Walton v. OneBeacon Ins. Co. CA2/4 ( 2015 )

Filed 12/21/15 Walton v. OneBeacon Ins. Co. CA2/4
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FOUR
EDWARD WALTON, B261863
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. BC361382)
v.
ONEBEACON INSURANCE
COMPANY,
Plaintiff and Respondent.
APPEAL from a judgment of the Superior Court of Los Angeles County,
Michael P. Linfield, Judge. Affirmed.
Simon Greenstone Panatier Bartlett and Brian P. Barrow for Plaintiff and
Appellant.
Musick, Peeler & Garrett and Susan J. Field for Plaintiff and Respondent.
________________________________
INTRODUCTION
Edward Walton appeals from a judgment following an order granting
summary judgment in favor of respondent OneBeacon Insurance Company on its
claim for subrogation. He contends respondent failed to demonstrate that it was
entitled to equitable or contractual subrogation. For the reasons explained below,
we conclude that respondent made an adequate showing that it was entitled to
subrogation, and that appellant failed to raise triable issues of material fact.
Accordingly, we affirm the judgment.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
On November 2, 2006, appellant filed a complaint for personal injury
against 46 defendants, including The William Powell Company (Powel), alleging
that he had developed malignant mesothelioma as a result of exposure to asbestos
from defendants’ asbestos-laden products and/or products designed to be used in
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association with asbestos-laden products. The complaint alleged that Powell
produced valves used in Navy ships, that appellant was exposed to Powell valves
during his Navy service from 1946 to 1968, and that he was diagnosed with
mesothelioma in November 2005. As a result of dismissals and settlements, by
midtrial, Powell remained the only defendant in the action. The jury found in
favor of appellant, and a judgment was entered awarding damages totaling
$5,660,624.39.
After Powell appealed, this court reversed. The record established that
Powell supplied none of the asbestos-laden products to which appellant was
exposed, and to the extent the valves were used in conjunction with asbestos-laden
1
The complaint was originally brought by both Edward Walton and his late
wife.
2
products, we concluded that Powell was not liable under the component parts
doctrine. We awarded Powell its costs on appeal. On February 29, 2012, the
California Supreme Court denied review in light of its decision in O’Neil v. Crane
Co. (2012) 53 Cal.4th 33. Thereafter, on June 14, 2012, Powell obtained a
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judgment following appeal for costs in the amount of $163,589.37.
On August 30, 2012, respondent filed an ex parte application for leave to
intervene in the action. Respondent argued that it had a right to intervene, as it was
a subrogee of Powell. In support of the application to intervene, Sander Alvarez,
respondent’s attorney, submitted a declaration, stating (1) that respondent is the
successor-in-interest to General Accident Fire and Life Assurance Corporation,
Ltd. (General Accident), (2) that respondent had issued several primary general
liability policies to Powell, including policy No. GLA-42-717-41 in effect for
policy period July 26, 1976 to July 26, 1977, (3) that pursuant to those policies,
respondent agreed to defend Powell in the instant action, and (4) that respondent
incurred and paid approximately $655,885 in defense costs on behalf of Powell in
connection with the action, including the costs awarded in the June 14, 2012
judgment. Respondent sought a declaration that it was entitled to the appellate
costs awarded in the June 14, 2012 judgment, and requested that a judgment be
issued stating that it, rather than Powell, should recover costs of suit in the same
amount.
Attached to the application was a proposed complaint-in-intervention. The
complaint alleged that Powell was covered under insurance policy no. GLA-42-
717-41, issued by respondent’s predecessor, General Accident. It further alleged
that respondent, the successor-in-interest to General Accident, paid Powell’s
2
The award of costs chiefly consists of the costs incurred to maintain a
supersedeas bond during the appellate process.
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defense costs in the instant action pursuant to that policy. A judgment in favor of
Powell awarding costs was issued on June 14, 2012. Finally, the complaint alleged
that respondent was a subrogee of Powell under equitable subrogation principles
and the subrogation provision in the policy. That contractual provision stated: “In
the event of any payment under this policy, the company shall be subrogated to all
the insured’s rights to recover therefor against any person or organization and the
insured shall execute and deliver instruments and papers and do whatever else is
necessary to secure such rights.”
Following a hearing at which appellant’s attorney appeared and argued, the
superior court granted respondent’s application to intervene. The proposed
complaint-in-intervention was filed August 31, 2012.
On October 1, 2012, appellant demurred to the complaint-in-intervention.
He argued that respondent failed to allege facts demonstrating it was entitled to
subrogation. Specifically, he contended that respondent failed to plead that Powell
had “execute[d] and deliver[ed] instruments and papers and do[ne] whatever else is
necessary to secure” respondent’s subrogation rights, as required by the contractual
subrogation provision. Appellant also argued that respondent lacked standing to
intervene in the action, as “any dispute or conflict between it and Powell with
regard to the costs judgment against Walton need not, and should not, be resolved
here.”
Respondent opposed the demurrer. It argued that intervention was
appropriate, as it is the successor-in-interest to General Accident which had issued
certain policies to Powell, and it had defended Powell in the action under those
policies. Respondent argued that it had both contractual and equitable subrogation
rights, and that those rights did not require any action on the part of Powell.
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The trial court overruled the demurrer, and appellant answered the
complaint-in-intervention. Appellant generally denied the allegations and raised
several affirmative defenses, including respondent’s lack of entitlement to
intervene and lack of standing.
On May 12, 2014, respondent filed a motion for summary judgment.
Respondent argued that it was entitled to judgment as a matter of law because it
was subrogated to the rights of its insured, Powell, in the June 14, 2012 judgment,
and the amount of the costs award is undisputed. Respondent also argued that it
was entitled to subrogation under equitable principles and under the express
subrogation provision in policy No. GLA-42-717-41, as it paid the defense costs
on behalf of Powell in the underlying action.
In support, respondent attached a declaration from Darilyn Michaud.
Michaud stated that she was the account manager at Resolute Management, Inc.,
which handled the claims at issue in the litigation under policy No. GLA-42-717-
41. She had been handling the claims under the policy since 2005, and had
personal knowledge of the facts set forth herein. She stated that respondent was
the successor-in-interest to General Accident, that it had provided Powell a defense
to the action under the policy, and that it had paid approximately $655,885 in
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defense costs through the trial and appeal of the action.
Appellant opposed the motion for summary judgment. He argued that
respondent failed to show that the General Accident policy provided coverage for
claims arising from exposure outside the policy period, that the contractual
conditions for subrogation had been satisfied, or that respondent had the exclusive
3
In support of its motion for summary judgment, respondent also filed a
request for judicial notice of various documents in the court file. The trial court
denied the request on the ground that it was “not necessary to request judicial
notice of pleadings already in the case file.”
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subrogation rights. Appellant also challenged Michaud’s declaration for lack of
foundation.
In reply, respondent argued that the policy covered appellant’s claims
against Powell, as under California law, exposure to asbestos outside the policy
period does not preclude coverage. It further argued that all contractual conditions
for subrogation had been satisfied, as it had paid Powell’s defense costs and
nothing more was required for subrogation. As to exclusivity, respondent
contended that whether Powell had other insurance policies was irrelevant, as
respondent was seeking to recover only those costs it had paid. With respect to
appellant’s evidentiary objections to Michaud’s declaration, respondent argued that
Michaud had personal knowledge of the relevant facts based on her handling of
claims under the policy since 2005. Respondent also argued that Michaud’s
testimony should be credited, as appellant had filed no affidavit or declaration in
opposition.
On October 2, 2014, the trial court overruled appellant’s evidentiary
objections, and granted respondent’s motion for summary judgment. The court
determined that Michaud’s statement that she was responsible for handling claims
under the policy was sufficient to establish her personal knowledge of the asserted
facts. It further determined that respondent was equitably and contractually
entitled to subrogation. A judgment in favor of respondent and against appellant
awarding costs was entered November 10, 2014.
On November 25, 2014, appellant noticed an intent to move for a new trial
and set aside the judgment. In his memorandum in support of the motion for a new
trial, appellant argued that a recently filed action by Powell in federal court in Ohio
raised triable issues of material fact regarding respondent’s subrogation rights.
Specifically, in that action, Powell alleged that it had purchased commercial
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general liability insurance from General Accident from 1955 to 1977, that General
Accident merged with various other insurers and was renamed OneBeacon
Insurance Company, that respondent had contractually assumed liability for all
obligations to Powell under the General Accident policies, and that respondent had
transferred those policies to another entity -- a “run-off” insurer -- in October 2012.
The Powell complaint further alleged that respondent had limited case
investigations, replaced counsel and unilaterally authorized large settlements in an
attempt to “erode [Powell’s] coverage and force Powell to pay out of its treasury
defense costs and settlements.” Appellant also sought leave to depose Michaud, as
the Powell complaint alleged that Michaud and Resolute Management, Inc. acted
in concert to deprive Powell of its rights under the General Accident policies.
Respondent opposed appellant’s motion for a new trial, arguing that the
Powell action was irrelevant, as that action did not involve appellant’s claims.
Respondent further argued that the allegations in the unverified Powell complaint
constituted inadmissible hearsay. As to taking Michaud’s deposition, respondent
argued that appellant had forfeited any right to do so by failing to exercise it during
the four months between the filing of respondent’s motion for summary judgment
and the filing of appellant’s opposition.
On January 23, 2015, the trial court denied appellant’s motion for a new
trial. It found that appellant had failed to demonstrate that the Powell federal
action in Ohio was “newly discovered” evidence. More important, the allegations
in the complaint constituted inadmissible hearsay. As to reopening discovery to
take Michaud’s deposition, the court denied the request based on appellant’s lack
of reasonable diligence.
Appellant filed a timely appeal from the judgment.
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DISCUSSION
A. Standard of Review.
Appellant contends the trial court erred in granting respondent’s motion for
summary judgment. Generally, “the party moving for summary judgment bears an
initial burden of production to make a prima facie showing of the nonexistence of
any triable issue of material fact; if he carries his burden of production, he causes a
shift, and the opposing party is then subjected to a burden of production of his own
to make a prima facie showing of the existence of a triable issue of material fact.”
(Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850 (Aguilar).) “‘Review
of a summary judgment motion by an appellate court involves application of the
same three-step process required of the trial court. [Citation.]’” (Bostrom v.
County of San Bernardino (1995) 35 Cal.App.4th 1654, 1662 (Bostrom).) Here,
the three steps are (1) identifying the issues framed by the complaint, (2)
determining whether the moving party has made an adequate showing of facts that
would justify a judgment in its favor, and (3) determining whether the opposing
party has raised a triable issue of fact. (Ibid.)
“Although we independently review the grant of summary judgment
[citation], our inquiry is subject to two constraints. First, we assess the propriety of
summary judgment in light of the contentions raised in [appellant’s] opening brief.
[Citation.] Second, to determine whether there is a triable issue, we review the
evidence submitted in connection with summary judgment, with the exception of
evidence to which objections have been appropriately sustained. [Citations.]”
(Food Safety Net Services v. Eco Safe Systems USA, Inc. (2012) 209 Cal.App.4th
1118, 1124.)
Appellant also contends the trial court erred in denying his motion for a new
trial. “[I]n the case of an order denying a new trial following summary judgment,
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the determinations underlying the denial dictate our standard of review. [Citation.]
To the extent the denial relies on the resolution of a question of law, including the
nonexistence of triable issues of fact, we examine the matter de novo. [Citations.]
. . . We examine other determinations underlying the denial ‘under the test
appropriate to such determination.’” (Wall Street Network, Ltd. v. New York Times
Co. (2008) 164 Cal.App.4th 1171, 1176, quoting Aguilar, supra, 25 Cal.4th at
p. 859.)
B. Respondent’s Subrogation Claim.
In assessing the propriety of summary judgment, we look first to
respondent’s allegations in the complaint-in-intervention. (Bostrom, supra,
35 Cal.App.4th at p. 1662.) The complaint alleged that respondent, the successor-
in-interest to General Accident, paid Powell’s defense costs in the instant action
pursuant to an insurance policy. It alleged that Powell obtained a judgment
awarding costs, and that respondent was a subrogee of Powell under equitable
subrogation principles and the subrogation provision in the policy. In granting
summary judgment, the trial court determined that respondent was entitled to
subrogation under both equitable principles and the contractual subrogation
provision. As explained below, we agree with these determinations.
“In the insurance context, subrogation takes the form of an insurer’s right to
be put into the position of the insured for a loss that the insurer has both insured
and paid. [Citations.]” (State Farm General Ins. Co. v. Wells Fargo Bank, N.A.
(2006) 143 Cal.App.4th 1098, 1106.) “In other words, subrogation does no more
than assign to the insurer the claims of its insured against the legally responsible
party.” (Garbell v. Conejo Hardwoods, Inc. (2011) 193 Cal.App.4th 1563, 1571.)
“Subrogation has its source in equity and arises by operation of law (legal or
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equitable subrogation). [Citation.] It can also arise out of the contractual language
of the insurance policy (conventional subrogation). [Citation.]” (Progressive West
Ins. Co. v. Superior Court (2005) 135 Cal.App.4th 263, 272.)
1. Equitable Subrogation
Here, respondent asserted a cause of action for equitable subrogation.
Generally, the elements of a claim for equitable subrogation are: “(1) the subrogee
made payment to protect the subrogee’s own interest; (2) the subrogee must not
have acted as a volunteer; (3) the debt paid must be one for which the subrogee
was not primarily liable; (4) the entire debt must be paid; and (5) [the] subrogation
must not cause injustice to the rights of others.” (Chicago Title Ins. Co. v. AMZ
Ins. Services, Inc. (2010) 188 Cal.App.4th 401, 432.) In moving for summary
judgment, respondent presented evidence that it had paid Powell’s defense costs
pursuant to an insurance policy its predecessor had issued to Powell. The costs
were incurred to defend against appellant’s claims, and respondent paid all trial
and appellate costs, totaling over $655,000.
Appellant contends respondent failed to show it paid the defense costs to
protect its own interest, rather than acting as a volunteer. Appellant contends that
General Accident, not respondent, insured Powell against his personal injury
(asbestos) claims. In addition, appellant contends that the General Accident policy
covered only those claims occurring between July 26, 1976 to July 26, 1977,
whereas appellant was exposed to Powell valves between 1946 to 1968, outside the
policy period. We conclude appellant has not raised a triable issue as to coverage
under the General Accident policy.
First, no triable issue exists as to respondent’s obligation under the General
Accident policy. As detailed above, respondent’s attorney submitted a declaration
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stating (1) that respondent is the successor-in-interest to General Accident, (2) that
pursuant to one or more General Accident policies, respondent agreed to defend
Powell in the instant action, and (3) that respondent incurred and paid
approximately $655,885 in defense costs on behalf of Powell in connection with
the instant action. Nothing in the record indicates the declaration was challenged
or contradicted. Moreover, under Evidence Code section 631, “[m]oney delivered
by one to another is presumed to have been due to the latter.” Here, it is
uncontradicted that respondent paid Powell’s defense costs under the 1976-1977
General Accident policy. Thus, under the Evidence Code, it is presumed that
respondent was obligated to defend Powell pursuant to that policy. Appellant
presented no evidence to challenge the presumption. Accordingly, there was no
4
triable issue as to respondent’s obligation under the General Accident policy.
Similarly, there was no triable issue as to whether the General Accident
policy covered appellant’s claims against Powell. In Montrose Chemical Corp. v.
Admiral Ins. Co. (1995) 10 Cal.4th 645, 689, the California Supreme Court held
that “the continuous injury trigger of coverage should be applied to the underlying
third party claims of continuous or progressively deteriorating damage or injury
alleged to have occurred during [the insured’s] policy periods.” Thus, “bodily
injury and property damage which is continuous or progressively deteriorating
throughout several policy periods is potentially covered by all policies in effect
during those periods.” (Ibid.) In Armstrong World Industries, Inc. v. Aetna
Casualty & Surety Co. (1996) 45 Cal.App.4th 1, the appellate court applied that
4
We note that in its motion for a new trial, appellant sought to introduce
Powell’s federal complaint against respondent. In that complaint, Powell alleged
that General Accident was merged with various other insurers and renamed
OneBeacon Insurance Company, and that respondent contractually assumed
liability for all obligations to Powell under any General Accident policy.
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reasoning to personal injury (asbestos) claims. The court held that coverage is
triggered if the claimant is exposed to the insured manufacturer’s product before or
during the policy period. (Id. at pp. 61-62.) Stated differently, “all of a
policyholder’s policies are triggered from first exposure to the policyholder’s
products until the date of claim or death, whichever occurs first.” (Id. at p. 62.)
Here, appellant’s 2006 complaint alleged that he was first exposed to Powell
valves in 1948. Thus, the 1976-1977 General Accident policy was triggered
because it fell within the period between 1948 and 2006. Because coverage was
triggered, respondent paid Powell’s defense costs to protect its own interest, not as
a volunteer. (Cf. United Pacific Ins. Co. v. Hanover Ins. Co. (1990) 217
Cal.App.3d 925, 939 [because insurance company failed to show its policy covered
loss, it had no right to equitable subrogation].)
Appellant also contends that respondent was not entitled to equitable
subrogation because it failed to make an adequate showing that it had exclusive
subrogation rights. Although exclusivity is not an element of a claim for equitable
subrogation, the existence of other insurers could implicate the fifth element of the
claim -- whether subrogation would cause injustice to the rights of others.
Respondent, however, produced evidence that it paid the entirety of Powell’s
defense costs. We also note that respondent has asserted, without contradiction,
that in the more than three years since the entry of judgment, no other insurer has
sought contribution for Powell’s defense costs. Thus, appellant has produced no
triable issue of fact that granting respondent’s subrogation rights would prejudice
another insurer’s subrogation rights.
Finally, appellant contends that Michaud’s declaration did not provide
admissible evidence to support a claim for equitable subrogation. Specifically,
appellant contends that Michaud failed to establish a foundation for her personal
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knowledge, as she did not describe her job duties, access to information or other
indicia of personal knowledge. We disagree. In her declaration, Michaud stated
that she had been responsible for handling claims under the insurance policy No.
GLA-42-717-41 since late 2005. That statement is sufficient to establish her
personal knowledge about, among other things, the terms of the policy, the claims
made on the policy, the insurer who paid the claims, and the amount paid. (See
Roy Brothers Drilling Co. v. Jones (1981) 123 Cal.App.3d 175, 181-182
[declarant’s statement that he “‘personally handled’” negotiations sufficient to
establish declarant’s personal knowledge of the parties’ agreement, including the
agreed scope of work and the related written documents].) Thus, Michaud would
have personal knowledge that Powell made a claim on the policy, that respondent
accepted the claim, and that respondent paid over $655,000 under the policy.
Accordingly, her declaration is sufficient to establish that respondent was entitled
to be subrogated for a claim it insured and paid.
2. Contractual Subrogation
Although not expressly asserted, respondent also raised a claim for
contractual subrogation in the complaint. As stated above, the subrogation
language in the policy provides: “In the event of any payment under this policy,
the company shall be subrogated to all the insured’s rights to recover therefor
against any person or organization and the insured shall execute and deliver
instruments and papers and do whatever else is necessary to secure such rights.” In
moving for summary judgment, respondent produced evidence that it made
payments under the policy, including paying the costs awarded to Powell in the
June 14, 2012 judgment. Respondent thus made an adequate showing that it was
entitled to contractual subrogation. We further conclude that appellant did not
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raise a triable issue of fact. The term “payment” plainly applies to respondent’s
payment of defense costs, and once Powell obtained the judgment awarding costs,
no other action was required on its part to secure respondent’s subrogation rights.
Accordingly, summary judgment was properly granted.
C. Appellant’s Motion for a New Trial.
Appellant contends he is entitled to a new trial based on the fact that Powell
sued respondent approximately 12 days after the hearing on respondent’s motion
for summary judgment in the instant action. Appellant contends that Powell’s
allegation in the Ohio federal action that respondent sold Powell’s policies to
another insurer raised triable issues of fact as to whether respondent had or retained
any subrogation rights. Those allegations, however, constituted inadmissible
hearsay. (See Day v. Sharp (1975) 50 Cal.App.3d 904, 914 [although court may
take notice of judicial document, it cannot take judicial notice of hearsay
allegations in court documents].) A party cannot rely on hearsay to oppose
summary judgment. (See Donnachie v. East Bay Regional Park Dist. (1963)
217 Cal.App.2d 172, 175 [“affidavit or declaration which is based upon hearsay or
conclusions and which contains no competent averments made by one having
personal knowledge of the facts is of no value in determining whether there is a
triable issue of fact”].) Moreover, the Powell complaint raised no triable issue, as
there is no allegation that Powell or another party paid any of the defense costs in
this action. Nor has appellant produced any evidence that respondent assigned or
transferred its subrogation rights to another insurer. Accordingly, the trial court
did not err in denying appellant’s motion for a new trial.
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DISPOSITION
The judgment is affirmed. Respondent is awarded its costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.
MANELLA, J.
We concur:
EPSTEIN, P. J.
WILLHITE, J.
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