Cimarusti v. Transcontinental Ins. Co.

Filed 1/3/08 Cimarusti v. Transcontinental Ins. Co. CA2/1

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION ONE

APPEAL from a judgment of the Superior Court of Los Angeles County. Jane L. Johnson, Judge. Affirmed.

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Gianelli & Morris, Robert S. Gianelli; Esner, Chang & Ellis, Stuart B. Esner and Andrew N. Chang for Plaintiffs and Appellants Rocco Cimarusti, Chester Linder and Douglas Brown.

Woolls & Peer, John E. Peer, Gregory B. Scher and Jo Ann Montoya for Defendant and Respondent.

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In a previous lawsuit Douglas Brown and Chester Linder obtained an $8 million personal injury judgment against Rocco Cimarusti for injuries they sustained in an accident caused by Cimarustis driving his dune buggy while drunk. When Cimarustis employers insurance company, Transcontinental, refused to pay the judgment, Cimarusti, Brown and Linder joined in bringing this action against Transcontinental alleging breach of contract and breach of the implied covenant of good faith and fair dealing. The trial court granted Transcontinentals motion for summary judgment.

The issue on appeal is whether there is a triable issue of fact that the accident was covered under the companys commercial general liability policy. We find no triable issue of fact and affirm the judgment.

FACTS AND PROCEEDINGS BELOW

The following facts are undisputed.

Rockys Food Distributors (Rockys) employed Cimarusti as the manager of its San Diego warehouse. Rockys is a family-owned wholesale meat distributor. Cimarustis father, Ralph, is president of the company and its majority stockholder.

Cimarusti managed Rockys fleet of delivery trucks at its San Diego location. Because Rockys delivers perishable meat, its refrigerated trucks need to remain in working order at all times. If a truck breaks down, Rockys loses money and business. To ensure that its trucks remain operative at all times Rockys uses the services of several repair shops including Rollin Renches.

Rollin Renches was important to Rockys because it had its own tow trucks which would pick up a disabled Rockys vehicle and take it to the shop for repairs saving Rockys time and money by avoiding reliance on a separate towing firm or requiring one of its employees to drive the truck to the shop. Maintaining a good relationship with Rollin Renches furthered Rockys interest in keeping its fleet of delivery trucks in continuous working order.

As manager of Rockys delivery fleet, Cimarusti had contact with Rollin Renches employees including Brown, its shop foreman, and Linder, its parts manager. On at least one occasion before the accident Rollin Renches had repaired Cimarustis own truck and trailer. Cimarusti had no personal or social relationship with either Brown or Linder prior to the accident.

Cimarusti and his father both enjoyed driving dune buggies in the desert and each owned a dune buggy. On the weekend of the accident Cimarusti, his father and other family members were staying at a campground in Glamis, California for the purpose of driving their dune buggies off-road.

Unknown to any of the Cimarusti party, Brown and Linder were staying at the same campground. While driving around the camp in the evening Brown recognized Cimarustis truck and stopped to pay him a visit because he was a customer of Rollin Renches. At Cimarustis camp site, he, Brown and Linder drank beer and discussed dune buggies There is no evidence in the record that the men ever discussed any business. Cimarusti offered to take Brown and Linder for a ride in his dune buggy and they accepted. Returning from the ride, the three men continued to talk, drank more beer, and at 2:00 a.m. decided to go for another drive in Cimarustis dune buggy. On this second ride the dune buggy drove off the lip of a 70-foot dune, flipped and crashed. Cimarusti and Brown were rendered paraplegics and Linder sustained serious injuries.

Cimarustis father told an insurance investigator that Cimarusti was on vacation and not engaged in any business activity related to Rockys at the time of the loss.

Brown and Linder sued Cimarusti and obtained judgments for $6 million and $2 million respectively in a personal injury action against him. Brown and Linder did not sue Rockys in that action and Cimarusti did not ask Transcontinental to defend him in the litigation. Cimarusti never treated any aspect of his ownership or use of the dune buggy as a business expense.

At the time of the accident, Rockys had a commercial general liability policy with Transcontinental. The policy covered bodily injury to third parties in two circumstances. It covered injuries caused by the companys officers and directors but only with respect to their duties as . . . officers or directors and injuries caused by the companys employees but only for acts within the scope of their employment . . . or while performing duties related to the conduct of [the] business. Transcontinental denied coverage for the dune buggy accident on the grounds, among others, that in giving Brown and Linder rides in his dune buggy Cimarusti was neither performing a duty as an officer or director nor acting within the scope of his duties as an employee of Rockys.^[1]

Cimarusti, Brown and Linder brought this action against Transcontinental alleging its denial of coverage constituted breach of the insurance contract and tortious bad faith.

Transcontinental moved for summary judgment presenting the evidence summarized above.

Cimarusti filed a declaration in opposition to the motion. Although he did not dispute the facts presented by Transcontinental, he stated that when he socialized with Brown and Linder and gave them rides in his dune buggy: I was trying to show them a good time as to engender a better business relationship between Rockys Food and Rollin Renches. Cimarusti also stated: I had full authority to act in furtherance of the business of Rockys Food[] in this circumstance. I was free to make sales and entertain those who could assist in the furtherance of the business of Rockys Food. I was not required to ask permission f[ro]m anyone at Rockys Food[] to entertain persons for business purposes if I believed it would further the interests of the business. In addition, Cimarusti testified at his deposition that when he gave Brown and Linder rides on the date of the accident it was his intent in doing so to generate [a] benefit to Rockys Food[.]

Cimarustis father also filed a declaration opposing the summary judgment motion in which he stated: Given Roccos duties and titles, he had full authority to act in furtherance of the business of Rockys Food[]. He was free to entertain those who could assist in the furtherance of the business. Rocco was not required to ask my permission to entertain persons for business purposes if he believed it would further the interests of the business. [] . . . If Rocco decided to give a ride to Mr. Linder and Mr. Brown in his dune buggy, or otherwise entertain those gentlemen to further the interests of the business, it was within his authority and power to do so.

The trial court granted Transcontinentals motion for summary judgment and plaintiffs filed a timely appeal from the subsequent judgment. Our review is de novo. (Lyle v. Warner Brothers Television Productions (2006) 38 Cal.4th 264, 274.)

DISCUSSION

A defendant seeking summary judgment must show that the plaintiff cannot establish one or more elements of any cause of action or show that it has a complete defense to all causes of action. (Code Civ. Proc., 437c, subd. (p)(2).) The defendant bears the burden to make a prima facie showing of the nonexistence of any triable issue of material fact. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.) If the defendant makes this showing, the burden shifts to the plaintiff to show a triable issue of material fact does exist. (Ibid.)

Transcontinental contends it is entitled to summary judgment because Cimarusti cannot establish that at the time of the accident he was performing the duties of an officer or director of the company or acting within the scope of his employment at Rockys.

We conclude that Cimarustis claim to coverage as an officer or director of the company is without merit. Neither the job of secretary or treasurer nor the position of director implicates the duty to entertain business contacts. Nor is there any evidence that Cimarusti had such a duty. Cimarustis father, the president of the company, testified only that Cimarusti was authorized to entertain in furtherance of the business not that Cimarusti had ever done so or that his duty as an officer or director required him to. Neither father nor son testified that on this occasion Cimarusti was fulfilling his duty as an officer or director. Moreover, Cimarustis deposition testimony shows that at the time of the accident he was unaware that he was an officer or director of Rockys.

Cimarusti relies on Barnett v. Firemans Fund Ins. Co. (2001) 90 Cal.App.4th 500, 513, in which the court reversed the sustaining of a demurer in a failure-to-defend case. The court held a potential for coverage existed because the plaintiffs alleged they were seeking to further their employers interest when they committed the alleged torts. Because the duty to defend is much broader than the duty to indemnify (Certain Underwriters at Lloyds of London v. Superior Court (2001) 24 Cal.4th 945, 961) Barnett is of no precedential value in this case in which we are concerned with the duty to indemnify.

As to Cimarustis coverage as an employee, Transcontinental points to the undisputed evidence that Cimarustis trip to Glamis was for purely personal reasonsto camp and drive his dune buggy in the desert. He did not go there on any company business, nor did he have any plans or even an expectation that he would meet Brown and Linder. Brown and Linder, not Cimarusti, initiated the social contact when they recognized his truck at the campground. Cimarustis association with Brown and Linder, drinking at the campsite and riding in the dune buggy, were private, not business ventures. Furthermore, an insurance investigator testified in his deposition in this case, without objection, that he had a conversation with Cimarustis father, Ralph, in which Ralph stated in substance that Cimarusti was not acting within the course and scope of his employment at the time of the accident. Transcontinental asserts that far from being engaged in duties related to Rockys business, at the time of the accident Cimarusti was on a frolic of his own. (Joel v. Morison (1834) 172 Eng. Rep. 1338, 1339). We agree.

The foregoing evidence was sufficient to carry the defendants initial burden. The burden thus shifted to Cimarusti to produce evidence from which a reasonable trier of fact could find that at the time of the accident Cimarusti was performing a duty related to the conduct of Rockys business or acting within the scope of his employment. He failed to do so.

Cimarustis evidence shows, at best, that at the time he gave Brown and Linder rides in his dune buggy he had a subjective belief that doing so might benefit his employer. Cimarusti has provided no authority for the proposition that an employee acts within the scope of his employment or is performing duties related to the conduct of the employers business based solely on the employees subjective belief that he was serving the employers interests. The law is to the contrary.

Transcontinental proposes that the test for coverage of employee torts under its commercial liability policy is the same as the test in determining an employers liability under the doctrine of respondeat superior. We agree. The evident purpose of the employee tort coverage in the policy is to protect the employer from respondeat superior liability. (See Vezina v. Continental Cas. Co. (1977) 66 Cal.App.3d 665, 669, 672 [applying rules applicable to doctrine of respondeat superior to policy covering employee . . . while acting in his capacity as such. . . .].)

Under the doctrine of respondeat superior, the employees motivation is a relevant but not sufficient basis for holding the employer liable for the employees tort. (Lisa M. v. Henry Mayo Newhall Memorial Hospital (1995) 12 Cal.4th 291, 298.) There must be a legally sufficient causal nexus between the employment and the tort. Courts have used various terms to describe this causal nexus: the incident leading to the injury must be an outgrowth of the employment; the risk of tortious injury must be inherent in the working environment; the risk must be typical or broadly incidental to the employers business; the tort was a generally foreseeable consequence of the employers business. (Id. at pp. 298-299.) Of these various formulations, our Supreme Court has expressed a preference for the foreseeability test because it reflects the central justification for respondeat superior [liability]: that losses fairly attributable to an enterprisethose which foreseeably result from the conduct of the enterpriseshould be allocated to the enterprise as a cost of doing business. (Id. at p. 299; citation omitted.) The forseeability test means that in the context of the particular enterprise an employees conduct is not so unusual or startling that it would seem unfair to include the loss resulting from it among other costs of the employers business. (Ibid.; citation omitted.)

Under any of the formulations for respondeat superior liability Rockys could not be held liable for Cimarustis negligence. The incident leading to Browns and Linders injuries was an outgrowth of Cimarustis employment only in the sense that Cimarustis employment brought him and Brown and Linder together at the camp site because they were acquainted through the business. But, as our Supreme Court has held, the fact [t]hat the employment brought tortfeasor and victim together in time and place is not enough. (Lisa M. v. Henry Mayo Newhall Memorial Hospital, supra, 12 Cal.4th at p. 298.) The risk that Cimarusti would negligently injure employees of one of Rockys vendors in a drunken dune-buggy accident while all three men were away on a weekend pleasure trip having nothing to do with their jobs is so improbable, unusual and startling that we can say as a matter of law that it would be unfair to hold Rockys liable for Browns and Linders injuries and, by analogy, to hold Transcontinental liable for the judgment rendered against Cimarusti.

Because Transcontinental had no duty to indemnify Cimarusti, plantiffs bad faith claim fails as well.

DISPOSITION

The judgment is affirmed.

NOT TO BE PUBLISHED.

ROTHSCHILD, J.

We concur:

VOGEL, Acting P. J.

JACKSON, J.^*

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^[1] Transcontinentals answer raised the policys limitation period as an affirmative defense but Transcontinental did not include this defense as a ground for summary judgment.

^* (Judge of the L. A. Sup. Ct. assigned by the Chief Justice pursuant to art. VI,  6 of the Cal. Const.)