Filed 8/23/22 Palma v. Mercury Insurance Company CA2/3
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION THREE
JULIO PALMA et al., B309063
Plaintiffs and Appellants, Los Angeles County
Super. Ct. No. 19STCV04181
v.
MERCURY INSURANCE
COMPANY,
Defendant and Respondent.
APPEAL from a judgment of the Superior Court of
Los Angeles County. Steven J. Kleifield, Judge. Affirmed.
Shernoff Bidart Echeverria, Ricardo Echeverria,
Steven Schuetze, Kristin Hobbs and Reid Ehrlich-Quinn
for Plaintiffs and Appellants.
Sheppard, Mullin, Richter & Hampton, Peter H. Klee
and Marc J. Feldman for Defendant and Respondent.
_________________________
Plaintiffs Julio Palma and Miriam Cortez1 (together,
Plaintiffs) appeal an order granting summary judgment in a
bad faith insurance case against Mercury Insurance Company
(Mercury). Mercury insured Frank McKenzie, who killed
Plaintiffs’ son in a car crash. Plaintiffs obtained a $3 million
judgment in a wrongful death action against McKenzie.
McKenzie then assigned Plaintiffs his rights against Mercury,
and Plaintiffs brought the present action against Mercury on
the basis that it failed to accept their reasonable offer to settle
their wrongful death claims. The trial court granted Mercury’s
motion for summary judgment after determining Plaintiffs
never offered to settle their claims. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
In September 2012, Frank McKenzie was driving a vehicle
that struck and killed Oscar Palma, who was riding a moped.
At the time, McKenzie was insured under a Mercury insurance
policy with bodily injury liability limits of $15,000 and property
damage limits of $10,000.
1. The settlement offer
On October 15, 2012, attorney Paul Zuckerman sent
Mercury a settlement letter on behalf of his law firm, Carpenter,
Zuckerman & Rowley, LLP (the Carpenter firm). The letter
identifies “Oscar Palma (deceased) Estate of Oscar Palma” as
“Our Clients” and states: “Oscar Palma (deceased) Estate of
Oscar Palma, demands that Mercury Insurance tender full
policy limits to Oscar Palma (deceased) Estate of Oscar Palma
1 Miriam Cortez is a party in her capacity as the successor-
in-interest to the Estate of Maria Bonilla. For the sake of
simplicity, we sometimes refer to Miriam Cortez in her capacity
as successor-in-interest as though she were Maria Bonilla.
2
to resolve their claim. In the event that your full policy limits
are not promptly tendered, during the course of litigation, we will
determinately prove our client’s medical expenses, and recovery
will be well in excess of your insured’s policy limit.”
The letter states the offer was to remain open for 14 days,
until October 29, 2012. It further states “this policy limit
demand is expressly conditioned on your insured [McKenzie]
providing declarations” attesting to several matters, including
that he had no other insurance available to cover the loss. It also
requires several “conditions precedent” that “must be completely
performed by you [Mercury] by October 29, 2012,” before the
“settlement offer can be accepted.” Among other things, it
lists as conditions precedent delivery of a draft “made payable
to ‘Oscar Palma (deceased) Estate of Oscar Palma and their
attorneys,’ ” and delivery of an “appropriate Release of All Claims
form.” The letter does not specify the terms of the release.
Mercury retained attorney Jeffrey Lim and instructed
him to accept the offer. On October 19, 2012, Lim faxed
the Carpenter firm a letter stating Mercury “is tendering to
the estate and all heirs of Oscar Palma Mr. McKenzie’s $15,000
policy limits. [¶] In order to confirm that all heirs are included
in the release for the policy limits, please have the heirs complete
and sign the attached affidavit of heirs.” The Carpenter firm
did not respond to the letter.
A few days later, Lim contacted McKenzie to discuss the
settlement offer. Lim advised McKenzie that he had “written
to Carpenter, Zuckerman & Rowley to request that they identify
who Mr. Palma’s heirs are. To date, they have not responded
to my request. In the October 15, 2012, demand letter they
assert that there are no other claims against you, other than
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the ones presented by them. If they are being untruthful in
their representations, then you may still be subject to a lawsuit
by persons with standing whom they do not represent. [¶] . . .
I have no reason to believe they are being untruthful regarding
there being no other claims, and by making that representation
they subject themselves to a lawsuit by any other heirs who
might have a right to a portion of the policy limits.” McKenzie
agreed to accept the settlement offer and signed a declaration
stating there is no other insurance covering the loss.
On October 24, 2012, Lim told Mercury that McKenzie
agreed to a settlement. Lim said he had “the settlement check
and will overnight it to plaintiff’s counsel today with the
declaration, the policy, and release.”
The same day, Lim wrote a letter to the Carpenter firm
accepting the “offer to resolve the death claim of Oscar Palma.”
Lim enclosed a check for $15,000 and represented that, aside
from the Mercury policy, there were no other policies in existence
for the loss. Lim, however, inadvertently failed to attach
McKenzie’s declaration to the letter.
Lim included with the letter his office’s standard Release
of Claims form, which required the release of all “bodily injury
and personal injuries and property damage claims, and wrongful
death claims . . . .” Lim told the Carpenter firm if “you have any
changes to my release, please let me know prior to October 29,
2012.” The Carpenter firm did not respond to Lim’s letter or
request any changes to the release.
In November 2012, Mercury contacted the Carpenter firm
to request information related to the value of Palma’s moped
in order to resolve any property damage claims. Although the
Carpenter firm did not respond to Mercury’s request, Lim sent
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the firm a check for $1,070 to cover the complete loss of Palma’s
moped.
In January 2013, Lim wrote to the Carpenter firm to
request the return of the signed Release of Claims form. The
Carpenter firm responded that there was no settlement because
its October 15, 2012 letter demanded payment of all available
policy limits, which included the $10,000 property damage policy
limits. Lim informed Mercury of the Carpenter firm’s position.
Between March and July 2013, Mercury sent the Carpenter
firm six letters “reiterat[ing]” its offer of the $15,000 bodily injury
policy limits. The Carpenter firm responded in a July 31, 2013
letter, claiming Mercury “committed bad faith” by failing to
accept a reasonable policy limits demand. The Carpenter firm
cited Mercury’s failure to tender its property damage policy
limits, and, for the first time, claimed Mercury failed timely
to deliver McKenzie’s declaration. The firm said it would be
filing a complaint and “[i]t is our expectation that we will
obtain a judgment far, far in excess of the insured’s policy limits
which will cause your insured to be driven into bankruptcy.
The insured’s credit will be destroyed making it impossible
for the insured to obtain credit at any reasonable rate.”
“The post-judgment collection proceedings will be extremely
distressing and embarrassing to the insured as this office will
aggressively examine the insured and every member of the
insured’s family to determine whether the insure[d] has hidden
any assets.”
Lim responded by sending the Carpenter firm a copy of
McKenzie’s declaration. He represented that the “declaration
had been received, but was inadvertently left out of my
October 24, 2012, letter to [the Carpenter firm]. In addition,
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I did not read the policy limit demand letter to be inclusive of
the property damage policy limits.”
Mercury sent the Carpenter firm a separate response
stating its position that it “timely offered its $15,000 bodily injury
policy limits to your clients to settle their claims against Mr.
McKenzie. It is Mercury’s position that it was not obligated to
tender its property damage policy limits, as your clients’ property
damage claim did not meet or exceed Mercury’s property damage
policy limits.” Mercury also said it “continues to offer its $15,000
bodily injury policy limits to your clients to settle their claims
against Mr. McKenzie.”
2. Plaintiffs’ wrongful death action against McKenzie
On August 28, 2013, the Carpenter firm filed a lawsuit
against McKenzie on behalf of Plaintiffs, Ana Guzman-Palma,
and the “Estate of Oscar F. Palma, a deceased individual.” The
complaint asserted causes of action for negligence, “survival
action,” and wrongful death. Following a jury trial, the court
entered judgment against McKenzie and in favor of Plaintiffs
for $3 million on their wrongful death claims. The court did
not enter judgment in favor of the Estate of Oscar F. Palma.
Mercury paid Plaintiffs its $15,000 bodily injury policy limits.
3. Plaintiffs’ bad faith action against Mercury
McKenzie assigned his rights against Mercury to Plaintiffs
in exchange for a covenant not to execute the judgment against
his personal assets. Plaintiffs then filed a complaint against
Mercury, alleging it acted in bad faith by failing to accept their
reasonable offer to settle within policy limits, which exposed
McKenzie to damages far in excess of his available insurance
limits. According to the complaint, Mercury failed to accept
6
Plaintiffs’ offer because it did not tender the available property
damage limits and did not timely deliver McKenzie’s declaration.
4. Mercury’s motion for summary judgment
Mercury moved for summary judgment and submitted
evidence establishing the facts summarized above. Mercury
argued that Plaintiffs could not establish a bad faith claim
because only the Estate of Oscar Palma made a settlement offer.
Mercury also argued the Carpenter firm’s offer was unreasonable
because it allegedly demanded payment of the $10,000 property
damage limits, yet the value of the property damage was only
around $1,070. Alternatively, Mercury argued its failure to
accept the settlement offer was the result of negligence, not
bad faith.
In opposition, Plaintiffs argued there were triable issues
of fact as to whether the Carpenter firm made the settlement
offer on their behalf. They also argued Mercury failed to accept
the offer because it did not send the Carpenter firm McKenzie’s
declaration by the October 29, 2012 deadline, and it unreasonably
demanded they release their property damage claims in exchange
for the bodily injury policy limits. Plaintiffs conceded that the
Carpenter firm’s offer did not require Mercury to tender its
property damage policy limits.
The trial court granted Mercury’s motion for summary
judgment after determining the Carpenter firm’s letter offered
only to settle a survival action on behalf of the estate. The court
explained that the “client is (awkwardly) referred to as ‘Oscar
Palma (deceased) Estate of Oscar Palma,’ but cannot reasonably
be construed to be anyone or anything other than the
decedent’s estate. [Citation.] The decedent’s estate, through
a representative, is the plaintiff in a survival action. [Citation.]
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The only losses described in the demand letter are ‘medical
expenses,’ which could only be recoverable in a survival action,
and not in a wrongful death case. [Citation.] Finally, the
letter states that there are no ‘competing claimants.’ [Citation.]
No other persons are named as potential claimants. [Citation.]
Although Mr. Lim inquired about wrongful death claimants,
no response was ever given.” The court concluded “[n]o
reasonable inference can be drawn that the demand was on
behalf of anyone other than an estate pursuing a survival action.
The action that resulted in the excess judgment, however, was
a wrongful death action. [Citations.] No offer of settlement was
made to resolve a wrongful death case. In the absence of an offer,
there is no determination of ‘reasonableness’ to be made.”
The court entered judgment for Mercury, and Plaintiffs
timely appealed.
DISCUSSION
Plaintiffs contend the trial court erred in granting
Mercury’s motion for summary judgment because there are
disputed issues of fact concerning whether Mercury unreasonably
failed to accept their settlement offer. They argue the Carpenter
firm’s October 15, 2012 letter constituted an offer to resolve their
wrongful death claims, which Mercury unreasonably refused by
failing to deliver McKenzie’s declaration by the October 29, 2012
deadline. Alternatively, they argue Mercury unreasonably
demanded they release any property damage claims in exchange
for the bodily injury policy limits.
1. Standard of review
On appeal from a grant of summary judgment, we examine
the facts presented to the trial court and determine their effect
as a matter of law, considering all the evidence set forth in the
8
moving and opposition papers. (Regents of University of
California v. Superior Court (2018) 4 Cal.5th 607, 618.) We
liberally construe evidence presented in opposition to a summary
judgment motion, and we resolve any doubts in favor of the party
opposing the motion. (Ibid.) A defendant seeking summary
judgment must show the plaintiff cannot establish at least one
element of the cause of action. (Ibid.) Summary judgment is
appropriate if no triable issue of material fact exists, and the
moving party is entitled to judgment as a matter of law. (Ibid.)
2. Bad faith refusal to settle
“From the covenant of good faith and fair dealing implied
by law in all contracts, and from the liability insurer’s duty
to defend and indemnify covered claims, California courts have
derived an implied duty on the part of the insurer to accept
reasonable settlement demands on such claims within the policy
limits. [Citation.] ‘[A]n insurer is required to act in good faith
in dealing with its insured. Thus, in deciding whether or not
to settle a claim, the insurer must take into account the interests
of the insured, and when there is a great risk of recovery beyond
the policy limits, a good faith consideration of the insured’s
interests may require the insurer to settle the claim within
the policy limits. An unreasonable refusal to settle may subject
the insurer to liability for the entire amount of the judgment
rendered against the insured, including any portion in excess
of the policy limits. [Citation.]’ ” (Hamilton v. Maryland
Casualty Co. (2002) 27 Cal.4th 718, 724–725.)
“An insured’s claim for bad faith based on an alleged
wrongful refusal to settle first requires proof the third party
made a reasonable offer to settle the claims against the insured
for an amount within the policy limits.” (Graciano v. Mercury
9
General Corp. (2014) 231 Cal.App.4th 414, 425 (Graciano).)
The plaintiff must also prove the insurer failed or refused
“ ‘to discharge contractual responsibilities, prompted not by
an honest mistake, bad judgment or negligence but rather
by a conscious and deliberate act, which unfairly frustrates
the agreed common purposes and disappoints the reasonable
expectations of the other party thereby depriving that party
of the benefits of the agreement.’ ” (Chateau Chamberay
Homeowners Assn. v. Associated Internat. Ins. Co. (2001)
90 Cal.App.4th 335, 346.) “In evaluating whether an insurer
acted in bad faith, ‘the critical issue [is] the reasonableness
of the insurer’s conduct under the facts of the particular case.’
[Citation.] To hold an insurer liable for bad faith in failing
to settle a third party claim, the evidence must establish that
the failure to settle was unreasonable.” (Pinto v. Farmers Ins.
Exchange (2021) 61 Cal.App.5th 676, 687.)
Whether an insurer acted in bad faith “is generally for
the trier of fact to resolve, unless, ‘from uncontroverted evidence,
a reasonable man following the law can draw but one conclusion
on the issue.’ [Citation.]” (Hedayati v. Interinsurance Exchange
of the Automobile Club (2021) 67 Cal.App.5th 833, 843
(Hedayati).)
3. Plaintiffs did not offer to settle their wrongful death
claims
The parties agree that we must interpret the Carpenter
firm’s October 15, 2012 offer under the general principles
of contract law. (See T. M. Cobb Co. v. Superior Court (1984)
36 Cal.3d 273, 279; Cal Fire Local 2881 v. California Public
Employees’ Retirement System (2019) 6 Cal.5th 965, 988;
Fassberg Construction Co. v. Housing Authority of City
10
of Los Angeles (2007) 152 Cal.App.4th 720, 765.) “ ‘The
rules governing the role of the court in interpreting a written
instrument are well established. The interpretation of a contract
is a judicial function. [Citation.] In engaging in this function,
the . . . court “give[s] effect to the mutual intention of the parties
as it existed” at the time the contract was executed. [Citation.]
Ordinarily, the objective intent of the contracting parties is a
legal question determined solely by reference to the contract’s
terms. [Citations.] . . .’ [Citation.]” (Wind Dancer Production
Group v. Walt Disney Pictures (2017) 10 Cal.App.5th 56, 68–69.)
“The language of a contract is to govern its interpretation, if the
language is clear and explicit, and does not involve an absurdity.”
(Civ. Code, § 1638.)
The Carpenter firm’s October 15, 2012 letter cannot
reasonably be interpreted as an offer to settle Plaintiffs’ wrongful
death claims. A wrongful death claim is a statutory cause of
action that allows a decedent’s heirs to recover compensation for
the economic loss and deprivation of consortium they personally
suffered as a result of the decedent’s death. (San Diego Gas &
Electric Co. v. Superior Court (2007) 146 Cal.App.4th 1545, 1550–
1551 (San Diego Gas); People v. Giordano (2007) 42 Cal.4th 644,
658.) Wrongful death claims belong to the heirs, not the decedent
or the decedent’s estate. (Quiroz v. Seventh Ave. Center (2006)
140 Cal.App.4th 1256, 1263.) The Carpenter firm’s letter,
however, does not mention Plaintiffs or Palma’s heirs, let alone
identify them as the offerors. Instead, it identifies the Carpenter
firm’s client as “Oscar Palma (deceased) Estate of Oscar Palma,”
“Oscar Palma (deceased),” or “Oscar Palma,” none of which had
11
the authority to pursue wrongful death claims.2 (See Code
Civ. Proc., § 377.60 [listing the persons with standing to bring
a wrongful death claim].) Rather, Palma’s estate could pursue
only a survival claim, which is a cause of action that “belonged
to the decedent before death but, by statute, survives that event.”
(Quiroz, at p. 1264; see Code Civ. Proc., §§ 377.20, 377.30; Ruiz
v. Podolsky (2010) 50 Cal.4th 838, 850, fn. 3 [a decedent’s estate
may bring a survival action].)
Further, although the letter does not explicitly identify
the claim it seeks to settle, it warns that the Carpenter firm
will “prove our client’s medical expenses” through litigation if
Mercury does not accept the offer. A decedent’s medical expenses
are recoverable in a survival action, but not in a wrongful death
action. (San Diego Gas, supra, 146 Cal.App.4th at p. 1553.) It is
clear, therefore, that the Carpenter firm’s letter offered to settle
the estate’s survival claim, and not Plaintiffs’ wrongful death
claims.
Plaintiffs insist that, although the letter does not explicitly
mention them or their claims, it does so implicitly. Plaintiffs
point out that the letter refers to “our clients” and “their claim,”
which they contend suggests the Carpenter firm made the offer
on behalf of clients other than Palma’s estate. We disagree. The
letter refers to the Carpenter firm’s “client” (singular) six times.
In contrast, it mentions the firm’s “clients” (plural) only twice,
2 A decedent’s personal representative may bring a wrongful
death claim on behalf of the heirs. (Code Civ. Proc., § 377.60.)
The personal representative, however, does so in his or her
capacity as a statutory trustee to recover damages for the benefit
of the heirs, not as the personal representative of the estate.
(Adams v. Superior Court (2011) 196 Cal.App.4th 71, 77–78.)
12
and it is clear that both are typographical errors. One mention
appears in the reference line, which identifies “Oscar Palma
(deceased) Estate of Oscar Palma” as the “clients.” The other
mention appears in the following sentence: “On September 3,
2012, our clients, Oscar Palma (deceased), was brought [sic]
his moped to a complete stop on Southbound Western Avenue
waiting to make a left turn onto eastbound 29th Street.” No
reasonable person would interpret either reference as suggesting
the Carpenter firm made the offer on behalf of other, unnamed
clients.
The same is true of the letter’s use of the phrase “their
claim.” The full sentence states: “In light of the foregoing, Oscar
Palma (deceased) Estate of Oscar Palma, demands that Mercury
Insurance tender full policy limits to Oscar Palma (deceased)
Estate of Oscar Palma to resolve their claim.” Read in context,
“their claim” clearly refers to the claim (singular) belonging to
“Oscar Palma (deceased) Estate of Oscar Palma.” It does not
suggest an intent to settle multiple clients’ separate claims.
Plaintiffs urge us to consider extrinsic evidence, which
they insist shows the parties understood the Carpenter firm’s
letter to be an offer to settle wrongful death claims. We
decline to do so. “Extrinsic evidence is ‘admissible to interpret
[a written] instrument, but not to give it a meaning to which it
is not reasonably susceptible’ [citations], and it is the instrument
itself that must be given effect.” (Parsons v. Bristol Development
Co. (1965) 62 Cal.2d 861, 865.) In other words, extrinsic evidence
is admissible “to show what the parties meant by what they said,
but it is not admitted to show that they meant something other
than what they said.” (Rilovich v. Raymond (1937) 20 Cal.App.2d
630, 639–640.) For the reasons discussed above, the Carpenter
13
firm’s letter is not reasonably susceptible to Plaintiffs’
interpretation. Accordingly, we may not consider extrinsic
evidence on the issue.
Because Mercury’s undisputed evidence shows Plaintiffs
did not offer to settle their wrongful death claims, they cannot
state a cause of action for bad faith refusal to settle those claims.
(Graciano, supra, 231 Cal.App.4th at p. 425.) The trial court
properly granted Mercury’s motion for summary judgment
on this basis.3
4. Mercury did not act in bad faith
Even if the Carpenter firm’s letter had offered to settle
Plaintiffs’ claims, Mercury would be entitled to summary
judgment because no reasonable trier of fact could conclude
it acted in bad faith.
The undisputed evidence shows Mercury directed Lim
to accept the Carpenter firm’s settlement offer under the terms
set out in its October 15, 2012 letter. Lim, in turn, sent the
Carpenter firm a letter accepting the offer, tendered the bodily
injury policy limits, and complied with all the required conditions
3 For the first time in their reply brief, Plaintiffs argue that
even if they did not offer to settle their wrongful death claims,
a trier of fact could still determine Mercury acted in bad faith.
Mercury moved to strike the argument on the basis that it is
untimely. Although we decline to strike the argument, we agree
with Mercury that it is untimely and decline to consider it for
that reason. (See Varjabedian v. City of Madera (1977) 20 Cal.3d
285, 295, fn. 11 [“Obvious reasons of fairness militate against
consideration of an issue raised initially in the reply brief of
an appellant.”]; Nordstrom Com. Cases (2010) 186 Cal.App.4th
576, 583 [“[P]oints raised for the first time in a reply brief on
appeal will not be considered.”].)
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by the deadline for acceptance, with the exception of the delivery
of McKenzie’s declaration.4 Although Lim had obtained a signed
declaration from McKenzie, he inadvertently failed to include
it with the acceptance letter. The only reasonable conclusion
from this evidence is that Mercury would have settled the claims
under Plaintiffs’ terms, but for Lim’s negligence in failing to
deliver McKenzie’s declaration. Mere negligence, however,
is insufficient to support a claim for bad faith failure to settle.
(Adelman v. Associated Internat. Ins. Co. (2001) 90 Cal.App.4th
352, 369 [“to recover in tort for an insurer’s mishandling of
a claim, [a plaintiff] must allege more than mere negligence”];
Merritt v. Reserve Ins. Co. (1973) 34 Cal.App.3d 858, 880 [bad
faith requires more than mere negligence]; Davy v. Public Nat’l
Ins. Co. (1960) 181 Cal.App.2d 387, 395–396 [bad faith refusal
to accept a settlement offer “arises only from a breach of the
covenant to exercise good faith and not from a failure to exercise
due care”].)
Plaintiffs insist Mercury nevertheless acted in bad faith
because it failed to review Lim’s acceptance letter to ensure it
included McKenzie’s declaration. We disagree. The undisputed
evidence shows that, on October 24, 2012, Lim informed
Mercury that he had obtained McKenzie’s signed declaration
and was going to “overnight” it to the Carpenter firm that day.
Mercury did not act unreasonably in relying on its counsel’s
representations, at least absent some basis to suspect Lim might
not deliver the declaration. Plaintiffs offer no authority to the
contrary. Instead, they contend Mercury acted unreasonably
because it failed to comply with its own policy, which required
4 We assume, for the sake of argument, that the offer
required Mercury to deliver the declaration by October 29, 2012.
15
managerial or administrative review of a response to a policy
limits demand. The undisputed evidence, however, shows
the policy applied only to Mercury’s “claims branches,” but
McKenzie’s case was handled by the “litigation unit.”
Plaintiffs alternatively argue Mercury acted in bad faith
because its Release of Claims form required they give up their
property damage claims, even though Mercury only offered
its bodily injury policy limits. Mercury, however, submitted
a declaration from Lim in which he provided a reasonable
explanation for including the property damage language in
the release. According to Lim, the Carpenter firm’s “demand
letter did not specify what release language would be acceptable
to the Estate; rather, it merely stated that an ‘appropriate
Release of All Claims form’ was required. There was no way
to know what terms the Carpenter firm and its client would
deem ‘appropriate.’ Therefore, my acceptance letter enclosed
the standard release form used by my office and in my letter
I expressly invited the Carpenter firm to let me know what
revisions, if any, they wanted to make to the release so that it
was consistent with their intentions. One of the reasons that
my acceptance letter was faxed and overnight mailed to the
Carpenter firm several days before the settlement deadline
was to allow time to work out these and any other details
before the deadline expired.”
Plaintiffs submitted no evidence contradicting Lim’s
declaration. Nor is there any evidence showing Mercury refused
to remove the property damage language from the release
or otherwise required it as a condition of settlement. To the
contrary, the undisputed evidence shows Mercury separately
attempted to resolve any property damage claims in November
16
2012, before the Carpenter firm informed it that there was no
settlement related to the bodily injury policy limits. It is clear,
therefore, that Mercury did not intend to require Plaintiffs to
release their property damage claims in return for its bodily
injury policy limits. Under these circumstances, the fact that
Lim sent the Carpenter firm his office’s standard release form
does not show Mercury acted in bad faith.
Plaintiffs’ reliance on Hedayati, supra, 67 Cal.App.5th 833
is misplaced. In that case, the insurer did not respond to a
settlement offer by the offeror’s deadline, never conveyed an
intent to accept the offeror’s proposed terms, failed to inform
the insured of the offer, and did not follow its internal guidelines
for handling and responding to the offer. (Id. at pp. 848–850.)
The insurer subsequently offered to settle for the policy limits,
but its outside counsel provided the other party a release with
potentially objectionable terms and ignored the party’s request
for a copy of the insured’s policy. (Id. at pp. 851–852.) The court
concluded the insurer was not entitled to summary judgment
because, “[u]nder all of these circumstances, a reasonable trier
of fact could conclude [the insurer’s] counteroffer to settle the
matter through its outside counsel was not reasonably calculated
to obtain [the other party’s] assent.” (Id. at pp. 852–853.)
Here, the undisputed evidence shows Mercury made
substantial efforts to accept the Carpenter firm’s offer. Among
other things, it informed McKenzie of the offer, obtained his
consent to accept it, tendered its full bodily injury policy limits,
made substantial efforts to obtain and deliver the requested
information and documents, and expressed a willingness to
modify the Release of Claims form. Unlike in Hedayati, there
17
is no question that Mercury wanted to settle the claims under
Plaintiffs’ terms.
Plaintiffs’ reliance on Barickman v. Mercury Casualty Co.
(2016) 2 Cal.App.5th 508 is similarly misplaced. In that case,
the insurer tendered its policy limits, but refused to modify
its release of claims form, even after the insured agreed to
the modification. (Id. at pp. 514, 520–521.) Here, there is
no evidence showing Mercury refused to modify the Release
of Claims form. Instead, the evidence shows Lim invited
the Carpenter firm to suggest revisions to his standard form,
but the firm never responded.
Plaintiffs also suggest in passing that Mercury did not
do all within its power to effectuate a settlement. It is not clear,
however, what more Mercury could have done. As discussed
above, Mercury tendered its bodily injury policy limits and
attempted to accept the Carpenter firm’s offer, which it would
have done but for its outside counsel’s inadvertent failure to
deliver McKenzie’s declaration. Mercury subsequently offered
its bodily injury policy limits seven more times, and there is no
evidence showing it insisted on objectionable terms in return.
There is also no doubt that, had Plaintiffs or the Carpenter
firm simply told Mercury they had not received McKenzie’s
declaration with Lim’s acceptance letter, Mercury would have
provided it by the original deadline. The issue could have
been resolved with a single phone call or email in October 2012.
The Carpenter firm instead was silent for nearly three months
before claiming there was no settlement because Mercury failed
to tender its property damage policy limits, a claim Plaintiffs
now admit lacks merit. The firm then waited six more months to
inform Mercury that it had not received McKenzie’s declaration,
18
by which time it was clearly preparing for litigation with an eye
toward a future bad faith action. Although Mercury responded
by providing the declaration and reiterating its policy limits offer,
Plaintiffs pursued a legal action against McKenzie, knowing
it would “destroy[ ]” his credit and subject him and his family
to “extremely distressing and embarrassing” post-judgment
collection proceedings. If anyone acted in bad faith, it was
Plaintiffs and the Carpenter firm.
DISPOSITION
The judgment is affirmed. Mercury Insurance Company
is awarded its costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
EGERTON, J.
We concur:
EDMON, P. J.
LAVIN, J.
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