A Video Explaining Why an Agent is Not an Insurer

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Private Limitation of Action Provision is Enforceable

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The video is available at https://youtu.be/RvFP2j0Jpp4

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Frankie and Michael Cabral sued for breach of contract, insurance bad faith, conversion, and negligence after defendant Public Storage disposed of personal belongings that plaintiffs had placed in a leased storage unit. Plaintiffs appeal from summary judgment in favor of Public Storage, and also challenge the court\\u2019s sustaining of a demurrer without leave to amend based on a limitations provision contained in plaintiffs\\u2019 Lease Agreement.

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California courts accord contracting parties substantial freedom to modify the length of the statute of limitations. Courts will enforce an agreed upon limitations period that is shorter than what is otherwise provided by statute if the limitations period is reasonable. Reasonable in this context means the shortened period nevertheless provides sufficient time to effectively pursue a judicial remedy.

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The limitations provision in this case was clear. Plaintiffs were informed they had one year to commence an action for a claim based on lost or damaged property covered under the lease. The one-year period afforded plaintiffs adequate time to determine the damages resulting from the loss of stored property and to file a claim. Plaintiffs contended that the Lease Agreement and limitations provision were unconscionable. The issue whether a contract or provision is unconscionable is a question of law.

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Procedural unconscionability focuses on oppression or surprise due to unequal bargaining power. Substantive unconscionability refers to a provision involving terms that are so one-sided as to shock the conscience, or that impose harsh or oppressive terms. In light of Court of Appeal\\u2019s finding that the provision is reasonable, a fortiori the limitations provision is not substantively unconscionable.

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The Court of Appeal concluded that the 12-month limitations provision is reasonable and enforceable. As a general rule, a plaintiff may only sue for breach of an insurance contract and breach of the covenant of good faith and fair dealing against an insurer that is a party to the contract. The insurer\\u2019s agents and employees who are not parties to the insurance contract cannot be sued. (Gruenberg v. Aetna Ins. Co. (1973) 9 Cal.3d 566, 576; Filippo, supra, 74 Cal.App.4th at pp. 1442-1444).

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