Judge: Christian R. Gullon, Case: 24PSCV01062, Date: 2024-08-20 Tentative Ruling

Case Number: 24PSCV01062    Hearing Date: August 20, 2024    Dept: O

Tentative Ruling

DEFENDANTS HOMESITE INSURANCE AGENCY, INC., HOMESITE INSURANCE COMPANY OF CALIFORNIA, AMERICAN FAMILY MUTUAL INSURANCE COMPANY, AND MARLON ADAMS’ DEMURRER TO PLAINTIFFS’ COMPLAINT is SUSTAINED with leave to amend (namely as Plaintiffs improperly rely upon the Report).  

Background

This case arises from insurance coverage. Plaintiffs ANGEL FUERTE and JENNIE FUERTE allege the following against Defendants HOMESITE INSURANCE AGENCY, INC. (“Homesite Agency” or “HIA”); HOMESITE INSURANCE COMPANY OF CALIFORNIA (“Homesite”, the insurer); AMERICAN FAMILY MUTUAL INSURANCE COMPANY (“American Family” or “AFICS”)[1]; and MARLON ADAMS (“Adams”):[2] In August 2021, a fire damaged Plaintiffs’ residence requiring the family to be displaced for two years. Under the insurance policy, Homesite provided coverage for fire/smoke damage, including funds for the replacement cost value (“RCV”). On May 12, 2023, both PLAINTIFFS' appraiser and the appraiser hired by Defendants AFICS and HOMESITE agreed that the proper RCV valuation of the LOSS under the policy was $323,992.01; The agreed final appraisal valuation was more than $260,000.00 greater than the appraised LOSS determined by Defendants in October of 2021.The crux of the allegations are that Defendants did not properly evaluate Plaintiffs’ loss and continued with their purposeful lowball evaluation by offering only a total of roughly 42% of the true loss valuation. (Complaint p. 12.)

On April 4, 2024, Plaintiffs filed suit against Defendants for:

On July 10, 2024, Defendants filed the instant demurrer.

On August 7, 2024, Plaintiffs filed their opposition.

On August 13, 2024, Defendants filed their reply.

Legal Standard

A demurrer, in pertinent part, may be asserted when the pleading does not state facts sufficient to constitute a cause of action. (See Notice of Demurrer, citing Code of Civ. Proc., § 430.10 subds. (e).) Accordingly, a demurrer tests the sufficiency of a pleading, and the grounds for a demurrer must appear on the face of the pleading or from judicially noticeable matters. (Code of Civ. Proc. § 430.30(a); Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)

Request for Judicial Notice (RJN)

The RJN, filed by Plaintiffs, is of The Report of Examination of the Homesite Insurance Company of California as of December 31, 2021 ("Report”).

For reasons to be discussed below, the RJN is DENIED.

Discussion

Defendants bring forth their demurrer based upon the following four (4) arguments:

1.     Homesite Agency, AFMIC, and ADAMS should be dismissed from the claim based on lack of privity between them and the Plaintiffs; the only contract that exists is between Plaintiffs and Homesite. (See Complaint ¶29 [“Plaintiffs and Homesite entered into a valid and existing [Policy]….”].)[3]

2.     Absent a contract, no breach of the implied covenant of good faith and fair dealing exists.

3.     The conspiracy claim that Adams and American Family conspired with Defendants Homesite and Homesite Agency to commit bad faith (Complaint at ¶¶56-81) fails as a matter of law because Homesite Agency, Adams, and American Family were not parties to the contract/insurance policy to owe a duty of good faith and fair dealing.

4.     Plaintiffs’ promissory fraud claim is insufficiently pled (i.e., lacks specificity and particularity).

Here, the court cannot address the crux of the demurrer—whether Plaintiffs lack standing to continue with any of their claims against the non-contracting Defendants—because the arguments raised in opposition rely upon allegations found outside of the four corners of the complaint.

In opposition, Plaintiffs rely upon the Report to support their theory that a breach of contract claim against HIA, AFMIC, and Adams is valid due to the purported existence of a parent-subsidiary relationship. (Opp. p. 8.) More specifically, Plaintiffs note that AFMIC is the parent company of Homesite and that even though the policy was with Homesite, the claim was managed by AFMIC through Adams, which demonstrates AFMIC’s “direct involvement in the day-to-day handling of the negotiation of liability.” (¶36.) As for HIA, Plaintiffs argue that under the Report, Homesite entered into an Agency Agreement with HIA to solicit potential customers and sell homeowners' insurance products on behalf of HOMESITE. Therefore, “[g]iven this integrated operation and the agency relationship, all DEFENDANTS, AFMIC, HIA, HOMESITE, and ADAMS, should be held jointly and severally liable for damages resulting from the breach of the insurance contract.” (Opp. ¶44.)

While the foregoing theories may provide a sufficient basis for Plaintiffs to proceed with their claims against all Defendants, the court cannot consider such arguments because, as noted in Reply (Reply p. 2:11-15), the RJN constitutes as “additional facts” outside of the four corners of the complaint. And a trial court is bound by the allegations in the complaint and “cannot consider the outré-judicial statements of counsel nor the additional facts found in the briefs.” (Melikan v. Truck Ins. Exchange (1955) 133 Cal.App.2d 113, 114.)

Conclusion

Based on the foregoing—as the relationship amongst the parties is central to the demurrer—the court sustains the entirety of the demurrer with leave to amend.