Judge: Deborah C. Servino, Case: 30-2022-01246352, Date: 2022-08-19 Tentative Ruling
Defendant State Farm General Insurance Company’s demurrer to the second through sixth causes of action alleged in Plaintiff Lorri Herman, Trustee for the Lorri Herman Living Trust Dated 10/18/2001’s Complaint, is overruled in part and sustained in part. The demurrer as to the second and third causes of action is overruled. The demurrer as to the fourth through sixth causes of action is sustained with 15 days leave to amend.
Special Demurrer for Uncertainty
A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures.” (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616.) Errors and confusion created by “the inept pleader” are to be forgiven if the pleading contains sufficient facts entitling plaintiff to relief. (Saunders v. Cariss (1990) 224 Cal.App.3d 905, 908.) A demurrer for uncertainty should be overruled if the facts are presumptively within defendant’s knowledge. (Khoury v. Maly’s of California, Inc., supra, 14 Cal.App.4th at p. 616.) A party attacking a pleading on “uncertainty” grounds must specify how and why the pleading is uncertain, and where that uncertainty can be found in the challenged pleading. (Fenton v. Groveland Community Services Dept. (1982) 135 Cal.App.3d 797, 809, disapproved on other grounds in Katzberg v. Regents of the University of California (2002) 29 Cal.4th 300.) Here, the second through sixth causes of action are not so unintelligible that Defendant cannot reasonably respond. Any ambiguities can be clarified through discovery. (Lickiss v. Financial Industry Regulatory Authority (2012) 208 Cal.App.4th 1125, 1135; Khoury v. Maly’s of California, Inc., supra, 14 Cal.App.4th at p. 616.) Accordingly, the special demurrer is overruled.
Breach of Covenant of Good Faith and Fair Dealing (Second Cause of Action)
In the insurance context the breach of implied covenant of good faith and fair dealing, the elements are (1) that the plaintiff suffered a loss covered under an insurance policy with the defendant; (2) that the defendant was notified of the loss; (3) that the defendant unreasonably failed to pay or delayed payment of policy benefits; (4) that the plaintiff was harmed; and (5) that the defendant’s failure to pay or delay in payment of policy benefits was a substantial factor in causing the plaintiff’s harm. To act or fail to act unreasonably means that the insurer had no proper cause for its conduct. (CACI no. 2331.) “‘There are at least two separate requirements to establish breach of the implied covenant: (1) benefits due under the policy must have been withheld; and (2) the reason for withholding benefits must have been unreasonable or without proper cause.’” (Mosley v. Pacific Specialty Ins. Co. (2020) 49 Cal.App.5th 417, 435 [internal citation omitted].)
Plaintiff alleged sufficient facts to state a cause of action for breach of covenant of good faith and fair dealing. (Complaint, at ¶¶ 6, 22, 35, 36, 49-60.) Accordingly, the demurrer to this cause of action is overruled.
Bad Faith Denial of Insurance Claim (Third Cause of Action)
The third cause of action is for bad faith denial of insurance claim. To allege a bad faith claim for failure to conduct a proper investigation, Plaintiff must show: (1) Plaintiff suffered a loss covered under an insurance policy issued by Defendant; (2) that Plaintiff properly presented a claim to Defendant to be compensated for the loss; (3) that Defendant failed to conduct a full, fair, prompt, and thorough investigation of all of the bases of Plaintiff’s claim; (4) that Plaintiff was harmed; and (5) that Defendant’s failure to properly investigate the claim was a substantial factor in causing Plaintiff’s harm. (CACI no. 2332.) When investigating Plaintiff’s claim, Defendant had a duty to diligently search for and consider evidence that supported coverage of the claimed loss. (CACI no. 2332.)
Plaintiff alleged sufficient facts to allege this cause of action on the ground that Defendant failed to conduct a full, fair, prompt, and thorough investigation. (Complaint, at ¶¶ 6, 9, 11-19, 21-24, 30, 32-36, and 62-70, Exhs. A, B, and C.)
Defendant argues that Plaintiff’s bad faith denial of insurance claim is duplicative of her breach of covenant of good faith and fair dealing claim. However, Defendant does not rely on any case in the insurance context to support this argument. (See Dem., at pp. 13-14.) The second cause of action is based on Defendant’s failure to pay the claim without justification, while the third cause of action is based on Defendant not properly investigating the claim. (Complaint, at ¶¶ 35, 36, 49, 56, 58, 67, 68, and 70.) The court declines to find the third cause of action is duplicative of the second cause of action. Accordingly, the demurrer is overruled.
Unfair Business Practices (Fourth Cause of Action)
Business & Professions Code section 17200 prohibits “any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising.” Under the unlawful prong, a violation of law may be actionable as unfair competition under Business & Professions Code section 17200. (Lueras v. BAC Home Loans Servicing, LP, 221 Cal.App.4th 49, 81.) “An unfair business practice occurs when that practice offends an established public policy or when the practice is immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers . . . An unfair business practice also means the public policy which is a predicate to the action must be tethered to specific constitutional, statutory or regulatory provisions.” (Ibid. [internal citations omitted].) A fraudulent practice “require[s] only a showing that members of the public are likely to be deceived and can be shown even without allegations of actual deception, reasonable reliance and damage.” (Ibid. [internal citations omitted].) A UCL claim “must be stated with reasonable particularity, which is a more lenient pleading standard than is applied to common law fraud claims.” (Gutierrez v. Carmax Auto Superstores California (2018) 19 Cal.App.5th 1234, 1261.)
Plaintiff did not allege sufficient facts to show an unlawful, fraudulent, or unfair business practice. Although Plaintiff contends she alleged sufficient facts to allege a violation of Insurance Code section 790.03, the Complaint does not allege a violation of section 790.03. Accordingly, the demurrer is sustained with 15 days leave to amend.
Fraudulent Misrepresentation (Fifth Cause of Action)
“The elements of fraud, which give rise to the tort action for deceit, are (a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.)
Every element of fraud must be pleaded with specificity. The particularity requirement for fraud requires the pleading of facts showing how, when, where, to whom, and by what means the representations were made. (Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73.) This is to provide the defendant with notice and to give the court enough information to assess whether there is a foundation for the charge of fraud. (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216.) The requirement of specificity in a fraud action against a corporation requires the plaintiff to allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. (Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157.) Nonetheless, “[l]ess specificity is required when it appears from the nature of the allegations that the defendant must necessarily possess full information concerning the facts of the controversy.” (Committee on Children’s Television, Inc. v. General Foods Corp., supra, 35 Cal. 3d at p. 216 [citation and internal quote marks omitted].)
Plaintiff did not allege fraud with the required specificity. Plaintiff does not allege who at State Farm made the representation that Defendant would provide coverage for the type of loss suffered by Plaintiff, how, when, where, or by what means the representations were made, or the speaker’s authority to speak or write on Defendant’s behalf.
Furthermore, the Complaint alleged the representation was that Defendant “would provide coverage for the type of loss suffered by Plaintiff.” (Complaint, at ¶ 89.) This appears to be a promise of future conduct, which is actionable as fraud only if made without a present intent to perform. A declaration of intention, although in the nature of a promise, made in good faith, without intention to deceive, and in the honest expectation that it will be fulfilled, even though it is not carried out, does not constitute a fraud. (Magpali v. Farmers Group, Inc. (1996) 48 Cal.App.4th 471, 481
Lazar v. Sup. Court (1996) 12 Cal.4th 631, 638-639 [promissory fraud]; Muraoka v. Budget Rent-A-Car, Inc. (1984) 160 Cal.App.3d 107, 119.)
Accordingly, the demurrer is sustained with 15 days leave to amend.
Declaratory Relief (Sixth Cause of Action)
Pursuant to Code of Civil Procedure section 1060, any person “interested under a written instrument, excluding a will or a trust, or under a contract, or who desires a declaration of his or her rights or duties with respect to another, or in respect to, in, over or upon property, or with respect to the location of the natural channel of a watercourse, may, in cases of actual controversy relating to the legal rights and duties of the respective parties, bring an original action or cross-complaint in the superior court for a declaration of his or her rights and duties in the premises, including a determination of any question of construction or validity arising under the instrument or contract.” To state a cause of action for declaratory relief, Plaintiff must allege: (1) a proper subject of declaratory relief, and (2) an actual controversy involving justiciable questions relating to the party’s rights or obligations. (Wilson & Wilson v. City Council of Redwood City (2011) 191 Cal.App.4th 1559, 1582.)
“The purpose of a judicial declaration of rights in advance of an actual tortious incident is to enable the parties to shape their conduct so as to avoid a breach. ‘[D]eclaratory procedure operates prospectively, and not merely for the redress of past wrongs. It serves to set controversies at rest before they lead to repudiation of obligations, invasion of rights or commission of wrongs; in short, the remedy is to be used in the interests of preventive justice, to declare rights rather than execute them.’” (Babb v. Superior Court (1971) 3 Cal.3d 841, 848; see Osseous Technologies of America, Inc. v. DiscoveryOrtho Partners LLC (2010) 191 Cal.App.4th 357, 366, citing 5 Witkin, Cal. Procedure (5th ed. 2008) Pleading, § 869 [There is no basis for declaratory relief where only past wrongs are involved. Where there is an accrued cause of action for an actual breach of contract or other wrongful act, declaratory relief may be denied.].)
Plaintiff’s sixth cause of action seeks a “judicial declaration confirming that coverage should have been provided Plaintiff . . . so that Plaintiff can be reasonably compensated for the losses sustained.” (Complaint, at ¶ 102.) Plaintiff’s sixth cause of action is seeking to address alleged misconduct in the past, and not to address prospective behavior. In addition, the sixth cause of action appears duplicative to the first cause of action for breach of contract. Accordingly, the demurrer is sustained with 15 days leave to amend.
Defendant shall give notice of the ruling.
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