target="A131906_files/props0002.xml">
Sasser v. Allstate Ins. Co.
Filed 7/8/13
Sasser v. Allstate Ins. Co. CA1/2
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opinion has not been certified for publication or ordered published for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
FIRST
APPELLATE DISTRICT
DIVISION
TWO
JAKE
SASSER,
Plaintiff and Appellant,
v.
ALLSTATE
INSURANCE COMPANY,
Defendant and Respondent.
A131906, A132887, & A133538
(Alameda County
Super. Ct. No. RG 08386735)
In
May 2007, a house owned by appellant Jake Sasser suffered
policy issued to Sasser by respondent Allstate Insurance Company (Allstate),
and Sasser filed a claim for the damage to the property. Allstate denied Sasser’s claim on the basis
that his loss was the result of vandalism, a type of loss subject to a policy
exclusion.
Sasser sued,
asserting seven causes of action.
Allstate moved for summary judgment or, alternatively, summary
adjudication, and the trial court granted summary adjudication on six of the
claims, all but that for breach of contract.
The case then proceeded to trial on the one remaining cause of
action. After brief deliberations, the
jury returned a verdict in Allstate’s favor.
After the trial,
Allstate filed a cost bill seeking over $25,000 in costs, and the trial court
allowed most of the costs under Code of Civil Procedure section 1032. Also after trial, Allstate filed a motion
under Code of Civil Procedure section 2033.420 to recover the legal fees it
incurred in proving the truth of admission requests Sasser had denied during
the course of discovery. The court
ultimately granted Allstate’s motion in part, awarding it $25,000 in connection
with Sasser’s denial of one request for admission.
Sasser filed three
appeals, from the judgment, the cost award, and the attorney fee award. His primary appeal, from the judgment,
essentially asserts four errors by the trial court: (1) granting summary adjudication on Sasser’s
“bad faith†claim; (2) its interpretation of the Allstate policy; (3) its
instructions to the jury; and (4) its approval of the special verdict form
provided the jury. Allstate
“protectively†cross-appeals the jury’s finding that it did not prove that the
fire resulted from vandalism because, it claims, Sasser had admitted that arson
caused the fire. We disagree with
Sasser’s first claim, but agree with his claim of prejudicial error in the jury
instructions. We thus reverse the
judgment for Allstate and vacate the award of costs. We affirm the attorney fee award.
Beginning in about
1992 Sasser and his wife (since deceased) owned the house at 7921 Holly Street
in Oakland, and regularly rented it out to tenants. Apparently in May 2005, Sasser evicted
his final tenants for nonpayment of rent.
When they departed, they took all the furnishings, leaving the house
substantially empty save for several pieces of allegedly “junk†furniture. Sasser was unsuccessful in his efforts to
rent the property, and it remained vacant.
Sasser had a chain-link fence erected around the property “to keep
vandals out,†to no avail: in the two
years between the departure of the last tenant and the 2007 fire, Sasser
learned that the property had been entered at least twice without his
permission.
During this period
of time, more specifically, beginning in March 2004, Sasser contracted with
Allstate to insure the Holly Street property under a “Landlords Package
Policy,†which policy was in effect at the time of the fire. Policy form AP529 specified the policy’s
coverage provisions and exclusions, and provided “Dwelling Protectionâ€
coverage. One provision of that form,
entitled “Losses We Cover Under Coverages A and B,†stated as follows: “We will cover sudden and accidental direct
physical loss to property described in Coverage A–Dwelling Protection and
Coverage B–Other Structures Protection except as limited or excluded in this
policy.â€
Under the title
“Losses We Do Not Cover Under Coverages A and B,†the policy continued: “We do not cover loss to property described
in Coverage A or Coverage B—Dwelling Protection or Other Structures Protection
when [consisting of or caused by]: [¶] . . .
[¶] 20. Vandalism.
we do cover sudden and accidental direct physical loss caused by fire resulting
from vandalism unless your dwelling had been vacant or unoccupied for more than
90 consecutive days immediately prior to the vandalism.â€
“willful or malicious conduct resulting in damage or destruction of property.â€
In May 2007 a fire
occurred at the property, destroying the front bedroom area and damaging other
portions of the house. Sasser reported
this loss to Allstate, and it assigned adjuster Stanley Eisen to handle the
claim. Sasser told Eisen that the
property had been vacant for approximately two years.
Via Eisen,
Allstate retained EFI Global, a company specializing in fire cause
investigation, and EFI assigned one of its senior fire investigators, George
Alboff, to determine the cause and origin of the fire. He undertook such an investigation and on
June 7 submitted a report in which he concluded that “the fire was
intentionally set and most likely accelerated with a fuel form such as a
flammable liquid.†After reviewing this
report, on June 22, Eisen wrote Sasser advising him that the vandalism
exception in the policy precluded coverage for the fire damage to the property.
During the
subsequent litigation, Sasser retained two individuals who examined the EFI report
and opined that its investigation was not thorough and undertaken and completed
too quickly. One of those investigators,
Steven Carman, visited the Holly Street property in 2010 and, in January 2011
submitted a report to the effect that EFI’s findings did not support its
opinion that arson had been committed.
The Proceedings Below
In May 2008,
Sasser filed suit against Allstate regarding its denial of his claim.
operative pleading was the second amended complaint, which asserted seven
causes of action against Allstate, for:
(1) breach of contract, (2) negligence, (3) bad faith, (4)
intentional infliction of emotional distress, (5) misrepresentation, (6) negligent
misrepresentation, and (7) negligent infliction of emotional distress.
In April 2010,
after discovery had been taken, Allstate moved for summary judgment or,
alternatively, summary adjudication.
Sasser opposed the motion and, following Allstate’s reply, the trial
court heard oral argument on October 14, 2010.
On November 1, 2010, the court granted Allstate summary adjudication on
all of Sasser’s causes of action except the first, for breach of contract. Sasser moved for reconsideration of the trial
court’s ruling, which was denied, and the case proceeded to trial on Sasser’s
breach of contract claim.
On February 9,
2011, the trial court granted Allstate’s motion to bifurcate the trial, to try
first the issue of whether Allstate’s policy covered the fire damage to
Sasser’s property. That trial commenced
on February 28. As discussed further
below, Sasser and the expert retained by him, Steven Carman, testified
concerning their beliefs regarding the cause of the fire. Allstate also presented evidence on that
issue from two witnesses, one an expert retained by it and another an
investigator employed by EFI.
Following the
presentation of evidence, a process that consumed six days, the trial court
presented the jury with a special verdict form containing six questions. On March 7, after only a few hours of
deliberation, the jury returned its verdict.
It found that, although Sasser had established that a contract existed
between him and Allstate, he had failed to “prove by a preponderance of the
evidence†that (1) the fire at the property “was a sudden and accidental direct
physical loss,†(2) so that an “exception to the vandalism exclusion applies,â€
(3) the Holly Street property “was not vacant for more than 90 consecutive days
immediately prior to the fire,†or (4) that the property “was not unoccupied
for more than 90 consecutive days prior to the fire.†The jury also found that Allstate had not
proven that the fire resulted from vandalism.
Sasser moved for a
new trial and also to set aside and vacate the judgment. Allstate moved for partial judgment
notwithstanding the verdict. The trial
court heard oral argument on both motions on April 19 and on April 21
denied both parties’ posttrial motions.
Sasser filed a notice of appeal on May 2, and Allstate its notice on May
20.
Following the trial,
Allstate filed a cost bill seeking over $25,000 in costs. Sasser contested the award, and by order of
July 25, 2011, the trial court allowed most of the costs, and on August 9,
2011, Sasser filed an appeal from this order.
Following the
trial, Allstate also filed a motion under Code of Civil Procedure section
2033.420 (section 2033.420) to recover the legal fees it incurred in proving
the truth of admission requests Sasser had denied during the course of
discovery. The trial court awarded
Allstate $25,000, and Sasser filed a notice of appeal from this order on
October 24, 2011. An order consolidating
these appeals will issue simultaneously with this opinion.
The
parties differ somewhat in their identification of the issues presented on the
appeal from the judgment. They agree on
three issues, whether the trial court: (1) erred in granting Allstate’s
motion for summary adjudication on Sasser’s claim for breach of the covenant of
good faith and fair dealing; (2) correctly determined that Sasser was required
to establish that the fire damage to his property fell within the terms of the
Allstate policy; and (3) correctly instructed the jury as to the meaning of the
term “accidental†in that policy. Sasser
correctly adds a fourth issue, namely whether the special verdict form
submitted to the jury by the court was “inconsistent,†and the verdict was thus
“defective.â€
The
parties agree regarding our standards of review of these issues: all of them should be reviewed de novo, i.e.,
they essentially present issues of law.
We agree with this, as such a standard is applicable to the issues
involved in this appeal. (See, e.g.,
162 Cal.App.4th 1376, 1384-1385 [summary adjudication]; Powerine Oil Co., Inc. v. Superior Court (2005) 37 Cal.4th 377,
389-391 [interpretation of the provisions in insurance policies];
171 Cal.App.4th 72, 82 [jury instructions]; and Zagami, Inc. v. James A. Crone, Inc. (2008) 160 Cal.App.4th 1083,
1092 [special verdicts].)
The
Trial Court Did Not Err in Granting Allstate’s Motion for Summary Adjudication
of Sasser’s Cause of Action for Breach of the Covenant of Good Faith and Fair
Dealing
Sasser first argues that the
trial court erred in granting summary adjudication of his cause of action for
breach of the covenant of good faith and fair dealing. We disagree.
In its ruling, and
after summarizing the applicable law, the trial court stated: “Allstate’s
denial of the instant claim was based upon its reliance on its forensic expert,
who concluded that the fire was due to arson committed by vandals or
trespassers, and because the property was vacant in excess of 90 days. Plaintiff initially admitted that the
property had been vacant for over two years prior to the fire and initially
agreed with that the fire was caused by arson.
[Citation.] Plaintiff’s counsel
argues that Allstate’s denial was in bad faith because the investigation
performed by Allstate’s forensic expert was not sufficiently thorough and was
based solely on the fact that the property was vacant and Plaintiffs are
elderly persons of color. There is a
complete absence of evidence to support the claims that the denial was based
solely upon Plaintiff’s race and age, or due to the fact (undisputed) that the
property was vacant at and before the time of the fire. While Plaintiff disagrees with the conclusion
reached in the EFI Report, Defendant’s reliance on that report was not on its
face unreasonable or arbitrary.
Plaintiff has not raised a triable issue of fact that Allstate’s denial
of coverage was unreasonable or without proper purpose.â€
Our de novo review
leads to the same conclusion.
In
& Health Ins. Co. (2010) 181 Cal.App.4th 60 (Nieto), the court stated:
“As summarized in Chateau
Chamberay Homeowners Assn. v. Associated Internat. Ins. Co. (2001) 90
Cal.App.4th 335, 345 ‘ “ ‘breach of the implied covenant of good
faith and fair dealing involves something beyond breach of the contractual duty
itself,’ and it has been held that ‘ “[b]ad faith implies unfair dealing
rather than mistaken judgment. . . .†[Citation.]’ [Citation.]â€
[Citation.]’ Thus, an insurers’ bad
judgment or negligence is insufficient to establish bad faith; instead, the
insurer must engage in ‘ “a conscious and deliberate act, which unfairly
frustrates the agreed common purposes and disappoints the reasonable
expectations of the other party thereby depriving that party of the benefits of
the agreement.†’ (
conduct was unreasonable. (
127; Nager v. Allstate Ins. Co.
(2000) 83 Cal.App.4th 284, 288.) ‘While
the reasonableness of an insurer’s claims-handling conduct is ordinarily a
question of fact, it becomes a question of law where the evidence is undisputed
and only one reasonable inference can be drawn from the evidence. [Citation.]’
(Chateau Chamberay Homeowners
Assn. v. Associated Internat. Ins. Co., supra,
at p. 346; Carlton v. St. Paul Mercury
Ins. Co. (1994) 30 Cal.App.4th 1450, 1456.) [¶] As aptly stated in
288: ‘Not every first party insurance
claim is transmogrified into a bad faith suit simply because an insurer
questions the amount of a bill before paying it. To give rise to tort liability
for bad faith, the insurer’s conduct not only must be erroneous but
‘unreasonable’ or ‘without proper cause’ as well. [Citations.].’ †(Nieto,
supra, 181 Cal.App.4th at p. 86.)
Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1395, an authority relied
upon by the trial court, is similar:
“Thus, allegations which assert . . . a claim [of breach of
the covenant of good faith and fair dealing] must show that the conduct of the
defendant, whether or not it also constitutes a breach of a consensual contract
term, demonstrates a failure or refusal to discharge contractual
responsibilities, prompted not by an honest mistake, bad judgment or negligence
but rather by a conscious and deliberate act, which unfairly frustrates the
agreed common purposes and disappoints the reasonable expectations of the other
party thereby depriving that party of the benefits of the agreement.†(See also, to the same effect,
Cal.App.4th 1282, 1291–1292 and Bionghi
v. Metropolitan Water Dist. (1999) 70 Cal.App.4th 1358, 1370.)
In his briefs to
us, Sasser argues that this law is not applicable here because Allstate did not
“fully inquire†into the cause of the fire but, instead, dismissed Sasser’s
claim “summarily.†He continues that
Allstate “did not refute†his claim that its “investigation was not adequateâ€
but instead argued that it had “a right to rely on their expert.†More specifically, Sasser contends that a
September 2010 declaration of his expert, Steven Carmen, had concluded that
EFI’s report was neither “persuasive†nor “reasonable†and, as a consequence,
the cause of the fire was “inexplicable because there was insufficient evidence
to determine its cause.†Finally, Sasser
argues that the July 2010 declaration of another reputed expert he
retained regarding the cause of the fire, one Barry Cramer, was entitled to
more credit by the trial court because Cramer had opined that the EFI report
“was inadequate as an investigation.â€
We reject these
contentions. First and foremost, they
are purely argument. At no time did
Sasser present any evidence regarding the alleged bias or inadequacy of the EFI
report commissioned by Allstate. Indeed,
in his briefs to us, he cites no such evidence.
in Sasser’s appendix filed with this court and, according to pleadings filed by
Allstate in support of its motion for summary adjudication, Cramer never even
visited the Holly Street property.
name="_ftnref4" title="">[4]
In short, Sasser’s
failure to introduce any evidence of deliberate action by Allstate to frustrate
the purpose and intent of the insurance contract in effect between the parties
clearly justifies the trial court’s grant of summary adjudication of Sasser’s
cause of action for breach of the covenant of good faith and fair dealing. Or to put it conversely, Sasser raises no
triable issue of material fact on this claim.
The
Trial Court Erred in Its Instructions, Which Error Was Prejudicial
Sasser contends
that he had secured an “all risk†policy from Allstate and that, therefore, the
trial court erred in (1) interpreting it differently and (2) based on that
interpretation, giving the jury an instruction which stated that Sasser
establishing by a preponderance of the evidence that the fire loss was covered
by the insurance contract. To meet this
burden here, Mr. Sasser must prove the fire loss was a ‘sudden and accidental
direct physical loss to property’ covered by the insurance contract with
Allstate. If you find that the fire loss
was not a ‘sudden and accidental direct physical loss’ to Mr. Sasser’s rental
dwelling, you must find for Allstate.â€
Sasser argues that this instruction was incorrect, because it “reversed
the burden of proof for an insured with all perils policy.â€
We begin with the
observation that Sasser is correct in his contention regarding the nature of
the Allstate policy: it is an all-risk
policy since, by its terms, it covered “sudden and accidental direct physical
loss to property . . . except as limited or excluded in this
policy.†(See, e.g.,
136 Cal.App.4th 1241, 1247; see also Croskey et al., Cal. Practice
Guide: Insurance Litigation (The Rutter
Group 2012) § 6:250.) While it is true that “[u]nder an ‘all risk’
policy, the insured has the threshold burden of proving a loss within the
insuring clause,†as Justice Croskey’s treatise points out, “[t]he burden on
the insured in this situation is usually minimal.†(Croskey et al., supra, § 6:253.1.) But
the instructions given by the trial court on the subject made Sasser’s task
more than minimal. Given the facts here,
it made it impossible.
The first relevant
instruction the trial court gave the jury on this issue was no. 17, which
read: “Mr. Sasser bears the initial burden of establishing by a preponderance
of the evidence that the fire loss was covered under the insurance
contract. [¶] To meet this burden
here, Mr. Sasser must prove the fire loss was a ‘sudden and accidental physical
loss to property’ covered by the insurance contract with Allstate. If you find that the fire loss was not a
‘sudden and accidental direct physical loss’ to Mr. Sasser’s rental
dwelling, you must find for Allstate.â€
Then followed the
trial court’s special instruction no. 18, entitled “Definition of Sudden and
Accidental,†which told the jury that “An ‘accidental event’ is one that is
unexpected and unintended. A purposeful
act is not an ‘accident.’ [¶] A
‘sudden’ event is one that is abrupt or immediate in nature.â€
Sasser argues that
the phrase “a purposeful act is not an accident†was both legally incorrect and
prejudicial to him. More specifically,
he contends that that phrase “made the definition [of the term ‘accidental]
ambiguous because it mean accidental was now possibly an act or an ‘accident,’
opposed to an adjective in that the loss was unintended or not expected by the
insured.†Sasser also argues that this
instruction was contrary to the law as set forth in American Alternative Ins. Corp. v. Superior Court (2006)
135 Cal.App.4th 1239, 1246 (American
Alternative), and that Allstate’s trial counsel seized on this instruction
to argue to the jury that, under it, Sasser had failed to bear his burden of
proving “that the fire at the dwelling was sudden and accidental.â€
We conclude that
this instruction was erroneous, because it did not tell the jury that the
“unintended and unexpected†must be from
the standpoint of the insured. (See, e.g., Reichert v. State Farm General Ins. Co. (2012) 212 Cal.App.4th
1543, 1547; MRI Healthcare Center of
Glendale, Inc. v. State Farm General Ins. Co. (2010) 187 Cal.App.4th
766, 782-784; American Alternatives,
supra, 135 Cal.App.4th 1239, 1249; Croskey et al., supra, § 6.275.1, p. 6B-32.)
Following oral
argument, we asked the parties for supplemental briefing on this issue. Allstate’s position is that from the
“standpoint of the insured†is not necessary because, it asserts, there is a
“plethora of California decisions [that] support the definition of accidental
in that jury instruction.†Hardly.
The two cases
cited by Allstate in claimed support—St.
Paul Fire & Marine Ins.Co. v. Superior Court (1984) 161 Cal.App.3d 1199
and Collin v. American Empire Ins. Co.
(1994) 21 Cal.App.4th 787—both involve liability insurance policies, and the
effect of the insured’s conduct on the duty to defend. These cases have no applicability here. As our colleagues in Division Three have
expressly noted, “[f]irst party coverage for damage to the insured’s own property
is not the same as third party liability coverage and should be treated differently.†(Shell
Oil Co. v. Winterthur Swiss Ins. Co. (1993) 12 Cal.App.4th 715, 765 (
48 Cal.3d 395, 405-408.)
The trial court
labored under the same misapprehension, noting in the course of settling the
instruction at issue that “we’re both kind of stuck with [Aydin] and its progeny in terms of their using sudden and
accidental the way they used it.†The
case referred to, Aydin Corp. v. First
State Ins. Co. (1998) 18 Cal.4th 1183, involved a “standard commercial
general liability insurance policy.†(
distinction from first party policies:
“Like Bebbington [
Co. (1947) 30 Cal.2d 157], Strubble
[v. United Services Auto Assn. (1973)
35 Cal.App.3d 498] is not instructive here.
The Strubble court emphasized
that its holding applied only to all-risks insurance policies, explaining that
‘in an action upon an all-risks policy such as the one before us (unlike a
specific peril policy), the insured does not have to prove that the peril
proximately causing his loss was covered by the policy. This is because the policy covers
specifically excluded by the policy.’ (
504, original italics.) Under a
comprehensive general liability insurance policy such as the one at issue here,
by contrast, the insured clearly bears the burden of establishing coverage. [Citation.]â€
(Aydin Corp. v. First State Ins.
Co., supra, 18 Cal.4th at p. 1190.)
We close with the
observation, self-evident though it may be, that arson is necessarily an
intentional act. It is not “unexpected
and unintended.†Put conversely, arson
is not accidental. The significance of
this, of course, is the instruction given by the trial court would mean that an
insured—however innocent he or she might be—could never recover for a fire set
by a third party. The law, of course, is
contrary, as confirmed by a leading commentator: “It is clear that arson without actual or
imputed involvement of the insured is compensable under the policy. Therefore, a defense of arson or willful
burning will not operate to defeat recovery under a fire insurance policy where
there has been no finding of knowledge, authorization, or ratification of such
burning by the insured.†(10A, Couch on
Ins. 3d (2005) § 149.54, p. 149-76, and numerous cases there collected;
also see Watts v. Farmers Ins. Exchange (2002)
98 Cal.App.4th 1246, 1261 [fraud by co-insured; innocent co-insured allowed to
recover for proportionate share of damaged property].)
As alluded to
above (see fn. 5), Sasser’s counsel did not request the precise language
required by the cases, which raises the next question: whether Sasser is foreclosed from rising the
issue now. We conclude he is not. Agarwal
v. Johnson (1979) 25 Cal.3d 932, 951, disapproved on other grounds in
21 Cal.4th 563, 574, fn. 4, noted that while “there ordinarily is no
duty to instruct in the absence of a specific request by a party,†an exception
“is a complete failure to instruct on material issues and controlling
reversible error.†As Witkin distills
the rule, “it is the duty of the court to see that jurors are guided on
controlling legal principles, and the complete failure to instruct properly on
a basic issue may be reversible error.â€
(7 Witkin, Cal. Procedure (5th ed. 2008) Trial, § 261, p. 315; see also
Cal.App.4th 1081, 1086 [trial court has “independent duty to instruct the jury
correctlyâ€]; Lysick v. Walcom (1968)
258 Cal.App.2d 136, 157 [trial court should have instructed the jury that
negligence was established as a matter of law]; Thomas v. Buttress & McClellan (1956) 141 Cal.App.2d 812, 819
[trial court had sua sponte duty to instruct jury as to correct measure of
damages]; Wegner et al., Cal. Practice Guide: Civil Trials and Evidence (The
Rutter Group 2012) §§ 14:41–14:43, pp. 14-11–14-12.)
The final question
on this issue is whether the error was prejudicial. We conclude it was. We recently collected the law in
212 Cal.App.4th 1, 30-31:
“ ‘ “[T]here
is no rule of automatic reversal or ‘inherent’ prejudice applicable to any
category of civil instructional error, whether of commission or omission. A judgment may not be reversed for
instructional error in a civil case ‘unless, after an examination of the entire
cause, including the evidence, the court shall be of the opinion that the error
complained of has resulted in a miscarriage of justice.’ (Cal. Const., art. VI, § 13.)
. . .†(Soule v. General Motors
Corp. [(1994)] 8 Cal.4th [584,] 580 (Soule).)
“ ‘. . .
“Instructional error in a civil case is prejudicial ‘where it seems probable’
that the error ‘prejudicially affected the verdict.’ [Citations.]â€
(Soule, supra, 8 Cal.4th at p.
580; accord, Ted Jacob Engineering Group,
Inc. v. The Ratcliff Architects [(2010)] 187 Cal.App.4th [945,]
961.) In assessing whether a
“miscarriage of justice†has occurred, “[t]he reviewing court should consider
not only the nature of the error, ‘including its natural and probable effect on
a party’s ability to place his full case before the jury,’ but the likelihood
of actual prejudice as reflected in the individual trial record, taking into
account ‘(1) the state of the evidence, (2) the effect of other instructions,
(3) the effect of counsel’s arguments, and (4) any indications by the jury
itself that it was misled’ [Citation.]†[Citations.]’ â€
Such a miscarriage
of justice occurred here.
It is probably
enough to note that, as indicated above, the instruction essentially told the
jury that Sasser could not prevail if the fire was arson. Beyond that, a review of Allstate’s counsel’s
closing argument reveals that he devoted a significant portion of his closing
argument to demonstrating that the “fire was not accidental.†Pages and pages of argument followed,
argument that included the following:
“Let’s take a look
at the second question that you are going to have to answer. The second question says, did Mr. Sasser
prove by a preponderance of the evidence that the fire at his rental dwelling
was a sudden and accidental direct physical loss? . . .
“Accidental
doesn’t just mean unintended. As Judge
McGuiness instructed you, a purposeful act is not an accident. That’s also part of the definition of
accidental, and you will see that when you get back into the jury room if you
look at the particular jury instruction.
“The point is, as
you have this as a special verdict question, this has to be proven, and it’s
Mr. Sasser who bears the burden to prove that the fire at the dwelling was
sudden and accidental.
“I told you a week
ago Allstate doesn’t dispute it was a sudden fire, but I think that all the
evidence proves it wasn’t accidental.
You heard and saw a lot of evidence about the cause of the fire, but
there wasn’t one document and there wasn’t one bit of testimony that supported
the notion that the fire was accidental, quite the contrary. You heard detailed testimony from Mr. Alboff
and Mr. Hasegawa who both told you the fire was intentionally set. They told you it was arson.†And on it went, counsel concluding that, in
light of “all the evidence, Mr. Sasser cannot prove, as he must, that the fire
was accidental, and therefore we think the only answer to question no. 2 is
no.â€
Again, an
observation by Division Three in Shell
Oil, supra, 12 Cal.App.4th at p. 772 is apt: “Rereading or emphasizing the language of an
incorrect instruction enhances the likelihood of prejudice. (Bolen
v. Woo (1979) 96 Cal.App.3d 944, 952‑953.) Similarly, emphasizing evidence supporting
the claim or defense covered by the instruction is likely to mislead the
jury. (Mitchell v. Gonzales[(1991)] 54
Cal.3d [1041,] 1054–1055.) The insurers’
counsel did both in their closing
arguments. Thus, the second
factor—whether the insurers’ jury arguments contributed to the instructions’
misleading effect—suggests that the incorrect instructions prejudiced Shell on
the affected issues.†Likewise
here. Indeed, as indicated above, the
answer to question no. 2 had to be “no,†because arson fires are per se not
“accidental.â€
title="">[7]
Following the
trial, Allstate filed a cost bill seeking over $25,000 in costs. Sasser field a motion to tax the award, the
trial court allowed most of the costs, and Sasser appealed. Since the cost award is dependent on Allstate
being the prevailing party, and since we have reversed the judgment, the cost
award falls with it.
The
Trial Court Did Not Abuse Its Discretion in Awarding Attorney Fees to Prove Up
a Denied Request for Admission
During the
litigation, both parties engaged in substantial discovery. That discovery included two sets of requests
for admission served by Allstate.
Request for Admission No. 17 in the January 8, 2010, set of requests
read: “Admit ALLSTATE did not act
negligently, as alleged in the COMPLAINT.â€
On February 3, 2010, Sasser responded to the admission requests, which
response included an unqualified denial of Allstate’s request No. 17.
As noted, the
trial court granted Allstate summary adjudication on six of Sasser’s seven
causes of action, one of which was Sasser’s second cause of action. In its ruling, the trial court quoted one of
our sister courts, which had held that “ ‘[n]egligence is not among the
theories of recovery generally available against insurers’ for alleged wrongful
denial of coverage.†(Quoting in part
from Sanchez v. Lindsey Morden Claims
Services, Inc. (1999) 72 Cal.App.4th 249, 254.) A few sentences later, it concluded its
ruling on that cause of action by stating:
“Plaintiff has not asserted a theory of relief sounding in negligence.â€
Following the
trial and judgment in its favor, Allstate filed a motion under Code of Civil
Procedure section 2033.420 (section 2033.420) to recover the legal fees it
incurred in proving the truth of admission requests Sasser had denied during
the course of discovery. Sasser filed
opposition to this motion, and following a hearing the trial court issued an
order setting a further briefing schedule on Allstate’s request for fees. Allstate submitted supplemental briefing and
a declaration regarding the fees it allegedly incurred between the date of
Sasser’s denial of its requests for admission through the date of the granting
of summary adjudication, claiming that it had incurred over $131,000 in
attorney fees during that period.
name="_ftnref8" title="">[8] Sasser filed a brief reply to Allstate’s
request for fees and a supporting declaration of counsel.
On October 10,
2011, the trial court granted Allstate’s motion for attorney fees, albeit only
in part, i.e., for the sum of $25,000, and only in connection with Sasser’s
denial of Allstate’s request for admission no. 17. In granting that portion of Allstate’s
request for attorney fees, the trial court specifically noted that the trial
court judge who granted Allstate’s motion for summary adjudication observed
that “negligence is not a theory of recovery which insureds can generally
assert against their insurers for coverage denials.†The court then went on to rule: “The court has reviewed the case history; the
discovery motions and orders; their nature and timing; the parties’ submissions
in support of and in opposition to Allstate’s motion for summary judgment;
listened to the evidence at trial submitted by each party and taken the jury’s
verdict here and each party’s argument and opposition to the relief requested
and orders as follows: [¶] Code of
Civil Procedure section 2033.420 sanctions are denied as to Requests for
Admissions Nos. 16, 18, 19, 20, 21, 22, 23 and 24 pursuant to Code of Civil
Procedure section 2033.420(b)(3) and (4).
[¶] As to Request for Admission No. 17, however, the court finds
that Code of Civil Procedure section 2033.420 sanctions are appropriate. Again, based upon the court’s review of the
entire record here (excepting trial) it finds that an award of $25,000 out of
the total of approximately $131,000 incurred during the relevant time period is
a reasonable amount expended in establishing the matters at issue here. [¶] Allstate shall therefore be entitled
to recover $25,000 from plaintiff.â€
The relevant
statute, section 2033.420 (formerly section 2033, subdivision (o)) provides:
“(a) If a party
fails to admit the genuineness of any document or the truth of any matter when
requested to do so under this chapter, and if the party requesting that
admission thereafter proves the genuineness of that document or the truth of
that matter, the party requesting the admission may move the court for an order
requiring the party to whom the request was directed to pay the reasonable
expenses incurred in making that proof, including reasonable attorney’s fees.
“(b) The court
shall make this order unless it finds any of the following: [¶] (1) An objection to the request
was sustained or a response to it was waived under Section 2033.290. [¶] (2) The admission sought was of no
substantial importance. [¶] (3) The
party failing to make the admission had reasonable ground to believe that that
party would prevail on the matter.
[¶] (4) There was other good reason for the failure to admit.†(§ 2033.420.)
Our standard of
review of an order granting attorney fees under section 2033.420 is abuse of
discretion. (See, e.g.,
Cal.App.4th 1242, 1275-1276 (Laabs);
Cal.App.4th 618, 637, fn. 10 (Wimberly).)
general standard of review regarding an award of attorney fees for a procedural
misstep by a litigant—especially when, as here, such is specifically addressed
in a statute—is abuse of discretion.
(See Eisenberg et al., Cal. Practice Guide (The Rutter Group 2012) Civil
Appeals & Writs, §§ 8:94.2-8:94.3.)
The recent
decision by the Laabs court
explained: “Under Code of Civil
Procedure section 2033.420, a party that denies a request for admission may be
ordered to pay the costs and fees incurred by the requesting party in proving
that matter. The court ‘shall’ order the
payment of such fees and costs unless it finds: (1) that an objection to the
request was sustained or a response to the request was waived; (2) the
admission sought was of no substantial importance; (3) the party failing to
make the admission had reasonable ground to believe that the party would
prevail on the matter; or (4) there was other good reason for the failure to
admit the request. (Code Civ. Proc., §
2033.420, subd. (b).) [¶] . . . [¶] A request for admission
has ‘substantial importance when the matter requested for admission [is]
central to disposition of the case.’ [Citation.] [¶] In evaluating whether a ‘good
reason’ exists for denying a request to admit, ‘a court may properly consider
whether at the time the denial was made the party making the denial held a
reasonably entertained good faith belief that the party would prevail on the
issue at trial.’ [Citation.]†(Laabs,
supra, 163 Cal.App.4th at p. 1276.)
We find no abuse
of discretion in the trial court’s ruling awarding Allstate $25,000 (out of the
over $131,000 it sought) in attorney fees.
Although the trial
court granted Allstate’s motion for summary adjudication as to six of his seven
causes of action (including his second cause of action for negligence), in his
appeal on the merits Sasser appealed only
from the trial court’s grant of summary adjudication on his claim for
breach of the covenant of good faith and fair dealing. And, as the language of section 2033.420
makes clear, Allstate was entitled to an award of attorney fees if its alleged
negligence was not and could not be proven by Sasser, unless one of the four exceptions in that statute applied. Nowhere in his briefs to us do we find any
argument that any one of the four exceptions specified in section 2033.420,
subdivision (b), applies here.
In his opening
brief in this court, Sasser offers two arguments in support of his position
that the trial court’s award of costs was incorrect. First, he argues that the trial court erred
because “Allstate did not identify when and what they did to prove the response
to Request No. 17 was incorrect.†He
then expands on this argument by contending that the fee award did not “bear a
rational relationship to the fees actually incurred,†and argues that this case
is similar to Smith v. Circle P Ranch Co.
(1978) 87 Cal.App.3d 267, 280, where the appellate court “reversed the
award of attorney fees based on an arbitrary division of attorney
fees. . . .†Second,
Sasser argues that Allstate improperly delayed its motion for attorney fees
regarding both request no. 17 and others until after the trial was completed,
pointing out that the case was pending before a different judge than the one
who presided at the time the requests for admission were filed and answered and
summary adjudications granted and, additionally, that he had filed a second
amended complaint after Allstate had filed its requests for admission.
We easily reject
both arguments. Neither was raised by
Sasser in the trial court. And both are
legally incorrect.
Regarding his
argument that there was no evidence as to what Allstate “did to prove the
response to Request No. 17 was incorrect,†there are two simple answers. First, and as noted above, section 2033.420,
subdivision (b), specifies four exceptions to when and why a trial court may
award attorney fees for the unwarranted denial of a request for admission. Sasser identifies none of them as supporting
this argument. Second, the trial court
granted summary adjudication as to the negligence cause of action and Sasser
did not appeal from that portion of the trial court’s order. Certainly, this failure implies rather
strongly that no evidence was available to Sasser with respect to the alleged
negligence of Allstate with regard to this transaction.
We also reject
Sasser’s argument that there was no “rational relationship†between the award
and the fees that may have been incurred by Allstate in defending against the
negligence claim. The trial court’s
order observed that the judge who had ruled on the summary adjudication motion
had specifically noted that “negligence is not a theory of recovery which
insureds can generally assert against their insurers for coverage denials.†The court then went on: “This court has reviewed the case history;
the discovery motions and orders; their nature and timing; the parties [
opposition to Allstate’s motion for summary judgment; listened to the evidence
at trial submitted by each party and taken the jury’s verdict here; reviewed
the motion here and each party’s argument and briefs in support and opposition
to the relief requested here and orders as follows . . . .†It then denied section 2033.420 sanctions as
to seven of the requests for admission, but ruled “[a]s to Request for
Admission No. 17, however, the court finds that Code of Civil Procedure section
2033.420 sanctions are appropriate.
Again, based on the court’s review of the entire record here (excepting
trial) it finds that an award of $25,000 out of the total of approximately
$131,000 incurred during the relevant time period is a reasonable amount
expended in establishing the matters at issue here.â€
This award was
not, as Sasser appears to argue, simply an acceptance of Allstate’s requested
award, which, as we understand it, was $43,924.34 “relating to the causes of
action for negligence and negligent infliction of emotional distress,†which,
divided in half (no award was made regarding the latter of Sasser’s original
claims), amounted to $21,962.17. The
trial court apparently determined to round this figure up to $25,000. There was no abuse of discretion. As the court stated in Garcia v. Hyster Co. (1994) 28 Cal.App.4th 724, 737, a trial
court “has discretion to base an award on an informed opinion of ‘ “the
value of services rendered†’ in his or her courtroom.†(See also, to the same effect:
179 Cal.App.3d 500, 508-512; Wimberly,
supra, 56 Cal.App.4th at p. 637, fn. 10; Barnett, supra, 90 Cal.App.4th at p. 499; and
pp. 1275‑1277.)
Sasser’s final
argument against the section 2033.420 award is that shortly after he filed his
response to Allstate’s request for admissions, he filed an amended complaint,
and this “made the request [for admissions] null and void without a showing by
Allstate that the alleged facts were unchanged, and the request as drafted
relates to the subsequent complaints.â€
Sasser’s argument seems to be that Allstate cannot recover attorney fees
incurred because (1) it did not file a timely request for such fees and
(2) somehow his denial of that request was voided for purposes of section
2033.420 because of the filing, two days later, of Sasser’s second amended
complaint. Neither argument is
convincing.
First, Sasser
never raised either of these arguments in the trial court. A party simply may not on appeal make an
argument not raised in the trial court.
(See Eisenberg et al., Civil Appeals & Writs, supra, ¶¶ 1:44 and 8:249 et seq.)
Second, Sasser’s
argument that Allstate unreasonably delayed in making its request for attorney
fees under section 2033.420 is unsupported by authority. Sasser admits that “there is no rule when a
discovery motion for sanctions can be brought,†but then appears to argue that,
because “a motion for cost [sic]
should be brought within 15 days after an order,†such a limitation ought
to apply in a case such as this. Sasser
cites no authority so holding, and we have found none even suggesting any such
time limit for motions under section 2033.420.
Allstate brought its motion for attorney fees 15 days after the
court had entered judgment in its favor on Sasser’s second amended complaint. There was nothing untimely in this.
Third, and related
to the foregoing argument, Sasser contends that it “was an abuse of discretion
for the trial court [i.e., Judge McGuiness] to determine fees for work before
another judge [Judge Lee]. . . .
Here, the trial court was not the summary judgment judge and could not
determine the value of professional services put forth before the other
court.†Or, as Sasser puts it in his
reply brief, “the trial judge had no jurisdiction to award discovery sanctions
where the cause of action was disposed of by a summary judgment court.†Neither brief cites any authority holding, or
even suggesting, that such a rule applies to an award of attorney fees under
section 2033.420.
name="_ftnref10" title="">[10]
Before making the
postjudgment attorney fee award at issue here, Judge McGuiness had before him
the entire record of the relevant pretrial proceedings before both Judge Lee
and himself. And in his order granting
the award he specifically stated that he had “reviewed the case history; the
discovery motions and orders; their nature and timing,†etc. That record was, pursuant to a specific order
of the trial court, presented to it via briefing directed to that issue by both
parties. The most comprehensive
discussion of the application of section 2033.420 we have found does not
suggest there is any time limitation regarding either the (a) filing of a
motion for an award of fees or (b) entry of an order by the trial court
responsive to such a motion. (See 2
Witkin, Cal. Evidence (5th ed. 2012) Discovery, § 177.)
Fourth, we reject
Sasser’s argument that request for admission no. 17 was “overbroad and
ambiguous†for two reasons: (1) it is
not, and (2) Sasser never raised any such objection in the trial court.
Finally, we reject
Sasser’s contention that Allstate acted “in reverse bad faith†by attempting to
recover attorney fees against Allstate, and that its request for fees was a
“thin veil of deception.†Again, such
argument was never made in the trial court.
Moreover, the authority Sasser cites in support of this argument,
220 Cal.App.3d 1612, involved a claim for attorney fees by an insurer that had
prevailed in a bad faith action brought against it by some insureds. That case did not involve a statute such as
section 2033.420 or any other remotely similar statute, and is thus
inapplicable here.
We end the
discussion with the observation that the cost-of-proof sanction under section
2033.420 is designed to compensate for unnecessary expenses resulting from
proving matters unreasonably denied.
Thus, the propounding party may be awarded such sanctions even if, as
here, it ends up not prevailing at trial.
(See Smith v. Circle P Ranch Co.,
Inc., supra, 87 Cal.App.3d 267 [$30,000 award to losing party].)
For all of the
reasons stated above, we find no abuse of discretion by the trial court in its
award of $25,000 in attorney fees to Allstate for Sasser’s denial of its
request for admission no. 17.
The judgment is
reversed, the cost award vacated, and the matter remanded for further
proceedings consistent with this opinion.
The order awarding attorney fees is affirmed. Each side will bear its
_________________________
Richman,
J.
I concur:
_________________________
Lambden, J.
>
Dissenting opinion of Haerle J.
I
respectfully dissent. I do so on the
ground that, under well-established law, appellant is barred from arguing on
appeal that the trial court erred in its instructions to the jury, specifically
in its special instruction no. 18.
In the
trial court, appellant never asked for an instruction stressing, or even using,
the words, “by the insured†in that—or any other relevant—instruction. Nor did his attorney even cite
State Farm General Ins. Co., supra, 187 Cal.App.4th 766 or any other
pertinent case in her opening brief to us.
Nor, when she cited it in her reply brief to this court, she never
argued, even slightly, that the “from the standpoint of the insured†language
should have been used by the trial court in its special instruction no.
18. And it is clear why she cannot so
argue: in the trial court, she never suggested any such language in
meaning of “accidental.â€
The law is
clear that an appellant cannot prevail because of alleged error in an
instruction when such an alleged error was never called to the attention of the
trial court—and, for that matter, never even argued to the appellate court. Witkin makes this point clear; he
states: “In order to complain of failure
to instruct on a particular issue, the aggrieved party must request the
[¶] Similarly, if the court gives an instruction correct in law,
but the party complains that it is too general, lacks clarity, or is
incomplete, the party must request the
additional or qualifying instruction in order to have the error reviewed.†(7 Witkin, Cal. Procedure,
italics added.)
Substantial
case authority supports this statement of the law. See, for example: Conservatorship
of Gregory (2000) 80 Cal.App.4th 514, 520-521; Scofield v. Critical Air Medicine, Inc. (1996) 45 Cal.App.4th 990,
1010-1011; Suman v. BMW of North America (1994)
23 Cal.App.4th 1, 9; Mesecher v. County
of San Diego (1992) 9 Cal.App.4th 1677, 1686.) Perhaps most importantly, just five years
ago, our Supreme Court, citing both Gregory
and same wording from Witkin quoted above (albeit from an earlier edition)
held to exactly the same effect. In
42 Cal.4th 1121, 1131, the court stated:
“ ‘Where, as here, “the court gives an instruction correct in law,
but the party complains that it is too general, lacks clarity, or is incomplete,
he must request the additional or qualifying instruction in order to have the
error reviewed.†[Citations.]’ [Citation.]
Plaintiff's failure to request any different instructions means he may
not argue on appeal the trial court should have instructed differently. [Citations.]â€
(Italics omitted.)
I
respectfully submit that this rule clearly applies here. As noted above, in the trial court, appellant
never asked for an instruction stressing , or even using, the words “by the
insured†with regard to the meaning of “accidental event.†Even more importantly, in his briefs to us,
appellant does not argue that the “by the insured†term should have been
inserted. For these reasons, I would
affirm the judgment of the trial court.
_________________________
Haerle,
Acting P.J.
name="_ftn1" title="">[1] At
trial, Sasser testified that he never received a complete set of the policy and
thus had no knowledge of this exclusion.
name="_ftn2" title="">[2]
The suit was actually filed by both Sasser and his wife, who passed away during
the course of the action. The complaint
also named as defendants Allstate agent Russ Nott and Eisen, the adjuster
handling the claim. Both individuals
were later dismissed from the action.
