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Sprinkles v. Associated Indemnity Corp.

September 1, 2010


APPEAL from an order of dismissal by the Superior Court of the County of Los Angeles, Ronald M. Sohigian, Judge. Affirmed. (Los Angeles County Super. Ct. No. BC410998).

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



Plaintiffs and appellants Rose, Austin, and Logan Sprinkles*fn1 are the heirs of a motorcyclist who died in an accident caused by an employee, Juan Bibinz (Bibinz), of Sinco Co., Inc. (Sinco). Sinco had an automobile liability policy issued by General Insurance Company of America (General), an excess and umbrella policy issued by Fireman's Fund Insurance Company (Fireman's Fund), and a commercial general liability (CGL) policy issued by Fireman's Fund.*fn2 Plaintiffs partially settled with Sinco and Bibinz for the full policy limits under the automobile policy and the excess and umbrella policy. Fireman's Fund denied coverage under the CGL policy and, under that policy, refused to defend an action by plaintiffs against Sinco. In the partial settlement, plaintiffs, Sinco, and Bibinz agreed to arbitrate plaintiffs' claims, and plaintiffs took an assignment of Sinco's claims under the CGL policy against Fireman's Fund.

After the arbitrator's award to plaintiffs of more than $27 million, plaintiffs filed this bad faith action against Fireman's Fund. Before the trial court on a demurrer to the complaint, Fireman's Fund contended that Bibinz was an insured under the CGL policy, and therefore the exclusion in the policy for automobile accidents applied. The trial court sustained the demurrer without leave to amend, holding that the CGL policy provided no coverage for the automobile accident that caused plaintiffs' damages.

Plaintiffs assert, inter alia, that the policy definition of "insured" is not equivalent to vicarious tort liability; Bibinz was not an "insured," and therefore the automobile accident exclusion did not apply; and Fireman's Fund had a duty to defend the claim under the CGL policy because there is a potential for coverage due to the possibility that Bibinz was not an "insured" under the policy definition. In affirming the order of dismissal, we hold under the complaint and matters judicially noticed that Bibinz was an insured, rendering the automobile exclusion in the CGL policy applicable, and that Fireman's Fund had no duty to defend Sinco.


As this case arises from a demurrer, we set forth the following allegations in the complaint and matters of which the trial court took judicial notice.

Michael Sprinkles, the husband of Rose Sprinkles and father of Austin and Logan Sprinkles, died as a result of a motorcycle accident caused by Bibinz, an employee of Sinco. Plaintiffs filed an action against Sinco and Bibinz (the Sinco action) alleging that Sinco negligently hired Bibinz, an uninsured and undocumented alien with a lengthy criminal record, who negligently drove his vehicle causing the death of Michael Sprinkles. Plaintiffs also alleged that each of the defendants was an employee and agent of the other acting within the scope of his or its authority.

At the time of the accident, Sinco had a commercial automobile policy issued by General with a $1,000,000 limit, an excess and umbrella policy issued by Fireman's Fund with a $1,000,000 limit, and a CGL policy issued by Fireman's Fund with a $1,000,000 limit. General, the auto insurer, and Fireman's Fund, the insurer of the excess over the automobile policy, agreed to provide coverage. Fireman's Fund separately denied coverage under the CGL policy.

Plaintiffs partially settled the Sinco action, with General paying its $1,000,000 primary limit and with Fireman's Fund paying its $1,000,000 excess limit. The settlement agreement included an assignment to plaintiffs of rights that Sinco may have against Fireman's Fund, and a provision that the plaintiffs would not execute on or record any judgment they obtained against Sinco or Bibinz in excess of the $2 million combined policy limits that the insurers agreed to pay. The settlement agreement also provided for an arbitration on the merits of plaintiffs' claims and that the defendants in the Sinco action had "neither the obligation nor the right to present a defense or to cross-examine witnesses," but that "the parties and their counsel [would] do everything necessary to ensure a full, fair and complete assessment and resolution of liability and damages." Plaintiff Rose Sparkles petitioned to approve the partial settlement of the Sinco action on behalf of the minor plaintiffs.

The arbitration conducted by Judge Diane Wayne, Superior Court Judge (Ret.), resulted in an award to plaintiffs that exceeded $27,000,000 and a finding that Bibinz was, at the time of the accident, acting within the course and scope of his employment under the "required vehicle" exception to the "going and coming" rule and that Sinco had been negligent in hiring and retaining Bibinz. The arbitrator stated that at the time of the accident, Bibinz was employed by Sinco, a property management company, to service various properties in a single day and therefore needed his automobile to visit job sites; he was on his way to work in the vehicle he used to go to the job sites; and he was under the influence of drugs and driving erratically. The arbitration award was confirmed by the superior court, and a judgment was entered on that award.

Plaintiffs then filed this action for breach of the covenant of good faith and fair dealing, wrongful refusal to settle, wrongful failure to defend, and breach of the insurance contract. Plaintiffs also asserted a claim under Insurance Code section 11580 [direct right of judgment creditor against an insurer (Shafer v. Berger, Kahn, Shafton, Moss, Figler, Simon & Gladstone (2003) 107 Cal.App.4th 54, 68)]. Plaintiffs alleged that Bibinz was not an insured under the policy. They alleged, "At the time of the accident, Bibinz was not performing duties related to the conduct of SINCO'S business and there was a potential for a finding that Bibinz was not acting in the scope of his employment with SINCO." The complaint included as exhibits pertinent portions of the Fireman's Fund CGL policy, plaintiffs' complaint in the Sinco action, and the judgment confirming the arbitration award. The trial court took judicial notice of other filings by plaintiffs: the minors' compromise petitions for Austin and Logan Sprinkles and the petition to confirm the arbitration award, which included the settlement agreement and the arbitration award.

Fireman's Fund demurred, asserting that the complaint failed to state a cause of action. The trial court sustained Fireman's Fund's demurrer without leave to amend and entered its order of ...

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