Brandwein v. Butler

• Decision Date: 09 August 2013
• Docket Number: D059413
• Citation: 218 Cal.App.4th 1485,161 Cal.Rptr.3d 728
• Court: California Court of Appeals Court of Appeals
• Parties: Howard J. BRANDWEIN, Individually and as Trustee etc., et al., Plaintiffs and Appellants, v. Robert BUTLER et al., Defendants and Respondents.

218 Cal.App.4th 1485

161 Cal.Rptr.3d 728

Howard J. BRANDWEIN, Individually and as Trustee etc., et al., Plaintiffs and Appellants,

v.Robert BUTLER et al., Defendants and Respondents.

D059413

Court of Appeal, Fourth District, Division 1, California.

Filed August 9, 2013

See 2 Witkin, Summary of Cal. Law (10th ed. 2005) Insurance, § 35.

APPEAL from a judgment of the Superior Court of San Diego County, Ronald S. Prager, Judge. Affirmed. (Super. Ct. No. 37–2008–00090249–CU–CO–CTL).

Lawrence Silver, Los Angeles, Karen S. Lai, Silver & Field for Plaintiffs and Appellants Howard J. Brandwein, Individually and as Trustee of the Howard J. Brandwein Trust and Jeri Geblin.

Anthony Joseph Passante, Martin & Passante for Defendants and Respondents Robert Butler and Western Maritime, Inc.

Forrest Booth, Erik M. Kowalewsky, San Francisco, Severson & Werson for Defendants and Respondents Ace Global Markets Ltd. Syndicate 2488, Axis Specialty Europe Limited, Ireland, UK Branch and G.S. Christensen and Others Syndicate No. 958, Certain Underwriters at Lloyd's of London.

Neil S. Lerner, Arun Dayalan, Los Angeles, Sands Lerner for Defendants and Respondents Oversea Insurance Agency, Inc., Scott Jarvie and Nichole Mayer.

O'ROURKE, J.

IINTRODUCTION

This action was brought by plaintiffs Howard J. Brandwein (Brandwein), a related trust, and Jeri Geblin (Geblin) (collectively, plaintiffs) to recover losses allegedly suffered as a result of unsuccessful efforts to salvage Brandwein's 65–foot yacht, the Sea Bear, which ran aground in April 2007 on a Mexican beach. The insurer of the Sea Bear, ACE Global Markets, Ltd. et al. (the Underwriters),¹ paid Brandwein the full amount of the insurance policy proceeds, $1,540,000, after the loss of the vessel. Brandwein, however, claimed losses in excess of that amount, contending that the vessel had been underinsured because the value of upgrades had not been taken into account, and also that he suffered emotional distress as a result of the sinking of his yacht and loss of personal effects during the salvage operation. Plaintiffs brought an action to recover damages from multiple parties, including the Underwriters, Oversea Brokers,² who procured the insurance from the Underwriters, and Western Maritime,³ the entity whose attempted salvage operation resulted in the total loss of the Sea Bear.

As a result of pretrial rulings, all the claims against the Underwriters and two claims against Oversea Brokers were dismissed, and Brandwein's request for emotional distress damages was stricken. Specifically, the trial court sustained Oversea Brokers's demurrer to plaintiffs' claims in the first amended complaint (FAC) arising from allegations that Oversea Brokers had failed to make inquiries about improvements to the vessel and advise Brandwein about insuring the full fair market value of the Sea Bear. As to those claims, the trial court found that it was Brandwein's legal duty to provide Oversea Brokers with all material information relating to the value of the Sea Bear, not Oversea Brokers's duty to inquire about increased value. The trial court also sustained the Underwriters' demurrer to the third amended complaint (TAC) as to all claims against them. In brief, the trial court concluded that Brandwein had released any negligence claims he might have had against the Underwriters as part of a settlement agreement entered into with the Underwriters in August 2008. The court also found that Brandwein had surrendered the insurance policy upon receiving payment of the insurance proceeds from the Underwriters and, thus, there was no longer any contract between them that could support a bad faith claim. Finally, the court concluded that emotional distress damages are not available under federal maritime law.

A jury trial was held on plaintiffs' remaining claims against Oversea Brokers and Western Maritime. The jury entered a verdict against Brandwein on the claim that Oversea Brokers had been negligent in the hiring of Western Maritime for the salvage operation. However, the jury found for Brandwein and against Western Maritime based on the latter's gross negligence during its salvage attempt. The jury awarded Brandwein damages on that claim in the amount of $1.45 million—equal to the purchase price of the vessel. The trial court entered judgment accordingly.

Brandwein does not appeal the jury's verdicts. Rather, he challenges the trial court's pretrial orders sustaining the demurrers of Oversea Brokers and the Underwriters to the FAC and TAC, respectively, as well as the order striking his request for emotional distress damages. We conclude the trial court did not err in these rulings and, accordingly, affirm the judgment.

IIFACTUAL AND PROCEDURAL BACKGROUND ⁴

A. The Loss of the Sea Bear

Brandwein purchased the Sea Bear, an ocean-going yacht, with the intent of using it not merely as an investment but as a home with Geblin, his life partner.⁵ Brandwein paid $1.45 million for the boat, but upgraded and refitted it with extra equipment and other items. Brandwein believed the value of the Sea Bear exceeded $3 million. In February 2007, Oversea Brokers procured from the Underwriters an insurance policy covering, among other things, the Sea Bear 's hull, machinery, personal effects, and tender and outboards, in the amount of $1.54 million. Brandwein alleged that the Underwriters and Oversea Brokers “knew or should have known that the SEA BEAR was not fully insured” under the Underwriters' policy. A copy of the policy was attached to the FAC.

Brandwein alleged that, on or about April 14, 2007, the Sea Bear “became distressed at sea” and ran aground on a beach near Manzanillo, Mexico. ⁶ Western Maritime was selected—allegedly by Oversea Brokers, who was acting for the Underwriters—to perform the salvage operation. Brandwein alleged that even though Western Maritime had “been engaged” by the Underwriters, Butler, Western Maritime's employee, represented to Brandwein that he required Brandwein to execute an agreement to pay for the costs involved with the salvage operation. Brandwein alleged he signed the agreement “under duress.” On April 24, 2007, during Western Maritime's attempt to remove the Sea Bear from the beach and bring it to a safe location, the yacht sank “and was a total loss.”

Brandwein alleged that Western Maritime did not have the skill, experience or equipment to perform the salvage operation, which the Underwriters knew or should have known, and that the loss was “due to the failure of [Western Maritime] to exercise reasonable care.” He further alleged that Western Maritime demanded that the Underwriters pay its fees and costs, but the Underwriters “refused to pay” Western Maritime because its salvage efforts were “negligent and below any reasonable standard of care.” ⁷ Brandwein also alleged that the Underwriters “employed certain surveyors to evaluate the work done and efforts undertaken by [Western Maritime] and fees and costs presented to the Underwriters by [Western Maritime].”

Brandwein made a claim under the insurance policy for the loss of the Sea Bear. He alleged that he and the Underwriters ultimately entered into a settlement agreement by which the Underwriters paid him for the loss of the vessel “to the full extent that it was insured [$1.54 million], leaving the uninsured value of the SEA BEAR to plaintiff Brandwein's loss.” The August 31, 2007 settlement agreement, attached to the FAC and TAC, released the Underwriters from “any and all liability, claims, demands, liens, mortgages and all other claims of ownership or interest” in the Sea Bear “for damage to and loss of the vessel and personal effects,” subject to certain specified reservations of rights. Brandwein also “tender[ed] and surrender[ed] the policy of insurance ... relative to any accident or incident post-dating the subject loss, the vessel having been declared a total loss, in full and complete satisfaction of the claim and damages presented herein.” Finally, the settlement agreement obligated the Underwriters “to assist and cooperate with Dr. Brandwein in any action brought by him for recovery against any person or entity regarding claims other than the claims against the Underwriters settled here relating to SEA BEAR.” Brandwein alleged in the FAC that “incident to the settlement,” the Underwriters agreed to “provide to Brandwein certain writings,” including any “surveyor's report(s) relating to the loss of the SEA BEAR.”

B. The Lawsuit and Pretrial Rulings

Brandwein, together with the Howard J. Brandwein Trust and Geblin (an alleged beneficiary of the trust) filed the first complaint in Ventura County on April 23, 2008.⁸ The action subsequently was transferred to San Diego County. The Underwriters and Western Maritime answered the complaint, but Oversea Brokers demurred. Before any action was taken on the demurrer, Brandwein filed the FAC, naming as defendants the Underwriters, Oversea Brokers, and Western Maritime.

In that amended complaint, Brandwein first sought a judicial declaration that the Underwriters were responsible to pay the expenses of the salvage effort, that Oversea Brokers and Western Maritime were the agents of the Underwriters in the salvage effort and, thus, responsible for damages arising therefrom, that the Underwriters acted in bad faith by failing to agree to hold Brandwein harmless from any claim against him by Western Maritime, and that the settlement agreement did not preclude the action against the Underwriters. The second and third causes of action against Oversea Brokers alone alleged breach of duty and negligence in failing to advise Brandwein of his ability to insure the Sea Bear at its full fair market value, and in failing to inquire about any improvements that increased the value of the Sea Bear, as a result of which the vessel was underinsured. The fourth cause of action against the Underwriters and Oversea Brokers alleged these defendants' negligence in the selection...