Washington v. Allstate Indemnity Co.

Filed 8/20/07 Washington v. Allstate Indemnity Co. CA2/8

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

SECOND APPELLATE DISTRICT

DIVISION EIGHT

APPEAL from a judgment of the Superior Court of Los Angeles County, Judith C. Chirlin and Brett C. Klein, Judges. Affirmed.

Law Offices of Robert Scott Shtofman, Robert Scott Shtofman, Richard J. Sullivan and Lawrence K. Shelton for Plaintiff and Appellant.

Pollak, Vida & Fisher and Michael M. Pollak for Defendant and Respondent.

* * * * * *

Appellant Connie Washington sued respondent Allstate Indemnity Company (Allstate) and M.B. Automotive (not a party hereto) because the engine of her car, repaired at one point by M.B. Automotive, seized up and Allstate refused to pay the resulting damages. Prior to trial, the court granted Allstates motion for summary adjudication in appellants claims for bad faith and punitive damages. The case went to trial on the bifurcated issue of judicial estoppel, which was tried to the court. The court determined that judicial estoppel applied to the case and entered judgment for Allstate. We affirm.

FACTS

We note at the outset that appellants statement of facts in her opening brief does not contain a single citation to the record, nor does the purported summary set forth all the evidence that is material to this appeal. In the first place, this is a violation of rule 8.204(a)(1)(C) of the California Rules of Court, which requires recitations of facts to be supported by citations to the record. It is not the task of the reviewing court to search the record for evidence that supports the partys statement; it is for the party to cite the court to those references. Upon the partys failure to do so, the appellate court need not consider or may disregard the matter. (Regents of University of California v. Sheily (2004) 122 Cal.App.4th 824, 826, fn. 1.) Second, even though appellant contends that there is no evidence to support the courts conclusion that judicial estoppel applies, the summary of facts omits any mention of facts that are unfavorable to appellant. If an appellant contends that the evidence is in some respect insufficient to sustain the judgment, the appellant is required to set forth in its brief all the material evidence on the point and not merely its own evidence. Unless this is done, the error is deemed waived. (Foreman & Clark Corp. v. Fallon (1971) 3 Cal.3d 875, 881.) Given these serious shortcomings, we disregard appellants summary of the facts and turn to respondents brief and, of course, to the record itself for a summary of the facts, which, for the most part, are not disputed.

On December 22, 2001, appellants 2000 Honda Passport struck a freeway wall on an on-ramp; according to appellant, this happened when she tried to avoid another car. The car was towed to M.B. Automotive (hereafter M.B.) by the tow truck driver. There is no evidence that Allstate selected M.B. or that it had a contract with this repair facility. Although M.B.s estimate was $7,955.86, after Allstate employee Santiesteban inspected the vehicle, Allstate issued a check for $8,598.20 on January 7, 2002, because Santiesteban found the damage to be more extensive than M.B.s estimate indicated.

Although M.B. worked on the car, the vehicle was transferred to a Honda dealer, Kaiser Brothers, for more work and once again transferred to Airport Marine Honda. All this took place in February and March 2002, with multiple phone calls between appellant, the service managers of the various repair facilities and Allstate personnel. In the course of the cars wanderings during these months, various problems were reported, such as vibration and electrical problems. This phase was closed out with another check drawn in March 2002 by Allstate for $1,100 paid to Airport Marine Honda.

Despite all of this work, appellant still reported problems with the car after Allstates last check. On July 18, 2002, appellant called Allstate and stated that the cars engine had seized up as a result of the accident. Notwithstanding all of appellants complaints about the car, the odometer showed that between January 4, 2002, and July 22, 2002, the car had been driven 6,963 miles.

On July 22, 2002, Rodney Sung of Allstate went to inspect the car at Airport Marina Honda, where it had been taken. Sung found that the engine oil filter base had been cracked and had been welded back together by M.B. The hole left by the welding for the oil to pass through was too small, which caused the problem with the engine. According to Sung, the oil filter base should not have been welded, but a new one should have been installed. In light of these findings, Allstate concluded that the damage had been caused by the repair work, and not by the accident, and therefore declined coverage, with the exception of a check for $250.11 payable to appellant for damage to the oil filter base.

Appellant never had the car repaired, she stopped paying on it, and the car was repossessed.

Appellant filed her action on December 20, 2002. Nothing of note occurred in the action until March 20, 2003, when appellant filed a first amended complaint (referred to hereafter in short as the complaint), which became the operative pleading. The complaint sought $2,525,000 in damages.

In the meantime, on February 18, 2003, appellant filed a Chapter 7 voluntary bankruptcy petition.^[1] The petition lists $42,914 in liabilities, which include a car loan of $24,013, and 19 delinquent credit card accounts totaling $18,612. Appellants employment is given as a court service supervisor with the Los Angeles Superior Court, responsible for compiling trial records for civil appeals. The bankruptcy petition made no mention of appellants civil action against Allstate and M.B. The order of discharge issued on June 3, 2003, and the order closing the bankruptcy case was issued on June 20, 2003.

Allstate served its motion for summary adjudication of the claims for punitive damages and bad faith on October 17, 2003. This motion was granted on September 14, 2005. The time between these dates was punctuated by discovery disputes, the gist of which is captured by two orders imposing sanctions on appellants counsel, i.e., one for $2,483.00 and the other for $1,430.22.

On October 14, 2005, Allstate filed a motion for leave to file an amended answer in which it sought to allege, among other things, that appellant was judicially estopped from pursuing the instant case because she had failed to list her action against Allstate as an asset in her bankruptcy petition. The delay in filing this motion was explained by the facts that the attorney who had taken appellants deposition in August 2003, where appellant has testified that she had filed for bankruptcy,^[2]had left the firm that represented Allstate without telling anyone of this item of testimony. This matter came to light only in September 2005, when another attorney was preparing to go to trial in this case and read appellants deposition. Allstates motion for leave was granted over appellants opposition on October 31, 2005. On that same date, the trial was also continued to January 2006.

Also on October 31, 2005, appellant filed a motion in bankruptcy court to reopen to include this action as an asset. On December 28, 2005, the bankruptcy court ordered this case to be abandoned to appellant.

The case went to trial in January 2006. As noted, the matter was bifurcated, the parties agreeing that the trial court, without a jury, could hear the matter of judicial estoppel separately from the other issues in the case. The trial court concluded that this action was judicially estopped and entered judgment for Allstate.

DISCUSSION

Judicial estoppel prevents a party from asserting a position in a legal proceeding that is contrary to a position previously taken in the same or some earlier proceeding.  The doctrine serves a clear purpose: to protect the integrity of the judicial process.  (Jackson v. County of Los Angeles (1997) 60 Cal.App.4th 171, 181.) In accordance with the purpose of judicial estoppel, we conclude that the doctrine should apply when: (1) the same party has taken two positions; (2) the positions were taken in judicial or quasi-judicial administrative proceedings; (3) the party was successful in asserting the first position (i.e., the tribunal adopted the position or accepted it as true); (4) the two positions are totally inconsistent; and (5) the first position was not taken as a result of ignorance, fraud, or mistake. (Id. at p. 183.)

Importantly, it has been observed that [j]udicial estoppel may be applied in the trial courts discretion. [Citation.] It is intended to protect the integrity of the judicial process by preventing litigants from playing fast and loose with the courts [citation] and, as such, it should be invoked only in egregious cases. [Citations.] For these reasons, judicial estoppel is usually limited to cases where a party misrepresents or conceals material facts. [Citation.] (California Amplifier, Inc. v. RLI Ins. Co. (2001) 94 Cal.App.4th 102, 118.)

We find that the elements of judicial estoppel, including the concealment of a material fact in the bankruptcy proceedings, which was appellants failure to list this action as an asset, are met in this case.

Appellant contends that by the time the case went to trial in January 2006, she had amended her bankruptcy petition by listing the Allstate action as an asset and that, for this reason, there were no operative contrary positions.

Appellant waited to file the motion to reopen the bankruptcy until the very day that the court granted Allstates motion for leave to file an amended answer raising judicial estoppel as a defense. Appellants contention would have at least a modicum of credibility if she had moved to reopen the bankruptcy as soon as Allstate notified appellant that it was aware of the bankruptcy.^[3] As it is, appellant delayed listing this action as an asset until the optimum moment,^[4]thereby clearly signaling that she did not want to put this asset at risk by listing it in the bankruptcy proceeding. In other words, the very timing of appellants motion to reopen the bankruptcy is a good indication that appellant wanted to play fast and loose with the judicial system. Thus, it is of no moment that when this case was tried, appellant had reopened the bankruptcy and listed this action as an asset therein; the point is that appellant had concealed this asset as long as this served her purposes. Neither this, nor the trial court is required to close its eyes to appellants conduct prior to October 31, 2005, when she filed the motion to reopen the bankruptcy. In fact, it is that very conduct that calls for the invocation of judicial estoppel.

We conclude that appellant adopted inconsistent positions and that this requirement of judicial estoppel is met.

Having sought leave to reopen the bankruptcy only under the pressure of an adverse ruling in this action, appellant is in a poor position to contend, as she does, that there is no evidence of bad faith. The determination of the existence of judicial estoppel is a factual finding which will be upheld if supported by substantial evidence. (International Engine Parts, Inc. v. Feddersen & Co. (1998) 64 Cal.App.4th 345, 354.) Appellant testified at the trial of this issue that she thought that Allstate was the reason that she had to file for bankruptcy. Whether or not this was true, the point is that Allstate was on appellants mind when she filed her bankruptcy petition; indeed, the action against Allstate was on file when the petition was filed. When this fact is coupled with the rather remarkable timing of appellants petition to reopen the bankruptcy, there is solid and substantial evidence that appellant intentionally concealed this action in the bankruptcy proceeding. Appellants contention that she did not attempt to conceal the bankruptcy proceedings in this action (she testified in her deposition that she had filed for bankruptcy) has it the wrong way around: it is in the bankruptcy proceedings that she attempted to conceal this action.

Without citing any authority for the proposition, appellant contends that judicial estoppel requires evidence that the one sought to be estopped benefited as a result of taking contrary positions. This ties in with appellants argument that it made no difference in the bankruptcy proceedings that she did not list this action as an asset since, once presented with this asset, the bankruptcy court ordered it abandoned to appellant. There are two reasons why these arguments are without merit.

First, legal positions urged in a brief must he supported by appropriate authority. (Cal. Rules of Court, rule 8.204(a)(1)(B).) We need not consider an argument for which no authority is furnished. (Dabney v. Dabney (2002) 104 Cal.App.4th 379, 384.) Indeed, it might be said that what authority exists on this point is to the contrary. In International Engine Parts, Inc. v. Feddersen & Co., supra, 64 Cal.App.4th 345, the litigant who was held to be judicially estopped failed to list, as in the case at bar, a pending lawsuit as an asset in the bankruptcy court. As in this case, the litigant contended on appeal that this made no difference in the bankruptcy proceeding. The court rejected the argument that judicial estoppel should not be applied because the omission was of no consequence to the underlying proceeding (id. at p. 354), which suggests that it is not material whether the inconsistency in the litigants positions actually benefits the litigant.

Second, that appellant did not in fact benefit from concealing this asset in the bankruptcy proceeding is not material. Judicial estoppel is aimed at controlling litigants conduct, whether or not that conduct has the desired (and impermissible) outcome. Appellants conduct was clearly predicated on the hope that the Allstates action would produce substantial and tangible results, and that those results should be shielded from the bankruptcy courts reach. This is exactly why appellant is judicially estopped from pursuing this action.

Having addressed appellants contention on its merits, we note that appellants failures to cite to the record and her inadequate statement of facts would have justified a finding that she waived her argument regarding judicial estoppel. (Foreman & Clark Corp. v. Fallon, supra, 3 Cal.3d 875, 881.)

We find that the elements of judicial estoppel are present in this case, and that the trial courts ruling is supported by substantial evidence. Thus, we need not address the issues whether summary adjudication of the bad faith and punitive damage should be upheld. Nonetheless, we note that Allstates conduct vis--vis appellant as its insured falls considerably short of even a colorable case of bad faith. Even if Allstates decision not to pay for a new engine was wrong, and we do not think it was, the decision had a rational, factual basis, which precludes a finding of bad faith and the imposition of punitive damages.

DISPOSITION

The judgment is affirmed. Respondent is to recover its costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

FLIER, J.

We concur:

RUBIN, Acting P. J.

BOLAND, J.

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^[1] We note that a copy of the bankruptcy petition is contained in respondents appendix, but apparently not in appellants appendix. See page 1, text, ante.

^[2] By the time of appellants deposition, the bankruptcy was closed and the order of discharge had been issued.

^[3] Appellants contention that she filed to reopen the bankruptcy as soon as it was made known to Appellant . . . that her bankruptcy petition had omitted this case is not supported by the record. Appellants counsel was informed by Allstate in a letter dated October 7, 2005, that Allstate was aware of the bankruptcy. As noted, appellant waited until October 31, 2005, when the court gave leave to file an amended answer, to petition to reopen the bankruptcy.

^[4] Optimum because it protected the asset from the bankruptcy court as long as possible, but also enabled appellant to claim in the Allstate action that she had amended her bankruptcy petition.