v. Work Comp for Less Insurance Services
Filed 10/4/13 San Diego Assemblers v. Work Comp for Less Insurance Services
CA4/1
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 This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115
COURT
OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION
ONE
STATE
OF CALIFORNIA
SAN DIEGO ASSEMBLERS, INC.,
Plaintiff and Appellant,
v.
WORK COMP FOR LESS INSURANCE
SERVICES, INC.,
Defendant and Respondent.
D062406
(Super. Ct. No. 37-2011-00051326- CU-PN-NC)
APPEAL from
a judgment of the Superior Court
of
County, Thomas P. Nugent, Judge. Affirmed.
Edwards
& Hunter, Richard P. Edwards and Ellen E. Hunter for Plaintiff and
Appellant.
Murchison
& Cumming, Kenneth H. Moreno and Scott J. Loeding for Defendant and
Respondent.
INTRODUCTION
San Diego
Assemblers, Inc. (Assemblers) appeals from a judgment of dismissal following
the court's granting of summary judgment
in favor of Work Comp for Less Insurance Services, Inc. (Broker). Assemblers contends the court erroneously
determined Broker had no duty to procure a liability insurance policy for
Assemblers covering Assemblers's prior completed work. Assemblers additionally contends its claim is
not barred by the superior equities doctrine or the
to Assemblers, the court erroneously sustained Broker's objections to the
declaration of Assemblers's standard of care expert.
We conclude
Assemblers's claim is barred by the superior equities doctrine. We further conclude Broker owed no duty to
procure prior completed work coverage for Assemblers. We, therefore, affirm the judgment.
BACKGROUND
Broker
procures insurance for businesses.
Assemblers was a remodeling contractor.
In 2000, Assemblers contacted Broker seeking a basic liability policy. Assemblers told Broker the policy limits its
clients required, but never described the types of coverage it wanted. Assemblers repeatedly told Broker to procure
the least expensive policy. Broker
procured policies and provided them to Assemblers's president, who read
them. The president never had any
questions for Broker after reading the policies and never asked for a different
policy or different coverage. Assemblers
never told Broker it did not want a policy with a manifestation endorsement or
with a prior completed work exclusion.
In addition, Broker never misrepresented any coverage contained in
Assemblers's policies and never failed to obtain the coverage Assemblers
requested.
In April
2004 Assemblers performed work for a restaurant. In July 2008 an explosion and resulting fire
occurred at the restaurant, causing substantial property damage. The restaurant's insurer, Golden Eagle
Insurance (Golden Eagle), paid for the damage under an insurance policy for
which the restaurant paid premiums.
Within a month of the fire, Golden Eagle began pursuing Assemblers to
pay for the damage. Assemblers tendered
Golden Eagle's claim to Lincoln General Insurance Company (Lincoln General),
the insurer who provided liability insurance for Assemblers in 2004, and
Preferred Contractors Insurance Company (Preferred), the insurer providing
liability insurance for Assemblers in 2008.
In an
October 14, 2008, telephone conversation, a Preferred claims specialist
informed Assemblers's president that Assemblers's policy included a prior
completed work exclusion. Assemblers's
president indicated he was aware of the exclusion and that Lincoln General had
also denied coverage. He told the claims
specialist he had informed Golden Eagle he had no coverage for the loss and
Golden Eagle was welcome to sue him.
Preferred denied coverage in writing on October 23,
2008, asserting a prior completed work exclusion. Lincoln General denied coverage on
February 10, 2009, asserting a manifestation endorsement limiting coverage
to injury or damage first manifested during the policy period.
After
learning of the denial of coverage, Assemblers did not ask Broker why Broker
had not obtained a different type of policy for Assemblers and Assemblers had
no criticisms of Broker's failure to do so.
Assemblers also did not ask Broker to change any of Assemblers's
policies to include the coverages excluded by the Lincoln General and Preferred
policies because the coverages were cost-prohibitive.
The month
after Lincoln General denied coverage in writing, Golden Eagle sued Assemblers
and subsequently obtained a default judgment.
Assemblers assigned to Golden Eagle any claims Assemblers had against
Broker and then petitioned for bankruptcy relief.
Golden
Eagle brought the instant lawsuit against Broker in Assemblers's name alleging
Broker negligently failed to procure Assemblers insurance coverage adequate to
cover the restaurant fire. Broker moved
for summary judgment asserting among its arguments that it had no legal duty to
provide Assemblers with different or additional coverages, Assemblers's claim
was barred by the superior equities doctrine and Assemblers's claim was barred
by the statute of limitations.
Assemblers
opposed each of these points. As part of
its opposition, it submitted a declaration from an insurance expert. Broker objected to the declaration on, among
other grounds, the declaration lacked foundation and failed to established
expertise in the standard of care for brokers providing insurance to
contractors in Southern California.
The court
granted Broker's motion, agreeing Broker owed no legal duty to provide
Assemblers with a different insurance policy that would have covered the
subject loss. The court also sustained
Broker's objections to the declaration of Assemblers's expert on the grounds
the declaration failed to establish the expert possessed expertise on the
standard of care for brokers for contractors in Southern California. The court further noted, "the scope of
the legal duty of care is established by the courts, not by expert
testimony." The court declined to
rule on any of Broker's other asserted grounds for summary judgment.
DISCUSSION
"
'Because this case comes before us after the trial court's grant of summary
judgment, we apply these well-established rules: " ' "[W]e take the
facts from the record that was before the trial court when it ruled on that
motion," ' " and we " ' " ' "review the trial court's
decision de novo, considering all the evidence set forth in the moving and opposing
papers except that to which objections were made and sustained." ' "
' " [Citation.] We also " '
"liberally construe the evidence in support of the party opposing summary
judgment and resolve doubts concerning the evidence in favor of that
party." ' " '
[Citation.] 'We need not defer to
the trial court and are not bound by the reasons in its summary judgment
ruling; we review the ruling of the trial court, not its rationale.'
" (Hartnett v. Crosier (2012) 205 Cal.App.4th 685, 689-690.)
I
Superior Equities
Doctrine
Although the
trial court declined to address this issue below, Broker contends Assemblers's
claim is barred by the superior equities doctrine. We agree.
The record
shows and the parties do not dispute the restaurant's insurer, Golden Eagle,
filed this action against Broker as Assemblers's assignee. "An insurer's right to subrogation is
delimited by the application of equitable principles and not by the law of
assignments. '[O]ne who asserts a right
of subrogation, whether by virtue of an assignment or otherwise, must first
show a right in equity to be entitled
to such subrogation, or substitution[.]'
(Meyers v. Bank of America
National Trust & Savings Association (1938) 11 Cal.2d 92, 96 (
establish that its equitable position is superior to the position of the party
to be charged." (
1442, 1446.)
An insurer
cannot establish its position is equitably superior to the party to be charged
if the party is not the wrongdoer whose act or omission caused the underlying
loss or is not otherwise legally responsible for the underlying loss. (Dobbas
v. Vitas, supra, 191 Cal.App.4th
at p. 1454; State Farm General Ins. Co.
v. Wells Fargo Bank, N.A. (2006) 143 Cal.App.4th 1098, 1112 ["the aim
of equitable subrogation is to shift a loss for which the insurer has
compensated its insured to one who caused the loss, or who is legally
responsible for the loss caused by another and whose equitable position is
inferior"].) Here, there is no evidence
Broker caused the restaurant fire. There
is also no evidence Broker agree to indemnify Assemblers for causing the
restaurant fire. Golden Eagle,
therefore, cannot establish its position is equitably superior to
Broker's. (Dobbas v. Vitas, at p. 1454 [an insurer is not in a equitably
superior position to a third party who agreed to procure insurance for a loss,
but did not cause the loss or agree to indemnify for the loss].)
The fact
Golden Eagle is acting as Assemblers's assignee in this case does not alter our
analysis. "[W]here by the
application of equitable principles, a surety has been found not to be entitled
to subrogation, an assignment will not confer upon him the right to be so
substituted in an action at law upon the assignment. His rights must be measured by the
application of equitable principles in the first instance, his recovery being
dependable upon a right in equity, and not by virtue of an asserted legal right
under an assignment." (
191 Cal.App.4th at p. 1455.)
II
Duty
Even if
Assemblers's claim was not barred by the superior equities doctrine, Broker
contends Assemblers cannot establish Broker owed a duty to Assemblers to
procure liability insurance with prior completed work coverage. We agree with this contention as well.
As we
recently explained, under well-settled law, "[i]Insurance brokers owe a
limited duty to their clients, which is only 'to use reasonable care,
diligence, and judgment in procuring
the insurance requested by an insured.'
[Citations.] Accordingly, an
insurance broker does not breach its duty to clients to procure the requested
insurance policy unless '(a) the [broker] misrepresents the nature, extent or
scope of the coverage being offered or provided . . . , (b) there is a request
or inquiry by the insured for a particular type or extent of coverage . . . ,
or (c) the [broker] assumes an additional duty by either express agreement or
by "holding himself out" as having expertise in a given field of
insurance being sought by the insured.' "
(Pacific Rim Mechanical
Contractors, Inc. v. Aon Risk Ins. Services West, Inc. (2012) 203
Cal.App.4th 1278, 1283 (Pacific Rim).)
Here,
Assemblers does not assert and has not produced evidence Broker breached its
limited duty to Assemblers in any of the above respects. Rather, Assemblers seeks to hold Broker
accountable for breaching a previously unrecognized implied contractual duty to
investigate Assemblers's coverage needs and procure the requisite coverage to
meet those needs, even if Assemblers did not request the coverage and, as
appears from the record, probably could not have afforded it.
Assemblers
touts many policy reasons for recognizing this implied contractual duty. These reasons revolve around Assemblers's
assertion that recognizing the implied contractual duty would ensure fairness
and equity by holding insurance brokers to the same standards as other
professionals. Whatever the merits of
these policy arguments, it is not difficult to conceive of countervailing
policy considerations, including the likelihood such an implied contractual
duty might cause brokers to oversell insurance to their clients in an effort to
avoid the prospect of later professional liability.
We are also
mindful that a decision to imply a duty here would effectively mandate prior
completed work coverage in all contractor general liability policies, which
could appreciably increase the cost of the policies without directly
benefitting the insureds. This case
presents such an example as it appears the only party who would have directly
benefited from the prior completed work coverage is Golden Eagle. The restaurant would not have directly
benefited from the coverage because its losses were already covered by the policy
it purchased from Golden Eagle.
Assemblers also would not have directly benefited from the coverage
because it was essentially insolvent at the time of the loss and had no assets
to protect.
As we
explained in Pacific Rim, balancing
these types of considerations is properly the function of the Legislature, not
the courts. (Pacific Rim, supra, 203
Cal.App.4th at p. 1285.) If imposing a
broad duty on brokers to affirmatively determine and procure insurance to meet
an insured's coverage needs, or mandating prior completed work coverage in all
contractor general liability policies, " 'is in the interest of the
public . . . , the people of California, by initiative or
through the Legislature, can create that duty . . . .' [Citation.]
'We may not legislate on the subject in their stead.' " (Id.
at p. 1287.)
Given our
conclusions that Assemblers's claim is barred by the superior equities doctrine
and Broker owed no legal duty to Assemblers to procure insurance with prior
completed work coverage, we need not address Broker's contention Assemblers's
claim is barred by the statute of limitations.
We also need not address Assemblers's contention the court erred by
sustaining Broker's objections to the declaration of Assemblers's standard of
care expert.
DISPOSITION
The
judgment is affirmed. Respondent is
awarded its appeal costs.
McCONNELL,
P. J.
WE CONCUR:
HUFFMAN, J.
O'ROURKE, J.
