What Are The Elements Of Negligence Under California Law? – McKennon Law Group PC

What Is Negligence?

Negligence is the term that refers to an individual’s failure to behave with the level of care that someone of ordinary prudence would have exercised under the same circumstances. The behavior usually consists of actions, but can also consist of omissions when there is some duty to act

Simply put, negligence is a legal concept under which all people are held responsible for their actions or their lack of action. We all owe others a basic duty of care. When someone’s behavior or actions don’t meet that basic duty, negligence has occurred. This is the area of law that proves why a negligent person should be held accountable and financially responsible for any injuries that occurred as a result of their carelessness.

Negligence plays a key role in personal injury law, and many California residents will find themselves a victim of someone else’s negligence at some point. For that very reason, it’s important to have an understanding of the law of negligence in California.

What Are The Elements Of Negligence Under California Law?

There are four basic elements of negligence under California state law: duty, breach, causation, and damages.

Duty demonstrates the expectation to use reasonable care with regard to others, i.e, “ a duty of care”. This duty is covered by the law. For example, shopkeepers owe a duty of reasonable care to those who patronize their stores. If there are tripping and slipping hazards on the floor, this duty of care has been breached. All drivers owe a duty of care to others on the road as well. If one driver gets behind the wheel while intoxicated and puts others at risk, they’ve breached their duty of care. This “breach” is the term that describes the wrongful conduct/unlawful act.

Causation is broken down into legal and factual causation. Causation is a very detailed, nuanced concept that could be meticulously explained in hundreds of ways. A simple summary of causation is the relationship between someone’s breach of care and the damage that occurred. If a shopkeeper failed to mop up a slipper spill on the ground, and you fell and broke your leg, you have causation which can be used in court to demonstrate the shopkeeper’s negligence.

Damages are less complicated than breach and causation. Damages include the cost of your medical care, your lost wages and diminished future earnings, your pain and suffering, and damages to your property. Anything you’ve had to spend – your time, money, emotional labor – due to someone else’s negligence, is referred to as damages.

There are many landmark California court cases, such as Lee v. West Coast Life Insurance Company, that have grappled with the concept of negligence in order to pay out damages to those who’ve been injured. If you have suffered an injury and have reason to believe someone breached a duty of care, causing the injury to occur, contact a personal injury lawyer as soon as possible.

What Is The Statute Of Limitations For Negligence In California?

Under California state law, the statute of limitations for negligence depends on the specific circumstances and entails of the case. For a personal injury case specifically, there is a two year statute of limitations. This means, an individual who has suffered an injury due to someone else’s negligence, carelessness or recklessness has two years from the date of the incident to seek damages via filing a personal injury claim.

How Much Does It Cost To Speak With A Personal Injury Lawyer About Negligence?

At McKennon Law Group PC, the vast majority of our clients retain us on a contingency fee basis. This means that our fee is calculated as a percentage of the total recovery we achieve for our client. Some specific cases are charged hourly fees, and in certain rare circumstances, we can offer a fixed flat rate.

We offer a free, no-obligation phone consultation to any California resident who has been injured due to someone’s negligence. We offer three fee options so that every person who seeks our help can have a range of options available that suits them.

Schedule Your Free Personal Injury Consultation With McKennon Law Group PC Today

If you are stuck paying medical bills for an injury that someone else caused, are out of work and don’t know what to do, you have the right to hold this negligent person accountable in a California state court. You have the right to seek compensation. Our attorneys will build a strong personal injury case that highlights that person’s negligence or breach of care, demonstrating causation, and defend your right to damages.

Call McKennon Law Group PC today to schedule your complimentary case evaluation.

Ninth Circuit Reaffirms Salyers; Rejects Insurer’s Contention That “Non-Waiver” Provision in ERISA Life Insurance Plan Insulates It From Plan Administrator’s/Agent’s Imputed Liability

Sometimes employers offer their employees the opportunity to purchase additional insurance coverage for the employees themselves and for their dependents as part of an employee benefit plan. In such cases, the employer often functions as a plan administrator and as the agent of the insurance company issuing the policy. To attempt to insulate themselves from legal liability, insurers often insert “non-waiver” provisions relating to the agency status of the employers to whom they sell life, health and disability insurance coverage.

Cho v. First Reliance Standard Life Insurance Co., 2021 WL 2885855 (9th Cir. 2021) involved an employee who purchased additional life insurance coverage in the amount of $500,000 for her dependent spouse through her employer, Giorgio Armani Corporation. Ms. Cho signed up for the coverage and paid premiums for it for more than a year when Ms. Cho’s dependent spouse died. First Reliance denied the claim based on the policy provision that clearly provided that the insured submit “proof of good health” for the coverage. Ms. Cho was forced to file suit against First Reliance in order to get the benefits of the insurance she had purchased and paid for. She claimed that First Reliance had waived its right to enforce the requirement for “proof of good health” because its behavior was “so inconsistent with an intent to enforce” it. The district court agreed and awarded her the full $500,000 policy benefit.

First Reliance appealed to the Ninth Circuit Court of Appeals. It contended that a “non-waiver” clause in the policy immunized it from liability and distinguished the case from the Ninth Circuit’s decision in Salyers v. Metropolitan Life Insurance Co., 871 F.3d 934, 940 (9th Cir. 2017), which the court commented was very similar on the facts. First Reliance claimed that it was not responsible for the acts and omissions of the plan administrator even though the plan administrator handled “nearly all the administrative responsibilities” of the plan. The Ninth Circuit easily found that the plan administrator was the agent of First Reliance, and, therefore, First Reliance was liable for the plan administrator’s conduct:

Cho is entitled to the benefits for which she paid. Because the plan was self-administered and Armani handled “nearly all the administrative responsibilities,” its “direct interaction with plan participants” would have suggested it was acting with “apparent authority on the collection of evidence of insurability.” See Salyers, 871 F.3d at 940–41 (citation and internal quotation marks omitted). For over a year Armani accepted Cho’s premiums without any submission of evidence of insurability though it “knew or should have known” the terms of the plan required such evidence. See id. at 941. Armani’s actions were “so inconsistent with an intent to enforce” the requirement that it was reasonable for Cho to believe she was not required to submit such evidence. See id. (citation and internal quotation marks omitted).

Cho, supra, 2021 WL 2885855, at *1.

This was an easy case – Armani “knew or should have known” that the terms of the plan required submission of proof of good health, and “Armani’s actions were ‘so inconsistent with an intent to enforce’ the requirement that it was reasonable for Cho to believe she was not required to submit such evidence.”

The Ninth Circuit did not enforce the non-waiver clause because “[a]llowing insurers like First Reliance essentially to vitiate Salyers and the good behaviors it seeks to promote by including one sentence in their plans would be unfair and unjust.”

Insurance companies can always be counted upon to do what they can to try to avoid liability through the use of self-serving provisions like the non-waiver clause at issue in Cho. However, they are still subject to principles of equity and fairness – they cannot “contract their way out” of liability for the substantial gross negligence of themselves or their agents.

If you have been unfairly denied insurance coverage based on mistakes made by insurance companies or their agents, McKennon Law Group, PC may be able to help you. We specialize in handling ERISA cases like this one and obtaining the maximum policy benefits, holding insurers responsible for the coverage they agreed to provide.

A Recent California Supreme Court Decision Clarifies when an Intentional Act with Unforeseen Results is an Accident under a Liability Policy

Generally, an insured will not receive coverage under a liability policy when they intentionally cause the loss or injury for which they are seeking coverage. As expected, insurers regularly deny claims when they are able to characterize an insured’s conduct as intentional, even when the damage or injury caused was accidental or not intended by the insured. In recent years, insurers in California have been able to successfully defend their denial of insurance claims involving an intentional act before California courts. The success experienced by these insurers has largely been the result of a California Supreme Court decision in 2009 holding that “an injury-producing event is not an ‘accident’ within the policy’s coverage language when all of the acts, the manner in which they were done, and the objective accomplished occurred as intended by the actor.” Delgado v. Interinsurance Exchange of the Automobile Club of Southern California, 47 Cal.4th 302 (2009). Prior to the Delgado decision, California courts followed a more expansive interpretation of liability policies requiring insurance companies to defend policyholders against lawsuits even where the underlying claim alleged only intentional conduct. See Gray v. Zurich ins. C.o., 65 Cal.2d 263 (1966).

Recently, the California Supreme Court provided clarity that once again expanded the interpretation of liability policy provisions to provide coverage even when an event involves an intentional act. In Liberty Surplus Insurance Corp. v. Ledesma & Meyer Construction Co., 418 P.3d 400 (2018), Ledesma & Meyer (“L&M”) contracted with a school district to manage a construction project. The assistant superintendent that L&M hired sexually abused a 13 year-old student, and L&M was sued for negligently hiring, retaining and supervising the assistant superintendent. L&M tendered the defense of the case to Liberty, its insurer. L&M’s insurance policy provided coverage for bodily injury caused by an “occurrence,” which was defined in the policy as an accident. Liberty sought declaratory relief from the federal district court contending it had no obligation to defend or indemnify L&M since the injury to the student was not caused by an “occurrence” or accident, since the alleged negligent hiring and supervision of the assistant superintendent was too attenuated from the injury-causing conduct, and the alleged negligent hiring and supervision of the assistant superintendent was not an accident despite the fact L&M did not intend for the injury to occur. Liberty also argued that because the sexual abuse was an intentional act by the superintendent hired by L&M, it could not be an “occurrence” triggering coverage.

The district court granted summary judgment to Liberty on the cause of action for negligent hiring, retention, and supervision. L&M appealed the decision arguing the district court misapplied California law, and the Court of Appeals sought the opinion of the California Supreme Court. The California Supreme Court noted that the applicable definition of “accident” in California means an unexpected, unforeseen, or undersigned happening or consequence from either a known or unknown cause. The Court further explained that the word “accident” in the coverage clause of a liability policy refers to the conduct of the insured for which liability is sought to be imposed (which here would be the conduct of L&M rather than the conduct of the assistant superintendent). The Court determined that the sexual abuse of the student may be deemed an accident or an unexpected consequence of L&M’s independent act of negligently hiring, retaining and supervising the assistant superintendent.

The Court noted that the insured’s “allegedly negligent hiring, retention and supervision were independently tortious acts, which form the basis of its claim against [the insurer] for defense and indemnity.” It then pointed out that the employee’s molestation “was the act directly responsible for the injury, while [the insured’s] negligence in hiring, retaining, and supervising him was an indirect cause.” It reasoned that the insured’s acts:

must be considered the starting point of the series of events leading to the molestation. [The insured] does not rely on any event preceding its own negligence to establish potential coverage. As alleged by [the plaintiff], the ‘occurrence resulting in injury’ began with [the insured’s] negligence and ended with [the employee’s] act of molestation.

The Court further explained that Liberty’s arguments, if accepted, would leave employers without coverage for claims of negligent hiring, retention, or supervision whenever an employee’s conduct is deliberate, and such a result would be inconsistent with California law. The Court concluded that absent an applicable exclusion, employers should expect to provide coverage for such claims under comprehensive general liability insurance policies, just as they do for other claims of negligence.

This decision should cause concern for insurance providers who have developed a practice of regularly denying general liability claims based upon the premise that there was an intentional act involved. Given that in California, a duty to defend exists if the insurer becomes aware of, or if a third party lawsuit pleads facts giving rise to the potential for coverage, this ruling will apply in a variety of contexts where an intentional act is at issue in a claim involving negligence.

New liability for claims adjusters the right move. Daily Journal Publishes McKennon Law Group PC Article.

The April 21, 2014 edition of the Los Angeles Daily Journal featured Robert McKennon’s article entitled: “New Liability for claim adjusters the right move.” In it, Mr. McKennon discusses a new case which exposes insurance adjustors to negligent misrepresentation and intentional infliction of emotional distress claims by policyholders. The article is posted below with the permission of the Daily Journal.

New liability for claims adjusters the right move

After filing an insurance claim, it is not uncommon for an insured to receive unfair treatment from the claims adjuster assigned by the insurer. For example, a claims adjuster may misrepresent the value of a claim or misstate policy coverage. An insured can, of course, bring claims for breach of contract and insurance bad faith against the insurer for such improper actions; however, it is well-established that under California law, insureds cannot sue the claims adjuster for breach of contract or insurance bad faith. See Sanchez v. Lindsey Morden Claims Services Inc., 72 Cal. App. 4th 249 (1999).

But can an insured sue a claims adjuster for negligent misrepresentation or intentional infliction of emotional distress? The state Court of Appeals, in Bock v. Hansen, 2014 DJDAR 4280 (Apr. 2, 2014), held that they can. Bock is the first case to extend liability for certain claims handling actions to adjusters.

Michael and Lorie Bock purchased a homeowner’s policy from Travelers Property and Casualty Insurance Co., which covered physical loss to their home and the cost of debris removal. After a tree limb collapsed onto the Bocks’ home and caused substantial property damage, the Bocks reported the incident to Travelers, which assigned Hansen, a claims adjuster to handle the claim. The Bocks allege that the adjuster spent no more than 15 minutes at the scene, altered the scene to downplay the severity of the damage, and falsely informed the Bocks they were not covered for debris removal.

Subsequently, the Bocks discovered and reported additional damage to their chimney. Travelers sent Hansen again, despite the Bocks’ protests. Hansen again told the Bocks their policy did not cover “cleanup,” and the Bocks, relying on this representation, began cleaning the debris themselves. Later that day, Travelers sent Vertex Construction Services, a company without a valid contractor’s license, which assessed the damage and issued a false report understating the extent of the damage. Based on Vertex and the adjuster’s estimates, Travelers issued a check in an amount barely enough to cover the costs of tree removal, let alone to cover the damage caused, and denied coverage for the chimney damage. The Bocks submitted additional information, including a licensed contractor’s review and response to the Vertex report, for a reconsideration of their claim, but Travelers never responded.

Subsequently, the Bocks filed a complaint against Travelers, the adjuster and Vertex for, among other claims, breach of contract, bad faith, negligent misrepresentation and intentional infliction of emotional distress. The trial court sustained demurrers to these actions without leave to amend. The Bocks appealed.

The Court of Appeal reversed and upheld the negligent misrepresentation claim and granted the Bocks leave to amend their IIED claim. The court noted that insurers were in a “special relationship” with insureds, “akin to a fiduciary relationship,” and therefore owed insureds a duty to perform their responsibilities in good faith. Because Travelers was in a special relationship with the Bocks, Hansen, its employee, owed certain legal duties to the Bocks as well.

Courts focus on two circumstances in finding negligent representation liability: (1) where providing false information poses a risk of, and results in, physical harm to a person or property and (2) where the information is conveyed in a commercial setting for a business purpose. Here, the court found both circumstances applied — Mrs. Bock was physically harmed while cleaning up broken glass around the tree limb, and Hansen misrepresented Travelers’ scope of coverage for a business purpose.

The court also explained an agent or employee is always liable for his or her own torts, even when acting within the scope of his or her agency or employment: “Hansen also argues that he cannot be liable as an agent because he was acting in the course and scope of his employment. The complete answer is found in the terse statement of the rule in Witkin: ‘An agent or employee is always liable for his or her own torts, whether the principal is liable or not, and in spite of the fact that the agent acts in accordance with the principal’s directions. Similarly, an agent who commits an independent tort, such as fraud, remains liable despite the fact that the principal, by ratification, also becomes liable.’” (Emphasis added).

The court distinguished cases involving an insurance agent rather than a claims adjuster, and dismissed the argument that reliance on any misrepresentation was unjustified because the policy itself stated otherwise. Indeed, California courts do not allow a duty-to-read-the-insurance-policy defense when agents make representations to insureds about policy coverage. The court explained that insurance policies are complicated legal contracts and “[a]bsent some notice or warning, an insured should be able to rely on an agent’s representations of coverage without independently verifying the accuracy of those representations by examining the relevant policy provisions.”

Additionally, the court rejected the argument that the Bocks were on notice as to coverage since the Bocks began cleaning up prior to receiving an estimate based on Hansen’s misrepresentation, and sustained damages despite the minimal amount paid by Travelers.

Finally, the court ruled that insureds may assert IIED claims against claims adjusters, but found that the Bocks did not adequately plead the claim. The Bocks alleged that Hansen engaged in outrageous conduct by, among other things, ignoring evidence of coverage, altering the accident scene to deny coverage, creating a false report regarding damage to the Bocks’ property, and denying the claim for chimney repair when Hansen knew it was the Bocks’ primary source of heat. Ultimately, the court was not persuaded that these allegations constituted extreme and outrageous conduct as a matter of law. However, because the Bocks identified a litany of other allegations they could assert in an amended complaint that constituted outrageous conduct and caused them severe emotional distress, the court permitted the Bocks to amend their claim to support an IIED claim.

Bock is a well-reasoned, policyholder-friendly decision that expands liability to claims adjusters, such that adjusters may be liable for negligent misrepresentation and IIED. Based on the holding, there is no reason to believe that intentional misrepresentation claims cannot also be asserted in the proper circumstances. Claims adjusters are often the face of the insurer. They are expected to know the policy terms and coverages and to apply them in good faith to a given set of facts to determine coverage. When claims adjusters misrepresent policy terms or assert facts that they know, or should know, are false and when they know or believe that the insureds will rely on them to their detriment, it is not unreasonable to hold them accountable. It will be up to policyholders’ attorneys to determine if suing adjusters adds any value to their case. In most cases it will not, but it may in some situations, be just the right remedy and it may even mean the difference between litigating in state court vs. federal court as naming a local claims adjuster could act to defeat diversity jurisdiction in federal court.

An Insurance Company Cannot Shield Itself from Negligence Liability by Filing an Interpleader

In Lee v. West Coast Life Insurance Company, 2012 U.S. App. LEXIS 15768 (9th Cir. July 31, 2012), the Ninth Circuit Court of Appeals ruled that a stakeholder insurance company cannot use an interpleader filing to shield itself from tort liability for its negligent actions. With this holding, the Court of Appeals confirmed that “where the stakeholder may be independently liable to one or more claimants, [an] interpleader does not shield the stakeholder from tort liability, nor from liability in excess of the stake.”

In 1998, West Coast Life Insurance Company issued a policy on the life of Steve Lee, Sr. Over the next ten years, West Coast received numerous change of ownership and change of beneficiary forms from members of the Lee family. However, in 2005, West Coast’s Director of Policy Administration gave erroneous instructions regarding who should sign particular forms, and in what capacity those forms should be signed. Assuming that West Coast had properly instructed them in completing those forms, the Lee family made several subsequent changes to the policy’s ownership and beneficiaries. When Mr. Lee died in 2009, West Coast realized that the 2005 changes were not properly executed, and informed certain members of the Lee family that they were not entitled to the life insurance benefits.

With West Coast’s discovery, two groups of the Lee family claimed that they were entitled to the life insurance proceeds: the named beneficiaries prior to the 2005 changes and the named beneficiaries at death. That first group of Lee family members (the pre-2005 beneficiaries) filed suit against West Coast for breach of contract and breach of the covenant of good faith and fair dealing. West Coast filed a counterclaim-in-interpleader, deposited the life insurance proceeds, plus interest, with the Court, and added the other members of the Lee family (the post-2005 beneficiaries) as counterclaimants. The post-2005 beneficiaries then filed counterclaims for negligence and declaratory relief against West Coast, as well as cross-claims against the pre-2005 beneficiaries.

Eventually, the members of the Lee family settled their disputing claims to the life insurance proceeds, with the pre-2005 beneficiaries receiving $290,000, and the post-2005 beneficiaries collecting the remainder of the funds. This did not end the litigation however, as the post-2005 beneficiaries maintained that West Coast was liable to them for the insurance proceeds allocated to the pre-2005 beneficiaries, as well as for attorneys’ fees incurred in litigating the cross-claims against them.

Following a bench trial on stipulated facts, the district court issued judgment in West Coast’s favor, ruling that the post-2005 beneficiaries failed to allege any cognizable damages flowing from West Coast’s alleged negligent conduct, and therefore it did not need to address the merits of the post-2005 beneficiaries’ negligence claims. Specifically, the district court “concluded that attorney’s fees are not recoverable in interpleader actions absent a showing of bad faith.” In overturning the district court’s ruling, the Ninth Circuit explained that while an interpleader does protect “the stakeholder from being obliged to determine as this peril which claimant has the better claim … interpleader protection generally does not extend to counterclaims that are not claims to the interpleaded funds.”

Here, the post-2005 beneficiaries “alleged that West Coast’s negligent actions in 2005 caused the instant controversy, and claim damages flowing from that negligence.” Thus, because their “damages flowed not from West Coast’s filing of an interpleader complaint but from its alleged negligent conduct,” the post-2005 beneficiaries were not required to show that West Coast acted in bad faith. Accordingly, because interpleader protection does not extend to counterclaims that are not claims to the interpleaded funds, West Coast could be liable for its negligent actions.

Based on this ruling, an insurance company cannot use an interpleader filing as a shield to protect itself from liability for its own negligent (or for that matter bad faith) actions. When the insurance company is not blameless with respect to the underlying controversy, it can face tort liability from a party that claims an interest in the disputed funds. In fact, an insurance company can face liability for negligence, and can even be liable for certain attorneys’ fees incurred in such an action.