Uhrich v. State Farm Fire & Cas. Co.

• Decision Date: 09 June 2003
• Docket Number: No. C036415.,C036415.
• Citation: 135 Cal.Rptr.2d 131,109 Cal.App.4th 598
• Court: California Court of Appeals Court of Appeals
• Parties: Jean Marie UHRICH, Plaintiff and Appellant, v. STATE FARM FIRE & CASUALTY COMPANY, Defendant and Respondent.

135 Cal.Rptr.2d 131

109 Cal.App.4th 598

Jean Marie UHRICH, Plaintiff and Appellant, v. STATE FARM FIRE & CASUALTY COMPANY, Defendant and Respondent.

No. C036415.

Court of Appeal, Third District.

June 9, 2003.

As Modified on Denial of Rehearing July 9, 2003.

Review Denied September 24, 2003.

Bien & Summers, E. Elizabeth Summers, Novato; Douglas E. Lord, Oakland; Stoddard, Pfeiffer, Bergquist & Wood and Steven N.H. Wood, Walnut Creek, for Plaintiff and Appellant.

Chapman, Popik & White, Susan M. Popik and Amy O'Keefe, San Francisco, for Defendant and Respondent.

MORRISON, J.

Plaintiff Jean Marie Uhrich sued Paul Alan Lindseth on a number of legal theories. Lindseth tendered defense of the suit to his two insurance companies: American Home Assurance Company (American), which declined to provide a defense, and State Farm Fire & Casualty Company (State Farm, defendant herein), which provided a defense, but then withdrew under a reservation of rights.

Uhrich and Lindseth settled the underlying case, and Lindseth assigned his bad faith claims to Uhrich. After a monetary judgment was entered in the underlying suit, Uhrich sued the insurers seeking payment of policy limits toward the judgment, and bad faith damages for wrongful refusal of a defense for Lindseth. The trial court granted State Farm's summary judgment motion and Uhrich filed this appeal from the ensuing judgment. Uhrich obtained a judgment against American, which is now pending on appeal in a separate action. (Uhrich v. American Home Assurance Co. (C037332, app. pending).)

In this appeal, Uhrich contends State Farm had a duty to defend Lindseth because there was a possibility of coverage for some of her claims against him. We disagree and shall affirm the judgment.

I. BACKGROUND

A. The Policy

State Farm issued Lindseth a $1,000,000 "Personal Liability Umbrella Policy" which we will assume covered the relevant time period. A "loss" was defined as "an accident that results in personal injury or property damages during the policy period." "Personal injury" meant "bodily harm, sickness, disease, shock, mental anguish or mental injury," as well as specified torts such as false imprisonment, defamation, invasion of privacy and assault and battery.

The policy excluded personal injury "a. which is either expected or intended by you; or [¶] b. to any person or property which is the result of your willful or malicious act." The policy also excluded coverage for "any loss caused by providing or failing to provide a professional service" and "any loss caused by your business operations or arising out of business property." "Business" was "a trade, profession or occupation," and "business property" referred to realty, not personalty.

B. The Underlying Complaint

1. Factual Allegations

On May 25, 1994, Uhrich sued Lindseth (Sacto.Super.Ct. No. 540825), asserting numerous legal theories arising out of a vendetta by Lindseth, ending in a conspiracy to pervert justice.

Lindseth, a psychologist, treated Uhrich from 1987 to 1989. During that period, Lindseth hired her to form and direct a residential treatment facility. Uhrich sued Lindseth (Sacto.Super.Ct. No. 514920) alleging malpractice, breach of contract and related claims. Uhrich and Lindseth settled. Lindseth paid Uhrich $110,000 and released a conversion cross-claim alleging Uhrich had stolen patient files from the treatment facility. Lindseth was also obliged to attend a confrontational mediation session with Uhrich, but he breached the conditions therefor.

Meanwhile the California Attorney General had begun a disciplinary proceeding against Lindseth alleging misconduct relating to Uhrich and another patient, particularly alleging inadequate recordkeeping. Lindseth defended in part by alleging Uhrich stole his patient files and records.

Lindseth also enlisted two men (Splawn and Johnson) into a conspiracy to convince the authorities that Uhrich had in fact stolen his files, and used or planned to use them for extortion, and had perjured herself during the first case.

The conspirators provided false information that led to the issuance of a search warrant for Uhrich's house. Uhrich alleged the search was degrading, officers seized her diary and personal and business records, and confidential information was disclosed to Lindseth. The criminal investigation was eventually dropped and her personal property was returned.

2. Legal Theories

Uhrich framed her complaint in terms of numerous legal theories, wrongly denominated as separate causes of action. (See Slater v. Blackwood (1975) 15 Cal.3d 791, 795-796, 126 Cal.Rptr. 225, 543 P.2d 593; Barrett v. Superior Court (1990) 222 Cal.App.3d 1176, 1181-1182, 272 Cal.Rptr. 304.) Further, the complaint employs the disfavored practice of incorporating all or most prior paragraphs within each purported cause of action. "This type of pleading should be avoided as it tends to cause ambiguity and creates redundancy." (Kelly v. General Telephone Co. (1982) 136 Cal.App.3d 278, 285, 186 Cal.Rptr. 184.) Our summary does not track the complaint, which improperly labels issues such as emotional distress damages and civil conspiracy liability as counts or causes of action. Uhrich claimed:

1. Malpractice—for breach of "continuing duties" after Lindseth stopped treating Uhrich, by revealing information gleaned during therapy, for breaching the first settlement and falsely reporting perjury and theft of patient files and by failing to prevent "`countertransference.'"

2. Interference with prospective economic advantage.

3. Malicious prosecution or abuse of process.

4. "Stalking"—for pestering Uhrich and her parents and threatening or attempting vandalism and burglary against her, and planting evidence to incriminate her.

5. Assault and battery—for causing peace officers to make offensive contact with Uhrich.

6. False imprisonment—for making false statements that resulted in the search warrant.

7. Trespass—for causing entry into her residence pursuant to the search warrant.

8. Conversion or trespass to chattel— for detention of personal property during and after execution of the warrant.

9. Defamation—for making three defamatory statements "to multiple third parties," viz. (1) Uhrich perjured herself, (2) she stole files, and (3) she "posed an immediate danger to the public through extortion of the patients."

10. Intentional infliction of emotional distress—based on the above conduct.

11. Negligence, characterized as "Negligent Infliction of Emotional Distress" or NIED.

12. Invasion of privacy.

C. The Tender and Withdrawal

On February 23, 1995, State Farm accepted defense of the underlying case with a reservation of rights, stating it did not believe there was any coverage under any of Lindseth's policies (only the umbrella policy is at issue).

Lindseth later pleaded guilty to conspiracy to "pervert and obstruct justice" as detailed below. State Farm then withdrew its defense, for lack of coverage.

D. The Second Settlement and Judgment

On March 4, 1997, Uhrich and Lindseth settled the underlying case. Lindseth paid $190,000 and assigned his bad faith choses in action to Uhrich. The parties stipulated to entry of a judgment "for each and every cause of action in the Complaint ... in an amount to be determined by the Court at a prove-up hearing."

At that hearing, Uhrich submitted evidence including a memorandum supported by declarations of herself, Splawn and Johnson. Most of the claimed damages ($2,500,000) were for mental anguish. The punitive damages represented about 90 percent of Lindseth's net worth (including "present value earning capacity").

On May 6, 1997, the trial court issued a judgment reciting that the stipulation stated the judgment would be "for each and every cause of action." Contrary to an assumption in Uhrich's brief, the judgment does not assign damages to each cause of action. For "tortious conduct" it awards damages ($3,948,425), plus—for "some of [Lindseth's] actions"—punitive damages ($1,500,000) plus attorney fees ($339,138). Fees were available because Uhrich was the victim of Lindseth's felony. (See Code Civ. Proa, § 1021.4.) The judgment as a whole (and not for each claim) is "for each and every cause of action."

E. The Instant Coverage Suit

Uhrich asked State Farm to pay the policy limit of $1,000,000. State Farm refused.

On April 8, 1999, Uhrich sued State Farm (and American) in the instant lawsuit for bad faith and failing to pay on the judgment. (Ins.Code, § 11580, subd. (b)(2).) The court granted State Farm's motion for summary judgment and Uhrich appealed from the ensuing judgment.

The trial court found in part: "(1) any claims for breach of professional duties are barred by the professional services exclusion of the policies; (2) any claims for bodily injury or property damage arising out of Lindseth's intentional or criminal conduct fall within the exclusions for intentional or willful acts of the insured; and (3) any claims for personal injury were caused by Lindseth's business operations and excluded from the ... policy."

II. STANDARD OF REVIEW

We review de novo an order granting summary judgment. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 860, 107 Cal.Rptr.2d 841, 24 P.3d 493 (Aguilar).) We need only address sufficient grounds to affirm. (Charpentier v. Von Geldern (1987) 191 Cal.App.3d 101, 107, 236 Cal.Rptr. 233.)

The meaning of the policy is a legal question. (Jauregui v. Mid-Century Ins. Co. (1991) 1 Cal.App.4th 1544, 1548, 3 Cal.Rptr.2d 21.) "`To prevail [on the issue of the duty to defend], the insured must prove the existence of a potential for coverage, while the insurer must establish the absence of any such potential. In other words, the insured need only show that the underlying claim may fall within policy coverage; the insurer must prove it cannot. ... [¶] Nevertheless, the obligation to defend is not without limits. `Rather, such a duty is limited by "the nature and kind of risk...