Klem v. Access Ins. Co.

• Decision Date: 20 November 2017
• Docket Number: D070623
• Court: California Court of Appeals Court of Appeals
• Parties: Robert KLEM, Plaintiff and Respondent, v. ACCESS INSURANCE COMPANY et al., Defendants and Appellants.

17 Cal.App.5th 595

225 Cal.Rptr.3d 711

Robert KLEM, Plaintiff and Respondent,

v.ACCESS INSURANCE COMPANY et al., Defendants and Appellants.

D070623

Court of Appeal, Fourth District, Division 1, California.

Filed November 20, 2017

Morris, Manning & Martin, Lewis E. Hassett ; Boss Law Firm and Daniel R. Salas, San Diego, for Defendants and Appellants.

Day Law Offices and Montie Stowell Day, for Plaintiff and Respondent.

IRION, J.

Robert Klem sued Access Insurance Company (Access Insurance) and Access General Insurance Adjusters, LLC (Access Adjusters, and, collectively with Access Insurance, Access) after he was in a car accident and Access administered his claim. Klem alleged Access falsely notified the California Department of Motor Vehicles (DMV) that his car was a total loss salvage, reducing its value and resulting in loss of use. Access filed a special motion to strike pursuant to Code of Civil Procedure section 425.16, the anti-SLAPP (strategic lawsuit against public participation) statute. The trial court found Access's notice to the DMV was protected communication, but that Klem met his burden in establishing a probability of prevailing on the merits. The court denied the motion, and Access appealed.

We conclude the court erred as to certain of its evidentiary rulings and by denying the anti-SLAPP motion. Accordingly, we reverse and direct the court to enter a new order granting Access's motion.

FACTUAL AND PROCEDURAL BACKGROUND¹

I. Events Giving Rise To The Litigation

On February 12, 2014, Klem was driving his 1993 Mercury Tracer (the Vehicle) when he was in an accident with a car whose owner was insured by Access. Klem was insured by another company not at issue here. At the time, the Vehicle had approximately 92,300 miles on it.

Klem filed a claim with Access. The claims log indicates that on March 21, Access accepted liability for the accident and Klem stated he "want[ed] repairs" through them. Subsequent log entries noted Klem was in a rental car, and that the Vehicle was a total loss. Access Adjusters continued to communicate with Klem, with the log reflecting communications on March 31, April 8, and April 17.

On April 18, Access Adjusters sent Klem a letter regarding his claim, which stated in relevant part:

"We have attempted to reach you to discuss the settlement of your total loss claim. Our offer to settle your total loss claim is explained below and it is important that you review the offer and contact me to discuss the resolution of your claim. [¶] We have completed the inspection of your vehicle and it has been determined to be a Total Loss. Enclosed is a Total Loss Evaluation, which is an independent market evaluation of your vehicle. This evaluation was prepared based on the inspection of your vehicle and the comparison of your vehicle to other comparable vehicles .... [¶] This will confirm that you will retain your salvage vehicle in settlement of the total loss. [¶] ... [¶]

"Pursuant to California Vehicle Code Section 11515(b), we have notified the [DMV] of the total loss of your vehicle and your retention of the salvage. A copy of the Notice of the Retention of Salvage has been enclosed for your records. ... It is your responsibility, within ten days from the settlement of the loss, to forward the properly endorsed ownership certificate or other evidence of ownership to the [DMV] for the issuance of a Salvage Certificate. ... [¶] If you keep your vehicle salvage .... Please be advised that the cost of the vehicle at resale and/or the insured value of the vehicle may be affected."

The notice of retention is DMV form REG 481, titled "Salvage Vehicle Retention by Owner." It states, in part:

"Insurance Company Reporting Retention of this Salvage Vehicle [¶] I, the undersigned, certify that the above described salvage vehicle has been retained by the owner(s) and, as required by California Vehicle Code § 11515(b), he/she has been notified that, within 10 days of the settlement of loss date, he/she must surrender the vehicle's Certificate of Title and license plates, and apply for a Salvage Certificate. The vehicle owner(s) has also been notified that the [DMVs'] database record for the vehicle will reflect a "Salvaged" notation (brand)."

Finally, the April 18 letter stated a check for the net settlement amount of $1,744.84 had been sent to Klem. Klem neither cashed the check, nor returned it. Klem and Access communicated on several more occasions, with Klem expressing his view that the Vehicle "should be worth more" and that he did not "agree with the comps."

Klem described his communications with Access in a declaration opposing Access's anti-SLAPP motion. He stated he advised Access he was repairing the Vehicle, it would "not be negotiated as a salvage vehicle," and that Access "was not to ... report it to the [DMV] as a ‘Salvage Title’ vehicle." He also stated he refused to negotiate a total loss settlement. Klem represented that, prior to receipt of the April 18 letter, he "demanded $4,500.00, which would be [his] estimated value of the vehicle at the time of the accident less what [he] though[t] would be the salvage value." Following the letter, he told Access he would not accept the check as payment for a total loss, and "demanded that if the vehicle was to be determined a salvage title by settlement agreement that [he] be paid the full value of the vehicle." Klem stated he was "essentially advised that [he] had to accept the offered payment [for Access to pay the claim] ... or that [he] would have to withdraw the claim ..., while the vehicle continued to have against it the ‘Salvage Title.’ "

Klem also discussed his use and repair of the Vehicle. He had used the Vehicle to transport his severely ill wife (now deceased) to medical appointments, and it was "repaired by [him] ... for [his] and [his] wife's benefit ..." Klem "caused the necessary repairs to be made to the vehicle for the vehicle to be ... in a safe working order" (but not cosmetic repairs), and continued driving it. The Vehicle later "developed an unrelated engine problem," and because Klem could not register it without salvage title, he "decided it was not economical to repair ... and ... disposed of the vehicle by selling it to a salvage yard."

In January 2015, Klem's counsel sent Access's counsel a declaration and asked for it to be signed and returned. It stated, in part: "I, on behalf of 21st Century Insurance Company [sic ], request[ ] that the Form REG 481 erroneously filed by Assess [sic ] ... be withdrawn. The filing ... was erroneous in that the vehicle was not a ‘Total Loss Salvage Title’ vehicle as described in Vehicle Code section 544." Access did not provide the requested declaration.

II. Litigation

Klem sued Access in February 2016, asserting causes of action for slander of title and violation of Business and Professions Code section 17200 (the unfair competition law, or UCL). Klem alleged, in relevant part, that because he repaired the Vehicle, it was not a total loss salvage under Vehicle Code section 544 and, in turn, Access's submission of the REG 481 notice to the DMV was both false and a violation of section 11515 and other statutes.² As we discuss post , section 544defines "total loss salvage vehicle," and section 11515 sets forth reporting requirements for such vehicles.

In April 2016, Access filed its anti-SLAPP motion and provided a declaration from Michael H. Meadows, Access Adjusters Senior Vice President, Chief Compliance Officer, which attached copies of the claims log and April 18 letter. Klem opposed the motion and filed his own declaration and that of his counsel in support. The parties objected to each other's declarations.

The trial court provided a tentative ruling. The court determined Access met its burden to establish protected activity, explaining the DMV notice "was a communication made ‘in anticipation of the bringing of an action or other official proceeding.’ " The court also noted "reporting of salvage vehicles to appropriate governmental agencies is a matter of significant public concern."

The court then concluded Klem established a probability of prevailing on his claims. It explained he "provide[d] evidence demonstrating that the vehicle should not have been classified as a ‘total loss,’ " while Access's "evidence [in] this regard [was] not admissible." The court also found Access's communication was not privileged. With respect to the absolute privilege under Civil Code section 47, subdivision (b), the court explained that "[a]lthough one potential outcome of the filing required by section 11515(b) is an investigation, it is not intended as a communication concerning possible wrongdoing, made to an official governmental agency such as a local police department."³ The court then found Klem sufficiently alleged malice to overcome any qualified privilege, malice could be inferred from his evidence, and, again, that Access's evidence was inadmissible. The court also found "damages from the loss of use of the vehicle [were] alleged," and that the facts alleged gave rise to unfair or fraudulent conduct for purposes of the UCL claim. Finally, the court sustained Klem's objections to the Meadows declaration without analysis.

After a hearing, the trial court confirmed its tentative ruling and elaborated on its reasoning. Addressing the absolute privilege, the court determined Access presented "no authority that the reporting and licensing requirements mandated by ... section 11515" were designed to prompt official action. The court also stated Klem's "lay opinion [was] sufficient prima facie evidence of the subject vehicle[']s status." The court overruled Access's objections to Klem's declaration and sustained most of its objections to his counsel's declaration. Access appealed.⁴

DISCUSSION

I. Evidentiary Rulings

Access contends the trial court erred by (1) sustaining Klem's objections to the claims log and April 18 letter, and (2) denying Access's objections to Klem's statements in his declaration...