Judge: Theresa M. Traber, Case: 21STCV05412, Date: 2025-01-23 Tentative Ruling
Case Number: 21STCV05412 Hearing Date: January 23, 2025 Dept: 47
Tentative Ruling
Judge Theresa M. Traber, Department 47
HEARING DATE: January 23, 2025 TRIAL DATE: August 19, 2025
CASE: Jennifer Gerard, et al. v. John
Haubrich, Jr., et al.
CASE NO.: 21STCV05412
MOTION
FOR SUMMARY JUDGMENT, OR, IN THE ALTERNATIVE; ADJUDICATION; JOINDER TO MOTION
FOR SUMMARY JUDGMENT OR SUMMARY ADJUDICATION
MOVING PARTY: Defendant Travelers Casualty & Surety Co. of
America; joined by Defendant Travelers Indemnity Co.
RESPONDING PARTY(S): Plaintiffs
Jennifer Gerard and Gerard Cosmetics, Inc.
CASE
HISTORY:
STATEMENT
OF MATERIAL FACTS AND/OR PROCEEDINGS:
This is an action for
declaratory and injunctive relief against a liability insurer and the attorneys
retained by the insurer to defendant Plaintiffs in an underlying employment
discrimination lawsuit.
Defendant Traveler’s Casualty &
Surety Co., joined by Defendant Travelers Insurance Co., moves for summary
judgment, or, in the alternative, summary adjudication of all remaining causes
of action.
//
TENTATIVE RULING:
Defendant Traveler’s Casualty &
Surety Co.’s Motion for Summary Judgment is DENIED.
Defendant Traveler’s Casualty &
Surety Co.’s Motion for Summary Adjudication is GRANTED as to the first and
second causes of action only and otherwise DENIED.
Defendant Traveler’s Indemnity Co.’s
Joinder to Defendant TCS’s Motion for Summary Judgment or Summary Adjudication
is GRANTED.
Defendant Traveler’s
Indemnity Co.’s Motion for Summary Judgment or Summary Adjudication is GRANTED.
DISCUSSION:
Motion for Summary Judgment
Defendant Traveler’s Casualty &
Surety Co. (“TCS”) moves for summary judgment. As Defendant has not
demonstrated its entitlement to summary adjudication as to each remaining cause
of action, Defendant’s Motion for Summary Judgment is DENIED.
Motion for Summary Adjudication (Traveler’s Casualty
& Surety Co.)
Defendant Traveler’s Casualty &
Surety Co. (“TCS”) moves for summary adjudication on all remaining causes of
action.
Evidentiary Objections to Declaration of Veronica Hallett
Plaintiffs
object to portions of the Declaration of Veronica Hallett submitted in support
of this motion. The Court rules on these objections as follows:
Objection
No. 1: SUSTAINED as lacking personal knowledge with respect to the statement
that Plaintiff “did not like LBBS’s analysis of [Plaintiff]’s potential
exposure to White. (Evid. Code § 702(a).) Otherwise OVERRULED, as the remainder
is a recitation of an opposing party statement and is founded upon Ms.
Hallett’s communication with Plaintiff. (Evid. Code § 1220.)
Objection
No. 2: OVERRULED. Opposing party statement founded upon Ms. Hallett’s
communication with Plaintiff. (Evid. Code § 1220.) Neither the testimony nor
Plaintiff’s objections establish the applicability of the secondary evidence
rule (see Evid. Code § 15230.)
Objection
No. 3: SUSTAINED. The statement is an improper opinion expressing a legal
conclusion regarding the scope of Travelers’ obligations. (Evid. Code § 803.)
Objection
No. 4: SUSTAINED under the secondary evidence rule. (Evid. Code § 1523.)
The Policy speaks for itself.
Objection
No. 5: SUSTAINED as an improper opinion expressing a legal conclusion
regarding the nature of Travelers’ conduct. (Evid. Code § 803.)
Requests for Judicial Notice
Defendant TCS
requests that the Court take judicial notice of (1) the Complaint in this
action; (2) the First Amended Complaint in this action; (3) the April 28, 2022
Doe Amendment in this action; (4) the January 2, 2024 Order on Stipulation
between Plaintiff and Traveler’s Indemnity Co. (“TIC”) dismissing all but the
first cause of action as to TIC; (5) the Notice of Ruling dated February 5,
2024 on TSC’s Motion for Summary Adjudication on the issue of duty to provide
independent counsel; (6) the May 3, 2024 Request for Dismissal; (7) the
California State Bar Report for Defendant Haubrich; and (8) the California
State Bar Report for Defendant Antonyan. Defendant’s requests Nos. 1 through 6
are GRANTED pursuant to Evidence Code section 452(d) (court records); and the
remainder are GRANTED pursuant to subdivision (c) (official acts of the
judiciary).
Plaintiffs
request that the Court take judicial notice of (1) Defendant TCS’s compendium
of evidence in support of this motion; (2) the compendium of evidence in
support of Defendants Lewis Brisbois Bisgaard & Smith, LLP, et al.’s Motion
for Summary Adjudication scheduled for January 30, 2024; and (3) the LBBS
Defendants’ Motion itself. Plaintiffs’ requests are GRANTED pursuant to
Evidence Code section 452(d) (court records). In so doing, the Court takes
judicial notice of the existence of these materials only, and not the truth of
their contents.
Legal Standard
The function of a motion for
summary judgment or adjudication is to allow a determination as to whether an
opposing party can show evidentiary support for a pleading or claim and, if
not, to enable an order of summary dismissal without the need for trial. (Aguilar
v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) Code of Civil
Procedure Section 437c(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, 381-82.)
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. (Code Civ Proc. § 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.) The lack of opposition by a plaintiff is
not grounds to grant a motion for summary judgment if a defendant cannot meet
their initial burden of proof. (See Thatcher v. Lucy Stores, Inc. (2000)
79 Cal.App.4th 1081, 1087.)
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.)
First Cause of Action: Unfair Competition
Defendant
TCS moves for summary adjudication of the first cause of action for unfair
competition in violation of Business & Professions Code section 17200.
Section 17200 of the Business and Professions Code
prohibits any “unlawful, unfair or fraudulent business act or practice.”
Ultimately, “an ‘unfair’ business practice occurs when that practice ‘offends
an established public policy or when the practice is immoral, unethical,
oppressive, unscrupulous or substantially injurious to consumers.” (Davis v.
Ford Motor Credit Co., LLC (2009) 179 Cal.App.4th 581, 585.) “Unlawful”
practices are business practices forbidden by any law.” (Olszewski v.
Scripps Health (2003) 30 Cal.4th 798, 827.) “Unfair” practices must also be
tethered to some underlying constitutional, statutory, or regulatory provision.
(Scripps Clinic v. Superior Court (2003) 108 Cal.App.4th 917, 940.) The
First Amended Complaint asserts five theories of unlawful or unfair business
practices: (1) violation of Insurance Code section 790.03(h); (2) violation of
section 2695 of title 10 of the Code of Regulations; (3) failure to adopt
written standards for the prompt investigation and processing of claims; and
(4) a breach of the duty to attempt in good faith to effectuate a prompt, fair,
and equitable settlement of a third party claimant’s claims; and (5) Plaintiff’s
claims for a defense “through competent, ethical counsel.” (FAC ¶¶ 68-69.) Defendant
argues that each of these theories lack merit.
1.
Insurance Code
Section 790.03(h)
Defendant
TSC first argues that Plaintiffs cannot prevail on a theory of Unfair
Competition grounded on Insurance Code section 790.03(h) because there is no
private right of action for a violation of that section. Insurance Code section
790.03, part of the Unfair Insurance Practices Act, defines unfair methods of
competition and unfair and deceptive acts or practices in the business of
insurance, including, as relevant here, a lengthy list of unfair practices
pertaining to coverage and liability under subdivision (h), none of which are
specified as the particular basis for liability in this case. (Ins. Code §
709.03(h).) Ambiguity in the claims asserted notwithstanding, Defendant argues
that section 709.03 cannot support a claim under the Unfair Competition Act
because there is no private right of action under that section. (Moradi-Shalal
v. Fireman’s Fund Insurance Companies (1988) 46 Cal.3d 287, 304-305
[holding there is no private right of action under Insurance Code section
709.03].)
Plaintiffs, in opposition, argue
that Defendant overextends the reach of Moradi-Shalal, contending that
claims under the Unfair Competition Act are separate legal claims which are not
affected by the language of section 790.03 and Moradi-Shalal. Plaintiffs
rely on Manufacturers Life Ins. Co. v. Superior Court, a 1999 California
Supreme Court opinion which clarified Moradi-Shalal’s holding, stating
that section 709.03 does not itself create a private right of action, but does
not preclude civil liability on other legal grounds for the same conduct which
would be violative of that provision, stating that “Moradi-Shalal marks
a return to the fundamental principle that the UIPA, like all statutes, is to
be applied according to its terms. Its language neither creates new private
rights nor destroys old ones.” (Manufacturers Life Ins. Co. v.
Superior Court (1995) 10 Cal.4th 257, 279-80 [emphasis added].) Although
this language is present in Manufacturers Life Insurance Co., Plaintiffs
ignore our high court’s central holding, which affirmed the Court of Appeal’s
ruling that a private cause of action may be stated under the Unfair
Competition Act for violations of the Cartwright Act but not for the
Unfair Insurance Practices Act. (Manufacturers Life Ins. Co., supra, 10
Cal. 4th at 266, 284.) Indeed, our Supreme Court expressly disapproved of attempting
to use the Unfair Competition Act to confer private standing to enforce a
provision of the UIPA as barred by Moradi-Shalal. (Id at 284.)
Based on this express authority, the Court concludes that Defendant is correct:
Insurance Code section 790.03(h) cannot serve as a basis for Plaintiffs’ Unfair
Competition claim as a matter of law.
2. Code of Regulations Title 10
Section 2695
Defendant
next argues that Plaintiffs cannot assert a claim for unfair competition
premised on Title 10, section 2695 of the Code of Regulations because that
provision is derived from Insurance Code section 790.03 and is thus deficient
for the reasons stated above. At the outset, the Court notes that there is no
individual provision known as section 2695 of the Code of Regulations, but
rather a lengthy set of regulations concerning unfair or deceptive acts in the
business of insurance, within subchapter 7.5 and 7.5.1 of Chapter 5 of title 10
and beginning with section 2695.1. Improper citations notwithstanding, the
parties agree that sections 2695.1 et seq are enacted pursuant to
section 790.03. (See Opp. p.16:12-17.) Consequently, the Court concludes, for
the reasons stated above, that section 2695.1 et seq of title 10 of the
Code of Regulations cannot support Plaintiffs’ unfair competition claim for the
reasons stated above.
3.
Failure to Adopt Written Standards
Defendant also argues that
Plaintiff’s contention that TSC failed to adopt written standards for the
prompt investigation and processing of claims is without merit. In support of
its position, Defendant offers evidence that it had written Billing Guidelines,
Litigation Guidelines, and File Documentation Best Practices Guidelines which
were in effect at all times relevant to both this action and the underlying
litigation. (Separate Statement of Undisputed Material Fact Nos. 38-40.) Plaintiffs
agree that these facts are undisputed and otherwise do not address Defendant’s
argument in opposing this motion. (See Plaintiffs’ Separate Statement of
Material Fact Nos. 38-40.) Defendant has thus demonstrated that this theory
cannot support an unfair competition claim, and Plaintiffs have failed to
demonstrate the existence of a triable issue of fact as to this theory.
//
4.
Failure to Effectuate Prompt, Fair, and Equitable
Settlement
Defendant next contends that
Plaintiffs’ theory that Defendant failed to effectuate a “prompt, fair, and
equitable settlement” of the underlying action is meritless. Where an insurer provides
liability coverage, the implied covenant of good faith and fair dealing
obligates the insurer to settle the claim, rather than litigate “in an
appropriate case.” (Comunale v. Traders & General Ins. Co. (1958) 50
Cal.2d 654, 659.) More specifically, when “there is great risk of recovery
beyond the policy limits so that the most reasonable manner of disposing of the
claim is a settlement which can be made within those limits,” the unwarranted
refusal to settle constitutes a breach of the implied covenant of good faith
and fair dealing. (Id.)
Defendant argues that the
underlying White action asserted an assortment of claims against
Plaintiffs, including some seeking punitive damages, which had the potential to
“far exceed” the limits of Plaintiffs’ insurance policy. (SSUMF No. 46.) Thus,
Defendant contends, TCS proposed a settlement at the $1 million limit of
Plaintiffs’ Policy, contingent upon Plaintiffs’ consent pursuant to the
Policy’s terms. (SSUMF Nos. 47-49.) Plaintiffs ultimately consented on
September 20, 2022, and the underlying action settled for the Policy limit,
paid entirely by Defendant. (SSUMF No. 50; Plaintiffs’ SSMF No. 51.) Thus,
Defendant argues, by reaching a settlement at the policy limits and satisfying
its good-faith obligation under Comunale, Defendant’s conduct cannot, as
a matter of law, constitute a failure to effectuate a prompt, fair, and
equitable settlement. In the Court’s view, however, such evidence does not
constitute a sufficient showing under the stringent standards for summary
adjudication to establish that there is no dispute of material fact with
respect to the promptness, fairness, and equity of the settlement. By nature,
Defendant’s evidence does not tend to demonstrate that Plaintiffs cannot
establish some deficiency with the settlement. Thus, the burden does not shift
to Plaintiffs to demonstrate a triable issue of fact in this respect. Moreover,
as Defendant has not demonstrated the deficiency of this theory of liability,
the Court need not address Defendant’s attack on Plaintiffs’ allegations
concerning TCS’s defense of Plaintiffs. The Court therefore turns to the issue
of damages and relief.
5.
Damages and Injunctive Relief
Defendant’s final contention with
respect to this cause of action is that Plaintiffs have not demonstrated a
right to any recovery under the first cause of action. The Unfair Competition
Act authorizes the Court to enjoin any practice which is deemed to constitute
unfair competition within the meaning of the Act. (Bus. & Prof Code §
17203.) The same provision authorizes any court orders necessary to restore to
any person in interest any money or property acquired by means of unfair
competition. (Id.) As Plaintiffs affirmatively state that they do not
seek restitution, the Court only considers the issue of injunctive relief. (See
SSMF No. 73.)
As to the issue of injunctive
relief, Defendant asserts that Plaintiffs are not entitled to an injunction
because, first, Defendant has not engaged in any wrongful conduct. As the issue
of liability for unfair competition remains live, the Court rejects this
contention. Second, Defendant contends that there is no threatened future
injury which could be redressed by injunctive relief. As Defendant states,
injunctive relief is for the prevention of future injuries, not the redress of
past wrongs. (Huntingdon Life Sciences, Inc. v. Stop Huntingdon Animal
Cruelty USA, Inc. (2005) 129 Cal.App.4th 1228, 1266.) According to
Defendant, the underlying action settled in September 2022, after Plaintiffs
retained independent counsel paid for by Defendant. (SSUMF Nos. 80; see also No. 70.) Thus, even if Defendant
had failed to carry out some obligation during the pendency of that action, there
is no future conduct which could be enjoined, as Plaintiffs have retained
independent counsel, and the underlying action has settled. Defendant has thus
offered evidence that Plaintiffs cannot prevail on this basis because there is
no threatened future conduct which could be enjoined. The burden therefore
shifts to Plaintiffs to establish a triable issue of fact in this respect.
Plaintiffs, in opposition, argue
that the underlying action is still not resolved because Shaun White, a party
to the underlying action, has not complied with his obligations under the
settlement. (See Plaintiffs’ Additional Material Fact No. 37.) This contention
is not relevant to Defendant’s argument, as, even if it is true, it does not
tend to prove that Mr. White’s conduct has any bearing on that issue. The Court
therefore finds that Plaintiffs have not demonstrated a triable issue of fact
in this respect.
As Plaintiffs have not established
a triable issue of fact with respect to their right to relief under the Unfair
Competition Act, Defendant’s Motion for Summary Adjudication of the first cause
of action for unfair competition is GRANTED.
Second Cause of Action: Declaratory Relief
Defendant
moves for summary adjudication of the second cause of action for declaratory
relief in light of the Court’s January 31, 2024 ruling on the issue of duty to
provide independent counsel under Civil Code section 2860.
The second
cause of action seeks to declare that a reservation of rights issued by
Defendant created an actual conflict of interest which imposed additional
obligations outside the scope of Civil Code section 2860 which Defendant,
through its selected counsel, failed to comply with, thereby prejudicing
Plaintiffs’ defense in the underlying action. (FAC ¶¶ 77-90.) The Court has
categorically rejected these theories, finding that Civil Code section 2860 is
the applicable authority to this action and that the reservation of rights did
not create an actual conflict of interest. (See January 31, 2024 Minute Order.)
Defendant is therefore entitled to summary adjudication of this cause of
action.
Accordingly, Defendant’s Motion for
Summary Adjudication of the second cause of action for declaratory relief is
GRANTED.
Third Cause of Action: Declaratory Relief
Defendant moves for summary
adjudication of the third cause of action for declaratory relief. This cause of
action seeks, as relevant to this Defendant, a declaration that Defendant must
credit to the “Additional Defense Limit” in Plaintiffs’ Policy any sums
Defendant has paid to the LBBS and Pettit Kohn Defendants for legal services in
connection with the underlying action. (FAC ¶ 98.) Although Defendant argues
the various allegations in connection with this claim are not relevant to TCS,
Defendant has failed to reckon with the demand for declaratory relief in
paragraph 98. “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, 381-82.) By failing to engage with the pleadings, Defendant’s
argument falls outside the proper scope of the issues addressed by this motion.
Defendant is therefore not entitled to summary adjudication of this cause of
action.
Accordingly, Defendant TCS’s Motion
for Summary Adjudication of the third cause of action for declaratory relief is
DENIED.
Fifth Cause of Action: Breach of Contract
Defendant
moves for summary adjudication of the fifth cause of action for breach of
contract.
To prevail on a claim for breach of
contract, a plaintiff must plead and prove (1) a contract; (2) plaintiff’s
performance or excuse for nonperformance; (3) the defendant’s breach; and (4)
resultant damage to the plaintiff. (Careau & Co. v. Security Pacific
Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1388.)
The fifth
cause of action for breach of contract is pled with extreme generality,
incorporating the preceding 118 paragraphs by reference and asserting that the
conduct alleged in those paragraphs constitutes a breach of the express terms
of Plaintiff’s insurance policy. (FAC ¶¶ 119-120.) Although Defendant notes the
lack of detail in the pleadings with respect to this cause of action, Defendant
does not challenge the sufficiency of the pleadings, but rather attempts to divine
the basis for the claimed breach of contract from the factual allegations in
the Complaint. (See Motion p. 23: 7-12.) Defendant’s educated guess necessarily
fails to embrace the full scope of the allegations set forth in the pleadings. Although
a motion for summary judgment may target the sufficiency of the pleadings as a
motion for judgment on the pleadings, (FPI Development Inc. v. Nakashima
(1991) 231 Cal.App.3d 367, 382), Defendant has not elected to do so on this
motion. Consequently, the Court cannot find that Defendant has carried its
burden with respect to this cause of action.
Accordingly,
Defendant TCS’s Motion for Summary Adjudication of the fifth cause of action for
breach of contract is DENIED.
Sixth Cause of Action: Breach of Implied Covenant of Good
Faith and Fair Dealing
Defendant
moves for summary adjudication of the sixth cause of action for breach of the
implied covenant of good faith and fair dealing.
As with the
fifth cause of action, the sixth cause of action incorporates by reference all
the preceding allegations in the First Amended Complaint and asserts that the
conduct alleged also constitutes a breach of the implied covenant of good faith
and fair dealing. (FAC ¶¶ 123-128.) Likewise, Defendant attempts to make an
educated guess as to the particular acts which give rise to this cause of
action which necessarily fails to embrace the full scope of the allegations set
forth in the pleadings. Thus, for the reasons stated above, Defendant has not
carried its burden with respect to this cause of action.
Accordingly,
Defendant TCS’s Motion for Summary Adjudication of the sixth cause of action
for breach of the implied covenant of good faith and fair dealing is DENIED.
Joinder to Motion
Defendant
Travelers Indemnity Co. (“TIC”) joins Defendant TCS’s Motion for Summary
Judgment or Summary Adjudication as to the first cause of action only. Pursuant
to the stipulation entered by the parties on January 2, 2024, all causes of
action with the exception of the first cause of action have been dismissed with
prejudice as to this Defendant. (January 2, 2024 Stipulation.) Consequently, as
the Court has found that Plaintiffs have not demonstrated a basis for any
injunctive relief under the first cause of action because they have not shown
any threatened future injury, Defendant TIC is likewise entitled to summary
adjudication of the first cause of action.
Accordingly,
Defendant TIC’s Joinder to Defendant TCS’s Motion for Summary Judgment or
Summary Adjudication is GRANTED.
Defendant
TIC’s Motion for Summary Judgment or Summary Adjudication is GRANTED.
CONCLUSION
Accordingly, Defendant Traveler’s
Casualty & Surety Co.’s Motion for Summary Judgment is DENIED.
Defendant Traveler’s Casualty &
Surety Co.’s Motion for Summary Adjudication is GRANTED as to the first and second
causes of action only and otherwise DENIED.
Defendant Traveler’s Indemnity
Co.’s Joinder to Defendant TCS’s Motion for Summary Judgment or Summary
Adjudication is GRANTED.
Defendant Traveler’s
Indemnity Co.’s Motion for Summary Judgment or Summary Adjudication is GRANTED.
Moving Parties to give notice.
IT IS SO ORDERED.
Dated: January 23,
2025 ___________________________________
Theresa
M. Traber
Judge
of the Superior Court
Any party may submit on the
tentative ruling by contacting the courtroom via email at Smcdept47@lacourt.org by no later than 4:00 p.m. the day
before the hearing. All interested parties must be copied on the email. It
should be noted that if you submit on a tentative ruling the court will still
conduct a hearing if any party appears. By submitting on the tentative you
have, in essence, waived your right to be present at the hearing, and you
should be aware that the court may not adopt the tentative, and may issue an
order which modifies the tentative ruling in whole or in part.