A Video Explaining Why an Agent is Not an Insurer

Private Limitation of Action Provision is Enforceable

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

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’s sustaining of a demurrer without leave to amend based on a limitations provision contained in plaintiffs’ Lease Agreement.

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.

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.

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’s finding that the provision is reasonable, a fortiori the limitations provision is not substantively unconscionable.

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’s 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).


The California Court of Appeal reiterated two very important aspects of California law: First, only an insurer can be sued for the tort of bad faith. Second, one year is a reasonable time to require suit to be filed in a lease agreement or an insurance contract. The Plaintiffs simply had no possibility of succeeding in the suit because they settled with the insurer and insisted on going forward against the agent and the storage company after the expiration of the private limitation of action provision.

© 2020 – Barry Zalma

This video and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 52 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Read posts from Barry Zalma at https://parler.com/profile/Zalma/posts

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About Barry Zalma

An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
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