Justia California Court of Appeals Opinion Summaries

In 2015, Zongwei Shen, owner of a massage spa, purchased a commercial insurance policy from Continental Casualty Company, which included an exclusion for abuse or molestation. In 2019, Toiah Gordon, Morganne Mersadie Root, and Karina Carrero sued Shen and his wife, alleging Shen sexually assaulted them during massage sessions. After Continental declined to provide a defense, Shen and Xin stipulated to liability, resulting in a $6.8 million judgment against them. Shen and Xin assigned their rights against Continental to the plaintiffs in exchange for a covenant not to execute the judgment. The plaintiffs then sued Continental for breach of contract and related claims.The Superior Court of Los Angeles County granted Continental's motion for summary judgment, finding that the abuse or molestation exclusion in the insurance policy applied. The court concluded that Shen had care and control of Gordon during the massage, thus the exclusion applied to her injury. The court also found that the claims against Xin for negligent training fell within the exclusion, as negligent training is a form of negligent hiring, retention, or supervision.The California Court of Appeal, Second Appellate District, affirmed the trial court's decision. The appellate court held that the abuse or molestation exclusion applied to Shen's actions because Gordon was under Shen's care and control during the massage. The court also held that the exclusion applied to the claims against Xin, as negligent training is encompassed within negligent employment and supervision. Consequently, Continental had no duty to defend Shen and Xin, and the summary judgment in favor of Continental was affirmed. View "Gordon v. Continental Casualty Co." on Justia Law

Erin Hughes, the plaintiff, obtained two homeowner’s insurance policies for her property in Malibu. One policy, through the California FAIR Plan Association (FAIR Plan), covered fire loss, while the other, issued by Farmers Insurance Exchange (Farmers), did not. After a fire caused significant damage to her property, Hughes filed a lawsuit against Farmers, alleging it was vicariously liable for the negligence of its agent, Maritza Hartnett, who assisted her in obtaining the FAIR Plan policy, resulting in underinsurance for fire loss.The Superior Court of Los Angeles County granted Farmers’ motion for summary judgment, concluding that Hartnett was not acting within the scope of her agency with Farmers when she assisted Hughes in obtaining the FAIR Plan policy. The court also denied Hughes’s motion for leave to amend her complaint.The Court of Appeal of the State of California, Second Appellate District, reviewed the case. The court affirmed the lower court’s decision, holding that Hartnett was not acting as Farmers’ actual or ostensible agent when she helped Hughes obtain the FAIR Plan policy. The court found that Hartnett was acting as an independent broker for the FAIR Plan policy and not on behalf of Farmers. Additionally, the court determined that Hughes failed to present evidence that could establish a triable issue regarding Farmers’ vicarious liability for Hartnett’s actions.The court also upheld the trial court’s denial of Hughes’s motion for leave to amend her complaint, noting that Hughes offered no explanation for the delay in filing the motion and that allowing the amendment would have prejudiced Farmers and Hartnett. The judgment in favor of Farmers was affirmed, and Farmers was entitled to recover its costs on appeal. View "Hughes v. Farmers Insurance Exchange" on Justia Law

In April 2013, Michael Riste applied for a bail bond for his son, Michael Peterson, and signed an Indemnity Agreement and a Premium Agreement with Bad Boys Bail Bonds (Bail Agent). The agreements required Riste to pay a $10,000 premium in installments. Peterson signed identical documents after his release. The Bail Agent executed a $100,000 bail bond on behalf of The North River Insurance Company (Surety), ensuring Peterson's appearance at future court proceedings. Peterson failed to appear, leading to the forfeiture of the bail bond and a summary judgment against the Surety in October 2015.Two panels of the California Court of Appeal previously affirmed the denial of motions by the Surety and Bail Agent to set aside the summary judgment, vacate the forfeiture, and exonerate the bond. In October 2020, a class action cross-claim in Caldwell v. BBBB Bonding Corp. argued that the Bail Agent's premium financing agreements were subject to Civil Code section 1799.91 and were unenforceable without proper notice to cosigners. The trial court and the Court of Appeal agreed, enjoining the Bail Agent from enforcing such agreements without the requisite notice.In September 2022, the Surety and Bail Agent filed a third motion to set aside the summary judgment, citing Caldwell and arguing that the premium was part of the consideration for the bail bond, making the bond void. The trial court denied the motion, and the Surety and Bail Agent appealed.The California Court of Appeal, Second Appellate District, Division Three, affirmed the trial court's order. The court held that the bail bond was not void because the consideration for the bail bond was Peterson's release from custody, not the premium financing agreement. The court concluded that the trial court had jurisdiction over the bond and properly denied the motion to set aside the summary judgment, vacate the forfeiture, and exonerate the bond. View "People v. North River Insurance Co." on Justia Law

In 2017, five plaintiffs sued three excess insurers, alleging breach of contract, declaratory relief, breach of the covenant of good faith and fair dealing, and aiding and abetting breaches of fiduciary duty. The plaintiffs claimed that the insurers failed to cover litigation costs related to a series of disputes between the plaintiffs and another party, Paine. The insurance policies in question provided $40 million in excess coverage, divided into four layers of $10 million each.The San Francisco County Superior Court sustained the demurrers of two excess insurers, St. Paul and Liberty Mutual, without leave to amend, on the grounds that the plaintiffs failed to allege exhaustion of the underlying insurance policies. The court overruled the demurrer of the first-level excess insurer, Twin City, allowing the claims against Twin City to proceed.The California Court of Appeal, First Appellate District, Division Two, affirmed the trial court's decision. The appellate court held that the plaintiffs did not sufficiently allege exhaustion of the underlying insurance policies, which is a prerequisite for triggering the excess coverage. The court also found that the plaintiffs' claims for declaratory relief, bad faith, and aiding and abetting breaches of fiduciary duty were properly dismissed. The court concluded that the plaintiffs failed to demonstrate a reasonable possibility of curing the defects in their complaint through further amendment. The judgments in favor of St. Paul and Liberty Mutual were affirmed, and the plaintiffs' appeal was denied. View "Fox Paine & Co., LLC v. Twin City Fire Insurance Co." on Justia Law

American Building Innovation LP (ABI) was hired by Balfour Beatty Construction, LLC (Balfour Beatty) as a subcontractor for a school construction project. ABI had a workers’ compensation insurance policy when it began work, but the policy was canceled due to ABI’s refusal to pay outstanding premiums from a previous policy. This cancellation led to the automatic suspension of ABI’s contractor’s license. Despite knowing it was unlicensed and uninsured, ABI continued working on the project.The Superior Court of Orange County found that ABI was not duly licensed at all times during the performance of its work, as required by California law. ABI’s license was suspended because it failed to maintain workers’ compensation insurance. ABI later settled its premium dispute and had the policy retroactively reinstated, but the court found this retroactive reinstatement meaningless because it occurred long after the statute of limitations for any workers’ compensation claims had expired. The court ruled that ABI could not maintain its action to recover compensation for its work due to its lack of proper licensure.The California Court of Appeal, Fourth Appellate District, Division Three, affirmed the lower court’s judgment. The court held that ABI was not entitled to retroactive reinstatement of its license because the failure to maintain workers’ compensation insurance was not due to circumstances beyond ABI’s control. ABI’s decision not to pay the premiums and its false representations to the Contractors’ State License Board were within its control. Consequently, ABI was barred from bringing or maintaining the action under section 7031 of the Business and Professions Code. The court also affirmed the award of attorney fees to Balfour Beatty under the subcontract’s prevailing party attorney fee provision. View "American Building Innovations v. Balfour Beatty Construction" on Justia Law

The case involves plaintiffs Martin Tait, Jane Tait, and Bry-Mart, LLC (collectively, the Taits) who sued Commonwealth Land Title Insurance Company (Commonwealth) for breach of a title insurance policy. The Taits alleged that Commonwealth failed to pay the full amount by which their property’s value was diminished due to an undisclosed easement. The Taits had purchased a residential property in Danville for $1.25 million and had plans to subdivide the property into two lots. However, they discovered a separate 1988 maintenance easement that they believed would impact the marketability and value of the property and interfere with its potential development.The trial court granted Commonwealth’s motion for summary judgment, ruling that the policy required Commonwealth to compensate the Taits only for the value of their actual use of the property as a vacant residential lot suitable for only one home rather than its highest and best use as a subdividable lot. The court reasoned that the legal standard for title insurance losses did not permit consideration of a property’s highest and best use, only its actual use as vacant residential land.The Court of Appeal of the State of California First Appellate District Division Four disagreed with the trial court's interpretation. The appellate court held that the Taits’ policy entitles them to reimbursement for the diminution in value of their property based on its highest and best use. The court found that the Taits’ evidence of the likelihood of subdivision and the value of a subdividable lot created a triable issue of fact regarding the amount of the Taits’ loss under the policy, thereby precluding summary judgment. Therefore, the court reversed the trial court's decision. View "Tait v. Commonwealth Land Title Insurance Co." on Justia Law

The case revolves around a dispute between Southern California Edison Company (SCE) and 21st Century Insurance Company and other insurance companies (plaintiffs). The plaintiffs, who paid policyholders for losses resulting from a fire known as the Creek Fire, sued SCE under a subrogation theory to recover their payments. They alleged that an arc from SCE's electric powerlines caused the fire. During discovery, SCE withheld certain documents, asserting they were generated during an attorney-led internal investigation into the cause of the fire and were protected by attorney-client privilege and the attorney work product doctrine. The plaintiffs moved to compel the production of these documents, arguing that SCE's primary reason for conducting the investigation was to comply with state law requiring it to publicly report any involvement it had in causing the fire. The trial court agreed with the plaintiffs and compelled the production of the documents.The Court of Appeal of the State of California Second Appellate District Division One reviewed the case. The court concluded that the trial court's order improperly invaded the protection afforded by the attorney work product doctrine. Even where the dominant purpose of an attorney-directed internal investigation is to comply with a client's public reporting requirement, attorney work product generated in connection with gathering facts to assist counsel in advising the client on how to comply with that statutory or regulatory reporting requirement remains protected. As the plaintiffs did not show grounds for the production of their adversary's work product, the trial court erred in compelling its production. The court did not address whether the order also violated the attorney-client privilege. The court granted SCE's petition and directed the trial court to vacate its order and issue a new order denying the plaintiffs' motion to compel. View "Southern California Edison Co. v. Superior Court" on Justia Law

The case involves a dispute over workers' compensation coverage for an employee, Braden Nanez, who was injured in a car accident while off work and away from his job at a remote fire base camp. The employer, Stonedeggs, Inc., expected employees not to leave the job site and to notify a manager if they did. Nanez did not notify a manager he was leaving camp. The Workers’ Compensation Appeals Board (the Board) found that Nanez’s use of his own car while off work to drive approximately 70 miles away from camp purportedly to obtain cellular service was conduct reasonably expected by his employer to be incident to its requirement that Nanez spend time away from home where cellular service was not adequately provided at the camp. The Board concluded that Nanez’s travel was for comfort and leisure and was not a distinct departure from his employment.The employer, Stonedeggs, Inc., and its insurer, Technology Insurance Company, Inc., administered by Amtrust North America, appealed the Board's decision, arguing that the Board acted in excess of its authority and that substantial evidence does not support the Board’s findings. They argued that Nanez was injured during a material deviation from his employment; he left the camp without employer approval on a personal activity that, under the unique circumstances of working at this remote fire camp, was not contemplated by the employer.The Court of Appeal of the State of California Third Appellate District affirmed the decision of the Workers’ Compensation Appeals Board. The court found that substantial evidence supported the Board’s findings that Nanez was a commercial traveler and that his departure from camp was a leisure activity that the employer may reasonably have expected to be incident to its requirement that Nanez spend time away from home. The court denied the petition for writ of review filed by Stonedeggs, Inc. and Technology Insurance Company, Inc. View "3 Stonedeggs, Inc. v. Workers' Comp. Appeals Bd." on Justia Law

This case revolves around a dispute between California Specialty Insulation, Inc. (CSI) and Allied World Surplus Lines Insurance Company (Allied World) over a commercial general liability insurance policy. The policy was issued by Allied World to CSI. The dispute arose when Allied World refused to defend and indemnify CSI against a negligence claim following a construction site accident. The parties disagreed on whether one of the policy’s exclusions for bodily injury liability applied in this situation. The policy excluded coverage for bodily injury to the employees of any “contractor,” but the term “contractor” was not defined in the policy. Allied World argued that the term was unambiguous and the exclusion precluded coverage for the negligence claim, while CSI argued that the term was ambiguous and the exclusion did not apply to the negligence claim.The trial court ruled in favor of CSI, granting its motion for summary judgment and denying Allied World’s. The court found that the term “contractor” in the disputed exclusion was ambiguous and interpreted the term in favor of CSI.The Court of Appeal of the State of California Second Appellate District Division Seven affirmed the trial court's decision. The appellate court agreed with the trial court that the term “contractor” in the disputed exclusion was ambiguous. The court interpreted the term based on CSI’s objectively reasonable expectations and concluded that the exclusion did not apply to the negligence claim in question. Therefore, Allied World was obligated to defend and indemnify CSI against the negligence claim. View "California Specialty Insulation, Inc. v. Allied World Surplus Lines Insurance Co." on Justia Law

The case involves an employee, Braden Nanez, who was injured in an auto accident while off work and away from his job at a remote fire base camp. His employer, 3 Stonedeggs, Inc., expected employees not to leave the job site and to notify a manager if they did. Nanez did not notify a manager he was leaving camp. The Workers’ Compensation Appeals Board (the Board) determined that under the commercial traveler rule, workers’ compensation coverage applied to Nanez's injuries. The Board found that Nanez’s use of his own car while off work to drive approximately 70 miles away from camp purportedly to obtain cellular service was conduct reasonably expected by his employer to be incident to its requirement that Nanez spend time away from home where cellular service was not adequately provided at the camp.The employer, 3 Stonedeggs, Inc., and its insurer, Technology Insurance Company, Inc., administered by Amtrust North America, petitioned for a writ of review, arguing that the Board acted in excess of its authority and that substantial evidence does not support the Board’s findings. They argued that Nanez was injured during a material deviation from his employment; he left the camp without employer approval on a personal activity that, under the unique circumstances of working at this remote fire camp, was not contemplated by the employer.The Court of Appeal of the State of California Third Appellate District denied the petition, finding that substantial evidence supports the Board’s findings. The court concluded that under the circumstances of Nanez’s age, his having his personal vehicle with him, the structure of his shifts, the remoteness of the camp, and his not being prohibited from using his vehicle during his off hours, it was reasonable for the employer to expect that Nanez would leave camp in his car during his off time as incident to being employed away from home. View "3 Stonedeggs, Inc. v. Workers' Compensation Appeals Board" on Justia Law