CSAA Insurance Exchange v. Hodroj ( 2021 )

Filed 11/3/21; Certified for Publication 12/1/21 (order attached)
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SIXTH APPELLATE DISTRICT
CSAA INSURANCE EXCHANGE, H046475
(Santa Cruz County
Plaintiff and Respondent, Super. Ct. No. 17-CV-00467)
v.
RAED HODROJ,
Defendant and Appellant.
CSAA Insurance Exchange sued Raed Hodroj for breaching an agreement to settle
his personal injury claim. CSAA moved for summary judgment, arguing that the
undisputed facts establish both formation of a contract and Hodroj’s breach. The trial
court granted the motion. Hodroj contends summary judgment was improper because
there is a triable issue regarding contract formation. For the reasons explained, we reject
that contention and will affirm the judgment.
I. BACKGROUND
Hodroj was injured in a car accident. He was a passenger in a Jeep Cherokee
involved in a single car collision. The driver was insured by CSAA. Hodroj retained an
attorney to represent him in obtaining compensation for his injuries.
Hodroj’s attorney wrote to CSAA offering that Hodroj would settle his claim for
bodily injuries in exchange for payment in the amount of the driver’s insurance policy
limits, as long as certain conditions were fulfilled. The conditions were that CSAA
provide a copy of the face page of the relevant insurance policy and a sworn declaration
confirming the policy limits; and deliver a check in the amount of the policy limits within
21 days of acceptance of the offer. The offer noted CSAA could condition its acceptance
on Hodroj signing a written release of all bodily injury claims against CSAA’s insured.
The offer was also conditioned on written acceptance within 21 days.
Fifteen days later, CSAA sent written acceptance of the offer. It stated, “We
accept your demand for settlement of this claim. We are tendering our insured’s policy
limits of $100,000[.]” Enclosed were a sworn declaration attesting to the policy limits,
and a written release of all claims to be signed by Hodroj. A $100,000 check was sent
separately, with the proviso that it should not be presented until the release was signed.
The next day, Hodroj reneged on the settlement. According to a letter from his
attorney to CSAA, the reason was “the release you required our client to sign introduces
significant and material new, additional and different terms and conditions” beyond the
offer of settlement. Among them was that the release required Hodroj to release all his
claims, including for property damage, whereas the settlement offer contemplated only
claims for bodily injury. Hodroj later filed a lawsuit against the driver for the injuries he
sustained in the car accident and for property damage.
In response to Hodroj’s suit against its insured, CSAA filed one of its own—the
lawsuit underlying this appeal. CSAA sued Hodroj for breach of contract, alleging his
settlement offer and its written acceptance in response created a binding agreement to
settle the injury claims, which Hodroj breached by suing the driver. Hodroj cross-
complained for declaratory relief confirming no binding contract between him and
CSAA.
Both parties moved for summary judgment on their respective causes of action.
The trial court granted CSAA’s motion and denied Hodroj’s, and entered judgment in
favor of CSAA. Hodroj filed a notice of appeal referencing a “ ‘[j]udgment after an order
granting a summary judgment motion,’ ” which CSAA asserts is insufficient to preserve
Hodroj’s right to appeal the adverse ruling on his cross-complaint. But we must broadly
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construe the notice of appeal. (Russell v. Foglio (2008) 160 Cal.App.4th 653, 661 [notice
of appeal must be liberally construed to protect the right of appeal whenever it is
“reasonably clear” what appellant is trying to appeal].) We find Hodroj’s notice adequate
to encompass both summary judgment orders.
II. DISCUSSION
Where a plaintiff produces evidence to establish each element of a cause of action,
summary judgment is appropriate unless a triable issue is shown regarding any of those
elements. (Code of Civ. Proc. § 437c, subd. (p)(1).) A triable issue means a reasonable
trier of fact could find for the nonmoving party on the element. (Powell v. Kleinman
(2007) 151 Cal.App.4th 112, 122.) Appellate review of a summary judgment ruling is de
novo. (Canales v. Wells Fargo Bank, N.A. (2018) 23 Cal.App.5th 1262, 1268). We
review the evidence the parties submitted with their moving papers in the light most
favorable to the nonmoving party. We then independently determine if the evidence
establishes either that the plaintiff is entitled to judgment as a matter of law, or that there
is a dispute on a material point that requires a trial to resolve.
CSAA sued Hodroj for breach of contract. The elements of a breach of contract
claim are that a contract was formed; that the plaintiff did everything required by the
contract; that the defendant did not do something required by the contract; and that the
plaintiff was harmed as a result. (Coles v. Glaser (2016) 2 Cal.App.5th 384, 391.)
Hodroj contends there is a triable issue regarding the first element, formation.
The parties do not dispute the facts. What they disagree about is the legal
significance of the facts, making this matter an appropriate candidate for summary
judgment, as demonstrated by the parties’ cross-motions. Hodroj contends CSAA’s
purported acceptance was actually a counteroffer he was free to reject because it included
a request that he sign a written release containing different terms than were in his
settlement offer. CSAA argues that a binding contract was formed when it accepted
Hodroj’s offer to settle his claim for the insurance policy limits and fulfilled all
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conditions stated in the offer, and the written release was simply an effort to reduce the
terms of the agreement to a formal writing.
A well-established principle of contract law dictates the result here: when parties
agree on the material terms of a contract with the intention to later reduce it to a formal
writing, failure to complete the formal writing does not negate the existence of the initial
contract. (Harris v. Rudin, Richman & Appel (1999) 74 Cal.App.4th 299, 307; Banner
Entertainment, Inc. v. Superior Court (1998) 62 Cal.App.4th 348, 358.) If the parties do
not agree on the content of the formal writing (for example because one party wants to
include something not agreed on in the first place, as Hodroj says happened here), the
proposed writing is not a counteroffer; rather, the initial agreement remains binding and a
rejected writing is a nullity. (American Aeronautics Corp. v. Grand Central Aircraft Co.
(1957) 155 Cal.App.2d 69, 82; Khajavi v. Feather River Anesthesia Medical Group
(2000) 84 Cal.App.4th 32, 61.)
Given that rule, the propriety of the summary judgment here comes down to one
question: Would a reasonable person looking at the parties’ communications think they
intended to be bound by a settlement agreement that would later be reduced to a more
formal writing? (See Beard v. Goodrich (2003) 110 Cal.App.4th 1031, 1038 [contract
formation is governed by objective standards; the test is what the outward manifestations
of consent would lead a reasonable person to believe].) We conclude the
communications between Hodroj’s lawyer and CSAA reflect a settlement which could be
later memorialized in a formal writing. No reasonable trier of fact would find otherwise.
Hodroj’s offer communicated that he agreed to settle his personal injury claim for
the insurance policy limits, provided his offer was accepted within 21 days, and provided
that CSAA show proof of the policy limits and that there was no other potential insurance
coverage. The offer expressly anticipated another instrument: “You may further
condition your acceptance of this offer by requiring that our client execute a Release of
all Bodily Injury Claims against your insureds and their heirs only, which Release is not
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inconsistent with the terms and conditions of this offer.” CSAA’s timely written
response communicated that the offer was accepted. CSAA provided the requested
documentation and conditionally tendered payment in the amount of the policy limits.
Like the offer, the acceptance also contemplated a formal release and proposed one for
Hodroj to sign.
We are confident that an objective observer would conclude from those
communications that the parties intended to settle Hodroj’s bodily injury claim for the
amount of the insurance policy limits ($100,000) and to later memorialize those terms in
a formal document. That the proposed document contained terms materially different
from what had been agreed to does not change the binding effect of the initial agreement.
Hodroj was under no obligation to sign a release that was inconsistent what he agreed to.
But a proposed writing that does not accurately reflect the terms of an agreement does not
unwind the entire deal. The contract formed by the parties’ offer, acceptance, and
consideration is still enforceable. Hodroj breached the contract here by filing suit on the
bodily injury claims he had agreed to settle.
The rule that a proposed writing containing terms different than those agreed on
does not render the initial agreement unenforceable is desirable from a policy
perspective. “ ‘ “Any other rule would always permit a party who has entered into a
contract like this, through letters … to violate it, whenever the understanding was that it
should be reduced to another written form, by simply suggesting other and additional
terms and conditions. If this were the rule the contract would never be completed in
cases where, by changes in the market, or other events occurring subsequent to the
written negotiations, it became the interest of either party to adopt that course in order to
escape or evade obligations incurred in the ordinary course of commercial business.” ’ ”
(Stephan v. Maloof (1969) 274 Cal.App.2d 843, 848–849.)
Hodroj also contends that the trial court erred by overruling his objections to
evidence regarding insurance industry custom and practice. That evidence is unnecessary
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to our decision so we have not considered it. We therefore need not decide whether it
was error to admit an expert’s declaration over Hodroj’s objections.
Given our conclusion that a contract was formed to settle Hodroj’s bodily injury
claim, the trial court properly granted CSAA’s motion for summary judgment on its
breach of contract cause of action and properly denied Hodroj’s motion for summary
judgment on his declaratory relief cause of action.
III. DISPOSITION
The judgment is affirmed. Costs are awarded to respondent by operation of rule
8.278, subdivision (a)(1) of the California Rules of Court.
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____________________________________
Grover, J.
WE CONCUR:
____________________________
Greenwood, P. J.
____________________________
Danner, J.
H046475 - CSAA Insurance Exchange v. Hodroj
Filed 12/1/21
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SIXTH APPELLATE DISTRICT
CSAA INSURANCE EXCHANGE, H046475
(Santa Cruz County
Plaintiff and Respondent, Super. Ct. No. 17-CV-00467)
v. ORDER GRANTING REQUEST FOR
PUBLICATION
RAED HODROJ,
Defendant and Appellant.
BY THE COURT:
Pursuant to California Rules of Court, rule 8.1105(b), the request for publication is
hereby granted. It is ordered that the opinion in this matter filed on November 3, 2021,
shall be certified for publication.
Dated: _____________________________________
Greenwood, P. J.
_____________________________________
Grover, J.
_____________________________________
Danner, J.
Trial Court: Santa Clara County Superior Court
Superior Court No. 17CV00467
Trial Judge: Hon. Paul P. Burdick
Plaintiff and Respondent CSAA Richard Wardell Loveland
INSURANCE EXCHANGE Alyssa Dang
Coddington Hicks & Danforth APC
Defendant and Appellant RAED HODROJ Stanley Kenneth Jacobs
Jacobs & Jacobs LLP
H046475 - CSAA Insurance Exchange v. Hodroj