Jimenez v. Protective Life Ins. Co.

• Decision Date: 29 July 1992
• Docket Number: No. E007527,E007527
• Citation: 8 Cal.App.4th 528,10 Cal.Rptr.2d 326
• Court: California Court of Appeals Court of Appeals
• Parties: Manuel JIMENEZ, Plaintiff and Respondent, v. PROTECTIVE LIFE INSURANCE COMPANY, Defendant and Appellant.

Page 326

10 Cal.Rptr.2d 326

8 Cal.App.4th 528

Manuel JIMENEZ, Plaintiff and Respondent, v. PROTECTIVE LIFE INSURANCE COMPANY, Defendant and Appellant.

No. E007527.

Court of Appeal, Fourth District, Division 2, California.

July 29, 1992.

[8 Cal.App.4th 530] James C. Powers, Thomas D. Long, and Nossaman, Guthner, Knox & Elliott, Los Angeles, for defendant and appellant.

William D. Shapiro, San Bernardino, for plaintiff and respondent.

OPINION

DABNEY, Acting Presiding Justice.

Defendant Protective Life Insurance Company (Protective) appeals from a judgment in favor of plaintiff Manuel Jimenez. Protective contends the trial court erred in granting summary adjudication on the issue of Jimenez's entitlement to the proceeds of an insurance policy on the life of his debtor, Kevin Breton. Protective argues: (1) the trial court abused its discretion in granting a motion for summary adjudication rather than summary judgment; (2) a creditor has an insurable interest in the life of his debtor only in the amount of the debt; (3) in granting the motion for summary adjudication, the trial court erroneously considered facts not set forth in Jimenez's statement of material facts; (4) the trial court abused its discretion in refusing to set aside, on the ground of mistake, Protective's stipulation for entry of summary adjudication; (5) the trial court made extraneous statements that should be disregarded on appeal; (6) Protective was entitled to summary judgment or summary adjudication, at least as to the bad faith claim; and (7) the award of interest should be reversed. We conclude the trial court erred in granting summary adjudication of issues when the motion sought only summary judgment. We also conclude the trial court erred as a matter of law in determining that Jimenez had an insurable interest that greatly exceeded the amount of the debt owed him. We therefore reverse the judgment.

FACTS

The underlying facts relating to the issues on appeal are essentially undisputed.

In June 1986, Jimenez sold a used motorcycle to Kevin Breton, a laborer who worked for Jimenez and lived with his family. The sale price of the motorcycle was $5,500, payable in weekly installments of $100 with 10 percent interest.

Breton and Jimenez discussed the dangers of motorcycling and discussed how Jimenez could be paid for the motorcycle if Breton were injured or killed. On June 9, 1986, Breton and Jimenez went together to Perris Valley Insurance Services where they met with James Wenker, a soliciting agent for Columbia National Insurance Company (Columbia National).

Breton and Jimenez discussed the circumstances of the debt and other matters, including the amount Jimenez was prepared to pay for insurance coverage. Wenker suggested they purchase a life insurance policy with death benefits of $160,000, with a double indemnity provision covering accidental death. ¹

Wenker completed an application form listing Jimenez as the sole beneficiary, and Jimenez paid the first quarterly premium of $101.34. Wenker gave Jimenez a conditional receipt for the payment. Wenker sent the original application to Columbia National. Because the form was deficient, Columbia National returned it to Wenker. On July 11, 1986, Wenker sent Columbia National a second application on the proper form. The underwriter who handled the application noted on the underwriting worksheet, "If purpose of coverage is to cover a debt we will need collateral assignment forms completed. Also proposed insured should be owner and name another beneficiary."

On July 7, 1986, Breton was involved in a traffic accident. Police reports of the accident indicate that the primary cause of the collision was that another driver violated the Vehicle Code by failing to yield to oncoming traffic when making a left turn. The report indicated that a contributing factor may have been the motorcycle's lack of required front brakes. On July 19, 1986, Breton died from injuries suffered in the accident.

On July 1, 1987, Columbia National merged with Protective. Through the merger, Protective acquired Columbia National's assets and liabilities, and Columbia National ceased to exist.

Jimenez sent a claimant's statement to Protective, seeking to collect the proceeds of the policy. Protective refused to pay the full benefits of the policy, but paid only $5,764.58. Protective stated that amount was the extent of Jimenez's insurable interest in Breton's life. The amount included the debt of $5,500, the insurance premium of $101.34, and interest at 7 percent per annum on those amounts. Jimenez then filed a complaint for breach of the contract, breach of covenant of good faith and fair dealing, and violation of INSURANCE CODE SECTION 790.03².

Protective filed a motion for summary judgment or for summary adjudication. The basis of the motion was that Jimenez's insurable interest in Breton's life was limited to the amount of Breton's debt to Jimenez.

The trial court denied Protective's motion. However, at the hearing on the motion, the trial court indicated it was prepared to rule that Protective was liable for $320,000, the face amount of the insurance policy including the double indemnity provision. Counsel for Protective responded that it would agree to treat Jimenez's opposition to the motion for summary judgment as Jimenez's own motion for summary judgment and to submit the case on that basis.

The court asked counsel to discuss the matter and indicated it would rule on the motion at the end of the calendar if the parties wished to proceed further. Following a recess, counsel for Protective stated, "I think we have arrived at a means by which the matter will be re-presented. [p] As I understand it, first of all, we on behalf of Protective agree that the opposition papers filed in opposition to our motion for summary judgment by the plaintiff may be deemed a motion for summary judgment on plaintiff's part by which plaintiff asserts that as a matter of law and without a matter of factual dispute plaintiff is entitled to recover $320,000 minus whatever has been paid. [p] Our moving papers shall be deemed opposition to that motion and the matter may be ruled upon without further notice, ruled upon at this time as a motion for summary judgment by plaintiff on that basis.

"......

"We will thus have, in effect, cross motions for summary judgment, both parties contending they are entitled for summary judgment as a matter of law."

The court deemed the matter to be on two opposing motions for summary judgment and ruled, "The Court has previously indicated and so rules that the motion for summary judgment on behalf of [Protective] has been denied. [p] With regard to the motion for summary judgment in favor of [Jimenez], and against [Protective] ... the Court is granting that motion and the Court finds that the insurance company is obligated to pay the plaintiff the sum of $320,000 less the amounts previously paid, ..."

Protective moved for reconsideration of the ruling on the motion on the ground Protective had entered into the stipulation under a mistake of fact. Protective asserted that contrary to Protective's expectation the trial court in ruling on the motion, had relied on evidence not set forth in Jimenez's statement of undisputed facts. The trial court denied the motion for reconsideration, explaining, "I'm further impressed by the fact that we entered into a binding stipulation, all parties appeared to know what they were doing at the time, and the purpose was to get this before the Appellate Court and have them make a decision as a matter of law." (Emphasis added.) The court further stated, "So I gave all of you an opportunity to put whatever you thought was pertinent on the record, because there was no doubt in my mind that one or the other was intending to take an appeal from my decision. And rather than have it as a writ, it was going to be a final order so you could have the appeal." (Emphasis added.)

On August 11, 1988, the trial court entered a partial judgment against Protective in favor of Jimenez in the sum of $314,235.32. The trial court's handwritten notation on the judgment stated that the judgment was on the contract cause of action only. An ex parte minute order entered on August 11, 1988 stated, "Motion for Summary Judgment denied as to the cause of action for breach of covenant of good faith and fair dealing, and the cause of action for violation of Insurance Code."

When Jimenez sought to execute on the partial judgment, Protective filed a petition for writ of mandate in this court seeking to require the trial court to vacate the judgment. ³ Protective complained that the judgment was, "at most, a judgment as to one cause of action only. It leaves pending two other causes of action. The 'judgment' violates the one final judgment rule and is not an appealable judgment." This court entered an order directing the trial court to set aside the partial judgment "and to enter instead an order adjudicating issues as without substantial controversy."

The matter proceeded to trial on the remaining causes of action. The jury awarded Jimenez interest in the amount of $70,672.40, apparently calculated at the rate of 7 percent per annum. The present appeal followed.

Other facts are stated in the discussion of the issues to which they pertain.

DISCUSSION

Grant of Summary Adjudication. Protective contends the trial court erred in granting summary adjudication in favor of Jimenez. Protective asserts that under the parties' stipulation, Jimenez's motion was for summary judgment only, not for summary adjudication of issues.

When the trial court ruled on the motion, Code of Civil Procedure section 437c, subdivision (f) stated, "A party may move for summary adjudication of issues, either by itself or as an alternative to summary judgment. If it appears that the proof supports the granting of the motion for summary adjudication as to some but not all the issues involved in the action, or...