Court Opinion

ID: 9408832
Source: CourtListenerOpinion
Date Created: 2023-07-13 20:05:14.263776+00
Date Added: 2024-06-11T17:20:47.183196
License: Public Domain

Filed 7/13/23 Gomez v. Reliant General Claims Services CA2/3
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for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 THREE

 MARIA GOMEZ et al.,                                                 B314207

          Plaintiffs and Appellants,                                 (Los Angeles County
                                                                     Super. Ct. No. 19STCV32537)
          v.

 RELIANT GENERAL CLAIMS
 SERVICES, INC. et al.,

          Defendants and Respondents.

       APPEAL from a judgment of the Superior Court of
Los Angeles County, Stephen I. Goorvitch, Judge. Affirmed in
part, reversed in part, and remanded.
       Mardirossian Akaragian, Garo Mardirossian, Armen
Akaragian, Adam Feit; The Ehrlich Law Firm and Jeffrey I.
Ehrlich for Plaintiffs and Appellants.
      Hinshaw & Culbertson, Ray Tamaddon and Edward F.
Donohue for Defendant and Respondent Transguard Insurance
Company of America, Inc.
      Wesierski & Zurek, Christopher P. Wesierski and Abe G.
Salen for Defendant and Respondent Reliant General Claims
Services.

                 ‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗

       Plaintiffs and Appellants Maria and Trinidad Gomez Sr.
(the Gomezes), parents of Trinidad Gomez (Gomez Jr.), appeal
from an order granting summary judgment in their insurance
bad faith and breach of contract action against Reliant General
Claims Services Inc. and Transguard Insurance Company of
America, Inc. (Respondents). In 2015, Sergio Morales was
driving the car of his mother, Leticia Carrillo, when he hit and
killed Gomez Jr. Carrillo was insured by Transguard. The
Gomezes obtained a $3 million judgment in a wrongful death
action against Carrillo and Morales. Carrillo and Morales
assigned their rights against Respondents to the Gomezes, who
then filed the present action against Respondents. They allege
Respondents acted in bad faith by failing to settle the wrongful
death claims against Carrillo and Morales, and that they
breached their contractual duties to defend and to pay post-
judgment interest.
       The trial court granted Respondents’ motion for summary
judgment, or alternatively, summary adjudication, as to each of
the Gomezes’ claims. We conclude Respondents did not establish
their entitlement to summary judgment; however, we affirm the
trial court’s summary adjudication of the breach of the covenant

                               2
of good faith and fair dealing claim. We reverse the trial court
order granting summary adjudication of the breach of contract
claims.
       FACTUAL AND PROCEDURAL BACKGROUND
The Accident, Underlying Lawsuit, and Settlement
Discussions
       In August 2015, Morales was driving his mother’s car when
he hit Gomez Jr., who was walking in a crosswalk. Gomez Jr.
was pronounced dead at the scene. The Gomezes filed suit
against the City of South Gate, where the accident occurred, and
later amended the suit to include claims against Carrillo and
Morales. The Gomezes asserted claims against Carrillo on a
permissive use theory and for negligent entrustment of her car to
Morales. They sued Morales for negligent operation of the
vehicle.
       At the time of the accident, Carrillo held an automobile
insurance policy issued by Transguard. The policy provided a
bodily injury limit of $15,000 per person and $30,000 per
accident. Transguard, through Reliant, its claims administrator,
defended Carrillo and Morales against the Gomezes’ lawsuit and
appointed defense counsel. The same law firm represented both
Carrillo and Morales.
       On July 27, 2016, the Gomezes’ counsel sent a letter to
Respondents offering to “settle [the Gomezes’] wrongful death
claims against your insureds’ policy limits on the following terms
and conditions provided that your insureds’ policy limits does not
exceed $600,000.” The terms and conditions included that the
offer had to be accepted in writing by August 27, 2016; that
Transguard provide a copy of the insurance policy face page
showing the policy limit; and that the insureds provide a

                                3
declaration attesting that they were “not in the scope of their
employment or agency” at the time of the accident, they were not
engaged in a joint venture with any other person at that time,
and that they had no other applicable insurance policy. The
letter also listed several factors on which the Respondents could
condition acceptance, including an executed “Release of all Bodily
Injury Claims against your insureds and their heirs only, which
Release is not inconsistent with the terms and conditions of this
offer.”
        On August 25, 2016, Respondents replied in writing:
“Pursuant to condition (1) of your correspondence, we hereby
accept your offer to settle your clients’ claim for the insured’s
Bodily Injury policy limit of $15,000.” Transguard enclosed with
the letter the requested insurance policy page showing the bodily
injury policy limit and the declaration signed by Carrillo and
Morales.
        Respondents also requested information from the Gomezes,
and stated their acceptance of the offer required a “signed
Release of All Claims form signed by the legal heirs of [Gomez
Jr.].” Attached to the letter was a document titled “Settlement
Agreement and General Release.” In relevant part, the document
read:
        “3.      RELEASORS desire to resolve all claims and
disputes associated with the SUIT, including the Survivor’s
Claim and the Wrongful Death claim arising out of the Accident.
        [¶]. . .
        “5.      Upon execution of this AGREEMENT, the
RELEASORS hereby generally and specifically release and
discharge RELEASEES, their agents, employees, attorneys,
representatives, predecessors, successors, and insurance carriers,

                                4
and all those legally responsible for RELEASORS damages, and
each of them, from any and all claims . . . arising out of the facts
and circumstances of the automobile accident. . . .”
       On August 31, 2016, counsel for the Gomezes replied:
“Your Release adds new and unacceptable terms to the
settlement, and is thus a counteroffer, which our clients hereby
reject. Our Offer was limited to my clients’ wrongful death
claims, but the Release expressly releases both wrongful death
and survivor actions (which we never offered to settle). The
Release also requires my clients to waive the right to pursue
claims against all others who are legally responsible for their
damages, and is not properly limited in scope to release your
insureds and their heirs only. . . .” The Gomezes also objected to
other terms in the proposed release, such as an attorneys’ fees
clause.
       The letter concluded, “Our Offer to resolve our clients’
wrongful death claims within policy limits will never again be
reinstated. You have failed to protect your insured and have
breached the covenant [of] good faith and fair dealing . . . by
making this counteroffer which is unreasonably inconsistent with
the terms and conditions of our reasonable offer. [¶] We submit
you have opened the policy, and we intend to obtain full fair and
adequate compensation . . . without regard to the limits of your
policy. We suggest you advise your insureds to retain
independent and experienced counsel, because there now exists a
conflict of interest between Reliant General and your insureds.”
       Consistent with the letter’s assertion that the settlement
offer would “never again be reinstated,” the Gomezes did not
request modifications to Respondents’ proposed release or
suggest settlement was possible on other terms. The parties

                                 5
dispute whether Respondents made any further settlement
overtures. The only undisputed evidence of subsequent
conversations is from the Declaration of Adam Feit, counsel for
the Gomezes, declaring he received a letter from Respondents on
December 18, 2017, “which ambiguously stated that the policy
limits were ‘on the table.’ ”
       In November 2018, the trial court in the underlying action
granted summary judgment in favor of the City of South Gate. In
April 2019, the Gomezes’ action against Carrillo and Morales
proceeded to a jury trial. The jury rendered a verdict of
$3 million against Carrillo and Morales, finding them 30 percent
and 70 percent at fault, respectively. Judgment was entered on
April 19, 2019. On May 17, 2019, the Gomezes received a check
for $15,000 from Transguard. In June 2019, Carrillo and Morales
assigned their rights under the Transguard insurance policy to
the Gomezes in exchange for a stay of enforcement of the
judgment.
The Bad Faith and Breach of Contract Action
       In September 2019, based on the assignment of rights, the
Gomezes filed suit against Respondents for breach of the
covenant of good faith and fair dealing and breach of contract.
The complaint alleged that Respondents unreasonably failed to
settle the Gomezes’ claims against Carrillo and Morales, failed to
adequately defend Carrillo and Morales, and failed to pay post-
judgment interest on the judgment. In December 2020, Carrillo
filed a complaint-in-intervention asserting her own claims
against Respondents.
       In October 2020, Respondents filed a motion for summary
judgment, or, alternatively, summary adjudication. Respondents
argued the Gomezes’ first cause of action for breach of the

                                6
covenant of good faith and fair dealing failed as a matter of law
because the settlement demand was unreasonable as it did not
offer the insureds a complete release of all claims. Respondents
asserted their acceptance of the settlement for the full policy
limit, with a request for release of all claims against the insureds,
was a reasonable response. Respondents also argued that the
Gomezes could not prevail as a matter of law on their second
cause of action for breach of contract. Respondents contended
there was no evidence of any conflict that required Carrillo and
Morales to have separate counsel. Respondents further argued
the terms of the policy did not require them to pay the entire
amount of the underlying judgment, or interest on the judgment,
since they made an early policy limits settlement offer. Finally,
Respondents claimed that the Gomezes’ action was barred by the
doctrine of unclean hands. The Gomezes countered that there
were triable issues of material fact as to each of these claims.
       The trial court granted summary judgment in May 2021. It
found the Gomezes’ settlement offer was not reasonable as a
matter of law because it did not resolve all claims against the
insureds, and Respondents did not act unreasonably or in bad
faith as to settlement. The trial court ruled the Gomezes’ breach
of the duty to defend claim failed because there was no evidence
of an actual conflict between Carrillo and Morales that would
have required the appointment of separate counsel. The court
further concluded Respondents were not contractually required to
pay interest on the judgment because they had offered to settle
the case for the full policy limit before judgment was entered.
       The Gomezes’ appeal timely followed.

                                 7
                            DISCUSSION
       The Gomezes argue the trial court erred in granting
summary judgment because Respondents failed to establish there
were no triable issues of material fact, or that their claims failed
as a matter of law. We agree summary judgment was not
warranted as there were triable issues of material fact as to some
of the Gomezes’ claims. However, we affirm the trial court’s
order granting summary adjudication of the claim that
Respondents acted in bad faith in failing to settle.
I.     Standard of Review
       Summary judgment is appropriate if there are no triable
issues of material fact and the moving party is entitled to
judgment as a matter of law. (Code Civ. Proc., § 437c, subd. (c);
Regents of University of California v. Superior Court (2018) 4
Cal.5th 607, 618.) A defendant moving for summary judgment
has the initial burden of showing that a cause of action lacks
merit because the plaintiff cannot establish an element of the
cause of action or there is a complete defense. (Code Civ. Proc.,
§ 437c, subd. (p)(2); Aguilar v. Atlantic Richfield Co. (2001) 25
Cal.4th 826, 853.) If the defendant satisfies this initial burden,
the burden shifts to the plaintiff to present evidence
demonstrating there is a triable issue of material fact. (Code Civ.
Proc., § 437c, subd. (p)(2); Aguilar, at p. 850.)
       “ ‘ “ ‘ “We review the trial court’s decision de novo,
considering all the evidence set forth in the moving and opposing
papers except that to which objections were made and
sustained.” ’ [Citation.] We liberally construe the evidence in
support of the party opposing summary judgment and resolve
doubts concerning the evidence in favor of that party.” ’
[Citation.]” (Hampton v. County of San Diego (2015) 62 Cal.4th

                                 8
340, 347.) We apply the same standard in reviewing an order
granting summary adjudication. (Mireskandari v. Edwards
Wildman Palmer LLP (2022) 77 Cal.App.5th 247, 256–257.)
II.    The Trial Court Properly Granted Summary
       Adjudication of the Gomezes’ Bad Faith Claim
       A. Bad faith and the duty to settle: Applicable legal
           principles
       “From the covenant of good faith and fair dealing implied
by law in all contracts, and from the liability insurer’s duty to
defend and indemnify covered claims, California courts have
derived an implied duty on the part of the insurer to accept
reasonable settlement demands on such claims within the policy
limits. [Citation.] ‘[A]n insurer is required to act in good faith in
dealing with its insured. Thus, in deciding whether or not to
settle a claim, the insurer must take into account the interests of
the insured, and when there is a great risk of recovery beyond the
policy limits, a good faith consideration of the insured’s interests
may require the insurer to settle the claim within the policy
limits. An unreasonable refusal to settle may subject the insurer
to liability for the entire amount of the judgment rendered
against the insured, including any portion in excess of the policy
limits. [Citation.]’ [Citation.]” (Hamilton v. Maryland Casualty
Co. (2002) 27 Cal.4th 718, 724–725.)
       “An insured’s claim for bad faith based on an alleged
wrongful refusal to settle first requires proof the third party
made a reasonable offer to settle the claims against the insured
for an amount within the policy limits.” (Graciano v. Mercury
General Corp. (2014) 231 Cal.App.4th 414, 425 (Graciano).)
However, even when presented with a reasonable settlement
offer, “[a]n insurer’s duty to accept . . . is not absolute,” and

                                 9
“failing to accept a reasonable settlement offer does not
necessarily constitute bad faith.” (Pinto v. Farmers Ins.
Exchange (2021) 61 Cal.App.5th 676, 688 (Pinto).) “ ‘[T]he crucial
issue is . . . the basis for the insurer’s decision to reject an offer of
settlement.’ [Citation.]” (Ibid., citing Walbrook Ins. Co. v. Liberty
Mutual Ins. Co. (1992) 5 Cal.App.4th 1445, 1460.)
       Specifically, “[i]n evaluating whether an insurer acted in
bad faith, ‘the critical issue [is] the reasonableness of the
insurer’s conduct under the facts of the particular case.’
[Citation.] To hold an insurer liable for bad faith in failing to
settle a third party claim, the evidence must establish that the
failure to settle was unreasonable.” (Pinto, supra, 61 Cal.App.5th
at p. 687.) The determination of an insurer’s good or bad faith as
to settlement must be evaluated in “ ‘light of the totality of the
circumstances. . . .’ [Citation.]” (Hedayati v. Interinsurance
Exchange of the Automobile Club (2021) 67 Cal.App.5th 833, 843
(Hedayati); accord Barickman v. Mercury Casualty Co. (2016) 2
Cal.App.5th 508, 520 (Barickman) [“ ‘the ultimate test is whether
the insurer’s conduct was unreasonable under all of the
circumstances’ ”].)
       While the reasonableness of an insurer’s conduct is
“ordinarily a question of fact, it becomes a question of law where
the evidence is undisputed and only one reasonable inference can
be drawn from the evidence.” (Chateau Chamberay Homeowners
Assn. v. Associated Internat. Ins. Co. (2001) 90 Cal.App.4th 335,
346; accord Hedayati, supra, 67 Cal.App.5th at p. 843; Reid v.
Mercury Ins. Co. (2013) 220 Cal.App.4th 262, 278 (Reid) [court
affirmed summary judgment on bad faith claim based on a failure
to settle after reviewing letters between insurance company and
claimant].)

                                   10
       B. Discussion
       We find no error in the trial court’s grant of summary
adjudication. The only reasonable inference that can be drawn
from the undisputed evidence is that Respondents did not act
unreasonably in failing to settle the Gomezes’ claims.
       The parties’ settlement discussions were set forth in the
letters between the Gomezes and Respondents. The Gomezes’
first letter offered to settle the wrongful death claims for the
policy limit and stated that the offer must be accepted in writing
by August 27, 2016. Respondents replied in writing before the
deadline, explicitly accepting the offer to settle for the policy
limit. They also provided materials the Gomezes requested in
their letter. The Respondents stated that their acceptance
required a “Release of All Claims form” signed by the legal heirs
of Gomez Jr. and a notarized “Affidavit of Heirs.”
       Days later, the Gomezes responded by stating that the
Respondents’ letter was a “counteroffer” that the Gomezes
“reject[ed].” The Gomezes explained that they had offered to
settle only the wrongful death claims and not any other claims.
They did not propose a revised release of claims or another way
to reach a settlement. Instead, the Gomezes rescinded their
settlement offer, stating: “Our [o]ffer to resolve our clients’
wrongful death claims within policy limits will never again be
reinstated.” The letter then advised Respondents to inform their
insured to retain counsel, implying the Gomezes would file a bad
faith lawsuit.
       Thus, Respondents accepted the settlement demand for the
full policy limits, in writing, by the deadline, with a proposed
release. (Graciano, supra, 231 Cal.App.4th at p. 434 [insurer acts
in good faith as a matter of law when it timely tenders full policy

                                11
limits in exchange for release to effectuate settlement].) In
response, the Gomezes permanently rescinded their settlement
offer and threatened a lawsuit. The Gomezes argue there are
triable issues as to whether Respondents acted unreasonably by
conditioning their acceptance of the offer on a release that would
have dismissed their pending claims against the City of South
Gate. We disagree.
       Barickman, supra, 2 Cal.App.5th 508, a case on which the
Gomezes rely, provides a helpful contrast. In Barickman, an
insured driver hit two individuals walking in a crosswalk. The
driver was sentenced to prison and ordered to pay victim
restitution. When the driver informed her insurer that she was
in a car accident, the insurer offered to pay her policy limit to the
victims. But when the victims sought to modify the insurer’s
form release to exclude the court-ordered restitution, the insurer
refused. (Id. at pp. 512–514.) Under California law, the
settlement of a civil action does not relieve a defendant of the
legal obligation to pay court-ordered restitution. (Id. at pp. 517–
518.) Thus, the insurer’s refusal to modify the release as
requested, or to propose other revisions, was sufficient for the
trier of fact to conclude the insurer acted unreasonably. (Id. at
pp. 521–522.)
       Here, there is no evidence that Respondents’ proposed
release would have required the Gomezes to relinquish a legal
right such as victim restitution in a criminal matter. Moreover,
an insurer may be required to reject an offer to settle that does
not adequately protect an insured from future liability, to avoid
acting in bad faith. This is because an insurer must protect its
insured from liability after settlement. (Coe v. State Farm Mut.
Auto. Ins. Co. (1977) 66 Cal.App.3d 981, 994 [bad faith for an

                                 12
insurer to accept an offer of settlement that would have left its
insured exposed to a recoupment action by a state workers’
compensation fund]; Strauss v. Farmers Ins. Exchange (1994) 26
Cal.App.4th 1017, 1021 [“an insurer may, within the boundaries
of good faith, reject a settlement offer that does not include a
complete release of all of its insureds” where acceptance would
have exhausted the policy].) No reasonable trier of fact could
conclude Respondents’ initial response to the Gomezes’
settlement offer was unreasonable or constituted bad faith.
       An insurer may act in bad faith if it rejects a reasonable
modification to a settlement release, even when, as here, it agrees
to the requested monetary settlement amount. (Barickman,
supra, 2 Cal.App.5th at p. 522.) However, in this case the
Gomezes did not ask Respondents to modify the proposed release,
and there was thus no refusal to do so by Respondents. Instead,
the Gomezes rejected Respondents’ initial proposed release and
immediately terminated settlement discussions. The Gomezes
contend their expert’s opinion that Respondents should have
sought further negotiations, or, of their own accord, “revised the
Release so as to effectuate settlement,” created a triable issue as
to the reasonableness of Respondents’ conduct. But the
undisputed facts establish that the Gomezes did not
communicate any willingness to entertain further settlement
negotiations. Their response to Respondents’ acceptance of a
policy limits settlement was to unequivocally state that their
offer to settle was permanently rescinded. Indeed, in his
deposition, Reliant Claims Director David Purcell testified that,
when requested, Reliant would modify the release to effectuate
settlement. It is undisputed that the Gomezes made no such
request.

                                13
       To find the insurer acted in bad faith in not settling, “there
must be, at a minimum, some evidence either that the injured
party has communicated to the insurer an interest in settlement,
or some other circumstance demonstrating the insurer knew that
settlement within policy limits could feasibly be negotiated.”
(Reid, supra, 220 Cal.App.4th at p. 272.) “In the absence of a
settlement demand or any other manifestation the injured party
is interested in settlement, when the insurer has done nothing to
foreclose the possibility of settlement . . . there is no liability for
bad faith failure to settle.” (Id. at p. 266.) While here there was
a settlement offer, it was formally rescinded, along with the
statement that it would never again be reinstated.
       The Gomezes’ bad faith claim for failure to settle rests
solely on Respondents’ proposal of a release of all claims and an
alleged failure to attempt further negotiations after the Gomezes
unequivocally terminated settlement discussions. The Gomezes
neither argued, nor offered evidence to support, that Respondents
engaged in other conduct that defeated or impaired the
possibility of settlement. (Cf. Hedayati, supra, 67 Cal.App.5th at
pp. 836, 850–852 [triable issue of fact where insurer failed to
provide information necessary for settlement, untimely
responded to settlement offer, and reasonable trier of fact could
find insurer’s counteroffer was “not reasonably calculated to
obtain [victim offeror’s] assent”].) The Gomezes did not show
there were triable issues of material fact as to the Respondents’
reasonableness in failing to settle the case.1

      1 The Gomezes assert various evidentiary arguments
regarding correspondence Respondents offered as support for
their summary judgment motion. Because we reach our

                                  14
       The critical question in determining whether Respondents
acted in bad faith is why they rejected the settlement offer, based
on the factual circumstances of this case. (Pinto, supra, 61
Cal.App.5th at pp. 687–688.) Here, the Respondents accepted the
settlement offer amount and timely tendered the policy limits,
with a release. The Gomezes objected to the release but did not
request modifications. Instead, they rescinded their offer, wrote
that it would never again be reinstated, and warned that bad
faith litigation would ensue. The undisputed evidence
establishes that the Gomezes explicitly communicated that there
was no longer any interest in settlement or further negotiations.
There was no evidence of a bad faith failure to settle in this case,
and no foundation for a claim of breach of the covenant of good
faith and fair dealing. (Reid, supra, 220 Cal.App.4th at p. 279.)
III. There is a Triable Issue as to Breach of the Duty to
       Defend
       In their complaint, the Gomezes alleged a conflict of
interest between Carrillo and Morales required Respondents to
appoint separate counsel. The trial court granted summary
adjudication of the claim, ruling that the failure to retain
separate counsel for Carrillo and Morales was unnecessary
because there was insufficient evidence of an actual conflict
between them. We conclude there were triable issues of material
fact sufficient to overcome summary adjudication on this claim.
       An insurer’s “duty to defend is contractual.” (Buss v.
Superior Court (1997) 16 Cal.4th 35, 47 (Buss).) Liability

conclusion above without relying on any record references to
contested evidence of Respondents’ subsequent settlement offers,
we need not consider the Gomezes’ arguments on appeal
challenging the trial court’s evidentiary rulings.

                                15
insurance usually imposes two separate obligations on an
insurer: (1) to indemnify its insured against third party claims
covered by the policy; and (2) to defend such claims against its
insured by furnishing competent counsel and paying attorney
fees and costs. (Howard v. American National Fire Ins. Co.
(2010) 187 Cal.App.4th 498, 519; see also J.B. Aguerre, Inc. v.
American Guarantee & Liability Ins. Co. (1997) 59 Cal.App.4th 6,
14, citing Merritt v. Reserve Ins. Co. (1973) 34 Cal.App.3d 858,
882 (Merritt) [“The duty to defend includes hiring competent
counsel, and ‘keep[ing] abreast of the progress and status of the
litigation in order that it may act intelligently and in good faith
on settlement offers’ ”].) “Normally one of the principal benefits
to an insured . . . is the provision of a proper defense by the
insurer to an action brought against the insured that is within
the coverage of the policy.” (Spindle v. Chubb/Pacific Indemnity
Group (1979) 89 Cal.App.3d 706, 712 (Spindle).)
       As explained in the context of conflicts between an insured
and the insurer, when a conflict necessitates the insured being
represented by independent counsel, the insurer’s duty to defend
includes paying for that independent counsel. (San Diego Navy
Federal Credit Union v. Cumis Ins. Society, Inc. (1984) 162
Cal.App.3d 358, 369, 375, superseded by Civil Code section 2860.)
However, not every conflict triggers this obligation. “For
independent counsel to be required, the conflict of interest must
be ‘significant, not merely theoretical, actual, not merely
potential.’ [Citation.]” (James 3 Corp. v. Truck Ins. Exchange
(2001) 91 Cal.App.4th 1093, 1101; Lehto v. Allstate Ins. Co.
(1994) 31 Cal.App.4th 60, 71 (Lehto); Spindle, supra, 89
Cal.App.3d at p. 713 [in context of a common defense of insureds
in an insurance action, “without . . . actual conflict between

                                16
jointly represented persons, there is no actionable impropriety in
their joint representation”].) A conflict requiring independent
counsel for jointly represented parties occurs “whenever their
common lawyer’s representation of the one is rendered less
effective by reason of his representation of the other.” (Spindle,
at p. 713; James 3 Corp., at p. 1101, italics omitted.)2
       Drawing all inferences in favor of the Gomezes as the
nonmoving party (Aguilar, supra, 25 Cal.4th at pp. 844–845), we
conclude there is evidence creating a triable question of fact as to
whether there was an actual conflict such that Carrillo and
Morales were entitled to have Respondents provide them with
separate, independent counsel. During her deposition, Carrillo
testified that Morales did not have her permission to use her car
at the time of the incident. Then, after her counsel interjected
and conferred with her, over the objection of opposing counsel,
Carrillo changed her response to indicate that Morales did have
her permission.3 The Gomezes’ theories of liability as to Carrillo

      2 Counsel may represent two insureds, even if they have
conflicting interests, if defense counsel discloses the potential
conflict and obtains written consent from each of them. (Rules
Prof. Conduct, rule 1.7.) There is no evidence in the record of a
disclosure of a potential conflict and written waiver.

      3 The following colloquy occurred during Carrillo’s
deposition:
      “Q: You allowed Mr. Morales to use your car in August
2015; is that correct?
      “A: No.
      “Q: You never let him use your car in August of 2015?
      “A: No.
      “Q: So when Mr. Morales used your car in 2015, it was

                                 17
required the jury to find that she gave Morales permission to use
her car, and that she knew, or should have known, that he was
unfit to drive. The jury also had to apportion liability between
Carrillo and Morales. Pursuit of a defense on behalf of Carrillo
that Morales used her car without her permission would have
provided Carrillo an avenue to potentially avoid all liability for
the accident, leaving Morales solely responsible.
       A divergence of interests alone would not be sufficient to
establish Respondents were obligated to provide independent
counsel. (Spindle, supra, 89 Cal.App.3d at p. 713; Lehto, supra,
31 Cal.App.4th at p. 71 [permissive use case in which father and
son were the insureds; only a potential conflict until settlement
offer was made to one insured only]; see also Progressive

against your permission?
       [Objection by defense counsel]
       “Q: You can answer it.
       “A: Could you please repeat the question?
       “Q: Sure. So in August 2015 when Mr. Morales used your
car, it was against your permission?
       “A: No.
       “Q: Did you give him permission in August of 2015 to use
your car?
       “A: No.
       “Q: Was he allowed to use your car or not in August of
2015?
       “A: Yes.
       “Q: Which one?
       [¶]. . .
       “A: I didn’t understand the question.”
       At this point, Carrillo’s counsel took a break, over the
objection of the Gomezes’ counsel. Following the break, Carrillo
testified that she had authorized Morales to use her car in
August 2015.

                                18
Northwestern Ins. Co. v. Gant (10th Cir. 2020) 957 F.3d 1144,
1153–1154 [no insurer liability for negligent hiring of counsel
where insureds were family members and had no desire to blame
one another, and instead advanced unified position that son was
not at fault].) But here, the Gomezes provided evidence from
which a reasonable trier of fact could conclude that Carrillo was
ready to testify that Morales did not have her permission to use
the car, creating the basis for a defense her counsel could not
pursue without harming Morales’s interests. (Industrial
Indemnity Co. v. Great American Ins. Co. (1977) 73 Cal.App.3d
529, 536–537 [counsel retained by insurer to defend multiple
insureds improperly continued the representation even after
conflicts between insureds became apparent]; Hammett v.
McIntyre (1952) 114 Cal.App.2d 148, 157–158 [driver denied fair
trial where insurer provided single counsel for driver and owner
of car, permissive use alleged, and owner claimed he had not
given permission].)
       Respondents argue that even if there was a conflict
between Carrillo and Morales, an insurer cannot be held
responsible for the actions of retained defense counsel as a
matter of law, relying on Merritt, supra, 34 Cal.App.3d 858. We
disagree that Merritt can be read so broadly. In Merritt, the
insured attempted to hold the insurance company liable under a
theory of vicarious liability for its retained defense counsel’s
negligence in conducting the litigation. (Id. at pp. 879–882.) The
Merritt court rejected the claim, explaining that “[h]aving chosen
competent independent counsel to represent the insured in
litigation, the carrier may rely upon trial counsel to conduct the
litigation, and the carrier does not become liable for trial
counsel’s legal malpractice. If trial counsel negligently conducts

                                19
the litigation, the remedy for this negligence is found in an action
against counsel for malpractice and not in a suit against counsel’s
employer to impose vicarious liability.” (Id. at pp. 881–882.)
       The claim here is for breach of the insurer’s own duty to
defend by failing to provide counsel who could deliver effective
representation to both insureds. An insurer can be held liable for
damages caused by its failure to provide an adequate defense.
(See Travelers Ins. Co. v. Lesher (1986) 187 Cal.App.3d 169, 191,
194–199, disapproved of on other grounds by Buss, supra, 16
Cal.4th at p. 50.) Even if counsel acts negligently, an insurer still
“remains liable for the negligent performance of its own duties.”
(Merritt, supra, 34 Cal.App.3d at p. 882.) The Merritt court had
no occasion to consider whether the failure to appoint
independent counsel may breach the insurer’s duty to defend
when there are multiple insureds whose interests are in actual
conflict. (Mercury Ins. Group v. Superior Court (1998) 19 Cal.4th
332, 348 [“A decision, of course, is not authority for what it does
not consider”].) Respondents have not established they are
entitled to summary adjudication on the breach of contract claim
based on the duty to defend.
IV. Respondents Are Not Entitled to Summary
       Adjudication of the Breach of Contract Claim Based
       on the Failure to Pay Post-Judgment Interest
       The Gomezes’ complaint asserted they are owed interest on
the full amount of the judgment between April 19, 2019, when
judgment was entered, and May 17, 2019, when they received a
payment of $15,000 from Respondents. Respondents countered
they had no obligation to pay interest because they offered to pay
the policy limit. In the alternative, they argued that if any
interest were owed, it is only on the $15,000 limit of liability.

                                 20
The trial court determined the policy provision regarding post-
judgment interest was “not triggered” because Respondents
offered to settle for the policy limits before judgment was entered.
       “ ‘Interpretation of an insurance policy is a question of law.’
[Citation.]” (Palmer v. Truck Ins. Exchange (1999) 21 Cal.4th
1109, 1115 (Palmer).) It “is solely a judicial function, unless the
interpretation turns on the credibility of extrinsic evidence.”
(State Farm General Ins. Co. v. Mintarsih (2009) 175 Cal.App.4th
274, 283.) Interpretation of an insurance policy follows the
general rules of contract interpretation. (TRB Investments, Inc.
v. Fireman’s Fund Ins. Co. (2006) 40 Cal.4th 19, 27.) Policy
language that is clear and explicit governs. (Civ. Code, § 1638
[“The language of a contract is to govern its interpretation, if the
language is clear and explicit, and does not involve an
absurdity”]; Foster-Gardner, Inc. v. National Union Fire Ins. Co.
(1998) 18 Cal.4th 857, 868.) “ ‘A policy provision will be
considered ambiguous when it is capable of two or more
constructions, both of which are reasonable.’ [Citation.]” (Foster-
Gardner, at p. 868.) When a contract’s language is unambiguous,
intent is determined solely by the language within the four
corners of the contract. (Brown v. Goldstein (2019) 34
Cal.App.5th 418, 432.) “When interpreting a policy provision, we
must give its terms their ‘ “ordinary and popular sense,” unless
“used by the parties in a technical sense or a special meaning is
given to them by usage.” ’ [Citation.]” (Palmer, at p. 1115.)
       The credibility of extrinsic evidence is not at issue in this
case. Accordingly, we begin by looking at the plain language of
the contract. (See Wolf v. Walt Disney Pictures & Television
(2008) 162 Cal.App.4th 1107, 1126–1128; City of Hope National
Medical Center v. Genentech, Inc. (2008) 43 Cal.4th 375, 395.)

                                 21
The policy unambiguously caps post-judgment interest at “that
portion of the judgment which is not more than our limit of
liability,” which in this case was $15,000. The trial court
therefore properly rejected the Gomezes’ argument that they
were entitled to interest on the entire $3 million dollar judgment,
as opposed to interest on the policy limit of $15,000.
       However, we reject Respondents’ argument that their pre-
judgment settlement offer excused their obligation to pay interest
on damages awarded at trial. Under the policy, Transguard
agreed to pay: “in addition to our limit of liability: [¶] . . . [¶] (3)
interest on damages awarded in a suit we defend accruing after
judgment is entered and before we have paid, offered to pay, or
deposited in court that portion of the judgment which is not more
than our limit of liability.” Thus, the payment offer contemplated
relates to damages determined through litigation, concerns a
time period “after judgment is entered,” and must reflect a
payment or offer to pay a “portion of the judgment.” There is
nothing in the ordinary meaning of this provision that suggests
an offer to settle—even a conditional offer—made before
judgment would absolve Respondents of their contractual
commitment to their insureds to pay interest on “damages
awarded in a suit.”
       Moreover, contract provisions must be interpreted in
context, giving effect to every part of the policy with “ ‘each clause
helping to interpret the other.’ [Citation.]” (Palmer, supra, 21
Cal.4th at p. 1115.) The post-judgment interest provision is
situated in a section of the policy titled “Part I – Liability” and
then under a subsection titled “Additional Payments.” In
addition to the “interest on damages awarded in a suit we
defend,” the insurer is obligated to pay “all costs we incur in the

                                  22
settlement of a claim or defense of a suit,” “all costs assessed
against you in our defense of a suit,” and “any other reasonable
expenses incurred at our request.” Thus, the “additional
payments” provision encompasses payments associated with a
“suit” the insurer defends. It is also broad, contemplating “any
other reasonable expenses.” Nothing in the provision renders the
policy provision here amenable to the strained and narrow
interpretation Respondents urge. (Waller v. Truck Ins. Exchange,
Inc. (1995) 11 Cal.4th 1, 18–19 [“Courts will not strain to create
an ambiguity where none exists”].)
       Accordingly, we reverse the grant of summary adjudication
on the Gomezes’ breach of contract claim based on the failure to
pay post-judgment interest.

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                           DISPOSITION
       The judgment is reversed. The matter is remanded with
directions that the trial court vacate its order granting
Respondents’ motion for summary judgment and enter a new
order granting summary adjudication on the claim for breach of
the duty of good faith and fair dealing for failure to settle and
denying summary adjudication of the Gomezes’ claims for breach
of the duty to defend by failing to appoint separate counsel and
breach of contract by failing to pay post-judgment interest. The
parties shall bear their own costs on appeal.
       NOT TO BE PUBLISHED IN THE OFFICIAL
REPORTS

                                         ADAMS, J.

We concur:

                 EDMON, P. J.

                 EGERTON, J.

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