City of Whittier v. Everest Nat. Ins. Co. ( 2023 )

Filed 12/6/23
CERTIFIED FOR PARTIAL PUBLICATION†
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION ONE
CITY OF WHITTIER, B321450
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. 20NWCV00143)
v.
EVEREST NATIONAL
INSURANCE COMPANY et al.,
Defendants and Respondents.
APPEAL from a judgment of the Superior Court of
Los Angeles County, Margaret Miller Bernal, Judge. Affirmed in
part, reversed in part, and remanded.
†Pursuant to California Rules of Court, rules 8.1105(b)
and 8.1110, this opinion is certified for publication, with the
exception of part B of the Discussion.
Woolls Peer Dollinger & Scher, Jeffrey A. Dollinger,
H. Douglas Galt and Brian W. Walsh for Plaintiff and Appellant.
Selman Leichenger Edson Hsu Newman Moore, Sheryl W.
Leichenger, Eldon S. Edson and Laura R. Ramos for Defendant
and Respondent, Everest National Insurance Company.
Musick, Peeler & Garrett, Lawrence A. Tabb and Jennifer
M. Kokes for Defendant and Respondent Starr Indemnity &
Liability Company.
____________________________
This appeal presents a question of first impression:
whether Insurance Code section 533 (section 533), under which
“[a]n insurer is not liable for a loss caused by the wilful act of the
insured,” bars indemnification for claims under Labor Code
section 1102.5. Labor Code section 1102.5 prohibits, inter alia,
retaliation against employees for reporting activity they have
reasonable cause to believe is unlawful, or for refusing to
participate in activity that actually is unlawful.
This is an important question whose answer will influence
enforcement of our employment laws. How so? Retaliation
claims are the most common employment claims in California.
For fiscal years 2016 through 2022, retaliation claims of all types
were the majority of charges filed in California with the United
States Equal Employment Opportunity Commission (EEOC).
(See EEOC, FY 2009-2022 EEOC Charge Receipts for CA.)1 In
2019, retaliation was the most common basis for right-to-sue
1 Available at
<https://www.eeoc.gov/statistics/enforcement/charges-by-
state/CA> (as of Nov. 16, 2023), archived at
<https://perma.cc/Y5ZB-4P4Z>.
2
requests filed with the California Department of Fair
Employment and Housing (DFEH). (DFEH, 2019 Annual Report,
at p. 9.)2
The availability of insurance is a key component of
enforcing our employment laws and of an ordered workplace.
The availability of insurance can ameliorate risk of collection
against potentially judgment-proof employers while also
providing expeditious compensation via settlement. Insurance
also ameliorates financial risk to employers choosing to defend
employment claims they believe are weak.
We decide this question upon the trial court’s grant of
summary judgment against the insured City of Whittier (the
City), in favor of its insurers, respondents Everest National
Insurance Company (Everest) and Starr Indemnity & Liability
Company (Starr). The City sought indemnification for settlement
of a lawsuit alleging retaliation under Labor Code section 1102.5.
In that lawsuit, police officers alleged retaliatory discipline when
they objected to, and refused to comply with, a purported illegal
citation and arrest quota system and the use of shift averaging to
compare officers’ arrest counts in evaluating their job
performance. The trial court concluded the police officers’
complaint necessarily involved willful conduct, thus barring
indemnification under section 533.
We disagree. As we explain in our Discussion, post, the
parties rely on jurisprudence, first developed in underlying
sexual molestation and assault cases, that equates “wilful” with
inherently harmful or intentional. Because we conclude not all
2 Available at <https://calcivilrights.ca.gov/wp-
content/uploads/sites/32/2020/10/DFEH_2019AnnualReport.pdf>
(as of Nov. 16, 2023), archived at <https://perma.cc/8867-L84N>.
3
Labor Code section 1102.5 claims involve necessarily willful
conduct, but rather some involve conduct more akin to
negligence, the trial court erred when it found to the contrary in
granting summary judgment in favor of Everest and Starr.
In the unpublished portion of this opinion, we agree with
Starr’s alternative argument that its specific policy language
does not obligate it to indemnify the City for the settlement.
Accordingly, we reverse the judgment as to Everest, and
affirm the judgment as to Starr under Starr’s alternative
argument.
BACKGROUND
1. The insurance policies
a. The Everest policies
Everest issued four public entity excess liability insurance
policies to the California Insurance Pool Authority (CIPA),3 and
included the City as a named insured and member agency. The
policies provided coverage for employment practice liability of
$10 million per “wrongful act” in excess of a retained limit of
$1 million.
The policies stated, “We will pay on your behalf, the
‘ultimate net loss,’ in excess of the ‘retained limit,’ that the
insured becomes legally obligated to compensate others for
loss arising out of your ‘employment practice liability wrongful
3 CIPA is a “joint powers authority,” i.e., a group of
member municipalities that agree to jointly exercise municipal
powers such as, for example, contracting for group insurance.
(See Gov. Code, § 6500 et seq.; The City of Oakland v. Williams
(1940) 15 Cal.2d 542, 547–548.)
4
act’. . . .” The policies defined “ ‘[u]ltimate net loss,’ ” as “the total
sum . . . actually paid or payable due to a ‘claim’ or ‘suit’ for
which you are liable either by a settlement to which we agreed or
a final judgment, and shall include defense costs.”
Under the policies, “ ‘[e]mployment practice liability
wrongful act’ ” included “ ‘retaliation.’ ”
b. The Starr policies
Starr issued two public entity excess liability policies to
CIPA and included the City as a named insured. Like the
Everest policies, the Starr policies provided coverage for
employment practice liability of $10 million per “wrongful act” in
excess of a retained limit of $1 million. The policies provided,
“We will pay on your behalf sums in excess of the retained limit
that the insured becomes legally obligated to pay for damages to
compensate others for loss arising out of your employment
practice liability wrongful act . . . .” Again like the Everest
policies, the Starr policies included “retaliation” in the definition
of “[e]mployment practice liability wrongful act.”
2. Underlying lawsuit
On March 3, 2015, six officers in the Whittier Police
Department, including Joseph Rivera (the Rivera plaintiffs), filed
a complaint against the City in the Los Angeles County Superior
Court. (Rivera et al. v. City of Whittier, No. BC574443.) The
complaint alleged the police department instituted “an unlawful
citation and arrest quota in violation of California Vehicle Code
sections 41600 et seq. on its officers, and illegally compared
officers using shift averaging as a means of determining a
benchmark for performance.” The complaint further alleged the
police department “retaliated against those [who] refused to
5
participate in and/or reported the unlawful citation and arrest
quota,” including, inter alia, “negative language and/or
documentation being placed in [plaintiffs’] personnel packages
about their refusal to comply with the unlawful quota,
unwarranted counseling sessions, unwarranted increased
scrutiny, unwarranted transfers, [and] disparaging comments
made about them.” We provide more information about the
allegations in our Discussion, post.
The City notified Everest and Starr about the Rivera
action, advising that the plaintiffs sought damages exceeding
$1 million and there was a potential for coverage under the
insurers’ policies.
Prior to trial, the City’s counsel notified the insurers of an
upcoming mediation session and demanded that they attend.
Everest’s and Starr’s coverage counsel attended the mediation, at
which the City negotiated a settlement with the Rivera plaintiffs
and agreed to pay $3 million to resolve the action. Neither
Everest nor Starr consented to the settlement.
The City paid the $3 million, and the Rivera action never
went to trial or resulted in a judgment. On December 24, 2019,
counsel for CIPA and the City tendered the Rivera settlement to
Everest and Starr for indemnity under their respective policies.
The insurers denied the request for indemnity.
3. The instant lawsuit
On February 26, 2020, the City filed this action against
Everest and Starr, asserting causes of action for declaratory
relief, breach of contract, and bad faith. The City alleged the
insurers owed a duty to indemnify the City in connection with the
Rivera settlement. The parties stipulated to referring to a referee
6
all issues pertaining to the City’s causes of action for declaratory
relief and breach of contract.
The insurers each moved for summary judgment, and the
City moved for summary adjudication. As relevant to this
appeal, the insurers contended retaliation claims under Labor
Code section 1102.5 can be established only through proof of an
employer’s willful acts, and section 533 therefore barred
indemnity. Starr argued in the alternative that its policy
required indemnification only of “damages,” which did not
include amounts paid in prejudgment settlement. In its motion,
the City contended section 533 did not bar indemnity and
therefore the insurers were in breach of the insurance contracts.
In a statement of decision, the referee agreed with the
insurers, finding no triable issue existed as to whether the
insurers owed the City indemnification of the Rivera settlement.
The referee reasoned that section 533 prohibits coverage for loss
caused by an insured’s willful act, and whistleblower retaliation
under Labor Code section 1102.5 “ ‘can only be established by
evidence of an employer’s motive and intent to violate or
frustrate’ California’s Whistleblower laws.” The referee granted
the insurers’ motions for summary disposition and denied the
City’s motion.
The trial court adopted the referee’s statement of decision
as its own. At the City’s request, the court dismissed without
prejudice the cause of action for breach of the covenant of good
faith and fair dealing, which was neither addressed nor resolved
by the various motions for summary disposition. The court then
entered judgment for the insurers.
The City timely appealed.
7
STANDARD OF REVIEW
A motion for summary judgment “shall be granted 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.” (Code Civ. Proc., § 437c, subd. (c); see
Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) We
review the trial court’s summary judgment rulings de novo.
(Barber v. Southern California Edison Co. (2022) 80 Cal.App.5th
227, 241.)
DISCUSSION
A. Section 533 Does Not Bar Coverage of the Rivera
Settlement
The trial court concluded section 533 bars the insurers from
indemnifying the City for the settlement of the Rivera plaintiffs’
claims under Labor Code section 1102.5. We first set forth the
relevant statutes and case law applying section 533.
1. Relevant statutes
a. Labor Code section 1102.5
Labor Code section 1102.5 “provides whistleblower
protections to employees who disclose wrongdoing to authorities”
(Lawson v. PPG Architectural Finishes, Inc. (2022) 12 Cal.5th
703, 709 (Lawson)), as well as to employees who refuse to
participate in illegal activities (see Nejadian v. County of
Los Angeles (2019) 40 Cal.App.5th 703, 718 (Nejadian)).
Labor Code section 1102.5, subdivision (b) states, in
relevant part: “An employer . . . shall not retaliate against an
employee for disclosing information . . . to a government or law
8
enforcement agency, to a person with authority over the
employee or another employee who has the authority to
investigate, discover, or correct the violation or noncompliance, or
for providing information to, or testifying before, any public body
conducting an investigation, hearing, or inquiry, if the employee
has reasonable cause to believe that the information discloses a
violation of state or federal statute, or a violation of or
noncompliance with a local, state, or federal rule or
regulation . . . .”
Labor Code section 1102.5, subdivision (c) states, in
relevant part: “An employer . . . shall not retaliate against an
employee for refusing to participate in an activity that would
result in a violation of state or federal statute, or a violation of or
noncompliance with a local, state, or federal rule or regulation.”
To prevail on a claim under Labor Code section 1102.5, a
plaintiff must prove “that he engaged in protected activity,” such
as a disclosure under subdivision (b) or a refusal to participate
under subdivision (c), “that he was subjected to adverse
employment action by his employer, and that there was a causal
link between the [protected activity] and the adverse action.”
(See Manavian v. Department of Justice (2018) 28 Cal.App.5th
1127, 1141 (Manavian).) For purposes of the statute, an adverse
employment action is one that “ ‘materially affects the terms,
conditions, or privileges of employment.’ [Citations.]” (Francis v.
City of Los Angeles (2022) 81 Cal.App.5th 532, 541.)
b. Section 533
Section 533 of the Insurance Code provides, “An insurer
is not liable for a loss caused by the wilful act of the insured; but
he is not exonerated by the negligence of the insured, or of the
insured’s agents or others.” This section is “ ‘an implied
9
exclusionary clause which by statute is to be read into all
insurance policies.’ [Citations.]” (J. C. Penney Casualty Ins. Co.
v. M. K. (1991) 52 Cal.3d 1009, 1019 (J. C. Penney).) “As a
statutory exclusion, section 533 is not subject to the rule of strict
construction against an insurer.” (Shell Oil Co. v. Winterthur
Swiss Ins. Co. (1993) 12 Cal.App.4th 715, 739 (Shell Oil).)
A “wilful act” under section 533 means “an act deliberately
done for the express purpose of causing damage or intentionally
performed with knowledge that damage is highly probable or
substantially certain to result.” (Shell Oil, supra, 12 Cal.App.4th
at p. 742.) Section 533 also “precludes indemnification, whether
or not the insured subjectively intended harm, if the insured
seeks coverage for an intentional, wrongful act that is inherently
and necessarily harmful.” (Shell Oil, at pp. 740–741.) The
statute “does not preclude coverage for acts that are negligent or
reckless.” (J. C. Penney, supra, 52 Cal.3d at p. 1021.)
Section 533 reflects a fundamental public policy of denying
coverage for willful wrongs and discouraging willful torts.
(J. C. Penney, supra, 52 Cal.3d at pp. 1019–1020, fn. 8 & 1021.)
“ ‘The public policy against insurance for losses resulting from
such [wilful wrongful] acts is usually justified by the assumption
that such acts would be encouraged, or at least not dissuaded, if
insurance were available to shift the financial burden of the loss
from the wrongdoer to the insurer. . . .’ [Citation.]” (Downey
Venture v. LMI Ins. Co. (1998) 66 Cal.App.4th 478, 514.)
Accordingly, parties cannot contract for coverage precluded by
section 533. (J. C. Penney, at pp. 1019–1020, fn. 8.)
2. Case law applying section 533
We have found no case in California or elsewhere
addressing whether section 533 bars coverage of claims under
10
Labor Code section 1102.5. The trial court and the insurers
analogize to B & E Convalescent Center v. State Compensation
Ins. Fund (1992) 8 Cal.App.4th 78 (B & E Convalescent Center)
and federal district court cases applying it, all of which address
retaliation claims in contexts other than Labor Code
section 1102.5. B & E Convalescent Center, in turn, relies on
J. C. Penney, supra, 52 Cal.3d 1009 and Fire Ins. Exchange v.
Altieri (1991) 235 Cal.App.3d 1352 (Altieri). We summarize each
case in turn.
a. J. C. Penney
J. C. Penney, a foundational case on the application of
section 533, concerned whether that statute barred coverage of
claims arising from the sexual molestation of a five-year-old girl.4
(J. C. Penney, supra, 52 Cal.3d at p. 1014.) The parties seeking
coverage were the victim and her mother, who had won a
$500,000 judgment against the molester and sought payment
from the molester’s homeowner’s liability insurer. (See ibid.)
The mother and child argued “that even an intentional and
wrongful act is not excluded from coverage unless the insured
acted with a ‘preconceived design to inflict injury.’ ” (Id. at
p. 1019.) They contended “psychiatric testimony shows that
molesters . . . often intend no harm despite the depravity of their
acts, and that the molestation is often a misguided attempt to
display love and affection for the child.” (Ibid.)
Our Supreme Court rejected these arguments, stating, “No
rational person can reasonably believe that sexual fondlings,
penetration, and oral copulation of a five-year-old child are
4 The high court noted the lack of legislative history for
section 533. (J. C. Penney, supra, 52 Cal.3d at p. 1020.)
11
nothing more than acts of tender mercy.” (J. C. Penney, supra,52 Cal.3d at p. 1019.) Although “section 533 does not preclude
coverage for acts that are negligent or reckless,” “[t]here is no
such thing as negligent or even reckless sexual molestation. The
very essence of child molestation is the gratification of sexual
desire. The act is the harm. There cannot be one without the
other. Thus, the intent to molest is, by itself, the same as the
intent to harm. (Id. at p. 1021; see id. at p. 1026 [“Some acts are
so inherently harmful that the intent to commit the act and the
intent to harm are one and the same.”].) Accordingly, the insurer
could deny coverage without showing the molester subjectively
intended to inflict harm, “because child molestation is always
intentional, it is always wrongful, and it is always harmful.” (Id.
At p. 1025.)
The court clarified the holding of Clemmer v. Hartford
Insurance Co. (1978) 22 Cal.3d 865,5 the case relied upon by the
mother and child for the proposition that section 533 applies only
when the tortfeasor acts with a “ ‘preconceived design to inflict
injury.’ ” (J. C. Penney, supra, 52 Cal.3d at p. 1023.) As the J. C.
Penney court explained, at issue in Clemmer was whether the
tortfeasor had the “mental capacity to commit the wrongful act,”
that is, “whether he was legally sane” when he shot and killed his
employer. (Ibid.) Clemmer’s use of the phrase “ ‘preconceived
design to inflict injury’ ” referred not to the tortfeasor’s subjective
intent to cause injury, but his mental capacity to intend the
wrongful act itself. (See ibid.) Clemmer therefore did not
support the mother and child’s argument that the molester’s
5 Clemmer later was overruled on other grounds by Ryan
v. Rosenfeld (2017) 3 Cal.5th 124.
12
intent to cause harm was relevant to section 533 analysis. (See
J. C. Penney, at p. 1023.)
J. C. Penney explained that the mother and child’s
argument, “[p]roperly understood,” went not to the molester’s
intent, but to his motive, which mother and child contended was
“something akin to a misguided show of affection.” (J. C. Penney,
supra, 52 Cal.3d at p. 1026.) But “[m]otive is irrelevant for
purposes of section 533. Motive is relevant only to the different
question of whether the conduct was wrongful, thereby giving
rise to liability.” (J. C. Penney, at p. 1026.) As an example, the
court posited a person who “intentionally shoot[s] another person
in the head at point-blank range. Obviously, the insured (if sane)
intends to injure. Whether the conduct is wrongful, however, will
depend on the insured’s motive.” (Ibid.) If the motive is self-
defense and “a court finds that the insured acted justifiably, it
necessarily follows that the insured did not act wrongfully,” in
which case “there is no liability, and the application of section
533 is not at issue.” (J. C. Penney, at p. 1026.) Because “[t]here
is no motive that can justify sexual molestation,” however, the
molester’s “professed motive is . . . entirely beside the point for
purposes of section 533.” (J. C. Penney, at p. 1027.)
b. Altieri
In Altieri, a teenage minor struck a schoolmate in the face,
causing serious injuries. (Altieri, supra, 235 Cal.App.3d at
p. 1354.) The victim sued the teenage minor and his parents for
personal injury. The parties stipulated to a judgment in an
amount assuming coverage under the defendants’ homeowners
policy. The carrier then brought a declaratory relief action.
(Ibid.) The trial court, relying on Clemmer, ruled section 533
did not apply absent proof the teenager intended not only to
13
strike his schoolmate, but also to cause the serious injuries.
(Ibid.)
The Court of Appeal reversed, relying on J. C. Penney.
(Altieri, supra, 235 Cal.App.3d at p. 1357.) The court framed the
issue as “whether [the teenager’s] actions in assaulting [the
schoolmate] were inherently harmful.” (Id. at p. 1359.) In
making that determination, the teenager’s alleged subjective
intent not to hurt his schoolmate badly was irrelevant. (Ibid.)
His motive was “relevant only to the issue of whether his conduct
was wrongful in the first instance.” (Ibid.) Because it was
undisputed the teenager did not act in self-defense, his motive
was irrelevant to the coverage issue. (Ibid.) “He may not have
intended to hurt [the schoolmate] ‘bad’ but he did intend, without
any legal justification, to hit him. [The teenager’s] conduct was
inherently harmful and wrongful,” and thus “an uninsurable
willful act under section 533.” (Altieri, at pp. 1359–1360.)
c. B & E Convalescent Center
B & E Convalescent Center involved an insured employer’s
declaratory relief, breach of contract, and bad faith claims
against State Compensation Insurance Fund arising out of that
Fund’s refusal to defend the employer in an employee’s wrongful
termination claim. (B & E Convalescent Center, supra, 8
Cal.App.4th at p. 83.) The Court of Appeal applied J. C. Penney
and Altieri to hold there was no potential for coverage and
therefore no duty to defend because section 533 bars coverage for
an employee’s claims, inter alia, for wrongful termination and
violation of the Fair Employment and Housing Act (Gov. Code,
§ 12940 et seq.; FEHA). (B & E Convalescent Center, at pp. 83–
84, 98.)
14
The employee alleged she had been fired for “refus[ing] to
carry out instructions to interfere with the efforts of a union
which had sought to organize the employees,” and for “refus[ing]
the demands of her employer that she systematically
terminate . . . employees and replace them with employees of
Filipino national origin, who, the employers believed, would be
less likely than others to vote for the union.” (B & E
Convalescent Center, supra, 8 Cal.App.4th at p. 84.) The
appellate court characterized this claim as a “Tameny” action for
“wrongful termination in contravention of a fundamental public
policy,” in this case “retaliation for [the employee’s] refusal (1) to
engage in antiunion activity violative of the [National Labor
Relations Act] and (2) to participate in discriminatory
employment practices violative of the FEHA.” (B & E
Convalescent Center, at pp. 90, 92; see Tameny v. Atlantic
Richfield Co. (1980) 27 Cal.3d 167.)6 The employee further
alleged that, in violation of FEHA, she had been “terminated on
the basis of her gender, age, and ethnic origin, in that she was a
woman over 60 years of age and of English national origin and
was replaced by a man, younger than she, and of Filipino
descent.” (B & E Convalescent Center, at pp. 84–85.)
The court concluded the employee’s claims alleged willful
conduct: “A termination affirmatively undertaken with the
intent to interfere with protected labor union rights or
6 Labor Code section 1102.5, subdivision (c) similarly
prohibits retaliation against an employee for refusing to
participate in an activity that violates a state or federal statute,
rule, or regulation. That subdivision, however, had not yet been
enacted at the time of B & E Convalescent Center. (See Stats.
2003, ch. 484, § 2.)
15
discriminate on the basis of gender, age, or ethnic origin cannot
be the result of negligence. An affirmative act which can only
violate the law when it is accompanied by such an impermissible
motivation necessarily involves willful and intentional
misconduct.” (B & E Convalescent Center, supra, 8 Cal.App.4th
at p. 95.)
The court summarized J. C. Penney and Altieri, stating
that under those cases “section 533 precludes indemnification by
insurance for any ‘intentional and wrongful act if the harm is
inherent in the act itself.’ ” (B & E Convalescent Center, supra,
8 Cal.App.4th at p. 98.) “A termination of employment for which
a tort action will lie under Tameny and its progeny is such an
act.” (Ibid.)
The court then explained how the employee’s claims alleged
acts that were intentional, inherently harmful, and wrongful. “It
is well established and generally self-evident that the act of
terminating an employee is an intentional act.” (B & E
Convalescent Center, supra, 8 Cal.App.4th at p. 98.) Also, “it can
hardly be denied that a termination from employment in
violation of antidiscrimination statutes or other fundamental and
substantial public policies is inherently harmful. It does not
require extensive discussion to demonstrate the devastating
impact of the loss of a job, whether from a financial, psychological
or emotional point of view. When that occurs in the context of an
employer’s discrimination against an employee’s sex, age, race or
national origin or in an effort to defeat nationally established
rights to bargain collectively, it is devastating not only to the
employee but to the body politic as well.” (Ibid.)
As to the question of whether the employee had alleged
wrongful conduct as that term was used in J. C. Penney and
16
Altieri, the court noted that Tameny actions redress “ ‘a discharge
[that] clearly violated an express statutory objective or
undermined a firmly established principle of public policy.’
[Citation.]” (B & E Convalescent Center, supra, 8 Cal.App.4th at
p. 98.) “A civil action under Tameny serves ‘firmly established,’
‘fundamental,’ and ‘substantial’ public policies that are ‘embodied
in the state Constitution.’ [Citations.]” (Id. at p. 99.)
The court concluded, “Under any reasonable criterion, a
termination in violation of such public policies must be
held wrongful as a matter of law. As we have pointed out, such
claim can only be established by evidence of an employer’s motive
and intent to violate or frustrate the law(s) declaring or
establishing fundamental public policy. It would be
unreasonable, mischievous and improper if section 533, which
reflects the ‘fundamental public policy of denying coverage for
willful wrongs’ [citation], were construed in any way other than
to deny insurance coverage in the most certain and unambiguous
terms for willful and intentional acts that contravene
‘fundamental policies that are delineated in constitutional or
statutory provisions’ [citation].” (B & E Convalescent Center,
supra, 8 Cal.App.4th at p. 99.)
d. Federal district court cases
In Markel American Ins. Co. v. G.L. Anderson Ins. Services,
Inc. (E.D. Cal. 2010) 715 F.Supp.2d 1068, the district court ruled
that section 533 barred coverage of an employee’s claims for
retaliation and wrongful termination in violation of public policy.
(Markel, at p. 1077.) The employee alleged she was terminated
for “complain[ing] about sexual harassment in the work place.”
(Ibid.) Citing B & E Convalescent Center, the district court
found, “A termination affirmatively undertaken with the intent
17
to interfere with sexual discrimination laws and in violation of
public policy cannot be the result of negligence because liability
‘necessarily involves willful and intentional misconduct’ based
upon impermissible motivation. [Citation.] A termination in
violation of FEHA or public policy can ‘only be established by
evidence of an employer’s motive and intent to violate or frustrate
the law(s) declaring or establishing fundamental public policy.’
[Citation.]” (Markel, at p. 1077.)
In Valley Imaging Partnership Medical Group, L.P. v. RLI
Insurance Co. (C.D. Cal. Sept. 14, 2007, No. CV 06-4595 ABC
(PLAx)) [2007 WL 9734496],7 the district court relied on B & E
Convalescent Center to conclude section 533 barred coverage of an
arbitration award for a claim of retaliation, specifically an
employee’s termination after she gave a deposition in a sexual
harassment lawsuit brought by another employee. (Valley
Imaging, at pp. *1, *3.)8 The district court stated that the
arbitrator’s decision was based “almost entirely” on the
individual defendant’s admission in the arbitration that the
employee was terminated for giving a deposition in support of
another employee’s sexual harassment case. (Valley Imaging, at
7 Unpublished federal opinions have persuasive value and
are not subject to California Rules of Court, rule 8.1115, which
governs citation to unpublished California opinions. (See Harris
v. Investor’s Business Daily, Inc. (2006) 138 Cal.App.4th 28, 34.)
8 Valley Imaging does not specify the statutory basis for
the retaliation claim at issue. The arbitration award for which
the insured sought indemnity, however, relied on CACI 2505, the
jury instruction for retaliation under FEHA. (See Lomeli v.
Valley Imaging Partnership (Super. Ct. Los Angeles County,
Dec. 15, 2005, No. BC311065) [2005 WL 6298989].)
18
p. *4.) The court reasoned, “Like wrongful termination claims, a
retaliation claim necessarily entails proof of a ‘wilful act’
under section 533. A plaintiff must prove that the employer took
some sort of adverse employment action because of protected
activity. An employer cannot be liable for negligent, or even
reckless, conduct, and there can be no legal ‘justification’ for
retaliatory actions.” (Valley Imaging, at p. *3.)
3. Claims under Labor Code section 1102.5 do not
necessarily involve willful conduct under
section 533
Given the significant number of retaliation cases in our
courts and importance of insurance in resolving those cases and
securing compensation for injured employees, we tread carefully
in applying the above jurisprudence to a new category of claims.
We agree with B & E Convalescent Center, Markel, and
Valley Imaging that the alleged or proven acts of the employers
in those cases were willful under section 533. To the extent,
however, those cases can be read more broadly to assert that any
retaliation against an employee engaging in protected conduct is
per se willful under section 533, we disagree.
Although Labor Code section 1102.5 encompasses the sort
of misconduct in B & E Convalescent Center, Markel, and Valley
Imaging, in which employers punished employees who either
reported clearly unlawful conduct or refused to participate in it,
the statute is not limited to such obviously intentional
misconduct. Indeed, it is conceivable an employer could be found
liable under Labor Code section 1102.5 despite making concerted
and reasonable efforts to avoid violating the law.
This is best illustrated by claims brought under
subdivision (c) of Labor Code section 1102.5. Unlike
19
subdivision (b) of that section, which protects an employee’s right
to report what the employee has reasonable cause to believe is a
violation of the law, subdivision (c) addresses the situation in
which an employee does not merely report, but refuses to comply
with an employer’s directives. (Lab. Code, 1102.5, subd. (c) [“An
employer . . . shall not retaliate against an employee for refusing
to participate in an activity that would result in a violation” of
law].) The law is less protective of employees in this
circumstance—whereas an employee’s disclosures are protected
under subdivision (b) so long as the employee has reasonable
cause to believe the conduct at issue is illegal, an employee is
protected under subdivision (c) only if the activity in which the
employee refuses to participate is actually illegal. (Nejadian,
supra, 40 Cal.App.5th at p. 719.)
Thus, in a trial on a claim under Labor Code section 1102.5,
subdivision (c), the court must “ ‘determine the legal question
whether the identified activity would result in a violation or
noncompliance with [an] identified statute, rule, or regulation
. . . .’ [Citation.]” (Zirpel v. Alki David Productions, Inc. (2023)
93 Cal.App.5th 563, 573.) If that question is one of first
impression, an employer might not discover it has “retaliate[d]”
against an employee for purposes of Labor Code section 1102.5,
subdivision (c) until the claim is brought to trial and a court has
determined the activity the employer directed the employee to
perform does, in fact, violate a statute, rule, or regulation.
Further, liability under Labor Code section 1102.5,
subdivision (c) does not require proof of bad faith, malice, or
punitive intent on the part of the employer. To prove the
employer’s intent to retaliate, a plaintiff need only show that the
protected activity—for example, the employee’s refusal to
20
participate in unlawful activity—was a “contributing factor” to
the adverse employment action. (Lab. Code, § 1102.6; Lawson,
supra, 12 Cal.5th at p. 712; see Manavian, supra, 28 Cal.App.5th
at p. 1141 [plaintiff must show “a causal link between the
[protected activity] and the adverse action”].) This means an
employer can be held liable for an adverse employment action
against an employee who refuses to participate in an unlawful
activity even if the employer honestly believes the activity is
lawful and acts not to punish, but to mitigate the harm to the
employer’s business from what it believes is an insubordinate
employee.
Labor Code section 1102.5, subdivision (c) thus creates the
potential for the following scenario:
Faced with what appears to be an insubordinate employee,
an employer evaluates the legality of the activity in which the
employee refuses to participate, for example by consulting with
counsel, reviewing guidance from a trade association, or other
similar efforts. The activity’s legality is unclear under the
applicable statute, rule, or regulation, and has never been
decided by a court. The employer therefore makes its best
determination and concludes the activity is legal. The employer
so informs the employee, the employee continues to refuse to
participate in the activity, and the employer fires the employee to
prevent further disruption of its business. The employee sues,
and the trial court decides as a matter of first impression that the
activity in which the employee refused to participate violates a
statute, rule, or regulation. It is not a defense to the employee’s
claim that reasonable minds could differ as to the legality of the
activity. Under this scenario and the statute, the employer has
21
retaliated against an employee for engaging in protected conduct,
and the employee is entitled to backpay among other remedies.
Liability is proper in this scenario—the employee, having
opposed the employer’s unlawful directives, should not bear the
burden of the employer’s mistake in believing those directives
were lawful. It does not follow, however, that the employer,
despite acting in good faith and taking reasonable steps to avoid
violating the law, has nonetheless engaged in intentional,
inherently harmful, and “wilful” conduct depriving the employer
of insurance under section 533.
The employer’s conduct in our scenario is not comparable to
that in B & E Convalescent Center, where the employer retaliated
against the employee for refusing to engage in activity that was
illegal under clearly established law. Although whistleblower
protections themselves are clearly established, the illegality of
the underlying conduct the whistleblower is resisting may not be.
In B & E Convalescent Center the employer had the
“impermissible motivation” “to interfere with protected labor
union rights or discriminate on the basis of gender, age, or ethnic
origin.” (Supra, 8 Cal.App.4th at p. 95.) The employer in our
posited scenario, in contrast, does not intend to interfere with the
employee’s right not to engage in unlawful conduct, because the
employer reasonably does not know the conduct is unlawful.
Further, the employer’s motivation for the adverse employment
action is not revenge or punishment, but prevention of further
harm to its business from a recalcitrant employee.
Doctrinally, the employer’s conduct in our scenario is closer
to negligence than intentional misconduct. The employer intends
the act—the adverse employment action—but not the
consequence—a violation of the employee’s rights under Labor
22
Code section 1102.5, rights that do not become clear until a court
has decided the legality of the conduct in which the employee
refused to participate.
Our scenario shares characteristics with disparate impact
discrimination, a workplace tort courts have deemed
“unintentional” and not subject to the indemnity prohibition of
section 533. (See Save Mart Supermarkets v. Underwriters at
Lloyd’s London (N.D. Cal. 1994) 843 F.Supp. 597, 606; accord,
Melugin v. Zurich Canada (1996) 50 Cal.App.4th 658, 665 [citing
Save Mart Supermarkets with approval].) A plaintiff may prove
disparate impact discrimination without showing the employer
had an intent to discriminate—instead, the plaintiff must show
“that regardless of motive, a facially neutral employer practice or
policy, bearing no manifest relationship to job requirements, in
fact had a disproportionate adverse effect on members of the
protected class.” (Guz v. Bechtel National, Inc. (2000) 24 Cal.4th
317, 354, fn. 20; accord, Mahler v. Judicial Council of California
(2021) 67 Cal.App.5th 82, 112.) Thus, the employer’s wrongdoing
appears not at the time it institutes the policy or practice, but in
a subsequent retrospective analysis of the impact of that policy or
practice.
Similarly, a plaintiff may prevail under Labor Code
section 1102.5 even if the employer had good reason to believe the
activity in which it ordered the plaintiff to engage was lawful, so
long as, in retrospect, a court determines the activity was in fact
unlawful.9
9 We recognize an employer might institute an ostensibly
neutral policy or practice with the intention of disproportionately
impacting a protected group, just as an employer might
23
Applying section 533 in our scenario also would not
comport with section 533’s purpose “to prevent insurance
coverage from encouragement of wilful tort.” (Tomerlin v.
Canadian Indemnity Co. (1964) 61 Cal.2d 638, 648.) This
purpose is evident in situations like that of B & E Convalescent
Center, in which an employer should not be able to shield itself
from the costs of liability for intentional conduct it knows, or with
minimal investigation should know violates well-established
principles of public policy. If applied universally to all retaliation
claims, even those against employers acting mistakenly but in
good faith, section 533 becomes a shackle, preventing employers
from dealing with insubordinate employees for fear of having to
face a retaliation claim without the protection of liability
insurance. This does not serve the purposes of section 533.
4. The Rivera complaint alleged nonwillful bases
for liability
The Rivera complaint asserted a single cause of action
under Labor Code section 1102.5, without express reference to
any particular subdivision of that statute. The complaint alleged,
however, retaliation for the Rivera plaintiffs’ refusal to
participate in a purportedly unlawful quota system, thus alleging
liability under Labor Code section 1102.5, subdivision (c).
intentionally violate Labor Code section 1102.5 by punishing an
employee for refusing to participate in activity the employer
knows is illegal. Our point is that neither tort necessarily
requires proof of an intent to violate the employee’s rights, and
therefore, an employer acting without intent to harm could still
be liable.
24
At paragraph 25, the complaint averred the police
department “imposed an unlawful citation and arrest quota in
violation of California Vehicle Code sections 41600 et seq. on its
officers, and illegally compared officers using shift averaging as a
means of determining a benchmark for performance. [The
department] thereafter retaliated against those [who] refused to
participate in and/or reported the unlawful citation and arrest
quota.” (Italics added.) At paragraph 27, the complaint alleged,
“For refusing to meet the unlawful quota, and for speaking out
against it, Plaintiffs were retaliated against,” including “negative
language and/or documentation being placed in their personnel
packages about their refusal to comply with the unlawful quota.”
(Italics added.) At paragraph 36, “Defendants . . . retaliated
against Plaintiff[s] for disclosing information to the City of
Whittier and the Whittier Police Department and/or refusing to
engage in the illegal activity . . . . Plaintiffs disclosed that they
were required to illegally fulfill a traffic citation quota and were
illegally compared to other officers using shift averaging as a
means of determining a benchmark for performance . . . .
Alternatively or during the same time, Plaintiffs refused to
participate in fulfilling traffic citation quotas in violation of
[Vehicle Code sections 41600 et seq.]” (Italics added.) At
paragraph 38, “A motivating factor for the Defendants to engage
in the foregoing adverse employment actions against Plaintiffs
was to retaliate for the Plaintiffs’ refusal to engage in illegal
activity and their engaging in the protected activities of disclosing
information to the City of Whittier and the Whittier Police
Department . . . .” (Italics added.)
Under these allegations, the City could be found liable if
(1) a court found the City policy at issue violated a statute,
25
regulation, or rule and (2) the City subjected the Rivera plaintiffs
to adverse employment actions because of their refusal to comply
with that policy. The Rivera plaintiffs would not have to prove
the City knew or should have known the City policy was illegal,
or acted maliciously, punitively, or in bad faith, nor could the
City avoid liability by establishing it reasonably believed the
alleged policy was legal.
We cannot conclude based on the allegations in the Rivera
complaint that the City policy with which the Rivera plaintiffs
refused to comply was clearly illegal such that the City
reasonably could not have believed otherwise. Vehicle Code
section 41602 prohibits a police department from “establish[ing]
any policy requiring any peace officer or parking enforcement
employees to meet an arrest quota.” An arrest quota is “any
requirement regarding the number of arrests made, or the
number of citations issued, by a peace officer, or parking
enforcement employee, or the proportion of those arrests made
and citations issued by a peace officer or parking enforcement
employee, relative to the arrests made and citations issued by
another peace officer or parking enforcement employee, or group
of officers or employees.” (Veh. Code, § 41600.) An officer’s
“number of arrests or citations issued,” however, “may . . . be
considered in evaluating the overall performance of a peace
officer” if it is not “the sole criterion for promotion, demotion,
dismissal, or the earning of any benefit provided by” the
department. (Id., § 41603.)10
10 Vehicle Code section 41603 provides, in its entirety, “No
state or local agency employing peace officers or parking
enforcement employees engaged in the enforcement of this code
26
The interplay between Vehicle Code sections 41602 and
41603 creates a potential for ambiguity as to whether “shift
averaging” and setting performance benchmarks by comparing
officers’ arrest counts, as alleged in the Rivera complaint, is
unlawful. Again, under Vehicle Code section 41603, a police
department properly can consider an officer’s arrest count when
evaluating performance, including by comparing it to other
officers’ arrest counts, so long as there is no requirement the
officer achieve a certain number of arrests (which arguably would
be a quota), and so long as the department considers other
criteria in addition to arrest count. Conceivably, therefore, a
department reasonably could believe it could impose an arrest
count benchmark based on shift averages if that benchmark was
but one of several factors considered in evaluating performance.
A court, however, might disagree. Consistent with our
conclusion in the previous section of the Discussion, the police
department in that circumstance would be liable under Labor
Code section 1102.5, subdivision (c), but would not have acted
willfully. As the City argues, a “belief that Vehicle Code
section 41603 specifically allowed the number of arrests to be
considered in evaluating the overall performance of a peace
shall use the number of arrests or citations issued by a peace
officer or parking enforcement employees as the sole criterion for
promotion, demotion, dismissal, or the earning of any benefit
provided by the agency. Those arrests or citations, and their
ultimate dispositions, may only be considered in evaluating the
overall performance of a peace officer or parking enforcement
employees. An evaluation may include, but shall not be limited
to, criteria such as attendance, punctuality, work safety,
complaints by civilians, commendations, demeanor, formal
training, and professional judgment.”
27
officer . . . necessarily means that there was no ‘specific intent to
wrongfully inflict injury.’ ” The Rivera complaint’s allegations do
not preclude this scenario, and therefore allege a theory under
which the Rivera plaintiffs could prevail without proof of willful
conduct. Section 533 thus does not bar indemnifying the City for
settlement of such a claim.
Because the Rivera complaint alleged liability under
subdivision (c) of Labor Code section 1102.5, we need not decide
whether violations of other subdivisions of that statute are
necessarily willful under section 533, and express no opinion on
that question.
B. Starr’s Policy Language Providing Coverage for
“Damages” Does Not Require It To Indemnify the
Rivera Settlement
Starr argues its policy language does not require it to
indemnify the City for the Rivera settlement, because the policies
provide coverage only for “damages,” and a settlement is not
“damages.” Starr raised this argument below, but the trial court
did not reach it, ruling instead in Starr’s favor under section 533.
We now reach that alternative argument and agree with Starr.
1. Relevant case law
In Certain Underwriters at Lloyd’s of London v. Superior
Court (2001) 24 Cal.4th 945, commonly referred to as Powerine
after the real party in interest, our Supreme Court interpreted a
provision in the standard comprehensive general liability
insurance policy requiring indemnity for “ ‘sums that the insured
becomes legally obligated to pay as damages.’ ” (Id. at p. 951.)
The court concluded that provision limited the insurer’s duty to
indemnify to “money ordered by a court.” (Ibid.) Accordingly, the
28
insurer did not have to indemnify the insured for “expenses
required by an administrative agency pursuant to an
environmental statute,” in that case costs imposed by
environmental agencies for clean-up and abatement of
contaminated sites. (Id. at pp. 951–952, 954.)
County of San Diego v. Ace Property & Casualty Ins. Co.
(2005) 37 Cal.4th 406 (County of San Diego) involved an insured
seeking indemnification “for expenses incurred . . . in responding
to an administrative agency order requiring it to remediate
environmental contamination,” as well as “sums expended . . . to
settle related third party property damage claims outside the
context of a lawsuit.” (Id. at p. 410.) The policy at issue was not
a standard comprehensive policy, as in Powerine, but a
nonstandard excess third party liability policy. (Ibid.) The policy
language, as characterized by the court, required the insurer to
indemnify “ ‘for all sums which the insured is obligated to pay by
reason of liability imposed by law or assumed under contract or
agreement,’ arising from ‘damages’ caused by personal injuries or
the destruction or loss of use of tangible property.” (Id. at p. 411.)
Our high court held Powerine controlled even as to this
nonstandard policy, and thus indemnity of “ ‘damages’ ” was
limited to “ ‘money ordered by a court.’ ” (County of San Diego,
supra, 37 Cal.4th at pp. 410–411.) Quoting Powerine, the court
explained, “ ‘[T]he duty to indemnify “entails the payment of
money” [citations],’ ‘has as its purpose “to resolve liability . . .
after liability is established” [citations],’ and ‘can arise only after
damages are fixed in their amount [citations].’ [Citation.]” (Id.
at p. 417.) The term “ ‘damages,’ ” “both in its legal and
commonly understood or ‘ “ordinary and popular sense,” ’ is
limited to ‘money ordered by a court.’ ” (Ibid.) “ ‘[O]ne
29
would not speak of any “sum that the insured becomes legally
obligated to pay as damages” apart from any order by a court. . . .
That is because, as a sum that the insured becomes legally
obligated to pay, “damages” presuppose an institution for their
ordering, traditionally a court, albeit no longer exclusively.
[Citations.] “Damages” do not constitute a redundancy to a “sum
that the insured becomes legally obligated to pay,” but a
limitation thereof.’ [Citation.]” (Ibid.)
Accordingly, because the policy required indemnification
only of “damages,” “costs and expenses associated with
responding to administrative orders to clean up and abate soil or
groundwater contamination outside the context of a government-
initiated lawsuit seeking such remedial relief, and property
buyout settlements negotiated with third party claimants outside
the context of a court suit, do not fall within the literal and
unambiguous coverage terms of the . . . insuring agreement.”
(County of San Diego, supra, 37 Cal.4th at p. 421.)
In Powerine and County of San Diego, the insureds were
seeking indemnification of expenditures and settlements outside
the context of a lawsuit. In Aerojet-General Corp. v. Commercial
Union Ins. Co. (2007) 155 Cal.App.4th 132 (Aerojet-General), the
Third District Court of Appeal applied those holdings to
settlements within the context of a lawsuit. (Id. at p. 143.)
Aerojet-General concerned insurers’ duty to indemnify
settlements reached in lawsuits brought by various “ ‘water
entities’ ” to recover “costs arising out of the alleged
contamination of groundwater in the San Gabriel Valley.’ ”
(Aerojet-General, supra, 155 Cal.App.4th at p. 136.) The policies
at issue required the insurers to indemnify “ ‘all sums which the
[insured] shall become legally obligated to pay, or by final
30
judgment be adjudged to pay, to any person or persons as
damages . . . .’ ” (Id. at p. 137.)
The Court of Appeal concluded that the limitation of
indemnity to “ ‘damages’ ” excluded settlements. (Aerojet-
General, supra, 155 Cal.App.4th at pp. 143–144.) The court
explained, “There can be no dispute that the term ‘damages’ as
interpreted in [Powerine] and used in liability insurance
indemnity provisions means only money ordered by a court to be
paid. The term has a clear and literal meaning, and, having been
construed consistently by the Supreme Court as money ordered
by a court to be paid, the term cannot be held to be ambiguous.”
(Id. at p. 143, citing County of San Diego, supra, 37 Cal.4th at
p. 423.) Because a court did not order Aerojet to pay damages,
nor did the parties seek “for the terms of the agreement to be
entered as the judgments in the lawsuits,” “[n]othing in the
record indicates the court ordered Aerojet to pay any sum of
money. Accordingly, the settlement costs are outside the scope of
indemnity coverage in [the insurers’] policies.” (Aerojet-General,
at p. 144.)
The court rejected the argument that “the phrase ‘money
ordered by a court’ refers generally to any monies paid to resolve
a lawsuit as distinguished from monies paid in response to an
administrative order.” (Aerojet-General, supra, 155 Cal.App.4th
at p. 144.) “The clause means what it says: money ordered by a
court.” (Ibid.) The court also rejected the argument that its
holding “defeats the public policy favoring settlements.” (Id. at
p. 145.) “If contractual language in an insurance contract is clear
and unambiguous, it governs, and we do not rewrite it ‘for any
purpose.’ ” (Ibid., quoting Powerine, supra, 24 Cal.4th at pp. 967,
968.)
31
2. Analysis
Starr’s policy states, “We will pay on your behalf sums in
excess of the retained limit that the insured becomes legally
obligated to pay for damages to compensate others for loss arising
out of your employment practice liability wrongful act . . . .” This
language is materially identical to that of the policies in Powerine
and Aerojet-General, in which the courts held the term “damages”
to be limited to money ordered by the court. As in Aerojet-
General, the record here does not indicate the trial court ordered
the City to pay any money to the Rivera plaintiffs, nor were the
terms of the settlement entered as a judgment. Under the
reasoning and holding of Aerojet-General, Starr was not required
to indemnify the City for the Rivera settlement.
The City does not address Starr’s alternative argument
either in its opening brief or reply, and therefore provides no
basis for us to deviate from Aerojet-General’s holding. We agree
with Starr that Aerojet-General controls and Starr has no duty to
indemnify the City for the Rivera settlement.
Unlike Starr’s policy, Everest’s policy language describing
the scope of coverage does not use the term “damages,” the key
term in Powerine, County of San Diego, and Aerojet-General.
Instead, it states Everest will pay “the ‘ultimate net loss’ . . . that
the insured becomes legally obligated to compensate others . . . .”
“ ‘Ultimate net loss,’ ” in turn, is defined as “the total sum . . .
actually paid or payable due to a ‘claim’ or ‘suit’ for which you are
liable either by a settlement to which we agreed or a final
judgment, and shall include defense costs.” Everest does not
assert this policy language on appeal to argue it defeats the City’s
indemnification claim for the Rivera settlement. We thus express
32
no opinion on that issue and nothing herein is intended to
foreshadow how we would rule on it.
DISPOSITION
The judgment in favor of Starr Indemnity & Liability
Company is affirmed. The judgment in favor of Everest National
Insurance Company is reversed and the matter remanded for
further proceedings. The City of Whittier shall pay Starr’s costs
on appeal, and Everest shall pay Whittier’s costs on appeal.
CERTIFIED FOR PARTIAL PUBLICATION.
BENDIX, Acting P. J.
I concur:
WEINGART, J.
33
CHANEY, J., Concurring and Dissenting.
I agree with the majority’s holding with respect to Starr.
With respect to Everest, the majority ably marshals the
case law concerning application of Insurance Code section 533
(section 533) to Labor Code retaliation claims and concludes that
some claims under Labor Code section 1102.5 may not involve
willful conduct within the meaning section 533. The possibility
that section 533 may not bar insurance for the Rivera plaintiffs’
claims precludes summary judgment on this issue. (Maj. opn.
ante, at p. 28.) I agree with this holding as well.
However, rather than reverse the judgment as to Everest
and remand the matter I would invite supplemental briefing on a
potentially dispositive issue of law: Whether the Everest policies
themselves precluded coverage.
The Everest policies provided coverage for sums that the
City of Whittier became “legally obligated” to pay third parties.
But here, the City never became legally obligated to pay the
Rivera plaintiffs anything, it voluntarily (and over Everest’s
objection) paid a settlement. The policy language read as a whole
does not extend the indemnification obligation to the unapproved
settlement of claims. On the contrary, the policies provided that
only approved settlements would be covered. Because the City
was not legally obligated to settle the underlying lawsuit, the
Everest policies afforded no coverage for the settlement.
We may affirm a grant of summary judgment on any
ground supported by the record (Jimenez v. County of Los Angeles
(2005) 130 Cal.App.4th 133, 140) if it is a “ ‘ground that the
parties had an adequate opportunity to address in the trial
court’ ” (Thurston v. Midvale Corp. (2019) 39 Cal.App.5th 634,
639). The majority observes in the unpublished portion of the
opinion that Everest does not assert on appeal that policy
language itself defeats the City’s indemnification claim for the
Rivera settlement, thus giving the City no opportunity to rebut
such an argument. In that circumstance, I believe the economical
course is not to reverse the Everest judgment but to request
supplemental briefing on this issue pursuant to Government
Code section 68081 (before rendering a decision based upon an
unbriefed issue the court shall afford the parties an opportunity
to present their views on the matter through supplemental
briefing).
Pursuant to the above reasoning, I would affirm the
judgment as to Starr and invite supplemental briefing as to
Everest.
CHANEY, J.
2