Judge: Anne Richardson, Case: 20STCV40296, Date: 2023-08-03 Tentative Ruling

DEPARTMENT 40 - JUDGE ANNE RICHARDSON - LAW AND MOTION RULINGS
The Court issues tentative rulings on certain motions.The tentative ruling will not become the final ruling until the hearing [see CRC 3.1308(a)(2)]. If the parties wish to submit on the tentative ruling and avoid a court appearance, all counsel must agree and choose which counsel will give notice. That counsel must 1) email Dept 40 by 8:30 a.m. on the day of the hearing (smcdept40@lacourt.org) with a copy to the other party(ies) and state that all parties will submit on the tentative ruling, and 2) serve notice of the ruling on all parties. If any party declines to submit on the tentative ruling, then no email is necessary and all parties should appear at the hearing in person or by Court Call. 

Case Number: 20STCV40296    Hearing Date: March 22, 2024    Dept: 40

Superior Court of California

County of Los Angeles

Department 40

I. Background

A. Pleadings

Plaintiffs Steven Katleman and Janet Katleman (the Katleman Plaintiffs) sue Defendants DeWitt Stern of California Insurance Services (DeWitt Stern Ins.), RSC Insurance Brokerage, Inc. (RSC) (operates as DeWitt Stern Ins.; sued as Risk Strategies Company), DeWitt Stern Group (company that merged with RSC in or around 2014), Janice Ruiz, Sara Neidlinger, E&S Inspection, Inc. (E&S Inspection; dismissed Oct. 26, 2021), AmWINS Access Insurance Services, LLC (AmWINS Access), AmWINS Insurance Brokerage of California, LLC (AmWINS Ins.), Eagle, Martin & Associates, Inc. (Eagle Martin), and Does 1-50 pursuant to an October 12, 2021 Third Amended Complaint (TAC) alleging claims of:

(1) Negligence against Defendants DeWitt Stern Ins., RSC, DeWitt Stern Group, AmWINS Access, AmWINS Ins., Janice Ruiz, Sara Neidlinger, and Does 1-25;

(2) Intentional/Negligent Misrepresentation against DeWitt Stern Ins., RSC, DeWitt Stern Group, Janice Ruiz, Sara Neidlinger, and Does 1-25;

(3) Intentional/Negligent Misrepresentation against Defendants AmWINS Access, AmWINS Ins., and Does 1-25;

(4) Breach of Contract against Defendants DeWitt Stern Ins., RSC, DeWitt Stern Group, and Does 1-25;

(5) Breach of the Implied Covenant of Good Faith and Fair Dealing against DeWitt Stern Ins., RSC, DeWitt Stern Group, and Does 1-25;

(6) Breach of Contract against Defendants AmWINS Access, AmWINS Ins., and Does 1-25; and

(7) Breach of the Implied Covenant of Good Faith and Fair Dealing against Defendants AmWINS Access, AmWINS Ins., and Does 1-25.

The claims arise from allegations that, among other things, the Katleman Plaintiffs were the owners of property located at 1945 Overhill Road, Agoura, California 91301 (Subject Property), which was (1) insured in 2012 by the DeWitt Defendants, Risk Strategies Co., AmWINS Access, AmWINS Ins., and Does 1-25 (Insurer Defendants) through Lexington Insurance Company and then, in 2018, through certain underwriters in Lloyd’s, London, (2) undervalued based on an October 1, 2018 appraisal by E&S Inspections, Inc., and (3) destroyed in the Woolsey fire on November 8, 2018, resulting in a loss of use, where, due to the undervaluation of the Subject Property, the insurance policy was inadequate and the Property and the Katleman Plaintiffs were underinsured (including as to replacement value).

B. Reassignment

This action was originally assigned to Department 50 at the Stanley Mosk Courthouse, the Honorable Teresa A. Beaudet presiding, and was reassigned to Department 40 at the Stanley Mosk Courthouse (the Court) on November 1, 2022.

C. Motion Before the Court

On October 24, 2023, Defendants DeWitt Stern Ins., RSC, Dewitt Stern Group, Janice Ruiz, and Sara Neidlinger (hereafter, the Broker Defendants) filed a motion for summary judgment or, in the alternative, summary adjudication of the TAC’s first, second, fourth, and fifth causes of action. Only the first and second causes of action are alleged against Janice Ruiz and Sara Neidlinger, while the first, second, fourth, and fifth causes of action are alleged against DeWitt Stern Ins., RSC, and Dewitt Stern Group.

On March 8, 2024, the Katleman Plaintiffs filed an opposition to the Broker Defendants’ motion.

On March 15, 2024, the Broker Defendants filed a reply to the Katleman Plaintiffs’ opposition.

The Broker Defendants’ motion is now before the Court.

II. Evidentiary Objections

In granting or denying a motion for summary judgment or summary adjudication, the court need only rule on those objections to evidence that it deems material to its disposition of the motion. Objections to evidence that are not ruled on for purposes of the motion shall be preserved for appellate review. (Code Civ. Proc., § 437c, subd. (q).) Evidentiary objections not made either in writing or orally shall be deemed waived. (Code Civ. Proc., § 437c, subd. (b).)

A. Opposition Objections to Motion’s Janice Ruiz Declaration

Objection No. 1: NOT RULED ON as not material to disposition of motion.

III. Motion for Summary Judgment or, in the Alternative, Summary Adjudication

A. Number of Operative Defendants at Issue in Motion

Briefing by the Broker Defendants maintains that DeWitt Stern Ins. is a dba used by RSC and that DeWitt Stern Group is a company that merged into RSC in or around 2014:

“This action filed by Plaintiffs Steven Katleman and Janet Katleman (hereinafter ‘Plaintiffs’) centers around the renewal of a homeowner’s insurance policy (the ‘Policy’), procured by their insurance broker – defendant RSC Insurance Brokerage, Inc. doing business as DeWitt Stern of California Insurance Services (hereinafter ‘RSC/ DeWitt’) – and its brokers [defendants Janice Ruiz (“Ruiz”) and Sara Neidlinger (‘Neidlinger’)] for Plaintiffs’ small 1,740 sq. ft. single family residence, located at 1945 Overhill Road, Agoura, California 91301 (the ‘Property’). Yet, for inexplicable reasons, Plaintiffs have also sued DeWitt Stern Group (‘DSG’), a privately held insurance brokerage and risk advisory firm based in New York company that has since merged (in or around 2014) with Risk Strategies Company, a national specialty insurance brokerage and risk management and consulting firm.”

(Mot., p. 7; see Mot., Separate Statement (Sep. St.), Undisputed Material Fact (UMF) Nos. 1, 4, citing Mot., Ruiz Decl., ¶¶ 4, 6.)

The Katleman Plaintiffs do not dispute this position in their opposition.

1. DeWitt Stern Ins. and RSC

The Court’s review of the California Secretary of State records for “DeWitt Stern of California Insurance Services” yields no results. (Business Search [DeWitt Stern of California Insurance Services] (2024) California Secretary of State <https://bizfileonline.sos.ca.gov/search/business> [as of Mar. 22, 2024].)

Similarly, the Court’s review of the Los Angeles County Registrar-Recorder/County Clerk for “DeWitt Stern of California Insurance Services” yields no results. (Fictitious Business Name Search [DeWitt Stern of California Insurance Services] (2024) Los Angeles County Registrar-Recorder/County Clerk <https://apps.lavote.gov/#/onlinesearch> [as of Mar. 22, 2024].)

The Declaration of Janice Ruiz, Vice-President of RSC, filed with the Broker Defendants’ motion, supports the dba position by explaining that “Defendant RSC Insurance Brokerage, Inc. doing business as DeWitt Stern of California Insurance Services (‘RSC/ DeWitt’) was the insurance broker for Plaintiffs during all relevant times when RSC/ DeWitt obtained the Policy for the Plaintiffs in 2018.” (Mot., Ruiz Decl., ¶ 4.)

The Court thus accepts for the purposes of this motion that in suing DeWitt Stern Ins., the Katleman Plaintiffs sue RSC.

For the remainder of this order, except where otherwise noted, the Court refers to DeWitt Stern Ins. and RSC as RSC/DeWitt, and all orders as to one of these Defendants are applicable to the other.

2. DeWitt Stern Group and RSC

The Court’s review of the California Secretary of State records for “DeWitt Stern Group” yields results showing that this entity was terminated on December 6, 2016. (Business Search [DeWitt Stern Group] (2024) California Secretary of State <https://bizfileonline.sos.ca.gov/search/business> [as of Mar. 22, 2024].)

The Court’s review of the Los Angeles County Registrar-Recorder/County Clerk for “DeWitt Stern Group” yields no results. (Fictitious Business Name Search [DeWitt Stern Group] (2024) Los Angeles County Registrar-Recorder/County Clerk <https://apps.lavote.gov/#/onlinesearch> [as of Mar. 22, 2024].)

The Declaration of Janice Ruiz supports the merger position by explaining that “DSG was the parent company of [DeWitt Stern Ins.] up until 2014 before its merger with Risk Strategies Company,” for which reason “DSG had no direct role in procuring the Policy for the Plaintiffs in 2018.” (Mot., Ruiz Decl., ¶ 6.)

The Court thus accepts for the purposes of this motion that in suing DeWitt Stern Group, the Katleman Plaintiffs sue RSC.

As a result, a grant of summary judgment or adjudication in RSC/DeWitt’s favor would result in similar relief for DeWitt Stern Group.

B. Legal Standard

A motion for summary judgment shall be granted if all the papers submitted show that there is no triable issue as to any material fact for trial or that the moving party is entitled to a judgment as a matter of law. (Code of Civ. Proc., § 437c, subd. (c).) A party may also seek summary adjudication of select causes of action, affirmative defenses, claims for damages, or issues of duty, which may be made by a standalone motion or as an alternative to a motion for summary judgment and proceeds in all procedural respects like a motion for summary judgment, but which must completely dispose of the challenged cause of action, affirmative defense, claim for damages, or issue of duty. (Code Civ. Proc., § 437c, subds. (f)(1)-(2), (t).)

The moving party bears the initial burden of production to make prima facie showing no triable material fact issues. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.) This burden on summary judgment or adjudication “is more properly one of persuasion rather than proof, since he must persuade the court that there is no material fact for a reasonable trier of fact to find, and not to prove any such fact to the satisfaction of the court itself as though it were sitting as the trier of fact.” (Id. at p. 850, fn. 11.) If the moving party meets this burden, the burden shifts to the opposing party to make a rebuttal prima facie showing that a triable issue of material fact exists. (Id. at p. 849.) “[I]n ruling on motions for summary judgment courts are to ‘“liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.”’ [Citations].” (Cheal v. El Camino Hospital (2014) 223 Cal.App.4th 736, 760.)

C. Analysis

1. Summary Judgment, First to Second and Fourth to Fifth Causes of Action: DENIED.

Because no single issue raised by the Broker Defendants disposes of all four causes of action, summary judgment is DENIED.

2. Summary Adjudication, First Cause of Action, Negligence: DENIED.

a. Local Standard

“‘The elements of a cause of action for negligence are … “(a) a legal duty to use due care; (b) a breach of such legal duty; [and] (c) the breach as the proximate or legal cause of the resulting injury.”’” (Ladd v. County of San Mateo (1996) 12 Cal.4th 913, 917.)

b. Complaint’s Allegations

The TAC’s first cause of action is directed at the DeWitt Stern Ins., RSC, DeWitt Stern Group, AmWINS Access, AmWINS Ins., Janice Ruiz, Sara Neidlinger, and Does 1-25 and alleges as follows.

The Katleman Plaintiffs requested that these Defendants obtain “appropriate and adequate insurance” for the full value of the Subject Property in the event of loss and/or damage to the property, and for loss of use of the Property in the event of loss and/or damage to the Property, and/or represented to the Plaintiffs that the Subject Property was adequately and properly insured, and/or represented to the Plaintiffs that they were fully covered in the event of a total loss, only for these Defendants to negligently, carelessly, and/or recklessly fail to obtain the promised insurance and misrepresent the nature, extent or scope of coverage on the Property to Plaintiffs. (TAC, ¶¶ 9, 15-16; see TAC, ¶¶ 13-21.) The claim also alleges that the Katleman Plaintiffs had informed these Defendants that the Subject Property was undervalued and underinsured, damaging the Katleman Plaintiffs when the property was destroyed in the Woolsey fire, with damages exceeding $75,000, in addition to foreseeable consequential and incidental damages to be proved at trial. (TAC, ¶¶ 17-19; see TAC, ¶¶ 13-21.)

c. Defendants RSC/DeWitt, Janice Ruiz, and Sara Neidlinger

The Broker Defendants motion challenges the Complaint’s first cause of action as to all Broker Defendants (with DeWitt Stern Group being terminated) for negligence on two grounds: (1) lack of a general duty from the Broker Defendants to the Katleman Plaintiffs; and (2) lack of special duties from the Broker Defendants to the Katleman Plaintiffs. (Mot., pp. 16-18, 18-23.)

The Court’s discussion is thus limited to the duty element of negligence.

i. Duty

I. Moving Party’s Burden

A. Moving Party’s Arguments

In their motion the Broker Defendants argue as follows. The Broker Defendants owed no duty to the Katleman Plaintiffs other than to use reasonable care, diligence, and judgment in procuring the insurance requested by the insured. The Broker Defendants cite the TAC at paragraphs 14 and 16 for the purpose of showing the allegations relating to the insurance requested by the Katleman Plaintiffs. Paragraph 15 provides that the Katleman Plaintiffs requested that all Defendants “obtain appropriate and adequate insurance for the full value of the Property in the event of loss and/or damage to the Property, and for loss of use of the Property in the event of loss and/or damage to the Property.” The Broker Defendants argue that such allegations fail where Mr. “Katleman testified repeatedly that he relied upon the Broker Defendants as to ‘the amounts and the scope and nature” of Plaintiffs’ coverage, stating that it was “their job” to determine replacement cost limits. The Broker Defendants support this argument by citing Jones v. Grewe (1987) 189 Cal.App.3d 950 (Jones) for the purpose of arguing that an insurance policy “arises out of the insured’s desire to be protected in a particular manner against a specific kind of obligation,” not a generalized desire to be protected against any possible financial loss. The Broker Defendants also cite Ahern v. Dillenback (1991) 1 Cal.App.4th 36 (Ahern) to show circumstances affirming a trial court’s grant of summary judgment where an insured only requested “the best policy there is” because though a broker may point out the advantages of additional coverage and obtain additional facts from the insured for such coverage, there is no obligation to do so. (Mot., pp. 16-18, citing Mot., Sep. St., UMF No. 16.)

A review of the cited evidence shows testimony from Mr. Katleman to the effect that he relied on Defendants to determine what the appropriate cost limits were, e.g. emailed Sara Neidlinger to state “[a]ll I care about is making sure that we’re covered on the house,” Sara Neidlinger “didn’t push back” and recommend an umbrella policy, and Mr. Katleman relied on “DeWitt Stern” to ensure that adequate coverage was in place for the home. (Mot., Sep. St., UMF No. 16, citing Mot., Weber Decl., Ex. A, Mr. Kattleman Deposition, 29:1-30:5.)

B. Court’s Determination

The Court finds that these arguments and evidence carry the Broker Defendants’ burden.

“It is the insured’s responsibility to advise the agent of the insurance he wants, including the limits of the policy to be issued.” (Jones, supra, 189 Cal.App.3d at p. 956.) If Mr. Katleman has testified only that he asked to be “covered on the house” and did not otherwise request specific limits for the policy for destruction in the event of a fire, then Mr. Katleman did not express a desire to be protected in a particular manner, undercutting the existence of a general duty for greater coverage than that procured through the work of RSC/DeWitt and its agents. Moreover, Sara Neidlinger—and RSC/DeWitt through her—did not, on the evidence presented by the Broker Defendants, have a duty to ferret out what being “covered” meant to Mr. Katleman. (Ahern, supra, 1 Cal.App.4th at p. 43.)

The burden thus shifts to the Katleman Plaintiffs.

II. Opposition Burden

A. Opposition Arguments

The Katleman Plaintiffs argue that the circumstances here differ from Ahern and cases with similar outcomes because Mr. Katleman did request to be protected in a particular manner against a specific kind of obligation, i.e., Mr. Katleman requested “replacement cost and loss of use coverage,” where “replacement costs” is defined by the California Code of Regulations to mean “the amount it would cost to repair, construct, rebuild or replace a damaged or destroyed structure.” The Katleman Plaintiffs compare these circumstances to those in Paper Savers, Inc. v. Nasca (1996) 51 Cal.App.4th 1090 (Nasca), where the court of appeal held that because the insured there requested insurance for a specific eventuality—the loss of defined property with a quantifiable value, not personal injury to third parties for which liability may be open ended—a negligence action could stand. The Katleman Plaintiffs also cite Desai v. Farmers Ins. Exchange (1996) 47 Cal.App.4th 1110 (Desai) for the purpose of comparing the request or inquiry by Mr. Katleman for replacement cost coverage to the circumstances in Desai that the Desai court found triggered a special duty for “100 percent replacement cost coverage.” (Opp’n, p. 13, citing Opp’n, Katleman Decl., ¶¶ 2-4, Nasca, supra, at p. 1098, Cal. Code Regs., tit. 10, § 2695.180, and Desai, supra, at pp. 1119-1121.)

B. Separate Statement Issue

The Court briefly notes that the opposition should have cited the separate statement somewhere in its argument relating to duty at page 13. Indeed, a review of the separate statement shows that paragraphs 2 to 4 of Mr. Katleman’s declaration are not referenced. Rather, the separate statement only cites other portions of the Steven Katleman Declaration. (Opp’n, Sep. St., Additional Material Fact (AMF) Nos. 32, 45-45, 138-139, citing Opp’n, S. Katleman Decl., ¶¶ 5, 9, 12-14.)

The Court may nevertheless consider Mr. Katleman’s declaration at paragraphs 2 to 4.

The Golden Rule of summary judgment is that if the material fact is not set forth in the separate statement, it does not exist. (United Comm. Church v. Garcin (1991) 231 Cal.App.3d 327, 337 (Garcin), superseded by statute on other grounds; Parsons v. Estenson Logistics, LLC (2022) 86 Cal.App.5th 1260, 1265, fn. 5, citing Garcin, supra, at p. 337.)

However, some appellate courts have applied a discretionary approach rejecting the Golden Rule under the rationale that section 437c requires the court to consider “all of the evidence set forth in the papers,” necessarily including facts stated in declarations, exhibits, points and authorities, or other papers presented to the court on a summary judgment motion. (San Diego Watercrafts, Inc. v. Wells Fargo Bank, N.A. (2002) 102 Cal.App.4th 308, 308 (San Diego Watercrafts) [requiring trial court to consider evidence submitted but allowing court in its discretion to ignore evidence not disclosed in relevant party’s separate statement of undisputed facts]; Ghazarian v. Magellan Health, Inc. (2020) 53 Cal.App.5th 171, 183 [“trial court likewise has discretion to consider facts not referenced in the opposing party’s separate statement”].)

The Court agrees with the approach in San Diego Watercrafts, particularly where the result in San Diego Watercrafts depended on submission of evidence with a reply, rather than the facts here: consideration of a declaration referenced in the separate statement and attached to the moving papers, but involving four paragraphs that were not included in the separate statement. (Mot., S. Katleman Decl., ¶¶ 2-4; cf. San Diego Watercrafts, supra, at pp. 310-311.) Moreover, the Broker Defendants do not raise objections to this portion of the opposition’s points and authorities in their reply papers.

C. Court’s Determination

Next, the Court determines that the Katleman Plaintiffs carry their burden through arguments relating to the second of three exceptions to the general rule stated in Jones above.

“The general rule in cases of this sort is . . . that, as a general proposition, an insurance agent does not have a duty to volunteer to an insured that the latter should procure additional or different insurance coverage. This rule is well summarized by […] Nacsa […]. (Nacsa, supra, 51 Cal.App.4th at p. 1095, 59 Cal.Rptr.2d 547.) The rule changes, however, when—but only when—one of the following three things happens: (a) the agent misrepresents the nature, extent or scope of the coverage being offered or provided (as in Free, Desai and Nacsa), (b) there is a request or inquiry by the insured for a particular type or extent of coverage (as in Westrick), or (c) the agent assumes an additional duty by either express agreement or by ‘holding himself out’ as having expertise in a given field of insurance being sought by the insured (as in Kurtz).” (Fitzpatrick v. Hayes (1997) 57 Cal.App.4th 916, 927 (Fitzpatrick).) The Court refers to these rule changes as the special duties exceptions.

Mr. Katleman states that “[he and his wife] requested that [their] broker and risk manager, Dewitt Stern, obtain a homeowners’ insurance package, including replacement cost and loss of use coverage, for [the Katleman Plaintiffs’] home.” (Mot., Katleman Decl., ¶ 2.) No objection appears to this representation in the reply papers. The California Code of Regulations defines “‘[r]eplacement value’ … [as] hav[ing] the same meaning as ‘replacement cost,’” which is “the amount it would cost to repair, construct, rebuild or replace a damaged or destroyed structure.” (Cal. Code Regs., tit. 10, § 2695.180.) There is therefore evidence that the Katleman Plaintiffs requested coverage for loss of defined property with a quantifiable value. Such evidence fits into the second of the special duties exceptions to Jones: duty arising from a request or inquiry by the insured for a particular type or extent of coverage.

D. Reply Arguments Are Unavailing

In their motion and in their reply, the Broker Defendants argue that they do not owe Plaintiff any special duty based on a request by Mr. Katleman for replacement costs for the home for various reasons. The motion argues that the TAC only alleges that the Katleman Plaintiffs requested that RSC/DeWitt “obtain appropriate and adequate insurance for the full value of the Property in the event of a total loss and/or damage to the Property,” that such a request is not for a specific dollar amount or a type of particular coverage, that Mr. Katleman testified to relying on RSC/DeWitt and its agents to obtain the adequate coverage, and that a specific request for a type of coverage did not come until three months after the policy was bound, at which time the insurer, not the Broker Defendants, rejected any increase, finding that the coverage limits were proper. (Mot., pp. 20-22.) The reply reiterates the three-months-later argument and adds that nothing in the opposition demonstrates the triggering of special duties because—without reference to any specific evidence—the Katleman Plaintiffs simply asked the Broker Defendants to obtain a policy increasing the Katlemans’ limits on their home. (Reply, pp. 6-7.)

These arguments do not persuade the Court’s determination that the Katleman Plaintiffs’ carry their burden. This is because the evidence cited in the opposition and not addressed in the reply at pages six to seven—i.e., ¶¶ 2-4 of the Steven Katleman Declaration—provides evidence raising a triable issue of fact as to whether the Katleman Plaintiffs requested from the Broker Defendants a specific type of insurance coverage covering a specific and quantifiable type of loss to their Property before the policy was bound through RSC/DeWitt, AmWINS Access, Lloyds, and the other Defendants.

The Broker Defendants’ reply also argues that Desai is distinguishable for a number of reasons. (Reply, pp. 3-6.)

However, none of the arguments in the reply are dispositive arguments of law so much as they are arguments related to the interpretation of case law to the facts presented by the Broker Defendants in their papers. A triable issue of material fact can arise from the latter circumstances, and here, Mr. Katleman’s declaration has provided that basis.

Summary adjudication is therefore DENIED as to the TAC’s first cause of action based on a triable issue of material fact as to special duty against RSC/DeWitt, Janice Ruiz, and Sara Neidlinger—as well as DeWitt Stern Group, which is essentially RSC/DeWitt for the purposes of this motion.

Based on this determination, the court need not discuss the parties’ arguments related to the first and third of the special duties exceptions to the general rule stated in Jones. (See Mot., pp. 19-20, 22-23; Opp’n, pp. 14-16 [as related to other exceptions]; Reply, pp. 6-8.)

3. Summary Adjudication, Second Cause of Action, Intentional/Negligent Misrepresentation: GRANTED [as to Janice Ruiz]; DENIED [as to RSC/DeWitt, DeWitt Stern Group, and Sara Neidlinger].

a. Local Standard

Intentional misrepresentation involves “(1) a knowingly false representation by the defendant; (2) an intent to deceive or induce reliance; (3) justifiable reliance by the plaintiff; and (4) resulting damages.” (Service by Medallion, Inc. v. Clorox Co. (1996) 44 Cal.App.4th 1807, 1816.)

Negligent misrepresentation involves (1) an assertion, as a fact, of that which is not true, (2) by one who has no reasonable ground for believing it to be true, (3) made with intent to induce the recipient to alter his position to his injury or his risk, (4) with justifiable reliance on the representation, and (5) resulting damage. (B.L.M. v. Sabo & Deitsch (1997) 55 Cal.App.4th 823, 834.)

Allegations of fraud “must be pled with more detail than other causes of action.” (Apollo Capital Fund, LLC v. Roth Capital Partners, LLC (2007) 158 Cal.App.4th 226, 240.) “Every element of the cause of action for fraud must be alleged … factually and specifically[,] and the policy of liberal construction of the pleadings … will not ordinarily be invoked to sustain a pleading defective in any material respect. [Citations.]” (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216, superseded by statute as stated in Branick v. Downey Savings & Loan Assn. (2006) 39 Cal.4th 235, 242.) “[G]eneral and conclusory allegations do not suffice.” (Small v. Fritz Cos., Inc. (2003) 30 Cal.4th 167, 184 [citations omitted].) Fittingly, a plaintiff pleading fraud must plead facts showing “how, when, where, to whom, and by what means” the allegedly fraudulent representations were tendered. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.)

b. Complaint’s Allegations

The TAC’s second cause of action is directed at the DeWitt Stern Ins., RSC, DeWitt Stern Group, Janice Ruiz, Sara Neidlinger, and Does 1-25 and alleges as follows.

Defendants “represented to Plaintiffs that the Property was adequately and properly insured in the event of loss and/or damage to the Property, that Plaintiffs had adequate and proper coverage for loss of use of the Property in the event of loss and/or damage to the Property based on the appraisal and/or their own personal evaluation of the property, and that a proper and adequate inspection/appraisal of the Property had been conducted by E&S INSPECTIONS and/or others, that they had no control of the selection of the inspector / appraiser or the inspection/appraisal process, and that the inspection/appraisal conducted by E&S INSPECTIONS was accurate, adequate and proper. Further, said Defendants presented plaintiffs with a summary of coverage to sign at the inception of the policy which did not include co-insurance provisions and also represented that there was a loss extension on both the dwelling and the other structures. Plaintiffs are informed and believe and thereupon allege that each of the aforementioned defendants, by and through their own words or conduct, or through the words and conduct of their agents, employees, independent contractors, joint-venturers and/or partners or co-defendants, made these representations to Plaintiffs.” These representations were made by Janice Ruiz and Sara Neidlinger on behalf of DeWitt Stern Ins., RSC, and DeWitt Stern Group in May, June, October, and November 2018. (TAC, ¶¶ 23-24.)

c. Defendants RSC/DeWitt, Janice Ruiz, and Sara Neidlinger

In their motion, the Broker Defendants argue that no triable issues of material fact exist as to the misrepresentation claim because, other than implied misrepresentations, which are not actionable, there is insufficient evidence of any misrepresentation by any of the Broker Defendants, either before or after the policy was bound. (Mot., p. 23, citing TAC, ¶ 23, Mot., Sep. St., UMF Nos. 17, 30, 40, and Wilson v. Century 21 Great Western Realty (1993) 15 Cal.App.4th 298, 306 (Wilson).)

The Broker Defendants also argue that Plaintiffs have not shown evidence of any misrepresentations by the Broker Defendants after the policy was bound. (Mot., pp. 23-24, citing Mot., Sep. St., UMF Nos. 30, 40.)

The Court’s discussion is thus limited to the misrepresentation element of an intentional or a negligent misrepresentation claim.

i. Misrepresentation

I. Moving Party’s Burden

A. Moving Party’s Arguments

In their motion, the Broker Defendants argue that no triable issues of material fact exist as to the misrepresentation claim—which has intentional tort and negligence components—because the TAC is conclusory as to what false representation was made by any of the Broker Defendants to any of the Katleman Plaintiffs, and because Mr. Katleman has testified that he relied on RSC/DeWitt’s statements through its agents but also testified to being unable to recall what Janice Ruiz said to Mr. Katleman relating to whether coverage on the Property was “sufficient.” The Broker Defendants argue this is insufficient where Wilson v. Century 21 Great Western Realty (1993) 15 Cal.App.4th 298 holds that implied assertions or representations are insufficient to establish a claim for misrepresentation. (Mot., p. 23, citing TAC, ¶ 23, Mot., Sep. St., UMF Nos. 17, and Wilson, supra, 15 Cal.App.4th at p. 306.)

The Broker Defendants also argue that Plaintiffs have not shown evidence of any misrepresentations by the Broker Defendants after the policy was bound. (Mot., pp. 23-24, citing Mot., Sep. St., UMF Nos. 30, 40.)

UMF No. 17 cites the deposition of Mr. Katleman for the purpose of showing his testimony to the effect that he cannot recall what Janice Ruiz responded “on the phone” “a couple of years before the fire” when Mr. Katleman asked Ruiz whether she was “sure the[] coverage [was] sufficient for [the Katleman Plaintiffs] to be able to rebuild [their] home.” (Mot., Sep. St., UMF No. 17, citing Mot., Weber Decl., Ex. A, 27:2-21.)

UMF No. 30 cites the Declaration of Janice Ruiz and an email from Mr. Katleman to the Brokers Defendant for the purpose of showing that Mr. Katleman had had concerns regarding whether the coverage (Coverage A) on the home was sufficient and had meant to get around to mentioning it to RSC/DeWitt when these parties began working together in 2014 but waited more than four years to do so, i.e., until his October 8, 2018, email, which the Court notes is after the 2018 policy was bound but before the Woolsey Fire. (Mot., Sep. St., UMF No. 30, citing Mot., Ruiz Decl., ¶ 15 & Ex. 4 [Oct. 8, 2018, 6:54 PM Email].)

UMF No. 40 cites the declaration of Janice Ruiz for the proposition that RSC/DeWitt and its brokers did not have the ability to change to policy after it was bound, which was a decision that only “Lloyds via AmWINS” could take. (Mot., Sep. St., UMF No. 40, citing Mot., Ruiz Decl., ¶ 24.)

B. Court’s Determination

A review of the evidence cited in UMF Nos. 17, 30, and 40 confirms the Broker Defendants’ position and carries the Broker Defendants’ burden.

If the cited deposition testimony is the only testimony from Mr. Katleman relating to his conversations with RSC/DeWitt agents, then the Broker Defendants have, in UMF No. 17, presented evidence showing that Mr. Katleman does not in fact remember what representation those agents made in relation to the replacement cost coverage (Coverage A) on the Property. Without knowledge of a representation, a misrepresentation claim cannot stand because there can be no determination of falsity when the content of the representation is not known.

The burden thus shifts to the Katleman Plaintiffs.

II. Opposition Burden

A. Opposition Arguments

In opposition, the Katleman Plaintiffs cite evidence attached to their papers to show that “DeWitt misrepresented to the Katlemans that the[] [Katlemans] had enough replacement cost coverage for their home on at least two occasions in June 2018 and October 2018 ….” (Opp’n, p. 17, citing Opp’n, Sep. St., AMF Nos. 44, 45, 59, 61, 89-92, 102, 123.) They also cite evidence to show that the replacement cost to rebuild the Katlemans’ home is well in excess of the coverage paid out to the Katlemans. (Opp’n, p. 16. Citing Opp’n Sep. St., AMF Nos. 138-139.)

The Katleman Plaintiffs also argue that the moving papers’ references to Mr. Katleman’s reliance on RSC/DeWitt to obtain the desired coverage—replacement cost coverage in the event of a total loss—support the reliance element of misrepresentation (Opp’n, p. 17), an argument that the Court need not consider because the challenging to this claim is limited to the misrepresentation, not reliance, element.

B. Reply Arguments

In reply, the Broker Defendants reiterate their arguments relating to the need for some kind of affirmative rather than implied misrepresentation for the purposes of this cause of action, which the opposition fails to provide. (Reply, pp. 8-9.)

C. Court’s Determination

The Court finds that the Katleman Plaintiffs carry their burden as to Sara Neidlinger and RSC/DeWitt—and thus, as to DeWitt Stern Group—but not as to Janice Ruiz.

1. Sara Neidlinger and RSC/DeWitt

AMF No. 45 cites various pieces of evidence, including the deposition of Janice Ruiz, to show that “DeWitt” represented to the Katlemans in June 2018 that the Lloyd’s policy would cover the cost to rebuild their property in the event of a total loss due to fire. (Opp’n, Sep. St., AMF No. 45, citing Opp’n, Nickerson Decl., Exs. 1, 119:15-19 [relevant Ruiz deposition testimony], 13 [June 2018 Insurance Summary from RSC/DeWitt] & Opp’n, Katleman Decl., ¶ 5.)

A review of the Janice Ruiz deposition at the cited portion shows only that she, by answering, “[y]es,” testified in the affirmative to the question of whether it “[w]as DeWitt’s position that th[e] policy covered the entire cost to rebuild the Katlemans’ property in the event of a total loss.” (Opp’n, Nickerson Decl., Exs. 1, 119:15-19.)

The Steven Katleman Declaration provides that “Dewitt Stern represented to us that the cost needed to rebuild a structure similar to our home in the event of a total loss was $632,141.” (Opp’n, Katleman Decl., ¶ 5.) This representation is supported by AMF No. 102.

AMF No. 102 cites the same and other evidence, including an October 10, 2018, email from Sara Neidlinger to Mr. Katleman stating that Neidlinger had calculated the replacement cost as being similar to that in the Lloyd’s policy. (Opp’n, Sep. St., AMF No. 61, citing Opp’n, Nickerson Decl., Exs. 1, 119:15-19 [relevant Ruiz deposition testimony], 6, 32:25-35:20; 36:2-15 [relevant Neidlinger deposition testimony], 12 [Lloyd’s policy], 13 [June 2018 Insurance Summary by DeWitt], 16 [Jul. 2018 Email] & Opp’n, Katleman Decl., ¶ 5.)

The October 10, 2018, email in particular provides a specific representation from an RSC/DeWitt agent—Sara Neidlinger—to one of the Plaintiffs—Mr. Katleman—regarding whether the replacement cost coverage secured earlier in 2018 was sufficient to replace the home in the event of a total loss.

And AMF Nos. 138-139 cites the Steven Katleman declaration presenting evidence that the Katlemans obtained an estimate to rebuild the Property in January 2020, which showed that the replacement cost to rebuild the Katlemans’ home was well in excess of the coverage paid out to the Katlemans, and that the Katlemans have not been able to rebuild their home to date because of the significant shortfall in coverage. (Opp’n, Katleman Dec., ¶¶ 13-14, cited in Sep. St., AMF Nos. 138-139.)

This evidence shows triable issues of material fact as to, at the very least, the October 10, 2018, email, and grounds for misrepresentation arising from statements made by Sara Neidlinger in those emails. This supports liability against Sara Neidlinger and RSC/DeWitt.

Summary adjudication of the TAC’s second cause of action as it relates to Sara Neidlinger and RSC/DeWitt—and as such, DeWitt Stern Group—is thus DENIED.

2. Janice Ruiz

However, summary adjudication of the same claim as relating to Janice Ruiz is GRANTED.

This is because none of the cited AMFs—Opp’n, Sep. St., AMF Nos. 44, 45, 59, 61, 89-92, 102, and 123—provide evidence of a statement by Janice Ruiz to the Katleman Plaintiffs regarding whether the replacement cost coverage secured in 2018 would permit the rebuilding of the Property in the event of a total loss. The portion of the Janice Ruiz deposition cited in AMF Nos. 44-45 and 61 merely states RSC/DeWitt’s position as to replacement cost coverage at the relevant time, not that Janice Ruiz made representations as to replacement cost coverage to the Katleman Plaintiffs. The remaining evidence cited in these AMFs is similarly unavailing as to a misrepresentation from Janice Ruiz. AMF Nos. 59, 89-92, and 102 cite evidence of representations by Sara Neidlinger, not Janice Ruiz. AMF No. 123, like the Steven Katleman Declaration and various others of the above AMFs merely state that RSC/DeWitt made misrepresentations as to replacement cost coverage to the Katleman Plaintiffs but do not identify Janice Ruiz as having made that affirmative misrepresentation or controlling the means of representation, e.g., the report cited in AMF No. 123.

Liability for misrepresentation against Janice Ruiz is thus not proper against Janice Ruiz pursuant to this evidence.

4. Summary Adjudication, Fourth Cause of Action, Breach of Contract: DENIED.

a. Local Standard

“A contract is a voluntary and lawful agreement, by competent parties, for a good consideration, to do or not to do a specified thing.” (Robinson v. Magee (1858) 9 Cal. 81, 83.) “To prevail on a cause of action for breach of contract, the plaintiff must prove (1) the contract, (2) the plaintiff’s performance of the contract or excuse for nonperformance, (3) the defendant’s breach, and (4) the resulting damage to the plaintiff.” (Richman v. Hartley (2014) 224 Cal.App.4th 1182, 1186.) Implicit in the element of damage is that the defendant’s breach caused the plaintiff’s damage.” (Troyk v. Farmers Group, Inc. (2009) 171 Cal.App.4th 1305, 1352, italics omitted.)

b. Complaint’s Allegations

The TAC’s fourth cause of action is directed at the DeWitt Stern Ins., RSC, DeWitt Stern Group, and Does 1-25 and alleges that Plaintiffs entered a written contract to procure home insurance for the Katlemans with Defendants, who “breached the contract by failing to obtain appropriate and adequate insurance for the full value of the Property in the event of loss and/or damage to the Property, and/or failing to obtain appropriate and adequate insurance for loss of use of the Property in the event of loss and/or damage to the Property.” (TAC, ¶ 50.)

c. Defendants RSC/DeWitt

In their motion, the Broker Defendants argue that the evidence fails to show any type of contract between RSC/Dewitt—and by extension, DeWitt Stern Group—and the Katleman Plaintiffs because the evidence fails to show any consideration for a contract existed between the parties.

The Court’s discussion is thus limited to the consideration element of contract formation.

i. Consideration

I. Court’s Determination

After review, the Court DENIES summary adjudication of the TAC’s fourth cause of action.

For the purposes of this discussion, the Court assumes that the Broker Defendants carried their initial burden as to RSC/DeWitt’s liability on this claim.

Moving to the merits, in their opposition, the Katleman Plaintiffs argue that consideration is not a requirement for contract formation under the doctrine of promissory estoppel. (Opp’n, p. 18.) “Under the doctrine of promissory estoppel, the promise by one party and the resulting detrimental reliance on that promise by another party operate as a substitute for consideration that may make the modification enforceable to the extent necessary to prevent injustice.” (Platt Pacific, Inc. v. Andelson (1993) 6 Cal.4th 307, 321, citing Youngman v. Nevada Irrigation Dist., supra, 70 Cal.2d at pp. 249-250.) The reply fails to address promissory estoppel, instead shifting the Broker Defendants’ arguments to topics that do not relate to consideration directly. (Reply, pp. 9-10.) As such, the promissory estoppel argument is unopposed. And the Court notes that the Broker Defendants’ moving papers themselves refer to the Katleman Plaintiffs’ reliance on the Broker Defendants’ work in securing appropriate replacement cost coverage. (Mot., p. 11, citing Mot., Sep. St., UMF No. 16 [Steven Kattleman deposition]; see Section III.C.2.c.i.I.A. discussion supra [discussing reliance raised in moving papers].) Whether that reliance was justified based on Steven Katleman’s preexisting concerns with the policy is not an issue addressed in the breach of contract portion of the reply and is thus not addressed.

5. Summary Adjudication, Fifth Cause of Action, Breach of the Implied Covenant of Good Faith and Fair Dealing: DENIED.

a. Local Standard

To prevail on a cause of action for breach of the implied covenant of good faith and fair dealing, the plaintiff must prove: (1) the existence of a contract between plaintiff and defendant; (2) plaintiff performed his contractual obligations or was excused from performing them; (3) the conditions requiring defendant’s performance had occurred; (4) the defendant unfairly interfered with the plaintiff’s right to receive the benefits of the contract; and (5) the plaintiff was harmed by the defendant’s conduct. (Merced Irr. Dist. v. County of Mariposa (E.D. Cal. 2013) 941 F.Supp.2d 1237, 1280 [discussing California law].) Allegations must demonstrate defendant’s conduct for failure or refusal to discharge contractual responsibilities was a conscious and deliberate act, not an honest mistake, bad judgment or negligence. (Ibid.) “‘[T]he implied covenant of good faith and fair dealing is limited to assuring compliance with the express terms of the contract and cannot be extended to create obligations not contemplated by the contract.’” (Ragland v. U.S. Bank Nat. Assn. (2012) 209 Cal.App.4th 182, 206 [quoting Pasadena Live v. City of Pasadena (2004) 114 Cal.App.4th 1089, 1094].)

b. Complaint’s Allegations

The TAC’s fifth cause of action is directed at the DeWitt Stern Ins., RSC, DeWitt Stern Group, and Does 1-25 and alleges that they breached the implied covenant of good faith and fair dealing in the parties’ written contract through “the aforementioned conduct,” i.e., failing to obtain appropriate and adequate insurance for the full value of the Property in the event of loss and/or damage to the Property, and/or failing to obtain appropriate and adequate insurance for loss of use of the Property in the event of loss and/or damage to the Property. (TAC, ¶¶ 54-63.)

c. Defendants RSC/DeWitt

In their motion, the Broker Defendants challenge the fifth cause of action on two grounds: lack of a contract between RSC/DeWitt and the Katleman Plaintiffs; and lack of additional circumstances meriting relief beyond breach of contract.

The Court’s discussion is thus limited to these two grounds.

i. Lack of a Contract

I. Court’s Determination

Based on the Court’s discussion at Section III.C.4.c.i.I., the Court finds that the Broker Defendants’ first argument—lack of contract between the parties—is unavailing.

ii. Lack of Circumstances for Relief Beyond Breach of Contract

I. Court’s Determination

The Court also finds that the ‘lack of circumstances for relief beyond breach of contract’ argument is unavailing.

In their motion, the Broker Defendants argue that this claim is fatally defective as stated against RSC/DeWitt—and thus DeWitt Stern Group—because a breach of the implied covenant claim can only be brought against an insurance carrier, not an insurance broker like RSC/DeWitt, citing Cates Construction, Inc. v. Talbot Partners (1999) 21 Cal.4th 28 (Cates) in support. (Mot., p. 26, citing Cates, supra, at pp. 43-44.)

However, the rule in Cates is not that insurance brokers cannot be held liable for a breach of covenant claim. Cates states in relevant part:

“Because the covenant of good faith and fair dealing essentially is a contract term that aims to effectuate the contractual intentions of the parties, ‘compensation for its breach has almost always been limited to contract rather than tort remedies.’ (Foley, supra, 47 Cal.3d at p. 684; see Freeman & Mills, Inc. v. Belcher Oil Co. (1995) 11 Cal.4th 85, 94 [44 Cal.Rptr.2d 420, 900 P.2d 669]; Hunter v. Up-Right, Inc. (1993) 6 Cal.4th 1174, 1180 [26 Cal.Rptr.2d 8, 864 P.2d 88] (Hunter).) At present, this court recognizes only one exception to that general rule: tort remedies are available for a breach of the covenant in cases involving insurance policies. (Hunter, supra, 6 Cal.4th at pp. 1180-1181; Foley, supra, 47 Cal.3d at p. 684.) In the insurance policy setting, an insured may recover damages not otherwise available in a contract action, such as emotional distress damages resulting from the insurer’s bad faith conduct (see Gruenberg v. Aetna Ins. Co. (1973) 9 Cal.3d 566, 580 [108 Cal.Rptr. 480, 510 P.2d 1032]) and punitive damages if there has been oppression, fraud, or malice by the insurer (see Civ. Code, § 3294).” (Cates, supra, 21 Cal.4th at pp. 43-44.)

Based on Coats, the Court determines that it follows that if an insurance broker exhibits bad faith in approaching its contract with a client, then a claim may stand for breach of the implied covenant of good faith and fair dealing.

And here, the Court adopts its discussion at Section III.C.3.c.i.II.1. to determine that the triable issues of material fact as to misrepresentation against RSC/DeWitt show triable issues of material fact as to bad faith by RSC/DeWitt in relation to the contract discussed in Section III.C.4.c.i.I above.

Because the Broker Defendants’ arguments in relation to this claim have both failed, the Court DENIES summary adjudication of the fifth cause of action.

IV. Conclusion

Defendants DeWitt Stern of California Insurance Services, DeWitt Stern Group, RSC Insurance Brokerage, Inc., Janice Ruiz, and Sara Neidlinger’s Motion for Summary Judgment or, in the Alternative, Summary Adjudication is GRANTED in part and DENIED in part as follows:

(1) DENIED as to summary judgment of the TAC’s claims against the Broker Defendants;

(2) DENIED as to summary adjudication of the TAC’s first cause of action as against Defendants DeWitt Stern of California Insurance Services, RSC Insurance Brokerage, Inc., DeWitt Stern Group, Janice Ruiz, and Sara Neidlinger.

(3) GRANTED as to summary adjudication of the TAC’s second cause of action in favor of Defendant Janice Ruiz;

(4) DENIED as to summary adjudication of the TAC’s third cause of action as against Defendants DeWitt Stern of California Insurance Services, RSC Insurance Brokerage, Inc., DeWitt Stern Group, and Sara Neidlinger;

(5) DENIED as to summary adjudication of the TAC’s fourth cause of action as against Defendants DeWitt Stern of California Insurance Services, RSC Insurance Brokerage, Inc., and DeWitt Stern Group; and

(6) DENIED as to summary adjudication of the TAC’s fifth cause of action as against Defendants DeWitt Stern of California Insurance Services, RSC Insurance Brokerage, Inc., and DeWitt Stern Group.