Opinion
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court of Los Angeles County No. BC372699. Mark V. Mooney, Judge.
Michael Reino for Plaintiff and Appellant.
Wilson, Elser, Moskowitz, Edelman & Dicker, Steven J. Joffe, Robert Cooper and David D. Kremenetsky for Defendants and Respondents.
CHANEY, J.
Plaintiff Harrison-Van Horn, Inc. alleges its insurance broker Charles Hill Agency and agent Ken Gorelick (collectively Charles Hill) breached their contractual and common law duties to procure business interruption insurance. The trial court held release agreements between plaintiff and parties in underlying litigation barred any action for negligence or breach of contract against Charles Hill. Though Charles Hill was not a party to the release agreements, the trial court found language in the agreements purporting to release all other persons or agents was unambiguous and benefitted Charles Hill. The trial court granted Charles Hill’s motion for summary judgment.
We conclude that whether the parties to the release agreements intended to release Charles Hill is a triable issue of fact. We reverse the judgment.
BACKGROUND
The facts are undisputed. Plaintiff is a furniture maker. It engaged Charles Hill to procure business loss insurance (the policy) from Century Surety Company (Century). After plaintiff’s manufacturing facility (the property) was damaged by a fire, plaintiff submitted a claim to Century, seeking coverage for property damage and loss of business income. Century paid approximately 10 percent of the claim, advising plaintiff that a coinsurance clause effectively negated much of the policy’s coverage for lost income.
The fire spawned four lawsuits among plaintiff, Century, the owners of the building, the owners’ insurer, and Modern Maintainers, the party that allegedly caused the fire. We refer to the four lawsuits collectively as the Century litigation. The Century litigation settled, plaintiff and Century agreeing to take $230,000 jointly (the global settlement).
The global settlement was recorded in a written “Settlement Agreement and Release” (the global release agreement). The parties to the global release agreement were the owners of the building, their insurer, plaintiff, Century, and Modern Maintainers, Inc. The agreement provides that “Each of the Parties to this Settlement Agreement do hereby provide the other a general, full, entire and complete release of all claims which they have or may have against the other in connection with the Released Claims.” “Released Claims” include “all claims by [plaintiff] in connection with [plaintiff’s underlying lawsuit] and the Fire Incident.”
In section 11 of the global release agreement, the parties acknowledge that the agreement “constitutes the entire agreement between the Parties in connection with the Released Claims.” Section 10 provides that the global release agreement “shall be binding upon and inure to the benefit of the Parties, and their respective employees, agents, attorneys, successors, devises, executors, administrators, assigns and insurance carriers.... ” (Italics added.)
No reference is made to Charles Hill in the global release agreement.
To divide the $230,000 jointly obtained in the global settlement, plaintiff and Century entered into a separate settlement agreement between themselves. (The Century settlement.)
The Century settlement was recorded in a written release entitled “Full Release of All Claims” (Century release agreement). The parties to the Century release were plaintiff and Century. They agreed to distribute $50,000 to plaintiff and $180,000 to Century. The Century release agreement states: “In consideration of the foregoing distribution of funds, [plaintiff] does hereby fully and finally release and forever discharge any and all claims and demands whatsoever against [Century],” under the insurance policy “or otherwise, arising from or connected with fire damages to” the property.
Plaintiff and Century also “release[d], acquit[ted] and forever discharge[d]... every company, partnership and individual, associated or affiliated or otherwise connected with Century and [plaintiff], and their agents, servants, successors, heirs, executors, attorneys, associations or partnerships, of and from any and all claims, actions, causes of action, demands, rights, damages, punitive damages, costs, attorneys fees, expenses and compensation whatsoever, which now has or which may hereafter accrue on account of or in any way growing out of any and all known and unknown, foreseen and unforeseen injuries, property damages, consequential damages, loss of business income, loss of profit, business interruption, loss of use of property, and the consequences thereof resulting or to result from any of the matters alleged in the [Century litigation], and from any claims, rights and demands under the” policy.
No reference is made to Charles Hill in the Century release agreement.
Plaintiff filed a complaint against Charles Hill for breach of its duty to procure adequate insurance, including business interruption insurance, seeking damages equal to its unrecovered actual loss of business income and such other relief as the court may deem proper. It alleged Charles Hill failed to explain the policy’s coinsurance clause and failed to obtain the level of insurance plaintiff specifically requested.
In its amended answer to the complaint, Charles Hill asserted the release agreements as an affirmative defense. It then moved for summary judgment on the ground that the release agreements discharged and released it from liability in connection with the fire and underlying litigation and on the ground that plaintiff’s acceptance of the policy without objection barred its complaint.
Plaintiff opposed the motion, arguing triable issues existed as to whether plaintiff intended in the global and Century release agreements to release its claims against Charles Hill. In support of the opposition plaintiff offered the declaration of Michael Reino, its attorney in the underlying litigation. Reino declared plaintiff did not intend in either the global or Century release agreements to release its claims against Charles Hill. Plaintiff also argued that while its own failure to read and understand the policy might support a finding of comparative fault, its comparative fault is not a ground to dismiss its claims altogether.
The trial court sustained Charles Hill’s objections to the Reino declaration and granted the motion for summary judgment, concluding the releases were not ambiguous and plaintiff intended by them to release all claims against even its own agents.
The trial court denied plaintiff’s motion for new trial and entered final judgment in favor of Charles Hill.
DISCUSSION
We review the record independently to determine whether Charles Hill was entitled to summary judgment. (Vahle v. Barwick (2001) 93 Cal.App.4th 1323, 1328 (Vahle).)
A motion for summary judgment must be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law. (Code Civ. Proc., § 437c, subd. (c).) A defendant asserting an affirmative defense on a motion for summary judgment must show that undisputed facts support each element of the defense. (Consumer Cause, Inc. v. SmileCare (2001) 91 Cal.App.4th 454, 467-468.) Only if it does so need the plaintiff produce evidence negating an element of the defense. (Id. at p. 468.)
Charles Hill was not a party to either the global or Century release agreements. It can therefore benefit from the agreements only if it was an intended third party beneficiary of them. Plaintiff contends triable issues exist as to whether by releasing the “agents” of the parties to the Century litigation it released its own agents, who were not parties. Charles Hill contends the release language is unambiguous and comprehensive, and bars plaintiff’s recovery.
“An insurance agent has an ‘obligation to use reasonable care, diligence, and judgment in procuring insurance requested by an insured.’ [Citations.] A broker’s failure to obtain the type of insurance requested by an insured may constitute actionable negligence and the proximate cause of injury. [Citation.]” (Desai v. Farmers Ins. Exchange (1996) 47 Cal.App.4th 1110, 1119-1120.) The broker’s liability may extend to any loss proximately caused by breach of the duty of care. (See Valentine v. Membrila Ins. Services, Inc. (2004) 118 Cal.App.4th 462, 475-476 [costs of defending a third party action recoverable]; Mid-Century Ins. Co. v. Hutsel (1970) 10 Cal.App.3d 1065, 1069 [“‘The liability of one who breaches a contract to procure insurance is to pay damages.... ’ [Citation.]”].)
“A release agreement containing boilerplate language that purports to excuse everyone in the world from liability can be enforced by persons who are not parties to the agreement. [Citations.]” (Vahle, supra, 93 Cal.App.4th at p. 1328.) But “the burden is on the third party to prove the parties to the release agreement intended to benefit the third party. [¶] Release agreements are governed by the generally applicable law of contracts. [Citation.] A third party’s right to enforce covenants of a contract is predicated on the contracting parties’ intent to benefit the third party. [Citation.] It is not enough that a literal interpretation of the contract would result in a benefit to the third party. [Citation.] [¶] ‘Thus, to obtain summary judgment on the ground that a general release has discharged him from liability, a third party to the release agreement must affirmatively show that the parties intended to release him. The burden of proof is on the third party, under both contract law and the summary judgment statute. [Citation.] Because the court must consider the circumstances of the contracting parties’ negotiations to determine whether a third party not named in the release was an intended beneficiary, it will seldom be sufficient for the third party simply to rely on a literal application of the terms of the release.... “Whether a third party is an intended beneficiary... to the contract involves construction of the parties’ intent, gleaned from reading the contract as a whole in light of the circumstances under which it was entered.”’ [Citation.]” (Vahle, supra, 93 Cal.App.4th at pp. 1328-1329.)
A literal reading of the part of the Century release agreement releasing “each other” and “every company, partnership and individual, associated or affiliated or otherwise connected with Century and [plaintiff], and their agents” supports the trial court’s ruling. “But... the release agreement must be read as a whole.” (Vahle, supra, 93 Cal.App.4th at p. 1329.) Other parts of the agreement suggest plaintiff intended to release only the other parties and persons in privity with them, i.e., persons in privity with the other parties. Nowhere does the Century release evidence an intent to benefit Charles Hill. At best, the language releasing every company and its agents creates an ambiguity in the contract. Further, the mere failure of the release agreement to mention Charles Hill and plaintiff’s potential claims against it for failure to procure insurance creates an ambiguity in the contract. (See ibid. [failure to name alleged tortfeasor in release agreement created ambiguity]; see also Appleton v. Waessil (1994) 27 Cal.App.4th 551, 555-556 [same].)
The global release agreement is even less conducive to the trial court’s ruling. In it, each party agreed to release “the other” from liability. There was no explicit release of other parties’ agents. At best, those agents benefit from the provision that the agreement will “inure to the benefit of the Parties[] and their respective... agents.” But the meaning of “inure to the benefit” is ambiguous. If the benefit at issue is plaintiff’s release, that release pertained only to parties against which plaintiff had asserted or could assert claims, not extraneous parties and not plaintiff itself. The tying phrase “and their respective agents” denotes only the released parties’ agents, not the agent of any unreleased party or, more pointedly, plaintiff’s own agents. It is therefore possible to conclude from the release language that plaintiff released only parties against which it asserted or could assert claims and this release inured to the benefit only of those parties’ agents, not the other parties’ agents and not plaintiff’s own agents.
Because the release agreements are reasonably susceptible to the interpretation urged by plaintiff, whether Charles Hill was an intended beneficiary is a triable issue of fact. The trial court erred in finding the agreements to be unambiguous as a matter of law.
DISPOSITION
The judgment is reversed. The trial court is directed to enter an order denying Charles Hill’s motion for summary judgment. Plaintiff is awarded its costs on appeal.
We concur: ROTHSCHILD, Acting P. J. JOHNSON, J.