Springer v. GEICO General Ins. Co. CA4/1 ( 2014 )

Filed 1/27/14 Springer v. GEICO General Ins. Co. CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
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COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
ROGER SPRINGER, D063017
Plaintiff and Appellant,
v. (Super. Ct. No. 37-2011-00059449-
CU-IC-NC)
GEICO GENERAL INSURANCE
COMPANY et al.,
Defendants and Respondents.
APPEAL from a judgment of the Superior Court of San Diego County, Jacqueline
M. Stern, Judge. Affirmed.
Law Office of Carla DeDominicis and Spencer Guerena for Plaintiff and
Appellant.
Konoske Akiyama & Brust, Gregory P. Konoske and D. Amy Akiyama for
Defendants and Respondents.
Roger Springer was involved in an automobile collision with another driver who
was at fault for the accident. The other driver's insurer paid Springer in full for damages
to his vehicle and wrote the check jointly to Springer and his selected automobile repair
shop. However, the automobile shop failed to repair Springer's vehicle and wrongfully
kept the money. Springer then requested his own automobile insurer (Geico General
Insurance Company (Geico)) to pay him for the unrepaired damages to his vehicle.
Geico denied the claim on the basis that the policy did not cover losses for the automobile
shop's wrongful conduct and/or that the policy excluded the claimed losses.
Springer then sued Geico and two related entities seeking a declaration of
coverage. After a brief trial based primarily on stipulated facts, the court found Springer
did not prove he was "entitled to coverage . . . under the terms of the subject policy of
insurance." The court thus entered judgment in defendants' favor. Springer appeals. We
affirm.
FACTUAL AND PROCEDURAL BACKGROUND
In April 2011, Geico issued an automobile insurance policy to Springer that
provided various types of insurance, including collision and comprehensive coverage.
The next month, Springer was involved in an automobile accident with Rasaura Laughlin.
Laughlin ran a red light and was at fault for the accident. Laughlin was insured by State
Farm Mutual Automobile Insurance Company (State Farm). Springer's vehicle, a 2008
Mustang, sustained property damage in the accident. Both Springer and Laughlin
reported the accident to their insurers.
Springer did not request that Geico pay for the repairs (even though he knew he
had the right to do so), and instead submitted a claim solely to State Farm. State Farm
accepted liability, and offered to pay for the total cost of repairing Springer's Mustang.
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As required under applicable law, State Farm allowed Springer to choose his own
automobile repair shop, rather than use a State Farm recommended shop. (Ins. Code,
§ 758.5.) Springer selected Cafaro's Go Straight Auto Body (Cafaros) based on an
acquaintance's recommendation and a personal meeting with owner Michael Cafaro.
Neither State Farm nor Geico was involved in the selection process.
On June 1, 2011, State Farm sent a letter to Springer advising him it had estimated
the damages to his vehicle and it would leave the estimate and payment at Cafaros
automobile repair shop. The letter stated in part:
"This payment is based on a repair estimate using prices that are
competitive in your market area. In the event additional damage is
identified by the repairer you select, any amount previously paid will
be taken into consideration as we determine any additional amounts
owed. We will review and consider any supplemental amounts
requested by you or the repairer you select, should additional loss-
related damage become apparent. . . ."
The letter also stated Springer should "review the damage estimate that has been prepared
on your vehicle. If now or later, you or your selected repairer discovers additional loss-
related damage to your vehicle, please contact us at the number indicated below."
Five days later, State Farm delivered a $15,155.84 check to Cafaros. The check
was written jointly to "CAFARO'S GO STRAIGHT & ROGER SPRINGER." Although
Springer did not sign the check, Mr. Cafaro endorsed the check and deposited the check
in his account the next day. Before depositing the check, Mr. Cafaro "asked and
received" Springer's "verbal authority to cash [the] check so repairs could commence."
(Italics added.)
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Cafaros began the repairs but never completed them despite repeated demands by
Springer. The completed repairs had a value of $2,705.41. Cafaros has refused to return
any of the funds for work that was not completed. The estimate of the additional
necessary repairs is $12,450.43. Springer's unrepaired vehicle is now in "some lot in
Oceanside" and is no longer in Cafaros's possession.
In September 2011, Springer's counsel made a written demand that Geico
indemnify Springer for the losses to his vehicle. Springer sought coverage under the
policy's collision coverage provisions based on facts showing his vehicle was damaged
by a collision with another vehicle and his vehicle remains unrepaired. Springer also
sought coverage under the policy's comprehensive coverage provisions based on facts
that he suffered damages caused by "acts of theft committed by an auto body repair shop
that is depriving [him] of possession of his vehicle . . . ." He stated that Cafaros has
"absconded with the money State Farm paid for the repair of [his] vehicle, and left the
Mustang to languish in disrepair." (Italics added.)
One month later, Geico sent Springer a written denial of his claim. Geico stated
"[t]he 'loss' did not occur as a result of the accident [and instead] 'the loss' is a result of
the breach of contract between Mr. Cafaro and Mr. Springer." Geico also identified
Exclusion 14, which states "There is no coverage for any liability assumed under any
contract or agreement." Geico stated: "Mr. Springer had a contract with [Cafaros] the
body shop of Mr. Springer's choice. We are unable to [provide] coverage in regards to
the dispute between Mr. Springer and Mr. Cafaro in regards to their contract on repairing
Mr. Springer's vehicle."
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The next month, Springer filed a superior court complaint for declaratory relief
seeking an order that Geico and related entities are responsible for paying to repair his
vehicle under the policy's collision coverage and/or comprehensive coverage.
The parties waived a jury and the case was tried primarily on stipulated facts (set
forth above). Springer additionally testified to the following. He stated that he has
reported Mr. Cafaro's conduct to police and regulatory agencies, but he has been
unsuccessful in getting his car repaired or his money returned. He agreed that Cafaros
stole his money and that Mr. Cafaro is a "crook." Springer said that when Mr. Cafaro
attempted to deposit the check in his bank account, the bank called him to obtain his
approval, and that he gave his verbal approval that the State Farm check could be
deposited into Cafaro's account, but he had "no idea" of the check amount.
At trial, Springer's counsel asked him, "Because of the actions of Michael Cafaro,
you have been denied the use of your vehicle; is that right?" Springer responded "Yes."
Springer also said he understood that he could have initially sought coverage under his
own policy, but he elected to instead seek coverage from Laughlin's insurer, State Farm.
At the conclusion of the evidence, both parties moved for nonsuit. The court
stated that it would take the motions under submission and gave the parties the
opportunity to argue the case in the event the nonsuit motions were denied.
Three days later, the court issued its written ruling in defendants' favor. The ruling
stated: "The court, after trial lasting less than 90 minutes . . . considered the evidence in
this case and denie[d] both parties' motions for 'nonsuit.' In addition, the court finds
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plaintiff is not entitled to coverage in this instance under the terms of the subject policy of
insurance."
DISCUSSION
I. General Legal Principles
"An insurance policy is written in two parts: the insuring agreement defin[ing] the
type of risks which are covered," and the exclusions that "remove coverage for certain
risks which are initially within the insuring clause." (Collin v. American Empire Ins. Co.
(1994) 21 Cal.App.4th 787, 802-803.) A court first " 'examine[s] the coverage provisions
to determine whether a claim falls within the potential ambit of the insurance.' " (Id. at p.
803.) The burden is on "the insured to bring the claim within the basic scope of
coverage, and . . . courts will not indulge in a forced construction of the policy's insuring
clause to bring a claim within the policy's coverage." (Ibid.) "Once the insured has made
that showing, the burden is on the insurer to prove the claim is specifically excluded."
(MRI Healthcare Center of Glendale, Inc. v. State Farm General Ins. Co. (2010) 187
Cal.App.4th 766, 777.)
" ' "While insurance contracts have special features, they are still contracts to
which the ordinary rules of contractual interpretation apply." ' " (Haynes v. Farmers Ins.
Exchange (2004) 32 Cal.4th 1198, 1204.) "Interpretation of an insurance policy is a
question of law and follows the general rules of contract interpretation." (TIG Ins. Co. of
Michigan v. Homestore, Inc. (2006) 137 Cal.App.4th 749, 755.) "The rules governing
policy interpretation require us to look first to the language of the contract in order to
ascertain its plain meaning or the meaning a layperson would ordinarily attach to it."
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(Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 18 (Waller).) The mutual
intention of the parties governs the interpretation of the policy, which is "inferred, if
possible, solely from the written provisions of the contract." (Ibid.) " 'The "clear and
explicit" meaning of these provisions, interpreted in their "ordinary and popular sense,"
unless "used by the parties in a technical sense or a special meaning is given to them by
usage," . . . controls judicial interpretation . . . .' " (Ibid.)
"Absent a factual dispute, the interpretation of an insurance contract and its
application to undisputed facts are questions of law that we review de novo. [Citation.]"
(Westrec Marina Management, Inc. v. Arrowood Indemnity Co. (2008) 163 Cal.App.4th
1387, 1391.)
II. Analysis
Springer contends the court erred in determining his claimed losses were not
covered under the collision and comprehensive coverage provisions of his Geico
insurance policy and/or determining that an exclusion applied.
A. Collision Coverage
Under the policy's collision coverage provisions, Geico agreed to "pay for
collision loss to the owned auto or non-owned auto for the amount of each loss less the
applicable deductible." " 'Loss' " is defined to mean "direct and accidental loss or
damage to: [¶] (a) an insured auto, including its equipment . . . ." A " 'Collision' " means
loss caused by upset of the covered auto or its collision with another object, including an
attached vehicle." The term "upset" in this context generally means the vehicle
overturned or lost "equilibrium" and "proceed[ed] beyond the power of those in charge to
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stop it." (Lombardi, Cal. Automobile Insurance Law Guide (Cont.Ed.Bar 2d ed. 2012)
§ 7.12, p. 196.)
Springer submitted an insurance claim to Geico for the costs to complete the
repairs on his vehicle, despite receiving full payment for the repairs from State Farm. As
explained below, these costs did not result from a covered collision loss as these terms
are defined in the policy.
The claimed damage (the vehicle's unrepaired condition) was not the result of a
physical "collision" between vehicles or an "upset" of Springer's vehicle. State Farm
fully compensated Springer for the damages caused by the collision, and Springer
approved the bank depositing these funds in Cafaros's account for the repairs. The fact
that Springer's vehicle remained unrepaired after receiving this full compensation
resulted from Cafaros's alleged wrongful conduct, and not the collision. As Springer
acknowledges, "Cafaro stole" his money, and it was "[b]ecause of the actions of Michael
Cafaro, [that he has] been denied the use of [his] vehicle . . . ."
In the proceedings below, Springer's counsel argued that Springer's current
damages (the loss of the funds provided to him by State Farm) were covered losses under
Geico's collision coverage because the collision with State Farm's insured "set everything
in motion" and "[i]f there hadn't been a collision, . . . [Springer's] car would be happily
rolling down the streets . . . ." In his appellate brief, Springer similarly argues that he is
entitled to coverage because the collision was the triggering cause of his current losses.
This argument is unsupported by the policy language and by California law
regarding causation in the first party insurance context.
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First, the Geico policy provides that " 'Loss' means direct and accidental loss of or
damages to" the insured's vehicle. (Italics added.) The trial court had a substantial basis
to find the direct cause of Springer's current claimed loss was Cafaros's conduct and not
the collision.
Additionally, Insurance Code section 530 states: "An insurer is liable for a loss of
which a peril insured against was the proximate cause, although a peril not contemplated
by the contract may have been a remote cause of the loss; but he is not liable for a loss of
which the peril insured against was only a remote cause." (Italics added.) This statute
codifies the efficient proximate cause doctrine applicable to first party insurance, under
which if there is more than one cause for a loss, coverage turns on whether the efficient
proximate cause of the loss—the " 'predominat[ing] cause' "—is a covered peril. (Julian
v. Hartford Underwriters Ins. Co. (2005) 35 Cal.4th 747, 750 (Julian); see Garvey v.
State Farm Fire & Casualty Co. (1989) 48 Cal.3d 395, 401-404.) "The efficient
proximate cause of a loss is the 'predominant' or 'most important' cause of the loss."
(Freedman v. State Farm Ins. Co. (2009) 173 Cal.App.4th 957, 961; Roberts v.
Assurance Co. of America (2008) 163 Cal.App.4th 1398, 1409.) "By focusing the causal
inquiry on the most important cause of a loss, the efficient proximate cause doctrine
creates a 'workable rule of coverage that provides a fair result within the reasonable
expectations of both the insured and the insurer.' " (Julian, supra, 35 Cal.4th at p. 754.)
If the asserted cause of the loss does not meet this test, it is a " 'remote cause' " and does
not trigger coverage. (Id. at p. 750.) " 'Remote' causes are irrelevant in the causation
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analysis." (Croskey et al., Cal. Practice Guide: Insurance Litigation (The Rutter Group
2013) ¶ 6:135.2, p. 6A-32.)
Here, although the collision may have set the events in motion, the collision was
remote to the claimed damages and was not the efficient proximate cause of the loss.
Once State Farm agreed to completely cover the loss and wrote the check to Springer for
the estimated damages in full (with the promise to pay additional funds if needed to
complete the repairs), and Springer accepted the funds and agreed to allow the repair
shop to cash the check for his benefit, the accident was no longer the predominate or
most important cause of the vehicle's unrepaired condition. Instead, this condition was
the direct result of Cafaros's presumed breach of contract. The accident merely furnished
the condition or occasion for Cafaros's breach and was unrelated to the primary cause of
the damages.
Springer argues that his car would never have been at Cafaros's repair shop if there
had been no accident and therefore the accident was a cause of the losses. This "but for"
or "triggering" theory is insufficient to show coverage under California law. (See Garvey
v. State Farm Fire & Casualty Co., supra, 48 Cal.3d at pp. 403-404; Roberts v.
Assurance Co. of America, supra, 163 Cal.App.4th at p. 1409.)
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Our conclusion that there is no coverage under the collision provisions of Geico's
policy is further compelled by the policy's contractual subrogation clause.1 Under the
subrogation provision, Geico has the right to seek reimbursement from the wrongdoer
and the insured must cooperate to allow Geico to enforce this right. However, a
conclusion that Geico's policy requires it to make a duplicate payment for the automobile
repair costs because of a third party's breach of contract would bar Geico from enforcing
this subrogation right. Because State Farm already paid in full for the damages, Geico
would not be entitled to obtain reimbursement from the at-fault driver or her insurer.
Relying on Sapiano v. Williamsburg National Insurance Company (1994) 28
Cal.App.4th 533, Springer argues this result is irrelevant because an insurer's subrogation
rights are always dependent on the insured's right to be made whole. The argument is
unavailing. Springer was made whole. Springer concedes State Farm paid his damages
in full, and it was merely the conduct of a third party occurring after he was made whole
that caused him to suffer continuing damages.
In this regard, Sapiano arose in a very different context. In Sapiano, the insured
(Sapiano) had total property losses of at least $20,000. (Sapiano, supra, 28 Cal.App.4th
at p. 535.) He received the maximum policy limit from his insurer ($14,500), and then
1 The policy's subrogation clause states: "When payment is made under this policy,
we will be subrogated to all the insured's rights of recovery against others. The insured
will help us to enforce these rights. The insured will do nothing after loss to prejudice
these rights. [¶] This means we will have the right to sue for or otherwise recover the
loss from anyone else who may be held responsible."
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sued the wrongdoer (without his insurer's involvement) and received $10,000 in a
settlement for the property damage claim. (Id. at p. 536.) Sapiano's insurer then sought
to recover the entire $10,000 settlement from Sapiano under the insurer's subrogation
rights. (Ibid.) The appellate court held the insurer was not entitled to this recovery,
relying on the general rule that until the creditor has been made whole for the loss, the
subrogee may not enforce its claims based on its subrogation rights. (Id. at pp. 536-538.)
The court emphasized that the insurer did not participate in the lawsuit and instead "sat
back without assisting" its insured and then "demanded all the proceeds for itself." (Id. at
p. 539.)
In this case, Springer received the funds from State Farm to fully repair his
vehicle, and State Farm agreed to pay additional amounts if the damages were found to
be more than the estimate. Thus, unlike the insured in Sapiano, Springer was provided
full recovery for the damage to his car. In this situation, preserving Geico's contractual
subrogation rights does not conflict with Springer's right to be made whole.
B. Comprehensive Coverage
Springer alternatively contends he was entitled to coverage under the
comprehensive coverage provisions of Geico's insurance policy. The relevant provision
of the policy states:
"We will pay for each loss, less the applicable deductible, caused
other than by collision to the owned or non-owned auto. This
includes glass breakage and loss caused by:
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(a) missiles; (j) hail;
(b) falling (k) water;
objects; (l) flood;
(c) fire; (m) malicious mischief;
(d) lightning; (n) vandalism;
(e) theft; (o) riot;
(f) larceny; (p) civil commotion; or
(g) explosion; (q) colliding with a bird or
(h) earthquake; animal."
(i) windstorm;
Springer argues his losses were caused by the perils identified in (e) and (f) (theft and
larceny) because Cafaros promised to repair Springer's vehicle and deposited the State
Farm insurance money without any intention of fixing Springer's vehicle.
The argument is without merit. Springer's insurance policy covers "loss . . . to the
owned auto" caused by theft or larceny, not the loss of funds related to the repair of the
vehicle. Under its plain meaning, a "theft" or a "larceny" means the wrongful taking and
carrying away of personal property with the intent to deprive the owner of this property
permanently or for an extended period. (See Barnett v. State Farm General Ins. Co.
(2011) 200 Cal.App.4th 536, 543-545; Pen. Code, § 484; Webster's 11th Collegiate Dict.
(2006) pp. 701, 1295.) Springer did not proffer any evidence showing Cafaros obtained
the vehicle wrongfully or without Springer's consent, or intended to deprive Springer of
the property. To the contrary, the undisputed facts showed Springer voluntarily gave the
vehicle to Cafaros for the repair, and the car is no longer in Cafaros's custody or control.
Cafaros accepted money to perform a service that it failed to perform. The loss resulting
from these actions did not arise from a third party's unlawfully taking or stealing the
insured's vehicle. Rather, the loss arose out of Cafaros's failure to fulfill its contractual
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obligation. The undisputed evidence shows the vehicle remains available to Springer
(although not in a repaired state).
Springer does not cite to any relevant legal authority supporting that Cafaros's
conduct constitutes "theft" or "larceny" of the vehicle as those terms are commonly
understood in California. Instead, he relies only on Riley v. Mid-Century Insurance
Exchange (1981) 118 Cal.App.3d 195, which is inapposite. In Riley, the insured had
purchased a stolen vehicle, but she had purchased the car in good faith and had no reason
to suspect it was stolen property. (Id. at p. 197.) Shortly after the insured's purchase, the
vehicle was stolen from the insured's driveway. (Ibid.) The insured made a claim under
her automobile insurance policy, and the insurer denied the claim. The insurer conceded
the theft of the vehicle from the insured was a covered loss under the policy terms, but
argued the insured had no insurable interest because the vehicle had been previously
stolen. (Ibid.) The reviewing court rejected this argument, reasoning that an innocent
purchaser for value has an interest in the vehicle against all but the lawful owner. (Id. at
pp. 197-200.)
Riley's holding is of no help to Springer. Although Springer had an insurable
interest in his vehicle, unlike the incident in Riley where a car was taken from the
insured's driveway without her knowledge or consent, Cafaros did not steal the vehicle
from Springer or remove it from his possession through larceny. Although Cafaros may
have improperly taken Springer's money, Springer did not show Cafaros's actions
constituted a theft or larceny of the vehicle.
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C. Contract Liability Exclusion
Because the evidence compels the conclusion that the loss is not a covered loss
under the comprehensive or collision policy provisions, we need not reach Geico's
alternative arguments that coverage fell within the contractual liability exclusion
(Exclusion No. 14). That exclusion provides: "There is no coverage for any liability
assumed under any contract or agreement."
Springer argues Exclusion No. 14 is the sole basis upon which we can affirm the
judgment because it is the only ground set forth in Geico's denial letter. This argument is
not factually supported. The denial letter identifies Exclusion No. 14, but also referred to
the policy definition of a " 'Loss' " and stated there was no coverage because "[t]he 'loss'
did not occur as a result of the accident." (Italics added.)
Further, the fact that an insurer does not identify a particular ground for denying a
claim in a denial letter does not necessarily preclude the insurer from asserting the claim
at trial. (Waller, supra, 11 Cal.4th at pp. 31-34.) Instead, waiver is a factual issue, and
the party seeking to establish waiver must prove " 'by clear and convincing evidence' "
the intentional relinquishment of a known right. (Id. at p. 31.) Likewise, an insurer is
estopped from relying on a defense that was not included in the denial letter only if the
insured proves it detrimentally relied on the insurer's failure to assert the defense. (Id. at
pp. 32, 34.)
There was an ample basis for the court to conclude that Springer did not meet his
burden to show waiver or estoppel. There are no facts showing Geico intended to
relinquish its rights to assert the argument that the claimed losses did not come within the
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insuring language of the policy. Moreover, although Springer now says that he "relied
upon the singularity of that basis [Exclusion 14] in pursuing this claim against Geico,"
he does not cite to any relevant evidence in the record supporting this assertion.
DISPOSITION
Judgment is affirmed. Appellant to bear respondents' costs on appeal.
HALLER, Acting P. J.
WE CONCUR:
MCDONALD, J.
IRION, J.
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