Court Opinion

ID: 2798157
Source: CourtListenerOpinion
Date Created: 2015-05-01 23:02:05.820828+00
Date Added: 2024-06-11T11:29:26.048316
License: Public Domain

Filed 5/1/15 The Belmont Companies v. Western Royalty Ins. Services 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                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication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

THE BELMONT COMPANIES,                                               B254441

         Cross-complainant,                                          (Los Angeles County
                                                                     Super. Ct. No. BC437338)
         v.

WESTERN ROYALTY INSURANCE
SERVICES, INC.,

         Cross-defendant and Respondent;

JOHN MARTONI et al.,

         Movants and Appellants.

         APPEAL from an order of the Superior Court of Los Angeles County. Ronald M.
Sohigian, Judge. Affirmed.
                                                         ______
         Joshua R. Furman for Movants and Appellants.
         Wilson, Elser, Moskowitz, Edelman & Dicker and Ian A. Stewart for Cross-
defendant and Respondent.
                                                         ______
       John and Patricia Martoni appeal from the order denying their motion for leave to
file a complaint in intervention in a cross-action for indemnity brought by the Belmont
Companies (Belmont) against Western Royalty Insurance Services, Inc. (Western
Royalty). The Martonis contend that the denial of the motion constituted an abuse of
discretion. We disagree and thus affirm order.
                 FACTUAL AND PROCEDURAL BACKGROUND
1.     The Wrongful Death Action and the Declaratory Relief Action and Cross-action
       In 2008, the Martonis’ son was killed when shot by Stanley Park. In 2009, the
Martonis sued Park and the Belmont Companies, among others, for wrongful death.
(Martoni v. Park (Super. Ct. Los Angeles County, 2009, No. NC053835).) The Belmont
Companies, which owned and operated the bar outside where the son had been shot,
tendered defense of the action to Landmark American Insurance Company (Landmark),
its general liability carrier. Landmark defended the action under a reservation of rights.
       Landmark instituted this case against Belmont in 2010 seeking a declaration that it
had no duty to defend or indemnify Belmont in the wrongful death action because its
policy contained an exclusion for assault and battery coverage. Later in 2010, Belmont
filed a cross-action against Western Royalty Insurance Services, Inc., its insurance
broker, alleging that Western Royalty had assured Belmont that assault and battery
coverage was included in its policy with Landmark. In 2011, Landmark moved for
summary judgment, which the trial court granted, and obtained a judgment providing that
it had no duty to defend or indemnify Belmont in the wrongful death action. Landmark
withdrew its defense of Belmont in the wrongful death action. At some point, Belmont’s
liquor liability carrier began defending Belmont in the wrongful death action, although
the terms of that defense are not clear from the record.1

1
        Western Royalty asserts that Belmont has not suffered any damages as a result of
the lack of assault and battery coverage in Landmark’s liability policy because its liquor
liability carrier picked up its defense in the wrongful death action once Landmark
withdrew a defense.

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2.     The Bankruptcy Action and the Motion for Leave to File a Complaint in
       Intervention
       In 2012, Belmont filed a Chapter 11 bankruptcy petition. The case was converted
to one under Chapter 7 in 2013, and the bankruptcy court appointed a trustee for
Belmont’s estate. In June 2013, the Martonis moved in the bankruptcy court for relief
from the automatic stay to pursue their wrongful death action against Belmont and as
well as a claim in Belmont’s cross-action against Western Royalty. While the Martonis’
motion was pending, the trustee moved in the bankruptcy court for authority to
compromise Belmont’s claim against Western Royalty. The trustee did not oppose the
Martonis’ request for relief from the automatic stay to pursue their wrongful death action
but did oppose their request to pursue a claim in Belmont’s cross-action against Western
Royalty. The Martonis maintained that the trustee’s proposed compromise with Western
Royalty, in the amount of $10,000, was too low and that Belmont’s claim against
Western Royalty was worth more. In August, the bankruptcy court granted the Martonis’
motion for relief from the automatic stay to pursue their wrongful death action against
Belmont, permitting enforcement of any final judgment against Belmont through
collection upon available insurance. It denied the trustee’s motion for authority to
compromise without prejudice, affording the Martonis an opportunity to make an offer to
the trustee for Belmont’s claim against Western Royalty. And it allowed the Martonis to
move to file a complaint in intervention in Belmont’s cross-action against Western
Royalty.
       Soon after, in September, the trustee settled Belmont’s claim against Western
Royalty for $20,000. The settlement agreement indicated that the settlement was subject
to bankruptcy court approval as well as to higher and better bids. In October, the trustee
filed a second motion for authority to compromise in the bankruptcy court, noting that the
settlement amount was now $20,000 and representing that the terms of the settlement
were in the best interest of Belmont’s estate and creditors and in good faith given the
potential defenses and maximum amount of damages of $100,000 (the limit of the assault
and battery coverage had it been procured). The trustee explained that, “because

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creditors [the Martonis] previously [had] opposed the [t]rustee’s compromise with
Western [Royalty] and made the [t]rustee a competing offer previously, the settlement
with Western [Royalty] is subject to overbid, to allow the Martonis, or any other
interested party, an opportunity to purchase the estate’s claims at the hearing on the
[m]otion.” According to the trustee, the Martonis were interested in a settlement that
involved the trustee stipulating to a judgment in favor of the Martonis in Belmont’s
action against Western Royalty in the amount of $125,000, with a partial cash payment to
the trustee and an assignment to them of the trustee’s right to pursue Belmont’s claim
against Western Royalty. The trustee decided to accept Western Royalty’s $20,000
settlement offer and did not further pursue a settlement with the Martonis.
       At a hearing on November 14, the bankruptcy court, over opposition by the
Martonis, granted the trustee’s motion for authority to compromise Belmont’s claim
against Western Royalty. About a week after the hearing, but before entry of the order,
the Martonis filed in this case a motion under Code of Civil Procedure section 387,
subdivision (a)2 for leave to file a complaint in intervention in Belmont’s cross-action
against Western Royalty. Western Royalty opposed the motion. On December 5, the
bankruptcy court entered its order granting the trustee’s motion for authority to
compromise. In the order, the bankruptcy court approved the settlement with Western
Royalty and allowed the trustee to effectuate the settlement agreement, including
dismissal of Belmont’s cross-action against Western Royalty. The bankruptcy court also
noted that no overbids on the settlement had been received.
       On December 18, the trial court denied the Martonis’ motion for leave to file a
complaint in intervention. The Martonis timely appealed. (Hodge v. Kirkpatrick
Development, Inc. (2005) 130 Cal. App. 4th 540, 547 [“order denying a motion for leave
to intervene is directly appealable because it finally and adversely determines the moving
party’s right to proceed in the action”].)

2
       Statutory references are to the Code of Civil Procedure.

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                                       DISCUSSION
       Under section 387, subdivision (a), which governs permissive intervention,
“[u]pon timely application, any person, who has an interest in the matter in litigation, or
in the success of either of the parties, or an interest against both, may intervene in the
action or proceeding.” Permissive intervention, gives the trial court discretion to allow
intervention when the proposed intervenor follows the proper procedures for intervention
provided that (1) he or she “has a direct and immediate interest in the litigation, (2) the
intervention will not enlarge the issues in the case, and (3) the reasons for intervention
outweigh opposition by the existing parties. [Citation.]” (Hinton v. Beck (2009)
176 Cal. App. 4th 1378, 1382-1383.) “The standard of review for an order denying
leave to intervene under section 387, subdivision (a) is abuse of discretion. [Citations.]”
(Siena Court Homeowners Assn. v. Green Valley Corp. (2008) 164 Cal. App. 4th
1416, 1428.)
       “Assuming the proper procedures have been followed, the threshold question
under section 387, subdivision (a) is whether the party seeking discretionary intervention
has a direct and immediate interest in the action. [Citation.] ‘The requirement of a direct
and immediate interest means that the interest must be of such a direct and immediate
nature that the moving party “‘will either gain or lose by the direct legal operation and
effect of the judgment.’ [Citation.]” [Citations.]’ [Citation.] ‘Conversely, “[a]n
interest is consequential and thus insufficient for intervention when the action in which
intervention is sought does not directly affect it although the results of the action
may indirectly benefit or harm its owner.” [Citation.]’ [Citation.]” (Siena Court
Homeowners Assn. v. Green Valley Corp., supra, 164 Cal.App.4th at p. 1428;
Continental Vinyl Products Corp. v. Mead Corp. (1972) 27 Cal. App. 3d 543, 549-550
[“person has a direct interest justifying intervention in litigation where the judgment in
the action of itself adds to or detracts from his legal rights without reference to rights and
duties not involved in the litigation”; “interest is consequential and thus insufficient for
intervention when the action in which intervention is sought does not directly affect it

                                              5
although the results of the action may indirectly benefit or harm” the proposed
intervenor].)
       The denial of the Martonis’ motion for leave to file a complaint in intervention in
Belmont’s cross-action against Western Royalty was not an abuse of discretion. The
Martonis, as a potential creditor of Belmont based on the wrongful death action, did not
establish the threshold requirement of a direct and immediate interest in the litigation for
permissive intervention. At the time of the proposed intervention, Belmont’s cross-action
against Western Royalty—the action in which the Martonis sought intervention—had
been settled and the bankruptcy court had approved that settlement, which allowed
the trustee to dismiss the action. Since then, the action was dismissed. The Martonis
participated in the proceedings before the bankruptcy court. Although the Martonis had
the opportunity to bid over the settlement amount to purchase Belmont’s claim against
Western Royalty, they declined to do so. Under these circumstances, no basis existed
for permissive intervention. (Continental Vinyl Products Corp. v. Mead Corp., supra,
27 Cal.App.3d at p. 553 [no direct interest in litigation pursued by bankruptcy trustee
even though success in the litigation assertedly would increase value of proposed
intervenor’s stock; if trustee chose to settle action, proposed intervenor would have
opportunity to object and assert position in bankruptcy court proceeding for approval
of the settlement]; Siena Court Homeowners Assn. v. Green Valley Corp., supra,
164 Cal.App.4th at p. 1429 [proposed intervenor’s claim to 48 percent interest in any
recovery obtained by the plaintiff did not show a direct interest in the litigation because
the judgment would not affect the proposed intervenor’s obligations and indirect benefit
or harm to proposed intervenor was “‘consequential and thus insufficient for
intervention’”].)3

3
       The Martonis contend that the trial court’s order indicating that the grounds for its
denial of their motion were “as fully reflected in [Western Royalty’s] opposing papers”
demonstrates an abuse of discretion because Western Royalty was a suspended
corporation when it filed its opposition and improperly relied on an unpublished, non-
citable opinion, although Western Royalty did argue that the Martonis had not shown the
requisite direct interest in the litigation for permissive intervention. In any case, as the

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                                    DISPOSITION
      The order is affirmed. Western Royalty is entitled to its costs on appeal.
      NOT TO BE PUBLISHED.

                                                ROTHSCHILD, P. J.
We concur:

             JOHNSON, J.

             BENDIX, J.*

moving parties, the Martonis were required to establish the requirements for permissive
intervention, which they did not do. Thus, even if there were issues with Western
Royalty’s opposition, the denial of the Martonis’ motion was not an abuse of discretion.
*
        Judge of the Los Angeles Superior Court, Assigned by the Chief Justice pursuant
to article VI, section 6 of the California Constitution.

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