Hood v. Superior Court

Opinion

EPSTEIN, Acting P. J.

May a party select issues (other than duty and punitive damages) implicated in one or more causes of action in its complaint or cross-complaint, amend that pleading to add a cause of action for declaratory relief as to those issues, and then obtain a summary adjudication of the declaratory relief cause of action? We answer that it cannot, for, if it could, the result would fully subvert the restrictions of Code of Civil Procedure section 437c, subdivision (f)(1).

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Since the order granting summary adjudication in the case before us was made in precisely this situation, we shall grant the petition for a writ of mandate directing that it be set aside.

Factual and Procedural Summary

This case presents a fairly simple issue enveloped in a complicated factual context. The summary that follows is limited to facts pertinent to our discussion.

John A. Hood and Agoura Hills Insurance Services, Inc. (Hood) were insurance agents for United Chambers Administrators, Inc. (UCA). Mr. Hood also served as an assistant territorial manager for UCA. UCA marketed group health insurance policies to members of chambers of commerce. A noncompetition clause in the agreement between Hood and UCA, the associate territorial manager (ATM) agreement, prohibited Hood from marketing

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policies issued by other companies to chamber of commerce members. A termination provision in that agreement empowered both UCA and Hood to terminate the agreement upon 30 days’ notice. It also allowed UCA to immediately terminate the ATM agreement for violation of the noncompetition clause.

In July 1992, UCA learned that Hood had begun marketing a chamber-sponsored insurance plan called the Quorum Chamber Classic Plan. Based on the noncompetition and termination clauses, UCA terminated Hood’s services.

UCA brought this suit for damages and injunctive relief alleging, among other things, that Hood breached the noncompetition clause in the ATM agreement by marketing the Quorum Chamber Classic Plan. Hood cross-complained seeking injunctive relief and asserting breach of contract and sundry torts inflicted by UCA. Hood’s second amended cross-complaint disputed UCA’s right to terminate the contract and alleged that UCA failed to pay commissions and service fees. It also alleged that UCA fraudulently induced Hood to enter the ATM agreement by leading Hood to believe the noncompetition provision would not be enforced.