Cassim v. Allstate Ins. Co.

• Citation: 123 Cal.Rptr.2d 512,100 Cal.App.4th 776
• Decision Date: 29 July 2002
• Docket Number: No. B139975.,B139975.
• Court: California Court of Appeals
• Parties: Fareed CASSIM et al., Plaintiffs and Respondents, v. ALLSTATE INSURANCE COMPANY, Defendant and Appellant.

123 Cal.Rptr.2d 512

100 Cal.App.4th 776

Fareed CASSIM et al., Plaintiffs and Respondents, v. ALLSTATE INSURANCE COMPANY, Defendant and Appellant.

No. B139975.

Court of Appeal, Second District, Division 7.

July 29, 2002.

Rehearing Denied August 14, 2002.

Review Granted October 30, 2002.

Horvitz & Levy, Peter Abrahams and Nina E. Scholtz; Pollak, Vida & Fisher, Michael M. Pollak and Lawrence J. Sher, Los Angeles, for Defendant and Appellant.

Law Offices of Ian Herzog, Evan D. Marshall, Ian Herzog and Amy Ardell, Santa Monica, for Plaintiffs and Respondents.

MUNOZ, J.^*

After a 33-day trial, appellant, Allstate Insurance Company (Allstate), was found to have breached the covenant of good faith and fair dealing in its handling of a claim made by respondents Fareed and Rashiba Cassim (Cassims). The jury specifically rejected contentions that: (1) the Cassims had submitted false claims to Allstate; and (2) the Cassims had intentionally set fire to their own home. The total amount of the judgment is $9,873,330, which includes $5 million in punitive damages. Additionally, respondents were awarded attorneys fees pursuant to Brandt v. Superior Court (1985) 37 Cal.3d 813, 210 Cal.Rptr. 211, 693 P.2d 796 in the sum of $1,193,533. Because of attorney misconduct in arguments to the jury, we reverse the judgment and remand the case for a new trial.

FACTS

In accordance with the normal rules for appeal, we view the judgment in the light most favorable to the prevailing party. (Las Palmas Associates v. Las Palmas Center Associates (1991) 235 Cal.App.3d 1220, 1230, 1 Cal.Rptr.2d 301.) In 1989 the Cassims purchased a home in Palm-dale for $173,690. Allstate subsequently issued a homeowner's policy to the Cassims on the residence. In December 1990, an arson fire caused significant damage to the Cassims' residence. Even though the entire residence had been damaged by heat, smoke and water, the only damage caused by the fire was to the bed in the master bedroom, the refrigerator and the adjacent cabinets in the kitchen.

The insurance policy issued by Allstate covered three kinds of losses: dwelling repair, contents replacement or repair and additional living expenses. After an Allstate agent visited the residence and determined the residence was uninhabitable, the agent gave Mrs. Cassim a $10,000 advance for additional living expenses (ALE) and to purchase items such as clothing and personal property.

Allstate assigned the claim to an outside adjusting service, Frontier, to investigate the Cassims' financial condition and the cause of the fire. On December 18, 1990, the Frontier adjuster inspected the residence and determined the extent of the necessary dwelling repairs. He then negotiated with various contractors and subsequently arrived at a price of $35,400 for dwelling repairs. Another Frontier adjuster inspected the contents of the residence and noted that many personal items seemed to be missing.

Because their residence was uninhabitable, the Cassims moved into a Hollywood motel. However, they did not keep any of the motel receipts. On January 3, 1991, the Cassims used part of the ALE advance to make their mortgage payment. Later that month, the Cassims hired a public adjuster, Anthony Thompson (Thompson), who obtained a dwelling repair estimate of $88,000. Allstate rejected the estimate as being inflated and including unnecessary work. Attempts to compromise were unsuccessful. Thompson's request for $35,400, the undisputed portion of the dwelling repair claim was denied by Allstate. Thompson then demanded an independent appraisal because he believed $35,400 was inadequate to repair the house.

In March 1991, the Cassims submitted a proof of loss in the amount of $44,180, which they claimed to be the replacement value for the contents of the home. Allstate rejected that claim because the origin of the loss was still under investigation and there was a lack of adequate documentation to support the claim.

In April 1991, Allstate had Mr. Cassim examined under oath (EUO). Mr. Cassim, whose native language is Farsi, rejected the use of an interpreter and testified that some of the items on the proof of loss had values much lower than those claimed. Mrs. Cassim's EUO was taken on June 21, 1991.

In July 1991 with foreclosure looming, the Cassims accepted Allstate's offer of $34,500 for the dwelling repairs. After the initial $10,000 advance, Allstate refused further advances for ALE and was unwilling to settle for anything more than $7,000. The Cassims rejected that offer and demanded $30,000. Allstate did not respond to the demand. In November 1991 the Cassims filed for bankruptcy. In December 1991 the present action for breach of the covenant of good faith and fair dealing, was filed by the Cassims against Allstate. The Cassims lost their home through foreclosure in February 1992.

After an initial mistrial, a jury in 1999 found: (1) the Cassims had not set the fire, (2) the Cassims had not made material misrepresentations in their claim; and (3) that Allstate had violated the covenant of good faith and fair dealing. The jury further found Allstate had acted with oppression, fraud or malice and awarded punitive damages. This appeal followed.

I. Plaintiffs' Counsel Committed Prejudicial Error By Implying That Some Of The Jurors Were Guilty Of Low Level Fraud And The Court Approved Of This Conduct

A. The trial court's procedure for employed jurors when court was not in session.

At trial, on days when the jury was not in session, the court adopted an unusual procedure. Jurors who were employed could show up in the courtroom, sign in and then leave for the day without having to return to work. The court did this at least twice and possibly a third time.

In the first instance, on Monday, October 25, 1999, the court stated: "And we'll reconvene then on Wednesday at 8:45 a.m., all right, for a full day, for a full day. [¶] Okay. We'll see you Wednesday. Only those who want to get credit, come tomorrow."

On the next Wednesday, October 27, 1999, the court once again recessed for the following day and instructed the jurors: "No court tomorrow. But, I'm going to allow you to come in and have credit. And, we'll pick up on Friday morning, [¶] ... [¶] Don't form any opinions, and we'll see you Friday. But if you come in tomorrow, you'll get credit."

The court's comments reveal the jurors were not required to be in court on days when court was not in session. However, they could nonetheless get paid by their employers if they came into court and signed in.¹ The respondents do not dispute this fact but disingenuously argue that jurors who came to the court to receive credit were performing services pursuant to the direction of the court. However, by arguing to the jury, counsel admitted that some of the jurors were not present for jury service even though they were paid by their employers.

B. The effects of the court's juror policy at argument.

At trial, Allstate's main defense to the Cassims' contentions was that the Cassims had intentionally misrepresented the facts in their claim filed with Allstate. At the conclusion of the trial, the court instructed the jury on the law prior to arguments by counsel. Following the instructions, both sides proceeded with argument. In his initial argument, Cassims' counsel explained the innocent nature of any misrepresentations and emphasized Allstate's bad faith in assessing the Cassims' claim. Counsel for Allstate responded by stressing the intentional nature of the misrepresentations by the Cassims. In his final argument to the jury, counsel for the Cassims argued sometime what initially appears to be intentional misrepresentation is, in actuality, not what it seems, because of an absence of an intent to defraud. Using the "judicially excused" failure to show up to work as an example, counsel argued:

"Now, let's talk about intentional misrepresentation for a second. I think we have a direct analogy to what goes on in this case. Let's think of this for a second if you would. Just think, you're at a job. You have worked at it real hard. You're a good employee. And then a new boss comes along. He doesn't like you. Maybe it's because of your sex, your race or whatever. And he discharges you. And he wrongfully discharged you. And you go get a lawyer and you sue for wrongful discharge.

"And your employer does what Allstate has done here is they look under every rock you were ever under. Look at every skeleton, everything in your life that they can use. And they go and they do a check and they say, oh, you were on jury duty in a case called Cassim. Okay. And they say you were supposed to be on jury duty but there's a couple days in which there wasn't court, but you said you were on jury duty and we paid you. That's a misrepresentation.

"[DEFENSE COUNSEL]: Your Honor I'm going to object. This is improper argument.

"[PLAINTIFF'S COUNSEL]: I don't think so.

"THE COURT: No, overruled.

"[DEFENSE COUNSEL]: And they will take something, like Allstate has done here, the mortgage file or whatever, it's even worse, what they've done here and say we have grounds now to fire you because you misrepresented about you being on jury duty on certain days and you got paid when you really weren't.

"And you say but, but, but Judge Cherness said it was okay. He says what I was doing was appropriate. And he says, no, you intentionally misrepresented. I didn't misrepresent anything. I thought that was the right thing to do.

"She said I didn't misrepresent anything. I was relying on Tony Thompson. I thought it was the right thing to do. I didn't intend to fool anybody.

"And your whole career, bang you're out.

"Isn't that what they've done here? They want to put an artificial standard on what is meant by intentional misrepresentation, a standard that would apply in a courtroom setting like this that we would never apply to ourselves. That we would not think that anything was intentional or wrong in that...