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State Farm General Insurance Co. v. Mintarsih

June 25, 2009

STATE FARM GENERAL INSURANCE COMPANY, PLAINTIFF AND APPELLANT,
v.
MIMIN MINTARSIH, DEFENDANT AND APPELLANT.



APPEALS from a judgment of the Superior Court of Los Angeles County, Mark V. Mooney, Judge. Affirmed in part and reversed in part with directions. (Los Angeles County Super. Ct. No. BC334728).

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

CERTIFIED FOR PUBLICATION

State Farm General Insurance Company (State Farm) and Mimin Mintarsih both appeal a judgment in a declaratory relief action. Mintarsih sued State Farm‟s insureds, Dennis Lam and Dina Lam, in the underlying action for false imprisonment and other counts arising from her employment as a domestic servant. She obtained a judgment against the Lams for compensatory and punitive damages, statutory penalties, attorney fees as costs, and other costs. In this action, State Farm sought a declaration of the parties‟ rights and duties with respect to two insurance policies that were issued to the Lams and later assigned to Mintarsih. The trial court determined that the policies provided coverage for $87,000 in compensatory damages and for the award of $161,591.05 in costs, but that State Farm had no obligation to pay the attorney fee award.

On appeal, Mintarsih contends State Farm is obligated to pay the attorney fee award against the Lams under policy provisions requiring it to pay costs awarded against the insureds, despite the fact that the right to a fee award arose solely from wage and hour claims for which there was no potential coverage under the policies. She also argues that she is entitled to postjudgment interest on the entire judgment. In its appeal, State Farm contends that it has no duty to indemnify the Lams for the compensatory damages award, based on Insurance Code section 533 and other grounds.

We conclude that State Farm‟s obligation under the policies‟ "supplemental payments" provisions, which promise to pay costs awarded against the insureds, extends only to costs arising from claims that were at least potentially covered under one or both of the policies. Mintarsih has not shown that the wage and hour claims that gave rise to the right to recover attorney fees were potentially covered under the policies and therefore has not established that State Farm is obligated to pay the attorney fees awarded as costs. In addition, Insurance Code section 533 precludes indemnity for the compensatory damages awarded against the Lams for false imprisonment and negligence. Because State Farm has no duty to indemnify the Lams under either policy for the damages awarded against them, we conclude that it has no obligation to pay postjudgment interest on the judgment awarded against them (other than interest on the cost award, which State Farm concedes). We therefore affirm the judgment in part and reverse in part with directions.

FACTUAL AND PROCEDURAL BACKGROUND

1. Insurance Policies

State Farm issued two insurance policies to the Lams, a homeowners policy and a personal liability umbrella policy. The homeowners policy included coverage for personal liability for "damages because of bodily injury or property damage to which this coverage applies, caused by an occurrence." (Emphasis omitted.) State Farm also agreed to defend any action seeking such damages. In addition, State Farm agreed to pay certain "claim expenses" over and above the limits of liability, including (1) "expenses we incur and costs taxed against an Insured in suits we defend;" (2) "prejudgment interest awarded against the Insured on that part of the judgment we pay; and [(3)] [¶] . . . interest on the entire judgment which accrues after entry of the judgment and before we pay or tender, or deposit in court that part of the judgment which does not exceed the limit of liability that applies."*fn1 (Emphasis omitted.)

The personal liability umbrella policy included coverage for the Lams‟ personal liability for "damages for a loss." (Emphasis omitted.) The term "loss" was defined to include the commission of specified offenses resulting in personal injury, including false imprisonment. State Farm also agreed to defend such an action. The policy also stated: "When the claim or suit is covered by this policy, but not covered by any other policy available to you: [¶] . . . [¶] . . . we will pay the expenses we incur and costs taxed against you in suits we defend; . . . [¶] . . . we will pay prejudgment interest awarded against you on that part of the judgment we pay under Coverage L; and [¶] . . . we will pay the interest on the entire judgment which accrues after entry of the judgment and before we pay or tender, or deposit in court, that part of the judgment which does not exceed the limit of liability that applies." The policy stated further that the payment of such costs or interest was in addition to the limits of liability.

2. Underlying Action

Mintarsih filed a complaint against the Lams in July 2004 (Mimin Mintarsih v. Dennis Lam et al. (Super. Ct. L.A. County, No. BC319275)). She alleged that she was falsely imprisoned in the Lams‟ home in Pasadena and forced to work as a domestic servant from June 1997 until approximately May 2004. She alleged that she previously had worked as a domestic servant for Dina Lam‟s relatives in Indonesia and Singapore before coming to the United States to work for the Lams. She alleged numerous counts against the Lams.

The Lams tendered their defense to State Farm under the homeowners and umbrella policies. State Farm agreed to defend the Lams, but reserved the right to assert defenses to coverage, to withdraw the defense if it determined that there was no duty to defend or indemnify the Lams, and to seek reimbursement of defense costs.

Mintarsih‟s complaint against the Lams was submitted to the jury on counts for false imprisonment, negligence, negligence per se, fraud, and wage and hour violations

under the Labor Code. The jury found the Lams liable on each of those counts.*fn2 It awarded Mintarsih $75,000 in noneconomic damages and $12,000 in economic damages on the first four counts, and awarded her a total of $745,671 in damages on and a statutory penalty for the wage and hour violations. It also awarded her $2,500 in punitive damages against each defendant. Judgment was entered against the Lams on May 12, 2006.*fn3

The court later granted Mintarsih‟s motion for attorney fees as costs as the prevailing party on the wage and hour claims, pursuant to Labor Code section 218.5. The court awarded her $733,323.60 ...


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