Court Opinion

ID: 9722656
Source: CourtListenerOpinion
Date Created: 2023-08-26 09:43:38.914525+00
Date Added: 2024-06-11T18:24:38.073936
License: Public Domain

*1012Opinion
DUNN, J.
This is an appeal from an order of dismissal (“judgment,” Code Civ. Proc. § 58 Id) following the sustaining of demurrers to plaintiff’s third amended complaint.
That complaint alleges as follows:
On November 1, 1957, plaintiff, a reinsurance company, entered into a written contract with defendants Transport Indemnity Company and Transport Underwriters Association (hereinafter Transport). After-wards, defendants Transport issued a policy of insurance to defendant Tanner Motors Tour, Ltd., which provided that Transport would indemnify Tanner for any liability in connection with, or arising out of the use of, a certain passenger bus and to defend Tanner in connection with any claims made asserting such liability. The risk thus insured by Transport was reinsured by plaintiff under the earlier reinsurance policy.
On May 4, 1962, the bus that was insured by Transport and reinsured by plaintiff was involved in an accident. Transport settled various claims, but did not settle the claim made by Nettie Gelfand, a passenger. Since Transport’s retention was exhausted in settling the other claims and in paying judgments, plaintiff, the reinsurer, defended Tanner in an action brought by Nettie Gelfand and her husband in the United States District Court for the Eastern District of New York.
The bus had been designed and manufactured by Flxible Company, and the accident was caused by a defect in the bus. Plaintiff, the reinsurance company, alleges that, but for the conduct of defendants in giving Flxible Company a general release in its own behalf and on behalf of Tanner, releasing Flxible from any liability for the accident, plaintiff would have been able to assert a claim for indemnity against Flxible for any liability to the Gelfands. Because of the release, the United States District Court held that plaintiff Security could not maintain a cross-action for indemnity against Flxible; that decision was affirmed on appeal.
The first and second causes of action deal with a breach of Transport’s contractual duty to plaintiff of good faith and fair dealing and Transport’s negligence in releasing Flxible, proximately resulting in damages to plaintiff.
*1013The third cause of action alleges that Tanner breached its contractual duty of good faith and fair dealing to plaintiff; the fourth alleged that Tanner was negligent to plaintiff; the fifth that Tanner breached the contractual duty of good faith to Transport, and that plaintiff, as a transportation insurer, is subrogated to Transport’s claim against Tanner; the sixth cause of action alleges that Tanner was negligent as to Transport and plaintiff is subrogated to Transport’s claim against Tanner.
In particular:
The third cause of action alleges that Tanner was the third party beneficiary of the reinsurance policy, and that Tanner, therefore, owed plaintiff a duty to act in good faith and deal fairly, and that the giving of the release breached that duty.
The fourth cause of action alleges that Tanner acted negligently toward plaintiff, and is based on the same facts as the third cause of action.
The fifth and sixth causes of action are based on a breach of duty by Tanner to Transport, and allege that plaintiff is subrogated to Transport’s rights against Tanner for breaching Tanner’s duty of good faith and to Transport’s rights against Tanner for negligently giving the release.
The seventh through tenth causes of action are against Longnecker, the attorney retained to represent some or all of the parties.1
The seventh and eighth causes of action assert that Longnecker was retained to represent plaintiff, among others, and was negligent. The ninth cause of action alleges that Longnecker is liable to Transport for negligence and that plaintiff is subrogated to Transport’s claim. The 10th cause of action is that Longnecker is liable to Tanner for negligence and that Transport is subrogated to Tanner’s rights.
The 11th and 12th causes of action are directed against all defendants. Plaintiff sought damages for negligence in the 11th cause of action and declaratory relief in the 12th cause of action.
*1014The only issues before this court are whether the complaint states a cause of action against any of the defendants, whether the action is barred by the statute of limitations, and whether the complaint is uncertain as to defendants Longnecker and Transport.
I
Plaintiff's first argument is that the failure to draw a distinction between Transport Underwriters Association and Transport Indemnity is not fatal to its case. It is true that Exhibit A, which is incorporated in the complaint, shows that the contract of reinsurance was entered into between plaintiff and Transport Underwriters Association, but in paragraph 6 of that complaint plaintiff has also alleged that the contract was entered jointly with Transport Indemnity and Transport Underwriters Association on the one hand, and plaintiff on the other hand. Whether Transport Underwriters was Transport Indemnity's agent is a matter of proof to be determined later. Plaintiff need not allege agency, and only need allege the ultimate fact of the making of the contract. (See Resetar v. Leonardi (1923) 61 Cal.App. 765, 767 [216 P. 71].) Since the allegations in the complaint must be taken as true for purposes of demurrer, the failure to distinguish between Transport Underwriters and Transport Indemnity does not render the complaint defective.
II
TRANSPORT INDEMNITY COMPANY
Plaintiff Security argues that Transport Indemnity, in its capacity as plaintiff's insured, owed plaintiff a duty of good faith and fair dealing. There is language in Comunale v. Traders & General Ins. Co. (1958) 50 Cal.2d 654, 658 [328 P.2d 198]2 to support the concept that the duty runs from the insured to the insurer, as well as from the insurer to the insured. But that language is dicta, and that case actually dealt with the duty of the insurer to the insured. The covenant of good faith and fair dealing generally relates to an insurer's special relationship to the insured and the special implied-in-law duties toward the insured. (Fletcher v. Western National Life Ins. Co. (1970) 10 Cal.App.3d 376, 403, 404 [89 Cal.Rptr. 78, 47 A.L.R.3d 2861.)
*1015Plaintiff Security next argues that Transport Indemnity’s conduct in releasing Flxible was a destruction by an insured of the insurer’s subrogation rights. Plaintiff alleges that Tanner was entitled to be indemnified by Flxible. An insurance carrier of an indemnitee is subrogated to the right of the latter to obtain indemnification from an indemnitor whose active negligence, operating concurrently, caused the loss. (Pylon, Inc. v. Olympic Ins. Co. (1969) 271 Cal.App.2d 643.)
Transport’s argument, that the doctrine of equitable subrogation is inappropriate under the facts of this case, is well taken. Transport Indemnity suggests that Tanner had no right to be indemnified by Flxible, and therefore giving the release to Flxible is irrelevant. Transport Indemnity relies on Atchison, T. & S. F. Ry. Co. v. Lan Franco (1968) 267 Cal.App.2d 881 [73 Cal.Rptr. 660], to support the proposition that Tanner had no right of indemnification from Flxible. In Lan Franco an injured train passenger sued the Santa Fe Railway and a truck driver, and the railway cross-complained against the truck driver and truck company, alleging that the railway was negligent only because of the high duty of care owed to its passengers, whereas the truck driver was primarily negligent. The Lan Franco (267 Cal.App.2d) case is analogous to the case at bench in that, in both cases, the party (Tanner) seeking indemnity was a common carrier, subject to the high duty of care imposed on such carriers.
In Lan Franco, the appellate court held that (p. 884): “The sole issue on review is whether the cross-complaint states a cause of action for noncontractual implied indemnity inasmuch as no contractual relationship existed between the parties.” Other than that statement, the appellate court did not state, in so many words, that no “relationship” (i.c.: vendor-vendee, owner-contractor, etc.) was alleged to have existed between the trucking company and the railway. Such seems necessary to an equitable right to recover, as the (p. 886): “right to noncontractual implied indemnity rests upon equitable considerations. [Citation.] The right is restitutional in nature and is based on inhérent injustice. [Citation.]” (Italics in original.)
Rules regarding prerequisites to indemnity are stated in Lan Franco (267 Cal.App.2d at pp. 886-887) as follows: “Notwithstanding the uncertainty generated by the . . . terminology, two critical prerequisites are generally necessary for the invocation of noncontractual implied indemnity in California: (1) The damages which the claimant seeks to shift are imposed upon him as a result of some legal obligation to the *1016injured party; and (2) it must appear that the claimant did not actively nor affirmatively participate in the wrong. [Citation].” (Italics in original.) And (on p. 889) the following appears: “the mere existence of the duty does not, standing alone, justify the application of the indemnity doctrine.” Again, on the same page, the court states: “In her complaint plaintiff maintains that Santa Fe and Whitehead were negligent in the operation and maintenance of their respective train and truck. In the event Santa Fe is determined to be liable in the principal action, such liability could only attach because of its own delict in operating or maintaining its train and signal equipment — not because of any wrong on the part of Whitehead. Consequently, Santa Fe is not being exposed to liability for Whitehead’s negligence. In the event both Whitehead and Santa Fe are held liable as joint tortfeásors, such liability would only result because of their concurrent, separate acts of negligence.”
Since we affirm the trial court because no right of indemnity exists, we need not consider other points raised by defendants, such as: whether the complaint is barred by the statute of limitations or is uncertain as to Longnecker and as to Transport.
The judgment is affirmed.

 Plaintiff alleges Longnecker was hired to represent interests of all parties.

 In Comunale v. Traders & General Ins. Co. (1958) 50 Cal.2d 654, 658 [328 P.2d 198], the court noted: "There is an implied covenant of good faith and fair dealing in eveiy contract that neither party will do anything which will injure the right of the other to receive the benefits of the agreement. [Citation.] This principle is applicable to policies of insurance."