MILLER, J.
McIntyre Framing, Inc. (McIntyre) sued Interstate Fire & Casualty Company (Interstate) and others for failing to return a portion of McIntyre's insurance premium. As to Interstate, McIntyre alleged a cause of action for breach of contract. The trial court granted Interstate's motion for summary judgment.
McIntyre contends the trial court erred because (1) the plain language of the policy reflects that McIntyre was owed a 75 percent refund of its insurance premium; (2) no coverage was provided under the policy because prior and completed work were excluded under the terms of the policy; (3) Interstate did not present evidence to establish it was exposed to risk or liability; (4) Interstate's course of dealing with McIntyre reflects the policy is ambiguous; (5) the minimum earned and audit premium endorsement is ambiguous; (6) McIntyre's reasonable expectation was that it would lose only 25 percent of its premium upon cancellation; (7) the "contra-insurer" rule should apply; (8) the minimum earned and audit premium endorsement is unconscionable; and (9) the trial court abused its discretion by sustaining Interstate's objection to the declaration of Elliot Rothman. We affirm the judgment.
The following facts are taken from McIntyre's first amended complaint and associated exhibits. McIntyre sought a commercial general liability insurance policy for construction work it planned to perform on the Desert Springs Apartments, in Victorville (the project). Redlands Insurance Brokers (Redlands) prepared an insurance policy proposal (the proposal) for McIntyre. The proposal reflected that Interstate would issue a policy for McIntyre. The proposal provided: "The policy premium is subject to an annual audit and 25% minimum earned premium in the event of cancellation." The proposal also reflected that the policy was project specific and related to the project.
After the proposal, Interstate issued a commercial general liability policy to McIntyre for March 1, 2008, to March 1, 2009 (the policy). McIntyre paid $97,500 for the policy premium. The policy reflected that it related to "all locations" owned, rented, or occupied by McIntyre. In regard to construction projects, an endorsement attached to the policy reflected that the policy related to "All Projects."
In regard to refunds and cancellation of the policy, the "Minimum Earned Premium and Premium Audit Endorsement" section of the policy (the endorsement) provided: "Cancellation at the request of the first Named Insured: [¶] This policy is subject to a Minimum Earned Premium which is 25% of the premium for this policy as shown in the applicable Coverage Part(s) Declarations unless scheduled here otherwise: 25%. This Minimum Earned Premium is the least amount of premium we shall retain as earned premium, regardless of the term. If the first Named Insured cancels, the refund will be determined as follows: [¶] (1) If at the time of cancellation the earned premium is greater than the Minimum Earned Premium, the refund will be 90% of the pro rata return. [¶] (2) If at the time of cancellation the earned premium is equal to or less than the Minimum Earned Premium, the refund will be the premium paid in excess of the Minimum Earned Premium."
The "Minimum Earned Premium and Premium Audit Endorsement" went on to provide that if the policy were subject to a "premium audit" then the following paragraphs would be added to the terms of the policy: "Premium shown in the Commercial General Liability Coverage Part Supplemental Declarations as Advance Premium is a deposit premium only which will be credited toward the amount of earned premium. The Advance Premium is the minimum premium for the policy period, is payable in full at the inception of coverage and is not refundable. At the close of each audit period we will compute the earned premium for that period. Audit premiums are due and payable on notice to the first Named Insured. [¶] This policy has a minimum amount of premium that applies to the term of insurance as listed on the policy. Unless otherwise stated, the minimum premium is equal to the advance and deposit premium as shown in the declarations, adjusted for subsequent endorsements. In the event that audit premiums are greater than the advance and deposit premium, the additional premium is due and payable upon notice to the insured. If audit premiums are less than the deposit, then the Company shall retain the advance and deposit premium. [¶] Minimum Annual Premium is 100% of the advanced and deposit premium as stated in the policy declarations."
Construction on the project was scheduled to begin in September 2007; however, the start date was delayed due to the developer's and/or builder's inability to obtain financing. In September 2008, McIntyre canceled the policy, with an effective date of November 1, 2008. McIntyre canceled the policy, because the commencement of construction on the project was uncertain. Upon cancellation, Interstate retained approximately 85 percent of the premium. As to the breach of contract cause of action, McIntyre alleged, "[Interstate] breached the contract in that it failed to refund the full amount due to [McIntyre]."
On July 16, 2010, Interstate filed a motion for summary judgment. Interstate asserted, "The Premium Endorsement unambiguously provides that if, at the time the insured cancels the policy, the earned premium is greater than 25% of the premium shown on the declarations page, [then] the premium refund will be 90% of the pro rata return." Interstate asserted that it insured McIntyre's projects for 245 days of a 365-day policy, and thus provided insurance for 67.11 percent of the policy term. Thus, Interstate reasoned that McIntyre was entitled to 90 percent of the remaining 32.88 percent of premium money. Interstate asserted that it refunded this exact amount of money to McIntyre—$28,860—and therefore, Interstate did not breach the contract.
Further, Interstate asserted that it earned the premium because it was exposed to liability despite the project not being constructed. Interstate pointed out the policy was not project specific, and the evidence reflected that McIntyre had several other projects in progress during the policy period; therefore, Interstate was exposed to liability on those other projects. A portion of a deposition transcript was attached to the motion for summary judgment, which reflected McIntyre performed work for Centex Homes at approximately four different locations during 2008.
The "Commercial General Liability Coverage Form" included with the policy detailed the various items covered by the policy. Items included on the list were (1) "`personal and advertising injury'"; and (2) medical expenses for bodily injury (a) on premises owned or rented by McIntyre, (b) "on ways next to premises" owned or rented by McIntyre, or (c) caused by McIntyre's operations.
On September 29, 2010, McIntyre filed its opposition to the motion for summary judgment. First, McIntyre asserted that the plain language of the policy provided for a 75 percent refund upon cancellation of the policy. McIntyre pointed out that he was entitled to a 75 percent refund if Interstate was not exposed to any risk. McIntyre reasoned that since the project was never constructed, Interstate was not exposed to any risk, and therefore McIntyre should receive a 75 percent refund.
Second, McIntyre asserted that the endorsement was ambiguous, because "[t]he term `earned premium' does not have an ordinary and plain meaning that a layperson could rely upon when reading the endorsement." Further, McIntyre contended that the endorsement was ambiguous due to the second section of the endorsement, which concerned policies that were subject to premium audits. McIntyre explained that this second section caused the endorsement to be ambiguous because all commercial general liability policies that use Insurance Services Office forms are subject to audits.
Third, McIntyre contended that the endorsement must be interpreted "in the sense the insurance company reasonably believed the insured understood [it] at the time the policy was issued," if the terms are ambiguous. McIntyre asserted that the plain language of the endorsement reflected that 75 percent of the premium would be refunded if Interstate was not exposed to risk of liability. Thus, McIntyre reasonably expected that it would receive a 75 percent refund of the premium, since the project was never constructed and Interstate was not exposed to the risk of liability.
Fourth, McIntyre argued that the "`Contra-Insurer'" rule should apply in this case. McIntyre explained that if an insured had no reasonable expectations about an ambiguous policy term, then the terms should be construed against the insurer. McIntyre asserted that Interstate did not give him a copy of the policy until months after the policy was issued, and Interstate was responsible for the refund/cancellation language in the endorsement, so the policy should be deemed ambiguous and interpreted in favor of McIntyre.
Fifth, McIntyre contended that the endorsement was unconscionable, and therefore unenforceable. McIntyre argued that the endorsement was unconscionable because it was undecipherable and not provided to him at the time the policy was issued.
In a declaration attached to the opposition, Bruce McIntyre (Bruce),
Interstate filed a reply to McIntyre's opposition. Interstate asserted that the cancellation/refund terms of the policy were unambiguous, and subject to only one reasonable interpretation. Interstate argued that the refund policies did not relate to exposure or risk, but rather, related to the amount of time that had elapsed on the policy. Nevertheless, Interstate asserted that it was exposed to risk during the policy period because the policy covered all of McIntyre's operations, as opposed to a specific project.
As to unconscionability, Interstate asserted that the endorsement was not unconscionable because it provided greater refunds than required by the Insurance Code. Interstate contended that the Insurance Code allowed an insurer to not refund any of the premium once the policy period had commenced.
On October 13, 2010, the trial court held a hearing on Interstate's motion for summary judgment. At the hearing, the trial court said, "It would appear to me that . . . McIntyre has some sort of notion that this insurance policy was specific to a project. But there is nothing that points the court to that. It appears that it's a policy—a general policy that is from the year '08 to '09." Based upon that conclusion, the trial court said, "And then the rest just falls into place. There is no difficulty in calculating the amount of the pro rata entitlement to a return."
McIntyre argued that it was not claiming the policy was project specific. McIntyre then explained that the policy never exposed Interstate to any risk. The trial court again said, "It did not mention a specific project . . . ." The trial court explained that the policy covered a variety of risks for McIntyre for a 245-day period, so Interstate earned 245 days worth of the premium. The trial court stated, "I think the language is clear as to what is an earned premium."
McIntyre asserted that its other projects in 2008 were covered by other insurance policies, and therefore the Interstate policy did not cover those other projects. McIntyre argued that the Interstate policy explicitly excluded projects that were covered by other wrap-up insurance policies. McIntyre asserted that its other projects were covered by wrap-up insurance, and thus were excluded under the Interstate policy. Interstate argued that the evidence of other wrap-up policies could not be considered because it was introduced for the first time in the reply to the opposition. The trial court agreed with Interstate.
As a second point, Interstate asserted that since "off the record" evidence was being discussed, in McIntyre's responses to special interrogatories it "did not identify any sort of wrap policies as being applicable to any of the projects." As a third point, Interstate argued that the policy did not cover just construction, it also covered general business operations, including certain employment risks and advertising risks. The trial court reviewed the Commercial General Liability Coverage Form, which detailed the various items covered by the policy. The trial court then granted the motion for summary judgment.
For a variety of reasons, McIntyre asserts that the trial court erred by granting the motion for summary judgment. We disagree with McIntyre's contentions.
When reviewing a grant of summary judgment we "`independently examine the record in order to determine whether triable issues of fact exist to reinstate the action.' [Citations.] `In performing our de novo review, we view the evidence in the light most favorable to [McIntyre]' [citation], and we `liberally construe' [McIntyre's] evidence and `strictly scrutinize' that of [Interstate's] `in order to resolve any evidentiary doubts or ambiguities in [McIntyre's] favor' [citation]." (O'Riordan v. Federal Kemper Life Assurance Co. (2005) 36 Cal.4th 281, 284.)
Further, in independently reviewing the trial court's summary judgment ruling as it pertains to the dispute over interpreting provisions of the policy, we apply the rules governing the interpretation of insurance contracts. (County of San Diego v. Ace Property & Casualty Ins. Co. (2005) 37 Cal.4th 406, 414.) "`"`While insurance contracts have special features, they are still contracts to which the ordinary rules of contractual interpretation apply.' [Citations.] `The fundamental goal of contractual interpretation is to give effect to the mutual intention of the parties.' [Citation.] `Such intent is to be inferred, if possible, solely from the written provisions of the contract.' [Citation.] `If contractual language is clear and explicit, [then] it governs.' [Citation.]" [Citation.]'" (Id. at p. 415.)
First, McIntyre asserts the trial court erred by granting Interstate's motion for summary judgment because the plain language of the policy reflects that Interstate is not entitled to more than 25 percent of the premium. McIntyre contends that Interstate did not present any evidence that it assumed a risk under the policy. We interpret McIntyre's contention as follows: "The trial court erred by granting summary judgment because Interstate did not show it earned the premium." We infer from the overall context of the argument that McIntyre is not asserting a "plain language" contention. We disagree with McIntyre's contention.
Insurance Code section 482 is titled "Earned premium," and provides: "Except as provided by section 481, or by the insurance contract, if a peril insured against has existed, and the insurer has been liable for any period, however short, the insured is not entitled to return of premiums, so far as that particular risk is concerned." For the sake of judicial efficiency, we will assume without deciding, that McIntyre is correct that the term "earned premium" relates to an insurer being exposed to risk. Put differently, an insurer earns the premium by being exposed to potential liability, such that, if there was never a risk then the premium has not been earned.
The policy reflected that it covered: "All Locations" owned, rented, or occupied by McIntyre. The policy, in part, covered any bodily injuries that occurred on the premises owned or rented by McIntyre, on the "ways" next to those premises, and it covered bodily injuries that occurred as a result of McIntyre's business operations. Further, the policy covered "`personal and advertising injury.'" The policy terms define "personal and advertising injury" as including injuries caused by false arrest, malicious prosecution, wrongful eviction, slander, libel, violation of the right to privacy, use of another's advertising idea in McIntyre's advertisements, and infringing on a copyright.
There is evidence reflecting that McIntyre was doing business during the policy period: there is a declaration showing that McIntyre was working on construction projects, that it had an office, and that it employed an office manager. A section of the policy excluded coverage for any work involving condominiums or townhomes; however, Interstate showed that it was exposed to liability because it was covering McIntyre's risks during the policy period—McIntyre could have been sued for slander if it spoke ill of another framing company. Since Interstate was exposed to potential liability during the policy period, it earned the premium. Accordingly, we are not persuaded that the trial court erred by granting Interstate's motion for summary judgment.
McIntyre asserts it presented evidence that the only work it engaged in during the policy period was covered by separate wrap-up insurance policies, and therefore, Interstate was not exposed to potential liability. We do not find this argument to be persuasive because the policy covered more than just construction work—it covered general business operation risks.
McIntyre asserts Interstate did not present any evidence showing how the coverage, such as advertising coverage, exposed Interstate to potential liability, and therefore, Interstate was not entitled to summary judgment. It is unclear from McIntyre's contention exactly what evidence it believes Interstate should have provided. There is evidence reflecting that McIntyre was doing business during the policy period: there is a declaration showing McIntyre was working on construction projects, it had an office, and it employed an office manager. Given that McIntyre was operating a business with an office space, there was potential liability for bodily injury occurring on McIntyre's premises. Also, there was the potential for a lawsuit based on slander or libel. The policy was actively insuring these risks. Without a more detailed argument regarding the type of evidence that Interstate should have provided, we find McIntyre's assertion to be unpersuasive.
McIntyre argues the bodily injury coverage and advertising coverage were excluded in the Policy's "Prior Work Exclusion" and "Pre-Existing Damage Exclusions."
McIntyre asserts the language of the policy is ambiguous because there are alternative methods for determining the refund of a premium following the insured's cancellation of the policy. McIntyre points out that if the earned premium is less than or equal to 25 percent, then a 75 percent refund of the premium is issued. However, if the earned premium is more than 25 percent, then a refund is issued for 90 percent of the remaining premium, e.g., 90 percent of 33 percent. Yet, there is also a sentence in the policy that reads, "The Advance Premium . . . is not refundable." McIntyre further points out that its policy involved an advance premium, so technically it may not have been entitled to a refund. McIntyre asserts that the term "earned premium" refers to being exposed to "risk or peril." McIntyre then writes that it "does not dispute that once it is determined that Interstate has been exposed to risk or liability under the policy that Interstate is entitled to keep [the] premium in excess of the 25% minimum by determining the amount of time Interstate was on risk [sic], but risk must first exist."
Based upon the entirety of McIntyre's argument, despite starting with a supposed "ambiguity" contention, it appears McIntyre is reasserting the contention that Interstate was never exposed to peril, and thus did not earn any portion of the premium, which means McIntyre is entitled to a 75 percent refund. We have addressed this contention ante, and concluded that summary judgment was properly granted.
We note that at one point in the "ambiguity" section of appellant's opening brief, McIntyre asserts that the policy "never defines `earned premium.'" The problem with this assertion is that the law provides, "The fact that a term is not defined in the policies does not make it ambiguous. [Citations.]" (County of San Diego v. Ace Property & Casualty Ins. Co., supra, 37 Cal.4th at p. 415.) McIntyre does not cite this law or provide an explanation about how this law impacts its case. As set forth ante, we assumed that McIntyre's definition of "earned premium" was correct, for the sake of this opinion, but still concluded that summary judgment was properly granted. Thus, even if McIntyre's preferred definition of the term is applied, reversal is not warranted.
Under a separate point heading, McIntyre raises additional contentions related to the subject of ambiguity. First, McIntyre asserts, "The term `earned premium' does not have an ordinary and plain meaning that [a] layperson could rely upon when reading the endorsement." Second, McIntyre contends that all commercial general liability policies that use Insurance Services Office forms are subject to audits, so the 25 percent refund language is superfluous, i.e., refunds should never be issued. Third, Interstate's policy is so confusing that it issued a refund to McIntyre when it should not have done so, because McIntyre's policy was subject to an audit. McIntyre contends that since the endorsement "is ambiguous the Court should apply the reasonable expectation of the insured to determine how return of the premium was supposed to be handled and find that Interstate was not entitled to more than the 25% minimum in the event of cancellation."
As set forth ante, we applied McIntyre's preferred definition of term "earned premium." When that definition was applied, McIntyre's cause of action still failed, because the evidence only reflects that Interstate was actively exposed to risks during the policy period. Thus, we are not persuaded by McIntyre's contention, because even if McIntyre is correct, and its definition of "earned premium" should be applied, it is still not entitled to a 75 percent refund.
McIntyre asserts its objectively reasonable expectations of the policy terms should be applied because the terms of the policy are ambiguous. McIntyre asserts its reasonable expectation "was that in the event of cancellation, where no work began and thus no risk was incurred, the insurer would keep 25% of the premium." The flaw in this argument is that even if there were ambiguous terms in the policy, and McIntyre's reasonable expectation controlled the interpretation of the contract, Interstate was exposed to risk. Thus, summary judgment would still be proper, because Interstate earned the premium.
McIntyre asserts it did not receive a draft of the policy until months after the policy was issued, so it could not have reasonable expectations about the ambiguous policy provisions. Since McIntyre did not have reasonable expectations, it asserts that the ambiguous terms should be construed against the drafter, Interstate, and construed in favor of McIntyre. As explained ante, even if McIntyre's preferred definition of "earned premium" is applied, its breach of contract claim fails. Accordingly, we are not persuaded by this contention, because even if McIntyre is correct and its preferred definition is applied, reversal is not warranted.
McIntyre asserts the endorsement was unconscionable when the policy was issued, because it was undecipherable and not provided to McIntyre prior to being issued. "[T]he elements of a cause of action for breach of contract are (1) the existence of the contract, (2) plaintiff's performance or excuse for nonperformance, (3) defendant's breach, and (4) the resulting damages to the plaintiff. [Citation.]" (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.) If a contract or clause is unconscionable, then it is unenforceable. (Gatton v. T-Mobile USA, Inc. (2007) 152 Cal.App.4th 571, 579.) Thus, if we were to agree with McIntyre's contention, then McIntyre loses the first element of the breach of contract action because we would have to conclude that the relevant provisions are unenforceable. In other words, if McIntyre is correct that the endorsement is unconscionable, then it still has not established that the trial court erred by granting summary judgment on the breach of contract claim, because there would not be an enforceable endorsement, i.e., this argument would void the first element of a breach of contract claim.
McIntyre attached the declaration of Elliott Rothman (Rothman) to its opposition to Interstate's motion for summary judgment. In the declaration, Rothman explained that he has been a commercial general liability insurance broker for 43 years, and he has placed over 100 commercial general liability policies for general contractors. Rothman declared that he had been retained as an expert witness in over 100 cases. Rothman reviewed the policy at issue in this case. Rothman concluded, "The Endorsement has no `plain meaning' as the term `earned premium' has no definition. [McIntyre's] reasonable expectation was that `earned premium referred to work actually performed by [McIntyre] that would have been covered by the Policy." Rothman further concluded that the refund language of the endorsement was ambiguous. In all, Rothman's declaration was four pages long.
Interstate objected to various portions of Rothman's declaration. Interstate asserted Rothman's conclusion that the endorsement lacks a plain meaning was a "raw legal conclusion." Interstate further asserted that the declaration lacked foundation as to Rothman's definition of the term "`plain meaning.'" Interstate also argued that expert testimony regarding the plain meaning of policy language is inadmissible. Additionally, Interstate asserted that the declaration contained hearsay related to McIntyre's reasonable expectations. In all, Interstate raised 11 objections to various sections of Rothman's declaration. Most of those 11 objections asserted a variety of reasons for the objection, e.g., lack of foundation, hearsay, improper legal conclusion, etc. The trial court sustained all 11 objections, but did not explain its reasons for the rulings.
McIntyre contends: "The Declaration of Elliott Rothman is admissible extrinsic evidence to show the particular trade usage of insurance industry terms in the context of insurance industry standards. The Rothman declaration provides the Court with an expert opinion as to the common usage and meaning of terms within the insurance industry." McIntyre cites approximately two paragraphs of Rothman's declaration.
McIntyre does not explain which of the 11 objections were incorrectly ruled upon, and does not explain why the rulings were incorrect, e.g., there was an adequate foundation and the evidence was not hearsay. This court is not inclined to act as McIntyre's cocounsel on appeal, and furnish legal arguments as to how the trial court's 11 rulings might have constituted error. (Doe v. Lincoln Unified School Dist. (2010) 187 Cal.App.4th 1286, 1293.) The failure to provide relevant legal arguments forfeits the issue on appeal. (Los Angeles Unified School Dist. v. Cassola (2010) 187 Cal.App.4th 189, 212; People v. Stanley (1995) 10 Cal.4th 764, 793.) Since McIntyre has not provided relevant legal arguments, we deem the issue to be forfeited.
The judgment is affirmed. Respondent is awarded its costs on appeal.
