J.R. Marketing v. Hartford Casualty Ins.
Co.
Filed 5/17/13 J.R. Marketing v. Hartford Casualty Ins. Co.
CA1/3
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opinion has not been certified for publication or ordered published for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
FIRST
APPELLATE DISTRICT
DIVISION
THREE
J.R. MARKETING, L.L.C. et al.,
Plaintiffs,
Cross-Defendants and Respondents,
v.
HARTFORD
CASUALTY INSURANCE COMPANY,
Defendant,
Cross-Complainant and Appellant.
A133750
(San Francisco
County
Super. Ct.
No. CGC-06-449220)
This
is an appeal from an order sustaining the demurrers of
respondents/cross-defendants Squire Sanders L.L.P. (Squire) and Scott
Harrington in a cross-action by appellant Hartford Casualty Insurance Company
(Hartford) for reimbursement of allegedly excessive or otherwise inappropriate
legal fees and costs billed by Squire to Hartford. Squire served as independent counsel for
cross-defendants J.R.
Marketing, L.L.C., Noble Locks Enterprises, Inc., Jane and Robert Ratto, Lenore
and Germain DeMartinis,
and Penelope Kane (collectively, insured cross-defendants) in a California tort action
after Hartford disclaimed coverage for the action under the relevant insurance
policy. Squire also served as
counsel for certain of the insured cross-defendants in two non-California
actions, and as counsel for the non-insured cross-defendants – to wit,
Harrington, Wheatland Baking Inc., and Kane Processing, L.L.C. – in the
California action or one or more of the non-California actions (collectively,
uninsured cross-defendants). According
to Hartford, some portion of the
fees and costs billed by Squire and paid by Hartford
were for legal services provided to
cross-defendants outside the scope of Hartford’s
contractual obligations as insurer under the relevant policy. For reasons discussed below, we affirm the
order.
FACTUAL AND
PROCEDURAL BACKGROUND
This
is not the first time this court been called upon to review trial court rulings
in this insurance
coverage lawsuit. We have twice before
decided appeals in this matter. (See
2007)
(nonpub); J.R. Marketing, L.L.C. v.
much of the relevant factual and procedural background of this coverage
dispute, allowing us, in
the name of judicial efficiency, to borrow extensively from our previous
opinions for purposes of this appeal.
With respect to more recent events, however, we abide by
well-established principles requiring us, when reviewing an order on demurrer,
to accept as true all factual allegations set forth in the operative
complaint. (Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 664, fn.
2.) We thus turn to the relevant facts.
In
Summer 2005, Hartford issued two commercial
general liability policies, the first policy to cross-defendant Noble Locks
Enterprises, Inc., effective July 28, 2005 to July 28, 2006, and the second policy to cross-defendant J.R.
Marketing, L.L.C., effective August 18, 2005 to August 18, 2006 (collectively, the J.R. Marketing and Noble Locks
policies). Under these policies, Hartford promised to defend and
indemnify claims against the named insureds for certain business-related
damages subject to various exclusions of coverage.
In
September 2005, several individuals, including Meir Avganim, sued cross-defendants
(except Wheatland Baking, Inc.) and others for intentional misrepresentation,
competition, restraint of trade, defamation, interference with business
relationships, conversion, accounting, mismanagement and conspiracy in
Marin Superior Court (Marin or
J.R. Marketing, L.L.C., the Rattos, Kane and Kane Processing, L.L.C. The Marin matter was immediately tendered to Hartford for defense and indemnity
under the J.R. Marketing and Noble Locks policies.
Around
the same time, two actions were brought against various of the cross-defendants
in non-California courts (non-California matters). The complaints in the non-California matters
were likewise tendered to Hartford for defense and indemnity
under the J.R. Marketing and/or Noble Locks policies.
In
the Marin matter, Hartford refused to defend or
indemnify the named cross-defendants on the ground, among others, that the acts
complained of appeared to have occurred before the relevant insurance policy’s
inception date. Hartford nonetheless invited them to
provide more information should they believe its position to be erroneous. In February 2006, cross-defendants J.R.
Marketing, L.L.C., Noble Locks Enterprises, Inc., the Rattos, and Kane,
represented by Squire, filed this coverage lawsuit, after which Hartford reconsidered its position
and, based on newly provided information, agreed in March 2006 to provide a
defense in the Marin matter under the J.R. Marketing policy subject to a
reservation of rights. In doing so, Hartford continued to refuse to pay
defense costs incurred before January 19, 2006, or to provide the named
cross-defendants independent counsel in place of its panel counsel. The named cross-defendants thus moved for
summary adjudication on the issue of whether Hartford owed them a duty to defend,
including a duty to provide independent counsel, from the initial tender of the
Marin matter in September 2005. The
trial court granted their motion on July 26,
2006,
finding a legal duty to defend and to fund independent (“Cumisâ€) counsel under the J.R. Marketing policy.
The
trial court also granted a subsequent motion by cross-defendants J.R.
Marketing, L.L.C., Noble Locks Enterprises, Inc., the Rattos, and Kane to
enforce Hartford’s duty to defend and fund independent counsel under the J.R.
Marketing policy (hereinafter, enforcement order). Specifically, on September
27, 2006, the trial court ordered Hartford to pay the insured
cross-defendants’ outstanding invoices within 15 days and to pay “all future
reasonable and necessary defense costs within 30 days of receipt.†Acknowledging a right of reimbursement, the
enforcement order provided, “[t]o the extent Hartford seeks to challenge fees and
costs as unreasonable or unnecessary, it may do so by way of reimbursement
after resolution of the Avganim
matter. American Motorists Insurance Co. v. Superior Court (“
35, 50 et seq.â€
Finally,
the order provided that, while Squire’s bills had to be reasonable and
necessary, Hartford was barred from invoking the protective provisions afforded
insurers under Civil Code section 2860 because it “has breached and continues
to breach its defense obligations by (1) failing to pay all reasonable and
necessary defense costs incurred by the insured and by (2) failing to
provide Cumis counsel.â€
1233.) In so ordering, the trial court
expressly reasoned there was “no authority for the proposition that once an
insurer breaches its duty to defend by refusing to provide Cumis counsel, when that insurer is later ordered to provide
the order, but later agrees to provide that counsel, it can unilaterally take
advantage of the rate limitation provision of Section 2860. Indeed, such an outcome would encourage
insurers to reject their Cumis
obligation for as long as they chose, safe in the notion that they could, at
any point, invoke the protection of the statute, effectively forcing their
policyholder to transfer the file to yet another law firm whose rates are
lower.†In this case, the court added,
“such a result would work an injustice, since Hartford has already forced its policyholders
to transfer the defense of the Avganim
matter from [Squire] to Hartford’s panel counsel, only to
have it come back again.†Finally, the
court concluded: “[T]he province of the Court is not to continually monitor the
conduct of a breaching insurer to determine at what point it is no longer in
‘breach’ so that it may benefit from a statute whose protection it previously
waived.â€
This
court affirmed both the enforcement order and the underlying summary
adjudication order in the aforementioned nonpublished opinion dated November 30, 2007.
name="_ftnref5" title="">[5]
On or
about October 2009, the Marin matter was resolved. Cross-defendants, including the insured and
uninsured, submitted bills to Hartford for defense fees and costs
totaling over $15 million, which Hartford subsequently paid. According to Hartford, these defense fees and
costs were charged by Squire for its legal services as independent counsel for
the insured cross-defendants in the Marin matter, as well as for its services
as counsel for the insured and uninsured cross-defendants in the Marin and/or
non-California actions. Hartford further alleges
cross-defendants authorized and ratified each act of legal service rendered by
Squire on their behalf as counsel in those actions, and did so under the
auspices of the enforcement order.
After
paying Squire’s invoices, on July 15, 2011, Hartford filed the operative
cross-complaint in this action, asserting causes of action for reimbursement of
monies paid pursuant to the enforcement order, unjust enrichment, accounting
and rescission.
title="">[6] In this cross-complaint, Hartford alleges Squire submitted
improper invoices to Hartford “under the auspices of the
enforcement order,†which caused it to pay in excess of $15 million in defense
fees and costs. As such, Hartford claims
a right under the enforcement order to obtain reimbursement of “all
unreasonable or unnecessary fees and costs billed to and paid by Hartford,â€
including those amounts outside the scope of the enforcement order for services
rendered: (a) for individuals and entities not insured under the underlying
policies; (b) prior to any proper tender to Hartford by any individual or
entity; (c) for any individual or entity in one of the non-California actions;
(d) for prosecution of any affirmative cross-complaints in the Marin action;
and/or (e) for any individual or entity to the extent such fees or costs are
abusive, excessive, unreasonable or unnecessary.
Respondents
Squire and Harrington, as well as cross-defendants J.R. Marketing, L.L.C., the
Rattos, the DeMartinis, and Kane, thereafter demurred to the operative
cross-complaint on the ground that each cause of action fails to allege facts
sufficient to state a valid legal claim against any of the named
cross-defendants. Following a hearing on
September 1, 2011, the trial court sustained the demurrer to the unjust
enrichment and accounting causes of action without leave to amend as to all
cross-defendants and to the reimbursement and rescission causes of action
without leave to amend as to respondents Squire and Harrington. The trial court overruled the demurrer to the
reimbursement and rescission causes of action as to cross-defendants J.R.
Marketing, L.L.C., the Rattos, the DeMartinis, and Kane.
On December 21, 2011, a judgment of dismissal was thus entered in favor of
Squire and Harrington and against Hartford. Hartford appeals.
DISCUSSION
Hartford
raises one primary issue for our review in seeking to overturn the trial
court’s order sustaining without leave to amend the demurrer of respondents Squire
and Harrington: Does Hartford have a
quasi-contractual right rooted in common law to maintain a direct suit against
Squire, independent counsel for certain cross-defendants in the Marin action,
or Harrington, an uninsured defendant in the Marin action, for reimbursement of
excessive or otherwise improperly-invoiced defense fees and costs?
For reasons set forth below, we conclude the answer with respect to both
respondents is “No.â€
of Review
“In evaluating a trial
court’s order sustaining a demurrer, we review the complaint de novo to
determine whether it contains sufficient facts to state a cause of action. (Blank
v. Kirwan (1985) 39 Cal.3d 311, 318 [216 Cal.Rptr. 718, 703 P.2d 58].) In
doing so, we accept as true all properly pleaded material facts, as well as
facts that may be implied from the properly pleaded facts [citation], and we
also consider matters that may be judicially noticed [citation]. We do not
assume the truth of contentions, deductions or conclusions of fact or law. (
(Peterson v. Cellco Partnership
(2008) 164 Cal.App.4th 1583, 1589.)
“When
a demurrer has been sustained . . . without leave to amend, we decide
whether there is a reasonable possibility that the defect can be cured by
amendment: if it can be, . . .
we reverse; if not, . . . we affirm.â€
(Blank v. Kirwan (1985) 39
Cal.3d 311, 318.) “The plaintiff ‘bears
the burden of demonstrating that the trial court erroneously sustained the
demurrer as a matter of law’ and ‘must show the complaint alleges facts sufficient
to establish every element of [the] cause of action.’ [Citation.]†(Peterson
v. Cellco Partnership, supra, 164 Cal.App.4th at p. 1589.)
Law Governing the Relationship Among Insurer, Insured and Independent Counsel.
Under well-established
California insurance law, an insurer has the right to control defense and
settlement of a third party action against its insured, and to otherwise
directly participate in the litigation on the insured’s behalf, so long as no
conflict of interest arises between the insurer and the insured. (Gafcon,
Inc. v. Ponsor & Associates (2002) 98 Cal.App.4th 1388, 1406-1407 (
relationship between an attorney retained by an insurer, on the one hand, and both the
insurer and insured, on the other hand, where no conflict of interest exists]; see also National Union Fire Ins. Co. v. Stites Prof. Law Corp. (1991) 235
Cal.App.3d 1718, 1727 [“[s]o long as the interests of the insurer and
the insured coincide, they are both the clients of the defense attorney and the
defense attorney’s fiduciary duty runs to both the insurer and the insuredâ€].)
In this case, however, it is undisputed a conflict of
interest between Hartford
and the insured cross-defendants did in fact arise. As such, a different rule was triggered. Specifically, where, as here, the interests
of the insurer and the insured no longer align, the insured is entitled under
Civil Code section 2860 (section 2860) to independent counsel at the insurer’s
expense. (§ 2860 [codifying and
clarifying the Cumis
doctrine]; e.g., Gafcon, supra, 98 Cal.App.4th at pp. 1421-1422.) Although independent counsel owes certain
limited duties to the insurer under these circumstances (mainly related to
sharing nonprivileged information), independent counsel represents the
insured alone. (§ 2860,
subds. (d), (f).) Otherwise stated,
“there is no attorney-client relationship between Cumis counsel and the insurer.â€
(Assurance Co. of America v. Haven
(1995) 32 Cal.App.4th 78, 87-88, 90 [Assurance].)
Section
2860 also provides certain protections for the insurer. These protections include provisions
governing the amount of fees payable to independent counsel, the subject matter
of this dispute. For example, the
statute limits the
rate of fees an insurer may be obligated to pay to “the rates which are
actually paid by the insurer to attorneys retained by it in the ordinary course
of business in the defense of similar actions in the community where the claim
arose or is being defended.†In
addition, the statute mandates that fee disputes “shall be resolved by final
and binding arbitration by a single neutral arbitrator selected by the parties
to the dispute.†(§ 2860, subd. (c).)
Yet
these protective rules come with an important caveat. “ ‘To take advantage of the provisions of [section] 2860,
an insurer must meet its duty to defend and accept tender of the insured’s
defense, subject to a reservation of rights.’ †(Atmel
Corp. v. St. Paul Fire & Marine (N.D. Cal. 2005) 426 F.Supp.2d 1039, 1047;
see also Truck Ins. Exchange v. Superior
Court (1996) 51 Cal.App.4th 985, 998.)
When, to the contrary, the insurer fails to meet its duty to defend and
accept tender, the insurer forfeits the protections of section 2860, including
its statutory limitations on independent counsel’s fee rates and resolution of
fee disputes. More generally, “[w]hen
relieved of his or her obligation to allow the insurer to manage the litigation
and may proceed in whatever manner is deemed appropriate.†(Eigner
v. Worthington (1997) 57 Cal.App.4th 188,
196. See also Stalberg v. Western Title Ins. Co., supra, 230 Cal.App.3d at
p. 1233 [an insurer that wrongfully refuses to defend the insured forfeits
its right to control the defense, including its rights to select defense
counsel and litigation strategy].)
Here,
undisputedly, Hartford failed to meet its duty to
defend and accept tender of the defense in the Marin matter, thereby, as this
court recognized in 2007, forfeiting its right to rely on the statutory
protections of section 2860 and to otherwise control the defense. (See J.R.
Marketing, L.L.C. v. Hartford
III. The Right of an Insurer to Seek Reimbursement for Defense Fees
and Costs.
A. Does
It is
within this context that we are left to consider Hartford’s asserted right to seek
reimbursement in a direct suit against Squire.
In doing so, we first identify two well-established legal principles
relevant to any claimed right of reimbursement by an insurer. First, with respect to claims that are at
least partially covered under the relevant policy, an insurer’s duty to defend
extends to the insured’s entire defense cost.
(Buss v. Superior Court,
supra, 16 Cal.4th at pp. 47-48 [recognizing that insurers contract to pay the
entire cost of defending at-least-potentially-covered claims] [
with respect to claims not even potentially covered under the relevant policy,
an insurer, like Hartford, does indeed have a right
to seek reimbursement of its cost to defend such claims once the underlying
suit has been resolved. (E.g.,
not even potentially covered, however, the insurer may indeed seek
reimbursement for defense costsâ€]; Reliance
Ins. Co. v. Alan (1990) 222 Cal.App.3d 702, 710.) However, having acknowledged this right to
seek reimbursement as to not-even-potentially-covered claims, the question
remains against whom may the insurer
assert this right.
Hartford,
in arguing its right to seek reimbursement extends against independent counsel,
looks to language in the California case law, including the high court’s
decision in Buss, describing the
nature of this right as both contractual and quasi-contractual: “Under the policy, the insurer does not have a duty to defend
the insured as to the claims that are not even potentially covered. With regard
to defense costs for these claims, the insurer has not been paid premiums by
the insured. It did not bargain to bear these costs. To attempt to shift them
would not upset the arrangement. [Citation.] The insurer therefore has a right of reimbursement that is implied in
law as quasi-contractual, whether or not it has one that is implied in fact in
the policy as contractual. [Fn. omitted.] As stated,
under the law of restitution such a right runs against the person who benefits
from ‘unjust enrichment’ and in favor of the person who suffers loss thereby. The ‘enrichment’ of the insured by the
insurer through the insurer’s bearing of unbargained-for defense costs is
inconsistent with the insurer’s freedom under the policy and therefore must be
deemed ‘unjust.’ â€
name="_ftnref8" title="">[8] (Buss,
supra, 16 Cal.4th at pp. 51-52 [italics added]; see also
Cal.App.4th 1350, 1370 [Durell]
[“ ‘where appropriate [in cases involving fraud, duress, conversion, or
similar conduct], the law will imply a contract (or rather, a quasi-contract),
without regard to the parties’ intent, in order to avoid unjust
enrichment’ â€].)
According
to Hartford, Buss and Durell stand for
the proposition that a right of restitution lies, independent of a contractual
relationship, between any person who has suffered loss and the person who has
been unjustly enriched thereby. Thus,
relying on the above-identified language, and in particular the language in
reimbursement for unbargained-for defense costs, Hartford argues one step further
that insurers are entitled to reimbursement from independent counsel of those costs to prevent counsel’s unjust
enrichment by the insurer. As we will
explain, the relevant law and policy both suggest otherwise.
With
respect to the law, Hartford’s
argument ignores several implications of the important caveat governing
restitution claims identified in both Buss
and Durell. According to this caveat, “ ‘ “[t]he fact
that one person benefits another is not, by itself, sufficient to require
restitution. The person receiving the
benefit is required to make restitution only if the circumstances are such
that, as between the two individuals, it is unjust for the person to
retain it. [Citation.]†’ [Citation.]â€
(Durell, supra, 183
Cal.App.4th at p. 1370; see also Buss,
supra, 16 Cal.4th at pp. 50-52.)
required only when it ‘ “ ‘involves no violation or frustration of
law or opposition to public policy, either directly or
indirectly.†’ †([
v. Cellco Partnership, supra, 164 Cal.App.4th at p. 1595.)
In
this case, important policies – to wit, those underlying the enactment of
section 2860 – would indeed be frustrated by allowing Hartford to directly sue Squire for
reimbursement. As explained in great
detail above, Hartford’s and Squire’s relationship
is governed by the Cumis scheme,
which “envisions an attorney pursing an insured’s defense independently
of the insurer rather than intertwined with it.†(Assurance, supra, 32 Cal.App.4th at
p. 91, fn. 8.) Thus, under
this scheme, where, as here, the insurer breaches its duty to defend the
insured, the insurer loses all right to control the defense, including, necessarily,
the right to control
financial decisions such as the rate paid to independent counsel or the
cost-effectiveness of any particular defense tactic or approach. (James
3 Corp. v. Truck Ins. Exchange (2001) 91 Cal.App.4th 1093,1103, fn.3
[“Th[e] right to control the defense necessarily encompasses the right to
determine what measures are cost effective, bearing in mind liability and
indemnity exposure†]; Dynamic Concepts,
Inc. v. Truck Ins. Exchange (1998) 61 Cal.App.4th 999, 1009, fn. 9
[insurers are barred from imposing on the insured’s counsel discovery or
research limitations that would impede counsel’s professional judgment or
otherwise unreasonably interfere with the insured’s defense].)
choice of fee arrangement for the defense of the insured by means of a
post-resolution quasi-contractual suit for
reimbursement against the insured’s separate counsel, such as Hartford
seeks to pursue here against Squire, runs counter to these Cumis-scheme principles for several reasons well-illustrated by the
facts at hand.
Recall
Hartford, an insurer in breach of its duty to defend, chose not to align its
interests with the insured cross-defendants for purposes of the Marin defense
and thereby forfeited all right to control that defense. Placed in this position, cross-defendants,
not Hartford, hired Squire as
independent counsel to represent their interests in the defense, negotiated the
relevant fee arrangement with Squire, and oversaw all matters of defense
strategy including, presumably, deciding with Squire the cost/benefit of
various litigation pursuits. It is
within this context that Hartford
claims the legal right to bring a reimbursement action against
unreasonable or unnecessary fees for their provision of legal services in the
name of cross-defendants’ defense. We
think not. As set forth above, it is
clear California law bars an
insurer, like Hartford, in breach
of its duty to defend from thereafter imposing on its insured its own choice of
defense counsel, fee arrangement or strategy.
This court now takes the law one slight step further by holding Hartford
likewise barred from later maintaining a direct suit against independent
counsel for reimbursement of fees and costs charged by such counsel for
crafting and mounting the insureds’ defense where Hartford
considers those fees unreasonable or unnecessary.
To
hold otherwise would effectively
afford the insurer that has waived the protections of section 2860 through its own
wrongdoing more rights in a fee dispute with independent counsel than the
insurer that has not waived such protections.
Specifically, while the insurer in compliance with its duty to defend
would be limited under section 2860 to arbitrating a fee dispute, the insurer
in breach of its duty could bring the fee dispute to court.
result. (See Comunale v. Traders & General Ins. Co. (1958) 50 Cal.2d 654,
660 [“Certainly an insurer who . . . wrongfully refused to
defend should be in no better position than if it had assumed the defenseâ€];
Housing Group v. PMA Capital Ins. Co. (2011) 193 Cal.App.4th 1150, 1157 [rejecting the position that “
‘insurers always can take advantage of [§2860] despite immediately failing to
meet their burden to defend’ †because
it “would encourage insurers to reject their Cumis obligations for as
long as they chose because they knew they could invoke the limitations and
remedies of section 2860 at any timeâ€].)
Indeed,
by providing legal services to cross-defendants, Squire did not confer any
benefit upon Hartford. Rather, Squire conferred a benefit on its
clients – to wit, cross-defendants. That
Hartford paid Squire for those services does not change this
fact. There simply is no legal basis
here for the restitution claim that Hartford has asserted against
Squire. Here, it is the insured cross
defendants – rather than independent counsel – that the insurer should look to
for reimbursement if it believes the fees were incurred to defend claims that
were not covered by the insurer’s policies or that the insured agreed to pay
Squire more than was reasonable for the services that Squire performed.
Finally,
we add that our holding in this regard is actually quite limited. Given the precise issue raised by the parties
to this appeal, we have no reason to, and do not, take a position as to whether
an insurer would have the right to maintain a direct suit against independent
counsel for fraudulent billing practices in connection with the underlying
defense of its insured. (Cf. Caiafa
Prof. Law Corp. v. State Farm Fire & Cas. Co. (1993) 15 Cal.App.4th 800,
803 [pointing out that if “the only issue in dispute truly was the amount of Cumis counsel fees the insurance company owed, it would be
improper, in most circumstances at least, for a trial court to stay the
arbitration proceeding mandated under section 2860 in order to allow a judicial
proceeding in the California courts to decide that issue and that issue
aloneâ€]; Fireman’s Fund Ins. Companies v.
Younesi (1996) 48 Cal.App.4th 451, 455-459 [where an insurer sued its
insured’s Cumis counsel for fraudulent billing practices, the appellate
court affirmed an order denying counsel’s motion to compel arbitration under
section 2860, subd. (c), holding “the language of [section 2860, subd. (c)] can
only be interpreted to limit the scope of arbitrable disputes to those in which
only the amount of legal fees or the hourly billing rates are at issueâ€].)
Thus,
for all the reasons stated, we conclude that, where a conflict arises with
respect to defense fees or costs paid by an insurer in breach of its duty to
defend to the independent counsel hired by its insured following this breach,
the insurer must look to the insured, not independent counsel, to resolve the
conflict.
title="">[12]
B. Does
Finally,
we address Hartford’s contention the trial court erred by sustaining the
demurrer to its reimbursement cause of action as to respondent Harrington, an
individual named as a defendant in the Marin matter but not insured by
Hartford.
title="">[13] In seeking reimbursement from Harrington, Hartford raises one argument in its
opening brief without any citation to legal authority or to the factual record:
Hartford claims simply that it has a right to restitution from
Harrington because he was unjustly enriched by receiving a Hartford-financed
defense in the Marin matter.
name="_ftnref14" title="">[14] As respondents point out, however, in
addition to failing in its opening brief to cite to relevant legal authority or
to the record, Hartford also failed in the operative complaint to allege that
any fees or costs were incurred or legal services provided solely for
Harrington’s defense (as opposed to for one or more of the insured
cross-defendants). Moreover, Hartford offered no explanation in
its opening brief as to how this failure to allege could be remedied.
We
conclude based on this record that Hartford has failed its burden to
prove the trial court abused its discretion by sustaining the demurrer as to
Harrington without leave to amend. This
court is not obligated to research the relevant law or to develop an
appellant’s otherwise conclusory legal assertions. (Dills v. Redwoods Associates, Ltd.
(1994) 28 Cal.App.4th 888, 890, fn. 1; HFH, Ltd. v. Superior Court (1975) 15 Cal.3d 508, 513, fn. 3.) To the contrary, this court is entitled to
disregard legal assertions not supported by meaningful argument, particularly
where the proponent of such assertions has the burden to prove grounds for
reversal. (McComber v. Wells (1999) 72 Cal.App.4th 512, 522; Sehulster
Tunnels/Pre-Con v. Traylor Brothers, Inc./Obayashi Corp. (2003) 111
Cal.App.4th 1328, 1345, fn. 16.)
While
Hartford may have provided additional argument in its
than respond to points raised by respondents in their appellate brief.
demonstrating the trial court’s error, runs contrary to our well-established
rules of appellate litigation. (Scott
v. CIBA Vision Corp. (1995) 38 Cal.App.4th 307, 322 [“[w]e do not entertain
issues raised for the first time in a reply brief,
in the absence of a showing of good cause why such issues were not raised in
the opening brief. [Citations.] No good cause appearing here, we will disregard
these issuesâ€].) Moreover, to condone
this approach for purposes of the present appeal would be unfair to
respondents, who have been deprived by Hartford’s tactic of any opportunity
to counter its reply arguments. (
Cal.App.4th 754, 764.) As our appellate
colleagues in the Third District have aptly noted: “ ‘Obvious
considerations of fairness in argument demand that the appellant present all of
his points in the opening brief. To
withhold a point until the closing brief would deprive the respondent of his
opportunity to answer it or require the effort and delay of an additional brief
by permission. Hence
the rule is that points raised in the reply brief for the first time will not
be considered, unless good reason is shown for failure to present them
before.’ †(Neighbors v. Buzz Oates
Enterprises (1990) 217 Cal.App.3d 325, 335, fn. 8.)
Thus,
we conclude that, given Hartford’s failure to state facts supporting its
reimbursement cause of action against Harrington, and to present timely and
legally-supported arguments as to how the trial court erred or how the
operative complaint could be amended to remove any defect, there are no grounds
for reversing this order.
DISPOSITION
The
judgment of dismissal in favor of respondents and against Hartford
is affirmed. Respondents are entitled to
recover costs on appeal.
_________________________
Jenkins,
J.
We concur:
_________________________
Pollak, Acting P. J.
_________________________
Siggins, J.
name="_ftn1" title="">[1]
the first appeal, we upheld a trial court order requiring Hartford
to immediately pay Squire’s outstanding legal fees and costs and declining to
permit Hartford to avail itself of
the protections provided to insurers pursuant to Civil Code section 2860,
subdivision (c). This order will be
discussed in greater detail herein. In
the second appeal, we upheld a trial court order denying Hartford’s
motion to disqualify Squire as counsel.
San Diego Fed. Credit Union v. Cumis Ins.
Society Inc. (1984) 162 Cal.App.3d 358.
For purposes of this appeal, we use the terms “Cumis counsel†and “independent counsel†interchangeably.
