Filed 3/16/01
CERTIFIED FOR PARTIAL PUBLICATION*
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION THREE
|
ZORAN K. BASICH, Plaintiff
and Appellant, v. ALLSTATE INSURANCE COMPANY,
etc., Defendant
and Respondent. |
B132634 (Super. Ct. No. BC 167194) |
APPEAL
from a judgment of the Superior Court of Los Angeles County, Gregory C.
O’Brien, Jr., Judge. Reversed.
David A. Cordier for Plaintiff and Appellant.
Howrey Simon Arnold & White, Kirk A. Pasich and Aneeta Kumar as Amicus Curiae on behalf of Plaintiff and Appellant.
Law Offices of Bernie Bernheim and David C. Parisi for Harry Edelstein as Amicus Curiae on behalf of Plaintiff and Appellant.
Bill Lockyer, Attorney General, Timothy Laddish, Senior Assistant Attorney General¸ Randall P. Borcherding, Supervising Deputy Attorney General, Kristian D. Whitten, and Anne Michelle Burr, Deputy Attorneys General, for State of California and Insurance Commissioner of the State of California Harry W. Low as Amici Curiae on behalf of Plaintiff and Appellant.
Shernoff, Bidart & Darras, William M. Shernoff, Michael J. Bidart, Jeffrey Isaac Ehrlich; Quisenberry & Kabateck, Brian S. Kabateck, Suzanne Havens Beckman and Heather M. Mason for Consumer Attorneys of California, United Policyholders, Consumer Federation of California, Congress of California Seniors, Foundation for Taxpayer and Consumer Rights and California Public Interest Research Group as Amici Curiae on behalf of Plaintiff and Appellant.
Luce, Forward, Hamilton & Scripps, Charles A. Bird, Peter H. Klee and Robert H. Roe for Defendant and Respondent.
Horvitz & Levy, Ellis J. Horvitz, David M. Axelrad, Lisa Perrochet, Stephanie Rae Williams; Barger & Wolen, Kent R. Keller, Steven H. Weinstein, Larry M. Golub and Robyn E. King for Century National Insurance Company, Association of California Insurance Companies, Personal Insurance Federation of California, National Association of Independent Insurers and Alliance of American Insurers as Amici Curiae on behalf of Defendant and Respondent.
Fred J. Hiestand for The Civil Justice Association of California (CJAC) as Amicus Curiae on behalf of Defendant and Respondent.
Nielsen, Merksamer, Parrinello, Mueller & Naylor, James R. Parrinello and John E. Mueller for California Chamber of Commerce and California Manufacturers and Technology Association as Amicus Curiae on behalf of Defendant and Respondent.
________________
Plaintiff and appellant Zoran K. Basich (Basich) appeals a judgment in this action for breach of the implied covenant of good faith and fair dealing entered in favor of defendant and respondent Allstate Insurance Company (Allstate). Judgment was entered after the trial court granted Allstate’s motion for nonsuit on the ground that Basich had failed to file his action within the one-year limitations period specified in the Allstate insurance policy. Basich also appeals from the trial court’s order granting Allstate’s motion for summary adjudication of issues as to his claim for punitive damages.
The essential questions presented are whether Basich’s opening statement presented sufficient evidence of an equitable estoppel to permit him to continue with the trial and whether the trial court improperly considered the clear-and-convincing standard of proof in deciding the motion for summary adjudication of issues.
Viewing the evidence and all inferences in the light most favorable to the plaintiff, we find in the unpublished portion of this opinion that it was error for the trial court to grant the motion for nonsuit. However, we conclude that the trial court properly granted the motion for summary adjudication of issues as to punitive damages.
FACTUAL AND PROCEDURAL BACKGROUND
1. Facts.
Basich was the co-owner with Patricia Harris of a multiple-unit, residential rental property in Los Angeles.[1] The property was insured by an Allstate residential fire policy
for, among other things, damages or loss caused by earthquake. The Allstate policy was in effect on January 17, 1994, the date of the 1994 Northridge earthquake.
An earthquake claim was initially submitted by Harris on January 18, 1994. During the following months, Harris, through a contractor she had retained, communicated with Allstate regarding the extent of damage to the property. On October 26, 1994 Allstate made a $50,065.41 payment to Harris for repairs to the damaged structure. On November 10, 1994 Allstate made a further payment of $5,225.00 to Harris as an advance on her claim for lost rental income through March 1995, the period during which the contractor had estimated repairs of earthquake-related damage could be completed. In a letter dated November 10, 1994, Allstate notified Harris that “your file is being closed with this payment . . . .”
On December 9, 1994 an attorney for Basich wrote Allstate asserting that the claim had not been settled, expressing concern about the running of the one-year contractual limitations period for filing claims contained in the policy and requesting a waiver of that limitations period. In response, on January 9, 1995 Allstate wrote that, “[s]ince [Basich’s] claim is being actively investigated, the one year time limit is not running. Only when we have reached a final resolution to your claim does the one year clock again run. The only time that may have lapsed to date would be the time from the earthquake until the claim was reported to Allstate.”
Discussion and negotiation between Basich and Allstate continued for the next 14 months. On March 1, 1996 Allstate advised Basich’s counsel that no further benefits would be paid and that Allstate “will be closing our file and concluding our handling of your earthquake claim at this time.” On March 7, 1996 Allstate wrote again and stated “[w]e believe your earthquake claim is now concluded.” In addition, the March 7, 1996 letter referred to the policy’s one-year limitations period for filing a lawsuit and explained that “[t]his one year period did not run between the time that you reported the claim to Allstate and the date of this letter when Allstate provided you with its formal coverage position.” Finally, on June 29, 1996, in response to correspondence from Basich’s lawyer, Allstate wrote again that no further payments would be made on the claim and concluded by advising Basich that “[t]his claim was closed by Allstate on March 13, 1996, and the one-year limitations period commenced running as of that date.”
2. Proceedings.
Basich filed his original complaint against Allstate on March 10, 1997 for breach of contract and breach of the implied covenant of good faith and fair dealing. One month later Basich and Allstate settled the contract claim with Allstate agreeing to pay Basich and Harris $192,428.34, the balance of their policy limits.
Basich subsequently filed a second amended complaint, seeking recovery for damages allegedly caused by Allstate’s unreasonable delay in investigating the claim and paying the policy limits. In its answer, Allstate alleged as an affirmative defense that Basich’s claims were barred by the policy’s one-year contractual limitations period.
a. Allstate’s
motion for summary judgment and summary adjudication of issues.
Allstate moved for summary judgment or, in the alternative, for summary adjudication of issues with respect to Basich’s second cause of action for breach of the implied covenant of good faith and fair dealing and his punitive damage claim. The trial court denied summary judgment but granted summary adjudication in Allstate’s favor on the issue of punitive damages, holding that the “evidence in support of punitives does not meet the criteria of Tomaselli v. Transamerica Ins. Co. (1994) 25 CA 4th 1269, 1286-89 as a matter of law.”
b. Allstate’s motion in limine and motion for nonsuit.
Trial was scheduled for March 16, 1999. By agreement of the parties, on March 10, 1999 the trial court considered Allstate’s motion in limine number 11, which sought an order precluding introduction of any evidence in support of the second cause of action for breach of the implied covenant of good faith and fair dealing on the ground that the claim was barred by either the two-year statute of limitations in Code of Civil Procedure section 339, subdivision 1[2] or the one-year contractual limitations period specified in the insurance policy.
Both parties submitted written briefs and presented oral argument, which addressed primarily (a) the period during which the applicable limitations period was tolled because the claim was open and under investigation;[3] and (b) the extent to which Allstate was equitably estopped from asserting that the limitations period began running prior to March 13, 1996.
Following argument, the trial court stated it was inclined to grant Allstate’s motion. Since the matter was not before the court as a summary judgment motion, however, the court suggested that Allstate move for a judgment of nonsuit after opening statement.
On March 16, 1999, using the procedure suggested by the trial court,[4] Basich made an opening statement with a full offer of proof. At the conclusion of the opening statement, Allstate moved for judgment of nonsuit. The trial court, incorporating by reference its observations and comments during the hearing on the in limine motion, granted the motion for nonsuit and judgment of nonsuit.
The trial court entered judgment in favor of Allstate on April 5, 1999. Allstate served a notice of entry of judgment on April 16, 1999. Basich filed a timely notice of appeal.
CONTENTIONS
Basich contends: the insurance policy’s limitations provision was equitably tolled until March 13, 1996, less than one year prior to the filing of his action; Allstate is equitably estopped from asserting that the contractual limitations period expired more than one year prior to the commencement of this lawsuit; and, in granting the motion for summary adjudication of issues, the trial court improperly evaluated the evidence presented in support of his punitive damage claim by the clear-and-convincing standard of proof applicable at trial.
DISCUSSION
1. The trial court erred in granting Allstate’s motion for nonsuit on the ground that Basich’s tort claim was time barred.[5]
a. Standard of review.
A trial court may grant a nonsuit only when, disregarding conflicting evidence, viewing the evidence in the light most favorable to the plaintiff and indulging every legitimate inference that may be drawn from the evidence, it determines there is no substantial evidence to support a judgment in plaintiff’s favor. (Code Civ. Proc., § 581c; Carson v. Facilities Development Co. (1984) 36 Cal.3d 830, 838-839; Acme Galvanizing Co. v. Fireman’s Fund Ins. Co. (1990) 221 Cal.App.3d 170, 173-174.) In considering a motion for nonsuit on plaintiff’s opening statement, the trial court must accept as proved all of the facts counsel says he or she expects to prove and must indulge in all favorable inferences reasonably arising from those facts. (Smith v. Roach (1975) 53 Cal.App.3d 893, 897.) A nonsuit on an opening statement “may be granted ‘only where it is clear that counsel has undertaken to state all of the facts which he expects to prove, and it is plainly evident that the facts thus to be proved will not constitute a cause of action.’ [Citations.]” (Id. at pp. 897-898.)
In an
appeal from a judgment of nonsuit, the reviewing court is guided by the same
rule requiring evaluation of the evidence in the light most favorable to the
plaintiff. (Carson v. Facilities Development Co., supra, 36 Cal.3d at p. 839; Acme
Galvanizing Co. v. Fireman’s Fund Ins. Co., supra, 221 Cal.App.3d at p.
174.) “ ‘The
judgment of the trial court cannot be sustained unless interpreting the
evidence most favorably to plaintiff’s case and most strongly against the
defendant and resolving all presumptions, inferences and doubts in favor of the
plaintiff a judgment for the defendant is required as a matter of law.’ [Citations.] [¶] Although a judgment
of nonsuit must not be reversed if plaintiff’s proof raises nothing more than
speculation, suspicion, or conjecture, reversal is warranted if there is ‘some
substance to plaintiff’s evidence upon which reasonable
minds could differ . . . .’ [Citations.]” (Carson v. Facilities Development Co., supra, 36 Cal.3d at p. 839.)
Only the grounds specified by the moving party in support of its motion may be considered by the appellate court in reviewing a judgment of nonsuit. (Carson v. Facilities Development Co., supra, 36 Cal.3d at p. 839.)
b. The evidence viewed in the light most
favorable to plaintiff could support a finding of equitable estoppel that
precludes dismissal of the tort claim as untimely.
The Allstate insurance policy provides, as required by statute (Ins. Code, §§ 2070, 2071), that an insured has one year from the date of the loss to file an action against the insurer: “No suit or action may be brought against us unless there has been full compliance will all the terms of this policy. Any suit or action must be brought within one year after the loss.”
Any tort
or statutory cause of action based on allegations relating to the handling of a
claim or the manner in which it is processed is “an action on the policy”
subject to the policy limitations clause.
(Velasquez v. Truck Ins. Exchange
(1991) 1 Cal.App.4th 712, 720-722.) “A
bad faith action based on denial of a claim in the underlying policy is an
action on the policy. [Citation.]” (Id.
at p. 722.)
Basich’s
loss occurred on January 17, 1994, and his claim was paid in part and denied in
part on November 10, 1994. Since Basich
did not file his lawsuit until March 10, 1997, his action was barred by
the limitations clause, and nonsuit was proper, unless the limitations clause
was inapplicable due to principles of either equitable tolling or equitable
estoppel.
i. Application of principles of equitable tolling alone will not save Basich’s tort claim from the bar of the one-year contractual limitations period.
An
insurance policy’s one-year contractual limitations period is equitably
tolled while the insurer investigates a claim -- that is, from the time that
the insured notifies the carrier of the loss until the claim is formally denied
in writing. (Prudential-LMI Com. Insurance v. Superior Court (1990) 51 Cal.3d
674, 693 [hereafter “Prudential-LMI”].) Although a similar
period of equitable tolling is not initiated by a request for reconsideration
after the insurer has denied coverage (Singh
v. Allstate Ins. Co. (1998) 63 Cal.App.4th 135, 145), if the insurer’s
conduct after denying a claim expressly waives the one-year limit or induces
the policyholder to forbear from filing suit, the doctrines of waiver and
estoppel may be applicable to preclude reliance on the running of the one-year
limitations period during the time of reconsideration. (Ibid.)
Allstate
acknowledges that under Prudential-LMI,
the limitations period was tolled between January 18, 1994, when Harris first
gave Allstate notice of the earthquake claim, and November 10, 1994, when
Allstate sent a further payment and wrote that “your file is being closed . . .
.” Allstate additionally concedes that,
since it advised Basich that it was actively reexamining his claim, the period
from December 9, 1994 to March 1, 1996 must be also excluded from calculating
the one-year limitations period under principles of either equitable tolling or
equitable estoppel.
Allstate
nonetheless insists that nonsuit was properly granted because the one-year
limitations period was not tolled (a) during the 28 days between November 10,
1994 and December 9, 1994, and (b) after March 1, 1996, when Allstate wrote
Basich’s counsel that Allstate “will be closing our file and concluding our
handling of your earthquake claim at this time.” Since the lawsuit was not filed until March 10, 1997, Allstate
argues,
the undisputed facts establish that Basich’s tort claim was
barred by the one-year contractual limitations period.
The trial
court properly rejected Basich’s argument that equitable tolling continued
without interruption from January 18, 1994 through March 13, 1996
because Allstate did not formally and unequivocally deny his claim in either
its November 10, 1994 or March 1, 1996 letters. The November 10, 1994 letter expressly
states “your file is being closed with this [enclosed]
payment . . . .” To
be sure, the letter also stated, “if you have any questions concerning your
claim or discover additional earthquake damage that has not been addressed,
please contact me without delay.”
Virtually identical language was considered by the Court of Appeal in Singh v. Allstate Ins. Co., supra, 63
Cal.App.4th at p. 145, which rejected, as we do, the argument that the
willingness to look at new information somehow makes an otherwise unequivocal
denial of a claim tentative or conditional:
“The extension of a courtesy, to look at anything else that plaintiffs
might have to offer, did not render the denial equivocal.” (Ibid.)
The March
1, 1996 letter was equally unequivocal in advising Basich that Allstate’s
reconsideration of his earthquake claim was concluded. “We feel that in accordance with your
insurance contract all monies due have been paid, based on your contractor’s
estimate. We will be closing our file
and concluding our handling of your earthquake claim at this time. If in the course of repairs if any
additional damage is uncovered, please call us so we may aid your contractor,
in determining if it may be earthquake related.” Under the factual circumstances of this case, Allstate’s letter
is a sufficient “formal written notice that the[ ] claim had been denied” to
halt equitable tolling under Prudential-LMI. (Prudential-LMI,
supra, 51 Cal.3d at p. 680; Singh v.
Allstate Ins. Co., supra, 63 Cal.App.4th at p. 145.)[6]
ii. Basich may be able to establish that
Allstate is equitably estopped from asserting his tort claim is untimely.
Although Prudential-LMI’s equitable tolling
principle does not permit Basich to escape the bar of the policy’s limitations
clause, viewing the facts described in the opening statement by Basich’s
counsel in the light most favorable to the plaintiff, we are unable to conclude
that Allstate might not be equitably estopped from asserting that the limitations
period began to run prior to March 13, 1996.
“The
essence of an estoppel is that the party to be estopped has by false language
or conduct ‘led another to do that which he would not otherwise have done and
as a result thereof that he has suffered injury.’ [Citation.]” (State Compensation Ins. Fund v. Workers’
Comp. Appeals Bd. (1985) 40 Cal.3d 5, 16.)
It is “settled law” that conduct by an insurance company that induces
the policyholder not to file a prompt action can result in an estoppel. “[A]n insurer that leads its insured to
believe that an amicable adjustment of the claim will be made, thus delaying
the insured’s suit, will be estopped from asserting a limitation defense. [Citations.]” (Prudential-LMI, supra,
51 Cal.3d at p. 690; Singh v. Allstate
Ins. Co., supra, 63 Cal.App.4th at p. 144; Velasquez v. Truck Ins. Exchange, supra, 1 Cal.App.4th at p. 723.)
In support
of his claim of estoppel, Basich relies on language in Allstate’s letters to
his counsel of January 9, 1995, March 7, 1996 and June 29, 1996. In the January 9, 1995 letter, Allstate’s
file manager wrote “in response to your inquiry[[7]] regarding application of the one year limitation period
for filing a lawsuit concerning the referenced earthquake claim.” Allstate’s letter assured Basich not only
that “this one year time limit is not running at the present time,” but also,
after specifically referring to Prudential-LMI,
that “[o]nly when we have reached a final resolution to your claim does the one
year clock again run. The only time
that may have lapsed to date would be the
time from the earthquake until the claim was reported to Allstate.” (Emphasis added.)
On March
7, 1996, notwithstanding having advised Basich on March 1, 1996 that his file
was being closed “at this time,” the Allstate file examiner assured Basich that
the one year period was not running through “the date of this letter” and again
stated that the only time that had elapsed was between the date of the
earthquake and the date the loss was reported.
“Both your Allstate policy and California law provide you up to one year
to present and pursue a claim under your policy for damages to your home and
its contents. . . . This one year period did not run between the
time that you reported the claim to Allstate and the date of this letter
when Allstate provided you with its formal coverage position.” (Emphasis added.)
Finally, on June 29, 1996 Allstate responded to additional questions from Basich’s attorney about Allstate’s denial of the claim, declining the request for additional payments for loss of rental income. The letter emphasized that “Allstate’s file on this claim has been closed and will remain closed.” It continued, “You should be mindful that the policy contains a one-year limitations provisions [sic] which requires any suit to be brought within one year from the date of closure. That period ran from the date of the earthquake until the claim was reported to Allstate, and was tolled during the period the claim was being investigated. This claim was closed by Allstate on March 13, 1996, and the one-year limitations period commenced running as of that date.” (Emphasis added.)
Basich asserts that these three letters from responsible Allstate claims employees, read together, induced him to believe that he had one year from March 13, 1996 to file his contract and tort claims, that he and his counsel reasonably relied upon those representations and that Allstate is now estopped from asserting that the limitations period began to run at an earlier date.
The basis upon which the trial court disregarded Basich’s claim of estoppel in granting the motion for nonsuit is not apparent either from the hearing on the nonsuit motion itself or from the hearing on the earlier in limine motion. In its brief on appeal, however, Allstate presents two grounds for rejecting Basich’s assertion of an estoppel: (1) Basich did not plead estoppel in his original complaint or second amended complaint; and (2) as a matter of law there can be no estoppel in situations where the party asserting estoppel is represented by counsel. Neither argument is persuasive.
A. The
failure to plead estoppel as an affirmative bar to the policy’s limitation
clause does not justify the motion for nonsuit.
It is true that “[a]s a general rule a party who has an opportunity to plead an estoppel upon which his cause of action depends must do so.” (Fleishbein v. Western Auto S. Agency (1937) 19 Cal.App.2d 424, 427.) “[W]hen estoppel is an element of the cause of action it must be specially pled. [Citations.]” (Smith v. County of Santa Barbara (1988) 203 Cal.App.3d 1415, 1426.) However, it is equally true that a complaint “need not anticipate any defense or new matter affirmatively pled in the answer.” (Ibid.)
In Hanson v. Garden Grove Unified School Dist. (1982) 129 Cal.App.3d 942, the single case cited by Allstate in its appellate brief in support of this argument, although the court of appeal noted that the plaintiff had not pleaded estoppel as an affirmative bar to the defense of statute of limitations (id. at p. 948), the court further emphasized that plaintiff failed to raise the issue at trial or include any argument concerning it in his trial brief. (Id. at p. 949.) Accordingly, the court held that estoppel could not be raised for the first time on appeal. (Ibid.) In the case at bar, in contrast, Basich’s estoppel argument is not raised for the first time on appeal. It was extensively briefed and argued in the trial court and was properly considered by the trial court in ruling on the motion for nonsuit.
B. Basich’s
representation by counsel does not preclude a finding of equitable estoppel as
a matter of law.
The existence of an equitable estoppel is generally a question of fact, and the party asserting the estoppel has the burden of proving all the necessary elements. (State Compensation Ins. Fund v. Workers’ Comp. Appeals Bd., supra, 40 Cal.3d at p. 16.) “Estoppel requires, inter alia, a representation or concealment of material facts to a party ignorant, ‘actually and permissibly,’ of the truth. [Citation.]” (Life v. County of Los Angeles (1991) 227 Cal.App.3d 894, 902.) The plaintiff must be able to establish that he or she could reasonably rely on the defendant’s statements allegedly giving rise to the estoppel. (Ibid.)
A party represented by counsel is charged, through his or her attorney, with knowledge of the law in California on the statute of limitations. (E.g., Tubbs v. Southern California Rapid Transit Dist. (1967) 67 Cal.2d 671, 679; Jackson v. Andco Farms, Inc. (1982) 130 Cal.App.3d 475, 480.) Accordingly, in cases in which the plaintiff has been represented by counsel, the claim of equitable estoppel is frequently denied. “ ‘[W]here one acts with full knowledge of plain provisions of law, and their probable effect upon facts within his knowledge, especially where represented by counsel, he can neither claim (1) ignorance of the true facts or (2) reliance to his detriment upon conduct of the person claimed to be estopped, two of the essential elements of equitable estoppel.’ [Citation.]” (Cal. Cigarette Concessions v. City of L. A. (1960) 53 Cal.2d 865, 871; Tubbs v. Southern California Rapid Transit Dist., supra, 67 Cal.2d at p. 679; Jackson v. Andco Farms, Inc., supra, 130 Cal.App.3d at p. 480.)
As these cases demonstrate, a plaintiff’s representation by counsel may make it extremely difficult to establish facts sufficient to equitably estop the defendant from asserting the bar of the statute of limitations. In fact, in those instances in which the alleged misrepresentation relates solely to a legal matter, there is no estoppel “as a matter of law.” (Romero v. County of Santa Clara (1970) 3 Cal.App.3d 700, 705.) But there simply is no general rule that, as a matter of law, a party represented by counsel may never prevail on a claim of equitable estoppel regardless of the factual context.
In the case at bar, the claim of equitable estoppel relates to factual, not legal, misstatements in letters from Allstate to Basich and his counsel regarding the date on which Allstate concluded its claim investigation, denied the outstanding portions of Basich’s claim and closed its file. Allstate’s January 9, 1995 letter is reasonably susceptible of the interpretation that Allstate had been actively examining the claim during the period from November 10, 1994 to December 9, 1994. Allstate’s March 7, 1996 letter confirms that assertion and also plainly suggests that the claim file was not closed on March 1, 1996, as previously stated. Allstate’s June 29, 1996 letter is also fairly read as advising Basich that his file had not been closed on March 1, 1996, but rather on March 13, 1996.
Basich through his counsel is charged with knowledge of the significance of these dates with respect to the equitable tolling principles of Prudential-LMI. Ironically, however, it is precisely that knowledge that makes the arguable misstatements by Allstate so problematic. Having apparently been assured by Allstate that the factual predicate for equitable tolling continued unabated from January 18, 1994 through March 13, 1996, Basich and his counsel relied upon those statements and waited until March 10, 1997 to file his complaint.
Allstate argues that Basich acted “with full knowledge of plain provisions of law, and their probable effect upon facts within his knowledge . . .” (Cal. Cigarette Concessions v. City of L. A., supra, 53 Cal.2d at p. 871), and that there was no justifiable reliance on the statements in the letters now cited by Basich. Allstate at trial may be able to prove just that. However, viewing the evidence and all inferences in the light most favorable to the plaintiff, as we must, it was error for the trial court to conclude as a matter of law that Basich could not prove Allstate was equitably estopped from asserting the limitations period began to run prior to March 13, 1996. There is at least “some substance to plaintiff’s evidence upon which reasonable minds could differ.” (Carson v. Facilities Development Co., supra, 36 Cal.3d at p. 839.) Accordingly, the order granting the motion for nonsuit after opening statements must be reversed.
2. The
trial court properly granted the motion for summary adjudication of issues with
respect to punitive damages.
a. Allstate satisfied its initial burden of showing that Basich could not prove one of the elements of his punitive damages claim.
Basich contends that the motion for summary adjudication of issues was procedurally defective because Allstate failed to cite specifically to evidence in the record to support its argument that Basich could not prove that Allstate had acted with malice, oppression or fraud, an essential element of the claim for punitive damages. (Civ. Code, § 3294, subd. (a); see PPG Industries, Inc. v. Transamerica Ins. Co. (1999) 20 Cal.4th 310, 319.) Basich is simply wrong.
Although Allstate’s memorandum of points and authorities in support of its motion does not repeat specific citations to the record, Allstate submitted a comprehensive Statement of Undisputed Material Facts, which separately identified the punitive damages claim and each supporting material fact claimed to be without dispute with respect to that claim. The separate Statement of Undisputed Material Facts specifically identified the evidence in support of each undisputed fact with an appropriate citation to the record. Nothing more is required: Allstate fully complied with section 437c, subdivision (b) and California Rules of Court, rule 342(c) and (d), which enumerate the requirements for papers filed in support of a motion for summary judgment or summary adjudication of issues.
Substantively, Basich does not argue that Allstate failed to meet its initial burden of showing that its handling of Basich’s claim was not malicious, oppressive or fraudulent. Rather, Basich contends that the trial court improperly evaluated the evidence he submitted to rebut this showing by the clear-and-convincing evidence standard applicable at trial.
b. Where the plaintiff’s ultimate burden of proof will be by “clear and convincing” evidence, the higher standard of proof must be taken into account in ruling on a summary judgment motion.
If, in fact, the trial court viewed the evidence submitted by Basich in opposition to the motion for summary adjudication with the clear-and-convincing evidence standard in mind,[8] it did so properly. (Reader’s Digest Assn. v. Superior Court (1984) 37 Cal.3d 244, 252; see Stewart v. Truck Ins. Exchange (1993) 17 Cal.App.4th 468, 481-482; Looney v. Superior Court (1993) 16 Cal.App.4th 521, 539-540; Rowe v. Superior Court (1993) 15 Cal.App.4th 1711, 1724.)
In Reader’s Digest Assn. v. Superior Court, supra, 37 Cal.3d 244, the Supreme Court issued a writ of mandate directing the trial court to grant the defendants’ motion for summary judgment in a defamation action. Noting that public figure plaintiffs need to prove actual malice (now referred to as “constitutional malice”) by clear and convincing evidence at trial, the Supreme Court held that, when evaluating the evidence concerning this element of the tort on a defendant’s motion for summary judgment, the evidence and all inferences that reasonably can be drawn from it must meet the higher standard. (Id. at p. 252.) Summary judgment should be granted “unless it appears that actual malice may be proved at trial by clear and convincing evidence . . . .” (Ibid.)
There is no persuasive reason to limit the holding of Reader’s Digest to public figure defamation cases, rather than to apply it to any summary judgment motion involving a claim that must be proved by clear and convincing evidence, including a claim for punitive damages. Indeed, the reasoning of the case has been applied in a variety of contexts to hold that a trial court deciding whether to allow a plaintiff to proceed with a claim for punitive damages must assess the plaintiff’s evidence with reference to the clear-and-convincing evidentiary burden.
In Looney v. Superior Court, supra, 16 Cal.App.4th 521, the Court of Appeal held that in determining whether to permit a claim for punitive damages against a health care provider pursuant to section 425.13, subdivision (a),[9] the evidence presented must be evaluated with the clear-and-convincing evidentiary standard in mind. “In our view, this issue is substantially identical to the problem raised by a defendant’s motion for summary judgment in a case where the plaintiff’s ultimate burden of proof will be by ‘clear and convincing’ evidence. In such a case, the evidence and all inferences which can reasonably be drawn therefrom must meet that higher standard. [Citations.] . . . [¶] There is no reason for the result to be any different here. If petitioners are ever going to prevail on a punitive damage claim, they can only do so by establishing malice, oppression or fraud by clear and convincing evidence. Thus, any prima facie case must necessarily meet that standard. In ruling on the motion to amend the pleadings the trial court will have to be satisfied that petitioners’ evidentiary showing rises to that level.” (Looney v. Superior Court, supra, 16 Cal.App.4th at pp. 539-540.)
The Court of Appeal in Rowe v. Superior Court, supra, 15 Cal.App.4th at p. 1724, used identical reasoning to conclude that the evidence proffered under section 425.14[10] by a plaintiff seeking leave to assert a punitive damage claim against a religious corporation must be evaluated with reference to the higher, clear-and-convincing evidentiary standard. Similarly, in Stewart v. Truck Ins. Exchange, supra, 17 Cal.App.4th 468, the Court of Appeal held that a motion for a nonsuit on the issue of punitive damages must be determined in light of the applicable evidentiary standard. “Since January 1, 1988, a claim for punitive damages has required evidence which establishes by ‘clear and convincing evidence’ that the defendant has been ‘guilty of oppression, fraud, or malice.’ If a plaintiff is to recover on such a claim, it will be necessary that the evidence presented meet this higher evidentiary standard. . . . [¶] We see no reason why this standard should not apply here. . . . Thus, the trial court properly viewed the evidence presented by Stewart with that higher burden in mind.” (Id. at pp. 481-482, emphasis in original, fn. omitted; see also Shade Foods, Inc. v. Innovative Products Sales & Marketing, Inc. (2000) 78 Cal.App.4th 847, 891 [appellate review of record in support of jury award of punitive damages must be conducted in light of plaintiff’s clear-and-convincing evidence burden of proof].)
As in Reader’s Digest Assn. v. Superior Court, supra, 37 Cal.3d 244, on a motion for summary adjudication with respect to a punitive damages claim, the higher evidentiary standard applies. If the plaintiff is going to prevail on a punitive damage claim, he or she can only do so by establishing malice, oppression or fraud by clear and convincing evidence. Thus, any evidence submitted in response to a motion for summary adjudication must necessarily meet that standard.
Basich does not contend that his evidence was sufficient to defeat Allstate’s motion if that evidence is appropriately evaluated in light of the higher, clear-and-convincing-evidence standard. Accordingly, the trial court’s order granting the motion for summary adjudication on the issue of punitive damages is affirmed.
DISPOSITION
The judgment is reversed. The order granting Allstate’s motion for summary adjudication of issues concerning punitive damages is affirmed. The case is remanded
for further proceedings not inconsistent with this opinion. Each party is to bear his or its own costs on appeal.
PERLUSS,
J.*
We concur:
KLEIN,
P.J.
CROSKEY, J.