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Essex Insurance Co. v. Heck

July 29, 2010

ESSEX INSURANCE COMPANY, CROSS-COMPLAINANT AND APPELLANT,
v.
RICHARD HECK, M.D., CROSS-DEFENDANT AND RESPONDENT.



APPEAL from a judgment of the Superior Court of Stanislaus County. William A. Mayhew, Judge. (Super. Ct. No. 309919).

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

CERTIFIED FOR PUBLICATION

OPINION

What the heck?!? At one point, the trial court commented, "This is one of the most screwed up cases I've ever seen." We heartily agree. Essex Insurance Company provided a defense to a defendant in a personal injury action who was not its named insured, but did not discover its mistake until after judgment was entered following a jury verdict in the plaintiff's favor. Litigation ensued over Essex's obligation to pay the judgment. Essex eventually entered into a global settlement with the plaintiff that resulted in the dismissal of three lawsuits, including the personal injury action and a bad faith action plaintiff brought against Essex, in exchange for a lump sum payment. The settlement agreement did not allocate the payment among the three lawsuits or resolve issues regarding the identity of Essex's insured.

Essex then sought indemnity from Dr. Richard Heck, who had treated the plaintiff in the personal injury action, through equitable subrogation, for his proportionate liability for the amount Essex paid in settlement. Dr. Heck filed a motion for summary judgment, which the trial court granted on the basis that Essex had waived any claim for equitable subrogation. In a post-judgment order, the trial court also awarded Dr. Heck his expert witness costs. On appeal, Essex challenges both the judgment and the order. We agree with the trial court that Essex must lie in the bed it made and affirm.

FACTUAL AND PROCEDURAL HISTORIES

Dompeling's Personal Injury Action

John Dompeling was hired to move refrigeration units in a restaurant that was being refurbished. While on the premises, Dompeling stepped on a nail that was protruding through a piece of sheetrock that other workers had left on the floor. Dompeling, a diabetic, sought treatment from his physician, Dr. Richard Heck. When the wound did not respond to outpatient treatment, Dr. Heck admitted Dompeling to the hospital. Within four days of his hospital discharge, the wound worsened. Dr. Heck readmitted Dompeling to the hospital and an orthopedic surgeon amputated Dompeling's leg below the knee. Four months later, a second amputation was required due to an infection that developed on his stump.

Dompeling filed a lawsuit for his personal injuries in April 2002, naming as defendants "Robert Abraham" and Cindy's Restaurant, which included a premises liability claim. Dompeling alleged that "Abraham" and the restaurant hired him to remove one of the refrigerators on the premises, they negligently managed, controlled and supervised the demolition being done on the premises, and failed to take reasonable precautionary measures to protect him from a risk of harm, which caused his injuries (the personal injury action). "Robert Abraham" tendered the defense and indemnity of the personal injury action to Essex under Essex policy number 2CC5660, which lists "Robert Lee Abraham" as the named insured. Essex agreed to defend "Robert Lee Abraham" under a reservation of rights, but denied it had a duty to indemnify him. In a January 2003 deposition in the personal injury action, "Robert Lincoln Abraham" testified that he bought the property and his son's name, "Robert Lee Abraham," was on the property's title.

In August 2003, "Robert Abraham" filed a cross-complaint against Dr. Heck in the personal injury action alleging causes of action for implied equitable indemnity and contribution based on Dr. Heck's alleged negligence in the medical care and treatment he provided Dompeling which contributed to Dompeling's damages. While the trial court allowed the amendment, it severed the cross-complaint from the original complaint for purposes of trial.

The trial on Dompeling's complaint took place in January 2004 and resulted in a jury verdict and judgment in favor of Dompeling and against "Robert Abraham" in the amount of $826,762.50 plus costs. The jury found "Robert Abraham" negligent in the "maintenance, use or repair" of the property and that he violated a California regulation, both of which were substantial factors in causing Dompeling harm. The jury further found Dompeling's damages totaled $1,102,350, comprised of past economic loss of $470,000, future economic loss of $175,000, and non-economic loss of $457,350. The jury assigned responsibility for Dompeling's harm 75 percent to "Robert Abraham" and 25 percent to Dompeling. "Robert Abraham" appealed from the judgment, raising various claims of trial court error. We affirmed the judgment in an unpublished opinion. (Dompeling v. Abraham (Oct. 17, 2005, F045481).)

Essex's Declaratory Relief Action

In June 2003, during the course of the personal injury action, Essex filed a declaratory relief action, entitled Essex Insurance Company v. Robert Lee Abraham, et. al., Stanislaus County Superior Court case number 333668 (the declaratory relief action), by which it sought an adjudication of the parties' respective rights, duties and obligations in the personal injury action. Essex named as defendants Robert Lee Abraham, Cindy's Restaurant and John Dompeling, and alleged it had no duty to indemnify Robert Lee Abraham or anyone else in connection with the personal injury action.

In October 2004, after judgment was entered in the personal injury action, Essex moved for leave to amend its complaint for declaratory relief to add Robert Lincoln Abraham as a defendant. For the first time, Essex asserted Robert Lincoln Abraham, not Robert Lee Abraham, was the party in the personal injury action against whom judgment was rendered and for whom it had provided a defense. Leave to amend was granted and Essex filed an amended complaint in November 2004 against both Robert Lee Abraham and Robert Lincoln Abraham denying coverage for, and a duty to defend against, the personal injury action. In December 2004, the court entered a default judgment against Cindy's Restaurant and Robert Lee Abraham in the declaratory relief action, which stated that Essex had no duty to defend or indemnify Robert Lee Abraham or Cindy's Restaurant. In March 2005, the clerk entered default against Robert Lincoln Abraham, but a default judgment was not entered.

In April 2005, Essex filed a motion for summary judgment in its declaratory relief action, in which it asserted it was entitled to judgment as a matter of law on its declaratory relief claim because (1) Robert Lincoln Abraham was the defendant in the personal injury action and he was not insured under the policy, (2) even if Robert Lincoln Abraham was an insured, Dompeling's claims were not covered by the policy, and (3) a default judgment had already been entered against Robert Lee Abraham, the sole named insured on the policy. The motion was denied on August 12, 2005.

Dompeling's Bad Faith Action

After Essex refused to pay the judgment in the personal injury action, Dompeling filed a lawsuit in August 2004 against Essex, entitled Dompeling v. Essex Insurance Company, et. al., Stanislaus County Superior Court case number 349807 (the bad faith action), which was later consolidated with the declaratory relief action. The complaint stated causes of action for direct payment of policy benefits, bad faith, declaratory relief and breach of contract.

In a subsequent amendment to the complaint, Dompeling added as defendants Robert Lincoln Abraham, Robert Lee Abraham, and the law firm that Essex retained to represent the premises owner in the personal injury action. Dompeling also added a direct cause of action for fraud and misrepresentation against both Essex and the law firm, alleging they knew, but did not disclose, that (1) Robert Lincoln Abraham was not Robert Lee Abraham, (2) Robert Lincoln Abraham appeared and acted as Robert Lee Abraham during the personal injury action, (3) Robert Lee Abraham owned record title to the premises but Robert Lincoln Abraham purchased, managed and controlled it, (4) the person acting as Robert Lee Abraham was not the named insured under the policy but an additional insured, and (5) they would contend any judgment entered against "Robert Abraham" was entered against Robert Lincoln Abraham in a fraudulent attempt to deny ...


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