Judge: Maurice A. Leiter, Case: 21STCV04428, Date: 2023-03-22 Tentative Ruling

Case Number: 21STCV04428    Hearing Date: March 22, 2023    Dept: 54

Hearing Date: March 22, 2023

Department 54, Judge Maurice A. Leiter

Motion for Summary Judgment

Moving Party: Defendant State Farm Mutual Insurance Company

Responding Party: Plaintiff Melissa Pellone

T/R:     STATE FARM’S MOTION FOR SUMMARY JUDGMENT, OR IN THE ALTERNATIVE, SUMMARY ADJUDICATION IS DENIED.

            STATE FARM TO NOTICE.

If the parties wish to submit on the tentative, please email the courtroom at¿SMCdept54@lacourt.org¿with notice to opposing counsel (or self-represented party) before 8:00 am on the day of the hearing. 

The court considers the moving papers, opposition, and reply.

BACKGROUND

            Plaintiff Melissa Pellone sued Defendants Ryan Crosby, Crosby Insurance and Financial Services, Mirzakhanyan Insurance Agency, Inc., and State Farm Mutual Automobile Insurance on February 4, 2021. Plaintiff filed the operative second amended complaint on September 13, 2022. The SAC asserts causes of action for (1) vicarious liability for professional negligence; and (2) reformation of insurance contract.

Plaintiff alleges Defendant Ryan Crosby and Crosby Insurance and Financial Services insured Plaintiff’s mother’s vehicles, one of which is driven by the Plaintiff.  Defendant Crosby and Crosby Insurance are in New York.  Plaintiff lives in Los Angeles, California.

Plaintiff’s mother, Debra, advised Defendant Crosby that she wanted to increase the uninsured motorist policy limit on Plaintiff’s vehicle to $250,000.  Because Crosby was not licensed in California, Plaintiff alleges that Crosby formed a joint venture with Mirzakhanyan to write insurance for Debra, and that neither increased the policy as requested.

Plaintiff was in a car accident and sustained injuries.  Plaintiff alleges that because she would have been covered by an uninsured policy with a $250,000 per claim policy limit, State Farm would have paid more than the $100,000 limit of the policy.

EVIDENCE OBJECTIONS

“In granting or denying a motion for summary judgment or summary adjudication, the court need rule only on those objections to evidence that it deems material to its disposition of the motion.” (CCP § 437c(q).) Defendant’s objections to Debra Pellone’s declaration are OVERRULED.

ANALYSIS

“The purpose of the law of summary judgment is to provide courts with a mechanism to cut through the parties' pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) Trial judges are required “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(p)(2).) 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.” (Id.)  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.) 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.)

            Defendant State Farm moves for summary judgment on Plaintiff’s second amended complaint or, alternatively, summary adjudication of Plaintiff’s causes of action.

A. First Cause of Action for Vicarious Liability for Negligence

The elements for negligence are: (1) a legal duty owed to the plaintiff to use due care; (2) breach of duty; (3) causation; and (4) damage to the plaintiff. (County of Santa Clara v. Atlantic Richfield Co. (2006) 137 Cal.App.4th 292, 318.)  

The Court of Appeal has discussed the duties of insurance agents in procuring insurance coverage as follows:

“[A]s a general proposition, an insurance agent does not have a duty to volunteer to an insured that the latter should procure additional or different insurance coverage.” (Fitzpatrick v. Hayes (1997) 57 Cal.App.4th 916, 927, 67 Cal.Rptr.2d 445 (Fitzpatrick); see also Roberts v. Assurance Co. of America (2008) 163 Cal.App.4th 1398, 1403-1404, 78 Cal.Rptr.3d 361.) “[I]n the ordinary case, ‘the onus is ... squarely on the insured to inform the agent of the insurance he requires.’ ” (Wallman, supra, 200 Cal.App.4th at p. 1309, 134 Cal.Rptr.3d 566; see Everett, supra, 162 Cal.App.4th at p. 660, 75 Cal.Rptr.3d 812 [an insurer does not have a general duty to set policy limits for insureds, including policy limits that equal the cost to replace an insured's home; rather, “[i]t is up to the insured to determine whether he or she has sufficient coverage for his or her needs”].)

The general no-duty rule changes only when one of the following three things occurs: (1) the agent misrepresents the nature, extent or scope of the coverage being offered or provided; (2) there is a request or inquiry by the insured for a particular type or extent of coverage; or (3) the agent assumes an additional duty by either express agreement or by holding themself out as having expertise in a given field of insurance being sought by the insured. (Roberts v. Assurance Co. of America, supra, 163 Cal.App.4th at pp. 1403-1404, 78 Cal.Rptr.3d 361.)

(Vulk v. State Farm (2021) 69 Cal.App.5th 243, 254-5.)

Defendant asserts that Plaintiff’s claim for negligence fails because Crosby had no duty to Plaintiff, nor did he breach any duty. Defendant represents Crosby could not effectuate change to California insurance policies as a New York agent and was not authorized to change Plaintiff’s policy without Plaintiff’s, rather than Plaintiff’s mother’s, permission. Defendant provides evidence showing Crosby is not licensed to sell insurance in California and State Farm requires that policy changes be made by the policy holder (here, Plaintiff). Defendant also provides evidence showing Plaintiff did not request any changes to her policy.

In opposition, Plaintiff presents evidence showing Crosby represented to Debra that he could and would change Plaintiff’s policy. Debra declares that she asked Crosby to change the policy limits and Crosby agreed. This would create a duty for Crosby to deliver the agreed-upon coverage. Desai v. Farmers Insurance Exchange (1996) 47 Cal. App. 4th 1110, 1119-1120. Defendant may be liable under theories of ratification and ostensible authority. Id. This is sufficient to create a triable issue of fact as to negligence.

Defendant’s motion for summary judgment is DENIED. Defendant’s motion for summary adjudication of the first cause of action is DENIED.

B. Second Cause of Action for Reformation of Insurance Contract

Defendant argues Plaintiff’s claim for reformation fails because it is barred by the statute of limitations, and because Plaintiff cannot show mutual mistake or fraud.

Defendant presents evidence showing Plaintiff knew that the UIM policy had not been changed in November 2017 and waited until May 5, 2021 to assert a cause of action for reformation. Defendants assert the claim is barred by the 3-year statute of limitations of CCP § 338. In opposition, Plaintiff asserts the claim is timely because the statute was tolled from April 6, 2020 to October 1, 2020 under Emergency Rule 9. Defendant does not address this in reply.

Defendant asserts Plaintiff cannot show mistake or fraud for same reasons Plaintiff cannot show negligence: that Crosby was unlicensed in California and did not have authority to change Plaintiff’s insurance policy. As discussed, Plaintiff presents evidence showing Crosby represented to Debra that Debra could and should upgrade the UIM policy limits on all of her policies, which Debra believed included Plaintiff’s policy. Plaintiff asserts Debra requested this coverage and Crosby agreed to acquire it. This creates a triable issue of fact as to mistake.

Defendant’s motion for summary adjudication of the second cause of action is DENIED.