Judge Randolph M. Hammock, Case Number: BC79987, Date: 2023-09-28 Tentative Ruling

Plaintiff Judy Randle brings this action against Defendant Farmers New World Life Insurance Company (“Farmers”) for breach of contract, breach of the covenant of good faith and fair dealing, and punitive damages in connection with a policy insuring the life of her ex-husband.

Pursuant to Defendant Farmers’ request, the court takes judicial notice of Exhibits A, B, and C. The court takes judicial notice of the exhibits without assuming the truth of the assertions contained therein. (See Seelig v. Infinity Broad. Corp. (2002) 97 Cal. App. 4th 798, 808

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. In analyzing motions for summary judgment, courts must apply a three-step analysis: “(1) identify the issues framed by the pleadings; (2) determine whether the moving party has negated the opponent's claims; and (3) determine whether the opposition has demonstrated the existence of a triable, material factual issue.” Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294. Thus, summary judgment is granted when, after the Court’s consideration of the evidence set forth in the papers and all reasonable inferences accordingly, no triable issues of fact exist and the moving party is entitled to judgment as a matter of law. Code Civ. Proc. § 437c(c); Villa v. McFarren (1995) 35 Cal.App.4th 733, 741.

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. 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. A defendant has met its burden of showing that a cause of action has no merit if it demonstrates the absence of any single essential element of plaintiff’s case or a complete defense to plaintiff’s action. Code Civ. Proc. § 437c(o)(2); Bacon v. Southern Cal. Edison Co. (1997) 53 Cal.App.4th 854, 858. Once the defendant moving party has met the burden, the burden shifts to the plaintiff to show via specific facts that a triable issue of material facts exists as to a cause of action or a defense thereto. § 437c(o)(2).

The complaint alleged, among other things, that on April 22, 2014, plaintiff sent Defendant Farmers a detailed letter explaining she was the owner of the policy pursuant to the divorce decree between her and her ex-husband, and she had been assured on multiple occasions by both Defendant Farmers and an insurance broker, Defendant Hebson, that she remained the 100 percent beneficiary; that defendant was given a copy of the divorce decree on April 23, 2014; the divorce decree “clearly confirmed that [plaintiff] was the rightful owner of the Policy after she began paying 100% of the Policy [premiums] in September 2008”; and defendant breached its duty of good faith and fair dealing by notifying her numerous times that she was the sole beneficiary and then, after Mr. McConnell’s death, informing her she was not, thus preventing her from filing a change in beneficiary form that would name her as sole beneficiary. She alleged causes of action for breach of the covenant of good faith and fair dealing and breach of contract against Defendant Farmers; a claim for promissory estoppel against both Defendants; and a claim for professional negligence against Defendant Hebson.

Hebson moved for summary judgment on plaintiff’s claim for professional negligence. (The parties stipulated to the striking of the promissory estoppel claim against Hebson.) The trial court granted Hebson’s motion, and on appeal, the Court of Appeal affirmed the judgment for Hebson. The Court concluded an insurance broker has no duty, “for the duration of a life insurance policy, to advise clients how to protect their interests in those policies.” (Randle v. Farmers New World Life Ins. Co. (May 18, 2018, B276579) [nonpub. opn.].)

In January 2019, Defendant Farmers moved for summary judgment or summary adjudication of issues. In April 2019, the trial court granted defendant’s motion for summary adjudication of the claims for breach of contract, breach of the covenant of good faith and fair dealing, and punitive damages. The court denied summary adjudication of Plaintiff’s cause of action for promissory estoppel.

1. Plaintiff Judy Randle failed to meet her burden that there was a promise made between herself and the agent Mark Hebson to support her claim for Promissory Estoppel as the court found that the statements made were only statements and not promises.

3. Even if Plaintiff had met her burden of a clear and unambiguous promise between herself and Defendant Farmers New World Life Insurance Company, Plaintiff Judy Randle's reliance on the alleged promise was not reasonable as Plaintiff could have and failed to take steps to enforce and safeguard her legal rights under the divorce decree between her and Alan McConnell.

Plaintiff did not appeal that finding. Plaintiff did, however, appeal the trial court’s order granting summary adjudication of the claims for breach of contract, breach of the covenant of good faith and fair dealing, and punitive damages. The Court of Appeal reversed the trial court’s ruling, concluding there existed disputed issues of material fact on these issues. (See Randle v. Farmers New World Life Ins. Co. (2022) 85 Cal App.5th 53, 59.)

The Court remanded to the trial court with instructions to vacate its order granting summary adjudication for Defendant on plaintiff’s claims for breach of contract, breach of the covenant of good faith and fair dealing, and punitive damages, and to enter a new order denying summary adjudication.

Now on remand, Defendant moves for summary judgment of the remaining claims for breach of contract, bad faith, and punitive damages. The motion is based on a single issue: Defendant contends the trial court “has already adjudicated the factual issues supporting” these claims during the trial on Plaintiff’s promissory estoppel claim, and that these findings are now binding on, and dispositive of, Plaintiff’s remaining claims. Accordingly, “no factual findings remain for a jury to decide,” and the court should “enter judgment in [Defendant’s] favor on Plaintiff’s claims for breach of contract, bad faith and punitive damages.” (Mtn. 5: 2-5.) Defendant argues this ruling “establishes the dispositive fact that there was no promise made between [Defendant] and Plaintiff that she was the 100% policy beneficiary of McConnell’s life insurance policy.” (Mtn. 10: 2022.)

In opposition, Plaintiff counters that resolution of the promissory estoppel claim has no bearing on the remaining claims, because “promissory estoppel and breach of contract are separate and distinct claims, with different elements, and are based upon different facts.” (Opp. 8: 4-5.)

The burden begins with Defendant to show that “one or more elements of a cause of action . . . cannot be established.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 853. Defendant suggests its burden has been met “by establishing through the findings of fact in the court’s judgment on the promissory estoppel claim that Plaintiff was not promised by FNWL that she was a 100% policy beneficiary, that Plaintiff was not entitled to 100% of the policy proceeds, and that Plaintiff could have and failed to take steps to enforce and safeguard her legal rights under the divorce decree between herself and Alan McConnell.” (Mtn. 8: 10-14; SSUMF 11, 12, 13.)

The trying of equitable claims before legal claims “may result in factual and legal findings that effectively dispose of the legal claims.” (See Nwosu v. Uba (2004) 122 Cal. App. 4th 1229, 1244 [emphasis in original].) It is “settled” that “if the court's determination of [the issues in the equitable phase] is also dispositive of the legal issues, nothing further remains to be tried by a jury.” (Id. at 1240.) “As so often happens in such a situation the solution of the equitable issues disposes of the legal issues.” (Id. at 1242.)

In Nwosu v. Uba, supra, a case relied on by Defendant, a plaintiff brought one legal claim for fraud with five equitable claims for specific performance, quiet title, declaratory relief, foreclosure of lien, and injunctive relief. (Id. at 1241.) The trial court tried the equitable issues first and found in the defendant’s favor. Based on the trial court’s “detailed findings” during the equitable phase, it concluded there was “no factual basis upon which to try” the remaining legal claim. (Id. at 1236.)

On appeal, the Court of Appeal “agree[d] with the trial court's conclusion that trial of the equitable issues disposed of the legal claim for fraud.” (Id. at 1240.) Importantly, the “allegations of the [fraud claim] were the same as those found in the equitable claims,” and merely relabeled the conduct as a “false promise” rather than “a breach of contract.” (Id. at 1242.) The Court found the fraud claim “was integrally related to the allegations supporting equitable relief,” and therefore, the trial court’ resolution of those issues also “clearly disposed of the legal claim of fraud.” (Id.)

The Nwosu Court explained that the principle is one similar to collateral estoppel. Collateral estoppel gives conclusive effect to issues actually litigated between parties in a former controversy. (Id. at 1244.) By definition, joinder of the claims in a single action would “prevent[] application of this doctrine of collateral estoppel.” (Id.) “The fact, however, that the parties chose to litigate their claims in a single action cannot change the impact of the court's prior determination of certain issues in the equitable phase of the trial upon the remaining legal claims. Just as the parties are bound by collateral estoppel where issues are litigated in a prior action, so, too, do issues decided by the court in the equitable phase of the trial become “conclusive on issues actually litigated between the parties.” (Id.)

Defendant also relies on Rincon EV Realty LLC v. CP III Rincon Towers, Inc. (2019) 43 Cal. App. 5th 988, a case with facts similar to the ones here. There, the trial court held a bench trial on all of the plaintiffs’ claims, some legal and some equitable. (Id.) The court rejected all of the claims and entered judgment for defendants. In Rincon I, the Court of Appeal held the trial court erred by striking the plaintiffs’ jury demand as to the legal claims, and therefore reversed the judgment as to those claims. (Id. at 992.) The Court affirmed the judgment as to the equitable claims.

On remand, the defendants filed a motion for summary judgment, contending the trial court’s findings made in connection with the resolution of plaintiffs’ equitable claims were “binding on, and dispositive of, plaintiffs’ remaining legal claims.” The trial judge agreed, concluding that resolution of a claim under the UCL resolved the plaintiffs remaining legal claims. (Id. at 992.)

On appeal in Rincon II, the court affirmed the trial court’s ruling. The Court noted the trial court’s express finding that there was “no evidence supporting the allegations of fraudulent acts or practices” was a common element in the plaintiffs’ claims. Resolution of this issue for the UCL claim therefore also “addressed whether each of plaintiffs’ six legal claims had merit.” (Id. at 995.)

Turning to the instant case, Plaintiff alleged in support of her cause of action for promissory estoppel that “Farmers and Hebson asserted to Judy a promise that she was the 100% Policy beneficiary. This promise was in response to Judy's specific question about whether she was the 100% Policy beneficiary and both Farmers' and Hebson's response was clear and unambiguous.” (Compl. ¶ 57.) Plaintiff alleged she relied on that promise, and as a result of that promise, “had no reason to file a change in beneficiary form and continued to pay 100% of Policy's premium from September 2008 until Alan's death in April 2014.” (Id. ¶ 59.)

Following the bench trial, Judge Rice ruled that Plaintiff “failed to meet her burden that there was a promise made between herself” and Defendants because “the statements made were only statements and not promises.” (RJN Exh. A.) Judge Rice also ruled that even if Plaintiff had met her burden, her “reliance on the alleged promise was not reasonable as Plaintiff could have and failed to take steps to enforce and safeguard her legal rights under the divorce decree between her and Alan McConnell.” (Id.)

Contrary to Defendant’s attempts to conflate Plaintiff’s claims for breach of contract and equitable estoppel, Plaintiff’s cause of action for breach of contract is based on the allegation that Defendant Farmers “breached the terms of the Policy by failing to provide benefits that it promised Judy was entitled to under the Policy.” (Id. ¶ 46 [emphasis added].) Although Plaintiff used the word “promise” in her allegations underlying the contract claim, that “promise” allegedly comes from the Policy itself—not by representations from Farmers or Hebson. (Id. ¶ 45.)

“The elements of promissory estoppel are (1) a clear promise, (2) reliance, (3) substantial detriment, and (4) damages “measured by the extent of the obligation assumed and not performed.” (Toscano v. Greene Music (2015) 124 Cal. App. 4th 685, 692.) On the other hand, the elements of breach of contract are “(1) the existence of the contract, (2) plaintiff's performance or excuse for nonperformance, (3) defendant's breach, and (4) the resulting damages to the plaintiff.” (D'Arrigo Bros. of California v. United Farmworkers of Am. (2014) 224 Cal. App. 4th 790, 800.)

Put simply, “the doctrine of promissory estoppel is not premised upon the existence of an enforceable contract. (Douglas E. Barnhart, Inc. v. CMC Fabricators, Inc. (2012) 211 Cal. App. 4th 230, 243.) Promissory estoppel is an “alternative theory of recovery” to contract law “that enforces promises because the promisee has justifiably and foreseeably relied on the promise and equity demands enforcement to avoid injustice.” (Id.) Hence, “promissory estoppel is distinct from contract in that the promisee's justifiable and detrimental reliance on the promise is regarded as a substitute for the consideration required as an element of an enforceable contract.” (Id.) Accordingly, the California Supreme Court Supreme Court “repeatedly has recognized the claims not only as distinct or alternative theories of recovery but also as mutually exclusive.” (Id. at 450.)

As we know, in a promissory estoppel case, there are certain elements that have been established over many years, and promissory estoppel is an equitable cause of action. In those situations where there is not a contract but akin to a contract, a party is often able to allege, in the alternative, equitable remedy of promissory estoppel[.]

By the equitable nature of the proceeding, Judge Rice acted on the assumption there was no Policy (or at least that Plaintiff had no entitlement to benefits under it) as an alternative theory to breach of contract. But Judge Rice never addressed whether Plaintiff had a right to benefits under the terms of the contract itself, which is precisely the relief sought by Plaintiff’s breach of contract claim. That Judge Rice also concluded that Plaintiff “could have and failed to take steps to enforce and safeguard her legal rights under the divorce decree” is also not dispositive of her potential rights under the Policy. (Id.)

Considering the above, Defendant fails to demonstrate how resolution of the promissory estoppel cause of action in its favor resolves any single element or fact necessary to Plaintiff’s breach of contract cause of action. Therefore, unlike Nwosu and Rincon, discussed supra, the same issues underlying Plaintiff’s remaining claims were not “actually litigated” in the bench trial on her equitable claim.

Finally, regarding Plaintiff’s claims for bad faith, Defendant argues the claim is dependent on a viable breach of contract. Because “Plaintiff’s breach of contract claim fails,” her “breach of the implied covenant claim must fail too.” (Mtn. 11: 18-19.) Along the same lines, Defendant contends Plaintiff’s claim for punitive damages fails with the claim for bad faith.

As discussed, Defendant has failed to meet its initial burden to defeat Plaintiff’s cause of action for breach of contract. Therefore, Plaintiff’s contention that her remaining claims must fail—the only argument made to attack the claims—is without merit.