Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County No. PC 038899, Barbara M. Scheper, Judge.
Raisin & Kavcioglu and Armenak Kavcioglu, for Plaintiff and Appellant.
Robinson, Di Lando & Liebhaber, Michael A. Di Lando and Cynthia A. Goodman, for Defendant and Respondent.
PERLUSS, P. J.
Forest Construction Co., Inc. (Forest) sued Powers & Effler Insurance Brokerage, Inc. (Powers), alleging a single cause of action against Powers for negligence in failing to secure coverage for Forest as an additional insured on a subcontractor’s commercial general liability (CGL) policy. Forest appeals from the judgment entered after the trial court granted Powers’s motion for summary judgment, as well as from the trial court’s denial of its motions for leave to file an amended complaint and its motion for a new trial. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Forest, a licensed general contractor, was hired to construct a gymnasium for a church in Porter Ranch. On March 14, 2003 Forest hired Kristopher Zimmerman as a subcontractor to construct insulated concrete walls for the new building. Their agreement required Zimmerman to maintain CGL insurance and to cause Forest to be named as an additional insured under Zimmerman’s policy. On March 22, 2003 Zimmerman, who was insured by Environmental & Casualty Insurance Co. (Environmental), applied for an additional insured endorsement for Forest. The endorsement was issued with an effective date of April 22, 2003 and an expiration date of September 22, 2003.
Environmental was placed into receivership. Zimmerman then asked Powers to secure a new CGL policy for him. On September 22, 2003 Powers arranged for the issuance of a new CGL policy for Zimmerman with Lincoln General Insurance Co. (Lincoln) through Arrowhead General Insurance Co. (Arrowhead), Lincoln’s agent. On October 8, 2003, pursuant to Zimmerman’s request, Powers asked Arrowhead to issue an additional insured endorsement covering Forest and the work Zimmerman was performing on the church gymnasium. That same day, Powers issued a certificate of liability insurance listing Forest as an additional insured. Form language at the top of the certificate states, “This certificate is issued as a matter of information only and confers no rights upon the certificate holder. This certificate does not amend, extend or alter the coverage afforded by the policies below.” The relevant CGL policy, including policy limits, is described in the body of the form. In a box at the bottom of the form entitled “Description of operations/locations/vehicles/exclusions added by endorsement/special provisions,” the following interlineated language appears: “Certificate holder [Forest] is shown as Additional Insured but only with respect to liability arising out of operations performed by named insured. ** Endorsement to follow subject to company approval RE: 19700 Rinaldi St. Porter Ranch, Ca.”
Two weeks later, pursuant to Arrowhead’s request for more information about the work Zimmerman was performing on the site, Powers sent Zimmerman a form to complete “with a complete/correct job description[] of what you [are] doing.” Zimmerman completed the form, and Powers transmitted it to Arrowhead on October 27, 2003. On November 17, 2003 Zimmerman received a notice his insurance would be cancelled for non-payment as of November 20, 2003. Powers immediately sent a request for reinstatement of the policy and, upon payment of the premium, the policy was reinstated.
On December 12, 2003 Lincoln sent Powers another notice of cancellation designating January 13, 2004 as the effective date, stating as the reason for cancellation, “Adverse inspection information: insured’s past or present operations include retaining wall work.” Zimmerman responded directly to Arrowhead by letter, explaining his contract required installation of insulated concrete forms rather than stand-alone retaining walls: “We DO NOT install independent retaining walls strictly for the purpose of retaining dirt, water, etc. These walls are part of a structure (i.e. house), not just an independent wall built to hold back dirt, plants, water etc.” The same day Powers sent a memorandum to Arrowhead asking if the additional insured certificates, including Forest’s, had been approved. Arrowhead returned the memorandum to Powers stamped “Not Accepted.” Two handwritten notes indicate Arrowhead had rejected the certificates because construction of retaining walls was part of the work to be performed by Zimmerman. Powers, in turn, sent a notice to Zimmerman that the requested certificates “have been Null & Void due to work being performed.” After an unsuccessful request to rescind the cancellation, Powers sent Zimmerman a letter on January 13, 2004 advising him that he no longer was insured and no replacement insurance had been identified.
While the insurance matters were moving forward, Zimmerman had been working on the church project, beginning in March 2003. However, following a dispute between Forest and the church, on December 22, 2003 the church suspended the construction contract. Both Forest and Zimmerman left the site, and Forest’s contract was terminated.
In February 2004 Forest sued the church for breach of contract, and the case proceeded to arbitration. The church filed a counter suit against Forest, Zimmerman and a number of other defendants for breach of contract, strict liability, negligence, various intentional torts, including fraud, and declaratory relief. A substantial portion of the church’s claims was based on Zimmerman’s allegedly defective work in casting the concrete forms for the walls, rendering them unstable. Forest, invoking its status as an additional insured, tendered the claim to Lincoln. Coverage was denied on the ground Forest had never been an additional insured under the Lincoln policy.
Forest then sued Lincoln and Powers in June 2006. Forest alleged a cause of action for breach of contract against Lincoln and for negligence against Powers. The negligence claim is premised on the allegation that “Powers failed to make sure that Lincoln and Environmental issue[d] endorsements naming Forest as an additional insured under Zimmerman’s policies.”
Forest’s contract claim against Lincoln is not at issue in this appeal.
Forest conceded Environmental had issued the additional insured endorsement to Zimmerman, but it appears Environmental, whose receivership prompted Zimmerman to seek coverage from Lincoln, never responded to Forest’s tender of a claim under that policy. Environmental is not a party in this proceeding.
Powers moved for summary judgment on two grounds: (1) Lincoln’s refusal to issue the certificate was based on its disapproval of Zimmerman’s operations and not any breach of duty by Powers; and (2) Powers had no ability to force Lincoln to issue an additional insured certificate to Forest and thus had not caused Forest’s injury. Forest opposed the motion, arguing Powers had failed to advise Forest the endorsement had not been issued and had negligently caused Forest to rely on the misleading certificate rather than seek coverage elsewhere. Recognizing it had failed to plead this theory of liability, Forest filed an ex parte application three days before the hearing on the summary judgment motion seeking leave to file an amended complaint.
The trial court denied Forest’s application for leave to file an amended complaint based on Forest’s lack of diligence and granted Powers’s motion for summary judgment on the ground Powers had neither the power nor the duty to force Lincoln to issue the endorsement and thus did not cause Powers’s damages. The court refused to consider Forest’s alternative theory of negligence, explaining: “Part of your problem is the way you framed your complaint. These complaints [relating to the failure to contact Forest about Lincoln’s delay] . . . I found to be irrelevant because they do not go to the single allegation . . . you claim was negligence, which was [Powers’s] failure to obtain the endorsement. . . . I don’t believe [Powers] [had] either the duty or the power to force the insurance company to issue an endorsement . . . .”
After judgment had been entered, Forest again moved for leave to file an amended complaint. The trial court denied the motion on the ground judgment had already been entered. Forest’s motion for a new trial was also denied.
CONTENTIONS
Forest contends it raised a triable issue of material fact with respect to Powers’s negligence and the trial court erred in concluding the evidence it submitted did not conform to the allegations of the complaint. Alternatively, Forest contends the court should have granted leave to amend the complaint and erred in denying Forest’s motion for a new trial. Forest also contends the trial court’s order granting summary judgment failed to comply with the requirements of Code of Civil Procedure section 437c, subdivision (g).
Statutory references are to the Code of Civil Procedure.
DISCUSSION
1. Standard of Review
We review the trial court’s grant of summary judgment de novo and decide independently whether the parties have met their respective burdens and whether facts not subject to triable dispute warrant judgment for the moving party as a matter of law. (Intel Corp. v. Hamidi (2003) 30 Cal.4th 1342, 1348; Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 334; § 437c, subd. (c).)
In analyzing a motion for summary judgment, the court must first “identify the issues framed by the pleadings,” because the motion must show “there is no factual basis for relief on any theory reasonably contemplated by the opponent’s pleading.” (AARTS Productions, Inc. v. Crocker National Bank (1986) 179 Cal.App.3d 1061, 1064; see Tsemetzin v. Coast Federal Savings & Loan Assn. (1997) 57 Cal.App.4th 1334, 1342.) A defendant moving for summary judgment need address only the issues raised by the complaint, and a plaintiff cannot raise “new, unpleaded issues” in his or her opposing papers. (Government Employees Ins. Co. v. Superior Court (2000) 79 Cal.App.4th 95, 98-99, fn. 4.) “A sufficient motion cannot be successfully resisted by counterdeclarations which create immaterial factual conflicts outside the scope of the pleadings; counterdeclarations are no substitute for amended pleadings.” (AARTS Productions, Inc., at p. 1065.)
On review of an order granting summary judgment, we view the evidence in the light most favorable to the opposing party, liberally construing the opposing party’s evidence and strictly scrutinizing the moving party’s. (O’Riordan v. Federal Kemper Life Assurance Co. (2005) 36 Cal.4th 281, 284.) “Only when the inferences are indisputable may the court decide the issues as a matter of law. If the evidence is in conflict, the factual issues must be resolved by trial. ‘Any doubts about the propriety of summary judgment . . . are generally resolved against granting the motion, because that allows the future development of the case and avoids errors.’” (Binder v. Aetna Life Ins. Co. (1999) 75 Cal.App.4th 832, 839.)
2. The Trial Court’s Summary Judgement Order Is Adequate for Review
Section 437c, subdivision (g), requires the trial court to specify the reasons for its decision to grant summary judgment in an order that “specifically refer[s] to the evidence proffered in support of, and if applicable in opposition to, the motion which indicates that no triable issue exists.” The trial court’s failure to perform this statutory duty, however, does not automatically require a reversal. (Ruoff v. Harbor Creek Community Assn. (1992) 10 Cal.App.4th 1624, 1627.) The de novo standard for appellate review of an order granting summary judgment frequently means the lack of a proper order constitutes harmless error. (Soto v. State of California (1997) 56 Cal.App.4th 196, 199 [“[t]he lack of a statement of reasons presents no harm where . . . independent review establishes the validity of the judgment”].)
The full text of section 437c, subdivision (g), provides: “Upon the denial of a motion for summary judgment, on the ground that there is a triable issue as to one or more material facts, the court shall, by written or oral order, specify one or more material facts raised by the motion as to which the court has determined there exists a triable controversy. This determination shall specifically refer to the evidence proffered in support of and in opposition to the motion which indicates that a triable controversy exists. Upon the grant of a motion for summary judgment, on the ground that there is no triable issue of material fact, the court shall, by written or oral order, specify the reasons for its determination. The order shall specifically refer to the evidence proffered in support of, and if applicable in opposition to, the motion which indicates that no triable issue exists. The court shall also state its reasons for any other determination. The court shall record its determination by court reporter or written order.”
In Santa Barbara Pistachio Ranch v. Chowchilla Water Dist. (2001) 88 Cal.App.4th 439, 449, the Court of Appeal explained when noncompliance with section 437c, subdivision (g), cannot be considered harmless error, holding that, if the issues are complex and the evidence conflicting and the trial court has “clearly decided credibility issues, at least through its apparent decision to disregard certain contradictions in the evidence,” de novo review is inappropriate because “[w]ithout a sufficient statement of reasons from the court, we are precluded from undertaking a meaningful review of the issues.” (See Byars v. SCME Mortgage Bankers, Inc. (2003) 109 Cal.App.4th 1134, 1146 [giving as example of when noncompliance with § 437c, subd. (g), is not harmless “when the trial court has discretion to ignore a party’s declaration that conflicts with the party’s deposition testimony”]; see also W.F. Hayward Co. v. Transamerica Ins. Co. (1993) 16 Cal.App.4th 1101, 1111 [“meaningful appellate review” is “a key objective” of § 437c, subd. (g)].)
Whatever technical deficiency there may be in the trial court’s formal order granting summary judgment, the court’s detailed remarks in this case provide a fully sufficient basis for “meaningful appellate review.” (See Santa Barbara Pistachio Ranch v. Chowchilla Water Dist., supra, 88 Cal.App.4th at p. 448.) In addition to the minute order, which sets forth the reasoning and factual basis for the ruling, the transcript of the hearing demonstrates the court had a firm understanding of the evidence submitted by the parties and the legal theories advanced by them in support of their respective positions. Any error, therefore, was harmless.
3. The Trial Court Correctly Granted Summary Judgment Because Neither of Forest’s Theories of Negligence -- the One Actually Pleaded or the One Belatedly Submitted in Opposition to Summary Judgment -- Is Legally Viable
Forest does not contest the trial court’s conclusion Powers lacked the ability to force Lincoln to issue the additional insured endorsement -- a material fact Forest did not dispute in the trial court -- thus effectively negating Forest’s original theory of liability. Holding Forest to the four corners of its complaint, the court refused to consider Forest’s alternative theory of negligence, first proffered in its opposition papers, that Powers negligently failed to alert Forest to the problems with the application and thus prevented Forest from protecting its own interests. (See Tsemetzin v. Coast Federal Savings & Loan Assn., supra, 57 Cal.App.4th at p. 1342 [“The burden of a defendant moving for summary judgment only requires that he or she negate plaintiff’s theories of liability as alleged in the complaint. . . . ‘“. . . The [papers] filed in response to a defendant’s motion for summary judgment may not create issues outside the pleadings and are not a substitute for an amendment to the pleadings.”’”]; Residential Capital v. Cal-Western Reconveyance Corp. (2003) 108 Cal.App.4th 807, 829 [plaintiff may not defeat summary judgment by creating triable issues of fact as to matters outside pleadings, nor is plaintiff’s opposition to the summary judgment motion a substitute for an amendment to the pleadings]; Lewinter v. Genmar Industries, Inc. (1994) 26 Cal.App.4th 1214, 1223 [where complaint alleged failure to give adequate warnings that deck of yacht was improperly laminated to hull, plaintiffs could not raise additional theory in opposition to summary judgment relating to failure to warn in connection with post-manufacture defect].)
Focusing on its revised theory of liability, Forest argues the trial court should have viewed the complaint’s allegation of negligence more broadly, insisting the court’s construction of its pleading was unnecessarily narrow. In view of the undisputed facts, however, Forest’s alternative theory of negligence, like its original claim, lacks merit. Accordingly, we need not address whether the court viewed Forest’s negligence allegation too restrictively or whether Forest’s delayed assertion of this new theory was for some reason excusable.
Whether a legal duty exists and the scope of that duty in a given factual context are questions of law subject to de novo review. (Ann M. v. Pacific Plaza Shopping Center (1993) 6 Cal.4th 666, 674;see Rowland v. Christian (1968) 69 Cal.2d 108, 112-113.) To establish the existence of a duty running from Powers to Forest, Forest relies on the familiar principle that “[a] defendant who enters upon an affirmative course of conduct affecting the interests of another is regarded as assuming a duty to act, and will be liable for negligent acts or omissions [citations], because one who undertakes to do an act must do it with care. [Citations.] As Prosser states: ‘Where performance clearly has begun, there is no doubt that there is a duty of care.’ (Prosser, Handbook of the Law of Torts (4th ed. 1971) § 56, p. 346.)” (Bloomberg v. Interinsurance Exchange (1984) 162 Cal.App.3d 571, 575.)
Forest asserts Powers assumed a duty to Forest when Powers forwarded to Forest the document entitled “certificate,” showing Forest as an additional insured with respect to Zimmerman’s operations and then breached that duty by failing to advise Forest of the status of the endorsement. To support this theory, Forest relies on a series of decisions involving misrepresentation or other negligent conduct by insurance agents in servicing their clients. (See, e.g., Free v. Republic Ins. Co. (1992) 8 Cal.App.4th 1726 [finding actionable claim when agent wrongly advised client he was adequately insured for home replacement costs]; Paper Savers, Inc. v. Nacsa (1996) 51 Cal.App.4th 1090, 1095 [reversing summary judgment after finding triable issues of fact as to whether the agent had “negligently represented the meaning and effect of the ‘replacement cost coverage’ endorsement . . . and thereby assumed a special duty to [the insured]”]; see also Desai v. Farmers Ins. Exchange (1996) 47 Cal.App.4th 1110, 1119 [distinguishing non-actionable claims by insureds against their agents who failed to recommend additional or different coverage from actionable claim agent failed “to deliver the agreed-upon coverage”].)
Forest, however, was not a client of Powers. Further, it is undisputed the only communications between Forest and Powers were the initial certificate (identifying Powers as an additional insured but clearly stating the endorsement was “subject to company approval”) and the follow-up certificate (stating the earlier certificate was “null & void”). None of the cases cited by Forest addresses the issue here, that is, whether an agent assumes a duty of care to a proposed additional insured “to make sure” the insurer issues the requested endorsement when it merely forwards a copy of the requested certificate, in effect, an application for an endorsement, to the proposed additional insured.
The gravamen of Forest’s alternative theory is negligent misrepresentation, that is, Powers misrepresented Forest’s status as an additional insured and unfairly misled it to rely on the policy to its detriment. But this theory fails on its initial premise, a failure Forest cannot cure through an amended pleading or with additional evidence. The certificate, even though it described Forest as an additional insured, plainly alerted Forest the certificate was not yet effective. Although Forest apparently failed to fully appreciate the significance of the contingency set forth on the certificate -- “Endorsement to follow; subject to company approval” -- there is no other way to understand this cautionary language: Forest was on notice the insurer had not agreed to issue the requested endorsement. (See Reserve Insurance Co. v. Pisciotta (1982) 30 Cal.3d 800, 807 [courts will not adopt strained or absurd interpretation to create ambiguity when none exists].)
This language is not only fatal to Forest’s duty argument, it is also fatal to any claim by Forest it reasonably relied on the certificate. Indeed, Forest does not allege it relied on Powers to its detriment, an essential element of Forest’s reconceived theory of negligence, the absence of which supports the trial court’s determination the new theory lay outside the pleadings. There simply is no avenue by which Forest could have resuscitated its negligence cause of action against Powers. The trial court did not err in granting summary judgment on that claim.
4. The Trial Court Did Not Err in Denying Forest’s Motions for Leave To Amend and for a New Trial
Forest’s remaining contentions also fail. Forest twice moved for leave to amend its complaint, once by ex parte application three days before the summary judgment hearing and once after the judgment had been entered. The trial court properly denied both motions as untimely. (See, e.g., Leader v. Health Industries of America, Inc. (2001) 89 Cal.App.4th 603, 613 [“‘[t]he law is well settled that a long deferred presentation of the proposed amendment without a showing of excuse for the delay is itself a significant factor to uphold the trial court’s denial of the amendment’”]; Estate of Murphy (1978) 82 Cal.App.3d 304, 311 [“[w]here inexcusable delay and probable prejudice to the opposing party is indicated, the trial court’s exercise of discretion in denying a proposed amendment should not be disturbed”].) In any event, as discussed in the preceding section, an amendment would have been futile; for Forest’s alternative theory of negligence liability was fatally defective. Under the circumstances denial of Forest’s motions for leave to amend the complaint was not an abuse of discretion.
Nor was the trial court’s denial of Forest’s motion for a new trial an abuse of discretion. While it is true “a motion for a new trial is appropriate following an order granting summary judgment” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 858), the “trial judge is accorded a wide discretion in ruling on a motion for new trial and . . . the exercise of this discretion is given great deference on appeal.” (City of Los Angeles v. Decker (1977) 18 Cal.3d 860, 871-872; Sherman v. Kinetic Concepts, Inc. (1998) 67 Cal.App.4th 1152, 1161.) Forest’s motion for a new trial was based on its erroneous assertion Powers assumed a duty of care to Forest when it forwarded the initial certificate to Forest. As we have already considered that argument and rejected it, we find no abuse of discretion in the trial court’s order denying the motion for a new trial.
DISPOSITION
The judgment is affirmed. Powers is to recover its costs on appeal.
We concur: WOODS, J., ZELON, J.
The requirement that an order denying summary judgment include a specific reference to the evidence establishing the existence of a triable issue of material fact was added to section 437c in 1983. (Stats. 1983, ch. 490, § 1, p. 1990; see Continental Ins. Co. v. Superior Court (1985) 165 Cal.App.3d 1069, 1070 [1983 amendment “requires a precise explanation of a trial court ruling denying summary judgment”].) The complementary provision at issue in this case, requiring specification of the evidence indicating that no triable issue exists, was added by amendment to section 437c in 1990. (Stats. 1990, ch. 1561, § 2, p. 7332.)