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Filed 3/4/22

Opinion following transfer from Supreme Court

CERTIFIED FOR PARTIAL PUBLICATION*

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

THIRD APPELLATE DISTRICT

(Butte)

----

BARNEY THOMAS WILLIAMS,

Plaintiff and Appellant,

v.

NATIONAL WESTERN LIFE INSURANCE 

COMPANY,

Defendant and Appellant.

C090436

(Super. Ct. No. 17CV03462)

OPINION ON TRANSFER

APPEAL from a judgment of the Superior Court of Butte County, Tamara L. 

Mosbarger, Judge. Affirmed in part and reversed in part.

Majors & Fox, Frank J. Fox; Law Offices of Mary A. Lehman and Mary A. 

Lehman for Plaintiff and Appellant.

Brian P. Brosnahan for Life Insurance Consumer Advocacy Center as Amicus 

Curiae on behalf of Plaintiff and Appellant.

* Pursuant to California Rules of Court, rules 8.1105 and 8.1110, this opinion is 

certified for publication with the exception of parts IIB, IIC and IID.
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Green Bryant & French, Joel R. Bryant; and Peter G. Lomhoff for Consumer 

Federation of California as Amicus Curiae on behalf of Plaintiff and Appellant. 

The Vossler Law Firm and Sil Vossler for California Elder Justice Coalition as 

Amicus Curiae on behalf of Plaintiff and Appellant. 

De Vries Law, Lizabeth N. de Vries and Kelly K. Dixon for Institute on Aging as 

Amicus Curiae on behalf of Plaintiff and Appellant.

Zach Newman and Patrick T. Nakao for Legal Aid Association of California as 

Amicus Curiae on behalf of Plaintiff and Appellant.

Hinshaw & Culbertson, Edward F. Donohue, Peter L. Isola; Davis Wright 

Tremaine and Spencer Persson for Defendant and Appellant.

National Western Life Insurance Company (NWL) appeals from a jury verdict 

holding the company liable for negligence and elder abuse arising from an NWL annuity 

sold to Barney Thomas Williams by Victor Pantaleoni. In 2016, Williams contacted 

Pantaleoni to revise a living trust after the death of Williams’ wife, but Pantaleoni sold 

him a $100,000 NWL annuity. When Williams returned the annuity to NWL during a 

30-day “free look” period, Pantaleoni wrote a letter over Williams’ signature for NWL to 

reissue a new annuity. In 2017, when Williams cancelled the second annuity, NWL 

charged a $14,949.91 surrender penalty. The jury awarded Williams damages against 

NWL, including punitive damages totaling almost $3 million.

In our prior opinion in we reversed the judgment, concluding that Pantaleoni was 

an independent agent who sold annuities for multiple insurance companies and had no 

authority to bind NWL. We determined that Pantaleoni was an agent for Williams, not 

NWL.
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Williams petitioned the California Supreme Court for review,1 which granted 

review and on September 22, 2021, issued an order stating in relevant part: “The matter 

is transferred to the Court of Appeal, Third Appellate District, with directions to vacate 

its decision and reconsider its finding that Pantaleoni did not have an agency relationship 

with National Western Life Insurance Company in light of Insurance Code sections 32,

101, 1662, 1704 and 1704.5 and O’Riordan v. Federal Kemper Life Assurance Company

(2005) 36 Cal.4th 281, 288. (See also Ins. Code, §§ 31 [‘ “Insurance agent” means a 

person authorized, by and on behalf of an insurer, to transact all classes of insurance 

other than life, disability, or health insurance, on behalf of an admitted insurance 

company’ (emphasis added)], 33 [‘ “Insurance broker” means a person who, for 

compensation and on behalf of another person, transacts insurance other than life, 

disability, or health with, but not on behalf of, an insurer’ (emphasis added)].)”2

Section 1704.5, subdivision (a) provides in relevant part that “a licensed life agent 

may present a proposal for insurance to a prospective policyholder on behalf of a life 

insurer for which the life agent is not specifically appointed, and may also transmit an 

application for insurance to that insurer,” and “[i]f a policy of insurance is issued 

pursuant to that application, the insurer is considered to have authorized the agent to act 

on its behalf, and the insurer is responsible for all actions of the agent that relate to the 

application and policy as if the agent had been duly appointed for the insurer.” Section 

101 provides: “Life insurance includes insurance upon the lives of persons or 

appertaining thereto, and the granting, purchasing, or disposing of annuities.” 

1 We deferred ruling on Williams’ request to take judicial notice of letters submitted 

by amici curiae to the California Supreme Court in support of his petition for review, and 

now deny the request as unnecessary to resolution of the appeal. (JRS Products, Inc. v. 

Matsushita Electric Corp. of America (2004) 115 Cal.App.4th 168, 174 & fn. 4.)

2 All undesignated statutory references are to the Insurance Code.
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After the transfer order, Williams submitted a supplemental brief contending that 

under the Supreme Court’s opinion, and the authority cited therein, the judgment should 

be affirmed. However, Williams continues to maintain that the trial court abused its 

discretion by not using plaintiff’s counsel’s home market rate in calculating the attorney 

fee award. NWL in its supplemental brief contends that it cannot be held liable for 

Pantaleoni’s conduct in violation of the rules governing its agents.

We will affirm the judgment finding NWL liable for negligence and financial 

elder abuse. However, punitive damages assessed against NWL are reversed. We find 

no abuse of discretion in the trial court’s calculation of the attorney fee award but remand 

the case for the court to reconsider the award in light of the reversal of punitive damages.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. Pretrial Proceedings

In December 2017, Williams filed a complaint alleging claims for elder financial 

abuse, negligence per se, and breach of fiduciary duty against Pantaleoni.3 Williams

alleged that he contacted American Family Legal Services to update a trust and estate 

plan after the death of his wife. Williams received a call from Pantaleoni to set up an 

appointment in Williams’ home. Pantaleoni identified himself as a paralegal with the 

company.

At the meeting in Williams’ home, Pantaleoni provided Williams with a business 

card stating Pantaleoni was a CSA (Certified Senior Advisor) and “Managing Partner and 

Paralegal” with American Family Legal Services. Pantaleoni obtained Williams’ trust 

documents and a $360 fee to update them. One week later Pantaleoni returned and

3 Williams also alleged that, in 2015, California’s Department of Insurance (DOI) 

filed an action against Pantaleoni for violations of the Insurance Code prohibiting 

misrepresentations to a senior regarding annuities. The action was resolved by an order 

on a stipulation in which Pantaleoni denied the allegations but agreed to a restricted 

license and payment of a $2,500 fine.
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obtained Williams’ signature on blank documents and a blank check, which Pantaleoni 

filled in in the amount of $100,000 and used to purchase an annuity from NWL for 

Williams.

When Pantaleoni delivered the annuity, Williams decided he did not want it and 

returned it to NWL during a 30-day free look period. Two weeks later Pantaleoni 

returned with more blank documents for Williams to sign, including documents that 

retracted the cancellation of the annuity. When the premium was not refunded, Williams 

sought the assistance of a financial advisor who wrote to NWL to cancel the annuity. 

Because the 30-day free look period had passed, NWL refunded the premium but charged 

a surrender penalty.

In February 2018, Pantaleoni answered the complaint.

In May 2018, Williams amended the complaint to add NWL in place of a Doe

defendant.

In July 2018, NWL demurred to the complaint. The trial court sustained the 

demurrer with leave to amend. The court adopted its tentative ruling that (1) the elder 

abuse cause of action had not alleged facts that NWL knew Pantaleoni’s conduct was 

likely to be harmful to Williams, as required by Welfare and Institutions Code section 

15610.310, subdivision (b), and (2) the negligence per se cause of action alleged that a 

series of Insurance Code provisions were violated but no facts regarding how defendants 

violated them, including a statutory provision prohibiting misrepresentations of the terms 

or benefits of a proposed policy where NWL was not alleged to have made 

misrepresentations to Williams. “Further, the exact duty owed by NWL to Plaintiff is 

unclear in the pleadings.”

In August 2018, Williams filed a first amended complaint. The amended 

complaint alleged, inter alia, that: (1) NWL knew of the DOI action against Pantaleoni 

and his restricted license because these were matters of public record; (2) NWL knew that 

Pantaleoni had filed bankruptcy three times in the last six years and was still in 
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bankruptcy at the time of the transactions at issue; (3) NWL knew or should have known 

that Pantaleoni did not have errors and omissions insurance coverage, contrary to NWL 

policy; (4) NWL knew or should have known that Pantaleoni operated “ ‘living trust 

mills’ ”4 to gain access to seniors and sell annuity products, which NWL knew was 

unlawful, and that Pantaleoni was selling insurance products using a company named 

Sierra Legal Services; (5) NWL knew that Pantaleoni would earn a $9,500 commission 

from the sale of an annuity based on a 13-year surrender period, which was inappropriate 

for someone Williams’ age; and (6) Williams’ April 5, 2017 letter instructing NWL to 

cancel the annuity complained about Pantaleoni’s misconduct, but NWL did not 

investigate or terminate Pantaleoni and charged a surrender penalty of $14,949.91.

In addition, Williams alleged that in April 2016 he sent a mispunctuated, 

misspelled handwritten note to NWL to return the first annuity, but the handwriting of the 

letter Pantaleoni forged to complete the application for the second annuity contrasted 

starkly with the first note, which Williams asserted “was a HUGE red flag of Mr. 

Pantaleoni’s financial abuse of Plaintiff.”

In September 2018, NWL demurred to the amended complaint. The trial court 

overruled the demurrer, stating that (1) as to the elder abuse cause of action, the amended 

complaint alleged the likelihood of harm to Williams in that (a) his life expectancy was 

less than the surrender term of the annuity, or (b) NWL possibly had notice of problems 

with the annuity because it received two notes in different handwriting purportedly from 

Williams, and (2) as to the negligence per se cause of action, the court took judicial 

4 A “ ‘living trust mill’ ” involves “salespeople, posing as experts in estate planning, 

engage[ing] in the unlawful practice of law, advis[ing] senior citizens to establish a living 

trust, and to invest in . . . annuities.” (People ex rel. Lockyer v. Fremont General Corp. 

(2001) 89 Cal.App.4th 1260, 1263.)
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notice of the DOI’s opinion that there was a private right of action under section 7855 and 

found that Williams presented “at least one theory” that NWL knew that Pantaleoni was 

wrongly using a legal services company to sell insurance products.

In November 2018, NWL answered the first amended complaint.

In February 2019, the trial court granted Williams’ unopposed motion for leave to 

file a second amended complaint, which substituted a fraud claim for the breach of 

fiduciary claim against Pantaleoni.

B. The Trial

1. Plaintiff’s Case

a. Barney Williams

Williams testified that his wife of 46 years, Barbara, passed away in 2015. 

Barbara was an ex-bookkeeper who took care of paying the bills. The couple saved on 

average $3,000 per year.

In February 2016, Williams called the office that had prepared a trust for him,

seeking someone to make changes to the trust because of his wife’s death. Pantaleoni 

came to Williams’ house. Williams said he wanted to remove his stepdaughter, Merrily 

Lee, from the trust and give her $25,000 of the trust benefits, with the remainder going to 

a homeless shelter, the Jesus Center. Williams gave Pantaleoni a check for $360 paid to 

American Family Legal Services for changes to the trust. Williams signed the check and 

Pantaleoni filled in the rest, including the words “TRUST UPDATE” on the memo line.

Pantaleoni asked Williams questions about his finances. Williams said that he had 

approximately $80,000 invested with a broker and $114,000 in the bank, $8,000 in 

5 Section 785, subdivision (a) provides: “All insurers, brokers, agents, and others 

engaged in the transaction of insurance owe a prospective insured who is 65 years of age 

or older, a duty of honesty, good faith, and fair dealing. This duty is in addition to any 

other duty, whether express or implied, that may exist.”
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checking and $106,000 in savings. Williams showed Pantaleoni the brokerage and bank 

statements. Pantaleoni worked on the trust papers and confirmed for Williams that the 

changes he requested had been made. Williams let Pantaleoni take the trust documents

with him when he left.

A week later Pantaleoni came back for another meeting. At Pantaleoni’s 

suggestion, Williams signed a paper to transfer $100,000 from his savings to his checking

account and the two of them went to the bank to complete the transfer. Back at Williams’

house, Pantaleoni asked for a check. Williams signed a blank check that Pantaleoni filled 

in. Williams knew the check was to be in the amount of $100,000. Williams did not 

know what the check was to be used for. Pantaleoni assured Williams his money was 

safe. Pantaleoni took the check with him and some other blank documents that Williams 

signed. Williams thought the documents had something to do with the trust. Pantaleoni 

did not give Williams copies.

The documents Williams signed included an NWL annuity application, a 

withdrawal benefit rider and a suitability questionnaire. The suitability questionnaire 

stated that Williams’ annual income was $24,000. Williams did not tell Pantaleoni his 

annual income was $24,000; his actual income was approximately $16,000 per year. A 

box checked on the questionnaire indicated that Williams’ approximate net worth after 

purchase of the annuity ranged from $50,000 to $99,999, but a blank for his liquid net 

worth after purchase was filled in with the amount of $120,000. Williams signed and 

initialed but did not fill out these documents. Williams did not understand what he was 

signing; he thought it had something to do with the trust. Pantaleoni never told or 

notified Williams that Pantaleoni was an insurance agent or selling insurance products.

Williams received a bank statement in the middle of the following week. From 

the statement, Williams learned for the first time that the $100,000 check was made out

to an insurance company.
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Pantaleoni came back to deliver the annuity and Williams signed a delivery 

receipt. Williams read on the first page of the policy that he could return the annuity

within 30 days. Williams wanted to send the annuity back because there was a 15

percent surrender penalty if the money was withdrawn within the first year, and a bit less 

each year thereafter for seven years. Williams did not think that in his medical condition 

he would survive for the surrender period. Williams sent the policy back with a 

handwritten note that he had received the policy and wanted to return it. The note stated: 

“I-WITH-LIKE-TO-RETURN-IT.” (Sic.)

A few days later Williams heard from Pantaleoni, inquiring about the cancelled 

annuity. Pantaleoni said he had papers for Williams to sign regarding his stepdaughter. 

Williams suggested Pantaleoni send the papers and he would sign them and send them 

back. Pantaleoni insisted on visiting Williams. Williams told Pantaleoni he would have 

to show Williams where to sign because he was sick and “blurry eyed.” When Pantaleoni 

came to the house, Williams signed another annuity application. Williams also signed 

two letters both stating in handwritten printing that “I HAVE DECIDED TO KEEP MY 

ANNUITY CONTRACT . . . AND NOT CANCEL IT,” and requesting that the annuity 

be reissued. Besides Williams’ signature, none of the handwritten printing on the page 

was his. When he signed, it was a blank sheet of paper. Williams told Pantaleoni he did 

not like signing blank papers. Williams thought he was signing papers regarding his 

stepdaughter. Pantaleoni never delivered a reissued annuity.

Williams waited two months for the return of his money but it did not show up. 

Williams called NWL’s office and was told the value of the annuity was now $88,000,

two months after Williams paid $100,000 for it. Williams decided not to cancel the 

annuity so that the amount of interest would increase and could be applied to the 15 

percent surrender penalty. With the help of a neighbor who had a computer, Williams 

checked online to see if the interest had increased.
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Williams sought help to try to get his money back from NWL. He paid $500 to 

Mark Starr of the investment firm Edward Jones for that purpose. In March 2017, 

Williams signed a surrender request to NWL directing that the refund check be mailed to 

Edward Jones.

On April 5, 2017, Starr typed a letter to NWL signed by Williams, which stated: 

“I am requesting an immediate processing of the surrender request for my annuity . . . . A 

copy of the surrender request is included with this fax. [¶] Not only was the policy 

purchased without explanation of what the investment was, but the agent, Victor 

Pantaleoni, refused to process the policy cancelation during my 30 day free look period. 

[¶] Since the day I decided to surrender the policy, Mr. Pantaleoni has continually 

harassed me by phone and in person to keep me from cancelling the policy. His focus is 

not on what is best for me, but only how his commission will be affected. [¶] My next 

step will be to file a complaint with the California Department of Insurance unless this 

request is processed quickly.”

In May 2017, NWL sent a check to Edward Jones for the benefit of Williams in 

the amount of $88,056.64.

On August 28, 2017, Williams and Prescott Cole, an attorney with California 

Advocates for Nursing Home Reform, wrote to NWL requesting all Williams’ annuity 

policies and related documents, as well as a final balance statement showing surrender 

charges.

In early September 2017, Juanita Ziebell at NWL responded to the letter from 

Williams and Cole. Ziebell summarized the events regarding the initial application for 

the annuity in February 2016, Williams’ request for a refund under the free look 

provision, and the subsequent letter Williams signed stating that he wanted the policy 

reissued. Ziebell stated: “At the time of your application, your agent, Victor Pantaleoni, 

provided you with a copy of the Consumer Information and Disclosure Brochure. The 

brochure provides an overview of the policy’s features, benefits, and limitations. This 
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includes free withdrawal options and withdrawal charge rates. The disclosure also states 

that this annuity is a deferred annuity and a long term investment. I am enclosing a copy 

of the signature page which you signed which states, in part, ‘I have received a copy of 

this disclosure and I have reviewed it with my agent. I fully understand the disclosure 

and specific points outlined above.’ ” The letter concluded with an explanation of the 

surrender charges, noting that in the second policy year the charge was 14.75 percent and, 

as of the first anniversary of the policy, Williams had earned $3,300 at a fixed interest 

rate of 3.30 percent.

On cross-examination by counsel for NWL, Williams confirmed that, when he 

went to Starr at Edward Jones, Williams did not ask for advice on how to get a $100,000 

refund, because 30 days had passed and Williams knew the refund would be about 

$88,000, due to the surrender penalty. Williams confirmed in deposition testimony read 

to the jury that he received the September 2017 letter from Ziebell and read it, but

accidentally burned it with his wife’s papers.

b. Dr. Stacey Wood

Dr. Stacey Wood, an expert on the susceptibility of elders to undue influence, 

testified that Williams was significantly susceptible to undue influence by Pantaleoni. 

On cross-examination by NWL, Dr. Wood confirmed that she was not testifying that 

undue influence actually occurred.

c. Victor Pantaleoni

Pantaleoni’s business card for his company American Family Legal Services 

identified him as a “CSA” and “Managing Partner/Paralegal” with the company and 

included insurance license numbers for California, Arizona and Nevada.
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In 2005, 2009 and 2013, NWL appointed Pantaleoni as an agent in Arizona, 

California and Nevada.6 Pantaleoni’s 2009 and 2013 contracts with NWL stated: “We 

appoint you to personally procure applications for insurance for us, deliver policies 

issued by us and provide policyholder services as requested, all subject to our Rate Book 

and our Rules and Regulations. You are an independent contractor, and this agreement 

does not establish an employer-employee relationship.” The contracts further read: 

“You agree to abide by our Rules and Regulations and the laws and regulations where we 

are licensed to sell insurance.”

Pantaleoni testified that NWL had a right to terminate him if he violated any laws 

or regulations. NWL never terminated him.

Pantaleoni received compliance bulletins from NWL. As advised by a bulletin on 

estate planning services, Pantaleoni understood he (1) could not give legal advice if he 

did not have a law license, (2) should avoid using the sale of a living trust as a pretext to 

sell insurance or an annuity, (3) had to identify himself as an insurance agent in 

advertising and when meeting with a customer, and (4) should avoid using professional 

designations that imply a level of authority or expertise that he did not possess. 

Pantaleoni admitted that (1) he had a certification as a CSA but lost it, (2) CSA was not a 

designation approved by DOI, and (3) he was “negligent” in keeping “CSA” on his 

business card. Pantaleoni understood, as advised by an NWL bulletin, that he should not 

use business names that misled customers. Pantaleoni testified that he understood that it 

was unlawful to use pretext interviews to sell annuities, but said he did not know that it is 

unlawful to use a trust mill to sell an annuity, nor did he understand what constituted a 

trust mill.

6 In 2007, Pantaleoni’s contract was terminated for lack of production.
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Pantaleoni testified that he had sold 13 annuities in the 13 years he had been 

appointed by NWL. He was familiar with NWL’s policy that for each annuity he 

delivered he was required to obtain a delivery receipt from the customer confirming that 

the policy was received.

Pantaleoni understood that in California the word “insurance” was required to 

appear on his business card. He agreed he sold insurance, an annuity, to Williams, and

admitted he “should have had a different card.”

Pantaleoni testified to his understanding that California has special Insurance Code 

provisions to protect people over 65. The law requires that anyone who meets with a 

senior in the home must deliver a notice in writing 24 hours prior to the meeting. He 

understood he was required to keep a copy of the notice, but he did not have one for 

Williams in his file. Pantaleoni testified he had asked NWL and the third party broker he 

was affiliated with for the notice to Williams but neither had a copy. Pantaleoni 

understood that a person meeting with a senior must provide a business card with 

identifying information and an insurance license number. He did not provide that card to 

Williams because he did not meet with him to sell insurance. Pantaleoni understood that 

he could not sell a life insurance policy or annuity using a scheme that misrepresented the 

true status of his contact with a senior.

In 2016, Pantaleoni was the president of American Family Legal Services. In 

2013, Pantaleoni surrendered his right for American Family Legal Services to transact 

intrastate business in California and reactivated it in 2018.

Pantaleoni’s contracts with NWL provided that all records and documents 

associated with NWL transactions were the company’s property and open to inspection. 

Pantaleoni could not recall, since 2016, NWL inspecting his business card, or telling him

to put the word “Insurance” on it, remove “CSA,” or move the word “Paralegal” away 

from his insurance license numbers.
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In 2013, Pantaleoni provided a certificate of errors and omissions insurance to 

NWL. Pantaleoni did not carry errors and omissions insurance when he met with 

Williams in 2016 and admitted he was negligent in not doing so. Pantaleoni also 

admitted that he was the subject of an enforcement action by DOI in 2015.

In February 2013, Pantaleoni filled out and signed an NWL agent data sheet 

identifying “Sierra Attorney Services Inc.” as agent and Pantaleoni as its principal. The

2013 contract Pantaleoni signed between NWL and Sierra Attorney Services Inc., 

identified Pantaleoni as general agent, and included his personal guarantee of Sierra 

Attorney Services Inc.’s obligations to NWL. In May 2013, NWL notified Pantaleoni 

that his requested name change from “Sierra Attorney Services” to “Victor Scott 

Pantaleoni” was executed and in effect. In June 2013, Pantaleoni signed an assignment 

of all compensation received under his contract with NWL to Sierra Attorney Services 

Inc.

In August 2013, Pantaleoni filed for bankruptcy. Pantaleoni was in bankruptcy

proceedings when he dealt with Williams in 2016. The bankruptcy terminated in April 

2016.

In February 2016, Pantaleoni received a $9,500 commission from NWL for selling 

an annuity to Williams.

Pantaleoni received a notice from NWL dated April 7, 2016, stating that Williams 

had returned the annuity delivered in March 2016. The notice read: “This request will be 

held for 5 calendar days from today. If the policy is conserved you must fax written 

notification from the policy owner to Client Services. This will be confirmed by letter. 

[¶] Comments: Please confirm if you are able to conserve. Return contract if you are 

unable to conserve. Thanks.”

Pantaleoni contacted NWL. He was told (1) in order to conserve the annuity, to 

go to see Williams and talk about the benefits of the annuity, and (2) what paperwork 
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NWL would need to conserve the annuity. The term “conserve” is an insurance term for 

speaking with a client to see if the client would like to keep a policy.

Pantaleoni called Williams to set up an appointment to talk with him about the 

reasons why he wanted to return the annuity. Williams did not tell Pantaleoni he was 

sick and would rather that Pantaleoni put the documents in the mail. On April 9, 2016, 

Pantaleoni visited Williams in his home and gave him the second annuity application to 

sign. Pantaleoni confirmed that he wrote the handwritten printed letter Williams signed

stating his intention to keep the annuity. Pantaleoni denied the letter was blank when 

Williams signed it.

Five days later, NWL issued a new annuity with the same policy number. 

Pantaleoni delivered the second annuity. Pantaleoni testified that Williams signed a 

delivery receipt for the second annuity. Pantaleoni denied that he did not deliver the 

second annuity so Williams would not have a chance to return it.

On cross-examination by NWL, Pantaleoni testified that he had life insurance 

agent appointments from multiple insurance carriers. No insurance company had ever 

asked to review his business card. Every insurance company reviewed the form of 

Pantaleoni’s 24-hour notice letter but no company ever asked to review the 24-hour 

notice from a specific sale.

Pantaleoni formed Sierra Attorney Services in Nevada to provide paralegal 

services to attorneys. The name was approved by the Nevada Department of Insurance. 

Pantaleoni only sold insurance products in California under his own name. The DOI in 

California required him to use his own name.

Williams wanted an annuity because his stepdaughter was abusing him and he 

wanted to keep money away from her. Pantaleoni made a recommendation on a solution 

for Williams to keep the money in his estate and give it to a different beneficiary, because 

this could not be done in the trust. Williams’ trust had a clause that the beneficiary could 
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not be changed by one trustor after the death of the other trustor. A beneficiary 

assignment in an annuity would trump the trust.

Regarding the second annuity application, Pantaleoni testified he called Williams 

to set up an appointment and Williams agreed. At the appointment, Williams was not 

sick and did not take off his glasses because his eyes were tearing. They went over why 

the original application for the annuity was done.

Williams said he cancelled the first annuity because he did not understand it. 

Pantaleoni talked about why Williams had his assets in a living trust and that a bank 

account not in the trust would go to probate. They talked about the benefits of the 

annuity. They talked about the surrender charge and Williams did not say he did not like 

the surrender provision. Williams asked why he was signing an application again. 

Pantaleoni explained that NWL required it because there was a change to the income 

benefit rider to give Williams a better payout in the future.

Pantaleoni handwrote the letter from Williams instructing NWL to reissue the 

policy because he does this on the spot in front of the client instead of preparing it 

beforehand. Something might change at the meeting; the client might have some 

peculiarity or idiosyncrasy regarding the letter of instruction.

On redirect, Pantaleoni confirmed that his 2013 agent application gave NWL the 

right to conduct a background check on him. The bankruptcies Pantaleoni filed were a 

matter of public record, which NWL could have discovered if they conducted a 

background check in 2013.

d. Merrily Lee

Merrily Lee, Williams’ stepdaughter, testified that she had never physically or 

financially abused Williams. In August 2015, Lee returned home when she learned her 

mother was near death. Lee and Williams took care of administering pain medication to 

Barbara in the last two weeks of her life. After her mother died, Lee stayed on for 

another week helping Williams with finding marriage, birth and death certificates and 
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sending death certificates to the appropriate people. To express his appreciation, 

Williams gave Lee a substantial check.

e. Ayanna Burns

Ayanna Burns, vice-president of marketing operations at NWL, previously was the

manager of the suitability department.

Burns admitted that NWL had not inspected Pantaleoni’s records, before or after 

the April 5, 2017 letter from Williams.

The April 5, 2017 letter came to NWL with a fax cover sheet addressed to the 

attention of the compliance department. The compliance department has procedures for 

investigating California complaints. NWL did not investigate the April 5, 2017 letter at 

the time.

Burns admitted that the August 28, 2017 letter was a complaint letter. Ziebell

reviewed the file in responding to the August 28, 2017 letter. The April 5, 2017 letter 

was in the file. Ziebell would have seen in the file that there had been no investigation of 

the April 5, 2017 letter.

There was no delivery receipt for the second annuity in NWL’s file. NWL 

believed the policy had been delivered. There was other activity in the file that made it 

clear Williams was aware of the second annuity. NWL procedure required an e-mail 

reminding the agent that a signed delivery receipt was needed. There was no such e-mail 

in the file. Once a policy is issued, there is an automated process for generating a 

delivery receipt. The second annuity was issued with the same policy number as the first 

policy, so the automated process for delivery receipt reminders did not occur. If an agent 

did not provide the signed delivery receipt, a second reminder stated that NWL can 

charge back the commission. Pantaleoni’s commission was never charged back.

Prior to NWL issuing the first annuity to Williams in 2016, NWL was aware from 

the DOI’s website that there was an enforcement action against Pantaleoni and an order 

restricting his license. There was nothing in NWL’s file indicating the company had 
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determined what the enforcement action against Pantaleoni in 2015 involved. His license 

was still active but restricted. NWL looked into whether Pantaleoni was still eligible to

write business with a restricted license.

NWL knew from the first annuity application that Williams was 78 years old. On 

the suitability questionnaire, a box was checked that Williams’ approximate net worth 

after purchase of the annuity ranged from $50,000 to $99,000 but also stated that he had a 

liquid net worth of $120,000 after purchase. Burns agreed that this was a mistake. The 

file did not indicate that NWL called Williams to find out what his net worth was. There 

was no reason to question his liquid net worth. The discrepancy was not that big. 

Williams could still be deemed suitable despite this anomaly, based on his other answers 

on the questionnaire.

Williams’ suitability questionnaire stated that his annual income was $24,000. 

NWL’s suitability guidelines state that, if the client’s annual income is below $25,000, 

low income would be a concern if the client does not have adequate liquid assets and 

emergency savings.

An NWL document setting forth frequently asked questions in a suitability review 

stated that a person at or nearing age 65 should have liquidity of at least one-and-a-half to

two years of expenses liquid in the event of an emergency and an annuity for a person 

over 65 should make up no more that 60 percent of the client’s liquid net worth. 

Williams had $114,000 of liquidity, so 60 percent of that amount was the largest annuity 

he should have been sold.

NWL sends a form letter to a client who has decided not to cancel a policy to let 

the client know the original policy is being conserved. NWL did not send this letter to 

Williams because a new and different policy was issued that made changes to the original 

policy.

The fax cover sheet from Starr on April 5, 2017, stated that the letter of instruction 

and annuity surrender request were provided “to be reviewed by your Compliance 
19

department.” NWL’s California complaint handling procedures required the company to 

(1) consider all relevant facts in resolving complaints, (2) attempt to resolve oral 

complaints over the phone and advise clients to make the complaint in writing when it 

cannot be resolved over the phone, (3) contact the client by phone, e-mail or regular mail 

to request clarification of any portion of a complaint that is not clearly understood, (4) 

make notes of communications with the client and agent in the course of the 

investigation, (5) maintain these records for the time required by statute, and (6) conduct 

a thorough investigation of the complaint and where an agent denies misconduct take into 

account whether the agent provided a substantive and believable explanation. NWL did 

not conduct an investigation in compliance with these procedures. NWL did not treat the 

April 5, 2017 fax as a complaint.

On cross-examination by NWL, Burns testified that items in the file showed 

Williams was aware that he had the second annuity policy, including several letters from 

NWL to Williams, the surrender request, his receipt of a personal identification number

(PIN) to access the NWL Web site for information about the policy, and that Williams 

had accessed the policy online.

NWL did not send the letter conserving the policy because the letter only goes out 

for policies that can be conserved. Williams did not conserve the policy. When NWL 

received Williams’ request during the 30-day free look period, NWL cancelled the first 

annuity and it was null and void. NWL required a new application and letter of 

instruction signed by Williams to issue a new policy. The letter of instruction was to 

make sure he understood why his money was not being returned after he cancelled the

first policy.

Burns reviewed the suitability application with a box checked that Williams’ net 

worth after purchase of the annuity ranged from $50,000 to $99,000. NWL measured

liquidity as at least one-and-a-half to two years of expenses. $99,000 would be almost 

five times Williams’ expenses. The 60 percent rule was not a strict rule. Another factor 
20

that affected the suitability analysis was that the annuity had a withdrawal benefit rider 

giving Williams an annual income of $7,000 for the rest of his life, which would increase 

his annual income. Sources of income listed on the suitability questionnaire were 10 

percent investments, 80 percent pension, and 10 percent social security—all of which 

were guaranteed sources of income. It was not uncommon for 78 year olds to have the 

majority of their income from pension and social security.

On redirect, Burns testified NWL did not require agents in California to submit 

their business cards for approval. NWL knew that in California an insurance agent has to 

give a business card to a senior. When Burns reviewed Pantaleoni’s file, there was no 

business card in the file. Burns saw documents in his file referring to Sierra Attorney 

Services. NWL did not determine what business Sierra Attorney Services was in. NWL 

did a background check on Pantaleoni when he received his first contract. Burns did not 

know the exact date of that background check. The background check would have 

included whether Pantaleoni was in bankruptcy.

Burns saw documents in Pantaleoni’s agent file indicating he was affiliated with 

American Family Legal Services. NWL did not determine the nature of that company’s 

business because there was no reason to. There was no document indicating that 

Pantaleoni worked for American Family Legal Services or that the company had anything 

to do with the insurance business.

In 2016, NWL did not require agents to have errors and omissions insurance. It is 

industry practice now but was not in 2016.

NWL did not terminate Pantaleoni or charge back his commission. NWL has not 

refunded the surrender penalty charged to Williams.

f. Dr. Aazaz Ul Haq

Dr. Aazaz Ul Haq, an expert witness in forensic geropsychiatry, testified that 

Williams suffered severe psychological distress as result of his interactions with 

Pantaleoni and had symptoms of posttraumatic stress disorder.
21

On cross-examination by NWL, Dr. Haq admitted that his written report did not 

mention posttraumatic stress disorder. Dr. Haq agreed that a medical record from 

Williams’ physician at the time of Williams’ interaction with Pantaleoni stated under 

“ ‘Psychology,’ ” “ ‘No depression, no eating disorder, no mental or physical abuse, no 

anxiety, no stress.’ ” Dr. Haq testified that this medical record was not an accurate 

indication of Williams’ mental state and reflected the poor quality of medical records 

prepared for medical insurance purposes.

g. Reynaldo Perez, Jr.

Excerpts of the deposition of Reynaldo Perez, Jr., NWL’s chief legal officer, were 

read to the jury. Perez testified that NWL did not require agents to submit their business 

cards for review and approval.

Perez confirmed that Ziebell was involved in handling policy holder complaints in 

2016 and 2017. The April 5, 2017 letter sounded as if it was a complaint about the 

agent’s conduct. If the complaint handling department or whoever received the April 5, 

2017 letter thought it was a complaint, they should have followed the requirements of 

NWL’s complaint handling procedures.

Perez stated that NWL did not contract with legal service companies. All NWL 

contracts were with independent insurance agents, not with legal service providers. NWL 

had compliance bulletins advising agents to avoid arrangements with legal service 

providers. NWL did not have a policy or procedure (1) that applied when the company 

learns that a legal service company is a trust mill, or (2) that screened legal service 

companies to make sure they are not trust mills. NWL did not take steps to make sure 

that the company is not doing business with agents selling annuities with trust mills other 

than to communicate the prohibition to agents.

If an agent violated a compliance bulletin or engaged in unlawful conduct, NWL 

had the right to terminate the agent. NWL did not terminate Pantaleoni.
22

h. Neal Bordenave

Neal Bordenave, an expert witness on the standard of care in life insurance 

transactions with elders in California, testified that NWL had guidelines and requirements 

in compliance bulletins but did not enforce them and had no checks and balances to make 

sure annuities were being transacted correctly. All insurance companies send out 

bulletins and expect agents to review them, but marketing or compliance people at 

insurance companies need to confirm that agents are in compliance with bulletins.

The document Williams wrote returning the first annuity was from someone with 

marginal literacy, which should have voided the annuity, but NWL asked Pantaleoni to 

conserve the annuity and a week later NWL issued another $100,000 annuity with the 

same policy number. The suitability questionnaire did not reconcile, which should have 

been a red flag for NWL to investigate further. The annuity of $100,000 was 85 to 

almost 90 percent of Williams’ liquid assets, which did not meet a reasonable suitability 

standard. The April 5, 2017 letter from Starr was effectively a complaint about 

Pantaleoni indicating a need to investigate the incompleteness of the file and NWL 

should have immediately offered to pay Williams’ money back.

Bordenave disagreed with NWL’s expert, Larry Nevonen, that Pantaleoni was a 

broker, stating that in California to transact life insurance or annuities Pantaleoni had to 

be an agent of NWL.7

On cross-examination by NWL, Bordenave confirmed that he was testifying that 

NWL’s overall supervision of Pantaleoni was insufficient. Bordenave stated that 

7 Bordenave also testified that Pantaleoni breached the standard of care: (1) he 

offered to do trust work as a way to sell insurance in violation of the Insurance Code; (2) 

he had Williams sign a blank check; (3) Williams apparently did not know he was buying 

an annuity; (4) Pantaleoni was illegally charging fees for trust work and getting a 

commission on an insurance transaction at the same time; (5) Pantaleoni may not have 

delivered the second annuity to Williams; and (6) Pantaleoni did not provide the required 

24-hour notice acknowledged by the customer for sales to a person over 65.
23

insurance companies have a responsibility to monitor their agents to make sure they are 

doing the right thing. Failing to monitor agents falls below reasonable custom and 

practice in the insurance industry. Insurance companies need to monitor agents because 

they are the company’s agents.

Bordenave agreed that there was nothing in NWL’s file to put the company on 

notice that Williams was complaining that he wanted a trust but got an annuity.

2. NWL’s Case

a. Larry Nevonen

Nevonen, an insurance industry expert, testified that the name Sierra Attorney

Services in the agent’s file did not give rise to duty to inquire what the name meant. The 

name was authorized by the Nevada Department of Insurance. Sierra Attorney Services 

received an assignment of commissions but never transacted insurance in California 

under that name. A legal name in Nevada would not be a red flag for illegal activity in 

another state.

The card Pantaleoni gave Williams improperly mixed insurance business with 

living trust and paralegal services business. The card should not have had a CSA 

designation that was expired and not recognized in California. Nothing on the card 

referred to NWL that would trigger review by NWL.

NWL’s compliance manuals were consistent with industry practice. Pantaleoni’s 

conduct did not constitute a trust mill because it was not a repetitive practice. “The 

classic trust mill situation is senior seminars for trust services and everybody walks out 

with an annuity.” Pantaleoni met with Williams not to sell an annuity but on learning his 

situation thought he might benefit from an annuity.

Nevonen was not surprised that the NWL annuity had a 13-year surrender period. 

Actuaries require higher surrender charges in the early years of an annuity because of the 

financial risk to the insurance company that comes from early surrenders.
24

In doing a suitability review, NWL did not see Pantaleoni’s bad acts. NWL 

assumed the suitability questionnaire was accurate. The contractual responsibility of the 

agent was to ask questions of the applicant and accurately record the answers in the 

application. For a senior, the particular focus is on liquid assets available after purchase 

of the annuity, so that if there is a change in the annuitant’s expenses the annuity does not 

have to be surrendered. The application answered this question by stating Williams had 

$120,000 in liquid assets. There were inconsistences in the questionnaire but it did not 

have to be entirely consistent. The questionnaire need only show a reasonable basis to 

determine there to be enough liquidity to avoid early surrender from a change of 

circumstances.

In forming his suitability opinion, Nevonen considered the product sold. NWL’s 

guaranteed benefit withdrawal rider had a good reputation in the industry for being liberal 

and favorable to buyers, which made it a good choice for people who want to improve 

their income and still have surrender value. The second NWL annuity sold to Williams 

had a guaranteed withdrawal benefit rider that would generate $7,200 annual income and 

also allowed him to withdraw 50 percent in 10 percent increments over time. This was a 

more liberal benefit than the first annuity.

Nevonen disagreed with Bordenave’s opinion that NWL was required to supply 

and obtain a copy of the 24-hour notice. The notice was the agent’s responsibility. The 

agent does the meeting and is required to keep a copy of the notice for seven years, even 

where no sale results. The custom and practice was for insurance companies to make 

agents aware of the requirement.

There is no requirement that an insurance company’s name be on an agent’s card 

presented to a senior. An agent might be offering several companies’ products.

The letter cancelling the first annuity voided the policy. It is fairly common for 

people to change their minds about a policy. The change from the first annuity to the 

second annuity made objective sense since the withdrawal benefit rider increased the 
25

payout. The $100,000 should have been sent back promptly unless there was a written 

direction from the buyer that he wanted a different policy. The notice to Pantaleoni that 

he had five days to conserve the business was not just to conserve the business but was 

also a heads up to check in with the client. Often a different agent will offer a customer 

an annuity during the 30-day free look period, describing it as a better deal. The first 

agent will not know what has happened, and the insurance company only will know the 

annuity was surrendered.

Nevonen disagreed with negative comments about the handwritten letter 

instructing NWL to keep the policy. Agents meeting with people do not have computers. 

A handwritten note is more likely to be performed with the knowledge and consent of the 

applicant than a typed letter. The fact that the note was handwritten was a positive 

indication that it represented Williams’ actual decision.

The April 5, 2017 letter from Starr was a mixed and unclear request for service to 

process surrender of the policy combined with complaint language. Nevonen was not 

surprised the letter went to the service department instead of the compliance department 

because the letter opened and closed with a request for service. Williams did not put 

NWL on notice of a problem that needed to be addressed. Williams did not complain at 

the time about Pantaleoni’s selling practices because he liked the interest in the annuity. 

Starr handled the surrender properly but mishandled the complaint.

The Ziebell letter was responsive to the demand letter from Cole based on her 

reading of the file. There was no documentation that Williams was demanding an 

investigation of Pantaleoni or return of surrender charges.

b. Juanita Ziebell

Beginning in March 2015, Ziebell was in the compliance department at NWL.

The August 28, 2017 letter from Cole and Williams was a request for copies of 

documents. Ziebell had received a request for documents but did not have a specific 

complaint, so she was generally looking at the file. Since the April 5, 2017 letter was
26

also in the file, in Ziebell’s opinion the August 28, 2017 letter was a complaint. Ziebell 

testified that it sometimes happens that an initial expression of dissatisfaction is followed 

by a letter from an attorney.

In handling the complaint in 2017, Ziebell reviewed the initial annuity application. 

All of the documents in the file appeared to be properly signed. The signature was 

distinctive. The check was in the file. It did not look suspicious or forged. It did not 

occur to Ziebell that the check might be filled out after it was signed. Ziebell went by the 

signature on the first application and from that point was looking for consistencies or 

inconsistencies in signatures.

The April 5, 2017 letter in the file contained complaint language. Ziebell did not 

form the impression from the letter that the policy holder did not know they owned the 

policy at the time the letter was written. The letter requested surrender of the annuity and 

NWL did that for Williams. Ziebell did not believe the agent had successfully interfered 

with the initial cancellation because Williams cancelled the policy himself. Both the 

initial cancellation and surrender of the second policy were effectuated successfully. 

Ziebell believed Williams had requested the second policy and wanted to surrender it 

because the policy had been in force for a year.

Ziebell provided some narrative in her letter response because, when an annuity 

has been surrendered, it was her standard practice to point out the benefits of the annuity. 

Ziebell sent the requested documents by Federal Express.

Ziebell testified that mostly NWL receives a letter stating a specific complaint. 

Ziebell responded to the August 28, 2017 letter with some narrative instead of just 

sending the requested documents, because NWL tries to explain the benefits of the 

annuity to the client, which sometimes helps the client to reply. NWL sets the matter for 

a follow-up in the system if there is a reply to get more information. The system has a 

30-day review set up automatically. Ziebell will look at the file to see if there is a 
27

response from the client and then NWL gives it another 30 days. That would have 

happened twice after Ziebell wrote her letter.

This file was unusual because most of the time she would get a reply with more 

details about the grievance. Ziebell was hoping for a reply explaining the nature of the 

grievance. Ziebell’s letter gave a telephone number to contact Ziebell or the NWL client 

services department with any further questions. More often than not the client will call 

the number. Ziebell was not trying to resolve the entire complaint process with her letter,

but rather to make a record of what she saw in the file so Williams could address it.

In reviewing the file, Ziebell saw there was a blank delivery receipt. It did not 

cross her mind that Williams did not receive the policy, because he had surrendered it. 

Applicants also received a welcome letter with an offer for a PIN and an interest letter on 

the anniversary of the policy.

On cross-examination by Pantaleoni, Ziebell testified she retained the April 5, 

2017 letter from Starr in the file, but did not reach out to Williams to address it because 

the annuity had already been surrendered.

On cross-examination by Williams, Ziebell confirmed that she was following the 

specific procedures for complaints from California in April 2017 and would do an 

investigation in response to a complaint. She admitted that the compliance department 

did not review the April 5, 2017 letter at the time or contact Williams to request 

documentation. The April 5, 2017 letter did not go to the compliance department but to 

the surrender department. Surrender was a priority.

c. Diamantina Courson

Diamantina Courson, currently the highest ranking person in licensing at NWL, 

testified to the basic functions and procedures of the licensing department. NWL 

operates in 49 states and Puerto Rico, Guam and the Virgin Islands. NWL has about 

20,000 agents.
28

On cross-examination by Williams, Courson testified that the legal department 

makes the decision to terminate an agent for misconduct or unlawful conduct. Licensing 

staff are not trained to look for agent complaints. If there is a complaint, it goes to the 

complaint department. Licensing would want to know if an agent was in trouble or had 

done something unlawful, but would not get the information unless it was sent to 

licensing. A report goes to licensing where information is received by compliance.

Courson testified that NWL procedure is to do a background check when newly 

contracting with the agent. The background check would not include looking for a 

bankruptcy. NWL would have run a background check on Pantaleoni when he was first 

appointed in 2005. NWL did not run a background check on Pantaleoni at the time of his 

new contract in 2013.

In January 2016, when NWL learned that Pantaleoni had been the subject of 

enforcement action and had been placed on a restricted license, NWL would go to DOI to 

check to see if the license was active and what the enforcement notice concerned. DOI 

would tell NWL if the enforcement action had been resolved. DOI would give 

background information from the enforcement documents only if NWL asked for it. 

Courson did know if NWL had asked for this information.

d. Ayanna Burns

On defense for NWL, Burns testified that she reviewed the annuity transaction 

with Williams for conformity with company policies and standards of suitability and it 

appeared to be suitable based on the documents the company received. There were no 

signs that Williams’ signature was forged or other red flags as to suitability. The answers 

provided in the suitability questionnaire and other documents looked in line for Williams’ 

age, what he was looking for, and the additional benefits he was receiving.

On cross-examination by Williams, Burns confirmed that NWL uses a score sheet 

to document and determine suitability. A score equal to or greater than 10 would require 

documentation by the suitability reviewer as to why the product is still deemed suitable. 
29

NWL did not have the score sheet for Williams because it was changing systems and the 

results were loaded into the new system. There was no need to keep the actual score 

sheet.

On redirect, Burns testified that the total suitability score for Williams was 6.2. 

NWL’s suitability reviewer or a coder entered information from the suitability 

questionnaire into an Excel spreadsheet, which generated a score and the information was 

uploaded into NWL’s system. The suitability reviewer looked at the information, the 

suitability questionnaire, and other documents to make sure the reviewer felt the product 

was suitable, and entered comments in the system. In user notes, the reviewer, Jennifer 

Burgess, identified a yellow flag for annual income because it was below $25,000. The 

reviewer noted that Williams’ expenses were covered and he had more than five years of 

liquidity. It looked like Williams had plenty of liquidity based on the information 

provided.

C. Motion for Nonsuit

At the close of Williams’ evidence, NWL filed a motion for nonsuit. The court 

denied the motion finding that “there has been substantial evidence presented during 

plaintiff’s case in chief supporting judgment on all causes of action for the plaintiff.”

D. Jury Verdicts and Judgment

The jury found NWL liable for elder abuse awarding Williams $14,949.41 in 

damages for economic loss, $200,000 in noneconomic damages for past pain and 

suffering, and $150,000 for future pain and suffering, totaling $364,949.41. The jury 

further determined the Williams had proved by clear and convincing evidence that NWL 

acted with recklessness, malice, oppression or fraud.

The jury also found Pantaleoni liable for elder abuse and that Williams proved 

Pantaleoni acted with recklessness, malice, oppression or fraud, awarding total money 

damages of $168,309.41 on this claim.
30

The jury found both NWL and Pantaleoni liable for negligence, awarding

Williams total money damages of $618,309.41 and allocating 30 percent to Pantaleoni 

and 70 percent to NWL. The jury further found Pantaleoni liable for intentional 

misrepresentation and awarded $200,000 in total damages.

The jury awarded punitive damages of $1,000 against Pantaleoni and $2.5 million

against NWL.8

In entering judgment, the trial court found that noneconomic damages awarded in 

the verdict for negligence overlapped with the elder abuse award. To avoid double 

recovery, the court limited noneconomic damages to $600,000 allocating 70 percent 

($420,000) to NWL and 30 percent ($180,000) to Pantaleoni.

The court entered judgment for Williams in the amount of (1) $14,949.41 against 

Pantaleoni and NWL, jointly and severally, (2) $2.92 million against NWL, and (3) 

$186,050.59 against Pantaleoni.

E. Posttrial Proceedings

NWL filed motions for judgment notwithstanding the verdict and for a new trial,

arguing, inter alia, that Pantaleoni was not NWL’s agent in the transactions with 

Williams.

The trial court denied the motions.

II. DISCUSSION

A. Section 1704.5

It is undisputed that NWL issued two annuities, a form of life insurance policy, to 

Williams on applications submitted by Pantaleoni. Thus, under section 1704.5, 

Pantaleoni was NWL’s authorized agent and NWL was “responsible for all actions of the 

8 Regarding punitive damages, the parties stipulated that NWL had $1.4 billion in 

assets and Pantaleoni was able to pay $1,000 in punitive damages.
31

agent that relate to the application and policy as if the agent had been duly appointed for 

the insurer.” (§ 1704.5, subd. (a).)

Pantaleoni’s actions included: (1) misrepresenting on NWL’s suitability 

questionnaire that Williams’ annual income was $24,000 when Williams told Pantaleoni 

it was $16,000; and (2) misrepresenting on the questionnaire that Williams’ net worth 

after purchasing the annuity was $50,000 to $99,999 and liquid net worth was $120,000, 

when Williams had approximately $80,000 invested with a broker but only $114,000 in 

the bank and Pantaleoni had facilitated Williams’ signing a check for $100,000 drawn on 

his bank funds to purchase the annuity.

Under section 1704.5, Pantaleoni was NWL’s agent and NWL was responsible for 

his wrongful actions committed in the sales of NWL annuities to Williams. (See People 

ex rel. Bill Lockyer v. Fremont Life Ins. Co. (2002) 104 Cal.App.4th 508, 525-526

(Lockyer); Civ. Code, § 2338 [“a principal is responsible to third persons for the 

negligence of his agent in the transaction of the business of the agency, including 

wrongful acts committed by such agent in and as a part of the transaction of such 

business . . . ”].) As NWL’s agent, Pantaleoni’s knowledge regarding the annuity sales to 

Williams was imputed to NWL whether or not Pantaleoni conveyed that information to 

NWL. (See O’Riordan v. Federal Kemper Life Assurance Co., supra, 36 Cal.4th at 

p. 288 (O’Riordan); Civ. Code, § 2332 [“As against a principal, both principal and agent 

are deemed to have notice of whatever either has notice of, and ought, in good faith and 

the exercise of ordinary care and diligence, to communicate to the other”].) Such 

imputed knowledge included that Williams’ annual income was not $24,000 as stated on 

the first suitability questionnaire but $16,000, and he did not have $120,000 of liquidity 

after he gave Pantaleoni a check for $100,000 to buy the annuity. In short, NWL was 

charged with knowledge that the annuity was not suitable for Williams.

In supplemental briefing, NWL preliminarily argues that the California Supreme 

Court only directed this court to eliminate the portion of our prior opinion analogizing an 
32

independent agent serving multiple insurance companies to an insurance broker. NWL 

maintains that an insurance agent selling policies for multiple insurers may be the agent 

of the insurance company or the insured, depending on the facts. (See Eddy v. Sharp 

(1988) 199 Cal.App.3d 858, 865 (Eddy) [“If an insurance agent is the agent for several 

companies and selects the company with which to place the insurance or insures with one 

of them according to directions, the insurance agent is the agent of the insured”]; 

Mercury Ins. Co. v. Pearson (2008) 169 Cal.App.4th 1064, 1073 (Mercury) [same, citing 

Eddy]; see also Loehr v. Great Republic Ins. Co. (1990) 226 Cal.App.3d 727, 733 (Loehr)

[“An agent is generally not limited in the number of agency appointments that he or she 

may have; thus, an agent may solicit business on behalf of a variety of different carriers, 

and still technically be an agent of each of those carriers”].) 

NWL misses the point of section 1704.5, which treats an agent selling life 

insurance differently from agents selling other classes of insurance. Eddy and Mercury

did not involve life insurance. (Eddy, supra, 199 Cal.App.3d at p. 862 [property 

insurance]; Mercury, supra, 169 Cal.App.4th at pp. 1066-1067 [automobile insurance]; 

see also Loehr, supra, 226 Cal.App.3d at p. 729 [health insurance]; cf. Lockyer, supra,

104 Cal.App.4th at p. 511 [annuities]; O’Riordan, supra, 36 Cal.4th at p. 283 [life 

insurance].) Under section 1704.5, by operation of law, an agent submitting an 

application for a life insurance or an annuity policy, which is then issued by an insurer, is 

the insurer’s authorized agent and the insurer is responsible for the agent’s actions. The 

California Supreme Court emphasized this statutory distinction in its order to this court

by highlighting that the definition of an insurance “agent” and “broker” set forth in 

sections 32 and 33, respectively, expressly exclude life insurance.

NWL’s principal contention is that “the undisputed facts show that Pantaleoni was 

acting outside the scope of his agency for NWL when he sold an annuity to Williams, and 

therefore NWL cannot be held liable for Pantaleoni’s negligent conduct.” NWL argues 

Pantaleoni’s agreement with NWL “expressly prohibited the sales tactics Pantaleoni 
33

employed with Williams.” Pantaleoni also failed to follow “the advice of NWL’s many 

compliance bulletins” he received relating to California laws and regulations. NWL cites

evidence presented at trial that “Pantaleoni violated California law, violated Pantaleoni’s 

contract with NWL, or both, when he (1) did not inform Williams prior to either of his 

trust meetings that the purpose of the interaction was to sell insurance; (2) did not present 

the NWL annuity completely and accurately while leaving the brochures and disclosures 

with Williams; (3) misled Williams into believing that he was receiving trust work and 

not an NWL annuity; (4) identified himself as a paralegal but would not say if an attorney 

supervised his work; (5) claimed to be a CSA but his certification lapsed in 2008; (6) 

mixed his trust services with the sale of NWL’s annuity; and, (7) gave Williams legal 

advice relating to changing his trust’s beneficiary without a license.”

Missing from this list are the critical facts that Pantaleoni filled out the suitability 

questionnaires for Williams that overstated his annual income and grossly overstated his 

net worth and liquid net worth after purchasing the annuity. Under section 1704.5, NWL 

is responsible for these actions and charged with Pantaleoni’s knowledge that these 

figures were false and that the true state of affairs was that the annuities were unsuitable 

for Williams. Thus, NWL is responsible for its agent’s actions in procuring an unsuitable 

annuity. 

Moreover, assuming Pantaleoni exceeded his authority in some or any of his 

actions, there is no evidence that Williams knew or had notice that Pantaleoni had 

breached his contract with NWL or failed to follow NWL’s compliance bulletins. Absent 

notice to the insured, an insurer is liable for the acts of an agent that are within the 

ordinary scope and limits of the insurance business entrusted to the agent, even if they are 

in violation of private instructions and restrictions on the agent’s authority. (See Chicago 

Title Ins. Co. v. AMZ Ins. Services, Inc. (2010) 188 Cal.App.4th 401, 426; R & B Auto 

Center, Inc. v. Farmers Group, Inc. (2006) 140 Cal.App.4th 327, 344; Troost v. Estate of 

DeBoer (1984) 155 Cal.App.3d 289, 298.) NWL appointed Pantaleoni to procure 
34

applications and deliver insurance policies, which was what he did in Williams’ case. 

The actions that NWL asserts breached Pantaleoni’s contract with NWL and violated the 

company’s compliance bulletins occurred in the course and scope of Pantaleoni procuring 

annuity applications from Williams and delivering policies to him that NWL issued. 

Since NWL does not direct us to evidence in the record showing that Williams knew the 

terms of NWL’s agreement with Pantaleoni, the advisements of NWL’s compliance 

bulletins, or Pantaleoni’s violations thereof, NWL cannot insulate itself from liability by 

claiming that they were outside the scope of his authority.

NWL’s supplemental brief does not address the jury verdict on Williams’ elder 

abuse claim, but Insurance Code section 1704.5 affects that claim, as well. Financial 

elder abuse “occurs when a person or entity . . . [¶] (1) Takes, secretes, appropriates, 

obtains, or retains real or personal property of an elder or dependent adult for a wrongful 

use or with intent to defraud, or both.” (Welf. & Inst. Code, § 15610.30, subd. (a)(1).) 

The statute defines “wrongful use” as taking property of an elder by a person or entity

who “knew or should have known that this conduct is likely to be harmful to the elder or 

dependent adult.” (Welf. & Inst. Code, § 15610.30, subd. (b); Paslay v. State Farm 

General Ins. Co. (2016) 248 Cal.App.4th 639, 657.) Since, under Insurance Code section 

1704.5, NWL is charged with knowledge of what Pantaleoni knew—i.e., that Pantaleoni 

employed deceptive methods to sell Williams unsuitable annuities—NWL committed 

financial elder abuse in accepting $100,000 from Williams to purchase the annuity and in

charging him a $14,949.91 surrender penalty.

In our prior opinion, because we reversed the judgment in favor of Williams, we 

found moot the remaining issues that NWL raised on appeal and that Williams raised in 

his cross-appeal concerning the attorney fee award. Since we now affirm the judgment 

against NWL on Williams’ negligence and financial elder abuse claims, we turn to the

remaining issues.
35

B. Emotional Distress Damages

NWL challenges the jury’s award and the trial court’s allocation of $420,000 in 

noneconomic damages to NWL on various grounds. NWL contends: (1) Williams 

presented no evidence that NWL caused him emotional distress; (2) emotional distress 

damages are “inappropriate” under the economic loss rule; (3) the large amount of 

emotional distress damages raised a presumption that the award against NWL was the 

product of passion and prejudice; and (4) the allocation of 70 percent of emotional 

distress damages was not supported by substantial evidence.

9

NWL’s first contention is essentially that there is no substantial evidence to 

support an award of emotional distress damages against the company. (Garcia v. Myllyla 

(2019) 40 Cal.App.5th 990, 999 [“We review the evidence relating to emotional distress 

damages under the substantial evidence standard”].) Under the substantial evidence 

standard, “we ‘ “view the evidence in the light most favorable to the prevailing party, 

giving it the benefit of every reasonable inference and resolving all conflicts in its 

favor.” ’ [Citation.] Our task ‘begins and ends with the determination as to whether, on

the entire record, there is substantial evidence, contradicted or uncontradicted,’ which 

will support the verdict. [Citation.] Substantial evidence is any evidence that is 

‘ “reasonable in nature, credible, and of solid value.” ’ [Citation.]” (Id. at pp. 999-1000.)

NWL admits that Dr. Haq testified that Williams suffered severe emotional 

distress. Dr. Haq testified Williams was traumatized by the loss of control of his life 

9 NWL also claims that the trial court erroneously denied its motion in limine to 

exclude evidence of emotional distress and “doubled down” on the error by instructing 

the jury that Williams had a preexisting disability that NWL aggravated and that 

Williams had impaired faculties, which instructions NWL asserts misled the jury and 

impacted the verdict. NWL does not cite supporting authority or articulate a standard for 

evaluating these claims, which are not set forth under a separate heading. Accordingly, 

we do not consider them. (See Hernandez v. First Student, Inc. (2019) 37 Cal.App.5th 

270, 279 (Hernandez).)
36

savings that he had accumulated over many years with his wife, which became an 

“ongoing trauma, and a lot of his symptoms can best be thought of as a posttraumatic 

stress disorder.” (See Kelly-Zurian v. Wohl Shoe Co. (1994) 22 Cal.App.4th 397, 410 

[plaintiff’s posttraumatic stress disorder diagnosis and symptoms constituted substantial 

evidence supporting emotional distress damages].) To the extent NWL attempts to 

attribute Williams’ emotional distress to Pantaleoni alone, under section 1704.5, NWL is 

liable for his negligent actions that led to Williams’ emotional distress. (See also Jacoves 

v. United Merchandising Corp. (1992) 9 Cal.App.4th 88, 103-104 [denying summary 

judgment to hospital on negligent infliction of emotional distress claim because triable 

issues existed as to whether negligent doctor was hospital’s agent].)

Turning to the economic loss rule, NWL does not cite any authority applying the 

rule to damages awarded on a financial elder abuse claim. In American General Life 

Insurance Co. v. Valentine (C.D.Cal. April 13, 2017, No. LA CV16-08097 JAK (JCx)), 

2017 WL 5635014, the federal court rejected application of the economic loss rule in that 

context. The court explained: “ ‘The economic loss rule requires a purchaser to recover 

in contract for purely economic loss due to disappointed expectations, unless he can

demonstrate harm above and beyond a broken contractual promise.’ [Citation.] The 

rationale behind the rule is that it ‘prevent[s] the law of contract and the law of tort from 

dissolving one into the other.’ [Citations.] The elder abuse claim arises under statute and 

not the common law of torts. Thus, California Welfare and Institutions Code § 15657.5

provides for ‘compensatory damages and all other remedies otherwise provided by law,’

as well as ‘reasonable attorney’s fees and costs.’ ” (Id. at p. *11.)10

10 NWL does not distinguish between negligence and financial elder abuse regarding 

application of the economic loss rule. We are not obliged to develop NWL’s arguments 

for it. (Hernandez, supra, 37 Cal.App.5th at p. 277.) In any event, the trial court 

determined that damages awarded for emotional distress on Williams’ financial elder 

abuse and negligence claims overlapped.
37

Regarding the amount of the emotional distress damages awarded, “[w]hen an

appellate court reviews a jury verdict for excessive damages, it can interfere ‘only on the

ground that the verdict is so large that, at first blush, it shocks the conscience and

suggests passion, prejudice or corruption on the part of the jury.’ [Citation.]” (Pearl v.

City of Los Angeles (2019) 36 Cal.App.5th 475, 491, quoting Seffert v. Los Angeles

Transit Lines (1961) 56 Cal.2d 498, 507.) While the emotional distress damages awarded

against NWL were high, we cannot say that an award of $420,000 “shocks the

conscience,” even though Williams’ economic damages were relatively small, amounting

to $14,949.91. (See Iwekaogwu v. City of Los Angeles (1999) 75 Cal.App.4th 803, 821

[$450,000 for emotional distress out of $500,000 total damages awarded were not

“excessive as a matter of law”]; Little v. Stuyvesant Life Ins. Co. (1977) 67 Cal.App.3d

451, 465-466 [award of $172,325 for emotional distress where no economic loss was

proved was not “so excessive or disproportionate as to raise a presumption that it resulted

from passion or prejudice”].)

NWL presents a cursory argument that “there is no justification for holding NWL

70% responsible for Williams’ emotional distress where no evidence supported that

NWL caused any of Williams’ non-economic damages.” “We review a jury’s

apportionment of fault under the substantial evidence standard and will disturb the

finding only if unsupported by the evidence.” (Scott v. County of Los Angeles (1994)

27 Cal.App.4th 125, 147; Pfeifer v. John Crane, Inc. (2013) 220 Cal.App.4th 1270, 1286

[“courts rarely disturb the jury’s apportionment of fault”].) 

Here, there was substantial evidence supporting allocation of 70 percent of

noneconomic damages to NWL. Among other things, NWL did not immediately return

Williams’ $100,000 premium payment when he sent back the first annuity during the free

look period with a note that he did not want it. Rather, NWL advised Pantaleoni to

contact Williams to induce him to keep the annuity, applied the payment on the first

annuity to the second annuity, and assessed a surrender charge when Williams sought to
38

return the second annuity. Had these actions by NWL not occurred, Williams would not

have unwittingly purchased a second annuity policy, when he never wanted the first one,

and incurred a loss of thousands of dollars when he returned that annuity, which as

Dr. Haq testified, was the main source of the traumatic psychological effects Williams

experienced. Accordingly, we have no basis to disturb the allocation of fault.

C. Punitive Damages

NWL contends that punitive damages were not justified because the evidence

merely showed negligence and there was no evidence that a managing agent knew of or

ratified Pantaleoni’s conduct. Alternatively, NWL argues that the amount of $2.5 million

imposed was unconstitutionally excessive. We agree with NWL on the first point and

therefore do not address the second.

To recover punitive damages for financial elder abuse against a corporate 

defendant, a plaintiff must satisfy the requirements of Civil Code section 3294. 

Subdivision (c) of Welfare and Institutions Code section 15657.5 provides in relevant 

part: “The standards set forth in subdivision (b) of Section 3294 of the Civil Code

regarding the imposition of punitive damages on an employer based upon the acts of an 

employee shall be satisfied before any punitive damages may be imposed against an 

employer found liable for financial abuse as defined in Section 15610.30.” Civil Code 

section 3294, subdivision (b) states: “An employer shall not be liable for damages 

pursuant to subdivision (a), based upon acts of an employee of the employer, unless the 

employer had advance knowledge of the unfitness of the employee and employed him or 

her with a conscious disregard of the rights or safety of others or authorized or ratified the 

wrongful conduct for which the damages are awarded or was personally guilty of 

oppression, fraud, or malice. With respect to a corporate employer, the advance 

knowledge and conscious disregard, authorization, ratification or act of oppression, fraud, 

or malice must be on the part of an officer, director, or managing agent of the 

corporation.”
39

Williams asserts that: “NWL’s status as Pantaleoni’s principal provides even 

more substantial evidence supporting the jury’s punitive damage [sic] award. This is 

because NWL’s status imputes to it, as a matter of law, all of Pantaleoni’s knowledge and 

ratification of his fraudulent and other misconduct in connection, with two annuity 

applications. NWL ‘is deemed to have knowledge of such facts,’ ” quoting O’Riordan, 

supra, 36 Cal.4th at page 288. However, even if we impute knowledge of Pantaleoni’s 

acts to NWL based on a principal-agent relationship under Insurance Code section 

1704.5, recovery of punitive damages for financial elder abuse requires more. Civil Code 

section 3294, subdivision (b), incorporated in Welfare and Institutions Code section 

15657.5, subdivision (c), calls for a plaintiff to show by clear and convincing evidence 

that an officer, director or managing agent had the required advance knowledge and 

conscious disregard, authorized or ratified the agent’s acts, or personally acted with 

oppression, fraud or malice towards the plaintiff. (Civ. Code, § 3294, subd. (b); see also 

Barton v. Alexander Hamilton Life Ins. Co. of America (2003) 110 Cal.App.4th 1640, 

1644; White v. Ultramar, Inc. (1999) 21 Cal.4th 563, 571 (White) [Civ. Code, § 3294, 

subd. (b) was intended by the Legislature “to avoid imposing punitive damages on 

employers who were merely negligent or reckless and to distinguish ordinary respondeat 

superior liability from corporate liability for punitive damages”].)

As to advance knowledge, Williams argues “NWL acquired advance knowledge 

of Pantaleoni’s use of misleading business names to sell insurance and then continued to 

employ him without taking action reasonably designed to protect the rights or safety of 

others.” Williams also refers to NWL’s “knowledge of [Pantaleoni’s] restricted license.”

This is insufficient. Evidence of advance knowledge of the employee’s unfitness 

must show that a director, officer or managing agent of the corporate defendant knew that 

the agent or employee had a propensity to inflict the injury that the plaintiff sustained. 

(See Weeks v. Baker & McKenzie (1998) 63 Cal.App.4th 1128, 1159; Croskey et al., Cal. 

Practice Guide: Insurance Litigation (The Rutter Group 2021) ¶ 13:402.5 [“It must 
40

appear that the employer had advance knowledge of the employee’s propensity to 

perform the type of act committed against the plaintiff”].) Conscious disregard also

requires “ ‘ “actual knowledge of the risk of harm it is creating, and in the face of that 

knowledge, fail[ure] to take steps that [the defendant] knows will reduce or eliminate the 

risk of harm.” ’ ” (King v. U.S. Bank National Assn. (2020) 53 Cal.App.5th 675, 711, 

quoting Butte Fire Cases (2018) 24 Cal.App.5th 1150, 1159.) 

At best, the evidence presented showed that NWL was negligent in appointing 

Pantaleoni and renewing his appointment to sell annuities (e.g., in light of his restricted 

license). However, there was no evidence that any person at NWL, let alone a director, 

officer or managing agent, knew in advance of Pantaleoni’s propensity to commit the

misconduct that victimized Williams.

Turning to ratification, Williams contends that Perez, Burns, Ziebell and Mohr 

were NWL’s managing agents. NWL disputes that Ziebell and Mohr were managing 

agents but concedes that Perez and Burns qualify for that status. However, NWL 

maintains that neither Perez nor Burns had actual knowledge of Pantaleoni’s misconduct

prior to Williams’ suit.

We agree with NWL that there was insufficient clear and convincing evidence to 

support a jury finding that Ziebell and Mohr were NWL’s managing agents. The 

evidence Williams describes as supporting that determination showed only that they had 

discretion in handling individual customer complaints and compliance issues. This is not 

the discretionary authority described in White, where the California Supreme Court said,

“principal liability for punitive damages [does] not depend on employees’ managerial 

level, but on the extent to which they exercise substantial discretionary authority over 

decisions that ultimately determine corporate policy.” (White, supra, 21 Cal.4th at 

pp. 577-578; Cruz v. HomeBase (2000) 83 Cal.App.4th 160, 167-168 (Cruz)

[“ ‘[C]orporate policy’ is the general principles which guide a corporation, or rules 

intended to be followed consistently over time in corporate operations. A ‘managing 
41

agent’ is one with substantial authority over decisions that set these general principles 

and rules”].) There was no evidence that Ziebell and Mohr had discretionary authority 

that determined general NWL policy. 

Williams analogizes Ziebell and Mohr to the claims adjuster in Major v. Western 

Home Ins. Co. (2009) 169 Cal.App.4th 1197, held to be a managing agent for purposes of 

ratification. This case hurts Williams’ argument more than it helps. In Major, the claims 

adjuster was the “regional manager/supervisor/claims adjuster,” who “managed 35 

employees in an office in Minnesota that handled claims as far away as California, 

oversaw the claims operation, supervised lower ranking supervisors, trained adjusters, 

worked on the budget, supervised the handling of certain files, and authorized payment of 

benefits.” (Id. at p. 1220.) 

Assuming based on NWL’s concession that Perez and Burns were managing 

agents for purposes of Civil Code section 3294, subdivision (b), the evidence does not 

show the requisite knowledge and acceptance of Pantaleoni’s conduct for Williams to

recover punitive damages against NWL under a ratification theory. “For purposes of 

determining an employer’s liability for punitive damages, ratification generally occurs 

where, under the particular circumstances, the employer demonstrates an intent to adopt 

or approve oppressive, fraudulent, or malicious behavior by an employee in the 

performance of his job duties.” (College Hospital Inc. v. Superior Court (1994) 8 Cal.4th 

704, 726 (College Hospital); see also Cruz, supra, 83 Cal.App.4th at p. 168

[“ ‘[R]atification’ is the ‘confirmation and acceptance of a previous act’ ”].) “Corporate 

ratification in the punitive damages context requires actual knowledge of the conduct and 

its outrageous nature.” (College Hospital, supra, at p. 726; Cruz, supra, at p. 168 [“A 

corporation cannot confirm and accept that which it does not actually know about”].) 

Thus, recovery of punitive damages from a corporation based on ratification requires 

clear and convincing evidence that a director, officer or managing agent had actual 
42

knowledge of an agent’s malicious and outrageous conduct and adopted or approved such 

conduct. 

Williams claims that Perez ratified Pantaleoni’s misconduct because he learned of 

it from Williams’ complaint, but NWL failed to investigate the allegations of the 

complaint, did not return the surrender charge, and did not terminate Pantaleoni. As for 

Burns, Williams asserts that she knew of the suitability requirements that Williams could 

not meet, and when designated as NWL’s most qualified person in this case, reviewed the 

agent file for Pantaleoni and the annuity file for Williams, learning that Williams’ 

complaint had not been investigated, there was no delivery receipt for the second annuity, 

and NWL did not charge back Pantaleoni’s commission. NWL also claims that Burns 

reviewed Williams’ complaint but NWL did not terminate Pantaleoni, investigate the 

complaint, charge back Pantaleoni’s commission, or refund the surrender charge.

None of this evidence shows actual knowledge on the part of Perez or Burns of 

Pantaleoni’s malicious and outrageous misconduct until Williams filed suit. In College 

Hospital, the California Supreme Court said the ratification issue “commonly arises 

where the employer or its managing agent is charged with failing to intercede in a known 

pattern of workplace abuse, or failing to investigate or discipline the errant employee 

once such misconduct became known.” (College Hospital, supra, 8 Cal.4th at p. 726.) 

None of the cases cited in College Hospital involved a managing agent of the corporation 

learning for the first time of the misconduct of the agent or employee via the allegations 

of a lawsuit. (Ibid.)

To be sure, in Chodos v. Insurance Co. of North America (1981) 126 Cal.App.3d 

86, in response to receiving the insured’s lawsuit, there was evidence of the insurance 

company’s decision not to pay the plaintiff, including an internal memorandum which 

characterized the insurer’s position as “ ‘very strong.’ ” (Id. at p. 102.) The court said

that the insurer’s “choice to respond to the summons and complaint rather than settle the 
43

matter removes any doubt about ‘ratification’ of the procedure utilized by the [insurer’s] 

employees.” (Id. at p. 103.) 

There was no similar evidence in this case. To the contrary, Williams moved to 

exclude, and NWL moved to admit, evidence of settlement negotiations, including

NWL’s multiple offers to compromise that included compensation for the surrender 

charge. The court ruled in favor of Williams on the dueling motions. NWL agrees on 

appeal that the trial court’s ruling was correct. However, as a result of the court’s ruling, 

there was evidence that NWL did not refund the surrender charge but no evidence that 

NWL chose not to do so, which would support a claim of ratification.11

Additionally, as Burns testified, when a lawsuit regarding the conduct of an agent 

is filed, the legal department of NWL “puts a hold on everything,” including the process 

for terminating an agent. The agent would be “flagged,” and NWL would not accept any 

additional business from the agent. Accordingly, Pantaleoni was flagged when NWL 

first learned of the litigation Williams instituted and could no longer place business with 

the company, which effectively terminated his appointment by NWL.

Based on these facts, there was insufficient clear and convincing evidence that 

NWL ratified, i.e., adopted and approved of Pantaleoni’s conduct after Perez and Burns

learned of it from Williams’ lawsuit. Rather, NWL attempted to refund the surrender 

charge and cut off Pantaleoni from placing new business, actions that would naturally 

result from NWL accepting the validity of Williams’ allegations regarding Pantaleoni’s 

malicious and outrageous conduct, but not accepting, adopting or approving Pantaleoni’s 

11 Williams added NWL as a defendant on May 24, 2018. On August 22, 2018, 

NWL served a Code of Civil Procedure section 998 offer to compromise in the amount of 

$16,000. This offer, the first of multiple offers to compromise, was specifically intended 

and calculated to compensate Williams for the surrender charge.
44

conduct. Given the evidence, the jury’s verdict awarding punitive damages must be 

reversed.

D. Attorney Fee Award

NWL contends that the attorney fee award should be reversed if we reverse 

Williams’ elder abuse claim. We have upheld the elder abuse claim, so we consider 

NWL’s alternative argument that we should remand to the trial court for recalculation of 

attorney fees if we reverse or reduce any of Williams’ damage claims. We agree that 

because we reverse the bulk of the total damages awarded, the trial court should have the 

opportunity to reconsider the reasonableness of attorney fees sought. (See Greenwich 

S.F., LLC v. Wong (2010) 190 Cal.App.4th 739, 768 [case remanded for trial court to 

reconsider attorney fee award after $600,000 in damages reversed]; see also Maldonado 

v. Epsilon Plastics, Inc. (2018) 22 Cal.App.5th 1308, 1337.) We do not address whether 

the remaining damages would support the fee award. That issue is for the trial court to 

decide in the first instance. (Greenwich, supra, at p. 768.) 

Williams cross-appeals the amount of attorney fees, contending that the trial court 

abused its discretion in refusing to award attorney fees based on his counsel’s “home 

market hourly rates” in San Diego. In calculating the “lodestar” award, the trial court 

used an hourly rate of $500 for plaintiff’s counsel, Frank Fox, instead of his “normal 

hourly rate of $765.”

In awarding attorney fees, California courts use the lodestar approach, “i.e., the 

number of hours reasonably expended multiplied by the reasonable hourly rate.” (PLCM

Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1095 (PLCM Group); Doppes v. Bentley

Motors, Inc. (2009) 174 Cal.App.4th 967, 997.)

“The reasonable hourly rate is that prevailing in the community for similar work.” 

(PLCM Group, supra, 22 Cal.4th at p. 1095.) “The relevant ‘community’ is that where 

the court is located.” (Altavion, Inc. v. Konica Minolta Systems Laboratory, Inc. (2014)

226 Cal.App.4th 26, 71; MBNA America Bank, N.A. v. Gorman (2006) 147 Cal.App.4th
45

Supp. 1, 13 [“determination of market rate is generally based on the rates prevalent in the 

community where the services are rendered, i.e., where the court is located”].) “[A] 

court’s use of reasonable rates in the local community, as an integral part of the initial 

lodestar equation, is one of the means of providing some objectivity to the process of 

determining reasonable attorney fees. Such objectivity is ‘ “ ‘vital to the prestige of the 

bar and the courts.’ ” ’ [Citations.]” (Nichols v. City of Taft (2007) 155 Cal.App.4th

1233, 1243.)

“ ‘The court may rely on its own knowledge and familiarity with the legal market

in setting a reasonable hourly rate. [Citation.]’ [Citation.]” (Nishiki v. Danko Meredith,

P.C. (2018) 25 Cal.App.5th 883, 898.)12 “The courts repeatedly have stated that the trial 

court is in the best position to value the services rendered by the attorneys in his or her 

courtroom [citation], and this includes the determination of the hourly rate that will be 

used in the lodestar calculus.” (569 East County Boulevard LLC v. Backcountry Against

the Dump, Inc. (2016) 6 Cal.App.5th 426, 437.) For that reason, while the trial judge's 

determination is subject to review, “ ‘ “it will not be disturbed unless the appellate court 

is convinced that it is clearly wrong.” ’ [Citation.]” (Ketchum v. Moses (2001)

24 Cal.4th 1122, 1132.)

“[I]n the unusual circumstance that local counsel is unavailable” or, put another 

way, “hiring local counsel was impracticable,” the trial court may use the rate of counsel 

from a higher fee market in determining a reasonable hourly rate. (Horsford v. Board of

Trustees of California State University (2005) 132 Cal.App.4th 359, 399 (Horsford).) In

Horsford, the plaintiff submitted an uncontradicted declaration that he was unsuccessful 

in obtaining local lawyers in Fresno to represent him before turning to a San Francisco 

12 At the hearing on plaintiff counsel’s attorney fee, the trial court commented: “I 

don’t know an attorney in Butte County who is billing $750 an hour, let’s put it that 

way.”
46

lawyer. The Court of Appeal held that the trial court abused its discretion in using local 

Fresno rates. (Id. at pp. 397-399; see also Center for Biological Diversity v. County of

San Bernardino (2010) 188 Cal.App.4th 603, 618-619 [a plaintiff's declaration that no 

local attorneys in San Bernardino practicing environmental law on behalf of 

environmental groups will do so for a reduced fee or on a contingent basis, and possess 

requisite expertise, was a sufficient showing that hiring qualified counsel in the area was 

impracticable]; Environmental Protection Information Center v. Department of Forestry

& Fire Protection (2010) 190 Cal.App.4th 217, 249 [affirming trial court’s use of out-oftown rates where the plaintiffs submitted a declaration from a local lawyer that he would 

not undertake primary representation in the suit and knew of no local counsel who would, 

as well as declarations from other local attorneys that would not have been willing to 

represent the plaintiffs at all].)

Here, Williams stated in his declaration that he contacted the district attorney and 

met with a local paralegal and an attorney to try to get documents from Pantaleoni but 

they were unable to help him. Then Williams met with an attorney for Northern 

California Legal Services, who could not take his case but referred Williams to Cole. 

Besides writing a letter on Williams’ behalf to obtain documents from NWL, Cole tried 

to find an attorney for Williams through his organization, California Advocates for 

Nursing Home Reform. After speaking with Cole, a lawyer from San Francisco called 

Williams, asked him some questions, but declined to take the case. At that point, as 

Williams stated: “I got frustrated and gave up.”

Cole stated in his declaration in support of an attorney fee award that he 

administers the lawyer referral service for California Advocates for Nursing Home 

Reform and helped develop a panel dedicated to assisting victims of financial elder 

abuse, which included Fox and 20 other lawyers at the time Cole referred Williams to 

Fox. California Advocates for Nursing Home Reform receives a 15 percent referral fee 

from any attorney fee recovered in a referred matter. Cole referred Williams to one San 
47

Francisco-based attorney who did not take the case. Cole’s attempt to find another 

lawyer from Northern California “was unsuccessful because of the relatively small 

economic losses involved and Mr. Williams’s inability to pay by the hour or even 

advance necessary costs.” Cole referred Williams to Fox in San Diego, the only attorney

on the panel Cole could find who was willing to take the matter on a contingency basis 

and advance costs.

In opposition to Williams’ motion for attorney fees, NWL submitted the 

declarations of six attorneys with elder law experience, all of whom stated that they 

would have taken the case if contacted. For example, the declaration from Dave C. Jones 

stated that he: is the senior trial lawyer at his firm; has litigated numerous financial elder 

abuse cases in counties from San Diego to Shasta, including Butte; and will take a 

contingency case where the financial injury is low but he perceives the injustice to be 

great. Jones further stated that, having reviewed the pleadings and jury instructions in 

this case, he was qualified and available to take the case and would have taken it if given 

the opportunity. Jones also stated that he was aware of five law firms in Butte and 

Sacramento counties and other firms in the Bay Area qualified to litigate a financial elder 

abuse case and would do so for less than a $765 hourly rate.

The other declarations were in a similar vein. Edward W. Goldkuhl declared that 

he had served as an expert witness in financial elder abuse cases. The hourly rates of 

these declarant attorneys ranged from $350 to $500 per hour.

Williams counters that the declarant attorneys were located in Sacramento and 

Contra Costa counties, which are not “contiguous” to Butte County, and none had offices 

in Butte County or Chico where the case was tried. Cole submitted a reply declaration in 

which he stated that none of the declarant attorneys was on his organization’s financial 

elder abuse panel; “however, having received attestations of their interest in handling 

elder financial abuse matters involving low economic losses, I will be sending them an 

application to join that panel.”
48

Citing Horsford, Williams argues that “when a prevailing party’s attorney has a 

home office in a different market where rates are higher, the attorney is entitled to home 

market hourly rates if the party either made a ‘good faith effort’ to find local counsel or 

showed that retaining local counsel was ‘impracticable.’ ” (Italics added.) Not so. The 

court in Horsford said, “we doubt a plaintiff needs to make anything more than ‘a good 

faith effort to find local counsel’ [citation] in order to justify the fees of out-of-town 

counsel . . . .” (Horsford, supra, 132 Cal.App.4th at p. 399, italics added; see also In re 

Tobacco Cases I (2013) 216 Cal.App.4th 570, 582 [“The court has the discretion to make 

an exception [to local rates] . . . when the prevailing party shows it was impracticable to 

use local counsel” (italics added)]; Cal. Judges Benchbook: Civil Proceedings—Trial 

(CJER June 2021 update) § 16.100 [“When local counsel is unavailable, the judge has the 

discretion to consider an out-of-town attorney’s higher rates” (italics added)].) In other 

words, on a sufficient showing of the unusual circumstance that local counsel is not 

available, the trial court is not limited to the use of local hourly rates and has discretion to 

use higher rates from counsel’s home market. It is an abuse of discretion only “to fail 

even to consider an hourly rate based on counsel’s ‘home’ market rate.” (Horsford, 

supra, 132 Cal.App.4th at p. 399; Caldera v. Department of Corrections & Rehabilitation

(2020) 48 Cal.App.5th 601, 609 (Caldera) [“When a plaintiff needs to hire out-of-town 

counsel, a trial court must consider counsel’s ‘home market rate’ when setting the hourly 

rate, rather than the local market rate”].) 

We cannot conclude that the trial court abused its discretion under the principles 

articulated in Horsford and its progeny. To begin with, the trial court did not err, as 

Williams claims, “applying Butte County rather than San Diego County hourly rates.” 

To the contrary, Williams’ argument was that the attorneys who submitted declarations in 

support of NWL’s opposition to his attorney fee motion were not local to Butte County,

but from Sacramento and the Bay Area, both of which are major metropolitan areas. 

Thus, the $350 to $500 hourly rates these attorneys quoted represent rates for financial 
49

elder abuse cases in higher-fee markets than Butte County. The rate the court ultimately 

used for the lodestar calculation was the highest of these. 

Nor is there evidence that the court refused to consider Fox’s home market rate. 

The court’s passing comment that it was unaware of any lawyer in Butte County charging 

$750 an hour does not equate to refusal to consider his rate. (Cf. Caldera, supra, 

48 Cal.App.5th at pp. 610-611 [“[T]he trial court rejected Caldera’s request of $750 per 

hours because it was ‘too high for this locale,’ ” and “lowered the hourly rate to $550 per 

hour, which the court stated was at the top of local rate for counsel in San Bernardino 

County ($450 to $550 per hour)”].)

Moreover, the evidence before the trial court in Horsford was “overwhelming and 

uncontradicted” the plaintiff could not find a local lawyer to take the case (Horsford, 

supra, 132 Cal.App.4th at pp. 398-399), while here the evidence of Williams’ attempt to 

find a lawyer with experience and expertise in financial elder abuse was for the most part 

limited to Cole’s efforts and contradicted by the declarations NWL submitted.

Therefore, our remand to the trial court is for the limited purpose of reconsidering 

the attorney fee award, if the court chooses, in light of the reversal of punitive damages. 

We find no abuse of discretion in the trial court’s use of a $500 hourly rate in the lodestar 

calculation.
50

DISPOSITION

The award of punitive damages is reversed. We remand this case to the trial court 

to reconsider the attorney fee award in light of the reversal of punitive damages. The 

judgment is otherwise affirmed. Williams shall recover his costs on appeal. (Cal. Rules 

of Court, rule 8.278(a)(1), (2).)

 /s/

RAYE, P. J.

We concur:

 /s/

ROBIE, J.

 /s/

MURRAY, J.*

* Retired Associate Justice of the Court of Appeal, Third Appellate District, 

assigned by the Chief Justice pursuant to article VI, section 6 of the California 

Constitution.