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Berghoff v. Gavrity7/31/2002
NOT TO BE PUBLISHED
California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.
This appeal arises from the trial court's ruling sustaining without leave to amend the demurrer of defendants The Paul Revere Life Insurance Company and Paul Revere Insurance Group (Revere) and Donald J. Gavrity to three of the four causes of action set out in plaintiffs' first amended complaint, seeking policy limit compensatory damages of $649,950 on a disability buy-out insurance policy, on the ground that this lawsuit was barred by the doctrine of res judicata. We order corrections of clerical errors in two trial court minute orders and dismiss the appeal insofar as it challenges the trial court's sustaining without leave to amend Gavrity's demurrer to plaintiffs' claim of negligent misrepresentation against him. We affirm the judgment (order of dismissal) entered following the trial court's sustaining without leave to amend Revere's demurrer to plaintiffs' claims of intentional and negligent misrepresentation against the insurer.
BACKGROUND
In January 1997, Herbert J. Berghoff and Richard M. Rosenthal, as trustee of the Berghoff, Abraham, Friedman & Johnson, Inc. Insurance Trust, filed in superior court a complaint for breach of contract and tortious breach of the implied covenant of good faith and fair dealing against Revere (Berghoff I). In the breach of contract cause of action, plaintiffs alleged that when individual disability policies to cover all four BAFJ shareholders were issued in 1992 by Revere to BAFJ (an accounting firm) Berghoff was a shareholder. Plaintiffs also alleged that in April 1994, Berghoff became totally disabled within the meaning of the policy. His claim was filed the same month, and in July, his BAFJ shares were transferred to BAFJ. According to the complaint, pursuant to a shareholder cross-purchase agreement (a prerequisite under the policy to any recovery under the policy), Berghoff was to be paid by BAFJ $92.85 for each share and defendants were obligated to pay the resulting $649,950 on April 29, 1995. The alleged breach was Revere's refusal to pay BAFJ.
In their bad faith cause of action, plaintiffs alleged their motivation for obtaining the insurance coverage was, among other things, to provide security in the event of plaintiff Berghoff's disability. "Plaintiffs placed trust and confidence in each of the defendants to protect plaintiffs from the adverse consequences of the matters for which they obtained insurance coverage, thus making plaintiffs especially vulnerable to sustaining harm should any of the defendants breach their obligations under the policy." Alleging that ordinary contract damages would not be adequate because such damages would neither require defendant to account fully for "their tortious and improper actions" nor make plaintiffs whole, in addition to compensatory damages, plaintiffs sought punitive damages, prejudgment interest, and costs of suit, including reasonable attorney fees.
Revere removed Berghoff I to federal district court, apparently on the basis of diversity jurisdiction. The district court granted Revere's motion for summary judgment. The court concluded the policy was unambiguous, that it obligated Revere to "reimburse" BAFJ for money actually paid by BAFJ to Berghoff, and that because BAFJ had paid no money to Berghoff, the triggering event had not occurred, and Revere was not obligated to make any payment under the policy. The court further ruled that
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