Court Opinion

ID: 3155123
Source: CourtListenerOpinion
Date Created: 2015-11-16 22:03:20.585066+00
Date Added: 2024-06-11T12:00:46.343528
License: Public Domain

Filed 11/16/15 Hollander v. XL Capital Ltd. CA2/1
                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication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

                                     SECOND APPELLATE DISTRICT

                                                  DIVISION ONE

GAIL HOLLANDER et al.,                                               B250649

         Plaintiffs and Appellants,                                  (Los Angeles County
                                                                     Super. Ct. No. BC365455)
         v.

XL CAPITAL LTD. et al.,

         Defendants and Respondents.

         APPEAL from a judgment of the Superior Court of Los Angeles County,
Michael L. Stern, Judge. Reversed.
         A. Tod Hindin, A. Tod Hindin and Karen L. Hindin for Plaintiffs and Appellants.
         Burris Schoenberg & Walden, Donald S. Burris, Richard E. Walden; Steptoe &
Johnson and Stephen O’Donnell for Defendants and Respondents.
                                             ——————————
       Gail and Stanley Hollander (Hollander) brought this suit alleging various contract
and tort claims and named as defendants XL Specialty Insurance Company (XL
Specialty) as well as a dozen other companies. The trial court ruled that nine of those
other defendants are not vicariously liable for the actions of XL Specialty. Because the
trial court erred in relying as law of the case on our prior decisions dismissing different
defendants for lack of jurisdiction, we reverse and remand.
                                     BACKGROUND
       Hollander commenced this action against XL Specialty and over a dozen other
related companies.
       A.     XL Summary Judgment Defendants File Motion on Liability
       Eleven of those defendants (collectively, the XL Summary Judgment
Defendants)—XL Capital Ltd. (ultimate parent of XL Specialty), XL Reinsurance
America Inc. (direct parent of XL Specialty), X.L. America Inc. (indirect parent of XL
Specialty), NAC Re Corp. (indirect parent of XL Specialty), XL Insurance America Inc.,
XL Insurance Company of New York Inc., XL Select Insurance Company, Indian Harbor
Insurance Company, Greenwich Insurance Company, XL Re Ltd., and XL America
Group—filed a motion for summary judgment asserting that they are not directly or
vicariously liable for actions of XL Specialty. The trial court denied the motion because
there were triable issues of fact.
       B.     XL London Defendants File Motion on Jurisdiction
       XL London Market Ltd., XL London Market Services Ltd., and XL Services UK
Ltd. (collectively, XL London Defendants)—no overlap with any of the XL Summary
Judgment Defendants—filed a motion to quash service on the summons and complaint
for lack of jurisdiction in California. The trial court granted the motion. This court
affirmed in Hollander v. XL London Market Ltd. (Apr. 16, 2010, B213864) [nonpub.
opn.] (XL London Defendants). As part of the holistic inquiry into jurisdiction, which
considers whether the moving defendants could be vicariously liable for the actions of the
nonmoving defendants, we held that Hollander had not established that the XL London

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Defendants are vicariously liable under the alter ego or agency doctrines for XL Specialty
or some of the XL Summary Judgment Defendants.
       C.     XL Insurance (Bermuda) Ltd. Files Motion on Jurisdiction
       XL Insurance (Bermuda) LTD—not one of the XL Summary Judgment
Defendants—filed a motion to quash service on the summons and complaint for lack of
jurisdiction in California. The trial court granted the motion. This court affirmed in
Hollander v. XL Insurance (Bermuda) Ltd. (Oct. 5, 2012, B230807) [nonpub. opn.] (XL
Insurance (Bermuda)). As part of the holistic inquiry into jurisdiction, which considers
whether the moving defendants could be vicariously liable for the actions of the
nonmoving defendants, we held that Hollander had not established that XL Insurance
(Bermuda) is vicariously liable under the alter ego or agency doctrines for XL Specialty
or some of the XL Summary Judgment Defendants.
       D.     XL Summary Judgment Defendants Renew Motion on Liability
       Upon remand from this court’s decision in XL Insurance (Bermuda), the XL
Summary Judgment Defendants renewed their prior summary judgment motion, citing to
this court’s prior decisions in XL London Defendants and XL Insurance (Bermuda).
Relying on those decisions as law of the case, the trial court granted summary judgment
that none of the XL Summary Judgment Defendants could be directly or vicariously
liable for the actions of XL Specialty.
                                      DISCUSSION
       We review de novo a trial court’s grant of summary judgment. (Doney v. TRW,
Inc. (1995) 33 Cal. App. 4th 245, 248.) On matters such as a trial court’s denial of a
motion to strike or decision to allow a party to file a renewed motion for summary
judgment, however, we defer to the trial court and will reverse only upon an abuse of
discretion. (Cal-Western Business Services, Inc. v. Corning Capital Group (2013) 221
Cal. App. 4th 304, 309; Nieto v. Blue Shield of California Life & Health Insurance
Company (2010) 181 Cal. App. 4th 60, 72.)

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I.     Trial court erred in relying on XL London Defendants and XL Insurance
(Bermuda) as law of the case for the issues on appeal here.
       As a preliminary matter, Hollander is incorrect that the alter ego issue is a question
for only the jury to decide. “The alter ego doctrine is ‘essentially an equitable one and
for that reason is particularly within the province of the trial court.’” (Dow Jones Co. v.
Avenel (1984) 151 Cal. App. 3d 144, 147.)
       Here, the trial court erred in holding that our prior decisions in XL London
Defendants and XL Insurance (Bermuda) are law of the case requiring it to conclude
there can be no vicarious liability as to the XL Summary Judgment Defendants, as
discussed below. We therefore remand for the trial court to decide the issue of vicarious
liability as raised in the XL Summary Judgment Defendants’ summary judgment motion.
Our decision here is not to hold the issue must be decided on summary judgment or
necessarily survives summary judgment. It may very well be that, on remand, the trial
court will reach the same conclusion. But it should do so without the mistaken belief that
our prior decisions restricted its equitable discretion.
       The law of the case doctrine precludes a party from seeking review of the same
issue already decided by an appellate court in that case. “In order for the doctrine to
apply, ‘“the point of law involved must have been necessary to the prior decision [and]
the matter must have been actually presented and determined by the court.”’” (Katz v.
Los Gatos-Saratoga Joint Union High School District (2004) 117 Cal. App. 4th 47, 62.)
       To determine whether any of the XL Summary Judgment Defendants are
vicariously liable for the actions of XL Specialty under the alter ego doctrine, the inquiry
requires analysis into whether there exists both (1) a unity of interest and ownership
between the corporation (here, XL Specialty) and its equitable owner (here, any of the 11
XL Summary Judgment Defendants) such that the separate personalities of the
corporation and equitable owner in reality do not exist and (2) an inequitable result in
treating the acts of the corporation as those of the corporation alone. (See Mesler v.
Bragg Management Co. (1985) 39 Cal. 3d 290, 300.)

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         Because it is founded on equitable principles, application of the alter ego doctrine
does not depend on prior court decisions with similar factual scenarios and instead must
be considered under the specific circumstances of the case at issue. (See Las Palmas
Associates v. Las Palmas Center Associates (1991) 235 Cal. App. 3d 1220, 1248.) Courts
must look at the entire circumstance and can consider factors such as identical directors
and officers between the two entities, commingling of funds and other assets between the
two entities, holding out by one entity that it is liable for the debts of the other entity,
inadequate capitalization, identical equitable ownership in the two entities, use of the
same offices and employees, holding out of one entity as a mere shell for the affairs of
the other entity, and disregard of corporate formalities. (See id. at pp. 1250–1251; Toho-
Towa Co., Ltd. v. Morgan Creek Productions, Inc. (2013) 217 Cal. App. 4th 1096, 1108–
1109.)
         The alter ego doctrine thus involves analysis of facts specific to the defendant
alleged to be vicariously liable. The trial court therefore erred because our prior
decisions in XL London Defendants and XL Insurance (Bermuda) analyzed the actions of
defendants different than those involved in the issues on appeal here. Specifically, our
prior decisions involved the actions of the XL London Defendants and XL Insurance
(Bermuda). The issues on appeal here, however, involve the actions of the XL Summary
Judgment Defendants (eleven separate entities). There is no overlap in defendants.
While the trial court asserted that in XL London Defendants our court found that XL Re
Ltd. and XL America Group (two of the XL Summary Judgment Defendants) are not
alter egos or agents of XL Specialty, we made no such finding. Similarly, while the trial
court asserted that the evidence presented as to the XL Summary Judgment Defendants
“is virtually the same as was reviewed in depth and rejected by the Court of Appeal” in
XL Insurance (Bermuda), that assertion is also incorrect for the same reason that different
defendants were at issue. Likewise, the trial court asserted that in XL Insurance
(Bermuda) we found “there is no chance of an inequitable result” because XL Specialty
“can pay on a judgment,” yet again nowhere in our prior decision did we make that
finding. In sum, as to both elements of the alter ego doctrine, the trial court erred in

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holding our prior decisions in XL London Defendants and XL Insurance (Bermuda) as
law of the case as to the XL Summary Judgment Defendants.
       In addition to relying on our prior decisions in XL London Defendants and XL
Insurance (Bermuda) to rule on the issue of vicarious liability as to alter ego, the trial
court appears to have granted summary judgment on the issues of agency, partnership,
and direct liability for the same reason, though its opinion is not clear or detailed on these
points. For the same reason discussed above, we remand for the trial court to consider
those issues consistent with this decision.
II.    Trial court did not abuse its discretion in reconsidering its prior denial of the
XL Summary Judgment Defendants’ motion.
       Code of Civil Procedure sections 437c, subdivision (f)(2), and 1008 explain that a
party must show, respectively, “newly discovered facts or circumstances or a change of
law” or “new or different facts, circumstances, or law,” before moving for
reconsideration of a summary judgment motion previously denied by a trial court.
       The trial court here did not abuse its discretion in considering our prior decisions
as meeting this standard. While our prior decisions are not law of the case on the issues
presented in the renewed summary judgment motion, they nevertheless constitute new
facts, circumstances, or law, that can justify the trial court to reconsider its prior ruling—
and the trial court can certainly consider our prior decisions in its new ruling. Further,
the trial court also relied on updated information on the net assets of XL Specialty and the
regulatory report on XL Specialty as supporting reconsideration of its prior ruling and did
not abuse its discretion in doing so. Moreover, the trial court has inherent authority to
reconsider its prior rulings, as long as it provides notice to the parties and a reasonable
opportunity to litigate the issues, which it satisfied here. (See Le Francois v. Goel (2005)
35 Cal. 4th 1094, 1096–1097.) Therefore, we reject Hollander’s argument that the trial
court abused its discretion in reconsidering its prior denial of the XL Summary Judgment
Defendants’ summary judgment motion.

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                                  DISPOSITION
     The judgment is reversed. The parties are to bear their own costs on appeal.
     NOT TO BE PUBLISHED.

                                              JOHNSON, J.

We concur:

             ROTHSCHILD, P. J.

             LUI, J.

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