Appellant employer sought review of a judgment of the Superior Court of Orange County (California) that sustained respondent workers’ compensation insurance carrier’s demurrer and dismissed appellant’s action for negligence or breach of the implied covenant of good faith and fair dealing as a result of respondent not actively pursuing subrogation rights.
California Business Lawyer & Corporate Lawyer, Inc. understands CACI conversion
Overview
Appellant employer brought a cause of action against respondent workers’ compensation insurance carrier for negligence or breach of the implied covenant of good faith and fair dealing as a result of respondent not actively pursuing subrogation rights. The trial court sustained respondent’s demurrer on the ground that appellant failed to state a cause of action, pursuant to Cal. Civ. Proc. Code § 430.10 (e). The court affirmed, holding that the workers’ compensation law did not impose a duty on respondent to pursue its subrogation rights in any particular manner. Thus, appellant could not state a cause of action for negligent performance of that duty. Subrogation was a right, not an obligation and respondent had the option of not pursuing subrogation recovery at all. Assuming a fiduciary-type relationship existed, neither the duty nor the covenant of good faith and fair dealing extended beyond the terms of the insurance contract and appellant received the full benefits of the agreement. As appellant did not seek leave to amend its complaint, its argument, raised for the first time at oral argument, was not adequate to justify a finding the trial court abused its discretion.
Outcome
The court affirmed a judgment of the district court that sustained respondent workers’ compensation insurance carrier’s demurrer and dismissed appellant employer’s action for negligence or breach of the implied covenant of good faith and fair dealing. The court held that the law did not impose a duty on respondent to pursue its subrogation rights in any particular manner. Appellant failed to state a cause of action.