Judge: Andrew E. Cooper, Case: 24CHCV00694, Date: 2024-08-19 Tentative Ruling

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Case Number: 24CHCV00694    Hearing Date: August 19, 2024    Dept: F51

MOTION TO STRIKE

Motion Filed: 5/7/24

MOVING PARTY: Defendant State Farm General Insurance Company (“Defendant”)

RESPONDING PARTY: Plaintiff Arto Boyajian (“Plaintiff”)

NOTICE: OK

RELIEF REQUESTED: Defendant moves to strike references to punitive damages from Plaintiff’s complaint.

TENTATIVE RULING: The motion is denied. Defendant to file and serve its answer to Plaintiff’s complaint within 30 days.

BACKGROUND 

This is an insurance action in which Plaintiff, a homeowner of certain real property located at 12215 Hondero Court, Los Angeles, CA 91344, alleges that Defendant wrongfully withheld funds from Plaintiff relating to a claim Plaintiff filed after his property was damaged on 9/1/23 due to water intrusion, and continues to delay the resolution of the matter. (Compl. ¶¶ 6–17.)

On 3/5/24, Plaintiff filed his complaint, alleging against Defendant the following causes of action: (1) Breach of Contract; and (2) Breach of the Duty of Good Faith and Fair Dealing. On 5/7/24, Defendant filed the instant motion to strike. On 8/6/24, Plaintiff filed his opposition. On 8/12/24, Defendant filed its reply.

ANALYSIS

The court may, upon a motion, or at any time in its discretion, and upon terms it deems proper, strike any irrelevant, false, or improper matter inserted in any pleading. (Code Civ. Proc., § 436, subd. (a).) The court may also strike all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court. (Id., § 436, subd. (b).) The grounds for moving to strike must appear on the face of the pleading or by way of judicial notice. (Id., § 437.)

A.    Meet and Confer

Defendant’s counsel declares that on an unspecified date, she met and conferred with Plaintiff’s counsel regarding the issues raised in the instant motion, but the parties were unable to informally resolve the issues. (Decl. of Christy Gargalis ¶ 2.) The Court therefore finds that counsel has satisfied the preliminary meet and confer requirements under Code of Civil Procedure section 435.5, subdivision (a).

B.     Punitive Damages

Punitive damages may be recovered in non-contract actions upon a proper showing of malice, fraud, or oppression by clear and convincing evidence. (Civ. Code § 3294, subd. (a).) “Malice” is defined as conduct intended to cause injury to a person or despicable conduct carried on with a willful and conscious disregard for the rights or safety of others. (Id. at subd. (c); Turman v. Turning Point of Cent. Cal., Inc. (2010) 191 Cal.App.4th 53, 63.) “Oppression” means despicable conduct subjecting a person to cruel and unjust hardship, in conscious disregard of the person’s rights. (Ibid.) “Fraud” is an intentional misrepresentation, deceit, or concealment of a material fact known by defendant, with intent to deprive a person of property, rights or otherwise cause injury. (Ibid.)

In the insurance context, “it is the obligation, deemed to be imposed by the law, under which the insurer must act fairly and in good faith in discharging its contractual responsibilities. Where in so doing, it fails to deal fairly and in good faith with its insured by refusing, without proper cause, to compensate its insured for a loss covered by the policy, such conduct may give rise to a cause of action in tort for breach of an implied covenant of good faith and fair dealing.” (Gruenberg v. Aetna Ins. Co. (1973) 9 Cal.3d 566, 574.) An insurance carrier may be liable for punitive damages if it is found to have acted with malice, fraud, or oppression in failing to deal fairly and in good faith with its insured. (Neal v. Farmers Ins. Exchange (1978) 21 Cal.3d 910, 922–923.)

Punitive damages must be supported by factual allegations. Conclusory allegations, devoid of any factual assertions, are insufficient to support a conclusion that parties acted with oppression, fraud or malice. (Smith v. Superior Court (1992) 10 Cal.App.4th 1033, 1042; Anschutz Entertainment Group, Inc. v. Snepp (2009) 171 Cal.App.4th 598, 643.)

In the complaint, Plaintiff alleges, inter alia, that following the water intrusion at his home, his contractor advised that Plaintiff and his family should relocate while the home was undergoing necessary repairs. (Compl. ¶¶ 8–9.) Thereafter, “Defendant nevertheless promptly denied an alternative housing allowance, unreasonably maintaining that it was not needed since there was ‘running water.’” (Id. at ¶ 10.) After Plaintiff retained counsel, “Defendant reassessed its position on housing and agreed to an allowance of $22,500 per month for three months. However, to date, State Farm has not paid this allowance, notwithstanding Plaintiff’s delivery of and Defendant’s receipt of a lease and payment for same.” (Id. at ¶ 12.)

Plaintiff further alleges that no progress was made by Defendant to investigate the physical damage to the home, and that multiple adjustors were assigned to the case, but to date, Defendant has yet to make progress in the investigation while Plaintiff “and his family continue to live in a state of disrepair and damages.” (Id. at ¶¶ 13–17.)

Here, Defendant argues that “while Boyajian has alleged conducted in an unreasonable manner to support a claim for bad faith, he has not alleged malicious, oppressive or fraudulent conduct.” (MTS 4:27–28.) “Here, Plaintiffs have alleged a dispute as to the amount of benefits or the manner and speed in which State Farm handled his claim.” (Id. at 6:4–5.)

In opposition, Plaintiff argues that he has sufficiently alleged that “Defendant unreasonably and in bad faith: Delayed Dr. Boyajian’s claim for property damage and alternative housing when it knew the claim was covered; Knowingly withheld payment of sums rightfully owed; Deliberately failed to conduct a timely and thorough investigation, violating industry standards and statutory requirements; Prioritized its own interests over the insured’s, contravening its fiduciary duty; Compelled Dr. Boyajian to institute litigation to recover policy amounts due; [and] Forced Dr. Boyajian to undermine his family’s financial security by failing to timely pay for repairs” (Pl.’s Opp. 6:15–24, citing Compl. ¶ 30.)

On reply, Defendant maintains that Plaintiff’s allegations are inadequate to show malice, fraud, or oppression giving rise to the recovery of punitive damages. (Def.’s Reply 2:22–3:12.) The Court disagrees. Based on a review of Plaintiff’s factual allegations, the Court finds that the Complaint, as pled, sufficiently pleads a basis for punitive damages against Defendant based on malice or oppression. As Plaintiff contends, the Complaint sufficiently alleges that Defendant caused unreasonable delay in failing to investigate and resolve the matter for over 6 months, causing Plaintiff and his family to either be displaced at Plaintiff’s expense or to remain at the damaged and dangerous home. This alleged conduct sufficiently supports a prayer for punitive damages as a “conscious disregard for the rights or safety of others.” (Civ. Code § 3294, subd. (c).)

Accordingly, the Court finds that at the pleading stage, Defendant’s alleged conduct as pled may be considered malicious and oppressive as defined by Civil Code section 3294. Further investigation of the merits of Plaintiff’s allegations may be resolved through the discovery process.

CONCLUSION 

The motion to strike is denied. Defendant to file and serve its answer to Plaintiff’s complaint within 30 days.