Judge: Edward B. Moreton, Jr., Case: BC675339, Date: 2022-11-14 Tentative Ruling

Case Number: BC675339    Hearing Date: November 14, 2022    Dept: 200

Superior Court of California

County of Los Angeles – West District

Beverly Hills Courthouse / Department 200

MOVING PARTY:                Prospective Intervenor Victoria Fire & Casualty Company

RESPONDING PARTY:         Plaintiffs Eric Bejar and Christina Bejar

BACKGROUND

This is a personal injury case.  Plaintiff Eric Bejar, a police officer, was struck from behind by Defendant Josephina Lopez while Bejar was on duty and pulling over another motorist.  At the time of the accident, Lopez was insured by Victoria Fire & Casualty Company (“Victoria”).  Lopez’s policy was subject to a limit of $15,000.  Prior to filing suit against Lopez, Eric Bejar and his wife Christina attempted to settle their claims against Lopez in exchange for her $15,000 policy limits.  The Bejars contend Victoria unreasonably failed to settle their claims and thereby breached the implied covenant of good faith and fair dealing in Lopez’s policy.  The Bejars also contend that as a result, Victoria is liable for the entire amount of judgment they obtained against Lopez (a jury verdict of nearly $50 million). 

Lopez filed a petition for bankruptcy protection on August 11, 2021.  (Lam Decl. ¶5)  The automatic stay imposed by the filing of the bankruptcy was lifted two weeks later to allow the Bejars’ claims to proceed to trial.  (Lam Decl. ¶6; Ex. A to Lam Decl.).  On October 20, 2021, following a trial in this Court, the jury awarded nearly $50 million to the Bejars.  (Ex. B to Lam Decl.)  This Court denied a motion for new trial.

Lopez then filed a notice of appeal in March 2022.  (Ex. C to Lam Decl.)  In April 2022, the clerk of the Court of Appeal sent a letter to the parties indicating that the trustee of Lopez’s bankruptcy estate, Howard M. Ehrenberg, is the proper appellant.  (Ex. D to Lam Decl.)  In March 2022, Lopez filed a letter requesting she be permitted to pursue the appeal in her own name.  (Ex. E to Lam Decl.)  In June 2022, the Court of Appeal asked Ehrenberg to respond to Lopez’s request to pursue the appeal in her own name.  (Ex. G to Lam Decl.)  In response, Ehrenberg stated he has exclusive standing to appeal.  (Ex. H to Lam Decl.)  On the same day, Lopez filed a second notice of appeal.  (Ex. I to Lam Decl.)

On September 20, 2022, the Court of Appeal issued an order stating that Ehrenberg, not Lopez, has standing to appeal.  (Ex. J to Lam Decl.)  In the same order, the Court of Appeal stated it “is considering dismissing” the appeals “as filed by a party without standing to do so.”  (Ex. J to Lam Decl.)  The Court asked Ehrenberg to “address the Bejars’ assertion that Lopez lacked standing to file the appeal at the time it was filed and whether the appeal should be dismissed.”  (Id.)  In response, Ehrenberg did not address whether the appeals should be dismissed but stated he would not oppose the Court of Appeal considering a motion to substitute Ehrenberg as the proper appellant.  (Ex. L to Lam Decl.)  Ehrenberg also explained he did not file an appeal in the first instance because “[i]n exercising my business judgment, I believe that an appeal of the Judgment was not in the best interest of the Bankruptcy Estate and thus took no action to appeal the judgment.”  (Ex. L to Lam Decl. at 3).        

This hearing is on Victoria’s motion to intervene, to protect its interests in the appeal. 

LEGAL STANDARD

Intervention may be mandatory or permissive.  (Code Civ. Proc., §387(d).)  Here, Victoria seeks permissive intervention.  Code Civ. Proc. §387(d) provides that a court “may, upon timely application, permit a nonparty to intervene in the action or proceeding if the person has an interest in the matter in litigation, or in the success of either of the parties, or an interest against both.” 

The Court permits intervention when the following factors are met: (1) the proper procedures have been followed; (2) the nonparty has a direct and immediate interest in the action; (3) the intervention will not enlarge the issues in the litigation; and (4) the reasons for the intervention outweigh any opposition by the parties presently in the action. (Siena Court Homeowners Ass’n v. Green Valley Corp. (2008) 164 Cal.App.4th 1416, 1428.)  CCP §387 should be liberally construed in favor of intervention.  (Simpson Redwood Co. v. State of California (1987) 196 Cal.App.3d 1192, 1200.)

To show a direct and immediate interest in the litigation, the prospective intervenor must show that he or she stands to gain or lose by direct operation of the judgment, even if no specific interest in the property or transaction at issue exists.¿ (Simpson Redwood, 196 Cal.App.3d at 1200.)¿ Stated differently, “[a] person has a direct interest justifying intervention in litigation where the judgment in the action of itself adds to or detracts from his legal rights without reference to rights and duties not involved in the litigation.”  (Continental Vinyl Products Corp. v. Mead Corp (1972) 27 Cal.App.3d 543, 549.)  ¿

An interest is consequential and thus insufficient for intervention when the action in which intervention is sought does not directly affect the proposed intervenor, although the results of the action may indirectly benefit or harm the proposed intervenor. (Continental Vinyl Products v. Mead Corp. (1972) 27 Cal.App.3d 543, 550.)  “One cardinal rule which is established by the cases is that an intervener's interest must be more direct and immediate than that of a simple creditor of one of the parties.” (California Physicians' Service v. Superior Court (1980) 102 Cal.App.3d 91, 95-96.)

DISCUSSION

Victoria argues intervention is necessary because the appeal may be dismissed for lack of standing.  But it is not clear how Victoria’s intervention would prevent this from happening.  The Court of Appeal has made clear that the only party with standing to appeal is the Trustee.  Victoria, like Lopez, lacks standing to appeal, and thus its intervention will not resolve the standing issue.    

Further, Victoria has not shown that the Trustee will not adequately represent its interests in the appeal.  Victoria claims that the trustee only “recently agreed” to be substituted in as appellant and has “expressed hostility to the appeal.”  But Victoria only recently asked the Trustee to be substituted in as the appellant, and within a day of that request, the Trustee agreed to do so.  (Ex. L to Lam Decl.)  Moreover, while the Trustee explained he did not pursue the appeal in the first instance because it was not in the best interest of the bankruptcy estate (Ex. L to Lam Decl.), he has also repeatedly told Victoria he has no objection to the appeal going forward.  (Ex. E to Lam Decl.) 

In addition, Victoria has not shown it has a “direct and immediate interest” in the action, as required by Code Civ. Proc., §387(d).  Victoria claims it has an interest because depending on the outcome of the appeal, it faces a “direct action” for policy benefits pursuant to Insurance Code §11580.  But Victoria has already paid those limits to the Bejars and cannot face a “direct action” for sums it has already paid.  (Ex. G to Eli Decl.)  Rather, Victoria is intervening because it is concerned that a judgment in excess of limits will constitute damages in a subsequent “bad faith” action the Trustee intends to file. 

But Victoria’s liability in excess of limits is not sufficiently “direct” to warrant intervention.  Its liability is contingent on whether a settlement it entered into with Lopez, whereby Lopez settled her “bad faith” claim against Victoria for $62,500, will be set aside as a fraudulent conveyance.  If the settlement is not set aside, Victoria faces no liability in excess of limits.  Its interest in the outcome of the appeal is contingent on resolution of an extraneous issue (fraudulent conveyance), and thus, its interest is “consequential” and does not warrant intervention.  Cf. Corridan v. Rose, Zurich General Acc. & Liability Ins. Co. (1955) 137 Cal.App.2d 524, 530 (denying insurer’s motion to intervene in third party’s negligence lawsuit against the insured; although a judgment rendered in the lawsuit may form the damages in a subsequent bad faith action, “the plaintiff’s claim against [the insurer] would not be decided by the judgment in the negligence action alone but would be contingent on the policy coverage which [the insurer] denies”).  

Accordingly, because Victoria has not shown it has a direct and immediate interest, it is not entitled to permissive intervention, and the Court does not reach the Bejars’ other arguments as to why Victoria’s motion should be denied. 

CONCLUSION

Based on the foregoing, the Court DENIES Victoria’s motion to intervene. 

IT IS SO ORDERED.

DATED: November 14, 2022                                              ___________________________

Edward B. Moreton, Jr.

Judge of the Superior Court