Opinion
H041738
04-27-2021
PETER KLEIDMAN, Plaintiff and Appellant, v. FEEVA TECHNOLOGY, INC., 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Santa Clara County Super. Ct. No. 113-CV247406)
Plaintiff Peter Kleidman challenges the superior court's denial of his motion seeking an order that Kaufhold Gaskin LLP (KG), a law firm, lacked the authority to act as the attorney for defendant Feeva Technology, Inc. (Feeva) in Kleidman's action against Feeva. On appeal, Kleidman claims that Feeva, which was defunct, could not have authorized KG to represent Feeva and that Feeva's insurer lacked the authority to select KG to defend Feeva against the claim. We conclude that Kleidman failed to demonstrate that Feeva's insurer lacked the authority to select KG to defend Feeva against the claim in Kleidman's action. Therefore, we affirm.
I. BACKGROUND
Feeva was insured under a $2 million liability policy issued by U.S. Specialty Insurance Company (USSIC). Under this policy, USSIC had a duty to defend a claim if Feeva "tender[ed]" the claim to USSIC. If USSIC assumed the defense under the "tender" provision, it had the "right to select defense counsel." If USSIC did not assume the defense pursuant to the "tender" provision, the policy nevertheless provided that "[t]he Insurer [USSIC] will be entitled to effectively associate in the defense and the negotiation of any settlement of any Claim."
In October 2010, Feeva ran out of operating capital. Feeva decided, rather than declaring bankruptcy, to use an assignment for the benefit of creditors to transfer its assets and liabilities to FeevT LLC so that the assets could be liquidated. After this assignment, Feeva existed only as a "corporate shell." Feeva thereafter had no officers, directors, employees, or authorized agents.
" '[A]n assignment for benefit of creditors is a widely used method by which an insolvent debtor transfers his or her assets in trust to an assignee, who liquidates them and distributes the proceeds to the creditors.' [Citation.] . . . 'An assignment for [the] benefit of creditors is a business liquidation device available to an insolvent debtor as an alternative to formal bankruptcy proceedings.' " (Sherwood Partners, Inc. v. EOP-Marina Business Center, L.L.C. (2007) 153 Cal.App.4th 977, 981-982.)
In 2011, Feeva was sued by Prosodie Interactive Florida, Inc. (Prosodie). Feeva's insurance broker allegedly "tendered" the Prosodie action to USSIC. USSIC assumed the defense of Feeva in the Prosodie action and selected KG to represent Feeva. The Prosodie litigation settled in March 2013.
In June 2013, Kleidman filed an action against a number of defendants, not including Feeva. He subsequently filed an amended complaint adding Feeva as a defendant. USSIC authorized KG to represent Feeva in Kleidman's action. In September 2013, KG notified Kleidman that it was appearing as counsel for Feeva in this action.
In September 2014, Kleidman filed a motion seeking an order that KG "does not represent" Feeva. He contended that KG could not represent Feeva because Feeva had no agent who could consent to an attorney-client relationship and USSIC lacked the authority to appoint KG as Feeva's counsel. In October 2014, the superior court denied his motion. Kleidman timely filed a notice of appeal from the court's order.
II. DISCUSSION
Kleidman claims that the insurance contract did not give USSIC the right to select KG to represent Feeva in the absence of a tender by Feeva. However, he ignores the provision of the insurance contract that expressly "entitled" USSIC to "associate in the defense" of any claim even if there was no tender. "In other words, although the insurer has no duty to defend a third-party action, it yet has the right to associate in the defense and control of such litigation." (Harbor Ins. Co. v. City of Ontario (1991) 231 Cal.App.3d 927, 934, italics added.)
Kleidman contends that the phrase "associate in the defense" does not include the right to select defense counsel for the insured because the insurance contract distinguishes between the right to select defense counsel and the right to associate in the defense. "[I]t is a fundamental principle of appellate procedure that a trial court judgment is ordinarily presumed to be correct and the burden is on an appellant to demonstrate, on the basis of the record presented to the appellate court, that the trial court committed an error that justifies reversal of the judgment." (Jameson v. Desta (2018) 5 Cal.5th 594, 608-609.) Kleidman makes no effort to satisfy this burden. He fails to explain how USSIC could "associate in the defense" of a claim without engaging an attorney to defend the claim.
We also find no merit in Kleidman's assertion that we are obligated to remand this matter for further discovery because the phrase "associate in the defense" is ambiguous and there may be parol evidence supporting his contention that it does not include the right to select an attorney to defend the claim. He cites no authority for this assertion. Kleidman, as the moving party, bore the burden of supporting his motion with evidence in the trial court. (Evid. Code, §§ 110, 115.) By not producing the entire insurance contract, he plainly failed to show that the insurance contract did not contain some other provision entitling USSIC to select defense counsel for an insured under circumstances such as those here. Moreover, Kleidman has not suggested any plausible meaning for the phrase "associate in the defense" that would not permit the insurer to engage an attorney to defend a claim made under the policy. We find no error in the superior court's conclusion that USSIC had the authority to select KG to defend the action against Feeva.
At oral argument, he argued that "associate in the defense" permits the insurer to "participate" but not "control" the litigation. He did not identify anything in the insurance contract that supports his argument. --------
III. DISPOSITION
The order is affirmed.
/s/_________
ELIA, ACTING P.J. WE CONCUR: /s/_________
GROVER, J. /s/_________
DANNER, J.