Judge: Frank M. Tavelman, Case: 19BBCV01129, Date: 2023-01-13 Tentative Ruling

Case Number: 19BBCV01129    Hearing Date: January 13, 2023    Dept: A

LOS ANGELES SUPERIOR COURT

NORTH CENTRAL DISTRICT - BURBANK

DEPARTMENT A

MOTION FOR JUDGMENT ON THE PLEADINGS

ALLEGATIONS:

The instant action arises from an alleged insurance agreement between Anoush Semerdjian (“Plaintiff”) and Mercury Insurance Company (“MIC”) and Mercury Insurance Group (“MIG”) (collectively, “Defendants”). Plaintiff contends she purchased a homeowner’s insurance policy (“Policy”) from Defendants  prior to April 7, 2018 that covered her pets. (SAC ¶¶6, 7.)  Plaintiff asserts that on April 7, 2018, Plaintiff’s dog escaped the property and subsequently bit Lode Margolis who sustained substantial injury. (SAC ¶9.) Plaintiff believes that these injuries were a covered loss under the Policy.

Plaintiff filed her initial Complaint on December 15, 2019, and her First Amended Complaint (“FAC”) on July 8, 2020. Plaintiff filed her Second Amended Complaint (“SAC”) on January 5, 2021. The SAC alleges three causes of action: (1) Breach of Contract, (2) Breach of Implied Covenant of Good Faith and Fair Dealing, and (3) Violation of Business & Professional Code §17200.

The Court notes that Exhibit 1 to the FAC is a copy of the Policy Plaintiff claims she purchased, and which Plaintiff believes became effective February 3, 2018. (FAC ¶6, Exh. 1.)  In her SAC, Plaintiff again alleges she purchased a homeowner’s insurance policy from Defendants on this date.  (SAC ¶6.)  While the SAC indicates that “[a] copy of the Policy is attached hereto as Exhibit 1[,]” no exhibits are attached to the SAC. 

The Court, on its own motion, takes judicial notice of Exhibit 1 to the FAC as part of the Court’s record of Plaintiff’s allegations.  It appears that Plaintiff failed to attach it as an exhibit to the SAC, notwithstanding an allegation she purchased a policy from Defendants. The Court notes that in MIC’s motion, they include excerpts of Exhibit 1 to the FAC as Exhibits A [Partial Renewal Declarations], B [Letter to Plaintiff from California Automobile Insurance Company (“CAIC”)], C [1/22/18 Letter to Plaintiff], and D [1/8/15 Letter to Plaintiff]. To the extent the Court relies on documents contained in Exhibit 1, it is doing so based on Exhibit 1 constituting part of the Court record and not MIC’s submission of exhibits in support of the instant motion.

PRESENTATION:

The Court received MIC’s Motion for Judgment on the Pleadings on October 26, 2022; opposition was filed by Plaintiff on December 1, 2022; reply was filed by Defendant on January 5, 2023.  

RELIEF REQUESTED:

MIC moves for judgment on the pleadings as to all causes of action asserted against it in the SAC.

ANALYSIS:

I.          LEGAL STANDARD

The standard for judgment on the pleadings is essentially the same as that for a general demurrer, that is, under the state of the pleadings, together with matters that may be judicially noticed, it appears that a party is entitled to judgment as a matter of law.  (Bezirdjian v. O'Reilly (2010) 183 Cal.App.4th 316, 321-322, citing Schabarum v. California Legislature (1998) 60 Cal.App.4th 1205, 1216) 

When the moving party is a defendant, they must demonstrate either of the following: 

(i)                 The court has no jurisdiction of the subject of the cause of action alleged in the complaint. 

(ii)              The complaint does not state facts sufficient to constitute a cause of action against that defendant. (CCP § 438 (c)(1)(B)(i)-(ii))  

II.        MEET AND CONFER

CCP § 439(a) requires that the moving party meet and confer with the party who filed the pleading that is subject to the motion for judgment on the pleadings at least five days before the date the responsive pleading is due, by telephone or in person, for the purpose of determining if the parties can resolve the objections to be raised in the motion. The moving party must file and serve a declaration detailing their meet and confer efforts.

It does not appear to the Court that the meet and confer requirements have been satisfied to code. No declaration was filed by the moving party detailing an effort to meet and confer about this motion. However, failure to meet and confer is not grounds to grant or deny a motion for judgment on the pleadings. (CCP § 439(a)(4))

III.       MERITS

A.     First Cause of Action for Breach

To state a cause of action for breach of contract, Plaintiff must establish “(1) the existence of the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to the plaintiff.” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821)

If a breach of contract claim “is based on alleged breach of a written contract, the terms must be set out verbatim in the body of the complaint or a copy of the written agreement must be attached and incorporated by reference.” (Harris v. Rudin, Richman & Appel (1999) 74 Cal.App.4th 299, 307.) In some circumstances, a plaintiff may also “plead the legal effect of the contract rather than its precise language.” (Construction Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 198-199.) “In order to plead a contract by its legal effect, plaintiff must ‘allege the substance of its relevant terms. This is more difficult, for it requires a careful analysis of the instrument, comprehensiveness in statement, and avoidance of legal conclusions.’ [Citation.]” (McKell v. Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1489) 

MIC argues that Plaintiff has failed to either attach the relevant insurance policy or to sufficiently state the legal effect of such a contract to state a cause of action. In opposition, Plaintiff claims that MIC relies impermissibly on documents outside the four corners of the SAC.  It is true that MIC refers to documents attached to Plaintiff’s FAC; however, documents attached to the FAC and made part of Plaintiff’s pleadings are part of the Court record. It is also true that Plaintiff’s SAC fails to either attach the relevant contract or to sufficiently plead its legal effect.

Here, Plaintiff alleges a contract existed between MIC and Plaintiff. MIC argues it did not issue the policy, rather the policy was issued by CAIC, and cites to documents submitted by Plaintiff in Exhibit 1 to the FAC in support of this position. In opposition, Plaintiff claims such documents are irrelevant in consideration of a motion for judgment on the pleadings as they are entirely extrinsic to the pleadings themselves.

“The general rule … is that material factual allegations in a verified pleading that are omitted in a subsequent amended pleading without adequate explanation will be considered by the court in ruling on a demurrer to the later pleading.” (Shoemaker v. Myers (1990) 52 Cal. App. 3rd 1, 12-13; see also Sunru Chang v. Carson Estate Co. (1959) 168 Cal.App.2d 110.) Defendant’s reply makes clear that the above rule is supported by an abundance of case law. While exceptions to the general rule exist, they are predicated on the Plaintiff providing an explanation as to why the earlier alleged facts were mistaken. (Avalon Painting Co. v. Alert Lumber Co. (1965) 234 Cal.App.2d 178, 183.)

Here, Plaintiff fails to explain why she failed to attach a copy of the contract which was attached to her FAC. Moreover, Plaintiff’s opposition fails to address that the SAC alleges a copy of the policy is attached as Exhibit 1 without attaching it.  (SAC ¶6, Exh. 1.)  Plaintiff provides no explanation at all as to the omission of the contract in the SAC, thus the Court considers the evidence of contract attached to the FAC. A review of Exhibit 1 to the FAC reveals that the company that issued the policy is indeed CAIC. The Homeowners Insurance Declaration Page lists the Company Name as CAIC, as does the letter attached to the policy. (FAC ¶6, Exh. 1, pgs. 1-3 [PDF pgs. 10-12].) Accordingly, Plaintiff has failed to allege a contractual relationship between herself and MIC.

Even if Plaintiff had adequately plead a contractual relationship, she has not alleged breach of the contract by its legal effect. The SAC avers to the general concept that Plaintiff’s property was insured by “Defendants,” but it does not reference any specific provisions within the policy that claims Plaintiff’s pets qualify as such property. The lone reference to a specific section of the policy is Plaintiff’s invocation of section 1(A). Even then, Plaintiff only alleges that this section requires Defendants indemnify Plaintiff for “direct loss to physical property.” (SAC ¶7.) There is no analysis of the policy which would indicate that loss suffered by Lode Margolis was intended to be covered by the policy. MIC argues that Plaintiff’s pets are considered property and that such property was itself insured against loss. Plaintiff does not allege facts sufficient to claim that injuries caused by Plaintiff’s property to a third-party outside person qualify as a “direct loss to physical property.”

MIC’s motion for judgment on the pleadings as to the first cause of action is GRANTED.

B.     Second Cause of Action

The elements for breach of the covenant of good faith and fair dealing require (1) the existence of a contractual relationship; (2) an implied duty; (3) breach; and (4) causation of damages.¿(Smith v. San Francisco (1990) 225 Cal. App. 3d 38, 49)

In insurance contexts, 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. (Love v. Fire Ins. Exchange (1990) 221 Cal.App.3d 1136, 1151)

Here, Defendant claims Plaintiff’s SAC fails to adequately plead this claim by failng to establish a contractual relationship between MIC and Plaintiff. As previously discussed, Plaintiff fails to allege the existence of a contractual relationship between the parties.

In addition,  Plaintiff fails to sufficiently allege insurance coverage for her pet’s actions. As a result, Plaintiff fails to sufficiently plead the duty element necessary for for breach of the covenant of good faith and fair dealing.

Although with no duty element properly plead, the issue of breach is moot; however, the Court will address it nonetheless.  Plaintiff fails to adequately plead the breach element. Plaintiff alleges that “… Defendants improperly denied her claim for indemnity for the loss alleged above by deliberately, unreasonably and in bad faith [sic] Plaintiff’s claim for indemnity under the Policy by its tortuous reading of the terms of the Policy in order for it to deny Plaintiff the benefit of the bargain for which she had "negotiated" for her purchase of the Policy.” (SAC ¶17.) This statement makes no reference to what these terms were, nor in what manner MIC allegedly tortiously misread them. As written, the SAC does not adequately plead breach of the covenant of good faith and fair dealing.

MIC’s motion for judgment on the pleadings as to the second cause of action is GRANTED.

C.     Third Cause of Action

California’s Unfair Competition Law (“UCL”) prohibits (1) unlawful, (2) unfair, or (3) fraudulent business practices. (Cal. Bus. and Profs. Code §17200.) A practice need only fulfill one of these three “prongs” to be actionable under the statute. (Daugherty v. American Honda Motor Co., Inc. (2006) 144 Cal.App.4th 824, 837.) “A plaintiff alleging unfair business practices [under the UCL] must state with reasonable particularity the facts supporting the statutory elements of the violation.” (Khoury v. Maly’s of Cal. (1993) 14 Cal.App.4th 612, 617) An action is “unfair” if the Defendant’s conduct violates public policy (as expressed in specific constitutional, statutory, or regulatory provisions), threatens an incipient violation of an antitrust law, or violates the policy or spirit of an antitrust law. (Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1366)

Here, the SAC does not adequately plead that MIC employed unfair business practices. Any allegation of unfair business practices is predicated upon the Plaintiff adequately pleading a violation of some underlying policy. Plaintiff points to the breach of the contract as the violation in question however, the SAC fails to sufficiently allege contractual breach by the MIC. As such, Plaintiff cannot rely on such breach as the bases for her claims of unfair business practices.

The fraudulent business practice prong of UCL is distinct from common law fraud. (Day v. AT&T Corp. (1998) 63 Cal.App. 4th 325, 332.) To set forth a cause of action under the fraud prong of UCL, a plaintiff need only allege that “members of the public are likely to be deceived” by the alleged business practice. (Kasky v. Nike, Inc. (2002) 27 Cal.4th 939, 951.) It is not necessary to plead a fraudulent business practice with the same particularity as is required for a common law fraud claim. (See, e.g., Quelimane Co v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 46-47.)

The SAC also fails to plead a violation of the UCL under this standard. The SAC alleges that members of the public would be misled by practices of the MIC but is unclear as to what those practices are. The SAC merely avers that MIC did not deal in good faith with the Plaintiff, an individual, in this one instance. (SAC ¿23.) The SAC alleges false advertising but doesn’t specify any specific business practice, merely stating that Defendant lied to the public about being honest in its business dealings. (SAC ¿23.) As written, it is unclear what business practice Plaintiff alleges violates the UCL.

MIC’s motion for judgment on the pleadings as to the third cause of action is GRANTED.

D.    Leave to Amend

“Whether a motion for judgment on the pleadings should be granted with or without leave to amend depends on “whether there is a reasonable possibility that the defect can be cured by amendment....” (Mendoza v. Continental Sales Co. (2006) 140 Cal.App.4th 1395; citing Blank v. Kirwan (1985) 39 Cal.3d 311, 318) Here the SAC fails to adequately plead its claims but it is reasonably possible that Plaintiff can amend the complaint to further allege the necessary facts to state her claims.

IV.       CONCLUSION

The Court GRANTS the motion for judgment on the pleadings as to all causes of action in the SAC. The motion is granted with 20 days’ leave to amend.

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TENTATIVE RULING:

In the event the parties submit on this tentative ruling, or a party requests a signed order or the court in its discretion elects to sign a formal order, the following form will be either electronically signed or signed in hard copy and entered into the court’s records.

ORDER

Defendant Mercury Insurance Company’s Motion for Judgment on the Pleadings came on regularly for hearing on January 13, 2023, with appearances/submissions as noted in the minute order for said hearing, and the court, being fully advised in the premises, did then and there rule as follows:

THE MOTION IS GRANTED WITH 20 DAYS’ LEAVE TO AMEND.

MERCURY INSURANCE COMPANY TO GIVE NOTICE.

IT IS SO ORDERED.

DATE:  January 13, 2023                              

_______________________________

                                                                        F.M. TAVELMAN, Judge

                                                                        Superior Court of California

County of Los Angeles