Court Opinion

ID: 5134514
Source: CourtListenerOpinion
Date Created: 2021-12-13 22:02:53.777501+00
Date Added: 2024-06-11T08:23:44.502227
License: Public Domain

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                 NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or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.,                                                                 A158769
           Plaintiffs and Appellants,                                    (City and County
 v.                                                                       of San Francisco
 CRUSADER INSURANCE                                                       Super. Ct. No. CGC-16-556197)
 COMPANY,
           Defendant and Respondent.

         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
                                       2
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
                                        3
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,

                                       4
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

                                       5
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.
                                       6
      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
                                        7
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
                                        8
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
                                        9
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
                                       10
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
                                       11
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].)

                                        12
      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

                                        13
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 now-
stated 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) [“self-
serving, 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.
                                       14
      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.)

                                        15
      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
                                        16
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
                                       17
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
                                       18
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

     The record indicates that during the October 10 discussion with
      1

Marentes, Aaron pointed out that Marentes may conclude “his interests were
                                        19
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.
                                       20
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.)
                                      21
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.
                                        22
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.
                                       23
       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 court-
awarded 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’

       Insurance Code section 11580 sets forth coverage requirements for
       4

insurance policies.
                                       24
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

                                        25
defendant acted with malice, oppression or fraud before awarding punitive
damages].)
                             DISPOSITION
     The judgment is affirmed.

                                    26
                                            _________________________
                                            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.
                                       27