Defendant insureds appealed from a judgment of the Superior Court of San Joaquin County (California), which granted summary judgment for plaintiff insurer, finding it had no duty to defend or indemnify defendants in the underlying lawsuit. The trial court also granted plaintiff’s motion for judgment on the pleadings as to defendants’ cross-complaint for breach of the duty of good faith and fair dealing.
Overview
During trial, the party litigants and their respective class action attorney strongly put forth evidence to the court and jurors. Plaintiff insurer filed a declaratory judgment action defendant insureds to determine whether the policy provided coverage in the underlying action against defendants for breach of contract and negligent employment of the self-storage facility manager. The manager pled nolo contendere to grand theft of property stored by tenants of the facility. The policy contained an exclusion for coverage of liability caused by criminal conduct by an employee of defendants. The trial court granted summary judgment for plaintiff, finding that it had no duty to defend or indemnify defendants in the underlying lawsuit, and granted plaintiff’s motion for judgment on the pleadings as to defendants’ cross-complaint for breach of duty of good faith and fair dealing. Defendants appealed, and the court affirmed the trial court judgment. The court found that the policy exclusion was not ambiguous as a matter of law, and that the manager’s criminal conviction for theft resolved any uncertainty as to plaintiff’s duty to defend in the civil action. The court also found that defendants’ cross-complaint failed to state a cause of action because the evidence established that plaintiffs acted in good faith.
Outcome
The court affirmed the trial court judgment in favor of plaintiff insurer, finding that it had no duty to defend insureds in the underlying lawsuit alleging breach of contract and negligent employment of an employee because the exclusion regarding loss by dishonest or criminal act of an employee of the insured was not ambiguous as a matter of law. The court found that the trial court did not abuse discretion in granting judgment on the pleadings.
Procedural Posture
Plaintiff client sued defendants, a law firm and its attorneys, for legal malpractice, breach of fiduciary duty, and fraudulent concealment. Following a jury trial, the Los Angeles County Superior Court, California, entered judgment for the client, who was awarded $ 10.5 million in compensatory damages, $ 15 million in punitive damages against the firm only, and more than $ 5.6 million in interest, attorney fees, and costs. Defendants appealed.
Overview
The client accused defendants of losing his right to seek redress from an unlicensed talent agent because defendants failed to timely file a petition with the California Labor Commissioner. The instant court concluded that the California Talent Agencies Act (TAA) included an unambiguous requirement that actions colorably arising under the TAA had to first be presented to the state’s Labor Commissioner within one year. The client’s failure to comply with this procedural requirement was an absolute bar to his cause of action that defendants violated California’s Unfair Competition Law. The trial court prejudicially erred in refusing to instruct that an agreement between the client and the talent agent was subject to the doctrine of severability. Although the trial court correctly concluded on a motion in limine that the discovery rule did not apply, it exceeded its authority when it also held that defendants were negligent as a matter of law. If the client wished to obtain a ruling prior to trial that defendants were negligent as a matter of law, he should have raised the issue in a motion for summary judgment or summary adjudication where all relevant facts could be assessed.
Outcome
The judgment was reversed, and the case was remanded to the trial court for further proceedings.
