Judge Ronald F. Frank, Case 21TRCV00431 2023-03-08 Tentative Ruling

Judge: Ronald F. Frank, Case: 21TRCV00431, Date: 2023-03-08 Tentative Ruling

Case Number: 21TRCV00431 Hearing Date: March 8, 2023 Dept: 8

Tentative Ruling¿

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HEARING DATE: March 8, 2023¿¿

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CASE NUMBER: 21TRCV00431

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CASE NAME: Erin Hughs v. Maritza, et al

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MOVING PARTY: Defendant, Farmers Insurance Exchange

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RESPONDING PARTY: Plaintiff, Erin Hughes

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TRIAL DATE: July 10, 2023

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MOTION:¿ (1) Motion for Summary Judgment

Tentative Rulings: (1) Motion for Summary Judgment is GRANTED.

But after this tentative was prepared, Plaintiff filed an ex parte application to continue the MSJ hearing again, which the Court will entertain before oral argument on this Tentative Ruling

I. BACKGROUND¿¿

A. Factual¿¿

Plaintiff Erin Hughes (“Plaintiff”) is the owner of property located at 2145 Rambla Pacifico in Malibu, California 90265 (the “Property”). Since the Property is in a brush fire zone, Plaintiff’s only option for fire insurance was to purchase it from California Fair Plan (“CFP”), California’s fire insurer of last resort. Besides purchasing a policy from CFP to insure the Property against the peril of fire (the “CFP Policy”), Plaintiff also purchased a supplemental homeowners’ policy from Farmers Insurance Exchange (“Farmers”) to cover other perils not covered by the CFP Policy (the “FIE Policy”). Plaintiff purchased the CFP Policy and the FIE Policy with the assistance of Farmers® insurance agent, Maritza Hartnett (“Hartnett”).

Less than one month after purchasing both the CFP Policy and the FIE Policy, the Property was destroyed in a fire. After the fire damaged her Malibu Property, Plaintiff made a claim for insurance benefits to CFP as well as Farmers, and alleges that she then learned that she was grossly underinsured by Hartnett for the peril of fire as well as deprived of vital coverage which Hartnett did not include such as Extended Coverage, Vandalism, and Mischief.

On June 14, 2022, Plaintiff filed a complaint against Hartnett and Farmers alleging causes of action for: (1) Professional Negligence (against Hartnett); (2) Negligent Misrepresentation (against Hartnett); (3) Breach of Fiduciary Duty (against Hartnett); and (4) Negligence (against Farmers). The basis of Plaintiff’s claim against Farmers is that Hartnett acted as an agent for Farmers in the course and scope of her employment with Farmers. (Complaint (“Compl.”), ¶ 24.) Plaintiff asserts that Farmers breached their duty of care by failing to properly train and supervise Hartnett and are vicariously liable for the acts of Hartnett. (Compl., ¶ 25.)

Defendant, Farmers now brings this Motion for Summary Judgment arguing that Plaintiff’s vicarious liability argument fails as a matter of law because Hartnett was not an actual agent of Farmers with respect to the CFP Policy, because her conduct in procuring the CFP Policy for Plaintiff falls outside the scope of the Agent Appointment Agreement (“Agent Agreement) she had with Farmers. Defendant also argues that Hartnett was also not an ostensible agent of FIE in connection with the CFP Policy because Plaintiff cannot point to any act or statement by Farmers when she procured the CFP Policy.

B. Procedural¿¿

On October 31, 2022, Defendant, Farmers Insurance Exchange filed this motion for summary judgement. On January 6, 2023, Plaintiff filed an opposition. On January 13, 2023, Defendant filed a reply brief. On January 19, 2023, this Court issued a tentative ruling to grant the Motion for Summary Judgment, but allowed for the filing of supplemental briefs.

On March 1, 2023, Plaintiff filed a supplemental brief in opposition to Defendant, Farmers Insurance Exchange’s Motion for Summary Judgment. On March 3, 2023, Defendant Farmers Insurance Exchange filed a reply brief to the supplemental opposition.

II. REQUEST FOR JUDICIAL NOTICE

Defendant has requested that this Court take judicial notice of: (1) The Complaint filed by Plaintiff, Erin Hughes (“Plaintiff”) in this action on June 14, 2021; and the “About FAIR Plan” located at https://www.cfpnet.com/about-fair-plan/. The Court GRANTS Plaintiff’s request for judicial notice of these two exhibits.

III. EVIDENTIARY OBJECTIONS

Defendant’s Objections to Plaintiff’s Evidence

Sustained: I(A)(5).

Overruled: I(A)(1-4, 6-10), II(A)(1-4.)

IV. ANALYSIS¿

A. Legal Standard

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 437(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.)¿ “The function of the pleadings in a motion for summary judgment is to delimit the scope of the issues; the function of the affidavits or declarations is to disclose whether there is any triable issue of fact within the issues delimited by the pleadings.”¿ (Juge v. County of Sacramento (1993) 12 Cal.App.4th 59, 67, citing FPI Development, Inc. v. Nakashima (1991) 231 Cal. App. 3d 367, 381-382.)¿

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); 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.)

B. Discussion

Defendant, Farmers moves for summary judgement on the basis that: (1) the single cause of action for negligence plead by Plaintiff against Farmers is based on vicarious principles, and Farmers asserts that is has no liability since the alleged negligent conduct by insurance agent Hartnett falls outside the scope of the agency relationship between Hartnett and Farmers.

Vicarious Liability

“An insurer, as a principal, may be vicariously liable for the torts of its agent if the insurer directed or authorized the agent to perform the tortious acts, of if it ratifies acts it did not originally authorize. (Desai v. Farmers Ins. Exch. (1996) 47 Cal.App.4th 1110, 1118.) Further, an insurer owes a fiduciary duty to conduct itself with the utmost good faith for the benefit if its insured. (Id. at 1119.)

Actual Agent

Farmers asserts that Hartnett was not its actual agent. An “insurance agent” is a person “authorized by and on behalf of an insurer, to transact all classes of insurance other than life insurance.” (Ins. Code § 31.) An “insurance broker” is a “person who, for compensation and on behalf of another person, transacts insurance other than life with, but not on behalf of an insurer.” (Ins. Code § 33.) A broker represents the insured; he or she “does not act for the insurer.” As such, Defendant argues that because Hartnett was an insurance broker, she was not acting on behalf of the client and, therefore, that an “insurer is not liable for the broker’s acts or omissions.” (Krumme v. Mercury Ins. (2004) 123 Cal.App.4th 924, 929.) Here, Plaintiff does not assert that Hartnett was an actual agent. Instead, Plaintiff asserts that Hartnett was an ostensible agent.

Ostensible Agent

“Ostensible authority is such as a principal, intentionally or by want of ordinary care, causes or allows a third person to believe the agent to possess. (Civ. Code, § 2317.) However, “[b]efore recovery can be had against the principal for the acts of an ostensible agent, three requirements must be met: The person dealing with an agent must do so with a reasonable belief in the agent’s authority, such belief must be generated by some act or neglect by the principal sought to be charged and the person relying on the agent’s apparent authority must not be negligent in holding that belief. Ostensible agency cannot be established by the representations or conduct of the purported agent; the statements or acts of the principal must be such as to cause the belief the agency exists.” (J.L. v. Children’s Institute, Inc. (2009) 177 Cal.App.4th 388, 403-404.)

Farmers argues that in order to prove ostensible agency, the proponent must present evidence “based on the acts of declarations of the principal and not solely upon the agent’s conduct.” (Emery v. Visa International Services Ass’n. (2002) 95 Cal.App.4th 952, 961.) As such, Farmers asserts that since selling an insurance policy issued by CFP is not within the scope of Hartnett’s actual agency relationship with the Farmers Insurers, Plaintiff is required to prove that Hartnett was an ostensible agent of Farmers with respect to the CFP Policy. Farmers further contends that the mere fact that Hartnett is allowed to use the Farmers® logo in her business does not, by itself, create an ostensible agency relationship with FIE as respects the CFP Policy

In support of her argument that a triable issue of material fact exists as to whether Hartnett was an ostensible agent of Farmers, Plaintiff asserts that the CFP Endorsement CA121 was included in the Farmers Policy, Farmers collecting premiums for the policy, Hartnett sold Plaintiff the CFP policy and Farmers policy as a packaged deal while working for Farmers, using their offices, logos, and materials. (Opposition, Exhibit A, B.) Plaintiff also asserts that the fact that Hartnett and Farmers entered into a contractual agreement with Farmers as to which insurance she was required to sell to Plaintiff under the circumstances, has no effect on the Plaintiff since she had no knowledge of the existence of such a contract. In sum, Plaintiff argues that Hartnett was an ostensible agent because Farmers purportedly retained control over operation of Hartnett instructing her which business she could accept through Farmers or place with other companies, controlled her income, and allowed her to use the Farmers logo on all paperwork in Plaintiff’s case and contracting terms.

In reply, Farmers argues that its Agent Agreement contract with Hartnett controls any claims that Farmers engaged in conduct from which an implied agency relationship arose with respect to the CFP policy. Farmers also points out that the single-page CFP Endorsement CA121, signed by Plaintiff on January 8, 2021, the document only makes reference to CFP and not to Farmers. The statement says: “this endorsement restricts and eliminates coverage under your policy for any peril which is covered or which is available for coverage by additional purchase under a California Fair Plan Association policy (‘the FAIR Plan policy’) whether or not you actually purchase coverage for any such peril.” (Exhibit 11 at attached to Declaration of Gustavo Garcia.) Farmers argues that this statement, in no way suggests that Farmer’s agent, Hartnett, would act on behalf of Farmers is if she were to assist Plaintiff in purchasing a CFP policy. Farmer further argues that any claim that Plaintiff did not understand that CFP is separate from Farmers is contradicted by her admission that she previously insured her property against the peril of fire with CFP. (Motion, Exhibit 5 at p. 6, RFA #17 attached to Declaration of Christopher R. Wagner (“Wagner Dec.”).)

Next, Farmer responded to Plaintiff’s assertion that “Farmers collected premiums for the [CFP] policy,” by noting that this claim is refuted by the Agent Agreement, which only charges Hartnett to “collect” and “remit” “monies due the Companies…” (Motion, Exhibit 9, p. 1, ¶ B.2.) Farmers argues that even if this were true, this collection of premiums would not constitute an “act or declaration” by Farmers that might reasonable cause Plaintiff to believe Hartnett was acting on behalf of Farmers when she helped Plaintiff procure the CFP policy. Farmer also emphasizes that Plaintiff’s assertion that Hartnett sold Plaintiff the CFP policy and Farmers policy as a packaged deal is false and insufficient to prove ostensible agency.

In response to Plaintiff’s argument involving Hartnett’s use of the Famers logo, offices, and materials, Farmers argues that Hartnett was designated as an “independent contractor” in the Agent Agreement. As such, she was responsible for “provid[ing] the facilities necessary to furnish professional insurance services to all policyholders of the Companies.” (Motion, Exhibit 9, p. 1, ¶ B.2.) As such, Farmers argues that Hartnett’s physical office was hers, not theirs. Additionally, Farmers argues that Plaintiff’s argument regarding Hartnett’s use of Farmers logo ignores the rule that “mere licensing of trade names does not create agency relationships ether ostensible or actual.” (Cislaw v. Southland Corp. (1992) 4 Cal.App.4th 1284, 1288, quoting Beck v. Arthur Murray, Inc. (1966) 245 Cal.App.2d 976, 981.)

Lastly, in response to Plaintiff’s argument that Farmers breached its duty of care by failing to properly train and supervise Hartnett, Farmers refers back to the Agent Agreement confirming that Hartnett’s principal duties under the agreement were “[t]o sell, solicit, and service insurance for the Companies and to submit to the Companies every request or application for insurance for the classes and lines of insurance underwritten by the Companies…” (Motion, Exhibit 9, p. 1, ¶ A.1.) Farmers contends that there is nothing in the Agent Agreement obligating it to train Hartnett with regard to insurance products sold by a different company, CFP. Farmers further argues that Plaintiff does not present any evidence that Farmers owed a duty to train Hartnett on CFP products.

In the alternative, Plaintiff’s opposition also asserts that Plaintiffs are entitled to a continuance of the hearing on this motion due to an inability to conduct discovery pursuant to California Code of Civil Procedure 473(c)(h). However, Farmers argues that this request should be denied because it asserts that Plaintiff’s counsel’s declaration is devoid of any facts showing how the discovery sought is necessary to resist the summary judgment motion, and because Plaintiff’s opposition does not meet the requirements of Code of Civil Procedure, section 437(h) requiring Plaintiff to explain why facts may exist but cannot, for reasons stated, be presented.

In Plaintiff’s supplemental opposition, with regard to the issue of agency, again, Plaintiff asserts that Hartnett was an actual and ostensible agent of farmers. Here, Plaintiff argues that Farmers issued the policy and then afterward allowed the application for the policy which contained numerous inaccuracies to be signed and entered after the policy was already issued, then sent a letter to Plaintiff on January 12, 2021 with the wrong replacement cost as well as containing the wrong description of the property based on mistakes of Hartnett. Plaintiff argues that Hartnett acted as a Farmers agent when she used Farmers’ 360 Value software to qualify the Plaintiff for her DIC policy with Farmers. Because Plaintiff argues that these actions made Hartnett an agent, Plaintiff also argues that Farmers breached their duty of care by failing to properly train and supervise Hartnett and are vicariously liable for the acts of Hartnett as Plaintiff argues in paragraph 25 of the Complaint as well as negligently underinsuring the property of Plaintiff, negligent cost replacement estimation by the estimator used by Farmers, and failing to match the overage in the FAIR plan policy when issuing a DIC Farmers Policy.

Plaintiff also argues that in the alternative, they are entitled to a continuance of the hearing on this motion due to gamesmanship of Farmers resulting in inability to conduct discovery. Citing California Code of Civil Procedure section 473(c)(h), Plaintiff contends that if it appears from the affidavits submitted in opposition to a motion for summary judgment or summary adjudication or both that facts essential to justify opposition may exist but cannot, for reasons stated, then be presented, the court shall deny the motion, or order a continuance to permit affidavits to be obtained or discovery to be had or may make any other order as may be just. Here, plaintiff assets that she requested a deposition of the person most knowledgeable for Farmers on January 24, 2023. However, Plaintiff notes that counsel for Farmers replied almost a month later, February 15, 2023, and provided the date of February 27, 2023, which was 2 days before the brief was due. Plaintiff asserts that its counsel served a Notice of Deposition for PMK of Farmers with the topics for deposition on February 24, 2023. On February 27, 2023, Plaintiff asserts that the alleged person most knowledgeable appearing for Farmers, John Grabowski, had no knowledge regarding the underwriting of the policy or claims process for the claims by Ms. Hughes. As such, Plaintiff argues that this discovery gamesmanship precluded Plaintiff from obtaining the necessary evidence for the opposition to summary judgement (See Declaration of Aleksandr Gruzman ¶3).

In opposition, Farmers relies as noted above on the language of its Agent Appointment Agreement. That contract, between Hartnett and Farmers which was never provided to Plaintiff before this suit was filed, notes that she is only an agent for Farmers and related Farmers® insurers when she obtains insurance for these companies. She is not an agent of FIE when she procures products from non-Farmers® insurers, like CFP. Next, Farmers argues that Hartnett testified at her deposition that she never represented to Plaintiff that the CFP policy was part of a deal that Plaintiff could purchase through Farmers. (Ro Decl. ¶ 5, Ex. 3, Hartnett Depo., 148:9-13.) Defendant points out that according to Hartnett, there were “no discounts for the California Fair Plan attached to anything that has to do with [Farmers]” (Ro Decl. ¶ 5, Ex. 3, Hartnett Depo., 158:8-14) and there was “no bundle deal” offered to Plaintiff for Hartnett’s procurement of both the Farmers Policy and the CFP Policy (Ro Decl. ¶ 5, Ex. 3, Hartnett Depo., 150:24-151:16).

Farmers also argues that Plaintiff cannot show that Hartnett offered any discounts for Plaintiff’s purchase of both the CFP Policy and the Farmer’s Policy because the two companies “were not related.” (Ro Decl. ¶ 5, Ex. 3, Hartnett Depo., 150:24-151:16.) On the contrary, Defendant contends that the only discount Plaintiff received from Farmers for procuring the Farmers Policy was due to the fact that Plaintiff already had an automobile policy from Farmers. Defendant asserts that this auto discount had nothing to do with the CFP Policy. (Ro Decl. ¶ 5, Ex. 3, Hartnett Depo., 150:24-151:8; 154:12-16). Defendant further argues that even if Hartnett had made a statement regarding a “packaged discount deal” as alleged by Plaintiff, this would not have been an “act or declaration” by Farmers. However, such an “act or declaration” by the alleged principal (not by the alleged agent) is required to prove ostensible agency. Emery, supra, 95 Cal.App.4th at 961; Morse, supra, 152 Cal.App.2d at 857.)

Next, with regard to Plaintiff’s argument that Hartnett was an ostensible agent of Farmers at the time she procured the CFP Policy because Hartnett received commissions from both Farmers and CFP for the policies she obtained from each company, Farmers argues that Hartnett testified at deposition that, while she received a commission from Farmers for the procurement of the Farmers Policy (Ro Decl. ¶ 5, Ex. 3, Hartnett Depo., 20:1-3), she received a separate commission from CFP for the procurement of the CFP Policy (Ro Decl. ¶ 5, Ex. 3, Hartnett Depo., 21:21-22:14). The fact that Hartnett received separate commissions from separate companies does nothing to advance Plaintiff’s ostensible agency argument.

Farmers also argues that Plaintiff’s “training” argument has no merit. Farmers argues that since the Farmers Policy excludes coverage for the peril of fire, any allegation that Farmers failed to adequately train Hartnett with regard to the Farmers Policy is irrelevant to this case. Defendant notes that this is confirmed by the CFP Endorsement signed by Plaintiff indicating that the Farmers Policy does not cover fire losses. (See Exhibit 11.) Defendant further notes that to the extent Plaintiff complains about the training Hartnett received from Farmers regarding CFP products, the undisputed evidence is that Hartnett did not receive training from Farmers regarding CFP products. (See Ro Decl. ¶ 5, Ex. 3, Hartnett Depo., 11:2-8; 144:6-13.)

Lastly, Farmers argues that Plaintiff’s request for a further continuance should be denied Farmers asserts that at the prior summary judgment hearing, Plaintiff did not ask for the deposition of a Farmers PMQ witness. (See Ro Decl. ¶ 2.) Nevertheless, Farmers notes it agreed to present a witness to testify regarding the CFP Endorsement. On February 15, 2023, Farmers contends it advised that its PMQ witness was available on February 27, 2023 and asked if the date “worked for you.” (Ro Decl. ¶ 6.) On February 21, 2023, Farmers allegedly reiterated its offer to present its PMQ witness on February 27. (Ro Decl. ¶ 6.) Two days later, on February 23, 2023, Plaintiff’s counsel agreed to take the deposition on that date. (See Ro Decl., ¶ 6.) At 10:58 p.m. on Friday February 24, 2023, Plaintiff’s counsel served a notice of deposition of Farmer’s PMQ in advance of the deposition scheduled for Monday morning. (See Ro Decl., ¶ 7.) The deposition notice sought five areas of testimony and 16 categories of documents – most of which had not been previously discussed. (See Ro Decl., ¶ 7, Ex. 5.) Farmers argues that not only was “midnight” service of a notice of deposition less than one business day before it was scheduled procedurally deficient, it does not satisfy the requirements of section 473(c)(h). Additionally, Farmers argues that Plaintiff does not offer explanation as to how additional discovery sought from Farmers would lead to facts that might support her argument regarding ostensible agency.

RULING and REASONING

After allowing additional time for supplemental evidence and briefing on the ostensible agency issue, the Court determines to GRANT the Motion for Summary Judgment as to Farmers. The issue of whether a claimed agent has ostensible authority is generally a question of fact (Pierson v. Helmerich & Payne International Drilling Co. (2016) 4 Cal.App.5^th 608, 635), except where, as here the facts are not in material dispute. While Hartnett has a Farmers logo on her stationary and office signs, Plaintiff had previously purchased a CFP fire policy that was not a Farmer’s policy, and is bound by the fact that she knew her Farmer’s policy excluded the peril of fire. Thus, it would not be a reasonable inference for a jury to draw that her Farmer’s agent or broker was acting on Farmer’s behalf when she offered Plaintiff a fire policy issued by the State, not by Farmers. Plaintiff has not presented sufficient evidence for the ostensible agency issue to reach a jury, and Farmer’s has carried its initial burden on a motion for summary judgment by presenting facts to establish a defense to the negligence cause of action.

The Court after preparing this tentative ruling noticed that Plaintiff has brought an ex parte application for another extension of time for Plaintiff to conduct additional discovery that it claims it did not have time to complete on the record presented here. The Court will consider that ex parte application before taking oral argument on this tentative ruling.