Case Number: BC551113    Hearing Date: October 31, 2014    Dept: 93

Superior Court of California
County of Los Angeles
Department 93

NHU DANG,

Plaintiff(s),
v.

KUAN CHU, and DOES 1 through 25, inclusive,

Defendant(s).
Case No.: BC 551113

Hearing Date: October 31, 2014

[TENTATIVE] RULING RE:
STATE FARM GENERAL INSURANCE COMPANY’S MOTION FOR LEAVE TO INTERVENE PURSUANT TO CCP § 378

Plaintiff-in-Intervention State Farm General Insurance Company’s Motion for Leave to Intervene Pursuant to CCP § 387 is GRANTED.

Background

This action arises out of an incident where Plaintiff Nhu Dang (“Dang”) was hit and injured by Defendant Kuan Chu (“Chu”) while they were riding their bicycles on August 7, 2013. The Complaint alleges a claim of general negligence against Defendant Chu, a policy holder of State Farm Insurance.

Plaintiff-in-Intervention State Farm filed the instant motion for leave to intervene on September 16, 2014. Plaintiff filed a timely opposition on October 20, 2014. The current trial date is set for August 27, 2015.

Plaintiff-in-Intervention State Farm argues that it satisfies the requirements of Code of Civil Procedure Section 387 and moves to file a complaint-in-intervention in order to direct and control the defense of Defendant Chu in the above-titled action.
The Complaint alleges that on August 7, 2013, Defendant Chu struck Plaintiff Dang with his bicycle while she was riding her bicycle. Plaintiff Dang then filed an insurance claim with State Farm Insurance for bodily injuries she allegedly sustained. During State Farm’s investigation of Plaintiff Dang’s claim, the investigator discovered that Dang and Chu were in a romantic relationship. (Motion, Sabolboro Decl. ¶ 3.)

The investigator also determined that Plaintiff Dang was responsible for the accident, and State Farm denied Plaintiff Dang’s claim. (Id. ¶ 4.) Throughout this process, Chu communicated several times that he believed he was solely responsible for the accident and wanted State Farm to pay Dang’s claim. (Id. ¶ 6.)
On February 27, 2014, Plaintiff Dang filed a lawsuit against Defendant Chu alleging general negligence and requesting loss of future earning damages. As a State Farm homeowners and personal liability umbrella policy holder, Chu was provided legal defense by State Farm. (Motion, Ostrander Decl. ¶¶ 1-2.) In response to
Plaintiff Dang’s request for admissions and special interrogatories, Chu repeatedly admitted to sole responsibility for the accident and denied any negligence on the part of Dang. (Id. ¶¶ 5-9; Response to Request for Admission 20, 21, Exs. F, G in support of Motion; Response to Special Interrogatory No. 3 (“I caused the incident by swerving to the left where I crossed the Plaitniff’s pathway”); Exs. H, I.)

Discussion

California Code of Civil Procedure § 387(a) provides:

Upon timely application, any person, who has an interest in the matter in litigation, or in the success of either of the parties, or an interest against both, may intervene in the action or proceeding. An intervention takes place when a third person is permitted to become a party to an action or proceeding between other persons, either by joining the plaintiff in claiming what is sought by the complaint, or by uniting with the defendant in resisting the claims of the plaintiff, or by demanding anything adversely to both the plaintiff and the defendant, and is made by complaint, setting forth the grounds upon which the intervention rests, filed by leave of the court and served upon the parties to the action or proceeding who have not appeared in the same manner as upon the commencement of an original action, and upon the attorneys of the parties who have appeared, or upon the party if he has appeared without an attorney, in the manner provided for service of summons or in the manner provided by Chapter 5 (commencing with Section 1010) Title 14 of Part 2.

Under this section, the trial court in its discretion may allow a third party to intervene in litigation pending between other parties if “(1) the proper procedures have been followed; (2) the nonparty has a direct and immediate interest in the action; (3) the intervention will not enlarge the issues in the litigation; and (4) the reasons for the intervention outweigh any opposition by the parties presently in the action.” (City and County of San Francisco v. State (2005) 128 Cal.App.4th 1030, 1036 (citations omitted); see also Reliance Ins. Co. v. Superior Court (2000) 84 Cal.App.4th 383, 386.) Further, “[t]he permissive intervention statute balances the interests of others who will be affected by the judgment against the interests of the original parties in pursuing their litigation unburdened by others.” (City and County of San Francisco, supra, 128 Cal.App.4th at 1036.)
With respect to the right of an insurance company to intervene in an action against its insured, the courts have held: “Generally speaking, an insurer should be allowed to intervene in an action against its insured when the insurer may be required to satisfy any judgment entered against the insured and when the insurer’s intervention will not enlarge the issues in the case.” (Executive Risk Indem., Inc. v. Jones (2009) 171 Cal.App.4th 319, 333 n.11.) Moreover, where, as here, the defendant is alleged not to be defending the case in good faith, the insured or similar interested party will be found to have an “interest” in the lawsuit. (See Kobernick v. Shaw (1977) 70 Cal.App.3d 914, 918 (“Where a party to a lawsuit fails to exercise good faith in defendant the action, then a party whose interest at the outset may be only consequential becomes a party with a direct interest and may therefore intervene.”).) In Kobernick, the Court held that where the officers or directors of a corporation fail to exercise good faith in defending an action against the corporation, the shareholders should be allowed to intervene. (Id. at 919.)

In Opposition to the motion, Plaintiff Dang cites to cases where the Courts have denied intervention by an insurance company, relying in part on the fact that disclosure to a jury that the insurance company is a party to litigation is a reason not to allow the party to intervene. (See, e.g., Corridan v. Rose, Zurich General Acc. & Liability Ins. Co., Intervenor (1955) 137 Cal.App.2d 524, 531; Continental Vinyl Products Corp. V. Mead Corp. (1972) 27 Cal.App.3d 543, 552.)
However, in both cases the insurance company denied liability under the policy, and thus the liability of the insurance company would not be decided by the judgment in the negligence action alone, but rather, on the issue of the policy coverage. (See Corridan, supra, 137 Cal.App.2d at 530.)

In this case, by contrast, State Farm has not denied Defendant Chu coverage under his insurance policy and has agreed to provide a defense for Defendant Chu in the personal injury lawsuit filed by Plaintiff Dang. As a result, State Farm will be liable to Plaintiff Dang for any judgment resulting from this lawsuit under Defendant Chu’s insurance policy. Thus, State Farm has a direct and immediate interest in the action as it will be required to pay the judgment if Plaintiff Dang is successful in this lawsuit.

This case is therefore more analogous to Johnson v. Hayes Cal Builders, Inc. (1963) 60 Cal.2d 572, 575-76, relied on by State Farm. In Johnson, the Court found that the trial court properly allowed the surety on a bond to intervene in a lawsuit where the surety did not deny liability and the bond holder defendant had abandoned defense of the action, distinguishing the holding in Corridan. (See Johnson, supra, 60 Cal.2d at 575.) The Court in Johnson held that intervention was appropriate “to eliminate a multiplicity of actions.” (Id. at 575-76.)

Similarly, in this case, where it is alleged that Defendant Chu is acting in bad faith in accepting fault for the accident in an effort to get State Farm to pay his girlfriend Dang, State Farm has an interest in insuring that the case is fairly litigated and its interests are protected in the lawsuit. While Defendant Chu responds in his Opposition that State Farm wants him to lie under oath, and that he did in fact cause the collision, this is a factual dispute that can be resolved in the lawsuit once State Farm is allowed to intervene. Defendant Chu correctly points out that if State Farm is allowed to intervene this does not mean that it can get Chu to lie under oath, but it would enable State Farm to insure that full discovery of the incident is obtained to determine the true facts of the incident, including discovery of Plaintiff Dang, and that all facts regarding the incident are fairly brought out at trial.

Plaintiff Dang also argues that it would be unfair for State Farm to intervene because this would require the jury to learn of the presence of insurance, which could affect a verdict. However, Dang cannot both argue that it wants to have the jury to learn of the existence of insurance and argue that it would suffer prejudice from this fact. To the extent Plaintiff seeks to exclude discussion of the insurance policy before the jury, this is an issue that can be addressed in an in limine motion before trial. As noted above, the Corridan case relied on by Plaintiff Dang was different in that the insurance company was denying liability, and thus the question of coverage would be placed squarely before the jury.

Further, State Farm’s intervention will not enlarge the issues of litigation. As argued by State Farm, it only wishes to provide an adequate liability defense for Defendant Chu and present arguments of comparative negligence against Plaintiff Dang. State Farm is not expanding the issues outside of the scope of Plaintiff Dang’s Complaint.

Finally, the reasons in favor of State Farm’s intervention outweigh any opposition by the parties presently in the action. The purpose of intervention is to protect the interest of those who may be affected by the judgment, but these interests must be a balanced with the rights of the original party to conduct the lawsuit on their own terms. State Farm has a right to direct Defendant Chu’s defense, as expressly stated in Chu’s insurance policy with State Farm. Similarly, by stipulating to sole liability and a lack of comparative negligence on Dang’s part, Defendant Chu is directly impacting State Farm’s interest and right to control Dang’s defense. If State Farm is not allowed to intervene as a party in this matter, it will hinder State Farm from presenting a substantive defense and fully protecting its own interests. Moreover, State Farm argues that Plaintiff Dang and Defendant Chu are colluding in order to maximize the insurance payout to Dang. State Farm bases this on Dang and Chu’s personal relationship and State Farm’s investigation of the accident.

Plaintiff Dang also argues in her opposition that the motion should be denied because the Complaint–in-Intervention is impermissibly vague as to State Farm’s request to control the defense of the insured. However, State Farm’s Complaint-in-Intervention requests to intervene in order to present evidence of comparative negligence against Dang and contest Chu’s own negligence in the case. State Farm is not required to present a detailed litigation strategy in its complaint. Furthermore, Dang fails to identify any legal basis to support her claim that the complaint is impermissibly vague.

Accordingly, State Farm satisfies the requirements of a permissive intervention and the Plaintiff-in-Intervention State Farm’s Motion for Leave to Intervene is GRANTED.

State Farm is ordered to give notice.

Dated: October 31, 2014

Hon. Gail Ruderman Feuer
Judge of the Superior Court