Judge: Christopher K. Lui, Case: 23STCV05962, Date: 2024-08-06 Tentative Ruling
Case Number: 23STCV05962 Hearing Date: August 6, 2024 Dept: 76
Plaintiffs allege that Defendants engaged in bad faith insurance practices in denying Plaintiffs’ claim for benefits under an auto insurance policy.
Defendant Liberty Mutual Fire Insurance Company demurs to the First Amended Complaint.
TENTATIVE RULING
Defendant Liberty Mutual Fire Insurance Company’s demurrer to the First Amended Complaint is SUSTAINED with leave to amend as to the first, third, fourth, sixth, seventh causes of action, and eighth causes of action, and without leave to amend as to the fifth cause of action. The demurrer is OVERRULED as to the second and ninth cause of action, and as to the argument that “Liberty Mutual Insurance” cannot be sued.
Plaintiffs
are given 30 days’ leave to amend where indicated.
ANALYSIS
Demurrer
Plaintiffs’ Evidentiary Objections
Declaration
of Hayk Ghalumyan
¶ 1: No objection asserted.
¶ 2: No objection asserted.
¶ 3: OVERRULED.
Declaration
of Ammelia Abbott
¶¶ 1 – 4: SUSTAINED. Irrelevant.
This is extrinsic evidence, and Defendant did not request judicial notice.
Meet and Confer
The
Declaration of Hayk Ghalumyan reflects that Defendant’s counsel satisfied the
meet and confer requirement set forth in Civ. Proc. Code § 430.41.
Discussion
Defendant
Liberty Mutual Fire Insurance Company demurs to the First Amended Complaint as
follows:
1. First
Cause of Action (Breach of the Implied Covenant of Good Faith and Fair
Dealing).
Defendant
argues that this cause of action fails because the law firm is not a named
insured under the policy.
Plaintiff
argues that this claim is assignable and the law firm was the registered owner
of the vehicle at all relevant times.
“The
prerequisite for any action for breach of the implied covenant of good
faith and fair dealing is the existence of a contractual relationship
between the parties, since the covenant is an implied term in the contract.” (Smith v. City and County of San Francisco
(1990) 225 Cal.App.3d 38, 49.)
Defendant
did not properly request judicial notice of the subject policy, and so the
Court will not consider the document submitted by Defendant. However, the 1AC
does not clearly allege the named insured entitled to payments under the
policy. The 1AC only alleges at ¶ 18 as follows:
18. On or
about 2016 Plaintiff Michael J. Libman purchased an automobile policy from
Liberty Mutual which included collision, comprehensive, and uninsured motorist
coverages for a 2014 Porsche 911 Carrera (hereinafter “Porsche”, California
license plate MRLALAW. The Porsche was registered to The Law Offices of Michale
J. Libman APC and defendants knew, or should have known this at all relevant
times.
It
is unclear as to whether both or only one named Plaintiff is the real party in
interest with standing as to this cause of action.
Only a real party in interest has standing to prosecute an action,
except as otherwise provided by statute. Section 367 states, “Every action must
be prosecuted in the name of the real party in interest, except as otherwise
provided by statute.”
“A real party in interest ordinarily is
defined as the person possessing the right sued upon by reason of the
substantive law. [Citation.]” (Citation omitted.) A real party in interest must
have an actual, substantial interest in the subject matter of the action. (Citation
omitted.) A person who has no interest in the subject matter of an action, and
therefore no right to relief, has no standing and cannot state a cause of
action, so a general demurrer will be sustained. (Citation omitted.)
(City of Industry v. City of Fillmore (2011)
198 Cal.App.4th 191, 208.)
Plaintiffs
must allege facts as to why each named Plaintiff has standing to sue on this
cause of action. Indeed, why don’t Plaintiffs simply attach the subject policy?
The
demurrer to the first cause of action as to Plaintiff Law Offices of Michael J.
Libman, APC is SUSTAINED with leave to amend.
2. Second
Cause of Action (Negligence).
Defendant
argues that California does not recognize negligence claims against insurers.
This
cause of action is only pled against the individual defendants. Yet, only
Defendant Liberty Mutual Fire Insurance Company brought this demurrer. Liberty
does not have standing to demur on behalf of the individual defendants.
The
demurrer to the second cause of action is OVERRULED.
3. Third
Cause of Action (Fraud, Deceit, Misrepresentation).
Defendant
argus that Plaintiff fails to allege the elements of this cause of action with
the requisite specificity.
“To establish a claim for deceit
based on intentional misrepresentation, the plaintiff must prove seven
essential elements: (1) the defendant represented to the plaintiff that an
important fact was true; (2) that representation was false; (3) the defendant
knew that the representation was false when the defendant made it, or the
defendant made the representation recklessly and without regard for its truth;
(4) the defendant intended that the plaintiff rely on the representation; (5)
the plaintiff reasonably relied on the
representation; (6) the plaintiff was harmed; and (7) the plaintiff's
reliance on the defendant's representation was a substantial factor in causing
that harm to the plaintiff. (Citations omitted.)” (Manderville v. PCG&S Group,
Inc. (2007) 146 Cal.App.4th
1486, 1498 [italics omitted].)
Fraud must be pleaded with specificity rather than with “ ‘general and
conclusory allegations.’ ” (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th
167, 184 [132 Cal. Rptr. 2d 490, 65 P.3d 1255].) The specificity
requirement means a plaintiff must allege facts showing how, when, where, to
whom, and by what means the representations were made, and, in the case of a
corporate defendant, the plaintiff must allege the names of the persons who
made the representations, their authority to speak on behalf of the corporation,
to whom they spoke, what they said or wrote, and when the representation was
made. (Lazar v. Superior Court, supra, 12 Cal.4th at p. 645.)
We enforce the specificity requirement in consideration of its two
purposes. The first purpose is to give notice to the defendant with
sufficiently definite charges that the defendant can meet them. (Committee on
Children's Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216
[197 Cal. Rptr. 783, 673 P.2d 660].) The second is to permit a court to weed
out meritless fraud claims on the basis of the pleadings; thus, “the pleading
should be sufficient ‘ “to enable the court to determine whether, on the facts
pleaded, there is any foundation, prima facie at least, for the charge of
fraud.” ’ ” (Id. at pp. 216–217.)
(West v. JPMorgan Chase Bank, N.A.
(2013) 214 Cal.App.4th 780, 793.)
Here, Plaintiffs do not allege
exactly what was said, by whom, when and in what manner (orally or in writing),
why such representation was known to be false when made, and both Plaintiffs’
actual and justifiable reliance causing out-of-pocket damage.
The demurrer to the third cause of
action is SUSTAINED with leave to amend.
4. Fourth Cause of Action (Breach of
Contract).
Defendant
argues that this cause of action fails because the law firm is not a named
insured under the policy.
This cause of action is
insufficiently pled for the same reason as the first cause of action.
The demurrer to the fourth cause of
action is SUSTAINED with leave to amend.
5. Fifth Cause of Action (Intentional
Infliction of Emotional Distress).
Defendant argues that a law firm
cannot sustain emotional distress.
Defendant argues that extreme and
outrageous conduct is not pled, and the failure to properly investigate a claim
or wrongful denial of insurance benefits does not constitute extreme and
outrageous conduct as a matter of law. Moreover, Plaintiff does not allege
severe emotional distress.
Finally, the Colemans argue that the
Insurer's conduct supports a cause of action for intentional infliction of
emotional distress. Again, we disagree.
Liability for intentional infliction of
emotional distress extends “only to conduct so extreme and outrageous ‘as to go
beyond all possible bonds of decency, and to be regarded as atrocious, and
utterly intolerable in a civilized community.’ ” (Alcorn v. Anbro Engineering,
Inc. (1970) 2 Cal.3d 493, 499, fn. 5 [86 Cal. Rptr. 88, 468 P.2d 216].)
. . .
[*417] . . .
But California courts have held that
delay or denial of insurance claims is not sufficiently outrageous to state a
cause of action for intentional infliction of emotional distress. . . .
(Coleman v. Republic Indem. Ins. Co. (2005) 132 Cal.App.4th 403, 416-17.)
As such, Plaintiffs have not alleged
any facts which would bring this claim outside of that rule of law.
As such, the demurrer to the fifth
cause of action is SUSTAINED without leave to amend, unless Plaintiffs
can demonstrate a reasonable possibility of successful amendment.
6. Sixth Cause of Action
(Misrepresentation).
Defendant
argus that Plaintiff fails to allege the elements of this cause of action with
the requisite specificity.
This
cause of action is insufficiently pled for the reasons set forth above re: the
third cause of action.
The
demurrer to the sixth cause of action is SUSTAINED with leave to amend.
7. Seventh Cause of Action (Fraud).
Defendant
argus that Plaintiff fails to allege the elements of this cause of action with
the requisite specificity.
This
cause of action is insufficiently pled for the reasons set forth above re: the
third cause of action.
The
demurrer to the seventh cause of action is SUSTAINED with leave to amend.
8. Eighth Cause of Action (Conspiracy
to Commit Fraud).
Defendant argues that there are no
facts pled to support a conspiracy.
Based on the rulings above, the
fraud causes of action are not sufficiently pled.
More fundamentally, though, an agent
cannot conspire with its principal:
“A corporation can act only through its
individual employees. … [¶] … A corporate employee cannot conspire with his or
her corporate employer; that would be tantamount to a person conspiring with
himself. Thus when a corporate employee acts in his or her authorized capacity
on behalf of his or her corporate employer, there can be no claim of conspiracy
between the [*639] corporate employer and the corporate employee.
(Doctors' Co. v. Superior Court [(1989)] 49 Cal.3d 39, 45 [260 Cal. Rptr. 183,
775 P.2d 508]; Marin v. Jacuzzi (1964) 224 Cal.App.2d 549, 554 [36 Cal. Rptr.
880].) In such a circumstance, the element of concert is missing. [¶]
Similar reasoning applies to aiding and abetting. … [S]ince a corporation can
act only through its employees, the element of concert is missing in the
‘aiding and abetting’ context just as in the conspiracy context.” (Janken,
supra, 46 Cal.App.4th at pp. 77–78.)
As appellants acknowledge without discussing the point, this “agent's immunity
rule” (Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th
503, 512 [28 Cal. Rptr. 2d 475, 869 P.2d 454]) applies only when the corporate
employee acts “in his or her authorized capacity on behalf of his or her
corporate employer.” (Janken, supra, 46 Cal.App.4th at p. 78.) “[A]gents and
employees cannot conspire with their principal or employer where they act on
its behalf, ‘ “and not as individuals for their individual advantage.” ’
(Doctors' Co., supra, 49 Cal.3d at p. 45.)” (1-800 Contacts, Inc. v. Steinberg
(2003) 107 Cal.App.4th 568, 591 [132 Cal. Rptr. 2d 789]; see Applied Equipment
Corp., supra, 7 Cal.4th at p. 512, fn. 4; Everest Investors 8 v. Whitehall Real
Estate Limited Partnership XI (2002) 100 Cal.App.4th 1102, 1107 [123 Cal. Rptr.
2d 297].) But agents can “be subject to ‘conspiracy liability for conduct which
the agents carry out “as individuals for their individual advantage” and not
solely on behalf of the principal [citation].’ ” (1-800 Contacts, Inc. v.
Steinberg, supra, 107 Cal.App.4th at p. 591, quoting Doctors' Co., supra, 49
Cal.3d at p. 47.)
(People ex rel. Herrera v.
Stender (2012) 212 Cal.App.4th 614, 638-39.)
Here, the facts pled do not allege
that any agents carried out conduct for their individual advantage and not
solely on behalf of the principal.
The demurrer to the eighth cause of
action is SUSTAINED with leave to amend.
9. Ninth Cause of Action (Bus. &
Prof. Code, § 17200 et seq.)
Defendant argues that Plaintiff
cannot allege that injunctive or restitutionary relief is justified, and that
the remedy at law—damages—is inadequate.
However, a demurrer does not
lie to only part of a cause of action or a particular type of damage or remedy.
(See Kong v. City of Hawaiian Gardens
Redevelopment Agency (2003) 108 Cal.App.4th 1028, 1046; PH II, Inc. v. Superior Court (Ibershof)
(1995) 33 Cal.App.4th 1680, 1682.)
The proper procedure is to bring a motion to strike the substantively
defective allegation. (Id. at 1682-83.)
The
demurrer to the ninth cause of action is OVERRULED.
10. All Claims Against “Liberty Mutual
Insurance.”
Defendant argues that Plaintiffs
cannot assert any claims against “Liberty Mutual Insurance” because it is not a
legal entity, but only a trade name for the Liberty Mutual group of insurance
companies, and it is not a party to any contract with Plaintiff.
This is based upon facts pled
outside the face of the 1AC.
“The
demurrer admits the facts pleaded in the complaint and raises the question
whether those facts are sufficient to state a cause of action on any legal
theory. . . . ‘The function of a demurrer is to test the sufficiency of the
complaint alone and not the evidence or other extrinsic matters. [Citation.]’
(Citation omitted.)” (Hellum v. Breyer (2011) 194 Cal.App.4th 1300, 1308-09.) “Because
a demurrer challenges defects on the face of the complaint, it can only refer
to matters outside the pleading that are subject to judicial notice.” (Arce
v. Kaiser Foundation Health Plan, Inc. (2010) 181 Cal.App.4th 471, 482.) “The sole issue raised by a general demurrer is whether the
facts pleaded state a valid cause of action, not whether they are true. No
matter how unlikely or improbable, plaintiff's allegations must be accepted as
true for the purpose of ruling on the demurrer. (Citation omitted.)
Furthermore, plaintiff's possible inability or difficulty in proving the
allegations of the complaint is of no concern. (Citation omitted.)” (Kerivan v. Title Ins. & Trust Co.
(1983) 147 Cal.App.3d 225, 229.)
This ground for demurrer is not
persuasive and is OVERRULED.
Plaintiff is given
30 days’ leave to amend where indicated.