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Heckart v. A-1 Self Storage

Filed 4/23/18 IN THE SUPREME COURT OF CALIFORNIA SAMUEL HECKART, ) ) S232322 Plaintiff and Appellant, ) ) Ct.App. 4/1 D066831 v. ) ) San Diego County A-1 SELF STORAGE, INC., et al., ) Super. Ct. No. 37-2013-00042315- ) CU-BT-CTL Defendants and Respondents. ) ____________________________________) In its rental agreements with tenants, defendant A-1 Self Storage, Inc. (A-1) states that it shall not be liable for loss of or damage to a tenant’s stored property, and it requires the tenant to obtain insurance for such losses. A-1 also offers an alternative to the requirement that a tenant obtain insurance: in exchange for an additional $10 in rent each month, A-1 will reassume the risk of such losses, up to $2,500. Plaintiff Samuel Heckart contends this alternative constitutes a contract of insurance, and because A-1 is not licensed to sell insurance, its sale of this indemnity agreement violates the Insurance Code. We conclude that A-1’s alternative indemnity agreement is not subject to regulation under the Insurance Code. First, the code’s provisions that regulate the sale of insurance by self-service storage facilities as agents for licensed insurers (Ins. Code, § 1758.7 et seq.; hereinafter Article 16.3; all further statutory references are to this code unless otherwise noted) have no application to A-1’s alternative arrangement because A-1 is not acting as an agent for an insurer. Second, the code’s definition of insurance (§ 22) has long been understood not to 1 reach indemnification agreements between parties to a transaction if the indemnification agreement is incidental to the principal object and purpose of the parties’ transaction, and it does not appear that the Legislature intended through its enactment of Article 16.3 to prohibit such incidental indemnification agreements. Here, the indemnification agreement is incidental to the principal object and purpose of renting storage space, placing it outside the scope of insurance regulation. Therefore, we will affirm the judgment of the Court of Appeal. I. FACTS “In reviewing a judgment of dismissal after a demurrer is sustained without leave to amend, we must assume the truth of all facts properly pleaded by the plaintiffs, as well as those that are judicially noticeable.” (Howard Jarvis Taxpayers Assn. v. City of La Habra (2001) 25 Cal.4th 809, 814.) Therefore, we take the facts from the first amended complaint and matters subject to judicial notice. Defendant A-1 owns the self-storage facility where plaintiff rented a storage unit. Neither A-1 nor any of the defendants that have an ownership interest in A-1 or assist in its management are licensed to sell insurance in California.1 Defendant Deans & Homer is an insurance underwriter, agent, and broker licensed to sell insurance in California. Plaintiff rented a storage unit from A-1 in June 2012 for $55 a month. The “A-1 Self Storage Rental Agreement” (Rental Agreement) signed by plaintiff released the owner of the storage facility from liability for loss of or damage to property at the facility. The Rental Agreement also required the tenant to maintain insurance for the value of the tenant’s …
Original document
Source: California Supreme Court