State Farm General Insurance v. Wells Fargo Bank

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 1100 [EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 1101 [EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 1102 [EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 1103 OPINION INTRODUCTION In this subrogation action, State Farm General Insurance Company (State Farm) seeks to recover sums it paid to its insureds, a condominium association and one of the condominium owners, following a fire loss. The fire started in an adjacent apartment building, after an ignition source was placed in a trash can, and the resultant fire spread to the insureds' condominium complex. State Farm sued the neighboring apartment building's owner and trustee, property managers, and refuse company (collectively respondents). It is undisputed that respondents did not place the ignition source in the trash…

I.

Therefore, I write separately to express my view that the doctrine is a judicial anachronism, which is inconsistent with our present day comparative fault tort regime. The Supreme Court should align California's subrogation law with those states which have modified or abandoned the doctrine in favor of the modern comparative fault paradigm. As I explain below, comparative fault tort law, including its application to indemnity and contribution claims, has supplanted any need for determining superior equities; a principle which today can have the pernicious consequence of providing a legal safe haven for third party tortfeasors who, under comparative fault standards, would be otherwise liable for indemnity and contribution in a lawsuit brought directly by the insured.

Doctrinally, the roots of subrogation are equitable in origin. Therefore, since the right of the party seeking subrogation stems from equity, it was seen as a logical adjunct that the doctrine "may be invoked against a third party only if he or she is guilty of some wrongful conduct that makes his or her equity inferior to that of the plaintiff. [Citations.]" (13 Witkin, Summary of Cal. Law (10th ed. 2005) Equity,…

INTRODUCTION

In this subrogation action, State Farm General Insurance Company (State Farm) seeks to recover sums it paid to its insureds, a condominium association and one of the condominium owners, following a fire loss. The fire started in an adjacent apartment building, after an ignition source was placed in a trash can, and the resultant fire spread to the insureds’ condominium complex. State Farm sued the neighboring apartment building’s owner and trustee, property managers, and refuse company (collectively respondents). It is undisputed that respondents did not place the ignition source in the trash can. Rather, State Farm contends respondents’ negligent failure to provide for the safe disposal of fireplace ashes caused the fire, which spread to its insureds’ property.

The trial court granted summary judgment in favor of respondents on the ground that State Farm’s claims were barred by the doctrine of superior equities, which requires a balancing of the respective equities of the parties in order to determine who should bear the loss. (See Meyers v. Bank of America etc. Assn. (1938) 11 Cal.2d 92, 101 [ 7 P.2d 1084 ] (Meyers); Golden Eagle Ins. Co. v. First…