1

Filed 8/10/ 21 Stevenson v. Farmers Ins. Exchange CA1/4

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or

or dered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION FOUR

TERESA STEVENSON,

Plaintiff and Respondent,

v.

FARMERS INSURANCE EXCHANGE,

Defendant and Appellant. A156727, A159373

(San Mateo County Super. Ct. No. CIV535684)

TERESA STEVENSON,

Plaintiff and Appellant,

v.

FARMERS INSURANCE EXCHANGE,

Defendant and Respondent. A159269

(San Mateo County Super. Ct. No. CIV535684)

Plaintiff Teresa Stevenson was injured and incurred medical expenses

when she slipped and fell outside a hotel. Farmers Insurance Exchange 1

(Farmers) provided insurance for the hotel’s owner, with a policy that

included not only liability insurance but general coverage for medical

1 Farmers Insurance Exchange was erroneously named in this action as Farmers Insurance Group.2

expenses . In this action, Stevenson alleged Farmers breached its contract

and failed to disclose the existence o f the medical expense coverage in breach

of the covenant of good faith and fair dealing

. Shortly after she filed this

lawsuit, Farmers paid her the policy limits. A jury found that Farmers

unreasonably failed to disclose the coverage, that Stevenson was entitled to

prejudgment interest for the delay in payment , and that she was not entitled

to damages for emotional distress or punitive damages.

In these consolidated appeals, Stevenson contends the trial court erred

in striking the jury’s award of prejudgment interest, in denying her request

for attorney fees under Brandt v. Superior Court (1985) 37 Cal.3d 813

( Brandt ), and in not granting a new trial on the issue of noneconomic

damages. Farmers, in turn, contends the trial court abused its discretion

when it granted Stevenson’s motion to tax costs and denied its motion for

reconsideration of the ruling. We agree with Stevenson that the trial court

erred in striking the prejudgment interest award and that she is entitled to

further proceedings on the question of Brandt fees, but we reject her claim

that she is entitled to noneconomic damages as a matter of law

. Because we

reverse the judgment on this basis, the cost award necessarily falls as well

.

FACTUAL AND PROCE D URAL BACKGROUND

Before filing the action now before us, Stevenson sued MAC

Hospitality, Inc. (MAC) and B&K Partnership (B&K), entities Farmers

insured, for her injuries (the personal injury action), and F armers’s legal

office handled the defense. It appears Farmers was not aware of Stevenson’s

injury before it received notice of the personal injury action. The claims

adjuster assigned to work on the matter , Teresa Pignolet, testified that under

the stand ard policy, medical coverage claims must be made within one year,

and Stevenson made her claim more than one year after her injury. Pignolet3

did not notice that the policy at issue had an endorsement setting medical

expense coverage at $2,500 and allowing a claim to be made up to three years

after the injury , and as a result she did not disclose the coverage

. During discovery in the personal injury action, Farmers responded on

MAC’s behalf to form interrogatories and document requests in a manner

that might charitably be described as misleading. A form interrogatory

asked whether there was any insurance policy through which MAC “might be

insured in any manner,” expressly including “medical expense coverage” for

the damages alleged

. Yet attorney And rew Lauderdale signed a response

disclosing only a commercial general liability insurance policy issued by

Farmers, with no mention of the separate medical expense coverage. His

partner on the case, Rick Pedersen, made clear this was no accidental

omis sion, refusing in deposition testimony even to “accede to the basic

premise that [the interrogatory] encompasses medical pay” coverage. Also , i n
response to a request for production of documents, Farmers belatedly sent a

redacted copy of the declarations page of the policy, striking out any mention

of the medical coverage.

Stevenson brought this action against Farmers in October 2015

alleging she was injured in June 2013 on property owned or controlled by

MAC and B&K and that s he incurred medical bills a s a result. T he

insurance policy issued by Farmers all egedly included coverage for medical

bills incurred as a result of injury on the insureds’ property, without regard

to faul t . Nevertheless, according to the complaint, Farmers refused to

provide payme nt for Stevenson’s medical expenses. Stevenson asserted

causes of action for breach of contract and breach of the implied covenant of

good faith and fair dealing.4

Shortly a fter Stevenson filed the present lawsuit against Farmers

,
Farmers gave her a che ck for the $2,500 med ical expense coverage policy

limits. Pignolet testified she realized after reading the allegations of the

complaint that she had made a mistake in not disclosing the medical

coverage earlier so Stevenson could receive the benefits to which she was

entitled

. On August 9, 2016, Farmers made an offer to compromise under Code

of Civil Procedure section 998, 2 offering Stevenson $25,000 if she dismissed

the action and executed a general release. Stevenson did not accept the offer.

The case went to trial before a jury. As to the cause of action for breach

of contract , questions one through three on the verdict form , the jury found

that Stevenson suffered a loss covered under an insura nce policy issued by

Farmers; that Farmers was notified of the los s ; and that Farmer s paid

Stevenson for her loss. No question in this portion of the verdict form

addressed whether Farmers’ s payment was untimely, but the damages

portion of the verdict for m addressed th at issue

. On the cause of action for breach of the covenant of good faith and fair

dealing , questions four through seven , the jury initially returned verdict s
finding that Stevenson suffered a covered loss; that Farmers did not

reasonably inform her of the applicable medical payments coverage; and that

Stevenson was not harmed

. The verdict form instructed the jury that if it

found Stevenson was not harmed, in answering question six, that it should

leave blank question seven, whether Farmer s’ s failure reasonably to inform

Stevenson of the applicable medical coverage was a substantial factor in

causing her harm.

2 All statutory references are to the Code of Civil Procedure.5

In the damages section of the verdict form, question eight told t he jury

that if it answered yes to question three

— whether Farmer s paid Stevenson

for her loss under the policy

— it must determine whether Stevenson was

entitled to prejudgment interest. The jury filled in dates to award interest

from July 28, 2014 to October 23, 2015

. Question nine, whether Stevenson

was entitled to damages for past or future mental suffering and distress,

directed the jury to answer only if it answered yes to question seven (whether

Farmers’s failure to inform Stevenson of the coverage caused her harm) ;
having left question seven blank, t he jury left question nine blank as well

. Question 11, whether Stevenson was entitled to punitive damages, stated it

applied only if the jury awarded damages in question 9 (noneconomic

damages) , so t he jury left this question blank , too

. Immediately aft er the jury verdict was read, there w as an unreported

bench conference, after which the court told the jury: “There would appear to

be some inconsistency in the verdict in light of the fact that the jury found

that Farmers did not reasonably inform Ms. St evenson of payment coverage

that was applicable to her loss. And further, that she was entitled to

prejudgment interest for the period of

. . . July 28, 2014, to October 23rd,

2015. [¶] I’m going to ask, in light of that finding

— even though the verdict

f orm said if your answer to number six [, whether Stevenson was harmed,]

was no and directed you to go on to section three [relating to damages] , the

fact that you did find that interest is due is damage. ” The court therefore

asked the jury to continue its deliberations and answer question seven

(whether Farmer s’ s failure to inform Stevenson of the medical coverage was a

substantial factor in caus ing her harm), question nine (noneconomic

damages) and question 11 (punitive damages).6

The jury did as instruct ed. It found that Farmer s’ s failure reasonably

to inform Stevenson of the medical payments coverage was a substantial

factor in causing her harm (question seven) ; that Stevenson was not entitled

to damages for past or future mental suffering, anxiety, hum iliation and

emotional distress (question nine) ; and that Stevenson did not prove by clear

and convincing evidence that Farmers intentionally acted with malice,

oppression, or fraud (question 11). The amended verdict form thus contained

a n apparent incons istency: in the cause of action for breach of the covenant

of good faith and fair dealing, the jury found both that Stevenson was not

harmed (question six) and that Farmers’ s failure to inform her of the medical

payments coverage was a substantial factor in causing her harm. The record

discloses no mention at the hearing of this discrepancy.

Stevenson moved for a new trial asserting, as pertinent here, that as a

matter of la w she was entitled to noneconomic damages for Farmers’ s bad

faith withholding of the insurance payment. The trial court denied the

motion.

Stevenson also moved for attorney fees and costs, contending she was

entitled to the amounts she incurred to obtai n the benefits to which she was

entitled under the insurance policy because Farmers withheld them in bad

faith . ( Brandt

, supra , 37 Cal.3d 813.) The trial court denied the motion on
the ground the jury found that Stevenson had not established all elements of

her bad faith cause of action, specifically, that Stevenson was not harmed by

Farmers’ s bad faith. In addition, the trial court struck, sua sponte, the jury

award of prejudgment interest in the amount of $310, concluding that

plaintiff did not establi sh defendant’s bad faith for purposes of her tort claim

and that prejudgment interest for breach of contract is not a question for a7

jury; thus, according to the court, any jury award of prejudgment interest was

made in error. Stevenson has appealed from the ensuing judgment.

As we discuss in more detail below , Farmers submitted a memorandum

of costs that included expert witness fees. Stevenson moved to tax costs, and

the trial court granted her motion. The trial court denied Farmers’s motion

for recon sideration of the order. Farmers has appealed from the orders

granting Stevenson’s motion to tax costs and denying Farmers’s motion for

reconsideration.

DISCUSSION

I. Stevenson’s Appeal

A. Prejudgment Interest

We must first decide whether the trial court erred in striking the award

of prejudgment interest. A close examination of the instructions and the

verdict form persuades us that the award should have been allowed to stand.

As we have explained, the jury’s verdict as finally rendered found, in

connection with the cause of action for breach of the covenant of good faith

and fair dealing, both that Stevenson was not harmed and that Farmers’ s
failure reasonably to inform her of the applicable coverage was a substantial

factor in causing her harm.

Where a party does not object to an ambiguous verdict before the jury is

discharged, “it falls to ‘the trial judge to interpret the verdict from its

language considered in connection with the pleadings, evidence and

instructions

, ’ ” as well as counsel’s argument to the jury. ( Woodcock v.

Fontana Scaffolding & Equipment Co. (1968) 69 Cal.2d 452, 456 ( Woodcock );

Fuller v. Department of Transportation (2019) 38 Cal.App.5th 1034, 1038

( Fuller ).) As our colleagues in Division One of this court have explained

, “[g]eneral and special verdicts are deemed inconsistent when they are8

‘beyond possibility of reconciliation under any possible application of the

evidence and instructions.’ [Citation s .] ‘If any conclusions could be drawn

thereunder which would explain the apparent conflict, the jury will be

deemed to have drawn them.’ [Citation.] Where the jury’s findings are so

inconsistent that they are incapable of being reconciled and it is impossible to

tell how a material issue is determined, the decision is ‘ “against law” ’ within

the meaning of Code of Civil Procedure section 657.” ( Oxford v. Foster

Wheeler LLC (2009) 177 Cal.App.4th 700, 716 ( Oxford ) .)

“Where the trial judge does not interpret the verdict or interprets it

erroneously, an appellate court will interpret the verdict if it is possible to

give a correct interpretation. [Citations.] If the verdict is hopelessly

ambiguous, a reversal is required, ” at least in relevant part. ( Woodcock

,

supra , 69 Cal.2d at p. 457; accord, OCM Principal Opportun ities Fund

, L.P. v.

CIBC World Markets Corp. (2007) 157 Cal.App.4th 835, 881.) The appellate

court review s the special verdict de novo. ( Fuller

, supra , 38 Cal.App.5th at

p. 1038 ; Singh v. Southland Stone

, U.S.A.

, Inc. (2010) 186 Cal.App.4th 338,

358 .)

Review of the instructions and the arguments of counsel readily

clarifies the facial inconsistency in the jury’s findings that Stevenson was not

harmed (question six) and that Farmers’ s failure reasonably to inform her o f

the applicable medical coverage was a substantial factor in causing her harm

(question seven). In his closing argument, Stevenson’s counsel argued that

Stevenson was harmed both by the delay in payment and by emotional

distress. The court, i n its initi al instructions summarizing the damages

Stevenson claimed, told the jury, “Ms. Stevenson claims mental suffering,

anxiety, and emotional distress.” The court did not tell the jury that interest

awarded as compensation for Farmers’ s failure timely to pay o n the policy9

constituted damages

. Instead , the court instructed that if the jury awarded

damages for past economic loss it would have to decide whether to award

prejudgment interest on such damages , then gave the jury a verdict form that

framed the award for Farmers’s delay in payment on the policy as an award

of prejudgment interest

. In the damages section of the verdict form, the jury found Stevenson

was entitled to prejudgment interest for Farmer’s 15

- month delay in payment

(question eight). Although the jury was told to answer this question if it

found Farmers had paid Stevenson for her loss under the policy for purposes

of the contract cause of action (question three), there is no basis to conclude

that the financial harm caused by the delay was relevant only to the contract

claim . And, although the jury initially found in question six that Stevenson

was not harmed for purposes of the cause of action for breach of the covenant

of good faith and fair dealing , the trial court then instructed it explicitly

—

which it had not done before

— that a delay in payment entitling Stevenson to

prejudgment interest meant Stevenson had suffered damage for purposes of

the tort cause of action. The court directed the jury to r esume deliberating

and decide whether Farmers’ s failure reasonably to inform Stevenson of the

applicable coverage was a substantial factor in causing her harm (question

seven), which the jury then answered in the affirmative. The jury was told

only to ans wer the questions it had previously left blank; it therefore had no

occasion to reconsider its initial answer to question six

— whether Stevenson

was harmed

— in light of the new instruction that delay in payment

constituted harm. T he finding that Farmers’ s f ailure to inform Stevenson of

the coverage was a substantial factor in causing her harm, combin ed with the

finding that Farmers owed her interest for the 15

- month period of delay and

with both findings viewed in light of the changing instruction s, makes cl ear10

that, when more fully instructed, the jury concluded Stevenson in fact was
harmed by Farmers’ s breach of its covenant of good faith and fair dealing

. Farmers argues (and the trial court concluded) that the jury’s initial

finding that Stevenson was no t harmed should control the result here. But

such a result runs square ly against the rule that we cannot choose between

inconsistent special verdict s ( Oxford

, supra , 177 Cal.App.4th at p. 716 ),

because it would require us to ignore the finding that Farmer s’ s action was a

substantial factor in causing her harm. In contrast

, our conclusion is not a

choice between inconsistent findings, but rather an interpretation of the

verdict in light of the instructions to conclude the jury , when more fully

instructed, found that Stevenson in fact suffered harm in the form of the

delay in payment, although not in the form of mental suffering and emotional

distress.

Defendants arg ue that Stevenson may not challenge the trial court’s

interpretation because she failed to seek clarification of the verdict before the

jury was discharged . We reject this contention. Although “failure to object to

the form of a verdict before the jury i s discharged” may waive the defect,

“[w]aiver is not found where the record indicates that the failure to object was

not the result of a desire to reap a ‘technical advantage’ or engage in a
‘litigious strategy.’ ” ( Woodcock

, supra , 69 Cal.2d at p. 456, f n. 2; see Keener

v. Jeld

- Wen

, Inc. (2009) 46 Cal.4th 247, 270 [discussing “ Woodcock ’ s
articulated exception to the waiver (forfeiture) rule for ambiguous verdicts”].)

Nothing suggests Stevenson engaged in gamesmanship in failing to seek

clarification of t he verdict before the jury was dismissed.

We conclude, therefore, that, properly interpreted, the special verdict

shows the jury found Stevenson established all the elements of her cause of

action for breach of the covenant of good faith and fair dealing, including11

damages in the form of loss of use of her money while Farmers delayed

payment. The basis upon which the trial court struck the award of

prejudgment interest

— that prejudgment interest on an award for breach of

contract is not a matter for the ju ry

— was therefore invalid. The trial court

erred in striking the award.

B. Brandt Fees

This conclusion is also dispositive of Stevenson’s contention that the

trial court erred in denying her request for Brandt fees. Although under

California law the partie s to a lawsuit normally each pay their own attorney

fees ( Trope v. Katz (1995) 11 Cal.4th 274, 278; § 1021), an exception exists in

insurance bad faith cases. Under this exception, “ if an insurer fails to act

fairly and in good faith when discharging its responsibilities concerning an

insurance contract, such breach may result in tort liability for proximately

caused damages. Those damages can include the insured ’ s cost to hire an

attorney to vindicate the insured ’ s legal rights under the insurance policy.

‘ When an insurer ’ s tortious conduct reasonably compels the insured to retain

an attorney to obtain the benefits due under a policy, it follows that the

insurer should be liable in a tort action for that expense. Th e attorney ’ s fees

are an economic loss

— damages

— proximately caused by the tort. ’ ” ( Cassim

v. Allstate Ins. Co. (2004) 33 Cal. 4 th 780, 806, quoting Brandt

, supra , 37

Cal.3d at p. 817.)

The trial court denied Stevenson’s motion for Brandt fees solely on the

ground she did not prevail in her cause of action for breach of the covenant of

good faith and fair dealing. But we have just concluded that the jury in fact

found that she did establish that cause of action. In the circumstances, we

must remand for further proceedings on Stevenson’s entitlement to Brandt

fees. It will be for the trial court, in the first instance, to determine what fees12

Stevenson was reasonably compelled to incur in order to prompt Farmers to

pay on its policy, but w e note that the amount may not exceed “t he amount

attributable to the attorney ’ s efforts to obtain the rejected payment due on

the insurance contract. ” ( Brandt

, supra , 37 Cal.3d at pp. 817, 819; see also

Cassim v. Allstate Ins. Co.

, supra , 33 Cal.4 th at p. 807 .)

C. Noneconomic Damages

As we have explained, the jury awarded Stevenson no damages for

mental suffering, anxiety, humiliation, and emotional distress. Stevenson

contended in her motion for a new trial that the lack of an award of

non economic damages rendered the award inadequate as a matter of law.

The trial court denied the motion. Stevenson contends the trial court erred in

denying her request for a new trial on this issue.

Section 657 authorizes a trial court to grant a new trial for inadequate

damages, but only if, “after weighing the evidence the court is convinced from

the entire record, including reasonable inferences therefrom, that the court or

jury clearly should have reached a different verdict or decision. ” Stevenso n
contends the jury’s award was inadequate as a matter of law because the

uncontroverted evidence shows she suffered annoyance and inconvenience.

( Calhoun v. Hildebrandt (1964) 230 Cal.App.2d 70, 73.) We may not disturb

the verdict unless the amount of t he award is not supported by substantial

evidence or it is a clear abuse of the jury’s discretion. ( Ibid .)

In her opening brief, in a section devoid of citation to legal authority,

Stevenson points to her testimony that she knew the attorney who signed the

form interrogatories on Farmers’s attorney ’ s behalf and respected him

, and

that she was “disappointed, disillusioned” when she learned he had omitted

the medical expense coverage from the response

. She also testified that,

rather than being “the bigge st problem in [her] life,” it was an annoyance ;13

that although she had “no money to spare,” she was able to pay her bills even

after paying her out

- of

- pocket medical expenses; and that

, by the time she

found out about the omission

, part of the personal inju ry action had settled

and the “financial pressure was off

. ” S he “just thought they shouldn’t be

doing this to people.” This evidence, Stevenson contends, entitled her to at

least nominal damages.

In her reply brief, Stevenson for the first time cites le gal authority for

her contention. Each of the cases upon which she relies is distinguishable

from this one however, because the cases involve physical and serious

injuries suffered by a plaintiff. The court in Gallentine v. Richardson (1967)

248 Cal.App. 2d 152, 153

– 155, for instance, found inadequate a verdict

awarding no damages for the pain and suffering of a plaintiff who received a

gunshot wound that led to him suffering pain and nausea, undergoing

surgery, remaining in a hospital for three days, bein g confined to his bed for a

week thereafter, sustaining a scar, and remaining in discomfort from his

wound for several months. ( See also Dodson v. J. Pacific

, Inc. (2007) 154

Cal.App.4th 931, 938 [plaintiff who “undergoes a serious surgical procedure

. . . must necessarily have endured at least some pain and suffering, and a

damage award concluding otherwise is therefore inadequate as a matter of

law” ]. ) In Cliffor d v. Ruocco (1952) 39 Cal.2d 327, 328

– 329, a jury awarded

only $1,500 to a plaintiff who suffered injuries in an automobile accident that

included a scalp laceration and bruises to her side and leg, a painful infection

that had to be drained, loss of the f ull use of the leg after the treatment led to

adhesions, an unsuccessful operation to remove the adhesions, a second

infection, and continued pain up to the time of trial; moreover, the plaintiff’s

economic damages alone exceeded the amount of the jury awa rd. In those

circumstances, the damages were held to be inadequate as a matter of law.14

( I d . at p. 329.) And in Smith v. Covell (1980) 100 Cal.App.3d 947, one
plaintiff suffered physical injury while a second, her husband, suffered loss of

consortium; th e jury awarded the wife $10,000 and the husband nothing . ( Id

. at p. 951.) The appellate court found the award to the husband inadequate

as a matter of law because there was “ un controverted evidence of a loss of

consortium.” ( Id . at p. 956.)

None of t hese authorities persuades us an award that did not include

noneconomic damages was inadequate here . There is no evidence Farmers’s

actions caused Stevenson any physical harm, and Stevenson’s counsel

acknowledged to the jury that the “vast majority of her emotional distress

was related to the physical injury, not to what happened here.” Stevenson’s

testimony that she was disappointed, disillusioned, and annoyed rises to

nowhere near the same level as the suffering endured by the plaintiffs in the

cases up on which Stevenson relies , and it certainly does not compel an award

for mental suffering

, anxiety, humiliation and emotional distress

.
II. Farmers’ s Appeal

Before trial, Farmers made a statutory offer to compromise the action

for $25,000 under section 998

, which allows a prevailing defendant who has

made a reasonable, good faith offer to compromise to recover costs if the

plaintiff rejects the offer and fails to obtain a more favorable judgment.

(§ 998, subd. (c)(1 ); Nelson v. Anderson (1999) 72 Cal.App.4th 111, 134.)

Explaining that Farmers had not yet provided substantive discovery

responses, Stevenson did not accept the offer.

A fter trial

, Farmers submitted a memorandum of costs that included

$82,427 in expert witness fees. Stevenson moved to tax Farmers’s costs

, contending expert costs were not recoverable because Farmers’s section 998

offer was invalid.15

Due to a clerical error on the trial court’s part, the motion was

calendared for the same date in two different departments, both of which

issued tentative rulings the day before the hearing: Department 25 ’s directed

the parties to appear , and Department 1 ’s denied Stevenson’s motion both as
untimely and on the merits

. Farmers’s counsel

, who saw only Department 1 ’s

tentative ruling, appeared in Department 1, where she was told she

prevailed, while Stevenson’s counsel appeared in Department 25

. In

Department 25 the court allowed Stevenson’s counsel to argue the motion

,
then granted it in part because “by virtue of the defense not even bothering to

appear today, it strikes me that they are conceding” the in validity of the 998

offer

. Farmers moved for reconside ration two days later

, explaining the

scheduling snafu, but t he trial court denied the motion for reconsideration.

Farmers has appealed from the orders granting the motion to tax costs and

the motion for reconsideration and from the resulting amended judgment.

At oral argument, Farmers conceded that, if we reverse the judgment

based on Stevenson’s appeal

— and we do

— its appeals are moot. We agree.

“ ‘An order awarding costs falls with a reversal of the judgment on which it is

based.’

. . . After reversal of a judgment ‘the matter of trial costs [is] set at

large.’ ” (

Allen v. Smith (2002) 94 Cal.App.4th 1270, 1284 ; accord, Ducoing

Management

, Inc. v. Su perior Court (2015) 234 Cal.App.4th 306, 314 .) Thus,

the cost orders and amended judgment must also be reversed. (See Merced

County Taxpayers ’ Assn v. Cardella (1990) 218 Cal.App.3d 396, 402.) I f

Farmers again seeks costs on remand, any motion to tax those costs must be

considered with no weight given to either of the conflicting ruling s on

Stevenson’s motion to tax costs. We express no view on the validity of

Farmer’s section 998 offer

.16 DISPOSI TION

The judgment is reversed

. The orders granting Stevenson’s motion to

tax costs and denying Farmers’s motion for reconsideration are reversed.

The matter is remanded for further proceedings consistent with the views

expressed in this opinion. Stevenson shall recover her costs on appeal.

TUCHER, J.

WE CONCUR:

POLLAK, P. J. STREETER, J.

Stevenson v. Farmers ( A156727, A159269, A159373 )