Judge: Craig Griffin, Case: Niaki Productions v. Western World Insurance Group, Date: 2022-09-12 Tentative Ruling
The Demurrer to the Second Amended Complaint (“SAC”) filed by Defendant Nabavian Insurance Agency, Inc. (“Nabavian”) is OVERRULED as to the 4th cause of action and SUSTAINED without leave to amend as to the 5th cause of action.
Nabavian’s Motion to Strike Portions of the SAC is GRANTED without leave to amend.
The Demurrer to the SAC filed by Defendant Hiscox Insurance Company, Inc. (“Hiscox”) is deemed MOOT as to the 1st and 2nd causes of action and is SUSTAINED without leave to amend as to the 3rd cause of action.
Hiscox’s Motion to Strike the 1st and 2nd causes of action in the SAC is GRANTED without leave to amend.
Nabavian is to answer the SAC as modified within 15 days.
Motion 1 (ROA 125): Nabavian’s Demurrer
4th COA – Professional Negligence
As an initial matter, Nabavian claims in its motion that this is the “third time around” for the demurrer to this cause of action implying that Plaintiff has had two previous opportunities to amend. However, the Court overruled Nabavian’s previous two demurrers to this cause of action. The Court will rule on the merits of the demurrer despite the fact that the Court overruled Nabavian’s prior two demurrers to this cause of action. (See Pacific States Enterprises, Inc. v. City of Coachella (1993) 13 Cal.App.4th 1414, 1420, fn. 3; Pavicich v. Santucci (2000) 85 Cal.App.4th 382, 389, fn. 3; Carlton v. Dr. Pepper Snapple Group, Inc. (2014) 228 Cal.App.4th 1200, 1211.)
The elements of a claim for professional negligence are: (1) the duty of the professional to use such skill, prudence, and diligence as other members of his profession commonly possess and exercise; (2) a breach of that duty; (3) a proximate causal connection between the negligent conduct and the resulting injury; and (4) actual loss or damage resulting from the professional’s negligence. (Paul v. Patton (2015) 235 Cal.App.4th 1088, 1095.)
Here, the SAC pleads that Nabavian, as an insurance professional, owed a duty to Plaintiff to fulfill promises made and services contracted for by Plaintiff; that Nabavian breached its duty by failing to obtain fire insurance when requested by Plaintiff; and that Plaintiff was harmed by Nabavian’s negligence because Hiscox denied the claim based on lack of coverage in effect at the time of the fire loss. (SAC, ¶¶ 18-21, 80-86.) Based on the above allegations, the Court finds that Plaintiff has properly pled a claim for professional negligence.
Nabavian’s argument that the demurrer should be sustained because the allegations are contradictory fails. It is well-established that “a party may plead in the alternative and may make inconsistent allegations.” (Third Eye Blind, Inc. v. Near North Entertainment Ins. Services, LLC (2005) 127 Cal.App.4th 1311, 1323.) Plaintiff has properly pled alternative theories of liability and inconsistent allegations pertaining to Nabavian.
Further, Nabavian fails to appreciate that the entire basis for Plaintiff’s professional negligence claim is that Nabavian failed to procure fire insurance coverage when requested by Plaintiff and before the fire loss. Thus, the fact that the SAC pleads that Nabavian procured fire coverage at a later time, i.e., after the fire loss, does not defeat Plaintiff’s professional negligence claim.
Accordingly, the Court OVERRULES the demurrer to the fourth cause of action.
5th COA – Fraud
The elements of fraud that must be pleaded are: (a) misrepresentation; (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage. (Philipson & Simon v. Gulsvig (2007) 154 Cal.App.4th 347, 363.)
Here, Plaintiff alleges that on July 27, 2018, Plaintiff authorized Nabavian to charge Plaintiff’s credit card on file to bind a fire insurance policy with Hiscox and that Nabavian represented that she could and would bind the policy forthwith. (SAC ¶ 92.) Plaintiff then alleges that a fire occurred at Plaintiff’s property on August 7, 2018, at 1:53 p.m. (Id. at ¶ 93.) Thereafter, on August 7, 2018, at 6:06 p.m. and again on August 8, 2018, and August 9, 2018, Nabavian represented to Plaintiff that she had bound a policy which provided business property coverage beginning on August 7, 2018, at 12:01am. (Id. at ¶¶ 94, 97-98.) Plaintiff further alleges that Nabavian represented to Plaintiff that there was insurance coverage at the time of the fire. (Id.) Plaintiff also alleges that Nabavian represented to Hiscox during a telephone call that Nabavian was in contact with Plaintiff by telephone on the day of the fire. (Id. at ¶ 104-105.)
As to the statements made between August 7 and August 9, 2018, critically, these statements are all alleged to have occurred after the fire loss took place. Thus, Plaintiff cannot claim justifiable reliance or resulting damages based on these statements. Given that the fire loss had already occurred, Plaintiff cannot assert that these statements caused it to forego insurance coverage elsewhere which could have covered the loss. In addition, it is unclear how these statements could have resulted in Plaintiff’s damages given that the basis for the insurance claim denial was that the policy was not purchased until after the fire loss occurred. Thus, these statements do not appear to have any bearing on the coverage determination. The allegations demonstrate that the insurance claim would have been denied regardless of whether Nabavian told Plaintiff after the loss occurred that said loss was covered by the policy.
Regarding the July 27, 2018 representation that Nabavian would procure the insurance policy forthwith, the SAC fails to allege facts demonstrating that Nabavian made these statements with knowledge of their falsity and with an intent to defraud Plaintiff. At most, the allegations here show that Nabavian negligently failed to procure the subject insurance. Every element of the cause of action for fraud must be alleged in full, factually and specifically. The policy of liberal construction of pleading will not be invoked to sustain a pleading defective in any material respect. (Wilhelm v. Pray, Price, Williams & Russell (1986) 186 Cal.App.3d 1324, 1332.) Thus, given the deficiencies described herein, the SAC again fails to plead a proper fraud cause of action against Nabavian.
Given that Plaintiff has had multiple opportunities to plead a viable fraud claim, but has failed to do so, the Court will SUSTAIN the demurrer to the fifth cause of action without leave to amend. (See Heritage Pac. Fin'l, LLC v. Monroy (2013) 215 Cal.App.4th 972, 994.)
Motion 2 (ROA 126): Nabavian’s Motion to Strike
Civil Code § 3294(a) provides that punitive damages may be awarded in an action for breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice. . .”
Section 3294(c) defines malice, oppression and fraud as follows:
“(1) “Malice” means conduct which is 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.
(2) “Oppression” means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person's rights.
(3) “Fraud” means an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.”
Here, again Nabavian’s actions as alleged do not rise to the level of despicable conduct which would support entitlement to punitive damages. “Despicable conduct” is conduct that is so “vile, base, contemptible, miserable, wretched or loathsome that it would be looked down upon and despised by ordinary decent people.” (Scott v. Phoenix Schools, Inc. (2009) 175 Cal.App.4th 702, 715.) There are also no factual allegations that would support a claim that Nabavian intended to cause injury to Plaintiff. In addition, as stated above, the allegations in the SAC are insufficient to support a claim of fraud against Nabavian.
Regarding attorney’s fees, the pleading again fails to allege grounds on which Plaintiff may recover attorneys’ fees in this action against Nabavian. Further, Plaintiff in its opposition does not reference any written contract or statutory basis that would permit recovery of attorney fees.
Given that Plaintiff has had multiple opportunities to correct these defects, but has failed to do so, the Court will GRANT the motion to strike without leave to amend. (See, e.g., Heritage Pac. Fin'l, LLC v. Monroy (2013) 215 Cal.App.4th 972, 994.)
Motion 3 (ROA 149): Hiscox’s Demurrer
1st and 2nd COAs
The demurrers to the first and second causes of action in the SAC are MOOT in light of the Court’s ruling below to grant Hiscox’s motion to strike these causes of action without leave to amend.
3rd COA – Fraud
Here, Plaintiff alleges that Hiscox made the following false representations: (1) that the policy was not in effect at the time of the reported loss; (2) that the policy was obtained after the occurrence of the incident; and (3) that Neda Nabavian from Nabavian Insurance Agency had spoken with Plaintiff on the incident date after the fire had taken place. (SAC ¶ 67.) Plaintiff alleges that these representations were false and were made with the intention of dissuading Plaintiff from seeking recovery for its loss under the terms of the policy. (Id. at ¶ 68.)
Again, Plaintiff’s fraud cause of action against Hiscox fails. The SAC fails to allege facts demonstrating that Hiscox made the above statements with knowledge of their falsity and with an intent to defraud Plaintiff. (See Philipson & Simon v. Gulsvig (2007) 154 Cal.App.4th 347, 363—discussing elements of fraud.) Given the allegations in the SAC that Nabavian did not attempt to bind the policy until August 7, 2018 due to a shortage in staff (see SAC ¶ 18) and that Hiscox informed Plaintiff that Nabavian attempted to bind the policy on August 7, 2018, at 6:04 p.m. (after the fire loss) (see SAC ¶ 59), the allegations in the SAC appear to show the truthfulness of Hiscox’s representations.
Further, Hiscox’s representation that Nabavian had spoken with Plaintiff on the incident date fails to support a fraud claim because Plaintiff has not alleged resulting damage from this statement, and it is unclear how Plaintiff could have been damaged from said statement. The insurance claim was denied because, according to Hiscox, the policy was purchased after the fire loss occurred. Whether Hiscox misrepresented that Nabavian spoke with Plaintiff on the incident date appears to have no bearing on the coverage determination. Rather, the allegations demonstrate that the insurance claim would have been denied regardless of whether said allegation was true or false.
Thus, the SAC again fails to plead a proper fraud cause of action against Hiscox.
Given that Plaintiff has had multiple opportunities to plead a viable fraud claim, but has failed to do so, the Court will SUSTAIN the demurrer to the third cause of action without leave to amend. (See Heritage Pac. Fin'l, LLC v. Monroy (2013) 215 Cal.App.4th 972, 994.)
Motion 4 (ROA 150): Hiscox’s Motion to Strike
Hiscox moves to strike the first and second causes of action in the SAC on the grounds that said causes of action are not in conformity with the Court’s order sustaining Hiscox’s demurrer to the Complaint.
Pursuant to Cal. Code of Civ. Proc. § 436, the Court may “strike out any irrelevant, false or improper matter inserted in any pleading” and “strike out all or any part of any pleading not drawn or filed in conformity with the laws of the state, a court rule, or an order of the court.”
A party given leave to amend following a demurrer is only authorized to amend as permitted by the court ruling. (People By & Through Dep't of Pub. Works v. Clausen (1967) 248 Cal.App.2d 770, 785–86; Harris v. Wachovia Mortgage, FSB (2010) 185 Cal.App.4th 1018, 1023; Taliaferro v. Davis (1962) 220 Cal.App.2d 793, 794–95.)
Here, the Court’s January 24, 2022 Order sustaining Hiscox’s demurrer to Plaintiff’s Complaint with leave to amend did not permit the addition of new causes of action against Hiscox. (ROA 76.) The Court’s ruling permitting leave to amend was limited to the fraud cause of action. (Id.; Complaint at ROA 2.) The SAC now asserts two additional causes of action against Hiscox – breach of contract and breach of duty of good faith and fair dealing. (ROA 114.) Thus, the first and second causes of action in the SAC assert new causes of action against Hiscox that are not within the scope of the Court’s prior order granting leave to amend.
Accordingly, Hiscox’s motion to strike the first and second causes of action is GRANTED without leave to amend. (People By & Through Dep't of Pub. Works v. Clausen, 248 Cal.App.2d at 785–86; Harris v. Wachovia Mortg., FSB, 185 Cal.App.4th at 1023.)
Counsel for Nabavian to give notice of the court’s rulings as to ROA 125 and 126.
Counsel for Hiscox to give notice of the court’s rulings as to ROA 149 and 150.