California Supreme Court Law Blog

Sometimes the California Supreme Court goes a little whacky like it did in Saelzler v. Advanced Group 400 (2001) 25 Cal 4th 763. In this case, while Ms. Saelzler, a FedEx employee, was trying to deliver a package during the day to a residential apartment complex, she was brutally sexually assaulted by three men who were never caught. Ms. Saelzler filed a lawsuit for damages against the owners of the complex alleging that the owner's failed to provide security to protect against foreseeable third party criminal acts.

To establish liability, she proved that pizza parlors refused to deliver to the complex, that the assistant manager, a woman, relied upon security to walk to her car, that there had been 55 incidences of broken fences, 41 trespasses, that the police had responded to the premises 50 times and that the criminal activity on the property included gunfire, robberies, rapes and assaults.

The defendant argued that it did not need to provide security during the day, that there was no way to prove that if there had been security the attack would not have occurred anyway. Cutting through the procedural aspects of the case, it reached the California Supreme Court. The California Supreme Court concluded that despite the overwhelming evidence of prior criminal acts and the recommendation of the security personnel that the apartment complex should have security during the day, plaintiff had to prove with certainty that security during the day would have prevented the brutal sexual assault. This decision was unquestionably good for owners of apartment complexes; but equally unquestionably a bad decision for Californians.

The dissenting opinion, written by the outstanding jurist, Justice Kennard, persuasively argued, in essence, how ridiculous the majority decision is in this case. Justice Kennard rightly chastised the majority for requiring certainty in establishing causation and preventing the case from reaching a jury. Gunfire, robberies, rapes, and assaults were enough for the dissent; and they should have been enough for the majority.

We need a courageous lawyer to challenge this decision or, alternatively, the legislature should act to protect its citizens.

Our judicial decisions often arise out of interesting facts. And, that is the case in Crisci v. Security Insurance Company (1967) 66 Cal 2d 425 which changed California Insurance law to give insureds the protection they pay for with liability insurance. Ah, the holding of the case- not yet. Let's review the facts first. They happen to be interesting and ones that cried out for change and justice.

June Dimare and her husband were tenants living in an apartment building owned by Rosina Crisci, who was a 70 year old widow. Mrs. DiMare was going down an outside wooden staircase when a star tread failed and she fell through the hole down to her waist and was dangling 15 feet above the ground. She and her husband filed a lawsuit against Rosina Crisci who had a $10,000.00 liability policy. Demands to settle were made within the policy limits and Mrs. Crisci even offered to pay $2,500.00 toward settlement.

The insurance company, Security Insurance Company, hired an experienced lawyer. This defense lawyer and the claims adjuster both thought that there might be a verdict in excess of $100,000.00 because Mrs. DiMare had suffered injuries and had psychosis as a result of the accident. The insurance company did a comprehensive, in-depth investigation to determine if Mrs. Dimare had psychosis preceding the accident, but it learned she did not. Mrs. Crisci authorized Security Insurance to settle. But Security Insurance refused to settle.

Mrs. Crisci and her husband won their lawsuit. Mrs. Crisci was awarded $100,000.00 and her husband, on a loss of consortium claim, was awarded $1,000.00. Security paid $10,000.00 the policy limit but adamantly refused to pay any more money. Mrs. DiMare and the 70 year old widow Mrs. Crisci entered into a settlement. Mrs. Crisci paid $22,000.00, gave Mrs. DiMare a 40% interest in property that Mrs. Crisci owned, and assigned her action against Security to Mrs. DiMare. Mrs. Crisci became indigent, hysterical, and even attempted suicide. Her rent was paid for by her relatives. None of this bothered Security. It paid its $10,000.00 policy limit.

Well, a broken staircase and Security's callousness lead to the California Supreme Court affirming a judgment for Mrs. Crisci for her own damages and the judgment that was in excess of her policy limits. The court reasoned that the insurance company gave more consideration to its own financial interests than to those of its insured's knowing that there was a significant risk that a verdict would exceed the policy limit; and, therefore, it was responsible not only for the policy limit but for everything awarded above the policy limit.

Attorneys now refer to this as "opening up the policy". Insurance companies have a duty to accept reasonable settlements. And when they refuse to settle within the policy limits giving more consideration to their own interests over the interests of their insureds and there is a verdict in excess of the policy limit, the insurance companies are liable for the whole amount.

Moral of the story - An insurance company can be callous and ignore the rights of its insureds, but they have to pay the price. Now, that is a common sense decision that helps insureds get what they pay for and one that encourages insurance companies to do the right thing.