Springer v. GEICO General
Ins. Co.
Filed 1/27/14 Springer v. GEICO General Ins. Co. CA4/1
OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a),
prohibits courts and parties from citing or relying on opinions not certified
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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 This opinion has not been
certified for publication or ordered published for purposes of rule 8.1115.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
ROGER
SPRINGER,
Plaintiff and Appellant,
v.
GEICO GENERAL
INSURANCE COMPANY et al.,
Defendants and Respondents.
D063017
(Super. Ct. No. 37-2011-00059449-
CU-IC-NC)
APPEAL
from a judgment of the Superior Court of
San Diego County, Jacqueline M. Stern, Judge. Affirmed.
Law
Office of Carla DeDominicis and Spencer Guerena for Plaintiff and Appellant.
Konoske
Akiyama & Brust, Gregory P. Konoske and D. Amy Akiyama for Defendants and Respondents.
Roger
Springer was involved in an automobile collision with another driver who was at
fault for the accident. The other driver's
insurer paid Springer in full for damages to his vehicle and wrote the check
jointly to Springer and his selected automobile repair shop. However, the automobile shop failed to repair
Springer's vehicle and wrongfully kept the money. Springer then requested his own automobile
insurer (Geico General Insurance Company (Geico)) to pay him for the unrepaired
damages to his vehicle. Geico denied the claim on the basis that the
policy did not cover losses for the automobile shop's wrongful conduct and/or
that the policy excluded the claimed losses.
Springer
then sued Geico and two related entities seeking a declaration of coverage. After a brief trial based primarily on
stipulated facts, the court found Springer did not prove he was "entitled
to coverage . . . under the terms of the subject policy of insurance." The court thus entered judgment in defendants'
favor. Springer appeals. We affirm.
FACTUAL
AND PROCEDURAL BACKGROUND
In
April 2011, Geico issued an automobile insurance policy to Springer that provided
various types of insurance, including collision and comprehensive coverage. The next month, Springer was involved in an
automobile accident with Rasaura Laughlin. Laughlin ran a red light and was at fault for
the accident. Laughlin was insured by
State Farm Mutual Automobile Insurance Company (State Farm). Springer's vehicle, a 2008 Mustang, sustained
property damage in the accident. Both
Springer and Laughlin reported the
Springer
did not request that Geico pay for the repairs (even though he knew he had the
right to do so), and instead submitted a claim solely to State Farm. State Farm accepted liability, and offered to
pay for the total cost of repairing Springer's Mustang. As required under applicable law, State Farm
allowed Springer to choose his own automobile repair shop, rather than use a
State Farm recommended shop. (Ins. Code,
§ 758.5.) Springer selected Cafaro's
Go Straight Auto Body (Cafaros) based on an acquaintance's recommendation and a
personal meeting with owner Michael Cafaro.
Neither State Farm nor Geico was involved in the
On
June 1, 2011, State Farm sent a letter to Springer advising him it had estimated
the damages to his vehicle and it would leave the estimate and payment at Cafaros
automobile repair shop. The letter stated
in part:
"This payment is based on a repair
estimate using prices that are competitive in your market area. In the event additional damage is identified
by the repairer you select, any amount previously paid will be taken into
consideration as we determine any additional amounts owed. We will review and consider any supplemental
amounts requested by you or the repairer you select, should additional
loss-related damage become apparent. . . ."
The letter also stated Springer should "review
the damage estimate that has been prepared on your vehicle. If now or later, you or your selected
repairer discovers additional loss-related damage to your vehicle, please contact
us at the number indicated below."
Five
days later, State Farm delivered a $15,155.84 check to Cafaros. The check was written jointly to "CAFARO'S
GO STRAIGHT & ROGER SPRINGER." Although
Springer did not sign the check, Mr. Cafaro endorsed the check and deposited
the check in his account the next day. Before
depositing the check, Mr. Cafaro "asked and received" Springer's "verbal authority to cash [the]
check so repairs could commence." (Italics
added.)
Cafaros
began the repairs but never completed them despite repeated demands by
Springer. The completed repairs had a
value of $2,705.41. Cafaros has refused
to return any of the funds for work that was not completed. The estimate of the additional necessary repairs
is $12,450.43. Springer's unrepaired
vehicle is now in "some lot in Oceanside" and
is no longer in Cafaros's possession.
In
September 2011, Springer's counsel made a written demand that Geico indemnify
Springer for the losses to his vehicle. Springer
sought coverage under the policy's collision coverage provisions based on facts
showing his vehicle was damaged by a collision with another vehicle and his
vehicle remains unrepaired. Springer
also sought coverage under the policy's comprehensive coverage provisions based
on facts that he suffered damages caused by "acts of theft committed by an
auto body repair shop that is depriving [him] of possession of his vehicle . .
. ." He stated that Cafaros has "
languish in disrepair." (Italics
added.)
One
month later, Geico sent Springer a written denial of his claim. Geico stated "[t]he 'loss' did not occur
as a result of the accident [and instead] 'the loss' is a result of the breach
of contract between Mr. Cafaro and Mr. Springer." Geico also identified Exclusion 14, which
states "There is no coverage for any liability assumed under any contract
or agreement." Geico stated: "Mr. Springer had a contract with [Cafaros]
the body shop of Mr. Springer's choice.
We are unable to [provide] coverage in regards to the dispute between Mr.
Springer and Mr. Cafaro in regards to their contract on repairing Mr. Springer's
vehicle."
The next month, Springer filed a superior
court complaint for declaratory relief seeking an order that Geico and related
entities are responsible for paying to
repair his vehicle under the policy's collision coverage and/or comprehensive coverage.
The
parties waived a jury and the case was tried primarily on stipulated facts (set
forth above). Springer additionally testified
to the following. He stated that he has
reported Mr. Cafaro's conduct to police and regulatory agencies, but he has
been unsuccessful in getting his car repaired or his money returned. He agreed that Cafaros stole his money and
that Mr. Cafaro is a "crook." Springer
said that when Mr. Cafaro attempted to deposit the check in his bank account,
the bank called him to obtain his approval, and that he gave his verbal
approval that the State Farm check could be deposited into Cafaro's account,
but he had "no idea" of the check amount.
At
trial, Springer's counsel asked him, "Because of the actions of Michael
Cafaro, you have been denied the use of your vehicle; is that right?" Springer responded "Yes." Springer also said he understood that he
could have initially sought coverage under his own policy, but he elected to
instead seek coverage from Laughlin's insurer, State Farm.
At
the conclusion of the evidence, both parties moved for nonsuit. The court stated that it would take the
motions under submission and gave the parties the opportunity to argue the case
in the event the nonsuit motions were denied.
Three
days later, the court issued its written ruling in defendants' favor. The ruling stated: "The court, after trial lasting less than
90 minutes . . . considered the evidence in this case and denie[d] both parties'
motions for 'nonsuit.' In addition, the
court finds plaintiff is not entitled to coverage in this instance under the
terms of the subject policy of insurance."
DISCUSSION
I. General
Legal Principles
"An
insurance policy is written in two parts: the insuring agreement defin[ing] the type of
risks which are covered," and the exclusions that "remove
coverage for certain risks which are initially within the insuring clause."
(Collin v. American Empire Ins. Co.
(1994) 21 Cal.App.4th 787, 802-803.) A court
first " 'examine[s] the coverage provisions to determine whether a claim
falls within the potential ambit of the insurance.' " (Id. at p. 803.) The
bring the claim within the basic scope of coverage, and .
. . courts will not indulge in a forced construction of the policy's
the burden is on the insurer to prove the claim is specifically excluded."
(MRI Healthcare Center
of Glendale, Inc. v. State Farm General Ins. Co.
(2010) 187 Cal.App.4th 766, 777.)
"
' "While insurance contracts have special features, they are still
contracts to which the ordinary rules of contractual interpretation apply."
' " (Haynes v. Farmers Ins.
Exchange (2004) 32 Cal.4th 1198, 1204.) "Interpretation of an insurance policy is
a question of law and follows the general rules of contract interpretation."
(TIG Ins. Co. of Michigan v.
Homestore, Inc. (2006) 137 Cal.App.4th 749, 755.) "The rules governing policy
interpretation require us to look first to the language of the contract in
order to ascertain its plain meaning or the meaning a layperson would
ordinarily attach to it." (Waller
v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 18 (Waller).) The mutual
intention of the parties governs the interpretation of the policy, which is "inferred,
if possible, solely from the written provisions of the contract." (Ibid.) " 'The "clear and explicit"
meaning of these provisions, interpreted in their "ordinary and popular
sense," unless "used by the parties in a technical sense or a special
meaning is given to them by usage," . . . controls
judicial interpretation . . . .' " (Ibid.)
"Absent
a factual dispute, the interpretation of an
and its application to undisputed facts are questions of
law that we review de novo.
[Citation.]" (Westrec Marina
Management, Inc. v. Arrowood Indemnity Co. (2008) 163 Cal.App.4th 1387,
1391.)
II. Analysis
Springer
contends the court erred in determining his claimed losses were not covered
under the collision and comprehensive coverage provisions of his Geico
insurance policy and/or determining that an exclusion applied.
A. Collision Coverage
Under
the policy's collision coverage provisions, Geico agreed to "pay for
loss to the owned auto or
each loss
less the applicable deductible." "
'Loss'
" is defined to mean "direct and accidental loss or damage to: [¶] (a) an insured auto, including its
equipment . . . ." A " '
" means loss caused by upset of the covered auto or its collision with
another object, including an attached vehicle." The term "upset" in this context
generally means the vehicle overturned or lost "equilibrium" and "proceed[ed]
beyond the power of those in charge to stop it." (Lombardi, Cal. Automobile Insurance Law
Guide (Cont.Ed.Bar 2d ed. 2012) § 7.12, p. 196.)
Springer
submitted an insurance claim to Geico for the costs to complete the repairs on
his vehicle, despite receiving full payment for the repairs from State Farm. As explained below, these costs did not
result from a covered collision loss as these terms are defined in the policy.
The
claimed damage (the vehicle's unrepaired condition) was not the result of a
physical "collision" between vehicles or an "upset" of
Springer's vehicle. State Farm fully
compensated Springer for the damages caused by the collision, and Springer approved
the bank depositing these funds in Cafaros's account for the repairs. The fact that Springer's vehicle remained unrepaired
after receiving this full compensation resulted from Cafaros's alleged wrongful
conduct, and not the collision. As
Springer acknowledges, "Cafaro stole" his money, and it was "[b]ecause
of the actions of Michael Cafaro, [that he has] been denied the use of [his]
vehicle . . . ."
In
the proceedings below, Springer's counsel argued that Springer's current
damages (the loss of the funds provided to him by State Farm) were covered
losses under Geico's collision coverage because the collision with State Farm's
insured "set everything in motion" and "[i]f there hadn't been a
collision, . . . [Springer's] car would be happily rolling down the streets . .
. ." In his appellate brief, Springer
similarly argues that he is entitled to coverage because the collision was the
triggering cause of his current losses.
This
argument is unsupported by the policy language and by California law
regarding causation in the first party insurance context.
First,
the Geico policy provides that " 'Loss' means
to" the insured's vehicle. (Italics
added.) The trial court had a
substantial basis to find the direct
cause of Springer's current claimed loss was Cafaros's conduct and not the
collision.
Additionally,
Insurance Code section 530 states: "An
insurer is liable for a loss of which a peril insured against was the proximate
cause, although a peril not contemplated by the contract may have been a remote
cause of the loss; but he is not liable
for a loss of which the peril insured against was only a remote cause." (Italics added.) This statute codifies the efficient proximate
cause doctrine applicable to first party insurance, under which if there is
more than one cause for a loss, coverage turns on whether the efficient
proximate cause of the loss—the " 'predominat[ing] cause' "—is
a covered peril. (Julian v. Hartford Underwriters Ins. Co. (2005) 35 Cal.4th 747, 750
(Julian); see Garvey v. State Farm Fire & Casualty Co. (1989) 48 Cal.3d 395,
401-404.) "The efficient proximate
cause of a loss is the 'predominant' or 'most important' cause of the loss."
(Freedman
v. State Farm Ins. Co. (2009) 173
Cal.App.4th 957, 961; Roberts v.
Assurance Co. of America
"By focusing the causal inquiry on the most important cause of a
loss, the efficient proximate cause doctrine creates a 'workable rule of
coverage that provides a fair result within the reasonable expectations of both
the insured and the insurer.' "
(Julian,
754.) If the asserted cause of the loss
does not meet this test, it is a " 'remote cause' " and does not
trigger coverage. (Id. at p. 750.) " 'Remote'
causes are irrelevant in the causation analysis." (Croskey et al., Cal. Practice
Guide: Insurance Litigation (The Rutter
Group 2013) ¶ 6:135.2, p. 6A-32.)
Here,
although the collision may have set the events in motion, the collision was
remote to the claimed damages and was not the efficient proximate cause of the
loss. Once State Farm agreed to
completely cover the loss and wrote the check to Springer for the estimated damages in full (with the promise to
pay additional funds if needed to complete the repairs), and Springer accepted the funds and agreed to allow the repair shop
to cash the check for his benefit, the accident was no longer the predominate or
most important cause of the vehicle's unrepaired condition. Instead, this condition was the direct result
of Cafaros's presumed breach of contract.
The accident merely furnished the condition or occasion for Cafaros's
breach and was unrelated to the primary cause of the damages.
Springer
argues that his car would never have been at Cafaros's repair shop if there had
been no accident and therefore the accident was a cause of the losses. This "but for" or "triggering"
theory is insufficient to show coverage under California
law. (See Garvey v. State Farm Fire & Casualty Co., supra, 48 Cal.3d at
pp. 403-404; Roberts v. Assurance Co. of
America, supra, 163 Cal.App.4th at p. 1409.)
Our conclusion that there is no
coverage under the collision provisions of Geico's policy is further compelled
by the policy's contractual subrogation clause.
the right to seek reimbursement from the wrongdoer and the insured must
cooperate to allow Geico to enforce this right.
However, a conclusion that Geico's policy requires it to make a
duplicate payment for the automobile repair costs because of a third party's
breach of contract would bar Geico from enforcing this subrogation right. Because State Farm already paid in full for the
damages, Geico would not be entitled to obtain reimbursement from the at-fault
driver or her insurer.
Relying
on Sapiano v. Williamsburg National
Insurance Company (1994) 28 Cal.App.4th 533, Springer argues this result is
irrelevant because an insurer's subrogation rights are always dependent on the
insured's right to be made whole. The
argument is unavailing. Springer
in full, and it was merely the conduct of a third party occurring
to suffer continuing damages.
In
this regard, Sapiano arose in a very
different context. In
property losses of at least $20,000. (
insurer ($14,500), and then sued the wrongdoer (without his insurer's
involvement) and received $10,000 in a settlement for the property damage claim. (Id.
at p. 536.) Sapiano's insurer then
sought to recover the entire $10,000 settlement from Sapiano under the insurer's
subrogation rights. (
the insurer was not entitled to this recovery, relying on the general rule that
until the creditor has been made whole for the loss, the subrogee may not
enforce its claims based on its subrogation rights. (Id
participate in the lawsuit and instead "sat back without assisting"
its insured and then "demanded all the proceeds for itself." (Id
In
this case, Springer received the funds from State Farm to fully repair his
vehicle, and State Farm agreed to pay additional amounts if the damages were
found to be more than the estimate. Thus,
unlike the insured in Sapiano,
Springer was provided full recovery for the damage to his car. In this situation, preserving Geico's contractual
subrogation rights does not conflict with Springer's right to be made whole.
B. Comprehensive Coverage
Springer
alternatively contends he was entitled to coverage under the comprehensive coverage
provisions of Geico's insurance policy.
The relevant provision of the policy states:
"We will pay for each
less the applicable deductible, caused other than by
to the owned or
by:
(a) missiles;
(b) falling objects;
(c) fire;
(d) lightning;
(e) theft;
(f) larceny;
(g) explosion;
(h) earthquake;
(i) windstorm;
(j) hail;
(k)
water;
(l) flood;
(m)
malicious mischief;
(n) vandalism;
(o) riot;
(p) civil commotion; or
(q) colliding with a bird or animal."
Springer argues his losses were caused by
the perils identified in (e) and (f) (theft and larceny) because Cafaros
promised to repair Springer's vehicle and deposited the State Farm insurance
money without any intention of fixing Springer's vehicle.
The
argument is without merit. Springer's insurance
policy covers "loss . . . to the
larceny, not the loss of funds
related to the repair of the vehicle. Under
its plain meaning, a "theft" or a "larceny" means the
personal property with the intent to deprive the owner of this property permanently
or for an extended period. (See
200 Cal.App.4th 536, 543-545; Pen. Code, § 484; Webster's
11th Collegiate Dict. (2006) pp. 701, 1295.) Springer did not proffer any evidence showing
Cafaros obtained the vehicle wrongfully or without Springer's consent, or
intended to deprive Springer of the property.
To the contrary, the undisputed facts showed Springer voluntarily gave
the vehicle to Cafaros for the repair, and the car is no longer in Cafaros's
custody or control. Cafaros accepted
money to perform a service that it failed to perform. The loss resulting from these actions did not
arise from a third party's unlawfully taking or stealing the insured's
vehicle. Rather, the loss arose out of
Cafaros's failure to fulfill its contractual obligation. The undisputed evidence shows the vehicle
remains available to Springer (although not in a repaired state).
Springer
does not cite to any relevant legal authority supporting that Cafaros's conduct
constitutes "theft" or "larceny" of the vehicle as those
terms are commonly understood in California. Instead, he relies only on
(1981) 118 Cal.App.3d 195, which is inapposite.
In Riley, the insured had
purchased a stolen vehicle, but she had purchased the car in good faith and had
no reason to suspect it was stolen property.
(Id. at p. 197.) Shortly after the insured's purchase, the vehicle
was stolen from the insured's driveway. (
insurance policy, and the insurer denied the claim. The insurer conceded the theft of the vehicle
from the insured was a covered loss under the policy terms, but argued the
insured had no insurable interest because the vehicle had been
reasoning that an innocent purchaser for value has an interest in the vehicle against
all but the lawful owner. (
Springer. Although Springer had an
insurable interest in his vehicle, unlike the incident in Riley where a car was taken from the insured's driveway without her
knowledge or consent, Cafaros did not steal the vehicle from Springer or remove
it from his possession through larceny. Although
Cafaros may have improperly taken Springer's money, Springer did not show Cafaros's actions constituted a theft
or larceny of the vehicle.
C. Contract Liability Exclusion
Because
the evidence compels the conclusion that the loss is not a covered loss under
the comprehensive or collision policy provisions, we need not reach Geico's
alternative arguments that coverage fell within the contractual liability
exclusion (Exclusion No. 14). That exclusion
provides: "There is no coverage for
any liability assumed under any contract or agreement."
Springer
argues Exclusion No. 14 is the sole basis upon which we can affirm the judgment
because it is the only ground set forth in Geico's denial letter. This argument is not factually
supported. The denial letter identifies
Exclusion No. 14, but also referred to the policy definition of a " '
and stated there was no coverage because "[t]he 'loss' did not occur
Further,
the fact that an insurer does not identify a particular ground for denying a
claim in a denial letter does not necessarily preclude the insurer from
asserting the claim at trial. (
31-34.) Instead, waiver is a factual
issue, and the party seeking to establish waiver must prove " 'by
clear and convincing evidence' " the intentional relinquishment of a
known right. (Id. at p.
31.) Likewise, an insurer is estopped
from relying on a defense that was not included in the denial letter only if
the insured proves it detrimentally relied on the insurer's failure to assert
the defense. (Id. at pp. 32, 34.)
There
was an ample basis for the court to conclude that Springer did not meet his
burden to show waiver or estoppel. There
are no facts showing Geico intended to relinquish its rights to assert the
argument that the claimed losses did not come within the insuring language of
the policy. Moreover, although Springer
now says that he "
[Exclusion 14] in pursuing this claim against Geico," he does not cite to any
relevant evidence in the record supporting this assertion.
DISPOSITION
Judgment is affirmed. Appellant to bear respondents' costs on
appeal.
HALLER, Acting P. J.
WE CONCUR:
McDONALD, J.
IRION,
J.
name="_ftn1" title="">[1] The policy's subrogation
clause states: "When payment is
made under this policy, we will be subrogated to all the insured's rights of recovery against others. The insured
will help us to enforce these rights.
The insured will do nothing
after loss to prejudice these rights.
[¶] This means we will have the
right to sue for or otherwise recover the loss from anyone else who may be held
responsible."
