Grundfor v. Demarest CA2/6 ( 2024 )

Filed 9/13/24 Grundfor v. Demarest CA2/6
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion
has not been certified for publication or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SIX
DREW B. GRUNDFOR, 2d Civil No. B329142
(Super. Ct. No. 19CV-0105)
Plaintiff and Appellant, (San Luis Obispo County)
v.
JOHN DEMAREST et al.,
Defendants and
Respondents.
Drew B. Grundfor rear-ended a car driven by N.M. His
blood-alcohol content was thrice the legal limit at the time.
Allstate, Grundfor’s insurer, retained attorney John Demarest
and the law firm of Hanger Steinberg Shapiro & Ash (collectively,
Respondents) to settle the civil lawsuit N.M. and her passengers
brought against Grundfor after the collision. The settlement paid
out the entirety of Grundfor’s policy liability limit.
After Grundfor was ordered to pay N.M. restitution in a
subsequent criminal proceeding, he sued Respondents for
negligence. The trial court granted Respondents’ motion for
summary judgment. Grundfor contends the judgment should be
reversed because the court erred in concluding that Respondents
had no duty to protect him from exposure to criminal restitution
when settling the civil lawsuit. We affirm.
FACTUAL AND PROCEDURAL HISTORY
Grundfor was listed as an insured driver on an automobile
insurance policy with Allstate. The policy covered up to $500,000
in damages for bodily injury per occurrence. The policy permitted
Allstate to “settle any claim or suit if [it] believe[d] it [was]
proper.” It did not require Allstate to pay for the criminal
defense of an insured, and stated that the company would not pay
for “damages [that] an insured person [was] legally obligated to
pay because of [¶] . . . [¶] bodily injury or property damage [that]
may reasonably be expected to result from the . . . criminal acts
of” that person.
In December 2014, Grundfor rear-ended a car driven by
N.M. There were three other passengers in the car, including
N.M.’s minor daughter, K.H. Grundfor’s blood-alcohol content
was more than three times the legal limit at the time of the
collision.1
Seven months later, N.M. filed a civil lawsuit against
Grundfor on behalf of herself and the other three passengers in
her car at the time of the collision. Allstate hired Respondents to
defend Grundfor in the suit.
1 Grundfor pleaded no contest to driving under the
influence and injuring another person (Veh. Code, § 23153, subd.
(b)), and admitted allegations that he had a blood-alcohol content
in excess of 0.20 percent (id., § 23556, subd. (b)(4)), injured more
than one person (id., § 23558), and suffered a prior conviction for
driving under the influence (id., § 23560).
2
In March 2016, the parties agreed to settle N.M.’s lawsuit.
The settlement required Allstate to pay out the entire $500,000 of
Grundfor’s policy liability limit in exchange for the dismissal of
N.M.’s suit. Grundfor was not a signatory to the settlement.
In July 2017, N.M. requested $178,000 in restitution from
Grundfor in the parallel criminal proceeding against him for
attorney fees she incurred in her civil lawsuit. The trial court
ordered Grundfor to pay the requested amount in February 2018.
We affirmed the restitution order on appeal. (People v. Grundfor
(2019) 39 Cal.App.5th 22, 31 (Grundfor).)
In February 2019, Grundfor sued Respondents for
negligence. He alleged Respondents should have either: (1)
extinguished his liability for criminal restitution by including
language in the settlement that made clear it included
reimbursement for N.M.’s attorney fees and costs in her civil
lawsuit, or (2) conditioned the settlement on the trial court’s
confirmation that it resolved any claim for criminal restitution.
Respondents moved for summary judgment, arguing that
Grundfor’s lawsuit was filed outside the applicable statute of
limitations (citing Code Civ. Proc.,2 § 340.6). They also argued
Grundfor could prove neither the duty nor the causation elements
of his negligence claim.
The trial court granted Respondents’ motion, concluding
they had no duty to structure the settlement with N.M. in a
manner that extinguished Grundfor’s potential liability for
criminal restitution. Grundfor’s policy provided no coverage for
criminal liability, and there was “no legal authority to suggest
that an insured has a right to have [their] insurance carrier
2 Further unlabeled statutory references are to the Code of
Civil Procedure.
3
insulate [them] from liability for criminal restitution. . . . [S]uch
an expansion of duty would be inconsistent with the deterrent
and rehabilitative goals of criminal restitution.” Nor did
Respondents “owe [Grundfor] a duty to consult with the criminal
court, or to structure the [c]ivil [s]ettlement so as to extinguish
[his] obligation for criminal restitution.”
DISCUSSION
Grundfor contends the trial court erred when it concluded
that Respondents had no duty to protect him from liability for
criminal restitution and granted their motion for summary
judgment. We disagree.
Standard of review
Summary judgment is appropriate “if all the papers
submitted show that there is no triable issue as to any material
fact and that the moving party is entitled to a judgment as a
matter of law.” (§ 437c, subd. (c).) The defendant bears the
initial burden of showing that the plaintiff cannot establish one
or more elements of the cause of action, or that there is an
affirmative defense to it. (§ 437c, subd. (o); Aguilar v. Atlantic
Richfield Co. (2001) 25 Cal.4th 826, 850.) If the defendant makes
one of the required showings, the burden shifts to the plaintiff to
establish a triable issue of material fact. (Aguilar, at p. 850.)
Our review is de novo. (Knapp v. Doherty (2004) 123
Cal.App.4th 76, 84.) We liberally construe the opposing party’s
evidence and resolve all doubts in their favor. (Lyle v. Warner
Brothers Television Productions (2006) 38 Cal.4th 264, 274.) We
consider all evidence in the moving and opposition papers, except
that to which objections were properly sustained. (Yanowitz v.
L’Oreal USA, Inc. (2005) 36 Cal.4th 1028, 1037.)
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Analysis
“To establish a cause of action for negligence, the plaintiff
must show that the ‘defendant had a duty to use due care, that
[the defendant] breached that duty, and that the breach was the
proximate or legal cause of the resulting injury.’ [Citation.]
Recovery for negligence [therefore] depends as a threshold matter
on the existence of a legal duty of care. [Citation.]” (Brown v.
USA Taekwondo (2021) 11 Cal.5th 204, 213 (Brown).)
“Duty is not universal; not every defendant owes every
plaintiff a duty of care. A duty exists only if ‘ “the plaintiff’s
interests are entitled to legal protection against the defendant’s
conduct.” ’ ” (Brown, supra, 11 Cal.5th at p. 213.) Stated
differently, “the law imposes a general duty of care on a
defendant only when it is the defendant who has ‘ “created a
risk” ’ of harm to the plaintiff.” (Id. at p. 214.) “The law does not
impose the same duty on a defendant who did not contribute to
the risk that the plaintiff would suffer the harm alleged.” (Ibid.)
“The no-duty-to-protect rule is not absolute, however; [the
Supreme Court] has recognized a number of exceptions.
[Citation.] Under some circumstances, a defendant may have an
affirmative duty to protect the plaintiff from harm at the hands
of a third party, even though the risk of harm is not of the
defendant’s own making. [Citations.] For example, . . . a person
may have an affirmative duty to protect the victim of another’s
harm if that person is in what the law calls a ‘special
relationship’ with either the victim or the person who created the
harm. [Citations.]” (Brown, supra, 11 Cal.5th at p. 215.)
“A special relationship between the defendant and the
victim is one that ‘gives the victim a right to expect’ protection
from the defendant . . . . [Citation.] . . . The existence of such a
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special relationship puts the defendant in a unique position to
protect the plaintiff from injury. The law requires the defendant
to use this position accordingly. [Citation.]” (Brown, supra, 11
Cal.5th at p. 216.) But “[w]here the defendant has neither
performed an act that increases the risk of injury to the plaintiff
nor sits in a relation to the parties that creates an affirmative
duty to protect the plaintiff from harm, . . . the defendant owes no
legal duty to the plaintiff.” (Ibid.)
Here, we conclude Respondents owed no legal duty to
Grundfor to extinguish his criminal restitution liability.
Respondents were hired to defend Grundfor in N.M.’s civil
lawsuit, and they settled the lawsuit for Grundfor’s full policy
limits. While Grundfor claims that N.M. was “ready and willing
to negotiate” her criminal restitution claim, there was no
criminal restitution claim pending as of the settlement date. Nor
is there any evidence that N.M. would have agreed to itemize her
attorney fees and costs when structuring the settlement to offset
her future criminal restitution.
Additionally, Grundfor put forth no evidence that
Respondents performed an act that increased his risk of injury.
The injury he claims—exposure to criminal restitution—was
caused by his own act of injuring several motorists while driving
intoxicated. That exposure existed before Respondents settled
N.M.’s civil lawsuit, and it existed after. Nothing Respondents
did changed that in any way.
Grundfor also put forth no evidence that Respondents had
an affirmative duty to protect him beyond defending against
N.M.’s civil lawsuit and paying out the entire $500,000 of his
policy liability limit. “[A] liability insurance policy’s purpose is to
provide the insured with a defense and indemnification for third
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party claims within the scope of the coverage purchased, and not
to insure the entire range of the insured’s well-being.” (Western
Polymer Technology, Inc. v. Reliance Ins. Co. (1995) 32
Cal.App.4th 14, 27, italics added.) Here, Grundfor’s policy with
Allstate was limited to defending him from civil liability.
Respondents fully performed their duties under that policy,
resolving N.M.’s lawsuit within policy limits. (See, e.g., Pinto v.
Farmers Insurance Exchange (2021) 61 Cal.App.5th 676, 688
[when there is risk of recovery beyond policy limits, insured’s
interests may require insurer to settle claim within
policy limits].)
Moreover, as a crime victim, N.M. was entitled to (and did)
seek restitution for attorney fees she incurred to “recover[]
. . . damages [she] suffered as a result of [Grundfor’s] criminal
conduct.” (People v. Fulton (2003) 109 Cal.App.4th 876, 883-884;
see also Pen. Code, § 1202.4, subd. (f)(3)(H) [“[a]ctual and
reasonable attorney’s fees” recoverable as restitution].) And
Grundfor points to nothing in the record to support his claim that
N.M. would have structured her settlement in a way to offset
future criminal restitution. Doing so would run counter to N.M.’s
financial interest and require her to relinquish her constitutional
rights as a crime victim. (See Cal. Const. art. 1, § 28, subd.
(b)(13)(B).)
We also reject Grundfor’s contention that Respondents
could have structured the settlement so that N.M. would
expressly waive her right to restitution but condition the civil
settlement on the approval of the criminal court. A civil
settlement is between the victim and the defendant, but a
“restitution order [is] between [the defendant] and the state.”
(Grundfor, supra, 39 Cal.App.5th at p. 28.) “While the release
7
may [relieve the defendant] from further civil liability, it [does]
not relieve [them] from paying criminal restitution.” (Ibid.)
Thus, a civil settlement “could no more ‘release [a defendant]
from [their] financial debt to the state any more than it could
terminate [their] prison sentence.’ ” (Ibid.)
Grundfor complains that Respondents’ duty was broader
than simply defending him against civil liability—i.e., that they
had an obligation to protect him from financial liability in a
separate criminal lawsuit. But he points to nothing in his
Allstate policy that would have required Respondents to do so.
The language of the policy prevents Respondents from
structuring the settlement in such a way: It excepted Allstate
from paying for “damages [that] an insured person [was] legally
obligated to pay because of . . . bodily injury or property damage
[that] may reasonably be expected to result from the . . .
[insured’s] criminal acts.”
We also do not read the cases on which Grundfor relies—
Janik v. Rudy, Exelrod & Zieff (2004) 119 Cal.App.4th 930(Janik) and Nichols v. Keller (1993) 15 Cal.App.4th 1672—as
imposing Grundfor’s proffered duty to extinguish his liability for
restitution resulting from his criminal conduct. These cases
discuss an attorney’s duty to advise a client of potential
affirmative claims arguably outside the scope of their retention.
(Janik, at p. 940; Nichols, at pp. 1686-1687.) That is different
than imposing on an attorney a duty to protect a client from
claims unquestionably outside the scope of their representation.
That can be limited by a retention agreement. (Janik, at p. 940;
see, e.g., State Farm Fire & Cas. Co. v. Superior Court (1987) 191
Cal.App.3d 74, 77-78 (State Farm) [insurance company had no
duty to defend client against attempted murder and assault
8
charges]; Jaffe v. Cranford Ins. Co. (1985) 168 Cal.App.3d 930,
933-936 [insurance company had no duty to defend doctor against
fraud and theft charges].)
Additionally, as the trial court recognized, imposing on
Respondents the duty to structure Allstate’s civil settlement with
N.M. in a manner that would shield Grundfor from liability for
criminal restitution would undermine restitution’s goals of
rehabilitation and deterring future criminality. (See People v.
Bernal (2002) 101 Cal.App.4th 155, 161-162 [discussing goals of
restitution].) As we stated previously, “ ‘ “[r]estitution ‘is an
effective rehabilitative penalty because it forces the defendant to
confront, in concrete terms, the harm [their] actions have
caused.’ ” ’ ” (Grundfor, supra, 39 Cal.App.5th at pp. 28-29.) It is
this “ ‘ “ ‘direct relation between . . . harm and . . . punishment
[that] gives restitution a more precise deterrent effect than a
traditional fine.’ ” ’ ” (Id. at p. 29.) As such, “[n]o conceivable
justification exists for allowing an individual to pass on such
liability to an insurance carrier.” (State Farm, supra, 191
Cal.App.3d at p. 78.)
We accordingly conclude that Respondents had no duty to
absolve Grundfor’s criminal restitution liability in the civil
settlement with N.M.3 The trial court properly granted their
motion for summary judgment.
3 Because we conclude Respondents owed Grundfor no legal
duty of care, we need not consider his objections to Demarest’s
declaration. (See Janik, supra, 119 Cal.App.4th at p. 936
[existence of duty a legal question].) We also do not consider
Respondents’ additional arguments in support of the judgment.
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DISPOSITION
The judgment is affirmed. Respondents shall recover their
costs on appeal.
NOT TO BE PUBLISHED.
BALTODANO, J.
We concur:
GILBERT, P. J.
CODY, J.
10
Rita Federman, Judge
Superior Court County of San Luis Obispo
______________________________
Tardiff Law Offices and Neil Tardiff for Plaintiff and
Appellant.
Nemecek & Cole and Kenny C. Brooks for Defendants and
Respondents.