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Cooper v. State Farm Mutual Automobile Insurance Co.

September 17, 2009


APPEAL from the Superior Court of San Bernardino County. Donald R. Alvarez, Judge. Reversed. (Super.Ct.No. SCVSS107232).

The opinion of the court was delivered by: King J.




The present appeal is from a judgment entered after the trial court‟s grant of defendant State Farm Mutual Automobile Insurance Company‟s (State Farm) motion for non-suit, following plaintiff‟s opening statement.

Plaintiff/appellant Bryan Cooper was an insured of State Farm. He was involved in a single car accident allegedly caused by a tread separation of the right rear tire. As part of the collision damage settlement with plaintiff, State Farm acquired possession of the vehicle, including the right rear tire. State Farm had the tire examined by an expert, who opined that it was defectively manufactured. State Farm notified plaintiff of its expert‟s opinion. Plaintiff sued the tire manufacturer, Continental Tire North America, Inc. (Continental Tire).

After plaintiff‟s counsel notified State Farm of the importance of the tire to plaintiff‟s case against Continental Tire, and after State Farm informed plaintiff that it would retain the tire, State Farm disposed of the car and the allegedly defective tire. Plaintiff then sued State Farm for damages allegedly caused by State Farm‟s destruction of the tire.*fn1 Plaintiff contends that as a result of State Farm‟s conduct, he was unable to prove his product defect case against Continental Tire. The parties waived jury trial and plaintiff‟s counsel made his opening statement. The court thereafter granted State Farm‟s motion for non-suit.

The issue in the motion for non-suit was whether plaintiff may legally recover damages against State Farm for injuries sustained in the underlying automobile accident, or whether said recovery is, by its very nature, too speculative. Relying primarily on Cedars-Sinai Medical Center v. Superior Court (1998) 18 Cal.4th 1 (Cedars-Sinai) and Temple Community Hospital v. Superior Court (1999) 20 Cal.4th 464 (Temple), the trial court ruled that plaintiff was legally precluded from recovering damages for the alleged destruction of the tire because he would be unable to show that he would have prevailed in his case against Continental Tire had the tire not been destroyed.*fn2 We disagree with the trial court‟s analysis and conclusion as applied to a motion for non-suit following opening statement and therefore reverse the judgment.

Initially, Cedars-Sinai and Temple are not on all fours to the present case because here, plaintiff set forth a prima facie case that he relied to his detriment on State Farm‟s promise to preserve the tire; no such promise and reliance was present in Cedars-Sinai and Temple. Second, we conclude that plaintiff‟s opening statement referred to sufficient prima facie evidence to create a strong inference that the tire was defective and, had it not been destroyed, plaintiff would have been able to prove his case against Continental Tire. We also conclude that, under the present facts, plaintiff‟s damages are reasonably ascertainable. Lastly, we believe plaintiff‟s pleadings, in conjunction with his opening statement, encompass the legal concepts of promissory estoppel and/or a voluntary undertaking by State Farm.


A. The Pleadings

By way of plaintiff‟s first amended complaint plaintiff added State Farm as a defendant to his pending action against Continental Tire. As against Continental Tire, plaintiff alleged that the right rear tire on his vehicle was manufactured by Continental Tire, that the tire was defective and caused his vehicle to go out of control and roll over, and that he was injured as a result. State Farm was sued in the fifth and sixth causes of action for "Breach of Implied Covenant of Good Faith and Fair Dealing" and "Negligent Destruction of Evidence." The allegations underlying both causes of action were that plaintiff sought custody of the tires on the vehicle and that State Farm, upon demand, "refused to release said tires to plaintiff, stating that it would retain custody of the tires in order to pursue subrogation claims against third parties." Plaintiff further alleged that State Farm "entered into a special relationship with its insured to preserve the [Continental] tires" and it "violated its contractual and fiduciary obligations to plaintiff by losing, destroying, disposing of and/or failing to preserve the [Continental] tires."

And, as stated in plaintiff‟s sixth cause of action, "[p]laintiff reasonably relied to his detriment upon [State Farm‟s] voluntary undertaking to preserve the [Continental] tires."

B. Plaintiff's Opening Statement

Plaintiff‟s counsel‟s opening statement was as follows: "On August 29, 2002, [plaintiff] was the driver of a 1999 Ford Ranger that was involved in a single vehicle accident. At the time of the accident, he was insured by State Farm under his father‟s policy . . . . [¶] . . . [¶]

". . . The accident was on [Interstate] 10 westbound in Redlands. [Plaintiff] was wearing his seat belt. He was traveling 65 to 70 miles per hour when his right rear tire suddenly failed. It caused a loss of control. . . .

"Following the accident . . . [a] claim for property damage was made. The vehicle was totaled and [plaintiff] was provided by State Farm a check for the full value of the vehicle.

"One of the provisions of Exhibit 1 is on Exhibit 1-20 of the policy, which is under Settlement of Loss. The policy states: We have the right to settle a loss with you or the owner of the property in one of the following ways-and the important one is No. 1-pay the agreed-upon actual cash value of the property at the time of the loss-and what‟s important here-"in exchange for the damaged property.‟

"So in order for [plaintiff] to obtain the benefit of his bargain with the insurance company and obtain the cash value, he was required to turn over the property to State Farm. State Farm took the property. [¶] . . . [¶]

". . . State Farm had the tire examined on hearing that [plaintiff] said the cause of the loss of his control was the failure of the right rear tire. And State Farm‟s own experts determined, based on that review, both an estimator as well as a specific tire expert that State Farm hired, that this tire was, in all probability, defectively manufactured and that was the cause of the accident.

"[Plaintiff] hired a lawyer to pursue his case against Continental Tire, the manufacturer of the tire that failed. The name of the law firm was Welebir and McCune. Welebir and McCune wrote to State Farm and requested, slash, demanded, that they keep possession of the tire so that [plaintiff] could pursue his case.

"State Farm made, on . . . three different occasions . . . , an explicit promise that they would preserve that evidence. They broke that promise, and in April 2003, despite having three times made promises that they would keep the tire, they, in fact, sold the vehicle with the tire in it and destroyed the tire, thereby destroying [plaintiff]‟s case against Continental Tire.

"The result of their destroying the tire was that [plaintiff] had no reasonable chance of prevailing in a product liability case against Continental Tire. The basis for that is a case that‟s name is Stephen v. Ford [Motor Co. (2005) 134 Cal.App.4th 1363], which is a California case, in which it was a Ford-Firestone failure, and plaintiff did not have the tire to pursue that case. . . . the court . . . excluded plaintiff‟s expert on the basis that it was not reliable testimony to provide testimony as to a defective tire on photographs alone.

"So, with that, [plaintiff] lost his ability to collect for his serious personal injuries, that included over $40,000 worth of medical expenses, and severe pain and suffering and general damages.

"We believe that the explicit promise, and then the broken promise, supports a cause of action for breach of contract. I‟d like to go through the elements of the formation of the contract.

"I think the first important aspect is that there was a special relationship between the parties. The courts have found . . . a special relationship that is more than just independent parties. And because of that special relationship, State Farm was given the advantage-or the position of being able to keep [plaintiff]‟s property when otherwise they would not have had any right to keep it.

"And part of that special relationship requires State Farm to put its interest no higher than [plaintiff]‟s interest. State Farm had a subrogation claim of $15,000. [Plaintiff] had a potential claim against Continental Tire of hundreds of thousands of dollars. Despite that, State Farm decided that it would keep the tire for its $15,000 case, and in doing so, it put its interest above the interests of [plaintiff].

". . . The evidence that will support the specific promise, Exhibit 6, would be plaintiff‟s first evidence to support a specific promise. And that is a letter from State Farm, dated October 9, 2000, written to Mr. Wright, the lawyer handling the case for the law firm of Welebir and McCune, attorneys for [plaintiff], in which Marcia Shinaul, the State Farm representative, specifically told plaintiff that they would preserve the evidence.

". . . in a telephone conversation between a Barbara Nitz-who replaced Marcia Shinaul as the adjustor on the case-and Mr. Wright . . . there was a discussion as to plaintiff wanting the tire and the vehicle . . . wanting the tire itself in order to preserve the evidence.

"Ms. Nitz indicated that no, that State Farm was going to keep that tire . . . but that it would preserve the tire.

"Then on Exhibit 7, which is a letter dated November 27, 2002, Ms. Nitz wrote to Mr. Wright and confirmed that conversation, in which she specifically said, we will continue to hold the vehicle for 30 days from our conversation, at which time we will retain the tire and dispose of the salvage.

"Ms. Nitz, on behalf of State Farm, for the third time now, promised plaintiff that the tire would be retained. In the conversation-that is the specific promise leading to the formation of the contract.

"That promise, whether it‟s considered a unilateral promise or an offer, either one, was accepted by Mr. Wright in the telephone conversation on November 26, 2002.

"Mr. Wright . . . would testify that he accepted the offer. The consideration for that formation of contract is that if State Farm had said, We will not keep the tire, or if State Farm had been silent on keeping the tire, [plaintiff]‟s lawyer would have been required to file an action and have the Court award possession of the tire either to the court or an order to hold the tire or . . . an order providing it to plaintiff. Plaintiff‟s foregoing that motion is consideration for the contract.

"The second element after formation of the contract is whether plaintiff did all that was required under this contract. And to make sure that I am clear, the contract was State Farm‟s promise to retain the tire for the benefit of both itself and [plaintiff].

"Plaintiff did all that was required under that contract. There won‟t be any testimony from any of the parties that plaintiff did not do all that was necessary to fulfill its part under that contract. All the conditions that were precedent required to make State Farm responsible to do that had been met.

"The fourth element is State Farm failed to do something required by the contract. And what they did in this case, as will be testified to by Barbara Nitz, is they sold and destroyed the evidence that they promised they would keep.

"Whether that was intentional or unintentional, it doesn‟t matter. Ms. Nitz will testify that that was done . . . contrary to what was told and relied upon by the plaintiff.

"Then we get to the issue that has been difficult for all the parties and the Court, which was the harm as a result. That‟s the next element of the contract.

"Whether there is harm-first the harm has to be foreseeable, and it has to be foreseeable to State Farm. And this clearly-the harm of [plaintiff] losing his ability to pursue the case against Continental Tire was clearly foreseeable.

"Exhibit 8 is a letter written December 24, 2002, from Mr. Wright, again to Barbara Nitz of State Farm, in which [plaintiff] advised State Farm: ["]Please be advised that if you dispose of the vehicle at this time and your insured‟s ability to recover for his damages is impaired in any way, State Farm . . . will be held liable for intentional spoliation of evidence and bad faith.[‟]

". . . [T]he testimony from Ms. Nitz will be she understood that if evidence was destroyed that she was obligated to keep, that the harm that would result from that was an action against State Farm, and the damages for that would be loss of [plaintiff]‟s ability to pursue the case.

"Exhibit 5 is further support for the foreseeability of harm, which was the opening letter that was sent by Welebir and McCune to Marcia Shinaul, at that time with State Farm, which was dated October 1, 2002. And in that letter, in capital and bold letters . . . [¶] . . . [¶] it says: ["]It is absolutely essential that the insured‟s vehicle be maintained, slash, preserved, in its immediate post-accident condition, including all four tires, until our investigation is completed. The rights of our clients, slash, your insureds, are tied to the preservation of this evidence. Inasmuch as ...

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