City of Hollister v. Monterey Insurance

An old municipal building at the Hollister airport caught fire. The City of Hollister (City) sought to recover the building’s “functional replacement value” under an insurance policy issued by Monterey Insurance Company (MIC). The policy provided that if City wished to recover such benefits, it must enter into a contract to repair or replace the building within 180 days after the fire. Throughout this period, however, MIC refused to confirm that it would honor such a claim, raised spurious grounds for its denial, delayed in communicating basic determinations affecting coverage, refused to disclose its best estimate of the functional replacement value, permitted City to labor under misapprehensions concerning its rights under the policy, and ignored communications from City seeking clarification of these and other matters. As the time to enter into a contract neared expiration, City brought this action to declare that MIC was estopped to assert the contracting provision in light of its own failure to cooperate in City’s performance of the condition. The trial court found for City, and MIC appealed. To avoid a suggestion of mootness, we will modify the judgment to reflect…