Opinion
B230880
02-07-2012
CAPITOL FILMS U.S., LLC, Plaintiff and Appellant, v. AON/ALBERT G. RUBEN INSURANCE SERVICES, INC., Defendant and Respondent.
Mitchell Silberberg & Knupp, Lucia E. Coyoca and Christopher A. Elliott for Plaintiff and Appellant. Buchalter Nemer, Holly J. Fujie and Karen L. Stevenson for Defendant and Respondent.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Los Angeles County Super. Ct. No. BC427887)
APPEAL from a judgment of the Superior Court of Los Angeles County. Holly E. Kendig, Judge. Affirmed.
Mitchell Silberberg & Knupp, Lucia E. Coyoca and Christopher A. Elliott for Plaintiff and Appellant.
Buchalter Nemer, Holly J. Fujie and Karen L. Stevenson for Defendant and Respondent.
Plaintiff and appellant Capitol Films U.S., LLC (Capitol), a film production company, appeals the judgment of dismissal after the trial court sustained a demurrer without leave to amend on the second amended complaint against defendant and respondent Aon/Albert G. Ruben Insurance Services, Inc. (Aon), an insurance broker. The trial court found Capitol's claims for professional negligence, breach of contract, and breach of fiduciary duty barred by the applicable two-year statute of limitations. We affirm.
FACTUAL AND PROCEDURAL HISTORY
In 2006, Capitol was engaged in the production of the feature film Black Water Transit (Film). Aon was Capitol's insurance broker. On behalf of Capitol, Aon obtained a blanket Motion Picture/Television Producers Portfolio Policy No. U-06/77030 (Policy) issued by U.S. Specialty Insurance Company (USSIC). The Policy provided insurance coverage for injury or illness to key cast members. The Policy also included an "Essential Element Endorsement" to cover injury to certain designated individuals. Samuel L. Jackson (Jackson) was declared an "Essential Element" to the Film under the Policy.
On about May 4, 2007, approximately one month before principal photography was scheduled to commence, Capitol learned that Jackson had suffered a back injury requiring surgery. Capitol identified three options it believed were available: (1) abandon the Film altogether which was its preferred option; (2) delay the start of production until Jackson recovered; or (3) recast the role of Jackson and proceed with principal photography.
On about May 9, 2007, Capitol made a claim under the Policy citing Jackson's back injury. That same week, USSIC informed Capitol that abandoning the Film was not an option under the Policy because Jackson had not been injured during principal photography of the Film. After Capitol was informed that it could not abandon the Film, Jackson's role was recast with another actor and principal photography commenced.
A conference call between representatives of USSIC and Capitol took place on May 21, 2007, during which the "push costs" that Capitol sustained having recast Jackson's role and moving forward with the Film were discussed. On November 1, 2007, USSIC made a de minimis offer of payment to settle the claim. The offer was rejected by Capitol.
Costs associated with a delay in production of a film.
On November 2, 2007, USSIC filed a declaratory relief action against Capitol seeking to relieve itself of its obligations under the Policy (USSIC Action). USSIC and Capitol settled the USSIC Action on April 8, 2009.
On October 30, 2009, Capitol and Aon entered into an agreement tolling any applicable statute of limitations from October 28, 2009 through November 30, 2009 (Tolling Agreement). On November 29, 2009, the Tolling Agreement was extended to December 14, 2009.
On December 14, 2009, Capitol filed a complaint (Complaint) against Aon and asserted causes of action for professional negligence, breach of contract, negligent misrepresentation, and breach of fiduciary duty. Capitol alleged the following: (1) it sustained losses in excess of $20 million as a result of Aon's negligent services; (2) it made a claim under the Policy "on or about May 9, 2007," and was surprised to be informed "during that same week" by USSIC's adjustors that it could not abandon the Film; and (3) that Essential Element coverage during the preproduction phase of film making was "standard in the insurance industry" and the Policy Aon procured from USSIC did not cover Jackson for "illness, death, or injury during preproduction." Capitol further alleged: "Because of [Aon's] negligence in placing the Policy with USSIC, Capitol had no coverage for preproduction injuries under the Essential Element endorsement and thus was forced to recast the Jackson role, rather than abandoning the film altogether. Had it abandoned the Film when Jackson dropped out, it would have been entitled to recover the money that had already been invested and spent on the Film. If the coverage had been placed with another carrier, abandonment would have been an option available to Capitol."
Aon demurred, arguing that Capitol's causes of action were barred by the applicable two-year limitations period. Capitol voluntarily filed a first amended complaint (FAC) which alleged causes of action for professional negligence, breach of contract, and breach of fiduciary duty. The FAC added allegations that "continuing throughout the summer and early fall of 2007" USSIC "refused to accept or deny the claim," and that on November 1, 2007 "USSIC informed Capitol for the first time that it did not believe the claim was covered, and that it would not pay the claim in full."
Aon again demurred on statute of limitation grounds, and asked the court to take judicial notice of Capitol's answer and counterclaim in the USSIC Action. Capitol's counterclaim alleged that Jackson's inability to perform "resulted in a multi-million dollar loss to Capitol" and that "Capitol incurred significant expense (in excess of $10 million) preparing to commence principal photography." Capitol also alleged in the counterclaim that "in or about June 2007" it recast Jackson's role and commenced principal photography "[i]n an effort to move forward with the Film and mitigate the harm caused to the Film and to Capitol by Jackson's injury and subsequent surgery."
The trial court took judicial notice of Capitol's answer and counterclaim in the USSIC Action and sustained the demurrer with leave to amend. At the hearing on the demurrer to the FAC the trial court stated that Capitol could avoid the bar of the statute of limitations at the pleading stage only by alleging new facts that USSIC did not make a final determination as to coverage for abandonment in May 2007. The court cautioned that any new facts alleged could not contradict Capitol's prior judicial admissions.
On August 2, 2010, Capitol filed the operative second amended complaint (SAC). Capitol added allegations that Capitol considered abandoning the Film after May 2007, and sent a letter to USSIC on June 5, 2007 stating that Capitol might still "'[shut] down production entirely.'" Aon demurred on the same grounds raised previously and asked the court to take judicial notice of Capitol's proposed first amended counterclaim filed in the USSIC Action. The counterclaim included an allegation that immediately following Jackson's injury, Capitol notified USSIC that "Jackson had been injured, that principal photography could not commence on May 16, 2007, and that Capitol would suffer severe losses as a result of these events, including the loss of significant financing for the Film." Capitol further alleged that during the period when Capitol was considering recasting Jackson's role, "representatives of USSIC, Steve Leedeke and Graham Henderson" told Capitol "once again that Capitol had no right to abandon the Film altogether and recover on the Policy."
The trial court granted Aon's request for judicial notice and sustained the demurrer without leave to amend on the ground that the SAC did not state facts sufficient to constitute a cause of action in that it showed on its face that the action was barred by the two-year statute of limitations contained in Code of Civil Procedure section 339.1. The court "was not convinced that [Capitol] pled around the judicial admissions by adding contradictory and inconsistent allegations . . . to push the accrual date to November 1, 2007, instead of May 2007." Capitol timely appealed the judgment of dismissal after the order sustaining the demurrer.
DISCUSSION
Capitol contends that the trial court erred in sustaining the demurrer without leave to amend because (1) the court made improper factual determinations in ruling that the claims were barred by the two-year statute of limitations; (2) the claims against Aon for failing to procure a policy that provided coverage for losses sustained if the Film had to be abandoned did not accrue until USSIC denied coverage; and (3) its cause of action for breach of fiduciary duty based on Aon placing the policy with USSIC was not barred by the statute of limitations because that was a separate and distinct claim that did not accrue until November 1, 2007.
I. Standard of Review
On appeal from a judgment of dismissal following a demurrer sustained without leave to amend, we assume the truth of all well-pleaded facts, as well as those that are judicially noticeable, but not contentions, deductions or conclusions of fact or law. (Howard Jarvis Taxpayers Assn. v. City of La Habra (2001) 25 Cal.4th 809, 814; Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) We review de novo a trial court's sustaining of a demurrer without leave to amend, exercising our independent judgment as to whether the complaint alleges sufficient facts to state a cause of action. (Zelig v. County of Los Angeles (2002) 27 Cal.4th 1112, 1126.) We apply the abuse of discretion standard in reviewing a trial court's denial of leave to amend. (Blank v. Kirwan, supra, at p. 318.) It is the plaintiff's burden to show either that the trial court erred in sustaining the demurrer or abused its discretion in denying leave to amend. (Kong v. City of Hawaiian Gardens Redevelopment Agency (2002) 108 Cal.App.4th 1028, 1038.)
II. Statute of Limitations
'"The defense of statute of limitations may be asserted by general demurrer if the complaint shows on its face that the statute bars the action.' [Citations.]" (E-Fab, Inc. v. Accountants, Inc. Services (2007) 153 Cal.App.4th 1308, 1315.) '"The ultimate question for review is whether the complaint showed on its face that the action was barred by a statute of limitations, for only then may a general demurrer be sustained and a judgment of dismissal be entered thereon.' [Citation.]" (Id. at p. 1316.)
The parties agree that the two-year statute of limitations for professional negligence in Code of Civil Procedure section 339, subdivision (1) applies to this complaint. The critical question here is when did Capitol know, or when should it have known, about Aon's wrongful conduct and the resulting harm.
III. Commencement of the Statute of Limitations
A civil action can only be commenced after the cause of action has accrued. (Norgart v. Upjohn Co. (1999) 21 Cal.4th 383, 397.) Generally a cause of action accrues on the date the cause of action is complete with all its elements, that is, when the wrongful act is done or the wrongful result occurs and the consequent liability arises. (Hydro-Mill Co., Inc. v. Hayward, Tilton & Rolapp Ins. Associates, Inc. (2004) 115 Cal.App.4th 1145, 1160 (Hydro-Mill).) '"In a professional malpractice context, accrual of the cause of action does not await the plaintiff's discovery that the facts constituting the wrongful act or omission constitute professional negligence, i.e., the plaintiff's discovery that a particular legal theory is applicable based on the known facts. If one has suffered appreciable harm and knows or suspects that professional blundering is its cause, the fact that the professional has not yet advised the plaintiff [of the mistake] does not postpone commencement of the limitations period.'" (Id. at p. 1160.)
A. Capitol Discovered Aon's Negligence During the Week of May 9, 2007
The gravamen of Capitol's three causes of action is essentially the same. With regard to professional negligence, Capitol alleges that Aon should have obtained coverage that would have allowed Capitol to abandon the Film if Jackson were injured during preproduction. Capitol alleges that as a result of Aon's placement of the Policy with USSIC, there was no coverage for Jackson's preproduction injury and Capitol was forced to recast the Jackson role, rather than abandoning the film altogether which was its preferred option. Capitol further alleges that preproduction coverage was a standard practice and if the coverage had been placed with another carrier, abandonment would have been an available option and Capitol would have been able to recover the money that had already been invested and spent on the Film. These core allegations remain consistent from the original complaint through the amended pleadings.
Capitol does not dispute that it made a claim under the Policy "on or about May 9, 2007" and that "during that same week" to its "surprise" was informed by Aon that it did not have an abandonment option under the Policy. Because Capitol alleged an abandonment option was "standard in the insurance industry," Capitol must concede it discovered Aon's negligence during the week of May 9, 2007, more than two years before Capitol filed the complaint on December 14, 2009. Aon's negligence in procuring a policy without an abandonment option resulted in the "loss of a right, remedy, or interest" and caused Capitol to suffer an "actual injury." (Van Dyke v. Dunker & Aced (1996) 46 Cal.App.4th 446, 457.)
During oral argument on the demurrer to the FAC Capitol's counsel stated, "under Hydro-Mill, we knew on May 9, that there was negligence." Capitol concedes in its brief that the issue in this appeal is "when Capitol sustained damage as a result of Aon's wrongful acts."
B. Capitol Sustained Damages More Than Two Years Before Filing Its Complaint
The second requirement for accrual of a cause of action is that the plaintiff must sustain damages. (Hydro-Mill, supra, 115 Cal.App.4th at p. 1161.) The parties disagree as to when the fact of damages became certain.
Capitol asserts that it sustained no appreciable harm in May 2007, and that it was not until USSIC made a final coverage decision on November 1, 2007, that the fact of damages became certain. But this assertion is belied by Capitol's allegations and judicial admissions. The Complaint, FAC, and SAC, all contain the allegation that the damages sought by Capitol included the "money that had already been invested and spent on the Film." In the counterclaim in the USSIC Action, Capitol alleged that: "Jackson's back injury resulted in a multi-million dollar loss to Capitol," "Capitol would suffer severe losses as a result of [Jackson's injury], including the loss of significant financing for the Film," "Capitol also suffered severe losses because much of its financing for the Film was in the form of foreign 'pre-sale' contracts, which were contingent on Jackson's performance in the Film," and "Capitol also was relying on financing from equity investments in the Film. When Jackson became unable to perform in the Film, those contracts (and these sources of financing) were lost and it became necessary to secure additional production financing at significant additional expense to Capitol."
Furthermore, Capitol's allegation in the USSIC Action that it recast Jackson's role "[i]n an effort to move forward with the Film and mitigate the harm caused to the Film and to Capitol by Jackson's injury and subsequent surgery," was a tacit admission that it had sustained damages in May 2007.
To negate the occurrence of damages in May 2007, Capitol conflates the push costs and abandonment costs and alleges in the SAC that if USSIC had paid the push costs it "could still have been made whole" and "this option would have left Capitol in a position as good or better than it would have been in if it had abandoned the Film and been paid the amount of its preproduction investment in the Film." These are not well pleaded material facts. Rather, they amount to mere self-serving contentions, deductions, or conclusions of law. (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-967.)
Capitol's contention that the push costs could have encompassed the abandonment costs is contradicted by its own pleadings and by Capitol's counsel at the hearing on the demurrers. During the hearing on the demurrer to the FAC, Capitol's counsel argued that abandonment costs and push costs constituted "different forms of loss that [were] sustained under the insurance policy," and stated "So to the extent that there was some suggestion that these push costs are subsumed within or are the same as the abandonment costs—that frankly is completely incorrect."
From the moment USSIC informed Capitol in May 2007 that abandonment was not an option under the Policy, Capitol not only knew that its broker Aon was negligent, but also that Capitol had sustained significant damages that were not covered by the Policy. This fact of damage is the relevant consideration because "the statute of limitations begins to run upon the occurrence of '"appreciable and actual harm, however uncertain in amount"' that consists of more than nominal damages. [Citations.]" (Van Dyke v. Dunker & Aced, supra, 46 Cal.App.4th at p. 452.)
Despite Capitol's argument to the contrary it is apparent from the face of the complaint and from matters judicially noted that both of the elements necessary for a professional negligence claim against its insurance broker Aon to accrue, occurred no later than May 2007. Capitol has offered no factual allegations that undermine the only conclusion one can reach—Capitol was aware of Aon's negligence and sustained damages in May 2007.
C. No Tolling of the Statute of Limitations
Capitol contends that USSIC was investigating the claim between May 2007 and November 1, 2007 and had not made a final decision as to coverage. Therefore, Capitol argues that it did not suffer appreciable damages until November 1, 2007 when USSIC made a de minimis offer to resolve the push costs claim, because while the investigation continued the possibility remained that Capitol could recover its losses.
Capitol added allegations in the SAC that "abandonment still remained a possibility and was discussed internally by Capitol and USSIC." Capitol also alleged that on June 5, 2007 its attorney sent a letter to USSIC in which it informed them that shutting down production was still under consideration by Capitol. But what Capitol was discussing internally or still considering was not relevant. The ongoing discussions and investigation Capitol refers to involved the push costs only and took place after USSIC had informed Capitol that abandonment was not an option and they would not pay Capitol for the costs already incurred. Notably absent was any allegation that USSIC was reconsidering its May 2007 determination that the Policy did not cover the costs of abandoning the Film.
Capitol argues that this appeal is factually similar to Hydro-Mill, and that Hydro-Mill is particularly instructive.
In Hydro-Mill, an insured aircraft parts manufacturer purchased earthquake insurance from a broker. The insured requested coverage for its three locations (one it owned and two it leased), but the broker mistakenly obtained less than the requested coverage for the owned location and no coverage for the two leased locations. (Hydro-Mill, supra, 115 Cal.App.4th at p. 1149.) After the Northridge earthquake caused extensive damage to all three locations, the insured submitted a claim for damages. On December 9, 1994, the insurer offered to pay $270,000 for Hydro-Mill's losses at the insured location, and made clear that this compensation excluded losses related to the two leased locations. (Id. at p. 1151.) Hydro-Mill asserted that the insurance broker was liable for the unpaid losses at the two uninsured locations and sued the broker to recover the additional benefits that would have been paid had the policy been written as requested, including causes of action for negligence, breach of oral contract, negligent misrepresentation, and breach of fiduciary duty. (Id. at p. 1152.)
Judgment was entered for Hydro-Mill and against the broker. The appellate court reversed, agreeing with the broker that, regardless of how the causes of action were labeled, the suit was a claim for professional negligence and, as such, was barred by the applicable two-year statute of limitations. (Hydro-Mill, supra, 115 Cal.App.4th at pp. 1159-1164.)
The court in Hydro-Mill noted that a cause of action for professional negligence did not accrue until the plaintiff sustained damage and discovered, or should have discovered, the negligence. (Hydro-Mill, supra, 115 Cal.App.4th at p. 1161.) Within hours of the Northridge earthquake, Hydro-Mill knew that the earthquake had caused damage to Hydro-Mill's equipment and operations. Within two days of the earthquake, Hydro-Mill also learned that its broker's mistake would result in harm to them. On December 9, 1994, when the insurer offered to pay $270,000, and clarified that losses at leased locations were being excluded, Hydro-Mill's cause of action accrued and the statutory limitations period began to run. But the court further ruled that the trial court erred in concluding that the limitations period as to the broker was tolled until the insurer denied Hydro-Mill's claim in writing. (Id. at pp. 1161 -1162.)
In an action by an insured against an insurer, the limitations period is tolled from the time the insured files a timely notice to the time the insurer denies the claim in writing. (Hydro-Mill, supra, 115 Cal.App.4th at p. 1162.) This is because '"[i]t would be "unconscionable" to permit the limitations period to run while the insured is pursuing its rights in the claims process, as required by the policy.'" (Id. at p. 1163.) But the limitations period was not tolled as to the insurance broker because: an insurance policy requires an insured to submit a timely claim to the insurer, which then investigates that claim, and suit should not be brought against an insurer before it completes its investigation and notifies the insured of the result; an insured should not be penalized for deferring litigation against an insurer unless and until the insurer denies the claim; a claim against an insurance broker, by contrast, does not involve processing a claim, and thus there is no rationale for tolling the limitations period while a claim is being processed. (Id. at pp. 1163-1164.) Furthermore, public policy did not support tolling an action "against a broker based on whether and when an insurer denies a claim in writing. The broker has no control or influence over that process. In this case, for example, the insurer did not give written notice before the insured filed suit. But the broker admitted fault early on. It would be inequitable to hold that the statute of limitations against an insurance broker is tolled indefinitely if an insurer never denies a claim in writing." (Id. at p. 1164.) Here, all the elements of a cause of action against Aon—wrongful conduct, causation, and harm—were satisfied in May 2007, when USSIC informed Capitol that abandonment was not an option under the Policy.
IV. The Trial Court Did Not Make Improper Factual Determinations
Capitol contends the trial court made improper factual determinations based on the information in the prior pleadings in this case and Capitol's pleadings in the USSIC Action of which the court took judicial notice.
A demurrer may be supported by matters that are subject to judicial notice. (Code Civ. Proc., § 430.30, subd. (a); Evans v. City of Berkeley (2006) 38 Cal.4th 1, 6.) Appellate courts should judicially notice any fact of which the trial court took proper judicial notice. (Evid. Code, § 459, subd. (a).)
"Under the sham-pleading doctrine, admissions in an original complaint that has been superseded by an amended pleading remain within the court's cognizance and the alteration of such statements by amendment designed to conceal fundamental vulnerabilities in a plaintiff's case will not be accepted. (Deveny v. Entropin, Inc. (2006) 139 Cal.App.4th 408, 425-426, fn. 3 [if a party files an amended pleading and attempts to avoid defects of original complaint by either omitting facts that rendered prior complaint defective or adding facts inconsistent with prior allegations, court may take judicial notice of prior pleadings and disregard inconsistent allegations or read into amended complaint the allegations of the superseded complaint]; Patane v. Kiddoo (1985) 167 Cal.App.3d 1207, 1213.)" (Berg & Berg Enterprises, LLC v. Boyle (2009) 178 Cal.App.4th 1020, 1043, fn. 25.)
Capitol failed to explain the inconsistencies between the allegations in the related declaratory relief action and prior pleadings in this case and the SAC. Capitol was unsuccessful in attempting to plead around judicial admissions related specifically to: (1) the denial of coverage by USSIC; (2) reconsideration of the abandonment position by USSIC; (3) Capitol's awareness of the loss of the abandonment option; and (4) Capitol's awareness of the scope of the losses suffered as a result of Jackson's injury and withdrawal.
Capitol's original complaint unequivocally showed that it was aware that USSIC was taking the position that coverage did not exist for Jackson's injury. Capitol alleged that during the week of May 9, 2007 when it made a claim under the Policy it was informed that there was "no coverage for preproduction injuries under the Essential Element endorsement and thus was forced to recast the Jackson role, rather than abandoning the film altogether."
The trial court instructed Capitol that it needed to plead facts to show that a final decision regarding abandonment was not made in May 2007. Capitol failed to cure the defect identified by the trial court because the SAC did not contain any allegations that USSIC reconsidered its May 2007 abandonment position. Capitol's newly added allegations that Capitol was discussing internally and communicating with USSIC the idea of abandonment do not change the analysis.
Nor did the trial court have to make a factual determination as to when Capitol became aware that abandonment was not an option because in the original complaint Capitol alleged that even though abandonment was its "preferred option" it was "forced to recast the Jackson role" because of defendant's negligence.
Finally, with respect to the scope of Capitol's financial losses, Capitol made numerous allegations in its counterclaim in the USSIC Action related to the financial impact of Jackson's injury and withdrawal which included allegations that "Jackson's back injury resulted in a multi-million dollar loss to Capitol," that his injury caused "the loss of significant financing for the Film," because "much of its financing for the Film was . . . contingent on Jackson's performance in the Film," and "[w]hen Jackson became unable to perform in the Film . . . it became necessary to secure additional production financing at significant additional expense to Capitol."
V. Breach of Fiduciary Duty Claim
Capitol contends that its breach of fiduciary duty cause of action is not barred by the statute of limitations because its claim of negligence was based on Aon's placement of the Policy with USSIC, a subpar carrier, which Capitol did not learn until USSIC conducted its investigation and refused to pay Capitol's claim on November 1, 2007. Capitol's contention raises the ambiguity between agency law and insurance on the issue of whether an insurance broker can be sued for breach of fiduciary duty.
In Kotlar v. Hartford Fire Ins. Co. (2000) 83 Cal.App.4th 1116 (Kotlar), a commercial property owner, Jack Kotlar, was a named insured on his tenant's commercial general liability policy. The tenant, who had purchased the policy through a broker, was to pay the premiums. The policy stated that the insurer would "endeavor" to give Kotlar 30 days' notice of cancellation. Without notice to Kotlar, the insurer canceled the policy when the tenant failed to make payments. A customer sustained injuries on the property and sued Kotlar. He tendered the defense of the action to the insurer, which refused the request on the ground that the policy had been cancelled. Kotlar filed suit against the insurer and the broker for failure to give notice of the cancellation. The trial court dismissed the action on demurrer, concluding that the defendants had no duty to give notice.
The Court of Appeal reversed the dismissal of the insurer stating that notice was required by section 677.2 of the Insurance Code but affirmed the dismissal of the broker, stating: "Kotlar cites no case holding an insurance broker owes a duty of care to a named insured to provide the named insured with notice of the insurer's intent to cancel the policy for nonpayment of premiums. Instead, he asks us to create such a duty. We decline to do so for several reasons." (Kotlar, supra, 83 Cal.App.4th at p. 1123.)
Consistent with Kotlar, the court in Hydro-Mill noted "it is unclear whether a fiduciary relationship exists between an insurance broker and an insured." (Hydro-Mill, supra, 115 Cal.App.4th at p 1156.) In declining to apply a four-year statute of limitations to the breach of fiduciary duty claim the Hydro-Mill court stated: "[T]he applicable statute of limitations is determined by—as variously phrased—the nature of the right sued upon, the primary interest affected by the defendant's wrongful conduct, or the gravamen of the action. [Citations.] Here, the complaint shows that the allegations of professional negligence subsume all of the allegations for breach of fiduciary duty." (Id. at pp. 1158-1159.)
Here, the gravamen of Capitol's complaint is professional negligence. Capitol's cause of action for breach of fiduciary duty is based upon the same set of facts as the professional negligence claim. Capitol alleged that Aon was negligent in procuring a Policy from USSIC that did not cover injury to Jackson during the preproduction phase of film making, an endorsement which was "standard in the insurance industry." Because Capitol was aware of this fact the week of May 9, 2007, it was also aware that USSIC was a subpar carrier for that reason and thus the statute of limitations began to run at that time. As such, Capitol's cause of action for improper placement with a subpar carrier is also barred by the two-year statute of limitations applicable to the other causes of action.
VI. The Trial Court Properly Exercised Its Discretion in Denying Leave to Amend
Capitol contends that the trial court abused its discretion by denying leave to amend the SAC. Capitol argues that it should be allowed an opportunity to address the allegations in the first amended counterclaim in the USSIC Action because the trial court relied on those allegations in sustaining the demurrers. We disagree.
"Code of Civil Procedure section 473 states the governing rule: 'The court may, in furtherance of justice, and on any terms as may be proper, allow a party to amend any pleading or proceeding . . . .' (Id. subd. (a)(1).) 'Leave to amend a complaint is thus entrusted to the sound discretion of the trial court. ". . . The exercise of that discretion will not be disturbed on appeal absent a clear showing of abuse. More importantly, the discretion to be exercised is that of the trial court, not that of the reviewing court. Thus, even if the reviewing court might have ruled otherwise in the first instance, the trial court's order will yet not be reversed unless, as a matter of law, it is not supported by the record."' [Citations.]" (Branick v. Downey Savings & Loan Assn. (2006) 39 Cal.4th 235, 242, fn. omitted.)
Capitol bears the burden of showing that there is a reasonable possibility that the defects in their causes of action can be cured by amendment. (Aguilera v. Heiman (2009) 174 Cal.App.4th 590, 595, 604.) Capitol must show '"in what manner [it] can amend [its] complaint and how that amendment will change the legal effect of [its] pleading.' [Citation.]" (Rakestraw v. California Physicians' Service (2000) 81 Cal.App.4th 39, 43.)
Capitol contends that the trial court misread the allegations in both the SAC and the counterclaim in the USSIC Action to allege that Fred Milstein was a representative of USSIC and that his statement to Capitol that it could not abandon the Film was binding. Capitol seeks leave to amend the complaint to establish that he was not in fact a representative of USSIC.
Capitol alleged in the SAC that "Milstein was president of CineFinance, the completion bond guarantor that was owned by the same parent company as USSIC, and a person who had been closely involved with the financing and insuring of the Film."
The record supports the trial court's exercise of discretion. Capitol alleged that during the same week it made a claim under the Policy "USSIC's adjustors on the claim told Capitol that it could not abandon the Film . . . ." Capitol also alleged that "representatives of USSIC, Steve Leedeke and Graham Henderson" told them that they "had no right to abandon the Film altogether and recover on the Policy." Thus the reference to Milstein was not the only allegation of communication between USSIC and Capitol regarding coverage for abandonment losses.
Capitol has not demonstrated how the clarification of Milstein's status alleviates the defects identified by the trial court and we find no abuse of discretion in the court's denial of leave to amend.
DISPOSITION
The judgment is affirmed. Aon is entitled to costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.
J.
DOI TODD
We concur:
P. J.
BOREN
J.
ASHMANN-GERST