Ceresino v. Fire Ins. Exchange

• Decision Date: 30 October 1989
• Docket Number: No. G006980,G006980
• Citation: 264 Cal.Rptr. 30,215 Cal.App.3d 814
• Court: California Court of Appeals Court of Appeals
• Parties: Gordon J. CERESINO, Plaintiff and Appellant, v. FIRE INSURANCE EXCHANGE et al., Defendants and Respondents.

Page 30

264 Cal.Rptr. 30

215 Cal.App.3d 814

Gordon J. CERESINO, Plaintiff and Appellant, v. FIRE INSURANCE EXCHANGE et al., Defendants and Respondents.

No. G006980.

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

Oct. 30, 1989.

Review Denied Jan. 24, 1990.

Walter Greene, Jr., Santa Ana, for plaintiff and appellant

Waldman, Bass, Stodel & Graham, Stewart A. Sutton and Bruce N. Graham, Los Angeles, for defendants and respondents.

OPINION

SONENSHINE, Associate Justice.

Gordon J. Ceresino appeals a judgment entered against him and in favor of Fire Insurance Exchange and Farmers Insurance Group (collectively Farmers). The parties stipulated to the judgment to allow review of two pretrial rulings. Ceresino objects to the court's determination he is collaterally estopped from contending Farmers should indemnify him for a prior stipulated liability judgment in favor of David McCulloch. He also insists Farmers may not raise an "advice of counsel" defense, while refusing to produce documents pursuant to the attorney/client privilege.

I

In August 1982 at the Red Onion Restaurant, Ceresino became entangled with David McCulloch over the affections of a young lady. When she adjourned to the ladies' room, Ceresino followed her--and McCulloch followed him. Ceresino was either "grabbed at" or "shoved from behind." The result was the same; he fell down a flight of stairs.

Apparently, each combatant was restrained by a bouncer. Ceresino managed an escape and punched McCulloch. McCulloch was escorted outside while Ceresino was questioned by restaurant employees, eventually unceremoniously following in McCulloch's footsteps.

Once outside, the melee continued, allegedly at the insistence of Ceresino and against the wishes of a bloodied and soon-bowed McCulloch. Ceresino insists McCulloch motioned him over and he approached just to "see what was going on." Nonetheless, by his own admission he landed six punches on McCulloch, the first three warded off by McCulloch, the last three without response when McCulloch was attempting to rise from the ground. McCulloch suffered a broken nose, fractured jaw and other injuries at the hands of Ceresino.

In September, McCulloch filed a complaint against Ceresino for assault and battery. An amended complaint added a cause of action for negligent infliction of the same injuries. Ceresino sought coverage under two policies, one issued by Commercial Union and the other by Farmers. The latter had a clause indicating the policy was secondary only; the former did not. The Farmers policy also excluded coverage for any intentionally inflicted injury. Commercial Union accepted the defense; Farmers refused to contribute to Commercial Union's legal costs. In addition to the attorney provided by Commercial Union, Ceresino hired his own "Cumis" counsel. (San Diego Federal Credit Union v. Cumis Ins. Society, Inc. (1984) 162 Cal.App.3d 358, 361, 208 Cal.Rptr. 494.)

In December 1983, Farmers filed a complaint for declaratory relief, naming Ceresino, McCulloch, and Commercial Union. It acknowledged a policy covering Ceresino, but specifically cited the section exempting intentional acts by the insured.

A stipulation for entry of judgment in the McCulloch/Ceresino action, filed December 10, 1984, "compromised and settled" any claims by McCulloch against Ceresino. The $300,000 judgment was based on the first cause of action for negligence. Of that amount, $100,000 represented the Commercial Union policy limits, in exchange for which Commercial Union was released for all legal purposes. McCulloch specifically dismissed with prejudice his second cause of action for assault and battery and any claim for punitive damages. McCulloch agreed to execute on the balance of the judgment solely against Farmers.

In March 1985, Farmers moved to set aside the stipulated judgment. It requested the right to enter the action as a party and relitigate damages; it also alleged Ceresino's activities were not covered by the policy because his acts were intentional and asked it be allowed to "additionally" litigate that issue. The motion was denied. Meanwhile on January 18, 1985, McCulloch filed suit against Farmers in an attempt to recoup the balance of the stipulated judgment.

In March 1986, the court filed its memorandum of decision for the consolidated cases--McCulloch's action against Farmers to collect on the unpaid portion of his stipulated judgment; and Farmers' declaratory relief action, now naming McCulloch only, to determine whether Ceresino's actions were negligent or intentional. The court noted McCulloch had, on the first day of trial, moved for judgment on the pleadings based on the stipulated judgment, Farmers' motion to set it aside, the denial of Farmers' motion, and Farmers' failure to appeal the denial. Said the court, "There was no final judgment on the merits or comity of the interests of the parties in this and the underlying case, McCulloch vs. Ceresino; therefore, the doctrine of collateral estoppel does not apply and the issue of negligence versus intentional conduct may be litigated in the consolidated actions before this court."

The court then proceeded to examine the evidence, including the policy at issue, and the testimony, both by deposition of witnesses to the fistfight and that given orally by McCulloch and Ceresino; it took judicial notice of the stipulated liability judgment, Farmers' motion to set aside the judgment, denial of the motion and notice of ruling. The court ruled "the conduct of Gordon Ceresino did not constitute non-intentional acts of self defense, but rather constituted intentional acts of striking David McCulloch in the face six times with his right fist and beating McCulloch to the ground. Such intentional conduct by Gordon Ceresino is excluded from coverage under the policy of insurance issued by [Farmers] to Gordon Ceresino and [Farmers] has no obligation to honor or pay any portion of any stipulated judgment entered between David McCulloch and Gordon Ceresino...."

Ceresino filed a complaint against Farmers for breach of contract and violation of the Insurance Code. He claimed the insurer refused to defend or indemnify him in the McCulloch/Ceresino action causing him emotional distress and economic damages. The latter were exemplified by litigation expenses and attorney fees (all covered by Commercial Union, which expects reimbursement if Ceresino is successful). He also asked for $5,000,000 in punitive damages.

In September 1987, the court denied Ceresino's motion for summary judgment, but ruled certain issues were not to be controverted at trial. The order acknowledged the 1982 Ceresino/McCulloch altercation, noting there was "conflicting evidence as to who threw the first punch." The Commercial Union and Farmers policies were named as "insurance policies that possibly afforded coverage to Ceresino for the underlying incident." (Emphasis added.) Legal representation for Ceresino was acknowledged in the persons of Marc Feinstein, appointed by Commercial Union, and Daniel Nordberg, retained as "Cumis" counsel by Ceresino. Also without controversy was the filed declaratory relief action, seeking a determination of whether Ceresino's acts were intentional; Commercial Union's cross-complaint; the dismissal of Commercial Union and Ceresino prior to trial; and settlement of the underlying McCulloch/Ceresino case. The terms of the settlement were related and Farmers' attempt to set it aside was noted.

In the latter part of 1988, Ceresino brought a series of motions, two of which are pertinent to this appeal. The first sought to "preclude the introduction of any evidence that the defendants relied upon 'advice of counsel.' " This request was based upon Farmers' previous refusal to produce correspondence between it and its counsel based on the attorney/client privilege. The second, and determinative, motion requested all evidence of the decision in the declaratory relief action be declared inadmissible at trial. In particular, Ceresino insisted he was not bound by that court's conclusion his acts were intentional and relieved Farmers of any duty to indemnify him. Rather, Ceresino contended Farmers was bound by the earlier stipulated judgment based on negligence.

The court denied the motions. Following a conference in chambers, the parties stipulated to entry of judgment against Ceresino, allowing an appeal from the rulings. Additionally, they agreed that in the event this court affirms the ruling on the second motion, judgment would be entered according to the stipulation.

II

Ceresino, in his second motion, stated he did "not believe that any evidence concerning Judge Woolley's decision in the declaratory relief action and direct action filed by David McCulloch against Farmers Insurance Company is relevant to this action." He requested "the jury not be permitted to hear anything concerning [that particular] decision...."

Following a hearing, the trial court found "that Judge Woolley's decision, that the Fire Insurance Exchange policy provided no coverage for any portion of the stipulated liability judgment, collaterally estopped plaintiff Ceresino from contending otherwise in the instant suit."

The prerequisites for collateral estoppel are "(1) a final judgment on the merits in the first action, (2) identity or privity among the parties in the first action and those against whom the estoppel is asserted, and (3) identity of the issue presented in the second action with one necessarily decided in the first." (Allstate Ins. Co. v. Overton (1984) 160 Cal.App.3d 843, 847, 206 Cal.Rptr. 823.)

McCulloch's appeal from the judgment in the declaratory relief action was dismissed, leaving that decision a final judgment on the merits. And the issue there presented, the unavailability of coverage under the Ceresino/Farmers policy, is central to a resolution of whether Farmers' refusal to defend was reasonable. Thus, only the issue of privity remains.

The...