Pacific Nat. Ins. Co. v. Superior Court (Liptak)

• Decision Date: 30 December 1986
• Citation: 198 Cal.App.3d 274,233 Cal.Rptr. 189
• Court: California Court of Appeals Court of Appeals
• Parties: Previously published at 198 Cal.App.3d 274 198 Cal.App.3d 274 PACIFIC NATIONAL INSURANCE COMPANY; et al., Petitioners, v. SUPERIOR COURT of the State of California, County of San Bernardino, Respondent. Philip LIPTAK, Sr., Real Party in Interest. E003165.

Page 189

233 Cal.Rptr. 189

Previously published at 198 Cal.App.3d 274

198 Cal.App.3d 274

PACIFIC NATIONAL INSURANCE COMPANY; et al., Petitioners, v. SUPERIOR COURT of the State of California, County of San Bernardino, Respondent Philip LIPTAK, Sr., Real Party in Interest.

E003165.

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

Dec. 30, 1986.

Review Granted March 18, 1987.

MacLachlan, Burford & Arias, Clifford R. Cunningham and Dennis Popka, San Bernardino, for petitioners.

Alan K. Marks, County Counsel, and Susan A. Hopkins, Deputy County Counsel, San Bernardino, for respondent.

Kassel & Kassel and Sanford A. Kassel, San Bernardino, for real party in interest.

OPINION

KAUFMAN, Acting Presiding Justice.

Petitioners here are the defendants in the underlying action in which Philip Liptak, Sr. (plaintiff) is suing Pacific National Insurance Company (Pacific National), its employee John A. Hammant, Carl Warren & Company, a licensed independent insurance adjuster, and its employee Kent Livingston, on causes of action for alleged violation of the Unfair Practices Act (Ins. Code, § 790 et seq.) and intentional infliction of emotional distress.

The defendants demurred on the grounds that no cause of action was stated. In respect to the count for intentional infliction of emotional distress it was urged that the facts pleaded failed as a matter of law to constitute the requisite outrageous conduct on the part of the defendants. In respect to the counts based on violation of the Unfair Practices Act defendants urged that plaintiff failed to allege a determination that Pacific National's insured was liable for plaintiff's damages, so no cause of action was stated against any defendant and that, in any event, neither a licensed independent adjuster nor its employees nor an insurance company's employees are "engaged in the business of insurance" within the meaning of Insurance Code section 790.01 and so those defendants are not subject to individual liability under the Act.

The trial court overruled the demurrer and defendants petitioned this court for a writ of mandate to compel the trial court to sustain the demurrer. We issued an alternative writ and the matter is now before us for determination. We conclude the demurrer should have been sustained as to all defendants on all counts.

Facts

The facts are derived from plaintiff's second amended complaint augmented by what appear to be undisputed facts taken from the parties' statements of fact in points and authorities filed in the trial court. (See Joslin v. H.A.S. Insurance Brokerage (1986) 184 Cal.App.3d 369, 228 Cal.Rptr. 878.)

On January 4, 1984, plaintiff's son, Philip Liptak, Jr., and William Sylvester Hopfer, Jr. were involved in a vehicular accident which resulted in extensive damage to plaintiff's allegedly handbuilt, custom-made vehicle. Mr. Hopfer was insured by defendant Pacific National for liability arising out of the use of his vehicle. Plaintiff filed suit against Mr. Hopfer to recover for the damage to his vehicle (action No. 225681).

Allegedly, estimates for the repair of plaintiff's vehicle were provided to Pacific National ranging from $35,000 to $40,000. On or about May 22, 1984, Pacific National offered plaintiff $10,000 in full satisfaction of his claims. On or about July 2, 1984, Pacific National's offer was increased to $20,000. Allegedly, Pacific National knew or should have known that it would cost plaintiff between $25,000 and $40,000 to repair or replace his automobile and knew at the time of both said offers that a settlement in those amounts would not constitute a fair and equitable settlement and that plaintiff could not repair or replace his automobile for the amounts offered.

At the time the $10,000 and $20,000 settlements were offered, Pacific National was represented by defendant Carl Warren & Company, a licensed independent adjuster. An employee of that company, Kent Livingston, allegedly processed the claim. However, thereafter plaintiff's claim was turned over for processing to an "in house" adjuster, John A. Hammant, an unlicensed employee of Pacific National. On or about October 4, 1984, Mr. Hammant on behalf of Pacific National notified plaintiff that all previous offers were withdrawn and an offer was made to settle the claim for a total of $2,000. It is asserted this was done to coerce plaintiff into an improvident settlement.

On January 3, 1985, plaintiff filed an action (No. 225680) for violation of the Unfair Practices Act against Pacific National, but apparently realizing the third party action had not been concluded and that the action filed January 3, 1984, was therefore premature, on March 7, 1985, the parties stipulated that action 225680 be dismissed without prejudice and that if plaintiff should decide to file another such suit a specified law firm was authorized to accept service on behalf of Pacific National and its employee John A. Hammant.

A few months later, on or about July 16, 1985, the third party action against the insured (225681) was settled for $25,000 in consideration of which plaintiff gave a release and filed a dismissal of the third party action with prejudice. The release stated it acquitted and discharged the insured "and all other persons, firms, corporations, associations or partnerships of and from any and all claims, actions, causes of action, demands, rights, damages, costs ... and compensation whatsoever ... on account of or in any way growing out of any and all known and unknown, forseen and unforseen bodily and personal injuries and property damage and the consequences thereof resulting or to result from the accident ... which occurred on or about the 4th day of January, 1984...."

Attached to the release, however, was an "EXHIBIT 'A' " in which (1) plaintiff reserved the right to file another lawsuit against Pacific National and its employees and (2) Pacific National and its employees and William S. Hopfer, Jr. specifically denied any "admission of liability."

Thereafter the instant action (No. 228275) was filed. The second amended complaint alleges that in making the allegedly unreasonable settlement offers "defendants, and each of them, knew that plaintiff was desirous of immediately repairing, rebuilding, or replacing his totally damaged automobile, and because of [his] financial status, was relying on the financial assistance from the insurance benefits ... promised ... in the policy.... Nevertheless, acting fraudulently, oppressively, maliciously, and outrageously toward plaintiff with conscious disregard for his known rights and intentionally causing, or willfully disregarding the probability of causing, unjust, and cruel hardship and severe emotional distress to plaintiff," defendants made the allegedly unreasonable offers "which caused plaintiff severe mental and emotional distress, and anguish, and consequent illness...."

In the counts based on violation of the Unfair Practice Act it was alleged that in so conducting themselves defendants and each of them violated section 790.03 by refusing "in good faith to effectuate a prompt, fair, and equitable settlement of the claim of plaintiff ... in which the claim of liability had been reasonably clear." (§ 790.03, subd. (h)(5).) It was more specifically alleged that in so conducting themselves defendants failed "to acknowledge and act reasonably and promptly upon communication with respective [sic] claims arising under insurance policies" in violation of subdivision (h)(2) of section 790.03; failed "to adopt and implement reasonable standards for the prompt investigation and processing of claims arising under insurance policies" in violation of subdivision (h)(3) of section 790.03; failed to attempt "in good faith to effectuate prompt, fair, and equitable settlement of plaintiff's claim in which liability has become reasonably clear" in violation of subdivision (h)(5) of section 790.03; delayed "the investigation of plaintiff's claim, by requiring plaintiff to submit a claim, and then requiring submission of subsequent formal proof of loss containing substantially the same material as contained in plaintiff's original claim" in violation of subdivision (h)(11) of section 790.03; and failed "to provide promptly a reasonable explanation of the basis [relied] on in the insurance policy ... for the denial of [plaintiff's] claim, or for the subsequent offers of a compromise settlement" in violation of subdivision (h)(13) of section 790.03.

It was also alleged that defendants Carl Warren & Company, Kent Livingston and John A. Hammant were each acting within the course and scope of their respective employments.

Discussion of Contentions

1. Infliction of Emotional Distress

"The elements of a prima facie case for the tort of intentional infliction of emotional distress were summarized in Cervantez v. J.C. Penny [sic] Co. (1979) 24 Cal.3d 579, 593 [156 Cal.Rptr. 198, 595 P.2d 975], as follows: '(1) extreme and outrageous conduct by the defendant with the intention of causing, or reckless disregard of the probability of causing, emotional distress; (2) the plaintiff's suffering severe or extreme emotional distress; and (3) actual and proximate causation of the emotional distress by the defendant's outrageous conduct. (Fletcher v. Western National Life Ins. Co. (1970) 10 Cal.App.3d 376, 394 [89 Cal.Rptr. 78, 47 A.L.R.3d 286]; Alcorn v. Anbro Engineering, Inc. (1970) 2 Cal.3d 493, 497-499 [86 Cal.Rptr. 88, 468 P.2d 216]; State Rubbish etc. Assn. v. Siliznoff (1952) 38 Cal.2d 330, 336-339 ; 4 Witkin, Summary of Cal. Law (8th ed.) Torts, §§ 234-237, pp. 2515-2517.) ... Conduct to be outrageous must be so extreme as to exceed all bounds of that usually tolerated in a civilized community. (Alcorn v. Anbro Engineering, Inc., supra, 2 Cal.3d at p. 499, fn. 5 [86 Cal.Rptr. 88, 468 P.2d 216]; Fuentes v. Perez (1977) 66 Cal.App.3d 163, 170 ; Rest.2d Torts, § 46, com. d.)' " (Davidson v. City of Westminster (1982) 32...