Judge: Blaine K. Bowman, Case: 37-2023-00024508-CU-MC-NC, Date: 2023-11-03 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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SOUTH BUILDING TENTATIVE RULINGS - November 02, 2023

11/03/2023  01:30:00 PM  N-31 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Blaine K. Bowman

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Civil - Unlimited  Misc Complaints - Other Demurrer / Motion to Strike 37-2023-00024508-CU-MC-NC CALIFORNIA CAPITAL INSURANCE COMPANY VS BOHAN [IMAGED] CAUSAL DOCUMENT/DATE FILED: Demurrer, 09/01/2023

The Demurrer brought by defendants William Bohan and Christy Bantugan-Bohan (collectively, Defendants, the Bohans, or the Homeowners) is SUSTAINED on abatement grounds pursuant to Code of Civil Procedure § 430.10(c). The case is ORDERED STAYED pending resolution of the separate Worker's Compensation case and related arbitration.

This matter is set for a Status Conference on Friday, November 1, 2024 at 9:00 a.m. in Department N-31. All parties are ORDERED to file a Status Report (which may be jointly submitted by the parties if the parties are able to reach agreement on a joint report) apprising this Court of the status of the proceedings in the Worker's Compensation case as well as apprising this Court of the status of the arbitration proceedings related thereto. Said Status Report(s) is/are ORDERED to be filed and served on all parties at least five court days prior to the Status Conference hearing.

Should the Worker's Compensation case and/or arbitration proceedings conclude prior to that Status Conference hearing date, any party may seek relief from this Court, utilizing the ex parte procedure, to have the stay lifted so that this matter can move forward.

The Request for Judicial Notice brought by Defendants is GRANTED pursuant to Evidence Code § 451, et seq.

The Supplemental Request for Judicial Notice brought by Defendants is GRANTED pursuant to Evidence Code § 451, et seq.

Factual Background and Procedural History Defendants own a residential townhome located at 130 Grandview Street, Encinitas, California (the Property). The townhome has two units, which share a common wall. It is alleged that Defendants have never occupied the unit themselves – they only rent it out to tenants. From time to time, Defendants hire a laborer to perform 'general maintenance work.' During the time of the specific incident in question, Defendants allegedly hired that laborer – defendant Paulino Cortes (Mr. Cortes) – to perform painting work on the inside of the Property. Mr. Cortes allegedly fell and injured himself during the scope of that work. That occurred on December 9, 2017.

A few months later, in March of 2018, Mr. Cortes filed a claim with the California Workers' Compensation Appeal Board. Allegedly, the assertion in that claim is that the Homeowners (Defendants herein) were his uninsured employer at the time of the incident.

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3014951 CASE NUMBER: CASE TITLE:  CALIFORNIA CAPITAL INSURANCE COMPANY VS BOHAN [IMAGED]  37-2023-00024508-CU-MC-NC In the background of these events, it is alleged that Defendants maintained an insurance policy on the Property. What appears to be in dispute is what that policy covers. The insurance carrier that issued the policy is plaintiff California Capital Insurance Company (the Insurance Company). The Insurance Company's position is that the policy in question is property insurance – not workers compensation insurance. Nonetheless, the existence of this policy essentially roped the Insurance Company into the separate worker's compensation case that Mr. Cortes filed.

Specifically, Defendants state in their opposition brief that the Insurance Company 'received an order joining it as a party defendant in the workers' compensation action on March 7, 2023.' The judicially-noticeable order joining the Insurance Company as a defendant in the worker's compensation action was signed by Worker's Compensation Judge Jeffrey Bruflat on December 20, 2022 – more than four years after the worker's compensation case had been initiated. (ROA 15, Ex. 2.) That order states: 'IT APPEARING THAT it is necessary to join California Capital Insurance Company as a party defendant herein...' (ROA 15, Ex. 2 (bold removed).) There thus appears to be a judicial determination that the Insurance Company was a 'necessary' party to the separate worker's compensation case.

About six months after being joined in that action, the Insurance Company initiated the instant civil litigation on June 8, 2023. The instant action brings a sole cause of action for declaratory relief seeking a determination that the insurance policy at issue is, indeed, not a worker's compensation policy.

Stopping at this juncture to analyze the legal procedural developments, it would appear from this initial time of filing the instant civil case that the worker's compensation issues between the Homeowners and Mr. Cortes should be resolved exclusively in the worker's compensation forum, while insurance coverage issues between the Homeowners and the Insurance Company should be resolved as a matter of contract law pursued in civil litigation. This might provide a 'clean' approach. However, somewhat critically in this case, Mr. Cortes entered into a formal Stipulation in the instant civil case agreeing to be bound by any determination herein. (ROA 10.) This Court signed off on that Stipulation.

Interestingly, the Homeowners now posit that the reason Mr. Cortes agreed to be bound by any determination in this civil suit is 'presumably because he could not afford to hire a civil attorney to fight this lawsuit filed by [the Insurance Company].' (ROA 18, p. 2:4-6.) While there may be some general merit to this notion, it must also be noted that Mr. Cortes was represented by counsel at the time he signed off on the Stipulation. (ROA 10 (indicating Mr. Cortes was represented by Attorney Manuel Rodriguez, Jr. at the time of signing the Stipulation).) The Court takes a slightly different view. Reading the tea leaves of the information provided, it appears that Mr. Cortes filed his worker's compensation claim against the Homeowners on a theory that they were uninsured in terms of having worker's compensation coverage. Without parsing the specific ramifications that that status may have in a worker's compensation dispute, it appears that the Homeowner's effort to prevail on the claims being made against them was to assert that they do have insurance. This, however, appears to have setoff a different dispute as to whether or not the insurance in question was broad enough to cover worker's compensation – or whether it was limited to other homeowning issues like fire damage.

From the perspective of an insurer, worker's compensation coverage would appear to be very different from a general property protection policy. As such, it seems that the Homeowner's efforts to rope the Insurance Company into the worker's compensation proceedings was met with some resistance by the Insurance Company given that worker's compensation forums are exclusive to worker's compensation issues and, correspondingly, their jurisdiction is uniquely limited to those issues as well – at least generally speaking. As such, it appears that Mr. Cortes does not have any particular concern or interest in whether or not the Homeowner's are or are not covered by worker's compensation insurance – his concern is that he get compensated for his injuries while on-the-job. As such, whether liability rests on the Homeowners or on the Insurance Company appears to be of little import to Mr. Cortes, which is why Mr. Cortes appears to have been willing to stipulate to be bound by any determination in this Court about the nature of the insurance policy in question.

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3014951 CASE NUMBER: CASE TITLE:  CALIFORNIA CAPITAL INSURANCE COMPANY VS BOHAN [IMAGED]  37-2023-00024508-CU-MC-NC The Homeowners, however, seem to have an interest in avoiding resolution of that issue in this Court because resolution of that issue might bear on their status as insured or uninsured – again, whatever implications that may have for a respondent in a worker's compensation case. To that end, the Homeowners now demur to the instant action on grounds that there is another action pending between the same parties on the same cause of action. (Code of Civil Procedure § 430.10(c).) A bit confusingly, there is reference in the briefing to the fact that after Mr. Cortes and the Insurance Company executed the Stipulation that Mr. Cortes would be bound by any judgment in the instant civil case, the worker's compensation court ordered the parties to mandatory arbitration. The papers submitted in support of the instant Demurrer indicate that the request to be sent to arbitration was made by 'Defendant,' but that is somewhat vague as to the worker's compensation action since both William Bohan (one of the Homeowners) and the Uninsured Employers Benefits Trust Fund (the UEBTF) are listed as 'Defendants' on the order and since it is admitted that the Insurance Company was added to the action prior to said order and would presumably have been added as a 'Defendant.' (ROA 16, Ex. 5.) The stated reason in the order sending the matter to arbitration is as follows: Labor Code § 5275(a) Disputes involving the following issues shall be submitted for arbitration: (1) insurance coverage Therefore, as coverage is at issue parties are ORDERED to arbitration with Robert Draculich. Def Capital Ins did object – Overruled.

(ROA 16, Ex. 5.) It thus appears that the request to be sent to arbitration was objected to by the Insurance Company – suggesting that it was either the Homeowner or the UEBTF that made the request to arbitrate.

Interestingly, the Demurrer in the instant case was filed on September 1, 2023, while the order compelling arbitration in the separate worker's compensation case was issued on September 5, 2023.

(Compare ROA 13 with ROA 16, Ex. 5.) This is somewhat confusing because the Notice of Demurrer specifically states that the grounds for the Demurrer are that 'another action pending between the same parties on the same cause of action, and specifically, Workers Compensation Case No. ADJ11541887, which was ordered to mandatory arbitration to determine coverage, pursuant to Labor Code section 5275' when, according to the documentation submitted, the worker's compensation case has not been ordered to mandatory arbitration at that time. Nonetheless, as that is eventually the reality that came to fruition, the point still stands that the Homeowners are claiming that there is arbitration already pending on this precise issue under Labor Code § 5275.

Merits of Motion Labor Code § 5275 reads as follows: (a) Disputes involving the following issues shall be submitted for arbitration: (1) Insurance coverage.

(2) Right of contribution in accordance with Section 5500.5.

(b) By agreement of the parties, any issue arising under Division 1 (commencing with Section 50) or Division 4 (commencing with Section 3200) may be submitted for arbitration, regardless of the date of injury.

Notably, this is a Labor Code provision – thus somewhat unique and exclusive to the concerns of worker's compensation. The Insurance Company's position is that because the jurisdiction of the Worker's Compensation Appeal Board (the Appeal Board) is limited to issues of worker's compensation: '[i]t would be beyond the purview of the [Appeal Board] to interpret legislation codified in the Insurance Code...' as doing so would 'impose upon all insurers within the State of California a requirement to provide mandatory workers' compensation benefits coverage for commercial policies like the California Capital policy in question.' (ROA 17, p. 5:9-12.) Calendar No.: Event ID:  TENTATIVE RULINGS

3014951 CASE NUMBER: CASE TITLE:  CALIFORNIA CAPITAL INSURANCE COMPANY VS BOHAN [IMAGED]  37-2023-00024508-CU-MC-NC This argument appears to be built atop another statutory provision – Insurance Code § 11590. The gist of Insurance Code § 11590 is that all homeowners insurance policies are required to also contain worker's compensation coverage for any household employees. It reads as follows: Except as provided in Section 11591, no policy of comprehensive personal liability insurance may be issued or renewed in this state on or after January 1, 1977, unless it contains a provision for coverage against liability for the payment of compensation, as defined in Section 3207 of the Labor Code, to any person defined as an employee by subdivision (d) of Section 3351 of the Labor Code. Any such policy in effect on or after January 1, 1977, whether or not actually containing such provisions, shall be construed as if such provisions were embodied therein. However, such coverage shall not apply if any other existing, valid and collectible, workers' compensation insurance for such liability is applicable to the injury or death of such employee. (Insurance Code § 11590.) It would appear that the argument of the Homeowners in the worker's compensation case (now in arbitration) is that even if the technical wording of the homeowners' insurance policy at issue limits the scope of coverage to not include worker's compensation, statutorily under Insurance Code § 11590, such coverage should be implied into the homeowners' insurance policy that existed.

On the surface, it would appear that the present Demurrer presents the legal question of whether the determination of the implications of Insurance Code § 11590 should be resolved first in worker's compensation proceedings or whether it should be resolved in civil court. That, however, is not the precise issue this Court faces today. It is entirely possible, and within the realm of reason, that the arbitrator in the arbitration proceedings being held pursuant to an order from the Appeal Board may determine that questions about Insurance Code § 11590 are outside the scope of his or her authority, or, as a corollary, that they are outside the scope of the Appeal Board and worker's compensation process altogether. In such a situation, the issue would remain open and to be resolved in another forum, such as this civil court. The question this Court faces today, is whether it is proper to abate the instant civil proceedings while that question is addressed elsewhere because there are presently two forums in which that question may be raised. Rather than this Court summarily making determinations about the jurisdiction of the Appeal Board (and, derivatively, the arbitration proceeding that the Appeal Board ordered), allowing those proceedings to play out, with the possibility that those forums may come to their own conclusion about what is or is not within their jurisdiction, is an appropriate use of the abatement procedure, an appropriate conservation of judicial resources and exercise of judicial efficiency, and an appropriate exercise of the notion of comity and respect for other judicial forums. Moreover, a stay of the instant civil case can preserve any rights that may exist if, after consideration in the arbitration proceedings, it is determined that jurisdiction is lacking such that the matter must be resolved by this Court.

Unless the ruling(s) above indicate that an appearance is necessary, parties who wish to submit, who are satisfied with the above tentative ruling(s), and/or who do not otherwise wish to argue the motion(s) are encouraged to give notice to the Court and each other of their intention not to appear.

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