Articles Posted in California Courts of Appeal

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Thee Sombrero, Inc. (Sombrero) owned commercial property. Pursuant to a conditional use permit (CUP), Sombrero’s lessees operated the property as a nightclub called El Sombrero. Crime Enforcement Services (CES) provided security guard services at the club. In 2007, after a fatal shooting, the CUP was revoked and replaced with a modified CUP, which provided that the property could be operated only as a banquet hall. In a previous action, Sombrero sued CES, alleging that CES’s negligence caused the shooting, which in turn caused the revocation of the CUP, which in turn caused a diminution in value of the property. It won a default judgment against CES. Sombrero then filed this direct action against Scottsdale Insurance Company (Scottsdale), CES’s liability insurer. The trial court granted summary judgment in favor of Scottsdale, ruling that Sombrero’s claim against CES was for an economic loss, rather than for “property damage” as defined in and covered under the policy. The Court of Appeal held Sombrero’s loss of the ability to use the property as a nightclub constituted property damage, which was defined in the policy as including a loss of use of tangible property. View "Thee Sombrero, Inc. v. Scottsdale Ins. Co." on Justia Law

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The Court of Appeal reversed the trial court's grant of summary judgment for Farmers in an action filed by the sons of the insured after Farmers denied them benefits under the insured's policy. The court held that the notice of prejudice rule applied to the waiver of deduction rider and Farmers could not make a showing of prejudice from the delayed notice of the insured's disability. The court held that, because Farmers did not assert that it was prejudiced and there was no dispute that the insured was totally disabled within the meaning of the rider, she was entitled to the benefit promised under the rider: to have the deductions charged to her account waived. Furthermore, because the deductions should have been waived and Farmers' denial of coverage was based solely on those deductions, Farmers failed to establish that, as a matter of law, the insured's policy had lapsed or that it was justified in denying her beneficiaries' claim under the policy. The court held that Farmers' arguments to the contrary were unavailing. View "Lat v. Farmers New World Life Ins. Co." on Justia Law

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In August 2013, the trial court entered a judgment against respondents Janet and Richard Buhler following a traffic accident in which appellant Mark Jones was seriously injured. By stipulation, the judgment awarded Mark $1,350,000 and his wife Melanie Jones $150,000 for loss of consortium. The Buhlers had an automobile insurance policy with IDS that provided coverage of $250,000 for bodily injury for each person and $500,000 for each occurrence. The issue this case presented for the Court of Appeal's consideration implicated the consortium claim: when a wife sues for loss of consortium after her husband is seriously injured in an automobile accident that is the defendant’s fault, was her claim subject to the same per person limit of the defendant’s insurance policy as her husband’s claim for bodily injury? The Court determined the language of the policy at issue here made clear that the damages for bodily injury include loss of consortium. Further, the policy language provided that so long as only one person suffered bodily injury, the per person limit applied. Although the plaintiffs here argued the language “to one person” modified “the maximum we will pay” rather than “bodily injury,” the Court disagreed. The Court affirmed the judgment in favor of defendant IDS Property Casualty Insurance Company (IDS). View "Jones v. IDS Property Casualty Ins. Co." on Justia Law

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Dave Jones, in his capacity as Insurance Commissioner of the State of California (the Commissioner), appealed an order enjoining him from enforcing three regulations, adopted in 1992, to implement the unfair claims settlement practices provision of the Unfair Insurance Practices Act (UIPA). The injunction was issued at the conclusion of the first phase of a trial in which PacifiCare Life and Health Insurance Company challenged the Commissioner’s finding that it had committed over 900,000 acts and practices in violation of the Insurance Code. The Court of Appeal reversed the order imposing the injunction in its entirety. The trial court determined the first regulation was inconsistent with the language of section 790.03(h), which it concluded had been interpreted by the California Supreme Court in Moradi-Shalal v. Fireman’s Fund Ins. Companies 46 Cal.3d 287 (1988), and in Zhang v. Superior Court, 57 Cal.4th 364 (2013), to apply only to insurers engaged in a pattern of misconduct. The appellate court determined the Supreme Court’s only binding interpretation of that statutory language was found in Royal Globe Ins. Co. v. Superior Court, 23 Cal.3d. 880 (1979), which held that section 790.03(h) could be violated by an insurer’s single knowing act. Consequently, the Court was bound by that precedent. View "PacifiCare Life & Health Ins. Co. v. Jones" on Justia Law

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Villanueva and the class (Plaintiffs) alleged that Fidelity, an underwritten title company that handled Plaintiffs’ escrow accounts, engaged in unlawful conduct under the Unfair Competition Law (UCL) (Bus. & Prof. Code, 17200) in charging overnight mail delivery fees, courier fees, and document preparation or “draw deed” fees that were not listed in its schedule of rates filed with the Department of Insurance in violation of Insurance Code 12401–12410.10, 12414.27. Fidelity argued that the lawsuit was barred by the statutory immunity in section 12414.26 for matters related to rate-making. The trial court rejected Fidelity’s immunity claim and granted Plaintiffs injunctive relief under the UCL, but denied their restitution claims. The court of appeal reversed. Fidelity’s immunity defense is not subject to the forfeiture doctrine because it implicates the court’s subject matter jurisdiction; this claim is subject to the exclusive original jurisdiction of the Insurance Commissioner because it challenges Fidelity’s activity related to rate-making. The court directed the trial court to enter a new order awarding costs to Fidelity. View "Villanueva v. Fidelity National Title Co." on Justia Law

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The IHSS program (Welf. & Inst. Code 12300) provides in-home services to elderly or disabled persons so that they may avoid institutionalization. For purposes of the state unemployment insurance system, IHSS service recipients are considered employers of their service providers if the providers are directly paid by the program or the recipient receives IHSS funds to pay their providers (Unemp. Ins. Code 683.) Generally, an employee of a close family member (child, parent or spouse) is excluded from unemployment insurance coverage. The California Unemployment Insurance Appeals Board ruled that, because a close-family-member IHSS service provider under the Direct Payment Mode is employed by the recipient, the provider is subject to the exclusion of Unemployment Insurance Code 631 (Caldera). Skidgel, an IHSS provider for her daughter, challenged the validity of Caldera, arguing government entities were joint employers with the recipient, thereby qualifying providers for unemployment insurance coverage despite the close-family-member exclusion. The court of appeal rejected the challenge, concluding that the Legislature, in enacting Unemployment Insurance Code section 683, intended to designate the recipient as the IHSS provider’s sole employer for purposes of unemployment insurance coverage. View "Skidgel v. California Unemployment Insurance Appeals Board" on Justia Law

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The term "invasion of the right of private occupancy" is ambiguous and may include non-physical invasions of rights in real property. The Court of Appeal reversed the trial court's grant of summary judgment for the umbrella insurer in an action alleging claims for breach of contract and breach of the implied covenant of good faith and fair dealing. In this case, the personal injury provision of plaintiff's umbrella policy potentially covered the allegations in the underlying action and the umbrella insurer breached its duty to defend by not providing plaintiff with a defense. Accordingly, the court vacated the trial court's order and directed the trial court to enter a new order granting the motion. View "Albert v. Truck Insurance Exchange" on Justia Law

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An insured plaintiff who has chosen to be treated with doctors and medical facility providers outside his insurance plan shall be considered uninsured, as opposed to insured, for the purpose of determining economic damages. The Court of Appeal held that the trial court properly allowed the plaintiff in this case, as a plaintiff who is treating outside his insurance plan, to introduce evidence of his medical bills. The trial court also permitted defendants to present expert testimony that the reasonable and customary value of the services provided by the various medical facilities was substantially less than the amounts actually billed. The jury rejected the expert evidence and awarded plaintiff the billed amounts. The court held that defendants have not demonstrated error except with respect to two charges regarding the amounts billed by Ventura County Medical Center and American Medical Response. Accordingly, the court reduced the damage award and affirmed the judgment as modified. View "Pebley v. Santa Clara Organics" on Justia Law

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Nielsen Contracting, Inc. and T&M Framing, Inc. (collectively Nielsen) sued several entities (defendants) alleging these entities fraudulently provided workers' compensation policies to Nielsen that were illegal and contained unconscionable terms. Defendants moved to compel arbitration and stay the litigation under an arbitration provision in one defendant's contract, titled Reinsurance Participation Agreement (RPA). Nielsen opposed the motion, asserting the arbitration provision and the provision's delegation clause were unlawful and void. After briefing and a hearing, the trial court agreed and denied defendants' motion. Defendants appealed, arguing: (1) the arbitrator, and not the court, should decide the validity of the RPA's arbitration agreement under the agreement's delegation clause; and (2) if the court properly determined it was the appropriate entity to decide the validity of the delegation and arbitration provisions, the court erred in concluding these provisions are not enforceable. The Court of Appeal rejected these contentions and affirmed. View "Nielsen Contracting, Inc. v. Applied Underwriters, Inc." on Justia Law

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The Court of Appeal reversed the trial court's entry of judgment for Gursey in an action alleging that plaintiffs had been damaged because they could not collect the additional money they would have been entitled to had Gursey purchased an insurance policy with the limits they had requested. The court held that plaintiffs did not incur actual damages until they became entitled to the benefits of the underinsured motorist policy. Consequently, plaintiffs' causes of action against Gursey accrued less than two years before they filed this action, and the trial court erred in holding that plaintiffs' claims were time-barred. View "Lederer v. Schneider" on Justia Law