Judge Holly J. Fujie, Case Number: 20STCV48954, Date: 2023-06-22 Tentative Ruling

DEPARTMENT 56 JUDGE HOLLY J. FUJIE, LAW AND MOTION RULINGS. The court makes every effort to post tentative rulings by 5.00 pm of the court day before the hearing. The tentative ruling will not become the final ruling until the hearing [see CRC 3.1308(a)(2)], and are also available in the courtroom on the day of the hearing [see CRC 3.1308(b)]. If the parties wish to submit on the tentative ruling and avoid a court appearance, all counsel must agree and choose which counsel will give notice. That counsel must 1) call Dept 56 by 8:30 a.m. on the day of the hearing (213/633-0656) and state that all parties will submit on the tentative ruling, and 2) serve notice of the ruling on all parties. If any party declines to submit on the tentative ruling, then no telephone call is necessary and all parties should appear at the hearing in person or by Court Call. Court reporters are not provided, and parties who want a record of motions and other proceedings must hire a privately retained certified court reporter.

MOVING PARTY: Defendant Sentinel Insurance Company, Ltd. (“Moving Defendant” or “Sentinel”)

RESPONDING PARTY: Plaintiff General Star National Insurance Company (“Plaintiff” or “General Star”)

In relevant part, the Complaint alleges: Moving Defendant issued a commercial general liability policy to Zuma House, LC (“Zuma”) (the “Sentinel Primary Policy”). (Complaint ¶ 5.) The Sentinel Primary Policy included business liability coverage of $1,000,000 per occurrence, in addition to defense expenses. (Id.) Zuma had a second primary general liability policy with St. Paul Fire and Marine Insurance Company (the “Travelers Primary Policy”) that included business liability coverage of $1,000,000 per occurrence. (Complaint ¶ 6.)

Zuma was also named as an insured on an Excess Commercial Umbrella Insurance Policy issued by Plaintiff. (the “General Star Policy”). (Complaint ¶ 7.) The General Star Policy applied in excess of the limits of the Sentinel Primary Policy and Travelers Primary Policy. (Id.)

On April 21, 2016, Fabian Caloca (“Caloca”), was struck by a garage door while making a delivery to Zuma’s property and sustained a head wound. (Complaint ¶ 8.) On May 23, 2016, Caloca’s counsel made a claim against Zuma for his injuries, which was reported to Sentinel on May 26, 2016. (Id.) Sentinel accepted coverage for the claim and did not report the claim to General Star or Travelers. (Id.) Sentinel did not materially investigate Caloca’s claim, did not gather and preserve evidence relevant to liability or damages, did not retain competent defense counsel, and did not attempt to timely settle the claim. (Complaint ¶ 9.)

On January 9, 2018, Caloca filed a personal injury complaint against Zuma (the “Underlying Action”). (Complaint ¶ 10.) Although Sentinel represented Zuma in the Underlying Action, its counsel failed to adequately defend against Caloca’s claim or take actions to limit Zuma’s liability. (See Complaint ¶¶ 11-13.) Sentinel also failed to give Plaintiff timely notice of the Caloca claim and the Underlying Action. (Complaint ¶ 14.) When Plaintiff received notice of the Underlying Action shortly before the trial thereon began, Plaintiff took action to limit Zuma’s exposure, and the Underlying Action settled shortly thereafter, with Plaintiff handling the portion of the settlement that exceeded the Sentinel and Travelers Primary Policies. (Complaint ¶ 15.) Had Moving Defendant properly handled Caloca’s claim and the Underlying Action, the Underlying Action would have settled for less than the $2,000,000 limits of the Sentinel and Travelers Primary Policies. (Complaint ¶ 16.)

Moving Defendant filed a motion for summary judgment/adjudication (the “MSJ”) on the ground that the undisputed material facts demonstrate that Moving Defendant is entitled to judgment as a matter of law. Moving Defendant also filed a motion to seal (the “Motion to Seal”) portions of documents filed in conjunction with the MSJ and responsive briefings.[1]

Plaintiff’s objections to the evidence submitted with the MSJ are OVERRULED. Plaintiff’s objections to the evidence submitted with the MSJ reply brief (the “MSJ Reply”) are SUSTAINED. The Court declines to consider the newly offered evidence in the MSJ Reply. (See San Diego Watercrafts, Inc. v. Wells Fargo Bank (2002) 102 Cal.App.4th 308, 313-14.)

The function of a motion for summary judgment or adjudication is to allow a determination as to whether an opposing party cannot show evidentiary support for a pleading or claim and to enable an order of summary dismissal without the need for trial. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) CCP section 437c, subdivision (c) requires the trial judge to grant summary judgment if all the evidence submitted, and all inferences reasonably deducible from the evidence and uncontradicted by other inferences or evidence, show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law. (Adler v. Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.)

As to each claim as framed by the complaint, the defendant moving for summary judgment must satisfy the initial burden of proof by presenting facts to negate an essential element, or to establish a defense. (CCP § 437c, subd. (p)(2); Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1520.) Courts liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party. (Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389.)

Once the defendant has met that burden, the burden shifts to the plaintiff to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto. To establish a triable issue of material fact, the party opposing the motion must produce substantial responsive evidence. (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 166.)

Moving Defendant provides evidence that: On April 21, 2016, Caloca was injured while delivering a package to Zuma. (Separate Statement of Undisputed Material Facts (“UMF”) 1.) Zuma notified Moving Defendant of the accident in May of 2016. (UMF 2.) Over the next 22 months, Moving Defendant’s adjuster unsuccessfully made inquiries with Caloca’s attorneys to obtain medical records about Caloca’s injuries. (See UMF 4.) The Underlying Action was initiated in 2018, and on about March 26, 2018, Zuma tendered its defense of the lawsuit to Moving Defendant. (UMF 6.) Caloca never made settlement demands within Sentinel’s policy limit. (See UMF 10-15.)

In its opposition (the “MSJ Opposition”), Plaintiff presents the declaration of an expert witness to refute Moving Defendant’s position regarding damages. (See Declaration of Timothy Walker (“Walker Decl.”).) Walker opines that if Sentinel had acted in good faith, the claim could have been resolved – whether by settlement or judgment – for less than $3 million. (Walker Decl., p. 12.) Walker puts forward various expert opinions stating that Sentinel engaged in misconduct by appointing staff counsel rather than outside counsel; failing to conduct investigation of fact and expert witnesses to defend against the claim; and failing to notify General Star of the claim. (See Walker Decl., p. 4-6, 7-11).

Walker opines that “had the case been aggressively prepared, it is extremely likely that a different outcome would have occurred and a settlement well within the $2 million primary policy limits could have been achieved” and “the case still had an opportunity to be resolved for less than $3 million had Sentinel made an offer that was warranted in the area of $500,000.” (Walker Decl., p. 14-15.) Walker points out certain specific evidence that either was or should have been in Sentinel’s possession and, if aggressively pursued, could have provided a “good opportunity” to resolve the case within the $2 million policy limits. (Walker Decl., p. 12-14, 16-18.)

The elements of an insurer's cause of action for equitable subrogation are as follows: (a) the insured suffered a loss for which the defendant is liable, either as the wrongdoer whose act or omission caused the loss or because the defendant is legally responsible to the insured for the loss caused by the wrongdoer; (b) the claimed loss was one for which the insurer was not primarily liable; (c) the insurer has compensated the insured in whole or in part for the same loss for which the defendant is primarily liable; (d) the insurer has paid the claim of its insured to protect its own interest and not as a volunteer; (e) the insured has an existing, assignable cause of action against the defendant which the insured could have asserted for its own benefit had it not been compensated for its loss by the insurer; (f) the insurer has suffered damages caused by the act or omission upon which the liability of the defendant depends; (g) justice requires that the loss be entirely shifted from the insurer to the defendant, whose equitable position is inferior to that of the insurer; and (h) the insurer's damages are in a liquidated sum, generally the amount paid to the insured. (Fireman's Fund Ins. Co. v. Maryland Cas. Co. (1998) 65 Cal.App.4th 1279, 1292.)

Moving Defendant argues that summary adjudication of all of Plaintiff’s claims is proper because the evidence establishes that there was no opportunity for Sentinel to settle within its policy limit and Plaintiff would not have accepted a settlement offer of less than $3 million dollars. The Court finds that Moving Defendant has met its burden to show that there are no triable issues of material fact regarding causation.

Plaintiff argues that its evidence is sufficient to raise a factual issue over whether Moving Defendant could have obtained a settlement within its policy limit if it had handled Caloca’s claim differently. In its MSJ Opposition, Plaintiff cites to Charnay and Mireskandri for the proposition that plaintiff must only show that that a more favorable result was possible. (Charnay v. Cobert (2006) 145 Cal.App.4th 170, 180-81; Mireskandari v. Edwards Wildman Palmer LLP (2022) 77 Cal.App.5th 247, 261.) These comparisons are inapt because they articulate the standard for evaluating pleadings at the demurrer stage rather than evaluating evidence in a dispositive motion. The court in Charnay explicitly noted that there is a difference between pleading standards in a demurrer and evidence submitted in a summary judgment, which needed to show that actual harm was not speculative. (Charnay, supra, 145 Cal.App.4th at 180-81.)

In Marshak v. Ballesteros, summary judgment was granted in favor of the defendant when the plaintiff in a legal malpractice action failed to offer any evidence to show that the case was worth more than the amount for which he settled it. (Marshak v. Ballesteros (1999) 72 Cal.App.4th 1514, 1519.) Similarly, in Herrington v. Superior Court, the court granted summary judgment when the plaintiff failed to produce evidence showing that his wife would have settled for less than she did or that, following a trial, he would have obtained a judgment more favorable than the settlement. (Herrington v. Superior Court (2003) 107 Cal.App.4th 1052, 1058.) In Barnard v. Langer, the court held that it was not enough for plaintiff to claim that it was possible to obtain a better settlement or a better result at trial, but the damages had to be proven to legal certainty. (Barnard v. Langer (2003) 109 Cal.App.4th 1453, 1461.) The Barnard court noted: “The mere probability that a certain event would have happened, upon which a claim for damages is predicated, will not support the claim or furnish the foundation of an action for such damages.” (Id. at 1462.)

Accordingly, it is not sufficient for Plaintiff to merely show that a more favorable result was possible in order to raise a triable issue of fact at the summary judgment stage. Rather, Plaintiff must offer evidence that absent Sentinel’s alleged misconduct, there would have been a more favorable settlement, or a jury verdict would have resulted in a lesser judgment. Plaintiff’s evidence regarding the myriad of ways in which it contends Moving Defendant mishandled Caloca’s claim and the Underlying Action does not raise nonspeculative evidence that Moving Defendant could have settled with Caloca for an amount within its policy limit had it acted differently. Accordingly, Plaintiff’s evidence is not sufficient to raise a factual dispute on the element of causation. (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 153; see e.g., Travelers Cas. & Sur. Co. v. Superior Court (1998) 63 Cal.App.4th 1440, 1462 (finding that insured’s opposition expert’s declaration that the contamination “could have been” caused by other factors did not raise a triable issue of fact).)

Plaintiff also argues that it incurred legal expenses as damages as a result of Moving Defendant’s handling of the Underlying Action. This argument is also unpersuasive. Damages solely based on legal costs are improper damages when a party is attempting to show a better result in an underlying litigation. (See Herrington, supra, 107 Cal.App.4th at 1058.)

Based on the foregoing, the Court finds that the MSJ Opposition does not raise a factual dispute over the issue of causation. The Court therefore GRANTS the MSJ in its entirety.

Under California Rules of Court (“CRC”), rule 2.550 (c), unless confidentiality is required by law, court records are presumed to be open. (CRC, r. 2.550 (c).) Subject to certain exceptions, a court record must not be filed under seal without a court order. (Overstock.com, Inc. v. Goldman Sachs Group, Inc. (2014) 231 Cal.App.4th 471, 486.) A party requesting that a record be filed under seal must file a motion or an application for an order sealing the record. (CRC, r. 2.551 (b).) The motion or application must be accompanied by a memorandum and a declaration containing facts sufficient to justify the sealing. (Id.) In order for records to be sealed, a trial court must hold a hearing and expressly find that: (1) there exists an overriding interest supporting closure and/or sealing; (2) there is a substantial probability that the interest will be prejudiced absent closure and/or sealing; (3) the proposed closure and/or sealing is narrowly tailored to serve the overriding interest; and (4) there is no less restrictive means of achieving the overriding interest. (Universal City Studios, Inc. v. Superior Court (2003) 110 Cal.App.4th 1273, 1279.) Since court records are public records, the burden rests on the party seeking to deny public access to those records to establish compelling reasons why and to what extent these records should be made private. (Mary R. v. B. & R. Corp. (1983) 149 Cal.App.3d 308, 317.)

The Motion to Seal requests that information regarding third-party medical records and Moving Defendant’s confidential business information be redacted from documents offered in connection with the MSJ. The Court finds that Moving Defendant has demonstrated that redacting this information is appropriate. For this reason and because it is unopposed, the Court GRANTS the Motion to Seal. (Sexton v. Superior Court (1997) 58 Cal.App.4th 1403, 1410.)

Parties who intend to submit on this tentative must send an email to the Court at SMC_DEPT56@lacourt.org as directed by the instructions provided on the court website at www.lacourt.org. If the department does not receive an email and there are no appearances at the hearing, the motion will be placed off calendar.

Hon. Holly J. Fujie

Judge of the Superior Court

[1] The Motion to Seal is unopposed. Any opposition papers were required to have been filed and served at least nine court days before the hearing under California Code of Civil Procedure (“CCP”) section 1005, subdivision (b).