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In re Estate of Prindle

April 20, 2009

ESTATE OF ANGELA MARIE PRINDLE, DECEASED.
EARLINE HARRIS, AS ADMINISTRATOR, ETC., PETITIONER AND RESPONDENT,
v.
JESSICA HARRIS ET AL., CLAIMANTS AND RESPONDENTS;
TRAVELERS PROPERTY CASUALTY INSURANCE COMPANY, OBJECTOR AND APPELLANT.



APPEAL from a judgment of the Superior Court of Sacramento County, Thomas M. Cecil, Judge. Affirmed. (Super. Ct. No. 02PR00918).

The opinion of the court was delivered by: Nicholson , J.

CERTIFIED FOR PUBLICATION

Although this is an appeal from an order of the probate court, it relates to three different actions: (1) the probate action, (2) a negligence action against the administrator of the estate of the deceased, and (3) a bad faith action against Travelers Property Casualty Insurance Company for refusing to defend the administrator in the negligence action and indemnify the administrator for the judgment in the negligence action. Travelers seeks to assert, as a defense in the bad faith action, that the failure of the plaintiffs in the negligence action to file a timely claim with the estate barred relief in that action and recovery against Travelers in the bad faith action. The court in the bad faith action referred the question to the probate court, and the probate court held that Travelers is estopped from asserting that no timely claim was filed. Travelers appeals from the probate court order.

We affirm. We conclude that (1) Travelers had standing to appear in the probate action, (2) Travelers is estopped from asserting that the failure of the plaintiffs in the negligence action to file a timely probate claim bars relief against Travelers in the bad faith action, and (3) provisions of the Probate Code do not limit damages in the bad faith action to the insurance coverage limits.

PROCEDURAL BACKGROUND

As noted, this appeal relates to three different actions -- one final and two still pending: (1) the probate of the estate of Angela Prindle, (2) the negligence action (now final) by Jessica Harris and her daughters (collectively, Harris) against the administrator of the estate, and (3) the action of Harris and the administrator against Travelers for bad faith denial of insurance coverage. After summarizing each action, we detail the proceedings in the trial court that directly led to this appeal.

A. Estate of Angela Prindle (Probate Action)

In May 2002, Darrel Prindle entered the home of Angela Prindle, his estranged wife. He shot and killed Angela. He also shot Angela‟s sister (Jessica Harris) and Jessica‟s daughter (Crystal Perkins). Jessica‟s other daughter (Christine Perkins) was present but was not injured.

In July 2002, Earline Harris (the mother of Angela Prindle and Jessica Harris) filed a petition for probate of the estate of Angela Prindle. The probate court appointed Earline Harris as administrator of the estate. (We refer to Earline Harris, hereafter, as the Administrator, to avoid confusing her with her daughter Jessica Harris, to whom we refer as Harris.) In November 2002, the estate gave notice to Angela Prindle‟s creditors that claims against the estate must be filed by January 2003.

In January 2007, the net assets of the estate were estimated at $16,000. Neither the Administrator nor counsel for the estate had yet been paid.

B. Harris v. Prindle (Negligence Action)

Harris sued Darrel Prindle and the Administrator on May 29, 2003, after the time for filing creditor‟s claims against the estate had expired.*fn1 Harris alleged that Angela Prindle was negligent in failing to warn Harris that Darrel Prindle would return to the residence.

The Administrator informed Travelers of the negligence action and asked Travelers to provide a defense. Harris made a demand to Travelers for the policy limits -- $100,000. Travelers responded by denying coverage and refusing to defend the estate. It stated that the policy applied to accidental conduct, not intentional conduct. It also stated that coverage was excluded under the terms of the policy, which stated that the policy did not cover injury or damage "which is expected or intended by any insured." (Underscoring in original.)

The Administrator answered the complaint, and a court trial was held. The court (Judge Richard K. Park) issued a statement of decision and entered judgment. It found the estate liable to Harris for negligence in the amount of about $7 million.

The Administrator assigned to Harris the estate‟s assignable rights against Travelers for failure to defend and indemnify the Administrator in the negligence action. In exchange for this assignment, Harris agreed not to execute on the judgment against the Administrator.

C. Harris v. Travelers (Bad Faith Action)

Harris and the Administrator sued Travelers, alleging breach of the insurance contract, breach of the implied covenant of good faith and fair dealing (bad faith), and breach of fiduciary duties. The allegation that Travelers acted in bad faith could expose it to liability for the full amount of the judgment against the Administrator (about $7 million), not just the policy limits ($100,000), because an insurer that breaches its duty of good faith and fair dealing may be held liable for the full amount of the judgment against the insured, even beyond the policy limits. (Kransco v. American Empire Surplus Lines Ins. Co. (2000) 23 Cal.4th 390, 401.)

D. Trial Court Proceedings Leading to This Appeal

On April 4, 2006, Harris filed a belated creditor‟s claim against the estate, claiming about $7 million plus interest pursuant to the judgment in the negligence case.

In the bad faith action, Travelers filed a motion for summary judgment, making two arguments. First, it asserted that the policy‟s exclusion for intentional acts of the insured precluded coverage for the actions of Darrel Prindle. And second, it argued that Harris failed to file a timely creditor‟s claim against the estate and therefore the estate was never in danger of a judgment in the negligence action exceeding the limits of the insurance policy. The trial court (Judge Shelleyanne W.L. Chang) denied the motion for summary judgment. Concerning the former assertion, the trial court found there was sufficient evidence to overcome the summary judgment motion because there was evidence that Darrel was not an insured under the policy. As to the latter issue, the court stated that the validity of the creditor‟s claim filed by Harris would have to be determined by the probate court.

On August 30, 2006, Travelers filed, in the probate action, a petition to (1) remove the Administrator and (2) determine that Harris‟s creditor‟s claim was invalid. The Administrator demurred to the petition, asserting that Travelers did not have standing to bring it. The Administrator also attempted to approve Harris‟s belated creditor‟s claim against the estate without first petitioning the court to allow the filing of a late claim under Probate Code section 9103.

The probate court (Judge Charles C. Kobayashi) overruled the demurrer. It ruled that Travelers has standing because it is an "interested person," pursuant to Probate Code section 48, because of the financial impact a ruling in the probate court could have on Travelers. The court ordered the Administrator to file and serve an appropriate response to Travelers‟ petition. The court also ordered the Administrator to file and serve a petition to allow the filing of Harris‟s late claim.

Harris filed a petition to allow her to file her late claim against the estate. In addition to Harris‟s petition, the Administrator filed (1) a response to Travelers‟ petition and (2) a petition for approval of Harris‟s late claim. In the latter document, the Administrator asked the probate court to "approve the late-filing of [Harris‟s] creditor‟s claim . . . or, in the alternative, determine and declare that the claim-filing requirement was properly waived in this case by the administrator or, as a further ...


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