Brand v. 20th Century Insurance/21st Century Insurance

21 Cal. Rptr. 3d 380, 124 Cal. App. 4th 594, 2004 Cal. Daily Op. Serv. 10576, 2004 Daily Journal DAR 14315, 2004 Cal. App. LEXIS 2026
CourtCalifornia Court of Appeal
DecidedSeptember 1, 2004
DocketB169913
StatusPublished
Cited by12 cases

This text of 21 Cal. Rptr. 3d 380 (Brand v. 20th Century Insurance/21st Century Insurance) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Brand v. 20th Century Insurance/21st Century Insurance, 21 Cal. Rptr. 3d 380, 124 Cal. App. 4th 594, 2004 Cal. Daily Op. Serv. 10576, 2004 Daily Journal DAR 14315, 2004 Cal. App. LEXIS 2026 (Cal. Ct. App. 2004).

Opinion

*599 Opinion

DOI TODD, J.

Defendant 20th Century Insurance Company/21st Century Insurance Company (21st Century) appeals the denial of its motion to exclude the testimony of 21st Century’s former attorney, Barry Zalma, as an expert in the trial of plaintiff Helen Brand’s claims against 21st Century. 21st Century moved to disqualify . Zalma under rule 3-310(E) of the Rules of Professional Conduct, 1 on the ground that he had formerly represented 21st Century in substantially related litigation and, as a result, had access to confidential information material to this action. We conclude that because Zalma was personally involved in providing legal advice and services to 21st Century in matters substantially related to the instant litigation, he is barred from testifying as an expert witness against 21st Century. Accordingly, we reverse.

FACTUAL AND PROCEDURAL BACKGROUND

From 1988 to 1991, 21st Century retained Zalma and his law firm, Barry Zalma, Inc., to defend 21st Century and to render coverage opinions in connection with coverage and bad faith claims under 21st Century’s insurance policies. Zalma represented 21st Century in connection with a variety of coverage disputes, including coverage for moisture intrusion, rot and fungal infestation under 21st Century’s homeowner policies. In total, Zalma directly represented 21st Century in 14 different actions. During the same period, Zalma supervised two or three attorneys employed by his law firm in handling an unspecified number of additional cases on behalf of 21st Century. While he was engaged as coverage counsel by 21st Century, Zalma received confidential information concerning the company’s claims handling policies and procedures, its litigation strategies, and its business practices, concerning, among other issues, the company’s handling of litigation based on mold infestation claims.

In 1990 Zalma and a business partner formed ClaimSchool, Inc., as an educational operation to train insurance adjusters and lawyers in the business of insurance. In 1990, while Zalma was still representing 21st Century, 21st Century engaged ClaimSchool to present a 12-week seminar to its adjusters *600 concerning 21st Century’s claims handling practices and procedures. 2 In preparation for the seminar, Zalma consulted with 21st Century concerning its claims handling policies and procedures, and during the seminar, he spent two or three days analyzing 21st Century’s homeowner’s policy line-by-line. Zalma acknowledges that as a result of this engagement to educate and train 21st Century’s claims adjusters, he acquired knowledge of the company’s claim handling practices, policies and procedures. He also provided the company with comments and criticism regarding its claims handling practices.

Plaintiff Helen Brand commenced the instant action based on a claim under her 21st Century homeowner’s insurance policy for damage to her home due to mold caused by a water leak. A first amended complaint, filed on July 5, 2001, alleges five causes of action against 21st Century, including breach of contract and bad faith, based on 21st Century’s alleged failure (1) to investigate properly plaintiff’s loss; (2) to advise plaintiff whether the claim is covered under the homeowner’s policy; and (3) to compensate plaintiff for the covered loss under the homeowner’s policy. This complaint further alleges plaintiff suffered emotional distress stemming from the presence of mold in her home, and asserts 21st Century negligently repaired a floor after inspection, as a result of which plaintiff fell.

On December 3, 2002, Brand designated Zalma as her expert to testify on the issue of 21st Century’s handling of her claim. Following Brand’s refusal to withdraw the designation, 21st Century moved for a protective order barring Zalma from testifying as Brand’s expert. At the hearing the trial court indicated it was not inclined to disqualify Zalma because: (1) 21st Century’s claims handling practices “could be discoverable”; (2) 21st Century had not produced “enough proof’ of a substantial relationship between Zalma’s current engagement by Brand and his representation of 21st Century; and (3) Zalma’s representation of 21st Century involved only the rendering of coverage opinions, not litigation. On this basis, the trial court denied the motion without prejudice to renew it following Zalma’s deposition.

Following Zalma’s deposition, 21st Century renewed its motion to disqualify Zalma as Brand’s coverage expert. The motion was supported by Zalma’s deposition testimony and the ClaimSchool notebook used in the seminar for 21st Century’s claims handlers and adjusters, which contained numerous forms and documents related to 21st Century insurance policies and claims handling procedures.

*601 The trial court denied the motion, indicating that a substantial relationship between the prior and current representations could not be established based on the amount of time (12 years) between the two engagements. The trial court also found the ClaimSchool seminar to be a “general course,” which could not form the basis for any claim of attorney-client privilege, and thus would not support Zalma’s disqualification.

21st Century filed in this court a petition for writ of mandate, prohibition or other appropriate relief challenging the trial court’s denial of the motion to disqualify Zalma. 3 A summary denial of the petition was issued on August 20, 2003. 4

21st Century then filed a timely notice of appeal from the trial court’s denial of the motion to disqualify Zalma.

DISCUSSION

A. Appealability.

The trial court’s order denying the motion to disqualify counsel and prohibit Zalma from testifying in this action as an expert constitutes a “final order upon a collateral issue” as well as an order denying an injunction. As such, it is directly appealable. (Meehan v. Hopps (1955) 45 Cal.2d 213, 216-217 [288 P.2d 267]; see Reed v. Superior Court (2001) 92 Cal.App.4th 448, 455 [111 Cal.Rptr.2d 842].)

B. Standard of Review.

We review a trial court’s ruling on a disqualification motion for abuse of discretion, and we accept as correct all express or implied findings that are supported by substantial evidence. (People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc. (1999) 20 Cal.4th 1135, 1143 [86 Cal.Rptr.2d 816, 980 P.2d 371]; City National Bank v. Adams (2002) 96 Cal.App.4th 315, 322 [117 Cal.Rptr.2d 125].) “However, the trial court’s discretion is limited by the applicable legal principles. [Citation.] Thus, where there are no material disputed factual issues, the appellate court reviews the trial court’s determination as a question of law.

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21 Cal. Rptr. 3d 380, 124 Cal. App. 4th 594, 2004 Cal. Daily Op. Serv. 10576, 2004 Daily Journal DAR 14315, 2004 Cal. App. LEXIS 2026, Counsel Stack Legal Research, https://law.counselstack.com/opinion/brand-v-20th-century-insurance21st-century-insurance-calctapp-2004.