Capitol Films v. Aon/Albert G. Ruben
Ins. Services
Filed 2/7/12 Capitol Films v. Aon/Albert G. Ruben Ins.
Services CA2/2
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 This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115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
TWO
CAPITOL FILMS U.S.,
LLC,
Plaintiff and Appellant,
v.
AON/ALBERT G. RUBEN INSURANCE
SERVICES, INC.,
Defendant and Respondent.
B230880
(Los Angeles
County
Super. Ct.
No. BC427887)
APPEAL from
a judgment of the Superior Court
of
County. Holly E.
Kendig, Judge. Affirmed.
Mitchell
Silberberg & Knupp, Lucia E. Coyoca and Christopher A. Elliott for
Plaintiff and Appellant.
Buchalter
Nemer, Holly J. Fujie and Karen L. Stevenson for Defendant and Respondent.
* * * * * *
Plaintiff and appellant Capitol Films U.S., LLC
(Capitol), a film production company, appeals the
court sustained a demurrer without leave to amend on the second amended
complaint against defendant and respondent Aon/Albert G. Ruben Insurance
Services, Inc. (Aon), an insurance broker.
The trial court found Capitol’s claims for professional negligence,
breach of contract, and breach of fiduciary duty barred by the applicable
two-year statute of limitations. We affirm.
FACTUAL AND PROCEDURAL HISTORY
In 2006, Capitol was engaged in
the production of the feature film Black
Water Transit (Film). Aon was
Capitol’s insurance broker. On behalf of
Capitol, Aon obtained a blanket Motion Picture/Television Producers Portfolio
Policy No. U-06/77030 (Policy) issued by U.S. Specialty Insurance Company
(USSIC). The Policy provided insurance
coverage for injury or illness to key cast members. The Policy also included an “Essential
Element Endorsement†to cover injury to certain designated individuals. Samuel L. Jackson (Jackson)
was declared an “Essential Element†to the Film under the Policy.
On about May 4, 2007, approximately one month
before principal photography was scheduled to commence, Capitol learned that Jackson
had suffered a back injury requiring surgery.
Capitol identified three options it believed were available: (1) abandon the Film altogether which
was its preferred option; (2) delay the start of production until Jackson
recovered; or (3) recast the role of Jackson
and proceed with principal photography.
On about May 9, 2007, Capitol made a claim
under the Policy citing Jackson’s
back injury. That same week, USSIC
informed Capitol that abandoning the Film was not an option under the Policy
because Jackson had not been injured
during principal photography of the Film.
After Capitol was informed that it could not abandon the Film, Jackson’s
role was recast with another actor and principal photography commenced.
A
conference call between representatives of USSIC and Capitol took place on May 21, 2007, during which the “push
costsâ€
role and moving forward with the Film were discussed. On November
1, 2007, USSIC made a de minimis offer of payment to settle the
claim. The offer was rejected by
Capitol.
On November 2, 2007, USSIC filed a
declaratory relief action against Capitol seeking to relieve itself of its
obligations under the Policy (USSIC Action).
USSIC and Capitol settled the USSIC Action on April 8, 2009.
On October 30, 2009, Capitol and Aon
entered into an agreement tolling any applicable statute of limitations from October 28, 2009 through November 30, 2009 (Tolling
Agreement). On November 29, 2009, the Tolling Agreement was
extended to December 14, 2009.
On December 14, 2009, Capitol filed a
complaint (Complaint) against Aon and asserted causes of action for
negligent misrepresentation, and breach of fiduciary duty. Capitol alleged the following: (1) it sustained losses in excess of $20
million as a result of Aon’s negligent services; (2) it made a claim under the
Policy “on or about May 9, 2007,†and was surprised to be informed “during that
same week†by USSIC’s adjustors that it could not abandon the Film; and (3)
that Essential Element coverage during the preproduction phase of film making
was “standard in the insurance industry†and the Policy Aon procured from USSIC
did not cover Jackson for “illness, death, or injury during
preproduction.†Capitol further
alleged: “Because of [Aon’s] negligence
in placing the Policy with USSIC, Capitol had no coverage for preproduction
injuries under the Essential Element endorsement and thus was forced to recast
the Jackson role, rather than abandoning the film altogether. Had it abandoned the Film when Jackson
dropped out, it would have been entitled to recover the money that had already
been invested and spent on the Film. If
the coverage had been placed with another carrier, abandonment would have been
an option available to Capitol.â€
Aon
demurred, arguing that Capitol’s causes of action were barred by the applicable
two-year limitations period. Capitol
voluntarily filed a first amended complaint (FAC) which alleged causes of action
for professional negligence, breach of contract, and breach of fiduciary
duty. The FAC added allegations that
“continuing throughout the summer and early fall of 2007†USSIC “refused to
accept or deny the claim,†and that on November 1, 2007 “USSIC informed Capitol
for the first time that it did not believe the claim was covered, and that it
would not pay the claim in full.â€
Aon again
demurred on statute of limitation grounds, and asked the court to take judicial
notice of Capitol’s answer and counterclaim in the USSIC Action. Capitol’s counterclaim alleged that Jackson’s
inability to perform “resulted in a multi-million dollar loss to Capitol†and
that “Capitol incurred significant expense (in excess of $10 million)
preparing to commence principal photography.â€
Capitol also alleged in the counterclaim that “in or about June 2007†it
recast Jackson’s role and commenced principal photography “[i]n an effort to
move forward with the Film and mitigate the harm caused to the Film and to
Capitol by Jackson’s injury and subsequent surgery.â€
The trial
court took judicial notice of Capitol’s answer and counterclaim in the USSIC
Action and sustained the demurrer with leave to amend. At the hearing on the demurrer to the FAC the
trial court stated that Capitol could avoid the bar of the statute of
limitations at the pleading stage only by alleging new facts that USSIC did not
make a final determination as to coverage for abandonment in May 2007. The court cautioned that any new facts
alleged could not contradict Capitol’s prior judicial admissions.
On August 2, 2010, Capitol filed the
operative second amended complaint (SAC).
Capitol added allegations that Capitol considered abandoning the Film
after May 2007, and sent a letter to USSIC on June 5, 2007 stating that Capitol
might still “‘[shut] down production entirely.’†Aon demurred on the same grounds raised
previously and asked the court to take judicial notice of Capitol’s proposed
first amended counterclaim filed in the USSIC Action. The counterclaim included an allegation that
immediately following Jackson’s injury, Capitol notified USSIC that “Jackson
had been injured, that principal photography could not commence on May 16,
2007, and that Capitol would suffer severe losses as a result of these events,
including the loss of significant financing for the Film.†Capitol further alleged that during the
period when Capitol was considering recasting Jackson’s role, “representatives
of USSIC, Steve Leedeke and Graham Henderson†told Capitol “once again that
Capitol had no right to abandon the Film altogether and recover on the Policy.â€
The trial
court granted Aon’s request for judicial notice and sustained the demurrer
without leave to amend on the ground that the SAC did not state facts
sufficient to constitute a cause of action in that it showed on its face that
the action was barred by the two-year statute of limitations contained in Code
of Civil Procedure section 339.1.
The court “was not convinced that [Capitol] pled around the judicial
admissions by adding contradictory and inconsistent allegations
. . . to push the accrual date to November 1, 2007, instead of
May 2007.†Capitol timely appealed the
judgment of dismissal after the order sustaining the demurrer.
DISCUSSION
Capitol
contends that the trial court erred in sustaining the demurrer without leave to
amend because (1) the court made improper factual determinations in ruling that
the claims were barred by the two-year statute of limitations; (2) the claims
against Aon for failing to procure a policy that provided coverage for losses
sustained if the Film had to be abandoned did not accrue until USSIC denied
coverage; and (3) its cause of action for breach of fiduciary duty based on Aon
placing the policy with USSIC was not barred by the statute of limitations
because that was a separate and distinct claim that did not accrue until
November 1, 2007.
I. Standard of Review
On appeal from a judgment of dismissal
following a demurrer sustained without leave to amend, we assume the truth of
all well-pleaded facts, as well as those that are judicially noticeable, but
not contentions, deductions or conclusions of fact or law. (Howard
Jarvis Taxpayers Assn. v. City of La Habra (2001) 25 Cal.4th 809, 814;
318.) We review de novo a trial court’s
sustaining of a demurrer without leave to amend, exercising our independent
judgment as to whether the complaint alleges sufficient facts to state a cause
of action. (Zelig v. County of Los Angeles (2002) 27 Cal.4th 1112, 1126.) We apply the abuse of discretion standard in
reviewing a trial court’s denial of leave to amend. (Blank
v. Kirwan, supra, at p. 318.) It is
the plaintiff’s burden to show either that the trial court erred in sustaining
the demurrer or abused its discretion in denying leave to amend. (Kong
v. City of Hawaiian Gardens Redevelopment Agency (2002) 108 Cal.App.4th
1028, 1038.)
II. Statute of Limitations
‘“The defense of statute of limitations
may be asserted by general demurrer if the complaint
shows on its face that the statute bars the action.’ [Citations.]â€
(E-Fab, Inc. v. Accountants, Inc.
Services (2007) 153 Cal.App.4th 1308, 1315.) ‘“The ultimate question for review is whether
the complaint showed on its face that the action was barred by a statute of limitations, for only then may a general demurrer be sustained and a judgment of dismissal be entered
thereon.’ [Citation.]†(Id.
at p. 1316.)
The parties
agree that the two-year statute of limitations for professional negligence in
Code of Civil Procedure section 339, subdivision (1) applies to this
complaint. The critical question here is
when did Capitol know, or when should it have known, about Aon’s wrongful
conduct and the resulting harm.
III. Commencement of the Statute of
Limitations
A civil action
can only be commenced after the cause of action has accrued. (Norgart
v. Upjohn Co. (1999) 21 Cal.4th 383, 397.)
Generally a cause of action accrues on the date the cause of action is
complete with all its elements, that is, when the wrongful act is done or the
wrongful result occurs and the consequent liability arises. (Hydro-Mill
Co., Inc. v. Hayward, Tilton & Rolapp Ins. Associates, Inc. (2004)
accrual of the cause of action does not await the plaintiff’s discovery that
the facts constituting the wrongful act or omission constitute professional
negligence, i.e., the plaintiff’s discovery that a particular legal theory is
applicable based on the known facts. If
one has suffered appreciable harm and knows or suspects that professional
blundering is its cause, the fact that the professional has not yet advised the
plaintiff [of the mistake] does not postpone commencement of the limitations
period.’†(Id. at p. 1160.)
During the Week of May 9, 2007
The gravamen of
Capitol’s three causes of action is essentially the same. With regard to professional negligence,
Capitol alleges that Aon should have obtained coverage that would have allowed
Capitol to abandon the Film if Jackson were injured during preproduction. Capitol alleges that as a result of Aon’s
placement of the Policy with USSIC, there was no coverage for Jackson’s preproduction
injury and Capitol was forced to recast the Jackson role, rather than
abandoning the film altogether which was its preferred option. Capitol further alleges that preproduction
coverage was a standard practice and if the coverage had been placed with
another carrier, abandonment would have been an available option and Capitol
would have been able to recover the money that had already been invested and
spent on the Film. These core
allegations remain consistent from the original complaint through the amended
pleadings.
Capitol does not
dispute that it made a claim under the Policy “on or about May 9, 2007†and
that “during that same week†to its “surprise†was informed by Aon that it did
not have an abandonment option under the Policy. Because Capitol alleged an abandonment option
was “standard in the insurance industry,†Capitol must concede it discovered
Aon’s negligence during the week of May 9, 2007, more than two years before
Capitol filed the complaint on December 14, 2009. Aon’s negligence in procuring a policy
without an abandonment option resulted in the “loss of a right, remedy, or
interest†and caused Capitol to suffer an “actual injury.†(Van
Dyke v. Dunker & Aced (1996) 46 Cal.App.4th 446, 457.)
During oral
argument on the demurrer to the FAC Capitol’s counsel stated, “under
Hydro-Mill, we knew on May 9, that there was negligence.†Capitol concedes in its brief that the issue
in this appeal is “when Capitol sustained damage as a result of Aon’s wrongful
acts.â€
Years Before Filing Its Complaint
The second
requirement for accrual of a cause of action is that the plaintiff must sustain
damages. (Hydro-Mill, supra, 115 Cal.App.4th at p. 1161.) The parties disagree as to when the fact of damages
became certain.
Capitol asserts
that it sustained no appreciable harm in May 2007, and that it was not until
USSIC made a final coverage decision on November 1, 2007, that the fact of
damages became certain. But this
assertion is belied by Capitol’s allegations and judicial admissions. The Complaint, FAC, and SAC, all contain the
allegation that the damages sought by Capitol included the “money that had
already been invested and spent on the Film.â€
In the counterclaim in the USSIC Action, Capitol alleged that: “Jackson’s back injury resulted in a
multi-million dollar loss to Capitol,†“Capitol would suffer severe losses as a
result of [Jackson’s injury], including the loss of significant financing for
the Film,†“Capitol also suffered severe losses because much of its financing
for the Film was in the form of foreign ‘pre-sale’ contracts, which were
contingent on Jackson’s performance in the Film,†and “Capitol also was relying
on financing from equity investments in the Film. When Jackson became unable to perform in the
Film, those contracts (and these sources of financing) were lost and it became
necessary to secure additional production financing at significant additional
expense to Capitol.â€
Furthermore,
Capitol’s allegation in the USSIC Action that it recast Jackson’s role “[i]n
an effort to move forward with the Film and mitigate the harm caused to the
Film and to Capitol by Jackson’s injury and subsequent surgery,†was a tacit admission
that it had sustained damages in May 2007.
To negate the
occurrence of damages in May 2007, Capitol conflates the push costs and
abandonment costs and alleges in the SAC that if USSIC had paid the push costs
it “could still have been made whole†and “this option would have left Capitol
in a position as good or better than it would have been in if it had abandoned
the Film and been paid the amount of its preproduction investment in the
Film.†These are not well pleaded
material facts. Rather, they amount to
mere self-serving contentions, deductions, or conclusions of law. (Aubry
v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966–967.)
Capitol’s
contention that the push costs could have encompassed the abandonment costs is
contradicted by its own pleadings and by Capitol’s counsel at the hearing on
the demurrers. During the hearing on the
demurrer to the FAC, Capitol’s counsel argued that abandonment costs and push
costs constituted “different forms of loss that [were] sustained under the
insurance policy,†and stated “So to the extent that there was some suggestion
that these push costs are subsumed within or are the same as the abandonment
costs—that frankly is completely incorrect.â€
From the moment
USSIC informed Capitol in May 2007 that abandonment was not an option under the
Policy, Capitol not only knew that its broker Aon was negligent, but also that
Capitol had sustained significant damages that were not covered by the
Policy. This fact of damage is the
relevant consideration because “the statute of limitations begins to run upon
the occurrence of ‘“appreciable and actual harm, however uncertain in amountâ€â€™
that consists of more than nominal damages.
[Citations.]†(
Despite
Capitol’s argument to the contrary it is apparent from the face of the
complaint and from matters judicially noted that both of the elements necessary
for a professional negligence claim against its insurance broker Aon to accrue,
occurred no later than May 2007. Capitol
has offered no factual allegations that undermine the only conclusion one can
reach—Capitol was aware of Aon’s negligence and sustained damages in May 2007.
C. No
Tolling of the Statute of Limitations
Capitol contends
that USSIC was investigating the claim between May 2007 and November 1, 2007
and had not made a final decision as to coverage. Therefore, Capitol argues that it did not
suffer appreciable damages until November 1, 2007 when USSIC made a de minimis
offer to resolve the push costs claim, because while the investigation
continued the possibility remained that Capitol could recover its losses.
Capitol added
allegations in the SAC that “abandonment still remained a possibility and was
discussed internally by Capitol and
USSIC.†Capitol also alleged that on
June 5, 2007 its attorney sent a letter to USSIC in which it informed them that
shutting down production was still under consideration by Capitol. But what Capitol was discussing internally or
still considering was not relevant. The
ongoing discussions and investigation Capitol refers to involved the push costs
only and took place after USSIC had
informed Capitol that abandonment was not an option and they would not pay
Capitol for the costs already incurred.
Notably absent was any allegation that USSIC was reconsidering its May
2007 determination that the Policy did not cover the costs of abandoning the
Film.
Capitol argues
that this appeal is factually similar to Hydro-Mill, and that Hydro-Mill
is particularly instructive.
In
an insured aircraft parts manufacturer purchased earthquake
insurance from a broker. The insured
requested coverage for its three locations (one it owned and two it leased),
but the broker mistakenly obtained less than the requested coverage for the
owned location and no coverage for the two leased locations. (Hydro-Mill,
supra, 115 Cal.App.4th at p. 1149.)
After the Northridge earthquake caused extensive damage to all three
locations, the insured submitted a claim for damages. On December 9, 1994, the insurer offered to
pay $270,000 for Hydro-Mill’s losses at the insured location, and made clear
that this compensation excluded losses related to the two leased
locations. (Id. at p. 1151.) Hydro-Mill
asserted that the insurance broker was liable for the unpaid losses at the two
uninsured locations and sued the broker to recover the additional benefits that
would have been paid had the policy been written as requested, including causes
of action for negligence, breach of oral contract, negligent misrepresentation,
and breach of fiduciary duty. (
Judgment was
entered for Hydro-Mill and against the broker.
The appellate court reversed, agreeing with the broker that, regardless
of how the causes of action were labeled, the suit was a claim for professional
negligence and, as such, was barred by the applicable two-year statute of
limitations. (Hydro-Mill, supra, 115 Cal.App.4th at pp. 1159–1164.)
The court in Hydro-Mill
noted that a cause of action for professional negligence did not accrue until
the plaintiff sustained damage and discovered, or should have discovered, the
negligence. (Hydro-Mill, supra, 115 Cal.App.4th at p. 1161.) Within hours of the Northridge earthquake,
Hydro-Mill knew that the earthquake had caused damage to Hydro-Mill’s equipment
and operations. Within two days of the
earthquake, Hydro-Mill also learned that its broker’s mistake would result in
harm to them. On December 9, 1994, when
the insurer offered to pay $270,000, and clarified that losses at leased
locations were being excluded, Hydro-Mill’s cause of action accrued and the
statutory limitations period began to run.
But the court further ruled that the trial court erred in concluding
that the limitations period as to the broker was tolled until the insurer
denied Hydro-Mill’s claim in writing. (
In an action by
an insured against an insurer, the limitations period is tolled from the time
the insured files a timely notice to the time the insurer denies the claim in
writing. (Hydro-Mill, supra, 115 Cal.App.4th at p. 1162.) This is because ‘“[i]t would be
“unconscionable†to permit the limitations period to run while the insured is
pursuing its rights in the claims process, as required by the policy.’†(Id.
at p. 1163.) But the limitations period
was not tolled as to the insurance broker because: an insurance policy requires an insured to
submit a timely claim to the insurer, which then investigates that claim, and
suit should not be brought against an insurer before it completes its investigation
and notifies the insured of the result; an insured should not be penalized for
deferring litigation against an insurer unless and until the insurer denies the
claim; a claim against an insurance broker, by contrast, does not involve
processing a claim, and thus there is no rationale for tolling the limitations
period while a claim is being processed.
(Id. at pp. 1163–1164.) Furthermore, public policy did not support
tolling an action “against a broker based on whether and when an insurer denies
a claim in writing. The broker has no
control or influence over that process.
In this case, for example, the insurer did not give written notice
before the insured filed suit. But the
broker admitted fault early on. It would
be inequitable to hold that the statute of limitations against an insurance
broker is tolled indefinitely if an insurer never denies a claim in
writing.†(Id. at p. 1164.) Here, all
the elements of a cause of action against Aon—wrongful conduct, causation, and
harm—were satisfied in May 2007, when USSIC informed Capitol that abandonment
was not an option under the Policy.
IV. The Trial Court Did Not Make Improper
Factual Determinations
Capitol contends
the trial court made improper factual determinations based on the information
in the prior pleadings in this case and Capitol’s pleadings in the USSIC Action
of which the court took judicial notice.
A demurrer may be
supported by matters that are subject to judicial notice. (Code Civ. Proc., § 430.30, subd. (a);
Cal.4th 1, 6.) Appellate courts should
judicially notice any fact of which the trial court took proper judicial
notice. (Evid. Code, § 459, subd. (a).)
“Under the
sham-pleading doctrine, admissions in an original complaint that has been
superseded by an amended pleading remain within the court’s cognizance and the
alteration of such statements by amendment designed to conceal fundamental
vulnerabilities in a plaintiff’s case will not be accepted. (Deveny
v. Entropin, Inc. (2006) 139 Cal.App.4th 408, 425–426, fn. 3 [if a party
files an amended pleading and attempts to avoid defects of original complaint
by either omitting facts that rendered prior complaint defective or adding
facts inconsistent with prior allegations, court may take judicial notice of
prior pleadings and disregard inconsistent allegations or read into amended
complaint the allegations of the superseded complaint]; Patane v. Kiddoo (1985) 167 Cal.App.3d 1207, 1213.)†(Berg
& Berg Enterprises, LLC v. Boyle (2009) 178 Cal.App.4th 1020, 1043, fn.
25.)
Capitol failed to
explain the inconsistencies between the allegations in the related declaratory
relief action and prior pleadings in this case and the SAC. Capitol was unsuccessful in attempting to
plead around judicial admissions related specifically to: (1) the denial of coverage by USSIC; (2)
reconsideration of the abandonment position by USSIC; (3) Capitol’s awareness
of the loss of the abandonment option; and (4) Capitol’s awareness of the scope
of the losses suffered as a result of Jackson’s injury and withdrawal.
Capitol’s
original complaint unequivocally showed that it was aware that USSIC was taking
the position that coverage did not exist for Jackson’s injury. Capitol alleged that during the week of May
9, 2007 when it made a claim under the Policy it was informed that there was
“no coverage for preproduction injuries under the Essential Element endorsement
and thus was forced to recast the Jackson role, rather than abandoning the film
altogether.â€
The trial court
instructed Capitol that it needed to plead facts to show that a final decision
regarding abandonment was not made in May 2007.
Capitol failed to cure the defect identified by the trial court because
the SAC did not contain any allegations that USSIC reconsidered its May 2007
abandonment position. Capitol’s newly
added allegations that Capitol was discussing internally and communicating with
USSIC the idea of abandonment do not change the analysis.
Nor did the trial
court have to make a factual determination as to when Capitol became aware that
abandonment was not an option because in the original complaint Capitol alleged
that even though abandonment was its “preferred option†it was “forced to
recast the Jackson role†because of defendant’s negligence.
Finally, with
respect to the scope of Capitol’s financial losses, Capitol made numerous
allegations in its counterclaim in the USSIC Action related to the financial
impact of Jackson’s injury and withdrawal which included allegations that
“Jackson’s back injury resulted in a multi-million dollar loss to Capitol,â€
that his injury caused “the loss of significant financing for the Film,â€
because “much of its financing for the Film was . . . contingent
on Jackson’s performance in the Film,†and “[w]hen Jackson became unable to
perform in the Film . . . it became necessary to secure
additional production financing at significant additional expense to Capitol.â€
V. Breach of Fiduciary Duty
Claim
Capitol contends that its breach
of fiduciary duty cause of action is not barred by the statute of limitations because
its claim of negligence was based on Aon’s placement of the Policy with USSIC,
a subpar carrier, which Capitol did not learn until USSIC conducted its
investigation and refused to pay Capitol’s claim on November 1, 2007. Capitol’s contention raises the ambiguity
between agency law and insurance on the issue of whether an insurance broker
can be sued for breach of fiduciary duty.
In Kotlar v. Hartford Fire Ins. Co. (2000) 83 Cal.App.4th 1116 (
was a named insured on his tenant’s commercial general liability policy. The tenant, who had purchased the policy
through a broker, was to pay the premiums.
The policy stated that the insurer would “endeavor†to give Kotlar 30
days’ notice of cancellation. Without
notice to Kotlar, the insurer canceled the policy when the tenant failed to
make payments. A customer sustained
injuries on the property and sued Kotlar.
He tendered the defense of the action to the insurer, which refused the
request on the ground that the policy had been cancelled. Kotlar filed suit against the insurer and the
broker for failure to give notice of the cancellation. The trial court dismissed the action on demurrer,
concluding that the defendants had no duty to give notice.
The Court of
Appeal reversed the dismissal of the insurer stating that notice was required
by section 677.2 of the Insurance Code but affirmed the dismissal of the
broker, stating: “Kotlar cites no case
holding an insurance broker owes a duty of care to a named insured to provide
the named insured with notice of the insurer’s intent to cancel the policy for
nonpayment of premiums. Instead, he asks
us to create such a duty. We decline to do so for several reasons.†(Kotlar,
supra, 83 Cal.App.4th at p. 1123.)
Consistent
with Kotlar, the court in
a fiduciary relationship exists between an insurance broker and an
insured.†(Hydro-Mill,
supra, 115 Cal.App.4th at p 1156.)
In declining to apply a four-year statute of limitations to the breach
of fiduciary duty claim the Hydro-Mill
court stated: “[T]he applicable statute
of limitations is determined by—as variously phrased—the nature of the right
sued upon, the primary interest affected by the defendant’s wrongful conduct,
or the gravamen of the action.
[Citations.] Here, the complaint
shows that the allegations of professional negligence subsume all of the
allegations for breach of fiduciary duty.â€
(Id. at pp. 1158–1159.)
Here, the
gravamen of Capitol’s complaint is professional negligence. Capitol’s cause of action for breach of
fiduciary duty is based upon the same set of facts as the professional
negligence claim. Capitol alleged that
Aon was negligent in procuring a Policy from USSIC that did not cover injury to
Jackson during the preproduction phase of film making, an endorsement which was
“standard in the insurance industry.â€
Because Capitol was aware of this fact the week of May 9, 2007, it was
also aware that USSIC was a subpar carrier for that reason and thus the statute
of limitations began to run at that time.
As such, Capitol’s cause of action for improper placement with a subpar
carrier is also barred by the two-year statute of limitations applicable to the
other causes of action.
VI. The Trial Court Properly Exercised Its
Discretion in Denying Leave to Amend
Capitol
contends that the trial court abused its discretion by
denying leave to amend the SAC. Capitol argues that it should be allowed an
opportunity to address the allegations in the first amended counterclaim in the
USSIC Action because the trial court relied on those allegations in sustaining
the demurrers. We disagree.
“Code of Civil Procedure section 473
states the governing rule: ‘The court
may, in furtherance of justice, and on any terms as may be proper, allow a
party to amend any pleading or proceeding . . . .’ (Id. subd. (a)(1).) ‘Leave to amend a complaint is thus entrusted
to the sound discretion of the trial court.
“. . . The exercise of that discretion will not be disturbed
on appeal absent a clear showing of abuse.
More importantly, the discretion to be exercised is that of the trial
court, not that of the reviewing court.
Thus, even if the reviewing court might have ruled otherwise in the
first instance, the trial court’s order will yet not be reversed unless, as a
matter of law, it is not supported by the record.â€â€™ [Citations.]â€
(Branick v. Downey Savings &
Loan Assn. (2006) 39 Cal.4th 235, 242, fn. omitted.)
Capitol bears the burden of showing that
there is a reasonable possibility that the defects in their causes of action
can be cured by amendment. (
Cal.App.4th 590, 595, 604.) Capitol must
show ‘“in what manner [it] can amend [its] complaint and how that
amendment will change the legal effect of [its] pleading.’ [Citation.]â€
(Rakestraw v. California
Physicians’ Service (2000) 81 Cal.App.4th 39, 43.)
Capitol contends
that the trial court misread the allegations in both the SAC and the
counterclaim in the USSIC Action to allege that Fred Milstein
statement to Capitol that it could not abandon the Film was binding. Capitol seeks leave to amend the complaint to
establish that he was not in fact a representative of USSIC.
The record
supports the trial court’s exercise of discretion. Capitol alleged that during the same week it
made a claim under the Policy “USSIC’s adjustors on the claim told Capitol that
it could not abandon the Film . . . .†Capitol also alleged that “representatives
of USSIC, Steve Leedeke and Graham Henderson†told them that they “had no right
to abandon the Film altogether and recover on the Policy.†Thus the reference to Milstein was not the only
allegation of communication between USSIC and Capitol regarding coverage for
abandonment losses.
Capitol has
not demonstrated how the clarification of Milstein’s status alleviates the
defects identified by the trial court and we find no abuse of discretion in the
court’s denial of leave to amend.
The judgment is affirmed. Aon is entitled to costs on appeal.
NOT TO BE PUBLISHED IN THE
OFFICIAL REPORTS.
`
_____________________, J.
DOI TODD
We
concur:
____________________________,
P. J.
BOREN
____________________________,
J.
ASHMANN-GERST
name="_ftn1" title="">[1] Costs
associated with a delay in production of a film.
alleged in the SAC that “Milstein was president of CineFinance, the completion
bond guarantor that was owned by the same parent company as USSIC, and a person
who had been closely involved with the financing and insuring of the Film.â€
