Judge: Colin Leis, Case: 23STCV22385, Date: 2025-04-11 Tentative Ruling
Case Number: 23STCV22385 Hearing Date: April 11, 2025 Dept: 74
DANNY
YOUNG vs FARMERS INSURANCE COMPANY, INC., et al.
BACKGROUND
This
motion arises from a breach of fiduciary duty action.
Plaintiff
Danny Young (Plaintiff) filed a complaint against defendants Farmers Insurance
Company, Inc. and Michelle Behm (Defendants).
Plaintiff alleges two causes of action in the First Amended Complaint:
(1) Intentional Infliction of Emotional Distress and (2) Aiding and Abetting
Breach of Fiduciary Duty.
Defendants
demur to the complaint.
DISCUSSION
Defendants demur to the first and second
causes of action on the grounds that they fail to state facts sufficient to
constitute a cause of action.
Intentional Infliction of Emotional
Distress
To
state a cause of action for intentional infliction of emotional distress,
Plaintiff must allege the following: (1) outrageous conduct by defendant; (2)
intentional or reckless causing of emotional distress; (3) severe emotional
distress; and (4) causation. (Huntingdon
Life Sciences, Inc. v. Stop Huntingdon Animal Cruelty USA, Inc. (2005) 129 Cal.App.4th 1228, 1259.)
Plaintiff
alleges that Defendants reached a settlement in a case where Plaintiff was also
a Defendant. (Complaint ¶¶ 56-58.) Due to the settlement, the case was dismissed
without prejudice against Plaintiff. (Complaint
¶ 58.) Both the initial case and the subsequent
dismissal caused Plaintiff to suffer emotional distress. (Complaint ¶¶ 58-61.) Plaintiff alleges that this conduct is
outrageous and was done with the intention to cause or reckless disregard to
the probability of causing emotional distress.
(Complaint ¶¶ 59-60.) Plaintiff
suffered severe emotional distress.
(Complaint ¶ 61.)
Defendants
argue that the court may determine via a demurrer the factual question of whether
their conduct was outrageous. Defendants
cite Trerice v. Blue Cross California (1989) which permits the court to
determine in a motion for summary judgment whether conduct could be
considered outrageous as a matter of law.
(209 Cal.App.3d 878, 883.) In a
demurrer, the Court accepts Plaintiff’s well-pleaded factual allegations. The Court overrules the demurrer to the First
Cause of Action.
Aiding and Abetting Breach of
Fiduciary Duty
To
state a cause of action for aiding and abetting breach of fiduciary duty,
Plaintiff must allege the following: (1) a third party’s breach of fiduciary
duties owed to Plaintiff; (2) Defendants’ actual knowledge of that breach of
fiduciary duties; (3) substantial assistance or encouragement by Defendants to
the third party’s breach; and (4) Defendants’ conduct was a substantial factor
in causing harm to Plaintiff. (Nasrawi v. Buck Consultants LLC (2014)
231 Cal.App.4th 328, 343.) There are two
legal theories for liability for aiding and abetting a breach of fiduciary
duty: (1) the aider and abettor owed a fiduciary duty to the victim or (2) the
aider and abettor provided substantial assistance to the primary breacher. (American Master Lease LLC v. Idanta
Partners, Ltd. (2014) 225 Cal.App.4th 1451, 1477.) The second theory requires that the aider and
abettor commit an independent tort or makes a conscious decision to participate
in a tortious activity for the purpose of assisting the primary breacher in a
wrongful act. (Ibid.) Plaintiff pursues the second theory of
liability.
Plaintiff
alleges that third-party Chrisine Lee breached the fiduciary duties owed to
Plaintiff. (Complaint ¶ 65.) Defendants provided substantial assistance
and encouragement with the intent to facilitate the breach of fiduciary
duty. (Complaint ¶ 66.) Plaintiff alleges specifically that
Defendants settled the claim and provided the check to Gregory Lee to
specifically ensure that the funds would not reach the WF funds. (Complaint ¶¶ 57-58.) Plaintiff also alleges that the Defendants
knowingly and intentionally inflicted emotional distress in order to assist in
the breach of fiduciary duty. (Complaint
¶ 65.) Thus, Plaintiff has alleged
sufficient facts to state a cause of action for aiding and abetting breach of
fiduciary duty.
Defendants
allege that insurers face no liability for eliminating a malicious prosecution
claim. In Hurvitz v. St. Paul Fire
& Marine Ins. Co. (2003), the Court found that an insurer did not
engage in bad faith conduct when it accepts a settlement over the insured’s
objections. Here, the Plaintiff’s
allegations go beyond simply bad faith settlement. Rather, Plaintiff alleges that Defendants
agreed to settle the claim with the intent to cause Plaintiff’s emotional
distress. (109 Cal.App.4th
918, 928-934.) Insurers are not liable
for opting to settle a claim over the insured objections when the insurer’s
decision is based on the belief that the benefits of settlement exceed the risk
of continuing litigation. (Id. at
931.) But it is not alleged in the
Complaint that Defendants settled the case based on this risk examination.
CONCLUSION
The
Court overrules Defendants’ Demurrer.