Judge: Frank M. Tavelman, Case: 22BBCV00479, Date: 2023-04-28 Tentative Ruling

Case Number: 22BBCV00479    Hearing Date: April 28, 2023    Dept: A

LOS ANGELES SUPERIOR COURT

NORTH CENTRAL DISTRICT - BURBANK

DEPARTMENT A

DEMURRER TO ANSWER

ALLEGATIONS: 

Erma L. Miller (“Miller”), TR a minor through her guardian ad litem L.B. Stites, and L.B. Stites (“Stites”) (“collectively “Plaintiffs”) bring this action against Matt Flynn, Bill Gomez, Jerry Paredes, John Grubaugh (“Grubaugh”), and State Farm General Insurance Company (“State Farm”) (collectively “Defendants”). Plaintiffs claim Defendants refused to issue assistance pursuant to an alleged homeowners insurance policy issued by State Farm. Plaintiffs claim Grubaugh was a senior manager at State Farm at the time the denial occurred.

HISTORY: 

On January 3, 2022, Plaintiffs filed their Third Amended Complaint (“3AC”). On February 9, 2023, Grubaugh filed his Amended Answer to the 3AC.

On February 17, 2023, Plaintiffs filed their demurrer to Grubaugh’s Amended Answer. Plaintiffs demur to the Amended Answer on grounds that Grubaugh’s affirmative defenses one through eight do not allege sufficient facts.

On April 17, 2023, Grubaugh filed his Opposition to the demurrer. No Reply was filed.

ANALYSIS: 

I.                LEGAL STANDARD 

The grounds for a demurrer must appear on the face of the pleading or from judicially noticeable matters. (C.C.P. § 430.30(a); Blank v. Kirwan (1985) 39 Cal. 3d 311, 318.) A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) The only issue involved in a demurrer hearing is whether the complaint states a cause of action. (Ibid.)

A demurrer assumes the truth of all factual, material allegations properly pled in the challenged pleading. (Blank v. Kirwan, supra, 39 Cal. 3d at p. 318.) No matter how unlikely or improbable, the plaintiff’s allegations must be accepted as true for the purpose of ruling on the demurrer. (Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.  App. 3d 593, 604.) But this does not include contentions; deductions; conclusions of fact or law alleged in the complaint; facts impossible in law; or allegations contrary to facts of which a court may take judicial notice. (Blank, supra, 39 Cal. 3d at p. 318.)

A general demurrer may be made on the ground that an answer does not state facts sufficient to constitute a defense. (Timberidge Enterprises, Inc. v. City of Santa Rosa (1978) 86 Cal. App. 3d 873, 880.) The answer to a complaint must contain the “general or specific denial of the material allegations of the complaint controverted by the defendant” and a “statement of any new matter constituting a defense.”  (C.C.P. § 431.30(b)(1) & (2).)  

The same pleading of “ultimate facts” rather than evidentiary matter or legal conclusions is required as in pleading a complaint. The answer must aver facts as carefully and with as much detail as the facts which constitute the cause of action and which are alleged in the complaint. (FPI Development, Inc. v. Nakashimi (1991) 231 Cal.App.3d 367, 384.) Defenses must be pleaded in the nature of “yes, the allegations [of the complaint] are true, but . . .”  (Id. at p. 383.) 

II.              MERITS

First Affirmative Defense - Overruled

Grubaugh’s first affirmative defense asserts insurance benefits due and owing to Plaintiffs are limited by the terms and conditions of their insurance contract. Specifically, Grubaugh alleges benefits are limited by the provision of the insurance contract, which limit recovery in instances of fraud and concealment. (Ans. Pg. 7.) Grubaugh alleges Stites misrepresented that he was married to Miller in order to receive insurance coverage to which he was otherwise not entitled. (Ans. pg. 7.)

Plaintiffs argue Grubaugh’s first affirmative defense states insufficient facts because he presents no new matter. Generally, a defendant bears the burden of proving “new matter,” which must be specifically pleaded in the answer. (California Academy of Sciences v. County of Fresno (1987) 192 Cal.App.3d 1436, 1442.) “The phrase ‘new matter’ refers to something relied on by a defendant which is not put in issue by the plaintiff.” (Walsh v. West Valley Mission Community College District (1998) 66 Cal.App.4th 1532, 1546.) Where the answer sets forth facts showing some essential allegation of the complaint is not true, such facts are not new matter but are denials. (Ibid.) Plaintiffs argue this affirmative defense is duplicative because the issue it addresses is covered by Grubaugh’s general denial. Plaintiffs argue this defense states no new facts as to the elements of fraud.

Grubaugh contends his answer does allege facts as to all the elements of fraud. Grubaugh points to the conflicting accounts by Stites of his marital status over the course of several phone conversations as speaking to the element of misrepresentation. (Ans. pg. 6.) Grubaugh points to the Examination Under Oath (“EUO”) testimony of Miller as speaking to the element of scienter. In her EUO testimony, Miller is alleged to deny a common law marriage with Stites and had no knowledge that Stites made such representations to State Farm. (Id. pg. 7.) Grubaugh alleges the common law marriage between Miller and Stites was fabricated by Stites so he could qualify as a resident for insurance purposes, speaking to an intent to defraud. (Id.) Grubaugh points to the allegation State Farm acknowledged Stites as an insured as speaking to State Farm’s justifiable reliance. (Id.) Grubaugh argues the allegations that State Farm made payments for temporary housing under the impression that Stites was an insured speaks to the factor of resulting damage. (Id. pg. 4.)

The Court is satisfied Grubaugh has sufficiently pled his affirmative defense for Fraud. Plaintiff is correct that Fraud must be pled with specificity, however, the Court finds Grubaugh has done so. Grubaugh provides detailed allegations as to the alleged misrepresentations made by Stites and the effect they had upon State Farm issuing payments on the policy. Plaintiff repeatedly alleges Grubaugh’s answers only state legal conclusions and not facts, but they do not endeavor to elaborate on this point.

As such, the demurrer to the first affirmative defense is OVERRULED.

Second Affirmative Defense - Overruled

Grubaugh’s second affirmative defense claims Plaintiffs contributed as a proximate cause in bringing about their injury. Grubaugh argues Plaintiffs’ failure to allow reinspection of the premises and to cooperate with State Farm to secure contractors renders Plaintiff comparatively at fault for not receiving insurance benefits. Grubaugh argues Plaintiffs’ recovery should be limited or entirely barred as a result of their comparative fault. Plaintiff again alleges Grubaugh has pled no facts which could be considered “new matter.”

Grubaugh argues he presents several factual allegations which qualify as new matter. Grubaugh points to the section of the answer which alleges the repeated refusal of Miller and Stites to allow State Farm to inspect the property over a period of three years. (Ans. pg. 3.) Grubaugh’s answer alleges a series of communications in which Miller and Stites indicated to State Farm that they would not allow an inspection of the property and refused to work with State Farm’s retained contractor. (Id.) Gruabugh’s answer also alleges Miller and Stites refused to cooperate with State Farm in regard to temporary housing. (Id. pg. 4.)

The Court finds the lengthy allegations in Grubaugh’s answer are new matter for the purposes of this affirmative defense. The Court finds Grubaugh has sufficiently alleged facts to support his affirmative defense of comparative fault.

As such, the demurrer to the second affirmative defense is OVERRULED.

Third Affirmative Defense - Sustained

Grubaugh’s third affirmative defense claims Plaintiffs’ benefits are limited by the terms and conditions of the following policy forms: FP-7955-CA; Option ID; Option OL; Option JF; FE 1313; FE 3422; and FE 3247.

Plaintiffs argue Grubaugh does not provide sufficient factual allegations as to what these policy forms are and how Plaintiffs violated the terms. Grubaugh clarifies in his reply that the third affirmative defense is meant to invoke FP-7955-CA, which contains the Concealment and Fraud conditions of the policy. (Reply pg. 3.) However, Grubaugh does not clarify why the other named forms were included in this defense. While facts speaking to these forms may have been alleged, Grubaugh has not shown how Plaintiffs violated these various forms. The Court finds Grubaugh has not alleged facts with sufficient particularity to support his third affirmative defense. Grubaugh may be able to allege such facts but has not done so here.

As such the Court SUSTAINS the demurrer to the third affirmative defense with 20 days leave to amend.

Fourth Affirmative Defense - Overruled

Grubaugh’s fourth affirmative defense claims Plaintiff’s recovery is limited by the Insurable Interest and Limit of Liability condition set forth in the policy. Grubaugh specifically argues Stites’ claim is barred in whole as he lacked a property interest. Grubaugh further asserts Miller’s claim is partially barred as a result of her 50% ownership of the property at the time of loss. The Insurable Interest and Limit of Liability Provision reads as follows:

Even if more than one person has an insurable interest in the property covered, we shall not be liable:

a.      to the insured for an amount greater that the insured’s interest.

Plaintiffs argue Grubaugh presents no factual support for his claim that Plaintiffs recovery is limited by this term.

Grubaugh alleges Stites did not have an interest in the property at the time of loss and Miller only had a partial interest. (Ans. pg. 17.) Grubaugh alleges public records show on the date of loss Miller shared 50% ownership interest of the property with a Wilhemina Miller Potter. (Id.) Grubaugh also repeats the allegations of fraudulent misrepresentation of Stites’ marital status.

The Court finds Grubaugh has alleged sufficient facts to support his fourth affirmative defense.

As such, the demurer to the fourth cause of action is OVERRULED.

Fifth and Sixth Affirmative Defense - Overruled

Grubaugh’s fifth and sixth affirmative defenses both allege Plaintiffs’ claims are barred because they failed to mitigate their damages. The fifth affirmative defense is a general claim of failure to mitigate damages, while the sixth defense claims Plaintiffs violated the “Your Duties After Loss” condition in the policy limits Plaintiffs’ recovery. The condition reads as follows:

Your Duties After Loss. After a loss to which this insurance may apply, you shall see that the following duties are performed:

a. give immediate notice to us or our agent …;

b.     protect the property from further damage or loss, make reasonable and necessary temporary repairs required to protect the property, keep an accurate record of repair expenditures;

c. prepare an inventory of damaged or stolen personal property. Show in detail the quantity, description, age, replacement cost and amount of loss. Attach to the inventory all bills, receipts and related documents that substantiate the figures in the inventory;

d. as often as we reasonably require:

(1) exhibit the damaged property;

(2) provide us with records and documents we request and permit us to make copies;

(3) submit to and subscribe, while not in the presence of any other insured:

(a) statements; and

(b) examinations under oath; and

(4) produce employees, members of the insured’s household or others for examination under oath to the extent it is within the insured’s power to do so; and

e. submit to us, within 60 days after the loss, your signed, sworn proof of loss which sets forth, to the best of your knowledge and belief:

(1) the time and cause of loss;

(2) interest of the insured and all others in the property involved and all encumbrances on the property;

(3) other insurance which may cover the loss;

(4) changes in title or occupancy of the property during the term of this policy; and

(5) specifications of any damaged building and detailed estimated for repair of the damage

(6) an inventory of damaged or stolen personal property described in 2.c.;

(7) receipts for additional living expenses incurred and records supporting the fair rental value loss; . . .

Plaintiffs again argue Grubaugh presents no facts upon which to base this defense. Grubaugh argues his lengthy allegations as to Miller’s refusal to allow for reinspection of the home and Plaintiff’s continuing refusal to work with State Farm’s contractor sufficiently allege failure to mitigate damages.

The Court finds Grubaugh has alleged sufficient facts as to Plaintiffs’ failure to mitigate their damages and failure to adhere to the conditions of the policy.

As such the demurrer to the fifth and sixth affirmative defenses is OVERRULED.

Seventh Affirmative Defense - Overruled

Grubaugh’s seventh affirmative defense claims Plaintiffs’ recovery is barred by the doctrine of unclean hands. Plaintiffs argue Grubaugh has not alleged facts speaking to unclean hands with sufficient particularity. Plaintiffs argue Grubaugh has not alleged any supposed wrongful conduct and is planning on ambushing them at trial with indefensible accusations. Plaintiffs claim Grubaugh does not allege facts as to each element of unclean hands but does not specify what these elements are.

Grubaugh argues he has asserted at length what Plaintiffs’ wrongful conduct is in his allegations of fraud and misrepresentation in order to obtain insurance coverage. The Court agrees. Plaintiffs provide no substantive argument with respect to unclean hands, only that Grubaugh has not alleged facts with sufficient particularity. As stated previously, the Court finds Grubaugh’s allegations are sufficiently detailed.

As such, the demurrer to the seventh cause of action is OVERRULED.

Eighth Affirmative Defense - Overruled

Grubaugh’s eighth affirmative defense claims Plaintiffs’ recovery is barred in whole or in part by the Concealment and Fraud condition of the Policy. The condition reads as follows:

Concealment or Fraud. This policy is void as to you and any other insured, if you or any other insured under this policy has intentionally concealed or misrepresented any material fact or circumstance relating to this insurance, whether before or after a loss.

Plaintiffs’ arguments here mirror their arguments in demurring to the first affirmative defense. The Court finds Grubaugh’s allegations are new matter and sufficiently detailed.

As such, the demurrer to the eighth cause of action is OVERRULED.

III.            CONCLUSION

The Court OVERRULES the demurrer to the first, second, fourth, fifth, sixth, seventh, and eighth causes of action.

The Court SUSTAINS the demurrer to the third cause of action with 20 days leave to amend.

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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 

Erma L. Miller, TR a minor through her guardian ad litem L.B. Stites, and L.B. Stites’ Demurrer came on regularly for hearing on April 28, 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 DEMURRER TO THE FIRST, SECOND, FOURTH, FIFTH, SIXTH, SEVENTH, AND EIGHTH CAUSE OF ACTION IS OVERRULED. 

THE DEMURRER TO THE THIRD CAUSE OF ACTION IS SUSTAINED WITH 20 DAYS LEAVE TO AMEND.

DEFENDANT JOHN GRUBAUGH TO GIVE NOTICE, UNLESS ALL PARTIES WAIVED NOTICE.

IT IS SO ORDERED. 

DATE:  April 28, 2023                            _______________________________ 

                                                                         F.M. TAVELMAN, Judge 

Superior Court of California 

County of Los Angeles