Key Decisions

December 2013 – All Articles

(filed under: Key Decisions | December 19, 2013)

A Person Must Qualify As An Insured To Get Uninsured Motorist Coverage

Berendes v. Farmers Insurance Exchange
(Cal. Ct. of App., 3d Dist.), filed November 18, 2013, published November 18, 2013

KEY FACTS

David Duril was driving a car when he hit and killed a pedestrian, Kristina Berendes. She was 39 years old and married to Todd Berendes. They had a daughter named Taylor.

Duril had automobile liability insurance with policy limits of $50,000. His insurer paid its policy limits to settle Todd and Taylor’s claims against Duril.

Because Duril’s policy limits were not adequate to compensate Todd and Taylor for the loss of Kristina, Todd and Taylor made a claim for underinsured motorist benefits under Todd’s own auto policy’s uninsured motorist coverage. Todd’s insurer paid its policy limits because Kristina was an “insured” under his uninsured motorist coverage.

Because Todd and Taylor felt the damages due to Kristina’s death were still worth more than they had received, they made a claim under the uninsured motorist coverage under a Farmers Insurance Exchange automobile insurance policy issued to Kristina’s father, William Felix. Kristina was a driver of one of the cars identified as an insured vehicle on the Farmers’ policy.

The Farmers policy, in accordance with the requirements of the Insurance Code, provided that Farmers would pay sums an insured person was legally entitled to recover from the owner or operator of an uninsured or underinsured motor vehicle. The Insurance Code defined an insured, for purposes of uninsured motorist coverage, as:

“[1] the named insured and [2] the spouse of the named insured and [3], while residents of the same household, relatives of either while occupants of a motor vehicle or otherwise, [4] heirs and any other person while in or upon or entering into or alighting from an insured motor vehicle and [5] any person with respect to damages he or she is entitled to recover for care or loss of services because of bodily injury to which the policy provisions or endorsement apply…”

For at least one year before the accident, Kristina had been living with Todd and Taylor, and not with her father, Felix.

Farmers declined the request for benefits reasoning that just because Kristina was identified as a driver of an insured car, that did not make her an “insured” under its uninsured motorist coverage.

Todd and Taylor sued Farmers for breach of contract and breach of the implied covenant of good faith and fair dealing. The trial court granted Farmers’ summary judgment motion, finding Farmers correctly concluded that Kristina was not an “insured.”

HOLDING & REASONING

The Court of Appeal affirmed. Kristina was not the “named insured,” i.e. Felix. Nor was she his spouse. Nor was she a resident of Felix’s household. Nor was she using an insured vehicle.

Even though Kristina was an “insured” for purposes of other policy coverages, the uninsured motorist coverage had its own definition of “insured,” which did not encompass Kristina. Different definitions of “insured” under different coverages did not make the policy ambiguous.

ANALYSIS

The court confirmed that qualifying for insured status under one part of a policy is not enough to make a person an insured for all purposes. Had Kristina resided in her father’s household, she would have been covered. Had she been using a car listed on her father’s policy, she would have been covered.

 

Evidence Was Properly Admitted

Leal v. Mansour
(Cal. Ct. of App., 2d Dist.), filed Oct. 30, 2013, published Nov. 20, 2013

KEY FACTS

Felines Hernandez experienced a “gallbladder attack,” having suffered for years from problems with her gallbladder. She went to the emergency room at Hollywood Presbyterian Medical Center. Her doctor, Antonie Mansour, had previously discussed surgical options with Mrs. Hernandez, and he again recommended surgery. Mrs. Hernandez agreed and Dr. Mansour did the surgery the same day. There were no apparent complications during surgery, and the following morning Mrs. Hernandez appeared to be doing well and was scheduled to be discharged.

However, around midday, Mrs. Hernandez’s condition deteriorated. Dr. Mansour ordered Mrs. Hernandez to be immediately taken to the intensive care unit. He requested several consults from other doctors.

Sometime in the evening, Mrs. Hernandez was placed on a ventilator because of her deteriorating condition.

Later that evening, the alarm on Mrs. Hernandez’s ventilator sounded. An ICU nurse immediately responded and determined the ventilator was properly connected. Mrs. Hernandez appeared to be receiving oxygen, but the ICU nurse called for the respiratory technician anyway. The technician could not determine the reason for the alarm, and switched out the ventilator for a new one, while the nurse manually gave oxygen to Mrs. Hernandez. During this time, Mrs. Hernandez’s pulse dropped resulting in a “Code Blue.”

A neurologist determined that Mrs. Hernandez had suffered brain damage from which she eventually died.

Her husband and son sued the hospital and Dr. Mansour for malpractice.

The case went to trial. At the close of plaintiffs’ evidence, the hospital moved for a nonsuit. The trial court granted it because plaintiffs failed to present any expert testimony on the hospital’s standard of care on the issue of the alleged ventilator malfunction.

Trial continued against Dr. Mansour. The jury found any negligence by Dr. Mansour was not a substantial factor in Mrs. Hernandez’s death. It agreed with his argument that the ventilator malfunction was the cause and ruled in his favor.

HOLDING & REASONING

The Court of Appeal affirmed.

It rejected plaintiffs’ contention that the trial court erred in allowing Dr. Mansour to present evidence and argument to the jury that a ventilator malfunction was the cause of death, not any negligence by him.

Code of Civil Procedure section 581c says:

“[i]n actions which arise out of an injury to the person or to property, when a motion for judgment of nonsuit was granted on the basis that the defendant was without fault, no other defendant during trial, over plaintiff’s objection, may attempt to attribute fault to or comment on the absence or involvement of the defendant who was granted the motion.”

However, the court found that Dr. Mansour’s evidence that the ventilator malfunction was the cause of Mrs. Hernandez’s death did not contravene the letter or spirit of the law. The court did not distinguish between a nonsuit based on an evidentiary finding, and a nonsuit establishing that the defendant was fault free. Dr. Mansour was not trying to place fault on the hospital.

ANALYSIS

Section 581c prevented Dr. Mansour from defending on the basis of hospital negligence. However, Section 581c did not stop him from arguing that a simple ventilator malfunction caused the injury.

 

A Homeless Person Can Be “Personally” Served At Their Designated UPS Store Address

Sweeting v. Murat
(Cal. Ct. of App., 2d Dist.), filed November 13, 2013, published November 13, 2013

KEY FACTS

Robert Sweeting sued Susan and Mary Murat, among others, for disposing of his personal property, which was in a shipping container at a storage facility. Sweeting was acting as his own attorney. Moreover, he was homeless and used a rental mailbox at a UPS Store as an address. This address was reflected in a Notice of Change of Address Form that Sweeting filed with the court.

The Murats filed a summary judgment motion and two discovery motions against Sweeting. All three were set for hearing on the same date. The Murats personally served these at Sweeting’s UPS Store address.

Sweeting filed oppositions two days before the hearing. The trial court exercised its discretion to disregard the oppositions for being late. The trial court then granted the motions, rejecting Sweeting’s argument that the motions had not been properly served.

HOLDING & REASONING

The Court of Appeal described the case as an issue of first impression regarding personal service on a party who is not represented by counsel and does not have a permanent residence.

Code of Civil Procedure section 1011(b) provides that personal service on a party to a lawsuit:

“shall be made in the manner specifically provided in particular cases, or, if no specific provision is made, service may be made by leaving the notice or other paper at the party’s residence, between the hours of eight in the morning and six in the evening, with some person of not less than 18 years of age.”

Personal service at the UPS Store was effective because Sweeting’s Notice of Change of Address form specified the UPS Store as his address and stated that service could be effectuated there.

ANALYSIS

Regardless of the merits, litigants cannot deprive their opponents of the ability to personally serve motions by using a rental mail box as one’s address.

 

Other Cases Of Interest

A Legal Malpractice Action Was “Assignable” Where The Corporate Malpractice Plaintiff Is Acquired

White Mountain Reinsurance Company of America v. Borton Petrini, LLP
(Cal. Ct. of App., 3d Dist.), filed November 26, 2013, published November 26, 2013

Modern Service Insurance Company issued an auto insurance policy to Flora Cuison. The policy had a $100,000 limit on bodily injury liability per person.

While the policy was in force, Cuison caused an automobile accident that seriously injured Karen Johnson. As a result, Johnson sued Cuison. Cuison was purportedly served with the complaint in the action, along with an undated 30-day offer to compromise for the $100,000 policy limits.

Country Insurance & Fidelity Services, the claims administrator acting on behalf of Modern Service, engaged the Borton Petrini law firm to defend Cuison in the action. Borton Petrini took the case, representing Modern Service and Cuison. Borton Petrini allegedly allowed the offer to compromise to expire without a response.

As the result of what might be described as a series of mergers and acquisitions, White Mountain Reinsurance Company of America took over Modern Service’s insurance business in California, assuming responsibility for the claim against Cuison. Among other things, White Mountain paid legal fees for Borton Petrini’s services in defending Cuison.

Eventually, White Mountain paid substantially more than the policy limits to settle the claim against Cuison. It did so because Modern Service had failed to settle within the applicable policy limits even though it had an opportunity to do so.

White Mountain then sued Borton Petrini for legal malpractice for failing to address the settlement offer that had been made when the case against Cuison was initiated.

The trial court held that White Mountain lacked standing to sue Borton Petrini because White Mountain had acquired its claim by way of an assignment and actions for legal malpractice are not assignable in California.

The Court of Appeal reversed.

The general rule is that legal malpractice actions are not assignable in California. Despite the general rule, the court found a narrow exception for instances in which a plaintiff’s action for legal malpractice was acquired as part of a larger transaction, such as that which occurred when White Mountain took over Modern Service’s insurance business. The policy reasons for prohibiting an assignment of a cause of action for legal malpractice did not apply in such an instance.

 

Section 128.7 Did Not Authorize Sanctions Against An Arbitration Party’s Attorneys

Optimal Markets, Inc. v. Salant
(Cal. Ct. of App., 6th Dist.), filed November 26, 2013, published November 26, 2013

Optimal Markets, Inc. filed a complaint against multiple defendants, alleging causes of action for misappropriation of trade secrets, common law unfair competition, statutory unfair competition, breach of contract, breach of fiduciary duty, breach of the covenant of good faith and fair dealing, and declaratory relief.

The following month, the parties entered into a written agreement to submit their dispute to binding arbitration pursuant to the JAMS Comprehensive Arbitration Rules and Procedures. As a result of this agreement, the trial court entered an order staying the action, pending the conclusion of arbitration proceedings.

After the trial court entered its stay order, Optimal changed its counsel.

A binding arbitration took place over an eight day period. The matters arbitrated consisted of Optimal’s seven causes of action as alleged in the complaint it had filed along with the defendants’ counterclaims. The arbitrator denied each of Optimal’s claims. It then awarded the defendants $2,563,487 in attorney’s fees and $221,225 in costs and expenses to be paid by Optimal. The arbitrator denied the defendants’ request for sanctions against Optimal’s attorneys. That request was based on the assertion that Optimal’s attorneys pursued a frivolous action. The arbitrator denied the request because the arbitration agreement authorized sanctions against a party, but did not authorize them against a party’s counsel.

Some of the defendants then filed a motion in the trial court for sanctions against Optimal’s attorneys pursuant to Code of Civil Procedure section 128.7. Optimal’s attorneys opposed the motion, arguing that they had not been Optimal’s attorneys of record when the superior court action was filed. Furthermore, Optimal’s attorneys had only substituted as counsel after the action had been stayed, which was four months before the arbitration hearing. The trial court denied the motion.

The Court of Appeal affirmed.

Section 128.7 requires that all pleadings filed with the court be signed by an attorney of a represented party, or, if the party is not represented by counsel, by the party. The person signing a filed pleading certifies that after a reasonable inquiry, the pleading: (1) is not being presented for an improper purpose; (2) contains positions that are not frivolous; (3) alleges factual matter having evidentiary support; and (4) contains denials of factual allegations, which denials have evidentiary support. Based on these requirements, the court, after proper statutory notice, may impose sanctions upon the attorneys, law firms, or parties who have improperly certified a pleading.

However, according to the court: “The primary purpose of the statute is deterrence of filing abuses, not to provide compensation for those impacted by those abuses.” Thus, the question is not whether a party was impacted by an improperly filed complaint, but rather whether the attorneys against whom the sanctions are sought engaged in filing abuses.

Since Optimal’s attorneys filed nothing with the court, they had not engaged in any filing abuses and were not subject to sanctions.

While Optimal’s attorneys did advocate the complaint on behalf of Optimal in the binding arbitration, the court held that such advocacy to an arbitrator does not constitute a presentation of the party’s claim “to the court” as required under the language of section 128.7.

 

Pay Attention To Fortune Cookies – At Least Where A Provocative Murder Is Involved

People v. Johnson
(Cal. Ct. of App., 2d Dist.), filed November 19, 2013, published November 19, 2013

Ryan Johnson orchestrated the home invasion robbery of Peter Davis’ home. Johnson did this because he knew Davis cultivated marijuana at his house. Johnson’s “crew” consisted of Kelsey Alvarez and Jesse Baker-Riley.

Alvarez and Baker-Riley knocked on Davis’ door and when Davis answered, Baker-Riley threatened him with a pistol.

Once inside Davis’ home, Baker-Riley saw a pile of marijuana on the table. He told Davis to wrap it in a paper towel and give it to them. Davis complied.

During these events, Baker-Riley was clicking the safety of his gun on and off and taunting Davis in a manner reminiscent of the “thugs” in the movie “Pulp Fiction.” He even remarked about the movie.

While holding Davis at gunpoint and taunting him, Baker-Riley spotted a fortune cookie on the table and made Davis open it. It prophetically read: “There will be many upcoming opportunities. Take advantage of them.” Baker-Riley remarked that he was taking advantage of opportunities by robbing Davis.

Baker-Riley then spotted some marijuana drying in a back bedroom. He ordered Davis to go into the bedroom and sit on the bed. Davis believed that Baker-Riley was getting ready to kill him.

Davis chose to sit next to a nightstand. On the nightstand was his own gun. Davis took advantage of the opportunity, grabbed his gun and shot and killed Alvarez.

Baker-Riley and Johnson were both convicted of first-degree murder based on Alvarez’s death.

The Court of Appeal affirmed. Even though Johnson was not present and even though Alvarez had not fired a shot, they were both guilty under the provocative murder doctrine.

The court remarked that:

[A] “mastermind’s” conviction of murder based on that doctrine is sound public policy. Allowing a “mastermind” to escape liability for murder while his provocateur accomplice (Baker-Riley) suffers a first degree murder conviction would be inconsistent and unfair. It could also encourage a criminal planner to employ accomplices to do his bidding in his absence to shield himself from the application of the provocative act murder doctrine.