Cheeks

Wlien Orenzo Cheeks’s house was damaged in the 1994 Northridge earthquake his insurer, defendant California Fair Plan Association (CalFair) compensated him under his “actual cash value” policy in the amount necessary to repair the damage minus an allowance for depreciation. Cheeks sued CalFair claiming breach of contract, bad faith, fraud, and infliction of emotional distress. The trial court approved CalFair’s method of calculating actual cash value under the policy, confirmed an arbitration award based thereon and granted CalFair’s motion for summary judgment. Cheeks appeals from the summary judgment and the order confirming the arbitration award. We reverse.

Facts and Proceedings Below

The parties agree there are no material issues of fact.

Prior to January 1994, Orenzo Cheeks purchased an indemnity policy from CalFair covering damage to his home including damage caused by earthquake. The loss settlement provision of the policy states: “Covered property losses are settled at actual cash value at the time of loss but not more than the amount required to repair or replace the damaged property.” Such a policy is commonly referred to as an “actual cash value”…