Judge: Cherol J. Nellon, Case: 25STCV02394, Date: 2025-04-17 Tentative Ruling

Case Number: 25STCV02394    Hearing Date: April 17, 2025    Dept: 14

#Case Background

This is an action for breach of insurance contract, breach of the implied covenant of good faith and fair dealing, and professional negligence. Plaintiff alleges it was insured by Defendnats when it suffered a loss due to vandalism and theft in 2024. Defendnats failed to investigate, adjust, and cover the insurance claim that resulted from the loss.

On January 28, 2025, Plaintiff 16650-16664 Ventura, LLC filed its Complaint against Defendants The Travelers Indemnity Company of Connecticut (Travelers),  Acrisure Southwest Partners Insurance Services, LLC (Acrisure), and Cindy Martini.

On March 6, 2025, Defendant Travelers filed this motion to strike.

On April 4, 2025, Plaintiff filed an opposition.

On April 10, 2025, Travelers filed a reply.

Instant Pleading

Defendant Travelers moves to strike Plaintiff’s demand for punitive damages.

Decision

Travelers’ motion to strike is GRANTED with 15 days leave to amend.

Discussion

Defendant Travelers moves to strike Plaintiff’s request for punitive damages.

In order to state a prima facie claim for punitive damages, a complaint must set forth the elements as stated in the general punitive damage statute, Civil Code section 3294. (College Hospital, Inc. v. Superior Court (1994) 8 Cal.4th 704, 721.) These statutory elements include allegations that the defendant has been guilty of oppression, fraud or malice. (Civ. Code, section 3294, subd. (a).) “Malice is defined in the statute as conduct intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.” (College Hospital, Inc., supra, 8 Cal.4th at p. 725 [examining Civ. Code, section 3294, subd. (c)(1)].) “As amended to include [despicable], the statute plainly indicates that absent an intent to injure the plaintiff, ‘malice’ requires more than a ‘willful and conscious’ disregard of the plaintiffs’ interests. The additional component of ‘despicable conduct’ must be found.” (College Hospital, Inc., supra, 8 Cal.4th at p. 725.) 

In actions against insurers, an insured may be entitled to recover punitive damages if they can prove that the insurer not only denied payment of policy benefits unreasonably or without proper cause, by also was guilty of malice, oppression, or fraud. (Jordan v. Allstate Ins. Co. (2007) 148 Cal.App.4th 1062, 1080.) It is not enough that the insurer engages in bad faith insurance handling practices. (Id.)

“[T]he imposition of punitive damages upon a corporation is based upon its own fault. It is not imposed vicariously by virtue of the fault of others.” (City Products Corp. v. Globe Indemnity Co. (1979) 88 Cal.App.3d 31, 36.) “Corporations are legal entities which do not have minds capable of recklessness, wickedness, or intent to injure or deceive. An award of punitive damages against a corporation therefore must rest on the malice of the corporation’s employees. But the law does not impute every employee’s malice to the corporation. Instead, the punitive damages statute requires proof of malice among corporate leaders: the ‘officer[s], director[s], or managing agent[s].’” (Cruz v. Home Base (2000) 83 Cal.App.4th 160, 167 [citation omitted].) As to ratification, “[a] corporation cannot confirm and accept that which it does not actually know about.’” (Ibid. [citing College Hospital, Inc., supra, 8 Cal.4th at p. 726 [for ratification sufficient to justify punitive damages against corporation, there must be proof that officers, directors, or managing agents had actual knowledge of the malicious conduct and its outrageous character]].) 

Here, Travelers argues that the Complaint fails to state facts which show Travelers engaged in despicable conduct sufficient to support a claim for punitive damages. Travelers argues that Plaintiff at most alleged that it disagreed with whether Travelers was required to cover a loss which took place in a vacant building if the insurance policy contained a limitation on vacancy. (Compl., ¶¶32-39.) Travelers alleges the gravamen of the Complaint is a basic insurance policy coverage dispute involving Plaintiff’s policy.

In opposition, Plaintiff argues that the Complaint sufficiently alleges that Travelers acted with malice by intentionally denying coverage for the loss despite knowing the vacancy inclusion did not apply to the loss.

The Court agrees with Travelers that the Complaint concerns a dispute over the interpretation of Plaintiff’s insurance policy rather than malicious conduct. The Complaint alleges that Travelers’ adjuster made misrepresentations in his letter designed to dispute Plaintiff’s claim. (Compl., ¶31.) However, the Complaint does not allege what misrepresentations were made. Rather, the Complaint alleges that Travelers unreasonably believed that the property was vacant for more than 60 days. (Id., ¶36.) The Complaint at most alleges that Travelers made findings that the subject property was vacant, which Plaintiff disagreed with. The facts fail to show that Travelers acted despicably when it determined the building was vacant. Merely interpreting a contract in a manner that is not favorable to Plaintiff is not despicable conduct. Therefore, the Complaint fails to state facts which support a demand for punitive damages.

The motion to strike is GRANTED. Plaintiff’s request for leave to amend is GRANTED.

Conclusion