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Date: 06-30-2017

Case Style: Victor Duarte v. Pacific Specialty Insurance Company

Case Number: A143828

Judge: J. Miller

Court: California Court of Appeals First Appellate District Division Two on appeal from the Superior Court, Alameda County

Plaintiff's Attorney: Felipe Raimondo Parker and Matthew Richard Stall

Defendant's Attorney: Kathryn Carroll Klaus and Lee James Danforth

Description: Not long after Victor Duarte bought an insurance policy from Pacific Specialty
Insurance Company (Pacific) to cover a rental property he owned, he was sued by his
tenants. When Pacific refused to defend him against the tenants’ claims, Duarte sued
Pacific, seeking, among other things, a declaration that Pacific was required to defend
him in the tenant suit. The trial court granted Pacific’s motion for summary judgment,
ruling that Pacific was entitled to rescind the policy because Duarte “made material
misrepresentations and/or concealed material facts” when he applied for the policy and
that rescission rendered the policy unenforceable from the outset, and therefore Duarte
never had any coverage and was not entitled to any benefits from the policy. The
“misrepresentations” at issue here concern Duarte’s responses of “no” to questions 4 and
9 in the insurance application. Question 4 is, at best, ambiguous: “Has damage remained
unrepaired from previous claim and/or pending claims, and/or known or potential (a)
defects, (b) claim disputes, (c) property disputes, and/or (d) lawsuits?” Question 9 is
more straightforward: “Is there any type of business conducted on the premises?”
2
Duarte appeals, arguing that Pacific did not establish as a matter of law that it was
entitled to rescind the policy. We agree with Duarte, and therefore we reverse and
remand.
FACTUAL AND PROCEDURAL BACKGROUND
The following facts are undisputed. In 2001, Victor Duarte bought property at
1825 East 19th Street in Oakland (the property). Steven Bowers, who occupied the house
on the property at that time, entered a rental contract with Duarte and remained at the
property as a tenant. At some point, Bowers’s daughter, Jennifer Pleasants, moved into
the property, and she remained there after Bowers died in about 2010. In February 2012,
Duarte gave Pleasants a 45-day notice to quit, but she did not leave.
1
On April 19, just
two months later, Duarte applied for landlord-tenant insurance coverage for the property
with Pacific through Yin Tang Insurance.
2
The application was submitted electronically,
and the same day, Pacific issued Duarte a policy on the property that included “Owners,
Landlords & Tenants Liability Coverage,” effective April 19, 2012 to April 19, 2013 (the
policy).
In June 2012, Pleasants and Jeremy Mueller filed a lawsuit against Duarte in
superior court (tenant suit), setting out 10 causes of action arising from habitability
defects that had allegedly existed throughout their tenancy, which began in 2009.
Claiming that they had notified Duarte about the defects, and that they suffered emotional
distress and physical injury, overpayment of rent and out-of-pocket expenses, they sought
to recover damages, attorneys’ fees and costs.
In August 2012, Duarte tendered defense of the tenant suit to Pacific, which
denied coverage and refused to defend the suit. In July 2013, after several months of

1
Pleasants was still occupying the property in July 2014.
2
In his declaration, Duarte states, “I filled out and submitted an application for the
Policy with the help of Tang.” At his deposition, Duarte testified that he visited Ms.
Tang’s office, which was a few blocks from his house; that she asked him questions and
that she typed things into a computer while he spoke with her; and that he signed the
insurance paperwork before he left the office.
3
correspondence with Pacific, Duarte sued Pacific in superior court seeking a declaration
that the policy required Pacific to defend Duarte in the tenant suit and also seeking
damages for breach of contract and tortious breach of insurance contract, on the grounds
that Pacific not only failed to defend the tenant suit, but also “wrongfully cancelled” his
policy. Pacific answered with a general denial, and alleged a number of affirmative
defenses, including its “right to rescind the policy in its entirety since inception because
of material misrepresentations, fraud and/or concealment of material facts made by
plaintiff on the application.”
In March 2014, Duarte filed a motion for summary adjudication on his claim for
declaratory relief, arguing he was entitled to a ruling that Pacific owed him a duty to
defend the tenant lawsuit. On the same day, Pacific filed a motion for summary
judgment or, in the alternative, summary adjudication, arguing it was entitled to rescind
the policy because Duarte made material misrepresentations in his application for
insurance. Pacific argued that when Duarte applied for coverage in April 2012 he
answered “no” to question 4, thereby representing that there were no disputes concerning
the property even though he knew there was a dispute with the tenants about the property
as evidenced by his responses the previous month to a complaint made by tenants to the
City of Oakland, and he answered “no” to question 9, thereby representing to Pacific that
there was no business conducted on the property even though just a month earlier “he
advised the City of Oakland that the tenants had ‘opened a shop,’ were conducting
‘dangerous’ welding activities, and were selling goods in connection therewith.” Pacific
also argued that Duarte’s contract claim failed because the tenant suit did not give rise to
coverage under the policy, that Duarte’s tort claim failed because there was no coverage
for the tenant suit and it had acted reasonably in denying Duarte’s tender, and that Duarte
had no tort claim for the non-renewal of the policy.3
The motions were scheduled for

3
In February 2013, Pacific issued a notice of non-renewal for the policy, stating
that Duarte had failed to comply with a request Pacific made months earlier for
information about the number of units on the property.
4
hearing on May 21, 2014. The parties filed opposition papers on May 7 and replies on
May 16.
Duarte’s opposition to Pacific’s motion and his reply to Pacific’s opposition rested
in part on arguments that Pacific impermissibly relied on documents subpoenaed from the
City of Oakland (Oakland records) to prove its rescission defense. Duarte objected that
the Oakland records, which were attached as an exhibit to a declaration from Pacific’s
attorney, were unauthenticated and constituted inadmissible hearsay.
In advance of the scheduled hearing, the trial court published a tentative ruling that
continued the hearing on Pacific’s motion “because [Pacific] filed the motion
prematurely.” The court stated that Pacific could not “establish that [Duarte] concealed
material facts or made material misrepresentations in his insurance application by
submitting unauthenticated records.” The court ordered Pacific to “conduct additional
discovery and file supplemental papers in support” of its motion by September 8, 2014,
set a schedule for the parties to file supplemental opposition and reply papers, and
continued the hearing to October 8, 2014. The trial court also published a tentative ruling
continuing Duarte’s motion to October 8 without explanation, but presumably because
the motions were related and Pacific’s opposition to Duarte’s motion relied in part on the
same records as Pacific’s own motion. The tentative rulings were not contested and
became orders of the court on May 21, 2014.4


4
The court apparently acted on its own initiative. Nothing in the record suggests
that either party had requested a continuance on any grounds, including Code of Civil
Procedure section 437c, subdivision (h). On appeal, Duarte contends that the court
should not have continued the hearing, but rather should have denied Pacific’s motion
and ruled on his. Duarte did not assert this position in the superior court until August
2014, three months after the order continuing the summary judgment hearing and two
months before the continued hearing, when he submitted an ex parte application to
shorten time on the hearing of his motion for summary adjudication, which was denied.
Duarte did not file a writ petition to challenge the continuance, and he does not challenge
the denial of his ex parte motion.
On appeal, Duarte argues for the first time that the orders continuing the hearing
were procedurally improper and prejudicial to him. The trial court’s orders were
unorthodox. It appears that the trial court could have ruled promptly on Duarte’s motion
5
Pacific and Duarte filed their supplemental papers on Pacific’s motion in
September. This time, Pacific’s papers included a declaration from Connie Taylor, a
manager of the Rent Adjustment Program (the Rent Program) in City of Oakland’s
Department of Housing and Development. She attached a copy of the Oakland records,
stating that the documents were a true and correct copy of the Rent Program’s file for
case T12-0066, in which Pleasants filed a tenant petition with the Rent Program
identifying Duarte as her landlord. Pacific also included a transcript of Duarte’s
deposition.
In advance of the scheduled hearing, the trial court published tentative rulings on
both motions, granting Pacific’s and denying Duarte’s. The tentative rulings were not
contested, no hearing was held, and the tentatives became orders of the court. In the
order granting Pacific’s motion, the court ruled that Pacific was entitled to rescind the
policy because Duarte made material misrepresentations or concealed material facts in
response to Pacific’s underwriting questions; and it declined to rule on Pacific’s

for a declaration that Pacific had a duty to defend. An insurer’s “ ‘duty to defend begins
when a potential for coverage arises, and the duty continues until the insurer proves
otherwise.’ ” (Haskel, Inc. v. Superior Court (1995) 33 Cal.App.4th 963, 977 (Haskel),
quoting Hartford Accident & Indemnity Co. v. Superior Court (1994) 23 Cal.App.4th
1774, 1781.) If Duarte could show a potential for coverage and Pacific could not meet its
burden to prove otherwise, Duarte’s motion could have been granted. Pacific would have
retained the right “to seek a contrary ruling at any time it acquire[d] the requisite
evidence to conclusively eliminate any potential for coverage.” (Haskel, supra, 33
Cal.App.4th at p. 978.) Such a ruling would have relieved Pacific of its obligation to
continue to defend. (Id. at p. 977.) However, Duarte has not shown that the continuance
constitutes reversible error. Duarte contends that the trial court’s request for
supplemental briefing improperly reduced the minimum notice requirements of the
summary judgment statute by giving him “less than 14 days to respond to what was
effectively an entirely new summary judgment motion,” which restricted his ability to file
an effective opposition. Even if Duarte could show that Pacific’s supplemental briefing
constituted an entirely new motion, Duarte forfeited this argument, because he did not
raise it in the trial court. (Doers v. Golden Gate Bridge etc. Dist. (1979) 23 Cal.3d 180,
184-185, fn. 1.)
6
alternative grounds for summary judgment.5
In the order denying Duarte’s motion, the
court cited Imperial Casualty & Indemnity Company v. Sogomonian (1988) 198
Cal.App.3d 169, 182 (Imperial Casualty) for the proposition that “a rescission effectively
renders the policy totally unenforceable from the outset so that there was never any
coverage and no benefits are payable,” and explained that Duarte’s motion was denied
because Pacific’s motion for summary judgment had been granted.
Judgment was entered for Pacific, and Duarte timely appealed, arguing that Pacific
failed to prove its rescission defense, and that his motion for summary adjudication
“should have been granted, assuming [Pacific’s] rescission defense fails.” Duarte asks us
to rule on his summary adjudication motion or remand the motion to the trial court for a
ruling.6

5 On appeal, neither party argues Pacific’s alternative grounds for summary
judgment. We do not discuss them further.
6 After the appeal was fully briefed, Duarte submitted two unopposed requests that
we take judicial notice of the decision in Roepel v. Pacific Specialty Insurance Company
(Mar. 14, 2013, B230306) [nonpub. opn.] (Roepel). We took the requests under
submission and now deny them.
Duarte initially asked us to take judicial notice of the decision pursuant to
Evidence Code section 452, subdivision (a), which in conjunction with Evidence Code
section 459 permits us to take judicial notice of the decisional law of any state. But
Duarte does not ask us to take notice of any law or legal principle. Rather, he asks us to
take notice of testimony from Susan Valencia, who testified for Pacific in Roepel as well
as here. Duarte argues that Roepel is relevant to the interpretation of underwriting
question 4 in this case, as well as to Pacific’s “credibility,” because in Roepel Valencia
discussed the significance of an underwriting question that is identical to question 4 and
interpreted it differently. We deny the request for judicial notice because “we cannot
take judicial notice of the truth of hearsay statements in other decisions, or court files
[citation], or of the truth of factual findings made in another action.” (Johnson &
Johnson v. Superior Court (2011) 192 Cal.App.4th 757, 768.) Moreover, Roepel
concerned a different portion of the question than this case, and in any event Valencia’s
testimony in Roepel is not inconsistent with her testimony here.
In a supplemental request, Duarte asks us to take judicial notice of the Roepel
decision pursuant to Evidence Code section 452, subdivision (d)(1), which allows courts
to take judicial notice of the records of any court in this state. Duarte relies on Gilbert v.
Master Washer & Stamping Co. (2001) 87 Cal.App.4th 212, 217-218, footnote 14
7
DISCUSSION
A. Standard of Review
A party is entitled to summary judgment “if all the papers submitted show that
there is no triable issue as to any material fact and that the moving party is entitled to
judgment as a matter of law.” (Code Civ. Proc., § 437c, subd. (c).) “We review a grant
of summary judgment de novo; we must decide independently whether the facts not
subject to triable dispute warrant judgment for the moving party as a matter of law.”
(Intel Corp. v. Hamidi (2003) 30 Cal.4th 1342, 1348.) The evidence must be viewed in
the light most favorable to the nonmoving party. (Saelzler v. Advanced Group 400
(2001) 25 Cal.4th 763, 768.) In deciding whether a material factual issue exists for trial,
we “consider all of the evidence set forth in the papers, except the evidence to which
objections have been made and sustained by the court, and all inferences reasonably
deducible from the evidence.” (Code Civ. Proc., § 437c, subd. (c).) “Pursuant to the
weight of authority, appellate courts review a trial court’s rulings on evidentiary
objections in summary judgment proceedings for abuse of discretion. [Citations.]”
(Eisenberg, et al., Cal. Practice Guide: Civil Appeals and Writs (The Rutter Group 2016)
¶ 8.168, p. 8-146.)7
The party challenging a trial court’s evidentiary ruling has the

(Gilbert) to support his argument that we should take judicial notice of the Roepel
decision “for the limited purpose of any persuasive value therein.” Duarte’s reliance on
Gilbert is misplaced. The court in Gilbert did not take judicial notice of an unpublished
opinion for the purpose of its persuasive value; rather, the purpose of the judicial notice
was to clarify a Supreme Court decision by citing to facts in the earlier appellate court
decision in the same matter. (Ibid.) Gilbert therefore provides no basis for taking
judicial notice of the Roepel decision for its persuasive value.
While we might take judicial notice of the fact that the Roepel decision was issued
or the fact that the trial court judgment in favor of Pacific in that case was affirmed in its
entirety, we do not find such notice to be necessary, helpful or relevant, and therefore we
deny Duarte’s supplemental request. (See Jordache Enterprises, Inc. v. Brobeck, Phleger
& Harrison (1998) 18 Cal.4th 739, 748, fn. 6 [denying request where judicial notice is
not necessary, helpful or relevant].)
7
The parties agree that the abuse of discretion standard is appropriate for our
review of the trial court’s rulings on the evidentiary objections in this case.
8
“burden to establish such an abuse, which we will find only if the trial court’s order
exceeds the bounds of reason. [Citation.] ‘Where a trial court has discretionary power to
decide an issue, an appellate court is not authorized to substitute its judgment of the
correct result for the decision of the trial court.’ [Citation.] We will only interfere with
the lower court’s judgment if appellant can show that under the evidence offered, ‘ “no
judge could reasonably have made the order that he did.” ’ ” (DiCola v. White Bros.
Performance Products, Inc. (2008) 158 Cal.App.4th 666, 679 [reviewing trial court’s
evidentiary rulings on summary judgment].)
A defendant “moving for summary judgment bears the burden of persuasion that
there is no triable issue of material fact and that [the defendant] is entitled to judgment as
a matter of law.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850
(Aguilar).) A defendant can meet this burden by showing “that there is a complete
defense to [a] cause of action.” (Code Civ. Proc., § 437c, subd. (p)(2).) A defendant’s
initial burden in moving for summary judgment is to come forward with evidence to
make a prima facie showing that there is no triable issue of material fact (Aguilar, supra,
25 Cal.4th at p. 850), where the material facts are determined by the pleadings.
(Fisherman’s Wharf Bay Cruise Corp. v. Superior Court (2003) 114 Cal.App.4th 309,
320.) If defendant meets that burden of production, the burden of production shifts to
plaintiff to make a showing that there is a triable issue of material fact. (Ibid.) “The
plaintiff . . . shall not rely upon the allegations or denials of its pleadings to show that a
triable issue of material facts exists but, instead, shall set forth the specific facts showing
that a triable issue of material fact exists.” (Code Civ. Proc., § 437c, subd. (p)(2).) “A
party cannot avoid summary judgment by asserting facts based on mere speculation and
conjecture, but instead must produce admissible evidence raising a triable issue of fact.”
(LaChapelle v. Toyota Motor Credit Corp. (2002) 102 Cal.App.4th 977, 981.)
B. Applicable Law
Our Supreme Court has explained that the law of rescission applies to insurance
contracts in the following way: “It is generally held that an insurer has a right to know all
that the applicant for insurance knows regarding the state of his health and medical
9
history. [Citations.] Material misrepresentation or concealment of such facts are grounds
for rescission of the policy, and an actual intent to deceive need not be shown.
[Citations.] . . . Materiality is determined solely by the probable and reasonable effect
which truthful answers would have had upon the insurer. [Citations.] The fact that the
insurer has demanded answers to specific questions in an application for insurance is in
itself usually sufficient to establish materiality as a matter of law. [Citations.]”
(Thompson v. Occidental Life Insurance Co. (1973) 9 Cal.3d 904, 915-916.)
This general principle applies as well to first party property claims and claims on
liability insurance policies. (Imperial Casualty, supra, 198 Cal.App.3d at pp. 174-175,
180-181.) The insurer is not required to show a causal relationship between the material
misrepresentation or concealment of material fact and the nature of the claim. (Ibid.
[insurer entitled to rescind policy because homeowners failed to disclose prior land
subsidence and water damage claims even though the loss at issue was by fire].) Nor
must the misrepresentation be intentional: an insurer is entitled to rescind a policy “based
on an insured’s negligent or unintentional concealment or misrepresentation of a material
fact.” (Mitchell v. United National Insurance Company (2005) 127 Cal.App.4th 457,
473.) This is because the focus of the inquiry is not on the state of mind of the insured or
applicant, but on “the probable and reasonable effect which truthful answers would have
had upon the insurer.” (Merced County Mutual Fire Ins. Co. v. State of California (1991)
233 Cal.App.3d 765, 772, citing Ins. Code, § 334.)
Thus, false representation or concealment in connection with an application for
insurance provide grounds for rescission of an insurance contract from the outset. (Civ.
Code, § 1689, subd. (b)(7); Ins. Code, §§ 331, 359; Imperial Casualty, supra, 198
Cal.App.3d at p. 182 [“rescission effectively renders the policy totally unenforceable
from the outset to that there was never any coverage and no benefits are payable”].)
The interpretation of an insurance policy is a question of law. (Waller v. Truck
Insurance Exchange, Inc. (1995) 11 Cal.4th 1, 18). We “look first to the language of the
contract in order to ascertain its plain meaning or the meaning a layperson would
ordinarily attach to it.” (Ibid.) A provision in a policy is considered ambiguous when it
10
is capable of two or more constructions, each of which is reasonable. (Ibid.) We
construe ambiguities against the insurer, as drafter of the policy. (State of California v.
Continental Insurance Company (2012) 55 Cal.4th 186, 195.) These principles apply
likewise to the questions in an application prepared by an insurer. Therefore, although an
insurer generally “has the right to rely on the applicant’s answers without verifying their
accuracy[,] . . . [¶] . . . [t]he insurer cannot rely on answers given where the applicantinsured
was misled by vague or ambiguous questions.” (Croskey et al., Cal. Practice
Guide: Insurance Litigation (The Rutter Group 2016) ¶¶ 5:217, 5:218, p. 5-64 (Croskey).)
Croskey provides several “[e]xamples of ‘inartful’ questions in insurance applications,”
including questions with “ambiguous” or “unfamiliar” terms, and questions “lumping
together many different conditions.” (Id. ¶ 5:218, p. 5-64, italics omitted.)
C. Analysis
1. Pacific’s Motion Was Not Procedurally Defective
We begin by addressing Duarte’s arguments that Pacific’s motion for summary
judgment was procedurally improper. The arguments lack merit.
Duarte argues that because Pacific never filed a pleading seeking affirmative
declaratory relief, it was improper for Pacific to seek—and for the court to grant—such
affirmative relief by a motion for summary judgment. Duarte’s argument is based on
statements in Pacific’s motion asking the court to rule that it “is entitled to rescind” the
policy and on the trial court’s statements that it agreed with Pacific’s “contention that it
has the statutory right to rescind the liability policy issued to [Duarte],” and that Pacific
“is entitled to rescind the subject policy,”8
This argument is a makeweight. Pacific

8 Along the same lines, Duarte quotes a portion of the trial court’s order (“The
Motion of Defendant Pacific Specialty Insurance Company (‘PSIC’) for Summary
Judgment or, in the Alternative, Summary Adjudication of Issues, as to the Complaint of
Plaintiff Victor Duarte for Breach of Contract, Tortious Breach of Insurance Contract
(‘Bad Faith’), and Declaratory Relief, pursuant to CCP § 437c, is GRANTED”), and
suggests that Pacific’s motion was thus a motion for declaratory relief. The suggestion is
meritless. The phrase “and Declaratory Relief” is not a description of Pacific’s motion,
but is rather a description of Duarte’s complaint, which as its caption reflects, alleges
11
alleged as an affirmative defense that it “had the right to rescind the policy in its entirety
since inception because of material misrepresentations, fraud and/or concealment of
material facts made by plaintiff on the application.” Pacific’s defense of rescission would
justify an award of summary judgment if there were no triable issue of fact that Duarte
made a material misrepresentation on his application. (Superior Dispatch, Inc. v.
Insurance Corp. of New York (2010) 181 Cal.App.4th 175, 181 (Superior Dispatch).
Duarte cites to no authority to the contrary.
Duarte argues that Pacific’s motion must fail because Pacific did not plead or
prove that it gave notice it was rescinding the policy or that it returned, or offered to
return, the premium paid. (Civ. Code, § 1691, subds. (a)-(b).) Although Civil Code
section 1691 states that notice and restoration of the premium are procedural
requirements for rescission, Duarte’s arguments lack merit. That is because Pacific
pleaded a rescission defense in its answer, and Civil Code section 1691 provides that
“[w]hen notice of rescission has not otherwise been given or an offer to restore the
benefits received under the contract has not otherwise been made, the service of a
pleading in an action or proceeding that seeks relief based on rescission shall be deemed
to be such notice or offer or both.” (Croskey, supra, ¶¶ 5:157.4, p. 5-45, LA Sound USA,
Inc. v. St. Paul Fire & Marine Ins. Co. (2007) 156 Cal.App.4th 1259, 1267 (LA Sound).)
Duarte argues that an answer that merely pleads an affirmative defense of rescission does
not adequately plead notice and offer for the purposes of Civil Code section 1691, but the
only authority that he cites to support that argument is inapposite. Duarte cites Myerchin
v. Family Benefits, Inc. (2008) 162 Cal.App.4th 1526, 1533 (Myerchin) for the
proposition that pleading an affirmative defense of rescission in an answer does not meet
the requirements of Civil Code section 1691 unless the answer alleges facts
demonstrating a rescission has been effected.9
Myerchin is unlike the case here because

“Breach of Contract,” “Tortious Breach of Insurance Contract,” and “Declaratory
Relief.”
9 Myerchin was disapproved on other grounds by Village Northridge Homeowners
Assn. v. State Farm Fire and Casualty Co. (2010) 50 Cal.4th 913, 929, footnote 6.
12
the deficient answer in Myerchin “d[id] not even mention, let alone assert, a rescission.”
(Ibid.) Furthermore, Duarte waived any defect in the pleadings by addressing the
rescission defense on the merits in opposing Pacific’s motion. (Superior Dispatch, supra,
181 Cal.App.4th 175 at p. 193, fn. 11.)
In his opening brief, Duarte suggests that Pacific could not prevail on a rescission
defense because it should have filed a cross-complaint to rescind the policy, but cites no
authority to support the point, and we are aware of none. It is well established that
although an insurer may not file a separate action for rescission once the insured has filed
suit, the insurer may assert rescission as an affirmative defense or in a cross complaint.
(Croskey, supra, ¶¶ 5:157.1 – 5:157.3, pp. 5-44 – 5-45, citing Resure, Inc. v. Superior
Court (1996) 42 Cal.App.4th 156, 166, and LA Sound, supra, 156 Cal.App.4th at pp.
1267-1268.) In his reply brief, Duarte concedes that “a pleading (even an answer) can
effectuate notice of rescission,” but qualifies his concession by arguing that rescission
must be “properly pled.” (Italics omitted.) The qualification does not help him, since he
addressed the defense on the merits and therefore waived any pleading defect. (Superior
Dispatch, supra, 181 Cal.App.4th at p. 193, fn. 11.)
Duarte argues that Pacific failed to “adequately identify, articulate, and support”
the misrepresentation element of its rescission defense in its separate statement or briefs,
and this failure was “highly prejudicial” to Duarte’s ability to oppose Pacific’s motion.
The argument lacks merit. Duarte’s sole citation to supporting authority is a glancing
reference to Code of Civil Procedure section 437c, subdivision (b)(1), which requires a
moving party to set forth “plainly and concisely all material facts which [it] contends are
undisputed.” Duarte’s contention that Pacific never identified Duarte’s alleged factual
misrepresentations is belied by Pacific’s detailed recitation of facts in its opening brief to
the trial court, which identified facts in its separate statement establishing its position that
Duarte made misrepresentations when he answered “no” to questions 4 and 9 on the
application, because when he applied for coverage, “he knew that there was a dispute
with the tenants about conditions at the subject property” and that he had recently
“complain[ed] to the City of Oakland that his tenants were conducting a dangerous
13
welding/shop business on the property.” Duarte’s contention that he was prejudiced by
the alleged deficiencies is belied by the detailed argument in his initial opposition papers,
in which he contends that he answered questions 4 and 9 truthfully, relying on his
declaration, in which he explains his understanding of the questions and the reasons for
his answers.
Duarte argues that Pacific’s failure to identify the misrepresentation element of its
rescission defense prevents it from meeting its burden to establish the materiality element
of its defense. Our conclusion that Pacific adequately identified alleged Duarte’s
misrepresentations, discussed immediately above, means that Duarte’s argument here
rests on a faulty premise.
2. Pacific Did Not Meet Its Initial Burden
To prevail on its rescission defense, Pacific has the burden to prove that in his
application for insurance Duarte, whether intentionally or not, made a misrepresentation,
and that Pacific would not have issued the policy if Duarte had not made that
misrepresentation. (Douglas v. Fidelity National Insurance Co. (2014) 229 Cal.App.4th
392, 408; see also CACI No. 2308.) Here, Pacific argues that Duarte misrepresented that
there were no pending claims or known or potential property disputes or lawsuits and also
misrepresented that no business was conducted on the property. We conclude that Pacific
did not meet its initial burden with respect to those purported misrepresentations. As we
discuss below, Pacific cannot rely on question 4 to elicit information about the existence
of pending claims, property disputes, or lawsuits concerning the property. And Pacific
has not met its burden to show that Duarte knew a “business” was conducted on the
property at the time he submitted his application.
a. Undisputed Facts
The following facts are undisputed. The application sets forth underwriting
guidelines, with a list of “unacceptable properties” that includes “[d]wellings with
unrepaired damage (including earthquake damage) and/or open or pending claims, and/or
known or potential (a) defects, (b) claim disputes, (c) property disputes, and/or (d)
lawsuits.” The guidelines also contain a list of “unacceptable risks” that includes “[r]isks
14
where space is rented to others for commercial use or risks with any type of business
(including childcare provided to unrelated individuals for compensation), trade or illegal
activity on the premises.” In his application Duarte answered “no” to underwriting
question 4, “Has damage remained unrepaired from previous claim and/or pending
claims, and/or known or potential (a) defects, (b) claim disputes, (c) property disputes,
and/or (d) lawsuits?” Duarte also answered “no” to the underwriting question 9, “Is there
any type of business conducted on the premises?” Duarte certified that he reviewed the
entire application for insurance, that his answers were true and correct, and that he
received, read and understood the application, including the underwriting guidelines that
were included in it.
There is no triable dispute that if Duarte had answered “yes” to question 4 or 9
during the application process, his application would have been rejected and the
application process would have terminated. Pacific offered the declaration of Susan
Valencia, Pacific’s Senior Vice President of Underwriting, stating that she was familiar
with Pacific’s underwriting operations and application process, and that if Duarte had
answered “yes” to either question, the policy would not have been issued. Duarte’s
contentions that Pacific misrepresented the contents of the declaration and that the
declaration is “conclusory” are without merit.
10
Duarte’s argument that the trial court

10 Duarte relies on a wrongful death case, Sesma v. Cueto (1982) 129 Cal.App.3d
108, for his argument that Valencia’s declaration is conclusory. That case is inapposite.
An action for wrongful death requires that the child be born alive (id. at p. 113), and the
defendant doctor in Sesma sought summary judgment based in part on his declaration that
plaintiff Sesma gave birth to “a stillborn fetus.” (Id. at p. 112.) There, the doctor’s
declaration did not meet the requirement for evidentiary facts because it said nothing
about “the child’s vital signs, such as breathing, heartbeat, signs of cerebration, muscular
activities or lack thereof,” and the parents’ “attempts to gain such facts from the doctor
were unsuccessful.” (Id. at p. 114.) Further, medical records and other testimony
supported the inference that “the fetus was viable at the time or very close to the time of
delivery.” (Ibid.) On that record, the trial court should not have concluded that there was
no triable issue of material fact. (Ibid.) Here, in contrast, Valencia did not offer
conclusory testimony. She did not testify simply that the answer to question 4 was
“material” or “important” or “significant” to Pacific. To the contrary, she testified that if
Duarte had answered the question “yes,” his application would have been rejected, which
15
need not believe Valencia’s testimony is insufficient to raise a triable issue of fact. (See
Imperial Casualty, supra, 198 Cal.App.3d at pp. 181-182 [review of insurance
company’s uncontradicted evidence supporting materiality establishes materiality as a
matter of law, even in the face of argument that jury might disbelieve the evidence].)
b. Question 4: Claims, Property Disputes, Lawsuits
As evidence that Duarte knew of open or pending claims, or potential property
disputes or lawsuits, Pacific offered deposition testimony from Duarte and documents
from the City of Oakland regarding Duarte’s attempt to evict Pleasants from the property
in February 2012; Pleasants’s subsequent complaint about issues at the property to the
Rent Program; Duarte’s March 2012 response to the Rent Program, which described
Pleasants’s tenancy and Duarte’s reasons for his demand that she vacate the property; and
a notice mailed to Duarte on April 3, 2012 scheduling a mediation and hearing for June 4,
2012 on the dispute between him and Pleasants.11

In her March 2012 complaint to the Rent Program, Pleasants said that in 2002
Duarte doubled the rent from $700 to $1,400 per month and stopped paying for water and
garbage. She said there had been no heat at the property for at least five years, the roof
leaked, the plumbing leaked, there was mildew, the floor boards were coming apart, there
were pests, including possums and birds, in the attic and she had been requesting repairs
in writing since 2009. She said Duarte was evicting her in retaliation.
In his March 2012 response to the Rent Program, Duarte stated that Pleasants had
been renting the house from him since 2010 for $1,400 per month, but had refused to sign

establishes that the information about pending disputes requested by Pacific, and not
disclosed by Duarte, was material.
11 The dispute was still pending when Duarte submitted his application to Pacific
on April 19, 2012, as reflected in Duarte’s handwritten letter to the Rent Program dated
April 26, 2012, in which Duarte stated that he “spoke with Inspector Wing Lew in order
to solve the problems, but she doesn’t answer the phone, Jennifer, March 15th, and he
tried to talk to her, but she said to me she doesn’t talk to fucking Mexicans.” On May 30,
2012, Duarte’s attorney wrote to the City of Oakland to advise that the property was
exempt from the jurisdiction of the Rent Program. Pleasants subsequently dismissed her
complaint at the Rent Program and filed suit in superior court.
16
a contract, despite his repeated requests. He asked her to vacate the house because he
wanted to make improvements to the electrical wiring, heating system and alarm system,
which required the house to be empty. He also asked her to move because “she has a
welding shop” in the house that was “using oxygen tanks and hazardous materials,”
creating a fire hazard. Pleasants began making claims and giving him a hard time after
he asked her to leave. She would not let him clean the yard, which led to the City of
Oakland imposing a fine, and she removed batteries from alarms, which also led to a fine.
She was also rude and insulting to his son.
After Pacific supplemented its motion for summary judgment, Duarte again
objected that the Oakland records lacked foundation, citing Evidence Code section 1401,
and constituted inadmissible hearsay, citing Evidence Code section 1200. The objection
was overruled. On appeal, Duarte argues that the Oakland records are “almost entirely
inadmissible” and the trial court abused its discretion in overruling his objection. Duarte
concedes that the Oakland records are part of the Rent Program’s files, and concedes that
the Activity Log and Filing Check List included in the Oakland records are subject to the
business records exception to the hearsay rule, codified in Evidence Code section 1280.
But he objects that other documents in the Oakland records, including correspondence on
which Pacific relies, have not been authenticated and constitute hearsay. As we discuss
below in connection with question 9, some of the documents include hearsay statements
that are not admissible for their truth, but as a general matter the objections lack merit.
At his deposition, Duarte testified that he recalled that Pleasants filed a complaint with
the Rent Program, that he completed and signed a Landlord Response form with the help
of someone at the Rent Program, and that he dictated and signed his March 2012
response to the Rent Program, which included the Rent Program’s case number, and
reflects his understanding that Pleasants had filed a complaint against him concerning the
property.12
Duarte argues that the documents do not substantiate any allegation as to the

12 Duarte argues that although he was “apparently being questioned” about the
Oakland records at his deposition, Pacific has not established that, because Pacific failed
to submit the deposition exhibits with the deposition transcript. This failure is
17
condition of the property when Duarte applied for insurance. But the condition of the
property, and more generally the truth or falsity of any statements made by Pleasants or
Duarte to the Rent Program, are irrelevant for purposes of this case: all that matters is
that Duarte knew of a claim or dispute concerning the property. We conclude that the
trial court did not abuse its discretion in overruling Duarte’s objection to Pacific’s
evidence.
But Pacific’s evidence notwithstanding, Pacific failed to show that Duarte made
any misrepresentation by answering “no” to question 4. And that is because to the extent
question 4 can be interpreted at all, it is utterly ambiguous as to how it should be read.
Question 4 asks, “Has damage remained unrepaired from previous claim and/or pending
claims, and/or known or potential (a) defects, (b) claim disputes, (c) property disputes,
and/or (d) lawsuits?” and calls for the answer “yes” or “no.”
Pacific asks us to interpret the question as requiring the answer “yes” if there is
unrepaired damage, or there are any open or pending claims, or there are any known or
potential defects, or there are any known or potential claim disputes, or there are any
known or potential property disputes, or there are any known or potential lawsuits. But
Pacific’s interpretation does not clearly follow from the language in the question. We
begin with the garbled syntax of question 4, in which the only verb is contained in the
phrase “has damage remained unrepaired.” The subject of the verb is “damage.”
Therefore, the question is reasonably construed as simply asking whether damage has
“remained unrepaired” from various past events, such as a “previous claim” or a property
dispute or lawsuit. In other words, a logical way to read this inconsistently worded
sentence is to tie everything back to the existence of unrepaired damage.

unfortunate, and no doubt complicated the trial court’s review of the record, as it
complicated ours. But the failure is not fatal to Pacific’s motion because the deposition
testimony, which refers to the contents, format and Bates numbers on the documents,
makes clear that Duarte was questioned about the Oakland records, which appear as
Exhibit A to Connie Taylor’s declaration.
18
Question 4 does not include any form of the verb “to be,” and therefore it is not at
all clear that it asks “Are there any pending claims,” or “Are there any known or potential
claim disputes,” or “Are there any known or potential property disputes,” or “Are there
any known or potential lawsuits?” Nor does the question, or anything else that Pacific
points us to, offer any explanation of the terms used in the question, such as “claim,” not
to mention any explanation of the differences among “known or potential claim disputes”
and “known or potential property disputes” and “known or potential lawsuits.” Indeed,
the question’s ambiguity is underscored by Pacific’s reliance on its underwriting
guideline number 22 to interpret question 4. That guideline, one of 16 that identify
“unacceptable properties,” reads as follows: “Dwellings with unrepaired damage
(including earthquake damage) and/or open or pending claims, and/or known or potential
(a) defects, (b) claim disputes, (c) property disputes, and/or (d) lawsuits,” is hardly a
model of clarity itself.
13 In sum, we find Pacific’s analysis of question 4 unconvincing.
Instead, we agree with Duarte that the question is reasonably interpreted as asking
whether the property has unrepaired damage associated in some way with previous or
pending claims, known or potential defects, known or potential claim disputes, known or
potential property disputes, or known or potential lawsuits. Duarte stated in his
declaration that he understood the term “claim” to mean insurance claim, and that when
he “submitted the application there was no unrepaired damage at the Property from
previous insurance claims.” We agree that Duarte’s proposed interpretation of question 4
is reasonable. Under this interpretation, Pacific has not met its burden to show that
Duarte made a misrepresentation in his response to question 4, because Pacific has not
shown that Duarte knew of any unrepaired damage from the identified sources. (See
O’Riordan v. Federal Kemper Life Assurance (2005) 36 Cal.4th 281, 287-288 [no
misrepresentation if applicant who has smoked just a couple of cigarettes answers “no” to

13 Although the application lists more than 50 “guidelines,” it contains 13
underwriting questions. This difference in number casts doubt upon whether it is
reasonable to expect an applicant for insurance to construe the questions by reference to
the guidelines.
19
the question “Have you smoked cigarettes in the past 36 months?” which is reasonably
construed as an attempt to determine habitual use].)
c. Question 9: Business on Premises
As evidence that Duarte knew there was a business conducted on the property and
misrepresented that fact by answering “no” to question 9, Pacific offered testimony from
Duarte’s deposition that Duarte knew that Pleasants’s father sold motorcycle parts from
the basement of the rented house while he lived there; that after Pleasants’s father died in
2010, Pleasants sometimes sold motorcycle parts from the basement of the rented house;
that Pleasants kept sandblasting equipment there; and that Duarte complained to the City
of Oakland in March 2012 that Pleasants had “a welding shop,” and the shop was “using
oxygen tanks and hazardous materials, and can cause a fire to the neighborhood.”
Pacific also offered evidence that in 2010, after Pleasants’s father died and about
two years before Duarte applied for insurance with Pacific, Pleasants sent him a letter
(which he did not recall receiving) in which she said, “This is Business. I need to run my
Business out of the Basement and if your maintenance issues are going to affect my
business I need to know.”14
Immediately after that portion of the letter was read to
Duarte at his deposition, this exchange took place:
Question by Pacific’s attorney: “Did Ms. Pleasants run a business out of her
basement?
“A Yes.
“Q What kind of business?
“A It’s not a business. She has motorcycle parts.
“Q Was she selling the motorcycle parts?
“A Sometimes. [¶] . . .
“Q . . . How did you know she was selling motorcycle parts from the basement?
“A That’s what her father did.

14 Pleasants’s statement in the letter is hearsay, and not admissible for its truth.
Even if it were admissible, Pacific does not address the fact that the letter predates
Duarte’s application by almost two years.
20
“Q And did she tell you that that’s also what she was doing?
“A Yes.
“Q Did she tell you she was buying and selling motorcycle parts?
“A No.
“Q Was she doing any other sort of business in the house that you knew about?
“A No.”
Pacific also offered evidence that in February 2012, Duarte received a letter from
Pleasants in which she wrote, “I am not working and rely on using the basement to
refurbish my [father’s] motorcycles to sell as my only source of income.” Like the
statements in the 2010 letter from Pleasants, this statement is hearsay and not admissible
for its truth.
Duarte argues that because he reasonably interpreted the phrase “business being
conducted on the premises” in question 9 as referring to “regular and ongoing business
activity,” and because there was no such regular and ongoing business activity at the
rental house (as opposed to an occasional sale) when he applied for insurance, Pacific has
not met its burden, and that at the very least there is a dispute of fact as to whether there
was a business conducted at the rental house. We agree that Duarte’s interpretation of
question 9 is reasonable, and Pacific does not argue otherwise. In the face of Pacific’s
own evidence that its inspector reported that that there was no business, farm or ranch
operating on the property, in the face of Duarte’s reasonable interpretation of question 9
as referring to ongoing and regular business activity, and in light of the requirement that
we view the evidence in the manner most favorable to Duarte as the non-moving party,
we are not persuaded that Pacific met its burden to show that Duarte misrepresented the
existence of a business on the premises at the time he submitted the application for
insurance.
Because we conclude that the trial court erred in determining that Pacific’s
rescission defense defeats Duarte’s claims, we will reverse the trial court’s orders
granting Pacific’s motion for summary judgment and denying Duarte’s motion for
summary adjudication. We will remand for the trial court to rule on Duarte’s summary
21
adjudication motion, which Pacific opposed not only on the ground that it was entitled to
rescind the policy, but also on the ground that there was no potential for coverage, an
issue that the trial court did not address.

Outcome: The judgment is vacated and the trial court orders granting Pacific’s motion for
summary judgment and denying Duarte’s motion for summary adjudication are reversed. The matter is remanded for further proceedings consistent with this opinion. Duarte shall recover his costs on appeal.

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