Carter v. Entercom Sacramento, LLC

Filed 9/3/13
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE DISTRICT
(Sacramento)
----
MATT CARTER, C066751
Cross-complainant and Appellant, (Super. Ct. No. 07AS00377)
v.
ENTERCOM SACRAMENTO, LLC,
Cross-defendant and Respondent.
APPEAL from a judgment of the Superior Court of Sacramento County, Lloyd A.
Phillips, Judge. Affirmed.
Ryan and Fong, Timothy J. Ryan; Demas and Rosenthal, Steven Schultz; Gerald
Glazer; Emry J. Allen for Cross-complainant and Appellant.
Pagliero & Associates, James R. Pagliero for Cross-defendant and Respondent.
As the result of drinking too much water in an ill-conceived radio contest, a
woman died. Plaintiff Matt Carter had helped conduct the contest as part of his duties as
an employee of defendant Entercom Sacramento, LLC, the company that owned the radio
station. Although Entercom told Carter it would provide legal counsel for him, Carter
chose to hire his own attorney. When the woman’s family sued Carter (as well as
Entercom and others), Carter tendered defense of the action to Entercom’s insurer. The
1
insurer accepted the tender without any reservation of rights and appointed a different
attorney to represent Carter. Carter refused that attorney and insisted on being
represented by the attorney he had chosen. When the insurer refused to pay for that
attorney, Carter filed a cross-complaint against Entercom seeking indemnity under Labor
Code section 2802 for the fees and costs he incurred.1 Subdivision (a) of section 2802
requires an employer to indemnify its employee “for all necessary expenditures or losses
incurred by the employee in direct consequence of the discharge of his or her duties.”
At the outset of the trial of Carter’s indemnity claim, the trial court denied Carter’s
motion for leave to amend to allege a claim for quantum meruit and unjust enrichment.
Thereafter, the court found that none of the fees and costs Carter incurred after the insurer
appointed an attorney to represent him were necessary expenditures and therefore Carter
was not entitled to indemnity for those fees and costs under section 2802.
On Carter’s appeal, we find no error. Contrary to Carter’s arguments, he did not
have an absolute right to chose his own attorney to represent him at the expense of his
employer or its insurer under section 2802. Nor did the fact that he faced potential
liability for punitive damages and (for a time) potential criminal charges give him the
right to insist that his employer or its insurer pay for the attorney he chose. Whether
particular expenditures are necessary, and thereby subject to the duty of indemnity under
section 2802, is a factual question, and here Carter has not shown that the trial court’s
determination of that question lacked substantial evidentiary support. Nor has Carter
shown that is was error to deny his request to allege a claim for quantum meruit and
unjust enrichment, given that Entercom had no statutory duty to indemnify him after he
refused the attorney Entercom’s insurer offered him. For these reasons, we affirm.
FACTUAL AND PROCEDURAL BACKGROUND
1 All further section references are to the Labor Code unless otherwise noted.
2
We take the initial facts from the trial court’s statement of decision:
“Carter was a part-time employee of Entercom Sacramento, LLC, working as an
assistant to a morning radio program. On the morning of [January] 12, 2007, the morning
program conducted a contest at the station for listeners called ‘Hold Your Wee for a
WII.’ . . . Jennifer Strange . . . was one of the participants in the contest which involved
rewarding the contestant who could delay urinating the longest after drinking a large
quantity of water. Strange died later that day from hyponatremia.
“Carter had been assigned by Entercom Sacramento, LLC, to assist with the
contest that morning by passing out bottles of water to the contestant[s] at regular
intervals and reporting the status of the contestants to the station’s on-air personalities.
“On January 16, 2007, Carter, as well as a number of other employees involved in
the morning radio program, were fired by Entercom Sacramento, LLC. Carter and the
other terminated employees were instructed that Entercom would provide legal counsel
for them. Later that week, Carter retained attorney Gerald Glazer to represent him.
“On January 17, 2007, the Sacramento County Sheriff’s office announced that it
was opening a criminal investigation into Strange’s death. . . .
“On January 25, 2007, a complaint was filed by Strange’s family naming multiple
defendants, including Carter [(case No. 07AS00377)]. Carter was served with a
summons and the complaint on January 29, 2007. Carter tendered the lawsuit against
him to the insurer for Entercom Sacramento, LLC, Vigilant Insurance Company
(‘Vigilant’).[2]
2 “Vigilant is a subsidiary of Chubb Insurance (‘Chubb’) , and communications
regarding the insurance coverage at various times came from employees of Chubb or
Vigilant. For purposes of this Statement of Decision, both entities are jointly referred to
as ‘Vigilant.’ ”
3
“Vigilant accepted Carter’s tender of defense, and on February 22, 2007, wrote
Carter that it was appointing Charles Painter of the law firm of Ericksen, Arbuthnot,
Kilduff, Day & Lindstrom, Inc. . . . to represent Carter.
“On February 25, 2007, Glazer wrote Painter and informed him that Carter
preferred to have Glazer continue to represent him. On February 27, 2007, Painter wrote
Glazer and recommended to Glazer that Carter allow Painter to represent him, and that
Entercom Sacramento, LLC, had in excess of $50,000,000 in insurance coverage
available, and that he would be defending Carter without any reservation of rights and
without any conflict whatever. Carter responded that he wanted Glazer to continue to
represent him.”
On April 2, 2007, the Sacramento County District Attorney announced that no
criminal charges would be filed in Strange’s death.
In May 2007, three other contestants, including Lucy Davidson, filed a separate
action against Entercom and Carter (among others) (case No. 07AS02328).
In August 2008, Carter filed a cross-complaint against Entercom in the Strange
action seeking indemnity under section 2802.3
In September 2008, the trial court consolidated the Strange action with the
Davidson action for all purposes.
In May 2009, Vigilant informed Carter’s attorney that Vigilant was settling with
the Strange plaintiffs for $25,000 for each of the eight individual defendants (including
Carter) and was settling with the Davidson plaintiffs for $2,500 for each individual
defendant. Following that settlement, in August 2009, the Strange plaintiffs dismissed
3 Carter named both Entercom Sacramento, LLC and Entercom Communications
Corp. as cross-defendants, but the trial court dismissed Carter’s claims against Entercom
Communications Corp. because that entity was never Carter’s employer. Accordingly,
we are concerned here only with Carter’s claim for indemnity against Entercom
Sacramento, LLC, to which we will refer as Entercom.
4
their action against Carter with prejudice and the Davidson plaintiffs dismissed their
action against all defendants with prejudice.
In October 2009, a jury awarded the Strange plaintiffs more than $16 million in
damages against Entercom.
In February 2010, Carter’s attorneys4 submitted a 108-page billing statement for
payment by Vigilant. The statement purported to contain time entries for 1,833 hours of
attorney services provided to Carter between January 2007 and September 2009. At a
billing rate of $325 per hour, the fees for those services totaled $595,725. The statement
also claimed $32,979.22 in costs and $178,717 for “Co-Counsel and Associate Fees.”
The latter figure was not supported by any time entries but instead was calculated by
multiplying the 1,833 “Total Hours” previously claimed by .3, then multiplying that
figure (549.9) by the previously claimed hourly rate of $325 (resulting in $178,717.50),
then dropping the 50 cents to obtain a round dollar figure.
In total, Carter sought indemnity for $807,421.22 in fees and costs. This total did
not include $59,572 in “Prejudgment Interest” Carter also claimed in the billing
statement.
Carter’s cross-complaint for indemnity against Entercom was tried to the court in
April 2010 based on written offers of proof. In his trial brief, Carter requested leave to
amend to include a cause of action for quantum meruit. For its part, Entercom asserted
that the court should not award Carter any more than $1,690, representing the amount of
attorney fees Carter incurred “between when his defense was tendered to Entercom, via
4 It is not clear exactly how many different attorneys participated in Carter’s
representation in the trial court in addition to Mr. Glazer, although it was several. We do
note, however, that the names of four different attorneys appear on his briefs in this
appeal.
5
Vigilant Insurance Company (February 7, 2007) and when Vigilant accepted the tender
of defense, without reservation (February 12, 2007).”
At trial, the court denied Carter’s motion to amend the cross-complaint to include
a claim for quantum meruit and unjust enrichment. Thereafter, the court ruled on
objections to the offers of proof, heard argument, and took the matter under submission.
In September 2010, the trial court issued its final statement of decision, in which it
found the facts that are set forth in the quoted paragraphs above. Based on those facts,
the court determined that “Carter’s refusal to accept Painter as his counsel was not
reasonable, and . . . therefore costs and fees incurred by Carter to defend himself were not
‘necessary expenditures’ ” within the meaning of section 2802. The court determined
that Carter was entitled to be indemnified for “the reasonable attorney’s fees and costs
incurred between January 19, 2007 and February 22, 2007,” but the court also found that
the reasonable hourly rate for those services was $150, not the $325 Carter claimed.
Thus, the court determined that Carter was entitled to a total of $1,980 in indemnity from
Entercom. The court entered judgment in that amount. Carter timely appealed from that
judgment.
DISCUSSION
The gist of the trial court’s ruling here was that Carter was not entitled to
indemnity under section 2802 for any attorney fees or costs he incurred after February 22,
2007, when Vigilant notified him that it had retained Painter to defend him in the Strange
action.5 Carter challenges that ruling on several grounds. He also challenges the trial
court’s denial of his motion to amend his cross-complaint to allege a claim for quantum
5 Although the trial court found that Vigilant “wrote Carter” on February 22, what
actually happened was that Vigilant wrote to Painter on that date, confirming that
Vigilant wanted him to handle Carter’s defense. Vigilant did, however, copy that letter to
one of Carter’s attorneys. Thus, Vigilant’s February 22 letter to Painter served to notify
Carter of the attorney Vigilant had chosen for him.
6
meruit and unjust enrichment. Before we turn to Carter’s arguments, however, we pause
to set forth some general principles regarding an employer’s duty to indemnify under
section 2802.
Subdivision (a) of section 2802 provides that “[a]n employer shall indemnify his
or her employee for all necessary expenditures or losses incurred by the employee in
direct consequence of the discharge of his or her duties, or of his or her obedience to the
directions of the employer, even though unlawful, unless the employee, at the time of
obeying the directions, believed them to be unlawful.”
It has sometimes been said that section 2802 requires an employer to “defend” an
employee who is sued by a third party for conduct in the course and scope of
employment. (See, e.g., Plancarte v. Guardsmark (2004) 118 Cal.App.4th 640, 647-
648.) That is not true, however. As the court explained in Grissom v. Vons Companies,
Inc. (1991) 1 Cal.App.4th 52, “Section 2802 does not say that an employer must ‘defend’
an employee. The word ‘defend’ does not appear in section 2802. The statute merely
requires the employer to indemnify the employee for all that the employee necessarily
expends in direct consequence of the discharge of the employee’s duties. The focus of
the actual words of the statute is on the employee’s expenditure. If that expenditure is
necessarily in direct consequence of the discharge of the employee’s duties, then the
employer must ‘indemnify’ (i.e., reimburse) the employee.” (Grissom, at pp. 57-58, fn.
omitted; see also Cassady v. Morgan, Lewis & Bockius LLP (2006) 145 Cal.App.4th 220,
236 [“Section 2802 does not impose a duty to defend upon an employer”].)
Although section 2802 does not impose a duty to defend, the cases recognize that
whether the employer nonetheless offers to defend the employee can have a bearing on
the employee’s right to indemnity under the statute. For example, “when an employer
refuses to defend an employee in an action which may or may not be unfounded for
conduct which may or may not have been within the course and scope of his employment
and it is ultimately established that the action was unfounded and the employee acted
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within the course and scope of his employment, then the employer has an obligation
under Labor Code section 2802 to indemnify the employee for his attorney’s fees and
costs in defending the action.” (Douglas v. Los Angeles Herald-Examiner (1975) 50
Cal.App.3d 449, 465.) This is so because if the employer declines to defend the
employee in such a case, the employee’s expenditures on his or her own defense are
considered “necessary” within the meaning of the statute and thus subject to the
employer’s duty to indemnify.
On the other hand, “[i]t may be . . . that an employee’s expenditure of money on
legal costs would be totally unnecessary if his or her employer timely provided
competent counsel to defend the employee under circumstances where the counsel is not
subject to any conflict of interest between the employer and employee. In such a
situation, for the employee to select and then hire his or her own counsel in addition to
counsel already being provided free of charge might, depending on all the facts involved,
be a gross waste of resources and highly unreasonable.” (Grissom v. Vons Companies,
Inc., supra, 1 Cal.App.4th at p. 58.) In such a case, the employee’s expenditures would
not be subject to the right of indemnity under section 2802 because they were not
“necessary” and thus outside the employer’s duty to indemnify.
I
Counsel Of His Own Choosing
With these principles in mind, we turn to Carter’s arguments in this case. Carter
first contends he had an “absolute” “right to counsel of his own choosing to defend
against the Strange lawsuit, and [accordingly] a right to indemnification for fees and costs
incurred by such counsel in [his] defense.” Carter is mistaken.
To the extent Carter cites various cases that contain general statements about a
person’s right to choose his or her own attorney in a civil or criminal action, none of
those cases involved the right of indemnity under section 2802 and thus they offer no
assistance in determining the case before us. For example, in Maxwell v. Superior Court
8
(1982) 30 Cal.3d 606, our Supreme Court addressed whether a trial court erred when,
notwithstanding a criminal defendant’s protest, the court recused his retained attorney
and appointed another attorney instead “on the ground that the fee contract, giving
retained counsel the right to exploit [the defendant’s] life story, created an intolerable
conflict of interest.” (Id. at p. 610.) In the course of determining that the trial court erred
in recusing the defendant’s retained attorney, the Supreme Court observed that “many
precedents recognize that the constitutional right to counsel includes a reasonable
opportunity for those defendants who have the necessary resources to control the
designation of their legal representatives.” (Id. at p. 613.) Obviously, this observation
had nothing to do with the application of section 2802, and thus Carter’s reliance on that
observation here is unavailing.
Unlike in Maxwell and the other cases Carter cites in support of this argument, the
question here is not whether Carter was entitled to choose his own counsel to represent
him in defense of the Strange action. Obviously, Carter did choose his own attorney, and
that attorney did represent him throughout the proceeding, without any interference by
the trial court. The question here is whether Carter was entitled to choose his attorney at
the expense of his employer (or its insurer) under section 2802. In other words, was
Carter entitled to indemnity for the fees and costs he incurred for the attorney he chose,
when his employer had arranged, through its insurer, to provide a different attorney free
of charge to Carter, whom Carter rejected? That question is not answered by Maxwell or
any of the other cases Carter cites at the outset of his argument.
That question is also not answered by rule (4) of Civil Code section 2778, on
which Carter also relies to support his claim that he was absolutely entitled to indemnity
for the attorney he chose, notwithstanding Vigilant’s choice of another attorney. Section
2778 of the Civil Code provides that “[i]n the interpretation of a contract of indemnity,
the following rules are to be applied, unless a contrary intention appears.” Civil Code
section 2778, rule (4) then contains the following: “The person indemnifying is bound,
9
on request of the person indemnified, to defend actions or proceedings brought against
the latter in respect to the matters embraced by the indemnity, but the person indemnified
has the right to conduct such defenses, if he chooses to do so[.]” According to Carter,
“the employment agreement between [him] and Entercom was in effect an agreement to
indemnify for reasonable costs of defense, by virtue of Labor Code section 2802,” and
therefore rule (4) of Civil Code section 2778 gave him “the right to conduct his defense”
-- that is, “employ counsel of his choosing . . . and thereafter, to be indemnified for
reasonable attorney’s fees and costs.”
Carter’s reliance on Civil Code section 2778 is misplaced for at least two reasons.
First, the indemnity requirement in section 2802 is a statutory obligation, not a
contractual one. (See Civ. Code, §§ 1427 [“An obligation is a legal duty, by which a
person is bound to do or not to do a certain thing”], 1428 [“An obligation
arises either from” “[t]he contract of the parties” “or” “[t]he operation of law”].) Indeed,
case law recognizes that the indemnity requirement in section 2802 is not contractual.
(See Cassady v. Morgan, Lewis & Bockius LLP, supra, 145 Cal.App.4th at p. 238 [“Nor
is the indemnity requirement at issue here based upon a contract between the parties”];
Grissom v. Vons Companies, Inc., supra, 1 Cal.App.4th at p. 60 [“The rights [§ 2802]
creates are statutory, not contractual”].) While it is true that a contract of employment
must exist for section 2802 to apply -- inasmuch as that statute applies only to an
employer and an employee -- that does not mean that the obligation of indemnity
imposed by section 2802 arises from “a contract of indemnity” subject to the rules of
interpretation in Civil Code section 2778. For there to be a contractual obligation of
indemnity, the parties would have had to consent to that obligation. There is no evidence
they did so. The contract on which Carter relies here is one of employment, not
indemnity, and the obligation of indemnity arises only by operation of law from the terms
of section 2802, without the consent of either the employer or the employee. Thus, Civil
Code section 2778 has no application here.
10
Second, even if Civil Code section 2778 did apply, it would not support Carter’s
argument that he was necessarily entitled to choose his own attorney at Entercom’s (or
Vigilant’s) expense. Even in the context of a contract of indemnity subject to Civil Code
section 2778, it has been said that while “an indemnitee is always free to conduct his own
defense despite the obligation imposed upon the indemnitor so to do,” “absent some
contractual privilege so to do or some showing of sufficient justification or need
therefore, an indemnitee ordinarily may not refuse to join in or cooperate with the
indemnitor’s proffered defense and still recover his separate and redundant attorneys’
fees and costs.” (Buchalter v. Levin (1967) 252 Cal.App.2d 367, 371.) “ ‘[I]f the
indemnitor notifies the indemnitee that he will defend an action against the indemnitee,
and does so, the indemnitee is not entitled to recover fees of his attorneys for their
participation in the defense with permission of the indemnitor, where such intervention
was not required by the terms of the agreement and according to the evidence was wholly
voluntary and gratuitous.’ ” (Ibid.) Thus, even under the rules of interpretation in Civil
Code section 2778, an indemnitee does not have an absolute right to conduct his own
defense at the expense of the indemnitor.
In summary, we reject Carter’s argument that he was absolutely entitled to be
represented by counsel of his own choice at the expense of Entercom or Vigilant.
II
Indemnity For Necessary Expenditures
Section 2802 gives the employee the right to indemnity for “necessary
expenditures,” and thus the dispositive question here is whether the fees and costs Carter
incurred for the attorneys he chose were “necessary” when his employer had arranged,
through its insurer, to provide Carter with a different attorney at no cost to him. To
answer that question, we first take a closer look at the Grissom case.
In Grissom, a truck driver who was injured in an accident sued the individuals he
contended were responsible, and he also filed a workers’ compensation claim against his
11
employer (Vons). (Grissom v. Vons Companies, Inc., supra, 1 Cal.App.4th at p. 56.)
The individuals filed a cross-complaint against the truck driver, claiming he was
responsible for their injuries. (Ibid.) The truck driver demanded that Vons defend him
against the cross-complaint, and Vons hired a law firm to do so. (Ibid.) When the truck
driver discovered that the firm representing him was also representing Vons with respect
to his workers’ compensation claim, he fired the firm and demanded that Vons provide
him with independent counsel. (Ibid.) Vons refused, so the truck driver sued Vons,
seeking a declaration that Vons was required to provide him with another attorney.
(Ibid.) Vons demurred, and the trial court sustained the demurrer without leave to
amend. (Ibid.)
The appellate court concluded the trial court erred in sustaining the demurrer
because the truck driver might be able to state a cause of action for indemnity against
Vons under section 2802. (Grissom v. Vons Companies, Inc., supra, 1 Cal.App.4th at
pp. 56, 59.) The court explained that while section 2802 does not impose on an employer
the duty to provide a defense to an employee, the statute does give the employee the right
to indemnity for necessary expenditures, and such expenditures may include the cost of
independent counsel. As the Grissom court explained, “just because an employer selects
and pays for an attorney to defend an employee does not mean that the employee might
not find it reasonably necessary to select and hire additional counsel. Counsel selected
by the employer may be incompetent, or, as the initial law firm selected by the employer
in this case, possibly caught in a conflict of interest between the employer and the
employee. Additionally, the sheer press of time may make it ‘necessary’ for an employee
to select and hire his or her own counsel. If an employer dithers on an employee’s
request for counsel while time to respond to a complaint or some discovery request is
running out, the employee is practically forced to go out and hire an attorney to take the
appropriate action--even if the employer later decides to provide counsel free of charge.
12
“Necessity is by nature a question of fact. . . . Accordingly, ascertaining what was
a necessary expenditure will require an inquiry into what was reasonable under the
circumstances. While we can imagine some factors which have an obvious bearing on
whether legal expenses incurred by an employee are necessary, the reasonableness of any
given expenditure must turn on its own facts.” (Grissom v. Vons Companies, Inc., supra,
1 Cal.App.4th at p. 58, fn. omitted.) The factors the Grissom court identified as relevant
to the determination of necessity were the following: “whether the employer has already
agreed to provide counsel,” “the competency and experience of counsel provided by the
employer,” “any time constraints requiring the employee to take unilateral action in
selecting and hiring counsel,” “the complexity and difficulty of the litigation against the
employee in relation to the ability and capacity of the employer-provided counsel,”
“whether there are any conflicts between the employer and the employee,” “the past
history of the relationship between the employer and the employee,” and “the nature of
any problems arising in the attorney-client relationship and the reasons behind those
problems.” (Id. at p. 58, fn. 4.)
Grissom provides the framework for our analysis of the remainder of Carter’s
arguments challenging the trial court’s decision on his indemnity claim under
section 2802. The question is whether the additional expenditures for which Carter
sought indemnity -- namely, the fees and costs he incurred after he rejected the attorney
Vigilant had retained to represent him -- were necessary. The trial court decided they
were not, and because necessity is a question of fact, the issue for us is whether the trial
court’s determination that the additional expenditures were not necessary is supported by
substantial evidence. (See Jessup Farms v. Baldwin (1983) 33 Cal.3d 639, 660 [“Where
findings of fact are challenged on a civil appeal, we are bound by the ‘elementary, but
often overlooked principle of law, that . . . the power of an appellate court begins and
ends with a determination as to whether there is any substantial evidence, contradicted or
uncontradicted,’ to support the findings below”].)
13
Here, Carter does not frame his arguments in terms of the sufficiency of the
evidence to support the trial court’s factual finding that all of his expenditures after
February 22, 2007, were unnecessary. Instead, he notes the various factors identified in
Grissom as relevant to the determination of necessity and then argues that those factors
“strongly militate in favor of a conclusion that [he] acted reasonably in expending funds
on counsel of his choice for purposes of defending the actions against him.” In
particular, Carter contends it was reasonable for him to incur fees and costs for the
attorney he had chosen instead of using the attorney Vigilant hired for him because:
(1) “Entercom’s act of turning [his] defense over to its insurance carrier was inadequate
to provide a complete defense to [him]” and (2) “counsel provided by the insurance
carrier labored under a conflict of interest.” Underlying both of these assertions is
Carter’s foundational premise that the attorney Vigilant retained to defend him in the
Strange action could not adequately represent him because he (Carter) “faced both the
prospect of criminal charges and punitive damages.” Viewed in light of our standard of
review, then, Carter can be understood to argue that his “need of a defense to possible
felony homicide charges and punitive damages claims,” which the insurance company
did not offer him, essentially overrode all of the other relevant factors and required the
trial court to find, as a matter of law, that the fees and costs he incurred after February 22,
2007, were reasonable and necessary.
We address the issue of punitive damages first. It is true that “public policy
prohibits the payment of punitive damage awards by [an] insurer.” (Peterson v. Superior
Court (1982) 31 Cal.3d 147, 157.) Thus, even though Vigilant offered to defend Carter
without a reservation of rights, Carter still faced potential exposure to a punitive damage
award, which Vigilant would have been forbidden by law from indemnifying him against.
In Carter’s view, this potential exposure necessarily made it reasonable for him to retain
an attorney other than the one Vigilant offered him. We disagree.
14
The decision of this court in Foremost Ins. Co. v. Wilks (1988) 206 Cal.App.3d
251 provides guidance here. In Foremost, the “critical issue presented” was “whether an
insurer is required to furnish independent counsel selected by the insured and paid for by
the insurer when the complaint against the insured seeks recovery of punitive damages as
well as compensatory damages.” (Id. at p. 254.) This court held that “the mere allegation
of punitive damages and a prayer therefor does not alone create a conflict between the
insured and insurer and trigger the . . . duty to provide the insured with independent
counsel.” (Ibid.) The court reasoned that there was no conflict of interest because it was
in the insurer’s interest “to vigorously defend the suit to avoid liability for
indemnification of compensatory damages,” and given the facts of the case and the
coverage afforded the insured under the policy, the insurer would gain no benefit from
pursuing a theory that the insured acted with the intent necessary to support an award of
punitive damages. (Id. at p. 261.)
The same reasoning applies here. Carter points to no reason why it would have
been in Vigilant’s interest to pursue a theory that would have subjected Carter to an
award of punitive damages, and because Vigilant was liable for any compensatory
damages award against Carter, it was in Vigilant’s interest, just as much as (if not more
than) it was in Carter’s interest, to vigorously defend against the Strange action. Under
these circumstances, Carter has failed to show that the mere prospect of punitive damages
prevented the attorney retained by Vigilant from providing Carter with a complete
defense or created a conflict of interest that made it necessary for him to retain
independent counsel.
We turn now to the potential for criminal charges. As Carter asserts, “it was
undisputed that after the victim died in this case, the Sacramento County Sheriff’s
Department and the Sacramento County District Attorney’s Office commenced criminal
investigations.” Carter further asserts that “[u]nder these circumstances, any reasonable
person in Mr. Carter’s position would want counsel to defend him against potential
15
criminal charges.” That bare assertion, however, is not sufficient to persuade us that the
trial court was bound, as a matter of law, to conclude that some or all of the attorney fees
and costs Carter incurred after February 22, 2007, were necessary. On this point, it is
significant to note that we have already rejected all of Carter’s arguments for indemnity
under section 2802 relating to his need for legal representation in the Strange civil action.
Thus, the only question before us is whether there was evidence before the trial court
sufficient to compel the conclusion that Carter needed to pay an attorney to represent him
in connection with the pending criminal investigation.
The answer to that question is “no.” Carter points to absolutely nothing in his
offer of proof that has any tendency to show that he needed representation in connection
with the criminal investigation. He points to no evidence of what that investigation
entailed, no evidence that he was ever contacted or interviewed in the course of that
investigation, and no evidence that the attorney he hired ever did a single thing connected
to the criminal investigation. In fact, we have reviewed the time entries on the billing
statement from the attorney’s initial meeting with Carter on January 19, 2007, through
April 2, 2007, when the district attorney announced that no criminal charges would be
filed, and we find not a single mention of the criminal investigation.
Carter argues that the April 2 date should not be used as a cut-off because the
district attorney was not bound by her announcement that she did not intend to pursue
criminal charges and thus “the District Attorney’s letter of April 2, 2007, did not
terminate the possibility of criminal . . . liability on the part of Mr. Carter.” But this
argument misses the point. The question is not whether there was some iota of a
possibility, however unlikely, that Carter could have been criminally prosecuted. The
question is whether the attorney fees and costs Carter incurred after Vigilant offered him
an attorney free of charge to defend him in the civil suit were “necessary expenditures”
within the meaning of section 2802, such that Entercom was under an obligation to
indemnify Carter for those expenditures. Even more specifically, the question before us
16
is whether Carter has shown that there was no substantial evidence to support the trial
court’s finding that those expenditures were not necessary and that, instead, the trial court
was bound to conclude as a matter of law that at least some of those expenditures were
necessary. Carter has not made that showing. The mere fact that a criminal investigation
was ongoing for two and one-half months and that the district attorney was not absolutely
barred from bringing criminal charges even after she announced that she did not intend to
do so at the conclusion of that investigation does not compel the conclusion that Carter
needed to spend money on an attorney, especially when there is no evidence the attorney
ever had anything to do whatsoever with the criminal investigation or ever took any
action relating to the potential for criminal charges against Carter.
On the record here, then, there was substantial evidence to support the trial court’s
determination that Carter did not need to incur fees or costs for independent counsel after
February 22, 2007, when Vigilant informed him that it had retained an attorney to
represent him in the Strange action, notwithstanding the fact that Carter faced a potential
claim for punitive damages and that a criminal investigation continued for a little over a
month thereafter. Accordingly, Carter has shown no error in the trial court’s ruling on his
claim for indemnity under section 2802.
All that remains is Carter’s argument that the trial court erred in refusing to allow
him to amend his cross-complaint on the day of trial to allege a claim for quantum meruit
and unjust enrichment. This argument need not detain us long. The gist of Carter’s
argument is that the fees and costs he incurred “for counsel of his choosing conferred a
direct benefit on Entercom and Vigilant because the contract of employment between
[Carter] and Entercom created an obligation on the part of Entercom, under section 2802,
to indemnify Carter for his reasonable fees and expenses in defending the Strange
lawsuit. Carter undertook his defense, and was entitled to indemnification for this, yet
Entercom paid nothing.” Stated another way, Carter contends he had a right to recover in
quantum merit the amount by which Entercom was unjustly enriched because “Entercom
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had a statutory obligation of indemnification and paid nothing.” The trial court found,
however, that Entercom did not have an obligation to indemnify Carter under
section 2802 for anything other than the fees he incurred through February 22, 2007, and
we have upheld that finding. Because Entercom had no statutory duty to indemnify
Carter any further than the trial court ordered, by Carter’s own argument Entercom was
not unjustly enriched by the additional services Carter’s attorney provided and Carter was
not entitled to recover in quantum meruit for the cost of those services. “The mere
nonpayment for services ‘does not constitute unjust enrichment.’ ” (Castillo v. Barrera
(2007) 146 Cal.App.4th 1317, 1328-1329.)
DISPOSITION
The judgment is affirmed. Entercom shall recover its costs on appeal. (Cal. Rules
of Court, rule 8.278(a)(1).)
ROBIE , J.
We concur:
HULL , Acting P. J.
DUARTE , J.
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