Doser v. Middlesex Mutual Ins. Co.
| Decision Date | 05 February 1980 |
| Citation | 162 Cal.Rptr. 115,101 Cal.App.3d 883 |
| Parties | Denise DOSER, Dean Doser, and Margaret Doser, Plaintiffs and Appellants, v. MIDDLESEX MUTUAL INSURANCE COMPANY, Defendant and Respondent. Civ. 55179. |
| Court | California Court of Appeals Court of Appeals |
Shield & Smith, Theodore P. Shield and Timothy L. Walker, Los Angeles, for defendant and respondent.
Plaintiffs and appellants Denise Doser, Dean Doser and Margaret Doser (Doser Heirs), as alleged assignees of a cause of action for bad faith breach of an insurance contract of the Estate of Richard Harold Kelly (Estate), appeal from a judgment entered on March 28, 1978, in favor of defendant and respondent Middlesex Mutual Insurance Company (Middlesex).
The case underlying the instant appeal commenced several years ago with the untimely deaths of Richard Harold Kelly (Kelly) and Dean Doser (Doser) in November of 1972. At the time, Kelly was a member of the Palomar Flying Club (Club) and on November 22, 1972, he was piloting a Piper aircraft leased by the Club from Pacific Aero Leasing & Service, Inc. (Pacific). Doser was flying with Kelly as a passenger when the plane crashed in Mexico.
Doser left a wife and two children. The Doser Heirs hired attorney Daniel C. Cathcart (Cathcart) to represent them.
Kelly left an estate that was practically worthless. However, an insurance policy issued by Middlesex covered Pacific and the members of the Club. 1 Since Kelly was a member of the Club and was flying a plane leased from Pacific at the time of the accident, his Estate potentially had available to it the proceeds of the Middlesex policy.
Prior to his death, Kelly had been a client of San Diego attorney Robert Madruga (Madruga). A few days after the plane crash, Kelly's girlfriend, Jane D. Stocks On behalf of the Doser Heirs, Cathcart filed a $500,000 claim against the Estate, which was rejected by Stocks on August 9, 1973. Thereafter, on August 16, 1973, a complaint for damages for wrongful death was filed in the San Diego Superior Court 2 by Denise Doser, a minor by her Guardian ad Litem Margaret Doser, Margaret Doser, and Dean Doser as plaintiffs against Jane D. Stocks, Administratrix of the Estate of Richard Harold Kelly, and Does 1-20 as defendants. The complaint alleged that Doser was a passenger in a certain Piper aircraft piloted by Kelly, and that as a result of the negligence of the defendants including Kelly, the aircraft crashed on November 22, 1972, in Mexico, causing the deaths of Kelly and Doser.
(Stocks), got in touch with Madruga, with the request that he represent Kelly's Estate. Madruga agreed, and proceeded with the probate of the Estate, and Stocks became the administratrix.
The complaint set forth that Stocks was the duly appointed administratrix of the Estate and in that capacity had rejected the Doser Heirs' proper and timely claim.
The plaintiff heirs prayed for $1,000,000 in general damages.
On October 3, 1973, Madruga filed an answer on behalf of Stocks as administratrix, generally denying the allegations.
On April 9, 1974, attorneys Kirtland & Packard filed an answer on behalf of Pacific, sued and served as Doe 1, and on June 4, 1974, the same attorneys filed an answer on behalf of the Club, sued and served as Doe 2. 3
Dismissals against Pacific and the Club were entered on August 19, 1975, following the payment of $15,000 to the Doser Heirs, as a settlement on their behalf.
On January 24, 1977, Stocks made a motion to dismiss the action for failure to bring the case to trial within two years, which was successfully resisted.
On May 23, 1977, Stocks moved for an early trial setting, which motion was granted, and the case was set for trial on November 7, 1977. However, the case did not go to trial and on August 11, 1978, pursuant to a request filed by the Doser Heirs, the entire wrongful death action was dismissed.
In undertaking the representation of the Estate, Madruga was unaware that any insurance was available to the Estate.
On September 13, 1973, Madruga wrote a letter to Cathcart stating he was looking into the possibility of insurance, to which Cathcart responded within two weeks, indicating that there was in fact insurance and that the insurance facets of the case were being handled by Funaro & Associates (Funaro), 4 setting forth Funaro's phone number. Cathcart requested that Madruga forward the pleadings of the wrongful death action to Funaro, together with a demand that Funaro's principals defend the Estate.
It was after the receipt of Cathcart's letter that Madruga prepared and filed an answer on behalf of the Estate.
During a deposition of Stocks on March 26, 1974, in the course of litigation, Madruga was provided with a copy of the Middlesex policy and read the provision which required that upon a claim being made of, or a suit being filed against, the insured, the insured should immediately forward to Middlesex all relevant papers.
The following day, a year and some four months after the accident and ensuing claim against the Estate, Madruga sent a letter to Funaro demanding that Middlesex defend the Estate.
On May 24, 1974, while the wrongful death action was pending, Cathcart sent a letter to Madruga charging Middlesex with bad faith for failure to defend the Estate or settle the Doser Heirs' claim for the policy limits of $100,000. Cathcart indicated that the Doser Heirs were willing to settle all claims against the Estate for the wrongful death of Doser and take an assignment of all causes of action the Estate might have against Middlesex, including all claims for breach of contract and bad faith refusal to settle, that the Doser Heirs would then proceed to file suit against Middlesex directly, and that the pending wrongful death action should be taken off calendar while the suit against Middlesex was prosecuted.
The letter went on to justify the requested settlement figure of $980,000, and reiterated the Doser Heirs' willingness to take an assignment in lieu of payment of any monies, and requested that Stocks execute the assignment which Cathcart had already prepared and enclosed. The assignment which was signed by Stocks on July 31, 1974, read in part as follows:
No releases from the Doser Heirs were ever forthcoming. The wrongful death action in San Diego was not dismissed until August 1978.
Omni learned of the accident as early as November 27, 1972, five days after the crash, and immediately hired Funaro to investigate the accident. Omni received a copy of Madruga's March 27, 1974 letter to Funaro, requesting insurance company defense of the Estate. Omni employed counsel to represent Pacific and the Club but, for some obscure reason, failed to procure representation for the Estate at the same time. On April 12, 1974, Omni denied the Doser Heirs' demand for the $100,000 policy limits. 5
It was not until January 1977 that attorney Arnold Ross, presumably also hired by Omni, was substituted in as attorney of record in place of Madruga to defend the Estate in the wrongful death action in San Diego. Ross and attorney Michael M. Edwards, who was retained by Middlesex, were engaged in that capacity during the pendency of the breach of contract action in Los Angeles.
After the Doser Heirs had in hand the executed assignment of July 31, 1974, they left the San Diego wrongful death action in abeyance and filed an action against Middlesex in the Los Angeles Superior Court, which action and its consequences constitute the subject matter of the appeal before us.
This action was commenced on October 3, 1974, when the Doser Heirs as alleged assignees of the Estate filed a complaint against Middlesex in the Los Angeles Superior Court, praying for $980,000 in damages allegedly resulting from a bad faith breach of an insurance contract. The complaint alleged, inter alia, that passenger Doser was killed November 22, 1972, when a plane piloted by Kelly crashed in Mexico; that Middlesex was obligated to defend the wrongful death action brought by the Doser Heirs against the Estate; that no defense was tendered and the Estate was therefore unprotected; that the amount of the claim of the Doser Heirs far exceeded the assets The jury returned a special verdict finding that Middlesex breached its implied covenant of good faith and fair dealing with the Estate by failing to defend the Estate when requested to do so on March 27, 1974, and by failing to settle when presented with the demand letter of April 12, 1974. The jury further found that the Estate breached its implied covenant of good faith and fair dealing with Middlesex.
of the Estate; that in an effort to avoid certain bankruptcy, (and for other good reasons) the administratrix compromised and settled the wrongful death claim for $980,000 and, in satisfaction of said settlement, assigned all causes of action against Middlesex to the Doser Heirs, which causes of action inured to the Estate as a result of Middlesex's negligence,...
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