Justia California Court of Appeals Opinion Summaries

A wine dealer sold millions of dollars’ worth of counterfeit wine to an unsuspecting wine collector. When the collector discovered the fraud, he filed an insurance claim based on his “Valuable Possessions” property insurance policy. The insurance company denied the claim. The collector sued for breach of contract. The trial court ruled in favor of the insurance company, sustaining its demurrer. The Court of Appeal concurred with the trial court: the collector suffered a financial loss, but there was no loss to property that was covered by the property insurance policy. View "Doyle v. Fireman's Fund Insurance Co." on Justia Law

The Court of Appeal affirmed the confirmation of an appraisal award under homeowners insurance policies issued by Liberty Mutual. Plaintiffs claimed that the appraisers exceeded their authority regarding the award and that it was the product of fraud. In the published portion of this opinion, the court held that the trial court erred under Evidence Code section 703.5 in admitting part of an appraiser's declaration that plaintiffs offered in opposing confirmation of the award. View "Khorsand v. Liberty Mutual Fire Insurance Co." on Justia Law

Victaulic, a manufacturer, sued its insurers in connection with product liability claims that resulted in litigation. Following summary adjudication for Victaulic (duty to defend) and a declaratory ruling (duty to indemnify), the case proceeded to a jury trial on Victaulic’s bad faith claim. Numerous witnesses testified and over 100 exhibits were introduced. Reversing an in limine ruling, the court allowed Victaulic to interrogate Finberg, the examiner on most of the claims, who had verified the insurers’ responses to Victaulic’s requests for admissions (RFAs). The court concluded Finberg “made an admission that she perjured herself” and stopped Finberg’s testimony. When she resumed the stand the next day, represented by personal counsel, the court ruled that she could, on a blanket basis, claim the Fifth Amendment privilege against self-incrimination— in front of jury. Victaulic’s closing arguments focused on “Finberg,” “RFAs,” “lies,” and “penalty of perjury.” The jury awarded damages for breach of contract totaling $1,073,868.80, with attorney fee damages for bad faith of $8,259,712.31. The punitive damages trial resulted in an award of $46 million. The court of appeal reversed, finding prejudicial errors, beginning with the court’s allowance of the use of the RFA responses, compounded by the court’s intensive questioning of Finberg, and by several errors in handling Finberg’s invocation of the Fifth Amendment. View "Victaulic Co. v. American Home Assurance Co." on Justia Law

The underlying action was initiated by homeowners from two residential developments in Rocklin against appellants Centex Homes and Centex Real Estate Corporation (Centex) for alleged defects to their homes. Centex and cross-defendant and respondent St. Paul Fire and Marine Insurance Company (St. Paul) have a history of insurance coverage disputes. St. Paul was an insurer for subcontractor Ad Land Venture (Ad Land), and agreed to defend Centex as an additional insured subject to a reservation of rights. Centex filed a cross-complaint against its subcontractors and St. Paul that sought, as the seventh cause of action, a declaration that Centex was entitled to independent counsel under Civil Code section 28601 because St. Paul’s reservation of rights created significant conflicts of interest. Centex appealed after the trial court granted St. Paul’s motion for summary adjudication of Centex’s seventh cause of action. Centex argued any possible or potential conflict was legally sufficient to require St. Paul to provide independent counsel. The Court of Appeal disagreed. Alternatively, Centex contended independent counsel was required because counsel appointed by St. Paul could influence the outcome of the coverage dispute and St. Paul controlled both sides of the litigation. The Court of Appeal concluded that because Centex failed to establish a triable issue of material fact regarding these assertions, the Court affirmed the judgment. View "Centex Homes v. St. Paul Fire & Marine Ins. Co." on Justia Law

The underlying action was initiated by homeowners from two residential developments in Rocklin against appellants Centex Homes and Centex Real Estate Corporation (Centex) for alleged defects to their homes. Centex and cross-defendant and respondent St. Paul Fire and Marine Insurance Company (St. Paul) have a history of insurance coverage disputes. St. Paul was an insurer for subcontractor Ad Land Venture (Ad Land), and agreed to defend Centex as an additional insured subject to a reservation of rights. Centex filed a cross-complaint against its subcontractors and St. Paul that sought, as the seventh cause of action, a declaration that Centex was entitled to independent counsel under Civil Code section 28601 because St. Paul’s reservation of rights created significant conflicts of interest. Centex appealed after the trial court granted St. Paul’s motion for summary adjudication of Centex’s seventh cause of action. Centex argued any possible or potential conflict was legally sufficient to require St. Paul to provide independent counsel. The Court of Appeal disagreed. Alternatively, Centex contended independent counsel was required because counsel appointed by St. Paul could influence the outcome of the coverage dispute and St. Paul controlled both sides of the litigation. The Court of Appeal concluded that because Centex failed to establish a triable issue of material fact regarding these assertions, the Court affirmed the judgment. View "Centex Homes v. St. Paul Fire & Marine Ins. Co." on Justia Law

The Court of Appeal affirmed the trial court's order granting Allied's applications for prejudgment attachment stemming from an insurance dispute because Allied had established the probable validity of its claims. The court held that Allied established the probable validity of its unjust enrichment claim where Allied had a right of reimbursement because the intentional noncompliance policy exclusion applied in this case. The court also held that Allied also established the probable validity of its rescission claim because substantial evidence supported the trial court's finding that SCWW and GCES misrepresented and concealed a material fact (that they did not accept, process, transport or discharge hazardous waste). The trial court did not err in granting the applications for prejudgment attachment based on implied contract theories even if an express contract covers the same subject. Finally, the trial court properly calculated prejudgment interest from the date Allied paid $2.5 million. View "Santa Clara Waste Water Co. v. Allied World National Assurance Co." on Justia Law

Plaintiff Mahmoud Alzayat, on behalf of the People of the State of California, filed a qui tam action against his employer, Sunline Transit Agency, and his supervisor, Gerald Hebb, alleging a violation of the Insurance Frauds Prevention Act (IFPA or the Act). (Ins. Code, sec. 1871 et seq.) Alzayat alleged Hebb made false statements in an incident report submitted in response to Alzayat’s claim for workers’ compensation, and Hebb repeated those false statements in a deposition taken during the investigation into Alzayat’s claim for compensation. Hebb’s false statements resulted in Alzayat’s claim being initially denied. Defendants filed motions for judgment on the pleadings contending: (1) this lawsuit was based on allegedly false and fraudulent statements Hebb made in connection with a workers’ compensation proceeding and was, therefore, barred by the litigation privilege under Civil Code section 47(b); and (2) Alzayat’s claim was barred by the workers’ compensation exclusivity rule. The superior court concluded the workers’ compensation exclusivity rule was inapplicable, but ruled the litigation privilege barred Alzayat’s claim. Alzayat appealed, contending the litigation privilege only applied to tort claims and not to statutory claims such as an action under the IFPA, and the IFPA was a specific statute that prevailed over the general litigation privilege. The Court of Appeal agreed with Alzayat that his lawsuit was not barred by the litigation privilege. Furthermore, the Court concluded this lawsuit was not barred by the workers’ compensation exclusivity rule. The trial court erred by granting judgment on the pleadings for defendants, so we reverse the judgment. View "California ex rel. Alzayat v. Hebb" on Justia Law

Respondent Denise Duncan sued Wal-Mart Stores, Inc. (Wal-Mart) for personal injuries she sustained at one of Wal-Mart’s stores while acting within the course and scope of her employment with Acosta, Inc. (Acosta). The trial court entered judgment finding Wal-Mart liable for Duncan’s injuries. Under Labor Code sections 3852 and 3856, appellant Hartford Accident & Indemnity Company (Hartford) applied for a lien on Duncan’s judgment to obtain reimbursement for the workers’ compensation benefits it paid Duncan, including medical expenses and temporary disability payments for lost wages. Although the judgment included compensation for Duncan’s medical expenses, it did not include compensation for Duncan’s lost wages because she did not seek those damages at trial. The court granted Hartford a lien on Duncan’s judgment, but reduced the lien amount to exclude the indemnity payments for lost wages. Hartford appealed the trial court’s postjudgment order, arguing the court exceeded its authority by reducing the lien amount for any item other than reasonable attorney fees and costs. The Court of Appeal agreed because section 3856’s plain language and the case law applying it granted Hartford a first lien on the judgment in the amount it paid Duncan for worker’s compensation benefits. Duncan’s choice not to seek lost wages at trial did not diminish Hartford’s lien rights under the workers’ compensation statutory scheme. View "Duncan v. Wal-Mart Stores, Inc." on Justia Law

The insurance policy in question in this case was issued by petitioner Admiral Insurance Company (Admiral) to the real party in interest, A Perfect Match, Incorporated (Perfect Match), a company that "match[es] surrogates and egg donors with infertile families." On the first page of the policy Admiral promised to provide coverage for potential claims that Perfect Match knew or reasonably should have known about, but failed to disclose. In this case, prior to purchasing the Admiral policy, there was no question Perfect Match knew about a potential claim former clients Monica Ghersi and Carlos Arango intended to file arising from the birth of their daughter with a rare form of eye cancer. A lawyer representing Ghersi and Arango sent a letter to Perfect Match in June 2012 giving notice of their intent to file a complaint alleging professional negligence. After consulting with its insurance broker, Perfect Match made the decision not to disclose the potential Ghersi/Arango claim to its current insurer out of concern it would result in a higher premium. When it applied for the Admiral policy in October 2012, Perfect Match likewise did not mention the potential Ghersi/Arango claim. But once the Ghersi/Arango complaint was filed and ultimately served in March 2013, Perfect Match claimed potential coverage under the Admiral policy based on a "professional incident" and asserted its right to a defense. Admiral denied coverage and refused to defend, citing the policy language that excluded coverage for claims the insured reasonably should have foreseen prior to inception of the policy. Perfect Match then sued alleging breach of contract and bad faith. The Court of Appeal found no material factual disputes in this case: Admiral was entitled to insist that Perfect Match disclose all potential claims of which it was, or should have been, aware; it could and did exclude from coverage any such claim that was not disclosed. The superior court erred in failing to grant summary judgment in favor of Admiral. Accordingly, the Court issued a writ of mandate directing the superior court to vacate its order denying Admiral's motion for summary judgment and instead enter an order granting the motion. View "Admiral Ins. Co. v. Superior Court" on Justia Law

Husband Patrick Steiner was an active duty military service member and had a group life insurance policy issued under the Servicemen's Group Life Insurance Act of 1965 (the SGLIA). As part of a status-only dissolution judgment, Husband and Alicja Soczewko Steiner (Wife), stipulated to an order requiring Husband to maintain Wife as the beneficiary of all of Husband's current active duty survivor and/or death benefits pending further court order. Notwithstanding the stipulated order, Husband changed the beneficiary of his life insurance policy to Husband's sister, Mary Furman, who received the policy proceeds upon Husband's death. The court subsequently found applicable federal law preempted the stipulated order and Furman was entitled to the policy proceeds. Wife appealed, contending federal law did not preempt the stipulated order or, alternatively, the fraud exception to federal preemption applies. The Court of Appeal concluded to the contrary on both points and affirmed the order. View "Marriage of Steiner" on Justia Law