Sartiaguda v. Ivy Bridge Group etc. CA2/5 ( 2020 )

Filed 12/21/20 Sartiaguda v. Ivy Bridge Group etc. CA2/5
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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has not been certified for publication or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FIVE
CHRISTINE SARTIAGUDA, B294402
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. BC631423)
v.
IVY BRIDGE GROUP (WEST
COAST), INC.,
Defendant and Respondent.
APPEAL from a judgment of the Superior Court of the
County of Los Angeles. Gregory W. Alarcon, Judge. Affirmed.
The Cullen Law Group, Paul T. Cullen, for Plaintiff and
Appellant.
Law Offices of Roger C. Hsu, Roger C. Hsu and Joseph M.
Liu, for Defendant and Respondent.
I. INTRODUCTION
Plaintiff Christine Sartiaguda contracted with defendant
Ivy Bridge Group (West Coast), Inc. to host in her home a 14-year
old student from China. During her stay, the student caused
significant damage to plaintiff’s hardwood floors. Plaintiff sued
defendant alleging it was responsible for the damage, but the
trial court entered judgment in defendant’s favor.
On appeal, plaintiff challenges the trial court’s ruling on
her implied covenant of good faith and fair dealing claim,
contending that the court misapplied the law and failed to make
required findings. She also contends that the court made an
error of law when it denied her motion for new trial and abused
its discretion when it denied her request for leave to amend her
complaint to add a claim under the Labor Code. We affirm.
II. FACTUAL BACKGROUND1
In August 2014, plaintiff entered into a “Homestay Service
Agreement” (Homestay Agreement) with defendant, pursuant to
which she agreed to provide housing for and supervision of a 14-
year-old student from China2 (the student). In addition to
1 With the exception of her challenge to the trial court’s
finding that the student’s conduct was intentional, plaintiff does
not challenge the sufficiency of the evidence in support of the
court’s other factual findings. This section is therefore based
primarily on those findings as stated in the court’s amended
statement of decision.
2 The amended statement of decision states that the student
was 15, but plaintiff asserts that she was 14.
2
specifying plaintiff’s obligations concerning the student’s housing,
meals, transportation, activities, and supervision,3 the Homestay
Agreement contained a provision dealing with damage to
plaintiff’s home that read: “[Plaintiff] will notify [defendant]
immediately of any damage to . . . [her] home. Students carry
third-party liability insurance and will be responsible for any
damage. Proof by photos of damage and estimates will need to be
provided to [defendant] and approved. In the event that the
student moves from [plaintiff’s] home, damage should be shown
during the check-out inspection along with photos and written
estimates provided within 48 hours.” (Italics added.)
In June 2014, the student moved into plaintiff’s three-level
home which had hardwood flooring throughout. In late January
or early February 2015, plaintiff discovered damage to her
hardwood floors caused by the student’s high heeled shoes.
Accordingly, on or about February 1, plaintiff notified defendant’s
representative by phone and text that the student was wearing
high heeled shoes and causing damage to her floors. But, by
February 21, “things were getting worse. And no one [from
defendant] was responding to [plaintiff].” She therefore e-mailed
defendant’s representative that day and again on February 24
and 28. On February 28, plaintiff spoke by phone with the
representative explaining that the damage to her floors was
getting worse and requesting that the student be removed from
her home.
On March 4, 2015, another representative came to
plaintiff’s home, inspected the damaged floors, and witnessed the
student write and sign a statement accepting responsibility for
3 In return for the services required by the agreement,
defendant agreed to pay plaintiff $1,400 per month.
3
the damage. At plaintiff’s request, the representative took
possession of the student’s high heeled shoes.
According to plaintiff, on March 17, 2015, she called the
police because the student “burst into [her] home, . . . threatened
[her] life and the [lives] of [her] children . . . .” The police
responded and removed the student and her belongings from
plaintiff’s home.
Following the student’s removal, her mother initially
offered to pay $2,000 for the damage to plaintiff’s floors. After
further negotiations, the mother increased her offer to $8,000,
but plaintiff refused to accept it.4 Plaintiff claimed that, despite
her repeated demands, defendant and its attorney refused to
provide her with any information concerning the student’s third-
party liability insurance.
III. PROCEDURAL BACKGROUND
In August 2016, plaintiff filed this action against
defendant. In the operative first amended complaint, she alleged
four causes of action for: (1) breach of contract; (2) breach of the
implied covenant of good faith and fair dealing (implied
covenant); (3) negligence; and (4) fraudulent inducement and
4 At the time of the negotiations, plaintiff had obtained two
estimates of approximately $47,000 and $50,000 for the damage
to her floors. Her expert opined at trial that the floors likely
could not be refinished and that the replacement cost would be
$60,000, plus other incidental expenses. Defendant’s expert
countered that the floors could be refinished for approximately
$14,000 and replaced for $33,000.
4
intentional misrepresentation.5 Plaintiff attached to her
complaint and incorporated by reference a copy of the Homestay
Agreement between herself and defendant.6
A bench trial commenced on January 18, 2018. On
March 5, 2018, the court heard the parties’ oral arguments and
took the matter under submission.
On March 27, 2018, the trial court issued its proposed
statement of decision ruling in defendant’s favor on each of
plaintiff’s five causes of action. On April 17, 2018, plaintiff filed
her objections to the proposed decision supported by the
declaration of her attorney and certain attachments, including a
proposed revised statement of decision.
On August 2, 2018, the trial court issued its amended
statement of decision which again ruled in favor of defendant on
each of plaintiff’s five causes of action.
On September 5, 2018, the trial court entered a judgment
in favor of defendant on all five causes of action and found that
defendant was entitled to recover attorney fees and costs from
plaintiff.
5 As explained below, the trial court’s amended statement of
decision included a determination on a fifth cause of action for
vicarious liability under Civil Code section 1714.1, which claim is
not the subject of this appeal.
6 The Homestay Agreement was among the exhibits
introduced at trial. Although plaintiff requested that the trial
exhibits be transmitted as part of the record on appeal, the trial
court advised that it did not retain custody of them. For purposes
of this appeal, we assume the copy of the Homestay Agreement
attached to the first amended complaint is identical to the copy
introduced as an exhibit at trial.
5
IV. DISCUSSION
A. Implied Covenant Claim
Plaintiff challenges the trial court’s ruling against her on
her implied covenant claim, contending that: (1) the court
“[m]isapplied the [t]est for [i]nsurability [u]nder Insurance Code
[section] 533” by finding that the student’s conduct was “‘largely
intentional’”7; (2) failed to make a finding as to one of plaintiff’s
theories; and (3) “[i]mproperly [i]mposed an [o]bligation on
[p]laintiff to [q]uantify the [p]ortion of [d]amages [a]ttributable to
[n]egligence [v]ersus [i]ntent.” We conclude there was no
reversible error on the implied covenant claim.
1. Background
On plaintiff’s first cause of action for breach of contract, the
trial court concluded that defendant did not breach the Homestay
Agreement because it obtained liability insurance for the student
and was not responsible for paying for property damaged by the
student. Plaintiff does not challenge this ruling on appeal.
Instead, she challenges the court’s ruling against her on her
second cause of action for breach of the implied covenant. On
7 “[B]y statute, and as a matter of public policy, the insurer
may not provide coverage for willful injuries by the insured
against a third party. (Ins. Code, § 533.)” (Waller v. Truck Ins.
Exchange, Inc. (1995) 11 Cal.4th 1, 18.) Section 533 “codifies the
general rule that an insurance policy indemnifying the insured
against liability due to his own willful wrong is void as against
public policy.” (Arenson v. National Automobile & Casualty Ins.
Co. (1955) 45 Cal.2d 81, 84.)
6
that claim, plaintiff alleged that defendant breached the implied
covenant by falsely representing in the Homestay Agreement
that the student would have insurance to cover damages to
plaintiff’s property; plaintiff suffered a loss which would have
been covered by the student’s policy; she timely notified
defendant of that loss; and defendant “unreasonably failed to
tender the insurance policy and/or failed to pay policy benefits,”
which failures caused her damage.
The trial court ruled in favor of defendant on the second
cause of action, finding that plaintiff failed to meet her burden for
two separate reasons. First, the court concluded that defendant
did not breach the implied covenant because the amount of the
student’s liability policy was sufficient under the circumstances
of this case. Second, the court concluded that “[d]efendant did
nothing to prevent [p]laintiff from receiving the benefits of the
Homestay Agreement, namely, from obtaining 500 [e]uros in
property damage coverage, which, as stated above, was
sufficient.”8
In the alternative, the trial court concluded that there were
no damages, reasoning that, “[e]ven if [d]efendant did obtain
additional coverage, there would still be no difference in the
outcome because the damage caused by [the student] to the wood
floors was largely intentional. [Fn. omitted.] ‘An insurer is not
liable for a loss caused by the willful act of the insured . . . . [(Ins.
Code § 533.)]’” The court added: “Moreover, [p]laintiff never
quantified which part of the damage to the floors was intentional
versus negligent.”
8 Both parties seem to acknowledge that the insurance policy
covered damages up to 500,000—not 500—euros.
7
2. Legal Principles9
“‘The implied promise [of good faith and fair dealing]
requires each contracting party to refrain from doing anything to
injure the right of the other to receive the benefits of the
agreement.’ (Egan v. Mutual of Omaha Ins. Co. (1979) 24 Cal.3d
809, 818 . . . .) ‘In essence, the covenant is implied as a
supplement to the express contractual covenants, to prevent a
contracting party from engaging in conduct which (while not
technically transgressing the express covenants) frustrates the
other party’s rights to the benefits of the contract.’ (Love v. Fire
Ins. Exchange (1990) 221 Cal.App.3d 1136, 1153 . . . .) [¶] . . . [¶]
“The implied covenant of good faith and fair dealing does
not impose substantive terms and conditions beyond those to
which the parties actually agreed. (Guz v. Bechtel National, Inc.
[(2000)] 24 Cal.4th [317,] 349.) ‘The covenant of good faith and
9 As stated in CACI No. 325, the elements of a cause of
action for breach of the implied covenant are:
“1. The plaintiff and the defendant entered into a
contract;
“2. The plaintiff did all, or substantially all of the
significant things that the contract required her to do or was
excused from having to do;
“3. All conditions required for the defendant’s
performance had occurred or were excused;
“4. The defendant engaged in specific conduct that
prevented the plaintiff from receiving certain benefits under the
contract;
“5. By doing so, the defendant did not act fairly and in
good faith; and
“6. The plaintiff was harmed by the defendant’s
conduct.” (Emphasis added.)
8
fair dealing, implied by law in every contract, exists merely to
prevent one contracting party from unfairly frustrating the other
party’s right to receive the benefits of the agreement actually
made. [Citation.] The covenant thus cannot “‘be endowed with
an existence independent of its contractual underpinnings.’”
[Citation.] It cannot impose substantive duties or limits on the
contracting parties beyond those incorporated in the specific
terms of their agreement.’ (Id. at pp. 349–350.)” (Avidity
Partners, LLC v. State of California (2013) 221 Cal.App.4th 1180,
1204.)
3. Analysis
We first consider plaintiff’s assertion that the trial court
“simply made no finding as to whether [p]laintiff requested that
[d]efendant turn over to her information regarding the insurance
it had ostensibly obtained for [the student].” Plaintiff suggests
that the judgment must be reversed because the court’s decision
omitted specific “findings of fact” and “conclusions of law” with
respect to a theory of liability in support of her implied covenant
claim. We disagree.
“[U]pon the trial of a question of fact by the court, written
findings of fact and conclusions of law shall not be required.”
(Code Civ. Proc., § 632.) Instead, even if the objecting party
follows proper procedure for such statements under Code of Civil
Procedure sections 632 and 634,10 “‘[t]he trial court is not
10 Defendant contends that plaintiff failed to comply with the
requirements of Code of Civil Procedure section 632 because she
did not file a request for decision specifying controverted issues
after the trial court announced its decision. We will assume
9
required to respond point by point to the issues posed in a
request for [a] statement of decision. The court’s statement of
decision is sufficient if it fairly discloses the court’s determination
as to the ultimate facts and material issues in the case.’
[Citations.] ‘When this rule is applied, the term “ultimate fact”
generally refers to a core fact, such as an essential element of a
claim.’ [Citation.] ‘Ultimate facts are distinguished from
evidentiary facts and from legal conclusions.’ [Citation.] Thus, a
court is not expected to make findings with regard to ‘detailed
evidentiary facts or to make minute findings as to individual
items of evidence.’ [Citation.]” (Thompson v. Asimos (2016) 6
Cal.App.5th 970, 983.)
In issuing its ruling on the second cause of action, the trial
court listed the elements necessary to establish a breach of the
implied covenant, including that the “[d]efendant must have
unfairly prevented [the] plaintiff from receiving the benefits [the]
plaintiff was entitled to receive under the contract. . . .” The
court then found, among other things, that “[d]efendant [was] not
liable [for breach of the implied covenant] because [it] did nothing
to prevent [p]laintiff from receiving the benefits of the Homestay
Agreement, namely from obtaining 500 [e]uros in property
damage coverage . . . .” That finding constituted a determination
of an ultimate or core fact, i.e., an essential element of plaintiff’s
implied covenant claim. (Thompson v. Asimos, supra, 6
without deciding that plaintiff’s proposed statement of decision,
filed at the court’s request before it announced its decision,
satisfied the requirements of section 632 regarding the timing
and content of a request under that section. Plaintiff’s proposed
decision included a finding on whether defendant’s failure to
provide insurance information or tender plaintiff’s damage claim
to the insurance company breached the implied covenant.
10
Cal.App.5th at p. 983.) The court therefore did not omit a
necessary finding on the second liability theory.11 (St. Julian v.
Financial Indemnity Co. (1969) 273 Cal.App.2d 185, 194 [“‘[A]
specific finding is not required on an issue where it follows by
necessary implication from a general finding [citations]. . . . [A]
finding on a particular issue is an implied negation of all
contradictory positions [citations]’”].)
Given the trial court’s finding that defendant did not
prevent plaintiff from receiving the benefits under the contract,
which was sufficient by itself to dispose of the implied covenant
claim in favor of defendant, we do not need to consider plaintiff’s
contention based on the court’s alternative ruling under
Insurance Code section 533.12 Plaintiff was not prejudiced by
11 Plaintiff does not challenge—nor could she—the sufficiency
of the evidence in support of the trial court’s finding that
defendant did nothing to prevent plaintiff from receiving the
benefits of the student’s liability coverage. Although plaintiff
testified that she repeatedly requested information about
insurance, defendant’s CEO and its representative assigned to
the Homestay Agreement both testified that plaintiff never
requested insurance information.
12 Ordinarily, we review the correctness of the trial court’s
ruling, not the reasons for it. (D’Amico v. Board of Medical
Examiners (1974) 11 Cal.3d 1, 18–19 [“‘The fact that the action of
the court may have been based upon an erroneous theory of the
case, or upon an improper or unsound course of reasoning, cannot
determine the question of its propriety. No rule of decision is
better or more firmly established by authority, nor one resting
upon a sounder basis of reason and propriety, than that a ruling
or decision, itself correct in law, will not be disturbed on appeal
merely because given for a wrong reason. If right upon any
11
any claimed error regarding that ruling in light of the court’s
other findings on the implied covenant claim. (See, e.g. F.P. v.
Monier (2017) 3 Cal.5th 1099, 1114 [“‘[i]f the findings which are
made are of such a character as to dispose of issues which are
sufficient to uphold the judgment, it is not a mistrial or against
law to fail or omit to make findings upon other issues which, if
made, would not invalidate the judgment’”].)
Finally, we reject plaintiff’s contention that the trial court
improperly imposed on her an obligation to quantify the portion
of damages attributable to negligence versus intentional conduct.
As plaintiff concedes, the court did not “directly” impose any such
obligation. To the contrary, in its statement of decision, the court
correctly recited the elements of a breach of the implied covenant
claim. In finding that plaintiff failed to prove damages, the court
also observed that “[p]laintiff never quantified which part of the
damage to the floors was intentional versus negligent.” That
statement, by itself, does not demonstrate that the court added
an element to plaintiff’s claim.
B. Motion for New Trial
1. Background
On October 9, 2018, plaintiff moved for a new trial,
arguing, among other things, that the trial court’s ruling that the
student’s conduct was “largely intentional” and therefore
uninsurable under Insurance Code section 533 was an error in
theory of the law applicable to the case, it must be sustained
regardless of the considerations which may have moved the trial
court to its conclusion’”].)
12
law to which plaintiff took exception at trial. Defendant opposed
the motion.
Following extensive argument at the November 8, 2018,
hearing on the new trial motion, the trial court took the matter
under submission. Because the court did not issue a ruling on
the motion within the time permitted by law, the motion was
deemed denied by operation of law. (Code Civ. Proc., § 660.)
2. Analysis
Plaintiff concedes that her challenge to the trial court’s
denial of her motion for new trial is dependent upon her
prevailing on her argument that the court misapplied Insurance
Code section 533. As we discuss above, plaintiff cannot
demonstrate that she was prejudiced by any assumed error in the
court’s application of section 533. We therefore reject her
challenge to the court’s ruling on the new trial motion.
C. Leave to Amend
1. Background
At the close of testimony on January 23, 2018, plaintiff
orally requested leave to amend her complaint to add a claim
under Labor Code section 2802.13 The trial court instructed
plaintiff to make the motion in writing.
13 Labor Code section 2802, subdivision (a) provides: “An
employer shall indemnify his or her employee for all necessary
expenditures or losses incurred by the employee in direct
consequence of the discharge of his or her duties, or of his or her
13
On January 31, 2018, plaintiff filed her motion for leave to
amend arguing, among other things, that she was simply
asserting “a different legal theory based upon and supported by
the same operative facts that [were] already in evidence.”
Defendant opposed the motion, arguing that it had not had the
opportunity to conduct discovery on the existence of an
employment relationship or the issue of whether the damage to
plaintiff’s floors constituted “necessary expenditures or losses”
incurred by an employee under Labor Code section 2802. In her
reply, plaintiff reiterated that the Homestay Agreement and the
testimony that had already been presented at trial about that
agreement established her employment status and entitlement to
the same damages she had already proven.
On March 5, 2018, following argument on the motion, the
trial court denied it.
2. Legal Principles
Leave to amend a complaint is within the sound discretion
of the trial court and “‘“[t]he exercise of that discretion will not be
disturbed on appeal absent a clear showing of abuse.”’” (Branick
v. Downey Savings & Loan Assn. (2006) 39 Cal.4th 235, 242.)
Code of Civil Procedure section 473 allows a party to amend his
or her pleadings in the furtherance of justice and section 576
allows a trial court to grant leave to amend even after the
commencement of trial. Section 469, which governs motions for
leave to amend to conform to proof at trial, provides in pertinent
obedience to the directions of the employer, even though
unlawful, unless the employee, at the time of obeying the
directions, believed them to be unlawful.”
14
part: “Variance between the allegation in a pleading and the
proof shall not be deemed material, unless it has actually misled
the adverse party to his or her prejudice in maintaining his or her
action or defense upon the merits.” Amendments to conform to
proof at trial, “if not prejudicial, are favored since their purpose is
to do justice and avoid further useless litigation.” (Union Bank v.
Wendland (1976) 54 Cal.App.3d 393, 400.)
“Such amendments have been allowed with great liberality
‘and no abuse of discretion is shown unless by permitting the
amendment new and substantially different issues are introduced
in the case or the right of the adverse party prejudiced [citation].’
. . . [Citations.]” (Trafton v. Youngblood (1968) 69 Cal.2d 17, 31.)
Leave to amend should be denied only “when [the proposed
amendments] raise new issues not included in the original
pleadings and upon which the adverse party had no opportunity
to defend. [Citations.]’ [Citations.]” (Ibid.) “The basic rule
applicable to amendments to conform to proof is that the
amended pleading must be based upon the same general set of
facts as those upon which the cause of action or defense as
originally pleaded was grounded.” (Union Bank v. Wendland,
supra, 54 Cal.App.3d at pp. 400–401.)
3. Analysis
Plaintiff maintains that the trial court abused its discretion
by denying her motion during trial to amend her complaint to
conform to proof. According to plaintiff, defendant’s questioning
of its CEO “opened up” the issue of whether the Homestay
Agreement created an employment relationship between plaintiff
and defendant. As plaintiff views the trial evidence, it was
15
sufficient―without more―to establish an employer-employee
relationship and damages under Labor Code section 2802.
Plaintiff therefore concludes that defendant would not have
suffered any prejudice if the court had allowed the amendment at
the end of trial.
The Labor Code claim that plaintiff sought to add late in
the trial would have required defendant to defend against that
assertion by showing that plaintiff was an independent
contractor, as opposed to an employee. “Under California law, an
individual who provides services for another is presumed to be an
employee. ([Labor Code] § 3357 [‘Any person rendering service
for another, other than as an independent contractor, or unless
expressly excluded herein, is presumed to be an employee’]; see
Robinson v. George (1940) 16 Cal.2d 238, 243 . . . .) From this
threshold, the burden is on an employer to ‘prove, if it can, that
the presumed employee was an independent contractor.’
(Narayan v. EGL, Inc. (9th Cir. 2010) 616 F.3d 895, 900.)”
(Gonzales v. San Gabriel Transit, Inc. (2019) 40 Cal.App.5th
1131, 1151, review granted Jan. 15, 2020, S259027 (Gonzales).)
There are two potential tests that could have been applied
to determine whether plaintiff was an independent contractor, as
opposed to defendant’s employee.14 We conclude, however, that
14 As the court in Gonzales, supra, 40 Cal.App.5th at page
1151 explained, “[f]or decades, California courts have applied the
test articulated in [S.G.] Borello [& Sons, Inc. v. Department of
Industrial Relations (1989)] 48 Cal.3d 341 [(Borello)], to
determine whether a worker is an employee or an independent
contractor. [Citations.] [¶] Under Borello, ‘“‘[t]he principal test
of an employment relationship [was] whether the person to whom
service is rendered ha[d] the right to control the manner and
means of accomplishing the result desired.’”’” (Ibid.) Specifically,
16
under either test, the required showing would have presented
contested issues of fact. (See Ali v. L.A. Focus Publication (2003)
112 Cal.App.4th 1477, 1485 [“Generally, whether a plaintiff was
an employee or independent contractor is a question of fact”].)
And these employment-related issues were not subject to
discovery prior to trial. Thus, if leave to amend had been
granted, defendant would have been required to examine
witnesses at trial on these issues without the benefit of first
deposing them. Moreover, defendant would have been unable to
call additional witnesses and to introduce additional documents
that may have come to light during pretrial discovery specifically
tailored to employment law issues, such as, for example, the right
to control the manner and means of accomplishing the result
desired. Under these circumstances, the trial court did not abuse
its discretion in denying the belated motion to amend the
complaint.
Borello and its progeny required courts to apply
several―eight―secondary indicia to resolve the issue. (Ibid.)
But, in Dynamex Operations W. v. Superior Court (2018) 4
Cal.5th 903, the court held that, in wage and hour cases, the
hiring party seeking to show an independent contractor
relationship must “establish each of the three factors embodied in
the ABC test—namely (A) that the worker is free from the control
and direction of the hiring entity in connection with the
performance of the work, both under the contract for the
performance of the work and in fact; and (B) that the worker
performs work that is outside the usual course of the hiring
entity’s business; and (C) that the worker is customarily engaged
in an independently established trade, occupation, or business of
the same nature as the work performed.” (Id. at p. 957.)
17
V. DISPOSITION
The judgment is affirmed. In the interest of justice, no
costs are awarded on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
KIM, J.
We concur:
RUBIN, P. J.
BAKER, J.
18