Clemmer v. Hartford Insurance

Opinion

By this action plaintiffs, the widow and the son of a victim of a killing, sue to recover from the liability insurer of the slayer the amount of a wrongful death judgment obtained against him. Following a jury verdict the trial court entered judgment against the defendant insurer, but it subsequently granted defendant’s motion for new trial, tendered on all issues, on the sole issue submitted to the jury—i.e., whether the death in question was caused by a willful act—and denied it on all other issues. Plaintiffs appeal from the aforesaid order granting a limited new trial. Defendant appeals from that portion of the judgment which is not affected by the order granting a limited new trial and also from the orders of the trial court denying its motions (1) for judgment notwithstanding the verdict, (2) to set aside and vacate the judgment and enter a new and different judgment, and (3) for a new trial on all issues. Its appeal must be dismissed insofar as it purports to be from the latter two orders, such orders being nonappealable. Defendant has also filed a protective cross-appeal from the whole of the judgment. (Cal. Rules of Court, rule 3(c).)

Factual Background

Plaintiffs, Marjorie Clemmer and Hugh Clemmer, are respectively the widow and minor son of Dr. Hugh Clemmer, deceased. Dr. Daniel Lovelace had worked for Dr. Clemmer, and he was shocked when the latter on January 29, 1971, advised him that the employment relationship would be terminated. The next day Dr. Clemmer was shot and killed by Dr. Lovelace, the Hartford Insurance Company’s insured. Just prior to the shooting Dr. Lovelace, from his apartment window, had observed Dr.

Notwithstanding expanded notions of privity, collateral estoppel may be applied only if due process requirements are satisfied. (Blonder-Tongue, supra; Bernhard, supra; Dilliard v. McKnight (1949) 34 Cal.2d 209 , 214-215 [ 209 P.2d 387 , 11 A.L.R.2d 835 ].) In the context of collateral estoppel, due process requires that the party to be estopped must have had an identity or community of interest with, and adequate representation by, the losing party in the first action as well as that the circumstances must have been such that the party to be estopped should reasonably have expected to be bound by the prior adjudication. (Lynch v. Glass, supra, at p. 948.) Thus, in deciding whether to apply collateral estoppel, the court must balance the rights of the party to be estopped against the need for applying collateral estoppel in the particular case, in order to promote judicial economy by minimizing repetitive litigation, to prevent inconsistent judgments which undermine the integrity of the judicial system, or to protect against vexatious litigation. (People v. Taylor (1974) 12 Cal.3d 686 , 695 [ 117 Cal.Rptr. 70 , 527 P.2d 622 ]; see also Teitelbaum, supra.)

With these considerations in mind, we now examine the relationship between plaintiffs and Dr. Lovelace. It is urged that this-relationship is one of “derivative privity” in that plaintiffs sue, inter alia, as third party

Hartford argues that Shapiro does not apply to preclude application of collateral estoppel based on Valladao where after the event giving rise to the claim the insurer has not entered into any agreement or an action, collusive or otherwise, which would defeat the rights of the injured third party. We are unconvinced that Shapiro should be so limited. The concept that an injured person stands in the shoes of the insured cannot be mechanically applied in all instances. (See Barrera v. State Farm Mut. Automobile Ins. Co. (1969) 71 Cal.2d 659 [ 79 Cal.Rptr. 106 , 456 P.2d 674 ]; Murphy v. Allstate Ins. Co. (1976) 17 Cal.3d 937 [ 132 Cal.Rptr. 424 , 553 P.2d 584 ].) The record indicates that, after having been adjudged guilty of

Hartford’s claim that there is no substantial evidence to support the verdict rests upon its contention that the testimony of Dr. Anselen, plaintiffs’ psychiatric expert; was rendered absurd by certain internal inconsistencies, and that therefore that testimony must be disregarded. The record reflects that Dr. Anselen testified, on the one hand, that Dr. Lovelace had the mental capacity to know what he was doing and to know the nature and quality of his acts, but he also testified that Dr. Lovelace was a paranoid personality throughout his professional life, that he suffered an acute paranoid episode when Dr. Clemmer sought to terminate their professional relationship, and that Dr. Lovelace, at the time he shot Dr. Clemmer, did not have the mental capacity to deliberate and premeditate or to form the specific intent to shoot and harm the victim and did not understand the consequences of his act, being then directed by paranoid delusions.

Even if it be assumed that there are logical inconsistencies in the foregoing testimony—a matter which we need not here reach—the fact that inconsistencies may occur in the testimony of a given witness does not require that such testimony be disregarded in its entirety for the purposes of a motion for judgment notwithstanding the verdict, nor does it mean that such testimony is necessarily insufficient to support the verdict. It is for the trier of fact to consider internal inconsistencies in testimony, to resolve them if this is possible, and to determine what weight should be given to such testimony. The motion for judgment notwithstanding the verdict was properly denied.

Exclusion of the Judgment of Conviction as Evidence of Willfulness

The trial court as we have seen was properly not persuaded by the collateral estoppel theory presented by Hartford. Failing in the attempt to

Placing the burden on Hartford to show that Lovelace’s act was willful is also consistent with Evidence Code section 520. That section provides: “The party claiming that a person is guilty of crime or wrongdoing has the burden of proof on that issue.” (See Lane & Pyron, Inc. v. Gibbs (1968) 266 Cal.App.2d 61 , 67 [ 71 Cal.Rptr. 817 ].)

Hartford also attempts to sustain its position by asserting that although the insurer has the burden of bringing itself within an exculpatory clause contained in the insurance policy, this is not the case when the “exclusion” defines the scope of insurance provided by that policy, citing Zuckerman v. Underwriters at Lloyd’s (1954) 42 Cal.2d 460 [ 267 P.2d 777 ].

The Zuckerman case, however, is clearly distinguishable. The policies there involved insured against “ ‘accidental bodily injury [including “bodily injury which shall occasion death” as defined in the policies] ....’” (42 Cal.2d at p. 473.) We held that the jury was properly instructed that plaintiffs, rather than the insurer, had the burden of showing that the death in question occurred by accidental means rather than by intentional self-injuiy, and that a part of this burden included the task of disproving intentional self-injury. The fact that an exclusion specifically withheld coverage for intentional self-injury, we held, did not operate to shift that burden. “The burden of establishing suicide, therefore, should not have been put on the insurer [as the plaintiffs had contended], as the provision as to death from that cause was not a condition subsequent but merely definitive of the precise risk assumed.” (Id., at p. 474.) In the instant case, on the other hand, coverage agreement which is the basis of the insurance provided speaks in general, comprehensive terms, the insurer agreeing to indemnify the insured “for all sums which the insured shall become legally obligated to pay as damages and expenses, . . . because of personal injury or property damage to which

V

Dr. Lovelace’s Failure to Notify the Insurer of the Wrongful Death Action, His Non tender of Defense and His Failure to Cooperate as a Defense in This Action.

The trial court found that within a week of the killing of Dr. Clemmer, Hartford was aware of the event. The court also found that Hartford was never informed by Dr. Lovelace that he had been served with summons and complaint in the action brought against him by plaintiffs, that the defense was not tendered to Hartford, and that Hartford was not advised by Dr. Lovelace of the request for entry of default served on Dr. Lovelace in the wrongful death case. The day before the hearing on the request, Hartford was notified of it by plaintiffs’ attorneys. This was Hartford’s first knowledge of the lawsuit. Disclaimer of coverage was conveyed to Dr. Lovelace’s counsel by a Hartford claims representative approximately two weeks after the hearing. The trial court concluded that Hartford could not claim the defense of lack of notice, of tender of defense, or of cooperation because by denying coverage it, as a matter of law, had waived any claim based thereon, and that in any event Hartford was not prejudiced.

On this appeal, Hartford refers to cases cited in its collateral estoppel argument—i.e., Valladao v. Fireman’s Fund Indem. Co., supra, 13 Cal.2d 322 ; Sumida v. Pacific Auto. Ins. Co. (1942) 51 Cal.App.2d 472 [ 125 P.2d 87 ], and Sears v. Illinois Indemnity Co. (1932) 121 Cal.App. 211 [ 9 P.2d 245 ]—claiming that since it was entitled to assert the same defense against the Clemmers as it would have against Dr. Lovelace, it was prejudicial error to deny it the indicated defense.

Plaintiffs correctly point out, however, that the defense of lack of notice, tender of defense and cooperation is not available here because Hartford has not shown prejudice. In Campbell v. Allstate Ins. Co. (1963)

Hartford’s Opportunity to Litigate the Damages

The trial court held Hartford bound by the amount of the judgment obtained by plaintiffs against Dr. Lovelace. Hartford argues that since it had no opportunity to litigate the issues in the suit brought against Dr. Lovelace by the plaintiffs, it cannot be bound by the amount of the judgment obtained therein. We disagree.

In Ford v. Providence Washington Ins. Co., supra, 151 Cal.App.2d 431 , it is stated to be the general rule that “an insurer who has had an opportunity to defend is bound by the judgment against its insured as to all issues which were litigated in the action against the insured.” (151 Cal.App.2d at p. 436.) The operation of this rule, the court goes on to state, “depends primarily upon notice to the insurer of the pendency of the action.” (Id., at p. 437.) These statements appear to accurately state the general rules governing these cases. (See Bonfils v. Pacific Auto Ins. Co. (1958) 165 Cal.App.2d 152 , 161 [ 331 P.2d 766 ]; see generally, 39 Cal.Jur.3d, Insurance Contracts, § 431, pp. 733-734.)

We are persuaded, nevertheless, that the insurer herein received the kind of “notice ... of the pendency of the [wrongful death] action” which should result in its being bound by the amount of damages found in that action to have been sustained by plaintiffs. We have indicated that Hartford was found by the trial court to have been aware of the shooting incident within a week of its occurrence, although its first notice of the pendency of the wrongful death action occurred when, on the day before the hearing on default judgment following Lovelace’s default, it was notified of that hearing by a telephone call and telegram from plaintiffs’ attorney. Within a few weeks thereafter Hartford directed a letter to Lovelace’s attorney in which it disclaimed coverage and asked to be advised of Lovelace’s intentions, but it at no time sought to have the

Code of Civil Procedure section 473 provides in part: “The court may, upon such terms as may be just, relieve a party or his legal representative from a judgment . . . taken against him through his mistake, inadvertence, surprise or excusable neglect.” (Italics added.) The term “legal representative” has been interpreted with considerable liberality to permit one who would not normally be considered a “representative” of a party but has a sufficient interest in the action to maintain the motion. (See, e.g., Nuckolls v. Bank of California (1937) 10 Cal.2d 266 , 272 [ 61 P.2d 927 ] (trustee in bankruptcy as successor of bankrupt party); Trumpler v. Trumpler (1899) 123 Cal. 248 , 253 [ 55 P. 1008 ] (successor in interest to property); Skolsky v. Electronovision Productions, Inc. (1967) 254 Cal.App.2d 246 , 248 [ 62 Cal.Rptr. 91 ] (person who obtained bond to release attachment of defendant’s property in which he had contractual rights); Guardianship of Levy (1955) 137 Cal.App.2d 237 , 244 [ 290 P.2d 320 ] (person contesting appointment of another as guardian and seeking appointment himself); Estate of Seaman (1921) 51 Cal.App. 409 , 411 [ 196 P. 928 ] (creditor of estate).) The Skolsky case is particularly instructive on this point. There the defendant gave a bond to release an attachment after Magna, a nonparty who had certain contractual rights respecting the property, provided the surety with a substantial letter of credit as security. The defendant then defaulted. The Court of Appeal, relying on our decisions in Johnson v. Hayes Cal Builders, Inc. (1963) 60 Cal.2d 572 [ 35 Cal.Rptr. 618 , 387 P.2d 394 ], Drinkhouse v. Van Ness (1927) 202 Cal. 359 [ 260 P. 869 ], and Elliott v. Superior Court (1904) 144 Cal. 501 [ 77 P. 1109 ], held that Magna had a sufficient interest in the subject matter of the action to bring a motion to set aside the default judgment under section 473. Quoting from Elliott the court stated: “ ‘There is in fact another plain, speedy, and adequate remedy allowed by our practice to one whose rights or interests are injuriously affected by the judgment or by any appealable order to a court given or made in an action or proceeding to which he is not a party. He may make himself a party by moving to set aside such judgment or order, and if his motion is denied may, on appeal

The standing of Hartford to move to set aside the default judgment which it might otherwise be required to satisfy is therefore clear. It would appear, moreover, that had it sought to set aside the judgment it would have had little difficulty making out a case for a “mistake, inadvertence, surprise or excusable neglect.” (See generally 5 Witkin, Cal. Procedure (2d ed. 1971) Attack on Judgment in Trial Court, §§ 126-147, pp. 3702-3703.)

Thus, under the circumstances, we hold that Hartford had ample opportunity to seek an adjudication of the damages. It knew or should have known that judgment against its insured would form the basis for a later claim against it under Insurance Code section 11580. Instead of protecting itself by means of a section 473 motion it chose to remain silent, resting on its claim of noncoverage. Having failed to pursue remedies thus available to it, it cannot now claim prejudice or lack of opportunity to litigate damages.

Hartford’s Other Contentions

Hartford claims that the trial court’s giving of a formula instruction on the issue of willfulness was prejudicial error as was its refusal to give Hartford’s instruction on that issue.

The issue of willfulness was submitted to the jury through a verdict form posing the following question: “Was the death of Dr. Clemmer caused by a willful act of Dr. Lovelace?” The jury, to aid it in answering this question, was instructed as follows: “If you find by a preponderance of the evidence that Dr. Lovelace had the mental capacity to intend to shoot and harm Dr. Clemmer when he caused his death, as well as the mental capacity to govern his own conduct, you will answer this question ‘Yes’. [¶] If on the other hand, you find that at that time Dr. Lovelace was suffering from a mental disease or defect of such magnitude that he could not form the mental state I have just mentioned, then you will answer the question ‘No’.” It is contended that the giving of the foregoing instruc

Contentions of Plaintiffs Regarding the Propriety of Granting Hartford’s Motion for New Trial.

Plaintiffs contend that the specifications given by the trial court in support of its order granting a new trial were insufficient. Code of Civil Procedure section 657 provides: “When a new trial is granted, on all or part of the issues, the court shall specify the ground or grounds upon which it is granted and the court’s reason or reasons for granting the new trial upon each ground stated.” Here the trial judge filed a five-page memorandum setting forth his reasons for the new trial. Specifically he dealt with Dr. Lovelace’s state of mind and raised substantial questions concerning the testimony of the experts relating thereto, particularly that of Dr. Anselen compared with that of Dr. DiNolfo, stating that he “rejected] the opinions of Dr. Anselen, which would exonerate Dr. Lovelace from the ability to know and recognize the nature of his act and to control his conduct, as being absurd. Aside from these ill-founded opinions, there is no support for the jury’s finding. I am satisfied that if the action had been between two individuals, rather than a widow and fatherless child against an insurance company, a different result would have been reached by the jury.”

Specifications for new trial are sufficient if they make a record sufficiently precise to permit meaningful review. (Scala v. Jerry Witt & Sons, Inc. (1970) 3 Cal.3d 359 , 363 [ 90 Cal.Rptr. 592 , 475 P.2d 864 ].) Specifications are insufficient if simply couched in the form of conclusions or statement of ultimate fact. (Miller v. Los Angeles County Flood Control Dist. (1973) 8 Cal.3d 689 , 698 [ 106 Cal.Rptr. 1 , 505 P.2d 193 ].)

Here plaintiffs’ attack is basically one of factual disagreement with the court’s reasons for disbelieving evidence of Dr. Lovelace’s lack of

It is next contended that a trial court’s power to grant a new trial on the ground of insufficiency of the evidence (Code Civ. Proc., § 657, subd. 6) deprives plaintiffs of their right to jury trial guaranteed by article I, section 16 of the California Constitution. This attack, however, comes too late in the jurisprudential day. It has long been held that the right to jury trial is not violated by the power in question. (Ingraham v. Weidler (1903) 139 Cal. 588 [ 73 P. 415 ]; Estate of Bainbridge (1915) 169 Cal. 166 [ 146 P. 427 ].) More recently we again passed upon this point in Dorsey v. Barba (1952) 38 Cal.2d 350 , 358 [ 240 P.2d 604 ],

We also find wanting plaintiffs’ claim that Code of Civil Procedure section 657 violates due process (Cal. Const., art. I, § 7; U.S. Const., Amend. XIV, § 1). It is but another statement of their jury trial argument discussed above, and for that reason we discuss it no further.

Finally, plaintiffs argue that in any event the willfulness of Dr. Lovelace was immaterial and irrelevant and that judgment should have been entered in plaintiffs’ favor because (1) Hartford breached its duty to defend Dr. Lovelace in the wrongful death action, and (2) Dr. Lovelace’s willfulness, if any, is inapplicable to innocent third parties.

Even assuming that the failure to defend Dr. Lovelace was unjustified and that issues relating to coverage could be litigated in the action against Dr. Lovelace, plaintiffs cannot prevail in this contention. We held in Murphy v. Allstate Ins. Co., supra, 17 Cal.3d 937 , 943-944, that in the absence of an assignment a third party claimant cannot bring an action upon a duty owed to the insured by the insurer. Plaintiffs, standing in place of the injured party, can claim no duty owing to Dr. Lovelace to defend, no assignment of Dr. Lovelace’s right being claimed.

Plaintiffs’ contention' that innocent victims of intentional torts should be able to recover from an insurer without regard to the willfulness of the insured clearly runs contrary to the policy expressed in

Conclusion

We conclude on the basis of the foregoing that the orders here subject to appeal, i.e., the orders granting a limited new trial and denying judgment notwithstanding the verdict, must be affirmed; that the protective cross-appeal, having become moot following affirmance of the order granting a limited new trial, must be dismissed; that the purported appeals from the orders denying the motion to set aside and vacate the judgment and enter a new and different judgment and the motion for a new trial on all issues must also be dismissed, said orders being nonappealable; and that that portion of the judgment which is not affected by the order granting a limited new trial must be affirmed.

Accordingly, the order entitled ruling on submitted matters, dated and entered in the minutes June 11, 1975, as amended nunc pro tunc by the order dated and entered in the minutes June 18, 1975, insofar as it constitutes an order granting a limited new trial, is affirmed. The same order as amended, insofar as it constitutes an order denying defendant’s motion for judgment notwithstanding the verdict, is affirmed. That portion of the judgment filed April 24, 1975, and entered April 25, 1975, which is not vacated and set aside by the aforesaid order as amended is affirmed. The protective cross-appeal filed by defendant July 3, 1975, and defendant’s purported appeals from the aforesaid order as amended insofar as it constitutes an order denying defendant’s motion to set aside and vacate the judgment and enter a new and different judgment and an order denying defendant’s motion for a new trial on all issues are, and each of them is, dismissed. The parties shall bear their own costs on appeal.

Bird, C. J., Tobriner, J., Mosk, J., Clark, J., Richardson, J., and Newman, J., concurred.

The petition of the defendant and appellant for a rehearing was denied January 17, 1979, and the opinion was modified to read as printed above.