Farhad Yaghoubi v. Travelers Casualty Insurance Company of America

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
FARHAD YAGHOUBI,
Plaintiff-Appellant,
v.
TRAVELERS CASUALTY INSURANCE
COMPANY OF AMERICA,
Defendant-Appellee.
No. 17-56618
D.C. No.
2:16-cv-05770-SVW-AS
MEMORANDUM*
Appeal from the United States District Court
for the Central District of California
Stephen V. Wilson, District Judge, Presiding
Argued and Submitted March 8, 2019
Pasadena, California
Before: SCHROEDER and OWENS, Circuit Judges, and CHRISTENSEN,** Chief
District Judge.
Plaintiff Farhad Yaghoubi and defendant Travelers Casualty Insurance
Company of America (“Travelers”) dispute the scope of plaintiff’s replacement-
FILED
MAR 22 2019
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
* This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
** The Honorable Dana L. Christensen, Chief United States District
Judge for the District of Montana, sitting by designation.

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cost benefits under his fire-insurance policy. The dispute arose after a fire
destroyed plaintiff’s commercial warehouse. After the fire, instead of seeking
funds to rebuild the warehouse, plaintiff sought costs he expended in purchasing an
apartment complex. Travelers denied plaintiff’s request. Plaintiff then sued for
breach of contract and a breach of the implied covenant of good faith and fair
dealing. The district court granted summary judgment for Travelers, finding that
the policy’s replacement-cost provision did not authorize reimbursement for the
costs of a building that served a different purpose than the property insured.
Plaintiff appeals. We affirm.
On appeal, plaintiff argues that the policy conflicts with California Insurance
Code section 2051.5(a)(1). That section provides that in the case of property
destruction, replacement-cost coverage includes “the amount that it would cost the
insured to repair, rebuild, or replace the thing lost or injured[.]” Cal. Ins. Code
§ 2051.5(a)(1). Plaintiff contends that the term “replace” as used within this
section does not require that the replacement structure be “used for the same
purpose” as the insured structure, and that the policy’s same-use requirement
therefore conflicts with section 2051.5’s purpose. Reimbursement should be made,
plaintiff argues, for any structure he chose to build following the fire.
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The statutory language limits the reimbursement to the costs to repair,
rebuild, or replace the property that was lost or injured. As the district court
recognized, the only relevant California authority supports Travelers’ position that
a replacement structure in this context must serve the same purpose as the original
structure. See Conway v. Farmers Home Mut. Ins. Co., 31 Cal. Rptr. 2d 883, 886
(Ct. App. 1994) (“[T]he term replace . . . includes the notion of substituting for an
original item another item which serves the same function as the original . . . .”).
Conway is consistent with the out of state authority on the same issue. Plaintiff has
cited no judicial authority that supports his position.
That both the insured structure and the new structure provided rental income
does not mean that the two structures served the same function within the meaning
of the policy or the statute.
AFFIRMED.
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