Dolores Striker Martin, et al. vs. Flenay USA, LLC, et al.

Dolores Striker Martin, et al. vs. Flenay USA, LLC, et al., 24CVP-0110

Hearing: Motion to Bifurcate Cross-Complaint

Date: August 25, 2026

Decedent Dolores Jean Striker Martin filed this action on April 2, 2024, against Garden View Inn, Dimfna Koc (Ms. Koc), and Flenay USA LLC (collectively Defendants, Cross- Complainants, or Flenay), alleging causes of action for negligence, willful misconduct, elder abuse and neglect, and negligence per se. Ms. Martin died on August 3, 2024.

On January 24, 2025, the Court granted Valerie Scott Mulholland’s (Plaintiff) request to file an amended complaint to substitute Ms. Mulholland as Decedent’s successor in interest. On June 2, 2025, Plaintiff filed a Second Amended Complaint (SAC).

Flenay filed a cross-complaint against Foundation Risk Partners Corporation (FRP), dba Leaders’ Choice Insurance (Leaders’ Choice), Michael Ponce (Ponce), and Kenneth Peterson (Peterson) (collectively, Cross-Defendants or FRP) on August 2, 2024. Flenay filed a First Amended Cross-Complaint (FACC) against Cross-Defendants for negligence, breach of fiduciary duty, negligent misrepresentation, and breach of oral contract on February 3, 2025.

Now before the Court is Cross-Defendants’ motion to bifurcate the cross-complaint, for a separate trial and for an order to try the cross-complaint prior to the complaint. Flenay does not oppose provided the cross-complaint is tried first. Plaintiff opposes. The motion will be granted in part.

I. SUMMARY OF ALLEGATIONS

A. Plaintiff’s Second Amended Complaint

In the amended complaint, Plaintiff alleges Decedent was a former resident of Garden View Inn. (SAC, ¶ 1.) Plaintiff alleges that Flenay is a Hawaii corporation doing business as Garden View Inn. (Id., ¶ 2.) Garden View Inn has a principal place of business in Atascadero. (Ibid.) Ms. Koc is the owner and agent for service of process for Flenay, and administrator at Garden View Inn. (Id., ¶ 3.) Plaintiff alleges Ms. Koc is “personally liable for injuries and damages asserted herein to wit; she is the alter ego of Flenay USA LLC.” (Id., ¶ 4.)

Plaintiff alleges Garden View Inn is an assisted living/residential care facility for the elderly. (SAC, ¶ 5.) Plaintiff alleges Defendants failed to maintain the required liability insurance in the amount of at least $1M per occurrence and $3M aggregate to cover injuries to residents or guests caused by the negligent acts, failure to act, or neglect by its employees. (Id., ¶ 6.) Plaintiff alleges that Decedent was admitted to Garden View Inn on September 25, 2021. (Id., ¶ 10.)

Plaintiff alleges that Garden View Inn is a “non-medical care facility” that “collaborates with Central Coast Home Health (CCHH) nurses on care planning, fall risk, assessments and instruction to facility caregivers on fall prevention measures for individual residents at risk.” (SAC, ¶ 11.) Plaintiff alleges that upon Decedent’s admission, CECH performed an initial assessment of Decedent’s needs and identified safety risks, and determined and documented that Decedent was a high fall risk. (Id., ¶ 12.) Plaintiff alleges that CCHH records document Decedent’s score at a “10 out of 10 in the Fall Assessment,” and instructed caregivers to “be present at all times with Decedent during transfers including toileting.” (Id., ¶ 14.)

Plaintiff alleges that, on April 15, 2022, caregiver Alex Pywtorak took Decedent to the bathroom. (SAC, ¶ 15.) Plaintiff alleges that while Decedent was sitting on the toilet, Pywtorak stepped out of the bathroom and that upon her return, she found Plaintiff on the floor in front of the toilet. (Ibid.)

Plaintiff alleges that as a result of the fall, Decedent suffered a right ankle fracture and underwent an open reduction and internal fixation of the right bimalleolar ankle fracture. (SAC, ¶ 16.) Plaintiff alleges that Decedent suffered significant pain and was admitted to Vineyard Hills Skilled Nursing facility for one month after surgery. (Ibid.)

B. Flenay’s First Amended Cross-Complaint

In the first amended cross-complaint, Flenay alleges that Cross-Defendant FRP, dba Leader’s Choice was a corporation formed in Delaware with a principal place of business in Daytona Beach, Florida. (FACC, ¶ 3.) Leaders Choice was registered to conduct business in California. (Id., ¶ 4.) During relevant times in this action, Michael Ponce and Kenneth Peterson were employees of Leaders’ Choice, “who provided insurance broker services to Garden View Inn.” (Id., ¶¶ 5, 6.)

Flenay alleges that in the underlying complaint it is alleged that Garden View Inn did not have the requisite insurance coverage for a California assisted living facility. (FACC, ¶ 10.) As it had for the seven previous years, Garden View Inn entrusted Cross-Defendants to obtain adequate insurance coverage for its assisted living facility. (Id., ¶ 11.) After Decedent made her claim, Garden View was denied coverage by two insurance companies because Cross-Defendants did not obtain adequate insurance coverage for the alleged loss. (Id., ¶ 12.)

Flenay alleges, “since purchasing the Garden View Inn in 2017, Garden View Inn had a $1 million claims-made and-reported professional liability coverage with a retroactive date of 2017 that was placed by Leaders’ Choice.” (FACC, ¶ 16.) With Leader’s Choice assistance, Garden View Inn made timely insurance payments and annually renewed its insurance policies. (Ibid., Ex. 1, James River policy [policy period 3/15/22 to 3/15/23], Ex. 2, Kinsale Insurance Co. policy.)

After years of having the same insurance coverage, Garden View Inn was advised by Cross- Defendants to change their insurance carrier from James River to Kinsale as of March 15, 2023.

(FACC, ¶ 17.) Garden View Inn believed that both policies provided the same coverage. (Id., ¶ 18.) Flenay alleges that Garden View Inn received Decedent’s personal injury claim demand letter on June 20, 2023, arising from Decedent’s injury on April 15, 2022. (Id., ¶ 20.) Garden View Inn was notified by both insurance carriers that Garden View Inn did not have coverage for Decedent’s claim. (Id., ¶ 22.)

Flenay alleges that months earlier, “Leaders’ Choice had apparently requested, and procured, the Kinsale replacement policy with a retroactive date of March 15, 2023, rather than 2017 as it always had done upon each prior renewal on behalf of Garden View Inn. This egregious error by Leaders’ Choice in filling out the Kinsale application left Garden View Inn without coverage for any claim made during Kinsale’s claims-made policy period, for any injury that occurred prior to March 15, 2023, like Ms. Martin’s claimed injury, which occurred on April 15, 2022.” (FACC, ¶ 23.) Flenay alleges the Kinsey replacement policy cut Garden View Inn’s fall-related coverage limits from $1 million to $100,000, creating a catastrophic coverage gap that left Garden View Inn $900,000 below California’s statutory minimum for assisted living facilities. (Id., ¶ 24.)

II. LEGAL STANDARD

Upon a properly noticed motion of a party made no later than the close of pretrial conference in cases in which such pretrial conference is to be held, or, in other cases, no later than 30 days before the trial date, a court may bifurcate a trial into separate issues when the convenience of witnesses, the ends of justice, or the economy and efficiency of handling the litigation would be promoted thereby. (Code Civ. Proc., § 598.)

“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, including a cause of action asserted in a cross-complaint, or of any separate issue or of any number of causes of action or issues, preserving the right of trial by jury required by the Constitution or a statute of this state or of the United States.” (Code Civ. Proc., § 1048, subd. (b).)

Code of Civil Procedure section 1048 subdivision (b) “is a general statute on severance of issues for trial. It does not affect other statutes that authorize severance of particular issues and specify the procedure for those trials (e.g., C.C.P. 597.5, 597, 598).” (4 Witkin, Cal. Procedure (6th ed. 2026) § 391.)

“It is within the discretion of the court to bifurcate issues or order separate trials of actions ..., and to determine the order in which those issues are to be decided.” (Royal Surplus Lines Ins. Co., Inc. v. Ranger Ins. Co. (2002) 100 Cal.App.4th 193, 205.)

III. DISCUSSION

A. Bifurcation is Appropriate

FRP moves for separate trials on the complaint and cross-complaint, asserting that the claims arise from independent facts.1 FRP further argues that a single trial would substantially prejudice FRP by confusing the jury and encouraging an improper allocation of fault based on FRP’s participation in the insurance industry. In support, FRP cites State Farm Mutual Automobile Insurance Company v. Superior Court (1956) 47 Cal.2d 428 (State Farm), and Shade Foods, Inc. v. Innovative Products Sales & Marketing, Inc. (2000) 78 Cal.App.4th 847.

In State Farm, supra, the Supreme Court held that trying an insurance coverage dispute alongside the underlying personal injury action would be prejudicial to the insurer because consolidation would “unquestionably confuse the jury in determining under differing tests set out in the instructions the consequences of any particular factual situation which the jury might find to exist.” (Id., at p. 431.)

Cross-Complainant does not oppose bifurcation, requesting only that the cross-complaint be tried first. Plaintiff’s opposition seems responsive to Cross-Complainant’s statement of nonopposition. 2 (See Opp., p. 2, ll. 1-3.) Plaintiff’s opposition does not address whether FRP would suffer prejudice, if the matters are tried together. Plaintiff does argue, however, that Plaintiff would suffer severe prejudice “if the brokers [sic] case is allowed to go first.” (Opp., p. 2, l. 15.)

As a preliminary matter, the Court recognizes that the cross-complaint asserts a claim against an insurance broker for allegedly failing to procure the requested insurance coverage, and not an insurance coverage dispute between an insured and its insurer. Nevertheless, although Cross- Defendants cite authorities arising in the insurer – insured coverage context, the Court finds that those decisions are sufficiently analogous to provide guidance for resolution of this motion.

The Court finds Shade Foods instructive. As FRP notes, the Court of Appeal recognized that, “in the field of insurance law, the consolidated trial of liability and coverage issues presents pitfalls that have been held to compel separate trials before different juries, leaving the matter outside the discretion of the court.” (Shade Foods, supra, 78 Cal.App.4th at p. 911.) At the same time,

1 See Weil & Brown, Cal. Practice Guide: Civil Trials and Evid. (The Rutter Group 2025) Ch. 4-G, § 4:331, noting that “bifurcate” is often used interchangeably with “sever.” Code of Civil Procedure section 598 does not use the term “bifurcate,” but courts commonly use it to mean trying liability separately before damages, typically producing a single judgment after the damages phase. By contrast, “severance” usually means splitting a case into separately tried segments (often before different juries), producing separate, separately appealable judgments. 2 A late filed supplemental brief was filed on August 18, 2026, by Plaintiff. The Court, on its own motion, strikes Plaintiff’s supplemental brief, as improperly filed without leave of court. (Code Civ. Proc., § 436, subd. (b).) 4

“[t]he rule is not absolute. While it may be an abuse of discretion to try issues of liability and coverage before the same jury, the question must be decided on a case-by-case basis. For example, an insured may itself bring an action against its insurer, joining coverage and bad faith claims, without any potential for prejudice. In such a case the only relevant issue concerns the order of proof.” (1 California Ins. Law Dictionary & Desk Ref. (2026 ed.) § B10, Bifurcation of Issues, see Shade Foods, supra, 78 Cal.App.4th at p. 912-913.)

Specifically, the Shade Foods’ court of appeal found “no abuse of discretion to order consolidated trial before same jury on liability and coverage issues, with appropriate cautionary instruction, where tortfeasor and its insurer waived objections to consolidated trial, plaintiff’s insurer had no standing to complain of their prejudice, and considerations of judicial economy favored consolidation; distinguishing Omaha Indem. Co.” (4 Witkin, Cal. Procedure (6th ed. 2026) § 391.)

Applying these authorities, the Court concludes that trying the complaint and cross-complaint together poses a risk of jury confusion and prejudice arising from the simultaneous presentation of liability and insurance-related issues, including the potential for improper allocation of fault to FRP, based on FRP’s status in the insurance industry, as identified in State Farm and Shade Foods. Additionally, the facts underlying the complaint and cross-complaint are not so intertwined as to negate these risks.

The motion to bifurcate is granted to order two separate trials. The sequence of trials is addressed below.

B. Order of Trials

FRP contends that judicial economy favors trying the cross-complaint before the complaint. FRP asserts that the cross-complaint trial will take only one to two days “[w]hereas trial on Plaintiff’s complaint would be a 3-5 day trial and involve more expert testimony from treating physicians.” (Mot., p. 6, ll. 1-2.) FRP further argues that trying the cross-complaint first “would impact resolution of Plaintiff’s claim” and because the complaint and cross-complaint involve different facts, there would be no prejudice to either Flenay or Plaintiff. As previously noted, Flenay does not oppose bifurcation provided that the cross-complaint is tried prior to the complaint.

Plaintiff opposes FRP’s suggested sequence of trials on two grounds: (1) Flenay lacks standing to oppose or consent to FRP’s motion to bifurcate; and (2) Plaintiff would be severely prejudiced if the cross-complaint is tried first.

As to standing, Plaintiff relies on RND Contractors, Inc. v. The Superior Court of San Bernardino County (2025) 112 Cal.App.5th 697 (RND Contractors) to argue that “[a] Co- Defendant generally has standing to oppose or agree to a fellow defendant’s motion to bifurcate, provided they can demonstrate an adverse interest o that the bifurcation directly impacts their rights[.]” (Opp., p. 2, ll. 11-12.) FRP disputes Plaintiff’s reading of RND Contractors. FRP notes that RND Contractors did not involve a motion for bifurcation; it held that codefendants may be

treated as adverse parties, “even without cross-claims between them, given their conflicting interests,” and therefore may oppose a codefendant’s motion for summary judgment. (Reply, p. 2, ll. 21-24.) The Court is unpersuaded by Plaintiff’s standing argument. Here, as noted by FRP, the existence of the cross-complaint confirms that Flenay and Cross-Defendants are adverse parties.

Turning to prejudice and the order of trial, FRP argues that Plaintiff would not be prejudiced because the complaint and cross-complaint are factually distinct. FRP contends that Plaintiff fails to demonstrate why her claims should be tried first.

The cross-complaint involves Flenay’s collateral dispute asserting a professional negligence claim against FRP, its insurance broker, based on its alleged failure to procure the requisite insurance coverage for Flenay’s living/residential care facility. An insurance broker is “a person who, for compensation and on behalf of another person, transacts insurance other than life, disability, or health with, but not on behalf of, an insurer. (Croskey et al., Cal. Practice Guide: Insurance Litigation (The Rutter Group 2026) ¶ 2:7, citing Ins. Code § 33.) “An insurance broker’s primary duty is to use ‘reasonable care, diligence, and judgment in procuring the insurance requested by an insured.’” (Id., ¶ 2:57.)

“To prevail on a negligence claim, the insured must prove that but for the broker’s negligence, the insured would have had insurance coverage for the loss in question. This is similar to a legal malpractice claim, in that liability must be established in a case-within-a-case. E.g., Insured can recover against Broker only if Insured can show that, but for Broker’s negligence, Insured would have had at least some coverage for a third party claim: ‘Without such a showing, there is no cause of action because there are no damages caused by the breach of the professional’s duty.’ [Roger H. Proulx & Co. v. Crest-Liners, Inc. (2002) 98 CA4th 182, 195, 119 CR2d 442, 450 (emphasis added)]” (Croskey et al., Cal. Practice Guide: Insurance Litigation (The Rutter Group 2026) ¶ 2:57.1.)

As pleaded, Flenay’s professional negligence claim against FRP requires proof of causation and damages, i.e. Flenay must show that but for FRP’s failure to procure the requested or requisite coverage, Flenay would have had insurance coverage for the loss at issue. (See Roger H. Proulx & Co. v. Crest-Liners, Inc., supra, 98 Cal.App.4th at p. 195.) That showing necessarily depends on what Plaintiff proves in the complaint trial and any resulting potentially covered exposure to Flenay. Proceeding with the cross-complaint first would be inefficient and would prejudice Plaintiff by delaying Plaintiff’s trial. Judicial economy and the ends of justice are best served by trying the complaint first, followed by the cross-complaint only if still necessary.

The Court finds FRP’s showing insufficient to justify trying the cross-complaint prior to the complaint and declines to do so. (See City of Riverside v. RLI Insurance. Company. (2026) 119 Cal.App.5th 405, 416 [“ ‘The trial court is empowered to determine the order in which the issues to be determined are tried and may order the ... complaint tried before the cross-complaint.’ ”]; State Farm v. Superior Court, supra, 47 Cal.2d at p. 433 [the court of appeal declined to issue “a

writ of mandate commanding the trial court to order the trial of the declaratory relief action prior to the trial of the personal injury actions.”]

The request to try the cross-complaint before the complaint is denied.

ORDER (PROPOSED)

The motion is granted in part. Cross-Defendants are directed to serve the notice of ruling. (Code Civ. Proc., § 1019.5., subd. (a).)

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