McKenzie v. Scottsdale Ins.
Filed 2/8/07 McKenzie v. Scottsdale Ins. CA2/6
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SIX
JIM McKENZIE, Plaintiff and Appellant, v. SCOTTSDALE INSURANCE COMPANY, Defendant and Appellant. | 2d Civil No. B182186 (Super. Ct. No. SC030556) (Ventura County) |
Jim McKenzie filed a breach of contract and bad faith action against his insurer Scottsdale Insurance Company when Scottsdale failed to pay a claim arising from the burglary of his business. After a jury trial, judgment was entered in favor of McKenzie awarding compensatory and punitive damages. McKenzie appeals and Scottsdale cross-appeals. McKenzie claims the trial court prevented him from presenting evidence affecting punitive damages by failing to take judicial notice of documents obtained from the Internet, to enforce a notice to appear for trial, or to continue the trial. Scottsdale claims the policy was void due to a material misrepresentation, and that there was insufficient evidence to support findings of bad faith, oppression or fraud. Scottsdale also claims evidentiary error and error in the award of attorney fees. We will remand the case for a trial of the amount of recoverable attorney fees. Otherwise, we affirm.
FACTS AND PROCEDURAL HISTORY
McKenzie operated an off-road racing hobby shop from premises in Simi Valley, California. On August 6, 1999, he bought commercial property insurance from Scottsdale covering his tools and inventory. On September 11, 1999, the hobby shop was burglarized, and more than $750,000 of insured property was stolen. McKenzie made a claim on his policy for the loss.
The police investigated and concluded that the burglars had entered the premises by punching through a roll up door and releasing the floor latch. But, the police noted certain " red flags" that raised a possibility that the burglary had been staged. The burglar alarm on the premises had been disarmed and the police questioned whether burglars would have had sufficient time to do so before the alarm sounded. The police also discovered that McKenzie had purchased insurance only one month before the burglary and at a time he was delinquent in his rent payments.
Scottsdale, who had been informed of the concerns of the police, conducted an investigation of McKenzie's claim. Among other things, Scottsdale retained independent claims adjuster Byron Hubanks to assist in evaluating all aspects of the claim, security and alarm expert Vince Nigro to investigate McKenzie's burglar alarm, private investigator Ty Hutchinson to investigate McKenzie and the burglary, and accountant Goeff Hill to analyze and value the inventory lost in the burglary.
In early 2000, after submission of reports by these consultants, Scottsdale completed its investigation of the claim. The investigation revealed questions regarding McKenzie's financial condition, but no direct evidence that McKenzie had staged the burglary. In particular, evidence showed that the burglar alarm had a time delay and was in working order at the time of the burglary. As a result, Scottsdale's senior adjuster concluded that there was insufficient evidence to deny the claim based on fraud.
Although its investigation had been completed without evidence to support a denial of the claim, Scottsdale neither denied nor accepted coverage. Instead, Scottsdale informed McKenzie throughout 2000 and 2001 that it was unable to make a coverage decision because it needed further time to investigate the circumstances of the burglary and the amount of McKenzie's claim.
In September 2001, McKenzie filed a complaint for breach of contract, breach of the implied covenant of good faith and fair dealing, and recovery of punitive damages. McKenzie learned that Scottsdale was denying his claim in Scottsdale's February 2002 answer to the complaint.
The issues of liability and punitive damages were bifurcated and tried by a jury in October 2004. The jury found Scottsdale liable for breach of contract and breach of the covenant of good faith and fair dealing. It awarded McKenzie $771,833 in breach of contract damages and $3,107 in bad faith damages. The jury also found that Scottsdale acted with oppression and fraud, necessitating a trial of the punitive damages issue. The jury awarded McKenzie $75,000 in punitive damages.
DISCUSSION
McKENZIE APPEAL REGARDING PUNITIVE DAMAGES
No Error in Denying Judicial Notice of Internet Documents
McKenzie contends that the trial court erred by failing to take judicial notice of documents printed out from the Internet websites of Scottsdale, Scottsdale's parent corporation, the California Department of Insurance, and others. We disagree.
A court has discretion to take judicial notice of " [f]acts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy." (Evid. Code, § 452, subd. (h).) If this standard is satisfied, judicial notice may be taken of information obtained from the Internet. (Boghos v. Certain Underwriters at Lloyd's of London (2005) 36 Cal.4th 495, 505-506, fn. 6; Walt Rankin & Associates, Inc. v. City of Murrieta (2000) 84 Cal.App.4th 605, 623-624, fn. 12.) Generally, it is permissible to take judicial notice of the existence and easy accessibility of Internet information, but not the truth or falsity of the information. (See People v. Barnett (1998) 17 Cal.4th 1044, 1122.)
A decision by a trial court not to take judicial notice will be upheld on appeal unless the reviewing court determines that, at trial, the party furnished information that was so persuasive that no reasonable judge would have refused to take judicial notice of the matter. (Willis v. State of California (1994) 22 Cal.App.4th 287, 291.) We conclude that there was no abuse of discretion in this case.
At the punitive damages phase of trial, McKenzie's counsel informed the court that he was seeking to introduce evidence of Scottsdale's financial condition by having the trial court take judicial notice of 100 to 150 pages of documents obtained from the Internet. He stated that he had documents from Scottsdale's Internet website and the Department of Insurance's website. He also stated that he had a profile of Scottsdale from Standard and Poor's, and a Securities and Exchange Commission filing by Scottsdale's parent corporation, Nationwide Financial Services, Inc.
As argued by Scottsdale, McKenzie did not furnish the trial court with sufficient information to permit the court to take judicial notice of the documents. McKenzie failed to identify the documents, mark them for identification, make an offer of proof of the relevant content of the documents, or show their reliability or authenticity. He asserted merely that he had a variety of documents he printed out from a variety of Internet websites. This presentation was inadequate for the court to determine that any of the Internet printouts were " not reasonably subject to dispute" or capable of being verified " by resort to sources of reasonably indisputable accuracy." (Evid. Code, § 452, subd. (h); see Hartwell Corp. v. Superior Court (2002) 27 Cal.4th 256, 279, fn. 12; Lockley v. Law Office of Cantrell, Green, Pekich, Cruz & McCort (2001) 91 Cal.App.4th 875, 885.) In particular, it appears that many of the documents were obtained through a fee-based online reporting service, and not directly from the identified sources.
In addition, McKenzie did not provide notice to Scottsdale of the documents that McKenzie was presenting to the court for judicial notice. When the subject of judicial notice is " of substantial consequence to the determination of the action," as in this case, the documents " shall be made a part of the record in the action" and the court must afford " each party reasonable opportunity to meet such information before judicial notice of the matter may be taken." (Evid. Code, § 455.) In the absence of notice, the parties have no opportunity to rebut the facts of which judicial notice is requested. (Estate of Nicholas (1986) 177 Cal.App.3d 1071, 1090.)
Moreover, the insufficient presentation to the trial court renders the record inadequate for appellate review. (Rancho Santa Fe Ass'n v. Dolan-King (2004) 115 Cal.App.4th 28, 46.) Without a clear indication on the record of the matters for which judicial notice was requested, we have no basis to determine whether there was any error by the trial court in denying the request. (See Estate of Nicholas, supra, 177 Cal.App.3d at p. 1090; In re Estate of Fain (1999) 75 Cal.App.4th 973, 992.)
No Error Regarding Notice to Produce Party and Documents
McKenzie contends that the trial court erred by failing to require Scottsdale to produce documents concerning its financial condition that were demanded in an April 2003 " Amended Notice to Produce Party and Documents at Trial." Although a trial court may order a defendant to produce its financial records for a determination of punitive damages, McKenzie neither requested such an order, nor even mentioned the notice he served on Scottsdale more than two years before trial. (See Mike Davidov Co. v. Issod (2000) 78 Cal.App.4th 597, 608-609.) The trial court did not err by not making an order that was not requested concerning a trial procedure that was not mentioned.
We reject McKenzie's argument that Scottsdale had an " obligation" to produce its financial documents without an order, or even a request in open court. There is no requirement that an opposing party volunteer evidence or assist opposing counsel. McKenzie chose to rely primarily on documents he found on the Internet. The lack of success in this trial strategy is not a basis for appellate relief. (See Amoco Chemical Co. v. Certain Underwriters at Lloyd's of London (1995) 34 Cal.App.4th 554, 556-562.)
Moreover, McKenzie's April 2003 notice was defective and overbroad. The notice demanded that Scottsdale " make itself available" for trial without identification of any individual, and it demanded production of documents covering virtually all aspects of the case. In substance, the notice served as an omnibus discovery device seeking disclosure of Scottsdale's entire defense. Code of Civil Procedure section 1987 contemplates the production of officers, directors, managing agents or other named witnesses at trial, and permits a demand that a designated witness bring specifically identified documents. (Id., at subds. (b) & (c).)[1] It is not a discovery tool that obligates a party to self-identify persons with relevant information and produce them at trial for interrogation on any and all subjects relevant to the case.
No Error in Denial of Continuance
McKenzie also contends that the trial court erred by refusing to continue the punitive damages phase of the trial to enable him to obtain other evidence of Scottsdale's financial condition. A trial court may continue a trial for good cause, including a party's inability to obtain essential testimony despite diligent efforts, and an unanticipated change in the status of the case which affects trial readiness. (Cal. Rules of Court, rule 3.1332(c) & (d); see Oliveros v. County of Los Angeles (2004) 120 Cal.App.4th 1389, 1395.)
Here, the trial court did not abuse its discretion in denying a continuance. There was no showing to explain McKenzie's failure to obtain evidence of Scottsdale's financial condition prior to the punitive damages trial, and no change in the status of the case other than the normal progression from a plaintiff verdict sufficient to support punitive damages to a trial of that issue. In addition, the denial of a continuance did not deny McKenzie a fair hearing on the issue because other evidence relevant to the determination of punitive damages was admitted. (See Oliveros v. County of Los Angeles, supra, 120 Cal.App.4th at pp. 1395-1396.) The trial court admitted evidence that Scottsdale had created a $1,008,340 loss reserve for McKenzie's claim.
No Error Regarding Testimony by Trial Counsel
McKenzie claims the trial court erred in refusing to compel Scottsdale's trial counsel to testify regarding Scottsdale's financial condition. First, the trial court did not refuse to allow counsel to testify. When McKenzie called Scottsdale's trial counsel as a witness, the trial court immediately asked for an explanation. In a sidebar, McKenzie discussed his request to use Internet documents to prove punitive damages, but did not mention opposing counsel's testimony, and made no effort to show that counsel had any relevant non-privileged information.
Second, although there is no absolute bar to testimony by trial counsel, there is no legal authority permitting testimony by opposing party's trial counsel under circumstances remotely resembling the instant case. Even deposing opposing counsel is severely restricted and requires " extremely" good cause. (Spectra-Physics, Inc. v. Superior Court (1988) 198 Cal.App.3d 1487, 1493-1494.) Such depositions are permitted in insurance bad faith cases when a defendant's attorney was the principal negotiator for his or her client, but, here, the jury had already returned its verdict of bad faith. (See Fireman's Fund Ins. Co. v. Superior Court (1977) 72 Cal.App.3d 786, 790.)
SCOTTSDALE CROSS-APPEAL
No Error Regarding Misrepresentation
Scottsdale contends that the insurance policy was void because McKenzie misrepresented a fact, and that the misrepresentation was material as a matter of law. We disagree and conclude that substantial evidence supports the jury's finding that McKenzie did not misrepresent a material fact concerning his claim.
The insurance policy includes a provision that the policy will be void if the insured intentionally misrepresents a material fact concerning coverage.[2] Such a provision is enforceable. (Leasure v. MSI Ins. Co. (1998) 65 Cal.App.4th 244, 248; Cummings v. Fire Ins. Exchange (1988) 202 Cal.App.3d 1407, 1414-1418.) Whether an intentionally false statement was made is a question of fact, but materiality is a mixed question of law and fact that can be decided as a matter of law when, but only when, reasonable minds could not disagree. (Cummings, at pp. 1416-1417; Woods v. Independent Fire Ins. Co. (11th Cir. 1985) 749 F.2d 1493, 1496.) A misrepresentation is considered material if it " concerns a subject reasonably relevant to the insured's investigation, and if a reasonable insurer would attach importance to the fact misrepresented." (Cummings, at p. 1417; see also Mitchell v. United Nat. Ins. Co. (2005) 127 Cal.App.4th 457, 470.)
McKenzie was examined by Scottsdale under oath in November 1999. McKenzie answered " No" when asked whether he had " an outside accountant who works with you in any way, shape, or form in connection with" his business. At trial five years later, he was asked whether he " felt the need to consult an accountant about [his] tax situation." McKenzie answered: " I don't remember exactly what deal or which check or anything I decided to seek an accountant because of, but I did seek an accountant at some point." When asked whether this was in 1999, McKenzie answered, " I don't recall. Probably." Scottsdale did not pinpoint the date the accountant was hired either by further questioning McKenzie or by other evidence.
In a special verdict, the jury found that McKenzie had not " intentionally misrepresent[ed] or conceal[ed] a material fact concerning his claim." The jury had been instructed a misrepresentation is material " if it concerns a subject which is 'reasonably relevant to the insurer's investigation.'" The verdict form did not provide for, and Scottsdale did not request, separate findings of the existence of a misrepresentation and of its materiality.
Although the evidence may have permitted a reasonable jury to find McKenzie misrepresented a material fact, it did not require the jury to do so. McKenzie testified at trial that he hired an accountant to do his 1999 taxes, but was uncertain as to the date. He testified that he " probably" hired the accountant in 1999, but it is reasonably possible that the accountant was hired after his November 1999 examination, or during the first few months of 2000 before 1999 tax returns had to be filed.
Even if we assume for purposes of argument that McKenzie misrepresented having an accountant in 1999, we cannot conclude the misrepresentation was material as a matter of law. An accountant is a potential source of information regarding the assets of a client and might have had information regarding the value of McKenzie's lost inventory, but there is nothing in the record that required the jury to conclude that any reasonable insurer would attach importance to the information. (See Cummings v. Fire Ins. Exchange, supra, 202 Cal.App.3d at pp. 1416-1417.) Nothing indicates that Scottsdale or another reasonable insurer would have relied upon information from McKenzie's accountant as opposed to a valuation by its own expert.
Scottsdale relies on the Cummings case which concluded that certain misrepresentations were material as a matter of law, but the misrepresentations were far more significant than McKenzie's statement in November 1999. In Cummings, thepolicyholder filed a claim for vandalism of her home and represented that the vandalism had been committed by unknown persons in her absence. (Cummings v. Fire Ins. Exchange, supra, 202 Cal.App.3d at pp. 1412-1413.) In fact, the policyholder's son committed the damage in her presence, and was living in her home at the time. These misrepresentations were critical to an exclusion for intentional acts and the policy's definition of the " insured" as including members of the policyholder's household. (Ibid.)
Substantial Evidence Supports Finding of Bad Faith
Scottsdale contends that a reasonable jury could not find bad faith because there was a genuine dispute about whether the burglary was staged. We disagree.
To breach the implied covenant of good faith and fair dealing, the insurer must fail to discharge its 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 . . . ." (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1395.) There is no bad faith where the insurer has a " genuine dispute" with the insured over the validity of a claim. (Fraley v. Allstate Ins. Co. (2000) 81 Cal.App.4th 1282, 1292.) Conversely, there may be bad faith when an insurer misrepresents the nature, status, and results of an investigation. (See Chateau Chamberay Homeowners Ass'n v. Associated Int'l. Ins. Co. (2001) 90 Cal.App.4th 335, 348; Tomaselli v. Transamerica Ins. Co. (1994) 25 Cal.App.4th 1269, 1281.)
In September 1999, Scottsdale had reason to suspect the burglary may have been staged based primarily on information received from the police. The record shows, however, that Scottsdale completed its own investigation in early 2000 without obtaining sufficient facts to support a denial of McKenzie's claim based on the circumstances of the burglary.
Consultant Hubanks concluded his investigation of McKenzie's claim in December 1999, private investigator Hutchinson completed his investigation in April 2000, accountant Hill completed a lost inventory analysis in November 1999, and alarm expert Nigro completed his report in September 1999. Also, Scottsdale's final communication with the alarm manufacturer occurred in March 2000. Moreover, Scottsdale's own claims adjuster testified that, based on her investigation, Scottsdale could not deny coverage on the basis of McKenzie having made a false claim. There was no evidence, other that speculation, that McKenzie had disabled the alarm himself. The alarm manufacturer informed Scottsdale that the alarm was in working order after a reconnection of the wiring, and that there were time delays in the alarm's motion detector. Also, the amount of McKenzie's claim was no longer an issue.
Accordingly, the jury could reasonably conclude that any " genuine dispute" regarding the claim had been resolved in favor of coverage by early 2000. Scottsdale, however, did not accept or deny coverage at that time or at any time thereafter, until it filed an answer to McKenzie's complaint in February 2002. Instead, Scottsdale repeatedly informed McKenzie that it could not make a coverage decision because it needed further time to investigate the burglary and obtain a report from its accountant regarding the amount of loss. The evidence permitted the jury to reasonably conclude that these communications by Scottsdale to McKenzie were false and made in bad faith.
Substantial Evidence Supports Award of Punitive Damages
Scottsdale contends that there is insufficient evidence to support an award of punitive damages for three reasons. We reject each of them.
First, Scottsdale argues that there was insufficient evidence of its ability to pay a $75,000 award. A plaintiff must present evidence of a defendant's financial condition sufficient for the court to determine that a punitive damages award is not disproportionate to its ability to pay. (Adams v. Murakami (1991) 54 Cal.3d 105, 110, 112.) Contrary to Scottsdale's contention, however, such evidence was presented to the jury. The trial court did not take judicial notice of McKenzie's Internet documents, but admitted evidence that Scottsdale had a $1,008,340 loss reserve for McKenzie's claim. The loss reserve evidence is sufficient to support a finding that Scottsdale had the ability to pay a $75,000 punitive damages award. (Id., at p. 110; see also Lara v. Cadag (1993) 13 Cal.App.4th 1061, 1064.)
Second, Scottsdale argues that there is insufficient evidence of oppression and fraud to support the award. (Civ. Code, § 3294, subd. (a).) " Fraud" requires an " intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury." (Civ. Code, § 3294, subd. (c)(3).) " Oppression" requires " despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person's rights." (Civ. Code, § 3294, subd. (c)(2).)
To be " despicable," conduct must be so contemptible that it would be looked down upon and despised by ordinary decent people. (George F. Hillenbrand, Inc. v. Insurance Co. of North America (2002) 104 Cal.App.4th 784, 817.) It requires more than the disregard of the insured's interests necessary for bad faith. (See Stewart v. Truck Ins. Exchange (1993) 17 Cal.App.4th 468, 482, fn. 28.)
Substantial evidence supports the finding that Scottsdale acted with oppression and fraud. Scottsdale failed to provide coverage despite an investigation that failed to disclose a sound legal basis for denying McKenzie's claim. And, then, instead of paying the claim, Scottsdale misrepresented the status of the investigation, and refused payment without any truthful explanation. The jury could find that Scottsdale's refusal to follow the results of its investigation and false representations of the investigation constituted either fraud or oppression for purposes of justifying an award of punitive damages.
Third, Scottsdale contends that there is insufficient evidence that oppressive and fraudulent conduct was committed, authorized, or ratified by a managing agent of the company as required by statute. (Civ. Code, § 3294, subd. (b).) Liability for punitive damages depends, not on a managerial level, but on the extent to which employees " exercise substantial independent authority and judgment over decisions that ultimately determine corporate policy." (White v. Ultramar, Inc. (1999) 21 Cal.4th 563, 573, 577.) The scope of an employee's discretion and authority is a question of fact to be determined on a case-by-case basis. (Id., at p. 567.) And, although clear and convincing evidence is required for such a factual finding, the standard of review on appeal is whether there is substantial evidence to support the finding. (Romo v. Ford Motor Co. (2002) 99 Cal.App.4th 1115, 1139, disapproved on another ground in People v. Ault (2004) 33 Cal.4th 1250, 1272, fn. 15.)
Substantial evidence supports the conclusion that the oppressive and fraudulent conduct by Scottsdale was performed, approved or ratified by managing agents of Scottsdale. Beverly Cousins had sufficient discretionary authority to constitute a managing agent of Scottsdale. She was senior claims examiner and the principal person with authority over McKenzie's claim. In addition, her supervisor, David Erickson, approved and ratified her actions.
Scottsdale argues that these individuals did not formulate Scottsdale's corporate policies or procedures. But, the phrase " managing agent" is used in the statute in addition to officers and directors and makes it clear that punitive damage liability in large corporations is not limited to individuals who have final and formal authority over significant corporate policy. (Civ. Code, § 3294, subd. (b).) A person does not have to be involved in " 'high-level policy making'" to be a managing agent. (Egan v. Mutual of Omaha Ins. Co. (1979) 24 Cal.3d 809, 822.) Here, evidence supports the conclusion that senior claims adjuster Cousins personally managed the most crucial aspects of Scottsdale's relationship with its policyholder, and that Cousins, with Erickson, possessed discretion to make ad hoc policy decisions. (Id., at p. 823; see also Chodos v. Insurance Co. of North America (1981) 126 Cal.App.3d 86, 102-103.)
No Error in Burden of Proof
Scottsdale contends that the trial court erred in failing to instruct the jury that McKenzie had the burden of proving that he did not stage the burglary as part of his burden of establishing a covered loss. We disagree.
McKenzie's insurance policy is a form of " all-risk" policy. It provides that, when the word " Special" is shown in the Declarations, as it is in McKenzie's policy, " Covered Causes of Loss means RISKS OF DIRECT PHYSICAL LOSS unless the loss" is excluded by specified provisions in the policy. And, Scottsdale's own claims adjuster testified that it is " a special form, which means it's all risk except for exclusions."
An all-risk policy broadly covers all risks of physical loss or damage, and limits coverage through specific exclusions. (Strubble v. United Services Auto. Assn. (1973) 35 Cal.App.3d 498, 504.) When a policy covers a specified peril, the insured has the burden of proving that its loss was caused by that peril. (Ibid.) But, under an all-risk policy, once the insured shows that an event falls within its basic coverage, the insurer has the burden to prove the claim falls under an exclusion from coverage. (Ibid.)
Here, the trial court correctly assigned the burden of proof. McKenzie had the burden of establishing that he sustained a loss falling within the policy's basic " direct physical loss" coverage, and Scottsdale had the burden of establishing the applicability of the " [d]ishonest or criminal act" exclusion.
No Error in Excluding Evidence of Grandmother's Lawsuit
Pursuant to Evidence Code section 352, the trial court excluded evidence that McKenzie's grandmother filed a lawsuit against him shortly before the burglary. Scottsdale contends that the ruling was an abuse of discretion. We disagree.
A trial court has broad discretion to " exclude evidence if its probative value is substantially outweighed by" a substantial danger of prejudice, or if the evidence is likely to confuse the issues, mislead the jury or necessitate an undue consumption of time. (Evid. Code, § 352.) A trial court's ruling will not be disturbed on appeal absent a clear showing of abuse. (E.g., Gouskos v. Aptos Village Garage, Inc. (2001) 94 Cal.App.4th 754, 762; Ramos v. Countrywide Home Loans, Inc. (2000) 82 Cal.App.4th 615, 624.)
An element of Scottsdale's staged burglary defense was that McKenzie was in dire financial straits in part because his grandmother, a long-term source of funding for his business, had stopped giving him money shortly before the burglary. The trial court ruled that evidence regarding McKenzie's financial condition was admissible, including evidence regarding his source of funds, but excluded evidence specifically informing the jury that his grandmother had filed a lawsuit against him regarding her prior loans or gifts.
There was no abuse of discretion. A wide range of evidence concerning McKenzie's financial condition was ruled admissible, and the trial court could reasonably conclude that evidence of the lawsuit was marginally relevant to McKenzie's financial condition, and likely to cause prejudice by suggesting misconduct in family relations. The court could also reasonably conclude that evidence regarding the lawsuit would be unduly time consuming and confuse the jury.
Trial Court Improperly Determined Amount of Attorney Fees
Scottsdale contends that the trial court erred by determining in a post-trial motion the amount of attorney fees recoverable by McKenzie, rather than requiring a determination of the amount by the jury. We agree and will remand for a determination of the amount of attorney fee damages by a jury.
When an insurer's bad faith compels an insured to retain an attorney to obtain policy benefits, the insurer can recover attorney fees expended for that purpose. (Brandt v. Superior Court (1985) 37 Cal.3d 813, 817.) Such fees are not costs authorized by contract or statute that are determined by the court in a post-trial motion. (Ibid.; Vacco Industries, Inc. v. Van Den Berg (1992) 5 Cal.App.4th 34, 56.) The fees are an element of damages caused by the insurer's tort and, as such, the determination of the amount " must be made by the trier of fact unless the parties stipulate otherwise." (Brandt, at p. 819; Campbell v. Cal-Gard Sur. Services, Inc. (1998) 62 Cal.App.4th 563, 571-572.)
Here, the jury found that McKenzie had incurred attorney fees to obtain policy benefits, but the court determined the amount of fees in a post-trial motion without a stipulation of the parties. Such action violated the clear dictate of Brandt that, in the absence of a stipulation, attorney fee damages must be determined by the trier of fact.
The jury was instructed that attorney fees could be awarded as damages but, during deliberations, asked the court whether it must specify a " dollar value, or can we just state attorney's fees, whatever the amount might be." The court directed the jury to indicate on the verdict form whether attorney fees should be awarded and ruled, over Scottsdale's objection, that the court would determine the amount of any recoverable fees after the judgment. Subsequently, the court awarded McKenzie $220,606 in attorney fee damages.
In short, the jury found that McKenzie was entitled to attorney fees as damages but, at the direction of the trial court, did not set a monetary amount. Accordingly, we will vacate the attorney fee order, and remand the matter to the trial court to conduct a jury trial of the amount of recoverable attorney fees only. As stated in Brandt, however, the parties may stipulate to a determination by the court or to the amount previously determined by the court.
We reject McKenzie's argument that Scottsdale is estopped from challenging the court's determination of attorney fees. Although the trial court believed the parties " proceeded on [the] assumption" the court would determine attorney fees and that there might be an estoppel, the court made no such finding, or a finding that the parties had entered into a stipulation. Moreover, the record does not support the court's supposition that there was an estoppel. An equitable estoppel requires the party to be estopped to know the true facts and mislead the other party into believing something else, and the party asserting estoppel to be ignorant of the facts. (Insurance Co. of the West v. Haralambos Beverage Co. (1987) 195 Cal.App.3d 1308, 1321, disapproved on other grounds in Buss v. Superior Court (1997) 16 Cal.4th 35, 50, fn. 12; see also Skulnick v. Roberts Express, Inc. (1992) 2 Cal.App.4th 884, 891.) The record does not show the existence of any of these requirements.
DISPOSITION
The order awarding attorney fees to McKenzie is vacated and the matter remanded for a jury trial (or determination by the court by stipulation) of the amount of attorney fees recoverable as tort damages under Brandt v. Superior Court, supra, 37 Cal.3d at page 819. Otherwise the judgment is affirmed. The parties shall bear their own costs.
NOT TO BE PUBLISHED.
PERREN, J.
We concur:
YEGAN, Acting P.J.
COFFEE, J.
Charles R. McGrath, Judge*
Superior Court County of Ventura
______________________________
Douglas Caiafa for Plaintiff and Appellant McKenzie.
Breidenbach, Huchting & Hamblet, Gary A. Hamblet and Gary A. Collis for Defendant and Appellant Scottsdale Insurance Company.
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[1] As relevant, Code of Civil Procedure section 1987, subdivisions (b) and (c) provide: " (b) In the case of the production of a party to the record of any civil action or proceeding or . . . of anyone who is an officer, director, or managing agent of any such party or person, the service of a subpoena upon any such witness is not required if written notice requesting the witness to attend before a court, or at a trial of an issue therein, with the time and place thereof, is served upon the attorney of that party or person. . . . The giving of the notice shall have the same effect as service of a subpoena on the witness, and the parties shall have those rights and the court may make those orders, including the imposition of sanctions, as in the case of a subpoena for attendance before the court. [¶] (c) If the notice specified in subdivision (b) is served at least 20 days before the time required for attendance, or within any shorter period of time as the court may order, it may include a request that the party or person bring with him or her books, documents or other things. . . ."
[2] The policy provides: " This Coverage Part is void in any case of fraud by you as it relates to this Coverage Part at any time. It is also void if you . . . intentionally conceal or misrepresent a material fact concerning . . . [a] claim under this Coverage Part."
· (Retired Judge of the Ventura Sup. Ct. assigned by the Chief Justice pursuant to art. VI, § 6 of the Cal. Const.)
