California Court of Appeals, Third District, Shasta
CERTIFIED FOR PARTIAL PUBLICATION[*]
APPEAL from a summary judgment of the Superior Court of Shasta County No. 166638, Monica Marlow, Judge.
Michael Cogan for Plaintiff and Appellant.
Selman Breitman, Linda Wendell Hsu and Vanessa O'Brien Beary for Defendant and Respondent.
Plaintiff Justin Barnes,  then 11 years old, was injured in 2001 when a table fell on his back during a recreational program co-sponsored by the Shingletown Activities Council (the Activities Council). Justin made a claim against the Activities Council. But when Justin subsequently requested payment from the Activities Council’s insurer more than one year after the accident for consultation with a medical specialist, the insurer, Western Heritage Insurance Company (Western Heritage), denied the request. Western Heritage asserted that to qualify for medical payment coverage under the applicable policy, Justin had to report a claimed medical expense to Western Heritage within one year of the accident.
Justin settled a separate personal injury lawsuit against the Activities Council and other local entities regarding his medical expenses. Western Heritage was not a party to that lawsuit. Five years later, Justin initiated the instant action, suing Western Heritage for breach of contract and breach of the implied covenant of good faith and fair dealing based on the denial of his request for medical payment coverage.
The trial court granted summary judgment in favor of Western Heritage. Among other things, the trial court ruled: Justin’s lawsuit against Western Heritage is barred by collateral estoppel because he settled his claims in the underlying personal injury action, including any claim for medical expenses; allowing Justin to recover under the medical payment provision of the policy would result in impermissible double recovery; Western Heritage is not equitably estopped to assert the policy’s one-year deadline as a defense because Western Heritage had no duty to disclose the deadline to Justin and Justin did not rely to his detriment on any failure to disclose; and certain evidentiary objections asserted by Western Heritage have merit.
Justin now contends the trial court erred. He argues (1) collateral estoppel does not bar this action because the issues raised, litigated and necessarily determined in the personal injury action are different from those raised, litigated and to be determined in this action; (2) permitting him to recover under the medical payment provision will not result in double recovery because Western Heritage owed him a separate and direct duty under the medical payment provision; (3) Western Heritage is equitably estopped from asserting the one-year deadline in the policy because it did not inform him of the deadline; and (4) certain evidentiary objections asserted by Western Heritage should have been overruled.
We agree with Justin that the trial court erred in granting Western Heritage summary judgment. Specifically, we conclude:
(1) collateral estoppel does not bar the present action because the issues asserted in this action were not litigated or determined in the prior personal injury action;
(2) a recovery in this action would not amount to an impermissible double recovery because Justin now sues Western Heritage alleging that it breached its direct duty to Justin under the medical payment provision of the insurance policy, a duty distinct from the obligation Western Heritage owed the Activities Council under the liability provision of the policy;
(3) there is a triable issue of material fact regarding whether Western Heritage is equitably estopped to assert the policy’s one-year deadline as a defense; and
(4) under the circumstances, we need not address Justin’s challenges to the trial court’s evidentiary rulings.
In reaching these conclusions, we do not express an opinion as to whether Justin can ultimately prevail on his claims against Western Heritage. We merely determine that the Western Heritage summary judgment motion should not have been granted on the current record. Accordingly, we will reverse the judgment.
Western Heritage issued a commercial general liability policy to the Activities Council covering the period from June 9, 2000 to June 9, 2001. The policy obligated Western Heritage to “pay those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies” (the liability provision). The policy defined “ ‘bodily injury’ ” as “bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time.” The policy also provided coverage of up to $5, 000 per person for medical expenses, provided that, among other things, the medical expenses were incurred and reported to Western Heritage within one year of the date of the accident (the medical payment provision). The obligation to pay for medical expenses under the medical payment provision was regardless of fault.
On May 12, 2001, when Justin was 11 years old, a table fell on his back while he was participating in an activity sponsored by Shasta Children and Families First Commission (Grass Roots) and the Activities Council at Black Butte Elementary School in Shingletown, California. Justin suffered a contusion and hematoma on his back. He received X-rays, a computed tomography (CT) scan, pain medications and physical therapy as a result of his injuries.
Justin made a claim against the Activities Council based on the accident. Western Heritage received notice of his claim on May 22, 2001. Western Heritage responded to the claim by informing Rich Rhodes, the superintendent of the Black Butte School District, in a letter dated May 30, 2001, that the policy provided $5, 000 in medical payment coverage to Justin for his injury. Western Heritage did not disclose, and never informed Justin, that to qualify for medical payment coverage Justin had to incur and report a claimed medical expense to Western Heritage within one year of the date of the accident (by May 12, 2002). Western Heritage asked Rhodes to forward a copy of the May 30, 2001 letter regarding medical payment coverage to the Barnes family.
In August 2001, Western Heritage paid $1, 478 to Justin’s medical care providers pursuant to the medical payment provision of the policy for services Justin received from May 30, 2001, through July 30, 2001. There is no evidence that Justin submitted any additional bills to Western Heritage for payment.
Acting through Kelly Barnes, Justin’s mother and guardian ad litem, Justin sued Shasta County, Grass Roots, the Activities Council and Black Butte Elementary School for negligence and premises liability on May 2, 2002 (the personal injury action). Western Heritage was not a party to that lawsuit. In the personal injury action, Justin sought to recover general damages and compensation for medical expenses. Pursuant to the liability provision of the policy, Western Heritage retained Tamara Wood as counsel to defend the Activities Council in the personal injury action.
In December 2002, more than a year after the accident, Justin requested coverage under the medical payment provision of the policy for a consultation with a specialist. The request was communicated to Wood, who asked Western Heritage whether medical payment coverage was available. In March 2003, Wood informed Justin’s attorney, Michael Cogan, that Western Heritage would not pay for a second opinion. Cogan informed Wood that Justin needed a consultation with a specialist, not a second opinion. When Cogan did not hear further from Wood about Justin’s request for additional medical payment benefits, Cogan sent Wood a letter dated May 2, 2003, stating that Justin needed to consult with a pediatric neurologic and orthopedic specialist because the doctor who attended Justin was not a specialist in child injuries. Cogan told Wood that Justin continued to “walk differently than he did before” the accident “and the long term effects of the injury [were]... quite concerning.” Cogan asserted that Justin was a third party beneficiary of the medical payment provision of the policy, and Justin may have a bad faith claim against Western Heritage for its refusal to provide additional medical payment benefits. Western Heritage received a copy of Cogan’s letter on or about May 2, 2003.
Wood consulted with James Campbell, a claims specialist for Western Heritage, about the reasons for declining coverage for a medical evaluation for Justin. Wood then informed Cogan in a letter dated May 29, 2003, that Western Heritage denied Justin’s request for additional medical payment benefits because the policy required expenses to be incurred and reported to Western Heritage within one year of the date of the accident and there was no indication that further medical expenses were reasonable and necessary. As for a claim of bad faith against Western Heritage, Wood told Cogan that her law firm did not represent Western Heritage and did not get involved in ...