Judge: Bruce G. Iwasaki, Case: 18STCV01351, Date: 2023-01-27 Tentative Ruling
Case Number: 18STCV01351 Hearing Date: January 27, 2023 Dept: 58
Judge Bruce G. Iwasaki
Hearing
Date: January 27, 2023
Case
Name: Jane Doe v.
Standard International Management, LLC, et al.
Case
No.: 18STCV01351
Matter: Motion for leave to
intervene
Moving
Party: Zurich American
Insurance Company
Responding
Party: Plaintiff Jane Doe
Tentative
Ruling: The motion for leave to
intervene is granted. The motion to
vacate default is denied. Zurich is
ordered to comply with Code of Civil Procedure section 387, subdivision (e).
Jane Doe (Plaintiff) sued Defendants
Standard International Management, LLC and Does 1-50 for invasion of privacy,
negligence, premises liability, and negligent hiring.
Plaintiff alleged that while she was
staying in Defendant’s hotel, two male employees broke into her room by cutting
through the door latch. After she
confronted them in a state of undress, the men left the room. She alleges that she is a sexual abuse
survivor and the incident caused severe emotional trauma and anxiety.
In December
2019, Plaintiff amended the Complaint to add in Jared Murphy (Murphy) as a defendant.
The hotel’s insurance company, Zurich
American Insurance Company (Zurich), agreed to represent Murphy and filed an
Answer on his behalf in February 2022. Murphy then refused to cooperate with Zurich’s
counsel. The Court subsequently issued
an order to compel Murphy to attend his deposition, but he still failed to
appear. On September 19, 2022, Murphy’s
Answer was stricken and the Court entered default against him.
Zurich now
moves to intervene in this case and set aside Murphy’s default. It argues that it has a direct interest
because under Insurance Code section 11580, a judgment creditor (Plaintiff) who
obtains a default judgment against Murphy may seek to enforce the judgment
against Zurich. In addition, it seeks to
set aside Murphy’s default.
Plaintiff
filed an untimely opposition, arguing that Murphy “abdicated any right to
contest the allegations against him” and that Zurich may only defend itself. The Court has discretion to disregard
Plaintiff’s opposition. Zurich, however,
filed a reply. Accordingly, the Court
will consider the merits.
Motion to Intervene
California
Code of Civil Procedure section 387, subdivision (a) provides that,
“[u]pon¿timely application, any person, who has an interest in the matter in
litigation, or in the success of either of the parties, or an interest against
both, may intervene in the action or proceeding.¿ An intervention takes
place when a third person is permitted to become a party to an action or
proceeding between other persons, either by joining the plaintiff in claiming
what is sought by the complaint, or by uniting with the defendant in resisting
the claims of the plaintiff, or by demanding anything adversely to both the
plaintiff and the defendant.”
To establish
a direct and immediate interest in the litigation for purposes of permissive
intervention, a non-party seeking intervention must show a “‘direct or
immediate’” interest “‘that the intervener will either gain or lose by the
direct legal operation of the judgment.’” (Simpson Redwood Co. v. State of
California¿(1987) 196 Cal.App.3d 1192, 1201.)¿ “Whether the intervener’s
interest is sufficiently direct must be decided on the facts of each case¿. . .
.¿And section 387 should be liberally construed in favor of intervention.”¿ (Id.¿at
p. 1200.) “In order that a party may be
permitted to intervene it is not necessary that his interest in the action be
such that he will inevitably be affected by the judgment.¿ It is enough
that there be a substantial probability that his interests will be so
affected.¿ ‘The purposes of intervention are to protect the interests of those
who may be affected by the judgment.’”¿ (Timberidge¿Enterprises, Inc.
v. City of Santa Rosa¿(1978) 86 Cal.App.3d 873, 881-882, original italics.)¿
When “[p]resented with a motion for
intervention, the court must determine whether the intervenor has established
(1) it has a direct interest in the lawsuit; (2) intervention would not enlarge
the issues raised by the original parties; and (3) the intervenor would not
‘tread on the rights of the original parties to conduct their own lawsuit.’” (Bame
v. City of Del Mar (2001) 86 Cal.App.4th 1346, 1364.)
An insurance
carrier who is not a party to an action can intervene on behalf of its insured
when the insurance carrier could be subject to a subsequent action under
Insurance Code section 11580.¿ (Reliance Insurance Co. v. Superior Court¿(2000)
84 Cal.App.4th 383, 386 [“An insurer’s right to intervene in an action against
the insured, for personal injury or property damages, arises as a result of Insurance
Code section 11580”].)¿ “Section 11580 provides that a judgment creditor may
proceed directly against any liability insurance covering the¿defendant,
and¿obtain satisfaction of the judgment up to the amount of the policy limits.
[Citation.] Thus, where the insurer may be subject to a direct action under
Insurance Code section 11580 by a judgment creditor who has or will obtain a
default judgment in a¿third party¿action against the insured,¿intervention is
appropriate.”¿ (Id. at pp. 386-387;¿see also¿Jade K. v.¿Viguri¿(1989)
210 Cal.App.3d 1459, 1468 [permitting an insurer to intervene in lawsuit to
litigate liability and damage issues].)¿
Analysis
Zurich is
the insurance carrier that provided coverage for Defendant Standard
International Inc. and its employees on the day of the incident. (Tamaddon
Decl., ¶¶ 2-3.) Zurich seeks to intervene because its counsel has made
several attempts to reach Murphy, who has refused to cooperate. (Id. at
¶ 4; Gutierrez Decl., ¶¶ 6-8.) Such efforts included sending a
reservation of rights letter to Murphy, reserving Zurich’s right to decline
coverage if Murphy continued to refuse to cooperate. (Tamaddon Decl., ¶ 4.) Zurich seeks to intervene to protect its own
interest, which will be adversely affected if it does not intervene, and
judgment is entered against Murphy. (Id. at ¶ 6)
Zurich has
presented sufficient facts to grant leave to intervene. As Murphy is
uncooperative and in default, a default judgment may be entered against him,
which may expose Zurich to liability. (Reliance Insurance Co. v. Superior
Court,
supra, 84 Cal.App.4th at p. 385 [“intervention by an insurer is
permitted where the insurer remains liable for any default judgment against the
insured, and it has no means other than intervention to litigate liability or
damage issues”].) While a
reservation of rights letter was mailed to Murphy, “an insurer providing a
defense under a reservation of rights has not ‘lost its right to control the
litigation’ [citation], and therefore retains a direct interest in the case.” (Gray v. Begley (2010) 182 Cal.App.4th 1509, 1523; see also Jade K. v.
Viguri, supra, Cal.App.3d at pp. 1468, 1472 [insurer had a
right to intervene even when it tendered a defense under a reservation of
rights].)
Plaintiff argues that Zurich can
only defend its own interests. This
position has not been thought through carefully enough. “[A]n intervening
insurer is not bound by a default taken against its insured . . . A
party’s default does not bind nondefaulting codefendants, even when the basis
for the action against the codefendants is vicarious liability arising from the
acts of the defaulting defendant. Thus, an insurer intervening in an action to
pursue its own interests after its insured has defaulted is not required to
vacate the insured’s default as to itself; the insured’s default simply has no
effect on the insurer.” (Western
Heritage Insurance Co. v. Superior Court (2011) 199 Cal.App.4th 1196,
1211.) It is because of Murphy’s default
and failure to protect his own interests that necessitated Zurich to move to
intervene. Thus, the Court grants the
motion for leave to intervene.
Motion
to vacate default
Zurich also seeks to set aside
Murphy’s default. Plaintiff opposes,
arguing that there is no relief for Murphy’s intentional conduct.
Code of Civil Procedure section 473,
subdivision (b) provides for either discretionary or mandatory relief from
certain prior actions or proceedings in the trial court. (Luri¿v. Greenwald¿(2003)
107 Cal.App.4th 1119, 1124.) “‘Under the
discretionary relief provision, on a showing of “mistake, inadvertence,
surprise, or excusable neglect,”¿the court has discretion to allow relief from
a “judgment, dismissal, order, or other proceeding taken against”¿a party or
his or her attorney.¿¿Under the mandatory relief provision, on the other hand,
upon a showing by attorney declaration of “mistake, inadvertence, surprise, or
neglect,”¿the court shall vacate any “resulting default judgment or dismissal
entered.”’ [Citation.] Applications seeking relief under the mandatory
provision of section 473 must be ‘accompanied by an attorney’s sworn affidavit
attesting to his or her mistake, inadvertence, surprise, or neglect.’ The
mandatory provision¿further adds that ‘whenever relief¿is granted based on an
attorney’s affidavit of fault [the court shall] direct the attorney to pay
reasonable compensatory legal fees and costs¿to opposing counsel or
parties.’” (Ibid.; Code Civ.
Proc., § 473, subd. (b).)¿¿
Zurich cites to Clemmer v. Hartford Insurance Co.
(1978) 22 Cal.3d 865, 885 for the proposition that an insurer may move to
vacate the default of its insured. In Clemmer,
the insurer first found out about the wrongful death action against its insured
“on the day before the hearing on default judgment following [insured’s]
default.” (22 Cal.3d at p. 884.) Thus, it was likely the insurer “would have
had little difficulty making out a case for a ‘mistake, inadvertence, surprise
or excusable neglect.’” (Id. at
p. 886.)
Zurich makes no such showing here. While the Court agrees that Zurich may move to
vacate the default, Zurich does not explain the “mistake, inadvertence,
surprise or excusable neglect.” (See
also Jade K. v. Viguri, supra, 210 Cal.App.3d at p. 1470 [reversing
trial court’s denial of a motion to vacate default judgment because the insured
“did not notify [insurer] of [plaintiff’s] lawsuit or request defense under the
[] policy until after entry of default”].)
Here, Murphy was represented by attorney Edgar J. Gutierrez, an attorney
appointed for him by Zurich. (Gutierrez
Decl., ¶ 2.) Gutierrez filed an Answer
on behalf of Murphy. (Id. at ¶
3.) Zurich does not argue that it was
surprised because it received notice of this case one day before default
judgment or after entry of default. (Clemmer,
supra, 22 Cal.3d at p. 884; Jade K., supra, 210 Cal.App.3d
at p. 1470.) Without such a showing, the
Court denies the request to vacate the default.
Conclusion
The motion for leave to intervene is
granted. The motion to vacate default is
denied. Zurich is directed to comply
with Code of Civil Procedure section 387.