Ex. 128 at
2-3, dkt. no. 243 at ECF pp. 1-3-104 (March 30, 2021 letter with similar statements); Plaintiffs’
Ex. IIIII (February 11, 2022 letter from Federal to Plaintiffs’ counsel) at 12, dkt. no. 236-4 at ECF
p. 382 (“Federal renews its request that you provide any supporting authority for your frequently
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repeated statement that ‘the Policy does not require that [additional living expenses] be incurred.’
As for the living expense claim submitted to date, Federal still lacks sufficient support from the
Insureds to support large parts of the claim made under this coverage, and these amounts may or
may not be covered.”); id., Ex. MMMMM at 14451, dkt. no. 236-4 at ECF p. 483 (March 23, 2022
email from Federal’s counsel to Plaintiffs’ counsel with similar request)). Therefore, Federal
argues, Plaintiffs cannot satisfy the element of estoppel requiring that Plaintiffs were ignorant of
the true facts. Id. at 5.
Federal also rejects Plaintiffs’ reliance on the state of emergency and California Insurance
Code § 2060(b)(1) (formerly § 2051.5(b)(2)), arguing that “[t]here can be no ‘delays in the
reconstruction process’ if there is no such process at all.” Id. According to Federal, Plaintiffs’
assertion that they “ ‘began working with licensed contractors’ on, for example, assessing
‘damage’ and creating an ‘invitation to bid[]’ ” does not help Plaintiffs because Plaintiffs do not
state that any reconstruction was actually begun. Id. Furthermore, Federal asserts, this section of
the Insurance Code “makes clear that the extension is intended to apply only to delays akin to
those caused by demand problems in the construction industry[,]” of which there is no evidence
here. Id. at 5-6.
Federal reiterates its position that coverage for “rebuilding to code” is available only where
an insured has rebuilt and incurred code compliance expenses. Id. at 6. Federal contends
Plaintiffs have cited no case authority that supports their position that these expenses are available
even if the insured does not rebuild. Id. Federal further asserts that while Plaintiffs argue that
they have spent money “repairing, replacing or rebuilding the Property[,]” id. (citing Opposition at
10 n.5), the evidence Plaintiffs cite shows only that “Plaintiffs hired experts in connection with
their insurance claim to assess damage and remediation[,]” not that they have actually rebuilt. Id.
at 6 & n. 8 (citing Plaintiffs’ Ex. XXXXX (Nutter Dep.) at 81, dkt. no. 236-4 at ECF p. 727
(testifying that he had spent about 200 hours performing work related to the Property); id.,
Plaintiffs’ Ex. IIIII (February 11, 2022 letter from Federal to Plaintiffs’ counsel) at 14579, dkt. no.
236-4 at ECF p. 372; id. Plaintiffs’ Ex. IIII (McMinn Report) at 31498, dkt. no. 236-3 at ECF p.
1057); id., Plaintiffs’ Ex. QQ (Schmidt Dep.) at 126, dkt. no. 236-1 at ECF p. 488).
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Federal observes that Plaintiffs do not address in their Opposition its assertion that
coverage of soil removal requires a “nexus” between rebuilding and soil removal under the Policy,
of which Plaintiffs present no evidence. Id. at 7. Federal further asserts that Plaintiffs’ reliance on
general requirements relating to soil replacement is not sufficient to establish that Plaintiffs are
entitled to coverage. It also rejects Plaintiffs’ argument that soil removal is covered under the
Debris Removal provision, arguing that that provision only covers soil removal “made necessary
by a covered loss.” Id. at 8. Likewise, Federal asserts, “the code-upgrade provision also requires
Plaintiffs to show the cost was tied to rebuilding, which they cannot do.” Id.
With respect to its VOC damages arguments, Federal reiterates the arguments in its
motion that Plaintiffs cannot prove increased VOCs in the air inside the house caused by the Glass
Fire and rejects Plaintiffs’ assertions that they have demonstrated triable issues of fact. Federal
also contends Plaintiffs do not dispute that VOCs are “pollutants” under the Contamination
exclusions and therefore, that at least damage caused by VOCs that existed prior to the Glass Fire
are excluded from coverage under that provision. Id. at 8-10. Federal also argues that as to any
VOCs in building materials, Plaintiffs have not established a triable issue of physical loss under
Another Planet. Id. at 10.
With respect to the bad faith claim, Federal rejects Plaintiffs’ assertion that there is “ample
evidence” of bad faith and argues that even if true, the examples they point to do not establish bad
faith. Id. at 11-14.
Federal rejects Plaintiffs’ arguments relating to the negligence claim. Id. at 14-15. As to
the underinsurance theory, it rejects Plaintiffs’ assertion that MIV was Federal’s agent, pointing to
allegations in the state court complaint that MIV acted as Plaintiffs’ broker and to a statement on
MIV’s website “describing itself as ‘independent’ and noting it ‘work[s] for you,’ not ‘an
insurance company.’” Id. at 14 (citing Dekel Supp. Decl., Ex. 133 (MIV Compl.) ¶¶ 9 (“policy
brokered by MIV”), 14, 18, 31, 34, 35), dkt. no. 243 at ECF pp. 216-17, 220-21). Federal
contends the document cited by Plaintiffs to show that MIV acts as a licensed agent of Federal is
“a hearsay statement about MIV’s authority to transact on Federal’s behalf that does not qualify
for any hearsay exception.” Id.
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As to the loss reserves theory, Federal observes that Plaintiffs pled this theory as part of
their negligence claim but now appear to assert it as part of their bad faith claim. Id. at 23.
According to Federal, “evidence of reserves is inadmissible to prove bad faith.” Id. (citing Malkin
v. Fed. Ins. Co., 2023 WL 6967458, at *13 (C.D. Cal. Oct. 20, 2023); Grant v. Allstate Ins. Co.,
2010 WL 11519538, at *3 (C.D. Cal. July 16, 2010)).
Finally, Federal rejects Plaintiffs’ assertion that they can recover more than the amount of
loss found by the Appraisal Panel for damage to manmade structures because the Award reflects
ACV. It incorporates its argument in opposition to Plaintiffs’ summary judgment motion on the
same issue, in which it asserts:
Plaintiffs also maintain that the panel was “statutorily obligated” to
consider preexisting damage “to generate an [actual cash value] ACV
award.” Mot. at 7; id. at 4. That is wrong on multiple levels. First, the
panel did not determine ACV; it determined replacement cost. The
standard-form fire-insurance policy calls for ACV coverage, which
entitles policyholders to replacement cost with a deduction for
depreciation. See Cal. Ins. Code §§ 2071, 10102, 2051. But Plaintiffs’
policy provides extended replacement cost coverage, which contains
no deduction for depreciation. See Dekel Dec. Ex. 76 (Policy) at
Coverage Summary 1, B-2. The appraisal provision in Plaintiffs’
policy thus calls for an appraisal not of ACV, but of “the amount of
loss,” id. at Y-5—which is exactly what Plaintiffs sought in their
Motion to Compel Appraisal, see ECF 27 at 2.
Federal’s Opposition to Plaintiffs’ Summary Judgment Motion, dkt no. 230 at ECF p. 12. Federal
asserts that Plaintiffs’ position is “absurd,” because “[i]f the panel had decided ACV, the appraisal
award and entire appraisal process would have no utility here because, as Plaintiffs emphasize,
ACV and replacement-cost coverage are different measures of loss and the former ‘does not serve
to set the extent of [Federal’s] obligation’ under this Policy.” Federal Reply to Plaintiffs’
Summary Judgment Motion at 15, dkt. no. 241 at ECF p. 20.
2. Breach of Contract and Declaratory Relief Claims
a. Whether ALE Coverage is Limited to Incurred Expenses
As a preliminary matter, the Court notes that Plaintiffs do not dispute that at least some of
the ALE they seek was not (or has not been) actually incurred. Therefore, although there appear
to be factual disputes as to whether Federal has provided adequate coverage of the ALE Plaintiffs
actually incurred, the question of whether ALE that was not (or has not yet been) incurred is an
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issue of law that can be properly decided on summary judgment.14 As set forth below, the Court
finds that the ALE provision covers only expenses that are actually incurred.
To determine whether ALE that has not been incurred is covered under the Policy, the
Court looks to the ALE provision (quoted above in full), which states, in part: “If a covered loss
makes your house or other permanent structure uninhabitable, we cover the reasonable increase in
your normal living expenses that is necessary to maintain your household’s usual standard of
living.” Compendium, Vol. 1, Ex. A (Policy) at B-6, dkt. no. 226 at ECF p. 39. The Court notes
that both sides believe that this language is “clear,” although their interpretations of the provision
are different. Plaintiffs point to the fact that this sentence does not include the word “incurred”
even though that word is used repeatedly throughout the Policy, including in the provision
governing Forced Evacuation Expenses (quoted above), arguing that this means that the extra
living expenses component of ALE need not have been incurred. Federal points to the term
“reasonable increase” in this sentence, asserting that it carries with it the requirement that the
expenses must have been incurred to be covered. The Court concludes that Federal has the
stronger argument.
Although the case authority on this issue is scant, the Ninth Circuit in United States v.
Didier interpreted a similar policy provision and concluded that it covered only incurred expenses.
The ALE policy provision in that case stated:
If your house cannot be lived in because of a covered loss to your
house or, if applicable, to your contents, we cover the reasonable
increase in your normal living expenses that is necessary to maintain
your household's usual standard of living. We cover this increase for
the reasonable amount of time required to repair, replace or rebuild
your house or your contents, or if you permanently relocate, the
shortest amount of time required for your household to settle
elsewhere. This period of time is not limited by the expiration of this
policy.
United States v. Didier, No. CR 12-36-M-DWM, 2013 WL 5524592, at *2 (D. Mont. Oct. 4,
2013), rev'd, 585 F. App'x 667 (9th Cir. 2014). The case involved an insured who had purchased a
14 At oral argument, Federal stipulated that it seeks summary judgment only as to hypothetical
expenses that Plaintiffs have not incurred and that disputes about the expenses Plaintiffs have
actually incurred can be addressed at trial.
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“white glove” policy from Chubb to insure a mansion that was rendered uninhabitable as a result
of a covered loss. Id. After Chubb was unable to find suitable alternative housing for the plaintiff,
she proposed, through a broker, that a residence owned by a family trust, purportedly belonging to
her extended family (“the Rollins property”), be leased as alternative housing, describing the
house as being “6900 square feet, with five bedrooms and two bathrooms” and seeking “a base
rent of $15,250 per month, a $7,000 security deposit, a $5,000 pet deposit, a $200 application fee,
a $1,500 cleaning fee, and a 10% broker fee.” Id. at 4. After asking the insured to confirm that
the Rollins property was not her own property and confirming the broker’s role, Chubb approved
these alternative living expenses. Id. Later, however, it learned that the insured was the trustor,
trustee and sole beneficiary of the family trust and that she had “fudged and lied about the Rollins
property[,]” which was actually “a cabin of approximately 860 square feet, two bedrooms, no
bathrooms, and no indoor plumbing” Id. at * 6. As a result, both she and the broker were
indicted for mail fraud and convicted. Id.
On a motion to set aside the verdict, the district court found that materiality had not been
established by the prosecution, reasoning:
This criminal mail fraud case is missing an essential element:
materiality. Chubb Insurance could have written the policy using
more precise language, reflecting their obligation to pay only the
actual cost of replacement housing. The insurer did not elect to write
the policy using that language, instead it predicated its obligation to
pay on an ambiguous term generously providing coverage for living
expenses based on a standard of living in this case in a 14 bedroom
mansion. The United States cannot invoke this ambiguity by
attempting to establish fraud in violation of 18 U.S.C. § 1341,
effectively making the grand jury and this criminal court an
enforcement mechanism for a policy dispute between a carrier and its
insured.
Id. at *16. The Ninth Circuit reversed, however, finding as follows:
The district court erred in concluding that no rational trier of fact
could have found Didier's misrepresentations material. The insurance
policy required the carrier to pay for the “reasonable increase” in
Didier’s living expenses resulting from a “covered loss.” Didier
misrepresented that she had incurred an increase in her living
expenses by virtue of the covered loss. This was “capable of
influencing” the carrier's decision to pay her pursuant to the policy.
United States v. Blixt, 548 F.3d 882, 888 (9th Cir.2008). Even if the
amount of expenses claimed would have been reasonable had Didier
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actually incurred them, the policy requirement of an “increase” made
Didier's misrepresentations material.
United States v. Didier, 585 F. App'x at 668 (emphasis added). Although the Ninth Circuit’s
conclusion in Didier as to expenses that were not actually incurred is accompanied by little
discussion and may be dicta, the reasoning – which is expanded upon in Krum v. Chubb Ltd., No.
23-1262, 2024 WL 3885479, at *4 (10th Cir. Aug. 19, 2024) – appears to be sound.
In Krum, the insured had purchased an insurance policy to cover a ski lodge that suffered
extensive damage when a fire-suppression sprinkler malfunctioned. Id. at *1. The policy
contained an additional living expenses provision that stated as follows:
If a covered loss makes [the] house or other permanent structure
uninhabitable during [a] usual vacation occupancy, [Great Northern]
cover[s] the reasonable increase in [the insured's] normal living
expenses that is necessary to maintain [the] household's usual
standard of living, including the boarding of domestic animals not
primarily owned or kept for business use.... [Great Northern] cover[s]
these extra living expenses for up to 60 days, even if the policy period
ends during that time.
2024 WL 3885479, at *4. The insured received $22,500 to cover extra living expenses but argued
he was entitled to more. Id. The district court granted summary judgment in favor of the
insurance company on the issue, finding “no reasonable jury could find that Krum was entitled to
additional extra-living-expenses benefits because ‘nowhere [did he] identify any evidence that he
incurred [a further increase in his normal living expenses] or submit[ ] appropriate verification.’ ”
Id. (citation omitted).
On appeal, Krum challenged the district court’s reasoning, arguing that “he need not
actually incur extra living expenses to obtain such benefits.” Id. Although the Court of Appeals
found that Krum had waived this argument by failing to raise it in the district court, it went on to
reject the argument on the merits, citing the Ninth Circuit’s ruling in Didier:
The extra-living-expenses provision plainly requires an “increase in
[the insured's] normal living expenses” to trigger coverage. . . . And a
reasonable increase in such expenses can only occur if the insured
incurs—that is, “suffer[s] or bring[s] on oneself”—some financial
liability or expense. Incur, Black's Law Dictionary (12th ed. 2024);
see also United States v. Didier, 585 F. App'x 667, 668 (9th Cir. 2014)
(interpreting identical policy language as imposing “requirement of
an ‘increase,’ ” meaning insured must “actually incur[ ]” increase in
normal living expenses to receive benefits under extra-living-
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expenses provision). In other words, if Krum incurred no financial
liability, then there was no “increase” in expenses for Great Northern
to cover. And because Krum has offered no evidence that he incurred
any further increase in normal living expenses, the district court did
not err in concluding that no reasonable jury could find Great
Northern breached the policy by failing to pay additional extra-living-
expenses benefits.
Id.
The Court is mindful that the Policy as a whole must be considered in construing the extra
living expenses language and that dictionary definitions must not be given undue weight. The
Court finds the reasoning in Krum to be persuasive, however, and is not persuaded that the failure
to expressly state in the Policy’s additional living expenses provision that extra living expenses
must have been incurred is sufficient to bear the weight Plaintiffs seek to put on it. While it is true
that Federal did specify that forced evacuation expenses must have been “incurred by you,” the
Court concludes that the “reasonable increase” in ALE that is covered under the Policy plainly
refers to expenses that were actually accrued, as found by the courts in Didier and Krum.
Nor is the Court persuaded by Plaintiffs’ argument that “[i]t is not unusual for insurance
companies to pay ALE benefits on a monthly basis based on a calculated determination of the
monthly cost to maintain an insured’s standard of living, without requiring those expenses first be
incurred and reimbursed.” Opposition at 6 (emphasis added) (citing Kelsey v. Allstate Ins. Co.,
2005 WL 1773302, *4–5 (N.D. Cal. July 26, 2005); Martinez v. Fire Ins. Exch., No. D044348,
2005 WL 3249458, at *2 (Cal. Ct. App. Dec. 2, 2005), as modified on denial of reh'g (Dec. 21,
2005)). Those cases address when covered living expenses must be incurred under the policies’
additional living expense provisions. The question here is if those expenses must be incurred at
all. Therefore, those cases are not on point.
Accordingly, the Court finds, as a matter of law, that under the Policy, Plaintiffs are
entitled only to ALE that is actually incurred.
b. Whether ALE is Limited to Two Years
Plaintiffs do not dispute that the Policy’s plain language limits ALE coverage to a
maximum of two years “or a later date if agreed to by [Federal][,]” or that Federal did not, in fact,
ever explicitly state that it had waived this policy limitation even though it continued to pay
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Plaintiffs’ living expenses after the two-year period had expired.15 Compendium, Vol. 1, Ex. A
(Policy) at B-6, dkt. no. 226 at ECF p. 39. They assert, however, that there are factual disputes as
to whether the two-year period may be extended under the doctrines of estoppel and prevention
and that in any event, because of the state of emergency that was declared at the time of the Glass
Fire, the period was extended to three years under California Insurance Code § 2060(b)(1)
(formerly § 2051.5(b)(2)). The Court is not persuaded by either argument.
“In the insurance context . . . , estoppel may arise from a variety of circumstances in which
the insurer’s conduct threatens to unfairly impose a forfeiture of benefits upon the insured.” City
of Hollister v. Monterey Ins. Co., 165 Cal. App. 4th 455, 488 (2008), as modified on denial of
reh'g (Aug. 28, 2008). It is well-established under California law that “[e]stoppel cannot be used
to create coverage under an insurance policy where such coverage did not originally exist.” Miller
v. Elite Ins. Co., 100 Cal. App. 3d 739, 755 (1980) (citing Aetna Casualty & Surety Co. v.
Richmond, 76 Cal.App.3d 645, 652-653 (1977)). However, an insurer may be estopped from
asserting a procedural defense to coverage where the requirements of estoppel are satisfied
because such an estoppel only “obligates the insurer to pay what it has agreed to pay when its only
defense to payment is brought into being by its own inequitable conduct.” City of Hollister, 165
Cal. App. 4th at 490, as modified on denial of reh'g (Aug. 28, 2008). Similarly, an insurer may be
barred from asserting a procedural defense to coverage where its own delay prevented the insured
from meeting a procedural requirement under the plan. Stephens & Stephens XII, LLC v.
Fireman's Fund Ins. Co., 231 Cal. App. 4th 1131, 1146 (2014), as modified on denial of reh'g
(Dec. 17, 2014).
For example, in Spray, Gould & Bowers v. Associated Internat. Ins. Co., the court found
that the insurer was barred from denying coverage based on the insured’s failure to file a claim
within the 12-month limitations period in the insurance policy because the insurance company had
15 At oral argument, Federal explained that as a matter of general practice, it pays the insured’s
living expenses until the coverage letter goes out but claimed that in doing so it does not waive the
right to enforce the policy limit by cutting off further living expenses where, as here, the two-year
period has expired. It stipulated that it does not seek to “claw back” additional living expenses
that it paid to Plaintiffs after the two-year period had expired but simply to avoid any further
liability for ALE going forward.
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failed to notify the insured of “all benefits, coverage, time limits or other provisions of [the]
insurance policy” as required under Cal. Code Regs., tit. 10, § 2695.4, subd. (a). 71 Cal. App. 4th
1260, 1269 (1999). The court reasoned that while violation of the regulation does not give rise to a
private right of action, failure to provide the required notice may constitute the kind of inequitable
conduct that will justify an estoppel to asserting a procedural forfeiture under an insurance policy,
even if the policy provisions are “plain, clear, and conspicuous[,]” because the regulation is
intended to ensure “a type of notice, communicated independent of the policy itself, which is
calculated to achieve actual rather than constructive knowledge.” Id. at 1272. The court in Spray
emphasized that its holding “create[d] no new liability for insurers.” Id. at 1268.
Similarly, in City of Hollister v. Monterey Ins. Co., the court found that the insurer was
equitably estopped from asserting forfeiture of coverage based on the insured’s failure to meet a
180-day limitations period for a procedural requirement where the insurer did not provide
adequate notice of the requirement under California regulations and common law. 165 Cal. App.
4th at 489 -90. As in Spray, the court emphasized that “[a]pplication of these regulations in this
manner causes no enlargement of an insurer’s substantive liabilities[.]” Id. at 490.
In Stephens & Stephens, the policy provided that the insurer was not required to pay
replacement cost “until the lost or damaged property is actually repaired or replaced and unless the
repairs or replacement are made as soon as reasonably possible after the loss or damage.” 231 Cal.
App. 4th at 1136. Otherwise, the insured could receive only the actual, depreciated value of the
damaged property, which is often much less than the full replacement cost. Id. at 1137-38.
When the case went to trial, the insured had not repaired the damage but the jury nonetheless
awarded the full replacement cost. Id. at 1139. The trial court reversed the verdict on that issue,
finding that the plaintiff was required to complete the repairs before it could seek full replacement
cost and rejected the insured’s argument that it was excused from the repair requirement. Id. at
1140.
The court of appeal disagreed, however, finding that under the prevention doctrine, the
insured was excused from the requirement that the damage be repaired “as soon as reasonably
possible after the loss or damage” because the insurance company’s “delayed resolution and denial
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of the claim materially hindered [the insured’s] ability to plan for the property’s repair.” Id. at
1146. In particular, the court found:
While there was significant evidence that [the insured] had debated
whether to repair, subdivide, or demolish the property, there was also
significant evidence that Fireman's Fund’s refusal to commit to
coverage made it difficult for [the insured] to know what to do with
the property. Donald Stephens testified that the company had
essentially exhausted its capital in maintaining the property and
needed a coverage commitment from Fireman's Fund to proceed. We
are satisfied that the uncertainty created by Fireman's Fund’s failure
to accept coverage sufficiently hindered [the insured’s] ability to
repair the property to satisfy the prevention doctrine.
Id. The court made clear, however, that “a coverage dispute should not give the insured a benefit
under the policy it never had in the absence of the dispute--such as the right to receive the
replacement cost without actually repairing the damage.” Id. at 1145-46.
The court in Stephens & Stephens went on to reject the insured’s argument that the insurer
should be estopped from denying coverage because it had “failed to discuss or disclose the policy
provisions[,]” finding “no reason to infer that [the insured] was uninformed about its options under
the policy” and observing that it was “a sophisticated professional owner of real estate[,]” that “the
policy’s language [was] clear and unambiguous; and the company was advised by an insurance
broker in its dealings with [the insurer].” Id. at 1149. Therefore, the court concluded, “substantial
evidence was not presented demonstrating that [the insured] was unaware of the repair
requirement due to any nondisclosure on the part of [the insurer].” Id.
Here, Plaintiffs do not seek to excuse any procedural requirement invoked by Federal to
deny coverage. The two-year limit on ALE coverage under the Policy is not a procedural
limitations period, in contrast to the facts of Spray and City of Hollister. Nor does Federal rely on
the two-year limit as a basis to deny coverage that would otherwise be available under the Policy,
as in Stephens & Stephens. Instead, Plaintiffs seek to expand the ALE coverage beyond what is
provided for under the Policy. California law does not allow them to do so. Furthermore, to the
extent they seek to invoke estoppel as a basis for ALE coverage beyond the two-year limit, the
policy language is clear that such coverage is unavailable. Therefore, Plaintiffs in this case, as in
Stephens & Stephens, cannot establish that they were unaware of that provision, which is a
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required element of estoppel.
Plaintiffs’ reliance on California Insurance Code § 2060(b)(1) (formerly § 2051.5(b)(2)) is
also misplaced. That section provides:
(b)(1) In the event of a covered loss relating to a state of emergency,
as defined in Section 8558 of the Government Code, coverage for
additional living expenses shall be for a period of no less than 24
months from the inception of the loss, but shall be subject to other
policy provisions. An insurer shall grant an extension of up to 12
additional months, for a total of 36 months, if an insured acting in
good faith and with reasonable diligence encounters a delay or delays
in the reconstruction process that are the result of circumstances
beyond the control of the insured. Circumstances beyond the control
of the insured include, but are not limited to, unavoidable
construction permit delays, lack of necessary construction materials,
and lack of available contractors to perform the necessary work.
Additional extensions of six months shall be provided to
policyholders for good cause.
Cal. Ins. Code § 2060(b)(1) (emphasis added). Plaintiffs argue that there was “good cause” to
extend the ALE coverage to three years because Federal “delayed reconstruction and thwarted
Plaintiffs’ actions by misrepresenting Policy benefits to Plaintiffs, failing to provide sufficient
funds for rebuilding all damaged structures, and ultimately denying the claim.” They cite no
authority, however, suggesting that these types of delays fall within the ambit of the statute. See
Opposition at 8-9.
To determine what “circumstances beyond the control of the insured” means, the Court
considers the examples that follow this phrase in the statute. The California Supreme Court has
explained:
“While the proviso ‘including, but not limited to’ ‘connotes an
illustrative listing,’ ” the “specific examples” listed may restrict the
meaning of the defined term. (People v. Arias (2008) 45 Cal.4th 169,
181, 182, 85 Cal.Rptr.3d 1, 195 P.3d 103.) This follows from the
interpretive canon known as ejusdem generis, meaning “of the same
kind.” (Id. at p. 180, 85 Cal.Rptr.3d 1, 195 P.3d 103.) The canon,
which “ ‘ “applies whether specific words follow general words in a
statute or vice versa,” ’ ” instructs that “ ‘the general term or category
is “restricted to those things that are similar to those which are
enumerated specifically.” ’ ” (Ibid.) It is based on the following logic:
Had the Legislature “ ‘intended the general words to be used in their
unrestricted sense, it would not have mentioned the particular things
or classes of things which would in that event become mere
surplusage.’ ” (Ibid.; see also International Federation of
Professional & Technical Engineers, Local 21, AFL-CIO v. Superior
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Court (2007) 42 Cal.4th 319, 342, 64 Cal.Rptr.3d 693, 165 P.3d 488;
Peralta Community College Dist. v. Fair Employment & Housing
Com. (1990) 52 Cal.3d 40, 50–51, 276 Cal.Rptr. 114, 801 P.2d 357;
Dyna-Med, Inc. v. Fair Employment & Housing Com. (1987) 43
Cal.3d 1379, 1390–1391, 241 Cal.Rptr. 67, 743 P.2d 1323.)
Brown v. City of Inglewood, 18 Cal. 5th 33, 43 (2025).
Here, all of the examples in the statute appear to relate to bottlenecks caused by excess
demand for rebuilding supplies and services associated with the state of emergency. None of the
examples is remotely similar to the reasons for the delay upon which Plaintiffs rely in this case.
Therefore, the Court declines to adopt the broad reading of this provision Plaintiffs propose. See
Shawver v. State Farm Gen. Ins. Co., No. B319252, 2024 WL 1168510, at *11 (Cal. Ct. App.
Mar. 19, 2024) (finding that litigation between family members that delayed rebuilding was not a
“circumstance beyond the insured’s control” within the meaning of the statute and that “[t]he
statute’s legislative history reflects that the Legislature was concerned that, given the number of
wildfires in California in recent years, the construction industry was ‘struggling to keep up with
construction demand,’ causing ‘reconstruction delays due to the massive need for debris removal,
permitting demand and lack of contractors and materials.’ ”) (citing Sen. Rules Com., Off. of Sen.
Floor Analyses, 3d reading analysis of Assem. Bill No. 1772 (2017-2018 Reg. Sess.) as amended
Aug. 24, 2018). Accordingly, the Court concludes, as a matter of law, that the 12-month
extension on ALE under Cal. Ins. Code § 2060(b)(1) does not apply to Plaintiffs’ coverage dispute
with respect to the ALE to which they are entitled under the Policy.
For these reasons, the Court finds that Federal is entitled to summary judgment in its favor
as to the enforcement of the two-year limit on ALE coverage under the Policy except as to ALE
that has already been paid that was incurred more than two years after Plaintiffs filed their claim
but before the coverage letter was issued, which Federal has stipulated it does not seek to “claw
back.”
c. Whether Federal is Entitled to Summary Judgment as to Rebuilding to Code
Costs
Federal contends it is entitled to summary judgment in its favor to the extent that Plaintiffs
seek Rebuilding to Code costs under the Policy for two reasons. First, it contends the Rebuilding
to Code provision provides for such coverage only if Plaintiffs actually rebuild, providing for
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coverage only for “the necessary cost of conforming to any law or ordinance that requires or
regulates” the rebuilding of the property. Motion at 11 (citing Policy at B-8, B-9, dkt. no. 226 at
ECF p. 41-42 (emphasis added in Motion)). Because Plaintiffs have not commenced rebuilding,
there are no such costs, according to Federal. Id. Second, Federal contends Plaintiffs have failed
to offer any evidence of the cost of complying with any code provision above and beyond the
regular cost of reconstruction. Id. The Court agrees.
As a preliminary matter, the Court is not persuaded by Plaintiffs’ argument that the Policy
and the California Insurance Code provide for Rebuilding to Code coverage even if the insured
does not rebuild and therefore does not incur such costs. The language in the Policy and the
Insurance Code upon which Plaintiffs rely in support of their position provides only that these
costs are available even if the insured decides not to rebuild at the same location and therefore
incurs these costs at a different location. Neither the Policy nor California Insurance Code §
2051.5 provides that Rebuilding to Code costs are available even if they are not incurred at all.
Furthermore, such a reading of the Policy would be inconsistent with the Policy language
requiring that coverage is available only when such costs are “necessary.”
The Court also agrees with Federal that in order to recover under this Policy provision,
Plaintiffs are required to offer evidence “substantiating the difference between cost attributed to
routine reconstruction and additional cost attributed to compliance with building codes.” See
Zois v. XL Specialty Ins. Co., No. SACV1401461JVSJCGX, 2015 WL 12656939, at *5 (C.D. Cal.
Oct. 15, 2015) (granting summary judgment in favor of insurer on “rebuilding to code” claim on
the basis that insured had provide no such evidence and therefore had “not shown an essential
element of their claim, namely, the occurrence of additional building costs for code compliance
covered by the Policy's Increased Cost of Construction Additional Coverage.”). Plaintiffs have
not done so. Instead, they point only to evidence that they have “spent money in furtherance of
repairing, replacing or rebuilding the Property.” See Opposition at 10 n. 5 (citing Plaintiffs’ Ex.
XXXXX at 81:3-17, dkt. no. 236-4 at ECF p. 726) (testimony by Christopher Nutter that he spent
approximately 200 hours evaluating cost of repairs); Plaintiffs’ Ex. IIIII at Chubb_14579, dkt. no.
236-4 at ECF p. 372 (status update from Federal dated Feb. 11, 2022 stating that “During
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Federal’s visit to the Insureds’ property on December 29, 2021, the Insureds had their own experts
conducting their own testing); Plaintiffs’ Ex. IIII at 31498, dkt. no. 236-3 at ECF p. 54 (McMinn
Report) (stating that McMinn & Associates was hired to determine the least cost of repair and first
visited the Property in October 2020; and describing the “extensive evaluation and testing of their
property” by Plaintiffs); and Plaintiffs’ Ex. QQ at 126:12-14, dkt. no. 236-1 at 488) (Schmidt
testimony re time spent VOC testing at the Property after the Glass Fire)). None of this evidence
addresses the cost of code compliance above and beyond the cost of routine reconstruction.
Furthermore, Plaintiffs conceded at the hearing that they have no evidence or expert who could
provide testimony from which a jury could determine what portion of the Appraisal Award (if
any) is attributable to costs related to code compliance. Because Plaintiffs have not demonstrated
a genuine issue of fact as to their entitlement to Rebuilding to Code costs, Federal is entitled to
summary judgment that no such costs are available to Plaintiffs.
d. Whether Federal is Entitled to Summary Judgment as to Soil Replacement
Federal argues that Plaintiffs are barred from seeking the cost of soil removal and
replacement because Plaintiffs have not offered evidence that soil removal is required to rebuild
the main house or any other permanent structure, as is required under the Policy’s Land provision.
As discussed above, that provision provides coverage for up to 10% of the amount of the covered
loss to the house or other permanent structure for the cost of “excavation, replacement or
stabilization of land under or around [the insured’s] house or other permanent structure” that is
“require[d]” to “repair, replace[ ], or rebuild[ ]” the house or permanent structure. Compendium
Vol. 1, Ex. A (Policy) at B-7, dkt. no. 226 at ECF p. 40. Plaintiffs point to evidence they contend
show soil removal is required generally but none of the cited evidence links soil removal to
rebuilding.
First, Plaintiffs point to page one of the Mandel Report, which they contend offers
evidence that soil removal is necessary to comply with Napa County’s DAR Regulations, “for
rebuilding structures on the Property.” Opposition at 11 (Citing Ex. OOO at 1, dkt. no. 236-2 at
ECF p. 891). That page of the Mandel Report contains a summary of the opinions in the report,
stating that the report “focuses on the cost of implementing remediation recommendations
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proposed to address the effects of the Glass Fire on the vegetated portions of the Property.” Dkt.
no. 236-2 at ECF p. 891. While the DAR Regulations are referenced, there is no suggestion that
Mandel considered those requirements specifically as they related to rebuilding in preparing the
report. Rather, the report states at page 1:
The proposed restoration plan is consistent with the requirements of
the Napa County Soil Standards for Private Debris and Ash Removal
(DAR) Cleanup, 2017 NAPA Fire Complex. While sampling has
been done that demonstrates soil contamination, the opinions
provided are based on the extensive ash impact area and the Napa
DAR requirements. Based on the information reviewed and
summarized below, soil removal to a depth of 12-inches is required
for both the landscape and wildland area.
Id. Indeed, Mandel testified at his deposition that he did not consider whether soil removal
“would be necessary for the replacement of the main house or the placement of the guesthouse.”
Dekel Decl., Ex. 13 (Mandel Dep.) at 260, dkt. no. 217 at ECF p. 381
Plaintiffs also cite to the last page of the McMinn Report, which references the State’s
Storm Water Pollution Prevention Plan (“SWPP”). Opposition at 11 (citing Ex. IIII at 31506, dkt.
no. 236-3 at ECF p. 62). In particular, the report states that the SWPP is “overseen by the state
and this property will be subject to all their many requirements, which include preventing any run-
off from this site entering any waterway. This will need to be maintained for the entire project
duration & after final building completion.” Dkt. no. 236-3 at ECF p. 62. While the quoted
language mentions rebuilding, however, it does not specifically address soil removal; nor does it
establish any connection between any soil removal requirements that might be imposed under the
SWPP and the needs of rebuilding. Likewise, Plaintiffs’ citation to page eleven of the Crimmins
Report, Opposition at 11 (citing Ex. MMM at 11, dkt. no. 236-2 at ECF p. 866), is to no avail as
there is no discussion of soil replacement or the need to remove soil in connection with rebuilding
there.
In sum, Plaintiffs point only to evidence that soil removal is generally required without
citing any evidence that the replacement is necessary for rebuilding, which is insufficient to
establish coverage under the Land provision. See Gronik v. Balthasar, No. 10-CV-0954, 2015 WL
905151, at *8 (E.D. Wis. Mar. 3, 2015) (holding on summary judgment that repairs for beach
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erosion were not a covered loss under Chubb policy with similar land provision because there was
“no evidence that the repair of a covered loss to the house require[d] the beach erosion-related
repairs.”). Therefore, Federal is entitled to summary judgment that Plaintiffs are not entitled to
coverage for this expense under the Land provision.
Plaintiffs contend, however, that they are also entitled to the cost of soil replacement under
the Debris removal and Rebuilding to Code provisions of the Policy. See id. at B-8, B-9. As to the
former, the court finds that the language of the Policy clearly specifies that coverage is for
removal of debris that results from the “demoli[tion] [of] damaged covered property.” Id. at B-8.
The removal and replacement of soil due to contamination (rather than demolition) does not fall
within the ambit of that provision. Nor have Plaintiffs pointed to any evidence of the cost of soil
replacement necessitated by demolition of the main house or any other structure on the Property.
Therefore, Federal is entitled to summary judgment that Plaintiffs are not entitled to coverage for
this expense under the Debris Removal provision
As to the Rebuilding to Code provision, there is no doubt that that provision provides for
coverage of soil replacement only to the extent that it is required to rebuild or replace damaged
structures. As discussed above, however, Plaintiffs have not offered any evidence to establish the
additional costs associated with regulatory compliance as compared to the regular cost of
reconstruction. This includes Rebuilding to Code costs related to soil removal.
Therefore, the Court finds that Federal is entitled to summary judgment that no soil
replacement coverage is available to Plaintiffs under the Policy.
e. Whether Federal is Entitled to Summary Judgment on “VOC Damages
Theories”
Federal’s arguments are aimed at VOCs in the air and VOCs in building materials. As a
preliminary matter, the Court notes that Plaintiffs’ theory of loss is not limited to VOCs in the air
or building materials of the house and that their experts have addressed other toxins as well,
including formaldehyde. Consequently, Federal’s attempt to single out VOCs from those other
toxins is of limited utility for streamlining the trial. Even assuming summary adjudication as to
VOCs in the air or building materials might properly be addressed separately on summary
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judgment, the Court finds that Federal has not established that it is entitled to summary
adjudication limited to VOCs here.
i. Whether Coverage is Barred Under Contamination exclusion
The Court considers first whether Plaintiffs are barred from recovering any losses
associated with VOCs in the air under the Contamination exclusion.
The starting point for the Court’s analysis is the California Supreme Court’s decision in
MacKinnon v. Truck Ins. Exch., 31 Cal. 4th 635 (2003), as modified on denial of reh'g (Sept. 17,
2003). In that case, the court considered whether a pollution exclusion virtually identical to the
Contamination exclusions here applied to a claim involving the death of the insured in her
apartment after the building owners had pesticides sprayed inside the building and did not warn
the insured about the dangerous chemicals in her apartment. 31 Cal. 4th at 639-40. The court
reviewed the authority interpreting similar provisions and found that there were two “camps”:
One camp maintains that the exclusion applies only to traditional
environmental pollution into the air, water, and soil, but generally not
to all injuries involving the negligent use or handling of toxic
substances that occur in the normal course of business. These courts
generally find ambiguity in the wording of the pollution exclusion
when it is applied to such negligence and interpret such ambiguity
against the insurance company in favor of coverage. The other camp
maintains that the clause applies equally to negligence involving toxic
substances and traditional environmental pollution, and that the
clause is as unambiguous in excluding the former as the latter.
Id. at 642. The court reviewed the historical background of the pollution exclusion, finding that it
was developed by the insurance industry in response to environmental laws passed in the 1970s
and 1980s that increased insurers’ potential exposure due to the “explosion of environmental
litigation.” Id. at 643-45. The Court explained that “[o]ne of the primary arguments for a narrow
interpretation of the pollution exclusion is based on [that] history.” Id. at 645. It continued:
We would be remiss, therefore, if we were to simply look to the bare
words of the exclusion, ignore its raison d'être, and apply it to
situations which do not remotely resemble traditional environmental
contamination. The pollution exclusion has been, and should continue
to be, the appropriate means of avoiding ‘ “the yawning extent of
potential liability arising from the gradual or repeated discharge of
hazardous substances into the environment.” ’ (Emphasis in original.)
[Citations.] We think it improper to extend the exclusion beyond that
arena.''
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Id. (citations omitted).
In adopting a narrow interpretation of the pollution exclusion, the court in MacKinnon
observed that a broader reading of the policy language that simply relied on dictionary definitions
of words such as “irritant or contaminant” would lead to “absurd results” as “[v]irtually any
substance can act under the proper circumstances as an ‘irritant or contaminant.’ ” Id. at 650.
Nonetheless, the court found support for its interpretation of the pollution exclusion in the
dictionary definitions of “release,” “escape,” “disperse” and “discharge,” none of which would
normally apply to the intentional application of pesticides at issue in that case. Id. at 651.
However, the court found that “[t]he key to this inquiry” “turn[ed] on the meaning of the term
‘pollutant.’” Id. It explained:
Because the definitional phrase “any irritant or contaminant” is too
broad to meaningfully define “pollutant,” we must turn to the
common connotative meaning of that term. This position was well
articulated by the court in Regional Bank of Colorado v. St. Paul Fire
and Marine Ins. Co. (10th Cir.1994) 35 F.3d 494, interpreting
Colorado law, when considering whether carbon monoxide fumes
from a residential heater should be considered pollution: “A
reasonable policy holder would not understand the policy to exclude
coverage for anything that irritates. ‘Irritant’ is not to be read literally
and in isolation, but must be construed in the context of how it is used
in the policy, i.e., defining ‘pollutant.’ [¶] While a reasonable person
of ordinary intelligence might well understand carbon monoxide is a
pollutant when it is emitted in an industrial or environmental setting,
an ordinary policyholder would not reasonably characterize carbon
monoxide emitted from a residential heater which malfunctioned as
‘pollution.’ It seems far more reasonable that a policyholder would
understand it as being limited to irritants and contaminants commonly
thought of as pollution and not as applying to every possible irritant
or contaminant imaginable.” (Id. at p. 498, 2d italics added; accord,
Stoney Run Co. v. Prudential–LMI Commercial Ins. Co. (2d Cir.
1995) 47 F.3d 34, 38; Gill, supra, 686 N.E.2d at p. 999.)
Limiting the scope of the pollution exclusion to injuries arising from
events commonly thought of as pollution, i.e. environmental
pollution, also appears to be consistent with the choice of terms
“discharge, dispersal, release or escape.” As one court has observed:
“The drafters’ utilization of environmental law terms of art
(‘discharge,’ ‘dispersal,’ ... ‘release,’ or ‘escape’ of pollutants)
reflects the exclusion's historical objective—avoidance of liability for
environmental catastrophes related to intentional industrial pollution.
(RSJ, Inc., supra, 926 S.W.2d at p. 681; see also Nautilus Ins. Co. v.
Jabar, supra, 188 F.3d at p. 30; Center for Creative Studies, supra,
871 F.Supp. at pp. 944–945; Koloms, supra, 227 Ill.Dec. 149, 687
N.E.2d at pp. 81–82.) It may be an overstatement to declare that
“discharge, dispersal, release or escape,” by themselves, are
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environmental law terms of art. But, as discussed above, these terms,
used in conjunction with “pollutant,” commonly refer to the sort of
conventional environmental pollution at which the pollution
exclusion was primarily targeted.
Moreover, as discussed above, there appears to be little dispute that
the pollution exclusion was adopted to address the enormous potential
liability resulting from anti-pollution laws enacted between 1966 and
1980.
Id. at 652–53 (2003), as modified on denial of reh’g (Sept. 17, 2003).
The approach set forth in MacKinnon was applied in The Villa Los Alamos Homeowners
Assn. v. State Farm Gen. Ins. Co., 198 Cal. App. 4th 522, (2011), upon which Federal relies in
support of its argument that the VOCs at issue in this case are excluded under the Contamination
exclusions. In that case, the court considered whether “the disturbing of asbestos during the
scraping of acoustical ‘popcorn’ ceilings in a three-story, 18–unit residential building, in which
asbestos fibers were released into the air, the common area hallways and stairwells, individual
units, and out to the common areas and public spaces and a private street outside [the] building,
constitute[d] environmental pollution.” 198 Cal. App. 4th at 527. Consistent with MacKinnon, the
court addressed two questions: 1) was asbestos a pollutant within the meaning of the policy; and
2) what was the “causal mechanism” that led to the harm. Id. at 536-37. The Court found that
asbestos was a “pollutant” and further concluded that the causal mechanism (scraping the ceiling)
constituted a “release” under the policy, explaining:
When asbestos is disturbed by construction and related activities, the
result is commonly referred to as a “release” of asbestos, and this
description occurs frequently in opinions and statutes. (See, e.g.,
Saller v. Crown Cork & Seal Co., Inc. (2010) 187 Cal.App.4th 1220,
1228, 115 Cal.Rptr.3d 151 [“[p]roducts that incorporate asbestos
release asbestos into the air if they are handled in a manner that
disturbs them because this causes the asbestos to become airborne”];
Coalition, supra, 122 Cal.App.4th at p. 1264, 19 Cal.Rptr.3d 635 [“
‘[d]isturbances of serpentine or asbestos-containing ultramafic rock
can cause asbestos fibers to be released into the ambient air when
disturbed... ’ ”]; Lab.Code, § 6501.8 [defining “ ‘asbestos-related
work’ ” as “any activity which by disturbing asbestos-containing
construction materials may release asbestos fibers into the air”];
Health & Saf.Code, § 25926, subd. (d) [legislative finding that
“[w]hen [asbestos] materials deteriorate or become loose, damaged,
or friable, they release asbestos fibers into the ambient air”].)
The Villa Los Alamos Homeowners Assn. v. State Farm Gen. Ins. Co., 198 Cal. App. 4th at 537.
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Therefore, the court found that the asbestos constituted “environmental pollution” and the
exclusion applied. Id. at 542.
Federal also cites Cold Creek Compost, Inc. v. State Farm Fire & Cas. Co., 156 Cal. App.
4th 1469 (2007) in support of its position. In that case, which involved essentially the same
pollution exclusion as in the cases discussed above, the court applied MacKinnon to determine
whether the exclusion applied to noxious odors from a nearby composting facility. The Court
found that it did because the odors constituted “environmental pollution” under MacKinnon. Id. at
1484. In summarizing MacKinnon, the court also observed in passing that the cases cited in
MacKinnon as examples of cases in which courts read the pollution exclusion narrowly included
at least one case in which “toxic smoke emitted from a fire” “presumably did not involve
traditional environmental pollution[.]” Id. at 1478 (citing MacKinnon, 31 Cal. 4th at 642 n. 3).
The Court concludes that the Villa Los Alamos and Cold Creek cases are distinguishable
from the facts here in an important respect. Both involved some human activity that directly
caused the discharge, release or dispersal of a pollutant. Thus, finding that the pollution exclusion
applied in those cases was consistent with MacKinnon’s guidance that that exclusion should be
construed narrowly in light of “the exclusion's historical objective—avoidance of liability for
environmental catastrophes related to intentional industrial pollution.” 31 Cal. 4th at 653. In
contrast, the causal mechanism that caused the VOCs in this case to (allegedly) harm Plaintiffs’
property was a fire that was not caused (at least directly) by human activity or any “intentional
industrial pollution.” MacKinnon, 31 Cal. 4th at 653. Thus, while MacKinnon is not explicit on
this point, it counsels that toxins released by a fire that was not intentionally set – which do not
fall within the ambit of the environmental laws that were the impetus for insurers’ adoption of
pollution exclusions -- are not the sort of pollution that is covered by those exclusions and that
likewise, the Contamination exclusion in the Policy does not apply to the VOCs that Plaintiffs
contend were released by the Glass Fire and caused damage to their house.
This conclusion finds support in Wesco Ins. Co. v. Brad Ingram Constr., No. 22-16584,
2024 WL 243344, at *1 (9th Cir. Jan. 23, 2024). There, the court addressed whether the insurer
had a duty to defend where the insured claimed injury from “airborne wildfire debris” and the
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policy contained a pollution exclusion like the one above. 2024 WL 243344, at *1. Because the
duty to defend is broader than the duty to indemnify, the court did not decide whether the
exclusion would actually apply but simply whether there might be coverage. Id. at *2. The court
took a “cautious” approach because the case involved “dust created or disbursed by a naturally
occurring event” and there was no California case on point. Id. at *2. The court held, “Given the
test in MacKinnon, which has not been applied in sufficiently analogous cases, and the fact that
the pollution exclusion does not apply unambiguously to the driver’s injuries, there existed a
potential for coverage under the insurance policy, and Wesco had a duty to defend the litigation.”
Id.
Judge Forrest dissented, however, highlighting the facts of the case and in particular, that
“[t]he dust directly resulted from a massive wildfire, but the ‘clouds’ of particles that allegedly
caused injury were created when the dust was disturbed by the wildfire cleanup project.” Id. at
*3. Applying MacKinnon, she found that the toxic dust could be a pollutant, noting that California
courts (including the court in Cold Creek) “have recognized that natural materials can be
pollutants.” Id. She further concluded that in considering the relevant “acts of dispersal or
release[,]” “the cleanup project [was] the proper focus” and not “the wildfire” because “the
complaint . . . alleges the injury stemmed from the cleanup effort ‘stirr[ing] up toxic dust.’ ” Id.
Implicit in the analysis of both the majority and the dissent is the assumption that toxic dust
released by wildfire or brush fire16 would not constitute environmental pollution under
MacKinnon whereas toxic dust released or dispersed as a result of some direct human activity
would.
Finally, the Court’s conclusion that toxins released by wildfire are not environmental
pollution and do not fall under the Contamination exclusion in this case finds support in Grow
16 At the hearing, it became apparent that there is a dispute between the parties as to whether the
Glass Fire was a “brush fire” or a “wildfire” under the Policy, an issue that has implications for
Policy limits. That dispute was not briefed and is not presently before the Court. Therefore, the
Court declines to resolve that dispute at this time. The Court notes, however, that there are
frequent references to “wildfire” throughout the parties’ briefing. In referencing the parties’
arguments the Court has, at times, also used the term “wildfire.” In doing so, it does not make any
finding as to whether the Glass Fire was, in fact, a brush fire or a wildfire under Plaintiffs’ Policy.
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Grp., Inc. v. N. River Ins. Co., No. C 92-2328 SC (ENE), 1992 WL 672265, at *4 (N.D. Cal. Aug.
14, 1992).17 That case was decided well before MacKinnon but in it, Judge Conti applied
reasoning that was consistent with MacKinnon, reaching the conclusion that the pollution
exclusion in that case did not apply to harm caused by the release of toxins due to a fire. Id. at *
3-4. Like the MacKinnon court, the court in Grow Group reasoned that the pollution exclusion
was ambiguous as to whether it applied to “pollutants which result from fires” and therefore had to
be construed in favor of the insured. Id. at *3. The court further observed, “it defies common
sense to think that a pollution exclusion could bar coverage for such a basic object of coverage as
a fire, particularly since nearly every fire emits, as a by-product, smoke and fumes which may well
be toxic, originating as they do from the material which is burning.” Id. It also noted that the
plaintiff had “proffered extrinsic evidence which suggests that the industry, and the drafters of the
exclusion, never intended the exclusion to bar coverage for hostile fires.” Id.
The Court therefore concludes that the VOCs that Plaintiffs claim contaminated their
house as a result of the Glass Fire are not environmental pollution under the Contamination
exclusion and are not excluded from coverage as a matter of law.
ii. Whether Federal is Entitled to Summary Adjudication that VOCs
Rendered Property Unsatisfactory for Future Use or Were Caused by the
Glass Fire
As discussed above, Federal contends that with respect to VOCs in the air inside the house,
Plaintiffs cannot demonstrate that “post-fire VOC levels rendered their ‘then . . . satisfactory’
property ‘unsatisfactory for future use[ ]’ ” because the undisputed facts show that the VOC levels
in their house after the Glass Fire are no “higher than VOC levels typically found in residential
homes that have not been exposed to fire.” Motion at 12 (quoting MRI Healthcare Ctr. of
Glendale, Inc. v. State Farm Gen. Ins. Co., 187 Cal. App. 4th 766, 779 (2010)). Similarly, it
asserts that with respect to the allegation that there are VOCs in the building materials in the
house, “the presence of VOCs in building materials . . . is not associated with corresponding
physical damage” and therefore is not a covered loss under the California Supreme Court’s
17 Although Plaintiffs cited this case in their Opposition, Federal did not mention it in its Reply
brief.
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decision in Another Planet. Id. at 15 (citing Another Planet, 15 Cal.5th at 1149). Federal also
argues Plaintiffs cannot show that the Glass Fire was the cause of any elevated VOC levels in the
house. Id. at 13-14. The Court finds that there are disputed facts that preclude summary
judgment on the question of whether VOCs caused by the Glass Fire rendered the Property
unsatisfactory for future use.
In “modern policies, ‘physical loss or damage’ is typically the trigger for coverage.” MRI
Healthcare Ctr. of Glendale, Inc. v. State Farm Gen. Ins. Co., 187 Cal. App. 4th 766, 778 (2010).
That is true of the Policy in this case as well and thus, Plaintiffs are required to demonstrate
“physical loss” to their home to establish coverage under the Policy. See Compendium Vol. 1, Ex.
A (Policy) at B-4, dkt. no. 226 at ECF p. 37 (“a ‘covered loss’ includes all risk to your house or
other property”). In the context of fire, the court in MRI explained:
Clearly, this threshold is met when an item of tangible property has
been “physically altered” by perils such as fire or water. (Ibid.)
However, serious questions crop up in instances when the structure of
the property itself is unchanged to the naked eye and the insured
claims its usefulness for its normal purposes has been destroyed or
reduced. (Ibid.) That the loss needs to be “physical,” given the
ordinary meaning of the term, is “widely held to exclude alleged
losses that are intangible or incorporeal, and, thereby, to preclude any
claim against the property insurer when the insured merely suffers a
detrimental economic impact unaccompanied by a distinct,
demonstrable, physical alteration of the property.”
Id. at 778-79.
Applying this rule, the California Supreme Court found in Another Planet that “allegations
of the actual or potential presence of COVID-19 on an insured’s premises do not, without more,
establish direct physical loss or damage to property within the meaning of a commercial property
insurance policy.” 15 Cal. 5th 1106, 1117 (2024). It noted, however, that “[i]n rare situations, a
property may suffer direct physical loss where it is not damaged in a conventional sense, including
where a chemical contaminant or noxious odor infiltrates the property and renders it effectively
unusable or uninhabitable.” Id. at 1118. The court explained:
In such a case, the contaminant or odor may cause direct physical loss,
but only where the source of the property’s unusability or
uninhabitability is sufficiently connected to the property itself. This
situation may arise when the effect of the contaminant or odor is so
lasting and persistent that the risk of harm is inextricably linked or
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connected to the property.
Id.
Here, Plaintiffs have presented evidence from their experts that both the air and the
building materials in their house are toxic due to chemicals contained in the smoke plume that
engulfed their house during the Glass Fire and that the main house is therefore uninhabitable. If
they can prove that this is the case, they will have demonstrated physical loss under the Policy and
Another Planet. While Federal argues that Plaintiffs cannot meet this burden, the parties’ experts
disagree on a multitude of issues, including the reliability of the measurements taken by both
sides’ experts of chemicals in the air and building materials, whether the level of contamination in
the air is higher than would be expected under all the circumstances and whether that
contamination resulted from the Glass Fire or other factors. Therefore, the Court rejects Federal’s
argument that it is entitled to summary judgment to the extent Plaintiffs seek to ask the jury “to
award damages based on Federal’s failure to pay for the alleged presence of VOCs and SVOCs” in
the house. Motion at 16.
3. Bad Faith and Elder Abuse Claims
“The key to a bad faith claim is whether or not the insurer’s denial of coverage was
reasonable.” Guebara v. Allstate Ins. Co., 237 F.3d 987, 992 (9th Cir. 2001). “A withholding of
benefits may be unreasonable if the insurer: (1) fails to ‘give at least as much consideration to the
interests of the insured as it gives to its own interests’; (2) fails to fully investigate the grounds for
denying a claim; (3) ‘ignores evidence available to it which supports the claim’; (4) conducts the
investigation in a biased manner; or (5) denies benefits ‘on a basis unfounded in the facts known
to the insurer, or contradicted by those facts.’ ” Vanderloo v. Allstate Northbrook Indem. Co., No.
23-CV-04964-EKL, 2025 WL 844414, at *9 (N.D. Cal. Mar. 17, 2025) (quoting Wilson v. 21st
Century Ins. Co., 42 Cal. 4th 713, 720-21 (2007)).
“Under California law, a bad faith claim can be dismissed on summary judgment if the
defendant can show that there was a genuine dispute as to coverage.” Guebara, 237 F.3d at 992.
The contours of this doctrine were set forth in Chateau Chamberay Homeowners Ass'n v.
Associated Int'l Ins. Co., in which the court explained:
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It is . . . clear that [the existence of a genuine dispute] may be resolved
as a matter of law in a proper case. “ ‘[A] court can conclude as a
matter of law that an insurer’s denial of a claim is not unreasonable,
so long as there existed a genuine issue as to the insurer’s liability.’
[Citation.] The ‘genuine dispute’ doctrine may be applied where the
insurer denies a claim based on the opinions of experts. [Citations.]”
(Fraley v. Allstate Ins. Co., . . . 81 Cal.App.4th at p. 1292 . . .) In
Fraley, a case that involved a dispute over the cost of repairs to the
insureds’ fire damaged home, with each side relying on the differing
opinions of their respective experts, the court held “[w]here the
parties rely on expert opinions, even a substantial disparity in
estimates for the scope and cost of repairs does not, by itself, suggest
the insurer acted in bad faith.” (Id. at p. 1293 . . .).
While many, if not most, of the cases finding a genuine dispute over
an insurer’s coverage liability have involved legal rather than factual
disputes, we see no reason why the genuine dispute doctrine should
be limited to legal issues. (See, e.g., Guebara v. Allstate Ins. Co. (9th
Cir.2001) 237 F.3d 987, 993–994; Phelps v. Provident Life and Acc.
Ins. Co. (C.D.Cal. 1999) 60 F.Supp.2d 1014, 1021–1022; Allstate Ins.
Co. v. Madan (C.D.Cal.1995) 889 F.Supp. 374, 381.) That does not
mean, however, that the genuine dispute doctrine may properly be
applied in every case involving purely a factual dispute between an
insurer and its insured. This is an issue which should be decided on a
case-by-case basis. (Guebara v. Allstate Ins. Co., supra, 237 F.3d at
p. 994).
As the Fraley court emphasized, where an insurer, for example, is
relying on the advice and opinions of independent experts, then a
basis may exist for invoking the doctrine and summarily adjudicating
a bad faith claim in the insurer’s favor. (Fraley v. Allstate Ins. Co.,
supra, 81 Cal.App.4th at p. 1293 . . . ; Guebara v. Allstate Ins. Co.,
supra, 237 F.3d at p. 994.) We concur, however, with the caveat
advanced by the Guebara court. It cautioned that an expert’s
testimony will not automatically insulate an insurer from a bad faith
claim based on a biased investigation. It suggested several
circumstances where a biased investigation claim should go to jury:
(1) the insurer was guilty of misrepresenting the nature of the
investigatory proceedings (see Tomaselli v. Transamerica Ins. Co. 25
Cal.App.4th 1269, 1281, . . . [allowing a bad faith claim to go to the
jury where an insurance company without any evidence of fraud
forced an insured to submit to an examination under oath, dissuaded
the insured from having an attorney present, and misled the insured
about the purpose of the examination]); (2) the insurer's employees
lied during the depositions or to the insured; (3) the insurer
dishonestly selected its experts; (4) the insurer's experts were
unreasonable; and (5) the insurer failed to conduct a thorough
investigation. (Guebara v. Allstate Ins. Co., supra, 237 F.3d at p.
996.)
90 Cal. App. 4th 335, 347–49 (2001), as modified on denial of reh’g (July 30, 2001).
Here, Plaintiffs’ bad faith claim is based on more than simply a disagreement among
experts acting in good faith with respect to coverage, in contrast to Fraley. Rather, Plaintiffs point
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to evidence that Federal’s investigation was biased; that it failed to fully investigate the claim and
ignored evidence; that it withheld data and misrepresented facts; that it misrepresented policy
terms and withheld money owed; that it used unqualified consultants; that it used the wrong
standard for damage, treating smoke as the equivalent of dust, and tailoring its investigation to that
standard to avoid finding damage; and that it provided insufficient detail in its Coverage Letter to
gain a tactical advantage over Plaintiffs. See Opposition at 14-15. While Federal asserts that all
of this evidence “crumbles” upon scrutiny, the Court finds that there are factual disputes as to
whether Federal acted reasonably that preclude summary judgment as to the bad faith claim and
therefore as to the Elder Abuse claim as well.
4. Negligence Claim
Plaintiffs have advanced two theories of negligence. With respect to the underinsurance
theory, Federal’s challenge hinges on the question of whether MIV acted as a broker or an agent
when Plaintiffs purchased the Policy from them. On that question, the evidence is mixed.
Plaintiffs have presented evidence that MIV is licensed by the Department of Insurance to do
business on behalf of Federal, see Plaintiffs’ Ex. RRRRR, dkt. no. 235-1,18 whereas Federal points
to Plaintiffs’ allegations in the state court case against MIV referring to MIV as a “broker” and to
a statement on MIV’s website. Because there appears to be a fact question as to whether MIV
acted as an agent of Federal when it sold the Policy to Plaintiffs, the Court finds that summary
judgment on this claim is not appropriate.
As to the loss reserves theory, Plaintiffs do not point to any specific evidence that Federal
denied its claim based on inadequate loss reserves. Therefore, the Court GRANTS summary
judgment in favor of Federal on this claim to the extent it is based on a loss reserves theory.
18 As stated above, the Court grants Plaintiffs’ request for judicial notice as to the fact that this
information is reflected on the Department of Insurance Website. Although Federal challenges
this evidence as hearsay, the cases it cites merely support the proposition that “judicial notice of
matters of public record is limited to the existence and authenticity of a document; the veracity and
validity of the contents remain open to dispute.” LifeScan Scotland, Ltd. v. Shasta Techs., LLC,
No. 5:11-CV-04494 EJD, 2012 WL 2979028, at *5 (N.D. Cal. July 19, 2012) (citation omitted);
Elliott v. Mortg. Elec. Registration Sys., Inc., No. 12-CV-4370 YGR, 2012 WL 12965955, at *2
(N.D. Cal. Dec. 7, 2012) (same).
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5. Damages Limit
The parties are in agreement that the award of the Appraisal Panel is binding (at least, to
the extent the Panel acted within the scope of its authority) under the Federal Arbitration Act. The
only dispute as to whether the Award places a cap on Plaintiffs’ recovery for damage to manmade
structures (and by extension, on land under the Policy’s Land provision) turns on whether the
Award measured replacement cost (as Federal contends) or ACV (as Plaintiffs contend). The
Court finds that Federal is correct that the award established replacement cost rather than ACV
and therefore, places an upper limit on Plaintiffs’ recovery for damage to manmade structures and
land.
Plaintiffs point to California Insurance Code §§ 2701 and 2501 in support of their position.
Section 2701 is California’s Standard Form Insurance Policy, which provides coverage for “actual
cash value of the property at the time of the loss.” Cal. Ins. Code § 2071. Section 2051 of the
California Insurance Code further provides:
Under an open policy that requires payment of actual cash value, the
measure of the actual cash value recovery, in whole or partial
settlement of the claim, for either a total or partial loss to the structure
or its contents, shall be the amount it would cost the insured to repair,
rebuild, or replace the thing lost or injured less a fair and reasonable
deduction for physical depreciation based upon its condition at the
time of the injury or the policy limit, whichever is less. A deduction
for physical depreciation shall apply only to components of a structure
that are normally subject to repair and replacement during the useful
life of that structure.
Cal. Ins. Code § 2051. But there is no dispute that the Policy here deviates from the standard
policy to the extent that it covers replacement cost.
Moreover, replacement cost is what the Panel evaluated. In particular, the costs itemized
in the Appraisal Award relate to the costs of rebuilding Plaintiffs’ house and there is no indication
that the Panel made any deduction for depreciation. See Dekel Decl., Ex. 2 (Appraisal Award),
dkt. no. 217 at ECF pp. 33-58. Plaintiffs understood this when they stated in their opposition to
Federal’s motion to vacate the award, “The award reflects the Panel’s conclusion that damage
from the Glass Fire to all manmade structures requires a rebuild, and that the cost for that
restoration is $33,170,429.58, valued at the time of the loss in 2020.” Dkt. no. 113 at ECF p. 9.
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Therefore, the Court rejects Plaintiffs’ position that it may recover more than the Panel awarded
for damage to manmade structures on this ground. Instead, Plaintiffs’ recovery for damage to
manmade structures may not exceed $32,122,214.15 and its recovery for damage to land may not
exceed $3,212,221.42.
E. Plaintiffs’ Summary Judgment Motion
1. Contentions of the Parties
a. Motion
In their partial summary judgment motion, Plaintiffs asks the Court to hold, as a matter of
law, that: 1) the Award issued by the Appraisal Panel in this matter (dkt. no. 88-1) “properly
accounted for the pre-existing condition of the man-made structures at Plaintiffs’ property as of
September 27, 2020” and therefore, Federal’s fourteenth affirmative defense (asserting Plaintiffs’
claims are barred in whole or in part because their losses were at least partly due to wear and tear
that manifested outside the applicable Policy period) fails as a matter of law and the
Contamination and Gradual Loss exclusions do not apply; 2) the Glass Fire that started on
September 27, 2020 was the efficient proximate cause of the physical damage identified by the
Appraisal Panel in its Award and therefore, neither the Neglect exclusion nor the Failure to Protect
provision bars coverage; 3) Federal’s counterclaims for breach of contract and fraud – as well as
their Fifteenth and Sixteenth Affirmative Defenses to the extent they are based on the same facts --
fail as a matter of law. Plaintiffs’ Summary Judgment Motion at 1.
In support of the first argument, Plaintiffs point to this Court’s conclusion in upholding the
Award that while Federal may challenge any causation findings “embedded” in the Appraisal
Award, the “panel did not act improperly to the extent that it appraised the loss as the ‘[c]ost of
repairs to return the Man-Made structures to their pre-loss condition as of the Date of Loss.’” Id. at
4 (citing dkt. no. 134, Appraisal Award Order, at 29). According to Plaintiffs, “the Award
specifically finds that the cost of those repairs was, on an actual cash value (‘ACV’) basis,
$32,122,214.15), and that the ‘Period of actual Construction’ for effecting that remedy was 36
months.” Id. Thus, Plaintiffs assert, it is “plain” that the Panel made findings as to:
(1) the existence of the Property; (2) its quality and condition as
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of September 27, 2020 (including any damage, wear, tear, etc.);
(3) the existence and extent of damage on or after September 27,
2020 (through the date of the evidence or the Panel’s inspections);
(4) the remedy required to address that damage; (5) an appraisal
of the estimated ACV cost of effecting that remedy, including
deductions for depreciation and pre-existing conditions pursuant
to Cal. Ins. Code §§ 2051 and 2071; and (6) the estimated period
of restoration to effectuate that remedy.
Id. at 5. According to Plaintiffs, none of these findings are findings of causation. Id.
Furthermore, Plaintiffs contend, “[t]he Award makes it plain that the ‘cleaning’ repeatedly
advocated by Chubb was rejected in favor of a rebuild of the manmade structures.” Id.
Plaintiffs contend “California law is clear that appraisers may make determinations of both
pre-loss and post-loss condition[.]” Id. at 6 (citing Lee v. California Cap. Ins. Co., 237 Cal. App.
4th 1154, 1172 (2015); Safeco Ins. Co. v. Sharma, 160 Cal. App. 3d 1060, 1066 (1984);
Comprehensive Med. Ctr., Inc. v. State Farm Mut. Auto. Ins. Co., No. LA CV17-07672 JAK
(JPRX), 2019 WL 12536808, at *5 (C.D. Cal. June 11, 2019)). They further contend the Ninth
Circuit has “expressly recognized that assessing the pre-existing damage of property does
not entail findings of causation.” Id. (citing Knapp v. Allstate Ins. Co., 134 F.3d 378 (9th Cir.
1998)). Furthermore, Plaintiffs assert, “assessing the pre-loss quality and condition (including
preexisting damages) is . . . statutorily mandated” under Cal. Ins. Code § 2071 (appraisers must
“appraise the loss, stating separately actual cash value [ACV] and loss to each item”). Id. To
satisfy this requirement, Plaintiffs contend, the appraisal panel must determine “the cost to
repair/replace damaged property ‘less a fair and reasonable deduction for physical depreciation
based upon its condition at the time of the injury.’ ” Id. (quoting Cal. Ins. Code § 2051 (emphasis
added)). Thus, Plaintiffs assert, the Appraisal Panel accounted for the pre-loss condition of the
Property in performing the statutory obligations discussed above. Id. at 7. Moreover, they
contend, the issue of the pre-loss condition of the Property was extensively briefed in the appraisal
proceeding and therefore, Federal’s “current attempts to re-argue preexisting wear and tear,
contamination, or deferred maintenance, etc. are inappropriate.” Id.
Next, Plaintiffs assert that the “efficient proximate cause” of the destruction of the guest
house and damage to the main house was the Glass Fire and therefore, they are entitled to
summary judgment that the loss is a covered loss under their all-risk policy. Id. at 9. In particular,
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they argue that neither the Gradual Loss Exclusion nor the Contamination Exclusion can preclude
coverage, for the loss as assessed by the Panel took into account the pre-existing condition of the
Property, as discussed above. Id. at 9-10. They argue further that as to the Contamination
Exclusion, Federal argued “extensively during the Appraisal proceedings that any contamination
was present at background levels, and that there was no damage from the fire itself.” Id. at 10.
Therefore, they contend, “[t]o the extent that the Panel considered ‘contamination’ issues in
assessing the damage and remedy (it may not have), and given its $32 million award, it can only
have found either (1) there was a change in the presence of those chemicals at the Property from
September 27, 2020 to immediately after, and that such change contributed to the physical damage
to the Property; or (2) there was no such change, and therefore would be no remediable damage to
which the Exclusion might apply.” Id.
Plaintiffs also argue that Federal’s reading of the Contamination Exclusion is inconsistent
with California law for the same reasons they oppose summary judgment in favor of Federal on
this issue, discussed above. Id. at 10-11.
In addition, Plaintiffs argue that there is no evidence that the post-loss exclusions based on
Neglect and Failure to Protect Property bar coverage as the Panel’s “award of a ‘replacement’
remedy obviates these exclusionary provisions” and Federal has “explicitly argued against there
being . . . any post-loss damage to the Property.” Id. at 12. Plaintiffs argue further that there is no
dispute that the Glass Fire “set the loss in motion” and “[u]nder California law, this is decisive:
when a loss is caused by a combination of covered and excluded perils, the entire loss is covered if
the efficient proximate cause (or ‘predominant cause’) is covered.” Id. at 12 (citing Garvey v.
State Farm Fire & Casualty Co., 48 Cal. 3d 395, 403-404 (1989) and Cal. Ins. Code § 530).
Although this is ordinarily an issue of fact, this issue can be decided as a matter of law because
there is no evidence of post-loss damage to the Property, Plaintiffs assert. Id. at 13. They point to
the testimony of several of Federal’s experts that “the Property can still be ‘fully remediated’ with
cleaning, even now – making it clear that there is no additional damage from neglect or failure to
protect.” Id. at 13-14 (citations omitted). They also contend Federal’s expert Kevin Salvagni
“testified that there was no damage at the Property between the date of the Glass Fire and the date
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of the Crystal Fire (June 5, 2024), well after the Award.” Id. at 13 (citing dkt. no. 229 at ECF p.
444 (Salvagni Dep. at 188)).19 Thus, Plaintiffs assert, Federal’s “attempt to employ these
exclusions in this case would effectively render illusory the ‘all risk’ nature of the Policy and
nullify California’s efficient proximate cause doctrine.” Id. at 14.
Plaintiffs contend Malkin v. Federal Ins. Co., 562 F.Supp.3d 854 (C.D. Cal. 2022)
supports this conclusion. Id. In that case, according to Plaintiffs, the court found that an exclusion
for Structural Movement, Surface Water, and Earth Movement did not apply where water
overflowed into and beneath the home because the drain was clogged by ash from a wildfire. Id.
The court found that “the ash clogging the drain was the ‘most important’ cause of the loss,
rendering those exclusions unenforceable under the efficient proximate cause doctrine.” Id.
Likewise, Plaintiffs contend, it is undisputed here that the Glass Fire destroyed the guest house
and damaged the main house and there is no evidence that anything else could be the most
important cause of the damage to the Property. Id. at 15. Therefore, Plaintiffs assert, the Court
should find, as a matter of law, that the Glass Fire was the efficient proximate cause of the damage
and that the loss is therefore covered. Id.
Plaintiffs also seek summary judgment as to Federal’s counterclaims for breach of contract
and fraud. Id. at 15-16. Plaintiffs contend Federal’s counterclaims fail as to the Duration
Opinion (Amended Answer, Counterclaim ¶ 57(a)) and the Loss Statement (Amended Answer,
Counterclaim ¶ 57(b)) because both are true, citing the Appraisal Panel’s conclusion that the main
house needed to be replaced and that the time needed to do so is 36 months; and citing the reports
19 Salvagni’s testimony was as follows:
Q. Well, there was damage in the Glass Fire, and then there was a Crystal Fire. Was there
any damage that you assessed at the property that occurred between the Glass Fire and the
Crystal Fire?
Salvagni: Not that I'm aware of.
Q. None, right?
Salvagni: Right.
Dkt. no. 229 at ECF p. 444.
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of McMinn Associates and Total Concepts “estimat[ing] that the repair cost for the man-made
structures, including estimated costs for the necessary landscaping, hardscaping, and land
remediation (which includes foundation work and was not assessed by the Panel) as well as code
upgrades covered under the Policy would cost $85,305,580.40.” Id. at 16-17 (citing Proof of Loss
signed August 2, 2021, dkt. no. 229 at ECF pp. 266-271).
As to the Purported Counsel Statement (Amended Answer, Counterclaim ¶ 57(c)),
Plaintiffs contend Federal misrepresents the statement made by their counsel in the September 27,
2021 Letter:
[Federal] claims that Plaintiffs asserted that “Ms. Bolstad Johnson had
concluded” three separate things: (1) that soot, ash, and other fire
byproducts “have permeated every part of the main house, including
the interstitial spaces of the walls and the building materials
themselves”; (2) that Kaizen’s laboratory analysis of various building
materials “demonstrates that ‘cleaning’ will not repair the physical
damage” to them, and that removal of contamination would cause
“significant additional damage” ; and (3) that “Therefore, because it
is [Federal’s] obligation under the Policy to repair or replace/rebuild
all buildings, infrastructure, and landscaping to their pre-fire
condition, your insureds are entitled to total replacement of the
physically destroyed and/ or contaminated buildings, infrastructure,
and landscaping.” [Dkt. 198 at 26:27-27:11 (¶ 38)].
In its Counterclaim, [Federal] places all three of these statements
within the quotation marks used to indicate what “Ms. Bolstad-
Johnson had concluded.” Id. This directly misrepresents the
September Letter which (correctly) ascribes the first two statements
to the Plaintiffs’ expert reports, particularly the Kaizen Report and the
Building Materials Report (defined immediately below). But the third
statement is not attributed to anyone, let alone Kaizen or Ms. Bolstad-
Johnson; it is the assertion of counsel regarding what is owed under
Chubb’s Policy based on (among other things) the previous two
statements. This is, of course, what “therefore” typically means.
Id. at 17.
Furthermore, Plaintiffs assert that the first two statements in the September 27, 2021 Letter
are consistent with the findings in the Kaizen Report and Kaizen’s February 26, 2021 Building
Materials Addendum (the “Building Materials Report”), both of which were attached to the
September 27, 2021 Letter. Id. at 18 (citing dkt. no. 226 at ECF p. 172 (Kaizen Report) and id.,
ECF p. 464). In particular, Plaintiffs point to the following statements in the Kaizen Report:
Because of the house’s unique construction as an actual French
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Chateaux, the walls are on average about 22” thick. The depth of this
space would allow chemicals and particulates associated with fire to
enter into these wall cavities and potentially remain trapped.
* * * *
Based on the sample data, every porous material, including building
materials and contents, that is capable of absorbing chemicals
generated from the fire is presumed to be contaminated. All building
materials used in the construction and contained within the buildings
tested are presumed to have similar concentrations of the gases
identified in the living spaces and coating of smoke, soot or char.
Id. (quoting Kaizen Report, dkt. no. 226 at ECF pp. 175, 247). They also point to the following
statements in the Building Materials Report:
Exterior plaster samples show evidence of carbon/soot deposits that
are impossible to wash off with soap and water.
* * * *
Slate roofing tiles showed varying levels of discoloration. This
material is very porous and per the attached lab report nearly
impossible to remove the contamination from the porous surface.
Id. (quoting Building Materials Report, dkt. no. 226 at ECF p. 467). Plaintiffs contend that in light
of this evidence, Federal cannot establish that counsel’s representations about what Plaintiffs’
experts had told them were false. Id. at 19. They emphasize that Federal’s allegation of falsity
“lies not in repairability, nor Plaintiffs entitlement to replacement” but rather is based on Federal’s
claim that the “statement is false because Kaizen allegedly never drew such conclusions[.]” Id. at
16 n. 10.
As to the third statement in the September 27, 2021 Letter, Plaintiffs contend the statement
cannot be actionable as fraud because it is a “mere statements of opinion, including legal
conclusions drawn from a true state of facts.” Id. (quoting Seeger v. Odell, 18 Cal.2d 409, 414
(1941); and citing Smith v. Brown, 59 Cal.App.2d 836, 838 (1943) (no recovery where alleged
statements are “expressions of opinion or statements of law, based upon facts known to both”)).
Moreover, Plaintiffs contend, counsel’s opinion in the September 27, 2021 Letter was supported
by both the findings of McMinn Associates and the findings of Federal’s expert, Kevin Salvagni.
Id. at 19 (citing June 3, 2021 McMinn Report, dkt. no. 229 at ECF p. 24; May 19, 2023 Expert
Report of Kevin Salvagni, dkt. no. 229 at ECF p. 393). In particular, Plaintiffs point to the
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following statement in the McMinn Report:
We have and did consider, and others have proposed, that remediation
is a possibility. This would entail, as a minimum, removing all interior
and exterior finishes down to the underlying framing and would
include removal of the entire roof, all doors and windows, sheathing,
all mechanical systems and so on.
This is not dissimilar to Shakespeare’s proverbial removal of a
“pound of flesh.” The theory sounds initially feasible. In practice,
performing all that work with surgical precision; without
contaminating the remaining structures, then upgrading the existing,
twenty-year-old framing to comply with the new and far more
rigorous building codes, seismic standards and so forth, in such a way
as to not diminish, weaken or otherwise impair the overall integrity
of the structure? This will prove to be close to impossible. It would
also need to include and then confirm: by sampling and laboratory
testing, that all fire residues and contamination have been removed—
even where they have permeated wood framing: at holes and cuts,
buried intersections and assemblies, and at all nail penetrations.
Considering the main residence has over a million such nail
penetrations, this makes Shakespeare’s surgical proposal seem easy
by comparison.
The cost of this approach—as is true of all remodels, compared to
demolition and building from new—will far exceed the actual
replacement cost of new construction. Hence, having considered this
option in some detail, we have determined it is neither a feasible,
viable, or economically realistic option. As a result, we have moved
on to the only long term, permanent solution: the demolition and
replacement of all existing structures, including the main residence.
Dkt. no. 229 at ECF p. 24. Plaintiffs also point to Salvagni’s opinion that “[t]here would be no
cost savings associated with a selective demolition and removal of the Main Structure exterior
building envelope and interior cladding down to the studs and rebuild.” Dkt. no. 229 at ECF p.
393, Section 1.2.1(4).20
20 Salvagni provided the following cost estimates in his report:
1) Demolition through footers with ground-up rebuild of the Guest House: $2,575,723.
2) Demolition through footers with ground-up rebuild of the Main Structure, Pavilion,
Garage/Wine Storage, Swimming Pool, and return hardscape and landscape to pre-loss
condition: $31,966,027.
3) Remove and reconstruct exterior cladding (stucco and slate roofing) and return hardscape
and landscape to pre-loss condition: $8,757,383.
Id. at ECF pp. 392-93, Section 1.2.1. In this context, he offered the opinion quoted above, that
“[t]here would be no cost savings associated with a selective demolition and removal of the
Main Structure exterior building envelope and interior cladding down to the studs and
Rebuild.” Id. at ECF p. 393, Section 1.2.1(4). However, he also found the rebuild cost estimate
of $125 million offered by Plaintiffs’ expert Christopher McMinn to be “grossly inflated,
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Plaintiffs also argue that counsel’s opinion in the September 27, 2021 Letter is protected
by the litigation privilege because it was made in anticipation of litigation. Id. at 18-20. Plaintiffs
point to the statement in the letter by their counsel that they had “serious concerns about the
manner in which [Federal] [was] handling their claim and believe[d] that [Federal’s] conduct
[was] in violation of California law” and the further statement that this had “caused substantial and
material harm to [Plaintiffs].” Id. at 20 (quoting September 27, 2021 Letter, dkt. no. 229 at ECF p.
304). According to Plaintiffs, these statements by Plaintiffs’ attorney constituted “specific threats
of legal liability.” Id. Furthermore, they contend, “Plaintiffs’ counsel at the time had been
putting in significant effort working the case up for over a year, and there had been extensive
discussions regarding the drafting of a complaint and the timing of the filing of legal claims.” Id.
(citing Pollock Decl. ¶ 18). They assert that “it was only two weeks later that Plaintiffs began
incurring legal costs for the actual drafting of a Complaint that would ultimately be filed in
December 2021 after several months of (very expensive) work.” Id. (citing Pollack Decl. ¶ 23).
Finally, Plaintiffs contend Federal’s counterclaims fail because Federal cannot prove
damage, reliance or substantial prejudice resulting from Plaintiffs’ alleged misrepresentations. Id.
at 20-25 According to Plaintiffs, Federal claims that it incurred investigative costs and policy
payments based on their alleged misrepresentations but Federal’s payment of these costs was not a
result of any reliance on their allegedly fraudulent statements. Id. at 21 (citing dkt. no. 198
(Amended Answer) at 31-32, Counterclaim ¶¶ 63, 70-71, 73)). First, Plaintiffs assert, to the extent
that Federal claims it paid Plaintiffs’ living expenses based on the allegedly fraudulent statement
that they had “a valid basis to believe the Glass Fire had rendered their Property uninhabitable
and that all the structures on the Property needed to be completely replaced[,]” that claim fails
because “the undisputed facts establish that Plaintiffs did present qualified expert opinion that the
Property was uninhabitable.” Id. at 21. In particular, they contend, “[t]he Kaizen Report could
not be clearer: ‘Based on the observations and analysis of the samples collected, it is
recommended that this residence not be occupied in its current condition.’” Id. (quoting
unreliable and unreasonable.” Id. at ECF p. 393, Section 1.2.2.
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Kaizen Report at 76, dkt. no. 226 at ECF p. 247) (emphasis added by Plaintiffs)).
According to Plaintiffs, Federal “may disagree with Kaizen, question its methodology, or
even discount Ms. Bolstad-Johnson’s qualifications” and also “has the discretion to assume bad
faith risk and just deny the claim if it thinks the evidence isn’t sufficient” but it “cannot say
(because it is indisputably false) . . . that Plaintiffs’ uninhabitability claim was not based on an
expert recommendation submitted to Chubb in support of Plaintiffs’ claim.” Id. Plaintiffs also
note that as of June 2021 they were being told by their construction experts “that given the extent
and nature of the damage, it was less expensive to replace than to attempt to remediate.” Id. at 22
(citing McMinn Report, dkt. no. 229 at ECF p. 24).
Next, Plaintiffs argue that Federal cannot claim that it incurred investigative costs in
reliance on their statements because it had an independent duty to investigate Plaintiffs’ claim. Id.
at 22 (citing Cal. Code Regs. tit. 10, § 2695.7; Egan v. Mut. of Omaha Ins. Co., 24 Cal.3d 809,
819 (1979)). This duty, Plaintiffs contend, “including a duty to investigate the possibility of
Plaintiffs’ home being a total loss – was triggered long before any supposedly fraudulent
statements.” Id. They point to the October 26, 2020 letter from their attorney informing Federal
that “ ‘in the best case scenario, they will reoccupy their residence in 1 to 1.5 years, and in the
worst case, it will be 4 years,’ but that the full scope of the damage would likely not be known for
at least six months.” Id. (quoting October 26, 2020 Letter, dkt. no. 226 at ECF p. 129).
Plaintiffs further assert that Federal understood that it would need to conduct such an
investigation, sending a response to the October 26, 2020 Letter on November 13, 2020 in which it
stated “that ‘a realistic assessment of the damage requires [Federal] to consider all available
information,’ and that it would need to determine the composition of fire by-products before
addressing remedies.” Id. (quoting November 13, 2020 email from Federal’s Steve Mortenson to
Plaintiffs’ attorney, dkt. no. 226 at ECF p. 135-136). This point was reiterated a week later,
according to Plaintiffs. Id. (citing November 18, 2020 email from Steve Mortenson to Plaintiffs’
attorney stating, “As we pointed out in our November 9, 2020 letter, it is premature to discuss
what kind of remediation process will be necessary in order to remove remaining combustion
byproducts. Once we all know the composition of the byproducts, Chubb’s experts and/or other
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retained professionals will recommend a remediation process. Once a process has been identified,
a strategy can be developed for testing the process[,]” dkt. no. 226 at ECF p. 139.).
According to Plaintiffs, when Federal reversed its position a month later, informing them
in December 2020 that the “Main House should be vacuumed, power-washed, deodorized, and the
insulation replaced because of smoke damage[,]” Plaintiffs “expressly rejected Chubb’s washing
remedies as inadequate” in letters dated January 8, 2021 and March 1, 2021, and sent Federal
copies of the Kaizen Report and the Building Materials Report on March 1, 2021. Id. at 22-23
(citing dkt. no. 226 at ECF pp. 146 (Federal’s December 17, 2020 letter), 153, 155 (Plaintiffs’
January 8, 2021 letter), 165 (Plaintiffs’ March 1, 2021 Letter)). Moreover, they contend, Federal
acknowledged that more investigation would be required when it informed Plaintiffs on March 11,
2021 that it could not respond to their request that the house be shrink-wrapped because Federal
was “in the process of reviewing the [B]uilding [M]aterials [R]eport attached to [Plaintiffs’]
March 1, 2021 letter, which [Plaintiffs] contend[ed] demonstrate[d] that Federal’s proposal to
power wash the building would not be effective.” Id. (quoting March 12, 2021 letter from Federal
to Plaintiffs, dkt. no. 229 at ECF p. 5).
According to Plaintiffs, they continued to inform Federal of their position that merely
cleaning the Main House was an inadequate remedy, supplying a detailed itemization of
construction costs with their Fourth POL, submitted to Federal in August 2021, and estimates
from CBIZ Forensic Consulting Group in support of their Fifth POL, submitted later that month.
Id. at 23-24 (citing dkt. no. 229 at ECF pp. 266, 274-276). Plaintiffs contend Federal “knew
exactly” what their experts’ reports said and that it had “engaged in a deep evaluation of the
credibility of the reports’ claims” but nevertheless on August 26, 2021 “made a blanket demand
for documents relevant to the proof of loss, claiming that it could not ‘accept or deny’ the claim
until its experts completed their analysis of the materials submitted in support[,]” indicating that it
understood that “more investigation was needed.” Id. (citing dkt. no. 229 at ECF p. 281).
Plaintiffs emphasize that Federal was already in possession of reports from their experts at this
time and furthermore, that Plaintiffs were “not required by law or the Policy to generate
any expert reports at all, much less one specifically supporting a remedy; Plaintiffs were [only]
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required to submit a proof of loss and cooperate by providing materials requested by the
insurer[,]” which they did. Id. at 24 (citing Policy at Y-4). Plaintiffs assert that they provided
their experts’ reports to Federal “months in advance of the allegedly fraudulent statements, and
Chubb undertook an extensive review of those materials that Chubb admits was still in progress as
of January 31, 2025.” Id. (citing Amended Answer, dkt. no. 198 at 15 (Third Affirmative
Defense)). In sum, Plaintiffs argue, Federal’s “investigation was not ‘reasonable reliance’ on
Plaintiffs’ statements; it knew exactly what the reports said and it cannot now complain that it was
misled as to their content or that it was lured into performing the investigation it claimed from the
outset that it needed to complete before taking a position on the appropriate remedy.” Id. at 24-25.
Finally, Plaintiffs argue that Federal cannot avoid coverage based on their alleged failure to
comply with the Policy’s Fraud Provision. Id. at 25. According to Plaintiffs, that provision is a
procedural requirement rather than a substantive requirement and under California law, insurers
can only avoid liability based on violation of such a requirement where they can establish that they
have suffered “actual and substantial prejudice” as a result of the alleged misrepresentation or
concealment. Id. (citing Silicon Valley Bank v. New Hampshire Ins. Co., 203 F.Supp.2d 1152,
1159 (C.D. Cal 2002) (citing Ins, Co. of the State of Pa. v. Assoc. Int’l Ins. Co., 922 F.2d 516, 423
(9th Cir. 1990); Clemmer v. Hartford Ins. Co., 22 Cal.3d 865, 882 (1978))). Plaintiffs assert that
Federal cannot meet this requirement for the same reasons it cannot establish reliance and
damages, discussed above. Id.
b. Opposition
Federal argues that Plaintiffs’ summary judgment motion should be denied in full. First, it
contends the Court should reject Plaintiffs’ argument that the Panel decided causation and
therefore, that they are entitled to summary judgment that no pre- or post- loss exclusions apply.
Opposition at 1-9. Federal points out that in denying Federal’s motion to vacate the arbitration
award, the Court rejected Federal’s argument that the panel impermissibly decided causation and
observed that to the extent an appraisal award contains “embedded” causation findings, those
findings may be challenged in court. Id. at 2-3 (citing dkt. no. 134 at 30-31). Thus, Federal
contends, Plaintiffs’ summary judgment’ motion “flouts every aspect of [the Court’s] holding . . .
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[,] ask[ing] the Court to treat the award as containing valid embedded causation determinations”
and precluding Federal from challenging them. Id. at 3. Federal further asserts that Plaintiffs’
motion is contrary to California law, which “is clear that informal, off-the-record appraisals may
not resolve coverage disputes.” Id. (citations omitted).
According to Federal, “[t]he Court and parties from the start understood that, under
California law, the panel’s role was strictly limited to determining the extent and not the cause of
damage, because causation is a (if not the) principal coverage dispute in this case.” Id. at 4. To
the extent that Plaintiffs point to the fact that pre-existing damage was briefed and argued before
the Appraisal Panel, Federal contends it was merely preserving its rights as to those issues. Id. at
5 (citing Federal’s pre-appraisal brief, dkt. no. 116-1, Ex. 20 at 2 n.1).
Federal rejects Plaintiffs’ assertion that the Panel did not make any causation findings,
arguing that if “the panel made a finding about the property’s condition immediately before [the
date of the Glass Fire] and its condition sometime after that date, the sum total of those findings
would isolate damage caused by the fire (and anything that occurred alongside/after it) and
exclude any pre-fire cause of damage[,] . . .[which] is a causation finding[.]” Id. at 6.
Federal also rejects Plaintiffs’ assertion that Federal was required under the insurance code
to appraise ACV and that that is what it did. Id. at 7-8. According to Federal:
The standard-form fire-insurance policy calls for ACV coverage,
which entitles policyholders to replacement cost with a deduction for
depreciation. See Cal. Ins. Code §§ 2071, 10102, 2051. But Plaintiffs’
policy provides extended replacement cost coverage, which contains
no deduction for depreciation. See Dekel Dec. Ex. 76 (Policy) at
Coverage Summary 1, B-2. The appraisal provision in Plaintiffs’
policy thus calls for an appraisal not of ACV, but of “the amount of
loss,” id. at Y-5—which is exactly what Plaintiffs sought in their
Motion to Compel Appraisal, see ECF 27 at 2.
Id. at 7. Furthermore, Federal asserts, “[t]he record is replete with evidence that Plaintiffs
understood the appraisal would evaluate full replacement costs, not ACV.” Id. at 7-8 & n. 3
(citing dkt. no. 27-5 at 3 (“Plaintiffs defining ‘amount of loss’ for guesthouse as ‘[c]ost to replace,’
plus land-related and code-upgrade costs ‘necessary to replace’”); dkt. no. 50 at 2 (“Plaintiffs
identifying issues for panel as ‘scope of damage’ to objects and ‘cost to replace [them]’); Brown
Decl. Ex. 1 at 15 (“Plaintiffs arguing under ‘Policy and settled California law,’ panel must ‘focus .
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. . on the scope of damage and the cost to rebuild the property at the time of the loss’”); dkt. no.
113 at 23 (similar)).
Federal argues that there are disputed issues of fact with respect to the applicability of both
pre- and post-loss Policy exclusions. Id. at 9-16. As to the pre-loss exclusions (Gradual Loss and
Contamination), both require a finding of what caused the loss, Federal contends, which must be
decided by the jury. Id. at 9. Federal also argues that Plaintiffs read the Contamination provision
too narrowly, as discussed above. Id. at 9-10.
As to the post-loss exclusions, Federal asserts that Plaintiffs misrepresent the record and
that there is, in fact, substantial evidence that Plaintiffs failed to adequately protect their property
after the fire, including refusing to engage in any cleaning efforts and intentionally leaving “all the
air filters in the property unchanged for years after the fire as the HVAC continued to run and
circulate air in the home.” Id. at 11 (citing Brown Decl. Ex. 5 (Pollock Dep.) at 338:9-340, dkt. no.
231 at ECF pp. 110-112; Dekel Decl., Ex. 6 (Pollack Dep.) at 128:14-22, 131:6-132:24, 342:3-
343-25, dkt. no. 217 at ECF pp. 102, 105-106, 148-49). Federal contends even Plaintiffs’ expert
Dawn Bolstad-Johnson found that “this refusal to clean had consequences: in a 2022 report,
Bolstad-Johnson stated she ‘observed [during a December 2021 site visit] several physical
changes showing deterioration or damage to the buildings on the property since the previous site
visit in December 2020.’ ” Id. (citing Brown Decl., Ex. 10 at 12, dkt. no. 231 at ECF p. 183).
Federal further contend that Plaintiffs are incorrect as to their assertion that this evidence
does not matter because the Glass Fire was the “predominant and proximate cause” of the damage
to their Property. Id. at 11-16. First, it argues that the proximate cause doctrine does not apply
because that doctrine applies when loss is caused by a combination of covered and excluded risks
but here, the Protect Property provision is not an exclusion but rather, “a contractual condition,
non-compliance with which ‘void[s] coverage entirely’—regardless of the cause of the alleged
loss.” Id. at 12 (citing Malkin v. Fed. Ins. Co., 2023 WL 6965003, at *4 (C.D. Cal. Oct. 20,
2023); Gilbert v. Infinity Ins. Co., 186 F. Supp. 3d 1075, 1086 (C.D. Cal. 2016)).
With respect to the Neglect Exclusion, Federal notes that it asserts this exclusion based on
both pre- and post-loss neglect but that Plaintiffs address only the latter. Id. As to post-loss
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neglect, Federal argues that Plaintiffs also “misappl[y] the efficient-proximate-cause doctrine.” Id.
According to Federal, “[t]hat doctrine applies only where ‘two or more distinct perils’ caused the
damage ‘for which coverage is sought,’ De Bruyn v. Superior Ct., 158 Cal. App. 4th 1213, 1222-
23 (2008) (emphasis added [by Federal]), not where damage has a single cause, see Pyramid
Techs., 752 F.3d at 820.” Id. at 12-13. Here, Federal contends, fire damage and neglect of fire
damage are not distinct and therefore, the efficient proximate cause doctrine does not apply. Id. at
13 (citing Finn v. Continental Insurance Co., 218 Cal. App. 3d at 71).
Even if the efficient proximate cause doctrine applied, however, there are factual disputes
that preclude summary judgment as to the Neglect Exclusion, Federal contends. Id. at 14. As to
Plaintiffs’ reliance on Salvagni’s deposition testimony in support of their assertion that there was
no damage to the Property after the Glass Fire, Federal argues that Plaintiffs take Salvagni’s
testimony out of context; in particular, Federal “retained Salvagni after the 2024 Crystal Fire to
‘review damages and perform a cost estimate to repair [Crystal Fire] damage[ ].’” Id. (citing
Brown Decl. Ex. 4 (Salvagni Dep.) at 92:2-9, dkt. no. 231 at 67). According to Federal, “[g]iven
the limited scope of that assignment, it is no wonder Salvagni acknowledged there was not ‘any
damage that [he] assessed at the property that occurred between the Glass Fire and the Crystal
Fire.’” Id. (quoting Brown Decl. Ex. 4 (Salvagni Dep.) at 188:5-14, dkt. no. 231 at ECF p. 72
(emphasis added by Federal)). In addition, Federal contends, several of its experts hired to
evaluate fire damage found evidence of harm resulting from Plaintiffs’ failure to protect their
property. Id. at 15-16.
Federal also rejects Plaintiffs’ assertion that they are entitled to summary judgment on
Federal’s fraud and breach of contract counterclaims. Id. at 16-25. It contends Plaintiffs’ request
for summary judgment on these claims asks the Court to “revisit” its order finding sufficient facts
to warrant permitting Federal to assert these additional counterclaims. Id. at 16; see also dkt. no.
197 (April 1, 2025 Order Granting Motion for Leave to File Amended Pleading). According to
Federal, Plaintiffs have yet to “identif[y] a single qualified expert willing to say their home needs
to be completely replaced because of the Glass Fire.” Opposition at 17. On the other hand,
Federal contends, there is substantial evidence that Plaintiffs lied when they represented to Federal
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that the main house needed to be completely replaced, that they were entitled to coverage of over
$1 million and that rebuilding would take approximately three years. Id. at 18-20.
With respect to the statement in the September 27, 2021 Letter (referred to by Plaintiffs as
the Purported Counsel Statement), Federal argues that the California litigation privilege does not
apply as to the breach of contract counterclaim because “[t]he California litigation ‘privilege
applies only to tort causes of action,’ not to breach-of-contract claims.” Id. at 20 (quoting Mattco
Forge, Inc. v. Arthur Young & Co., 5 Cal. App. 4th 392, 406 (1992)). Furthermore, Federal
asserts, “[e]ven with respect to Federal’s fraud counterclaim, the litigation privilege does not apply
because the September [27,] 2021 statement is not contained in prelitigation correspondence.” Id.
at 21 (citing Mezzetti v. State Farm Mut. Auto. Ins. Co., 346 F. Supp. 2d 1058, 1066 (N.D. Cal.
2004); Edwards v. Centex Real Est. Corp., 53 Cal. App. 4th 15, 34-35 (1997)). According to
Federal, “[a]t most, the privilege’s applicability raises fact questions that must be decided by the
jury. Id. (citing Golden Eye Media USA, Inc. v. Trolley Bags UK Ltd., 525 F. Supp. 3d 1145, 1237
(S.D. Cal. 2021)).
Federal further contends the statement in the September 27, 2021 Letter was false. Id. at
22-24 (citing evidence). It argues, as a preliminary matter, that Plaintiffs’ “ever-evolving
characterization of the basis for the statement is grounds itself to deny summary judgment and find
that the jury must resolve credibility issues underpinning Federal’s counterclaims.” Id. at 22
(citing Swafford v. IBM Corp., 408 F. Supp. 3d 1131, 1144 (N.D. Cal. 2019)). According to
Federal, “[i]n March, they claimed the statement did not represent Bolstad-Johnson’s expert
findings, but rather their own conclusion ‘that the main home could not be remediated by
“cleaning”’ drawn from ‘Plaintiffs’ own knowledge and experience’ as a lawyer and poet”
whereas Plaintiff now “claim that it was simply ‘the assertion of counsel regarding what is owed
under [Federal’s] policy.’ ” Id. (citing dkt. no. 194 at 11; Motion at 17). Furthermore, Federal
contends, the only “reasonable interpretation” of the statement in the September 27, 2021 Letter
that the Main House would need to be rebuilt was that it was based on the report of Bolstad-
Johnson. Id. at 23. However, the undisputed evidence establishes that Bolstad-Johnson “never
recommended that the property be replaced[,]” Federal asserts. Id. (emphasis in original).
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Federal also rejects Plaintiffs’ reliance on the Building Materials Report, arguing that
“[n]othing in [that report]21—which is not supported by a declaration from Bolstad-Johnson or
SEMTEC and is thus inadmissible—concluded that building materials on the property could not
be cleaned, including through washing.” Id. at 24. According to Federal:
The [Building Materials Report] was based on testing of 22 building
samples by SEMTEC laboratories. Far from concluding that cleaning
was “insufficient,” SEMTEC found that numerous building materials
were either undamaged or could be cleaned or “easily washed off.”
See, e.g., Brown Dec. Ex. 9 (SEMTEC Rep.) at 3 (plaster sample
“clean and without any visible darkening or other indications of fire
debris”); id. at 7 (“discoloration” on interior plaster sample “easily
washed off with water/detergent/soft brush”); id. at 9 (exterior plaster
sample “lightly sanded” and successfully cleaned). The [Building
Materials Report] even says that there was “no observed penetration
of carbon or soot into the texture layers of the interior walls,” ECF
226 Ex. J [Building Materials Report] at 20, and that “[i]n all cases
where discoloration was noted, it was limited to the surface,” without
“any measurable penetration.” Brown Dec. Ex. 9 (SEMTEC Rep.) at
12. The [Building Materials Report] itself ultimately concludes that
“[f]urther evaluation should be completed…to determine the next
steps to fully remediate the fire damage (repair, replace or rebuild).”
ECF 226 Ex. J at 20 (emphasis added).
Id.
Finally, Federal argues that there is sufficient evidence to establish damages, reliance and
prejudice resulting from Plaintiffs’ alleged breach of contract and fraud and that these questions
must be decided by the jury. Id. at 24-25. Federal asserts that reliance is considered a question of
fact under California law and furthermore, that it “unquestionably relied upon and was prejudiced
and damaged by Plaintiffs’ misrepresentations.” Id. In particular, it points to evidence that it
incurred “$568,965.35 engaging additional experts to investigate Plaintiffs’ fraudulent claims—
including industrial hygiene expert Hamid Arabzadeh, analytical chemistry expert Dr. Shane Que
Hee, and physician and toxicologist Dr. Timur Durrani” after it had “already hired industrial
hygienists and a physician to investigate Plaintiffs’ insurance claim before Plaintiffs’ fall 2021
POLs.” Id. at 25. According to Federal, it would not have hired these additional experts had it not
21 Federal refers to this report as an Addendum. The Court uses the title adopted by Plaintiffs to
avoid confusion. Whatever the short form, the document can be found at docket no. 226 at ECF
pp. 464-502.
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been “for Plaintiffs’ representations that Bolstad-Johson’s testing required total replacement of the
property.” Id. (citing Brown Decl., Ex. 12 (Federal’s Second Amended Initial Disclosures, dated
April 11, 2025), dkt. no. 231 at ECF pp. 226-27; Jaeger Decl. ¶ 2,22 dkt. no. 231 at ECF pp. 207-
208).
Federal argues further that it “paid Plaintiffs more than $4 million, including nearly $1
million to live in rental properties rather than remediate and return to the property, plus a $250,000
payment to clean that Plaintiffs never used for that purpose.” Id. (citing Dekel Decl. Ex. 78
(Payment Spreadsheet) at 2, dkt. no. 218 at ECF p. 143). According to Federal, had it “known in
fall 2021 that no qualified expert had ever told Plaintiffs the property must be replaced, Federal
would have denied Plaintiffs’ replacement claim then and would not have paid more than two
additional years’ worth of additional living expenses to Plaintiffs.” Id. (citing Jaeger Decl. ¶ 323,
dkt. no. 231 at ECF p. 208). Therefore, it asserts, the Court should reject Plaintiffs’ assertion that
they are entitled to summary judgment based on lack of reliance.
22 Daniel Jaeger states in his declaration that he is claim manager for Federal’s Special
Investigative Unit and has been designated as Federal’s corporate representative as to its
counterclaims against Plaintiffs. Jaeger Decl., dkt. no. 232, ¶ 1. He states:
Federal suffered substantial harm as a result of Plaintiffs' representations that their
home was irreparably damaged by the Glass Fire and that their claim for replacement of
the property was supported by testing and conclusions from an industrial hygienist
qualified to make such determinations. In reliance on Plaintiffs' representations, Federal
incurred at least $568,965.35 to engage additional experts to investigate Plaintiffs' total-
replacement claim, including $492,604.50 paid to industrial hygiene expert Hamid
Arabzadeh, $51,777.15 paid to analytical chemistry expert Dr. Shane Que Hee, and
$24,583.70 paid to physician and toxicology expert Dr. Timur Durrani. Were it not for
Plaintiffs' misrepresentations in presenting their total-replacement claim, Federal would
not have retained these experts.
Id. ¶ 2.
23 Jaeger states in paragraph 3:
Further, if Plaintiffs had not represented to Federal during Federal's investigation
of Plaintiffs’ claim that a qualified expert determined that their property must be replaced
due to Glass Fire damage, Federal would have reached a coverage determination shortly
after Plaintiffs' submission of their August 2021 proofs of loss and denied Plaintiffs' total-
replacement claim at that time. Plaintiffs’ misrepresentations forced Federal to continue
investigate Plaintiffs' claim until March 2024, however, and to continue paying Plaintiffs’
additional living expenses for more than two additional years in reliance on these
representations.
Jaeger Decl. ¶ 3.
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c. Reply
In their Reply, Plaintiffs contend Federal is merely trying to “relitigate” what has already
been decided by the Appraisal Panel. Reply at 1. Plaintiffs reject Federal’s assertion that they are
relying on a finding of causation by the Panel, emphasizing that “[t]he Panel did not determine
causation; it correctly and properly determined the extent of the loss, by personal inspection,
hearing testimony, and reviewing evidence.” Id. at 2 (emphasis in original). Moreover, it asserts,
the Appraisal Panel determined ACV, as required by law, and not the amount of “extended
replacement cost coverage,” which would have required the Panel to make coverage
determinations in violation of California law. Id. at 3. In particular, according to Plaintiffs,
“[u]nder California law, ‘an appraiser has authority to determine only a question of fact, namely
the actual cash value or amount of loss of a given item.’ ” Id. (quoting Comprehensive Med. Ctr.,
Inc. v. State Farm Mut. Auto. Ins. Co., 2025 WL 416814, at *1 (9th Cir. Feb. 6, 2025)).
Plaintiffs reject Federal’s assertion that the Appraisal Panel may not evaluate “pre-loss
condition . . . by ‘tethering that determination to the moment right before a covered event.” Id. at
6 (citing Opposition at 6). They assert that the Court rejected the same argument when it declined
to vacate the Award, observing in its Order “that there is nothing in the Policy that suggests that
‘loss’ means damage to the Homeowner’s insured property untethered to any specific event, as
Federal contends.” Id. at 6 (quoting dkt. no. 134, Appraisal Award Order, at 28). They go on to
reiterate their position that the Gradual Loss and Contamination Exclusions are incompatible with
the findings of the Appraisal Panel and further, that the Contamination Exclusion is inapplicable
here. Id. at 7-8.
Plaintiffs also contend Federal is incorrect in its assertion that the efficient proximate cause
doctrine does not apply to the Neglect Exclusion because the damage from the Glass Fire and the
alleged neglect that followed resulted from a single peril. Id. at 8-9. According to Plaintiffs,
“[w]ildfires and neglect can occur completely independent of each other” and therefore, these
perils “are ‘conceptually distinct: that is, they could each, under some circumstances, have
occurred independently of the other and caused damage.’” Id. at 9 (distinguishing Finn v. Cont.
Ins. Co., 218 Cal. App. 3d 69 (1990)). Furthermore, Plaintiffs contend, neither the Neglect nor the
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Contamination Exclusion applies under the efficient proximate cause doctrine given that Federal
has admitted that the Glass Fire caused damage to the structures on the Property. Id. at 9-11.
Moreover, they assert, there is no evidence of post-loss damage. Id. at 11-12.
Plaintiffs reiterate their assertion that they are entitled to summary judgment on the fraud
and breach of contract counterclaims. Id. at 12-15. First, as to the Duration and Loss Statements
made in their August 2021 POLs, Plaintiffs contend that the Appraisal Panel’s conclusions as to
the time it would take to rebuild and the amount it would cost are findings of fact that establish
that these statements were true and therefore cannot be the basis for any breach of contract or
fraud claim against Plaintiffs. Id. at 12-13. Plaintiffs point out that Federal asked the Court to
vacate the Appraisal Panel’s finding that rebuilding would take 36 months but the Court refused
that request, concluding that this finding was a factual finding necessary to calculate
reconstruction costs. Id. at 13 (citing dkt. no. 134, Appraisal Award Order, at ECF p. 33).
Plaintiffs argue further that Federal is incorrect in its assertion that at the time Plaintiffs
made the Loss Statement asserting that the Main House would need to be rebuilt, “ ‘not a single
expert had recommended their property be replaced.’” Id. at 14 (quoting Federal Opposition at
18). In fact, Plaintiffs assert, “Chris McMinn, a local construction expert, testified at deposition
that he told Tom Pollock, at or around October 10, 2020, that he did not think anything could be
done to decontaminate the structures on the Property.” Id. (citing Strauss Decl., Ex. 1 (McMinn
Dep.) at 302-304, dkt. no. 258 at ECF p. 79). According to Plaintiffs, “[a]t the time of the Glass
Fire, Mr. McMinn had approximately 52 years of construction experience, familiarity with
California building codes, and had conducted more than six thousand building inspections, over
the last 43 years.” Id. (citing McMinn Decl., dkt. no. 245, ¶ 4 & Ex. 1 (McMinn CV)).
Furthermore, Plaintiffs contend, Federal received a copy of McMinn’s draft report, dated June 21,
2021, in which McMinn stated:
We have subsequently determined that it is physically impossible to
remove all of those contaminating and toxic residues from this
surviving residence, either at the exterior, or throughout the interior.
. . .
In conclusion, although we have explored and considered potential
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remediation (see below) the only practical solution to achieve full and
complete remediation and removal of all contaminating fire residues,
will be to demolish and remove all the existing structures, excavate
the subgrade until sampling of all remaining underground exposed
surfaces test negative for toxic residues.
Id. (quoting McMinn Report, dkt. no. 228 at ECF pp. 23-24). Plaintiffs further contend they had a
“raft of experts” who were specialists in their individual fields and had “recommended
replacement of their individual components of the Property.” Id. at 14 (citing dkt. no. 194
(Plaintiffs’ Opposition to Defendant’s Motion for Leave under FRCP 15 And 16 to File an
Amended Pleading) and supporting declarations).
With respect to the Purported Counsel Statement, Plaintiffs assert that Federal “does not
even bother to try and defend the misleading quoting and factual mischaracterization of Ms.
Haskett’s letter, in favor of a new basis for ‘falsehood,’ [or] that Plaintiffs have provided more
than one basis supporting that no false statement was ever made by Ms. Haskett.” Id. at 15.
Plaintiffs contend Federal has no authority for the proposition that there can be a triable issue of
fact “when a party has multiple bases for which a statement is, in fact true.” Id. According to
Plaintiffs, their attorney “said they had experts they were relying on for their information
regarding the contamination on their Property” and the evidence establishes that “they did.” Id.
Furthermore, they contend, “Bolstad-Johnson has opined, both in her written reports and has
testified in deposition that she did not believe the Property could be cleaned [of] its toxic
contaminants, and it was not habitable.” Id. (citing generally Bolstad-Johnson Decl., dkt. no.
246,24 and “Exhibits thereto, including Rebuttal Report, at 4, 5, & 10”).
Finally, Plaintiffs assert Federal has offered no evidence of intent to defraud, reliance,
damages or substantial prejudice and therefore, that they are entitled to summary judgment on
24 This document contains Bolstad-Johnson’s February 20, 2025 Expert Report (Exhibit 1,
beginning at ECF p. 3) and her April 18, 2025 Expert Rebuttal Report (Exhibit 2, beginning at
ECF p. 1307). The Court declines Plaintiffs’ invitation to review these documents generally to
find support for this claim; rather, it considers only the page numbers specifically identified in this
respect. On page 4 of her rebuttal report, Bolstad Johnson states: “Chemical contamination from
the Glass Fire has fundamentally altered the Pollacks’ property, rendering it impossible to restore
the structures to their pre-loss condition through current professional cleaning techniques.” She
expresses similar opinions on pages 5 and 10 of that report. Plaintiffs do not provide a citation to
support their assertion that Bolstad-Johnson offered similar testimony in her deposition.
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Federal’s counterclaims. Plaintiffs also contend the Jaeger Declaration is inadmissible because it
lacks foundation and is not based on personal knowledge. Id. n. 9. Plaintiff’s assert:
Being designated as a 30(b)(6) witness does not provide that
foundation. Mr. Chris Lassiter, Chubb’s primary adjuster on
Plaintiffs’ claim, testified in deposition that he made all decisions
relating to all aspects of the Pollocks claim, with input from . . . Corey
Everett. ECF 226 Lassiter Dep. 114-117 Mr. Jaeger did not claim to
speak with Mr. Lassiter prior to penning this declaration. Further, the
declaration is impermissibly speculative, self-serving, and provides
no back up documentation so it lacks reliability. It should be
excluded. At a minimum . . . the declaration violates FRE 602, 701
and FRCP 56(c)(4).
Id.
2. Whether Pre-Loss Exclusions are Barred by Appraisal Award
Plaintiffs argue that the pre-loss exclusions invoked by Federal for damage to the main
house that existed before the Glass Fire are barred by the Appraisal Panel’s Award, which
measured ACV and therefore took into account the structure’s condition as of the date of the Glass
Fire pursuant to California Insurance Code §§ 2051 and 2071. As discussed above, however, the
Court finds that the Panel’s award measured replacement cost rather than ACV. Furthermore, as
the Court found when it addressed Federal’s motion to vacate the Award, “the disputes related to
causation are for the Court (or Jury) and remain to be decided.” Dkt. no. 134 at 34.
The Court notes that when Federal sought to vacate the Appraisal Award, it argued (as do
Plaintiffs here) that by evaluating the loss with reference to the date of the Glass Fire, it made a
determination of causation. See dkt. no. 102 at ECF p. 22. The Court rejected that argument on
the grounds that the Award contained a disclaimer that it did not establish coverage, finding that
under Lee v. California Cap. Ins. Co., 237 Cal. App. 4th at 1170, the panel did not exceed its
authority. See dkt. no. 134 at ECF p.3, 29. But it hard to deny the logic of this argument as it is
but a small inferential step to conclude that the damage to structures on the Property as compared
to their condition just before the Glass Fire was the damage caused by the Glass Fire. As the
Court found when it denied Federal’s motion to vacate, to the extent such a causation finding is
embedded in the Appraisal Award, Federal is entitled to revisit that finding at trial. This means
that Federal is entitled to present to the jury evidence relating to whether pre- and post-loss
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exclusions bar some or all of Plaintiffs’ claimed loss even if the Panel’s award implicitly found
that they did not. This includes Federal’s defenses that the loss claimed by Plaintiffs was caused
by gradual deterioration and wear and tear that pre-dated the Glass fire, and/or by pre- and post-
fire neglect and failure to take reasonable measures to protect the Property.
The Court also rejects Plaintiffs’ reliance on Knapp v. Allstate Ins. Co., 134 F.3d 378 (9th
Cir. 1998) for the proposition that “assessing the pre-existing damage of property does not entail
findings of causation.” Plaintiffs’ Summary Judgment Motion at 6. In that unpublished case, the
Ninth Circuit rejected the plaintiffs’ argument that “the appraisal umpire exceeded his powers in
issuing an estimate based on a determination that much of the damage was preexisting, because
such a determination impermissibly resolve[d] a question of coverage.” 134 F.3d 378 (9th Cir.
1998). The court reasoned:
The case upon which the Knapps rely, Safeco Ins. Co. v. Sharma, 160
Cal.App.3d 1060 (1984), is inapposite because, there, the insured item
was stolen, not damaged, so that appraisers improperly speculated on
what property was insured. That did not occur here. Moreover, the
district court's order directed the appraisers “to determine the amount
of loss incurred at Plaintiffs' Newhall property as a result of the
January 17, 1994 Northridge earthquake in accordance with the terms
of Allstate's policy.” Accordingly, the panel did not exceed its
authority by appraising the value of the earthquake damage.
Id. In other words, the district court expressly authorized the appraiser to address causation and
found Sharma to be distinguishable. In contrast, the Court here has concluded that under Sharma,
“the causation findings that are embedded in the panel’s appraisal award may be challenged before
this Court, which is charged with deciding such issues . . . .” Dkt. no. 134 at ECF pp. 30-31.
Therefore, the Appraisal Panel’s Award does not preclude Federal from litigating the
applicability of the pre-loss exclusions it cites in support of its denial of coverage. As discussed
above, the Court does find the Contamination Exclusion is inapplicable for a different reason,
namely, that that exclusion is limited to conventional environmental pollution. However, as to the
remaining pre-loss exclusions (the exclusions for damage incurred outside of the Policy Period
and for Gradual Loss), Federal has demonstrated that there are material disputes of facts.
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Therefore, the applicability of those exclusions must be decided by the jury.25
3. Whether Post-Loss Exclusions are Barred Under Efficient Proximate Cause
Doctrine
The California Supreme Court has held that “[I]n determining whether a loss is within an
exception in a policy, where there is a concurrence of different causes, the efficient cause—the
one that sets others in motion—is the cause to which the loss is to be attributed, though the other
causes may follow it, and operate more immediately in producing the disaster.” Sabella v. Wisler,
59 Cal. 2d 21, 31–32 (1963) (quoting 6 Couch, Insurance (1930) § 1466). Thus, for example, in
Sabella:
[N]egligent construction of a sewer line led to its rupture, which in
turn resulted in settling of the plaintiff's house in the uncompacted fill
on which it stood. Settling was excluded from the plaintiff's broad
peril policy, but negligent construction of the sewer was not. The
Supreme Court held the loss was covered because the faulty pipe was
its “efficient proximate cause.”
Finn v. Cont'l Ins. Co., 218 Cal. App. 3d 69, 71 (1990) (citing Sabella, 59 Cal.2d at 26, 30-31).
In contrast, the Court in Finn found that the efficient proximate cause doctrine did not
apply, explaining that “[i]n Sabella, and in the cases applying it, the two perils were conceptually
distinct: that is, they could each, under some circumstances, have occurred independently of the
other and caused damage.” Id. at 72. In Finn, a break in a pipe led to seepage of water under the
insured’s house for many months, which in turn caused settling and damage to the foundation. Id.
at 71. The insured’s all-risk policy contained an exclusion for gradual seepage, but the insured
argued that the efficient proximate cause was a sudden break in her pipe, which was a covered
risk, and therefore that the seepage exclusion did not apply. Id. The court rejected her argument:
[Plaintiff’s] argument is premised on viewing the leakage and the
break as two conceptually distinct events, linked only causally. But
“leakage” and “seepage” necessarily imply some break or gap in the
thing leaking. Thus the verb “leak” is defined, “to enter or escape
25 This does not mean Federal may revisit at trial factual determinations made by the Appraisal
Panel that do not implicate causation. Thus, for example, to the extent the jury rejects Federal’s
defenses based on pre- or post-loss exclusions and finds that the damage to the main house caused
by the Glass Fire required a complete rebuild of the house, Federal is bound by the Appraisal
Panel’s conclusions as to the cost of rebuilding.
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through a hole, crevice, or other opening usu. by a fault or mistake.”
(Webster's New Internat. Dict. (3d ed. 1961) p. 1285.) “Seep” means
“to flow or pass slowly through fine pores or small openings.” (Op.
cit. supra, at p. 2056.)
The Sabella analysis has no application here because leakage and
broken pipes are not two distinct or separate perils. In Sabella, and in
the cases applying it, the two perils were conceptually distinct: that
is, they could each, under some circumstances, have occurred
independently of the other and caused damage. (See, e.g., Sauer v.
General Ins. Co. (1964) 225 Cal.App.2d 275, 278 [37 Cal.Rptr. 303]
[leakage of water from plumbing system (covered peril) and sinking
of earth (excluded peril)]; Premier Ins. Co. v. Welch (1983) 140
Cal.App.3d 720, 725 [189 Cal.Rptr. 657] [negligent installation of
sewer (covered peril) and saturation of earth in heavy rain (excluded
peril)].) In the present case there are not two conceptually distinct
perils. Leakage or seepage cannot occur without a rupture or
incomplete joining of the pipes. This case involved not multiple
causes but only one, a leaking pipe.
Id. at 72.
Here, in contrast to Finn, the two perils that allegedly caused damage to the Property --
wildfire and neglect – are “conceptually distinct” because there is nothing inherent in them that
renders them a single peril. Therefore, the Court finds that summary judgment on this basis is
inappropriate.
Plaintiffs’ reliance on Malkin v. Fed. Ins. Co., 562 F. Supp. 3d 854, 861 (C.D. Cal. 2022)
is misplaced. See Plaintiffs’ Summary Judgment Motion at 14. In that case, ash resulting from
the Thomas Fire clogged the home’s drainage system, causing water to overflow into and under
the home and leading to differential settlement of the house and associated damage. 562 F. Supp.
3d at 858-59. The insurer denied coverage for this loss under the homeowners’ all-risk policy,
citing exclusions for settlement and ground water, among others, and sought summary judgment
that the exclusions precluded coverage as a matter of law. Id. at 864. The Court, however, found
under a stipulated set of facts related to causation, that the policy’s exclusions did “not as a matter
of law preclude coverage if plaintiff's theory of causation [was] proven correct.” Id. at 865. In
that case, the question of whether the Thomas Fire was, in fact, the proximate cause of the claimed
damage was put to the jury and Federal was permitted to argue to the jury that the exclusions
applied. See Brown Decl., Ex. 18 (Malkin Jury Instructions), dkt. no. 231 at ECF pp. 263-270; id.
Ex. 19 (Malkin Verdict Form), dkt. no. 233-2. Likewise, in this case these questions should be
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decided by the jury.26
4. Whether Plaintiffs are Entitled to Summary Judgment on Federal’s Breach
of Contract and Fraud Counterclaims
As discussed above, Federal’s breach of contract and fraud counterclaims are based on
three statements that it alleges were false at the time they were made: the Duration Opinion, the
Loss Statement and the Purported Counsel Statement. The Court finds that these counterclaims
fail based on the undisputed facts in the record.
a. The October 26, 2020 Letter Duration Opinion
First, to the extent that Federal’s claim is based on the Duration Opinion in counsel’s
October 26, 2020 Letter, the Court finds no evidence the statement in that letter was false at the
time it was made, as is required to prevail on its fraud and breach of contract counterclaims. The
Court notes that Federal’s theory of falsity as to all three statements is that the statements “were
false at the time they were made, because Plaintiffs knew that no qualified expert had concluded
that the Property needed to be completely replaced because of Glass Fire damage.” Dkt. no. 198
(Amended Answer), Counterclaim ¶ 58. In the October 26, 2020 Letter, however, counsel’s
estimate of the time it would take to restore the main house is not based on any conclusions as to
whether the main house would need to be rebuilt or if, instead, it could be restored without a
complete rebuild. See generally dkt. no. 231 at ECF pp. 229-236.
To the contrary, the letter explicitly leaves that question open, stating that the “insureds do
not believe a true assessment of the scope and extent of damage will be known for 6 months” and
opining that after “damage assessment” was “complete” and the parties had “agree[d] on the
repairs to restore the main residence . . .” it would take at least another six months to draw up
plans and obtain permits and “[o]nly then [could] true restoration and/or reconstruction begin.”
26 The Court rejects Plaintiffs’ argument that there is no evidence of post-loss damage. While
Plaintiffs point to the testimony of Kevin Salvagni that there was no damage to the Property
between the Glass Fire and the Crystal Fire, Federal has pointed to the testimony of industrial
hygienist Enrique Medina and Plaintiffs’ expert Dawn Bolstad-Johnson indicating that delay in
cleaning the main house resulted in deterioration in the condition of the structure. See Federal
Opposition at 15-16 (citing evidence). Therefore, the Court concludes that there are disputes of
material fact relating to whether there was post-loss damage to the Property.
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Id. at 232-233 (emphasis added). This statement does not imply that demolition and a complete
rebuild of the main house is required. Thus, it is entirely clear that the estimated duration of
restoration work of one to three years in the October 26, 2020 Letter was not based on any
misrepresentation as to what Plaintiffs’ experts may or may not have told them about whether the
main house would need to be demolished and rebuilt.
Likewise, while an opinion may give rise to a fraud claim if it is “based on or implies the
existence of facts which are nonexistent,” Seeger v. Odell, 18 Cal. 2d 409, 414 (1941), the fact that
Federal contends was misrepresented – that Plaintiffs’ experts had advised them that the main
house needed to be rebuilt – is simply nowhere to be found in the October 26, 2020 Letter, even
by implication.
b. The August 2021 POLs
Federal also bases its counterclaims on the August 2021 POLS to the extent that the
estimated loss stated in those POLs was premised on Plaintiffs’ belief that the main house could
not be remediated and restored through cleaning and would have to be demolished and rebuilt. As
to these statements, Federal’s counterclaims are based on the theory that Plaintiffs intentionally
misled Federal because they did not have a “valid basis” to believe that the main house needed to
be completely rebuilt. The Court finds, however, that the undisputed evidence establishes that at
the time these statements were made, Plaintiffs had, in fact, been advised by their experts that the
damage to the main house was so severe that remediation could only be achieved by demolishing
the existing structure and replacing the main house.
In particular, Plaintiffs have offered uncontroverted testimony that Christopher McMinn, a
construction expert with extensive experience restoring and rebuilding smoke and fire-damaged
structures, first visited the Property on October 10, 2020 to inspect the damage to the main house
from the Glass Fire and concluded the smoke-damage was too extensive to address through
removal of the contaminants, testifying at his deposition:
. . . I went inside the house, and I looked at all the ash that was
deposited. And then I went up to the attic, and there's ash throughout
the attic. And at that point, I explored briefly, and I saw that the attic
has these large openings, which penetrate all the way down to the first
floor, because it has double cavity walls, and those had been full of
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smoke. And I think I had been told that the house had been in the
smoke plume for over a week. And that's when I realized, and I think
I told [Mr. Pollack] at the time, I don't think there's anything we can
do to remove all these contaminants, based on my experience over the
last 40 years.
Strauss Decl., Ex. 1 (McMinn Dep.) at 302, dkt. no. 258 at ECF p. 79); see also McMinn Decl.,
dkt. no. 245, ¶ 4 & Ex. 1 (McMinn CV) (reflecting that Mr. McMinn’s experience includes “[w]ild
fire and structure fire cost analysis of decontamination and demolition protocols, repair and
replacement of both damaged and destroyed structures, site and related issues.”).
Furthermore, on June 3, 2021, Mr. McMinn provided Plaintiffs with a report, based on at
least eight additional site visits, in which he reached the same conclusion, stating:
. . . exhaustive investigations after the fire, with sampling and
meticulous laboratory analysis of material samples, taken from both
the exterior and interior surfaces, including plaster, drywall, framing,
masonry, ducting, wiring, appliances and so forth, have sought to
establish and rigorously define, not only the extent of the fire damage,
but the possibility of remediation, repair, or the more drastic measure
of outright replacement. These investigations are still ongoing,
although the bulk of the laboratory results are now available, and have
been thoroughly documented. These documents include Kaizen
Safety Solutions’ 291page report, a pending final metallurgical report
and other investigations still in progress, covering the related issues
of structural engineering, sub grade and slope soil stability, to be
followed by stabilization analysis, along with investigation and
removal of sub grade fire contamination and so on.
However, while all these investigations are both essential, ongoing
and entirely relevant as a foundation to define the overall scope and
options as they relate to remediation, repair or replacement, the focus
of this report and analysis is to determine, as accurately as possible,
the actual real-world costs to restore all of the buildings, structures
and especially the main residence, guest house and pavilion, to the
condition they were in right before the fire.
Therefore, we have reviewed and drawn upon the results of the above
noted investigations, with this goal in mind. One prevailing
conclusion drawn from Kaizen’s inspections and analysis is that the
main residence is permeated throughout with both potential and actual
toxic fire residues. Their certified industrial hygienist: Dawn Bolstad-
Johnson, MPH, CIH, CSP, FAIHA has determined the building is not
safe to enter or inhabit without either full respiratory masks—
or complete removal of all contaminants.
Consequently, we have explored—exhaustively--the possibility and
practicability of removing all fire and smoke residues, wherever they
have penetrated all the remaining structures. We have accessed and
utilized our extensive prior experience with fire remediation, heat
damage and chemical residue contamination from wild fire and
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structure fire combustion products. We have subsequently determined
that it is physically impossible to remove all of those contaminating
and toxic residues from this surviving residence, either at the exterior,
or throughout the interior. This would include their presence in all
cavity walls, in conduits, in ducting, inside equipment, within
appliances, within any and all porous materials, (which would include
but not be limited to stucco, plaster, limestone, tile, wood, wiring,
veneers, fabrics and so forth). This would apply equally to the
accessory buildings, including the pavilion, outside barbecue, exterior
patios, garage, wine cellar and the adjacent site structures, including
hardscape, landscape, statuary and all related installations.
In conclusion, although we have explored and considered potential
remediation . . . the only practical solution to achieve full and
complete remediation and removal of all contaminating fire residues,
will be to demolish and remove all the existing structures, excavate
the sub grade until sampling of all remaining underground exposed
surfaces test negative for toxic residues.
McMinn Report at 5-6, dkt. no. 228 at ECF pp. 23-24 (emphasis in original).
Because this evidence is uncontroverted, Federal cannot prevail on its counterclaims to the
extent they are based on alleged misrepresentations in the POLs. Therefore, Plaintiffs are entitled
to summary judgment on Federal’s counterclaims to the extent they are based on the POLs.
c. The September 27, 2021 Letter
Federal also asserts in its counterclaims that Plaintiffs engaged in fraud and breached their
contractual obligation not to make false or misleading statements related to their claim because
“[o]n or around September 27, 2021, Plaintiffs asserted Kaizen Safety Solutions had concluded
that the Glass Fire caused damage that could not be repaired and thus Plaintiffs were entitled to the
total replacement of the structures and landscaping on the Property.” Amended Answer,
Counterclaim ¶ 57(c). The plain language of the September 27, 2021 Letter, however, establishes
that this allegation is incorrect. In particular, while accurately reciting the findings in the Kaizen
Report that “soot, char, [and] ash… have permeated every part of the main house, including the
interstitial spaces of the walls and the building materials themselves[,]” the September 27, 2021
Letter does not state (contrary to Federal’s allegations) that Kaizen Safety Solutions had
concluded that the main house had to be replaced. Rather, it is evident that that conclusion is an
opinion of counsel based on the findings set forth in the Kaizen Report. Furthermore, as discussed
above, while an opinion may be sufficient to support a fraud claim, the undisputed facts establish
that this particular opinion accurately reflected the findings of the McMinn Report, discussed
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above, in which Mr. McMinn found – based in part on the findings in the Kaizen Report – that the
contamination of the main house could be addressed only by demolishing and rebuilding.
Therefore, the undisputed facts establish that Federal cannot prevail on its counterclaims to the
extent they are based on the September 27, 2021 Letter.
In sum, Federal’s counterclaims and related affirmative defenses (the Fifteenth and
Sixteenth Affirmative Defenses) fail as a matter of law and therefore are dismissed with
prejudice.27
V. CONCLUSION
For the reasons stated above, the Motions are GRANTED in part and DENIED in part.
No later than August 26, 2026, the parties shall meet and confer and file a joint case management
conference statement that includes a proposed schedule for the remainder of the case. The parties
shall also include, in the joint statement, an agreed upon statement of the legal and factual issues
that remain to be tried. A Further Case Management Conference will be held by Zoom webinar on
September 2, 2026 at 2:00 p.m.
IT IS SO ORDERED.
Dated: July 16, 2026
______________________________________
JOSEPH C. SPERO
United States Magistrate Judge
27 The Court does not reach Plaintiffs’ argument that these claims fail because the conclusions of
the Appraisal Panel establish that the allegedly false statements made by Plaintiffs were, in fact,
true. Nor does it reach Plaintiffs’ argument that the statements in the September 27, 2021 Letter
are subject to the litigation privilege.
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