CYNTHIA SABO VS JANET HAWES

Case Number: BC512566    Hearing Date: October 21, 2014    Dept: A11

SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF LOS ANGELES – NORTH DISTRICT

CYNTHIA and DAVID SABO, )
) Case Number BC 512566
Plaintiff, )
) ORDER AFTER HEARING
v. )
) Date of Hearing:
ESTATE OF JANET HAWES, ) October 21, 2014
) Dept. A-11
Defendant. ) Judge Randolph A. Rogers
____________________________________)

Intervener Access General Insurance Company, Inc’s motion to intervene came on for hearing on October 21, 2014. Plaintiffs Cynthia and David Sabo appeared through their counsel of record, _______________. Intervener Access General Insurance Company, Inc. appeared through its counsel of record, _______________. The Court, having received and reviewed the pleadings of record and evidence submitted and having considered argument of counsel, it is hereby ORDERED:

Access General Insurance Company, Inc.’s motion to intervene is GRANTED. Access General Insurance Company, Inc.’s Complaint in Intervention as attached is deemed filed and served this date.

SO ORDERED this the _____ day of October, 2014.

______________________
RANDOLPH A. ROGERS,
JUDGE

SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF LOS ANGELES – NORTH DISTRICT

CYNTHIA and DAVID SABO, )
) Case Number BC 512566
Plaintiff, )
) STATEMENT OF DECISION
v. )
) Date of Hearing:
ESTATE OF JANET HAWES, ) October 21, 2014
) Dept. A-11
Defendant. ) Judge Randolph A. Rogers
____________________________________)

The Court bases the Order After Hearing of this date upon the following Statement of Decision:

1. The present case arises from a vehicle collision dating from November 27, 2012. Plaintiff Cynthia Sabo (“Cynthia”) was driving on the day of the accident when it collided with a Vehicle operated by Janet Hawes (“Decedent”). Cynthia sustained injuries as a result of the collision. In the same accident, Decedent sustained injuries that left her in a coma, to which she subsequently passed away on July 28, 2013. On June 17, 2013, Cynthia, together with spouse David Sabo (collectively “Plaintiffs”) brought suit against Decedent, alleging causes of action for negligence and loss of consortium.

2. Following Decedent’s death, Cynthia petitioned for the creation of a probate estate for Decedent on March 21, 2014 under the provisions of Probate Code §8461. On June 19, 2014, Cynthia was appointed the administrator of the Estate of Janet Hawes (“Estate”). On July 7, 2014, Plaintiffs submitted a claim to Cynthia, who elected not to respond to the claims, causing it to be deemed rejected. On September 10, 2014, Plaintiffs amended their Complaint to remove Decedent and name Estate as the defendant.

3. Intervener Access General Insurance Company (“Access”) was the liability insurer of Decedent. After discovering the accident in December of 2012, Access actively attempted to engage in settlement negotiations. This resulted in settlement of the property damage claims with Plaintiffs on March 14, 2013. Access also offered to settle the personal injury claims on March 22, 2013 for policy limits, the offer of which Plaintiffs did not respond to. Access was not contacted, notified, or informed of the creation of Estate until Plaintiffs amended their Complaint and substituted Estate for Decedent.

4. On September 11, 2014, the same day Plaintiffs notified it of the amended Complaint, Access filed an ex parte application for an order to intervene or to shorten the time for hearing on a motion to intervene. The Court set a hearing date on the motion for October 7, 2014, and Plaintiffs filed their Opposition on September 24, 2014.

5. Pursuant to the minute order dated October 7, 2014, the Court continued the hearing of the motion to October 21, 2014 due to a late served Opposition, setting a date of October 14, 2014 for a Reply to be filed. Access did so on October 14, 2014, setting forth additional facts pertinent to the present case.

6. Discussion – Under Code of Civil Procedure §387(b), the court must permit intervention if the person seeking intervention claims an interest relating to the property or transaction which is the subject of the action and that person is so situated that the disposition of the action may as a practical matter impair or impede that person’s ability to protect that interest, unless that person’s interest is adequately represented by existing parties.

7. The court may also permit a party to intervene (1) if the nonparty has a direct and immediate interest in the litigation, (2) the intervention will not enlarge the issues in the case, and (3) the reasons for intervention outweigh any opposition by the existing parties. CCP §387(a); US Ecology, Inc. v. State (2001) 92 Cal.App.4th 113, 139.

8. “Intervention may … be allowed in the insurance context, where third party claimants are involved, when the insurer is allowed to take over in litigation if its insured is not defending an action, to avoid harm to the insurer.” Royal Indem. Co. v. United Enterprises, Inc. (2008) 162 Cal.App.4th 194, 206. An insurer providing a defense under a reservation of rights has a sufficient interest in the litigation to intervene when the insured fails to protect the insurer’s interest. See Gray v. Begley (2010) 182 Cal.App.4th 1509, 1524 (allowing an insurer to intervene when insured reaches a settlement without the participation of the defending insurer).

9. “An insurer’s right to intervene in an action against the insured, for personal injury or property damage, arises as a result of Insurance Code section 11580 [which] provides that a judgment creditor may proceed directly against any liability insurance covering the defendant, and obtain satisfaction of the judgment up to the amount of the policy limits.” Reliance Ins. Co. v. Superior Court (2000) 84 Cal.App.4th 383, 386. Cases that have considered an insurer’s intervention have generally been situations where the insured has failed to properly defend the action despite the insurer’s provision of a defense, or where the insured has taken action in contravention to the interests of the insurer. See Western Heritage Ins. Co. v. Superior Court (2011) 199 Cal.App.4th 1196 (grant of motion to intervene proper where insurer provided defense to insured and insured’s employee, and the employee defaulted); Gray v. Begley (2010) 182 Cal.App.4th 1509 (intervention appropriate where insurer provides a defense, but is excluded from the settlement agreement); Reliance Ins. Co. v. Superior Court (2000) 84 Cal.App.4th 383 (denial of motion to intervene was an abuse of discretion where insured was a suspended corporation and could not defend itself); Nasongkhla v. Gonzalez (1994) 29 Cal.App.4th Supp. 1 (denial of motion to intervene was an abuse of discretion where defendant could not be found and default judgment was entered after answer was stricken due to defendant’s failure to respond to discovery); Jade K. v. Viguri (1989) 210 Cal.App.3d 1459 (affirmed granting of motion to intervene where defendant was in jail and default judgment was taken).

10. The facts as presented by Access suggest a strong and highly sympathetic case in favor of intervention. Plaintiffs’ most persuasive argument against intervention is that Access can fully defend its interests through the appointment of counsel for Estate.

11. There are, however, multiple facts that suggest Access’ interests are not adequately protected by Estate here, whose actions and decisions could bind it and render it liable. First, Estate is administered by Cynthia, who is a plaintiff in the present case. As such, Plaintiffs are, in essence, in charge of administering their own claim, which is obviously adverse to the interests of the Estate. Such a curious position alone, however, is insufficient to permit Access’ intervention in light of the statutory grounds permitting such administration. See Cal. Prob. Code §8461(q) (permitting creditors to be appointed administrator where a decedent dies intestate). See also In re Lyons’ Estate (1955) 132 Cal.App.2d 790, 792 (permitting a creditor be appointed administrator where no one having priority for appointment had applied); Silva v. Superior Court (1948) 83 Cal.App.2d 521, 526 (permitting judgment creditor to petition and nominate an administrator for judgment debtor after his death where his heirs made no effort to probate his estate).

12. Plaintiffs’ problem, however, comes from the numerous irregularities highlighted by Access. There is, of course, no doubt that Plaintiffs were fully aware of Access’ interests in their claim, considering the March 2013 settlement of the property damage claim. The failure to notify Access of the creation of Estate, therefore, and particularly in light of Cynthia’s appointment as administrator, suggests a willingness to exclude Access from meaningful participation in the administration of the Estate.

13. Cynthia’s unilateral rejection of Plaintiffs’ claim to the Estate raises further concerns. Cynthia was obviously aware of Decedent’s insurance policy with Access. Liability for the claim for personal injury, therefore, at least as to policy limits, necessarily implicates Access. Given an insurer’s potential liability, Cal. Ins. Code §11580(b)(2), and in light of the already tendered offer of policy limits by Access in March of 2013, the complete failure to notify Access of the claim, and the unilateral decision to reject the claim, appears entirely unreasonable.

14. The present case presents similar considerations as those present in Reliance Insurance Company v. Superior Court, supra. In the Reliance case, an insured corporation was sued by the plaintiffs for damages to personal property. The insured filed an answer to the complaint, which the plaintiffs attempted to strike on the ground that its corporate status had been suspended and could not defend the action. The insurer filed a motion for leave to intervene, which was denied.

15. In finding that the trial court abused its discretion in denying the motion, the Court of Appeal noted that “if Reliance does not intervene in the instant case and raise defenses . . . , the [plaintiffs] will be able to obtain an unopposed default judgment. The [plaintiffs] will then be able to bring a direct action against Reliance for payment of the default judgment to which Reliance is bound because it did not intervene. This result would have the effect of punishing Reliance for something it did not do, since ‘[i]nsurers have no control over the solvency or corporate viability of their insureds.’” Reliance, supra, 84 Cal.App.4th at 388 (internal citations omitted).

16. While imperfect, there are some poignant parallels between the present case and Reliance. As should be eminently obvious, a deceased insured is equally powerless to defend herself as a suspended corporation. Indeed, it is arguable that a suspended corporation may actually be in a better position to defend itself than an estate administered by a person directly invested as a plaintiff in pending litigation against the estate. Moreover, an insurer is unjustly punished when it is denied intervention whether it is because judgment is rendered against an insured incapable of defending itself or an insured who refuses to defend herself.

17. The provision of counsel for Decedent or Estate alone is insufficient in and of itself to guarantee Access’ interests are safeguarded. While an attorney may have control over ordinary procedural matters, acts of a serious nature beyond those incidental to the management of the lawsuit are decided by the client. See Levy v. Superior Court (1995) 10 Cal.4th 578, 583; 7 Cal.Jur.3d Attorneys at Law §212. As such, if Estate were to opt for a course of action deleterious or in dereliction to its best interests, Access is no better protected for its provision of counsel to Estate than if it had done nothing at all.

18. In light of the conscious acts taken to exclude Access from meaningful participation in administration of the claim against Estate, there is strong reason to believe that Access cannot fully protect its interests in the subject matter of the litigation absent intervention. As such, Access’ interests in intervening outweighs the interest of the original parties in conducting their lawsuit on their own terms, considering the fact that Plaintiffs can effectively play both sides of the contest, and still ostensibly bind Access to the outcome.

19. Accordingly, Access’s motion to intervene is GRANTED.

SO ORDERED AND ADJUDGED this the ______ day of October, 2014.

_____________________________
RANDOLPH A. ROGERS, JUDGE

Print Friendly, PDF & Email
Copy the code below to your web site.
x 

Leave a Reply

Your email address will not be published. Required fields are marked *