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Ducoing Management Inc. v. Superior Court (Winston & Associates Insurance Brokers, Inc.)

California Court of Appeals, Fourth District, Third Division

September 19, 2014

DUCOING MANAGEMENT INC., Petitioner,
v.
THE SUPERIOR COURT OF ORANGE COUNTY, Respondent, WINSTON & ASSOCIATES INSURANCE BROKERS, INC., et al., Real Parties in Interest.

[REHEARING GRANTED 10-15-14]

Original proceedings; petition for a writ of mandate to challenge an order of the Superior Court of Orange County, No. 30-2010-00361854 John C. Gastelum, Judge.

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[Copyrighted Material Omitted]

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COUNSEL

Foley Bezek Behle & Curtis, Roger N. Behle, Jr., Justin P. Karczag and Muhammed T. Hussain for Petitioner.

No appearance for Respondent.

Wood, Smith, Henning & Berman, Seymour B. Everett III, David L. Martin and Christopher C. Hossellman for Real Parties in Interest.

OPINION

THE COURT [*]

INTRODUCTION

This writ petition demonstrates the importance of the disposition in an appellate opinion in determining the form of judicial relief, particularly when the disposition reverses a judgment and remands for retrial. The disposition articulates what the trial court should do, with clear and understandable instructions, and whether and how the trial court should exercise its discretion upon remand.

Here, this court issued an opinion on an appeal from two plaintiffs who were both nonsuited at trial. (The two plaintiffs were represented by the same counsel and presented a unified theory of recovery.) We affirmed the judgment of nonsuit as to the second plaintiff but reversed the judgment “in all other respects, ” remanding the matter for a retrial by the first plaintiff. Essentially, we left plaintiffs’ claims intact, holding they properly were pursued in their entirety by the first plaintiff, the second plaintiff being superfluous for purposes of recovery. We awarded no costs on appeal. No party filed a petition for rehearing.

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Are real parties in interest (defendants below) automatically entitled to recover all their trial costs as prevailing parties from petitioner (the second plaintiff below) without any further review? If yes, real parties in interest will succeed in recovering very substantial trial costs even though their adversaries yet may achieve all their litigation objectives.

In this writ proceeding, we apply the plain words of the disposition to preclude such an irrational outcome. Because we reversed the judgment “in all other respects, ” our disposition reversed not only the judgment of nonsuit as to the first plaintiff, but also that portion of the judgment which awarded costs to real parties in interest. In accordance with our prior notification to the parties, we issue a peremptory writ in the first instance to effectuate the clear meaning of our disposition.

STATEMENT OF FACTS AND PROCEDURAL HISTORY

In Ducoing Enterprises, Inc. v. Winston & Associates Ins. Brokers, Inc. (Sept. 9, 2013, G046734) (nonpub. opn.) (hereafter Slip Opn.), we considered an appeal from a judgment of nonsuit in a trial against real parties in interest, an insurance broker and his insurance brokerage, who were sued for negligent failure to procure insurance coverage.

Brent and Ami Ducoing, a married couple, created a corporation, Ducoing Enterprises, Inc. (DEI), to provide painting services. At their accountant’s advice and with real parties in interest's assistance, the Ducoings later created a second corporation, petitioner Ducoing Management, Inc., ostensibly to take advantage of lower rates for workers’ compensation insurance. Both DEI and petitioner do business under the fictitious name “Perfection Painting.” A dishonest payroll manager concocted a scheme to create so-called “ghost” employees and embezzled more than $90, 000, causing the Ducoings to sustain substantial losses. To their consternation, the Ducoings discovered their current insurance coverage did not include employee dishonesty coverage, even though real parties in interest recalled that employee dishonesty coverage had been included in prior policies. (Slip Opn., supra, at pp. 2-7.)

In April 2010, DEI and petitioner, as plaintiffs, filed suit against real parties in interest, as defendants, for negligence, negligent misrepresentation, and breach of fiduciary duty in failing to procure full insurance coverage with “‘all the bells and whistles, ’” as allegedly promised by the insurance broker. (Slip Opn., supra, at p. 3.) DEI and petitioner jointly pursued the same causes of action, and jointly sought the same damages from real parties in interest.

The matter came to jury trial over several days in January 2012. At the close of plaintiffs’ case-in-chief, the trial court (Judge David R. Chaffee)

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granted real parties in interest's motion for nonsuit against both DEI, the first plaintiff, and petitioner, the second plaintiff. The trial court reasoned that DEI sustained no loss because the payroll manager only stole money from petitioner, not DEI, and because real parties in interest owed no duty to petitioner to provide employee dishonesty coverage; such duties, if any, were owed only to DEI. (Slip Opn., supra, at pp. 7-8.)

On March 28, 2012, the trial court entered judgment in favor of real parties in interest and against DEI and petitioner. In the first paragraph, the trial court ordered that real parties in interest "shall have JUDGMENT entered in their favor and against PLAINTIFFS, DUCOING MANAGEMENT, INC., and DUCOING ENTERPRISES, INC. dba PERFECTION PAINTING (hereinafter ...


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