Justia California Court of Appeals Opinion Summaries

Three appeals arose from an insurance coverage dispute following a wildfire that burned in Siskiyou County, California. In September 2014, the Boles Fire damaged and destroyed numerous homes in the town of Weed, including the homes owned by plaintiffs Gary Andrighetto, James Dalin, and Matthew Vulk. Plaintiffs and others filed suit against their insurance company, defendant State Farm General Insurance Company, alleging various claims, including breach of contract and negligence. Central to the parties’ dispute was whether State Farm intentionally or negligently underinsured plaintiffs’ homes. Plaintiffs argued their homes were insufficiently insured due to State Farm’s alleged failure to calculate reasonable or adequate policy limits on their behalf for the full replacement cost of their homes. After the trial court granted State Farm’s motion for summary judgment against Andrighetto, Dalin and Vulk stipulated to entry of judgment in favor of State Farm. Each plaintiff timely appealed, and the Court of Appeal consolidated the appeals for argument and disposition. Thereafter, the Court requested that the parties discuss in their briefing whether the judgments in the Dalin and Vulk matters needed to be reversed pursuant to Magana Cathcart McCarthy v. CB Richard Ellis, Inc., 174 Cal.App.4th 106 (2009). After review, the Court affirmed the trial court in the Andrighetto matter; the Court reversed in the Dalin and Vulk matters, and remanded those for further proceedings. View "Vulk v. State Farm General Ins. Co." on Justia Law

In the underlying action, the insureds were sued by victims of a fire that occurred at the insureds' property. The insurer, Aspen, and managing underwriter, D&H, defended the action, which ultimately settled without any out-of-pocket payment from the insureds. The insureds then filed this action against Aspen and D&H, seeking a declaration that a conflict of interest existed in the underlying case between them and Aspen and D&H, so they were entitled to so-called "Cumis" counsel under Civil Code section 2860. The trial court sustained a demurrer without leave to amend and entered judgment for Aspen and D&H.The Court of Appeal concluded that the demurrer was the incorrect procedural vehicle to resolve the insureds' declaratory judgment claim against Aspen and D&H. However, the insureds' family suffered no prejudice because the second amended complaint (SAC) did not allege a conflict of interest entitling them to independent counsel pursuant to section 2860 as a matter of law. Accordingly, the court modified the judgment to declare the rights adverse to the insureds and affirmed the trial court's judgment. View "Nede Management, Inc. v. Aspen American Insurance Co." on Justia Law

Maryam Hedayati appealed the grant of summary judgment in favor of Interinsurance Exchange of the Automobile Club (Auto Club or the Club) on Hedayati’s breach of good faith and fair dealing claim. Hedayati suffered catastrophic injuries in October 2012 when Auto Club’s insured ran a red light and struck her in a pedestrian crosswalk. The insured driver immediately notified Auto Club of the accident and authorized the Club to disclose his policy limits ($25,000); he also informed Auto Club he had no other insurance or assets. Auto Club’s policy with its insured required him to relinquish to the Club his right to negotiate settlement of potential tort claims falling within the policy. When he inquired about a release, Auto Club inaccurately told its insured driver Hedayati was not willing to sign one. Despite repeated requests during settlement negotiations from Hedayati’s attorney, Auto Club initially declined to disclose the insured’s policy limits; eventually it acquiesced, but Auto Club still declined to provide written proof of those limits, which the Club knew was common practice to facilitate a settlement. Auto Club then withheld from Hedayati’s counsel the insured’s written declaration which indicated he had no other insurance, which the Club had confirmed, and the insured’s statements that he had no assets. Auto Club also, despite multiple requests from Hedayati’s lawyer, failed to provide a copy of its insured’s policy which Hedayati’s lawyer needed to verify its terms. Hedayati’s counsel had demanded a hard copy of the policy as a settlement condition. Auto Club ultimately failed to settle the matter within its $25,000 policy limits. Hedayati subsequently obtained a $26 million judgment against the insured driver, along with assignment of the insured’s claim against the Club for breach of the covenant of good faith and fair dealing implicit in its policy with him. The trial court concluded the evidence presented by Hedayati was insufficient as a matter of law. After its de novo review, the Court of Appeal disagreed with the trial court’s evaluation of the evidence. It therefore reversed the summary judgment ruling and remanded for further proceedings. View "Hedayati v. Interinsurance Exchange of the Auto. Club" on Justia Law

Allstate Insurance Company et al. (Allstate) filed a complaint on behalf of itself and the People of California (qui tam) against Dr. Sonny Rubin and related medical providers (Rubin). Allstate generally alleged Rubin prepared fraudulent patient medical reports and billing statements in support of insurance claims. Rubin filed an anti-SLAPP motion, arguing the preparation and submission of its medical reports and bills were protected litigation activities. The trial court denied Rubin’s motion. "Litigation is not 'under [serious] consideration' - and thereby protected activity under the anti-SLAPP statute - if the ligation is merely a 'possibility.'" The Court of Appeal found that Rubin failed to show its medical reports and bills were prepared outside of its usual course of business in anticipation of litigation that was “under [serious] consideration.” Thus, the Court affirmed the trial court’s order denying Rubin’s anti-SLAPP motion. View "California ex rel. Allstate Ins. Co. v. Rubin" on Justia Law

In an appeal related to a California insurance insolvency proceeding, the New York Plaintiffs requested clarification from the San Francisco Superior Court as to whether its orders "prohibit or stay" their New York claims. In the insolvency case, the trial court appointed the California Insurance Commissioner (Commissioner) as conservator, and later as liquidator, of CastlePoint. The trial court, as part of the process, issued injunctions and approved releases pertaining to claims filed against or on behalf of CastlePoint or its assets.The Court of Appeal concluded that some of the causes of action in the New York lawsuit are not barred. These causes of action relate to: (i) the alleged breach of so-called "successor obligor provisions"; and (ii) an alleged $143 million payment from ACP to shareholders of TGIL. The court explained that these causes of action are not asserted against CastlePoint or the insurance companies that were merged into it, and there is no indication the Commissioner could have asserted these causes of action on behalf of the insolvent insurance companies. Therefore, the court reasoned that permitting them to proceed in New York will not interfere in any meaningful way with the plan for CastlePoint's liquidation, especially given the New York Plaintiffs' agreement not to assert any judgment against the insolvent insurance companies' estate or assets.However, prior to entering into releases, the Commissioner could have asserted fraudulent conveyance causes of action and a cause of action for unjust enrichment because they are based on alleged improper transfers of assets of the insolvent insurance companies. Accordingly, the court concluded that these causes of action are barred by the injunctions and releases in the liquidation proceeding. The court affirmed in part and reversed in part. View "Lara v. Castlepoint National Insurance Co." on Justia Law

National Western Life Insurance Company (NWL) appealed a jury verdict holding the company liable for negligence and elder abuse arising from an NWL annuity sold to Barney Williams by Victor Pantaleoni, an independent agent. In 2016, Pantaleoni sold a $100,000 NWL annuity to Williams, who had contacted Pantaleoni to revise a living trust after the death of Williams’ wife. When Williams returned the annuity to NWL during a 30-day “free look” period, Pantaleoni wrote a letter over Williams’ signature for NWL to reissue a new annuity. In 2017, when Williams cancelled the second annuity, NWL charged a $14,949.91 surrender penalty. The jury awarded Williams damages against NWL, including punitive damages, totaling almost $3 million. NWL moved for judgment notwithstanding the verdict, which was denied. The Court of Appeal reversed: “Assuming NWL had monitored Pantaleoni as Williams suggested, there was no evidence showing that NWL knew or should have known of Pantaleoni’s fraud. … That Williams wrote the note cancelling the first annuity and Pantaleoni apparently wrote the letter requesting that it be reissued for Williams’ signature did not suggest to NWL that the letter was forged.” View "Williams v. National Western Life Insurance Co." on Justia Law

Foremost provided insurance for McIsaac's motorcycle. The uninsured motorist coverage endorsement included an arbitration provision. McIsaac was involved in an accident. The other driver’s insurance policy provided $15,000 of coverage. McIsaac’s policy provided uninsured/underinsured motorist coverage of up to $100,000 per person per accident. McIsaac initiated an uninsured motorist claim. Foremost opened an investigation and sent a settlement offer. McIsaac served Foremost with an arbitration demand. Foremost suggested proceeding with discovery and sent McIsaac interrogatories and a deposition notice.Months later, McIsaac filed suit, alleging breach of contract, unjust enrichment, breach of the covenant of good faith and fair dealing, and bad faith. Foremost filed a petition to compel arbitration. McIsaac argued his dispute was not solely about damages, but whether Foremost breached the contract and acted in bad faith. Foremost argued arbitration was a “condition precedent” to McIsaac’s lawsuit. The trial court denied the petition, stating that arbitration does not apply to claims of bad faith by the insurer.The court of appeal reversed. Under Insurance Code section 11580.2(f), disputes between insureds and insurers over entitlement to recover damages caused by an uninsured or underinsured motorist, or the amount of damages, must be resolved by agreement or arbitration. Foremost made a showing that the parties dispute the amount of damages. View "McIsaac v. Foremost Insurance Co." on Justia Law

CMA and others filed suit against Aetna, seeking among other claims, an injunction for alleged violations of the Unfair Competition Law (UCL; Bus. & Prof. Code, section 17200). The trial court found that CMA lacked standing under the UCL because it was not directly injured by Aetna's policy.The Court of Appeal affirmed the trial court's grant of Aetna's motion for summary judgment, concluding that the body of law permitting an association to bring a nonclass representative action does not bestow standing upon CMA to seek an injunction against Aetna under the UCL, whether or not CMA individually suffered injury in fact and lost money or property. The court also concluded that CMA's evidence that it diverted substantial resources to assist its physician members who were injured by Aetna's policy did not create a material disputed fact as to whether CMA itself suffered injury in fact and lost money or property. The court explained that an association must sustain direct economic injury to itself and not just its members to bring a UCL claim. Furthermore, evidence that an association diverted resources to investigate its members' claims of injury and advocate for their interests is not enough to show standing under the UCL. In this case, the federal authorities CMA cites are neither binding on this court nor instructive. View "California Medical Ass'n v. Aetna Health of California, Inc." on Justia Law

After plaintiffs lost their home in a fire, they promptly submitted a claim under their homeowner’s insurance policy to their insurer, Mid-Century. Mid-Century denied the claim on the ground that the policy had been canceled for nonpayment of premium six days before the fire. Plaintiffs immediately paid the past due premium, the policy was reinstated, but Mid-Century continued to deny the claim. Plaintiffs filed suit for breach of contract and breach of the implied covenant of good faith and fair dealing. The trial court granted summary adjudication for plaintiffs on the issue of Mid-Century's duty to provide coverage and denied Mid-Century's motion for summary judgment in its entirety.The Court of Appeal concluded that the trial court properly denied Mid-Century's motion for summary judgment but improperly granted plaintiff's motion for summary adjudication. The court rejected Mid-Century's argument that the loss-in-progress rule precludes coverage. Rather, the court concluded that the law allowed Mid-Century to retroactively reinstate the policy with no lapse in coverage. However, the court concluded that there exists a triable issue of material fact regarding Mid-Century's intent when it reinstated the policy that precludes summary adjudication for either party. View "Antonopoulos v. Mid-Century Insurance Co." on Justia Law

The Court of Appeal affirmed the trial court's order denying Federal's special motion to strike a civil complaint for fraud as a strategic lawsuit against public participation under Code of Civil Procedure section 425.16, as well as the trial court's order overruling its evidentiary objections. In the underlying action, plaintiffs filed lawsuits against Moldex, alleging Moldex manufactured defective air respirators and masks that failed to protect them. This litigation ensued between Truck, Federal, and First State over coverage and the extent to which Truck was obligated to reimburse Federal and First State for payments made for Moldex's defense and indemnity, plus interest. Federal argued that Truck's complaint for fraud is based on Federal's "acts in furtherance of its right to petition" and are thus protected speech pursuant to section 425.16, subdivisions (e)(1) and (e)(2).The court affirmed the trial court's rulings on Federal's evidentiary objections and concluded that the first amended complaint is not relevant to the court's review of the anti-SLAPP motion. The court also affirmed Federal's special motion to strike Truck's complaint for fraud, concluding that Federal met its burden of showing that Truck's complaint for fraud arises from Federal's protected activity, and that the trial court correctly found that Truck met its burden to establish a probability of success on the merits of its fraud cause of action.In this case, a factfinder considering all the circumstances could reasonably conclude that when Truck signed the July 2013 settlement agreeing to pay nearly $5 million to Federal and to dismiss its pending appeal of the February 2013 judgment, it did so in reasonable reliance on Federal's course of conduct and Federal's stated position that it had a duty to defend Moldex pursuant to its policy. Furthermore, Truck agreed to file a request for dismissal of its pending appeal, with prejudice, when it entered the settlement agreement, which further supports a finding of extrinsic fraud by Federal. Finally, Federal is mistaken in its belief that Truck "released the claim for which it now seeks damages" by signing the July 2013 settlement agreement. View "Truck Insurance Exchange v. Federal Insurance Co." on Justia Law