Williams v. Nat. W. Life Ins. Co.
C090436A
| Cal. Ct. App. | Mar 4, 2022Background
- Elder plaintiff Barney Williams signed documents during a purported trust update with Victor Pantaleoni; Pantaleoni used a $100,000 check to purchase an annuity from National Western Life Insurance Co. (NWL).
- Williams returned the first annuity within the 30-day free look; Pantaleoni obtained a handwritten letter (purportedly signed by Williams) to reissue a second annuity.
- When Williams surrendered the second annuity after the free-look period, NWL refunded principal minus a $14,949.91 surrender charge.
- A jury found NWL liable for negligence and financial elder abuse and awarded substantial noneconomic and punitive damages; Pantaleoni was also found liable.
- The California Supreme Court transferred the case back to the Court of Appeal to reconsider agency under Ins. Code § 1704.5 and O’Riordan. The Court of Appeal held NWL liable under § 1704.5 but reversed punitive damages and remanded for reconsideration of attorney fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether NWL is liable for Pantaleoni’s conduct under Ins. Code § 1704.5 | § 1704.5 makes an appointed life‑agent who submits an application that is issued the insurer’s authorized agent; NWL is therefore responsible for agent’s misconduct | Pantaleoni exceeded his authority and acted outside scope of agency; NWL cannot be held liable for acts in violation of its contract/bulletins | Held for Williams: § 1704.5 applies to life/annuity sales; NWL is charged with agent’s knowledge and responsible for agent’s wrongful acts relating to the application and policy |
| Sufficiency and allocation of emotional‑distress (noneconomic) damages | Williams suffered severe psychological injury; NWL’s conduct (not promptly returning funds, conserving policy, imposing surrender charge) caused distress; 70% allocation to NWL appropriate | NWL argues no substantial evidence it caused emotional distress; invokes economic‑loss rule; allocation unsupported | Held for Williams: substantial evidence supports emotional‑distress award and 70% allocation; economic‑loss rule inapplicable to statutory elder‑abuse remedies |
| Punitive damages against NWL | Imputed agent knowledge and conduct warrant punitive damages against insurer | Civil Code § 3294 (incorporated in Welf. & Inst. Code § 15657.5) requires clear‑and‑convincing proof that an officer/director/managing agent had advance knowledge, consciously disregarded risk, or ratified misconduct | Held for NWL on punitive issue: reversed. Imputed knowledge alone is insufficient; plaintiffs failed to prove by clear and convincing evidence that an officer/director/managing agent had the requisite advance knowledge, ratification, or conscious disregard |
| Attorney fees — use of plaintiff counsel’s home‑market hourly rate | Trial court should have used counsel’s San Diego (home) market rate because local counsel was unavailable/impracticable | Trial court properly used local (Butte‑area) market rates after considering availability evidence | Held: no abuse of discretion in using $500/hr rate; remand to reconsider fee award in light of reversal of punitive damages |
Key Cases Cited
- O’Riordan v. Federal Kemper Life Assurance Co., 36 Cal.4th 281 (Cal. 2005) (discusses insurer liability for life‑agent knowledge and conduct)
- People ex rel. Bill Lockyer v. Fremont Life Ins. Co., 104 Cal.App.4th 508 (Cal. Ct. App. 2002) (insurer liability for agent conduct in annuity sales)
- White v. Ultramar, Inc., 21 Cal.4th 563 (Cal. 1999) (definition of managing agent and corporate ratification standard for punitive damages)
- College Hospital Inc. v. Superior Court, 8 Cal.4th 704 (Cal. 1994) (ratification requires actual knowledge of outrageous conduct by managing agent)
- PLCM Group, Inc. v. Drexler, 22 Cal.4th 1084 (Cal. 2000) (lodestar approach and reasonable hourly rate standard for attorney fees)
- Horsford v. Board of Trustees of California State University, 132 Cal.App.4th 359 (Cal. Ct. App. 2005) (when local counsel unavailable, trial court may consider out‑of‑town counsel’s home‑market rates)
- Major v. Western Home Ins. Co., 169 Cal.App.4th 1197 (Cal. Ct. App. 2009) (example of a claims manager treated as a managing agent for punitive‑damages ratification analysis)