Judge: Craig Griffin, Case: McGorrin v. State Farm General Insurance Company, Date: 2022-07-18 Tentative Ruling

Defendant Gerald Newlin demurs generally and specially on the ground of uncertainty to the fourth cause of action for negligent misrepresentation in the FAC.


The elements of negligent misrepresentation are (1) a misrepresentation of a past or existing material fact, (2) made without reasonable ground for believing it to be true, (3) made with the intent to induce another's reliance on the fact misrepresented, (4) justifiable reliance on the misrepresentation, and (5) resulting damage.  Ragland v. U.S. Bank National Assn. (2012) 209 Cal.App.4th 182, 196. 


Moving defendant contends that the fourth cause of action in the FAC fails to allege any facts showing the elements of misrepresentations of past or existing material fact and justifiable reliance.  He contends that the fourth cause of action is based on expressions of opinions rather than false statements of facts. 


Responding plaintiff relies heavily on citing Bock v. Hansen (2014) 225 Cal.App.4th 215.  That case held states at p. 229 that, because of the special relationship between an insurer and its insured, employees of the party in the special relationship have a heightened duty to be truthful to the insured and can be held liable for negligent misrepresentation to the insured.  In stating that the “general law of negligent misrepresentation applies” to “the employee of the party in the special relationship,” the court added: 


It is generally said that “... California courts have recognized a cause of action for negligent misrepresentation, i.e., a duty to communicate accurate information, in two circumstances. The first situation arises where providing false information poses a risk of and results in physical harm to person or property. The second situation arises where information is conveyed in a commercial setting for a business purpose.” [Citation.]  The setting here involves both: Mrs. Bock was injured as a result of Hansen's misrepresentation. And Hansen said what he said for a business purpose.


After setting forth the elements negligent misrepresentation, the court indicated that a claim was adequately set forth by allegations that the defendant falsely told the plaintiff that their policy did not cover the cost of cleanup, that the defendant either knew that the representation was false when he made it, or he made it with reckless disregard of its truth, and the plaintiffs relied on the defendant’s false statements to their detriment.  Bock v. Hansen, supra, 225 Cal.App.4th at p. 231. 


In this case, the fourth cause of action alleges that the moving defendant made false representations to the plaintiff’s on 4-21-21.  Among other things, plaintiff alleges that moving defendant “falsely represented that Plaintiff bore the onus of paying investigative costs if a non-covered loss was revealed, and identifying a suitable contractor to do that work, when the policy and law actually required Defendant to pay those costs and identify the contractor, as part of its investigative duties, even if there was ultimately a determination of no coverage.”  (FAC, ¶ 57.)  Plaintiff also alleges that moving defendant falsely stated that “accessing the pipe was necessary to render a coverage termination, and that Plaintiff was obligated to pay for Defendants, and each of them, to access the damaged pipe when the Policy did not require Plaintiff to do anything other than exhibiting the damage to the Property – which Plaintiff had already done.”  (FAC, ¶ 58.)  Plaintiff additionally alleges that moving defendant “omitted and failed to disclose the fact that a post-tensioned slab, such as Plaintiff’s, could not be cut into without an expensive procedure, by a suitable professional, that could cause serious damage that would be exorbitantly expensive, if not impossible to repair.”  (FAC, ¶ 58.) 


The fourth cause of action further alleges that plaintiff justifiably or reasonably relied on the misrepresentations of the moving defendant and was harmed as a result because she was deprived of insurance benefits.  But it fails to identify in which manner plaintiff relied on the false statements to her detriment.  There is no allegation that plaintiff relied on the statement and had a contractor cut into her post-tensioned slab, causing her damage.  That the plaintiff was forced to hire counsel and sue was not based on the false statements, but on defendant’s failure to cover the claim.  Under her theory that defendant was simply looking for an excuse to wrongfully deny her claim, plaintiff apparently would not have acted any differently in hiring counsel if defendant had been honest about simply not wanting to pay her claim.  (FAC, ¶ 59.) 


Accordingly, the demurrer to the fourth cause of action for negligent misrepresentation in the first amended complaint of plaintiff Miraim McGorrin is SUSTAINED, with 20 days leave to amend.


Moving party to give notice.