I. BACKGROUND & PROCEDURAL HISTORY 

On July 5, 2022, plaintiffs Toiah Gordon (“Gordon”), Morganne Mersadie Root (“Root”), Karina Carrero (“Carrero”), Zongwei Shen (“Shen”), Zhong Xin (“Xin”), and Sanyiweile Inc. (“Sanyiweile” (collectively, “Plaintiffs”)  filed their First Amended Complaint (“FAC”) against Continental Casualty Company (“Continental”), Topco Insurance Agency, Inc. (“Topco”), Northfield Insurance Company, (“Northfield”), Hawkeye Wholesale Insurance Services, Inc. (“Hawkeye”) and Does 1 through 20 stemming from a separate action wherein Continental and Northfield refused to provide Shen, Xin, and Sanyiweile defense in a tort action brought by Gordon, Root, and Carrero for allegations of sexual misconduct by Shen when he gave them massages at Nobles Foot Massage Spa. (FAC ¶¶ 1-4.) As a result, Shen, Xin, and Sanyiweile provided their own defense, and judgment was entered against them in the amount of $6,778,231.48. (Id. ¶ 3.) Shen, Xin, and Sanyiweile assigned to Gordon, Root, and Carrero their assignable rights under the Continental and Northfield Insurance contracts. (Id. ¶ 5.) In the alternative, Plaintiffs allege that insurance brokerage firms Topco and Hawkeye failed to obtain appropriate insurance coverage available in the market for Shen and Sanyiweile, and that Topco and Hawkeye failed to advise Shen and Sanyiweile of this. (Id. ¶ 4.) 

Since then, Continental’s motion for summary judgment was granted, Northfield dismissed, and Plaintiffs settled with Hawkeye. Thus, the only remaining causes of action are the fourth cause of action for professional negligence by Shen against Topco and the fifth cause of action for breach of implied-in-fact contract by Shen against Topco. There is notably no actual cause of action alleged by Sanyiweile against Topco in the FAC. 

Topco, as the only remaining named defendant, moves for summary judgment on Shen’s and Sanyiweile’s FAC against Topco, or in the alternative, for summary adjudication on the issues of Shen’s causes of action for negligence/professional malpractice and breach of implied contract. As provided above, the Court cannot locate any cause of action asserted by Sanyiweile against Topco in the FAC. Thus, the only causes of action at issue are Shen’s claims against Topco for the fifth and sixth causes of action. Plaintiffs oppose the motion for summary judgment, and Topco filed its reply. 

On May 22, 2024, the previous court requested supplemental briefing on five topics pertaining to the application of Insurance Code §533. (Min. Order, May 22, 2024.) 

This case matter was then reassigned, effective July 5, 2024. This Court has reviewed the original briefs and the supplemental briefs. Preliminary, the Court notes that the topics for supplemental briefing did not necessitate the filing of any additional evidence or supplemental declarations. In terms of the supplemental briefing, this Court’s review will be limited to contentions directly responsive to the questions posed by the prior court on narrow issues, and nothing more.  

II. LEGAL STANDARD 

A party may move for summary judgment “if it is contended that the action has no merit or that there is no defense to the action or proceeding.” (Code Civ. Proc. § 437c, subd. (a).) “[I]f 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,” the moving party will be entitled to summary judgment. (Adler v. Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.) A motion for summary adjudication may be made by itself or as an alternative to a motion for summary judgment and shall proceed in all procedural respects as a motion for summary judgment. (Code Civ. Proc. § 437c, subd. (f)(2).) 

The moving party bears an initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact, and if the party does so, the burden shifts to the opposing party to make a prima facie showing of the existence of a triable issue of material fact. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850; accord Code Civ. Proc. § 437c, subd. (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 the cause of action or a defense thereto.” (Ibid.) “If the plaintiff cannot do so, summary judgment should be granted.” (Avivi v. Centro Medico Urgente Med. Ctr. (2008) 159 Cal.App.4th 463, 467.) 

“When deciding whether to grant summary judgment, the court must consider all of the evidence set forth in the papers (except evidence to which the court has sustained an objection), as well as all reasonable inferences that may be drawn from that evidence, in the light most favorable to the party opposing summary judgment.” (Avivi, supra, 159 Cal.App.4th at p. 467; see also Code Civ. Proc., § 437c(c).) 

III. EVIDENTIARY OBJECTIONS & REQUEST FOR JUDICIAL NOTICE 

Plaintiffs object to Topco’s evidence submitted in support of the motion for summary judgment. 

Plaintiffs object to the declaration of Jamileh Hawatmeh (“Hawatmeh”). Objections 1-6 are overruled. 

Plaintiffs’ remaining objections are to the declaration of Samuel Lin. The objections are sustained to the extent of Lin testifying as to the statements of others or information in which he has not established personal knowledge.  

Topco objects to Plaintiffs’ evidence submitted in opposition to the motion for summary judgment. Topco’s objections are overruled. 

Topco submitted a supplemental declaration of Hawatmeh, which provides four additional exhibits of the May 3, 2021 arbitration judgment in the underlying suit, a copy of the Continental insurance policy in effect from October 3, 2015 to October 3, 2016, a copy of the Northfield insurance policy from October 3, 2017 to October 3, 2018, and a copy of the Court’s November 30, 2022 order granting co-defendant Continental’s motion for summary judgment. The previous court did not request the parties to provide supplemental evidence. Plaintiffs’ objections are sustained except as to the insurance policies in effect at the time. 

Topco requests judicial notice of the Complaint in this case. The request is granted.  (Cal. Evid. Code § 452(d).) 

IV. DISCUSSION 

Topco argues that it did not have a duty to obtain or advise Shen of coverage that would provide coverage for the underlying lawsuit. Topco contends Shen never indicated to Topco that he wanted or needed such coverage, and that Shen only sought premises liability coverage from Topco to satisfy the property landlord’s requirements.  

As a general rule, there is no duty to defend in an action filed against the insured in which there is no potential that the insurer would have to provide indemnification. (Downey Venture v. LMI Ins. Co. (1998) 66 Cal.App.4th 478, 507 (Downey Venture).) However, there is a difference between the duty to indemnify and the duty to defend. The parties agree that pursuant to Coit Drapery Cleaners, Inc. v. Sequoia Ins. Co. (1993) 14 Cal.App.4th 1595 (Coit), and Downey Venture, Insurance Code § 533 does not explicitly prohibit insurers from contracting to provide a defense for wrongful conduct and/or willful acts. Insurance Code § 533 only serves as a bar to indemnification.  

Therefore, the issue is whether Topco, as an insurance broker, breached a duty to Shen for failure to procure appropriate insurance, such that Shen could have had insurance that included a contractual duty to defend him and his business in the underlying sexual misconduct case. 

Based on the original and supplemental briefs, the following facts are undisputed. Topco, a licensed casualty-broker agent in California, was the insurance agency that procured the Continental policy for Shen. Shen and Xin are spouses who owned and operated Nobles Foot Massage Spa. Nobles Foot Massage Spa was then transferred to Sanyiweile, a corporation owned by Shen. For the July 16, 2016 assault against Gordon, the relevant policy in effect from October 3, 2015 to October 3, 2016 was issued by Continental, with “Zongwei Shen dba Nobles Massage Spa” as the named insured. For the November 26, 2017 assault against Root and the May 2, 2018 assault against Carrero, the relevant policy in effect from October 3, 2017 to October 3, 2018 was issued by Northfield with “Sanyiweile Inc. DBA Nobles Foot Massage Spa,” as the named insured. 

As framed by the FAC, the fourth cause of action is brought by Shen only against Topco. The complaint alleges that Topco knew or should have known that Shen needed and wanted coverage for the kinds of claims alleged against him in the underlying tort action, that Topco had experience and expertise in insurance, and that Topto breached its duty as a reasonable broker by failing to procure the type of insurance. (FAC ¶¶53-58.) 

In California, an insurance broker owes the client a duty to procure the requested insurance. (Hydro-Mill Co., Inc. v. Hayward, Tilton & Rolapp Ins. Associates, Inc. (2004) 115 Cal.App.4th 1145, 1153.) On the other hand, the broker is under no duty to advise the insured on specific insurance matters. (Jones v. Grewe (1987) 189 Cal.App.3d 950, 956.) Unless a client has made a “specific[] request[]” for insurance, there can be no claim that the broker failed to obtain such insurance. (Roberts v. Assurance Co. of America (2008) 163 Cal.App4th 1398, 1405; see also Jones, supra, 189 Cal.App.3d at p. 956 [“An insurance policy arises out of the insured’s desire to be protected in a particular manner against a specific kind of obligation. It is the insured’s responsibility to advise the agent of the insurance he wants”].) “An agent may point out to [the insured] the advantages of additional coverage and may ferret out additional facts from the insured applicable to such coverage, but he [or she] is under no obligation to do so; nor is the insured under an obligation to respond. (Id. at p. 954.) 

In asserting that Topco did not breach its duty to Shen, nor did Topco have a heightened duty, Topco argues Shen only asked for premises liability coverage in 2014, and never asked Topco representatives for coverage that Topco would obtain for Nobles Foot Massage Spa would include coverage for certain sexual abuse or molestation occurring at the massage business. Thereafter, Shen signed renewal documents at Topco’s offices every year until 2019. Topco contends that when Shen met with Topco to sign policy documents for the 2015-2016 policy, that Shen only asked if the policy would be approved by the landlord, and that Topco representatives explained that it would satisfy the landlord’s requirements. Topco argues that Shen never asked anyone at Topco for insurance that would cover sexual misconduct.  

Topco has not met its prima facie burden that Shen only asked for premises liability coverage, and never asked for coverage that would include sexual misconduct. Nor does Topco meet its burden regarding what its representatives advised or discussed with Shen. Topco relies on the declaration of Samuel Lin (“Lin”), general manager of Topco, in support of these arguments. However, Lin lacks the requisite personal knowledge as to any discussions held after the initial meeting in 2014 between Topco representatives and Shen. Lin declares that Shen met with representatives of Topco, including Lin himself, for the first 2014 meeting, in which Shen asked about the insurance coverage needed to satisfy the landlord’s requirements for premises liability coverage only. (Decl. Lin ¶ 4.) Every year thereafter until 2019, Lin fails to establish any foundation or personal knowledge that Shen did not ask any Topco representatives for a policy that would cover sexual misconduct or what was discussed regarding coverage. (Id. ¶¶ 5, 8) Lin avers that any potential coverage would only extend to the innocent employer, and not to the intentional wrongdoer of the sexual misconduct such as Shen. (Id. ¶ 7.)  

Topco has not established that Shen limited his insurance request, has not established what type of insurance policy a massage business would typically require, and has not established that no coverage existed to have covered Shen’s defense in the underlying claim. A massage business involves personal contact with customers’ bodies, and it is feasible that claims of sexual misconduct, whether true or false, may potentially arise. Topco has not established with any evidence that insurance coverage, in terms of a contractual duty to defend, did not exist on the market. Because Topco did not meet its prima facie burden of production, the burden does not shift to Shen to raise a triable issue of material fact. 

Summary adjudication as to the fourth cause of action is denied. 

The fifth cause of action by Shen against Topco alleges that an implied-in-fact contract was created when Topco promised Shen that it would procure appropriate insurance for the spa. (FAC ¶ 61.) Topco argues there was no implied-in-fact contract with Shen to obtain or advise as to sexual misconduct or abuse coverage for Nobles Foot Massage Spa because Shen never requested coverage for sexual misconduct or abuse for Topco to misrepresent the available coverage. 

“The standard elements of a claim for breach of contract are: ‘(1) the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) damage to plaintiff therefrom.’” (Wall Street Network, Ltd. v. New York Times Co. (2008) 164 Cal.App.4th 1171, 1178.)  “A cause of action for breach of implied contract has the same elements as does a cause of action for breach of contract, except that the promise is not expressed in words but is implied from the promisor’s conduct.” (Yari v. Producers Guild of America, Inc. (2008) 161 Cal.App.4th 172, 182.) 

Topco’s argument fails for the same reasons as for the cause of action for professional negligence. The burden does not shift to Shen. Summary adjudication as to the fifth cause of action is denied.