State Comp. Ins. Fund v. Dep't of Ins.

96 Cal.App.5th 227

314 Cal.Rptr.3d 78

STATE COMPENSATION INSURANCE FUND, Plaintiff and Appellant,

v.DEPARTMENT OF INSURANCE et al., Defendants and Respondents;

A-Brite Blind & Drapery Cleaning, Real Party in Interest and Respondent.

C093897

Court of Appeal, Third District, California.

Filed September 19, 2023

Certified for Partial Publication.^*

Anthony Lewis, Noah Graff, Rhett R. Johnson, Pleasant Hill, and Seaton Tsai, State Compensation Insurance Fund, 900 Corporate Center Drive, Suite 401, Monterey Park, CA 91754, for Plaintiff and Appellant.

Rob Bonta, Attorney General, Tamar Pachter, Assistant Attorney General, Molly K. Mosley, Craig D. Rust, Debbie J. Vorous, and Michael Sapoznikow, Deputy Attorneys General, Office of the State Attorney General, 1300 I Street, Suite 125, P.O. Box 944255, Sacramento, CA 94244, Lauren Elizabeth Freeman, Office of the Attorney General, 1300 I Street, Sacramento, CA 95814, for Defendant and Respondent.

Drew E. Pomerance, Roxborough, Pomerance, Nye & Andreani, LLP, 5820 Canoga Avenue, Suite 250, Woodland Hills, CA 91367, David Ryan Ginsburg, Roxborough, Pomerance, Nye & Andreani, LLP, 5820 Canoga Avenue, Suite 250, Woodland Hills, CA 91367, for Real Party in Interest and Respondent.

Krause, Acting P. J.

In 2018, the Insurance Commissioner (Commissioner) found that State Compensation Insurance Fund (State Fund) violated the Insurance Code by miscalculating the workers’ compensation insurance policy premiums of A-Brite Blind & Drapery Cleaning (A-Brite). Rather than challenging that ruling by way of a petition for writ of mandate, State Fund entered into a settlement agreement with the Department of Insurance (the Department) to resolve the action. Just a few weeks later, in a separate action involving a different insured employer, the Department took official notice of key documents from the A-Brite file and gave preclusive effect to the A-Brite decision, actions which State Fund perceived to be a breach of the settlement agreement. In response, State Fund filed a writ petition in the trial court challenging the original decision and order in A-Brite . The trial court granted the Department's motion for summary judgment on the ground that the writ was untimely, rejecting State Fund's arguments of equitable estoppel and equitable tolling.

Although we disagree with the trial court's interpretation of the settlement agreement, we conclude the grant of summary judgment was nonetheless proper and therefore affirm.

FACTUAL AND PROCEDURAL BACKGROUND

State Fund is a public enterprise fund established under the California Insurance Code. ( Ins. Code, § 11770 et seq. ) It is authorized to sell and provide workers’ compensation insurance to California employers. In 2017, A-Brite initiated an action with the Department's administrative hearing bureau against State Fund regarding State Fund's policy premiums. Following an evidentiary hearing, an administrative law judge (ALJ) issued a proposed decision to the Commissioner, who declined to adopt it. Instead, the Commissioner issued his own decision and order on November 16, 2018 (the "A-Brite order"), finding that State Fund violated the Insurance Code by, among other things, including an unlawful rating tier modifier during the 2015 and 2016 policy periods. The Commissioner further designated the A-Brite order as precedential under Government Code section 11425.60, subdivision (b). State Fund filed a motion for reconsideration, which was deemed denied when the Commissioner failed to respond.

On January 28, 2019, more than a month before the deadline for State Fund to challenge the A-Brite order in the trial court by petition for writ of mandate ( Cal. Code Regs., tit. 10, § 2509.76, subd. (a) ), State Fund's general counsel sent a letter to the Department, asking the Commissioner to "rescind the designation of the [A-Brite] Decision as precedential," as the decision contained "clear errors of facts and law." The letter stated that, due to the precedential designation, an attorney in another administrative matter had already contacted State Fund, demanding State Fund immediately suspend the use of its tier modifier. State Fund also cautioned that the precedential designation "exposes insurers to unwarranted litigation by faulting one insurer for the Department's choice to approve the confidential filing of a tier algorithm." In response to the letter, the Department's attorney, Bryant Henley, contacted State Fund to discuss settlement. State Fund and the Department ultimately signed a settlement agreement containing, in pertinent part, the following terms:

"2. Resolution of the Dispute. The A-Brite order applies to A-Brite Blind & Drapery Cleaning, and State Fund agrees to be bound by the terms of the A-Brite Order as those terms relate to the obligations between State Fund and A-Brite. State Fund agrees, further, not to file a Writ Petition challenging, in whole or in part, the A-Brite Order. The Department agrees to remove the precedential designation from the A-Brite Order, rendering the decision non-precedential. As a result of this Agreement, the Parties agree the A-Brite Order may not be ‘relied on as precedent’ within the meaning of Government Code section 11425.60, subdivision (a) in any other action by the Department relating to State Fund's rating plan and premium discount modifier." (Unnecessary capitalization omitted.)

The agreement also included language stating that the contract was fully integrated.

On February 6, 2019, the Commissioner signed the settlement agreement and issued an order rescinding the precedential designation of the A-Brite order. On March 15, 2019, State Fund's deadline for filing a writ petition challenging the A-Brite order expired.

Ten days later, after noting "several legal and factual issues in common" between the A-Brite matter and another administrative action brought against State Fund, an ALJ for the Department took official notice of the A-Brite order, the A-Brite settlement agreement, and various other A-Brite documents in In the Matter of the Appeal of Sessions Payroll Management, Inc. (File: AHB-WCA-18-47, July 18, 2019) (the Sessions matter). The ALJ also ordered the parties to brief whether the "doctrines of exhaustion of judicial remedies and collateral estoppel preclude relitigation of factual and/or legal issues decided by the Commissioner in A-Brite. " (Fn. omitted.)

In response, State Fund argued that judicial exhaustion did not apply because the settlement agreement eliminated the A-Brite order's preclusive effect, and argued collateral estoppel was inapplicable due to public policy considerations and because the issues in the two matters were not identical. The ALJ disagreed with State Fund, instead adopting Sessions's position that both doctrines applied and issuing an order finding that State Fund was precluded from relitigating the factual and legal issues decided in A-Brite . State Fund filed a petition for reconsideration, which the ALJ denied on May 31, 2019.

On June 10, 2019, State Fund filed a petition for a peremptory writ of administrative mandate challenging the merits of the 2018 A-Brite order. Aware that the petition was filed after the limitations period had run, State Fund alleged that equitable estoppel and equitable tolling applied to render the petition timely. Specifically, State Fund alleged that Henley, the Department's attorney, conveyed the message that signing the settlement agreement would have the same effect as a victory on a writ petition. It further alleged that the Commissioner intentionally misled State Fund by representing that the settlement agreement would preclude any use of the A-Brite order in subsequent proceedings. State Fund alleged it reasonably relied on the Commissioner's representations, and thus entered into the settlement and did not challenge the A-Brite order within the designated statutory period. State Fund allegedly did not learn of the Department's "deception" until three months later, when the Department breached the settlement agreement through its ALJ, who gave preclusive effect to the A-Brite order in the Sessions matter.

On November 19, 2020, in response to State Fund's effort to reopen the A-Brite matter by filing this writ, the ALJ in Sessions issued an order vacating its ruling finding the A-Brite order preclusive in that case, as the A-Brite order was no longer final for purposes of collateral estoppel and judicial exhaustion.

The same day, the Department filed a motion for summary judgment in the trial court, arguing that State Fund's petition was time-barred as a matter of law. The court granted the motion, finding that neither equitable estoppel nor equitable tolling applied to extend the period of limitations. In doing so, it found that the settlement agreement only required the Department to "de-designate" the A-Brite order as precedent under the applicable Government Code section, and it did not preclude the Department from binding State Fund to the A-Brite order through other means, such as nonmutual offensive collateral estoppel. State Fund appeals.

DISCUSSION

State Fund argues the trial court erred by granting summary judgment on the ground that the writ was time-barred, as there is a triable issue of material fact as to whether equitable estoppel or equitable tolling apply, which would render the writ timely. We disagree.

ILegal Standard

"A trial court properly grants summary judgment where no triable issue of material fact exists and the moving party is entitled to judgment as a matter of law. [Citation.]" ( Merrill v. Navegar, Inc. (2001) 26 Cal.4th 465, 476, 110 Cal.Rptr.2d 370, 28 P.3d 116 ; see also Code Civ. Proc., § 437c, subd. (c).)¹ A defendant moving for summary judgment "bears the burden of persuasion that ‘one or more elements of’ the ‘cause of action’ in question ‘cannot be established,’ or that ‘there is a complete defense’ thereto." ( Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850, 107 Cal.Rptr.2d...