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2015 Sacramento Seminar - PPT Presentation

California Law Update Christine Reed Partner Monterey Office Kurt Bridgman Partner San Francisco Office Chavez v 24 Hour Fitness USA Inc 2015 238 CalApp4th 632 Facts   Plaintiff suffered a traumatic brain injury when the back panel of a Free Motion cable crossover mach ID: 495004

court plaintiff medical cal plaintiff court cal medical app 4th trial insurance plaintiff

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Presentation Transcript

Slide1

2015 Sacramento SeminarSlide2

California Law Update

Christine Reed, Partner, Monterey Office

Kurt Bridgman, Partner, San Francisco OfficeSlide3

Chavez v. 24 Hour Fitness USA, Inc. (2015) 238 Cal.App.4th

632

Facts

:

 

Plaintiff suffered a traumatic brain injury when the back panel of a “Free Motion” cable cross-over machine came loose and struck her head at a 24 Hour Fitness facility. When plaintiff joined the 24 Hour Fitness facility, she signed a Membership Agreement that included a release of liability. Under the release provision, plaintiff agreed that 24 Hour Fitness would not be liable for any injury she suffered as a result of 24 Hour’s negligence. Plaintiff and her husband sued 24 Hour Fitness for ordinary and gross negligence, premises liability and strict products liability. 24 Hour Fitness moved for summary judgment, arguing that the release in the Membership Agreement barred plaintiffs’ claims for negligence and premises liability. The trial court granted summary judgment, and plaintiffs appealed.

Appellate Court Decision

:

 

The Court of Appeal reversed. The Court found that plaintiffs had raised a triable issue of material fact as to whether 24 Hour Fitness’ conduct constituted gross negligence. The evidence showed regular maintenance was not performed, which the owner’s manual required. Also, the machine was missing brackets which could have prevented the incident. On that basis, 24 Hour Fitness failed to exercise scant care or demonstrated passivity and indifference toward results. Slide4

Jimenez v. 24 Hour Fitness USA, Inc.

(

2015) 237 Cal.App.4th

546

Facts:

Plaintiff Jimenez was a member of 24 Hour Fitness USA, Inc. Plaintiff was found unconscious at a 24 Hour Fitness facility near a treadmill machine. Plaintiff could not remember what happened. She hired an accident reconstruction expert who opined that she sustained injuries after falling backwards while using a treadmill. When plaintiff joined 24 Hour, she signed a Membership Agreement in English, which contained a liability release provision. Plaintiff only spoke Spanish. 24 Hour filed a motion for summary judgment on the grounds that plaintiff’s claims were barred by the liability release provision in the Membership Agreement. The trial court granted the motion for summary judgment, and plaintiff appealed.

Appellate Court Decision:

The Court of Appeal reversed. The Court of Appeal found that there was a triable issue of fact as to whether 24 Hour was grossly negligent. Plaintiff’s accident reconstruction expert determined that the space between the treadmill and the wall did not comply with the minimum space required in the treadmill manufacturer’s owner’s manual and assembly guide. Also, the Court found that there was a triable issue of fact as to whether plaintiff’s signature on the agreement was procured by fraud. Plaintiff spoke Spanish and did not read or speak English. The 24 Hour manager who signed plaintiff’s agreement did not speak Spanish. Plaintiff contended that the manager made gestures implying that if plaintiff paid the membership fee, she could use the facility. Plaintiff interpreted the gestures as meaning that the agreement only set forth what she needed to pay to use the facility. The Court found that there was a triable issue of fact as to whether the manager’s gestures could constitute a fraudulent misrepresentation of the terms of the agreement. Slide5

Eriksson v.

Nunnink

(2015) 233 Cal.App.4th 708

Facts

:

 

Plaintiffs were parents of a 17-year-old girl who died during an equestrian competition. Plaintiffs claimed their daughter’s trainer negligently permitted their daughter to participate in a competition that was above her level on an injured horse. When the daughter began training with the coach, the coach had the parents sign a Release of Liability Agreement. The parents filed a wrongful death action against the coach, who filed a motion for summary judgment, which was granted by the trial court. The parents appealed.

 

Appellate Court Decision

:

 

The Court of Appeal affirmed the trial court’s ruling. The Court held that the release was enforceable. Although the release did not specify that heirs and parents would have their claims released if the daughter was injured, the release would bar the parents’ claim. Because the parents could not show that the coach was grossly negligent, the release barred the parents’ claims. Slide6

Eriksson v.

Nunnink

(2015) 233 Cal.App.4th 708

Facts

:

 

Plaintiffs were parents of a 17-year-old girl who died during an equestrian competition. Plaintiffs claimed their daughter’s trainer negligently permitted their daughter to participate in a competition that was above her level on an injured horse. When the daughter began training with the coach, the coach had the parents sign a Release of Liability Agreement. The parents filed a wrongful death action against the coach, who filed a motion for summary judgment, which was granted by the trial court. The parents appealed.

 

Appellate Court Decision

:

 

The Court of Appeal affirmed the trial court’s ruling. The Court held that the release was enforceable. Although the release did not specify that heirs and parents would have their claims released if the daughter was injured, the release would bar the parents’ claim. Because the parents could not show that the coach was grossly negligent, the release barred the parents’ claims. Slide7

Fazio v. Fairbanks Ranch Country Club

(

2015) 233 Cal.App.4th 1053

Facts:

Plaintiff was hired to perform at Fairbanks Ranch Country Club (the “Club”). While plaintiff was setting up his equipment on the stage, he stepped off the stage and fell into a gap by the stage. Plaintiff sued the Club for negligence. The Club filed a motion for summary judgment, arguing it owed no duty to plaintiff because plaintiff assumed the risk of potential dangerous conditions on a stage on which he was performing. The trial court granted the motion for summary judgment and found the doctrine of primary assumption of the risk barred plaintiff’s claim. Plaintiff appealed.

Appellate Court Decision:

The Court of Appeal reversed. While the Court recognized that falling off a stage is an inherent risk of all stage performers, the Court concluded that the summary judgment motion should not have been granted because there had not been a sufficient showing that the Club had not increased the inherent risk plaintiff assumed as a stage performer. Particularly, the Club had not presented sufficient evidence to refute plaintiff’s claim that the Club’s construction of the stage had not increased the risk of harm. The jury should be deciding whether the Club increased the risk of falling. Slide8

Nealy

v. City of Santa Monica

(

2015) 234 Cal.App.4th 359

Facts:

Plaintiff was a recycling worker with the City of Santa Monica (“City”). Plaintiff injured his knee at work. After knee surgeries, plaintiff was released to light duty work with restrictions against heavy lifting. The City unsuccessfully attempted to locate a job complying with plaintiff’s physical limitations. Eventually, plaintiff applied for a position as a City Planning Staff Assistant, but the City determined that plaintiff did not meet the minimum qualifications for the position because plaintiff did not have two years of recent paid work experience performing clerical support duties. The City eventually sent plaintiff a letter stating the City was unable to provide plaintiff with reasonable accommodation into an alternative position because plaintiff was not minimally qualified for the only position available that was not a promotion. After receiving a Right-to-Sue Notice from the California Department of Fair Employment and Housing, plaintiff filed a lawsuit against the City, claiming that the City violated California Fair Employment and Housing Act for disability discrimination, failed to provide reasonable accommodation, failed to engage in the interactive process and retaliated against her. The City successfully made a motion for summary judgment, and plaintiff appealed.

Appellate Court Decision:

The Court of Appeal affirmed. Plaintiff could not perform the essential functions of his original employment position. Plaintiff’s contention that the City could have restructured his old position to accommodate his disability was rejected because plaintiff’s proposal would have eliminated an essential function, which cannot be a reasonable accommodation. Because plaintiff was not qualified to perform the other positions which he felt should have been offered to him, plaintiff could not contend that the City was not providing a reasonable accommodation by failing to allow him to have one of those positions. Because plaintiff could not demonstrate that the City had failed to reasonably accommodate his disability, plaintiff could not maintain his disability and failure to engage in interactive process causes of action. Slide9

Navarrete v. Meyer

(

2015) 237 Cal.App.4th 1276

Facts:

Brandon Coleman (“Coleman”) was driving a vehicle at a high rate of speed in a residential neighborhood. He lost control of the vehicle and struck a parked vehicle which contained three children and their parents. The collision killed the father and injured the mother and the three children. The accident occurred on a residential street which had dips in the road. The front seat passenger (Meyer) encouraged the driver to driver fast on the street so the vehicle could jump in the air when it struck the dips. Coleman lost control of his vehicle after he hit one of the dips. The mother and the children filed a wrongful death action against Coleman and Meyer. As to Meyer, they alleged that she violated Vehicle Code § 21701 and civil conspiracy. Vehicle Code § 21701 states in pertinent part that “No person shall

wilfully

interfere with the driver of a vehicle or with the mechanism thereof in such manner as to affect the driver's control of the vehicle.” Meyer moved for summary judgment. The trial court granted Meyer’s motion for summary judgment, and the plaintiffs appealed.

Appellate Court Decision:

The Court of Appeal reversed. The Court compared this case to the case of

Agovino

v.

Kunze

(1960) 181 Cal.App.2d 591, in which both participants in an illegal drag race on a city street could be held liable for an injury which he sustained when he was struck by only one vehicle involved in the race. So, Meyer could potentially be liable for civil conspiracy and violating Vehicle Code § 21701. Regarding the alleged violation of Vehicle Code § 21701, the Court held that one can “willfully interfere” with the driver of a vehicle without touching the driver, hindering the driver’s ability to see or drive or tampering with the vehicle. Slide10

Conti v. Watchtower Bible & Track Society of New York

(

2015) 235 Cal.App.4th 1214

Facts:

Two elders of the Jehovah’s Witness Congregation were made aware that a member of the congregation had molested his stepdaughter. This known child molester was allowed to continue to perform field services in the church. Plaintiff was a member of the church and claimed that she was molested by the known child molester. The congregation had a policy of restricting the molester’s activities with children and attempted to make sure that the child molester was watched. The elders did not inform the congregation that the child molester had molested a child. Plaintiff testified that the child molester had been with her many times when neither of her parents were present. At trial, the jury found the congregation and Jehovah’s Witness liable. They appealed the trial verdict.

Appellate Court Decision:

The Court of Appeal affirmed. While the Court held that the congregation had no legal duty to warn the general congregation about the child molester’s past conduct, the Court found that defendants had established policies to ensure that the child molester would not be placed in a position of molesting children, which established a duty of care to minors in the congregation to ensure that the child molester would not be in a position to molest children. The Court did not overturn the jury’s finding that the Jehovah’s Witness organization had breached its duty of care to the minor to ensure that she was not in a position where she could be molested. Slide11

Johnson v. United States Steel Corporation

(

2015) 240 Cal.App.4th 22

Facts:

Plaintiff worked as an auto mechanic. He was diagnosed with acute myeloid leukemia and claimed that his cancer was caused by benzene in paints, solvents or other products to which he was exposed while working as an auto mechanic. Among those products was Liquid Wrench, which plaintiff used almost daily to loosen rusted machine components. Liquid Wrench was formulated by Radiator Specialty Company (“RSC”), and one formulation contained coal

raffinate

, a by-product of steel production that U.S. Steel supplied to RSC. U.S. Steel did not dispute that the

raffinate

it sold to RSC between 1960 and 1978 contained benzene, but it presented evidence that RSC also sold a petroleum-based formulation of Liquid Wrench during that time and currently that does not contain benzene. U.S. Steel moved for summary judgment, claiming the evidence was insufficient to show plaintiff was exposed to

raffinate

-formula Liquid Wrench. The trial court granted the motion for summary judgment, and plaintiff appealed.

Appellate Court Decision:

The Court of Appeal reversed. The Court analyzed the Component Parts Doctrine, which provides that component parts manufacturers are not liable for injuries caused by the finished product unless the component itself was defective and caused harm. U.S. Steel could be liable if the

raffinate

was defective and its defect caused plaintiff’s injuries. Resolution of this issue turned on the reasonable expectations of the consumer. Applying the Consumer Expectations Test, the Court emphasized that the product in question was

raffinate

, not benzene. While

raffinate

may be a substance with which ordinary consumers were unfamiliar and had no expectations concerning its properties or effects, if the evidence demonstrated that the incorporation of

raffinate

into Liquid Wrench or any finished product caused the product to be less safe than ordinary consumers would expect, the product could be shown to contain a design defect under the Consumer Expectations Test. As the moving party for summary judgment, it was U.S. Steel’s burden to present evidence negating the existence of a design defect in the

raffinate

. U.S. Steel failed to do so

. Slide12

Kahn v. The Dewey Group

(

2015) 240 Cal.App.4th 227

Facts:

Plaintiff sued twenty defendants for personal injury. Seven months before trial, all twenty defendants jointly made a Code of Civil Procedure § 998 Offer to Compromise to plaintiff in the sum of $75,000. The case went to trial. The trial court granted a non-suit as to fourteen of the twenty defendants. The jury was deadlocked as to the remaining six defendants, and the trial court declared a mistrial. The re-trial was still pending when the fourteen dismissed defendants filed a Memorandum of Costs seeking 70% of the collectively incurred costs of $358,341. These defendants claimed that they had received a judgment more favorable than 70% of the C.C.P. § 998 offer. Plaintiff filed a motion to strike or tax costs. The trial court denied plaintiff’s motion and ruled the defendants were entitled to recover their expert witness fees. Plaintiff appealed.

Appellate Court Decision:

The Court of Appeal reversed. The Court ruled it was unable to conclude whether these defendants could recover pursuant to the joint C.C.P. § 998 offer by comparing only the actual recovery of plaintiff against some of the defendants, since the outcome was uncertain for the six remaining defendants. The reasonableness of the offer must be determined by comparing the actual recovery to plaintiff for all of the offering defendants. The Court ruled the fourteen settling defendants must wait for the final judgment against the six remaining defendants to determine if costs including expert fees would be awarded pursuant to the joint C.C.P. § 998 offer. Slide13

Litt

v. Eisenhower Medical Center (2015) 237 Cal.App.4th 1217

Facts:

Plaintiff sued Eisenhower Medical Center (“EMC”) for negligence after he sustained personal injuries as a result of his head becoming stuck in a partially closed gate at EMC’s cafeteria. Several months before trial, the medical center served a C.C.P. § 998 offer on

Litt

for $15,000. Plaintiff did not accept the offer. After the expiration date of the offer, plaintiff amended his complaint to add Compass Group USA, Inc. (“Compass”) as a defendant. Compass operated the EMC cafeteria under a contract with EMC. Compass did not serve a C.C.P. § 998 offer on

Litt

. EMC and Compass jointly retained several medical experts. Compass paid all of EMC’s costs and expert expenses pursuant to an indemnity provision between them. The jury returned a verdict for

Litt

and against the defendants jointly and severally for $3,000. After the trial, EMC and Compass jointly requested reimbursement of expert fees pursuant to EMC’s unaccepted C.C.P. § 998 offer. Plaintiff moved to strike and/or tax costs, arguing in part that EMC could not recover expenses incurred after it served its C.C.P. § 998 offer, because Compass had actually incurred and paid them. Also, plaintiff contended that Compass could not recover the incurred expert fees because it had not served the C.C.P. § 998 offer. Plaintiff requested reimbursement of costs. EMC and Compass jointly moved to strike and/or tax on the grounds that plaintiff could not recover any costs post-dating EMC’s C.C.P. § 998 offer, because EMC and Compass were the prevailing parties. The trial court allowed plaintiff to recover his costs incurred before EMC served its C.C.P. § 998 offer. The trial court did not allow EMC to recover any costs after the C.C.P. § 998 offer because those costs had been paid by Compass. EMC and Compass appealed the post-trial orders.

Appellate Court Decision:

The Court of Appeal reversed the trial court decision striking EMC’s recovery of C.C.P. § 998 offer costs and expert fees. The Court held that it was irrelevant that Compass had actually paid those costs and expert fees. The Court refused to agree with EMC and Compass that both of them should have been treated as prevailing parties, which precluded plaintiff from recovering his costs. Slide14

Lee v.

Silveira

(2015

) 236 Cal.App.4th 1208

Facts:

Plaintiff was injured in an automobile accident. Plaintiff’s attorney served defendants with a C.C.P. § 998 Offer to Compromise in the amount of $1 million. At trial, all counsel stipulated that the amount of the billed medicals was $274,514, and the amount of the paid medicals was $109,251. The jury awarded plaintiff damages totaling $1,027,014, including $274,514 in past medical expenses. Defendants filed a post-trial motion for reduction of jury verdict, contending that the judgment should be reduced by the difference between the billed medicals and paid medicals. Plaintiff contended that the reduction should not occur until after the court determined whether plaintiff should recover her expert fees and pre-judgment interest under Civil Code § 3291, because defendants failed to obtain a more favorable judgment than plaintiff’s C.C.P. § 998 offer. Eventually, the trial court agreed with defendants and reduced the judgment to $887,098, which reflected an award of the past paid medical bills. A judgment was entered in the amount of $887,098, which excluded plaintiff’s expert witness fees and pre-judgment interest. Plaintiff appealed.

Appellate Court Decision:

The Court of Appeal affirmed. The Court agreed that the judgment should be reduced to reflect paid medical bills, not billed. Once the judgment had been properly modified to reflect the award of reasonable past medical expenses, plaintiff had not received a judgment more favorable than her C.C.P. § 998 offer. Slide15

Centex Homes v. St. Paul Fire & Marine Ins. Co.

(

2015) 237 Cal.App.4th 23

Facts:

Centex Homes (“Centex”) was a developer of single-family residences and was sued by homeowners for construction defects. Centex tendered its defense to St. Paul Fire & Marine Ins. Co. and St. Paul Mercury Insurance Company (“Travelers”) as an additional insured under a policy issued to one of Centex’s subcontractors. Travelers accepted the defense under a reservation of rights, including the right to choose defense counsel. Travelers appointed panel counsel to defend Centex. Centex sued its subcontractors and their insurers for among other things breach of contract for failing to appoint independent counsel and apportion defense fees and costs among all Centex insurers. Travelers demurred to the complaint, arguing that no actual facts had been pled to demonstrate manipulation of Centex’s defense, and any allocation was premature because the underlying case was ongoing. The trial court sustained Travelers’ demurrer without leave to amend. Centex appealed.

Appellate Court Decision:

The Court of Appeal affirmed. The Court found that there were not enough facts about liability and damages or the cost of defense for the trial court to decide the rights and obligations of the parties. Generally, an insurer has a right to control the defense, and a general reservation of rights is not sufficient alone to trigger the right to independent counsel. The Court found that Travelers and Centex had the same interests in defending the underlying claim for both insureds; so, Travelers’ reservation of the right for reimbursement of defense costs did not give panel counsel an incentive to control the defense adverse to Centex. Also, the amount of defense fees which Travelers could potentially seek to have reimbursed pursuant to the reservation of rights letter was not a ripe issue. Slide16

Nolte v. Cedars Sinai Medical Center (2015) 236 Cal.App.4th 1401

Facts:

Plaintiff received treatment from a physician at a facility owned by Cedars Sinai Medical Center (“Cedars”). Plaintiff signed a contract promising to pay Cedars for any services Cedars provided to him, but plaintiff was never told by the doctor or by Cedars that after his doctor’s visit he would be charged a fee by Cedars for setting up a new patient account on its computer system. Also, plaintiff had not been informed that the facility had contracted with Cedars to perform that overhead task, and that Cedars would issue plaintiff a bill for that service. Plaintiff filed a class action complaint contending that being charged a facility fee by Cedars was an unfair business practice under Business and Professions Code § 17200 et seq. and a deceptive practice under the Consumer Legal Remedies Act, Civil Code § 1750 et seq. Cedars filed a demurrer. The trial court sustained the demurrer without leave to amend, and plaintiff appealed.

Appellate Court Decision:

The Court of Appeal affirmed. Plaintiff could not maintain a Business and Professions Code § 17200 cause of action. The facility’s fee charge was not specifically prohibited by law. There was no law requiring the facility to explicitly and individually disclose the facility’s fee. Plaintiff claimed that Cedars was “cramming” charges onto the bill of a business transaction between unaffiliated third parties, which is prohibited under California law. The Court decided that Cedars was not an unaffiliated third party, and plaintiff had agreed to separate billing for those services. The agreement did not provide that Cedars must seek, and plaintiff must give, plaintiff’s informed consent to every bill or charge. Slide17

Velasquez v.

Centrome

(2015

) 233 Cal.App.4th 1191

Facts:

Plaintiff was an undocumented immigrant. Plaintiff claimed he contracted a rare lung disease from his exposure to chemicals at his employment. Plaintiff filed a complaint against the manufacturers and distributors of the chemical compounds used to make the chemicals at his employment. At trial, plaintiff filed a motion in

limine

to exclude any evidence of his immigration status. Defendants opposed the motion in

limine

, arguing that evidence of his immigration status was admissible for questioning experts on plaintiff’s ability to receive a lung transplant. Pre-trial discovery had disclosed that plaintiff’s status as an undocumented immigrant could be a factor in a hospital potentially denying a lung transplant to plaintiff. The trial court denied the motion in

limine

. At trial, a physician from the hospital where plaintiff had applied to receive a transplant testified that in a recent policy change, the hospital would not consider plaintiff’s immigration status when making a decision on transplant approvals. After this testimony, the trial court ruled that evidence about plaintiff being in the United States illegally would be excluded. The jury returned a special verdict in favor of defendants. Plaintiff appealed.

Appellate Court Decision:

The Court of Appeal reversed. The Court held that the trial court should have granted plaintiff’s motion in

limine

and not allowed any testimony concerning plaintiff’s status as an undocumented immigrant into evidence. Typically, a personal injury plaintiff’s status as an illegal immigrant is inadmissible evidence at trial unless the plaintiff is claiming damages for lost earnings or earning capacity. Because the plaintiff’s immigration status would create strong potential prejudice, the trial court should have granted the motion in

limine

. Slide18

2015 Sacramento SeminarSlide19

SIGNIFICANT INSURANCE COVERAGE CASES

David

L. Blinn, Partner, San Francisco OfficeSlide20

SIGNIFICANT INSURANCE COVERAGE

CASES

 

I. SIGNIFICANT DECISIONS – SUPREME COURTII. SIGNIFICANT PENDING SUPREME COURT CASES

III. SIGNIFICANT 9TH DISTRICT COURT OF APPEAL DECISIONS

IV. LIABILITY INSURANCE

A. MISCELLANEOUS

B. AUTOMOBILE INSURANCE

C. DUTY TO DEFEND

D. BAD FAITH

E. PROCEDURAL ISSUES

V. PROPERTY INSURANCE Slide21

SIGNIFICANT DECISIONS

SUPREME

COURT

Hartford

Casualty Insurance Co. v. Swift Distribution

(

2014) 59 Cal.4th 277

There can be no coverage under “advertising injury” for trade disparagement where the insured does not mention the competing product or company by name, and does not clearly derogate that product or business.

 

Hartford

Casualty Insurance Co. v. JR Marketing, LLC.

(2015) 61 Cal.4th 988

Carrier did not meet its obligations to defend case upon tender and thereafter provided court ordered

Cumis

counsel. Carrier was not barred from bringing unjust enrichment claim against

Cumis

counsel for fraudulently or otherwise manifestly and objectively wasteful and useless costs. Slide22

SIGNIFICANT PENDING

SUPREME

COURT CASES

Gradillas

v. Lincoln General Insurance Company

(2015) ___Cal.4th ___ (Cert.

Grntd

8/12/15, 792 F.3d 1050)

U.S. Court of Appeals for 9th Circuit has asked a question to be certified to the California Supreme Court as to the correct test to apply in determining whether an injury arose out of use of an automobile for purposes of determining coverage under an automobile insurance policy.

Nickerson v. Stonebridge Life Ins.

(2015) ___ Cal.4th ___ (Rev.

Grntd

12/11/13, 219 Cal.App.4th 188)

Carrier lost at trial on bad faith claim over denial of coverage under hospital indemnity policy. Provision relied upon calling for “necessary treatment” only was found to have been unenforceable as not conspicuous, plain and clear. Case is up to Supreme Court for review of issue of punitive damages. (Jury awarded $19 million against $31,500 in policy proceeds, Court of Appeal affirmed lowering this to 10:1 ratio of damages). Slide23

SIGNIFICANT 9TH DISTRICT COURT OF APPEAL DECISIONS

Encompass

Ins. Co. v. Coast National Ins. Co.  (

2014) 764 F.3d 981

 

Where

defendant passer-by pulled passenger from wreckage of vehicle after single vehicle accident, causing further injury to passenger, this was “unloading” and thus a ‘use” of a vehicle for purposes of the defendant’s automobile policy.Slide24

LIABILITY

INSURANCE

MISCELLANEOUS

American States Ins. Co. v Travelers Property &

Cas

. Co. of America

(

2014) 223 Cal.App.4th 495

Food catering truck was considered “mobile equipment,” rather than an auto, and thus not excluded from coverage under commercial general liability policy.

 

Regional

Steel Corp. v Liberty Surplus Ins. Corp.

(

2014) 226 Cal.App.4th 1377

Where alleged defective component parts of buildings did not result in damage to some other portion of structure, this did not constitute “property damage” for purposes of coverage under a CGL policy. Slide25

LIABILITY INSURANCE

MISCELLANEOUS

Dameron Hosp.

Ass’n

v. AAA Northern Calif.

(

2014) 229 Cal.App.4th 549

Healthcare provider may protect its right to pursue from third party the difference between bill for services and amount paid by insurer, as long as language in agreement with insurer is clear on this point.

 

Centex Homes v. St. Paul Fire and Marine Ins. Co.

(2015) 237 Cal.App.4th 23

General Contractor’s attempt to incorporate declaratory relief claims on additional insured status and its right to

Cumis

counsel into its cross-complaint against subcontractors for indemnity failed, as neither claim was “ripe” or “actual.” Slide26

Underwriters

v.

Probuilders Specialty Ins. Co. (2015) ___ Cal.App.4th ___ Summary judgment in favor of one carrier insuring builder based on “escape clause” was overturned, as courts favor modern trend of requiring equitable contributions on a pro-rata basis from all primary insurers.

LIABILITY INSURANCE

MISCELLANEOUSSlide27

AUTOMOBILE INSURANCE

Maslo

v Ameriprise Auto & Home Ins.

(

2014) 227 Cal.App.4th 626

Where insurer made no offer on Uninsured Motorist case prior to arbitration, where liability and some level of damages were otherwise clear, insurer was exposed to complaint for bad faith.

 

Scottsdale

Ins. Co. v National Continental Ins. Co.

(2014) 229 Cal.App.4th 1166

Under Insurance Code section 11580.9(d), a policy that specifically describes a vehicle involved in an accident is primary to a policy that does not describe any vehicle, despite the language of section 11580.9(h) which relates to persons in the business of

trucking.Slide28

Mercury

Casualty Co. v Chu

(2014) 229 Cal.App.4th 1432 Under exclusion in auto policy, carrier did not provide coverage for bodily injury to anyone included in the policy’s definition of “an insured.” In this case, that included “all residents” who “inhabited the same dwelling” as the named insured. No coverage for non-related passenger who shared residence with driver-named insured.

 

Elliot v.

Geico

Insurance Co.

(2014) 231 Cal.App.4th 789

Insured

not entitled to Underinsured Motorist benefits when she received monies in excess of the policy limits from the underinsured motorist’s carrier and the motorist’s employer under a separate general liability policy.

AUTOMOBILE INSURANCESlide29

DUTY TO DEFEND

Transport

Insurance Co. v Superior Court (R.R. Street & Co.) (2014) 222 Cal.App.4th 1216

When interpreting the term “underlying insurance,” for purposes of whether excess policy owed duty to defend the additional insured, the relevant “reasonable expectations” as to coverage were those of additional insured, rather than the named insured.

 

Davler

v. Arch Insurance

(2014) 229 Cal.App.4th 1025

Employee Related Practices Exclusion in CGL policy effectively excluded insured’s coverage under Personal & Advertising Injury for alleged false imprisonment of employees.Slide30

Gonzalez v. Fire Insurance Exchange

(2015) 234 Cal.App.4th 1220 Insured sued for alleged sexual assault and false imprisonment, invasion of privacy and slander per se and other claims from alleged group assault on young woman at party. Where policy relates both bodily and personal injury claims to “occurrences” defined as an “accident,” there was no potential coverage under the policy.

 

Upasani

v. State Farm General Ins. Co.

(2014) 227 Cal.App.4th 509

Insureds were sued for allegedly conspiring with a child’s mother to abduct the child from the father. There was no basis for coverage and no duty to defend because a conspiracy requires that the defendant knowingly and intentionally participate in the conspiracy.

DUTY TO DEFENDSlide31

Crown

Capital Securities v. Endurance American Specialty Ins. Co.

(2015) 235 Cal.App.4th 1122

Carrier could properly deny coverage on claims that “arose out of the same events” as those involved in a claim insured disclosed on its application, and thus, “the facts underlying the undisclosed claims” should have been disclosed and would not have been covered.

DUTY TO DEFENDSlide32

BAD FAITH

Bock

v. Hansen (2014) 225 Cal.App.4th 215

Claims Adjuster potentially individually liable for fraudulent misrepresentation of claims benefits made to insured.

 

Graciano

v. Mercury General Insurance

(2014) 231 Cal.App.4th 414

Carrier was not liable for bad faith as to settlement of insured’s third party claim where plaintiff’s demand letters identified incorrect insured and incorrect policy as being involved in the accident. Once the carrier learned of the correct insured/policy it attempted to settle in a timely

fashion.Slide33

McMillin

Companies, LLC v. American Safety Indemnity Co. (2015) 233 Cal.App.4th 518 Where a general contractor named as additional insured under subcontractor’s policy settles with one or more carriers and receives more than their total defense costs (contract damages), they are still entitled to prove at trial that the settlement funds are allocated either to defense costs or to their tort claim for bad faith against non-participating carrier.

 

Albert

v. Mid-Century Insurance

(

2015) 236 Cal.App.4th 1281

Summary judgment was proper on behalf of carrier sued for breach of policy for failure to defend when all claims raised in the underlying action against the insured arose from non-accidental conduct.

BAD FAITHSlide34

21

st

Century Ins. Co. v Sup. Ct.

(2015) 240 Cal.App.4th 322 Stipulated settlement between plaintiff and insured not binding on carrier in bad faith action where carrier had been defending the insured under the policy listing insured and the insured vehicle, but not on two other policies claimed to have coverage.

BAD FAITHSlide35

PROCEDURAL ISSUES

Douglas

v. Fidelity National

(2014) 229 Cal.App.4th 392

In trial for bad faith involving claims of material misrepresentations on policy of insurance, carrier is entitled to instruction as to whether independent insurance agency obtaining policy for insured was agent of insurer or broker for the insured.

 

Snyder v. CIGA

(

2014) 229 Cal.App.4

th

1196

Three year statute of limitations for bringing an action against CIGA for failure to accept a claim does not accrue until all events necessary to create a covered claim have occurred, giving rise to the insured’s right to demand payment from CIGA. Slide36

Greenwell v Auto-Owners Insurance Co.

(2015) 233 Cal.App.4

th

783 A Michigan wrote policy of property insurance for California resident covering apartment building in Arkansas. Although carrier thus “availed itself of California’s forum benefits” for jurisdictional purposes, bad faith claim arising out of damage to Arkansas property had no substantial nexus to the carrier’s forum activities, such that it could not be sued in California.

 

National

Union Fire Ins. Co. v

Tokio

Marine and

Nishido

Fire Ins.

Co.

(

2015) 233 Cal.App.4

th

1348

Where indemnitee settles a third party claim, it is entitled to present evidence acquired post-settlement in its equitable indemnity claim against non-participating carrier.

PROCEDURAL ISSUESSlide37

PROPERTY INSURANCE

Najah

v. Scottsdale

(

2014) 230 Cal.App.4

th

125

Insureds who had sold property and taken second mortgage, later re-acquired the property by making a full credit bid at foreclosure sale by the lender in first position was not entitled to recover pre-foreclosure damage to the property. That insured held two mortgages made no difference.

 

Stephens

& Stephens XII v. Fireman’s Fund Ins. Co.

(2014) 231 Cal.App.4

th

1131

Where policy provided that insured under property damage coverage was entitled to recover the full cost of repair if repairs were actually made, insured was still entitled to recover conditional judgment awarding the full cost of repair based on the insured being hindered in making repairs by carrier’s decision to decline coverage for those benefits not in dispute. Slide38

Lee

v. California Capital Insurance Company

(2015) 237 Cal.App.4th 1154 In fire loss case, it was error to compel the appraisal panel to assign loss values to items simply because they were listed in the insured’s scope of loss, and regardless of whether inspection revealed they were undamaged or never existed.

 

Grebow

v. Mercury Insurance Company

(2015) ___ Cal.App.4

th

___

Plaintiff homeowners were not entitled to reimbursement for costs spent to repair rear deck and residence from “imminent collapse” when policy specifically referred to actual collapse and had a definition of the same.

PROPERTY INSURANCESlide39

2015 Sacramento SeminarSlide40

RECOVERABLE MEDICAL SPECIALS IN PERSONAL INJURY ACTIONS

By Laura S. Flynn

Low, Ball & LynchSlide41

To recover damages for past medical expenses, plaintiff must prove the reasonable cost of reasonably necessary medical care he/she has received.

To recover damages for future medical expenses, plaintiff must prove the reasonable cost of reasonably necessary medical care plaintiff is reasonably certain to need in the future.

California Jury Instruction 3903ASlide42

A plaintiff may recover as economic damages

no more

than the reasonable value of the medical services received and is not entitled to recover the reasonable value if his or her actual loss was less.

Howell v. Hamilton (2011) 52 Cal.4th 541, 555. “Reasonable” compensation for past medical expenses may not exceed the amount actually paid or incurred whether by private insurance, Medi-Cal, Medicare, plaintiff’s employer or any collateral source.

Reasonable and IncurredSlide43

Under the collateral source rule, medical benefits received by plaintiff from sources wholly independent of the defendant, e.g., under plaintiff’s health, disability or accident insurance, or social security or disability benefits, are not deducted from damages otherwise recoverable.

Rule reflects public policy of encouraging “prudent investment in insurance” and ensuring victims are made whole.

Collateral Source RuleSlide44

Collateral source rule only operates with regard to payments from a source with which defendant had nothing to do with and to which defendant did not contribute.

If, prior to trial, plaintiff is paid pursuant to a no-fault medical coverage provision, plaintiff’s recoverable damages are diminished to that extent. Evidence of such payments is therefore admissible.

Dodd v. Bucknum

(1963) 214 Cal.App.2d 206.

Offset for Payments Made by or on Behalf of DefendantSlide45

Collateral source rule does not apply to bar an offset for benefits received from a joint tortfeasor because the source is not “wholly independent” of defendant.

Payments by Joint TortfeasorSlide46

Where a medical provider has: 1) rendered medical services to a plaintiff, 2) issued a bill for those services, and 3) subsequently written off a portion of the bill gratuitously, the amount written off constitutes a benefit that may be recovered by the plaintiff under the collateral source rule.

Sanchez v. Strickland

(2011) 200 Cal.App.4

th 758, 769.

Gratuitously Written OffSlide47

A plaintiff whose medical expenses are paid through private insurance may recover as economic damages no more than the amounts paid by the plaintiff or his or her insurer for the medical services received or still owing at the time of trial.

Not a modification of collateral source rule. Just a determination the discount medical providers offer the insurer is not a benefit provided to the plaintiff in compensation for his or her injuries.

Private InsuranceSlide48

Because the provider can no longer assert a lien for the full cost of its services, the Medicaid beneficiary may only recover the amount payable under Medicaid as his or her medical expenses.

Olszewski v. Scripps

(2003) 30 Cal.4

th 798, 827.Plaintiff not entitled to full amount billed as the reasonable value of medical services when Medi-Cal’s actual payment for services was less.

Hanif v. Housing Authority

(1988) 200 Cal.App.3d 635, 639-644.

Medicaid BeneficiarySlide49

An employee injured on the job may not recover medical expenses from a third-party tortfeasor exceeding the discounted amount that plaintiff’s employer paid under workers’ compensation.

Sanchez v. Brooke

(2012) 204 Cal.App.4

th 126, 140-143.

Workers’ CompensationSlide50

Measure of damages will turn on an inquiry into the reasonable value of medical services provided because uninsured plaintiffs will typically incur standard, nondiscounted charges that will be challenged as unreasonable by defendants.

Can’t rely solely on evidence of unpaid medical charges to meet burden of proof.

Need proof of reasonable value, not just what amount was incurred by plaintiff.

Bermudez v. Cioleki (filed 6/22/15, California Court of Appeal, Fourth District)

Uninsured Plaintiff with Unpaid BillsSlide51

The intervention of a third party in purchasing a medical lien does not prevent a plaintiff from recovering the amounts billed by the medical provider, as long as the plaintiff legitimately incurs those expense and remains liable for their payment.

Katiuzhinsky v. Perry

(2007) 152 Cal.App.4

th 1288, 1291.

Purchasing of Lien by Third PartySlide52

Still not entitled to introduce evidence of collateral source benefits and jury can’t reduce plaintiff’s recovery based on payments from collateral source. However, governmental entity has specified procedural rights to post-trial set-off adjustments against its share of the verdict if the verdict returned against the entity includes over $5,000 in collateral source benefits paid or obligated to be paid by plaintiff.

Tortfeasor is a Government Entity

(Govt. Code §985)Slide53

Form and Special Interrogatories

Request for Production of Documents

Subpoenas for Medical Billings/Payments

Documents Relating to Lien AgreementsRetain expert as to reasonable value of services providedDepositions of Medical Providers/ExpertsDeposition of Lien Holder

Discovering Amount RecoverableSlide54

Evidence of amount actually incurred or paid to medical providers is relevant to prove plaintiff’s damages for past medical expenses and , assuming it satisfies other rules of evidence, is admissible at trial.

However, evidence that the payments were made in whole or in part by an insurer generally remains inadmissible under the collateral source rule.

Evidence to Establish Past Medical ExpensesSlide55

Must have expert testimony to establish the need for future treatment is reasonably certain.

Expert must also testify as to probable costs.

Economist can discuss the effect of inflation on such costs.

Ultimate award must be reduced to present cash value.If plaintiff requires lifetime care, plaintiff must submit competent evidence of his remaining life expectancy.

Evidence of Future Medical SpecialsSlide56

Where, by prior agreement, the medical provider has accepted a discounted amount as full payment, evidence of the full (undiscounted) amount is not relevant and not admissible to prove past medical specials, future medical expenses or noneconomic damages.

Undiscounted charges for medical services vary tremendously from provider to provider and do not necessarily reflect the cost of providing those services or their market value.

Corenbaum v. Lampkin

(2013) 215 Cal. App.4

th

1308, 1327-1330.

Admissibility of Billed/Undiscounted Amount Slide57

If plaintiff was uninsured at the time of the incident and his medical bills remain unpaid, undiscounted medical bills might form a valid basis for estimating past medical expenses.

Where a collection agency purchases a medical provider’s lien at a discount and the plaintiff patient still remains liable for the undiscounted charges, i.e., the full lien amount.

Circumstances Under Which Billed Amount Might be AdmissibleSlide58

Treating physicians can testify about the nature and extent of the injuries, the treatment and medication prescribed, the need for treatment and medication, and the reasonableness of charges.

Request Evidence Code §802 hearing to determine if treating physician is qualified to testify to reasonable and customary charges for services provided.

Testimony by Treating PhysiciansSlide59

Medical records can document the diagnosis and treatment of the plaintiff’s condition and verify that claimed services were provided and for what reason.

Documents must be authenticated. Evid. Code §1401(a).

Contents are subject to hearsay exceptions if not within the purview of the “business records” exception. Evidence Code §§ 1270-1272.

Opinions of experts not in the courtroom are not admissible.

Medical RecordsSlide60

Plaintiff without medical insurance contracted with medical providers to treat her in exchange for a lien on whatever she might recover from defendant in the lawsuit.

MedFin, a third party assignee, purchased the lien from medical providers at a discounted amount.

Plaintiff remained liable for full amount.

Court denied motion to exclude evidence of billed amounts.Does amount MedFin pay come into evidence?

In or Out? Slide61

Amount paid by MedFin had a tendency to prove reasonable value and was therefore relevant.

However, need evidence that the payment represented a reasonable value for the treatment in order to be admissible. Without such evidence, minimal probative value.

Amount MedFin paid was not based on reasonable approximation of the value of medical services. It represented a reasonable approximation of the collectability of the debt.

In deciding what price to offer medical providers for the right to recover full payment from an injured person, MedFin evaluates the risk of collectability and bets on whether and how much the person will receive in a pending lawsuit.

Uspenskaya v. Meline

(

filed

10/28/15,Court

of Appeal, Third Appellate

District)Slide62

Evidence precluded pursuant to Evidence Code §352.

In absence of evidence to show what MedFin paid was the reasonable value of plaintiff’s treatment, the probative value was outweighed by danger of creating undue prejudice as well as danger of confusing and misleading jury

.

Substantial danger of prejudice because jury could rely solely on third party payment to fashion its award which might not represent the reasonable value of a plaintiff’s treatment and result in a situation where the plaintiff is not made whole, but rather remains liable to the third party for the entire debt.

Uspenskaya v. Meline

(

filed

10/28/15,Court

of Appeal, Third Appellate

District)Slide63

Plaintiff has health insurance, but receives treatment from medical provider outside coverage and signs lien with third party financing company accepting liability for full amount.

No authority on point.

Duty to mitigate – avoid unnecessary damages.

Amount paid is relevant to reasonable value. Amount billed? Only if testimony it reflects reasonable value.Argue not collateral source because funds not paid for medical treatment. Funds used to obtain collectible asset.

Insured Plaintiff Sent to Lien Providers - Duty to MitigateSlide64

Form Interrogatory 4.1.

Request for Admission – had insurance, referred by attorney

Copy of Health Insurance Policy and Card

Medical Billing Expert prepare reimbursement schedule of plaintiff’s insurance plan for the care provided.Depose outside provider regarding acceptance of patients with plaintiff’s health coverage.Confirm same treatment could have been provided under plaintiff’s health insurance.

Determine basis for not receiving treatment by a provider covered by health insurance.

Gathering Evidence to Support Failure to MitigateSlide65

THE ENDSlide66

2015 Sacramento Seminar