Court Opinion

ID: 9746349
Source: CourtListenerOpinion
Date Created: 2023-08-27 14:13:08.028811+00
Date Added: 2024-06-11T07:25:12.410549
License: Public Domain

CROSBY, J., Dissenting.
— Hard to believe, but my colleagues were reversed in Horace Mann Ins. Co. v. Barbara B. (1993) 4 Cal.4th 1076 [17 Cal.Rptr.2d 210, 846 P.2d 792], the first appellate incarnation of this case, for the same mistake they repeat today, upholding a trial court failure to recognize the difference between intentional and negligent torts. In Barbara B. the court was at pains to point out that distinction; some of the pertinent language appears in the margin.1
*169Let us examine the so-called collusive trial before Judge Luesebrink. There, Gary Lee was represented by a counsel provided by an insurer, his homeowner’s carrier. The judge did not even learn of the parties’ stipulation to proceed only on the negligence accusations in the underlying complaint until midtrial. He then expressed reservations concerning the “unrepresented” absentee carrier, it is true. But, in view of the judgment rendered, he must have put those reservations aside — and for good reason.
First, Horace Mann Insurance Company could have been involved, but it decided to gamble on a wrong-headed legal position rather than provide the defense that six justices of the Supreme Court and one from this court found was obviously required after reviewing plaintiff’s complaint. Second, the judge may have become aware at some point, as is the nature of these matters in the trial courts, that Lee’s defense was underwritten by an insurer, albeit not Horace Mann. He knew Horace Mann was not there, but so what. Horace Mann’s duty, which it desperately sought to avoid, was to defend its insured, not itself.
Third, and most important, the stipulation was a true two-way street. It seemingly limited the issues to those involving negligence, to the plaintiff’s apparent benefit; but the reality is it also permitted a defense based on the theory Commissioner Myers later bought, i.e., that every alleged negligent act was part of an overall scheme to molest Barbara. Thus, although it would ordinarily be contrary to the insured’s interest to defend on the basis that his conduct was of a higher degree of culpability than ordinary negligence, and thus beyond the pale for an insurer-provided attorney to so assert, that was the defense here.
Lee’s counsel found himself in a unique situation. He realized that with no fear of liability of an intentional tort finding (and a virtual certainty that those claims would be procedurally barred forever), he could and did marry the carrier’s coverage defense to that of its insured: His strategy was to prove a continuing course of intentional criminal conduct and argued to Judge Luesebrink there were no isolated negligent acts for that reason.
Plaintiff’s expert and Barbara B. herself based the claimed damages on percentages relative to the intentional and negligent torts. The victim apportioned the sexual and nonsexual emotional distress “50/50.” *170Janet Quillian, a veteran licensed clinical social worker, gave the same apportionment.2
The defense, however, was able to “prosecute” the insured for his and the insurer’s mutual benefit. Counsel started with an emphasis on the sexual misconduct on cross-examination of Barbara. He continued with the defense expert, Dr. William McAdoo, a forensic and clinical psychologist, who was bluntly asked on direct examination whether the negligent conduct proved by plaintiff “is separate and distinct, in your opinion, from the ultimate touching or sexual touching that has been admitted here in court by Mr. Lee?” McAdoo replied, “No, it is not separate. It is all encompassed in the relationship. It all goes to the psychological state of mind of the person. ... To separate it is virtually impossible. It would take us back to the mind, body concepts of [Descartes]. We can’t make that distinction. They facilitate one another.” He was asked the same rephrased question and agreed with counsel’s statement that “any nonsexual activity that occurred between the teacher and the student [is] part of the larger picture ... of sexual activity — ” McAdoo’s testimony did not go unchallenged on cross-examination, of course.
The defense summation made clear this was the issue Judge Luesebrink was asked to resolve: Was it possible to apportion damages between the negligent and intentional torts on the facts before him?3 Here is part of the remarkable argument defense counsel made on behalf of his client, Lee:4 “There is no distinction between sexual and nonsexual activity. It merges together. It’s part of a courtship that, unfortunately, took place, and it culminated in felonious activity.” He added, “I don’t believe there is evidence before the court that the court can take a handle on this and say, well, because Mr. Lee put his ■ arm around Barbara . . . , that is nonsexual; therefore, that is actionable and, therefore, there is a dollar value attached to that.”
So there we have the first trial. The result we already know: Judge Luesebrink found the conduct was legally severable; and what’s more, he found it was factually severable, and awarded damages accordingly. The question before the house, then, is whether this latter finding was binding on *171Horace Mann. There is no reason it should not have been except, arguably, the very broad pronouncement of the Supreme Court in J. C. Penney Casualty Ins. Co. v. M. K. (1991) 52 Cal.3d 1009, 1018 [278 Cal.Rptr. 64, 804 P.2d 689]. But that language is, I think, broader than the court intended and should be revisited.
No insurer ought be permitted to take advantage of its own error in denying a defense by the simple devices of a reservation of rights letter and prolonged litigation of the issue at the expense of the victim and its own insured. Where a noncollusive trial results in a judgment in negligence, the carrier should be bound just as if it had simply denied coverage and a defense altogether: “As a general matter, a liability insurer is bound by the finding in a tort action against its insured that the insured was liable due to negligence.” (Allstate Ins. Co. v. Atwood (1990) 319 Md. 247, 260 [572 A.2d 154, 160] (citing cases nationwide, including California).)
The Atwood court stated the rule I believe should apply: “In our view, the insurer should be able to bring a post-tort trial declaratory judgment action where the conflict of interest situation exists. The trial judge in that declaratory judgment action would first determine, as a legal matter, whether the issue which was resolved in the tort trial and which determines insurance coverage, was fairly litigated .... If the declaratory judgment judge decides that the issue was fairly litigated in the tort trial, there should be no relitigation of that issue in the declaratory judgment action. Instead, a final judgment would be entered . . . declaring that the issue was fairly litigated [previously] and that the insurer is bound by the outcome . . . against its insured. On the other hand, if the judge in the declaratory judgment action determines that the issue was not fairly litigated in the tort trial, then the insurer should be permitted to relitigate the matter in the declaratory judgment action.” (319 Md. at p. 262 [572 A.2d at p. 161]; Ford v. Providence Washington Ins. Co. (1957) 151 Cal.App.2d 431 [311 P.2d 930]; 2 Cal. Liability Insurance Practice: Claims and Litigation (Cont.Ed.Bar 1994) § 19.29, pp. 19-22 to 19-24; but see § 19.31, p. 19-25.)
Ironically, the Atwood procedure was employed here; but Commissioner Myers found the trial before Judge Luesebrink was not “fairly litigated.” Her finding of collusion, however, is simply unsupported by the record, except in the very, very narrow definition she assigned the term: that a person with an interest before the court was not represented, i.e., Horace Mann. That is hardly the usual connotation of collusion, though. Hundreds of cases could be cited for the proposition that where an insurer willfully fails to defend it will be bound by any ensuing judgment. And the issue is a false one anyway to this extent: A carrier must defend its insured to its own detriment, if *172necessary, not itself. Collusion for present purposes must be defined to mean that the absent carrier was somehow deceived or denied due process, i.e., that the issue was not “fairly litigated.”
This record yields exactly no evidence of that sort of collusion, and Lee’s defense counsel’s testimony before Commissioner Myers emphatically rejected that accusation by Horace Mann’s attorney. The case before Judge Luesebrink was vigorously defended by an attorney who was in the pay of another insurance company. He entered into a clever stipulation to try only the negligence allegations and thereby freed himself to produce expert testimony in support of the very argument Commissioner Myers and my colleagues adopt,, i.e., that all Lee’s conduct was part and parcel of an ongoing molestation of Barbara. Horace Mann could have done no better had it provided its own defense. Thus, under the rule of the Atwood case, it should not have had the opportunity to revisit an issue “fairly litigated.”
I would reverse.

For example: “The flaw in Horace Mann’s reasoning is its unsupported assumption that the other alleged misconduct necessarily was part of the molestation and not in the course of Lee’s educational activities. The evidence presented in support of the summary judgment motion fails to clearly establish the inferences necessary to sustain the ruling. Indeed, the evidence supported the potential for liability apparent on the face of the complaint and, with it, Horace Mann’s duty to defend.” (Horace Mann Ins. Co. v. Barbara B., supra, 4 Cal.4th at p. 1082, italics added.) “Neither precedent nor logic dictates that a molester cannot also be liable for torts of negligence against the victim which are apart from, and not integral to, the molestation.” (Id. at p. 1083.) “In many cases the plaintiff’s allegations of molestation and other misconduct may be inseparably intertwined (e.g., when the molestation allegedly was carried on in secret, without any distinct injury to the plaintiff’s social relations). Lee’s nolo
*169plea to one count of violating Penal Code section 288, subdivision (a), established his sexual molestation of Barbara, but his alleged public embarrassment of Barbara B. affected a different interest.” (Id. at p. 1085.)

Quillian had also read a report by the defense expert, Dr. William McAdoo, in which he found “that Barbara’s stress, 25 percent is related to the molestation and 75 percent to other problems.”

The judge did not have the benefit of the Barbara B. opinion, of course. The Supreme Court’s decision appeared almost two years after the trial. We now know it was legally possible to separate the conduct. (See fn. 1, ante.)

This may be a new defense in the halls of insurance company-retained defenders: May I be permitted to name it the “plain ol’ child molester” ploy.