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McMillin Scripps North Partnership v. Royal Insurance Co.9/30/1993
In this case the insured under a first party property insurance policy concedes it has not experienced any loss covered by the policy. Nonetheless, the insured argues the insurer should reimburse it for expenses it incurred in determining whether its losses were covered by the policy.
We find nothing on the face of the policy which provides for reimbursement of the investigation costs the insured is seeking. Accordingly, we affirm the summary judgment entered in favor of the insurer.
FACTUAL AND PROCEDURAL BACKGROUND
1. 1986 LEAK
Plaintiff and appellant McMillin Scripps North Partnership (McMillin) owns a parcel of land on Scripps Trail Drive in San Diego which it leases to the operators of a gasoline station and convenience store. On May 6, 1986, the lessees performed a precision test on the gasoline tank system and discovered a leak. The leak was repaired in September 1986 and thereafter the system passed all further precision tests.
2. 1988 POLICY
On May 30, 1988, defendant and respondent Royal Insurance Company of America (Royal) issued McMillin a commercial property insurance policy which covered the year ending May 30, 1989. By way of a renewal McMillin extended the coverage through May 30, 1990. The policy covered losses at the Scripps Trail gasoline station and convenience store.
3. 1989 CLAIM
On March 28, 1989, the County of San Diego sent McMillin a notice the county's investigation of gasoline odors in sewer pipes disclosed a leak had occurred at the Scripps Trail gasoline station. The notice required McMillin to determine the cause of the odors and remedy the problem.
McMillin retained the consulting firm of Ninyo and Moore to assist it in responding to the county's notice. In a report dated May 26, 1989, Ninyo and Moore advised McMillin the odors were probably caused by leakage from the gasoline storage tanks and that the leakage had probably occurred before the 1986 precision tests and repairs.
On October 26, 1989, McMillin gave Royal written notice of a potential loss under the policy due to the gasoline contamination identified by the county.
4. ROYAL'S RESPONSE
On November 15, 1989, Royal advised McMillin it would investigate the claim but was reserving its right to dispute coverage. On January 8, 1990, McMillin provided Royal with reports prepared by Ninyo and Moore.
On January 10, 1990, McMillin submitted a proof of loss to Royal which Royal found defective. Later McMillin provided additional information to Royal, including the fact McMillin had incurred in excess of $150,000 in investigation costs.
5. THESE PROCEEDINGS
Because Royal had failed to determine whether McMillin's claim was covered under Royal's policy, on April 9, 1990, McMillin filed a complaint against Royal in which it alleged breach of contract, breach of the implied covenant of good faith and fair dealing, negligence, negligent misrepresentation and a cause of action for declaratory relief.
Royal answered the complaint and alleged as an affirmative defense its contention no benefits were due McMillin under Royal's policy. On August 14, 1990, Royal moved for summary judgment. Royal argued there was undisputed evidence the contamination was caused by the leak discovered in 1986 and therefore no benefits were due under the policy. McMillin opposed the motion and objected to the form of Royal's motion and the admissibility of documents Royal submitted in support of the motion.
The trial court overruled McMillin's objections and granted Royal's motion. Following entry of judgment in Royal'
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