STATUTE OF LIMITATIONS
- Personal Property3 YearsCal. Civ. Proc. Code § 338(c)
- Personal Property/Personal Injury/Contractors/Architects (Patent Deficiency)4 YearsCal. Civ. Proc. Code § 337.1*
- Personal Injury/Death2 YearsCal. Civ. Proc. Code § 335.1
- Breach of Contract/Written4 YearsCal. Civ. Proc. Code § 337
- Breach of Contract/Oral2 YearsCal. Civ. Proc. Code § 339
- Breach of Contract/U.C.C./Goods4 YearsCal. U. Com. Code § 2725
- Statute of Repose/Products/Personal Injury2 YearsCal. Civ. Proc. Code § 335.1
- Statute of Repose/Products/Property Damage3 YearsCal. Civ. Proc. Code § 338(c)**
- Statute of Repose/Real Property (Latent Deficiency/Patent Deficiency)10/4 YearsCal. Civ. Proc. Code § 337.15 and § 337.1***
- Breach of Warranty/U.C.C.4 YearsCal. U. Com. Code § 2725
- Workers' Compensation - Action Against Third Party2 YearsCal. Labor Code § 3852
- Strict Product Liability/Personal Injury2 YearsCal. Civ. Proc. Code § 335.1
- Strict Product Liability/Property Damage3 YearsCal. Civ. Proc. Code § 338(c)(1)
Statute of Limitations Exceptions
*None directly applicable to product liability actions. Refer to § 338(c). Standard 3 year SOL will apply to product liability actions. California has no repose statute potentially ending the manufacturer’s liability at the end of an express or implied period of time designated as the “useful life” of the product.
**4 Years from substantial completion of construction or construction of improvement to real property arising out of a patent defect, 10 Years from substantial completion for a latent defect. This doesn’t apply to actions based on willful misconduct or fraudulent concealment. Ca. Civ. Proc. Code § 337.1, 337.15.
Contributory Negligence/Comparative Fault
Pure Comparative Fault. Damaged parties can recover even if 99% at fault. Recovery is reduced by the damaged party’s degree of fault. Plaintiff’s negligence will offset defendant’s liability. Li v. Yellow Cab, 119 Cal. Rptr. 858 (Cal. 1975); Diaz v. Carcamo, 253 P.3d 535 (Cal. 2011).
Med Pay/PIP Subrogation
Med Pay: No. Insurer entitled to reimbursement rights only, based on policy provisions authorizing same, provided that the insured has been made whole with regard to non-covered damages (not including attorneys’ fees). 21st Century Ins. Co. v. Superior Court (Quintana), 213 P.3d 972 (Cal. 2009). No direct subrogation allowed because assignment of personal injury actions is not allowed. No intervention allowed in Med Pay subrogation cases. Id. The two (2) year personal injury statute of limitations runs from the date of the insured’s accident. Cal. Civ. Proc. Code § 335.1 (2002). Three (3) year UM subrogation SOL runs from the date that payment was made. Cal. Ins. Code § 11580.2(g).
PIP: Coverage not applicable.
Automobile and Property: Pro-Rata. Cal. Code of Regs. tit. 10, § 2695.7(q). “Every insurer that makes a subrogation demand shall include in every demand first-party claimant’s deductible. Every insurer shall share subrogation recoveries on proportionate basis with first-party claimant, unless first-party claimant has otherwise recovered whole deductible amount. No insurer shall deduct legal or other expenses from recovery of deductible unless insurer has retained outside attorney or collection agency to collect that recovery. The deduction may only be for pro-rata share of allocated loss adjustment expense.”
Note: The plain meaning of this regulation is that an insurer seeking settlement from a tortfeasor must seek recovery of its insured’s deductible. It does not authorize an insured to recover a deductible in litigation without the insured being a party to the suit. Pacific Gas & Elec. Co. v. Superior Court, 50 Cal. Rptr.3d 199, 203 (Cal. App. 2006). The above section does not apply to disability and health insurance.
Deductible must be included in any subrogation demand.
Made Whole Doctrine
The Made Whole Doctrine has been viable in California since 1974. Travelers Indem. Co. v. Ingebretsen, 113 Cal. Rptr. 679 (Cal. App. 1974). In California, the rule generally precludes an insurer from recovering any third-party funds unless and until the insured has been made whole for the loss. Progressive West Ins. Co. v. Yolo County Superior Ct., 135 Cal.App.4th 263 (Cal. App. 2005); Barnes v. Independent Auto. Dealers of Cal., H & W Benefit Plan, 64 F.3d 1389 (9th Cir. 1995). The Doctrine usually applies only when there is no agreement to the contrary. Barnes, supra; Samura v. Kaiser Found. Health Plan, 17 Cal.App.4th 1284 (Cal. App. 1993).
The Made Whole Doctrine was extended to Med Pay subrogation in 2005. Progressive West, supra. An underinsured motorist carrier is entitled to reimbursement from the tortfeasor without regard to whether the insured has been made whole. Holcomb v. Hartford Cas. Ins. Co., 281 Cal. Rptr. 651 (Cal. App. 1991). On the other hand, an uninsured motorist carrier is not entitled to subrogation until the injured insured has been completely made whole. Security Nat’l Ins. Co. v. Hand, 31 Cal.App.3d 227 (Cal. App. 1973); United Pacific-Reliance Ins. Cos. v. Kelly, 140 Cal.App.3d 72 (Cal. App. 1983).
In California, the subrogation rights and reimbursement rights of a first-party Med Pay insurer fall within the rubric of subrogation, and thus both of those rights are limited by the Made Whole Doctrine. 21st Century Ins. Co. v. Superior Ct., 213 P.3d 972 (Cal. 2009). California courts recognize the Made Whole Doctrine when, typically due to underinsurance, the tortfeasor could not pay his or her “entire debt” to the insured.
The applicability of the Made Whole Doctrine generally depends on whether the insured has been completely compensated for all the elements of damages, not merely those for which the insurer has indemnified the insured. Allstate Ins. Co. v. Superior Ct., 151 Cal.App.4th 1512 (Cal. App. 2007) (writ granted by California Supreme Court on Sept. 25, 2007). Some jurisdictions have narrowly construed the made whole exception as referring only to an insured being fully compensated for covered losses. Ludwig v. Farm Bur. Mut. Ins. Co., 393 N.W.2d 143 (Iowa 1986). California holds that insurance companies are entitled to reimbursement of payments they made under a Med Pay policy provisions even though the insured has not been reimbursed all of his attorney’s fees. 21st Century Ins. Co. v. Superior Ct., supra. In other words, the Made Whole Doctrine does not include liability for all the attorney’s fees the insured must pay in order to recover economic damages (including medical expenses) from a third-party tortfeasor. Id.
Although California recognizes the Made Whole Doctrine, it does not apply it as a blanket rule. Chase v. National Indem. Co., 129 Cal.App.2d 853 (Cal. App. 1950); Sapiano v. Williamsburg Nat’l Ins. Co., 28 Cal.App.4th 533 (Cal. App. 1994); Chong v. State Farm, 428 F. Supp.2d 1136 (S.D. Cal. 2006), order vacated on reconsideration by, Chong v. State Farm Mut. Auto. Ins. Co., 2010 WL 2175842 (S.C. Cal. 2010). It does not apply in cases where the insurance policy conveys “all right of recovery against any party for loss to the extent that payment therefore is made by this company.” Ingebretsen, supra. It should be noted that in Ingebretsen, the insured and insurer executed a detailed subrogation agreement, after the loss and at the time the insurer paid the insured. The Court also noted that the insurer’s priority to the recovered funds was conditioned on it having cooperated and assisted in the recovery from the third party. Even when it is not possible to determine what portion of the recovery represents the damages paid by the insurance company, the “all right of recovery” language obviated the need for the insurer to prove what portion of the judgment was attributable to the covered loss. Id.
The requirements necessary to eliminate the application of the Made Whole Doctrine set forth in Ingebretsen are strictly applied in California. Where a policy’s subrogation language is general in nature and the insurer does not participate or cooperate with the insured in the third-party action, the insured retains the right of priority over any recovery. Sapiano, supra.
It is possible to contract around the Made Whole Doctrine. Samura v. Kaiser Found. Health Plan, Inc., 17 Cal.App.4th 1284 (Cal. App. 1993). There is authority that language in an insurance policy that grants the insurance company “all rights of recovery to the extent of its payment” overrides the common law Made Whole Doctrine. Barnes, supra; Progressive West. Ins. Co. v. Yolo County Superior Court, 135 Cal. App.4th 263 (Cal. App. 2005). If there is clear contractual language to the contrary, the insurer might be able to subrogate without the insured first being “made whole.” American Contractors Indem. Co. v. Saladino, 115 Cal.App.4th 1262 (Cal. App. 2004); Progressive West Ins. Co. v. Yolo County Superior Ct., 37 Cal.Rptr.3d 434 (Cal. App. 2005); Hodge v. Kirkpatrick Dev., Inc., 130 Cal.App.4th 540 (Cal. App. 2005). However, unlike other states, California adds one additional requirement in order to effectively negate the Made Whole Doctrine. In addition to having the right disclaimer policy language, the carrier must cooperate and assist the insured in the recovery effort. Sapiano, supra.
Although California allows the parties to an insurance contract to agree that the Made Whole Doctrine does not apply, the efficacy of such an agreement appears to only apply if the contract is sufficiently specific in this regard, and if the carrier cooperates and assists the insured in the recovery. The policy language must clearly and specifically indicate the parties’ intent to abrogate the Made Whole Doctrine. A provision in an automobile insurance policy stating that insurer “is entitled to all the rights of recovery that the insured person to whom payment was made has against another,” is not sufficient to accomplish this. Progressive West, supra. Any policy language intending to do so must clearly and specifically give the insurer a priority out of proceeds from the tortfeasor regardless whether the insured was first made whole. Policy language eliminating the Made Whole Doctrine must be specific, especially when subrogating auto claims. The only way to contract around the Made Whole Doctrine is with clear language stating that the insurer’s reimbursement rights are “first dollar” reimbursement rights. Id. Because generic subrogation language adds nothing to the right of equitable subrogation which arises by law independent of any policy language, the policy must provide that the insurer has a priority to payments made by the tortfeasor in order to overcome the Made Whole Doctrine. Id.; Chong v. State Farm Mutual, 428 F.Supp.2d 1136 (S.D. Cal. 2006).
The appellate court has held that the insured’s assignment to the insurance company of “all rights” “to the extent of payment” gave the insurance company priority to any recovery obtained by the insured, overcoming the Made Whole Doctrine. Id. However, later case law implies that in order to overcome the Made Whole Doctrine a carrier must assist with the prosecution of the third-party case and cannot just sit back without assisting. Sapiano, supra. One California court recently held that the policy language must clearly and specifically give the insurer a priority out of the proceeds from the tortfeasor regardless whether the insured was first made whole. Progressive West, supra. Clearly, it behooves insurers to carefully draft policy language and claims handlers to engage subrogation counsel in California. Id.
Notwithstanding the aforementioned ability of a policy to disclaim the Made Whole Doctrine, California has ameliorated this ability by putting the Doctrine of Unconscionability into play. Samura, supra. Therefore, the defense of “unconscionability” is available and may require the court to look at the individual facts of each case before it disallows the Made Whole Doctrine based on policy language.
If, after a loss, an insured and insurer executes a detailed subrogation agreement which specifically negates the Made Whole Doctrine, and there is some cooperation and assistance, the insurer should be able to subrogate without regard to whether or not the insured is made whole. Ingebretsen, supra. The Made Whole Doctrine applies equally to both subrogation and reimbursement and reimbursement causes of action. Progressive West, supra. California case law specifically says that carriers which “sit back without assisting” while the insured prosecutes the third party action will not be able to recover unless the insured is fully made whole. Samura, supra. This means that, where applicable, the Made Whole Doctrine prohibits a carrier from subrogation or reimbursement unless there is a surplus resulting from the insured’s receipt of both insurance benefits and tort damages. Hodge, supra.
A carrier that has knowledge of an insured’s tort action and decides not to participate in it may not seek reimbursement from a successful recovery unless the insured’s tort recovery exceeds his actual loss. Plut v. Fireman’s Fund Ins. Co., 135 Cal.App.4th 263 (Cal. App. 2005). In California, if the Made Whole Doctrine applies, it means that an insured must reimburse its nonparticipating insurer for the surplus, if any, remaining after the insured satisfies “his loss in full and his reasonable expenses incurred in the recovery.” Id. Therefore, when an insurer elects not to participate in the insured’s third party action against a tortfeasor, the insurer is entitled to subrogation only after the insured has been made whole.
Although the Made Whole Doctrine applies in the Med Pay context to reduce an insurer’s reimbursement right, it does not apply to the insured’s claim for attorney fees. In other words, the insured’s attorney’s fees are not included as part of the insured’s damages for purposes of determining whether the insured has been made whole in Med Pay reimbursement cases. 21st Century Ins. Co. v. Superior Court, 213 P.3d 972 (Cal. 2009).
In summary, the Made Whole Doctrine is alive and well in California. However, California courts recognize two exceptions to its applicability: (1) An insurer may disclaim the doctrine in an insurance contract by using clear and specific language that indicates the parties’ intent to permit the insurer to seek reimbursement even if the insured has not been made whole. Chandler v. State Farm Mut. Auto. Ins. Co., 596 F. Supp.2d 1314 (C.D. Cal. 2008) aff’d, 598 F.3d 1115 (9th Cir. 2010); Progressive West Ins. Co., supra; Sapiano, supra. The insurer must also cooperate with and assist the insured in the third party litigation; and (2) the Made Whole Doctrine does not apply if the insurer prosecutes the claim against the third-party tortfeasor. Chandler, supra; Ingebretsen, supra; Progressive West, supra. The insured must attempt to recover from the tortfeasor.
A carrier may pursue reimbursement and has no obligation to make the insured whole out of reimbursement proceeds unless and until the policyholder attempts and fails to recover from the tortfeasor. Chandler, supra.
Economic Loss Doctrine
Intermediate Rule. In California, economic losses are defined as “damages for inadequate value, costs of repair and replacement of the defective product or consequent loss of profits – without any claim of personal injury or damages to other property.” Frank M. Booth, Inc. v. Reynolds Metals Co., 754 F.Supp. 1441 (E.D. Cal. 1991). The line between physical injury to property and economic loss reflects the line of demarcation between tort theory and contract theory. Philadelphia Indem. Ins. Co. v. Simplex Grinnell, L.P., 2012 WL 1668979 (N.D. Cal., May 11, 2012). The negligent performance of a construction contract, without more, does not justify an award of tort damages. Aas v. Superior Court, 24 Cal.4th 627, 12 P.3d 1125 (2000).
The ELD bars recovery in tort for economic damages caused by a defective product with two exceptions: (1) the loss is accompanied by some form of personal injury or damage to property other than the defective product itself, or (2) a “special relationship” exists. Jimenez v. Superior Court, 59 P.3d 450 (Cal. 2002). The “other property” exception is found in KB Home v. Superior Court, 112 Cal.App.4th 1076 (Cal. App. 2003). This includes damage to one part of a product caused by another defective part. The injured “component” may be defined as “other property” if a jury determines that it is “a sufficiently discrete element of the larger product that it is not reasonable to expect its failure invariably to damage other portions of the finished product.” Aas v. Superior Court, 24 Cal.4th 627 (Cal. 2000). The court must first determine what the product at issue is; only then does the court find out whether the injury is to the product itself, for which recovery is barred by the ELD, or to property other than the defective product, for which plaintiffs may recover in tort. KB Home, supra. Nevertheless, in construction defect cases where property damage is alleged – e.g., a defect that causes harm to other portions of the property, as a result of a contractor’s negligence – the plaintiff has alleged a duty independent of any contract. Robinson Helicopter, 102 P.3d 268 (Cal. 2004) (citing Jimenez v. Superior Court, 58 P.3d 450 (Cal. 2002)). Thus, to the extent that plaintiffs are asserting property damage resulting from the negligence of the defendant, they can state a claim for negligence.
The second exception is if a “special relationship” exists. J’Aire v. Gregory, 24 Cal.3d 799 (Cal. 1979). When there is a special relationship between the plaintiff and defendant, recovery for damage to the product only can be had. Id. This special relationship exists where (a) the plaintiff is an intended beneficiary of the defendant’s obligations under a contract, (b) the plaintiff’s loss is foreseeable, (c) it is very likely that the plaintiff would suffer the loss from the defendant’s conduct, (d) there is a close connection between the plaintiff’s conduct and the defendant’s loss, (e) the defendant’s conduct is morally blameworthy, and (f) public policy favors liability on the defendant. Biankanja v. Irvine, 49 Cal.2d 647 (Cal. 1958). There is an exception for fraud or conversion, or where one party breaches the contract intentionally. Robinson Helicopter, Inc. v. Dana Corp., 102 P.3d 1256 (Cal. 2004).
Therefore, where the product purchaser’s expectations are frustrated because the product purchased is not functioning properly, the remedy is in contract alone, because the owner has suffered only “economic” losses. Robinson Helicopter Co., Inc. v. Dana Corp., supra. The ELD is followed, and requires a purchaser to recover in contract for purely economic loss due to disappointed expectations, unless he can demonstrate harm above and beyond a broken contractual promise.
California has avoided per se rules with regard to the “Sutton Rule” (see Oklahoma) and taken a more flexible case-by-case approach, holding that a tenant’s liability to the landlord’s insurer for negligently causing a fire depends on the intent and reasonable expectations of the parties to the lease as ascertained from the lease as a whole. Fire Ins. Exch. v. Hammond, 83 Cal. App.4th 313, 99 Cal. Rptr.2d 596, 602 (Cal. 2000).
California has generally held that a lessee is not responsible for damages where the lessor and lessee intend the lessor’s fire policy to be for their mutual benefit. Hammond, supra. The import of this rule is that an insurer may not seek subrogation against an insured’s lessee in such cases for a fire he or she negligently causes, even when the elements necessary for subrogation have otherwise been met.
California prohibits a subrogation action by the fire insurance company of a lessor against a lessee where a lessee’s negligence causes a fire, but the policy is intended to benefit the lessee. In such cases, the lessee is treated as an insured, despite the lessee not being a named insured on the policy. Because the insurance company could not seek subrogation against its own named insured (the lessor), it cannot seek subrogation against the lessee. Western Heritage Ins. Co. v. Frances Todd, Inc., 2019 WL 1011104 (Cal. App. 2019). This comes into play via the doctrine of superior equities, which prevents an insurer from recovering against a party whose equities are equal or superior to those of the insurer. State Farm Gen. Ins. Co. v. Wells Fargo Bank, N.A., 49 Cal. Rptr.3d 785 (Cal. App. 2006).
In Fred A. Chapin Lumber Co. v. Lumber Bargains, Inc., 189 Cal.App.2d 613 (Cal. App. 1061), a lessor’s policy was held to be for the mutual benefit of the lessor and lessee where the lease expressly required the lessor to maintain fire insurance. This rule was followed in Gordon v. J.C. Penney Co., 7 Cal.App.3d 280 (Cal. App. 1970). That court affirmed a judgment in favor of the lessee following a court trial, stating, “A fire insurance policy which does not cover fires caused or contributed to by the insured would be an oddity indeed. … Otherwise, few insured fire claims would be paid without controversy and most would require litigation.” For that reason, courts do not deem that a policy “for the benefit” of a lessee excludes coverage for fires caused by his negligence.
In Liberty Mutual Fire Ins. Co. v. Auto Spring Supply Co., 59 Cal.App.3d 860 (Cal. App. 1976), the lessee’s insurer was denied subrogation against the sub-lessee where the sub-lessee’s rent covered the premium on the lessee’s fire policy and proceeds of the policy were to be used to repair fire damages. The court held it was quite obvious from these provisions that the parties to the lease and the sublease all intended that the proceeds of [the insurance company’s] fire insurance policy, maintained by the lessee at [the sub-lessee’s] expense, were to constitute the protection of all parties to the lease documents against fire loss[.] This was the commercial expectation of these parties. Stated otherwise, under the facts of this case, we regard the subtenant … as an implied in law co-insured of [the lessee], absent an express agreement between them to the contrary.” (Id. at p. 865.)
A lessor can shift to the lessee the burden of insuring against the lessee’s negligence. However, where the lease agreement adverts to the possibility of fire and there is no clear language or other admissible evidence showing an agreement to the contrary, a lease agreement should be read to place on the lessor the burden of insuring the premises (as distinguished from the lessee’s personal property) against lessor and lessee negligence.” Parsons Mfg. Corp. v. Superior Court, 203 Cal. Rptr. 419 (Cal. App. 1984).
In Western Heritage Ins. Co. v. Frances Todd, Inc., 2019 WL 1011104 (Cal. App. 2019), the lease required the tenant to obtain only liability insurance and not fire insurance. The implication of this is that fire insurance would be carried by the lessor. Lessors were also prohibited from purchasing fire insurance under the covenants and conditions of the condominium association. Therefore, there was no way to protect themselves from fire. Finally, the yield-up clause in the lease provided that lessees agreed to “surrender the Premises at the termination of the tenancy herein created, in substantially the same condition as they were on the Commencement Date, reasonable wear and tear, casualty, and any alterations, improvements, and/or additions which are the property of the Lessor under Paragraph 7 excepted.” “Casualty” includes damage from fire. The clause is similar to the one in Parsons. Where the lease agreement “adverts to the possibility of fire and there is no clear language or other admissible evidence showing an agreement to the contrary, a lease agreement should be read to place on the lessor the burden of insuring the premises (as distinguished from the lessee’s personal property) against lessor and lessee negligence.” Therefore, the tenant was an implied co-insured of the landlord and subrogation against it was barred because there was no express agreement that tenant would obtain his own fire insurance.
First-Party Tort For Intentional Spoliation: The California Supreme Court has held that there is no tort for “the intentional spoliation of evidence by a party to the cause of action to which the spoliated evidence is relevant [i.e., first-party spoliation], in cases in which … the spoliation victim knows or should have known of the alleged spoliation before the trial or other decision on the merits of the underlying action.” Cedars-Sinai Med. Ctr. v. Superior Ct., 18 Cal.4th 1, 74 Cal.Rptr.2d 248, 258, 954 P.2d 511 (Cal. 1998).
Third-Party Tort For Intentional Spoliation: The California Supreme Court has also held that there was no cause of action for intentional spoliation of evidence by a third-party. Temple Cmty. Hosp. v. Sup. Ct., 20 Cal.4th 464, 84 Cal.Rptr.2d 852, 862, 976 P.2d 223 (Cal. 1999).
No Tort of Negligent Spoliation: The California Court of Appeals extended these decisions to preclude causes of action for negligent spoliation by first or third parties. Forbes v. County of San Bernardino, 101 Cal.App.4th 48, 123 Cal.Rptr.2d 721, 726-27 (Cal. 2002).
Sanctions: California recognizes the availability of standard non-tort remedies to punish and deter for the destruction of evidence. Cedars-Sinai Medical Center v. Superior Court, supra. The available remedies may include: (1) The evidentiary inference that the evidence which one party has destroyed or rendered unavailable was unfavorable to that party. California Evidence Code § 413 (evidence which one party has destroyed or rendered unavailable was unfavorable to that party); (2) Discovery sanctions under California Code of Civil Procedure § 2023; (3) Disciplinary action against the attorneys. Cal. Rules Prof. Conduct, Rule 5-220 and Cal. Bus. & Prof. Code §§ 6077 and 6106; and (4) Criminal penalties for destruction of evidence under California Penal Code § 135 (criminalizes the spoliation of evidence, which creates an effective deterrent against this wrongful conduct).
Post Judgment Tort of Spoliation: California courts have not addressed the issue whether a tort for intentional spoliation of evidence exists “in cases of first-party spoliation in which the spoliation victim neither knows nor should have known of the spoliation until after a decision on the merits of the underlying action.” Cedars-Sinai Med. Ctr., 74 Cal.Rptr.2d at 258 n. 4, 954 P.2d 511 (Cal. 1998). As a consequence, this court must decide this issue as it believes the California Supreme Court would do. HS Servs., Inc. v. Nationwide Mut. Ins. Co., 109 F.3d 642, 644 (9th Cir. 1997).
The Federal District Court in Central California concluded that the California Supreme Court would not recognize an intentional spoliation of evidence tort where the spoliation victim did not know nor should have known of the spoliation until after a decision on the merits of the underlying action. Roach v. Lee, 369 F.Supp.2d 1194, 1203 (C.D. Cal. 2005).
Willful Misconduct. Parents jointly and severally liable for willful misconduct causing injury, death or property damage. Liability generally imposed on parent when child has acted with “willful” misconduct; negligence of child is sufficient to impose liability on parents when child harms person or property while operating motor vehicle with parent’s permission. Government Code § 38772 provides that cities and counties can make child and parent liable for cost of abatement of nuisance due to graffiti. Education Code § 48904 makes parents liable for injury or death caused by willful act of child to any fellow pupil or school employee. Penal Code § 490.5 covers shoplifting. Cal. Civ. Code § 1714.1.
The limits of liability are: 1) Property: $25,000; 2) Medical, Dental, Hospital Costs: $25,000.00; and 3) Vandalism: $25,000 (Including Atty’s Fees)(Damage limitations will be adjusted every 2 years by the Judicial Council to reflect cost of living in California according to California Consumer Price Index. An insurer is not liable for more than $10,000 for conduct imputed to parent).
Discharge of Firearms. Parents liable if permitted child to have firearm or left it someplace accessible. Cal. Civ. Code § 1714.3.
The limits of liability are $30,000 for injury to or death of one person as a result of any one occurrence, and $60,000 for injury to or death of all persons as a result of any one such occurrence.
Minor Driving. Person verifying minor’s license application liable for driving of minor. Cal. Veh. Code § 17707.
Parents Civil Liability for Driving. Parents jointly and severally liable for negligent driving of child. Cal. Veh. Code § 17708.
The limits of liability for a Minor’s Driving are $15,000 per person for bodily injuries, $30,000 max per occurrence for bodily injuries, and $5,000 max for property damage.
Child must be under 18-years-old.
Modified Joint and Several Liability.
Joint and several liability for economic damages on negligence claims, otherwise several liability for non-economic damages. Cal. Civ. Code Ann. § 1431. Exceptions: Strict liability claims. Daly v. General Motors Corp., 575 P.2d 1162 (Cal. 1978).
California allows for contribution by statute. Cal. Civ. Proc. Code § 875 states:
- Where judgment rendered jointly against two or more defendants there is right of contribution.
- Contribution allowed only after one tortfeasor has discharged or extinguished the joint judgment or has paid more than his pro rata share. Contribution limited to the excess so paid over the pro rata share of contribution plaintiff and no contribution defendant owes contribution beyond his own pro rata share of the entire judgment.
- No contribution if intentional act.
- A liability carrier who has discharged the liability of a tortfeasor judgment debtor is subrogated to his right of contribution.
- No contribution if there is indemnity right.
Is called “Partial equitable indemnity.” Good faith settlement finding bars contribution against settling tortfeasor and provides an offset in the amount of the settlement to the subsequent liability of non-settlers. A settling defendant can recover equitable indemnity from a non-settling defendant to the extent the settling defendant has discharged a liability that the non-settling defendant should be responsible to pay. The right of contribution can be enforced in a separate lawsuit. Caterpillar Tractor Co. v. Teledyne Indus., Inc., 53 Cal. App.3d 693, 126 Cal. Rptr. 455 (Cal. Ct. App. 1975).
The statute of limitations is one (1) year from date the settlement is paid. Smith v. Parks Manor, 243 Cal. Rptr. 256 (Cal. App. 1987).
Suspension of Drivers' Licenses
Administrative Suspension: Any driver involved in an accident which results in property damage of $750 or more, bodily injury or death, must report the accident on a SR-1. Cal. Veh. Code § 16000. If the report reveals the driver was not in compliance with the mandatory insurance laws, the state will send out a notice to suspend that person’s driver’s license, and will suspend license thirty (30) days after the notice. Cal. Veh. Code § 16070.
Judgment: A party can obtain a judgment against the uninsured defendant and file a certified copy with the DMV indicating that the judgment debtor has failed to satisfy the judgment for a period of thirty (30) days. Cal. Veh. Code § 16370. The DMV will then suspend the driver’s license of the judgment debtor and it will remain suspended until (1) the debtor gives proof of financial responsibility, and (2) the judgment is satisfied. Cal. Veh. Code § 16371.
Contact Information: California Department of Motor Vehicles, ATTN: Civil Judgment, P.O. Box 942884, Mail Station J237, Sacramento, CA 94284-0884, (916) 657-7573, https://www.dmv.ca.gov/portal/dmv.
Applicable to contracts entered into after January 1, 2013. Neither public nor private owner can force subcontractor to indemnify or insure another party for that other party’s “active negligence or willful misconduct,” for defects in the project’s design provided to the subcontractor, or for claims arising outside the scope of the subcontractor’s work. (Exceptions: (1) private owner acting as contractor or supplying materials/equipment § 2782(c)(1), or (2) private owner performing improvement to sing-family dwelling § 2782(c)(3). Indemnity for sole negligence still applies to these two exceptions). List of inapplicable circumstances to which new § 2782.05(a) does not apply found in § 2782.05(b). § 2782(a) appears to narrow, but not completely prohibit circumstances under which subcontractor can be required to name a GC, CM, or another SC as additional insured. § 2782.5 also prevents indemnity of GC, CM, or other subcontractor for “active negligence.”
Diminution of Value
First Party: Depends on the policy language. Courts have held that, where a damaged auto was repaired to “its pre-accident safe, mechanical, and cosmetic condition,” an insurer’s obligation to repair to “like kind and quality” is discharged according to the insurance policy. A court will not rewrite an otherwise unambiguous limitation of collision coverage to provide for a risk not bargained for.
When carrier repairs car to its pre-accident condition, it’s not also required to pay for any loss of value to vehicle, which can occur after a seriously damaged vehicle is fully repaired. (Croskey, et al., Cal. Practice Guide: Insurance Litigation, supra, ¶ 6:2025, p. 6G-4.). “To hold [the insurer] liable for the automobile’s diminution in value… would render essentially meaningless its clear right to elect to repair rather than to pay the actual cash value of the vehicle at the time of loss.” Ray v. Farmers Ins. Exch., 200 Cal. App.3d 1411 (Cal. App. Dist. 3, 1988).
If a policy covers “damages for property damage for which an insured person is legally liable because of an accident.” “Property damage” is defined as “physical damage to tangible property, including destruction or loss of its use.” Although diminution in value is not itself a form of physical damage, it is an accepted way of measuring damage and, therefore, should be paid. Copelan v. Infinity Ins. Co., 2018 WL 2714588 (9th Cir. 2018).
An insurance policy which states that “…at [defendant’s] option” it may “pay for a loss less any depreciation” or, alternatively, “repair or replace any damaged or stolen property with like kind and quality less any depreciation” expressly excludes coverage for “any diminution in the value” If an insurer opts to repair a vehicle rather than declare it a loss and pay its pre-accident value, the insurer’s obligation to insured is discharged if those repairs return the car to its “pre-accident safe, mechanical, and cosmetic condition.” This does not require restoration to “pristine factory condition” or to its pre-accident market value. Foster v. Interinsurance Exchange, 2018 WL 1980943 (Cal. App. 2018).
Where insurance policy contains no provision requiring carrier to pursue insured’s diminished value claim or wait to assert its subro claim, there’s no bad faith or breach of contract. Insurer doesn’t need to consider diminished value in electing to repair vehicle. Carson v. Mercury Ins. Co., 210 Cal. App.4th 409 (Cal. App. 2012) (finding insurance company’s “failure to take into account vehicle’s depreciation in value when opting to repair vehicle cannot be deemed against public policy or covenant of good faith”). Copelan v. Infinity Ins. Co., 192 F. Supp.3d 1063 (C.D. Cal. 2016).
Third Party: The issue is confusing in California. While no court decisions regarding recovery allowed for diminution in value of a damaged vehicle in a third-party claim, the new jury instruction for auto property damage seems to allow a jury to award it. Recovery for third-party property damages is limited to the difference between the FMV of the vehicle before the loss and its value after the loss. Ray v. Farmers Ins. Exch., 200 Cal. App.3d 1411 (Cal. App. Dist. 3, 1988); Moran v. California Dep’t of Motor Vehicles, 139 Cal. App.4th 688 (Cal. App. Dist. 4, 2006).
However, the California Jury Instruction (CACI 3903J, 2017), reads in part as follows:
However, if you find that the [e.g., automobile] can be repaired, but after repairs it will be worth less than it was before the harm, the damages are (1) the difference between its value before the harm and its lesser value after the repairs have been made plus (2) the reasonable cost of making the repairs. The total amount awarded may not exceed the [e.g., automobile] value before the harm occurred.
All-Party Consent: California has very specific laws regulating the recording of oral and electronic communications. All parties must give their consent to be recorded. However, The California Supreme Court has ruled that if a caller in a one-party state records a conversation with someone in California, that one-party state caller is subject to the stricter of the laws and must have consent from all callers. Although California is a two-party state, it is also legal to record a conversation if an audible beep is included on the recorder and for the parties to hear. Cal. Penal Code § 632(a)-(d); Kearney v. Salomon Smith Barney Inc., 39 Cal.4th 95 (Cal. 2006); Kight v. CashCall, Inc., 200 Cal. App. 4th 1377 (2011); Cal. Pub. Util. Code Gen. Order 107-B(II)(A); Air Transp. Ass’n of Am. v. Pub. Utilities Comm’n of State of Cal., 833 F.2d 200 (9th Cir. 1987).
Although California courts allow for criminal restitution when they are the direct victim of the criminal conduct – i.e., fraud committed by the defendant directed at the insurance company – case law distinguishes these cases from when an insurance company simply reimburses their insured as a victim of criminal conduct: “Insurance companies that ‘suffer the consequences of crime only by reimbursing the crime-related losses of their policyholders [do] not reasonably fall within [the] definition [of direct victims].’” However, a workers’ compensation carrier is entitled to be reimbursed out of criminal restitution received by an employee if the carrier has paid workers’ compensation benefits. People v. Busser, 186 Cal. App.4th 1503, 1509, 113 Cal. Rptr.3d. 536, 540 (2010); Cal. Penal Code § 1202.4; People v. Johns, 2015 WL 3542355 (Cal. App. 2015).
Notwithstanding limitations on restitution, an insured entitled to restitution is still subject to whatever contractual reimbursement/subrogation rights the insurer may have. People v. Millard, 95 Cal. Rptr.3d 751 (Cal. App. 2009).
Health and Disability Insurance
Statute of Limitations: 2 Years. Cal. Civ. Proc. Code § 335.1.
Subrogation of Medical and Disability Benefits are allowed, but no direct subrogation rights against tortfeasor but a right of reimbursement from the insured’s settlement. Fifield Manor v. Finston, 54 Cal.2d 632, 354 P.2d 1073 (1960). Made-Whole and Common Fund apply. Allstate Ins. Co. v. Superior Court, 151 Cal.App.4th 1512 (Cal. App. 2007); But see, Cal Civ. Code § 3040; 21st Century Ins. Co. v. Superior Court, 47 Cal.4th 511 (2009).
Funeral Procession Traffic Laws
The only law California has regarding funeral processions prohibits anyone from disregarding any traffic signal or direction given by a peace officer in uniform authorized to escort a procession. Cal. Veh. Code § 2817.
Statute of Limitations: 2 Years. Cal. Labor Code § 3852.
Can Carrier Sue Third Party Directly: Yes, with notice by certified mail.
Recovery from UM/UIM Benefits: No.
Subrogation Against Medical Malpractice: No.
Subrogation Against Legal Malpractice: Undecided.
Recovery Allocation/Equitable Limitations: (1) Costs/Fees Based on Services by Both; (2) Carrier Reimbursed; and (3) Rest to Plaintiff.
Employer Contribution/Negligence: Proportional, only if verdict.
Attorney’s Fees/Costs: Apportion, if the carrier actively participates.
Future Credit: Yes, in the amount of the employee’s net recovery. A petition should be filed with the W.C.A.B.
Auto No-Fault: No.
Dog Bite Laws
Strict Liability on the dog owner where a dog bite occurs when victim is on public property or lawfully on private property. Cal. Civ. Code § 3342.
Employee Leasing Laws
In California, both the employee leasing firm and its client are considered to have made workers’ compensation insurance premium payments, and both are immune from a third-party suit, provided an employee leasing agreement has been executed and insurance coverage for the worker remained in effect throughout the length of his employment. Ann. Cal. Labor Code § 3602(d).
Condominium Waiver of Subrogation Laws
Condo associations are responsible for maintaining common areas. Unless otherwise provided by the condo declaration, each unit owner is responsible for maintaining their own interest. No waiver of subrogation requirement. Section 4775 currently states that unless otherwise provided in the covenants, conditions & restrictions (CC&R), a community association is responsible for repairing, replacing, or maintaining the common area, other than exclusive use common area. The homeowner of each separate interest is responsible for maintaining their separate interest (their unit or home) and any exclusive use appurtenant (attached or next to) their separate interest. Statute has addressed who is responsible for maintenance, repair, and replacement of the common area. “Exclusive use common area” is merely common area which an owner has the exclusive right to use. Unless otherwise provided in the declaration, the association is responsible for maintaining, repairing, and replacing the common area, the owner of each separate interest is responsible for maintaining, repairing, and replacing the separate interest, and the owner of the separate interest is responsible for maintaining the exclusive use common area appurtenant to the separate interest while the association is responsible for repairing and replacing the exclusive use common area. West’s Ann. Cal. Civ. Code § 4775.
Automobile Total Loss Thresholds
Total Loss Formula (See here for definition).
A vehicle is a total loss where the cost of repair exceeds the vehicle’s value prior to the repair of the vehicle.
“Total Loss” means either of the following:
(a) A vehicle, other than a non-repairable vehicle, that has been damaged to the extent the insurance company considers it uneconomical to repair, and is not repaired; or
(b) A vehicle determined to be uneconomical to repair, for which a total loss payment has been made by an insurer, whether or not the vehicle is subsequently repaired, if prior to or upon making the payment, the insurer obtains the agreement of the claimant to the amount of the total loss settlement, and informs the client that, pursuant to subdivision (a) or (b) of § 11515, the total loss settlement must be reported to the DMV, which will issue a salvage certificate for the vehicle.
California defines a salvaged vehicle as one that has been either totally destroyed or damaged beyond what the insurance company is willing to pay to fix it, so the owner never gets the vehicle repaired. Depending on its condition, one of several things may happen to the car.
The first of these is that the title is exchanged for a Salvage Certificate issued by the DMV. Cal. Veh. Code § 544 and Cal. Veh. Code § 11515. Martinez v. Enter. Rent-A-Car Co., 13 Cal. Rptr. 3d 857 (Cal. App. 2004).
Sudden Medical Emergencies While Driving
Doctrine of Imminent Peril. A person confronted with a sudden emergency is held to a lesser standard of care under the circumstances. A driver who is suddenly stricken by an illness, which he could not anticipate, while driving an automobile, which renders it impossible for him to control the car, is not negligent. Waters v. Pac. Coast Dairy, Ltd. Mut. Comp. Ins. Co., Intervener, 131 P.2d 588, 590 (1942); Hammontree v. Jenner, 97 Cal. Rptr. 739 (Ct. App. 1971).
A sudden mental illness does not preclude a driver from negligence. Bashi v. Wodarz, 53 Cal. Rptr.2d 635 (Cal. 1996).
State Sovereign Immunity And Tort Liability
Tort Claims Act: California Tort Claims Act.
Except as otherwise provided by statute, public entities are not liable for an injury, arising from an act or omission of the public entity or their employee. Cal. Gov’t Code § 815. Numerous immunities provided. Cal. Gov’t Code §§ 815 – 996.6 (1963). Public employee liable for injury to the same extent as a private person. Cal. Gov’t Code § 815.
Notice Deadlines: Personal injury/ property claim within six months after accrual of the cause of action. All other claims shall be presented within one year. Cal. Gov’t Code § 911.2. State Board of Control Gov’t Claims Branch, P.O. Box 3035 Sacramento, CA 95812-3035. Board must respond within 45 days. Then six months to file suit.
Claims/Actions Allowed: A public entity (e.g., state) is liable for injuries proximately caused by their employee’s acts or omissions except when that employee is immune from liability. Cal. Gov’t Code § 815.2. A public entity is liable for death or injury proximately caused by a negligent or wrongful act or omission in the operation of any motor vehicle by a public employee acting within the scope of his employment. Cal. Veh. Code § 17001.
Comments/Exceptions: A public employee is not liable for an injury resulting from his act or omission where the act or omission was the result of a discretionary act. Cal. Gov’t Code § 820.2. Public entities are not liable for injuries caused by misrepresentation. Cal. Gov’t Code § 818.8. Public entities are not liable for an injury caused by adopting or failing to adopt an enactment or by failing to enforce any law. Cal. Gov’t Code § 818.2.
Damage Caps: None. No punitive damages against the State. Cal. Gov’t Code § 818.
Recovery of Sales Tax After Vehicle Total Loss
First-Party Claims: Insurer must (1) offer a cash settlement based upon the actual cost of a “comparable auto” including all applicable taxes and other fees, or (2) offer a replacement comparable auto including all applicable taxes, license fees, and other fees. Cal. Code of Regs. Tit. 10 § 2695.8(B).
Pro-rata refund of Vehicle License Fee (VLF) portion of the registration fees (in lieu of property tax) is required when one (1) vehicle is stolen and not recovered within 60 days after police report, Cal. Rev. and Tax. Code § 10902; (2) total loss, Cal. Veh. Code § 11515 & Cal. Rev. and Tax. Code § 10902, or (3) vehicle completely stripped or burned.
When a carrier elects to repair the car to its pre-accident condition, it’s not required to pay for any loss of value to the vehicle, which can occur after a seriously damaged vehicle is fully repaired. Carson v. Mercury Ins. Co., 148 Cal. Rptr. 3d 518 (Cal. App. 2012).
Third-Party Claims: Third-party total loss claims are evaluated in the same way as first-party claims. Cal. Code of Regs. Tit. 10 § 2695.8(B)(5).
Damage to Property Without Market Value
Service Value: “[t]he ‘cost to … replace the property … destroyed’ is very simply the replacement cost, i.e., that which must be expended to replace, without regard to depreciation. Further discussion is unnecessary.” Pacific Gas and Electric Co. v. Alexander, 90 Cal. App.3d 253 (Cal. Ct. App. 1979).
Intrinsic Value: “For items with no market value, plaintiffs are entitled to recover the rationally determined value of those items.” Robinson v. U.S., 175 F. Supp.2d 1215 (E.D. Cal. 2001).
Sentimental Value: “Testimony regarding the sentimental value of the property or any speculative valuations of the property must necessarily be excluded.” Robinson v. U.S., 175 F. Supp.2d 1215 (E.D. Cal. 2001).
Muncipal/County/Local Governmental Immunity and Tort Liability
California Tort Claims: Public entity liable if the act or omission would, apart from this section, have given rise to a cause of action against that employee. Cal. Gov’t Code § 815.2. Numerous immunities provided. Cal. Gov’t Code §§ 815 – 996.6 (1963). A public entity may sue and be sued. Cal. Gov’t Code § 945. Public employee liable for injury to the same extent as a private person. Cal. Gov’t Code § 815.
Notice Deadlines: Personal injury/property claim within six (6) months after accrual of the cause of action. All other claims shall be presented within one (1) year. Cal. Gov’t Code § 911.2. Board must respond within 45 days. Then six (6) months to file suit. “Substantial compliance” may be found even if deficiencies. See Cal. Gov’t Code §§ 910 and 915 for claim filing requirements. See §§ 911.4 to 912.2 re: leave to file late claims.
Claims/Actions Allowed: A public entity includes city, county or political subdivision. Cal. Gov’t Code § 811.2. Public entity is liable for injuries proximately caused by their employee’s acts or omissions except when that employee is immune from liability. Cal. Gov’t Code § 815.2. A public entity is liable for death or injury proximately caused by a negligent or wrongful act or omission in the operation of any motor vehicle by a public employee acting within the scope of his employment. Cal. Veh. Code § 17001.
Comments/Exceptions: A public employee is not liable for an injury resulting from his act or omission where the act or omission was the result of a discretionary act. Cal. Gov’t Code § 820.2. Public entities are not liable for injuries caused by misrepresentation. Cal. Gov’t Code § 818.8. Public entities are not liable for an injury caused by adopting or failing to adopt an enactment or by failing to enforce any law. Cal. Gov’t Code § 818.2.
Damage Caps: None. No punitive damages against the State. Cal. Gov’t Code § 818.
No Pay, No Play Laws
Rule: An injured person cannot recover non-economic damages if that person was under the influence at the time of the accident and was convicted of that offense, the injured driver’s vehicle was not insured, or the injured driver cannot establish financial responsibility as required by the state. However, if the uninsured driver was injured by another driver that was under the influence and convicted of that offense, then that uninsured driver may recover non-economic losses.
Authority: Cal. Civ. Proc. Code § 3333.4
Laws Regarding Using Cell Phones/Headphones/Texting While Driving
Cell Phone/Texting: A person shall not drive a motor vehicle while using a wireless phone unless that phone is specifically designed and configured to allow hands-free listening and talking, and is used in that manner while driving, except for emergency purposes or for emergency services professionals while in the course/scope of their duties. Cal. Veh. Code § 23123.
A person shall not drive a motor vehicle while using an electronic wireless communication device to write, send, or read a text-based communication, unless it is voice operated and hands-free. Cal. Veh. Code § 23123.5.
Drivers under the age of 18 shall not drive a motor vehicle while using a wireless phone, even if it is hands-free. Cal. Veh. Code § 23124
Other Prohibitions: A person may not wear a headset or earplugs in both ears while operating a motor vehicle. Exceptions include persons using special construction equipment or equipment for maintaining highways, person operating refuse collection equipment, hearing aids for hard of hearing, and using earplugs to attenuate injurious noise levels. Cal. Veh. Code § 27400.
Admissibility of Expert Testimony
Admissibility Standards: Frye
Case/Statutory Law: People v. Leahy, 882 P.2d 321 (Cal. 1994).
Workers’ Compensation Claims by Undocumented Employees
Statute: The term “employee” expressly includes “aliens.” Cal. Lab. Code § 3351.
Case Law: Farmer Brothers Coffee v. Ruiz, 133 Cal. App. 533 (Cal. App. Ct. 2005).
Comments/Explanation/Other: There is no evidence that the legislature intended “unlawfully employed” to have a complex meaning or to incorporate federal immigration law. Only if you are proved to not be an employee can a person not recover for workers’ compensation.
Product Liability Law
Statute of Limitations/Repose: 2 years for personal injury and wrongful death. Cal. Civ. Proc. Code § 335.1. Discovery Rule applies. Statute of Repose is 4/10 years. Cal. Civ. Proc. Code § 337.15.
Liability Standards: Negligence, Strict Liability, Consumer Expectation, Warranty, Other.
Fault Allocations: Pure Comparative.
Non-Economic Caps/Limits On Actual Damages: Yes.
Punitive Y/N and Limits: Yes.
Heeding Presumption?: No. Huitt v. Southern California Gas Co., 116 Cal. Rptr.3d 453, 467-68 (Cal. App. 2010).
Innocent Seller Statute: No.
Joint and Several Liability: Yes, for economic damages. Cal. Civ. Code § 1431.2.
Available Defenses: Assumption of Risk; Misuse; Government Contractor Defense; Alteration; Learned Intermediary; Inherently Unsafe Products; State of Art; Presumption; Compliance With Government Standards; Seatbelts; Alcohol/Drugs; Sophisticated User.
Restatement 2nd or 3rd?: Both.
Imputing Contributory Negligence of Driver to Vehicle Owner
Imputed Contributory Negligence Law: Contributory negligence of the driver of a vehicle is not ordinarily imputable to his passenger or guest; unless the parties are engaged in a common or joint enterprise, contributory negligence of one will not bar recovery by the other. Pope v. Halpern, 193 Cal. 168, 223 P. 470 (1924).
In 1967, § 17150 was amended to remove the words “and the negligence of such person shall be imputed to the owner for all purposes of civil damages.” This reinstated the common law rule that contributory negligence of a bailee of a vehicle is not imputed to the owner of the vehicle in action against third-party tortfeasor to recover for damages to vehicle. Hertz Corp. v. Pippin, 113 Cal. Rptr. 698, 700 (Cal. App. 1974).
Vicarious Liability/Family Purpose Doctrine: Every owner of a motor vehicle is liable for injury or damage caused by negligent operation of vehicle by any person using a vehicle with permission, express or implied, of the owner. California Vehicle Code § 17150. Limited to $15,000/$30,000/$5,000. California Vehicle Code § 17150.
No Family Purpose Doctrine. Spence v. Fisher, 193 P. 255 (Cal. 1920).
Sponsor Liability for Minor’s Driving: California Vehicle Code § 17707: Person verifying minor’s license application liable for driving of minor.
California Vehicle Code § 17708: Parents jointly and severally liable for negligent driving of child.
Owner Liability For Stolen Vehicle
Key In The Ignition Statutes: N/A
Common Law Rule: A vehicle owner may be liable for injuries caused by a thief if “special circumstances” exist. The “special circumstances” must create a duty owed by the vehicle owner to third persons in regard to the manner in which the vehicle is secured when not in use. The question becomes one of foreseeability and whether the foreseeable risk of harm was unreasonable. Carrera v. Maurice J. Sopp & Son, 177 Cal. App.4th 366, 378-381, 99 Cal. Rptr.3d 268 (2nd Dist. 2009); Kiick v. Levias, 113 Cal. App.3d 399, 403, 169 Cal. Rptr. 859, 861 (Ct. App. 1980); Archer v. Sybert, 167 Cal.App.3d 722 (Cal. Ct. App. 1985).
An insurer has no right to subrogation against its own insured for losses or liability for which the insured is covered under the policy. Truck Ins. Exch. v. County of Los Angeles, 95 Cal. App.4th 13, 115 Cal. Rptr.2d 179 (Cal. Ct. App. 2002). If the subrogee is not insured for the loss that occurs, the insurer can still seek subrogation and the ASR does not apply. Id. If a claimant and a tortfeasor are insured by the same policy, the insurer cannot subrogate against the tortfeasor for the insurer’s payment for the loss, because doing so would mean in effect that the insured would be covering his own loss, despite the insurer’s having accepted premiums to do so. Longoria v. Hengehold Motor Co., 191 Cal. Rptr. 439 (Cal. Ct. App 1983) (Subrogation barred where husband and wife who shared policy collided while driving separate vehicles). With regard to equitable subrogation against an insured, if the policy does not cover the insured for a particular loss or liability, it would neither undermine the insured’s coverage nor be inequitable to impose the loss or liability on the insured if the insured caused or was otherwise responsible for the loss or liability. McKinley v. XL Specialty Ins. Co., 33 Cal.Rptr.3d 98 (Cal. Ct. App. 2005). The anti-subrogation rule bars an insurer’s subrogation claims against its own insured for a claim arising from the very risk for which the insured was covered. Romero v. S. Schwab Company, Inc., 2018 WL 31261111 (S.D. Cal. 2018); Pennsylvania General Ins. Co. v. Austin Powder Co., 502 N.E.2d 982 (N.Y. 1986).
If an insurer insures both the tortfeasor and victim under separate policies, the ASR is triggered when the insurer attempts to recover from the tortfeasor for losses paid to the victim from the same incident. Nat’l Union Fire Ins. Co. of Pitt., Pa. v. Engineering-Science, Inc., 673 F. Supp. 380 (N.D. Cal. 1987) (Subrogation barred where insurer insured contractor under builder’s risk policy and engineering firm under errors and omissions policy which provided coverage for the same loss). However, in White v. Allstate Ins. Co., 1996 WL 601476 (9th Cir. 1996) (unpublished), the Ninth Circuit, applying California law, found that subrogation was permissible against a painter, whom Allstate covered under an auto insurance policy, when the painter negligently burned down a home that Allstate covered under a homeowner’s policy.
Use of Non-Original Equipment Manufacturer (OEM) Aftermarket Crash Parts in Repair of Damaged Vehicles
Authority: Cal. Bus. & Prof. Code §§ 9875 to 9875.2; 10 CA A.D.C. § 2695.8.
Summary: Insurers are prohibited from requiring the use of aftermarket parts when repairing a damaged vehicle, unless use of the aftermarket part is disclosed to the policyholder prior to repair. Any parts used on the vehicle must have their manufacturer readily identifiable from some sort of marking on the part. This mark should remain visible after installation if at all practicable. The written estimate must notify the insured of who manufactured the non-OEM parts and that the part manufacturer warrants the non-OEM parts, not the auto manufacturer.