State Farm v. Superior Court

17 Cal. Rptr. 3d 146, 121 Cal. App. 4th 490
CourtCalifornia Court of Appeal
DecidedAugust 9, 2004
DocketB174063
StatusPublished
Cited by12 cases

This text of 17 Cal. Rptr. 3d 146 (State Farm v. Superior Court) 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
State Farm v. Superior Court, 17 Cal. Rptr. 3d 146, 121 Cal. App. 4th 490 (Cal. Ct. App. 2004).

Opinion

17 Cal.Rptr.3d 146 (2004)
121 Cal.App.4th 490

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Petitioner,
v.
The SUPERIOR COURT of Los Angeles County, Respondent;
Jerry Hill et al., Real Parties in Interest.

No. B174063.

Court of Appeal, Second District, Division One.

August 9, 2004.

*147 Heller Ehrman White & McAuliffe, Paul Alexander, Robin A. Schaefers, Julia M. Laurin, Menlo Park; Skadden, Arps, Slate, Meagher & Flom and Raoul D. Kennedy, San Francisco, for Petitioner.

No appearance for Respondent.

*148 Hennigan, Bennett & Dorman, J. Michael Hennigan, Mark Anchor Albert, Michael Swartz, Los Angeles; Gianelli & Morris, Timothy J. Morris, Los Angeles; Ernst and Mattison, Raymond E. Mattison; Law Offices of Robert S. Gerstein and Robert S. Gerstein for Real Parties in Interest.

MALLANO, J.

In general, if a trial judge enters judgment in a civil action, and the judgment is reversed on appeal, resulting in a remand to the trial judge for a "new trial," any party can disqualify the judge by way of a peremptory challenge. (See Code Civ. Proc., § 170.6, subd. (a)(2), 2d par.)

In the present case, after the pleading stage, defendant filed a motion in the trial court to resolve a conflict of laws issue: whether California law or Illinois law applied to plaintiffs' causes of action. Defendant argued that Illinois law applied and that the case had to be dismissed. Plaintiffs argued that California law governed and that dismissal would be improper. The trial court agreed with plaintiffs.

Defendant petitioned this court for a writ of mandate. After briefing and oral argument, we granted the petition, concluding that Illinois law applied but that the trial court had correctly declined to dismiss the case. On remand, the parties appeared before the same trial judge. Defendant moved to disqualify him, filing a peremptory challenge. The judge denied the motion.

Defendant then filed another petition for writ of mandate — which is now before us — contending that the trial judge should have granted the motion to disqualify. We conclude that, given the limited nature of the prior writ proceeding — to determine which state's law is applicable — a peremptory challenge does not lie because the trial judge did not "try" the case, nor will the prior writ proceeding result in a "new trial." Rather, the trial judge will simply continue on with the case, applying Illinois law.

I

BACKGROUND

Defendant State Farm Mutual Automobile Insurance Company (State Farm) was created under the laws of the State of Illinois in 1922. It is incorporated there and is headquartered in Bloomington, Illinois. The board of directors meets in Bloomington.

On June 17, 1998, State Farm policyholders filed this action, alleging that State Farm had retained an excessive amount of its surplus funds and, instead, should have returned the excess surplus to the policyholders in the form of higher dividends. The complaint contained causes of action for breach of contract and breach of the covenant of good faith and fair dealing, among others.

After the pleading stage, State Farm brought a "Motion to Determine Applicable Law," contending that, under the "internal affairs" doctrine, Illinois law governed plaintiffs' causes of action.[1] State Farm also argued that the business judgment rule applied to plaintiffs' claims.[2]*149 In a separate "Motion to Dismiss," State Farm argued that the internal affairs doctrine required dismissal of the case in favor of an Illinois forum — that plaintiffs had to file the case in Illinois. Plaintiffs filed opposition papers, arguing that the internal affairs doctrine did not apply, California law governed, the business judgment rule was not applicable, and dismissal would be improper.

In a statement of decision dated May 21, 2003, the trial court ruled that the internal affairs doctrine did not apply, California law was controlling, the business judgment rule was not applicable, and the case would not be dismissed.

State Farm filed a petition for writ of mandate with this court, seeking to overturn the trial court's decision. We issued an order to show cause, instructed the parties to submit briefs, and heard oral argument.

In a published opinion, State Farm, supra, 114 Cal.App.4th 434, 8 Cal.Rptr.3d 56, we held that, with respect to the Motion to Determine Applicable Law, the internal affairs doctrine governed, the law of Illinois was controlling, and the business judgment rule applied to plaintiffs' claims. As for the Motion to Dismiss, we concluded, as had the trial court, that the internal affairs doctrine — while requiring the application of Illinois law — did not require dismissal of the suit. The case could be tried here. (Id. at pp. 454-456, 8 Cal.Rptr.3d 56.)

In addition, "[f]or guidance, we set forth [in the opinion] the principles under current Illinois law" (State Farm, supra, 114 Cal.App.4th at p. 451, 8 Cal.Rptr.3d 56), stating that Illinois recognized a cause of action for breach of the covenant of good faith and fair dealing only where an insurer has failed to settle a third party claim against its insured and that, in other circumstances, a plaintiff is required to raise covenant principles as part of a breach of contract claim (id. at pp. 451-454, 8 Cal.Rptr.3d 56). We further explained that if State Farm's dividend decisions were "proper under the business judgment rule, then the covenant of good faith and fair dealing ... cannot be used as an end-run to impose liability here." (Id. at p. 454, 8 Cal.Rptr.3d 56.)

On remand after the granting of the petition, the case returned to the same trial judge. State Farm moved to disqualify the judge under section 170.6, subdivision (a)(2), second paragraph, of the Code of Civil Procedure, which states in part: "A motion [to disqualify] may be made following reversal on appeal of a trial court's decision, or following reversal on appeal of a trial court's final judgment, if the trial judge in the prior proceeding is assigned to conduct a new trial on the matter." (Italics added; hereafter section 170.6(a)(2); all further statutory references are to the Code of Civil Procedure.)

The trial court denied the motion on the ground that "[w]hile [section 170.6(a)(2)] permits a [peremptory] challenge following reversal on appeal, it does not afford the same right on issuance of a writ by a Court of Appeal directing a trial court to apply different law to an interlocutory legal determination made by the trial court."

State Farm then filed a petition for writ of mandate with this court, challenging the trial court's ruling on the motion to disqualify. We issued an order to show cause why the trial court's decision should not be *150 vacated. We also established a briefing schedule and calendared the matter for oral argument. Having considered the parties' written and oral presentations, we now consider the merits of the petition.

II

DISCUSSION

As our Supreme Court recently explained: "[A] party may secure the disqualification of a judge on the basis of an affidavit asserting that the party believes the judge is biased. This constitutes the peremptory challenge of a judge set forth in section 170.6....

"...

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Cite This Page — Counsel Stack

Bluebook (online)
17 Cal. Rptr. 3d 146, 121 Cal. App. 4th 490, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-farm-v-superior-court-calctapp-2004.