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Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 

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ORIGINAL

NOTFORPUBLICATION

UM TEDSTATESCOURTOFAPPEALS F IL E D

lklAd1ûzggg

CATHYA GATTERSON

CURK,u.s.èOLRTCFAF?F1Iq

FORTHENTNTHCWCIJIT

JESUSANGUIANO,anindividual,

Plaintif-Appelant,

M LSTATEINSLTRANCECOMPANY,an

llinoiscorporation,

Defendant-Appelee.

No.97-56704

D.C.No.CV-97-01690-WM8

> MORANDUMI

AppealfromtheUnitedStatesDistrictCourt

fortheCentTalDistrictofCalifornia

WiliamMatthewBynze,Jr.,ChiefDistrictJudge,Presiding

ArguedandSubmitedOctober8,1999

Pasadena,California

Before'. B.FLETCX R,D.W.NELSON,andBRUNETTI,CkcuitJudges.

ThirdpartyclaimatltJesusAtlguiano(''Anguiano''),apasengerinjuredina

cardlivenbytheinsmed,LouisRomero(''Romero''),apealsthedistrictcourt's

grantofslmmaryjudoentinfavorofAlstatelnsuranceCompany(''Alstate'').

Thisdispositionisnotappropriateforpublicationandmayn c otbecitedtoorbythe ourtsofthiscircuitexceptasmaybeprovidedby9thCir.R..36-3.

 Case: 97-56704, 03/10/2000, ID: 3864867, DktEntry: 42, Page 1 of 8
AnguianosuedAlstateforbreachofitsdutyofgoodfaithandfairdealingtoits

instredRomerounderanassignmentfromRomerotoAnguiano.Wehave

jtrisdictionunder28U.S.C.j1291.Reviewingthedistrictcourt'sgrantof

slmmaryjudo entdenovo,wereverse.SeeParesiv.CityofPortland,182F.3d

665,667(9thCir.1999).

OnDecember17,1994,Anguianowasinvolvedinanautomobileaccident

whiletravelingasapassengerinacardrivenbyLouisRomero.Anguianowas

renderedaquadriplegicasaresultoftheaccident.Atthetimeoftheaccident,

RomeroandhisparentswereinstredbyAlstate.Thepolicyprovidedliability

coverageof$15,000perpassenger,$30,000peraccident,andanadditional$1,000

inmedicalpaymentscoverage.

Shortlyaftertheaccident,AlstatedeterminedthatLouisRomero,itsinsured,

was100%responsible.AlstatealsodecidedthattheRomeroswerepotentialy

exposedtodamagesinexcessoftheirpolicylimitsduetotheseverephysical

damagesufferedbyAnguiano.Therefore,Alstateinitialymadeafulpolicylimits

ofertoAnguiano'smother,GracielaCampos(''Cnmpos''),shortlyafterdetermining

thattheRomeroswereexposedtoliabilityinexcessoftheirpolicylimits. Cnmpos

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didnotacceptAlstate'sofer,statingthatsheneededadditionaltimetoconsider

heroptions.Alstatefailedtocommunicateanyofthedetailsofthisconversationto

theRomeros.

OnApril21,1995,CamposcontactedAlstate'sadjuster,BarbaraMeza,and

attemptedtoacceptAlstate'sfu1policylimitsofer.Mezaagainreiteratedthat

Alstatewouldbewilingtosetletheclaimfor$16,000,.however,Mezainjected

additionaltennsintotheagreementincludingtherequirementthatthesettlementbe

structuredinordertoaccountforAnguiano'sminoritystatus.'Whileitisclearthat

Camposdidnotacceptthoseadditionalterms,herdepositiontestimony

demonstratesthatshecotmteroferedbyindiçatingherwilingnesstosettletheclaim

for$16,000incash.AlstaterejectedthatofferandfailedtocontacttheRomeros

regardingCampos'settlementofer.

CamposemployedanatorneyandonJtme16,1995,hesentaletter

informingAlstatethatitcouldsettletheclaimfor$16,000butthatthecheckmust

bereceivedwithinfvedays.Mezarespondedtothelettertwodaysafterits

expirationdate.Asaresult,shewasinformedbyAnguiano'sattomeythatthe

acceptancewasnottimelyandthustheywouldnotconslmmateasettlementwith

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Alstate.Alstatealsofailedtoinformthekomerosaboutanyofthedetailsofthis

secondofer.

OnAugust24,1995,AnguianofiledacomplaintagainsttheRomerosin

Californiastatecourt.OnSeptember23,1996,astipulatedjudoentwasentered

againsttheRomerosandinfavorofAnguianointheamotmtof$8milion.The

stipulationassignedalofRomero'sclaimsagainstAlstatetoAnguianoinexchange

foracovenantnottoexecutethejudgmentagainsttheRomeros.

OnFebruary10,1997,AnguiapofiledacomplaintagainstAlstatein

CaliforniastatecourtassertingtheRomeros'badfaithclaimsagainstAlstate. The

actionwassubsequentlyremovedtofederalcourtondiversitygrotmds. On

November7,1997,thedistriotcourtgrantedAlstate'smotionforslmmary

judoent.Thisappealfolowed.

11.

Slzmmaryjudgmentisonlyproperif,uponviewingtheevidenceinthelight

mostfavorabletothepartyopposingthemotion,wefmdthatnogenuineissueof

materialfactexists,andthatthemovingpartyisentitledtojudoentasamaterof

law.SeeNewmanv.AmericapAirlines,l76F.3dl128,1130(9thCir.1999).We

reversethedistrictcourt'sgrantofmlmmaryjudo entbecauseagenuineissueof

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materialfactexistsastowhetherAlstatepropérlyhandledCnmpos'twosettlement

ofers.

Californialawimpliesacovenantofgoodfaithandfairdealinginevery

instlrancecontract.SeePPGIndus..lnc.v.Transamericalns.Co.,975P.2d652,

654(Ca1.1999).Thisdutyextendstoaninsurancecompany'sinsureds,inthiscase

theRomeros.SeeMoradi-shalalv.FiremanFtmdInstlranceCos.,758P.2d58,68

(Ca1.1988)(1nBnk).Anguiano'scauseofactionarisesbecauseRomeroasigned

lzisclaimsagainstAlstatetoAnguiano.Alstate'streatmentofCnmpos,therefore,

isrelevantonlyinsofarasthecompany'sactionstowardsCamposexposedthe

RomerostoliabilityoverandabovethelimitsoftheAlstatepolicy.

California1awrequiresthataninstu'er''takeintoaccounttheinterestofthe

instredandgiveitatleastasmuchconsiderationasitdoestoitsowninterest'''

whenevaluatingsettlementofers.Walbrooklns.Co.v.LibertyMutuallns.Co.,7

Cal.Rptr.2d513,52l(Cal.Ct.App.1992)(quotingComunalev.Traders&

Generallns.Co.,328P.2d198,20l(Cal.1958)(1nBankl).Asaresult,theimplied

covenantofgoodfaithandfairdealingimposesadutyuponinstlrerstogivean

''oferitsinteligentandinformedconsideration',thattheinsureradvisetheinsm'ed

ofanysettlementofers,togetherwiththemsultsofitsilwestigations',andthatthe

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insurergiveequalconsiderationtotheinterestsofitsinstred.''Cainv.StateFnrm

MutualAuto.Ins.Co.,121Cal.Rptr.200,205(Ca1.Ct.App.1975).Abreachof

anyoftheseobligationscoupledwitharefusaltosettlewithinpolicylimitsmay

renderaninsurerliableforanyjudpuentagainstitsinstred,includinganyportionin

excessofthepolicylimits.Seeid.

Theinstrer'sdutytocommtmicateasetlementoffertotheinstredis

particularlyimportantwhenthereisaconflictofinterestbetweentheinsurerandthe

insured.SeeMïlerv.Elitelns.Co.,l61Cal.Rptr.322,331(Cal.Ct.App.1980).

Aconflictofinterestariseswhen''anoffertosettleanexcessclaimismadewithin

policylimitsorwhenasettlementoferismadeinexcessofpolicylimitsandthe

asstrediswilingandabletopaytheexcess.''Merittv.ReserveIns.Co.,l10Cal.

Rptr.511,523-24(Cal.Ct.App.1973).

Inthiscase,aclearconflictofinterestarosebetweenAlstateandthe

RomerosbecauseasAlstatedetermined,thepotentialliabilityoftheRomeroswas

welbeyondthepolioylimitsofthekinstrancepolicybecauseAlstatefoundthem

100%liableforAnguiano'squadriplegicinjuries.UnderCalifornialaw,aconflict

ofinterestaroseatthemomentCamposoferedtosetletheexcesclaim(the$8

nliliohjudpnent)withinpolicylimits,becauseacceptalweofthesetlementcould

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haveeliminatedanyliabilityexpostlretotheRomerosinexcessoftheirpolicy

limits.SeeMiler,161Cal.Rptr.at331-32.lncontrast,theRomeroswere

exposedtornilionsofdolarsofexcessliabilityasaresultofAlstate'srejectionof

Campos'twosettlementoffers.

Construingtheevidenceinalightmostfavorabletothenomuovingparty,

Camposmadetwoseparateofferstosettlewithinpolicylimits.zHowever,Alstate

failedtoinformtheRomerosabouteithersettlementofferoranysettlement

negotiationdetailsuntilAugust24,1995,thedaythatAnguianofledalawsuit

againsttheRomerosinCaliforniastatecotrt.Bythattime,itwastoolateforthe

RomerostoexerciseanyinfluenceoverAlstate'sdecisiontorejeotthesetlement

ofers.SeeMartinv.HartfordAcoidentandIndemnityCo.,39Cal.Rptr.342,346

(Cal.Dist.Ct.App.1964)(''gA)n(sicqinstlredwhoiskeptinformedmayhave

furtherinformationtogivetothecarier',hemayusepowersofpersuasionuponthe

cariertoincreaseitsoffer,'hemayengagecotmsel',hemayhaveothercotlrsesof

actionopento1.,.'').

zNlstatearguesthatCnmpojnevermadeacountero/erduringtheApril21conversation.

ThereforepAlstatecontends,ithadnodutytoforwardCnmpos'counteroFertotheRomeros

beçauseCamposnevermadeanofl-er.However,forpurposesofasummaryjudgmentmotion,

wemustconstruealtheevidenceinalightmostfavorabletotheplaintiK BecauseCampos;

depositiontestimonyindicatesthatshedidmakeanofrer,Alstate'sargumentiswithoutmerit

becausetlisisadisputedgenuineissueofinaterialfactthatshouldberesolvedattrial.

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Alstaterespondsbyarguingthatitdidnothaveanobligationtoinformthe

Romerosaboutdefectiveortmreasonableoffers.AlstatecontendsthatCnmpos'

offersweredefectivebecausetheyfailedtoaccountforaMedi-callienoverany

setlementproceedspaidtoAnguianobyAlstate.ThefactsregardingtheMedi-cal

lienareindispute.WlzileCampos'ofersmayhavebeendefective,suchadefect

doesnotrelievetheinstrerofitsobligationtoforwardalsettlementofferstothe

instlred.AsaresultofAlstate'sfailtretoinformtheRomerosaboutanyofthe

setlementnegotiationsandofers,theRomeroswerenotgiventheopportunityto

eliminatethelienproblemandtheirexcessliabilityexposme.

UnderCalifornialaw,Alstate'sfailuretoinformtheRomerosabout

Cnmpos'settlementofferspresentsagenuineissueofmaterialfact.Accordingly,

wereversethedistrictcourt'sgrantofslmmaryjudgment.

REVERSED.

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