Opinion
D075312
06-03-2020
INSURANCE COMPANY OF THE WEST, Plaintiff and Appellant, v. BALBOA INSURANCE COMPANY, Defendant and Respondent.
Hirsch Closson and Robert V. Closson, Jodi E. Lambert for Plaintiff and Appellant. Prata & Daley and Robert J. Prata, John F. Morning for Defendant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 37-2016-00024982-CU-IC-CTL) APPEAL from a judgment of the Superior Court of San Diego County, Eddie C. Sturgeon, Judge. Affirmed. Hirsch Closson and Robert V. Closson, Jodi E. Lambert for Plaintiff and Appellant. Prata & Daley and Robert J. Prata, John F. Morning for Defendant and Respondent.
Plaintiff and appellant Insurance Company of the West (ICW) sued respondent Balboa Insurance Company (Balboa) seeking in part a judicial declaration concerning Balboa's duty to indemnify and defend an underlying property contamination action against insureds Jung Soon Myung and Daniel D. Myung (Myungs or the insureds). Following a bench trial, the court ruled there was no evidence Balboa had issued a policy of insurance to the Myungs, and entered judgment in Balboa's favor. ICW contends the existence of a binder and other documents issued by an insurance agency to the Myungs under the agent's actual or ostensible authority created a presumption of coverage that Balboa failed to rebut. It maintains as a result the court erred in its ruling and asks that the judgment be reversed and the matter remanded for judgment to be entered in its favor and for the court to determine the extent of contribution allowed for past defense costs. We hold ICW has not demonstrated the court erred by entering judgment in Balboa's favor. We affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
The judgment here is based on a statement of decision following a trial on stipulated facts, deposition and declaration testimony and other submitted documents. We state undisputed facts from the record, and, to the extent those facts permit conflicting inferences, resolve those to support the judgment in Balboa's favor. (Jackson v. LegalMatch.com (2019) 42 Cal.App.5th 760, 767; C9 Ventures v. SVC-West, L.P. (2012) 202 Cal.App.4th 1483, 1492; see In re Shaputis (2011) 53 Cal.4th 192, 214, fn. 11 [appellate court is not limited to facts or evidence cited in trial court's statement of decision but review extends to the entire record].)
Since 1978, Daniel Myung or his and his wife's family partnership have owned Green's Cleaners, a dry cleaning business in South Gate, California. In 2015, a school district sued the Myungs and their partnership alleging damages from environmental contamination. The Myungs tendered their defense and indemnity of that action to ICW, which agreed to defend on a reservation of rights. ICW had previously issued policies to the Myungs as part of a dry cleaners insurance program through the California Fabricare Institute (CFI), a membership-based association. In particular, ICW issued a dry cleaners policy to the Myungs for the period of August 15, 1983, to September 1, 1984, which was renewed for the following year but then cancelled as of mid-March 1985 for nonpayment of the premium.
The Myungs also tendered defense of the underlying action to Balboa based on documents in their possession from their insurance broker, Henderson Insurance Agency (Henderson), which in 1982 and 1983 had procured insurance for dry cleaners from a number of different insurers, including Balboa. One of the Myungs' documents is Henderson invoice No. 41977 to Green's Cleaners referring to policy number 2, indicating a $1,325 "dry cleaners package policy renewal premium" (capitalization omitted) and $100 "broker fee" for the effective dates of March 1, 1983, to March 1, 1984 (the Henderson invoice). The second is a three-page document entitled, "A Professional Drycleaners and Laundry Insurance Program for Green's Cleaners" (the insurance program document) containing a schedule of insurance, a listing of monetary liability limits for various types of coverage including for "bodily injury/property damage," and a specification of annual and monthly premiums. Below the listing of premiums the insurance program document contains a line with filled-in blanks reading: "Coverage bound 3/1/83 By Balboa." It further contains a note stating: "This is not the insurance policy. It is merely a summary of your coverages." (Some capitalization omitted.) Balboa denied the Myungs' tender because it could not locate an insurance policy it had issued to them.
In 2016, ICW sued Balboa seeking a judicial declaration of Balboa's duty to defend and indemnify the underlying action, and alleging a cause of action for equitable contribution. The matter proceeded to trial on a joint stipulation of facts and on documents (the Henderson invoice and insurance program document, as well as portions of deposition transcripts or declarations), which the parties' deemed authenticated. ICW submitted additional exhibits for trial, including various documents produced by Balboa in discovery, excerpts from the depositions of Daniel Myung and Henderson's chief executive officer Scott Henderson, Scott Henderson's unsigned declaration, and a declaration of CFI insurance committee member Norman Barry Bosshard, who averred based on attached September 24, 1982 minutes of a CFI insurance committee meeting that Balboa was the endorsed liability insurer for CFI before ICW.
The parties stipulated to conduct the trial in two phases. The first phase would determine the threshold issue of whether Balboa issued a policy. The second phase would occur only if the court found Balboa had issued a policy, and if the parties could not agree to an allocation percentage and award on ICW's contribution cause of action.
According to Scott Henderson, his company prepared insurance program documents in the 1980's as a regular business practice following its receipt of insurance quotes or binders from Balboa or Balboa's agent; thus the "coverage bound" language did not suggest a written insurance binder was issued on Balboa's behalf to Green's Cleaners with respect to the described coverage. He averred such program documents were not intended to serve as insurance binders on Balboa's behalf, but were used to advise insureds of proposed or available coverage terms, facilitate purchase of insurance coverage, and obtain premium payments. Henderson stated that his company never had a written agency agreement or other agreement with Balboa, written or oral, authorizing Henderson to issue drycleaner liability insurance policies or bind insurance on Balboa's behalf and he had no knowledge of such authorization; to the extent his company had procured drycleaners liability insurance from Balboa, it had done so only in its capacity as an insurance broker acting on behalf of its clients, the insureds. Scott Henderson stated that the March 1983 invoice did not necessarily indicate that Balboa provided liability insurance to Green's Cleaners before March 1, 1983; based on his knowledge of Henderson's business practices, earlier insurance coverage could have been provided by Balboa or another carrier. He stated his company had no record of Green's Cleaners paying any insurance premium in connection with the March 1983 insurance program or invoice No. 41977. Henderson confirmed, however, that CFI had selected Balboa for its insurance program in or about September 1982, and it was more likely that before March 1, 1983, Henderson sold Green's Cleaners a policy with the CFI-endorsed program.
Daniel Myung testified at his deposition that he was responsible for obtaining insurance for Green's Cleaners from about 1978 to the present time. In 1981, he purchased insurance through Henderson. Myung could not locate any insurance policy issued to his business after 1978 other than the ICW policy; the only documents he found were the Henderson invoice and the insurance program document. He could not recall whether Balboa issued a physical policy of insurance to Green's Cleaners in or around 1983. Myung produced records of payments to Henderson between 1982 and 1985, but he had lost all of his check information from 1983 with the exception of a check dated January 16, 1983. However, according to Myung, he paid insurance premiums to Henderson whenever it sent a bill.
Balboa submitted its own "compendium of facts and evidence" based in part on the joint stipulation and accompanying documents, which included additional excerpts from Scott Henderson's and Daniel Myung's depositions. In those excerpts, Henderson testified he had never been appointed by Balboa as an agent, and he recalled selling insurance policies from companies other than Balboa during the 1982 time frame. He also explained that the phrase "coverage bound" was used to communicate where coverage would have been bound if the premium payment was made. Referring to the Henderson invoice, Scott Henderson testified the term "renewal" was intended to convey that the insured had obtained a policy through Henderson; that despite the word "renewal" it was common the insurance company would change. He testified that the existence of the ICW policy as of August 1983 suggested to him that the insureds did not pay the Henderson invoice.
After ruling on evidentiary objections and hearing the parties' arguments, the court issued a statement of decision in Balboa's favor. It found Daniel Myung and Henderson had not produced any record that the Myungs paid Henderson for the proposed Balboa policy, nor had they produced a record that Henderson paid a policy premium to Balboa on the Myungs behalf or that Balboa issued a policy to the Myungs. The court ruled it was ICW's burden to establish by a preponderance of the evidence that Balboa had issued a liability insurance policy or policies to the Myungs for Green's Cleaners, but found "no reliable evidence" supported such a conclusion, and thus ICW could not establish Balboa shared an obligation to defend or indemnify the Myungs against the underlying environmental contamination lawsuit. ICW filed this appeal from the ensuing judgment.
ICW objected to the trial court's proposed statement of decision in part on grounds it did not address whether the insurance program document satisfied Insurance Code requirements to qualify as a binder (Ins. Code, § 382.5) and if so, "the presumptive effect of such a qualification." In its reply brief on appeal, it argues for the first time that the proposed statement of decision failed to explain the legal and factual basis of the decision as required by Code of Civil Procedure section 632. ICW suggests one of these bases was the question of ostensible agency. We will not consider points raised for the first time in a reply brief "because such consideration would deprive the respondent of an opportunity to counter the argument." (American Drug Stores, Inc. v. Stroh (1992) 10 Cal.App.4th 1446, 1453.) Even if we were to entertain the argument, ICW does not explain the consequences of the trial court's asserted failure to make required findings, or urge this court not to imply findings in favor of the court's decision. (See Code Civ. Proc., § 634; In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1134.) Under the circumstances, we are not prevented from implying trial court findings on the question of Henderson's actual or ostensible authority to act on Balboa's behalf in issuing insurance binders.
DISCUSSION
Characterizing this as a "lost policy" coverage dispute, ICW contends as a general proposition that an insurance binder creates a presumption of coverage that must be rebutted by the insurer. It maintains the Henderson invoice and the insurance program document constitute a binder because the program document expressly states it binds coverage, and it contains all of the statutory information set forth in Insurance Code section 382.5 for a binder to be deemed an insurance policy. Relying on Chicago Title Ins. Co. v. AMZ Insurance Services, Inc. (2010) 188 Cal.App.4th 401, 419 (Chicago Title), ICW further contends the binder is enforceable because Henderson had actual or ostensible authority to issue it. ICW argues Balboa failed to rebut this presumption of coverage, the terms of which are established by the policy admitted into evidence issued to CFI members such as the Myungs.
Balboa does not challenge ICW's arguments that the Henderson invoice and program documents meet the Insurance Code requirements for a binder. It responds that substantial evidence, particularly Scott Henderson's declaration, shows Henderson did not have actual authority to bind coverage on its behalf. Balboa further argues ICW has forfeited its argument that Henderson had ostensible authority to issue a binder because it did not make such an argument to the trial court. Balboa nevertheless argues there is no evidence it granted ostensible authority to Henderson to bind coverage on its behalf. It finally argues even if Henderson had been authorized to bind coverage, substantial evidence negated any finding the Myungs accepted or paid any premium for the binder, or that the binder took effect.
I. Standard of Review
The parties dispute the applicable standard of review. Citing Chicago Title, supra, 188 Cal.App.4th at page 419, ICW contends this court should independently review as a pure question of law whether the Henderson invoice and insurance program document constitute a binder triggering a presumption of insurance coverage. It agrees the substantial evidence standard of review applies to the remaining questions concerning the effect of the binder. Balboa maintains the matter presented solely factual questions for the trial court and thus this court should review for substantial evidence the underlying finding that it did not issue insurance coverage for the Myungs.
" 'Whether or not a valid binder exists is a question of fact insofar as a finding comprehends issues relating to the credibility of witnesses or the weight of the evidence, but a question of law insofar as a finding embraces a conclusion that such factual elements do not constitute a valid oral binder.' [Citation.] 'Whether undisputed facts establish the existence of a binder is a question of law.' " (Chicago Title, supra, 188 Cal.App.4th at p. 419; see also Granco Steel, Inc. v. Workmen's Compensation Appeals Bd. (1968) 68 Cal.2d 191, 197 [involving a preliminary oral binder of insurance].)
However, the " '[e]xistence of an agency relationship is usually a question of fact, unless the evidence is susceptible of but a single inference.' " (Zimmerman v. Superior Court (2013) 220 Cal.App.4th 389, 401; Markow v. Rosner (2016) 3 Cal.App.5th 1027, 1039.) ICW acknowledges that apart from the question of the existence of a binder, the matter presents factual questions, and we agree in view of deposition testimony that Henderson never had a written or oral agency agreement with Balboa seemingly in contrast to the binder indicating coverage was bound and other evidence suggesting Henderson acted merely as a broker, the agency question is one of fact. Thus, we review the trial court's express or implied findings on actual and ostensible agency for substantial evidence. Under that standard, we " 'start with the presumption that the record contains evidence sufficient to support the judgment; it is [ICW's] burden to demonstrate otherwise.' " (Carrington v. Starbucks Corp. (2018) 30 Cal.App.5th 504, 518.) We " ' "consider all of the evidence in the light most favorable to the prevailing party, giving it the benefit of every reasonable inference, and resolving conflicts in support of the [findings]. [Citations.]" [Citation.] We may not reweigh the evidence and are bound by the trial court's credibility determinations. [Citations.] Moreover, findings of fact are liberally construed to support the judgment.' " (Ibid.) " '[O]ur review begins and ends with the determination as to whether, on the entire record, there is substantial evidence, contradicted or uncontradicted, which will support the trial court's factual determinations.' " (Id. at p. 525.)
II. Legal Principles
This court explained the distinction between a binder and a subsequently-issued insurance policy in Ahern v. Dillenback (1991) 1 Cal.App.4th 36: "There is a distinct difference between a temporary binder and the policy of insurance subsequently issued. . . . ' "For the sake of convenience, contracts of insurance sometimes exist in two forms: (1) A preliminary contract intended to protect the applicant pending investigation of the risk by the company or until the policy can be properly issued. (2) The final contract or policy itself." ' [Citation.] [¶] 'The binder issued on an application for insurance is a mere memorandum of the most important terms of a preliminary contract of insurance, intended to give temporary protection pending the investigation of the risk by the insurer or until the issuance of a formal policy.' " (Id. at p. 48.)
"Thus, a binder is an independent contract, separate and distinct from the permanent insurance policy. It is intended to give temporary protection pending the investigation of the risk by the insurer and until issuance of a formal policy or rejection of the insurance application by the insurer. Hence, the fact that the effective date of insurance coverage may predate issuance of the policy under a written binder . . . does not mean the insurance policy has been issued. Rather, a binder evidences that the policy has not yet been issued since the binder is effective until one of two events: the insurance application is rejected or the policy is issued." (Ahern v. Dillenback, supra, 1 Cal.App.4th at p. 48; see also Chicago Title, supra, 188 Cal.App.4th at p. 418 ["A binder 'temporarily obligates the insurer to provide . . . insurance coverage pending issuance of the insurance policy' "]; Adams v. Explorer Ins. Co. (2003) 107 Cal.App.4th 438, 451 ["A binder . . . is a 'temporary contract of insurance' "].) Formation of a binder is governed by the law of contracts, and mutual assent is necessary for contract creation. (Chicago Title, at pp. 419, 422.) Mutual assent is determined under an objective standard applied to the parties' outward manifestations: the reasonable meaning of their words or acts, not unexpressed intentions or understandings. (Id. at p. 422.) Whether an entity who issues a purported insurance binder acts with mutual assent depends on whether that entity is acting as an actual or ostensible agent of the insurer. (Id. at pp. 422-423.)
Insurance Code section 382.5 contains requirements that if met, will deem a binder an insurance policy for the purpose of proving coverage. It provides in part: "A binder which is issued in accordance with this section shall be deemed an insurance policy for the purpose of proving that the insured has the insurance coverage specified in the binder. [¶] (a) As used in this section, 'binder' means a writing (1) which includes the name and address of the insured and any additional named insureds, mortgagees, or lienholders, a description of the property insured, if applicable, a description of the nature and amount of coverage and any special exclusions not contained in a standard policy, the identity of the insurer and the agent executing the binder, the effective date of coverage, the binder number or the policy number where applicable to a policy extension, and (2) which temporarily obligates the insurer to provide that insurance coverage pending issuance of the insurance policy." (Ins. Code, § 382.5.)
According to Chicago Title, supra, 188 Cal.App.4th 401: "The first sentence of subdivision (a) of Insurance Code section 382.5 divides the definition of binder into two parts. The first part of the definition, following the number (1), is prescriptive, and lists the prescribed contents of a binder such as the name and address of the insured. The second part of the definition, following the number (2), is descriptive, not prescriptive, and describes the legal effect of the binder as 'temporarily obligat[ing] the insurer to provide that insurance coverage pending issuance of the insurance policy.' Thus, the binder need only identify the nature and amount of coverage and any special exclusions not contained in a standard policy." (Id. at p. 423.)
The Court of Appeal in Chicago Title held that a trial court correctly instructed a jury that a document entitled "Evidence of Property Insurance" (EOI) was an insurance binder as a matter of law. (Chicago Title, supra, 188 Cal.App.4th at pp. 407, 417.) The EOI identified the insurer, the insureds, the purported agent executing the document, the effective date of coverage, the binder number, and the insured's property address. (Id. at p. 420.) The document also stated: " '[T]his is evidence that insurance as identified below has been issued, is in force, and conveys all the rights and privileges afforded under the policy.' " (Ibid.) The EOI contained information pages listing the coverage provided with the amounts of insurance and deductible for each, recited the annual premium, and included an invoice for the amount. (Ibid.) It was undisputed that a mortgage broker had asked the agent to provide a policy on the insured's home, the agent in response provided the referenced EOI paper, and after the lender accepted the document as a binder, escrow closed. (Ibid.) In rejecting the insurance company's argument that the EOI did not contain language obligating it to provide insurance coverage, the Chicago Title court observed that the paper "obligated [the insurer] to provide insurance according to 'the terms, conditions and exclusions customarily contained in the standard policy' used by [the insurer]." (Id. at p. 423.) But two factual questions remained for the jury as to enforceability of the document as a binder: (1) whether the agent had actual or ostensible authority to bind the insurer and (2) whether the insurer legally cancelled the binder. (Id. at p. 420.)
Both the insurance company and its owner were defendants and appellants in Chicago Title. (Chicago Title, supra, 188 Cal.App.4th at pp. 407, fn. 1, 412.)
As to agency, the court in Chicago Title held that substantial evidence supported the jury's finding that the insurance agency, AMZ, was the insurance company's actual or ostensible agent. (Chicago Title, supra, 188 Cal.App.4th at p. 425.) This was so despite the fact AMZ was not an appointed agent of the insurer and the producer's agreement between them stated AMZ had " 'no authority to act on behalf of, or to bind, [the insurer],' " and AMZ " 'shall always be deemed a representative of the insured and not an agent for the company unless an agency appointment has been made with the California Department of Insurance.' " (Id. at p. 408.) The evidence showed the insurance company's regional sales manager had instructed and authorized AMZ's owner to issue the EOI documents as binders for escrow transactions, and AMZ had done so 30 to 40 times on the insurer's behalf before receiving premium payments. (Id. at pp. 409, 426.) The Court of Appeal held that notwithstanding the absence of a notice of appointment filed with the insurance commissioner, this evidence established AMZ had actual authority to bind the insurer by issuing such documents for escrow transactions. (Id. at p. 426.) It relied on the rule that, absent actual or constructive notice to the insured of a limitation on authority, a general agent may bind a company by acts, agreements or representations within the ordinary scope and limits of the insurance business entrusted to him, even if in violation of private instructions or restrictions on his authority. (Ibid.)
Insurance Code section 1704, subdivision (a), provides: "Any person acting as a licensee under this chapter shall not act as an agent of an insurer unless the insurer has filed with the commissioner a notice of appointment, executed by the insurer, appointing the licensee as the insurer's agent." While the absence of a notice of appointment might subject a purported agent to fines or a disciplinary proceeding, a purported agent's actions in issuing a binder could bind an insurer if the facts otherwise support an agency relationship. (See Chicago Title, supra, 188 Cal.App.4th at p. 425.)
The court pointed out that neither the insureds nor the plaintiff title company were informed of any limitations on AMZ's authority to issue the documents as homeowner's insurance binders. (Ibid.) The Court of Appeal further held this evidence established AMZ had ostensible authority to act on the insurer's behalf. (Chicago Title, supra, 188 Cal.App.4th at p. 426.) It explained: " '[O]stensible authority arises as a result of conduct of the principal which causes the third party reasonably to believe that the agent possesses the authority to act on the principal's behalf.' [Citation.] 'Ostensible authority may be established by proof that the principal approved prior similar acts of the agent.' [Citation.] ' "[W]here the principal knows that the agent holds himself out as clothed with certain authority, and remains silent, such conduct on the part of the principal may give rise to liability." ' " (Id. at pp. 426-427.) Chicago Title held the evidence of the insurer's instructions and authorization to AMZ to issue binders multiple times before without objection, as well as an escrow officer's testimony she had seen AMZ issue such binders and believed it had authority to do so for the insureds, supported the jury's finding of ostensible authority: "By issuing the EOI as a binder before payment of the premium and receipt of the signed application, AMZ was acting according to [the insurer's] instructions and with [the insurer's] authorization. [AMZ's owner] testified AMZ had issued EOI's as binders in such circumstances 30 to 40 times without objection from PSIC. [The escrow officer] testified she had seen EOI's issued by AMZ naming [the insurance company] as the insurer five to 10 times and believed AMZ had authority to prepare and issue the EOI for the [insureds]." (Id. at p. 427.)
III. The Henderson Documents As a Binder
We assume without deciding that the Henderson invoice and insurance program document contain the prescribed contents required by Insurance Code section 382.5 to constitute a binder. There remains the question of whether the binder was effective and enforceable by reason of mutual assent; that is, whether substantial evidence supports an implied finding that Henderson was not authorized as either an actual or ostensible agent to issue binders on Balboa's behalf. (Chicago Title, supra, 188 Cal.App.4th at pp. 422-423.)
IV. Claim of Henderson's Actual Authority to Issue a Binder
In the insurance context, an agent is statutorily defined as " 'one who is "authorized, by and on behalf of an insurer, to transact all classes of insurance" except for life insurance [citation] while a broker is "a person who, for compensation and on behalf of another person, transacts insurance other than life with, but not on behalf of, an insurer." ' " (American Way Cellular, Inc. v. Travelers Property Casualty Co. of America (2013) 216 Cal.App.4th 1040, 1051-1052; see also Krumme v. Mercury Ins. Co. (2004) 123 Cal.App.4th 924, 928-929.) A broker does not act for the insurer (American Way, at p. 1052); it acts as a middleman between the insured and the insurer, soliciting insurance from the public under no employment from any special company, and, upon securing an order, placing it with a company selected by the insured or with the broker's selected company; whereas an agent represents an insurer under employment by it. (Ibid.; see Rios v. Scottsdale Ins. Co. (2004) 119 Cal.App.4th 1020, 1026 [broker "has no binding authority and is as a matter of law not a general agent for the insurer"].) "An agency is actual when the agent is really employed by the principal." (J.L. v. Children's Institute, Inc. (2009) 177 Cal.App.4th 388, 403, citing Civ. Code, § 2299.)
ICW contends Henderson had actual authority to issue the binder. It maintains the circumstances here are like those in Chicago Title, supra, 188 Cal.App.4th 40, where there was no formal notice of appointment on file for the agent, because in this case the insurance program document "expressly purported to bind Balboa" and there was no evidence giving the Myungs notice of any limitations on Henderson's authority to bind Balboa. ICW also asserts the evidence shows Daniel Myung paid the premium to Henderson based on the Henderson invoice and Daniel Myung's deposition testimony that he sent a check whenever Henderson billed him. ICW suggests that in view of this evidence the binder is legally effective because there was no actual or constructive notice of limitations on Henderson's authority, and thus "Henderson could 'bind [Balboa] by any acts, agreements or representations that are within the ordinary scope and limits of the insurance business entrusted to [it], although they are in violation of private instructions or restrictions upon [Henderson's] authority."
These arguments do not appreciate the facts in Chicago Title or operation of the substantial evidence standard of review, under which we resolve conflicting evidence in favor of the judgment. (Carrington v. Starbucks Corp., supra, 30 Cal.App.5th at p. 518.) As we have summarized above, Chicago Title held the jury's finding that the purported agent had actual authority to issue the binder was supported by evidence that on numerous past occasions the insurer's representative gave express instructions to the agent to issue binders in escrow transactions. (Chicago Title, supra, 188 Cal.App.4th at p. 426.) Here, ICW does not cite evidence that any Balboa representative expressly instructed or authorized Henderson to issue insurance program documents as binders for dry cleaners. Even if there was such evidence or an inference could be drawn from the evidence, it is contradicted by other evidence—Scott Henderson's declaration—that Henderson never had a written agency agreement or other written or oral agreement with Balboa authorizing Henderson to issue drycleaner liability insurance policies or bind insurance on Balboa's behalf, and that to the extent Henderson had procured drycleaners liability insurance from Balboa, it had done so only in its capacity as an insurance broker acting on behalf of the insureds.
ICW in reply acknowledges this evidence but maintains that under Chicago Title a formal agency relationship with Balboa is not necessary for a binder to be effective. It argues "the lack of a formal relationship cannot be construed as substantial evidence that supports the trial court's decision." Again, this misunderstands Chicago Title's holding, in which the Court of Appeal held the absence of a statutory notice of appointment filed with the insurance commissioner (Ins. Code, § 1704, subd. (a)) did not preclude it from finding based on the express authorization evidence that the agent there had an actual agency relationship with the insurer. (Chicago Title, supra, 188 Cal.App.4th at pp. 425-426.) The court went on to find the evidence of the insurer's express authorization to AMZ to issue EOIs constituted substantial evidence to support the jury's finding of actual authority. (Id. at p. 426.)
In sum, evidence that Henderson acted without Balboa's authorization and only as a broker in issuing insurance program documents or procuring drycleaners insurance is substantial evidence supporting the trial court's implied finding that Henderson had no actual authority to bind insurance on Balboa behalf, and its ruling that no evidence established Balboa issued a policy of insurance to the Myungs. Henderson's declaration by itself is enough to support these express and implied findings. (See Evid. Code, § 411; In re Marriage of Mix (1975) 14 Cal.3d 604, 614 [testimony of a single witness, even a party, may constitute substantial evidence]; People v. Ghobrial (2018) 5 Cal.5th 250, 281 [same].)
V. Claim of Henderson's Ostensible Authority
ICW contends alternatively that if the evidence does not demonstrate actual agency, the evidence supports a finding that Henderson had ostensible authority to bind coverage on Balboa's behalf. It argues several factors concerning the parties' relationships, the terms of the binder, and the course of conduct between the Myungs and Henderson would have caused the Myungs to reasonably believe Henderson had authority to bind Balboa. Specifically ICW points to (1) the presence of Henderson representatives at the September 24, 1982 CFI meeting where Balboa was announced as the CFI endorsed insurer; (2) Balboa's designation as the CFI insurer during the 1983 time period; (3) Henderson's status as an agent for CFI and the fact any CFI policy would identify Balboa as the approved insurer; (4) the fact the Myungs operated a dry cleaner that obtained insurance through Henderson; (5) the Myungs' receipt of the binder that billed a premium and stated coverage was bound by Balboa; (6) Daniel Myung's payment of bills sent by Henderson; (7) the absence of any indication by Henderson or Balboa to the Myungs that Henderson did not have authority to issue the binder; and (8) the fact the Myungs' later insurance was placed with ICW, which replaced Balboa as the preferred CFI insurer. According to ICW, all of these circumstances permit a conclusion that Henderson issued an enforceable binder as an ostensible agent.
Balboa responds first that ICW forfeited this argument by failing to raise it in the trial court, and should be precluded from advancing a new theory on appeal. ICW asserts it raised the issue below during oral arguments on the matter when its attorney analogized Chicago Title to the present case and argued the producer in Chicago Title was held to have ostensible authority to issue a binder. ICW further maintains it raised the issue in its objections to the proposed statement of decision.
We need not decide the question of forfeiture. On the merits, we conclude the cited evidence and this record do not support a finding that Henderson had ostensible authority to issue insurance on Balboa's behalf. "Ostensible authority is such as a principal, intentionally or by want of ordinary care, causes or allows a third person to believe the agent to possess." (Civ. Code, § 2317; see American Way Cellular, Inc. v. Travelers Property Casualty Co. of America, supra, 216 Cal.App.4th at p. 1053.) Whether such authority exists or may be implied from the circumstances is a question of fact. (Pierson v. Helmerich & Payne Internat. Drilling Co. (2016) 4 Cal.App.5th 608, 635.) A party seeking to prove a principal should be bound by acts of an ostensible agent must show several factors: " 'The person dealing with an agent must do so with a reasonable belief in the agent's authority, such belief must be generated by some act or neglect by the principal sought to be charged[,] and the person relying on the agent's apparent authority must not be negligent in holding that belief.' " (Valentine v. Plum Healthcare Group, LLC (2019) 37 Cal.App.5th 1076, 1087, quoting J.L. v. Children's Institute, Inc., supra, 177 Cal.App.4th at pp. 403-404 [" 'Liability of the principal for the acts of an ostensible agent rests on the doctrine of "estoppel," the essential elements of which are representations made by the principal, justifiable reliance by a third party, and a change of position from such reliance resulting in injury' "]; American Way, at p. 1053.) Importantly, " '[o]stensible agency cannot be established by the representations or conduct of the purported agent; the statements or acts of the principal must be such as to cause the belief the agency exists.' " (American Way, at p. 1053; J.L v. Children's Institute, Inc., at p. 404.)
"[A]s stated, the principal, and not the agent, must make statements or commit acts causing the person relying on the apparent agency to believe the agency exists." (American Way Cellular, Inc. v. Travelers Property Casualty Co. of America, supra, 216 Cal.App.4th at p. 1053.) Evidence of Henderson's involvement in CFI meetings where Balboa was designated the new underwriter for the CFI package policy, and Henderson's provision of CFI policies of insurance during the time frame, is not evidence of statements or conduct by Balboa or Balboa representatives that would permit the Myungs to reasonably believe Henderson had ostensible authority to bind Balboa or issue insurance on its behalf. (Accord, ibid. [no showing of a triable issue of fact as to ostensible agency where the plaintiff's owner testified that other than bills and a denial letter, he did not receive any correspondence from the insurer and that no one from the insurance company called or visited].) In reply, ICW further points out that representatives of another broker, White & Myatt, were present at the CFI September 1982 meeting, that John White of White & Myatt signed a sample policy for unrelated insureds produced by Balboa in discovery, and ICW's policy was produced by White & Myatt and written on almost identical forms as the sample Balboa policy. ICW maintains these and all of the other facts "left any reasonable person in the insured's position with the unequivocal understanding that coverage was bound" and the binder "gives no suggestion that Henderson was committing fraud" when it represented that coverage was bound by Balboa or that Henderson lacked authorization to send it.
It is unclear to us, and ICW does not further explain, how statements and actions by another broker, White & Myatt, represent conduct or reflect statements and actions by Balboa on which the Myungs could have relied to perceive an agency relationship between it and Henderson. Nor has ICW shown a historical course of conduct between Henderson and Balboa that would permit the Myungs to rely on Balboa's silence on the matter. (See Valentine v. Plum Healthcare Group, LLC, supra, 37 Cal.App.5th at pp. 1088-1089 [reliance on a principal's silence when it knows an agent holds itself out with authority requires a historical relationship or course of conduct, such as repeated prior authorizations or prior processing of claims], citing Chicago Title, supra, 188 Cal.App.4th at pp. 408-409, 426-427 & Gulf Ins. Co. v. TIG Ins. Co. (2001) 86 Cal.App.4th 422, 435-437, 439 [history of accepting and processing claims by agent on principal's behalf].) Absent Henderson's authority to act on Balboa's behalf, any binder is ineffective for the absence of mutual assent. (Chicago Title, at p. 422.) ICW has not demonstrated the trial court erred by finding the record devoid of evidence that Balboa issued a policy of insurance to the Myungs. Accordingly, we affirm the judgment.
DISPOSITION
The judgment is affirmed.
O'ROURKE, J. WE CONCUR: HUFFMAN, Acting P. J. GUERRERO, J.