Michael Cingari vs. Farmers Insurance CompanyOppositionCal. Super. - 4th Dist.January 17, 2017A I T K E N 4 A I T K E N 4 C O H N 3 M A C A R T H U R P L A C E , SU IT E 80 0 O O 0 9 O N Dn B A W - p m p d e d e d f e d A N Ln B R A W N = O 71 4- 43 4- 14 24 71 4- 43 4- 36 00 F A C S I M I L E S A N T A A N A , C A 92 70 7 NS ] No No No No No No No Ne ] -_ -_ == 0 ~ AN Wn =~ Ww No - { = O o o ~ £9 PRINTED ON RECYCLED PAPER WYLIE A. AITKEN (SBN 37777) RICHARD A. COHN (SBN 145156) CASEY R JOHNSON (SBN 223523) AITKEN 4 AITKEN 4 COHN 3 MACARTHUR PLACE, SUITE 800 SANTA ANA, CA 92707-2555 (714) 434-1424 Telephone (714) 434-3600 Facsimile Attorneys for Plaintiffs ELECTRONICALLY FILED Superior Court of California, County of Orange 10/05/2018 at 07:10:00 FM Clark of the Superior Court By Monique Ramirez, Deputy Clerk SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF ORANGE COUNTY MICHAEL CINGARI, an individual; H. REY GUBERNICK, D.C., individually and as an actual and ostensible agent of NATURAL HEALTH SPORTS THERAPY, INC.; MARK ROCHE, individually, and as President of NATURAL HEALTH SPORTS THERAPY, INC.; AARON BERGER, individually, and as Vice President of NATURAL HEALTH SPORTS THERAPY, INC., Plaintiffs, VS. FARMERS INSURANCE COMPANY; MID-CENTURY INSURANCE COMPANY; CNA INSURANCE COMPANY; AMERICAN CASUALTY COMPANY; MARTIN STUKA and DOES 1 to 100, inclusive Defendants. CASE NO.: 30-2017-00897866-CU-PO-CJC Judge: Linda S. Marks Dept: C10 PLAINTIFFS’ OPPOSITION TO DEFENDANT FARMERS INSURANCE COMPANY AND MID-CENTURY INSURANCE COMPANY’S MOTION FOR SUMMARY ADJUDICATION/ SUMMARY JUDGMENT [Filed concurrently with Plaintiffs’ Separate Statement; Declaration of Richard A. Cohn; Declaration of Timothy Walker, Declaration of Lee O'Connor] Reservation No.: 72807110 DATE: October 22,2018 TIME: 10:00 a.m. DEPT: C10 Complaint filed: 1/17/17 Trial Date: 5/28/19 Plaintiff hereby opposes the Motion for Summary Judgment/ Summary Adjudication filed by Defendants Farmers Insurance Company and Mid-Cent DATED: October 5, 2018 AITKEN 4+ AITK surance Company. -/ WYLIE A. ATTKEN RICHARD A. COHN CASEY R. JOHNSON Attorneys for Plaintiffs OPPOSITION TO MOTION FOR SUMMARY ADJUDICATION/ SUMMARY JUDGMENT A I T K E N ¢ A I T K E N 4 C O H N 3 M A C A R T H U R P L A C E , SU IT E 80 0 NO 0 9 OA Ln BA W N b - t p d pe d e d e d ed pe A A Un B R A W N = O 71 4- 43 4- 14 24 71 4- 43 4- 36 00 F A C S I M I L E S A N T A A N A , C A 92 70 7 No D O NO \ No No No ND - pt - ~ AN Wn EN wo No - = Oo 0 2 No 0 £9 PRINTED ON RECYCLED PAPER Item No.: I. II. II. IV. VL VII. TABLE OF CONTENTS A. NHST Procures the Mid-Century Policy ............cccoovvvevvnnnnn... B. The Cingari v. NHST Litigation .................ccccoviiueinennnnnnn.. C. Mid-Century’s Improper Denial of a Defense to NHST and Gubernick in the Underlying Matter ................ccooevviviininnnnnnn, D. Mid Century’s Failure to Protect It’s Insured When The Opportunity To Settle Within Policy Limits AroSe ...........ccovvuiiieeiniinennnn.n. IT IS WELL-ESTABLISHED JUDICIAL POLICY WHEN RULING ON SUMMARY JUDGMENT MOTIONS TO CONSTRUE ALL AFFIDAVITS FAVOR OF THE PARTY OPPOSING THE MOTION, ALL INFERENCES IN FAVOR OF FINDING TRIABLE ISSUES OF FACT AND TO RESOLVE ANY DOUBTS ON THE MOTION BY DEIN YING TT in «3 v seomsinc vo ocssiosnan s 45.55 560005005 £55 Abii 0 4m vmcmvmmc 5. #5 wmsmmommsssmcns PLAINTIFF STIPULATES THAT DEFENDAT FARMERS INSURANCE COMPANY IS AN IMPROPER PARTY.........cccvvnen... DOES NOT OPPOSE SUMMARY JUDGMENT AS TO DEFENDANT “FARMERS INSURANCE COMPANY.” (HOWEVER, PLAINTIFF HAS NAMED THREE NEW FARMERS ENTITIES AS DOE DEFENDANTS BASED ON RECENT DISCOVERY ................. FARMERS/MID-CENTURY BREACHED THEIR DUTY TO INVESTIGATE MICHAEL CINGARI’S CLAIM, CONSTITUTING BAD FAITH INSURANCE PRACTICE AND BREACH OF THE IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING ......... NUMEROUS QUESTIONS OF FACT EXISTED AS TO WHETHER FARMERS/MID-CENTURY OWED ITS INSUREDS A DUTY TO DEFEND THEM IN THE CINGARI v. NATURAL HEALTH SPORTS THERAPY, INC. MATTER; SUCH THAT DEFENDANT BREACHED IT’S DUTY TO DEFEND CONSTITUTING BAD FAITH INSURANCE PRACTICE «io sams 15 500mm «5 2 sor smcommsm oe + scemenre +s smsscscssss 1 3 53 SFmISTES £5 53 FFHmS 10 10 TABLE OF CONTENTS A I T K E N 4 A I T K E N 4 C O H N 3 M A C A R T H U R P L A C E , SU IT E 80 0 OO 0 9 O&O wn A W N = -_ - = e d e d e d p e d p m A A Ln B R A W N = O 71 4- 43 4- 14 24 71 4- 43 4- 36 00 F A C S I M I L E S A N T A A N A , C A 92 70 7 No Do No No No NS No No - - - ~N N Wn HN wo NS ] - o \O 0 ~ [N oe ] £9 PRINTED ON RECYCLED PAPER B. Plaintiff has Herein Provided More Than Sufficient Evidence to Raise a Triable Issue of Material Fact as to Whether Defendant Mid Century Breached its Duty to Defend ....................ocooiiiiiiiinn, 13 VIII. MID CENTURY/FARMERS BREACHED ITS DUTY TO PROTECT ITS INSURED BY SETTLING THE CASE WITHIN ITS POLICY LIMITS WHENLIABILIYT HAD BECOME REASONABLY CLEAR, AND DAMAGES LIKELY EXCEEDED THE POLICY LIMITS ............ 19 TX: CONCLUSION ;cotencssnsmanses somone sos mmmsmos s o smmamses os 52s wymsmmeors £113 559 20 TABLE OF CONTENTS A I T K E N 4¢ A I T K E N ¢ C O H N 3 M A C A R T H U R P L A C E , SU IT E 80 0 O O 0 NN O N Wn B W W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 71 4- 43 4- 14 24 71 4- 43 4- 36 00 F A C S I M I L E S A N T A AN A, CA 92 70 7 £9 PRINTED ON RECYCLED PAPER TABLE OF AUTHORITIES State Cases Aguilar v. Atlantic Richfield Co., 24 Cal. 4% 855 ee, D Amico v. Board of Medical Examiners (1974) BIE Oi Bed 1p RH cn v1 smn ys menus 3 socnsmsepumnsc 11. 5 omnes £3 opm 4 4.4 $000 Gray v. Zurich Ins. Co. (1966) ES ESR SEE, VEDTT 11s wumoscon x1 sons £5 5 somennsnmn ss 44 Sommannss 33 SRL 28 Guz v. Bechtel National, Inc. (2000) 24 Cald™ 317,334 wooo, Horace Mann Ins. Co. v. Barbara B. (1993) 6 Cal.dth 1076, 1081 one ee eee, Montrose Chemical Corp. v. Superior Court (1993) 6 Caldth 287, 205 oni Scottsdale Ins. Co. v. MV Transportation (2005) 36 Cal.dth 643, 655 oon Waller v. Truck Ins. Exchange, Inc. (1995) TTCAl 4™ 19 ieee Wilson v. 21°" Century Insurance Co. (2007) 42 Cal. 4™ 713, 720-721 cove Appellate Cases Amato v. Mercury Casualty Co. (1993) 18 Cal. App. 4th 1784 «ooo Antles v. Aetna (1963) 221 Cal. APP.2d 438 ooo Atlantic Mutual Ins. Co. v. J. Lamb, Inc. (2002) 100 Cal. App. 4th 1017, 1038-1039 ...........cociciiicoissammis ios sn sm main Barnes v. Black (1999) 71 Cal. AppAT 1473, 1477 ooo Beverly Glen v. City of Los Angeles 1973) 34 Cal. App.3d 117, 127 «cree iii TABLE OF CONTENTS 9 A I T K E N ¢ A I T K E N 4 C O H N 3 M A C A R T H U R P L A C E , SU IT E 80 0 O 0 J OO Un A WwW ND - e d p d e d e d p d pe A N nn B R A W N = O 71 4- 43 4- 14 24 71 4- 43 4- 36 00 F A C S I M I L E S A N T A A N A , C A 92 70 7 N N N N N N N N = - - N O N Da H W NN = SS © © No 0 € PRINTED ON RECYCLED PAPER Bunzel v. American Academy of Orthopaedic Surgeons (1980) 107 Ca. App.3d 165, 169-170 ...oovviniiniiiiiie eee 8,9 Chevron USA, Inc. v. Superior Court (1992) 4 Cal APPA" 544, 548 o.oo iii, 9 Everett v. Superior Court (2002 104 Cal. APP.4" 388,392 .....oviiiee eee eee, 11 FoodPro International, Inc. v. Farmers Ins. Exchange (2008) 169, CALAPPA" 976 «vv, 5,13, 14, 15, T¥ Hollingsworth v. Commercial Union Ins. Co. (1989) 208 Cal. APP.3d 800 «eon 14 Mirpad v California Ins. Guar. Ass'n (2005) 132 Cal.App.4th 1058, 1068 ....viieiii eee 12 Mullen v. Glens Falls Ins. Co. (1977) 73 CalLApp.3d 163, 173-174 ovine 12 O'Byrne v. Santa Monica Hospital Medical Center (2001) 94 Cal. APPA" 797, 804 ....vvveeeeee eee eee ee, 9 KPFF, Inc. v. California Union Ins. Co. (1997) 56 Cal. APP.A™ 963, 973 «ooo 10 Ray v. Valley Forge Ins. Co. (1999) #7 Cal APPA TOF TOMB .\ vo sms soy osmsss ens sssassminss i 1 sams «os socsmme 13 Tradewinds Escrow Inc. v. Truck Ins Exchange (2002) 97 CalLApp.4th 704 ooo 14 Statutes California Code of Civil Procedure §437¢(C) «.uvneirininiianiiiaiiiiiiiiieeanannn, 8,9 iv TABLE OF CONTENTS A I T K E N 4 A I T K E N 4 C O H N 3 M A C A R T H U R P L A C E , SU IT E 80 0 - _ -_- e a e a e d p a Ln A L W N N D = O O N N W N 71 4- 43 4- 14 24 71 4- 43 4- 36 00 F A C S I M I L E > S A N T A A N A , C A 92 70 7 \] ND NO NJ No No No [\ ) bd - - ~ aN Wn +B Ww No - Oo O © ~ No [e e] $9 PRINTED ON RECYCLED PAPER MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION Despite Defendant Mid-Century’s/Farmers’ feigned protestations to the contrary, this is a “poster child” case of insurance bad faith. The insurer denied the insured a legal defense (and coverage) before doing any reasonable investigation into the facts of the case, nor analysis of the legal relationship among the party defendants and plaintiff whatsoever. The insurer made a “tunnel vision” / “snap decision” that its “professional services” exclusion applied; and thereafter knowingly refused to acknowledge that longstanding case law providing clear precedent under the facts/circumstances of this case dictated at a minimum that the insured be defended, (and ultimately indemnified as well.) Indeed, before conducting any legally-required, reasonable investigation of the facts, the insurers denied a defense of its insured, Natural Health Sports Therapy (“NHST”) in the underlying action brought by Michael Cingari (“Cingari”) for permanent and significant injuries. NHST, forced to pay for their own defense out of pocket, predictably did what they could to minimize their monetary outlay and avoid potentially catastrophic financial exposure - making a substantial arm’s length payment and assigning their bad faith rights to Cingari. The matter proceeded to a bench trial before Orange County Superior Court Judge Frederick Horn, resulting in a detailed statement of decision and a Judgment in excess of $6.2 million. Defendant’s immediate intent to deny coverage to NHST was expressed through their claims adjuster, Katie Ambrosio, during her very first phone call with the insured (NHST’s Mark Roche), notifying her of the claim. This was before any investigation was conducted, whatsoever. Defendant’s conduct thereafter followed a calculated path intended to lead only to denial of coverage and a refusal to defend NHST in the underlying action. The insurer did not even attempt to contact Cingari (or his lawyer) during the essentially non-existent sham “Investigation” of the claim and made no effort whatsoever to learn what happened and how. As a result, Defendants are now forced to employ tortured analyses to try to justify their factually and legally unfounded defense denial. As detailed below, grounds for coverage clearly does exist under Defendants’ policy, such that the insurer will be held liable for the full amount of the 1 OPPOSITION TO MOTION FOR SUMMARY ADJUDICATION/ SUMMARY JUDGMENT A I T K E N 4+ A I T K E N 4 C O H N 3 M A C A R T H U R P L A C E , SU IT E 80 0 A L N SS O X NN O N Wn 11 12 13 14 15 16 17 18 19 20 21 22 23 71 4- 43 4- 14 24 71 4- 43 4- 36 00 F A C S I M I L E S A N T A AN A, CA 92 70 7 24 25 26 27 28 9 PRINTED ON RECYCLED PAPER Judgment. However, Defendant’s argument in their motion that Plaintiff must prove coverage in order to defeat the motion is legally wrong. Plaintiffs do not have the burden of proving that the subject incident was, in fact, covered under Defendants’ policy. Plaintiffs need only show that a possibility of coverage existed so as to trigger the duty to defend. As Defendant’s own claims adjuster Mark Olson acknowledges, it is a “basic” rule of insurance law that the mere possibility of coverage suffices to trigger Defendants’ duty to defend - a breach of which subjects Defendant to liability for the full amount of the Judgment. (See case law cited in detail, infra.) Defendants never conducted any reasonable investigation, so they never knew that Cingari’s allegations and the legal relationships among the parties created numerous possibilities for coverage. Most importantly, Defendants’ investigation (albeit inadequate) did clearly indicate that there was a likelihood of coverage (because the communication with the insured revealed NHST was not providing any “professional services” to Cingari; but rather, said services were provided by Gubernick, an independent third party.) Pursuant to well-established case law discussed in the claims file, Mid-Century was well-aware that this alone triggered the duty to defend, and yet the insurer nonetheless intentionally and deliberately ignored the insured’s contractual rights to defense, resulting in damages. A single triable issue of fact as to a single one of the numerous allegations that created the mere possibility for defense and coverage mandates a complete denial of Defendants’ instant motion. IL. STATEMENT OF FACTS A. NHST Procures the Mid-Century Policy In 2010, NHST secured a Mid-Century insurance business office policy through Farmers captive agent, insurance broker Martin Stuka. (PAF 1, Stuka Depo 12:15-17:21, 52:1-5, 62:23- 63:15.) Stuka had offered his insurance services to Roche to procure and purchase the policy. (PAF 2, Stuka Depo 52:1-5, Roche Depo 65:14-66:14.) Prior to purchasing the policy, Farmers/ Stuka generated an insurance proposal that was provided by Stuka to Roche on behalf of NHST, after Stuka had visited the NHST office and become familiar with the nature of NHST’s business. (PAF 3, Stuka Depo 75:25 - 84:4.) Roche already had individual medical malpractice 2 OPPOSITION TO MOTION FOR SUMMARY ADJUDICATION/ SUMMARY JUDGMENT A I T K E N 4 A I T K E N ¢ C O H N 3 M A C A R T H U R P L A C E , SU IT E 80 0 SS OO 0 NN NN nn B R A W N -_ = = e a e d e d p e aA Ln BA WLW = 71 4- 43 4- 14 24 71 4- 43 4- 36 00 F A C S I M I L E SA NT A AN A, CA 92 70 7 N O R D RN N N m m N a Lh A W N ~~ SS © ow DN 0 €3 PRINTED ON RECYCLED PAPER coverage for himself as did the other individual practitioners at NHST. He thus believed NHST was purchasing insurance from Stuka that would cover NHST “if anything happened in my office” including “double coverage” and “an umbrella over my office” and Stuka told Roche that NHST would be so covered. (PAF# 4, Roche Depo 38:15-20; 53:2-55:25; 63:22-64:14.) B. The Cingariv. NHST Litigation On September 23, 2013, Michael Cingari suffered back injuries while undergoing treatment by Dr. H. Rey Gubernick at NHST. (PAF #5, See Defendant’s moving papers, Exhibit D, Statement of Decision of Judge Frederick P. Horn dated April 28, 2016, 1:19-2:5.) Asa result of his injuries, Michael Cingari brought suit against Gubernick and NHST. (PAF 6, See Defendant’s moving papers, Exhibit A, Cingari Complaint.) Thereafter, Roche tendered the defense of NHST to Mid-Century. (PAF 7, See Defendant’s moving papers, Exhibit E, Claims Log, p. 1 & 4.) Virtually immediately, and again shortly thereafter by letter dated June 11, 2015, Mid-Century denied coverage and refused to defend NHST in the Cingari v. NHST matter. (PAF 8, See Defendant’s moving papers, Exhibit E, Claims Log. See also Denial letter dated June 11, 2015 - Exhibit H to defendant’s motion.) Having been abandoned by Mid-Century, and facing a potentially substantial judgment in the face of Michael Cingari’s injuries, NHST, Roche, and Gubernick entered into a settlement agreement with Cingari, whereby Gubernick and NHST would make payments totaling $20,000 to Michael Cingari and Cingari would be assigned all assignable bad faith causes of action by NHST, Gubernick and Roche. (PAF 9, See Defendant’s moving papers at Exhibit C, Settlement Agreement). The Cingari v. NHST matter proceeded to bench trial before Judge Frederick Horn from April 18, 2016 through April 20, 2016, resulting in a six page statement of decision, and Judgement against NHST, Roche and Gubernick totaling over $6.2 million (PAF 10, See Defendants’ Exhibit D, Statement of Decision.) Judge Horn specifically found that Michael Cingari suffered a disc herniation of 26 mm, resulting in back surgery within 10 days, followed by 17 epidural and steroid injection procedures, radiofrequency ablations and facet joint injections. Cingari underwent surgical placement of spinal cord stimulator and will require lifelong future monitoring and care and replacement of the spinal cord stimulator battery. (PAF 11, see Defendant’s Exhibit D, Statement of Decision of Judge 3 OPPOSITION TO MOTION FOR SUMMARY ADJUDICATION/ SUMMARY JUDGMENT A I T K E N ¢ A I T K E N ¢ C O H N 3 M A C A R T H U R P L A C E , SU IT E 80 0 SS OO XX N N N nn B R A W N -_ = e e a a A N Wn BA W N 71 4- 43 4- 14 24 71 4- 43 4- 36 00 F A C S I M I L E S A N T A A N A , C A 92 70 7 NS ] ND NO ] N o No N o No ND - - - = aN Wn E N wo B o - S O os ] ~ No oo <3 PRINTED ON RECYCLED PAPER Frederick P. Horn dated April 28, 2016, 2:20-27.) C. Mid-Century’s Improper Denial of a Defense to NHST and Gubernick in the Underlying Matter Defendants’ adjuster Katie Ambrosio received the claim on May 6, 2015, made one quick phone call to Defendant Martin Stuka (the Farmer’s agent that sold the policy) and then immediately concluded there would be no defense and no coverage because the claim involved medical malpractice and thus was excluded from coverage by the professional services exclusion. Then on May 11, 2015, at the time of the first phone conversation that NHST’s Roche had with Katie Ambrosio tendering the defense to Mid-Century, and before any investigation had been conducted, Mark Roche was told by Defendant’s adjuster Ambrosio that there was no coverage under his general liability policy, because bodily injury from a professional service is excluded. (PAF # 12, Depo Olson 69:4-70:19; See also Defendants’ claims log, Exhibit E to Defendant’s MSJ, and see also Declaration of Plaintiff’s Expert Timothy Walker). Mark Olson, the senior general adjuster charged with the ultimate coverage investigation of the claim made by Cingari in the underlying matter immediately agreed with Ambrosio’s initial assertion that there is no coverage under the general liability policy, improperly making the blanket assertion that bodily injury from a professional service is always excluded. (PAF # 13, Depo Olson 29:1-8, 29:16-30:2, 75:2-7; 99-103, 124. See also Declaration of Plaintiff's Expert, Timothy Walker.) However, this assertion ignored that in this case, the insured was not the one performing the professional services. Id. Plaintiff's Expert, Tim Walker outlines the insurer’s duty to investigate and defend in his declaration filed concurrently herewith. These duties are confirmed by defendant’s adjuster, Mark Olson, who was trained by Farmers that (1) insurers owe a duty to defend an insured if there is any possibility of coverage; (2) the duty to defend lasts until the carrier can show there is no potential for coverage; (3) if coverage depends on an unresolved dispute over a factual question the very existence of that dispute would establish a possibility of coverage and thus a duty to defend; (4) any doubt as to whether the facts in a claim give rise to a duty to defense must be resolved in favor of the insured; (5) an insurer must fully inquire into possible bases that 4 OPPOSITION TO MOTION FOR SUMMARY ADJUDICATION/ SUMMARY JUDGMENT - 2 3 4 5 6 7 8 9 10 11 12 z 13 7 = g5g = U4 $48 = 2d og Fata os 2x%38 16 $E