Judge: Matthew C. Braner, Case: 37-2022-00036641-CU-MC-CTL, Date: 2024-04-19 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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HALL OF JUSTICE

TENTATIVE RULINGS - April 18, 2024

04/19/2024  09:00:00 AM  C-60 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Matthew C. Braner

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Civil - Unlimited  Misc Complaints - Other Summary Judgment / Summary Adjudication (Civil) 37-2022-00036641-CU-MC-CTL ASPIRE GENERAL INSURANCE COMPANY VS BRICKELL [IMAGED] CAUSAL DOCUMENT/DATE FILED:

Defendant Kimberly Brickell's motion for summary judgment, or in the alternative summary adjudication, is GRANTED.

Plaintiff Aspire General Insurance Company ('Aspire')'s motion for summary judgment, or in the alternative summary adjudication, is DENIED.

Defendant's Motion Summary judgment is appropriate when all the papers submitted by the parties show there is no triable issue of material fact as to any cause of action and the moving party is therefore entitled to judgment as a matter of law. (Code of Civ. Proc., § 437c, subd. (c).) A defendant who moves for summary judgment has the initial burden of showing each and every alleged cause of action is without merit. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) A defendant can meet that burden by showing one or more elements of each cause of action cannot be established or that there is a complete defense to each cause of action. (Code of Civ. Proc., § 437c, subd. (p)(2).) Here, Defendant argues summary judgment is warranted because Plaintiff's claims are barred by the doctrine of res judicata, as the underlying case between Defendant and Plaintiff's insured, Joseph Medeiros, resulted in a judgment last year. Defendant presents evidence that Plaintiff and Mr. Medeiros were in contractual privity and otherwise 'sufficiently close' to justify application of the doctrine, that the purported December 2018 settlement arose from and relates to the same nexus of facts as the judgment, and that Plaintiff could (and should) have sought to enforce the purported settlement in the underlying case, instead of sitting on its (and its insured's) rights for nearly four years before filing this case in September 2022. The court agrees.

The doctrine of res judicata, or claim preclusion, bars re-litigation of matters 'actually raised by proper pleadings and treated as an issue' in a prior action. (Aerojet-General Corp. v. American Express Ins. Co. (2002) 97 Cal.App.4th 387, 402.) It applies 'when 'a second suit involves (1) the same cause of action (2) between the same parties [or their privies] (3) after a final judgment on the merits in the first suit.'' (Grande v. Eisenhower Medical Center (2022) 13 Cal.5th 313, 323 [quoting Samara v. Matar (2018) 5Cal.5th 322, 327].) As relevant to this case, the doctrine of res judicata also applies to any matter 'within the scope of the action, related to the subject-matter and relevant to the issues, so that it could have been raised,' thereby rendering the judgment in the earlier action 'conclusive on it despite the fact that it was not in Calendar No.: Event ID:  TENTATIVE RULINGS

3078779  16 CASE NUMBER: CASE TITLE:  ASPIRE GENERAL INSURANCE COMPANY VS BRICKELL [IMAGED]  37-2022-00036641-CU-MC-CTL fact expressly pleaded or otherwise urged.' (Id.; see also Hulsey v. Koehler (1990) 218 Cal.App.3d 1150, 1157 ['The doctrine of res judicata . . . preclude[es] parties from relitigating issues they could have raised in a prior action concerning the same controversy.']; Torrey Pines Bank v. Superior Court (1989) 216 Cal.App.3d 813, 821 ['Res judicata bars 'not only the reopening of the original controversy, but also subsequent litigation of all issues which were or could have been raised in the original suit.'' (quoting Gates v. Superior Court (1986) 178 Cal.App.3d 301, 311)].) In applying the doctrine, the earlier and subsequent actions concern the same controversy if 'they both arose from the same transactional nucleus of facts,' and if they did, 'the judgment in the first action is deemed to adjudicate for purposes of the second action every matter which was urged, and every matter which might have been urged, in support of the cause of action or claim in litigation.' (Hulsey v. Koehler, supra, 218 Cal.App.3d at p. 1157.) Facts that give rise an affirmative defense that could have been raised in the first action precludes a party or its privies 'from asserting those identical facts as affirmative defenses' in the second action. (Torrey Pines Bank v. Superior Court, supra, 216 Cal.App.3d at p. 821.) Here, the purported December 2018 settlement plainly arises from the same nucleus of facts as Defendant's personal injury case against Plaintiff's insured. Moreover, Plaintiff does not dispute the settlement would have resolved Defendant's bodily injury claims in the underlying case against Plaintiff's insured, to the direct and substantial benefit of both Plaintiff its insured. Notwithstanding its artful pleading effort to distance Mr. Medeiros from the purported settlement, (Complaint, ¶¶ 9, 11-18), Mr.

Medeiros was not only the direct beneficiary of the settlement, but his interest in securing the settlement was far greater than Plaintiff's, given the $15,000 limit for bodily injury on the insurance policy and the high likelihood of a substantial bodily injury claim against him if the settlement fell through. Mr. Medeiros also participated directly in the settlement effort, as Defendant had required signed affidavits from him attesting to all applicable insurance policies and that he was not driving within the course and scope of his employment. Thus, if settlement of the bodily injury claims had in fact been reached, as Plaintiff now claims in this case nearly four years later, such facts equally gave rise to an affirmative defense by Mr.

Medeiros that could (and should) have been raised in Defendant's personal injury case against him.

Plaintiff's arguments in opposition are without merit. First, Plaintiff mischaracterizes this court's prior orders overruling Defendant's demurrer and denying Defendant's motion for judgment on the pleadings.

In connection with each motion, the court was bound by the allegations in the complaint, which framed the 2018 settlement as solely between Defendant and Plaintiff. The court emphasized this limitation in its order denying the motion for judgment on the pleadings and concluded that adjudication of Defendant's arguments should be addressed in a fact-based motion or at trial. (ROA #73, p. 2.) Second, Plaintiff relies on legal authority concerning issue preclusion to contend that only issues 'actually litigated' are barred in a subsequent suit. The same is not true for res judicata, as the above cited authority makes clear. Relatedly, Plaintiff's contention its cause of action for declaratory relief somehow precludes application of res judicata relies on a complete misreading of the Aerojet case.

There, the court observed that if the earlier case resulted in a declaratory judgment, then that judgment had preclusive effect only on matters declared in the judgment. (Aerojet-General Corp. v. American Express Ins. Co., supra, 97 Cal.App.4th at pp. 402-404.) This limitation is irrelevant in this case, as the judgment in the underlying case was not declaratory.

Finally, Plaintiff's assertion the issue of the settlement could not be raised in the underlying case borders on the frivolous. Evidence of insurance coverage is inadmissible only to 'to prove negligence or other wrongdoing,' which is not the purpose such evidence would serve in connection with showing a settlement was reached. (Evid. Code, § 1155.) And given Plaintiff filed its own summary judgment motion in this case to prove the existence of the settlement, such a motion could also have been filed in the underlying case, thereby eliminating the risk of prejudice in front of a jury, which itself is highly speculative. Indeed, there is an equal or greater likelihood a jury will react with greater restraint in determining damages against an individual if it knows insurance coverage is limited to $15,000.

Consequently, if Plaintiff and Mr. Medeiros were in privity, the doctrine of res judicata will bar Plaintiff Calendar No.: Event ID:  TENTATIVE RULINGS

3078779  16 CASE NUMBER: CASE TITLE:  ASPIRE GENERAL INSURANCE COMPANY VS BRICKELL [IMAGED]  37-2022-00036641-CU-MC-CTL from asserting in this second case that a settlement was reached. The concept of 'privity' requires 'the sharing of 'an identity or community of interest,' with 'adequate representation' of that interest in the first suit, and circumstances such that the nonparty 'should reasonably have expected to be bound' by the first suit.' (DKN Holdings LLC v. Faerber (2015) 61 Cal.4th 813, 826 [quoting Clemmer v. Hartford Insurance Co. (1978) 22 Cal.3d 865, 875]; see also Grande v. Eisenhower Medical Center, supra, 13 Cal.5th at p. 326.) As between an insured and its insurer more specifically, a 'liability insurer is not, as [the insurer] well knows, a stranger to the judgment. [Citation.] The contractual relationship of liability and social policy supply the necessary privity of party between insured and insurer to bind the latter.' (Executive Risk Indemnity, Inc. v. Jones (2009) 171 Cal.App.4th 319, 334, quoting Ridgeway Gulf Life Ins. Co. (5th Cir. 1978) 578 F.2d 1026, 1029.) Here, as described above, contractual privity existed between Plaintiff and Mr. Medeiros as insurer and insured, and the purported settlement was to the benefit of both Plaintiff and its insured, thereby demonstrating a community of interest as to both the settlement and the case as a whole. Plaintiff's interests were also adequately represented in the underlying case; it is undisputed Plaintiff complied with its duty of defense to its insured and supplied him with legal counsel throughout that four-year case.

Thus, Plaintiff and Mr. Medeiros were in privity; Plaintiff should reasonably have expected to be bound by the judgment resulting from the underlying case.

Plaintiff's reliance on Citizens for Open Access Etc. Tide, Inc. v. Seadrift Assn. (1998) 60 Cal.App.4th 1053, to refute privity between it and its insured, is misplaced. That case involved an issue of privity between the attorney general and the general public (in connection with a settlement between the attorney general and the California Coastal Commission) sufficient to preclude a subsequent declaratory relief action; it does not stand for the broad principle that privity is construed narrowly for preclusive purposes.

In sum, the doctrine of res judicata applies to Plaintiff's claims in this case, which could have been asserted in the underlying case that resulted in a judgment. The instant claims are therefore barred.

Accordingly, Defendant's motion for summary judgment is granted.

Plaintiff's Motion Given the preclusive effect of the judgment in the underlying case on Plaintiff's claims in this case, Plaintiff's motion has effectively been mooted, and is therefore denied. The court notes that even if res judicata did not bar the claims, the court still would have denied the motion. The court is not persuaded CSAA Ins. Exchange v. Hodroj (2021) 72 Cal.App.5th 272 would have any bearing on this outcome, as that case is limited to the specific facts in that case, and such facts are not present here.

In CSAA Ins. Exchange v. Hodroj, the court emphasized the well-established contract law principle that 'when parties agree on the material terms of a contract with the intention to later reduce it to a formal writing, failure to complete the formal writing does not negate the existence of the initial contract.' (Id. at p. 276.) The plaintiff's counsel had communicated an offer that was conditioned only on an agreement to settle the 'personal injury claim' for the insurance policy limits within 21 days and on provision of proof of the policy limits and the lack of any other insurance coverage. The court construed the following language as anticipating an intent to reduce the agreement to a subsequent writing: 'You may further condition your acceptance of this offer by requiring that our client execute a Release of all Bodily Injury Claims against your insureds and their heirs only, which Release is not inconsistent with the terms and conditions of this offer.' The court then concluded the insurer's timely written response communicating the offer was accepted, providing the requested documents, and conditionally tendering payment of the policy limit, was sufficient to accept the offer and form a contract. On these facts, the subsequent issues with the release (i.e., reducing the agreement to a formal writing) did not negate the agreement.

Here, the facts are much different. Defendant's offer specified a litany of material conditions and made clear that failure to fully comply with any one of them would be considered a rejection of the offer.

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3078779  16 CASE NUMBER: CASE TITLE:  ASPIRE GENERAL INSURANCE COMPANY VS BRICKELL [IMAGED]  37-2022-00036641-CU-MC-CTL Although Plaintiff emphasizes the extensive and good faith efforts its employee made to try to comply with Defendant's conditions despite the proximity of the Christmas and New Years holidays, those efforts ultimately fell short. The facts here resemble far more closely the facts in Heyadati v. Interinsurance Exchange of the Automobile Club (2021) 67 Cal.App.5th 833. Although the issue in that case was whether the insurer's efforts to comply with the plaintiff's conditions was sufficiently reasonable to preclude a bad faith action, that issue could only have been before the court if it was found that the facts surrounding the settlement (which are very similar to the facts in this case) demonstrated that a settlement was not entered.

Closing Comments Adjudication of the parties' motions resolves Plaintiff's complaint. However, Defendant's cross-complaint remains, in which Defendant brings a bad faith claim against Plaintiff assigned to her by Mr. Medeiros. In an effort to avoid unnecessary future motion practice, the court notes that it is very unlikely to grant a motion for summary judgment in favor of either party in connection with the cross-complaint. 'Good faith is generally for the trier of fact to resolve, unless, 'from uncontroverted evidence, a reasonable man following the law can draw but one conclusion on the issue.'' (Heyadati v. Interinsurance Exchange of the Automobile Club, supra, 67 Cal.App.5th at p. 843 [quoting Davy v. Public National Ins. Co. (1960) 181 Cal.App.2d 387, 400].) 'An insurer's good or bad faith must be evaluated in light of the totality of the circumstances surrounding its actions.' (Id. [quoting Wilson v. 21st Century Ins. Co. (2007) 42 Cal.4th 713, 723].) Much of the evidence (all of which is undisputed) presented in connection with the parties' instant motions overlaps with the evidence relevant to a bad faith claim. Based on this evidence, the court does not believe a reasonable person could draw only one conclusion. Although Plaintiff ultimately failed to comply with Defendant's offer terms, it made substantial efforts to comply and quite obviously intended to comply. Conversely, a reasonable person could find that Defendant's conditions were unreasonable, evidencing an intent not to settle, but instead to manufacture a future bad faith claim against Plaintiff. A reasonable person could also conclude that even if the conditions were unreasonable, Plaintiff's subsequent failure to raise the issue of settlement as a defense of its insured was bad faith conduct.

In sum, it is apparent to this court that facts exist for each party that are favorable to their respective arguments concerning Plaintiff's good or bad faith conduct. As such, it is appropriate to leave this determination to the fact-finder.

The minute order is the order of the court.

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