McNeill v. McCann CA4/1

Filed 11/6/14 McNeill v. McCann CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

J. MARK MCNEILL, D064842

Plaintiffs and Appellants,

v. (Super. Ct. Nos. 37-2008-93080A;
37-2009-00060197-CU-PO-CTL)
RANDY MCCANN,

Defendant and Respondent.

APPEAL from a judgment of the Superior Court of San Diego County, Richard

E.L. Strauss, Judge. Affirmed.

William J. Brown III and John T. Richards for Plaintiffs and Appellants.

Law Offices of Gregory J. Hout and Gregory J. Hout for Defendant and

Respondent.

Owners J. Mark McNeill and his coplaintiffs (collectively Owners) owned certain

residential units destroyed by a massive wildfire and joined a lawsuit against numerous

defendants allegedly responsible for the destruction of these and other properties. As

additional claims specific to Owners, they alleged that, in connection with the rebuilding
of their units, the residential complex's Homeowners Association (HOA) and its Board of

Directors, in conjunction with the HOA's casualty insurer (State Farm General Insurance

Company) (Insurer), and the company hired by the HOA to rebuild their units (R&M

Construction, Inc.) (R&M), conspired amongst themselves to reap economic profits at

Owners' expense by agreeing to rebuild the destroyed units to a lesser standard than

Owners should have received under Insurer's policy.

The present appeal is limited to the judgment entered in favor of Randy McCann,

a shareholder in and President of R & M. McCann was named by Owners as one of the

defendants because he was allegedly one of the principal conspirators. McCann moved

for summary judgment, arguing there was no triable issue of material fact on whether he

conspired with the HOA to breach the HOA's fiduciary duties to Owners as alleged in

Owners' 23rd cause of action, nor was there any triable issue of material fact on whether

he conspired with the HOA and/or Insurer to defraud Owners as alleged in Owners' 20th

cause of action. The trial court agreed, and entered summary judgment in favor of

McCann. Owners timely appealed and challenge the rulings in McCann's favor as to

those causes of action.1

1 Owners' third amended complaint also alleged a claim against McCann for
"Violation of the Unruh Act," and the court also entered summary judgment in McCann's
favor on that claim, but Owners do not challenge that ruling. Additionally, one week
before the hearing on McCann's summary judgment motion, Owners requested leave to
file a fourth amended complaint that added claims asserting breach of contract (Owners'
29th cause of action) and negligence (Owners' 28th cause of action), apparently based on
the allegations that R&M negligently constructed the contracted-for improvements. The
court also granted McCann's individual motion for summary judgment as to those claims
because there was no allegation or evidence supporting McCann's individual liability for
2
 I

FACTUAL AND PROCEDURAL BACKGROUND2

In 2007, the Witch Creek Fire damaged several units in the residential complex

governed by the HOA. The HOA had an insurance policy with Insurer covering the

units, and the HOA contacted Insurer to report the claim. Insurer appointed an adjuster

for the claim, and Insurer prepared a room-by-room "scope of work." Insurer told the

HOA that it was up to the HOA to hire a contractor, but did not tell the HOA which

contractors to contact for bids.

After the HOA received Insurer's scope of work, it contacted several contractors,

including R&M, and forwarded Insurer's scope of work and solicited bids from the

contractors on that scope of work. R&M calculated a price for each item identified on

Insurer's scope of work and submitted a bid to the HOA. R&M was ultimately retained

by the HOA to perform the scope of work identified by Insurer under a work

authorization contract between the HOA and R&M. After work commenced, R&M and

the HOA agreed to several modifications to the work authorization contract, in the form

those claims under alter ego principles. Owners' brief on appeal contains no effort to
challenge the rulings in McCann's favor on Owners' 28th and 29th causes of action, and
we therefore do not further consider the propriety of those rulings.

2 Our factual background, drawn from the papers filed in support of and in
opposition to the motion for summary judgment, is stated most favorably to Owners (LPP
Mortgage, Ltd. v. Bizar (2005) 126 Cal.App.4th 773, 775-776), but is limited to evidence
that is competent and admissible, and disregards allegations that involve speculation,
conjecture, imagination or guess work, and ignores cryptic, broadly phrased, and
conclusory assertions or mere possibilities. (Brown v. Ransweiler (2009) 171
Cal.App.4th 516, 525.)
3
of addenda and change orders, and R&M ultimately completed all of the work required

by the work authorization contract and its addenda and change orders, and the HOA

accepted R&M's work.3

During the course of R&M's work in rebuilding their units, the individual

plaintiffs asked R&M for the price to install certain upgrades (in countertops, lighting,

cabinetry, flooring, etc.) for which the Insurer would not pay under the policy (the

upgrade work). R&M submitted prices and the plaintiffs contracted with R&M to pay

many of the additional costs associated with their requested upgrade work. R&M

completed the additional upgrade work and the plaintiffs paid R&M in accordance with

the contracts for the upgrade work. The plaintiffs expressed anger that Insurer refused to

pay for the upgrade work.

B. The Claims Against McCann

Owners' "conspiracy to defraud" claim alleged that Insurer, the HOA and its Board

of Directors (and particularly the HOA's President, Mr. Boyer), R&M and McCann

3 We acknowledge that, in the proceedings below, Owners purported to list as
"disputed" nearly every fact stated by McCann in support of his motion for summary
judgment. However, our review of the papers filed in opposition to McCann's summary
judgment motion reveal that almost all of Owners' "disputes" relied on allegations or
contentions and contain little or no evidentiary basis for disputing the stated fact. For
example, in response to McCann's evidence that R&M and the HOA agreed to several
modifications to the work authorization contract, Owners stated this was disputed
because "Plaintiffs do not trust Defendants, especially Randy McCann, who has lied
repeatedly," and then cite several declarations explaining why the declarants mistrusted
McCann and the HOA, but Owners' response was devoid of evidence raising a triable
issue of fact on whether R&M and the HOA agreed to several modifications to the work
authorization contract. Because Owners' opposition to McCann's summary judgment
motion is largely devoid of admissible evidence on the material facts, we limit our
analysis to whether the facts presented by Owners precluded summary judgment.
4
conspired to defraud Owners through a scheme to minimize the amount paid by Insurer to

rebuild the units. The purported scheme involved the agreement among these

conspirators that (1) Insurer would use a scope of repair less than required under the

insurance policy, (2) the HOA would select Insurer's "preferred vendor" (R&M) to

perform the work using R&M's "lowball" pricing for the scope of repair work, (3)

Owners would be forced to pay R&M for work that should have been paid for by the

Insurer by characterizing such work as additional upgrade work for which the Insurer

would not pay, and (4) Boyer would conceal that Insurer's scope of repair was less than

required under the insurance policy to enrich Boyer (presumably through some form of

kickbacks), Insurer (through lower-than-required payouts under the policy) and R&M.4

Owners' "conspiracy to breach fiduciary duties" claim rested on parallel

allegations. Owners alleged a claim for breach of fiduciary duty against Boyer and other

HOA board members alleging, among other things, that Boyer and the HOA (1) falsely

told Owners the insurance policy provided coverage to rebuild the units the way they had

been built in 1984 knowing this was an improper standard of repair, (2) chose R&M to

handle the reconstruction because Boyer and the HOA knew R&M was Insurer's

preferred vendor and "totally in [Insurer's] pocket," (3) allowed R&M to act as a "public

4 Owners' complaint was oblique on precisely how R&M was "enriched" by the
scheme. It appears that, had Insurer paid for the level of repairs Owners claim should
have been paid under the insurance policy, R&M would have garnered the same amounts
and only the source of the payments would have changed. Accordingly, we construe
Owners' allegation to mean R&M was enriched because, had R&M not been a captive
contractor for Insurer that would conspire with Boyer and Insurer to minimize Insurer's
payout, R&M would not have been selected by the HOA to perform the work at all.
5
adjuster" to negotiate the claim with Insurer, and (4) aided R&M to reap benefits from

the upgrade by confirming that outside contractors would not be allowed to perform the

work under R&M's WRAP policy until R&M's work was completed. All of these

breaches of fiduciary duty, along with dozens of other alleged breaches, were part of a

scheme to "save [Insurer] money and enrich the HOA, R&M and . . . Boyer, at Plaintiffs'

expense." Owners' claim against McCann was that he conspired to "aid and abet" Boyer

and the HOA in breaching their fiduciary duties to Owners.

C. The Summary Judgment Motion

McCann's motion for summary judgment proffered facts5 showing (1) the Insurer

initially determined the scope of work; (2) the HOA provided that scope to several

contractors, including R&M, and solicited bids from those contractors; (3) R&M has

never been a "preferred" vendor for or "hired gun" of Insurer; (4) neither R&M nor

McCann ever conspired with Insurer or Boyer to minimize Insurer's scope of work or

payout for the reconstruction; (5) R&M's prices were not a "lowball" bid but were instead

reasonable and customary for the work specified in the scope of work; (6) R&M did not

act as a public adjuster for HOA and, instead, the scope of work was determined by

Insurer's adjuster and R&M simply priced the items identified in that scope of work; (7)

R&M never gave any remuneration or anything to Boyer; and (8) neither R&M nor

5 On appeal, Owners argue many of those facts should have been disregarded
because the facts were averred to in McCann's declaration but he was unable to recall
those facts during his deposition. However, Owners apparently did not object below to
McCann's declaration, which waives any claim of error as to its admissibility. (Code Civ.
Proc., § 437c, subd. (b)(5).)
6
McCann ever conspired with Boyer, the HOA, or anyone else, to do anything other than

bid on the project as defined by Insurer and requested by the HOA, and to enter into the

contract and complete the reconstruction required by the contract.

Owners argued their declarations raised triable issues of fact as to their claims

against McCann and R&M. However, Owners' declarations showed only that (1) Boyer

and McCann were acquainted because they were members of the same golf club6; (2)

Owners were not provided with copies of the work authorization contract between R&M

and the HOA; (3) the HOA did not permit Owners to be involved in selecting and

contracting with R&M; (4) Insurer did not communicate with Owners; (5) Insurer did not

pay for all of the reconstruction work to which Owners believed they were entitled under

the policy; (6) Owners would not have paid for the additional upgrade work had Insurer

paid for the work to which Owners believed they were entitled; (6) R&M placed limits on

Owners' ability to tour the construction site while R&M and its subcontractors were in

the process of completing their work; and (7) Insurer, the HOA and R&M would not

allow Owners to bring in outside contractors to do construction work on the property

until R&M had completed the insured work.

The court granted McCann's motion for summary judgment. Owners timely

appealed.

6 Owners disputed "the extent of [the] connection [between Boyer and McCann],"
but cited no evidence supporting their claim that Boyer and McCann had a closer
relationship.
7
 II

SUMMARY JUDGMENT PRINCIPLES

The purpose of summary judgment is to penetrate through pleadings to ascertain,

by means of affidavits, the presence or absence of triable issues of material fact. (Molko

v. Holy Spirit Assn. (1988) 46 Cal.3d 1092, 1107.) The trial judge determines whether

triable issues exist by examining the affidavits and evidence, including any reasonable

inferences that may be drawn from the facts. (People v. Rath Packing Co. (1974) 44

Cal.App.3d 56, 61-64.) In examining the affidavits, those of the moving party are strictly

construed and those of the opposing party liberally construed. Any doubts as to the

propriety of granting the motion are resolved in favor of the party resisting the motion.

(Stationers Corp. v. Dun & Bradstreet, Inc. (1965) 62 Cal.2d 412, 417.)

When the motion for summary judgment is supported by affidavits sufficient to

sustain the motion, however, the burden shifts to the party opposing the motion to show

that triable issues exist. (Chern v. Bank of America (1976) 15 Cal.3d 866, 873.) A party

cannot avoid summary judgment based on mere speculation and conjecture (Pena v. W.

H. Douthitt Steel & Supply Co. (1986) 179 Cal.App.3d 924, 931), but instead must

produce admissible evidence raising a triable issue of fact. (Craig Corp. v. County of Los

Angeles (1975) 51 Cal.App.3d 909, 915.)

A defendant moving for summary judgment can satisfy his or her burden of

showing a prima facie entitlement to summary judgment in at least two ways. As

explained by the court in Brantley v. Pisaro (1996) 42 Cal.App.4th 1591, 1598:

8
 "[A] moving defendant now has two means by which to shift the
burden of proof under subdivision (o)(2) of section 437c to the
plaintiff to produce evidence creating a triable issue of fact. The
defendant may rely upon factually insufficient discovery responses
by the plaintiff to show that the plaintiff cannot establish an essential
element of the cause of action sued upon. [Citation.] Alternatively,
the defendant may utilize the tried and true technique of negating
('disproving') an essential element of the plaintiff's cause of action."

To evaluate whether a moving party is entitled to summary judgment, the trial

court must apply a three-step analysis. First, it must identify the issues framed by the

pleadings because it is these allegations to which the motion must be directed. Second, it

must determine whether the moving party's showing has satisfied his or her burden of

proof and would, if unrebutted, justify a judgment in movant's favor. Finally, if the

defendants' showing would prima facie justify a judgment in his or her favor, the third

and final step is to determine whether the opposition demonstrates that a triable, material

factual issue exists on the particular issue. (Zuckerman v. Pacific Savings Bank (1986)

187 Cal.App.3d 1394, 1400-1401.)

A moving defendant who chooses the "tried and true technique" of disproving an

essential element must produce evidence that prima facie demonstrates an essential

element of the plaintiff's claim cannot be established. (Allyson v. Department of

Transportation (1997) 53 Cal.App.4th 1304, 1317-1318; see also Ahrens v. Superior

Court (1988) 197 Cal.App.3d 1134, 1150.)

When the moving defendant has made the requisite prima facie showing, the

burden shifts to the plaintiff to produce competent evidence demonstrating that, on the

issues as framed by the pleadings to which defendant's motion is directed, a triable issue

9
of fact exists.7 (FSR Brokerage, Inc. v. Superior Court (1995) 35 Cal.App.4th 69, 73-

74.) The evidence of the moving party is strictly construed and that of the opponent is

liberally construed, and any doubts as to the propriety of granting the motion are to be

resolved in favor of the party opposing the motion. (Branco v. Kearny Moto Park, Inc.

(1995) 37 Cal.App.4th 184, 189.) In assessing whether summary judgment is

appropriate, the facts submitted by the party opposing summary judgment, together with

the reasonable and permissible inferences that may be drawn from those facts, must be

accepted as true.8 (Sada v. Robert F. Kennedy Medical Center (1997) 56 Cal.App.4th

138, 148.)

7 A plaintiff may not defeat a summary judgment motion by producing evidence to
support claims outside the issues framed by the pleading. (Robinson v. Hewlett-Packard
Corp. (1986) 183 Cal.App.3d 1108, 1131-1132; City of Hope Nat. Medical Center v.
Superior Court (1992) 8 Cal.App.4th 633, 639.)

8 When a party relies on inferences to raise triable issues of fact, the inferences must
be reasonable and cannot be based on "speculation, conjecture, imagination, or
guesswork." (Joseph E. Di Loreto, Inc. v. O'Neill (1991) 1 Cal.App.4th 149, 161.)
Additionally, because a plaintiff bears the burden of proof by a preponderance of the
evidence, the inferences he or she relies on to defeat summary judgment must be more
than speculation and must instead satisfy the "more likely than not" burden the plaintiff
will bear at trial. (Leslie G. v. Perry & Associates (1996) 43 Cal.App.4th 472, 487; cf.
Kidron v. Movie Acquisition Corp. (1995) 40 Cal.App.4th 1571, 1580-1581 [grant of
nonsuit proper when plaintiff's evidence does not support logical and reasonable
inference in his or her favor and amounts to nothing more than speculation or conjecture];
Salter v. Keller (1964) 224 Cal.App.2d 126, 128 ["it is incumbent upon the plaintiff to
produce evidence which supports a logical inference in his favor and which does more
than raise a mere conjecture or surmise that the fact is as alleged"].)
10
 IV

ANALYSIS OF OWNERS' CLAIMS OF ERROR

A. The "Incorrect Standard" Claim

Owners argue the trial court applied the incorrect standard when assessing

McCann's motion because the trial court was "hostil[e]" toward Owners' theory of

liability and therefore ignored the evidence supporting Owners' claims of conspiracy. A

trial court's ruling is presumed correct (Denham v. Superior Court (1970) 2 Cal.3d 557,

564), and the appellate court indulges all intendments and presumptions to support the

ruling on matters as to which the record is silent (ibid.), including the basic presumption

indulged in by reviewing courts that the trial court is presumed to have known and

applied the correct statutory and case law (People v. Jacobo (1991) 230 Cal.App.3d

1416, 1430.) The appellant has the burden of overcoming the presumption of correctness

by affirmatively showing error. (Bianco v. California Highway Patrol (1994) 24

Cal.App.4th 1113, 1125.) The sole basis for Owners' claim that the court improperly

weighed the evidence is that, after Owners argued (during oral argument) McCann

"committed a misdemeanor by acting as a public adjuster [and] low-balled my clients'

claims," the court asked if McCann had been convicted of a misdemeanor. This

innocuous question does not affirmatively show hostility to Owners, much less satisfy

Owners' burden of affirmatively showing the court applied the wrong standard in

assessing McCann's motion.

11
 B. Summary Judgment Was Properly Entered on Owners' Conspiracy Claims

McCann affirmatively produced evidence that Insurer initially determined the

scope of work and, when the HOA gave that scope to several contractors (including

R&M) to solicit bids for that work, R&M simply priced the items identified in that scope

of work. Moreover, McCann averred R&M's prices were not a "lowball" bid but were

instead reasonable and customary for the work specified in the scope of work. McCann

also affirmatively averred R&M has never been a "preferred" vendor for or "hired gun"

of Insurer, and never conspired with Insurer to minimize the scope of work or payout for

the reconstruction. Moreover, McCann averred R&M did not act as a public adjuster for

the HOA and, instead, the scope of work was determined by Insurer's adjuster. Finally,

McCann affirmatively averred R&M never gave any remuneration or anything to Boyer;

and never conspired with Boyer, the HOA, or anyone else, to do anything other than bid

on the project as defined by Insurer and requested by the HOA, and to enter into the

contract and complete the reconstruction required by the contract.

On appeal, Owners do not argue these facts, if undisputed, would be insufficient to

support summary judgment in favor of McCann on Owners' pleaded claims against him.

Instead, Owners' claim on appeal is that the trial court ignored "substantial evidence of

[McCann's] individual misconduct . . . committed in furtherance of a conspiracy to cheat

Plaintiffs." Specifically, Owners claim there was evidence supporting the existence of a

"conspiracy between [McCann] and [Boyer] to defraud Plaintiffs and breach the HOA

Defendants' fiduciary duty toward Plaintiffs" by "disregard[ing] that the [Insurer's] policy

was a replacement cost policy," which covered "what was . . . in each unit on the date of

12
the fire (as required by California law and as covered under [Insurer's] policy)," which

then allowed McCann to "grossly over-charge Plaintiffs for so-called extras . . . which the

[Insurer's] policy covered."

However, the above-quoted passages in Owners' opening brief are unaccompanied

by any references to the record where we might, for example, find evidence that McCann

and Boyer had meetings at which they and the Insurer agreed to ignore the terms of the

Insurer's policy, or that the terms of the Insurer's policy even covered the extras for which

plaintiffs were required to pay.9 Owners' claims in their opening brief are equally

unaccompanied by any references to the record where we might find any competent

evidence that McCann had any prior relationship with (much less conspired with) Insurer,

9 Indeed, it appears that a core allegation of Owners' conspiracy claims is that
Owners were injured by the conspiracy because Insurer should have paid all of the costs
to restore their units to their pre-fire condition, but Insurer conspired with McCann and
Boyer to deny Owners those policy benefits (and thereby save Insurer money), which
required Owners to pay R&M (under the rubric of "upgrades") to rebuild their units to
their pre-fire condition. However, before the court entered summary judgment in
McCann's favor, Owners dismissed with prejudice all of their claims against Insurer,
including the core claim (contained in Owners' 19th cause of action) that Insurer refused
to "fully, completely or fairly pay the coverages" it owed, as well as the claims that
Insurer conspired with McCann and Boyer to defraud Owners (contained in Owners' 20th
cause of action) by misrepresenting what was covered under the policy. Owners do not
explain how their claims against McCann for conspiracy, which operates only to hold a
third party jointly liable for the wrong committed by the direct perpetrator (see, e.g.,
Klistoff v. Superior Court (2007) 157 Cal.App.4th 469, 479 [" 'Conspiracy is not a cause
of action, but a legal doctrine that imposes liability on persons who, although not actually
committing a tort themselves, share with the immediate tortfeasors a common plan or
design in its perpetration.' "]), survive dismissal with prejudice of the claims against the
direct perpetrator of the wrongful act.
13
or that R&M's bid was a "low-ball bid."10 This default is an egregious violation of

California Rules of Court, rule 8.204, subdivision (a)(1)(C), which requires an appellant

to "[s]upport any reference to a matter in the record by a citation to the volume and page

number of the record where the matter appears," and permits us to disregard Owners'

claim that they presented evidence below raising a triable issue of fact. (See, e.g., Kim v.

Sumitomo Bank (1993) 17 Cal.App.4th 974, 979 [reviewing court may disregard

contentions unsupported by citation to the record]; Aguimatang v. California State

Lottery (1991) 234 Cal.App.3d 769, 796 [reviewing court may disregard evidentiary

contentions unsupported by proper page citations to the record]; City of Lincoln v.

Barringer (2002) 102 Cal.App.4th 1211, 1239, fn. 16 [record citations in factual

background at beginning of brief do not cure failure to include pertinent record citations

in argument portion of brief].) Under these circumstances, we agree with the court's

observations in Schmidlin v. City of Palo Alto (2007) 157 Cal.App.4th 728, 738-739, in

which the court rejected a challenge by the appellant in part because:

10 The only citations to the record contained as part of Owners' argument are
references to portions of the declarations of Mr. Malik and Mr. and Mrs. Price. However,
the cited pages (in addition to averring R&M "specializ[ed] in representing the interests
of the insurance companies over insureds" without any showing what personal
knowledge formed the basis for that conclusory allegation) merely reflect that (1) they
were unhappy with McCann's handling of the credits for replacement costs values, (2)
Boyer was hostile, (3) their units had been upgraded before the fire, (4) they were
required to use subcontractors insured and approved by R&M if they wanted to make
changes to the units while R&M was still involved in reconstructing the units, (5) they
were not allowed on the site and were not allowed to directly contact the subcontractors
doing the construction work, and (6) prices for certain changes were too high. None of
those passages suggested Owners possessed admissible evidence raising a triable issue of
fact on the existence of an illicit agreement between McCann, Boyer and the Insurer to
violate the terms of Insurer's policy protections.
14
 "[Appellants'] brief pervasively alludes to factual matters
unaccompanied by record citations. It is the duty of counsel to refer
us to the portion of the record supporting his contentions on appeal.
[Citations.] 'It is not incumbent upon this court to search a record of
this character to determine a point raised in this manner.' [Quoting
Erro v. City of Santa Barbara (1932) 123 Cal.App. 508, 513;
citation.] [¶] . . . [¶] [Appellants'] brief continues . . . [to] allud[e] to
and argu[e] from supposed evidence, almost none of which is
supported by record citations. . . . [Respondent's] brief includes a
. . . catalog of [the evidence]—fully backed by citations to the
record—supporting the [judgment] but absent from [appellants']
presentation." (Id. at pp. 728-729, fn. omitted.)

In Schmidlin, the court concluded the appellants' peremptory assertions without

evidentiary citations rendered the case "a prime candidate" for application of the rule that

the appellants' presentation was "insufficient to impeach the judgment." (Id. at p. 739.)

We likewise conclude Owners have forfeited any claim that they produced admissible

evidence raising a triable issue of fact on the existence of a conspiracy between McCann,

Boyer and the Insurer to defraud Owners or violate Boyer's fiduciary obligations to

Owners.

Owners also assert the trial court erred to the extent its ruling was based on

McCann's "immunity" under Doctors' Co. v. Superior Court (1989) 49 Cal.3d 39. In

Doctors' Co., the court recognized that an insurer owes a duty to its insured under certain

circumstances to attempt to settle claims against its insured, and the insured sued the

insurer for breach of that duty because the insurer failed to settle the claim but instead

went to trial. (Id. at p. 42.) The insured also pleaded conspiracy claims against the

attorneys hired by the insurer to defend the insured, and the expert witness retained by the

insurer as part of the defense, alleging the attorney and expert conspired with insurer to

15
breach the insurer's duty to settle. The Supreme Court held that because the duty to settle

was imposed solely on the insurer, the agents could not be held jointly liable under

conspiracy allegations if their alleged conduct was taken as agents of the insurer,

although the agents could be held liable for conduct undertaken as individuals for their

independent individual advantage. (Id. at pp. 44-49; accord, Reynolds v. Bement (2005)

36 Cal.4th 1075, 1089-1090, abrogated on other grounds in Martinez v. Combs (2010) 49

Cal.4th 35, 62-66.)

Subsequently, in Brown v. Professional Community Management, Inc. (2005) 127

Cal.App.4th 532 (Brown), the court applied Doctors' Co. in a situation analogous to the

present action. There, the plaintiff sued her homeowners association and the

management company (PCM) hired by her homeowners association, alleging PCM (as

part of its services to the homeowners association) prepared " ' "late letters" and "lien

letters" for which it charge[d] a fee and therefore share[d] in the profits of these illegal

fees.' " (Brown, at p. 536.) The plaintiff's complaint alleged (1) a claim against the

homeowners association for violation of its duties to her under former Civil Code section

1366.1 because these fees were excessive fees improperly levied under that section, and

(2) a claim against PCM alleging it conspired with the homeowners association to charge

excessive fees and to share in the profits from these fees. (Brown, at p. 536.) The court

first concluded the duty allegedly violated—the duty to not levy excessive fees under

former Civil Code section 1366.1—was owed by the homeowners association alone and

did not limit PCM from charging the homeowners association for PCM's services in

preparing lien letters and late letters, noting that although the duty imposed "prohibits an

16
association from marking up the incurred charge to generate a profit for itself, the vendor

is not similarly restricted. Plaintiff would have it that no vendor selling its services to an

association could charge a fee, or, indeed, continue in business as a profit-making

enterprise. That cannot be the law." (Brown, at p. 539.) The Brown court then

concluded that, under Doctors' Co., the plaintiff's conspiracy claim necessarily failed

because the duty was owed by the homeowners association alone, explaining:

"[Because] PCM does not owe an independent duty under section
1366.1, we need only follow the high court's precedent [in Doctors'
Co.]. PCM cannot be liable in tort for conspiring with [the
homeowners association] to charge fees in excess of the amount
necessary to defray [the homeowners association's] costs. If, as
Brown alleges, PCM 'shares' in the 'profits' represented by the fees
for 'late letters' and 'lien letters,' PCM violates no duty owed by it,
either to the association or its members, because it is not prohibited
from earning a profit, or from charging any fee the competitive
market will bear. On the other hand, if [the homeowners
association] is, in fact, 'sharing' in the fees charged by PCM (i.e.,
kickbacks), [the homeowners association] may be violating section
1366.1, but to the detriment, not the advantage, of PCM." (Brown,
supra, 127 Cal.App.4th at p. 540.)

Because Brown's application of Doctors' Co. involved facts substantively

indistinguishable from those presented here, we conclude it is controlling. Owners' claim

that HOA, Boyer or other board members violated their fiduciary duty to Owners, even

assuming it was meritorious,11 involves (as it did in Brown) the violation of a duty not

owed by McCann to Owners and, as in Brown, the allegations of a conspiracy cannot

11 Indeed, we are puzzled over whether Owners' claim for "conspiracy to breach
fiduciary duties" even remained viable because all of the board members who did owe
the fiduciary duties allegedly breached, and with whom McCann presumably conspired,
were voluntarily dismissed by Owners before the summary judgment motion was
decided.
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create a duty where none otherwise existed. As in Brown, McCann was under contract

with the HOA to perform services and undoubtedly profited from that contract but, as in

Brown, the fact the agent garnered profits from discharging its contract does not, without

more, permit a claim against the agent for conspiring to violate a duty owed solely by his

principal and not owed by the agent to the plaintiff. Owners have articulated no reason

for us either to distinguish or to depart from Brown.12 We conclude McCann was

properly granted judgment on Owners' claims for conspiracy to aid and abet breach of

fiduciary duty and to defraud.

C. Conclusion

We conclude the trial court correctly granted McCann's motion for summary

judgment on all claims pleaded against him personally.

12 Owners' only argument is that McCann allegedly engaged in separate
misconduct―by intentionally acting as a "public adjuster" without the requisite license in
violation of the Insurance Code―and this somehow saved Owners' conspiracy claims.
First, we question whether a contractor, hired by an insured to repair damages for which
an insurer will pay, transgresses these regulatory provisions of the Insurance Code by
bidding on the scope of work or by later submitting change orders or addenda seeking
additional payments for such work. Although Owners cite Building Permit Consultants,
Inc. v. Mazur (2004) 122 Cal.App.4th 1400 to support such a claim, Mazur is
distinguishable because the party retained by the insured in Mazur was not the contractor
hired to perform the restoration, but was instead a consultant hired solely to assist the
insured's attorney in negotiating the claim with the insurer. Indeed, although Mazur held
such a consultant was required to be licensed, Mazur noted the consultant's contract
stated the insured would hire an attorney to litigate or negotiate the claim and the attorney
would then employ the consultant to support such attorney in litigating or negotiating the
claim. (Id. at pp. 1404-1405.) Curiously, the Mazur court made no effort to explain why
the exemption for the insured's attorney (Ins. Code, §§ 14021, subd. (e), 15008, subd. (c))
did not apply to experts or consultants working under that attorney. We therefore view
Mazur's discussion and holding as open to question.
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 DISPOSITION

The judgment is affirmed. McCann is entitled to costs on appeal.

McDONALD, J.

WE CONCUR:

HUFFMAN, Acting P. J.

McINTYRE, J.

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