PAUL v. STATE FARM FIRE CASUALTY CO (1987)

Plaintiff and appellant Richard A. Paul (Paul) appeals from an order of dismissal entered after the trial court sustained without leave to amend the demurrer of defendants and respondents State Farm Fire & Casualty Co. (State Farm) and Darvin Howell (Howell) (collectively respondents) to Paul's third amended complaint.

Because any of Paul's alleged exceptions to the statute of limitations may apply, and because the presence of essential issues of fact preclude resolution of Paul's third amended complaint on demurrer, we reverse the order of dismissal.

PROCEDURAL AND FACTUAL BACKGROUND 1

In August 1979, Howell, a State Farm agent with offices on Pacific Coast Highway in Malibu, issued Paul a homeowner's policy insuring Paul's Malibu property “against all risks of physical loss․”  The policy excluded, inter alia, loss caused by flood and earth movement.

In February 1980, Paul's property suffered substantial damage allegedly caused when a negligently maintained water drainage facility resulted in a landslide on Paul's property.   That same month Paul gave notice of his losses and claims to Howell.

On or about March 28, 1980, Howell transmitted a letter to Paul stating flood losses were not covered under the policy.²  Paul took no further action respecting his claim, nor did State Farm undertake any investigation.

About four years later in mid-March of 1984, Paul received a form letter addressed “Dear Policyholder” from State Farm announcing provisions of Paul's “new State Farm Homeowners policy” which purportedly led him to believe the 1980 landslide losses were in fact covered.   In June 1984, Paul again filed a claim with State Farm.

When State Farm did not settle, Paul filed the instant action in July 1984, more than four years beyond the asserted denial of his claim.

The original complaint alleged, “Plaintiff relied on defendants' denial of his claim, and explanation thereof, in reasonably believing that his loss was not covered under the Policy․, Defendants intentionally misled Plaintiff into believing his loss was not covered under the Policy.   Plaintiff's reasonable belief ․, was countered only after Plaintiff brought [sic] ․ [the March 1984], letter from State Farm to his counsel for explanation.   On June 22, 1984, Plaintiff, through his counsel, again made a claim to State Farm for the loss sustained as a result of the negligently caused landslide.” ³

Respondents demurred to the original, and to each of Paul's successive complaints.   Their demurrer to Paul's second amended complaint was sustained as to each cause of action based upon the statute of limitations.

Paul's third amended complaint again alleged several manners of “tortious denial of benefits due under insurance policy,” including a breach of fiduciary duties, arising out of respondents' knowing wrongful failure to pay Paul's valid claim.

In the third amended complaint, Paul described what had earlier been denominated State Farm's “denial of his claim” as follows:  “On or about March 28, 1980, defendant Darvin Howell transmitted to plaintiff a letter stating that flood losses were not covered.”

The trial court sustained respondents' general and special demurrers to this complaint without leave to amend and entered an order of dismissal finding, among other things, “[t]here is no estoppel alleged to preclude the applicability of the statute of limitations.”

CONTENTIONS

Paul contends the trial court erred by relying on the statute of limitations to dismiss his complaint.   He claims the doctrines of delayed discovery, fraudulent concealment and equitable estoppel, none of which can be determined on demurrer, apply.   Paul asserts his reliance on Howell's misrepresentation in the March 1980 letter was reasonable and therefore, because his cause of action did not accrue until receipt of the March 1984 letter, the July 1984 complaint was timely under the shortest applicable statute of limitations of one year.

DISCUSSION

1. Scope of appellate review.

 The function of a demurrer is to test the sufficiency of a plaintiff's pleading by raising questions of law.  (Buford v. State of California (1980) 104 Cal.App.3d 811, 818, 164 Cal.Rptr. 264.)  “[A] general demurrer admits the truth of all material factual allegations in the complaint․”  (Alcorn v. Anbro Engineering, Inc. (1970) 2 Cal.3d 493, 496, 86 Cal.Rptr. 88, 468 P.2d 216.)   The allegations are to be liberally construed with a view to obtaining substantial justice between the parties.  (King v. Central Bank (1977) 18 Cal.3d 840, 843, 135 Cal.Rptr. 771, 558 P.2d 857.)

“A complaint which shows on its face the cause of action is barred by limitations is subject to demurrer.”  (5 Witkin, Cal. Procedure (3d ed. 1985) Pleading, § 912, p. 349.)   The plaintiff must therefore allege specific facts which excuse failure to file within the statutory period.

2. Nature of relationship between Paul and respondents.

Although Paul alleged the existence of a fiduciary relationship between himself and respondents, at this point in the litigation, little is known factually about the dealings between Paul and Howell.   Questions await resolution such as, what representations did Howell make, if any, at the time the policy was sold to Paul, did Paul seek Howell's advice and assistance in initially insuring his property, and was there any pre-existing friendship or association between the two?

What little is known about Howell indicates he sold insurance as an agent of State Farm in the community of Malibu.   Paul, a homeowner in the same community, purchased “all-risk” insurance policies through Howell commencing at least in 1979, and maintained contact through 1984.   Paul continued to deal with Howell even after his 1980 landslide loss had not been paid.

Apart from this largely undeveloped factual relationship, there also existed certain legal relationships between the parties.   Howell was the local State Farm agent.   An insurance agent is defined by Insurance Code section 31 as a person authorized by an insurer to transact insurance on its behalf.   An insurance broker, on the other hand, “is a person who, for compensation and on behalf of another person, transacts insurance other than life with, but not on behalf of, an insurer.”  (Ins. Code, § 1623.)   A broker normally deals in the policies of more than one insurer and is the agent of the insured.   However, once an insurance broker sells a particular insurer's policy, the broker may then also act as an agent of the insurer for such purposes as delivering the policy or collecting the premiums.  (See 3 Couch on Insurance (2d ed. 1984) § 25:93, pp. 442–444.)

The primary legal relationship between respondents and Paul, insurer-insured, is an area of the law in continuing development.  Gibson v. Government Employees Ins. Co. (1984) 162 Cal.App.3d 441, 445, 208 Cal.Rptr. 511, noted “[a]lthough the California Supreme Court has not been presented a case squarely posing the question whether the relationship between insurer and insured is properly deemed a fiduciary one, its most recent discussion of the subject leaves little room for doubt.”  Gibson then reviewed the Supreme Court's discussion in Seaman's Direct Buying Service, Inc. v. Standard Oil Co. (1984) 36 Cal.3d 752, 206 Cal.Rptr. 354, 686 P.2d 1158, before “[a]ssuming ․ the relationship between an insurer and its insured is a fiduciary one, ․” (Gibson v. Government Employees Ins. Co., supra, 162 Cal.App.3d at p. 446, 208 Cal.Rptr. 511.)

Since Gibson, our Supreme Court has done little to contradict the assumption made there.   In Frommoethelydo v. Fire Insurance Exchange (1986) 42 Cal.3d 208, at pages 214–215, 228 Cal.Rptr. 160, 721 P.2d 41, the court again addressed the relationship as follows:  “A covenant of good faith and fair dealing is implied in every insurance contract.  [Citations.]  The implied promise requires each contracting party to refrain from doing anything to injure the right of the other to receive the agreement's benefits.   To fulfill its implied obligation, an insurer must give at least as much consideration to the interests of the insured as it gives to its own interests.   When the insurer unreasonably and in bad faith withholds payment of the claim of its insured, it is subject to liability in tort.   And an insurer cannot reasonably and in good faith deny payments to its insured without fully investigating the grounds for its denial.  [Citation.]  [¶] In addition an insurer holds itself out as a fiduciary.   With the public trust must go private responsibility consonant with the trust, including qualities of decency and humanity inherent in the responsibilities of a fiduciary.  [Citation.]”  Italics added.)

While Frommoethelydo reaffirms the high standard of fidelity to which an insurer must be held, i.e., the responsibilities of a fiduciary, the court still has never directly referred to the relationship of insurer to insured as a “fiduciary relationship.”   Although Gibson assumed this to be so, it confined an insurer's fiduciary duties to the terms of the insurance contract, and held an insured need not be advised of the availability of other types of insurance or the benefits of higher medical payment limits.   In this regard, Gibson noted the suit there was not between an insured and an insurance broker.  (Gibson v. Government Employees Ins. Co., supra, 162 Cal.App.3d at p. 450, 208 Cal.Rptr. 511.)

Thus, we remain unguided by our Supreme Court as to the extent to which insurer-insured is coterminous with other legally recognized fiduciary relationships such as, trustee-beneficiary, attorney-client, tenant-cotenant, director-corporation, doctor-patient, etc.   However, we believe the fiduciary relationship here alleged impacts the fact situation before us, based on the case authorities now available.

3. Paul's tolling theories.

a. The “date-of-discovery” exception to the “date-of-injury” rule.

 Generally, a cause of action accrues when the wrongful act or injury occurs and mere ignorance of the wrong will not toll the running of the statute of limitations.  (Myers v. Eastwood Care Center, Inc. (1982) 31 Cal.3d 628, 634, 183 Cal.Rptr. 386, 645 P.2d 1218.)   However, Paul contends the discovery rule of accrual applies to his cause of action under the theories of fraudulent concealment, estoppel and breach of fiduciary duties.  (See Code Civ.Proc., § 338, subd. (4).)

The discovery exception to the date of injury rule seeks to ameliorate the rule's sometimes harsh results by tolling the statute of limitations until a plaintiff, through the exercise of reasonable diligence, discovers or should have discovered, all facts essential to a cause of action.  (April Enterprises, Inc. v. KTTV (1983) 147 Cal.App.3d 805, 826–827, 195 Cal.Rptr. 421.)   A common rationale for applying the discovery rule is the unfairness of rewarding a party whose wrongful conduct is of a type not subject to reasonable discovery.  (Neel v. Magana, Olney, Levy, Cathcart and Gelfand (1971) 6 Cal.3d 176, 188, 98 Cal.Rptr. 837, 491 P.2d 421.)

April Enterprises, Inc. extended the discovery rule to a breach of contract action between joint venturers, noting the difficulty of detecting the injury as the “common thread” running through all actions in which that exception had been applied.  (April Enterprises, Inc. v. KTTV, supra, 147 Cal.App.3d at p. 831, 195 Cal.Rptr. 421.)  “To obtain the benefit of the late-discovery exception to the statute of limitations, the complaint must allege facts showing that the cause of action could not with reasonable diligence have been discovered” before the running of the statute.  (Silver v. Watson (1972) 26 Cal.App.3d 905, 911, 103 Cal.Rptr. 576.)

b. Fraudulent concealment.

“[T]he fraudulent concealment by the defendant of the facts upon the existence of which the cause of action depends tolls the statute, and such statute does not begin to run until the discovery by plaintiff or until by reasonable diligence the plaintiff should have discovered the facts.”  (Kimball v. Pacific Gas & Elec.Co. (1934) 220 Cal. 203, 215, 30 P.2d 39.)

 While mere nondisclosure by a nonfiduciary will not toll the statute of limitations, fraud may be presumed when those in whom confidence is reposed avail themselves of the trust to obtain an advantage at the expense of the confiding party.  (Johnson v. Clark (1936) 7 Cal.2d 529, 534–535, 61 P.2d 767.)

Civil Code section 1573 defines constructive fraud, in pertinent part, stating:  “Constructive fraud consists:  [¶] 1. In any breach of duty which, without an actually fraudulent intent, gains an advantage to the person in fault, or anyone claiming under him, by misleading another to his prejudice, or to the prejudice of anyone claiming under him;  ․”

Spindle v. Chubb/Pacific Indemnity Group (1979) 89 Cal.App.3d 706, 712, 152 Cal.Rptr. 776, recognized a fiduciary's nondisclosure of matters relevant to the relationship, to the advantage of the fiduciary, constituted a breach of the implied covenant of good faith and fair dealing in every insurance contract and amounts to constructive fraud.

 Thus, an allegation of a fiduciary relationship obviates the necessity of pleading fraud and the action may be treated as one of fraudulent concealment.  (Amen v. Merced County Title Co. (1962) 58 Cal.2d 528, 534, 25 Cal.Rptr. 65, 375 P.2d 33.)   While the defendant may have made no active misrepresentation, this element is supplied by the breach of a fiduciary's obligation to make full disclosure.  (Ibid.)  Therefore, material nondisclosure by an insurer to an insured may constitute fraud sufficient to permit application of the discovery rule, thereby tolling the statute of limitations.

c. Equitable estoppel.

 The doctrine of equitable estoppel prevents fraudulent or inequitable resort to the statute of limitations.  (Sears v. Rule (1945) 27 Cal.2d 131, 147, 163 P.2d 443;  Industrial Indem. Co. v. Ind. Acc. Com. (1953) 115 Cal.App.2d 684, 689, 252 P.2d 649.)   Estoppel applies where a defendant has induced plaintiff to forebear bringing a suit on a known cause of action until after the statute of limitations has run.  (43 Cal. Jur.3d, Limitation of Actions, § 161, pp. 225–227.)

In Glickman v. New York Life Ins. Co. (1940) 16 Cal.2d 626, 107 P.2d 252, an immigrant purchased insurance policies which, upon permanent disability, provided for monthly payments and waiver of premiums.   The insured became disabled and, in need of funds, went to the insurer in order to borrow against one policy to pay the premiums on another.   Glickman, not realizing his entitlement to benefits on account of the disability, told an employee, “ ‘I am disabled, not feeling well and I can't do anything, I am not working and I simply haven't got any money.   Now, can you figure out a way I can borrow some money here to pay my premium up?’ ”  (Id., at p. 629, 107 P.2d 252.)   The employee advised Glickman to surrender the policy.

Glickman held it would be manifestly unjust not to permit rescission of the surrender of the policy in light of the false or misleading advice the insurer had undertaken to give the insured, construing such advise as the equivalent of constructive fraud.  (Id., at p. 634, 107 P.2d 252.)

d. Duty to investigate diminished when a fiduciary relationship exists.

 When a fraud cause of action involves parties in a fiduciary relationship, diligence to investigate is relaxed.  (Hobart v. Hobart (1945) 26 Cal.2d 412, 440, 159 P.2d 958.)   In such an action, “the duty to investigate may arise later by reason of the fact that the plaintiff is entitled to rely upon the assumption that his fiduciary is acting in his behalf.   But, once the plaintiff becomes aware of facts which would make a reasonably prudent person suspicious, the duty to investigate arises and the plaintiff may then be charged with the knowledge of facts which would have been discovered by such an investigation [citation].”  (Bedolla v. Logan & Frazer (1975) 52 Cal.App.3d 118, 131, 125 Cal.Rptr. 59 (involving a dispute between accountants and a partnership).)

“[W]here a fiduciary obligation is involved, the courts have recognized a postponement of the accrual until the beneficiary has knowledge or notice of the act constituting a breach of fidelity.”  (United States Liab. Ins. Co. v. Haidinger-Hayes, Inc. (1970) 1 Cal.3d 586, 596, 83 Cal.Rptr. 418, 463 P.2d 770;  Sherman v. Lloyd (1986) 181 Cal.App.3d 693, 698, 226 Cal.Rptr. 495;  Schneider v. Union Oil Co. (1970) 6 Cal.App.3d 987, 994, 86 Cal.Rptr. 315.)   The existence of a trust relationship limits the duty of inquiry and “[t]hus, when a potential plaintiff is in a fiduciary relationship with another individual, that plaintiff's burden of discovery is reduced and he is entitled to rely on the statements and advice provided by the fiduciary.”  (Sherman v. Lloyd, supra, 181 Cal.App.3d at p. 698, 226 Cal.Rptr. 495.)

In Sherman, the general partner told plaintiff the structure of the partnership in which he was investing complied with California law.  Sherman held “case law has recognized that the recipient of such advice will quite appropriately give it substantial weight” (id., at p. 699, 226 Cal.Rptr. 495), and “[s]ince [plaintiff] was in a fiduciary relationship with [defendant], he was entitled to rely on [defendant's] statements concerning the propriety of the investment structure.   As such, [plaintiff's] cause of action did not accrue until he learned from counsel that the investment structure may have been improperly created.”  (Id., at p. 700, 226 Cal.Rptr. 495.)

4. Paul has plead sufficient facts to withstand demurrer.

Each of the various tolling theories advanced by Paul in some way interacts with, and depends upon, a determination of the nature of the relationship between Paul and the respondents.   As noted, the factual specifics of their interaction are still unknown.   Further muddying the water is the lack of clarity surrounding the duties included in “the responsibilities of a fiduciary.”  (Frommoethelydo v. Fire Insurance Exchange, supra, 42 Cal.3d at p. 215, 228 Cal.Rptr. 160, 721 P.2d 41.)   However, for the purposes of the present case, we need only hold the resolution of Paul's tolling theories presents issues of fact which cannot be determined on demurrer.

 Paul was entitled to assume respondents were acting on his behalf.   Therefore, facts which might ordinarily require discovery may not excite suspicion because the same degree of diligence is not required when one is dealing within the confines of a fiduciary relationship.  “There are no hard and fast rules for determining what facts or circumstances will compel inquiry by the injured party and render him chargeable with knowledge.  [Citation.]  It is a question for the trier of fact.”  (United States Liab. Ins. Co. v. Haidinger-Hayes, Inc., supra, 1 Cal.3d at p. 597, 83 Cal.Rptr. 418, 463 P.2d 770;  Hobart v. Hobart Estate Co., supra, 26 Cal.2d at p. 440, 159 P.2d 958;  Leaf v. City of San Mateo (1980) 104 Cal.App.3d 398, 409, 163 Cal.Rptr. 711;  Bowman v. McPheeters (1947) 77 Cal.App.2d 795, 803, 176 P.2d 745.)

As a question for the trier of fact, this issue cannot be determined at the demurrer stage where the allegations of the complaint must be taken as true.   (Kiseskey v. Carpenters' Trust for So. California (1983) 144 Cal.App.3d 222, 228, 192 Cal.Rptr. 492.)

5. Respondents' reliance on Neff v. New York Life Ins. Co. (1947) 30 Cal.2d 165, 180 P.2d 900, is misplaced.

In Neff, a son instituted litigation over the denial of his father's claim for disability benefits which neither the insured father nor his widow had pressed in the sixteen years since it had been denied.   The court held, “[i]t is a matter of common knowledge that there are often differences of opinion concerning liability under insurance policies and no mere denial of liability, even though it be alleged to have been made through fraud or mistake, should be held sufficient, without more, to deprive the insurer of its privilege of having the disputed liability litigated within the period prescribed by the statute of limitations.”  (Id., at pp. 172–173, 180 P.2d 900.)

Respondents urge Neff and a federal case, Matsumoto v. Republic Ins. Co. (9th Cir.1986) 792 F.2d 869, applying Neff to facts strikingly similar to those of the instant case, should control here.

However, during the 40 years since Neff, the duties imposed upon insurers have greatly increased.   At the end of the 1950's, our Legislature enacted Insurance Code section 790.03 defining unfair and deceptive practices in the insurance business.   In the 1960's, the courts, after considering the inherent inequities in the bargaining positions between insurer and insured, applied concepts of adhesion contracts to insurance policies.  (Steven v. Fidelity & Casualty Co. (1962) 58 Cal.2d 862, 879–884, 27 Cal.Rptr. 172, 377 P.2d 284.)

In the 1970's, both the Legislature and the Supreme Court placed additional checks on unfair insurance industry practices.   In 1972, the Legislature added subdivision (h) to Insurance Code section 790.03, listing 15 unfair and deceptive practices by insurance companies.   The following year, the Supreme Court recognized the refusal to compensate an insured for a loss under the policy may give rise to an action for breach of the implied covenant of good faith and fair dealing.  (Gruenberg v. Aetna Ins. Co. (1973) 9 Cal.3d 566, 573–574, 108 Cal.Rptr. 480, 510 P.2d 1032.)

Finally, in the 1980's, the relationship between insurer and insured was construed to include the responsibilities of a fiduciary.  (Frommoethelydo v. Fire Insurance Exchange, supra, 42 Cal.3d at p. 215, 228 Cal.Rptr. 160, 721 P.2d 41.)

Based on this expansion of an insurer's duties, which the Matsumoto court failed to even mention, there exists strong statutory and case precedent to conclude the Neff case would be differently decided today.

Moreover, notwithstanding the foregoing legal developments, another factor distinguishing this case from Neff is the nature of the loss involved.   The insured in Neff based a claim of permanent disability on written proof he had contracted tuberculosis of both lungs.   The insurer denied coverage claiming Neff “ ‘was [not] “permanently, continuously and wholly prevented thereby, for life, from pursuing some gainful occupation” ’;  ․”   (Neff v. New York Life Ins. Co., supra, 30 Cal.2d at p. 168, 180 P.2d 900.)   Neff's complaint alleged such proof could not be provided within the insured's lifetime and, therefore, the denial of the claim for disability payments was fraudulent.

Thus, the insurer in Neff attempted to avoid payment based upon a simple denial of the fact of disability, the rebuttal of which is within the ken of most insureds.   The denial involved no particularly esoteric or specialized knowledge, as the underlying coverage question was a relatively straightforward matter of fact.

Here, by comparison, the question of coverage depends upon a much more complex question of law and fact.

From what is presently in the record regarding Paul's loss, which obviously may be incomplete, it appears to have been caused by supersaturation of the land, which resulted in a portion of the property giving way or subsiding, thereby causing damage to his residence.

Based on only these facts, the damage appears to fall into any number of the risks excepted from the policy, e.g., risk of loss due to surface water, overflow of streams or other bodies of water, water which backs up through sewers or drains, water below the surface of the ground which exerts pressure on the foundation or walls, loss “caused by, resulting from, contributed to or aggravated by any earth movement,” landslide, mudflow or earth sinking, rising or lifting.

However, despite the apparent applicability of these exceptions, if the moving or efficient cause of such an excepted risk of loss was the negligent act of a third party, for example the negligent construction or maintenance of a drainage system, the entire loss should be covered by Paul's “all-risk” policy.  (See fn. 3, ante.)

Thus, denial here was not a simple matter as in Neff, but a purportedly deceptive construction of the policy that even a well-versed insured would be hard pressed to argue, given the stated exceptions on the face of that lengthy and confusing document.

Respondents' fraudulent conduct may, in a perfect world, have been discoverable sooner.   However, Paul's allegations of respondents' knowing use of the intricacies of the policy to conceal the exception to the exceptions, thereby taking unfair advantage of their fiduciary responsibility and his continuing reliance on their fidelity, presents a case in which it would be palpably inequitable to permit them now to raise the bar of the statute of limitations.

2A Couch on Insurance (2d ed. 1984) section 23:11, page 785, instructs “[g]ood faith demands that the insurer deal with laymen as laymen and not as experts in the subtleties of law and underwriting.”   In attempting to read and comprehend insurance policies, generally, laymen are confused and bewildered.   Further, it is not unusual for such laymen to seek advice from their agents as to their rights under policies, and to accept and rely on the advice received.

Paul's allegation that as a layman, his acceptance of Howell's version of his policy was reasonable, is supported by these tenets.

Further, although Paul's contention Howell knew of the causation problem might under other circumstances seem strained, several factors make it more credible here.   Both Howell's office and Paul's property were within the community of Malibu.   A landslide causing the destruction of a residence, in all probability, attracted some local attention.   Given Howell's line of work, one would expect knowledge by him concerning the landslide's cause and likelihood of repetition, at least equal to and possibly greater than, others living in the community.   This knowledge, if proven, combined with Howell's presumably superior familiarity with the coverage afforded by the policy as well as his responsibility to Paul, renders it unfair to permit respondents' to capitalize on their alleged deceit.

CONCLUSION

Paul did not expect he was dealing with an adversary when he told Howell of the landslide on his property.   Howell, being a local insurance agent, and presumably possessed of superior knowledge and expertise, knew or should have known of the difficult problem presented as to the causation of such a loss;  further, he did not investigate the causation.   It appears reasonable for Paul to presume Howell possessed a full and complete understanding of the policy coverage and that his interpretation of it was correct.

Paul dealt on an ongoing basis with Howell in Malibu from at least 1979 through 1984.   If the respondents abused their special relationship with Paul by taking advantage of his reliance on their fidelity and used the exceptions of the policy to deny benefits as Paul alleged, they should not now be permitted to profit from their wrong by using the statute of limitations as a bar.

Accepting the allegations of Paul's complaint as true and construing them liberally in his favor, any of the asserted exceptions to the statute of limitations may apply in this case.   Even assuming Paul's inquiry in February 1980 constituted a claim, and Howell's March 28, 1980, letter in response constituted a denial, he may still be entitled to recover.

A finder of fact could properly determine Paul's duty to inquire should be relaxed.   It then becomes a question of fact as to when, under all the circumstances as yet undeveloped, Paul should be charged with knowledge of respondents' wrong.   Therefore, dismissal without leave to amend was improvidently granted.

DISPOSITION

The judgment of dismissal sustaining the demurrer without leave to amend is reversed.   Paul to receive costs on appeal.

FOOTNOTES

1.   The facts are gleaned from the complaints and other papers in the clerk's transcript.

2.   State Farm properly does not dispute Paul's assertion Howell acted as their agent.

3.   See Sabella v. Wisler (1963) 59 Cal.2d 21, 30–34, 27 Cal.Rptr. 689, 377 P.2d 889, for a discussion of an insurer's liability when a covered risk acts as the efficient or moving cause of an excepted loss.

KLEIN, Presiding Justice.

DANIELSON and ARABIAN, JJ., concur.