Insurance is an agreement of the utmost good faith that requires that both parties to the insurance contract do nothing to deprive the other of the benefits of the insurance. I Michael Favreau et al. v. Navigators Insurance Company et al., G056718 c / w G056938, Court of Appeal of the State of California Fourth Appellate District Division Three (December 15, 2020) Favreau sought the annulment of a summary judgment granted to Navigators, claiming that he was not
Michael Favreau and Favreau's Custom Woodworking, Inc., (FCW) were denied coverage by the Navigators Insurance Company (Navigators) for claims against them in an underlying construction defect dispute. In this case, Favreau and FCW both sued the Navigators for allegations of misconduct arising from this denial of coverage. The FCW's reluctant argument is based on the assertion that the Navigators' withdrawal of the policy was based on the same facts they relied on when they denied coverage in the underlying case. The navigator's denial of coverage for the underlying action was based on the fact that the work done by Favreau and FCW that gave rise to the underlying lawsuit fell outside the scope of the policy coverage. Navigator's subsequent repeal of the policy, on the other hand, was based on false statements by Favreau and FCW when applying for the policy.
Navigators began insuring FCW in November 2007, through an Artisans Contractors program administered by Navigators' agent. The program serves specific trading entrepreneurs including carpentry. It excludes main contractors and construction managers. The original policy described the FCW's operations as "Carpentry Interior."
FCW renewed its navigation policy for the last time in 2011. The renewal application contained a provision under the heading "Special conditions", which showed that FCW paid a lower premium. because "no new residential construction work before proof of occupancy is permitted."
The application represented that FCW "is a licensed contractor carrying out residential and commercial cabinet and wood shop operations", that "the value of its largest current or planned job" was $ 2600, and that the value of its largest job in the last three years was $ 3750. The application also represented that 100 percent of FCW's business was "non-structural redevelopment" and that 0 percent of its business was new construction or "structural redevelopment." It represented that FCW's gross annual revenue was $ 150,000.
The application contained, inter alia, several "questions of justification" and the FCW answered a false "No" to each of the questions, as well as a section entitled "Trade-Specific Qualification Questions." The FCW answered a false "no" to almost all questions.
In April 2013, Christopher and Theresa Ruiz started a lawsuit against Favreau, a company called Favreau's Construction Management – a fictitious company name established by Favreau – s amt FCW. The complaint alleged several causes of action, including fraudulent induction of contract, negligent presentation, breach of warranty and fraud and breach of contract. each claim related to the construction of their new custom homes in 2011 and 2012. More specifically, they claimed that Favreau had them hire him to build his own home through various misrepresentations and false promises about his license, his qualifications and the qualifications of the subcontractors he would hire to work on the project. Ruizes also claimed that FCW was involved in a "civil conspiracy" with Favreau and Favreau's Construction Management to commit these acts.
In June 2014, after conducting an investigation of the claim, the Navigators formally denied coverage because (1) the policy excludes coverage. at the expense of repair, replacement or removal of FCW's own work, (2) the insurance excludes all construction lines carried out for a fee (and does not list Favreaus Construction Management as an insured); and (3) the policy excludes work performed in the construction of a dwelling prior to the certificate.
The Ruiz atmosphere was tested in 2016 without Navigator's further interference. In April 2016, the court issued a judgment against Favreau and in favor of Ruizes for $ 700,000 in damages, measured by the depreciation of the home. The court awarded an additional $ 700,000 in damages to Favreau.
Navigators claimed that revocation was justified based on various misrepresentations in FCW's 2011 policy application, including material misstatement of its past – and planned – work on new housing construction prior to the issuance of a occupancy certificate; the size of the planned projects, the fact that the principal intended to act as construction manager for a job in which it was involved and its participation in waterproofing work.
The trial court held that a summary judgment was warranted.