The Serbian Orthodox Church - School Congregation of Saint Petka v. Brotherhood Mutual Insurance Company et al

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF CALIFORNIA
THE SERBIAN ORTHODOX CHURCH
– SCHOOL CONGREGATION OF
SAINT PETKA,
Plaintiff,
v.
BROTHERHOOD MUTUAL
INSURANCE COMPANY, and DOES 1–
20,
Defendants.
Case No.: 3:24-cv-1375-CAB-KSC
ORDER GRANTING-IN-PART &
DENYING-IN-PART MOTION FOR
PARTIAL SUMMARY JUDGMENT
[Doc. No. 28.]
Before the Court is Defendant Brotherhood Mutual Insurance Company’s (“BMIC”)
motion for partial summary judgment. [Doc. No. 28.] Defendant seeks summary judgment
on Plaintiff Serbian Orthodox Church – School Congregation of Saint Petka’s (“St. Petka”)
second cause of action for breach of the implied covenant of good faith and fair dealing,
and claim for punitive damages. The matter is fully briefed. [Doc. Nos. 28, 31–32.] The
Court finds this matter appropriate for determination on the papers. 	See S.D. Cal. CivLR
7.1(d)(1). 	For the reasons below, the Court DENIES the motion for partial summary
judgment as to the second cause of action for breach of the implied covenant of good faith
and fair dealing, and GRANTS the motion as to the claim for punitive damages.
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I. 	BACKGROUND
This case stems from an insurance claim made by Plaintiff St. Petka under a
commercial ministry insurance policy issued by Defendant BMIC. 	[Doc. No. 21 at 3.]
That policy covered, inter alia, St. Petka’s church building, referred to as the Sanctuary,
for direct physical loss caused by a covered peril, including rain. [Id.; Doc. No. 28-1 at 6;
Doc. No. 28-8 at 264.] The relevant sections of the policy are the Broadened Building and
Personal 	Property 	Coverage 	Part 	and 	the 	Interior 	Building 	Damage 	Coverage
Endorsement. [Doc. No 28-1 at 6–8.] The former excluded any loss caused by neglect or
water leakage that continues for 14 days or more, and the latter excluded loss caused by
wear and tear. [Id. at 7.]
On February 1, 2023, St. Petka filed an insurance claim for water damage the
Sanctuary sustained from wind and rain on January 15, 2023. [Id. at 8; Doc. No. 31 at 8.]
St. Petka claimed that the rain and wind caused extensive water intrusion into the
Sanctuary, damaging its plaster walls and ceilings and fresco paintings. 	[Id.] 	BMIC
assigned the claim to senior adjuster Patrick Hurley (“Hurley”). [Id. at 11.] After initial
site inspections by both St. Petka and BMIC, Hurley sent a letter discussing potential bars
to coverage and requesting further information and documents from St. Petka. [Doc. No.
28-7 at 585–94.]
Over the course of the next seventeen months, the parties exchanged additional
letters and responses to no avail. BMIC variably sought reports, documents, information,
photographs, and/or videos specifically concerning (1) repairs made following a previous
claim from 2017 for water damage to the parsonage (a separate building), (2) repairs made
to the Sanctuary following the 2023 water damage claim, (3) GoFundMe donations given
to St. Petka for repairs, and (4) efforts to protect the Sanctuary from water damage. [See,
e.g., Doc. No. 28-8 at 3–5, 145–49; Doc. No. 28-7 at 592–93.] 	St. Petka argues that
documentation for the 2017 claim is irrelevant and that BMIC made other irrelevant
requests like identities of St. Petka’s GoFundMe donors and documentation for buildings
other than the Sanctuary. [Doc. No. 31 at 10.]
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With no resolution reached, St. Petka sued on August 2, 2024 for breach of contract
and breach of the implied covenant of good faith and fair dealing. 	On October 8, 2025,
based on photographs and videos acquired during the course of litigation and testimony by
St. Petka’s priest and former president, BMIC ultimately acknowledged that a portion of
St. Petka’s claim for water damage to the interior of the Sanctuary was covered and issued
a payment of $543,711.73. [Doc. No. 28-8 at 260–265.] St. Petka contends, however, that
BMIC’s payment was both too little and too late.1 [Doc. No. 31 at 6.] 	They argue that
BMIC unreasonably delayed the claim, failed to properly investigate it, and inadequately
supervised their assigned claim adjusters. [Id. at 6–7.] BMIC counters that it reasonably
relied on expert opinions, St. Petka repeatedly failed to provide information necessary for
claim adjudication, and that St. Petka provided inconsistent information. [Doc. No. 28-1
at 17–25.]
A. 	Timeline of the Claim
i. 	Initial Correspondence and Investigations
On January 15, 2023, the Sanctuary’s interior was damaged after a heavy wind and
rain storm. 	St. Petka hired David Melzer (“Melzer”), a public adjuster, to assess the
damage and assist with their policy claim. On February 1, 2023, St. Petka filed its claim,
and Melzer interviewed St. Petka’s priest and former president who both stated they had
seen water raining down in the Sanctuary amid a heavy rain and windstorm. [Doc. No. 31
at 8.] 	Melzer himself also observed water damage on the domes, ceiling surfaces, and
fresco in the Sanctuary, and ultimately determined it was due to the reported event. [Id at
8, 10.] Meanwhile, BMIC assigned the claim on their end to senior desk adjuster Patrick
Hurley (“Hurley”). [Doc. No. 31 at 10.]
On February 14, 2023, Robert Wahnon (“Wahnon”), BMIC’s assigned field
adjuster, inspected St. Petka’ property. 	Wahnon noted interior damage to the Sanctuary
1 St. Petka claims approximately $926,000 in interior Sanctuary damage, exclusive of attorney fees and
costs, statutory interest, and any damages recoverable for bad faith. [Doc. No. 31 at 6.]
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that may have been due to long-term water damage and “water stains that may have
happened multiple times” as opposed to solely from the reported event. [Doc. No. 28-7 at
19.] BMIC subsequently retained Doru Botic (“Botic”), a forensic engineer, who inspected
the property, confirmed water damage to the interior of the Sanctuary, noted there were
signs of long-term water intrusion in the Sanctuary’s attic, and concluded that the roof was
damaged prior to the reported event. [Id. at 540–44.]
On March 1, 2023, BMIC also retained Paul Nilles (“Nilles”), a construction
consultant, who in turn retained Joe LoBasso (“LoBasso”), a forensics consultant, to
determine the extent of moisture damage to the dome of the Sanctuary. 	On March 13,
2023, LoBasso inspected the Sanctuary with Melzer present and concluded that moisture
damage to the lower section of the dome was indicative of long-term moisture intrusion.
[Id. at 522, 529.] On March 20, 2023, Melzer submitted photographs from October 2022
to LoBasso and BMIC, which Melzer described as “showing the ceiling in pristine
condition” and would thus contradict LoBasso’s opinion. 	[Id. at 569; Doc. No. 31 at 9–
10.]
On March 21, 2023, Melzer submitted St. Petka’s proof of loss to BMIC with the
reported date of loss of January 15, 2023 crossed out and replaced with a handwritten
January 1, 2023. 	[Doc. No. 28-7 at 577.] 	On April 24, 2023, Melzer sent a notice of
demand to BMIC noting that BMIC had issued no payment, status letter, or reservation of
rights, and requesting all photos and reports by BMIC’s adjusters and vendors. [Id. at 581.]
ii. 	BMIC Requests Additional Information
On April 25, 2023, BMIC sent Melzer a reservation of rights letter, which (1) stated
the 	investigation 	was 	ongoing, 	(2) 	outlined 	the 	facts 	BMIC 	knew 	based 	on 	the
aforementioned inspections, (3) highlighted possible coverage exclusions based on the
inspections, and (4) requested information and documents related to a prior 2017 claim,
any preventative water intrusion measures and repairs made following the 2017 claim, any
work done on the Sanctuary in February 2023, and an accounting of donations made to St.
Petka for repairs. [Id. at 585–94.]
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On May 8, 2023, Hurley sent Melzer a letter acknowledging Melzer’s April 24 letter
and stating that the investigation was ongoing and that BMIC would provide Melzer with
required photos and reports by May 24, 2023. [Id. at 596.] On June 2, 2023, Hurley sent
Melzer 	certain photos and reports and reiterated BMIC’s request for the previously
requested information and documents. [Id. at 598.]
iii. 	St. Petka Retains Counsel and a Forensics Firm
St. Petka eventually retained counsel and on July 14, 2023, attorney Erika Alba
(“Alba”) sent a notice of representation to BMIC. [Doc. No. 28-7 at 600.] Alba requested
the insurance policy, any coverage determinations, and that all further communications be
directed through her. [Id.] On July 25, 2023, Hurley acknowledged Alba’s letter, sent the
policy, and informed her that BMIC had not completed its investigation because St. Petka
had not provided the information requested in previous letters. [Doc. No. 28-8 at 3.] On
September 8, 2023, Hurley followed up on the July 25, 2023 letter and again sought the
requested information. [Id. at 7.]
On December 6, 2023, Alba sent Hurley a letter seeking reevaluation of BMIC’s
coverage determination2 for only the interior of the Sanctuary, specifically the plaster
walls, ceiling, fresco, and light fixtures—not the roof.3 [Id. at 9–10.] She also argued that
St. Petka’s 2017 claim concerned damage in a different building than the 2023 claim and,
if BMIC disagreed, requested all information on the 2017 claim that BMIC had. 	[Id.]
Finally, Alba stated that St. Petka retained Forensic Building Science (“FBS”) to inspect
the Sanctuary’s damage and included FBS’s report which found that the damage to the
Sanctuary was consistent with a wind and rain event that occurred on January 15, 2023 and
was not pre-existing water damage. [Id. at 10, 14.]
2 Alba mentioned that Hurley’s September 8 letter denied coverage, however nothing in the letter
suggested that BMIC had made a final decision.
3 St. Petka’s initial claim also sought coverage for the parsonage, which was a separate building on the
Church’s property. The parties make clear that only coverage for the Sanctuary is at issue in this litigation.
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On January 15, 2024, Hurley replied to Alba’s December 6 letter that BMIC was
investigating the FBS report and that St. Petka still had not provided the information and
documentation BMIC previously requested. 	[Id. at 143.] 	On May 6, 2024, Hurley
followed up and told Alba and Melzer that the December 6 letter and FBS report provided
some but not all of the information and documentation that BMIC was seeking. [Doc. No.
28-8 at 145.] 	Moreover, based on new facts raised by the December 6 letter and report,
Hurley made additional requests including 100 pre-claim photos from October 2022 that
St. Petka had provided to FBS and information concerning a tarp on the Sanctuary’s roof
that was meant to protect the interior. [Id. at 146–49.] Hurley also noted that his September
8 letter did not deny coverage as Alba had suggested but only followed up on the requests
for information. [Id. at 146.]
On May 29, 2024, BMIC sent a letter to Melzer in response to a complaint he filed
on May 3, 2024 with the California Department of Insurance over BMIC not providing
certain documentation. BMIC argued that part of the information that Melzer sought was
from the previous 2017 claim, which BMIC was no longer required to maintain, and that
the information for the 2023 claim was provided. [Id. at 151–52.]
On June 13, 2024, Alba replied to Hurley’s May 6 letter and addressed every
question and request made. [Doc. No. 28-8 at 155–59.] She explained, inter alia, how the
light fixtures and fresco sustained damage, that seal ice and water guards—not a tarp—was
actually used to protect the roof, the 2017 claim concerned damage to the “Hall” while the
2023 claim concerned damage to the “Church”, the GoFundMe donations were to offset
funds lost due to COVID shutdowns not for repairs. [Id.] Alba also provided the 100 pre-
claim photographs from October 2022 and hundreds of documents relating to repairs made
following the 2017 claim. [Id.]
On July 3, 2024, Hurley acknowledged the June 13, 2024 letter and stated again that
BMIC needed all photographs and videos of the church building before the claimed date
of loss. [Doc. No. 28-8 at 161.] 	Moreover, Hurley stated that BMIC understood that the
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2017 claim did not involve the church building, but it did involve the parsonage. However,
St. Petka withdrew the 2023 claim relating to the parsonage seven months earlier.
iv. 	St. Petka Files Suit
On August 2, 2024, St. Petka filed this lawsuit. 	In October 2024, Peter Kujak
(“Kujak”), a BMIC senior manager and Hurley’s supervisor, placed Hurley on limited
duties because he was having trouble getting things completed properly and timely. [Doc.
No. 31-2 at 134–35.] In November 2024, Kujak was assigned to St. Petka’s claim. [Id. at
17.] In December 2024, Hurley was fired because of diminished mental capacity. [Id. at
133.] 	On January 9, 2025, Kujak sent Alba a letter once again summarizing the claim,
relevant known facts, and status of the ongoing investigation. [Doc. No. 28-8 at 221–28.]
In August 2025, St. Petka produced additional photographs and videos and a revised
estimate from FBS that excluded damage that St. Petka’s presidents said was never meant
to be part of the claim. 	[Doc. No. 28-1 at 14.] 	That month, BMIC also retained Todd
Martin (“Martin”), a forensics consultant, to evaluate the information BMIC had obtained
so far. [Doc. No. 28-1 at 20.] Martin concluded that the “moisture-related interior finish
distress at the [Sanctuary] was primarily the result of removed/missing metal panel roofing
over an extended period of time, in conjunction with multiple storm events.” 	[Doc. No.
28-8 at 338.]
On October 8, 2025, Kujak sent Alba a coverage explanation letter and a check for
$543,711.73. [Doc. No. 28-8 at 260–65.] Kujak explained that BMIC agreed to pay for
the interior water damage to the Sanctuary caused by rain on January 15, 2023 based on:
(1) testimony from St. Petka’s presidents that they saw water seeping through the fresco
and that the GoFundMe for roof repairs related to the main entrance which was not
supposed to be part of the claim, (2) the updated FBS estimate which removed the main
entrance from the total amount sought, and (3) the photographs and videos produced in
August 2025. [Id. at 265.] Regarding the photographs and videos, Kujak stated that though
they were not time stamped, BMIC understood from a St. Petka president’s testimony that
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they were taken immediately after the leak was discovered and that they show a large
amount of rain entering the Sanctuary. [Id.]
II. 	LEGAL STANDARD
Summary judgment is appropriate when “there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(a). 	A fact is material only if it could affect the outcome of the case under governing
law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A factual dispute is
“genuine” when it could “lead a rational trier of fact to find for the non-moving party[.]”
Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
The moving party bears the initial burden of identifying relevant portions of the
record that demonstrate the absence of a fact or facts necessary for one or more essential
elements of each claim upon which the moving party seeks judgment. 	Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986). 	Where the moving party meets its initial burden, the
opposing party must then set out specific facts showing a genuine issue for trial to defeat
the motion. 	Anderson, 477 U.S. at 248. 	Reasonable inferences must be drawn in the
nonmoving party’s favor, but such inferences are limited to those upon which a reasonable
jury might return a verdict. 	U.S. ex. rel. Anderson v. N. Telecom, Inc., 52 F.3d 810, 815
(9th Cir. 1995).
III. 	DISCUSSION
BMIC asserts that it did not breach the implied covenant of good faith and fair
dealing, or act in bad faith, because there was a genuine dispute as to whether St. Petka’s
claim was covered. 	[Doc. No. 28-1 at 5.] 	St. Petka counters that the record shows
unreasonable conduct by BMIC which creates a triable issue of fact for a jury. [Doc. No.
31 at 5.]
A. 	California Law
To establish a breach of the implied covenant of good faith and fair dealing, an
insured must establish that (1) benefits due under the policy were withheld, and (2) the
reason for withholding benefits was unreasonable or without proper cause. 	Love v. Fire
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Ins. Exch., 221 Cal.App.3d 1136, 1151 (1990). “While an erroneous denial of a claim may
constitute a breach of contract, it does not by itself support tort liability.” 	LG Infocomm
U.S.A., Inc. v. Euler Am. Credit Indem. Co., 419 F.Supp.2d 1248, 1254 (S.D. Cal. 2005).
Rather, tort liability will result “[w]hen the insurer unreasonably and in bad faith withholds
payment of the claim of its insured.” 	Frommoethelydo v. Fire Ins. Exch., 42 Cal.3d 208,
214–215 (1986).
However, 	the 	“genuine-dispute 	doctrine 	is 	an 	affirmative 	defense 	to 	a bad-
faith claim. Under the doctrine, ‘an insurer denying or delaying the payment of policy
benefits due to the existence of a genuine dispute with its insured as to the existence of
coverage 	liability 	or 	the 	amount 	of 	the insured’s coverage 	claim 	is 	not 	liable
in bad faith even though it might be liable for breach of contract.’” 	Fed. Ins. Co. v.
Tungsten Heavy Powder & Parts, Inc., 654 F.Supp.3d 1086, 1109 (S.D. Cal. 2023)
(quoting Wilson v. 21st Century Ins. Co., 42 Cal.4th 713, 723 (2007)). 	“In evaluating
whether an insurer acted in bad faith, the critical issue is the reasonableness of the insurer’s
conduct under the facts of the particular case.” 	McGranahan v. GEICO Indem. Co., 714
F.Supp.3d 1187, 1194 (C.D. Cal. 2024) (citing Pinto v. Farmers Ins. Exch., 61 Cal.App.5th
676, 786 (2021)).
Neither party has moved for summary judgment on the breach of contract claim. As
such, there remains a question of material fact as to whether benefits due under the policy
were withheld and/or delayed—the first prong of the bad faith claim. Acknowledging this
awkward posture, other courts have elected to focus on the second prong and whether the
withholding of benefits due, if any, was reasonable. See Bravo v. U.S. Life Ins. Co. in City
of N.Y., 701 F.Supp.2d 1145, 1159 (E.D. Cal. 2010) (“[B]ecause there is a material question
regarding breach of contract, there is necessarily also a material question as to whether
benefits due were withheld. The court therefore looks to whether defendant is entitled to
summary judgment on the issue of reasonableness.); Schafer v. Allstate Ins. Co., No. S-08-
827-LKK-DAD, 	2009 	WL 	1505302, 	at 	*7 	(E.D. 	Cal. 	May 	27, 	2009) 	(similar).
Accordingly, the Court elects to do the same here.
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B. 	Reasonableness of BMIC’s Conduct
i. 	BMIC’s Initial Burden
The Court finds that BMIC carries its initial burden to show that its handling of St.
Petka’s claim was reasonable. BMIC highlights three bases in the record: (1) reliance on
expert opinions that the claimed damage was due to long-term water intrusion which the
policy did not cover, (2) St. Petka not providing all requested information, and (3)
inconsistencies in the information that St. Petka did provide. [Doc. No. 28-1 at 17.]
1. 	Expert Opinions
A court may find that bad faith does not exist where “an insurer relies on the advice
and opinions of experts to deny or delay payment of a claim.” Cosmero v. State Farm Mut.
Auto. Ins. Co., No. CIVS-06-CV-276-DFL-KJM, 2007 WL 1345473, at *3 (E.D. Cal. May
8, 2007), as amended (May 15, 2007) (citing Chateau Chamberay Homeowners Ass’n v.
Associated Int’l Ins. Co., 90 Cal.App.4th 335, 348 (2001)).
BMIC notes that it retained four independent forensic consultants—Botic, LoBasso,
Nilles, and Martin—to assist with investigating the claim. Botic inspected the Sanctuary
and concluded that the Sanctuary’s roof was damaged prior to January 15, 2023 based on
“advanced degradation of the roof sheathing and dry rot (plywood board perforations).”
[Doc. No. 28-7 at 540.] LoBasso evaluated the Sanctuary’s main dome and concluded that
moisture stains within it were due to “long-term and repeated exposure to moisture
intrusion.” 	[Id. at 531.] 	Nilles compared pre- and post-January 15, 2023 photographs,
which he found suggested that the Sanctuary “is experiencing ongoing water infiltration
dating back to if not before 2022.” [Doc. No. 28-8 at 350.] Finally, Martin analyzed photos
and a site evaluation report and concluded that some moisture damage in the Sanctuary
was due to multiple storm events that occurred over an extended period of time rather than
just the January 15, 2023 event. [Id. at 338.]
These expert opinions suggest at least some of the claimed water damage may have
resulted from excludable causes. 	See Brackett v. Travelers Prop. Cas. Co. of Am., No.
2:23-CV-555-DJC-AC, 2025 WL 1549033, at *6 (E.D. Cal. May 30, 2025) (“As courts
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have found, genuine disputes exist where denial or delay of a claim [was] based on expert
opinion.”).
2. 	Further Information Needed
“[T]here 	can 	be 	no 	unreasonable 	delay 	‘until 	the 	insurer 	receives 	adequate
information to process the claim and reach an agreement with the insureds.’” 	Id. at *4
(quoting Globe Indemn. Co., v. Superior Court, 6 Cal.App.4th 725, 732 (1992)). 	BMIC
sought varying information and documents, including photos of the Sanctuary from before
the claim date, through approximately nine letters sent to St. Petka between April 2023 and
January 2025. BMIC claims that this information was needed to adjudicate the claim, and
that once it received it through the discovery process, it completed its investigation and
issued the coverage decision and payment.
3. 	Inconsistencies
Finally, BMIC argues there were three inconsistencies in St. Petka’s claim.
California courts have found no bad faith where the insured’s claim had “material
misrepresentations and several inconsistencies[.]” 	Hodjat v. State Farm Mut. Auto. Ins.
Co., 211 Cal.App.4th 1, 9 (2012).
First, St. Petka changed the date of the claim on its proof of loss from January 15 to
January 1, 2023, which meant damage on January 15, 2023 may have been excluded from
coverage, before changing it back to January 15 in letters that Alba sent. Second, St. Petka
changed the reported cause of loss from wind that damaged the roof, to wind that blew off
a tarp, to water penetrating or wind blowing off ice/water guards that led to water intrusion
into the Sanctuary. And third, BMIC highlights that Melzer initially claimed photographs
from October 2022 showed the ceiling in pristine condition despite the fact that the FBS
report depicted prior water stains from 2022, as well as other October 2022 photos that
BMIC received during discovery. [Doc. No. 28-1 at 25.]
In total, the aforementioned evidence identified by BMIC suffices to carry its burden
of production and “negat[e] an essential element of [St. Petka’s] claim[.]” 	Jones v.
Williams, 791 F.3d 1023, 1030–31 (9th Cir. 2015). Accordingly, the burden now shifts to
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St. Petka to set out specific facts showing there is a genuine issue as to the reasonableness
of BMIC’s conduct.
ii. 	St. Petka’s Burden
St. Petka argues that a jury could find BMIC’s handling of the claim was
unreasonable based on, inter alia, evidence that BMIC’s investigation was inadequate and
that it did not need information that it repeatedly sought from St. Petka. The Court agrees.
1. 	Inadequate Investigation
St. Petka contends that BMIC’s investigation of the claim was inadequate because
BMIC could have sought testimonies it relied on to adjudicate the claim far earlier, Hurley
was an incompetent adjuster, and Kujak neglected St. Petka’s claim.
“[I]t is essential that an insurer fully inquire into possible bases that might support
the insured’s claim.” 	Egan v. Mut. of Omaha Ins. Co., 24 Cal.3d 809, 819 (1979). 	An
insurer’s investigation is unreasonable where it “fails to consider, or seeks to even
discover,” relevant evidence. 	Duitch v. Travelers Ins. Co., No. 16-CV-5625-PSG-JCX,
2017 WL 3579695, at *5 (C.D. Cal. Aug. 1, 2017) (citing Mariscal v. Old Republic Life
Ins. Co., 42 Cal. App. 4th 1617, 1624 (1996)). 	Indeed, “an insurer is not entitled to
summary judgment if a reasonable jury could conclude that the insurer acted unreasonably,
and thus in bad faith, by failing to fully inquire into possible bases that might support the
insured’s claim.” 	Id. at *6. “[T]he reasonableness of an insurer’s claims-handling conduct
is ordinarily a question of fact.” 	Amadeo v. Principal Mut. Life Ins. Co., 290 F.3d 1152,
1161 (9th Cir. 2002) (citations and quotation marks omitted) (alteration in original).
In his October 8, 2025 letter, Kujak stated that BMIC found coverage for St. Petka’s
claim based in part on testimony from St. Petka officials that they saw water enter the
building on January 15, 2023, and seep through the fresco. 	[Doc. No. 28-8 at 265.]
Although the claim was initially filed in February 2023, the officials’ depositions did not
take place until May 2025, [Doc. No. 28-10 at 191, 207], and July 2025, [Doc. No. 31-2 at
77]. St. Petka officials had highly relevant information from the beginning—as evidenced
by the coverage decision partially resting upon what they shared—and that fact should have
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been obvious to BMIC. A jury could find BMIC unreasonably delayed the claim by not
seeking and considering testimony from these officials earlier.
St. Petka also takes issues with the adjusters assigned to their claim. They argue that
Hurley was an incompetent adjuster and BMIC failed to supervise him. 	To begin, they
note that Hurley failed to complete a required status report on St. Petka’s claim until over
a year from when it was initially due. [Doc. No. 31 at 11.] Hurley also repeatedly sought
information on the 2017 claim, which concerned the parsonage, and not the Sanctuary, well
after St. Petka withdrew its claim for coverage for the parsonage. 	St. Petka argues that
BMIC was on notice of Hurley’s performance issues long before he was terminated but
failed to supervise him or take earlier action. For example, BMIC received between 10–
20 complaints about Hurley from other customers from approximately February 2024
through November 2024. 	He suffered memory loss from a stroke in August 2024, was
placed on limited duties in October 2024, and fired in November 2024 for performance
issues.
Additionally, St. Petka asserts that Kujak—Hurley’s replacement—neglected the
claim after being assigned to it in November 2024. Kujak states that until he prepared for
his deposition in this case on May 29, 2025, all he did was speak with Wahnon and Nilles
for a brief status update in November 2024 and review the January 2025 letter that BMIC
sent to St. Petka. [Doc. No. 31-2 at 16.] Kujak did not read the policy-at-issue, the FBS
report, or any of the forensic consultants’ reports until he prepared for his deposition in this
case on May 29, 2025. 	[Doc. No. 31 at 13–14.] 	Nor did Kujak ever discuss the reports
with any of their authors. St. Petka argues that effectively no BMIC adjuster was working
on St. Petka’s claim from November 2024 until May 2025.
BMIC replies that (1) St. Petka ignores the January 2025 letter sent by Kujak, (2)
other BMIC employees were investigating the claim, and (3) after the lawsuit was filed
BMIC had to conduct its investigation through counsel via formal discovery. 	[Doc. No.
32.] 	Though Kujak did sign the January 2025 letter, his deposition indicates he only
reviewed the letter before it was sent—implying he did not write it. [Doc. No. 31-2 at 16.]
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BMIC also does not explain what any other BMIC employee was doing on the claim.
Further, even if other BMIC personnel were involved and if BMIC had to conduct further
investigation through counsel, BMIC concedes that Kujak, as the adjuster, was still the
only one who could make all final coverage decisions. [Doc. No. 28-6 at 7.]
2. 	BMIC Seeks Unnecessary Documentation
Another stated basis for coverage in Kujak’s October 8, 2025 letter was that BMIC
finally received long-sought photos and videos from St. Petka on August 19, 2025.
Throughout the investigation, BMIC repeatedly requested photographs and videos of the
Sanctuary from before January 15, 2023. 	[Doc. No. 28-8 at 262.] 	Indeed, St. Petka’s
purported failure to provide pre-loss documentation is one of the major bases upon which
BMIC’s argument for reasonableness rests. BMIC, however, ultimately did not need every
photograph and video from before the loss date to find coverage.
In the October 8, 2025 letter, Kujak acknowledged that the photographs and videos
provided by St. Petka on August 19, 2025 were not time stamped, but that BMIC
understood that they were taken immediately after the water intrusion on the loss date based
on testimony by former St. Petka president. 	Thus, BMIC was able to reach its coverage
decision without having photographs and videos that pre-dated the loss date. 	See Chalal
v. United Fin. Cas. Co., No. 2:25-CV-00037-TLN-SCR, 2025 WL 2779769, at *4 (E.D.
Cal. Sept. 30, 2025) (“While there can be no unreasonable delay until the insurer receives
sufficient information to process a claim, there may be unreasonable delay when an insurer
is in receipt of sufficient information to render a coverage determination.” (internal citation
and quotation marks omitted)).
However, even if BMIC received photographs and videos on August 19, 2025 that
were pre-loss, and relied on them, St. Petka had already provided 100 pre-loss photographs
from October 2022 earlier on June 13, 2024, in response to a request by Hurley. [Doc. No.
28-8 at 158–59.] 	Hurley confirmed receipt of the pre-loss photographs in a follow-up
letter but again simply reiterated a request for all pre-loss photographs and videos. Neither
Hurley then, nor BMIC now, explained how those 100 pre-loss photographs were
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insufficient or what BMIC needed to see in additional pre-loss photographs/videos to
adjudicate the claim. Moreover, St. Petka flags in its opposition that it sent four, 2022 pre-
loss photographs of the Sanctuary’s interior to Hurley and BMIC even earlier on March
20, 2023, which it argued showed the ceiling in pristine condition. Although BMIC now
argues that other photographs they acquired later show prior water stains within the interior
of dome, during the investigation of the claim they did not acknowledge nor appear to
investigate or follow up on those four pre-loss photographs. See Mariscal, 42 Cal.App.4th
at 1623 (“A trier of fact may find that an insurer acted unreasonably if the insurer ignores
evidence available to it which supports the claim. The insurer may not just focus on those
facts which justify denial of the claim.”).
Ultimately, the Court finds that St. Petka carries its burden to show that there is a
genuine issue as to whether BMIC’s handling of St. Petka’s claim was reasonable. Indeed,
St. Petka has sufficiently shown that a jury could conclude BMIC’s conduct was
unreasonable based on the totality of the evidence, which includes failing to seek crucial
information earlier, Hurley’s and Kujak’s performances as adjusters, and BMIC delaying
adjudication because it purportedly required all pre-loss photographs/videos when it
eventually found coverage without relying on them and was already provided over 100 pre-
loss photographs. 	See Shade Foods, Inc. v. Innovative Prod. Sales & Mktg., Inc., 78
Cal.App.4th 847, 879 (2000) (“Among the most critical factors bearing on the insurer’s
good faith is the adequacy of its investigation of the claim.”).
C. 	Punitive Damages
BMIC argues that even if the Court denies summary judgment as to the bad faith
cause of action, punitive damages are not warranted. The Court agrees.
“[T]he evidence required to support an award of punitive damages for breach of the
implied covenant of good faith and fair dealing is ‘of a different dimension’ from that
needed to support a finding of bad faith. A marginally sufficient case of bad faith is not
likely to prove malice or oppression by clear and convincing evidence.” Id. at 909–10.
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The evidence St. Petka relies on in support of punitive damages is the same which it
relied on for its bad faith argument. That evidence is insufficient; BMIC’s conduct simply
cannot “be described as evil, criminal, recklessly indifferent to the rights of [St. Petka], or
with a vexatious intention to injure.” Tomaselli v. Transamerica Ins. Co., 25 Cal.App.4th
1269, 1288 (1994). Accordingly, the Court GRANTS summary judgment on the issue of
punitive damages and DISMISSES the claim.
IV. 	CONCLUSION
For the reasons above, the Court finds that there is a genuine dispute as to whether
BMIC’s handling of St. Petka’s insurance claim was reasonable. Accordingly, the Court
DENIES the motion for partial summary judgment as to the claim for breach of the
covenant of good faith and fair dealing. Regarding punitive damages, the Court GRANTS
summary judgment.
It is SO ORDERED.
Dated: March 19, 2026
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