Cal. Casualty Indemnity Exchange v. Downs CA3

Filed 10/9/20 Cal. Casualty Indemnity Exchange v. Downs CA3 NOT TO BE PUBLISHED California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published,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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA THIRD APPELLATE DISTRICT (San Joaquin) ----

CALIFORNIA CASUALTY INDEMNITY C078460 EXCHANGE, (Super. Ct. No. CV031407 ) Plaintiff and Appellant,

v.

BEVERLY DOWNS,

Defendant and Respondent.

Defendant Beverly Downs, a resident of Lodi, had an automobile insurance policy with plaintiff California Casualty Indemnity Exchange (CCIE). She added her son, Justin Travnicek, and his Volvo to the policy based on her representations to CCIE agents that Travnicek was a member of her household and was a college student living away from home. Rita Rios, one of the CCIE customer service representatives with whom Downs spoke, did not believe Downs’s representations. Rios was right in her assessment that Downs was lying. Travnicek was neither a household member nor a college student;

1

rather he was in the Marine Corps stationed at Camp Pendleton and he resided in Oceanside. Consequently, he did not qualify to be added to Downs’s CCIE policy with its discounted premiums. Two months after Downs added him to the policy, Travnicek and his passenger Douglas Hunter were killed in a two-car vehicle accident. CCIE acceded to the demand of Douglas Hunter’s widow for payment of the $500,000 policy limit. CCIE then sued Downs to rescind the policy on the grounds that Downs obtained coverage for Travnicek through material misrepresentations. CCIE also sued for fraud, seeking damages for the money it paid to Hunter’s widow. The trial court bifurcated the issues related to rescission to be litigated at a bench trial. The court concluded that Downs had intentionally misled two customer service representatives to obtain lower premiums on Travnicek’s coverage. However, the court further concluded that, under Barrera v. State Farm Mut. Auto. Ins. Co. (1969) 71 Cal.2d 659 (Barrera), “[a]ny right [CCIE] had to rescind the . . . policy covering [Travnicek] and his Volvo was lost by [CCIE’s] failure to exercise due diligence in determining whether Rios’[s] belief that [Downs] was lying was correct.” Based on that, the trial court found that CCIE was estopped from bringing an action for rescission and found for Downs on CCIE’s remaining causes of action. After the trial court granted CCIE’s motion to compel arbitration on Downs’s claims in her cross-complaint, the arbitrator awarded Downs $50,000.1 CCIE appeals from the final judgment of the trial court which, consistent with the statement of decision and the arbitrator’s award, was in favor of Downs. CCIE asserts on appeal that (1) the trial court misinterpreted Barrera, (2) CCIE’s interpretation of Barrera is consistent with Insurance Code provisions on which it relies regarding