Ken W. Riley, Judge Steven E. Hintz, Judge Superior Court County of Ventura (Super. Ct. No. CIV233435)
The opinion of the court was delivered by: Gilbert, P.J.
CERTIFIED FOR PUBLICATION
An automobile insurance policy allows the insurer the option to pay for damages to an insured vehicle or to repair it. We conclude that the insurer satisfies its contractual obligation when it elects to repair, although the insured refuses to authorize the repairs.
The insurer may be liable in bad faith, however, when it pays for repairs not authorized by the insured, and then recovers from the tortfeasor in subrogation because the subrogation action may be prejudicial to the insured's direct action against the tortfeasor.
We reverse the trial court's grant of summary judgment or adjudication in favor of the insurer.
Harry and Jessica Hibbs owned a 1995 Toyota Previa van, insured by Allstate Insurance Company (Allstate). The van had been damaged in a previous accident and was repaired satisfactorily by Body Tech, an Allstate-approved repair shop. Thereafter, the Hibbs had offered the van for sale.
On April 13, 2004, the van was parked legally in front of the Hibbs's home when it was struck by a sedan driven by Jerome Brooks. Damage to the van's front end was substantial. The van was towed to Body Tech. Thomas Koch is the owner and manager of the Body Tech repair shop.
Jessica Hibbs (Jessica) called Allstate and on April 14, 2004, the day after the accident, she went to Body Tech. Koch told her that he could not give a repair estimate without her consent to "tear down" the front end of the van to determine the extent of damage. Jessica signed a form authorizing the tear down and an authorization to repair. Each authorization is dated April 14, 2004.
The repair authorization estimated a $6,500 cost, but did not contain any details. Jessica believed the documents she signed only authorized the tear down. Koch testified in his deposition that he believed the documents Jessica signed on April 14, 2004, authorized "[o]nly the disassembly of the vehicle to determine the damage."
After Jessica returned home from Body Tech, she called Allstate's claims adjuster, Kristi Baker. Jessica told Baker she believed the van was a total loss.
On April 22, 2004, Baker received a telephone call from Harry Hibbs (Harry), who was adamant that the van was a total loss. He stated that he would refuse to pick the vehicle up if repaired. After speaking to Harry, Baker called Body Tech. An employee told her that Jessica had authorized the repairs, which were now substantially complete.
On May 3, 2004, Body Tech sent the van to Sears for wheel alignment. After the alignment was completed, a Sears employee driving the van back to Body Tech ran into another car. Once again, the front end of the van suffered damage. The Hibbs refused to authorize repairs arising from the Sears accident, and refused to pick up the van.
Body Tech's total charge for repairs relating to the April 13, 2004, accident was $6,200.40. Allstate paid $5,700.40 directly to Body Tech. The $500 balance represented the insured's deductible. Allstate eventually recovered $6,200.40 from Brooks's insurer. Allstate sent a $500 check to the Hibbs, which they never cashed.
Body Tech sold the van at auction to satisfy its lien for the $500 deductible, storage charges and other costs. Koch was the only buyer at the lien sale.
The Hibbs filed the instant action against Allstate, alleging causes of action for conversion, breach of contract and breach of the covenant of good faith and fair dealing. Allstate moved for summary judgment and summary adjudication.
Koch's Declaration in Support of Allstate's Motion:
After the van arrived at Body Tech, Koch telephoned Jessica to sign authorizations for tear down and payment by Allstate. He explained he could not give an accurate estimate until the van was torn down and inspected. Jessica came to the shop on April 14, 2004, and signed the authorizations. Thereafter, Koch disassembled the van and completed a detailed estimate.
On April 15, 2004, Koch telephoned Jessica and went over the estimate, line-by-line. Jessica gave Koch oral authorization to proceed with the repairs. Koch then either mailed the estimate to Jessica or gave it to her personally when she came to the shop later on April 15, 2004, to retrieve an item from the van.
As soon as Koch received Jessica's permission to proceed, he immediately placed orders for parts and began the tear down. Based on Koch's experience, it would take from one to four days from April 15, 2004, for the parts to arrive. Body work and painting, except for final assembly, would have been completed by April 22, 2004. He telephoned Jessica on April 29 and told her final assembly would be completed on April 30, 2004. Koch test-drove the van on April 30, and found no problems.
On May 3, 2004, Koch sent the van to Sears for alignment. As a Sears employee was driving the van back to Body Tech, it was involved in a "minor" accident resulting in "extremely minor" front-end damage. Sears agreed to pay for the repairs.
On May 5, 2004, Koch spoke with Jessica on the telephone, and told her about the Sears accident. Jessica came to Body Tech to view the damage. She would not sign the final estimate for the April 13, 2004, accident or the authorization to repair the damage from the Sears accident. She told Koch that her husband would handle the matter.
On May 7, 2004, Koch spoke with the Allstate adjuster. Baker told him the Hibbs would not accept delivery of the van, but that Allstate would pay for the repairs. On May 10, Koch spoke on the telephone ...