Heller v. Networked Ins. Agents, Inc., B261013
| Decision Date | 21 July 2016 |
| Docket Number | B261013 |
| Parties | RICHARD HELLER, as Trustee, etc., et al., Cross-complainants and Appellants, v. NETWORKED INSURANCE AGENTS, INC. Cross-defendant and Respondent. |
| Court | California Court of Appeals Court of Appeals |
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Los Angeles County Super. Ct. No. BC461995)
APPEAL from a judgment of the Superior Court of Los Angeles County. Joseph R. Kalin, Judge. Affirmed
Hamrick & Evans, A. Raymond Hamrick III, and Douglas K. Kackey for Cross-complainants and Appellants
Jampol Zimet, Mark J. Zimet, and Landon R. Schwob for Cross-defendant and Respondent.
____________________ Richard Heller and Joel Heller, as trustees of the Kenneth B. Heller Inter Vivos Trust Agreement, and J.K.R. Limited Partnership (the Hellers) provided information to their insurance broker (DeBeikes) about certain real property. The information included misrepresentations about the use of the property. DeBeikes included that information in the Hellers' applications for insurance and submitted the applications to Networked Insurance Agents (NIA), an authorized agent for Fireman's Fund Insurance Company (FFIC). After a fire at the property, the Hellers made property and liability claims under the policy. FFIC sued the Hellers to rescind the policy based on the misrepresentations and to seek reimbursement of sums it paid under the policy (the FFIC action). FFIC successfully moved for summary adjudication of the rescission cause of action.
In the FFIC action, the Hellers cross-complained against FFIC, DeBeikes, and NIA. Against NIA, the Hellers sought a judicial declaration as to the rights and obligations of the parties. NIA moved for summary judgment, and the court determined that NIA owed no duty to the Hellers. The Hellers appealed. We affirm.
NIA is licensed by the State of California as an agent-broker and describes itself as an "insurance aggregator." It provides insurance carriers with access to insurance brokers, and brokers with access to carriers. At the relevant time, NIA was a party to a "Wholesale Agency Agreement" with FFIC, an insurance carrier, by which FFIC appointed NIA as its agent in California. Under the agreement, NIA was authorized to receive applications for FFIC insurance and to "bind insurance and execute and renew policies," subject to limits specified in the FFIC agency agreement.
DeBiekes was an insurance broker. In 2004, DeBeikes and NIA were parties to an "Agreement of Affiliation" (the affiliation agreement) which described NIA as "a duly licensed insurance agency that is authorized to represent certain insurance carriers," and described DeBeikes as "a duly licensed insurance agent or agency that desires to obtain insurance coverages" from insurance carriers for its clients.
Under the affiliation agreement, DeBeikes was permitted to "submit to NIA for placement applications for . . . insurance," and NIA was "willing to review, process,and submit to the carriers . . . applications for such insurance coverages on behalf of [DeBeikes]." DeBeikes had "the responsibility for the choice of coverage with [DeBeikes's] client, and the final review of policies for accuracy." Subject to exceptions not relevant here, "[t]he ownership and control of the expirations of policies written through NIA by [DeBeikes] belong to [DeBeikes]." DeBeikes's relationship with NIA was described in the affiliation agreement as "that of an independent contractor and not that of an employee," and the agreement stated that nothing therein "shall create the relationship of employer and employee." NIA agreed to pay DeBeikes a portion of the commission it earned on insurance it placed for DeBeikes.
DeBeikes was the Hellers' insurance broker in 2009. On July 19, 2009, DeBeikes submitted applications to NIA for liability and property insurance on behalf of the Hellers. In the spaces on the application forms to indicate "Premises Information," "Nature of Business/Description of Operations by Premise(s)," and "Schedule of Hazards," DeBeikes referred to attached schedules. The attached schedules listed numerous properties, including two buildings on a parcel on Whittier Boulevard in Los Angeles (the Whittier property). The schedules described one building (the front building) as:
"3575 WHITTIER BLVD. LOS ANGELES, CA 90023
BANQUET HALL, CLOTHING-NEW";
The second building (the rear building) was described as:
The Whittier property was not then being used as a banquet hall, a clothing store, or for furniture storage. In fact, since early 2008, the Hellers had been leasing the property to Faustino Gamez and Gamez Auto Center for "[a]uto repair and any other legal uses." Gamez operated an automobile repair shop on the premises in violation of local ordinances and subleased it to others for use as a lock and key shop and a window and door business.
After receiving the applications from DeBeikes, NIA made various inquiries to DeBeikes in connection with its "pre-qualification process." It did not, however, ask DeBeikes about the occupancy descriptions on the property schedules. NIA and the Hellers did not communicate directly with each other.
On July 31, 2009, NIA submitted the applications, with the property schedules to FFIC. Later that day, NIA provided DeBeikes with a price quote for coverage with FFIC. On August 4, DeBeikes, on behalf of the Hellers, submitted to NIA an application for umbrella insurance, which included the property schedules that described the Whittier property as a banquet hall, clothing store, and a place for storing furniture. On August 17, NIA resubmitted to FFIC the applications and property schedules without substantive changes.
On September 21, 2009, FFIC issued to the Hellers a policy of insurance providing property and liability coverage for the Whittier property, and a related umbrella policy. NIA is listed as "Producer" on the policy. Although the property schedules that accompanied the Hellers' application listed the Whittier property's front and rear buildings separately, the FFIC policy listed the entire Whittier property as a single insured location.
In October 2009, DeBeikes contacted NIA about the fact that the two buildings had been combined as one location in the policy. NIA responded by sending an email to FFIC requesting that FFIC "separate" the locations for the Whittier property as indicated in the Hellers' application. There is no evidence that FFIC responded to this request, or of any further action or communication by anyone on this issue.
In October 2010, a lawsuit was filed against the Hellers for the wrongful death of one person and personal injuries suffered by a second person caused by a fire in the rear building of the Whittier property in July 2010, during the term of the FFIC policies. The Hellers tendered the defense of the lawsuit to FFIC. FFIC agreed to defend the Hellers in the litigation subject to a reservation of rights, including the right to rescind its policy. It subsequently commenced the FFIC action against the Hellers to rescind the policybased upon the misrepresentations in the insurance applications regarding the use of the Whittier property.
The Hellers filed a cross-complaint in the FFIC action and, later, the operative first amended cross-complaint against FFIC, DeBeikes, and unnamed "Roe" cross-defendants. The first amended cross-complaint alleged two causes of action against FFIC (breach of the covenant of good faith and fair dealing and breach of contract), four causes of action against DeBiekes (professional negligence, breach of fiduciary duty, breach of oral agreement, and breach of the covenant of good faith and fair dealing), and one cause of action against "all Cross-Defendants" for declaratory relief. In the declaratory relief cause of action, the Hellers sought "a declaration of the parties' rights and obligations among and between themselves." In November 2012, the Hellers substituted NIA in place of cross-defendant Roe No. 1.
In June 2013, the court granted FFIC's motion for summary adjudication against the Hellers on its rescission cause of action. As a result of the rescission, the court declared that FFIC did not have a duty to pay the Hellers' property damage claim, or to defend or indemnify the Hellers in the underlying tort litigation.1
In November 2013, NIA filed a motion for summary judgment on the Hellers' cross-complaint "as to the one and only cause of action asserted against [NIA]—declaratory relief." The court granted the motion in June 2014. The court explained that NIA "was an agent for FFIC, owing duties only to its principal, FFIC"; it "was neither an agent nor broker for either [the Hellers] or DeBeikes [and] did not owe any duties to [the Hellers] or DeBeikes." The court further found that NIA "never had any direct communications with [the Hellers]," and there were "no facts establishing that [NIA] was a subagent for DeBeikes." After the court entered judgment for NIA, the Hellers appealed.
Summary judgment is proper when all the papers submitted on the motion show there are no triable issues of material fact and the moving party is entitled to judgment as a matter of law. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843 (Aguilar); Code Civ. Proc., § 437c, subd. (c).) A defendant moving for summary judgment bears an initial burden of showing that one or more elements of the plaintiff's cause of action cannot be established or that there is a complete defense to that cause of action. (Aguilar, supra, 25 Cal.4th at p. 849.) If the defendant meets this...
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