Purcell v. Colonial Ins. Co.

• Decision Date: 26 October 1971
• Citation: 97 Cal.Rptr. 874,20 Cal.App.3d 807
• Court: California Court of Appeals Court of Appeals
• Parties: Joseph PURCELL, Plaintiff and Appellant, v. COLONIAL INSURANCE COMPANY, Defendant and Respondent. Civ. 37640.

Page 874

97 Cal.Rptr. 874

20 Cal.App.3d 807

Joseph PURCELL, Plaintiff and Appellant, v. COLONIAL INSURANCE COMPANY, Defendant and Respondent.

Civ. 37640.

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

Oct. 26, 1971.

Hearing Denied Dec. 23, 1971.

Minsky, Garber & Rudof, by J. M. Groshan, Los Angeles, for plaintiff and appellant.

Stearns & Nelson, Bruce L. Nelson, Hollywood, for defendant and respondent.

COMPTON, Associate Justice.

Plaintiff Joseph Purcell appeals from a judgment of dismissal following the granting of a motion for a judgment on the pleadings.

On March 27, 1968, plaintiff filed a complaint against his former insurance carrier Colonial Insurance Co. (hereinafter defendant) seeking $100,000.00 in damages for 'grievous mental and physical pain and nervous pain and suffering,' and $3,500.00 in legal expenses. The pain and suffering was alleged to be the result of the defendant's failure to settle, within the limits of its policy, a claim against plaintiff for bodily injury, property damage, and wrongful death. Defendant in moving for a judgment on the pleadings urged that (1) plaintiff was not the real party in interest, having assigned his cause of action, and (2) the action was barred by the statute of limitations.

The trial court assumed that plaintiff had a cause of action but ruled that said cause of action was barred by the one-year statute of limitations applicable to personal injury actions. (Code Civ.Proc. § 340, subd. (3).)

FACTUAL BACKGROUND

On June 20, 1962, the plaintiff was involved in an automobile accident near St. Louis, Missouri. The accident resulted in the death of two individuals, Barbara and Jay Reich, and injury to a third, Jeffrey Reich. A liability insurance policy issued by defendant covered the plaintiff up to $10,000.00 for death or injury to any one person and $20,000.00 for death or injury arising out of a single accident.

Subsequent to June 20, 1962, Jeffrey Reich and Lee Reich, next-of-kin of the deceased individuals, (hereinafter referred to as the 'Reichs') offered to settle all claims against the plaintiff for an amount within the policy limits of $20,000.00. Defendant refused the offer to settle.

Thereafter, on February 25, 1965, plaintiff entered into an assignment agreement with the Reichs.

The assignment agreement was not pleaded in the complaint but was instead filed as an exhibit with the answer.

The general rule is that on a motion for judgment on the pleadings as in the case of general demurrer, the court may not consider matters extrinsic to the pleading under attack. (2 Witkin, California Procedure, § 67, p. 1704.) Nevertheless, we judicially notice the provisions of the agreement. To fail to do so would be to ignore the pivotal factor in the proper resolution of this case. No useful or desirable end would result from such technical rigidity.

Both parties in their briefs refer to the agreement. The plaintiff asks us to consider the agreement in aid of his pleading. Thus there has been compliance with sections 452 and 453 of the Evidence Code. On the other hand we can treat the matter as a summary judgment. In that context the effect of the assignment presents a question of law which, if resolved against plaintiff, would be conclusive and leave no room from triable issues of fact.

That agreement after referring to the pendency of the action (No. 819818) brought by the Reichs against plaintiff and the refusal of defendant to settle, provided that plaintiff assigned to the Reichs 'any and all causes of action which he has or may have, now or in the future, against Colonial with respect to all matters arising out of said accident and the claims incident thereto, * * *.' (Emphasis added.) Pursuant to another provision of the The agreement further provided in part as follows: '3. It is expressly contemplated by Assignees that they will press said action No. 819818 to judgment and then seek to collect the amount of such judgment from Colonial. As assignees of the cause of action described in paragraph 1, above, they shall have in their sole discretion the right but not the duty to bring and prosecute a second action, against Colonial, to enforce such cause of action. Full control over such cause of action shall be in Assignees, who may assert or not assert it, settle or not settle it, as they see fit, all without notice to or concurrence of Assignor. 4. * * * Therefore, should Assignees at any time succeed in collecting payments from Colonial in excess of $20,000.00 (exclusive of interest, costs and property damage claims), whether through judgment, settlement or otherwise, then Assignor shall receive a refund from Assignees of 50% Of any such excess until the amount of such refund equals $12,500.00, without interest.'

agreement, plaintiff paid $12,500.00 to the Reichs and in turn obtained a release.

On September 1, 1965, a judgment in an aggregate sum of $35,000.00 or $15,000.00 in excess of the policy limits was entered in favor of the Reichs and against plaintiff. In that action the trial court applied Missouri law which limited the amount of damages. The Reichs appealed.

In the case of Reich v. Purcell, 67 Cal.2d 551, 63 Cal.Rptr. 31, 432 P.2d 727, our Supreme Court held that the Missouri limitations were not applicable. Pursuant to stipulation between the Reichs and plaintiff the judgment was increased to $55,000.00. The judgment was final on November 29, 1967. Subsequently, plaintiff commenced this action and the Reichs initiated a separate action against defendant.

IS PLAINTIFF THE REAL PARTY IN INTEREST?

The question of who is the real party in interest turns upon whether plaintiff was at the time of the assignment possessed of a single cause of action or two causes of action, one for a personal tort and one for breach of contract.

Beginning with Brown v. Guarantee Ins. Co., 155 Cal.App.2d 679, 319 P.2d 69, this court viewed the cause of action for a wrongful failure to settle as ex-delicto but essentially arising out of the contract of insurance. In terms of assignability, it was given the attributes of a cause of action based on contract.

Comunale v. Traders & General Ins. Co., 50 Cal.2d 654, 328 P.2d 198 (citing Brown with approval) stated that, 'Although a wrongful refusal to settle has generally been treated as a tort (citations), it is the rule that where a case sounds both in contract and tort the plaintiff will ordinarily have freedom of election between an action of tort and one of contract. (Citation.)' (Page 663, 328 P.2d page 203.)

The result of Comunale was, as to the issue of the Statute of Limitations, the application of the four-year statute on obligations arising out of written contracts. (Code Civ.Proc. § 337.1.)

As to the issue of assignability the court held that whether that cause of action is described as ex contractu or ex delicto, it is clearly assignable.

Section 954 of the Civil Code provides: 'A thing in action, arising out of the violation of a right of property, or out of an obligation, may be transferred by the owner. * * *'

Crisci v. Security Ins. Co., 66 Cal.2d 425, 58 Cal.Rptr. 13, 426 P.2d 173, while citing Comunale with approval, recognized that in a case of a wrongful refusal to settle, the plaintiff who suffered mental stress could recover damages therefor in addition to compensation for pecuniary loss. It appears that in Crisci, there had been an assignment by Mrs. Crisci of the cause of action. On the other hand the recited facts speak of an award in her favor for $91,000 because of the judgment in excess of the policy limits. This in addition to damages for the emotional distress. In While Crisci held that the cause of action did not sound solely in contract it is clear that the court considered the cause of action to be rooted in the contract of insurance, as demonstrated by the following language at page 434, 58 Cal.Rptr. page 19, 426 P.2d page 179: 'Among the considerations in purchasing liability insurance, as insurers are well aware, is the peace of mind and security it will provide in the event of an accidental loss, and recovery of damages for mental suffering has been permitted for breach of contracts which directly concern the comfort, happiness or personal esteem of one of the parties. (Chelini v. Nieri, 32 Cal.2d 480, 482, 196 P.2d 915.)' (Emphasis added.)

any event the issue of the assignment does not appear to have been raised.

Neither Comunale nor Crisci suggest the existence of two causes of action. Instead they refer to 'the action for wrongful refusal to settle' and declare that the plaintiff has an election to proceed in either contract or tort. If two causes of action...