Judge Bruce G. Iwasaki

Department 58

Hearing Date: March 28, 2024

Case Name: Rothstein v. Metropolitan Life Insurance Company, et al

Case No.: 22STCV21573

Matter: Motion for Judgment on the Pleadings

Moving Party: Defendant Jeffrey Kaliher

Responding Party: None

Tentative Ruling: Defendant Jeffrey Kaliher’s motion for judgment on the pleadings to the thirteenth and sixteenth causes of action is granted without leave to amend.

This is a breach of contract action. Rhonda Rothstein (Rothstein) and her company, Cal First Responders Insurance Agency, Inc. (CFR) (jointly, Plaintiffs) sued Metropolitan Life Insurance Company (MetLife or MLIC), Metropolitan Property and Casualty Insurance Company, MetLife Legal Plans, Inc. (MetLaw or MLP), County of Los Angeles Fire Museum Association (CLAFMA), Winston Financial Services, Inc. (Winston), Jeffrey Kaliher, Paul Oyler, and Paul Schneider for breach of contract, breach of the implied covenant of good faith and fair dealing, fraud, conversion, unfair business practices, and promissory estoppel.

Rothstein alleged that she developed a group insurance plan for Los Angeles County firefighters. She then reportedly entered into numerous contracts with the various Defendants to provide and administer the insurance. The Third Amended Complaint (TAC) principally alleges the existence of the following agreements:

• January 28, 2019: contract between Rothstein, through her company RRIA, with Metropolitan Property and Casualty Insurance Company.1 This contract was later assigned by RRIA to CFR. The agreement governed Rothstein's commissions as to personal lines of property and casualty insurance.

• January/February 2019: contract between Plaintiffs and MetLaw allegedly providing Plaintiffs 10% commission of total annual premiums for new enrollments of firefighters in the MetLaw plan relating to legal coverage.

• Two contracts between Rothstein, through CFR, and MetLife that were executed on May 16, 2019 (First MetLife Non-Standard Commission Agreement) and June 10, 2019 (Second MetLife Non-Standard Commission Agreement). These agreements allegedly established Plaintiffs entitlement to commissions as to optional life, optional accidental death & dismemberment, dependent optional life, dependent optional accidental death & dismemberment, and voluntary short-term disability coverage.

• May 16, 2019: contract between Rothstein, through CFR, and MetLife (MetLife Enrollment Vesting Based Commission Agreement). This agreement governed Plaintiffs' commission structure as to critical illness insurance, hospital indemnity insurance, and accident with hospital coverage insurance.

The Pleadings alleges that by July 2019, Rothstein was entitled to at least $533,611.62 in commissions, but has only received $19,900. In addition, Plaintiff alleges that Defendants colluded with each other to remove her from the agreements and divert her commissions to CLAFMA.

As one example, Plaintiffs allege that MetLife Defendants pressured Plaintiffs into making Winston Financial Services (Winston) the a third-party benefits administrator to administer its group insurance plan; however, Winston was allegedly inept, and Rothstein frequently had to step in and provide guidance to any firefighters that had enrollment questions or inquiries. Rothstein further alleges that, as part of this fraudulent plan, CLAFMA terminated Plaintiffs as its insurance broker, using Winston’s ineptitude as pretext for the termination.

In August 11, 2023, Defendants County of Los Angeles Fire Museum Association (CLAFMA), Paul Oyler (Oyler), and Paul Schneider (Schneider) (collectively, CLAFMA Defendants) demurred to the fifteenth, sixteenth, and seventeenth causes of action in Third Amended Complaint. Plaintiffs filed an opposition and Defendants filed a reply. The Court sustained the demurrer as to each cause of action without leave to amend.

On August 11, 2023, Defendants MetLife and MetLaw (collectively, MetLife Defendants) demurred to the fifth, sixth, seventh, eighth, tenth, eleventh, twelfth, sixteenth and seventeenth causes of action in the Third Amended Complaint. MetLife Defendants also moved to strike the request for punitive damages and attorney fees. Plaintiffs filed an opposition and Defendants filed a reply. The Court sustained the demurrer without leave to amend as to the fifth, tenth, eleventh, twelfth, sixteenth and seventeenth causes of action and overruled as to the sixth, seventh, and eighth causes of action. The Court also granted the motion to strike in full without leave to amend.

On September 11, 2023, Defendant, Farmers Property and Casualty Insurance Company, Successor in Interest to Metropolitan Property and Casualty Insurance Company, (Farmers Insurance) demurred to the sixteenth and seventeenth causes of action in the Third Amended Complaint. Defendant Farmers Insurance also moved to strike the request for punitive damages. Plaintiffs filed an opposition and Defendant filed a reply.

On September 28, 2023, Defendant Jeffrey Kaliher filed a joinder to Defendant Farmers Insurance’s demurrer.

The Court sustained the demurrer to the sixteenth and seventeenth causes of action and granted the motion to strike. Defendant Kaliher’s joinder to Farmers Insurance’s demurrer was denied for procedural reasons.

On February 9, 2024, Defendant Kaliher filed a motion for judgment on the pleadings to the TAC. No opposition was filed.

The motion for judgment on the pleadings is granted.

Legal Standard for Motions for Judgment on the Pleadings

A motion for judgment on the pleadings is equivalent to a demurrer. (Kapsimallis v. Allstate Ins. Co. (2002) 104 Cal.App.4th 667, 672.) A demurrer is an objection to a pleading, the grounds for which are apparent from either the face of the complaint or a matter of which the court may take judicial notice. (Code Civ. Proc., § 430.30, subd. (a); see also Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The purpose of a demurrer is to challenge the sufficiency of a pleading “by raising questions of law.” (Postley v. Harvey (1984) 153 Cal.App.3d 280, 286.) “In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.” (Code Civ. Proc., § 452.) The court “ ‘ “treat[s] the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law . . . .” ’ ” (Berkley v. Dowds (2007) 152 Cal.App.4th 518, 525.) In applying these standards, the court liberally construes the complaint to determine whether a cause of action has been stated. (Picton v. Anderson Union High School Dist. (1996) 50 Cal.App.4th 726, 733.)

Sixteenth Cause of Action for Conversion

Defendant Kaliher moves for judgment on the pleadings as to the conversion cause of action on the grounds that Plaintiff has failed to state a claim.

“Conversion is generally described as the wrongful exercise of dominion over the personal property of another. [Citation.] The basic elements of the tort are (1) the plaintiff's ownership or right to possession of personal property; (2) the defendant's disposition of the property in a manner that is inconsistent with the plaintiff's property rights; and (3) resulting damages.” (Fremont Indemnity Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 119.) “The tort of conversion is derived from the common law action of trover. The gravamen of the tort is the defendant's hostile act of dominion or control over a specific chattel to which the plaintiff has the right of immediate possession.” (PCO, Inc. v. Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP (2007) 150 Cal.App.4th 384, 395.)

Thus, to establish a viable cause of action for conversion, Plaintiffs must establish an actual interference with their ownership or right of possession of property. (Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.App.3d 593, 610.) To do that they must have “either ownership and the right of possession or actual possession [of the property] at the time of the alleged conversion thereof.” (General Motors Acceptance Corp. v. Dallas (1926) 198 Cal. 365, 370.)

The Court previously sustained a demurrer by Defendant Farmers Insurance finding that Plaintiffs’ cause of action for conversion improperly “lumped” all three Metlife Defendants together in alleging that they (MetLife, MPCIC,[1] and MetLaw) converted Plaintiff’s broker’s license, and used the license number and office address to divert funds rightfully belonging to Plaintiffs. (TAC ¶ 246, see also ¶¶ 242-250.)

Specifically, the TAC alleges that the MetLife Defendants, including MPCIC, “took, used, and possessed Plaintiffs’ insurance licenses, insurance license numbers, and the names and addresses associated with Plaintiffs’ insurance licenses . . . and exercised dominion or control over the same in a manner that was inconsistent with Plaintiffs’ rights and property interest.” (TAC ¶ 245.) That is, the claim is not solely based on the converted commissions but also on MetLife Defendants’ use of Plaintiffs’ insurance licenses to continue selling and servicing the group insurance plans.

The Court previously interpreted this cause of action to mean that Defendants misappropriated Plaintiff Rothstein’s brokerage license and number to improperly divert funds, resulting in the conversion of funds – rather than a conversion of her license itself. (2/8/23 Court’s Ruling, p. 8.) The Court determined that “because Plaintiffs group all Defendants together, they do not sufficiently specify any dollar amounts that are traceable to the allegedly converted funds with the use of her brokerage license or numbers.” (Id.)

Defendant Kaliher’s motion here is well taken for the same reasons. The TAC’s allegations do not sufficiently specify any dollar amounts that is traceable to Defendant Kaliher from the allegedly converted funds with the use of Plaintiff Rothstein’s brokerage license or numbers. (TAC ¶ 246.)

Further, the conversion claim – based on the converted commissions – was insufficiently alleged as a matter of law. It is well-established that “a mere contractual right of payment, without more, will not suffice” to support a claim for conversion. (Farmers Ins. Exchange v. Zerin (1997) 53 Cal.App.4th 445, 452.) Moreover, “[m]oney cannot be the subject of a cause of action for conversion unless there is a specific, identifiable sum involved, such as where an agent accepts a sum of money to be paid to another and fails to make the payment.” (Sanowicz v. Bacal (2015) 234 Cal.App.4th 1027, 1042 [italics in original]; see also Vu v. California Commerce Club, Inc. (1997) 58 Cal.App.4th 229, 235 [A “generalized claim for money [is] not actionable as conversion.”].)

Based on the foregoing legal authority and the Court’s prior rulings to this cause of action, the motion for judgment on the pleadings to the conversion claim arising from the allegedly misappropriated funds is well taken as to Defendant Kaliher.

Further, the Court considered Plaintiffs’ previous reliance on G.S. Rasmussen & Assocs. v. Kalitta Flying Servs. (9th Cir. 1992) 958 F.2d 896, for the proposition that California courts have recognized that the wrongful use of another’s license can support a conversion claim. (Id. at 906-07.) The Court acknowledged that the TAC’s allegations regarding the conversion of the license is itself a sufficient basis for the conversion cause of action in the TAC.

However, the TAC only alleges “MetLife, MPCIC, and MLP . . . used Plaintiffs’ insurance licenses.” (TAC ¶ 246.) Rather, the TAC seeks to attach liability to Kaliher by suggesting that he converted Plaintiff’s insurance license “by virtue of receiving letters, commission statements, tax documentation, checks for compensation, and other documents from the MetLife Defendants in connection with receiving payments for insurance business that Plaintiffs had transacted/” (TAC ¶ 247.) This allegation is insufficient to show that Kaliher exercised wrongful dominion or control over Plaintiff’s insurance license.

Moreover, as the Court previously found, Plaintiffs have not alleged any resulting damages from the converted license. (See, e.g., Voris v. Lampert (2019) 7 Cal.5th 1141, 1150-1151 [among other essential elements conversion requires resulting damages]; Intel Corp. v. Hamidi (2003) 30 Cal.4th 1342, 1351 [“In modern American law generally, ‘[t]respass [to chattels] remains as an occasional remedy for minor interferences, resulting in some damage, but not sufficiently serious or sufficiently important to amount to the greater tort’ of conversion”]; Zaslow v. Kroenert (1946) 29 Cal.2d 541, 551 [“Where the conduct complained of ... consists of intermeddling with or use of or damages to the personal property, the owner has a cause of action for trespass ... and may recover only the actual damages suffered by reason of the impairment of the property or the loss of its use.”].) That is, specific unpaid commissions amounts are damages resulting from the breach of contract claims and not damages resulting from the conversion of the license. In order to allege resulting damages from the conversion of the license, the damages must flow from the use of the license. Here, the use of the license is irrelevant to Plaintiffs’ entitlement of the unpaid commissions, which would exist as a claim irrespective of the alleged license conversion.

Thus, the TAC fails to state a claim for conversion against Defendant Kaliher. The motion for judgment on the pleadings to this cause of action is granted.

Thirteenth Cause of Action for Violation of Business and Professions Code section 17200:

Defendant Kaliher also moves for judgment on the pleadings as to the Section 17200 claim on the grounds that Plaintiff has failed to state a claim.

The UCL defines unfair competition as “any unlawful, unfair, or fraudulent business act or practice.” (Bus. & Prof. Code § 17200.) A business practice need only satisfy one of the three criteria—unlawful, unfair, or fraudulent—to be considered unfair competition. (McKell v. Wash. Mut., Inc. (2006) 142 Cal.App.4th 1457, 1470-1471.)

First, to state a claim under the “unfair” prong, the allegation must show conduct that “offends an established public policy or…is immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers.” (People v. Vasa Blanca Convalescent Homes, Inc. (1984) 159 Cal.App.3d 509, 530.) California authority, however, has “require[d] that the public policy which is a predicate to the action…be ‘tethered’ to specific constitutional, statutory, or regulatory provisions.” (Gregory v. Albertson’s, Inc. (2002) 104 Cal.App.4th 845, 854.)

Second, the “fraud” contemplated by section 17200's third prong bears little resemblance to common law fraud or deception; rather, the test is whether the public is likely to be deceived. (Mass. Mut. Life Ins. Co. v. Super. Ct. (2002) 97 Cal.App.4th 1282, 1290.) “This means that a section 17200 violation, unlike common law fraud, can be shown even if no one was actually deceived, relied upon the fraudulent practice, or sustained any damage.” (South Bay Chevrolet v. General Motors Acceptance Corp. (1999) 72 Cal.App.4th 861, 888.)

Finally, “[a]n ‘unlawful’ business practice or act within the meaning of the UCL ‘is an act or practice, committed pursuant to business activity, that is at the same time forbidden by law. [Citation.]’ [Citation.] Further, “[b]y proscribing ‘any unlawful’ business practice, ‘section 17200 “borrows” violations of other laws and treats them as unlawful practices’ that the unfair competition law makes independently actionable. [Citation.]” (Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 180.)

Moreover, the court notes that remedies available to private plaintiffs under the UCL are limited to injunctive relief and restitution. (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1144 [“We have stated that under the UCL, ‘[p]revailing plaintiffs are generally limited to injunctive relief and restitution.’ ”].) In order to establish an entitlement to restitution under the UCL, a plaintiff must show: (1) that she had at one time “an ownership interest” in the money or property she “lost” and (2) that money or property must have been “acquired” by the defendant. (Kwikset Corp. v. Superior Court (2011) 246 P.3d 877, 895.)

Here, the TAC alleges “on information and belief” that Defendant “Kaliher was involved in agitating for CLAFMA to terminate Plaintiffs as broker of record during the months of June and/or July 2019” in order “to obtain some or all of Plaintiffs’ commissions.” (TAC ¶ 215.) Defendant Kaliher allegedly did so by offering to pay Plaintiff “for advisory services” as set forth in an “Independent Contractor Agreement” and that “[t]he agreement purported to redescribe the work Plaintiffs had already performed as broker of record to CLAFMA...” (TAC ¶ 215.)

These allegations do not show how Defendant Kaliher “agitated” Plaintiff’s termination as broker or how attempting to have Plaintiff sign an “Independent Contractor Agreement” is actionable as a “unfair business practice” under Section 17200. Nor is it clear how Defendant Kaliher “proceeded to take some of all of Plaintiffs’ commissions through payments received from Winston.” (TAC ¶ 216.)

Thus, the allegations fail to show “any unlawful, unfair, or fraudulent business act or practice” or any resulting “injury in fact” to Plaintiff caused by Defendant Kaliher. The motion for judgment on the pleadings to the thirteenth cause of action is granted.

Conclusion

The motion for judgment on the pleadings to the thirteenth and sixteenth causes of action in the Third Amended Complaint is granted. Leave to amend is denied. Plaintiff filed no opposition and thus made no showing that amendment was possible. (Rakestraw v. California Physicians' Service (2000) 81 Cal.App.4th 39, 43 [“The plaintiff bears the burden of proving there is a reasonable possibility of amendment.”].)

[1] Farmers Insurance is the successor in interest to Metropolitan Property and Casualty Insurance Company (MPCIC).