Opinion
A156787
05-15-2020
CHRISTINE MCKEON, Plaintiff and Appellant, v. ELIZABETH RISNER, Defendant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (San Mateo County Super. Ct. No. 16-CIV-02467)
Plaintiff and appellant Christine McKeon was injured when an automobile in which she was a passenger collided with another automobile owned by a third party and driven by defendant Elizabeth Risner. After the accident, Risner provided McKeon's daughter with the third party's insurance information, and McKeon subsequently entered into a settlement agreement with Risner and the third party's insurance company. After the limitations period for her personal injury claim expired, McKeon brought suit against Risner for personal injury and rescission of the settlement agreement, alleging that Risner had fraudulently withheld the existence of her own automobile insurance policy. The trial court sustained Risner's demurrer to the complaint without leave to amend. We affirm.
BACKGROUND
The factual background is drawn from the operative fourth amended complaint.
On September 19, 2014, McKeon was a passenger in a vehicle driven by her daughter and traveling south on U.S. Highway 101 in San Francisco when the vehicle was hit by another vehicle, owned by Ernest and Patricia Andrews, and driven with their permission by Risner. After the collision, McKeon was injured and was taken by ambulance to the hospital. Meanwhile, according to the allegations of the operative complaint:
"16. On or about September 19, 2014, Defendant RISNER fraudulently provided PLAINTIFF's daughter Sarah Anne Shanahan with proof of insurance purportedly underwritten by Hartford Insurance Company, rather than her own insurance policy underwritten by GEICO Insurance Company. PLAINTIFF was unable to communicate directly with Defendant RISNER due to her treatment for her injuries. Defendant RISNER knew that PLAINTIFF would rely on her fraudulent misrepresentation in pursuing PLAINTIFF'S claim with only Hartford Insurance Company. Defendant RISNER had a legal duty to provide truthful information of her own insurance policy underwritten by GEICO Insurance Company to PLAINTIFF'S daughter Sarah Anne Shanahan, who was acting as PLAINTIFF'S agent due to her injuries.
"17. Furthermore, Defendant RISNER fraudulently provided California Highway Patrol Officer Meiller with proof of insurance purportedly underwritten by Hartford Insurance Company, rather than her own insurance policy underwritten by GEICO Insurance Company. A true and correct copy of California Highway Patrol Traffic Collision Report No. 2014090138, dated September 19, 2014 (hereinafter 'CHP TCR'), is attached hereto as Exhibit A.
"18. PLAINTIFF obtained a copy of the CHP TCR in pursuing her claims against Defendants and relied on Defendant RISNER's misrepresentation to both PLAINTIFF's daughter and Officer Meiller of the existence of her own GEICO Insurance Company policy in engaging only Defendants ANDREWS' Hartford Insurance Company representatives regarding her claim.
"19. Finally, Defendant RISNER withheld the existence of her own GEICO Insurance Company policy in her interactions with the insurance adjuster for Defendants ANDREWS' Hartford Insurance Company, despite her legal duty to be truthful regarding her own GEICO Insurance Company policy. The insurance adjuster for Defendants ANDREWS Hartford Insurance Company policy relied on Defendant RISNER's fraudulent misrepresentations in interacting with PLAINTIFF in negotiating a settlement of PLAINTIFF's claims."
On or about September 8, 2016, eleven days before the expiration of the two-year statute of limitations for bringing a personal injury claim, McKeon entered into a settlement agreement with Risner, Ernest and Patricia Andrews, and Hartford Insurance Company, whereby she released the defendants from liability arising from the accident in exchange for a payment of $15,000.
On November 18, 2016, McKeon filed a complaint against Risner and Ernest and Patricia Andrews, and in May of 2018, a fourth amended complaint, asserting claims for personal injury and rescission of the September 2016 settlement agreement. The complaint alleged that McKeon "relied on Defendant RISNER's fraudulent acts in settlement of her personal injury claims against all the Defendants, estopping Defendant RISNER from asserting a statute of limitations defense to this action," and that McKeon "would not have entered into the Contract if Defendant RISNER had not breached her legal duty to disclose truthful information regarding her GEICO Insurance Company policy" to her daughter and to the Hartford Insurance Company adjuster.
The complaint also alleged that Riser was required to, but did not, file a "Form SR-1" with the California DMV demonstrating proof of insurance, which "would have confirmed the existence" of Risner's GEICO policy, notwithstanding McKeon's "belated request for the SR-1, after the expiration of the statute of limitations for her personal injury action."
Risner filed a demurrer to the complaint, which the trial court sustained without leave to amend, concluding that Risner was not estopped from asserting a statute of limitations defense because "[t]he complaint does not allege that Defendant intentionally withheld the [insurance] information in order to induce Plaintiff not to file suit," and that McKeon was not entitled to rescission of the contract because "[t]he pleading does not allege that Defendant made any statements to Plaintiff about insurance, and it does not allege that Defendant owed a duty, absent a request from Plaintiff, to disclose the existence of insurance."
McKeon does not challenge this aspect of the trial court's ruling.
The trial court entered an order dismissing the fourth amended complaint as to Risner, from which McKeon appeals.
Because this order leaves no issues to be determined as to Risner, we treat it as appealable. (See Ram v. OneWest Bank, FSB (2015) 234 Cal.App.4th 1, 9; Eisenberg et al., Cal. Practice Guide: Civil Appeals and Writs (The Rutter Group 2019) ¶¶ 2:91-2:93, pp. 2-66-2-67.)
DISCUSSION
On appeal from a dismissal after an order sustaining a demurrer, we review the matter de novo, exercising our independent judgment about whether the complaint states a cause of action as a matter of law. (Moore v. Regents of University of California (1990) 51 Cal.3d 120, 125; Desai v. Farmers Ins. Exchange (1996) 47 Cal.App.4th 1110, 1115.) We give the complaint a reasonable interpretation, reading it as a whole and viewing its parts in context. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318; see Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-967.) We deem to be true all material facts properly pled. (Serrano v. Priest (1971) 5 Cal.3d 584, 591.) We must also accept as true those facts that may be implied or inferred from those expressly alleged. (Marshall v. Gibson, Dunn & Crutcher (1995) 37 Cal.App.4th 1397, 1403.) If no liability exists as a matter of law, we must affirm that part of the judgment sustaining the demurrer. (See Baughman v. State of California (1995) 38 Cal.App.4th 182, 187.)
Risner Is Not Estopped From Asserting a Statute of Limitations Defense to the Personal Injury Cause of Action
" ' "Equitable estoppel . . . comes into play only after the limitations period has run and addresses . . . the circumstances in which a party will be estopped from asserting the statute of limitations as a defense to an admittedly untimely action because his conduct has induced another into forbearing suit within the applicable limitations period. [Equitable estoppel] is wholly independent of the limitations period itself and takes its life . . . from the equitable principle that no man [may] profit from his own wrongdoing in a court of justice." ' (Battuello v. Battuello [(1998)] 64 Cal.App.4th 842, 847-848 (quoting Bomba v. W.L. Belvidere, Inc. (7th Cir. 1978) 579 F.2d 1067, 1070).)" (Lantzy v. Centex Homes (2003) 31 Cal.4th 363, 383.)
"An estoppel may arise although there was no designed fraud on the part of the person sought to be estopped. [Citation.] To create an equitable estoppel, 'it is enough if the party has been induced to refrain from using such means or taking such action as lay in his power, by which he might have retrieved his position and saved himself from loss.' . . . '. . . Where the delay in commencing action is induced by the conduct of the defendant it cannot be availed of by him as a defense.' " (Benner v. Industrial Acci. Com. (1945) 26 Cal.2d 346, 349-350.)
" 'Four elements must ordinarily be proved to establish an equitable estoppel: (1) The party to be estopped must know the facts; (2) he must intend that his conduct shall be acted upon, or must so act that the party asserting the estoppel had the right to believe that it was so intended; (3) the party asserting the estoppel must be ignorant of the true state of facts; and, (4) he must rely upon the conduct to his injury.' " (DRG/Beverly Hills, Ltd. v. Chopstix Dim Sum Cafe & Takeout III, Ltd. (1994) 30 Cal.App.4th 54, 59.)
We agree with the trial court that McKeon's argument for equitable estoppel fails. As the trial court concluded, the complaint nowhere alleges that Risner failed to disclose the existence of her GEICO insurance policy with the intention that doing so would cause McKeon not to file suit within the limitations period. Instead, it alleges that Risner's intent was that McKeon would pursue her claim "with only Hartford Insurance Company."
The complaint also fails to allege that McKeon relied on Risner's nondisclosure of the GEICO policy to her injury. It alleges that McKeon negotiated a settlement with the Hartford Insurance Company and did not pursue her claim with GEICO, but she does not allege that she obtained a smaller or less advantageous settlement as a result—for example, because of limits of the Hartford policy—or for any other reason. And more importantly, the complaint offers no explanation whatsoever for McKeon's failure to bring suit within the limitations period—which she presumably could have done independently of any settlement negotiations and with or without knowledge of the GEICO policy. In sum, the complaint does not allege sufficient facts to support equitable estoppel of the limitations period.
The facts of this case are distinguishable from those of Casey v. Anshutz (1967) 252 Cal.App.2d 9 (Casey), upon which McKeon relies. There, the defendant was driving her mother-in-law's automobile in which the plaintiff was a passenger when an accident occurred. (Id. at p. 10.) Defendant stated both orally and in writing to plaintiff and plaintiff's insurance agent that she had no insurance, and the trial court found that defendant made these statements in good faith and while believing them to be true. (Id. at pp. 10-12.) Plaintiff, in reliance on these statements, did not file suit within the limitations period and instead presented her claim to her own insurance company, which informed her—after the limitations period had expired—that the defendant was in fact insured through a policy on another automobile owned by her husband. (Id. at pp. 10-11.) After a bench trial on the issues of the statute of limitations and estoppel, the trial court found that defendants were not estopped from asserting a statute of limitations defense. (Id. at pp. 10, 12.)
The Court of Appeal reversed. It held that the trial court failed to consider the possibility that defendant might be guilty of "culpable negligence in failing to apprise herself of the contents of the insurance policy . . . before representing to plaintiff that she was uninsured," and that such culpable negligence could satisfy the element of fraud necessary to create an estoppel. (Casey, supra, 252 Cal.App.2d at p. 14.) The court also held that although the trial court found that defendant made the statements regarding insurance without any intention of persuading plaintiff to delay filing suit, she could have made the statements under such circumstances as to create the justifiable belief on plaintiff's part that they were so intended, thereby creating an estoppel. (Ibid.)
Here, as noted, the complaint does not allege any intent by Risner to prevent or delay McKeon from filing suit. And unlike the situation in Casey, McKeon would not have been justified in believing that Risner's failure to mention the insurance policy was so intended. In Casey, the defendant repeatedly made affirmative statements that she had no insurance, and the court suggested such statements could have created the "justifiable belief, on plaintiff's part, that it would be futile and impractical for her to bring suit against a defendant who was uninsured and without any other monetary assets of which plaintiff was aware." (Casey, supra, 252 Cal.App.2d at p. 14.) Such a belief was not justifiable in this case, where Risner was apparently covered to some extent under the Hartford insurance policy, and failed to disclose—as opposed to affirmatively misrepresenting—the existence of her own insurance policy. Finally, in Casey, the plaintiff's reliance was not at issue—she failed to file suit in "full reliance" on defendant's statements that she was uninsured. (Id. at p. 10.) Here, McKeon has failed to allege facts supporting the conclusion that she relied on Risner's nondisclosure in failing to file suit within the limitations period or that she suffered any damage as a result.
The Complaint Fails to State a Claim for Rescission
The trial court sustained the demurrer as to the rescission cause of action, concluding as follows: "The allegations are insufficient to allege fraudulent inducement. The pleading does not allege that Defendant made any statements to Plaintiff about insurance, and it does not allege that Defendant owed a duty, absent a request from Plaintiff, to disclose the existence of insurance."
Under Civil Code section 1689, subdivision (b)(1), a party to a contract may rescind the contract "[i]f the consent of the party rescinding, or of any party jointly contracting with him, was given by mistake, or obtained through duress, menace, fraud, or undue influence, exercised by or with the connivance of the party as to whom he rescinds, or of any other party to the contract jointly interested with such party." "[T]he elements of a fraud cause of action that would underlie a request for rescission . . . ' "are (a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or 'scienter'); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage." ' (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.)" (Geraghty v. Shalizi (2017) 8 Cal.App.5th 593, 597.)
The complaint fails to state a claim for rescission of the contract, most particularly because it fails to allege justifiable reliance. "Reliance is 'justifiable' only when 'circumstances were such to make it reasonable for plaintiff to accept defendant's statements without an independent inquiry or investigation.' (Wilhelm v. Pray (1986) 186 Cal.App.3d 1324, 1332, italics omitted.)" (Philipson & Simon v. Gulsvig (2007) 154 Cal.App.4th 347, 363.) McKeon does not allege any facts or circumstances suggesting that it was reasonable or justifiable for her to assume, based on Risner's having provided the Hartford policy information and not her own GEICO policy, that no such policy existed. And McKeon did not conduct any investigation or inquiry until after she had entered into the contract and the limitations period had expired. Under these circumstances, any reliance was manifestly unjustifiable.
"Reliance exists when the misrepresentation or nondisclosure was an immediate cause of the plaintiff's conduct which altered his or her legal relations, and when without such misrepresentation or nondisclosure he or she would not, in all reasonable probability, have entered into the contract or other transaction." (Alliance Mortgage Co. v. Rothwell (1995) 10 Cal.4th 1226, 1239.) Although the complaint makes the conclusory allegation that McKeon "would not have entered into the Contract and have permitted the statute of limitations for her personal injury cause of action to expire if Defendants had not fraudulently withheld the existence of the GEICO Insurance Company policy," it does not allege any facts or circumstances, or indeed any explanation, for why the existence or non-existence of the GEICO policy had anything to do with her decision to enter into the contract to settle her claims against the defendants, including Risner. (See Goodman v. Kennedy (1976) 18 Cal.3d 335, 346-347 [conclusory allegations of reliance are insufficient to state a claim for fraud].) In short, the complaint fails to state a claim for rescission based on fraud.
DISPOSITION
The judgment (order) is affirmed. Risner shall recover her costs on appeal.
/s/_________
Richman, J. We concur: /s/_________
Kline, P.J. /s/_________
Miller, J.