Filed 8/21/14 Moffett v. Lampe Group CA4/3




                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS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
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              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                     FOURTH APPELLATE DISTRICT

                                                DIVISION THREE


DONNA MOFFETT,

     Plaintiff and Appellant,                                          G049896

         v.                                                            (Super. Ct. No. RIC10005567)

THE LAMPE GROUP, INC., et al.,                                         OPINION

     Defendants and Respondents.



                   Appeal from a judgment of the Superior Court of Riverside County, Daniel
A. Ottolia, Judge. Affirmed.
                   Law Offices of Robert K. Scott, Robert K. Scott, James W. Haines; Sina
Law Group and Reza Sina for Plaintiff and Appellant.
                   Lewis Brisbois Bisgaard & Smith, Joseph C. Campo and Patrik Johansson
for Defendants and Respondents.
                                          *                  *                  *
              Donna Moffett sued defendants The Lampe Group, Inc. (Lampe) and
Douglas Becker (collectively defendants) and Old Mutual Financial Life Insurance
Company, Inc. (Old Mutual) regarding its rescission of the life insurance policy
purchased by her mother, Barbara Sodders. Old Mutual previously sought and was
granted summary judgment in its favor, and that decision is now final. The trial court
concluded that rescission was proper because there were several misrepresentations on
the application, and even after receiving the policy with the application attached, Sodders
failed in her duty to correct the inaccurate information.
              What remained after that ruling were claims for fraud and professional
negligence against Lampe, the broker, and Becker, the agent. The trial court granted
summary judgment in their favor, concluding it was undisputed Sodders had
misrepresented several facts, and despite Moffett’s attempt to blame Becker for the
information on the application, she failed in her duty to correct the information. Thus,
Sodders’s actions rather than Becker’s were the cause of any damages. Moffett now
appeals, and for the reasons discussed below, we affirm.
                                               I
                                           FACTS
              On July 24, 2008, Sodders met with Becker at her home for the purpose of
applying for life insurance. She was approximately 67 years old at the time. Moffett was
present during this meeting.
              There are many disputes about what precisely occurred during this meeting,
and Moffett argued that Becker’s conduct was below the standard of care and/or
fraudulent in numerous respects, including failing to provide Sodders with appropriate
senior disclosures, failing to provide a conditional receipt, failing to disclose that
premiums were not guaranteed to be level for 15 years, failing to provide the actual
policy, having her sign a blank application, choosing a policy that did not require medical
underwriting, failing to maintain notes from the meeting, and various other issues. What

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is undisputed and important for purposes of the instant summary judgment motion is that
during the meeting, Becker obtained extensive health information from Sodders.
According to the first amended complaint (the complaint) and Moffett’s separate
statement of undisputed facts, Becker asked Sodders about her history of smoking.
Sodders said that she had been a smoker but had stopped two years earlier. Becker told
her that if she had ceased smoking for at least one year, she could answer “no” on the
application.
               Becker also asked Sodders if, in the past 10 years, it had been
recommended to her to have any tests, treatment or surgery which had not been
performed. Moffett testified at her deposition that Sodders answered “no.”
               The application also asked Sodders to state the date she last saw her doctor,
the reason for the visit, and the results. The application lists Dr. Antonio A. Tan and his
address. According to Moffett’s deposition, her mother told Becker that she had seen
Tan a couple of months ago, but did not say anything else about that visit.
               The basic application was completed during that meeting on July 24, and
Sodders’s signature is on the application. On August 4, Old Mutual issued the policy,
providing a $50,000 death benefit and listing Moffett as beneficiary. The contestability
period of the policy was two years from the date of issue. The policy stated the contract
between Old Mutual and Sodders included the application, which was attached to the
policy. It stated further that Old Mutual “will rely on all statements made in an
application.” On August 30, Sodders accepted delivery of the policy, including the
signed application. She signed a delivery receipt which stated, “By executing this
Receipt, the Contract Owner further acknowledges that the insured’s health and
occupation have not changed since, and that the Insured’s health remains exactly as stated
in, the Application for insurance.”
               Sodders died on June 12, 2009, less than one year after the policy was
issued. The cause of death was “septic shock in part due to the shutting down of her

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bowels, and a malformation, congenital defect and/or diseased aortic opening.” Moffett
made a timely claim for benefits, and because the policy was within the contestability
period, Old Mutual conducted an investigation into Sodders’s medical history.
               During this investigation, Old Mutual discovered several discrepancies.
First, despite Sodders’s statement to Becker that she had stopped smoking two years
earlier, medical records revealed a different story. Tan’s patient records from a visit in
April 2008 stated that patient “continues to smoke 1 ppd.” At his deposition, Tan
confirmed that Sodders had told him she continued to smoke one pack per day.
Moreover, on March 15, 2008, Sodders was seen by Dr. Raj K. Sindher at Raincross
Medical Group, Inc., which was apparently an express care clinic. Sindher’s notes under
“impression” state “Smoker, COPD, Bronchitis” and under treatment instructions, among
other things, Sindher stated “D/C Smoke.”1 Old Mutual would not have issued the policy
at the same premium if it had known that Sodders had smoked within one year prior to
the application date.
               With respect to the question regarding any tests, treatments or surgeries had
been recommended but not completed in the past 10 years, to which Sodders had
answered “no,” her medical records also showed that Tan had recommended she seek
psychiatric help in 2004. Tan’s records also showed that her most recent visit’s purpose
had not been disclosed. According to Tan’s records, Sodders most recent visit had been
about depression and anxiety, which was not disclosed to Becker. Both of these facts,
according to Old Mutual, would have materially influenced their decision to issue the
policy.
               After further inquiries, in September 2009, Old Mutual sent Moffett a letter
informing her of its decision to rescind the policy due to Sodders’s misrepresentations
and omissions on the application.


1   It seems likely from the context that “D/C” stands for “decrease” or “discontinue.”

                                              4
              Moffett filed an initial complaint in March 2010, filing the amended
complaint in June. Against Old Mutual, Moffett alleged claims for breach of contract,
breach of the implied covenant of good faith and fair dealing, and fraud. As to
defendants, the complaint alleged causes of action for fraud and professional negligence.
The complaint alleged, among other things, that Becker had failed to list all the medicines
and medical conditions Sodders had disclosed. The complaint also asserted defendants
assured Sodders that “MOFFETT, would receive the benefits of the policy if everything
she disclosed to BECKER at the time of the application was truthful.” In her prayer,
Moffett alleges economic damages “for failure to provide [life]2 insurance benefits owed
to MOFFETT under the Policy, plus interest . . . .”
              In July 2011, Old Mutual moved for summary judgment, arguing the
undisputed facts demonstrated the policy was properly rescinded, among other things.
The trial court agreed, granting Old Mutual’s motion in October. The court found Old
Mutual “properly rescinded the life insurance policy. . . due to material
misrepresentations and concealment,” mostly of facts concerning her mental health and
medications. Even if Becker had improperly recorded Sodders’s responses, she had “a
duty to correct the above misrepresentations and omissions upon her receipt of the policy
and application.” As relevant here, the court stated “the rescission of the policy is
independently supported by Sodders’s undisputed misrepresentation and concealment on
the application of the true nature of her last physician visit by failing to disclose that it
involved her depression and anxiety. The undisputed evidence shows that Sodders did
not truthfully and accurately describe her last visit with Dr. Antonio Tan to Becker. It is
undisputed that this misrepresentation and concealment was material to OM Life’s
decision to issue the policy. And as noted, this misrepresentation does not implicate
Becker’s conduct at all.” Further, the court stated: “the rescission of the policy is

2 The prayer actually says “disability” insurance, but we presume that was a
typographical error.

                                               5
independently supported by Sodders’s misrepresentation and concealment in response to
the application’s Question 4.c. The undisputed evidence shows that Dr. Tan
recommended to Sodders that she obtain psychiatric treatment, that Sodders never
obtained such treatment, and that Sodders did not disclose these facts to Becker. It is
undisputed that this misrepresentation and concealment was material to OM Life’s
decision to issue the policy. Once again, this misrepresentation does not implicate
Becker’s conduct at all.” As far as we can tell, there was no appeal taken from the
judgment duly entered in Old Mutual’s favor.
              In November 2011, defendants moved for summary judgment, arguing
Moffett could not establish a causal link between her alleged damages and any conduct
by defendants. Because the undisputed facts demonstrated that certain of Sodders’s
statements led to rescission, not any wrongdoing Becker may have committed, she could
not establish the causation necessary for either a fraud or professional negligence claim.
Defendants also argued Sodders had a duty to correct her application upon receipt of the
policy, should it be necessary.
              Moffett opposed, arguing Sodders did not misrepresent any facts and,
Becker had knowledge of all relevant facts regarding Sodders’s depression and anxiety.
With respect to the uncompleted treatment question, Moffett argued the question was
vague and ambiguous, asked a 67-year-old applicant to take her memory back over 10
years, and was overly burdensome. With respect to the last physician visit, Moffett
denied Sodders had said it was a checkup, but did not deny that Sodders did not mention
anxiety or depression.
              Moffett additionally argued insurance agents are not immune for
negligence, including negligently misrepresenting a policy’s coverage. She stated Becker
was negligent because he had Sodders sign a blank application. She also argued an agent
could be liable for holding himself out as an expert or failing to deliver the agreed-upon
coverage. She stated Becker failed to deliver such coverage because “Sodders requested

                                             6
coverage that would pay benefits to her daughter in the event she passed away.” In reply,
defendants essentially argued that Moffett was rather desperately tap-dancing around the
causation question.
              The trial court granted the motion, concluding the following:
              “1. The undisputed evidence shows that Ms. Sodders lied about her
continued smoking to both [Defendants] and to [Old Mutal]. The undisputed evidence
shows that this misrepresentation and concealment was material to [Old Mutual’s]
decision to rescind the policy.
              “2. The undisputed evidence shows that Ms. Sodders did not truthfully and
accurately describe her last medical visit to Dr. Tan to Douglas Becker. It is undisputed
that this misrepresentation was material to [Old Mutual’s] decision to issue the policy.
              “3. The undisputed evidence shows that Dr. Tan recommended to Ms.
Sodders that she obtain psychiatric treatment, that Ms. Sodders never obtained such
treatment, and that Ms. Sodders never disclosed this to Becker. It is undisputed that this
misrepresentation and concealment was material to [Old Mutual’s] decision to issue the
policy.
              “4. Ms. Sodders had a duty to correct any misrepresentations in the
application upon her receipt of the policy. Ms. Sodders failed to correct any of the
misrepresentations in the application upon her receipt of the policy. Ms. Sodders, who
failed to advise her insurer of the inaccuracies in the application, after signing and
receiving the application, cannot avoid rescission by claiming that she had no knowledge
of the misrepresentations in the application.
              “5. Plaintiffs attempt to blame Becker for Sodders’ misrepresentations is
unavailing because it is undisputed that Becker had no involvement in at least three of
Sodders’ material misrepresentations. As such, even if Plaintiff’s claims against
Defendants were true, it does not impact [Old Mutual’s] proper rescission of the policy
and summary judgment.

                                                7
              “6. Ms. Sodders’ lies, misrepresentations, and concealment, not the alleged
conduct by Defendants, caused the rescission of the policy. Therefore, Plaintiff is unable
to establish causation against Defendants.”
              Judgment was entered in April 2012. Moffett now appeals.
                                              II
                                       DISCUSSION
A. Standard of Review and Relevant Law
              Summary judgment is appropriate “if all the papers submitted show that
there is no triable issue as to any material fact and that the moving party is entitled to a
judgment as a matter of law.” (Code Civ. Proc., § 437c, subd. (c).) “[T]he party moving
for summary judgment bears an initial burden of production to make a prima facie
showing of the nonexistence of any triable issue of material fact; if he carries his burden
of production, he causes a shift, and the opposing party is then subjected to a burden of
production of his own to make a prima facie showing of the existence of a triable issue of
material fact.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.) “A prima
facie showing is one that is sufficient to support the position of the party in question.”
(Id. at p. 851.) “There is a triable issue of material fact if, and only if, the evidence would
allow a reasonable trier of fact to find the underlying fact in favor of the party opposing
the motion in accordance with the applicable standard of proof. [Fn. omitted.]” (Id. at p.
850.)
              “We review the trial court’s decision de novo, considering all of the
evidence the parties offered in connection with the motion (except that which the court
properly excluded) and the uncontradicted inferences the evidence reasonably supports.
[Citation.]” (Herberg v. California Institute of the Arts (2002) 101 Cal.App.4th 142,
148.)




                                               8
B. Defendants’ Initial Burden
              As noted above, the party moving for summary judgment has the “initial
burden of production to make a prima facie showing of the nonexistence of any triable
issue of material fact.” (Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th at p. 850.)
The relevant causes of action here are fraud and professional negligence. The elements
of a cause of action for fraud are: (1) a misrepresentation; (2) knowledge of falsity; (3)
intent to defraud or induce reliance; (4) actual and justifiable reliance by the plaintiff; and
5) resulting damage. (Civ. Code, § 1709; Conroy v. Regents of University of California
(2009) 45 Cal.4th 1244, 1255; Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167,
173.) For a professional negligence claim, a plaintiff must establish “(1) the duty of the
professional to use such skill, prudence and diligence as other members of the profession
commonly possess and exercise; (2) breach of that duty; (3) a causal connection between
the negligent conduct and the resulting injury; and (4) actual loss or damage resulting
from the professional negligence.’ [Citation.]” (Loube v. Loube (1998) 64 Cal.App.4th
421, 429.) Thus, both claims involve the element of causation — the fraud or negligence
on defendant’s part must be the cause of plaintiff’s damage.
              In the trial court, defendants argued Sodders made at least three material
misrepresentations on the application, in which Becker had no part. These
misrepresentations, therefore, led to Old Mutual’s decision to rescind and Moffett’s
alleged damages — the lack of benefits from the policy.
              We agree this argument is supported by undisputed evidence. Moffett’s
complaint and separate statement of facts both indicate Sodders told Becker she had
stopped smoking two years earlier. Two sets of medical records indicate this was untrue.
              With regard to the question about tests or treatment which had not been
performed, Moffett testified at her deposition that Sodders answered this question “no.”
But Sodders’s medical records indicated that Tan had recommended she seek psychiatric
help in 2004. This was not disclosed.

                                              9
              As to Sodders’s most recent doctor visit, Moffett testified at her deposition
that her mother told Becker that she had seen Tan a couple of months ago, but did not say
anything else about that visit. Tan’s records indicated Sodders’s most recent visit had
been about depression and anxiety, which was not disclosed to Becker.
              As to the materiality of these misstatements and omissions, defendants
offered the declaration of Dennis Gunderson, Old Mutual’s chief underwriter.
Gunderson stated that if Old Mutual had known the truth about Sodders’s smoking,
anxiety and depression, it would not have issued the policy at the same rate.
              Defendants also argued Sodders had an independent duty to correct the
information discussed above once she received the receipt of the policy and application.
We agree. “Even if [plaintiff] did not receive a copy until delivery of the policy, he was
obligated at that time to correct any misstatements or omissions in the representations
regarding his health. [Citations.]” (Lunardi v. Great-West Life Assurance Co. (1995) 37
Cal.App.4th 807, 820.)
              We therefore conclude that defendants met their initial burden to show that
Moffett could not prevail on either of her claims due to a lack of causation.


C. Plaintiff’s Evidence Regarding a Triable Issue of Material Fact
              The burden now shifts to Moffett to demonstrate a triable issue of material
fact. (Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th at p. 850.) Moffett’s briefs on
appeal depart from her arguments below. She now argues that the trial court’s analysis
was wrong because the issue is not whether Becker’s conduct caused rescission of the
policy, but whether it caused her damages for some other reason. This is an odd claim,
because the only economic damages alleged in her complaint are “for failure to provide
[life] insurance benefits owed to MOFFETT under the Policy, plus interest . . . .”3

3 She also alleges general damages for mental and emotional distress, but offers no
theory under which such damages are recoverable without economic damages.

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(Italics added.) But even if we take Moffett’s late-asserted claim of other damages
seriously, she still fails to raise a triable issue of fact.
               She argues a triable issue exists as to whether Becker failed to procure the
agreed-upon coverage. She argues: “Sodders requested coverage that would pay benefits
to her daughter in the event she passed away. She had never purchased life insurance
before. She asked for coverage that was obtainable, in light of her health, medical
history, and age. Becker stated to her that he would get her a policy that covers her. He
had her sign a blank application. He represented to her that he would properly fill out the
application by using key terminology. He specifically reviewed her bag of medications.
He took her money, leading her to believe she had secured life insurance benefits for Ms.
Moffett.”
               What is confusing about this argument is that Becker did, indeed, obtain
coverage for her. This is undisputed. She then claims the Old Mutual policy was “not
the right policy.” She fails to offer any evidence at all that a better policy existed,
however, and ignores the fact that if she had made the same misrepresentations, any other
policy Becker procured might also have been rescinded. Her argument here amounts to
pure speculation and wishful thinking. Moreover, the cases she cites are completely
inapposite, addressing questions, for example, such as whether an agent misrepresented a
homeowner’s policy by telling the homeowner a certain policy would provide “100%
coverage for the cost of repairs and/or replacement . . . including any and all increases in
costs . . . in the event of a loss.” (See Desai v. Farmers Ins. Exchange (1996) 47
Cal.App.4th 1110, 1114.) Here, in her own words, she requested coverage “that would
pay benefits to her daughter in the event she passed away.” It is undisputed that such a
policy was procured, and but for Sodders’s misrepresentations, that policy would have
paid benefits to Moffett. She cannot simply sidestep the causation issue because it is
unhelpful to her case.



                                                 11
              Next, arguing that Becker misrepresented the policy, Moffett again argues
that Becker had Sodders sign a blank application. She again claims he failed to take
notes of the meeting, or fill out the application correctly. What this argument lacks,
however, is any evidence of misrepresenting the policy itself. Moffett never claims, for
example, that Sodders did not know the policy was for $50,000, did not understand the
premiums, or other pertinent information. Again, the cases she cites have no relevance
here. (See Clement v. Smith (1993) 16 Cal.App.4th 39, 45 [agent represents specific kind
of loss would be covered by policy.]) The type of “loss” here was Sodders’s death. That
was, indeed, covered by the policy Becker obtained for Sodders.
              Moffett’s next assertion of a triable issue of fact is that Becker held himself
out as a counselor. She again claims she relied on Becker to fill out the application
properly. This again sidesteps the issue of causation in the three undisputed areas where
Sodders gave Becker incorrect information. It does not raise an issue of material fact,
given that her damages arise from the rescission of the policy.
              With respect to the professional negligence claim, Moffett essentially
makes the same arguments under the cloak of a different cause of action, citing her
expert’s testimony that Becker failed to use reasonable care, diligence and judgment in
selling the life policy to Sodders. If the issues here were duty and breach, this testimony
would be relevant. Because the issue is causation, it is not. Even if Becker committed
the misdeeds Moffett claims, the only response is “so what?” The issues Moffett
attempts to raise here are not relevant to the reasons for rescission, which is the proximate
cause of Moffett’s damages. The same applies to Moffett’s brief argument regarding her
fraud claim — she conveniently omits the undisputed areas in which Sodders failed to be
honest in the information she provided.
              In sum, we find Moffett has failed to raise any issue of triable fact with
regard to either cause of action. Summary judgment was therefore properly granted.



                                             12
                                         III
                                   DISPOSITION
            The judgment is affirmed. Defendants are entitled to their costs on appeal.




                                               MOORE, J.

WE CONCUR:



RYLAARSDAM, ACTING P. J.



FYBEL, J.




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