Afuso v. U.S. Fid. & Guar. Co.

• Decision Date: 27 June 1985
• Citation: 215 Cal.Rptr. 490,169 Cal.App.3d 859
• Court: California Court of Appeals Court of Appeals
• Parties: Toshiko AFUSO, Plaintiff and Appellant, v. UNITED STATES FIDELITY AND GUARANTY COMPANY, INC., et al., Defendants and Respondents. G001254.

Page 490

215 Cal.Rptr. 490

169 Cal.App.3d 859

Toshiko AFUSO, Plaintiff and Appellant, v. UNITED STATES FIDELITY AND GUARANTY COMPANY, INC., et al., Defendants and Respondents.

G001254.

Court of Appeal, Fourth District, Division 3, California.

June 27, 1985.

[169 Cal.App.3d 861] Allen & Flatt and Christian W. Wilbert, Newport Beach, for plaintiff and appellant.

Norby & Brodeur and Vincent W. Campbell, Torrance, for defendants and respondents.

OPINION

TROTTER, Presiding Justice.

Plaintiff appeals from a judgment dismissing her action against an insurer for bad faith after a demurrer to her original complaint was sustained without leave to amend.

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Plaintiff Toshiko Afuso filed a complaint against United States Fidelity and Guaranty Company, Inc. (USF & G), and two of its employees, alleging unfair claims settlement practices in violation of Insurance Code section 790.03, subdivision (h)(5). ¹ Plaintiff alleged she was injured in a motor vehicle accident on June 10, 1982, which was proximately caused by the negligence of Joseph Roybal, the driver of a vehicle owned by USF & G's insured. Plaintiff further alleged that on September 14, 1983, she accepted USF & G's offer to settle the suit for $40,000. She stated that, pursuant to the settlement, she executed "a release of all claims;" ² however, "[n]othing contained in said release purported to waive Plaintiff's right to proceed against Defendants ... for their breach of duty under Insurance Code section 790.03." Plaintiff did not attach a copy of the release to her complaint.

Defendants demurred to the complaint and attached a copy of the release. The trial court sustained the demurrer without leave to amend on the ground the release barred plaintiff's suit for violation of section 790.03.

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On appeal, plaintiff contends the trial court erred in sustaining the demurrer to her complaint. Initially, she argues the language of the release does not preclude her from litigating her claim against defendants for their violation of section 790.03. However, we need not address this issue since the release was not properly before the trial court.

"A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed (Code Civ.Proc., §§ 430.30, 430.70). The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action [citation]." (SKF Farms v. Superior Court (1984) 153 Cal.App.3d 902, 905, 200 Cal.Rptr. 497.) Defendants here did not request that the trial court take judicial notice of the release. (Evid.Code, § 453.) However, even if they had, judicial notice would not have been proper. Although a trial court may properly take judicial notice of the records of any court of record of any state of the United States (Evid.Code, § 452, subd. (d); Day v. Sharp (1975) 50 Cal.App.3d 904, 914, 123 Cal.Rptr. 918), there is no indication that the release in this case was part of any court record. Typically, the release in a personal injury suit is not filed with the court. Thus, the trial court here improperly considered the contents of the release.

Both parties agree the cases to be considered on this appeal are Rodriguez v. Fireman's Fund Ins. Co. (1983) 142 Cal.App.3d 46, 190 Cal.Rptr. 705 and Trujillo v. Yosemite-Great Falls Ins. Co. (1984) 153 Cal.App.3d 26, 200 Cal.Rptr. 26. Plaintiff, however, urges this court not to follow Trujillo. The Trujillo court interpreted Rodriguez as requiring a plaintiff to plead "... the allegedly inadequate settlement [of the underlying personal injury action] was accompanied by an express reservation of the right to claim more in a bad faith action...." in order to state a cause of action for bad faith against an insurer. (Trujillo v. Yosemite-Great Falls Ins. Co., supra, 153 Cal.App.3d at p. 28, 200 Cal.Rptr. 26.) However, before reaching the Trujillo issue, we must address the threshold question of whether plaintiff's underlying personal injury action was "concluded" for purposes of Royal Globe Ins. Co. v. Superior Court (1979) 23 Cal.3d 880, 153 Cal.Rptr. 842, 592 P.2d 329.

In Royal Globe Ins. Co. v. Superior Court, supra, 23 Cal.3d at p. 884, 153 Cal.Rptr. 842, 592 P.2d 329 the Supreme Court held a third party claimant may sue an insurer for violating section 790.03, subdivision (h), only after the action between the injured party and the insured is "concluded." The court explained the purpose of this requirement as follows: "... unless the trial against the insurer is postponed until the liability of the insured is first determined, the defense of the insured may be seriously hampered by discovery initiated by the injured claimant against the insurer. In addition, damages suffered by the injured party as a result of the insurer's violation of subdivisions (h)(5) and (h)(14) may best be determined after the conclusion of the action by the third party claimant against the insured." (Id., at p. 892, 153 Cal.Rptr. 842, 592 P.2d 329.)

Rodriguez v. Fireman's Fund Ins. Co., supra, 142 Cal.App.3d at p. 48, 190 Cal.Rptr. 705 expanded the concept of the "conclusion" of the action to include acceptance of a statutory offer (Code Civ.Proc., § 998) in addition to a final judgment. In Rodriguez, plaintiff accepted the statutory offer from Fireman's but notified Fireman's she was reserving her right to proceed against it and was releasing only its insured from further liability. After voluntarily dismissing her action against the insured with prejudice, she brought suit against Fireman's, alleging it violated section 793.03, subdivision (h). She also alleged at the time she accepted the settlement offer she advised Fireman's she was " 'reserving her right to proceed' " against it for claims she might have for " 'bad faith and tortious conduct' arising in the handling of her claim." (Id., at p. 50, 190 Cal.Rptr. 705.) The trial court sustained Fireman's demurrer to her complaint without leave to amend, holding no action by a third party claimant against an insurer should lie unless a judgment is first entered against the insured. The trial court also held plaintiff's reservation of rights to proceed against Fireman's had no legal effect.

On appeal, the Rodriguez court reversed, holding "[w]hile a preferred conclusion of an action is by final judgment, in cases where the liability of the insured is admitted and the underlying lawsuit is concluded by the statutory acceptance of an offer (Code Civ.Proc., § 998) followed by a judgment entered thereafter or an injured plaintiff's motion to dismiss with prejudice, the requirements of Royal Globe are satisfied." (Rodriguez v. Fireman's Fund Ins. Co., supra, 142 Cal.App.3d at p. 53, 190 Cal.Rptr. 705.) The court held plaintiff's action was "concluded" when...