Agent Cannot be Sued as an Insurer

One Year Private Limitation of Action Provision Enforceable, Fair, and Reasonable

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.


In Frankie Cabral et al. v. Public Storage, B294798, Court Of Appeal Of The State Of California Second Appellate District Division Four (April 10, 2020) Frankie helped her son, Michael, rent a self-storage unit at a Public Storage facility so he could store household goods and woodworking supplies. After they arrived at a Public Storage Frankie selected $3,000 in coverage and paid for the rental unit and insurance at the same time. New Hampshire, as the insurance company under the policy, appointed PSCC, Inc. (PSCC) as its producer and claims adjuster.

A Public Storage manager accused Michael of violating facility rules and informed plaintiffs they were prohibited access except for a supervised visit to vacate their belongings. The Cabral’s did not remove their goods so Public Storage did. The Cabrals alleged employees broke into the unit, “stole whatever property had economic value and discarded the rest.”

Frankie made a claim for burglary and vandalism under the storage unit insurance with PSCC. New Hampshire’s claims investigators denied Frankie’s claim because the unit was repossessed as an eviction.

The Lease Agreement, Addendum, and Certificate of Storage Insurance

Attached to the operative complaint were a Lease Agreement, an Insurance Addendum, and a Certificate of Storage Insurance. The agreement provided, among other things, that any claim or suit shall be barred unless Occupant commences an action “within twelve (12) months after the date of the act, omission, inaction or other event that gave rise to such claim, demand, right or defense.” (Italics added.)

The Demurrer, Opposition, and Reply

In its demurrer to the conversion and negligence causes of action Public Storage contended the claims were barred by the 12-month limitations period set forth in the Lease Agreement. Public Storage alleged that because the suit was filed more than twelve months after disposition of the property. plaintiffs’ claims arising from the lease were time-barred.

The trial court sustained the demurrer without leave to amend, finding the limitation clause in the lease was valid. The court rejected plaintiffs’ arguments against enforcing the clause.

Public Storage’s Motion for Summary Judgment

Public Storage filed a motion for summary judgment. Public Storage argued that it could not be held liable on the causes of action because it was not contractually obligated to provide insurance coverage under the New Hampshire policy.

Public Storage submitted two employee declarations in support of its motion. Public Storage and PSCC do not share a corporate affiliation with New Hampshire or its claims manager, Sedgwick Claims Management Services, Inc. (Sedgwick). Plaintiffs purchased an insurance policy that was underwritten by New Hampshire, not Public Storage. PSCC was not a party to plaintiff’s insurance agreement with New Hampshire, has never been an insurer under the insurance program, and has never agreed to provide insurance to plaintiffs.

The court granted summary judgment in favor of Public Storage.


When a demurrer is sustained without leave to amend the appellate court must decide if there is a reasonable possibility that the defect can be cured by amendment: if it can be, the trial court has abused its discretion and the court of appeal will reverse; if not, there has been no abuse of discretion and it will affirm.

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).

It is undisputed that Public Storage is not a party to the insurance agreement between Frankie and New Hampshire. Though PSCC is named in the agreement, it is clearly identified as a producer and not a principal. Public Storage cannot be held liable under the terms of the insurance agreement or the implied covenant of good faith and fair dealing since an agent is not liable under an insurance contract or bad faith when its signature as agent and not as principal appears on the agreement.

Even if Public Storage somehow abused its corporate privilege by having an ownership interest in PSCC and the company that reinsured New Hampshire’s risk (a fact that has not been demonstrated), that fact would not require that a court disregard the separate identity of a corporation. An essential feature of reinsurance is that it does not alter the terms, conditions or provisions of the contract of liability insurance between the direct liability insurer and its insured.


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 article, 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 and

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.

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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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