Mahecha v. Hanover Ins. Group CA4/1 (2015) · DecisionDepot
Mahecha v. Hanover Ins. Group CA4/1
California Court of Appeal May 26, 2015 No. D065325Unpublished
Filed 5/26/15 Mahecha v. Hanover Ins. Group CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
NELSON Y. MAHECHA, D065325
Plaintiff and Appellant,
v. (Super. Ct. No. 37-2013-00057450- CU-IC-CTL) THE HANOVER INSURANCE GROUP, INC.,
Defendant and Respondent.
APPEAL from a judgment of the Superior Court of San Diego County, Joel R.
Wohlfeil, Judge. Affirmed.
The Law Office of Michael A. Alfred and Michael A. Alfred for Plaintiff and
Appellant.
Murchison & Cumming and Edmund G. Farrell for Defendant and Respondent.
This case involves a judgment creditor's action brought by plaintiff Nelson Y.
Mahecha against defendant Hanover Insurance Group, Inc. (Hanover) under Insurance
Code section 11580 (all further undesignated statutory references are to the Insurance
Code unless otherwise specified), which authorizes a third party claimant, in certain
situations, to bring a direct action against a liability insurer on an insurance policy after
obtaining a judgment against an insured party in a separate action against that party based
upon "bodily injury, death, or property damage." (§ 11580, subd. (b)(2); Wright v.
However, "[t]here are several exceptions to the general rule which prohibits a third
party claimant from suing an insurer." (Harper, supra, 56 Cal.App.4th at p. 1086.)
Under the judgment creditor exception at issue here, "once a party has a final judgment
against the insured, the claimant becomes a third party beneficiary of the insurance policy
and may enforce the terms which flow to its benefit pursuant to [] section 11580."
(Harper, at p. 1086.) Section 11580 provides in part:
"A policy insuring against losses set forth in subdivision (a) shall not be issued or delivered to any person in this state unless it contains the provisions set forth in subdivision (b). Such policy, whether or not actually containing such provisions, shall be construed as if such provisions were embodied therein.
"(a) Unless it contains such provisions, the following policies of insurance shall not be thus issued or delivered: [¶] . . .
"(2) Against loss of or damage to property caused by draught animals or any vehicle, and for which the insured is liable . . . .
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"(b) Such policy shall not be thus issued or delivered to any person in this state unless it contains all the following provisions: [¶] . . .
"(2) A provision that whenever judgment is secured against the insured . . . in an action based upon bodily injury, death, or property damage, then an action may be brought against the insurer on the policy and subject to its terms and limitations, by such judgment creditor to recover on the judgment." (Italics added.)
In Wright, supra, 11 Cal.App.4th at pages 1014-1015, this court explained that
"[s]ection 11580 requires a policy issued or delivered in this state which covers liability
for injuries to a person or covers liability for loss of or damage to property caused by a
vehicle or draught animal[3] (§ 11580, subds. (a)(1)(2)), to include a provision that
whenever judgment is secured against the insured in an action based upon bodily injury,
death, or property damage, the judgment creditor may sue the insurer on the policy,
subject to its terms and limitations, to recover on the judgment (§ 11580, subd. (b)(2)).
Under the section, if the policy does not actually contain the required provision, it is
construed as if it did so. A direct action under section 11580 is a contractual action on
the policy to satisfy a judgment up to policy limits." (Italics added, footnote omitted; see
Hand v. Farmers Ins. Exchange (1994) 23 Cal.App.4th 1847, 1858 (Hand) ["once having
secured a final judgment for damages, the plaintiff becomes a third party beneficiary of
the policy, entitled to recover on the judgment on the policy"].)
3 Despite the archaic phrase "caused by a vehicle or draught animal" in subdivision (a)(2) of section 11580, the "loss of or damage to property" that will support a judgment creditor's direct action against an insurer is not limited to loss of or damage to property caused by a draught animal or any vehicle. (People ex rel. City of Willits v. Certain Underwriters at Lloyd's of London (2002) 97 Cal.App.4th 1125, 1131-1132.) 9
This court also explained in Wright that, under section 11580, a third party
claimant bringing a direct action as a judgment creditor against an insurer "should
therefore plead and prove 1) it obtained a judgment for bodily injury, death, or property
damage, 2) the judgment was against a person insured under a policy that insures against
loss or damage resulting from liability for personal injury or insures against loss of or
damage to property caused by a vehicle or draught animal,[4] 3) the liability insurance
policy was issued by the defendant insurer, 4) the policy covers the relief awarded in the
judgment, [and] 5) the policy either contains a clause that authorizes the claimant to bring
an action directly against the insurer or the policy was issued or delivered in California
and insures against loss or damage resulting from liability for personal injury or insures
against loss of or damage to property caused by a vehicle or draught animal." (Wright,
supra, 11 Cal.App.4th at p. 1015.)
Thus, one of the essential elements that a third party judgment creditor must plead
to state a direct action claim against an insurer under section 11580 is that the policy in
question covers the relief awarded in the judgment the plaintiff judgment creditor secured
against the defendant insurer's insured. (Wright, supra, 11 Cal.App.4th at p. 1015;
People ex rel. City of Willits v. Certain Underwriters at Lloyd's of London, supra, 97
Cal.App.4th at p. 1130, fn. 2.)
Here, Hanover argues the court's order sustaining without leave to amend its
demurrer to Mahecha's section 11580 claim must be affirmed because, "[b]y [Mahecha's]
4 See footnote 3, ante. 10
own prior judicial admission, there is no coverage for the relief awarded in the judgment
[against Stacy]," and thus he cannot state a claim under that section. We agree.
"The admission of fact in a pleading is a 'judicial admission.'" (Valerio v. Andrew
Youngquist Construction (2002) 103 Cal.App.4th 1264, 1271 (Valerio).) "'"A judicial
admission in a pleading . . . is not merely evidence of a fact; it is a conclusive concession
of the truth of a matter which has the effect of removing it from the issues. . . ."'" (Addy
v. Bliss & Glennon (1996) 44 Cal.App.4th 205, 218 (Addy).) "[A] trial court may not
ignore a judicial admission in a pleading, but must conclusively deem it true as against
the pleader." (Thurman v. Bayshore Transit Management, Inc. (2012) 203 Cal.App.4th
1112, 1155.)
We take judicial notice of Mahecha's original verified complaint in Mahecha prior
action against Hanover and Stacy. (Evid. Code, §§ 452, subd. (d), 459, subd. (a);
Rakestraw, supra, 81 Cal.App.4th at p. 43 [in reviewing the legal sufficiency of a
complaint, the reviewing court considers matters that may be judicially noticed].) In
paragraph No. 38 of that pleading Mahecha alleged that "[t]he true facts were that [Stacy]
was not covered by malpractice insurance because he failed to inform [Hanover] that an
action was pending against him when he renewed his policy." (Italics added.) We also
take judicial notice of the verified amended complaint Mahecha later filed in that same
action, in which he twice repeated the same allegation that Stacy "was not covered by
malpractice insurance" under the policy Hanover issued to Stacy.
The foregoing admissions of fact are judicial admissions by Mahecha that the
policy Hanover issued to its purported insured, Stacy, provided no coverage. (Valerio,
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supra, 103 Cal.App.4th at p. 1271; Addy, supra, 44 Cal.App.4th at p. 218.) Thus, in the
present case, Mahecha cannot state a claim against Hanover under section 11580 because
the policy in question does not cover the relief awarded in the default judgment Mahecha
obtained against Stacy in the prior action. (See Wright, supra, 11 Cal.App.4th at p. 1015
[judgment creditor who brings a direct action against an insurer under section 11580 must
"plead and prove . . . the policy covers the relief awarded in the judgment"].)
In light of our foregoing conclusions, we need not reach Mahecha's contention that
the court "erred in sustaining Hanover's demurrer on the grounds that res judicata barred
relitigation of the same claims." (Folgelstrom v. Lamps Plus, Inc., supra, 195
Cal.App.4th at p. 989 ["The judgment must be affirmed if it is proper on any lawful
grounds raised in the demurrer."].)
B. Second Cause of Action for Breach of Implied Obligation of Good Faith and Fair Dealing
We also conclude Mahecha's related second cause of action for breach of implied
obligation of good faith and fair dealing also fails as a matter of law. As already noted,
this cause of action is based on Mahecha's allegations that Hanover had a duty to make a
good faith offer to settle Mahecha's claim for payment of the judgment against Stacy in
the prior action once Hanover had notice of the judgment. The Court of Appeal has
explained that a third party claimant who has secured a final judgment for damages
against the insured "becomes a third party beneficiary of the policy, entitled to recover on
the judgment on the policy" (Hand, supra, 23 Cal.App.4th at p. 1858), and the judgment
creditor plaintiff "also become(s) a beneficiary of the covenant of good faith" (ibid.) such
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that the insurer's "duty to exercise good faith in not withholding adjudicated damages
necessarily is owing to the plaintiff also." (Ibid.) However, as is obvious, that duty to
exercise good faith in not withholding adjudicated damages is contingent on the existence
of coverage under the policy in question. Here, as already discussed, Mahecha has
judicially admitted that the policy does not cover the relief awarded in the default
judgment against Stacy.
For all of the foregoing reasons, we affirm the judgment of dismissal.
DISPOSITION
The judgment is affirmed. The Hanover Insurance Group, Inc. shall recover its
costs on appeal.
NARES, J.
WE CONCUR:
McCONNELL, P. J.
O'ROURKE, J.
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AI Brief
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Holding. The court held that the plaintiff failed to state a cause of action under Insurance Code section 11580 because he had previously judicially admitted that the insurance policy did not cover the damages awarded in his underlying judgment against the insured. Consequently, his related claim for breach of the implied covenant of good faith and fair dealing also failed as a matter of law.
Issues
Whether the trial court erred in sustaining a demurrer to a judgment creditor's action under Insurance Code section 11580.
Whether a plaintiff's prior judicial admissions regarding lack of insurance coverage preclude a direct action against an insurer under section 11580.
Whether a third-party claimant can maintain a claim for breach of the implied covenant of good faith and fair dealing absent insurance coverage.
Disposition. affirmed
Quotations verified verbatim against the opinion
“Mahecha has failed to state facts sufficient to constitute a cause of action under section 11580 because, as Hanover correctly points out, Mahecha judicially admitted in the prior action that the subject policy issued by Hanover does not cover”
“The admission of fact in a pleading is a 'judicial admission.'”
“We also conclude Mahecha's related claim for breach of implied obligation of good faith and fair dealing also fails as a matter of law.”