Moreno v. Coronel

Filed 4/17/09 Moreno v. Coronel CA4/2

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

FOURTH APPELLATE DISTRICT

DIVISION TWO

APPEAL from the Superior Court of Riverside County. Mark Marnell, Temporary Judge. (Pursuant to Cal. Const., art. VI,  21.) Affirmed.

Gibson & Hughes, Robert Gibson, Jeffrey S. Hughes; Bisnar|Chase, Brian D. Chase, John V. Bell and Scott A. Ritsema for Plaintiff and Appellant.

Abeltin & Migoya and James B. Abeltin for Defendant and Respondent.

Plaintiff Heliodoro Moreno was injured in an auto accident involving (among others) defendant Javier Mora Coronel.^[1]

Coronel had been driving his employers car. His employers automobile insurer, however, denied coverage, on the ground that Coronel had not been acting within the course and scope of his employment when the accident occurred.

Coronels own automobile insurance policy had applicable limits of $15,000. When Moreno demanded that Coronels insurer pay the limits of all liability policies . . . applicable to the . . . claim, it duly tendered $15,000. In exchange, Moreno gave Coronel a release of all claims.

Later, Moreno discovered that the employers policy might actually apply, because Coronel had had the employers permission to use the car. Moreno promptly sought to rescind the release based on fraud and misrepresentation. One supposed misrepresentation was the denial of coverage by the employers insurer. Another was the tender of $15,000 by Coronels insurer, which Moreno argued was effectively a representation that there was no other applicable insurance. The trial court granted summary judgment for Coronel. We will affirm.

I

FACTUAL BACKGROUND

The trial court was permitted (though not required) to consider evidence not referenced in the parties respective separate statements of undisputed facts, as long as this did not violate due process. (King v. United Parcel Service, Inc. (2007) 152 Cal.App.4th 426, 437-438; San Diego Watercrafts, Inc. v. Wells Fargo Bank (2002) 102 Cal.App.4th 308, 315-316.) Both sides relied on such evidence; moreover, the trial court expressly stated that it had considered all the papers. Accordingly, we, too, consider all of the evidence submitted by the parties. It showed the following.

In 2005, Moreno, Coronel, and Sheriffs Deputy Mario Galvan were all involved in a traffic accident. At the time, Coronel was driving a car owned by his employer, McAnally Enterprises LLC (McAnally). McAnally had an automobile insurance policy issued by Old Republic Insurance Company (Old Republic) with policy limits of up to $5 million.

Old Republic notified Morenos counsel that its policy did not cover Coronel. It explained: The liability insurance will not cover damage to a third party automobile or personal injury[] if the vehicle is not being used for company business. It is our understanding that the driver, Javier Coronel, was not on company business at the time of the incident.

Coronel also had his own automobile insurance policy, issued by Viking Insurance Company of Wisconsin (Viking), with applicable policy limits of $15,000. Morenos counsel demanded that Viking pay an amount equal to the sum of the limits of all liability policies . . . applicable to the . . . claim. Viking asked for more time to respond to the demand, explaining that it was still investigating the claim and coverage. Eventually, Viking agreed to settle Morenos claim for the policy limit of $15,000.00. Moreno signed a release of all claims against Coronel arising out of the accident. Viking duly paid the $15,000.

In discovery, Morenos counsel learned that McAnally had given Coronel permission to use the company car for personal purposes. They concluded that Coronel might be covered under the Old Republic policy after all, based on permissive use. They notified Coronels counsel that they intended to name Coronel as a defendant, despite the settlement and release, because there had been a lack of information indicating that your client may have coverage through an additional entity.^[2]

Moreno had over $25,000 in medical expenses alone, and he expected to need additional medical treatment. Hence, if he had known that there was other potentially applicable insurance, he would not have released his claims for only $15,000.

II

PROCEDURAL BACKGROUND

In Morenos initial complaint, the only named defendants were the County of Riverside and Deputy Galvan. Later, however, Moreno filed an amendment to the complaint, adding Coronel as a defendant. Coronel filed an answer, alleging as an affirmative defense that a [prior] settlement of all claims was reached between the parties . . . .

Coronel then filed a motion for summary judgment based on the prior settlement and release. Anticipating that Moreno would argue that the release had been induced by misrepresentation, Coronel argued that (1) neither he nor Viking had made any misrepresentation, (2) the asserted misrepresentation was protected by the litigation privilege (Civ. Code,  47), and (3) Moreno had neither rescinded the release nor offered to restore the consideration.

At a hearing on the motion, the trial court (per Commissioner Joan F. Burgess) indicated that it was inclined to grant the motion on the grounds that the asserted misrepresentation was not a statement of fact and theres no justifiable reliance. However, it allowed the parties to file further briefs on these issues.

After receiving the parties further briefs, and after a further hearing, the trial court (per Temporary Judge Mark Marnell) granted the motion. It ruled, in part: None of the declarations . . . contained any specific statements of Viking . . . personnel that could be considered material misrepresentations of fact. . . . However, assuming for the sake of argument that those allegations were material misrepresentations, none of them could have been reasonably or justifiably relied upon by [Moreno]s counsel. Accordingly, it entered judgment against Moreno and in favor of Coronel.

III

DISCUSSION

A. Standard of Review.

A trial court properly grants summary judgment where no triable issue of material fact exists and the moving party is entitled to judgment as a matter of law. [Citation.] (Merrill v. Navegar, Inc. (2001) 26 Cal.4th 465, 476.) [I]n moving for summary judgment, a defendant . . . has met his burden . . . if he has shown that one or more elements of the cause of action . . . cannot be established, or that there is a complete defense to that cause of action. Once the defendant . . . has met that burden, the burden shifts to the plaintiff . . . to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto. . . . [Citation.] (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 849.) We review the trial courts decision de novo . . . . [Citations.] (Johnson v. City of Loma Linda (2000) 24 Cal.4th 61, 65-66.)

B. Analysis.

Moreno concedes that, once Coronel introduced evidence of the release, the burden shifted to him to raise a triable issue of fact with respect to rescission of the release. He contends, however, that there was evidence that Coronels insurers misrepresented the available amount of insurance coverage, and that this would be grounds for rescission. He also contends that there was evidence that his reliance on such a misrepresentation was justifiable.

Our analysis has been complicated somewhat by the fact that, because the release was first raised as an affirmative defense, Moreno has not been required to plead with specificity the particular misrepresentation that supposedly entitles him to rescind the release. Accordingly, we must discuss, in turn, each of the arguable misrepresentations shown by the evidence.

1. Vikings supposed representation that there were no other applicable policies.

First, Moreno relies on an asserted misrepresentation by Viking. His counsel asked Viking to pay the limits of all liability policies . . . applicable to the . . . claim; in response, Viking offered the policy limit of $15,000.00. He argues that this was, in effect, a representation that the Viking policy was the only policy that applied.

Such an interpretation, however, would be completely unreasonable. Viking had no duty to pay any more than its own policy limits of $15,000. If, by chance, Viking had issued another policy that covered the accident, then it might have had a duty to pay more. Still, Morenos demand that it pay the limits of all applicable liability policies necessarily referred to other policies issued by Viking. Moreno would have no reason to demand, and Viking would have no reason to pay, any amounts due under any policies issued by any other insurer. Thus, it would be unreasonable to construe Morenos demand as a demand for payment of amounts due under some other insurers policy. A fortiori, it would be unreasonable to construe Vikings payment of $15,000 as a representation that no other insurers policy applied to the accident. If and to the extent that Moreno construed it as such a representation and relied on it as such, his reliance was unreasonable as a matter of law. At oral argument, Morenos counsel agreed that Viking did not make a material misrepresentation; he merely claimed that Vikings statements were relevant to whether there was justifiable reliance on Old Republics misrepresentations.

2. Old Republics representation that there was no coverage under its policy.

In this court, Moreno also relies on an asserted misrepresentation by Old Republic namely, its statement that its policy did not apply to the accident because Coronel had not been driving on company business.

Preliminarily, we note that this was not Morenos position below. Admittedly, his written points and authorities did appear to rely, at least in part, on this misrepresentation by Old Republic. In argument on the motion, however, his counsel expressly disclaimed this position, stating: I think that perhaps some of the direction of the argument is being misconstrued here, because essentially what this is boiling down to, its not so much [Old Republic], but its Viking. (Italics added.) Moreover, when the trial court specifically asked, [T]ell me what the misrepresentations of fact are, his counsel identified only the asserted misrepresentation by Viking. Accordingly, even if there were triable issues of fact relating to a misrepresentation by Old Republic, Morenos counsel invited the error.

Separately and alternatively, the trial court could properly grant summary judgment with respect to Old Republics asserted misrepresentation. One of the grounds on which Coronel moved for summary judgment was that the misrepresentation by Old Republic was not attributable to him or to Viking. Moreno therefore argues that Old Republic was Coronels agent. Not so.

[T]he hallmark of agency is the exercise of control over the agent by the principal. (F. Hoffman-La Roche, Ltd. v. Superior Court (2005) 130 Cal.App.4th 782, 797.) Civil Code section 2295 defines an agent as one who represents another, called the principal, in dealings with third persons. An agent acts on behalf of the principal

and subject to the principals control. [Citation.] In the absence of the essential characteristic of the right of control, there is no true agency . . . . [Citation.] (Korean Air Lines Co., Ltd. v. County of Los Angeles (2008) 162 Cal.App.4th 552, 562.)

In the insurer-insured relationship, this right of control is generally absent. For example, under the typical third-party liability insurance policy, an insurer that is providing a defense has the absolute right to decide whether to settle claims against the insured. The insured has no right to settle directly with the claimant without the insurers consent. [Citations.] (Croskey et al., Cal. Practice Guide: Insurance Litigation (The Rutter Group 2008)  7:502.5, pp. 7B‑2-7B‑3, italics omitted.) It follows that an insurer cannot be the agent of its policyholder. (Ulwelling v. Crown Coach Corp. (1962) 206 Cal.App.2d 96, 140; see also In re Marriage of Cloney (2001) 91 Cal.App.4th 429, 438-439 [title insurance company is not agent of its insured], Lewis v. Superior Court (1994) 30 Cal.App.4th 1850, 1869 [same].)

It would be particularly absurd to say that Old Republic was acting as Coronels agent for the purpose of determining whether its policy covered him. At that point, there was an inherent conflict of interest between them. Moreover, Old Republic ultimately determined that it did not provide coverage. It is hard to see how it could be acting as Coronels agent in denying that the supposed basis of the agency even existed.

The only authority that Moreno cites in support of his agency theory is Shafer v. Berger, Kahn, Shafton, Moss, Figler, Simon & Gladstone (2003) 107 Cal.App.4th 54. Shafer, however, is inapposite. There, an insurance companys attorney had allegedly made a misrepresentation to injured third-party claimants regarding the scope of the coverage for their claims. (Id. at pp. 61-66; see also id. at pp. 74-75.) The trial court sustained the attorneys demurrer. (Id. at pp. 66-67.) The appellate court reversed, holding that the attorney could be personally liable for making such a misrepresentation. (Id. at p. 59; see also id. at pp. 67-77.)

The insurance company was not involved in the appeal. Accordingly, the appellate court had no occasion to consider whether the insurance company could be held liable for its attorneys misrepresentation on an agency theory. Even if the court had held the insurance company liable on this theory, however, Shafer would not be authority for imposing liability on Coronel in this case. An attorney is the agent of the client, at least for some purposes. (See Channel Lumber Co. v. Porter Simon (2000) 78 Cal.App.4th 1222, 1230.) By contrast, as we have already discussed, the insurer is not the agent of the insured. Shafer simply did not address this issue.

Because Coronel was not responsible for the alleged misrepresentation, Moreno could not rescind the release as to him based on either fraud or misrepresentation. We need not consider whether Moreno was entitled to rescind the release based on mutual mistake. He did not raise mutual mistake in the trial court. His opening brief in this court does refer cursorily to fraud, misrepresentation, or mutual mistake; however, he has forfeited a mutual mistake theory by failing to support it with either legal analysis or citation of authority. (Gunn v. Mariners Church, Inc. (2008) 167 Cal.App.4th 206, 217-218.)

Even if not forfeited, a mutual mistake theory would lack merit. [W]here parties are aware at the time the contract is entered into that a doubt exists in regard to a certain matter and contract on that assumption, the risk of the existence of the doubtful matter is assumed as an element of the bargain. [Citations.] Otherwise stated, the kind of mistake which renders a contract voidable does not include mistakes as to matters which the contracting parties had in mind as possibilities and as to the existence of which they took the risk [citations]. (Stermer v. Board of Dental Examiners (2002) 95 Cal.App.4th 128, 134.)

Here, the release placed the risk of a broad range of potential mistakes squarely on Moreno. It provided that he was releasing not only Coronel, and not only Viking, but all of Coronels insurers from any and all claims, whether known or unknown, and whether suspected or unsuspected . . . . Moreover, Moreno specifically waived his right to avoid the release of unknown claims under Civil Code section 1542. Thus, the parties recognized that there was a risk that Moreno might have then-unknown claims against Coronels insurers, and they expressly allocated this risk to him.

IV

DISPOSITION

The judgment is affirmed. Coronel is awarded costs on appeal against Moreno.

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

RICHLI

J.

We concur:

RAMIREZ

P.J.

HOLLENHORST

J.

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^[1] The record indicates that Javier Mora Coronel does business under the name Javier Mora. Hence, we suspect that, in accordance with Hispanic naming conventions, his fathers last name was Mora, his mothers maiden name was Coronel, and he should properly be called Mr. Mora.

His own counsel, however, calls him Mr. Coronel. (Also, it would be rather confusing if the parties were referred to as Mora and Moreno.) We therefore refer to him as Coronel.

^[2] Later, Old Republic did agree to defend Coronel, albeit under a reservation of rights.