Omaha Indemnity Co. v. Superior Court, B036158

• Court: California Court of Appeals
• Citation: 258 Cal.Rptr. 66,209 Cal.App.3d 1266
• Decision Date: 26 April 1989
• Docket Number: No. B036158,B036158
• Parties: OMAHA INDEMNITY COMPANY, Petitioner, v. SUPERIOR COURT of the State of California for the County of Santa Barbara, Respondent. Frank GREINKE, et al., Real Parties in Interest.

Page 66

258 Cal.Rptr. 66 209 Cal.App.3d 1266 OMAHA INDEMNITY COMPANY, Petitioner,
v.
SUPERIOR COURT of the State of California for the County of Santa Barbara, Respondent.
Frank GREINKE, et al., Real Parties in Interest. No. B036158. Court of Appeal, Second District, Division 6, California. April 26, 1989.

[209 Cal.App.3d 1268]

Page 67

Booth, Mitchel & Strange, and Eileen Robinson, Kristin E. Meredith, Los Angeles, for petitioner.

No appearance for respondent.

Gary E. Hickman, Garden Grove, for real parties in interest.

209 Cal.App.3d 1269

OPINION AND ORDER

GILBERT, Associate Justice.

An attorney files a writ petition with the Court of Appeal pointing out an apparent error of the trial court. The Court of Appeal summarily denies the petition. The bewildered attorney asks, "Why?"

If this case does not answer the question, we hope the following rule will at least assuage counsel's frustration: Error by the trial judge does not of itself insure that a writ petition will be granted. A remedy will not be deemed inadequate merely because additional time and effort would be consumed by its being pursued through the ordinary course of the law. (Rescue Army v. Municipal Court (1946) 28 Cal.2d 460, 171 P.2d 8.)

In this action, plaintiffs are suing defendants for negligence. They are also suing defendants' insurance company in a cause of action for declaratory relief. Plaintiffs claim that they are third party beneficiaries of this insurance contract. The trial court has denied the motion of the insurance company to sever the declaratory relief cause of action, and the insurance company therefore seeks relief by way of extraordinary writ. We initially denied the writ, but after our Supreme Court directed us to issue an alternative writ, we shall now grant a writ of mandate.

BACKGROUND

Real parties Frank and Margaret Greinke owned rental property in the city of Santa Maria. In July of 1980, the Greinkes leased the premises to K.R. Trefts and Patricia M. Trefts. The lease agreement required the Trefts to purchase a general liability insurance policy for the mutual benefit of landlord and tenant. In July of 1982, Omaha Indemnity Company, an insurance company, issued a general liability policy to the Trefts.

The Greinkes claim that, on or about July 17, 1986, they became aware of damage to their property caused by an oil spill. They contend that the oil spill occurred during the Trefts' occupation of the property. The Greinkes demanded that Omaha compensate them, under the terms of the insurance policy, for the damage to the property. Omaha has purportedly denied coverage under the policy.

On March 14, 1988, the Greinkes sued the Trefts for damage resulting from the oil spill. They also sued Omaha for declaratory relief of their rights under the terms of the insurance contract.

Omaha demurred to the declaratory relief cause of action. In its demurrer it asserted that the Greinkes were not parties to the contract of insurance [209 Cal.App.3d 1270] and, therefore, had no standing to pursue a claim for declaratory relief. (See Blank v. Kirwan (1985) 39 Cal.3d 311, 331, 216 Cal.Rptr. 718, 703 P.2d 58.) It contended that the Greinkes had alleged neither that they had an interest in the insurance policy nor that there had been a denial of coverage. Thus, Omaha reasoned that there is no case or controversy pending against it. (See Green v. Travelers Indemnity Co. (1986) 185 Cal.App.3d 544, 557, 230 Cal.Rptr. 13.)

The trial court was correct in overruling the demurrer. The Greinkes allege that they are the intended beneficiaries of the insurance policy and that Omaha had denied them coverage. In such instances, an action for declaratory relief is appropriate. (General Ins. Co. of America v. Whitmore (1965) 235 Cal.App.2d 670, 673, 45 Cal.Rptr. 556.)

In the alternative, Omaha moved to sever the declaratory relief action from the tort lawsuit. Omaha claimed that it would suffer prejudice should the lawsuit against both itself and the Trefts go forward. Further, it pointed out that severance would promote judicial economy in that there would be no need to try the declaratory relief action should the tenants be found not liable.

Page 68

Although Omaha has requested our review of this ruling, it has neglected to supply us with a copy of the reporter's transcript. This did not simplify our task of review. (See Sherwood v. Superior Court (1979) 24 Cal.3d 183, 186-187, 154 Cal.Rptr. 917, 593 P.2d 862.)

On August 2, 1988, we denied a petition for writ of mandate. On September 29, 1988, the Supreme Court granted a petition for review. It then ordered the case re-transferred to us with the direction to issue an alternative writ in light of Evidence Code section 1155 and Moradi-Shalal v. Fireman's Fund Ins. Companies (1988) 46 Cal.3d 287, 306, 250 Cal.Rptr. 116, 758 P.2d 58.

DISCUSSION

A. Motion To Sever

Code of Civil Procedure section 1048, subdivision (b) states, in pertinent part:

"The court, in furtherance of convenience or to avoid prejudice, or when separate trials will be conducive to expedition and economy, may order a separate trial of any cause of action...."

In a negligence action, Evidence Code section 1155 precludes the use of evidence that a tortfeasor has insurance for the injury that he has allegedly [209 Cal.App.3d 1271] caused. "The evidence [of a party being insured] is regarded as both irrelevant and prejudicial to the defendant." (1 Witkin, Cal.Evidence (3d ed. 1986) § 417, p. 391.)

Our Supreme Court has stated that the suing of an insured for negligence and the insurer for bad faith in the same lawsuit " '... obviously violate[s] both the letter and spirit of [Evid.Code, § 1155].' [Royal Globe Ins. Co. v. Superior Court (1979) 23 Cal.3d 880, 891, 153 Cal.Rptr. 842, 592 P.2d 329.] ... '... [U]ntil the liability of the insured is first determined, the defense of the insured may be seriously hampered by discovery initiated by the injured claimant against the insurer.' [Citation.]" (Moradi-Shalal v. Fireman's Fund Ins. Companies, supra, 46 Cal.3d at p. 306, 250 Cal.Rptr. 116, 758 P.2d 58, emphasis in original.)

"It is within the discretion of the court to order a severance and separate trials of such actions [citations], and the exercise of such discretion will not be interfered with on appeal except when there has been a manifest abuse thereof. [Citation.]" (McLellan v. McLellan (1972) 23 Cal.App.3d 343, 353, 100 Cal.Rptr. 258.) Although we find that the trial court abused its discretion when it denied Omaha's motion to sever (Downey Savings & Loan Assn. v. Ohio Casualty Ins. Co. (1987) 189 Cal.App.3d 1072, 1086, 234 Cal.Rptr. 835), relief by way of extraordinary writ should not be considered a foregone conclusion.

B. Relief By Way Of Extraordinary Writ--Why It Is Hard To Get, And Why We Initially Denied The Petition

Approximately 90 percent of petitions seeking extraordinary relief are denied. (See Cal.Civil Writ Practice (Cont.Ed.Bar 1987) § 2.2, p. 50.) Only rarely does the court give detailed reasons for its rejection of a petition. (E.g.,...