Judge: David Sotelo, Case: 21STCV13617, Date: 2022-09-27 Tentative Ruling

Case Number: 21STCV13617    Hearing Date: September 27, 2022    Dept: 40

MOVING PARTIES:           Defendants Mercury Insurance Company and

Mercury General Corporation.

On April 12, 2021, Plaintiff Javier Alarcon Munoz filed a complaint alleging 11 causes of action against several defendants, then later filed doe substitutions against Mercury Insurance Company and Mercury General Corporation (“Mercury”) on February 24, 2022.

On April 18, 2022, Plaintiff filed the operative Third Amended Complaint (“Third Amended Complaint” or “TAC”) alleging 14 causes of action.  Generally, the TAC alleges Defendant Juvenal Alejandro Farias (“Defendant Farias”) sold Plaintiff a non-legitimate 2015 Lexus vehicle (an “RC F”), induced by Farias’ guarantee that the car had “[n]o issues, no problems” (TAC, ¶¶10-14); that  Plaintiff entered a written contract with Mercury for automobile insurance providing full/comprehensive coverage; and that the coverage was not full/comprehensive after all and Mercury refused to cover Plaintiff’s alleged injury/loss sustained. (TAC, ¶¶75-82, 99.) Plaintiff found out later that the car was improperly sold (it was salvage titled, carried an invalid VIN and not marketable).

On July 1, 2022, Mercury demurrers to the Fifth, Tenth, Eleventh, Twelfth, and Fourteenth causes of action in the TAC for failure to state a cause of action.

Objection to the Reply

Plaintiff objects to Mercury Defendants’ untimely reply and moves to strike it. (See Code Civ. Proc., § 1005(b).) The Court  agrees and strikes the reply. 

Meet and Confer

The meet and confer requirements have been satisfied.

Demurrer Analysis: SUSTAINED with leave to amend as to the Fifth cause of action, and OVERRULED as to Tenth, Eleventh, Twelfth, and Fourteenth

Fifth (Breach of Written Contract) Cause of Action: SUSTAINED, WITH LEAVE TO AMEND

“To prevail on a cause of action for breach of contract, the plaintiff must prove (1) the contract, (2) the plaintiff’s performance of the contract or excuse for nonperformance, (3) the defendant’s breach, and (4) the resulting damage to the plaintiff.” (Richman v. Hartley (2014) 224 Cal.App.4th 1182, 1186.)

“A written contract may be pleaded by its terms—set out verbatim in the complaint or a copy of the contract attached to the complaint and incorporated therein by reference—or by its legal effect.” (McKell v. Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1489.) “In order to plead a contract by its legal effect, plaintiff must allege the substance of its relevant terms.” (Id.)

The TAC alleges the parties entered into a written agreement in which Plaintiff agreed to purchase from Mercury and the Mercury Defendants agreed to procure and provide Plaintiff an automobile insurance policy and coverage providing full/comprehensive coverage for the car. (TAC, ¶75.) These allegations are insufficient to show the substance of the relevant terms. Plaintiff also does not attach the contract or set out the terms verbatim.

Fourteenth (Reformation) Cause of Action: OVERRULED

A reformation action lies when a written instrument does not accurately reflect the oral understanding that gave rise to it. (Civ. Code § 3399; Getty v. Getty (1986) 187 Cal. App. 3d 1159, 1178.) That is, the sole purpose of the reformation doctrine is to correct a written instrument in order to effectuate a common intention of the parties which was incorrectly reduced to writing. (Getty, supra, 187 Cal.App.3d at 1178.) Thus, when, through fraud or a mutual mistake of the parties, or a mistake of one party, which the other at the time knew or suspected, a written contract does not truly express the intention of the parties, it may be revised by the court on the application of a party aggrieved, so as to express that intention, so far as it can be done without prejudice to rights acquired by third persons, in good faith and for value. (Civ. Code § 3399; Getty, supra, 187 Cal.App.3d at 1178.) However, the court cannot, under a theory of reformation, create a new agreement for the parties which conforms to circumstances other than those that they had mistakenly assumed were true; if the written instrument accurately reflects the agreement of the parties, albeit an agreement based upon a mistaken assumption of fact, an action for reformation does not lie. (Getty, supra, 187 Cal.App.3d at 1178.)

The Mercury Defendants demur to the Fourteenth cause of action on the basis that the terms of the contract are not set forth. However, that does not appear to be an element of this cause of action. Essentially, Plaintiff has pled that the parties agreed to full/comprehensive insurance coverage, and the policy did not provide this. This appears adequate at the pleading stage.

Tenth (Money Had and Received) Cause of Action: OVERRULED

Mercury Defendants demur to the Tenth cause of action arguing that a common count claim is not proper when an action is based on express contract where the plaintiff seeks damages for breach. However, Plaintiff may assert alternate theories of liability. (See Mendoza v. Rast Produce Co., Inc. (2006) 140 Cal.App.4th 1395, 1402 (stating a party may plead alternative legal theories and make inconsistent allegations in the pleading).)

Eleventh (Breach of Fiduciary Duty) Cause of Action: OVERRULED

Mercury demurs on the basis that insurers are not fiduciaries. (Love v. Fire Ins. Exchange (1990) 221 Cal.App.3d 1136, 1148.) An insurance agent is a fiduciary. (Eddy v. Sharp (1988) 199 Cal. App. 3d 858, 865.) Plaintiff has alleged agency, and thus the insurer can be liable under the theory of vicarious liability. Plaintiff has alleged agency and ratification by the Mercury Defendants. (TAC, ¶¶7, 15, 16, 118.)

Twelfth (Negligence) Cause of Action: OVERRULED

Mercury demurs on the basis that negligent claim handling, in and of itself, is not actionable. However, as pointed out in opposition, the claim is not for negligent claim handling, but negligence in providing the correct policy to Plaintiff.

Conclusion

The Demurrer is SUSTAINED with leave to amend as to the Fifth cause of action and OVERRULED as to the other challenged causes of action.