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Filed 12/13/21 Marentes v. Crusader Insurance CA1/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or 

ordered published for purposes of rule 8.1115. 

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION THREE

VINCENT CASTILLO MARENTES 

et al.,

Plaintiffs and Appellants,

v.

CRUSADER INSURANCE 

COMPANY,

Defendant and Respondent.

 A158769

 (City and County

 of San Francisco

 Super. Ct. No. CGC-16-556197)

Plaintiff Vincent Marentes was involved in a multi-car accident while 

driving a tow truck for his employer. During the accident, Plaintiff Liudmilla 

Bichegkueva suffered serious injuries and sued Marentes and his employer. 

Defendant Crusader Insurance Company (Crusader) agreed to defend 

Marentes and his employer without any reservation of rights and retained 

counsel to represent them. Marentes also had a personal automobile 

insurance policy with State Farm Mutual Automobile Insurance Company 

(State Farm) but State Farm initially refused to defend Marentes. 

Bichegkueva offered to settle her claims against Marentes and his employer 

for Crusader’s policy limits and a default judgment against Marentes in 

exchange for a covenant not to execute that judgment against Marentes and 

an assignment by Marentes of his bad faith claim against State Farm. After 

an almost two hour discussion with Crusader’s counsel about the offer and its 
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consequences, Marentes rejected Crusader’s offer of independent counsel at 

Crusader’s expense and accepted Bichegkueva’s offer. Bichegkueva and 

Marentes (collectively, plaintiffs) then sued State Farm for bad faith but lost. 

Soon after, Plaintiffs sued Crusader but lost again as the trial court granted 

summary judgment, finding that Crusader did not act in bad faith to 

Marentes.

Plaintiffs now appeal from that summary judgment order. They 

primarily argue Crusader and its counsel had multiple undisclosed conflicts 

of interest with Marentes. They also claim Crusader breached its duty to 

settle Bichegkueva’s claims for its policy limits without obtaining a release 

from liability for Marentes, and Crusader committed fraud by materially 

misrepresenting and concealing facts from Marentes to induce him to accept

Bichegkueva’s settlement offer. The record does not support plaintiffs’

assertions, and we affirm.

FACTUAL AND PROCEDURAL BACKGROUND

I. Bichegkueva’s Lawsuit

Crusader insured Extreme Towing, Inc. (Extreme Towing) and its 

employee, Marentes, under a $1 million automobile liability policy for 

accidents while Marentes drove Extreme Towing’s tow truck. Marentes also 

had a personal State Farm automobile insurance policy limited to $30,000.00

per person and $60,000.00 per accident. 

In 2013, while driving Extreme Towing’s tow truck, Marentes was 

involved in a multi-vehicle accident that injured Bichegkueva and several 

other individuals. By September 2013, Crusader had paid $29,847.12 to 

settle the latter’s claims, leaving $970,152.88 to settle Bichegkueva’s claims. 

Bichegkueva filed a personal injury and property damages lawsuit against 

Extreme Towing and Marentes, which Crusader agreed to defend without 
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any reservation of rights. Crusader engaged outside counsel Aaron & Wilson, 

LLP (Aaron) to handle their defense. 

A. Settlement Negotiations

In September 2014, Bichegkueva notified Crusader of her willingness 

“to accept the policy limits from” both Crusader and State Farm. She further 

stated that if State Farm denied Marentes any defense or indemnity under 

its policy, she was prepared to “take [a bad faith claim] assignment from []

Marentes against State Farm,” enter a default judgment against Marentes,

and agree to a covenant “to only execute [the judgment] against [] Marentes’s 

State Farm Insurer.” She reiterated this covenant and assignment offer on 

multiple occasions. In one instance, her counsel stated that he was 

personally “hopeful that [Marentes’s and Extreme Towing’s] insurers refuse 

to offer the policy limits” because he could then file a bad faith claim against 

an insurer for amounts beyond the policy limits. 

Later in September, State Farm denied Marentes coverage on the 

ground the tow truck was not a covered vehicle under Marentes’s personal 

policy. On October 3, Bichegkueva acknowledged that State Farm did not 

agree to defend Marentes or pay its policy limits. As a result, she again 

offered to settle her claims against Marentes for Crusader’s policy limits plus 

an assignment of Marentes’s bad faith claims against State Farm in 

exchange for a covenant not to execute on a prove-up default judgment 

against Marentes. This offer remained open until October 10.

On October 9, Aaron emailed Bichegkueva that “ ‘Crusader is inclined 

to offer the remaining limits of its policy, around $970,000 or so, but it wants 

ALL its insureds dismissed with prejudice . . . To [sic] do otherwise, seems 

like an abdication of its responsibilities to its insured, Vincent Marentes.” In 

response, Bichegkueva’s counsel reiterated her demand to give Marentes only 
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a covenant not to execute any default judgment, rather than a release, in 

exchange for an assignment of his potential bad faith claim against State 

Farm for its refusal to defend Marentes. In addition to explaining the process 

for pursuing such a claim, he attached a news article describing how he had 

recovered nearly $10 million from an insurer using a similar arrangement in 

a different case. 

B. Crusader’s Discussions with Marentes About 

Bichegkueva’s Settlement Offer

On October 10, Aaron met with Marentes for almost two hours to 

discuss Bichegkueva’s “covenant and assignment” offer. Among the topics of 

discussion was the risk of offering Crusader’s remaining policy limits in 

exchange for dismissing both Marentes and Extreme Towing from the 

lawsuit—an outcome that Crusader preferred. Specifically, Aaron explained 

to Marentes that such an offer would constitute a rejection of Bichegkueva’s

covenant and assignment offer. As a result, Bichegkueva could reject 

Crusader’s counteroffer and instead proceed directly to trial, which could 

result in a judgment above the policy limits for which Marentes would be 

personally liable. Bichegkueva’s settlement offer, in contrast, fully protected 

Extreme Towing but not Marentes because a judgment would only be entered 

against him. For that reason, Aaron offered Marentes independent counsel 

at Crusader’s expense to advise him about his options. If Marentes wished to 

consult independent counsel or needed more time, Aaron intended to ask 

Bichegkueva to extend the deadline to accept her settlement offer. Finally, 

Aaron explained that Marentes was not obligated to accept the settlement 

offer, and that Crusader would continue to defend him in the lawsuit. That 

same day, Aaron provided Marentes a letter that explained his options, 
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including the option of having “this issue reviewed by independent counsel at 

the expense of” Crusader. 

After the discussion, Marentes declined independent counsel and 

agreed to Bichegkueva’s covenant and assignment offer. In December 2014, 

Bichegkueva, Marentes, and Extreme Towing signed a written settlement 

agreement that required Crusader to pay its full policy limits of $970,152.88

to Bichegkueva. Under the agreement, Bichegkueva released Extreme 

Towing from liability, while Marentes allowed a default judgment to be 

entered against him in exchange for Bichegkueva’s agreement not to execute 

or enforce the judgment. Marentes also agreed not to contest Bichegkueva’s 

damages or the judgment. Marentes assigned his potential bad faith claims 

to Bichegkueva, and Bichegkueva agreed that upon her counsel’s 

determination that there were insufficient grounds to sue State Farm for bad 

faith, she would give Marentes a full release.

C. The Default Judgment Against Marentes

In February 2015, Bichegkueva informed State Farm of her intention 

to proceed with a default judgment against Marentes if State Farm refused to 

defend him. Despite its prior position, State Farm unexpectedly agreed to 

defend Marentes subject to a reservation of rights. Bichegkueva filed a

motion to enforce the judgment, and Aaron and Bichegkueva stipulated to the 

entry of a default judgment against Marentes. Despite the stipulation, Aaron 

appeared to join State Farm in filing an opposition to Bichegkueva’s motion 

to enforce the judgment on behalf of Marentes—an apparent breach of the 

settlement agreement—without Marentes’s knowledge. The trial court, 

however, struck the opposition, accepted the stipulation, and entered a 

default judgment against Marentes. In April 2016, a $2,597,352.30 default 
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prove-up judgment was entered against Marentes for Bichegkueva’s injuries 

and damages from the 2013 auto collision. 

II. Plaintiffs’ Litigation with State Farm

After the default judgment was entered, State Farm sued plaintiffs in 

federal court seeking a declaration that it had no duty to defend or indemnify 

Marentes against Bichegkueva’s claims. It also sought reimbursement for 

legal fees incurred while opposing Bichegkueva’s motion to enforce the 

judgment against Marentes. New counsel, rather than Crusader or Aaron, 

represented Marentes. The federal district court ultimately dismissed State 

Farm’s case. 

In November 2015, Bichegkueva and Marentes, through new counsel, 

sued State Farm for bad faith, and sought full payment of the default 

judgment against Marentes, as well as emotional distress and punitive 

damages for Marentes. But in December 2016, the trial court granted State 

Farm summary judgment because its policy excluded Extreme Towing’s 

truck. 

III. Plaintiffs’ Litigation Against Crusader

Shortly after Bichegkueva and Marentes lost their bad faith lawsuit 

against State Farm, Marentes assigned to Bichegkueva his right to sue 

Crusader for bad faith in exchange for Bichegkueva’s covenant not to execute 

or enforce the default judgment against him. They agreed that if 

Bichegkueva did not receive money from a lawsuit against Crusader or any 

other insurer of the tow truck, she “will execute a stipulation to vacate the 

Judgment against Marentes.” They also agreed to release each other from 

any claims that they breached the settlement agreement. Then, they sued 

Crusader for, among other things, bad faith, breach of contract, unfair 

business practices, and fraud/concealment. 
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The parties both submitted motions for summary judgment. In support 

of plaintiffs’ motion, Marentes declared that he met with Aaron on October 

10, 2014, but that Aaron did not explain Marentes’s “rights to insurance 

beyond what is stated in” Aaron’s letter or that Marentes had the right to 

demand that Crusader offer its policy limits to Bichegkueva to settle the case 

for both him and Extreme Towing. He then stated “I would not have agreed 

to or initialed the October 10, 2014 letter giving permission to Crusader to 

only settle the case for . . . Extreme Towing, Inc., if I had known that 

Crusader never demanded that Liudmilla Bichegkueva accept its policy 

limits for both Extreme Towing and me.” He also stated that Aaron did not 

mention any conflicts of interest between him and Crusader or between him 

and Extreme Towing. Aaron, according to Marentes, did not explain why he 

was offering to appoint independent counsel on his behalf. Finally, Marentes 

noted that Aaron did not ask whether he or Extreme Towing would be willing 

to pay additional money to settle the case. Marentes did not, however, state 

that he had any additional money to settle the case.

The trial court granted Crusader’s motion for summary judgment, and 

plaintiffs timely appealed.

DISCUSSION

I. Standard of Review

Summary judgment is proper where there is “no triable issue as to any 

material fact and the moving party is entitled to judgment as a matter of 

law.” (Code Civ. Proc., § 437c, subd. (c).) A defendant moving for summary 

judgment must demonstrate that the plaintiff “ ‘has not established, and 

cannot reasonably expect to establish’ ” the elements of the plaintiff’s cause of 

action. (State of California v. Allstate Ins. Co. (2009) 45 Cal.4th 1008, 1017.)

“We review the trial court’s decision de novo, liberally construing the 
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evidence in support of the party opposing summary judgment and resolving 

doubts concerning the evidence in favor of that party.” (Id. at pp. 1017–

1018.)

II. Duty of Good Faith and Fair Dealing

Plaintiffs claim Crusader and Aaron, the counsel retained by Crusader 

to represent Marentes, failed to properly disclose their various conflicts of 

interest with Marentes, breached the duty to settle, failed to provide 

Marentes with an informed evaluation of Bichegkueva’s settlement offer, and 

breached other professional responsibilities owed to Marentes—all 

amounting to bad faith. Thus, plaintiffs contend the trial court erred by 

granting summary judgment in favor of Crusader. We disagree. 

Like all contracts, insurance policies have an implied covenant of good 

faith and fair dealing, requiring the parties to refrain from actions that would 

deprive them of the agreement’s benefits. (Wilson v. 21st Century Ins. Co.

(2007) 42 Cal.4th 713, 720 (Wilson).) For example, the implied covenant

requires the insurance company “to make reasonable efforts to settle a third 

party’s lawsuit against the insured.” (Howard v. American Nat. Fire Ins. Co.

(2010) 187 Cal.App.4th 498, 524 (Howard).) Mere errors, bad judgment, or 

negligence does not, however, constitute bad faith. (Nieto v. Blue Shield of 

California Life & Health Ins. Co. (2010) 181 Cal.App.4th 60, 86; Brandt v. 

Superior Court (1985) 37 Cal.3d 813, 819.) Instead, the insurer must engage 

in a “ ‘conscious and deliberate act, which unfairly frustrates the agreed 

common purposes and disappoints the reasonable expectations of the other 

party thereby depriving that party of the benefits of the agreement.’ ” 

(Chateau Chamberay Homeowners Assn. v. Associated Internat. Ins. Co.

(2001) 90 Cal.App.4th 335, 346 (Chateau).) Thus, the relevant inquiry in any 

bad faith claim against an insurer is whether the insurer’s conduct was 
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unreasonable—a question of fact that “becomes a question of law where the 

evidence is undisputed and only one reasonable inference can be drawn from 

the evidence.” (Ibid.) We evaluate the insurer’s good or bad faith “in light of 

the totality of the circumstances surrounding its actions.” (Wilson, supra, 42 

Cal.4th at p. 723.)

A. Conflict of Interest Arising From Bichegkueva’s 

Settlement Offer

Bichegkueva’s covenant and assignment offer required consideration 

directly from Marentes and beyond Crusader’s policy limits. According to 

plaintiffs, this created a conflict of interest between Marentes and Crusader

that warranted disclosure. Because Crusader failed to disclose this conflict of 

interest to Marentes, plaintiffs contend Crusader acted in bad faith. They, 

however, misstate Crusader’s duties with respect to the settlement offer. In 

fact, Crusader appropriately discharged its duties under the policy.

A conflict of interest develops “when a settlement offer is made in 

excess of policy limits and the insured is willing and able to pay the excess.” 

(Merritt v. Reserve Ins. Co. (1973) 34 Cal.App.3d 858, 877 (Merritt).) But in 

those circumstances, there is no duty to disclose the conflict. Rather, the 

insurer “must make a rational and knowledgeable assessment of the 

advisability of accepting or rejecting the settlement offer.” (Id. at p. 874.) To 

that end, it must advise the insured about the pending settlement offer, 

identify the additional consideration beyond the policy limits that the third 

party is demanding, and determine whether the insured is willing to 

contribute this additional consideration. (Id. at p. 875.) That occurred here. 

As plaintiffs point out, Aaron recognized that Bichegkueva’s covenant 

and assignment offer created a conflict of interest between Crusader and 

Marentes. He then identified to Marentes the consideration beyond 
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Crusader’s policy limits—Marentes’s agreement to a stipulated judgment 

against him personally and his assignment to Bichegkueva of his right to 

pursue a bad faith claim against State Farm in exchange for a covenant from 

Bichegkueva not to execute the judgment against him—sought by the offer. 

Aaron explained to Marentes that the covenant would preclude Bichegkueva 

from collecting that judgment amount from him, thus offering Marentes 

financial protection. He further noted that the judgment could negatively 

affect Marentes’s credit rating or prospective employment opportunities. 

Additionally, he described the potential consequences of rejecting 

Bichegkueva’s offer, i.e., going to trial and Marentes’s potential personal

liability for a large judgment. Finally, he emphasized that it was Marentes’s 

decision to accept or reject the offer, that Crusader could not enter the 

settlement without Marentes’s “informed written consent,” that Crusader 

would defend Marentes if he rejected the offer, and that Marentes could 

consult with independent counsel at Crusader’s expense about the offer. 

By communicating with Marentes in this manner, Crusader complied 

with its obligations to Marentes. (See Heredia v. Farmers Ins. Exch. (1991) 

228 Cal.App.3d 1345, 1360 [failure to inform insured of settlement offer 

exceeding policy limits is bad faith]; Merritt, supra, 34 Cal.App.3d at p. 875.)

B. Right to Independent Counsel 

Citing Civil Code section 2860, plaintiffs contend Bichegkueva’s 

settlement offer created an ethical conflict of interest between Crusader’s 

counsel and Marentes, thus triggering Marentes’s right to independent 

counsel. (Civ. Code, § 2860, subd. (a) [requiring insurer to provide insured 

with independent counsel unless insured, when informed of conflict, 

expressly waives in writing the right to independent counsel].) Plaintiffs 

complain Marentes did not knowingly waive his right to independent counsel 
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because Crusader’s counsel failed to disclose its conflict of interest with 

Marentes and failed to explain why it offered him independent counsel. 

As an initial matter, we question whether Crusader’s counsel had an 

actual conflict of interest with Marentes that triggered his right to 

independent counsel. (See Dynamic Concepts, Inc. v. Truck Ins. Exchange

(1998) 61 Cal.App.4th 999, 1007–1008 [actual conflict of interest “precludes 

insurer-appointed defense counsel from presenting a quality defense for the 

insured” and requires appointment of independent counsel; potential conflicts

do not].) While an actual conflict of interest exists “where the insurer 

pursues settlement in excess of policy limits without the insured’s consent and 

leaving the insured exposed to claims by third parties,” those circumstances 

do not appear to exist here. (James 3 Corp. v. Truck Ins. Exchange (2001) 91 

Cal.App.4th 1093, 1101, italics added.) Marentes admitted he had a good 

understanding of the offer and consented to a settlement that exceeded

Crusader’s policy limits. Indeed, Aaron made clear that Marentes was not 

obligated to accept Bichegkueva’s offer and that Crusader would defend 

Marentes without limitation if he rejected the offer. Thus, Marentes, not 

Aaron, controlled whether to accept Bichegkueva’s settlement offer. Under 

these facts, Aaron’s representation of Crusader did not appear to render less 

effective his representation of Marentes. (See id. at p. 1102.) 

But resolving this issue is unnecessary. Even if Aaron’s disclosure of

any assumed conflict or explanation of the need for independent counsel was 

inadequate, plaintiffs do not demonstrate that his omissions proximately 

caused any damages. (See, e.g., Golden Eagle Ins. Co. v. Foremost Ins. Co.

(1993) 20 Cal.App.4th 1372, 1396 [insured entitled to compensatory damages 

for failure to appoint independent counsel]; PPG Industries, Inc. v. 

Transamerica Ins. Co. (1999) 20 Cal.4th 310, 315 [insurance company is only 
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liable for damages that are proximately caused by a breach of the implied 

covenant of good faith and fair dealing].) This is because Aaron did offer

Marentes independent counsel at Crusader’s expense. Plaintiffs complain 

that this offer was illusory because Bichegkueva’s offer expired the same day 

Aaron made the offer. But Marentes never claimed that he would have 

consulted with independent counsel if Aaron had made the required 

disclosure or explanation or if Aaron had given him more time to consider the 

offer. Nor did Marentes ever claim that he would have rejected the offer if he 

had consulted with independent counsel. In fact, Marentes admitted he did 

not feel it was necessary to get another attorney involved after discussing the 

issues with Aaron. Based on these undisputed facts, Marentes’s speculation 

that independent counsel would have negotiated a settlement agreement that 

included a full release from liability cannot create a triable issue of fact. 

C. Duty to Settle

Plaintiffs insist Crusader acted in bad faith by not offering its policy 

limits to release both Marentes and Extreme Trucking from liability. They 

similarly fault Crusader for not offering Bichegkueva an additional 

$30,000.00 to be paid by either Marentes or Extreme Trucking plus its policy 

limits to settle her claims. Now, many years after the parties entered into 

the settlement agreement, Bichegkueva declares that she would have 

accepted these counteroffers if Crusader had presented them. For that 

reason, plaintiffs claim Crusader breached its duty to settle and is thus liable 

for the entire judgment entered against Marentes. (See Hamilton v. 

Maryland Casualty Co. (2002) 27 Cal.4th 718, 724–725 (Hamilton) [allowing 

recovery of entire amount of judgment rendered against insured where 

insurer unreasonably refused to settle].) 
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There is little merit to plaintiffs’ claim because Crusader did settle with 

Marentes’s informed written consent. (See Pinto v. Farmers Ins. Exchange

(2021) 61 Cal.App.5th 676, 688 [“claim for bad faith based on the wrongful 

refusal to settle . . . requires proof the insurer unreasonably failed to accept 

an offer”].) More importantly, an “insurer does not breach the duty to settle if 

it never had an opportunity to settle . . . . [T]he opportunity to settle is 

typically shown by proof that the injured party made a reasonable settlement 

offer within the policy limits and the insurer rejected it.” (Howard, supra,

187 Cal.App.4th at p. 525.) 

Here, Bichegkueva never offered to settle solely for Crusader’s policy 

limits or for an additional $30,000.00 from Extreme Towing or Marentes, as 

plaintiffs contend. The record establishes that Bichegkueva first offered to 

settle for payment of the policy limits by both Crusader and State Farm. Her 

second offer was to settle for Crusader’s policy limits, entry of a default 

judgment against Marentes with a covenant not to execute that judgment 

against him, and assignment of Marentes’s bad faith claims against State 

Farm. She continually repeated this second offer. When Crusader’s counsel 

expressed its inclination to offer Crusader’s policy limits to release both 

Marentes and Extreme Towing, Bichegkueva’s counsel reiterated this second 

offer. He even sent Aaron a news article describing how he had successfully 

used a “similar arrangement” to recover nearly $10 million from an insurer 

who, like State Farm, had denied coverage. Crusader thus appropriately 

explored the possibility of settling for its policy limits, but based on 

Bichegkueva’s communications, reasonably believed it could not “feasibly be 

negotiated.” (Reid v. Mercury Ins. Co. (2013) 220 Cal.App.4th 262, 278 

[insurer may act in bad faith “when a claimant clearly conveys to the insurer 
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an interest in discussing settlement but the insurer ignores the opportunity 

to explore settlement possibilities to the insured’s detriment”].) 

Crusader’s decision not to respond to Bichegkueva’s settlement offers 

with a counteroffer to settle for its policy limits was also reasonable. At the 

time, Bichegkueva never manifested any willingness to settle under her nowstated terms. (Cf. Graciano v. Mercury General Corp. (2014) 231 Cal.App.4th 

414, 427–428 [“An insured’s claim for ‘wrongful refusal to settle’ cannot be 

based on his or her insurer’s failure to initiate settlement overtures with the 

injured third party . . . but instead requires proof the third party made a 

reasonable offer to settle the claims against the insured for an amount within 

the policy limits”].) More significantly, Aaron had no assurances that if it 

made the counteroffer—which would have rejected Bichegkueva’s offers—

that Bichegkueva would have renewed any of her offers, particularly given 

her counsel’s eagerness to sue an insurer for bad faith. (See Martinez v. 

Brownco Construction Co. (2013) 56 Cal.4th 1014, 1020 [“a counteroffer that 

deviates from the terms of an offer ordinarily operates as a rejection of the 

offer so as to terminate the offer immediately”].) 

Bichegkueva’s current self-serving and uncorroborated declaration that 

she would have released both Marentes and Extreme Towing if Crusader had 

simply offered its policy limits or if Marentes had paid $30,000.00 himself 

cannot establish that Crusader acted unreasonably. (See Taylor v. Financial 

Casualty & Surety, Inc. (2021) 67 Cal.App.5th 996, 1004 (Taylor) [“selfserving, uncorroborated evidence . . . does not meet their burden to 

demonstrate triable issues of material fact”]; King v. United Parcel Service, 

Inc. (2007) 152 Cal.App.4th 426, 433 (King) [same].) As noted above, there 

was no evidence that Bichegkueva objectively manifested any such intent 

during the settlement negotiations. 
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Finally, Crusader’s failure to offer to settle for $30,000 from Extreme 

Towing or Marentes cannot support a bad faith claim. There is no evidence 

that Extreme Towing or Marentes or the two of them together could or would 

have made such an offer. To the contrary, the only evidence in the record 

indicated that Extreme Towing lacked the financial wherewithal to offer any 

of its own funds to settle Bichegkueva’s claims. Similarly, Marentes’s 

declaration did not suggest, much less state, that he had any money of his 

own to settle the claims. 

Under the totality of the circumstances, Crusader’s efforts to settle 

were reasonable. (See Howard, supra, 187 Cal.App.4th at p. 524.) Because 

plaintiffs’ claim that Crusader breached its duty to settle fails, their claim for 

the entire amount of the judgment against Marentes fails. (See Hamilton, 

supra, 27 Cal.4th at pp. 724–725.)

D. Duty to Provide Marentes with an Informed Evaluation of 

the Settlement Offer

We reject plaintiffs’ claim, citing Continental Casualty Co. v. United 

States Fidelity & Guaranty Co. (N.D.Cal. 1981) 516 F.Supp. 384, that 

Crusader breached its duty to provide Marentes with an informed evaluation 

of Bichegkueva’s settlement offer. (Id. at p. 389.) In that case, the insurer 

conceded that it did not engage in any negotiations after receiving the 

settlement offer, did not discuss the offer with the insured, and did not 

respond to the offer. Instead, the insurer insisted on going to trial, even 

though its payments department recommended paying the policy limits. 

(Ibid.) In contrast, Crusader “conduct[ed] good faith settlement negotiations 

sufficient to ascertain the most favorable terms available” and made the 

requisite evaluation of Bichegkueva’s settlement demand. (Ibid.)
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Aaron’s almost two-hour long discussion with Marentes specifically 

addressed “whether to accept the settlement proposal on the table, which was 

an imperfect solution but which provided [] Marentes with financial 

protection, and . . . whether to hold out and press for a full release, which []

Bichegkueva might or might not be willing to give.” Aaron also identified the 

risks of requesting a release based solely on Crusader’s policy limits, such as 

Bichegkueva rejecting the counteroffer—which would have extinguished her 

other offers—and taking the case to trial. According to Aaron, “[w]e 

discussed my assessment that this risk appeared quite real based on my 

interactions with [Bichegkueva’s counsel], who seemed dead set on pursuing 

a ‘bad faith’ claim against one or both insurers and who I believed might seize 

upon any excuse—such as a counter-offer—to refuse to settle within policy 

limits.”

Aaron also explained to Marentes that “if [] Bichegkueva refused to 

settle and took the case to trial, [] Marentes faced the possibility of having a 

judgment in excess of the limits of the policy entered against him. [Aaron] 

related that [Marentes’s] insurance company would be obligated to pay the 

remaining limits on the policy but [Marentes] faced personal exposure for any 

amounts in excess of that figure. The conversation included the shared 

understanding that Extreme Towing was not in a financial position to cover 

an excess judgment.” 

Although plaintiffs fault Aaron for his failure to provide Marentes with 

an informed assessment of Bichegkueva’s personal injury claims and the 

potential damages she could recover at trial, this argument is meritless. 

Contrary to plaintiffs’ claim that this was solely a liability case, Aaron’s 

assessment, provided to Crusader, also noted that Bichegkueva’s potential 

damages were problematic—she had a potential $720,000.00 wage loss claim
17

that “if proved, turns this into a policy limits case.” He described 

Bichegkueva as “likeable,” and concluded a jury would likely believe her wage 

loss claim. There is no reason to believe that this assessment would have 

affected Marentes’s decision to accept Bichegkueva’s offer. Indeed, Marentes 

made no such claim in his declaration. (Lueter v. Cal. (2002) 94 Cal.App.4th 

1285, 1303 (Lueter).)

Plaintiffs’ claim that Aaron was required to convey to Marentes his 

thoughts about the need for further discovery before Crusader paid its policy 

limits to Bichegkueva is equally meritless. Aaron had advised Crusader 

against agreeing to any settlement without additional discovery, such as two 

independent medical examinations of Bichegkueva. But Bichegkueva had 

threatened to withdraw her settlement offer for Crusader’s and State Farm’s 

policy limits if Crusader proceeded with the examinations. Under these

circumstances, we cannot conclude that Aaron acted unreasonably or in bad 

faith by failing to provide Marentes with this information. (Chateau, supra,

90 Cal.App.4th at p. 346.) But even if he had, there is no evidence that this 

information would have affected Marentes’s decision-making. (Lueter, supra, 

94 Cal.App.4th at p. 1303.) Accordingly, Aaron’s failure to provide Marentes 

with his evaluation of Bichegkueva’s claims cannot support plaintiffs’ bad 

faith claim.

E. Crusader’s Duty to Treat Extreme Trucking and Marentes

Equally

Plaintiffs contend the settlement agreement favored Extreme Trucking 

over Marentes, and thus Crusader breached its duty of good faith and fair 

dealing owed to both insureds. (Lehto v. Allstate Ins. Co. (1994) 31 

Cal.App.4th 60, 72 [insurer “cannot favor the interests of one insured over 

the other”].) Crusader, according to plaintiffs, paid its policy limits to obtain 
18

a release from liability for Extreme Trucking while leaving Marentes without 

protection or insurance coverage. We disagree.

True, the settlement agreement allowed a default judgment to be 

entered against Marentes. But the covenant not to execute the judgment 

protected Marentes from any excess liability. As a result, Marentes has 

never incurred any out-of-pocket expenses in this case. Thus, Crusader did 

not bankroll Bichegkueva’s case against Marentes. (See State Farm Mutual

Automobile Ins. Co. v. Crane (1990) 217 Cal.App.3d 1127, 1136 [payment 

without obtaining release against insured would “bankroll” injured party’s 

litigation against insured and could constitute bad faith toward insured].) 

Marentes also expressly consented to Bichegkueva’s settlement offer, 

including the lack of an individual release. (See Ivy v. Pacific Automobile Ins. 

Co. (1958) 156 Cal.App.2d 652, 661 [insurer must give insured the 

opportunity and information to decide “whether he would be satisfied with a 

covenant not to execute against him, and, if not, what steps he wanted to 

take to protect his interest”].) Moreover, the settlement agreement stated 

that Bichegkueva would release Marentes if her counsel determined there 

were insufficient grounds to sue State Farm for bad faith. 

For these reasons, this case is distinguishable from the cases cited by 

plaintiffs. In each of those cases, the insurer acted without the consent of the 

insured and exposed that insured to the risk of greater liability. (See, e.g., 

Schwartz v. State Farm Fire & Casualty Co. (2001) 88 Cal.App.4th 1329, 

1340 [summary adjudication improper where payment of full policy limits to 

one insured party may have impaired rights of coinsured “from receiving a 

fair share of benefits under the policy”]; Shell Oil Co. v. Nat. Co. (1996) 44 

Cal.App.4th 1633, 1645 [insurer’s payment of entire $1 million policy limits 

on behalf of only one coinsured, leaving the other insured to pay out-of-pocket 
19

for settlement constituted bad faith]; Palmer v. Financial Indemnity Co.

(1963) 215 Cal.App.2d 419, 431 [settlement covering one insured for $7,500 in 

exchange for convent not to execute that did not cover the second insured and 

without the second insured’s knowledge left her abandoned, unprotected, and 

exposed to greater liability, sufficient for finding bad faith].) 

Here, in contrast, Marentes consented to the settlement offer, and the 

settlement protected Marentes from any personal liability. Under these 

undisputed facts, we do not see how Crusader’s actions can be construed as a 

conscious or deliberate act against Marentes’s interests. (Wilson, supra, 

42 Cal.4th at p. 726.)

F. The Rules of Professional Conduct 

Plaintiffs claim Aaron breached the Rules of Professional Conduct

while representing Marentes. Specifically, they claim Aaron’s simultaneous 

representation of Extreme Towing and Marentes created an undisclosed 

conflict of interest to which Marentes did not provide informed written 

consent. (See Flatt v. Superior Court (1994) 9 Cal.4th 275, 283–284 (Flatt)

[conflict may arise from a lawyer’s simultaneous representation of clients 

with directly adverse interests]; Rules Prof. Conduct, rule 1.7(a)-(b).) They 

also contend Aaron’s post-settlement conduct—including his apparent 

participation in State Farm’s opposition to Bichegkueva’s motion to enforce 

the default judgment on Marentes’s behalf without his knowledge—breached 

his duty of loyalty to Marentes. (See Flatt, at p. 289 [attorney cannot 

“assume a position adverse or antagonistic to his client without the latter’s 

free and intelligent consent given after full knowledge of all the facts and 

circumstances”].) But even if Aaron breached his ethical duties,1 plaintiffs 

1 The record indicates that during the October 10 discussion with 

Marentes, Aaron pointed out that Marentes may conclude “his interests were 
20

have not demonstrated that these breaches proximately caused any damage

to Marentes. (See Fair v. Bakhtiari (2011) 195 Cal.App.4th 1135, 1153

[requiring “proof of damages where the client seeks compensatory damages 

as a tort remedy for breach of fiduciary duty”].) Indeed, Marentes does not 

claim he would have rejected Bichegkueva’s covenant and assignment offer 

had Crusader’s counsel disclosed these or any other purported conflicts of 

interest. 

There is also no merit to plaintiffs’ claim that Aaron’s failure to discuss

Marentes’s potential rights under Labor Code section 2802—which provides 

for employer indemnification of employees sued by third parties for conduct 

in the course and scope of employment—created a conflict of interest between 

Extreme Towing and Marentes, thus injuring Marentes. Indemnification was 

not an issue here. Bichegkueva recognized Marentes and Extreme Trucking 

lacked any assets, and there is no evidence that they had any assets to pay 

Bichegkueva. Bichegkueva never asked Marentes to personally pay her in 

exchange for releasing Marentes from liability. Instead, she only sought 

payment from Crusader and State Farm. 

Aaron’s purported filing of an opposition to Bichegkueva’s motion to 

enforce the settlement without Marentes’s knowledge also resulted in no 

harm to Marentes. The trial court struck the opposition, enforced the 

settlement agreement, and entered the default judgment against Marentes. 

Per the settlement agreement, Bichegkueva was still able to sue State Farm, 

and plaintiffs later released each other from any claims that they breached 

the settlement agreement. Thus, Marentes suffered no harm from Aaron’s 

not best served by settling while the interests of others were.” He noted that 

Bichegkueva’s covenant and assignment offer fully protected Extreme Towing 

but not Marentes. 
21

opposition. Indeed, that opposition, if successful, would have voided the 

settlement agreement—the very outcome that plaintiffs claim should have 

occurred.

Likewise, Marentes has not demonstrated he suffered any damage from

Crusader’s failure to defend him against State Farm’s lawsuit for declaratory 

relief. The court dismissed State Farm’s complaint, and Marentes admitted 

that he did not pay any attorney fees or incur any additional expenses as a 

result of State Farm’s actions.

Under the totality of the circumstances and the undisputed facts, there 

is no reasonable inference that Crusader’s actions were unreasonable and 

made in bad faith.2 (See Chateau, supra, 90 Cal.App.4th at p. 346.) In any 

event, even if Crusader’s assumed errors were the result of bad faith rather 

than negligence or bad judgment, plaintiffs have not demonstrated that those 

errors harmed Marentes. (McLaughlin v. Nat. Union Fire Ins. Co. (1993)

(1994) 23 Cal.App.4th 1132, 1162 [“Plaintiffs must show actual damage; proof 

of defendant’s bad faith is not enough”].) Bichegkueva never attempted to 

collect any portion of the default judgment against Marentes, and Marentes 

has not paid anything as a result of entering into the settlement agreement 

with Bichegkueva. And Marentes admitted that he never will. Marentes 

also stated that he will not have to pay anyone if he does not recover 

anything in this lawsuit. 

Accordingly, Aaron’s purported breach of the Rules of Professional 

Conduct cannot support plaintiffs’ bad faith claims. 

2 We do not address plaintiffs’ claim Crusader acted in bad faith by 

failing to inform Marentes of Bichegkueva’s Code of Civil Procedure section 

998 demand for $1.25 million. Plaintiffs forfeited this argument on appeal by 

failing to raise it in the trial court. (DiCola v. White Brothers Performance 

Products, Inc. (2008) 158 Cal.App.4th 666, 676.)
22

II. Fraud and Fraudulent Concealment

We reject plaintiffs’ claim that Crusader committed fraud by making 

various misrepresentations and omissions that wrongly induced Marentes to 

accept the settlement offer. Fraud requires a “ ‘misrepresentation, 

knowledge of its falsity, intent to defraud, justifiable reliance, and resulting 

damage.’ ” (Curcini v. County of Alameda (2008) 164 Cal.App.4th 629, 649

(Curcini).) Fraudulent concealment requires the intentional concealment or 

suppression of a material fact that the defendant was under a duty to disclose

and an intent to defraud. (Levine v. Blue Shield of California (2010) 189 

Cal.App.4th 1117, 1127.) The plaintiff must have been unaware of this fact 

and “ ‘would not have acted as he did if he had known of the concealed or 

suppressed fact,’ ” and as a result, sustained damage. (Ibid.)

Plaintiffs identify several allegedly inaccurate statements made by 

Aaron. But they only contend one of those statements—that Crusader had 

offered to settle Bichegkueva’s claims against Marentes for its policy limits—

misled Marentes into accepting Bichegkueva’s settlement offer. (See Caro v. 

Procter & Gamble Co. (1993) 18 Cal.App.4th 644, 668 (Caro) [“A 

misrepresentation of fact is material if it induced the plaintiff to alter his 

position to his detriment’”].) That alleged misstatement cannot, however, 

support a claim of fraud.3

Plaintiffs cite two specific statements in Aaron’s letter to Marentes that 

are allegedly false. First, they contend Aaron’s representation that “we have 

asked plaintiff to accept the policy limits under the Crusader policy without

the additional conditions outlined above, i.e., a stipulated judgment against []

3 We do not discuss the additional alleged inaccuracies because 

plaintiffs do not present any argument or facts demonstrating that they 

induced Marentes to alter his position to his detriment. 
23

Marentes,” was false. Second,they argue Aaron repeated this 

misrepresentation when he wrote that “Crusader will continue to offer 

plaintiff the amount of the remaining insurance, $970,152.88, in exchange for 

a dismissal with prejudice of BOTH Extreme Trucking, Inc. and [] Marentes.” 

But neither purported misrepresentation is material. For example, the 

first statement was largely accurate. As noted earlier, Crusader’s counsel 

explored Bichegkueva’s willingness to dismiss both Marentes and Extreme 

Towing in exchange for Crusader’s policy limits. Bichegkueva, however,

ignored those overtures. Instead, Bichegkueva’s counsel repeatedly 

expressed his desire to sue State Farm for bad faith. 

Likewise, the second statement, when read in context, simply explained 

Marentes’s and Crusader’s next steps if Marentes was “unwilling to accept 

[Bichekgueva’s] proposed settlement demand, i.e., entering into a stipulated 

judgment, etc.” In that circumstance, “the case would simply continue, as 

before, with Crusader . . . funding the defense, and responsible for any 

judgment or settlement up to the limits of its policy.” Crusader would then 

continue to offer Bichegkueva its policy limits to settle her claims against 

Marentes. Thus, the second statement was also largely accurate. 

But even if these statements were inaccurate, plaintiffs cannot 

establish that they were material. (Caro, supra, 18 Cal.App.4th at p. 668.) 

Based on the undisputed evidence available at the time of the settlement 

negotiations, Bichegkueva only manifested an intent to accept both 

Crusader’s and State Farm’s policy limits. Her self-serving and 

uncorroborated declaration does not establish otherwise. (See Taylor, supra, 

67 Cal.App.5th at p. 1004; King, supra, 152 Cal.App.4th at p. 433.) Thus, the

alleged misstatements could not have induced Marentes to alter his position 

to his detriment. 
24

Finally, there is no merit to Marentes’s claim that Crusader misled him 

regarding its inability to obtain a release for him unless State Farm paid its 

$30,000.00 policy limits. That information was accurate. Bichegkueva only 

offered to settle for both Crusader’s and State Farm’s policy limits and never 

offered to settle for Crusader’s policy limits. Instead, Bichegkueva made it 

clear that she would not settle for just Crusader’s policy limits because she 

wanted the opportunity to sue State Farm for bad faith. In any event, 

Marentes cannot establish that he justifiably but detrimentally relied on this 

alleged misstatement. (See Curcini, supra, 164 Cal.App.4th at p. 649.)

Summary judgment in favor of Crusader on this claim was therefore proper. 

III. Unfair Competition Law Claim

Summary judgment was proper on plaintiffs’ unfair competition law

(UCL) claim. That claim is based solely on Crusader’s alleged violations of 

the Unfair Insurance Practices Act (UIPA). Violations of the UIPA, by 

themselves, may not form the basis of a UCL claim. (Zhang v. Superior 

Court (2013) 57 Cal.4th 364, 384.) 

IV. Claim for Costs and Interest

Bichegkueva’s argument that she is entitled to $18,722.50 in courtawarded costs and interest on her judgment pursuant to the supplementary 

payments provision in Crusader’s insurance policy also fails. She claims 

Crusader’s failure to pay that amount constitutes bad faith, a breach of 

contract, and a violation of Insurance Code section 11580.4 The record does 

not support this claim.

Crusader’s supplementary payments provision authorizes paying the 

insured “[u]p to $100,000 for all costs taxed against the ‘insured’ in any ‘suit’ 

4 Insurance Code section 11580 sets forth coverage requirements for 

insurance policies. 
25

against the ‘insured’ we defend,” as well as “all interest on that part of any 

judgment to which this insurance applies” and accrues after entry of 

judgment. Bichegkueva, however, was not the insured. And under the 

settlement agreement, Bichegkueva agreed “to bear her own costs, expenses 

and attorneys’ fees incurred in connection with the Subject Action and 

automobile Accident.” 

Bichegkueva is also not entitled to recover interest on the default 

judgment. Under the supplementary payments provision, Crusader’s duty to 

pay interest “ends when we have paid, offered to pay or deposited in the court 

the part of the judgment to which this insurance applies and that is within 

our Limit of Insurance.” Crusader discharged its obligations under this 

provision when it paid Bichegkueva its remaining policy limits of $970,152.88 

on February 6, 2015. The default judgment was entered on April 13, 2016, 

more than a year later and well after Crusader had paid and exhausted its

policy limits. The trial court’s decision rejecting Bichegkueva’s claim because 

plaintiffs offered “no evidence giving rise to a triable issue of material fact” 

was proper. 

V. Punitive Damages

We do not address plaintiffs’ argument that they are entitled to 

punitive damages because they make it for the first time in their reply brief. 

(Campos v. Anderson (1997) 57 Cal.App.4th 784, 794, fn. 3.) But even 

assuming plaintiffs did not forfeit this argument, they have not demonstrated 

that Crusader’s actions were sufficiently “reprehensible, fraudulent or in 

blatant violation of law or policy” to award punitive damages. (See Food Pro 

Internat., Inc. v. Farmers Ins. Exchange (2008) 169 Cal.App.4th 976, 994; Civ. 

Code, § 3294, subd. (a) [requiring clear and convincing evidence that 
26

defendant acted with malice, oppression or fraud before awarding punitive 

damages].)

DISPOSITION

The judgment is affirmed.
27

_________________________

Chou, J.

WE CONCUR:

_________________________

Tucher, P. J.

_________________________

Petrou, J.

A158769

 Judge of the Superior Court of San Mateo County, assigned by the

Chief Justice pursuant to article VI, section 6 of the California Constitution.