Weingarten v. Certain Underwriters at Lloyd's etc. CA2/4

Filed 3/23/23 Weingarten v. Certain Underwriters at Lloyd’s etc. CA2/4
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FOUR
ALEX WEINGARTEN, B321148
Plaintiff and Respondent, (Los Angeles County
v. Super. Ct. No.
20STCV15841)
CERTAIN UNDERWRITERS AT
LLOYD’S, LONDON
SUBSCRIBING TO POLICY
NUMBER IML-0114N0-190029,
Defendant and Appellant.
APPEAL from an order of the Superior Court of Los
Angeles County, Steven J. Kleifield, Judge. Affirmed.
Wilson Elser Moskowitz Edelman & Dicker and B. Otis
Felder for Defendants and Appellants.
Herzog, Yuhas, Ehrlich & Ardell, Ian Herzog, Evan D.
Marshall, Justin Ehrlich and Eric Freeman for Plaintiff and
Respondent.
INTRODUCTION
Defendants Certain Underwriters at Lloyd’s, London
Subscribing to Policy Number IML-0114N0-190029 (Lloyd’s
Underwriters)1 appeal from the trial court’s order denying their
motion to compel arbitration of plaintiff Alex Weingarten’s
complaint for breach of implied covenant of good faith and fair
dealing, intentional infliction of emotional distress, and negligent
misrepresentation. In their opening brief, Lloyd’s Underwriters
also challenge the trial court’s denial of their motion to quash for
lack of personal jurisdiction. With respect to the motion to quash,
for the reasons discussed below, we conclude: (1) because Lloyd’s
Underwriters failed to appeal from the order denying their
motion to quash, we lack jurisdiction to address the merits of
their argument; and (2) even if we had jurisdiction, Lloyd’s
Underwriters waived their personal jurisdiction challenge by
failing to timely petition for writ of mandate after the trial court
denied their motion and instead filing an answer to the operative
complaint and a motion to compel arbitration. We further
1 “Certain Underwriters at Lloyd’s, London” is the term used
by Weingarten to refer to the individual underwriters of
Weingarten’s insurance policy. By way of background,“[t]he
anonymous underwriters of Lloyd’s insurance, who are
commonly referred to as ‘Names,’ invest in a percentage of the
policy risk. . . . [E]ach Lloyd’s Name is exposed to unlimited
liability, but only for his or her share of the loss on a policy that
the Name has underwritten. In other words, the liability of each
Name on any given policy, while unlimited, is several and not
joint. Insurance from Lloyd’s is typically subscribed to by
hundreds of Names belonging to different subgroups known as
‘syndicates.’” (E.R. Squibb & Sons, Inc. v. Accident & Cas. Ins.
Co. (2nd Cir. 1998) 160 F.3d, 925, 929.)
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conclude the trial court did not err by denying Lloyd’s
Underwriters’ motion to compel arbitration because no
arbitration agreement exists between Lloyd’s Underwriters and
Weingarten. Accordingly, we affirm.
FACTUAL AND PROCEDURAL BACKGROUND
A. The Underlying Malpractice Action
In 2013, Adam Levin, Tristen Lazareff, and Criterion
Capital Partners, LLC, retained Weingarten Brown LLP to
defend them in the case entitled MXB Holdings LP, et al. v.
Adam Levin, et al., San Francisco Superior Court Case No. CGC-
XX-XXXXXXX (the MXB action). The retainer agreement (the
Levin/Weingarten retainer agreement) contained an arbitration
provision, which provided in part: “Any disputes arising out of or
relating to this Agreement, or to enforce or interpret this
Agreement shall be resolved by binding arbitration administered
by JAMS, as more specifically provided below. The arbitration
will be governed by the laws of the State of California, regardless
of whether other laws or locations are involved in the
representation.”
On February 25, 2015, Adam Levin and Criterion Capital
Partners, LLC, filed an action in the Los Angeles Superior Court
for legal malpractice and breach of fiduciary duty against Alex
Weingarten, Weingarten Brown LLP, and Venable LLP (the
malpractice action).2 The complaint alleged Weingarten
negligently represented the defendants in the MXB action. The
2 The complaint alleged Venable LLP acquired Weingarten
Brown LLP in July 2014, assumed the duties and obligations of
Weingarten Brown LLP, and assumed an attorney-client
relationship with plaintiffs.
3
parties later stipulated to arbitration before JAMS based on the
arbitration provision in the retainer agreement. Weingarten
notified Lloyd’s Underwriters about the malpractice action,3 and
Lloyd’s Underwriters accepted defense of the Weingarten
defendants.
The arbitrator found in favor of Adam Levin and Criterion
Capital Partners, LLC, and issued an award that exceeded
Weingarten’s insurance coverage.
B. The Bad Faith Action
In April 2020, Weingarten sued Lloyd’s Underwriters for
breach of the implied covenant of good faith and fair dealing,
intentional infliction of emotional distress, and negligent
misrepresentation.4 In the operative complaint (the SAC), filed on
April 20, 2021, Weingarten alleges Lloyd’s Underwriters acted in
bad faith in the malpractice action by, among other things,
“[r]ejecting settlement within the policy limits when they knew or
should have known that the potential judgment could exceed the
amount of the limits and by failing to act in good faith and weigh
the insureds’ interests at least as equally as their own[.]”
In response to the SAC, Lloyd’s Underwriters moved to
quash service of the complaint, contending they were neither
3 Lloyd’s Underwriters issued a malpractice policy to
Weingarten Brown LLP, effective January 1, 2014.
4 Weingarten also sued Landmark American Insurance
Company and Robert A. Cutbirth. They are not parties to this
appeal.
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properly named in the complaint nor properly served.5
Weingarten opposed the motion, detailing the “numerous
occasions [Weingarten] perfected service” on Lloyd’s
Underwriters.6 On January 10, 2022, the trial court denied
Lloyd’s Underwriters’ motion to quash.
On January 31, 2022, Lloyd’s Underwriters filed a motion
to compel arbitration of the SAC based on the arbitration
provision in the Levin/Weingarten retainer agreement. They
argued that although they are nonsignatories to the
Levin/Weingarten retainer agreement, they are third party
beneficiaries of the agreement and, therefore, they are entitled to
enforce the arbitration clause. They further argued Weingarten is
bound under principles of estoppel because Weingarten moved to
compel arbitration of the underlying malpractice action.
Weingarten opposed the motion, arguing: the insurance policy
issued by Lloyd’s Underwriters does not contain an arbitration
provision; Lloyd’s Underwriters are not intended, or third party,
beneficiaries of the Levin/Weingarten retainer agreement; and
the doctrine of equitable estoppel is inapplicable. On March 29,
2022, after a hearing on the motion to compel arbitration, the
trial court denied the motion.
On April 18, 2022, Lloyd’s Underwriters filed a notice of
appeal from the March 29, 2022 order denying their motion to
5 The motion to quash is not included in the record on
appeal. The parties agree, however, on the grounds on which the
motion was filed.
6 Because we do not reach the merits of Lloyd’s
Underwriters’ contention that the court erred by denying their
motion to quash, we omit recitation of the facts regarding service
of the complaint and amended complaints.
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compel arbitration. On April 22, 2022, Lloyd’s Underwriters filed
an answer to the SAC.
DISCUSSION
A. Motion to Quash
Lloyd’s Underwriters contend the trial court erred by
denying their motion to quash service of summons because
Weingarten failed to properly name and serve “the alleged
foreign insurers who do not do business in California.” This issue
is not properly before us on appeal for two reasons.
First, Lloyd’s Underwriters failed to identify the order
denying their motion to quash in their notice of appeal. “[T]he
timely filing of an appropriate notice of appeal or its legal
equivalent is an absolute prerequisite to the exercise of appellate
jurisdiction.” (Hollister Convalescent Hospital, Inc. v. Rico (1975)
15 Cal.3d 660, 670.) “Generally, we must liberally construe a
notice of appeal in favor of its sufficiency. (Cal. Rules of Court,
rules 8.100(a)(2), 8.405(a)(3).) A notice of appeal shall be ‘liberally
construed so as to protect the right of appeal if it is reasonably
clear what [the] appellant was trying to appeal from, and where
the respondent could not possibly have been misled or
prejudiced.’” (In re J.F. (2019) 39 Cal.App.5th 70, 75, original
italics.) “But there are limits to our ability to liberally construe a
notice of appeal. ‘The policy of liberally construing a notice of
appeal in favor of its sufficiency [citation] does not apply if the
notice is so specific it cannot be read as reaching a judgment or
order not mentioned at all.’” (Id. at p. 76.) “Therefore, when a
notice of appeal manifests a ‘clear and unmistakable’ intent to
appeal only from one order, we cannot liberally construe the
notice to apply to a different, omitted order.” (Ibid.)
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Lloyd’s Underwriters’ notice of appeal omits any reference
to the January 10, 2022 order denying their motion to quash.
Instead, the notice expressly states Lloyd’s Underwriters
intended to appeal solely from the March 29, 2022 “Order
denying Defendant[s’] Petition and Motion to Compel Arbitration
filed by [Lloyd’s Underwriters] under Code of Civil Procedure
§ 1294 & CRC 8.712 (Chap. 2)[.]” Thus, we cannot liberally
construe Lloyd’s Underwriters’ notice of appeal to embrace the
January 10, 2022 order denying their motion to quash. (See
Baker v. Castaldi (2015) 235 Cal.App.4th 218, 225 [“[I]t is well
‘beyond liberal construction’ to view an appeal from one order as
an appeal from a ‘further and different order’”].) We therefore
lack jurisdiction to review the omitted order. (See Faunce v.
Cate (2013) 222 Cal.App.4th 166, 170 [“‘Our jurisdiction on
appeal is limited in scope to the notice of appeal and the
judgment or order appealed from.’ [Citation.] We have no
jurisdiction over an order not mentioned in the notice of
appeal”].)
Second, even if we had jurisdiction, we note Lloyd’s
Underwriters waived any purported personal jurisdiction defect
by failing to timely file a petition for writ of mandate. “A general
appearance occurs when the defendant takes part in the action or
in some manner recognizes the authority of the court to proceed.”
(Dial 800 v. Fesbinder (2004) 118 Cal.App.4th 32, 52; see also
Code Civ. Proc.,7 § 1014 [“A defendant appears in an action when
the defendant answers” the complaint].) “Such participation
operates as consent to the court’s exercise of jurisdiction in the
proceeding.” (In re Marriage of Obrecht (2016) 245 Cal.App.4th 1,
7 All further undesignated references are to the Code of Civil
Procedure.
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7.) “By generally appearing, a defendant relinquishes all
objections based on lack of personal jurisdiction or defective
process or service of process.” (Id. at p. 8.)
“Section 418.10 fixes the point in time at which a defendant
who participates in litigation after filing a motion to quash will
be deemed to have made a general appearance.” (ViaView, Inc. v.
Retzlaff (2016) 1 Cal.App.5th 198, 212 (ViaView).) Subdivision
(e)(1) of section 418.10 provides: “If the court denies the motion
[to quash], the defendant or cross-defendant is not deemed to
have generally appeared until entry of the order denying the
motion.” “Subdivision (e)(2) extends that time in cases where a
party petitions for a writ of mandate: ‘If the motion . . . is denied
and the defendant . . . petitions for a writ of mandate . . . , the
defendant . . . is not deemed to have generally appeared until the
proceedings on the writ petition have finally concluded.’ (Italics
added.) The petition for writ of mandate must be filed ‘within 10
days after service . . . of a written notice of entry of an order of the
court denying [the] motion, or within any further time not
exceeding 20 days that the trial court may for good cause allow.’
(§ 418.10, subd. (c), italics added.)” (ViaView, supra, 1
Cal.App.5th at p. 212.) Thus, subdivision (e) “‘does not change the
essential rule that “[a] defendant submits to the court’s
jurisdiction by making a general appearance in an action” by
“participat[ing] in the action in a manner which recognizes the
court’s jurisdiction.” [Citation.] It merely delays the effect of such
actions until the motion to quash is denied or, if the defendant
seeks writ review, until proceedings on the writ have concluded.’”
(ViaView, supra, 1 Cal.App.5th at p. 211.)
Here, as discussed above, the trial court entered the order
denying Lloyd’s Underwriters’ motion to quash on January 10,
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2022. Rather than file a petition for writ of mandate, as required
by section 418.10, subdivision (c), on January 31, 2022, Lloyd’s
Underwriters filed a motion to compel arbitration of the claims in
the SAC. After the trial court denied their motion to compel,
Lloyd’s Underwriters filed an answer to the SAC. By filing a
motion to compel arbitration and an answer to the SAC without
first filing a petition for writ of mandate seeking reversal of the
order denying their motion to quash service, Lloyd’s
Underwriters generally appeared in the action, and thus waived
their personal jurisdiction challenge. (See, e.g., ViaView, supra, 1
Cal.App.5th at p. 210 [“A defendant submits to the court’s
jurisdiction by making a general appearance in an action and
thereby waives the defense of lack of personal jurisdiction”]; see
also People v. Mena (2012) 54 Cal.4th 146, 155-156 [“Under Code
of Civil Procedure section 418.10, subdivision (c), a defendant in a
civil case may only challenge by extraordinary writ a trial court
order refusing to quash service” because “the Legislature has
made writ relief the exclusive avenue to address trial court
error”]; State Farm General Ins. Co. v. JT’s Frames, Inc. (2010)
181 Cal.App.4th 429, 437 [“It has long been the rule in California
that a defendant who chooses to litigate the merits of a lawsuit
after its motion to quash has been denied has no right to raise
the jurisdictional question on appeal”].)8
8 We note Lloyd’s Underwriters correctly state in their
opening brief that subject matter jurisdiction can never be
waived. But here, Lloyd’s Underwriters do not argue the trial
court lacks jurisdiction to hear the subject matter of the dispute,
i.e., a bad faith insurance matter. Rather, they argue the trial
court lacks personal jurisdiction over Lloyd’s Underwriters
because they allegedly were misnamed in the complaint and not
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B. Motion to Compel Arbitration
Turning to the order properly before us, Lloyd’s
Underwriters contend the trial court erred by denying their
motion to compel arbitration based on the arbitration clause in
the Weingarten/Levin retainer agreement. Lloyd’s Underwriters
acknowledge they were not parties to the Weingarten/Levin
retainer agreement. They nevertheless argue arbitration
agreements are enforced with regularity against nonsignatories,
and list six theories by which a nonsignatory may be bound to
arbitrate: incorporation by reference; assumption; agency; veil-
piercing or alter ego; estoppel; and third party beneficiary.
Although not entirely clear, Lloyd Underwriters appear to rely on
third party beneficiary and estoppel theories as a basis for
requiring Weingarten to arbitrate his claims. Neither of those
theories, however, apply here.
“A third party beneficiary is someone who may enforce a
contract because the contract is made expressly for his [or her]
benefit.” (Matthau v. Superior Court (2007) 151 Cal.App.4th 593,
602.) “‘“The test for determining whether a contract was made for
the benefit of a third person is whether an intent to benefit a
third person appears from the terms of the contract.”’” (Cargill,
Inc. v. Souza (2011) 201 Cal.App.4th 962, 967.) “[T]he terms of
the contract must demonstrate the express intent to confer the
benefit.” (Jensen v. U-Haul Co. of California (2017) 18
Cal.App.5th 295, 302.)
properly served. (See, e.g., Donaldson v. National Marine, Inc.
(2005) 35 Cal.4th 503, 512, original italics [“Generally subject
matter jurisdiction is the court’s power to hear and resolve a
particular dispute or cause of action, while personal jurisdiction
relates to the power to bind a particular party . . . .”].)
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Applying these principles, we conclude Lloyd’s
Underwriters are not third party beneficiaries of the
Levin/Weingarten retainer agreement. The retainer agreement
describes the scope of legal services to be provided by
Weingarten’s law firm to the defendants in the MXB action.
Section 12 of the agreement provides Weingarten’s law firm will
maintain “errors and omissions (‘malpractice’) insurance for the
services to be rendered pursuant to this agreement.” Nothing in
the retainer agreement, however, demonstrates an express intent
to benefit a third party—whether Lloyd’s Underwriters
specifically or any other insurance company generally.
We likewise reject Lloyd’s Underwriters’ contention that
Weingarten is equitably estopped from opposing their motion to
compel arbitration. Under the doctrine of equitable estoppel, “‘a
nonsignatory defendant may invoke an arbitration clause to
compel a signatory plaintiff to arbitrate its claims when the
causes of action against the nonsignatory are “intimately founded
in and intertwined” with the underlying contract obligations.’”
(JSM Tuscany, LLC v. Superior Court (2011) 193 Cal.App.4th
1222, 1237.) “‘This requirement comports with, and indeed
derives from, the very purposes of the doctrine: to prevent a party
from using the terms or obligations of an agreement as the basis
for his claims against a nonsignatory, while at the same time
refusing to arbitrate with the nonsignatory under another clause
of that same agreement.’” (Id. at p. 1238.)
Here, the FAC does not assert claims against Lloyd’s
Underwriters that are based on the Levin/Weingarten retainer
agreement; the claims are based on the insurance policy provided
to Weingarten by Lloyd’s Underwriters. Specifically, the FAC
alleges Lloyd’s Underwriters breached the implied covenant of
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good faith and fair dealing by, among other things, rejecting the
settlement within the policy limits, narrowly interpreting the
provisions of the insurance policy, failing to adequately assess
and investigate the merits of claims and defenses asserted in the
underlying malpractice action, and failing to act in the best
interests of the insureds by unreasonably failing or refusing to
engage in settlement discussions despite knowing Weingarten’s
desire to settle the action. The FAC, therefore, does not rely on or
use any terms of the Levin/Weingarten retainer agreement as a
foundation for its claims. (See, e.g., Goldman v. KPMG, LLP
(2009) 173 Cal.App.4th 209, 218 [declining to apply the doctrine
of equitable estoppel as the basis for allowing a nonsignatory to
enforce an arbitration clause where the plaintiffs’ complaints
“d[id] not rely on or use any terms or obligations of the operating
agreements [which contained the arbitration clause] as a
foundation for their claims”].) Accordingly, we conclude there is
no basis in law or equity for preventing Weingarten from suing
Lloyd’s Underwriters in court.
Lloyd’s Underwriters also note that a nonsignatory may be
bound to arbitrate where there is a preexisting relationship
between one of the parties to the arbitration agreement and a
nonsignatory. They rely on the allegation in the FAC that
“Weingarten entered into an agreement with Levin to share a
portion of the recovery which Weingarten may receive” in this
bad faith action. But this does not create a preexisting
relationship between Lloyd’s Underwriters on the one hand, and
Levin or Weingarten on the other.
Finally, Lloyd’s Underwriters alternatively contend an
arbitrator, not the court, must determine whether the dispute
between Weingarten and Lloyd’s Underwriters should be
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arbitrated. They rely on the proposition that questions of an
arbitration agreement’s scope “are for the arbitrators and not for
the court to resolve.” (Felner v. Meritplan Insurance Co. (1970) 6
Cal.App.3d 540, 543.) The issue here, however, is not the scope of
the Levin/Weingarten retainer agreement, but whether an
arbitration agreement exists between Weingarten and Lloyd’s
Underwriters. Only the court can decide the threshold issue of
existence of an agreement to arbitrate. (See Henry Schein, Inc. v.
Archer & White Sales, Inc. (2019) __ U.S. __, __ [139 S.Ct. 524,
530, 202 L.Ed.2d 480] [“To be sure, before referring a dispute to
an arbitrator, the court determines whether a valid arbitration
agreement exists.”].) Thus, the trial court properly determined
the threshold issue of whether the nonsignatory defendants
(Lloyd’s Underwriters) could compel the signatory plaintiff
(Weingarten) to arbitrate his claims.
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DISPOSITION
The March 29, 2022 order is affirmed. Weingarten is
awarded his costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
CURREY, Acting P.J.
We concur:
COLLINS, J.
STONE, J.*
* Judge of the Los Angeles Superior Court, assigned by the
Chief Justice pursuant to Article VI, section 6, of the California
Constitution.
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