Judge: Andrew E. Cooper, Case: 24CHCV02627, Date: 2025-01-22 Tentative Ruling

Case Number: 24CHCV02627    Hearing Date: January 22, 2025    Dept: F51

DEMURRER WITH MOTION TO STRIKE

Demurrer with Motion to Strike Filed: 9/23/24

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

RESPONDING PARTY: Plaintiffs Hayk Khachatryan; and Mary Sultanyan (collectively, “Plaintiffs”)

NOTICE: OK

RELIEF REQUESTED: Defendant demurs to the second and third causes of action in Plaintiffs’ complaint. Defendant also seeks an order striking Plaintiffs’ references to punitive damages from the complaint.

TENTATIVE RULING: The demurrer is overruled against Plaintiffs’ third cause of action and sustained against Plaintiff’s second cause of action with 30 days leave to amend. The motion to strike is denied.

BACKGROUND 

This is an insurance action in which Plaintiffs, the insured, allege that on 9/22/22 and 6/13/23, their home was burglarized. (Compl. ¶¶ 10, 13.) Plaintiffs allege that it submitted two insurance claims for losses incurred in connection with these incidents to Defendant, who issued their homeowners insurance policy, but Defendant unreasonably denied Plaintiffs compensation for their covered losses. (Id. at 11–22.)

On 7/18/24, Plaintiffs filed their complaint, alleging against Defendant the following causes of action: (1) Breach of Contract; (2) Tortious Breach of Insurance Contract; and (3) Breach of the Implied Covenant of Good Faith and Fair Dealing.

On 9/23/24, Defendant filed and served the instant demurrer and motion to strike. On 12/30/24 and 12/31/24, Plaintiffs filed their oppositions thereto. On 1/14/25, Defendant filed its reply.

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DEMURRER

As a general matter, a party may respond to a pleading against it by demurrer on the basis of any single or combination of eight enumerated grounds, including that “the pleading does not state facts sufficient to constitute a cause of action.” (Code Civ. Proc., § 430.10, subd. (e).) In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice.¿(Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.)¿

“A demurrer tests the pleading alone, and not the evidence or facts alleged.” (E-Fab, Inc. v. Accountants, Inc. Servs. (2007) 153 Cal.App.4th 1308, 1315.) As such, the court assumes the truth of the complaint’s properly pleaded or implied factual allegations. (Ibid.) The only issue a demurrer is concerned with is whether the complaint, as it stands, states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) 

Here, Defendant¿demurs to Plaintiffs’ second and third causes of action on the bases that the complaint fails¿to allege facts sufficient to¿state¿those causes of action.

A.    Meet-and-Confer 

Defendant’s counsel declares that on an unspecified date, she emailed Plaintiffs’ counsel a meet and confer letter discussing the issues raised in the instant demurrer and motion to strike, and followed up with a telephone call, but the parties were unable to come to a resolution. (Decl. of Christy Gargalis ¶ 2.) Therefore, the Court finds that counsel has satisfied the preliminary meet and confer requirements of Code of Civil Procedure section 430.41, subdivision (a).

B.     Tortious Breach of Insurance Contract

Plaintiffs’ second cause of action alleges against Defendant a tortious breach of the insurance contract. As a preliminary matter, Defendant argues that Plaintiffs’ second and third causes of action are duplicative of one another, and that “Plaintiffs cannot allege two separate identical causes of action for bad faith simply by giving them different titles.” (Dem. 4:11–12.) Furthermore, as Defendant observes, Plaintiffs do not address this issue in their opposition, therefore “Plaintiffs ignore the fact that they alleged two identical causes of action and do not establish the identical claims are proper.” (Def.’s Reply 2:12–13.)

Based on the foregoing, the Court finds that Plaintiffs have failed to allege facts sufficient to constitute a cause of action for Tortious Breach of Insurance Contract. Accordingly, the demurrer against Plaintiffs’ second cause of action is sustained.

C.    Breach of Implied Covenant of Good Faith and Fair Dealing

Plaintiffs’ third cause of action alleges against Defendant a breach of the implied covenant of good faith and fair dealing. Every contract contains an implied covenant of good faith and fair dealing that neither party will do anything to interfere with the other party’s right to receive the benefits of the agreement. (Howard v. American Nat’l Fire Ins. Co. (2010) 187 Cal.App.4th 498, 528.) The precise nature and extent of the duty depends on the nature and purpose of the underlying contract and the parties’ legitimate expectations arising from the contract. (Ibid.) “A breach of the implied covenant of good faith is a breach of the contract … and breach of a specific provision of the contract is not ... necessary to a claim for breach of the implied covenant of good faith and fair dealing.” (Thrifty Payless, Inc. v. The Americana at Brand, LLC (2013) 218 Cal.App.4th 1230, 1244.)

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 [emphasis added].)

Here, Defendant argues that “aside from a dispute as to benefits, Plaintiffs do not allege facts to show State Farm’s conduct was unreasonable. Plaintiffs do not allege State Farm ignored evidence, failed to question witnesses or otherwise engaged in unreasonable conduct. Plaintiffs simply allege a dispute as to coverage.” (Dem. 6:23–26.) Defendant further argues that “Plaintiffs do not allege any facts to show State Farm engaged in unreasonable conduct but merely relies on conclusory allegations. As such, Plaintiffs’ claim for bad faith fails.” (Id. at 7:10–11.)

In opposition, Plaintiffs argue that they have sufficiently alleged that “State Farm made zero effort themselves to retrieve the Police Report, despite having the report number and other requisite information. They then unreasonably denied Plaintiffs claim and did not allow the EUO to move forward despite Plaintiff advising they were willing and able.” (Pl.’s Opp. 7:15–18, citing Compl. ¶¶ 53, 60.) Plaintiffs contend that “it is highly unreasonable for State Farm to not only deny the claim but deny it based on the fact that they did not conduct an EUO in which they refused to reschedule.” (Id. at 7:20–22.)

Defendant argues in reply that “here, Plaintiffs simply allege State Farm investigated the claim and do not allege facts to show State Farm’s conduct was unreasonable. Plaintiffs do not identify evidence State Farm ignored. Plaintiffs argue State Farm could obtain the police report but ignore the fact that Plaintiffs have a duty to cooperate and assist in an investigation.” (Def.’s Reply 3:2–5.)

The Court finds that here, at the pleading stage, Plaintiffs have sufficiently alleged that Defendant breached the implied covenant of good faith and fair dealing by unreasonably refusing to schedule an Examination Under Oath and denying Plaintiffs’ claims, based on Plaintiffs’ inability to obtain police statements and cell phone statements, despite Plaintiffs’ best efforts to do so. (Compl. ¶¶ 16–21.) Accordingly, the demurrer against Plaintiffs’ third cause of action is overruled.

MOTION TO STRIKE

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.) Here, Defendant moves to strike Plaintiffs’ references to punitive damages from the complaint.

A.    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.)

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.)

Here, as the Court finds that Plaintiffs have alleged facts sufficient to constitute a cause of action for Breach of the Implied Covenant of Good Faith and Fair Dealing, it likewise finds that Plaintiffs have alleged facts sufficient to support a prayer for punitive damages relating thereto. Accordingly, the motion to strike is denied.

LEAVE TO AMEND

Where a demurrer is sustained, leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.) The burden is on the plaintiff to show the court that a pleading can be amended successfully. (Id.; Lewis v. YouTube, LLC (2015) 244 Cal.App.4th 118, 226.) However, “[i]f there is any reasonable possibility that the plaintiff can state a good cause of action, it is error to sustain a demurrer without leave to amend.” (Youngman v. Nevada Irrigation Dist. (1969) 70 Cal.2d 240, 245).

Here, the Court notes that this is the first demurrer brought against Plaintiffs’ original complaint, and that Plaintiffs have requested leave to amend should the Court sustain the instant demurrer or grant the motion to strike. (Pls.’ Opp. 8:11–13.) Therefore, under the Court’s liberal policy of granting leave to amend, Plaintiffs are granted 30 days leave to amend the complaint to cure the defects set forth above, particularly that the second and third causes of action are duplicative of one another.

CONCLUSION 

The demurrer is overruled against Plaintiffs’ third cause of action and sustained against Plaintiff’s second cause of action with 30 days leave to amend. The motion to strike is denied.