Judge: Elaine Lu, Case: 20STCV36064, Date: 2022-07-26 Tentative Ruling

Case Number: 20STCV36064    Hearing Date: July 26, 2022    Dept: 26

Superior Court of California

County of Los Angeles

Department 26

Procedural Background

On September 21, 2020, Plaintiffs Spotora & Associates, A.P.C. (“S&APC”) and Anthony J. Spotora (“Spotora”) (jointly “Plaintiffs”) filed the instant legal malpractice action.  On June 16, 2021, Plaintiffs filed the operative First Amended Complaint (“FAC”) against Defendants Winget, Spadafora & Schwartzberg, LLP (“WS&SLLP”); Nationwide Insurance Company (“Nationwide”); Scottsdale Insurance Company (“Scottsdale”); Reif Law Group, P.C. (“RLGPC”); Greer & Associates, P.C. (“G&APC”), Bruce A. Fields, A.P.C., (“BAFPC”); James Greer (“Greer”); Brandon Reif (“Reif”); and Bruce Fields (“Fields”) (collectively “Defendants”).  The FAC asserts six causes of action for (1) Professional Negligence against Defendants; (2) Breach of Written Contract against Nationwide and Scottsdale; (3) Breach of the Implied Covenant of Good Faith and Fair Dealing against Nationwide, Scottsdale, RLGPC and Reif; (4) Negligent Misrepresentation against Defendants; (5) Violation of Business and Professions Code section 17200 against Defendants; and (6) Promissory Estoppel against Defendants.

On February 16, 2022, Defendants Nationwide and Scottsdale filed the instant demurrer to the FAC. 

On March 4, 2022, the Court sustained Defendants G&APC and Greer’s demurrer to the FAC and granted Plaintiff leave to amend between July 27, 2022 and August 5, 2022 due to the multiple pending demurrers to the FAC set to be heard by July 26, 2022.  (Order 3/4/22.)  On May 26, 2022, the Court sustained Defendants WS&SLLP’s demurrer to the FAC and granted Plaintiff leave to amend between July 27, 2022 and August 5, 2022.  (Order 5/26/22.)  On May 27, 2022, the Court sustained Defendants Fields and BAFPC’s demurrer to the complaint with leave to amend between July 27, 2022 and August 5, 2022.  (Order 5/27/22.)  On July 15, 2022, the Court sustained Defendants Reif and RLGPC’s demurrer to the complaint with leave to amend between July 27, 2022 and August 5, 2022.  (Order 7/15/22.)

On July 13, 2022, Plaintiffs filed an opposition to the instant demurrer and motion to strike.  On July 19, 2022, Defendants Nationwide and Scottsdale filed a reply.

Allegations of the Operative Complaint

The FAC alleges as follows:

            In 2017, Plaintiffs were named in a malpractice suit brought by a former client (the “2017 Action”).  (FAC ¶ 16.)  The 2017 action was frivolous because Plaintiffs “had only represented one (1) plaintiff for a period of a couple of weeks in 2017 and were never attorneys of record for any of the suing parties in any litigation matter.”  (FAC ¶ 16.) 

“FIELDS and/or BAFPC had worked on those parties’ case and knew and/or should have knew [sic] that there was not even a valid contract between the affected parties in the underlying matter that led to the 2017 Action. Further that G&APC and GREER subsequently took over representation from [Plaintiffs] in that matter. G&APC and GREER became the attorney for the clients and later abandoned those client’s matter. G&APC and GREER’s clients later became the moving parties in the 2017 Action yet G&APC and GREER were not named as a Defendant in the 2017 Action.”  (FAC ¶ 16.)

            Plaintiffs forwarded the malpractice claim to their malpractice insurance carrier Nationwide who assigned WS&SLLP to defend Plaintiffs in the 2017 Action.  (FAC ¶¶ 17-18.)   WS&SLLP assigned Reif as the attorney to represent Plaintiffs in the 2017 Action, but a dispute arose between WS&SLLP and Reif in which Reif left to start his own firm RLGPC.  (FAC ¶¶ 19- 20.)  Plaintiffs were left in the dark during this period.  (FAC ¶ 19.)  Nationwide then transferred Plaintiffs’ action to RLGPC and Reif to defend.  (FAC ¶ 20.)

            “Thereafter RLGPC and REIF represented [Plaintiffs] and FIELDS until the evening before the Mandatory Settlement Conference when he abandoned [Plaintiffs’] case and yet continued to represent FIELDS. RLGPC and REIF in the course of their representation failed to join G&APC and GREER (indispensable necessary parties) and knew and/or should have knew [sic] that there was not even a valid contract between the affected parties in the underlying matter that led to the 2017 Action. Further that FIELDS possessed additional material information during the course of the defense of [Plaintiffs’] case that could have ended that matter in its preliminary phase as based on that material information there never should have been a lawsuit filed against [Plaintiffs].”  (FAC ¶ 21.) 

            “Plaintiffs are informed and believe and thereupon allege that as a direct result of the negligent acts and omissions of Defendants, Plaintiffs have been severely damaged monetarily and certainly would have obtained a better legal result had they been provided with competent legal representation of [Plaintiffs]. And had Defendant attorneys acted as reasonably careful attorneys and performed as reasonable attorneys should [Plaintiffs] would not have been harmed. Furthermore, had the underlying 2017 Action plaintiffs had competent non-negligent representation by G&APC and GREER the 2017 Action would not have been brought against [Plaintiffs].”  (FAC ¶ 22.)

Request for Judicial Notice

Defendants Nationwide and Scottsdale request judicial notice of the following:

A.    Intellectual Property Lawyers Professional Liability Policy number FJS0000636 referenced in the FAC

B.     Substitutions of Attorney filed on March 13, 2019 in Gil, et. al. v. Law Offices of Spotora and Associates, LASC Case Number BC664657

C.     Notice of Settlement and Settlement Agreement filed on September 25, 2019 in Gil, et. al. v. Law Offices of Spotora and Associates, LASC Case Number BC664657

As the Court may take judicial notice of court records and actions of the State, (See Evid. Code, § 452(c)(d)), Defendants Nationwide and Scottsdale’s requests for judicial notice B and C are GRANTED. 

As to Request A, generally the court cannot take judicial notice of the existence of a private contract between the parties.  (See Gould v. Maryland Sound Industries, Inc. (1995) 31 Cal.App.4th 1137, 1145.)  However, when a complaint relies on selected portions of a contract, it is proper for a trial court to judicially notice the contract in its entirety.  (Marina Tenants Assn. v. Deauville Marina Development Co. (1986) 181 Cal.App.3d 122, 130.)  Accordingly, Defendants Nationwide and Scottsdale’s request for judicial notice is GRANTED.  However, the Court does not take judicial notice of the truth of assertions within. (See Herrera v. Deutsche Bank National Trust Co. (2011) 196 Cal.App.4th 1366, 1375.)

Legal Standard

A demurrer can be used only to challenge defects that appear on the face of the pleading under attack; or from matters outside the pleading that are judicially noticeable. (Blank v. Kirwan (1985) 39 Cal 3d 311, 318.) No other extrinsic evidence can be considered (i.e., no “speaking demurrers”). (Ion Equipment Corp. v. Nelson (1980) 110 Cal.App.3d 868, 881.)

A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal. App. 4th 740, 747.)  When considering demurrers, courts read the allegations liberally and in context.  (Taylor v. City of Los Angeles Dep’t of Water & Power (2006) 144 Cal. App. 4th 1216, 1228.)  In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice.  (Donabedian v. Mercury Ins. Co. (2004) 116 Cal. App. 4th 968, 994.)  “A demurrer tests the pleadings alone and not the evidence or other extrinsic matters.  Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed.”  (SKF Farms v. Superior Ct. (1984) 153 Cal. App. 3d 902, 905.)  “The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action.”  (Hahn, supra, 147 Cal.App.4th at 747.) 

Meet and Confer Requirement

Code of Civil Procedure § 430.41, subdivision (a) requires that “[b]efore filing a demurrer pursuant to this chapter, the demurring party shall meet and confer¿in person or by telephone¿with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer.” The parties are to meet and confer at least five days before the date the responsive pleading is due and if they are unable to meet the demurring party shall be granted an automatic 30-day extension.  (CCP § 430.41(a)(2).)  The demurring party must also file and serve a declaration detailing the meet and confer efforts.  (Id.¿at (a)(3).)¿ If an amended pleading is filed, the parties must meet and confer again before a demurrer may be filed to the amended pleading.  (Id.¿at (a).) 

Defendants Nationwide and Scottsdale have satisfied the meet and confer requirement.  (Rojas Decl. ¶¶ 3-6.)

Discussion

            Defendants Nationwide and Scottsdale demurrer to the first, second, third, fourth, fifth, and sixth causes of action.

First Cause of Action: Legal Malpractice

            Defendants Nationwide and Scottsdale contend that the first cause of action fails because Defendants Nationwide and Scottsdale were never Plaintiffs’ Attorneys, and the first cause of action is barred by the statute of limitations.

“To state a cause of action for legal malpractice, a plaintiff must plead ‘(1) the duty of the attorney to use such skill, prudence, and diligence as members of his or her profession commonly possess and exercise; (2) a breach of that duty; (3) a proximate causal connection between the breach and the resulting injury; and (4) actual loss or damage resulting from the attorney's negligence.’ [Citation.]”  (Kumaraperu v. Feldsted (2015) 237 Cal.App.4th 60, 66.) 

Duty

“A key element of any action for professional malpractice is the establishment of a duty by the professional to the claimant. Absent duty there can be no breach and no negligence.” ’ ” (Moore v. Anderson Zeigler Disharoon Gallagher & Gray (2003) 109 Cal.App.4th 1287, 1294.)  “[T]here can be no such liability unless defendant owed a duty to plaintiffs to avoid the asserted wrongdoings. . . . Whether such a duty existed is a question of law and depends on a judicial weighing of the policy considerations for and against the imposition of liability under the circumstances.”  (Goodman v. Kennedy (1976) 18 Cal.3d 335, 342.)

Privity of contract is not required.  “Rejecting the requirement of privity, [the Supreme Court] said in Biakanja: ‘The determination whether in a specific case the defendant will be held liable to a third person not in privity is a matter of policy and involves the balancing of various factors, among which are the extent to which the transaction was intended to affect the plaintiff, the foreseeability of harm to him, the degree of certainty that the plaintiff suffered injury, the closeness of the connection between the defendant's conduct and the injury suffered, the moral blame attached to the defendant's conduct, and the policy of preventing future harm.’ ”  (Goodman, supra, 18 Cal.3d at pp.342–343.)  However, “Courts have generally disregarded the ‘moral blame’ factor in evaluating an attorney's duty to a nonclient.”  (Chang v. Lederman (2009) 172 Cal.App.4th 67, 83, Fn.7.)  Instead, the Court have replaced that factor with the “burden on the profession” factor discussed in Lucas v. Hamm (1961) 56 Cal.2d 583.  (Osornio v. Weingarten (2004) 124 Cal.App.4th 304, 321, Fn. 15.)

“[T]hese factors are: ‘[1] the extent to which the transaction was intended to affect the plaintiff, [2] the foreseeability of harm to him, [3] the degree of certainty that the plaintiff suffered injury, [4] the closeness of the connection between the defendant's conduct and the injury ... [5] the policy of preventing future harm’ [Citation.], and [6] ‘whether the recognition of liability [to the wrong alleged] would impose an undue burden on the profession.’ ”  (Osornio, supra, 124 Cal.App.4th at p.330.)

Pursuant to these factors, “negligence is not among the theories of recovery generally available against insurers[.]”  (Sanchez v. Lindsey Morden Claims Services, Inc. (1999) 72 Cal.App.4th 249, 254.)  However, an insurer has a duty “to employ competent counsel to represent the assured and to provide counsel with adequate funds to conduct the defense of the suit[.]”  (Merritt v. Reserve Ins. Co. (1973) 34 Cal.App.3d 858, 882.)

Here, with regard to the first cause of action, the FAC alleges that Plaintiffs paid the $5,000 deductible and forwarded a copy of the 2017 Action to their professional insurance carrier Nationwide who assigned WS&SLLP to defendant Plaintiffs in the 2017 Action.  (FAC ¶¶ 17-18.)  The FAC further alleges that Nationwide transferred Plaintiffs’ defense in the 2017 to Reif and RLGPC.  (FAC ¶¶ 20-21.)  No allegations are made as to Scottsdale as to the first cause of action.  There is no allegation whatsoever against Scottsdale alleging any duty.  Thus, Plaintiffs fail to state a claim against Scottsdale for professional negligence. 

As to Nationwide, the judicially noticed record demonstrates that Nationwide is not a party to the insurance policy alleged in the FAC.  (Request for Judicial Notice “RJN” Exh. A.)  As noted in the malpractice insurance policy issued to Plaintiffs, the insurance policy was issued by Scottsdale and is between Scottsdale and Plaintiff – not Nationwide.  In fact, Plaintiffs concede in opposition that Plaintiff’s malpractice insurance agreement is with Scottsdale.  (Opp. at p.4:10-11.)  Because Plaintiffs do not allege any policy that Plaintiffs had with Nationwide, Nationwide would not owe Plaintiffs any coverage or duty.  Plaintiff fails to state a claim for negligence – or any tort – against Nationwide.  (Benavides v. State Farm General Ins. Co. (2006) 136 Cal.App.4th 1241, 1250.)

            Accordingly, Defendants Scottsdale and Nationwide’s demurrer to the first cause of action is SUSTAINED.

            Statute of Limitations

“A demurrer based on a statute of limitations will not lie where the action may be, but is not necessarily, barred.  In order for the bar ... to be raised by demurrer, the defect must clearly and affirmatively appear on the face of the complaint; it is not enough that the complaint shows that the action may be barred.”  (Committee for Green Foothills v. Santa Clara County Bd. of Supervisors (2010) 48 Cal.4th 32, 42, [internal citations omitted].)  “An action against an attorney for a wrongful act or omission, other than for actual fraud, arising in the performance of professional services shall be commenced within one year after the plaintiff discovers, or through the use of reasonable diligence should have discovered, the facts constituting the wrongful act or omission, or four years from the date of the wrongful act or omission, whichever occurs first.”  (CCP § 340.6(a).)  “The statute of limitations usually commences when a cause of action ‘accrues,’ and it is generally said that ‘an action accrues on the date of injury.’”  (Vaca v. Wachovia Mortgage Corp. (2011) 198 Cal.App.4th 737, 743, [internal citations omitted].) 

“In order to rely on the discovery rule for delayed accrual of a cause of action, ‘[a] plaintiff whose complaint shows on its face that his claim would be barred without the benefit of the discovery rule must specifically plead facts to show (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence.’ [Citation.] In assessing the sufficiency of the allegations of delayed discovery, the court places the burden on the plaintiff to ‘show diligence’; ‘conclusory allegations will not withstand demurrer.’ [Citation.]”  (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 808.)

Here, the only conduct alleged against Defendants Nationwide and Scottsdale with regard to the first cause of action is that Defendant Nationwide assigned WS&SLLP and then latter assigned Reif and RLGPC to defend Plaintiffs in the 2017 Action.  (FAC ¶¶ 18, 20-21.)  As noted in the judicially noticed record, on March 13, 2019 WS&SLLP was substituted for Reif and RLGPC as defense counsel for Plaintiffs in the 2017 Action.  (RJN Exh. B.) Any negligent appointment of WS&SLLP had to occur before March 13, 2019, when WS&SLLP was substituted out as defense counsel for Plaintiffs in the 2017 Action.  Similarly – at the latest – Reif and RLGPC were at the latest negligently appointed to defend Plaintiffs when they substituted in on March 13, 2019.  However, Plaintiffs did not file the instant action until September 21, 2020 – 1 1/2 years later – well beyond the one-year statute of limitations.  Moreover, Plaintiffs fail to allege any facts showing that Plaintiffs did not discover and could not have reasonably discovered Defendant WS&SLLP or Reif and RLGPC’s negligent conduct earlier.

As the action appears barred by the statute of limitations, Defendant Nationwide and Scottsdale’s demurrer to the first cause of action is also SUSTAINED on this additional, independent ground.

Second and Third Causes of Action: Breach of Contract and Breach of the Implied Covenant of Good Faith and Fair Dealing

            Defendants Nationwide and Scottsdale assert that the second cause of action fails because there is no allegation that Defendants Nationwide and Scottsdale breached the agreement, and there is no claim of damages.

“The elements of a cause of action for breach of contract are: ‘(1) the contract, (2) plaintiff's performance or excuse for nonperformance, (3) defendant's breach, and (4) the resulting damages to plaintiff.’”  (Coles v. Glaser (2016) 2 Cal.App.5th 384, 391 [internal citations omitted].)

“The covenant of good faith and fair dealing, implied by law in every contract, exists merely to prevent one contracting party from unfairly frustrating the other party's right to receive the benefits of the agreement actually made.”  (Guz v. Bechtel Nat. Inc. (2000) 24 Cal.4th 317, 349.)  “It cannot impose substantive duties or limits on the contracting parties beyond those incorporated in the specific terms of their agreement.”  (Id. at pp.349–350.)  Accordingly, “[a] breach of the implied covenant of good faith is a breach of the contract.”  (Thrifty Payless, Inc. v. The Americana at Brand, LLC (2013) 218 Cal.App.4th 1230, 1244.)  Therefore, “[a] breach of the covenant of good faith and fair dealing does not give rise to a cause of action separate from a cause of action for breach of the contract containing the covenant.”  (Smith v. International Brotherhood of Electrical Workers (2003) 109 Cal.App.4th 1637, 1645, Fn.3.)

Moreover, “[a] ‘breach of the implied covenant of good faith and fair dealing involves something beyond breach of the contractual duty itself’ and it has been held that ‘[b]ad faith implies unfair dealing rather than mistaken judgment....’ [Citations.]”  (Careau & Co., supra, 222 Cal.App.3d at p.1394.) 

Accordingly, “[i]f the allegations do not go beyond the statement of a mere contract breach and, relying on the same alleged acts, simply seek the same damages or other relief already claimed in a companion contract cause of action, they may be disregarded as superfluous as no additional claim is actually stated. Thus, absent those limited cases where a breach of a consensual contract term is not claimed or alleged, the only justification for asserting a separate cause of action for breach of the implied covenant is to obtain a tort recovery.”  (Id. at p.1395.)  However, tort recovery for breach of contract, even in bad faith, is limited solely to claims for breach of an insurance contract.  (Freeman & Mills, Inc. v. Belcher Oil Co. (1995) 11 Cal.4th 85, 87-103; See also Erlich v. Menezes (1999) 21 Cal.4th 543, 552–553, [“In holding that a tort action is available for breach of the [implied covenant of good faith] in an insurance contract, we have “emphasized the “special relationship” between insurer and insured, characterized by elements of public interest, adhesion, and fiduciary responsibility.’”)

            Here, the FAC alleges that Plaintiffs entered into an agreement for legal malpractice insurance with Defendants Nationwide and Scottsdale (“Agreement”) in 2002.  (FAC ¶ 32.)  After Plaintiffs were sued for malpractice in the 2017 Action, Defendants Nationwide assigned WS&SLLP and later Reif and RLGPC to Plaintiffs under the insurance policy.  (FAC ¶¶ 18, 20-21.)  Plaintiffs allege that Defendants Nationwide and Scottsdale breached the agreement “by failing to provide competent legal counsel and monitor the changing of legal representation and billing for legal matters rendered allegedly on Plaintiff’s behalf throughout the underlying action.”  (FAC ¶ 27.) 

            Thus, the FAC alleges that Defendants Nationwide and Scottsdale did not deny the claim and provided coverage for the 2017 Action.  The FAC contends that Nationwide and Scottsdale breached the insurance agreement  by providing incompetent counsel in the underlying action.  However, there is no allegation as to what term of the malpractice insurance policy Defendants Nationwide and Scottsdale breached by providing the allegedly incompetent counsel in the 2017 Action.  Moreover, there is no explanation as to how WS&SLLP or Reif and RLGPC were incompetent in the 2017 Action.  As to WS&SLLP, the FAC alleges merely that Defendant WS&SLLP was assigned to represent Plaintiffs in the 2017 Action, WS&SLLP assigned an attorney to represent Plaintiffs, there was a period of weeks without communication, and WS&SLLP was substituted out for the attorney that was already representing Plaintiffs.  (FAC ¶¶ 19-21.)  As to Reif and RLGPC, the only claimed breach is abandoning Plaintiffs the evening before the Mandatory Settlement Conference.  (FAC ¶ 21.)  However, this allegation is irrelevant because there is no allegation as to how Plaintiffs could have obtained a better legal result or what that better legal result would have been had Defendants Reif and RLGPC not abandoned Plaintiffs before the Mandatory Settlement Conference.  As noted in the judicially noticed record, Plaintiffs settled the 2017 Action without paying any settlement.  (RJN Exh. C.) 

            Moreover, Defendants Nationwide and Scottsdale provided coverage, and Plaintiffs settled the 2017 Action without paying any settlement amount. Thus, Plaintiffs fail to allege damages caused by Defendants Nationwide and Scottsdale.

            Further, as noted above, the judicially noticed record shows that Nationwide is not a party to the insurance agreement and thus could not be in breach of an agreement of which Nationwide was not a part.  (RJN Exh. A.)  Accordingly, Defendants Nationwide and Scottsdale’s demurrer to the second cause of action is SUSTAINED.

Fourth Cause of Action: Negligent Misrepresentation

            Defendants Nationwide and Scottsdale assert that the fourth cause of action lacks sufficient specificity.

“The elements of fraud are (a) a misrepresentation (false representation, concealment, or nondisclosure); (b) scienter or knowledge of its falsity; (c) intent to induce reliance; (d) justifiable reliance; and (e) resulting damage.”  (Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294.)    “The elements of negligent misrepresentation are similar to intentional fraud except for the requirement of scienter; in a claim for negligent misrepresentation, the plaintiff need not allege that the defendant made an intentionally false statement, but simply one as to which he or she lacked any reasonable ground for believing the statement to be true.” (Bains v. Moores (2009) 172 Cal.App.4th 445, 454 [internal citations omitted].)  “Under California law, negligent misrepresentation is a species of actual fraud and a form of deceit.”  (Wong v. Stoler (2015) 237 Cal.App.4th 1375, 1388.) 

Both a claim for intentional misrepresentation and a claim for negligent misrepresentation must be pleaded with specificity rather than with general and conclusory allegations.  (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.)  “Fraud allegations ‘involve a serious attack on character’ and therefore are pleaded with specificity.  [Citation.]  General and conclusory allegations are insufficient.  [Citation.]  The particularity requirement demands that a plaintiff plead facts which ‘‘‘show how, when, where, to whom, and by what means the representations were tendered.’’’  [Citation.]”  (Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1469.)  Moreover, “each element must be pleaded with specificity.  [Citations.]”  (Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1166.) 

            Here, the FAC alleges that “Plaintiff is informed and believes and thereon alleges that Defendants Nationwide and Scottsdale and their agents including RLGPC and Reif made untrue, inaccurate and/or misleading representations to Plaintiff and/or failed to divulge vital and necessary information to Plaintiff regarding the defense of Plaintiff’s case in the underlying action and Plaintiff’s payments to Defendants for the underlying action.”  (FAC ¶ 41.)  Defendants Nationwide and Scottsdale’s “representations to Plaintiff regarding the competent legal defense of the underlying action were not true.”  (FAC ¶ 42.) 

            Here, the complaint merely alleges conclusions.  These claims lack any specificity whatsoever and are well below the heightened pleading requirement for a claim of negligent misrepresentation.  The FAC fails to allege what vital information Defendants Nationwide and Scottsdale withheld or what Defendants Nationwide and Scottsdale misrepresented.  Moreover, as noted there is no indication of what Plaintiffs even contend was not competently undertaken by their assigned counsel in the 2017 Action.  Without such allegations, Defendants Nationwide and Scottsdale’s could not have misrepresented that the legal defense of the 2017 was competent in any particular regard.  Moreover, the claim lacks the heightened pleading requirements which require facts showing “‘‘how, when, where, to whom, and by what means the representations were tendered.’’’  [Citation.]”  (Cansino, supra, 224 Cal.App.4th at p.1469.)  Given that no facts have been alleged – let alone the heightened requirement for pleading a claim of fraud – Defendants Nationwide and Scottsdale’s demurrer to the fourth cause of action is SUSTAINED.

Fifth Cause of Action: Violation of Business and Professions Code § 172000

            Defendants Nationwide and Scottsdale assert that the fifth cause of action fails because there is no allegation of unlawful, unfair, or fraudulent business practices.

California’s Unfair Competition Law (“UCL”).   The purpose of the UCL “is to protect both consumers and competitors by promoting fair competition in commercial markets for goods and services. [Citation.]” (Kasky v. Nike, Inc. (2002) 27 Cal.4th 939, 949.)  Thus, the UCL prohibits unlawful, unfair or fraudulent business acts or practices.  (Bus. & Prof. Code, § 17200.)  “The Legislature intended this ‘sweeping language’ to include ‘anything that can properly be called a business practice and that at the same time is forbidden by law.’” (Bank of the West v. Sup. Ct. (1992) 2 Cal.4th 1254, 1266.)  “A plaintiff alleging unfair business practices under these statutes must state with reasonable particularity the facts supporting the statutory elements of the violation.” (Khoury v. Maly's of California, Inc. (1993) 14 Cal.App.4th 612, 619.)

“Because the statute is framed in the disjunctive, a business practice need only meet one of the three criteria to be considered unfair competition.”  (Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1359.)  Section 17200’s “unlawful” prong “borrows violations of other laws ... and makes those unlawful practices actionable under the UCL.”  (Klein v. Chevron U.S.A., Inc. (2012) 202 Cal.App.4th 1342, 1383.)  “[V]irtually any law or regulation—federal or state, statutory or common law—can serve as [a] predicate for a ... [section] 17200 ‘unlawful’ violation.’ ”  (Ibid.)  “A business practice is “fraudulent” within the meaning of section 17200 if it is “likely to deceive the public.”  (Id. at p.1380.) “‘A business practice is unfair within the meaning of the UCL if it violates established public policy or if it is immoral, unethical, oppressive or unscrupulous and causes injury to consumers which outweighs its benefits.’ [Citation.]”  (Nolte v. Cedars-Sinai Medical Center (2015) 236 Cal.App.4th 1401, 1407–1408.)  The determination of whether a business practice is unfair involves an examination of that practice’s impact on its alleged victim, balanced against the reasons, justifications, and motives of the alleged wrongdoer.  (Ibid.)  In brief, the court must weigh the utility of the defendant's conduct against the gravity of the harm to the alleged victim.  (Nolte, Supra, 236 Cal.App.4th at pp. 1407–1408; Cf. Durell v. Sharp Healthcare, supra, 183 Cal.App.4th at 1365 [“[u]nfair” business practices are those which offend an “established public policy” that is tethered to “specific constitutional, statutory, or regulatory provisions”]; Morgan v. AT & T Wireless Services, Inc. (2009) 177 Cal.App.4th 1235, 1254–1255.)

Here, the FAC fails to allege any unlawful, unfair, or fraudulent conduct by Defendants Nationwide and Scottsdale.  Rather, the FAC merely alleges that “Plaintiff is informed and believes and thereon alleges that Defendants Nationwide and Scottsdale and their agents including RLGPC and Reif’s actions, omissions and wrongful billing practices towards Plaintiff constituted a ‘unfair’ business practice in violation of California Business and Professions Code section 17200.”  (FAC ¶ 49.)  There is no indication of what the unlawful, unfair, or fraudulent conduct in the billing practices of Defendants Nationwide and Scottsdale is.  Indeed, there is no allegation that Defendants Nationwide and Scottsdale even caused any harm to Plaintiffs at all. 

            Accordingly, Defendants Nationwide and Scottsdale’s demurrer to the fifth cause of action is SUSTAINED.

Sixth Cause of Action: Promissory Estoppel

            Defendants Nationwide and Scottsdale assert that no promissory estoppel has been alleged against them.

            “The elements of a promissory estoppel claim are ‘(1) a promise clear and unambiguous in its terms; (2) reliance by the party to whom the promise is made; (3) [the] reliance must be both reasonable and foreseeable; and (4) the party asserting the estoppel must be injured by his reliance.’”  (Flintco Pacific, Inc. v. TEC Management Consultants, Inc. (2016) 1 Cal.App.5th 727, 734 [internal citations omitted].)  “A cause of action for promissory estoppel is a claim in equity that substitutes reliance on a promise for consideration ‘in the usual sense of something bargained for and given in exchange.’”  (Fleet v. Bank of America N.A. (2014) 229 Cal.App.4th 1403, 1412–1413 [internal citation omitted].) 

            Here, the FAC alleges that “Plaintiff is informed and believes and thereon alleges that in 2002 and thereafter through the underlying action Defendants Nationwide and Scottsdale and their agents including RLGPC and Reif made specific promises to plaintiff that were clear and unambiguous in their terms regarding the competent legal defense of the underlying action.”  (FAC ¶ 53.)  There is no allegation as to what these clear and unambiguous promises were.  The FAC merely points to nearly two decades and states that some specific promises were made regarding competent legal defense.  Moreover, as noted above, Plaintiffs have not sufficiently alleged that the legal defense was not competent in the 2017 Action.

            Accordingly, Defendants Nationwide and Scottsdale’s demurrer to the sixth cause of action is SUSTAINED.

Leave to Amend

Leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.) The burden is on the plaintiff to show the court that a pleading can be amended successfully. (Goodman v. Kennedy, supra, 18 Cal.3d at p.348; Lewis v. YouTube, LLC (2015) 244 Cal.App.4th 118, 226.) 

            Here, it is unclear whether Plaintiffs may be able to successfully amend the complaint.  Moreover, there appears to be no basis for many of the alleged Defendants to be parties to the instant action, such as Nationwide.  However, this is the first time that the Court has sustained Defendants Nationwide and Scottsdale’s demurrer to the complaint on these grounds.  Therefore, the court finds it is proper to allow Plaintiffs an opportunity to cure the defects discussed in this order.  (See Goodman v. Kennedy (1976) 18 Cal.3d 335, 349; Kong v. City of Hawaiian Gardens Redevelopment Agency (2002) 108 Cal.App.4th 1028, 1037.)

CONCLUSION AND ORDER

            Based on the foregoing, Defendants Nationwide Insurance Company and Scottsdale Insurance Company’s demurrer to the first, second, third, fourth, fifth, and sixth causes of action of the First Amended Complaint is SUSTAINED.  Plaintiffs may file their amended complaint between July 27, 2022 and August 5, 2022.  If Plaintiffs decide to not pursue claims against some of the currently named defendants in the Second Amended Complaint, Plaintiffs should drop those defendants from the caption when filing the Second Amended Complaint.  The defendants who are deleted and omitted from the Second Amended Complaint may also file and serve a motion or ex parte application for a judgment of dismissal from the action with prejudice.

            The case management conference is continued to September 19, 2022 at 8:30 am.

Moving Parties are to give notice and file proof of service of such.

DATED: July 26, 2022                                                           ___________________________

                                                                                          Elaine Lu

                                                                                          Judge of the Superior Court