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Warwick California Corp. v. Applied Underwriters, Inc.

California Court of Appeals, First District, Fourth Division

January 7, 2020

WARWICK CALIFORNIA CORP. et al., Plaintiffs and Respondents,
v.
APPLIED UNDERWRITERS, INC., et al., Defendants and Appellants.

         [257 Cal.Rptr.3d 323] City and County of San Francisco Superior Court, Hon. Richard B. Ulmer, Jr., Judge. (San Francisco City & County Super. Ct. No. CGC-16-551614)

Page 68

         COUNSEL

         Counsel for Appellants: Hinshaw & Culbertson LLP; Spencer Y. Kook, Los Angeles, Travis Wall, San Francisco, Kent R. Keller, Los Angeles

         Counsel for Respondents: Larry J. Lichtenegger, Carmel, and Roxborough, Pomerance, Nye & Adreani; Nicholas P. Roxborough, Woodland Hills, Joseph Christopher Gjonola

          OPINION

         TUCHER, J.

Page 69

          This case arises out of a dispute over payment for workers’ compensation insurance. Plaintiffs are six companies affiliated with the Warwick Hotel chain (collectively, Warwick). Defendants include several companies affiliated with Applied Underwriters, Inc. (collectively, Applied). The trial court stayed the action based on inconvenient forum as to all plaintiffs with the exception of two Warwick companies that are incorporated in California (the California plaintiffs). In 2018, a court trial was held to hear the California plaintiffs’ claims and Applied’s cross-claim for breach of

Page 70

contract. The court found that neither side proved the damages elements of their [257 Cal.Rptr.3d 324] claims. Applied filed a notice of appeal from the court’s statement of decision (SOD), which is not a judgment or an appealable order. Accordingly, we will dismiss this appeal.

          BACKGROUND

          Warwick’s operative first amended complaint was filed in May 2016. In addition to the Applied defendants, Warwick sued Willis of New York, Inc., which is an insurance brokerage firm, and 50 Doe defendants. Warwick alleged nine causes of action against various combinations of defendants, seeking damages and equitable relief based on theories of breach of contract, fraud and unfair business practices. As support for these claims, Warwick alleged the following facts: Warwick used Willis as their broker to procure workers’ compensation insurance. In June 2013, Willis presented Warwick with a quote for purchasing insurance from the Applied defendants. Defendants made representations to Warwick about the nature of the insurance program that was being offered to Warwick. Based on those representations, Warwick entered into a contract to purchase workers’ compensation insurance for a three-year period, from June 14, 2013, through June 14, 2016. One policy, issued by defendant California Insurance Company, covered Warwick employees in California and Texas. Another policy, issued by a different Applied defendant, covered employees in New York and Colorado.

          According to the complaint, on June 19, 2013, five days after Warwick’s insurance coverage went into effect, Applied presented Warwick with a "Reinsurance Participation Agreement" (RPA), which constituted an adhesion contract and which Warwick had no choice but to accept. Thereafter, Applied used new criteria disclosed for the first time in the RPA to adjust claims made against the Warwick policies in a way that significantly increased costs to Warwick. Furthermore, Applied refused to correct the inflated invoices and attempted to coerce Warwick to admit that the incorrect invoices were accurate by threatening to deprive Warwick of insurance coverage it was required by law to provide to its employees and by charging "enormous and unconscionable cancellation fees under the RPA."

         In June 2016, Applied filed a motion to stay this action on the ground of inconvenient forum under Code of Civil Procedure, section 418.10 (section 418.10).[1] The motion was based on a forum selection clause in the RPA, which required that claims relating to the RPA be filed in Nebraska, where defendant Applied Underwriters, Inc. was incorporated. ...


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