Andrade v. Jennings
| Decision Date | 31 March 1997 |
| Docket Number | No. D020822,D020822 |
| Citation | 62 Cal.Rptr.2d 787,54 Cal.App.4th 307 |
| Court | California Court of Appeals Court of Appeals |
| Parties | , 1997 A.M.C. 2193, 97 Cal. Daily Op. Serv. 2830, 97 Daily Journal D.A.R. 5016 Manuel J. ANDRADE, Intervener and Appellant, v. Dennis Edward JENNINGS, Defendant and Respondent. |
Higgs, Fletcher & Mack and John Morris, Webb, Smelko & Carey and Patrick D. Webb, San Diego, for Intervener and Appellant.
Rice, Fowler Booth & Banning, Norman J. Ronneberg, Jr., San Francisco, for Defendant and Respondent.
Intervener Manuel J. Andrade appeals a judgment after jury trial favoring defendant Dennis Edward Jennings (sued as Underwriters at Lloyd's, London) on Andrade's complaint-in-intervention for declaratory relief and breach of contract. Attacking the jury's special verdicts sustaining Jennings's defense of collusion, Andrade contends such defense was barred as a matter of law and unsupported by substantial evidence. We affirm the judgment.
Jennings issued an excess liability policy to tuna boat captain Andrade's employer. Suffering Under the settlement agreement, Andrade dismissed his state lawsuit against his employer. However, agreeing that Andrade could obtain judgment in his federal lawsuit against his employer in an amount invoking the excess policy issued by Jennings, Andrade and his employer scheduled a prove-up hearing in the federal court. Jennings was then notified of the settlement agreement and scheduled hearing. At the prove-up hearing Andrade presented evidence and his employer offered no defense. The federal court entered judgment favoring Andrade in the requested amount. Although notified of the prove-up hearing, Jennings declined to attend due to his belief such appearance would be pointless in light of Andrade's employer's effective admission of liability as part of the settlement.
shipboard injury, Andrade made a claim against his employer and the vessel. Andrade filed state and federal lawsuits. Since Andrade's employer's primary insurer was insolvent, the employer and the vessel's lienholders sought to settle Andrade's claim without impairing their interests in the vessel. Eventually, without informing Jennings, the employer [54 Cal.App.4th 313] settled with Andrade for an amount invoking Jennings's excess policy. Andrade agreed not to execute against his employer's assets including the vessel, with the employer assigning to Andrade all its rights against excess insurer Jennings.
Andrade then intervened in his employer's state lawsuit against Jennings. As a third party beneficiary of the excess policy issued by Jennings and as his employer's assignee, Andrade sought recovery from Jennings. Defending against Andrade's claim, Jennings asserted the federal judgment was unenforceable as the result of Andrade's collusion with his employer. After the superior court granted summary adjudication/judgment favoring Andrade, we reversed and remanded on the limited ground the record contained evidence raising triable factual issues on Jennings's defense of collusion. Upon remand, the defense of collusion was tried to a jury. The jury returned special verdicts favoring Jennings. Andrade appeals, attacking the verdicts as lacking legal or evidentiary support since despite notice Jennings did not timely intervene in the federal lawsuit.
We state the facts stipulated by the parties. We state other facts in the light most favorable to Jennings.
On behalf of his syndicate, Lloyds of London underwriter Jennings issued to Jorge Fishing, Inc. (Jorge), owner of the tuna seiner M/V Maria C.J., a protection and indemnity insurance policy for the period February 16, 1983, to February 16, 1984, covering claims exceeding $1 million up to a limit of $5 million (the excess policy). American Maritime Services Corporation (American Maritime) was the vessel's primary insurer, providing liability coverage up to $1 million. 1 Ultimately, American Maritime became insolvent.
Andrade worked as a commercial fisherman. Andrade never worked in any other occupation.
In July 1983 the M/V Maria C.J. was docked in Puerto Rico. During loading of aviation fuel onto the vessel, some of the fuel oil spilled onto the wet deck. The vessel's Chief Engineer Mamede walked through the spilled fuel and up a ladder to locate the vessel's 33-year-old Captain Andrade. While following Mamede back down the ladder, Andrade slipped and fell. 2
Andrade was diagnosed with lumbar strain. Due to Andrade's continued pain, doctors thought he might have compression of a nerve root or a protruded disc. Back surgery (internal fixation) was recommended. 3
In October 1983 Andrade through attorney Dougherty sued Jorge in state court for damages for personal injuries allegedly incurred in his July 1983 accident aboard the M/V Maria C.J. (Andrade v. Maria C.J. (Super. Ct. San Diego County, 1983, No. 510275).) Andrade contended the vessel was unseaworthy due to the presence of aviation fuel on the wet deck. Andrade also contended the vessel was negligent in that its chief engineer Mamede allowed the spilling of aviation fuel. Wells Fargo Bank, the holder of a $10 million preferred ship mortgage on the M/V Maria C.J., retained the law firm of Gray, Cary, Ames & Frye (Gray Cary) to defend Jorge against Andrade's lawsuit. 4
On October 29, 1985, Gray Cary wrote Los Angeles attorney Bradley, counsel for Jennings in another matter. Gray Cary's letter stated Andrade alleged he was "totally disabled from tuna fishing" and "we believe Mr. Andrade's claim may be in excess of $1,000,000.00, the amount of deductible after which your client's coverage begins."
On November 5, 1985, by letter to Gray Cary, Bradley stated his firm had not been retained in the Andrade matter and suggested Gray Cary have Jorge's insurance broker notify Jennings that Andrade's claim might exceed $1 million.
On December 13, 1985, Andrade submitted a settlement conference statement demanding $950,000 from Jorge.
On December 20, 1985, Gray Cary wrote counsel for Jorge's broker. Advising that in light of American Maritime's insolvency Jorge had no primary insurance, Gray Cary requested help in notifying Jennings that Jorge demanded defense of Andrade's action. Gray Cary's letter also stated Andrade's wage loss alone could exceed $900,000 and that at least one doctor had concluded On December 27, 1985, counsel for Jorge's broker advised Gray Cary to contact Jennings's London broker. Gray Cary sent Jennings's London broker a copy of its earlier letter to Jorge's broker's counsel. Gray Cary also advised Jennings's London broker that trial was "fast approaching" and asked for an immediate response.
Andrade's back injuries required spinal fusion surgery. Gray Cary's letter further stated: "We have already attempted to negotiate with Mr. Andrade's attorney, William Dougherty, to assign to him all claims that the owners may have against their various insurers and against your client...."
On January 3, 1986, Gray Cary was informed by Jennings's broker that Jennings had requested the San Francisco law firm of Hancock, Rothert & Bunshoft (Hancock) to contact Gray Cary.
In January 1986 attorney Booth of the Hancock firm asked attorney Kammer of Gray Cary to keep him updated on case developments including information bearing on liability, damages, medical complaints, and depositions. Kammer told Booth that Andrade's case had a $200,000 settlement value. Booth asked Kammer to provide him with any information indicating Andrade's claim might exceed $1 million.
On January 10, 1986, at the settlement conference, Andrade's Attorney Dougherty made an opening settlement demand of $950,000 against Jorge. Andrade's settlement statement took into account Andrade's claimed wage losses, his recommended back surgery, and his future medical costs. Dougherty generally expected a settlement recovery of between one-third and two-thirds of his initial demand. Gray Cary did not provide Jennings with a copy of Andrade's offer to settle for $950,000.
On May 12, 1986, PCA asked Gray Cary to seek speedy resolution of Andrade's claim and present a new settlement proposal to Andrade. PCA also told Gray Cary to fashion the settlement agreement without allowing Andrade to record a lien against the vessel and not to accept or appear to accept service of process for Jorge in any in rem federal court lawsuit.
On May 13, 1986, noting the absence of primary insurance covering Andrade's claim in light of American Maritime's insolvency, Gray Cary asked Dougherty to present an "immediate demand" and new settlement proposal. 5
On June 19, 1986, knowing his client Andrade was recovering well from back surgery performed the previous month, Dougherty met with Gray Cary's Kammer for about two hours to craft a settlement. Immediately after the meeting, Dougherty drafted and filed with the superior court an offer to compromise for a $1.5 million stipulated judgment. (Code Civ. Proc., § 998.) 6
On June 25, 1986, Andrade through attorney Dougherty sued Jorge and the M/V Maria C.J. in federal court seeking personal injury damages for negligence under the Jones Act and unseaworthiness under general maritime law. Dougherty named the vessel as a defendant in rem to preserve Andrade's rights. Gray Cary was Jorge's defense counsel.
On June 25, 1986, Gray Cary wrote Booth, enclosing medical bills for Andrade's surgery but not mentioning the recent settlement discussions with Dougherty.
On June 26, 1986, Gray Cary received Andrade's offer to compromise for $1.5 million. Gray Cary did not immediately provide Jennings with a copy of Andrade's $1.5 million demand.
On July 11, 1986, Andrade's counsel Dougherty began discussing settlement...
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...company’s performance is excused if its ability to provide a defense has been substantially prejudiced).[321] See Andrade v. Jennings, 54 Cal. App.4th 307, 62 Cal. Rptr.2d 787 (1997).[322] See Select Insurance Co. v. Superior Court, 226 Cal. App.3d 631, 276 Cal. Rptr. 598, 601 (1990).[323] ......
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