Judge Gail Killefer, Case 22STCV09172 2023-04-04 Tentative Ruling

PROCEEDING: AAA’s Demurrer to the Complaint; Motion to Strike Portions of Complaint

TENTATIVE: AAA’s demurrer is sustained. Plaintiffs are granted 20 days leave to amend only as to the first, second, tenth, and eleventh causes of action against Defendant AAA, and not the eighth. Having sustained AAA’s demurrer, the motion to strike is moot. Defendants are to provide notice.

Background

This premises liability action arises in connection with the apartment located at 6655 Obispo Avenue, Apt. 255, Long Beach, California 90805 (the “Subject Property”). Bruce Gayfield, Orpha Gayfield, and Vicki Wilson (“Plaintiffs”) lived in the Subject Property as lessees of Defendants 3101 E. Artesia Apartments, LLC., Amusement Industry Inc. DBA Westland Real Estate Group (“Owner Defendants”).

Plaintiffs allege they were insured for losses sustained at the premises by Defendant Inter-insurance Exchange of the Automobile Club (“AAA”) and its subsidiary, Defendant ACSC Management Services, Inc. (“ACSC”). Plaintiffs allege they retained a renters’ policy with AAA throughout their lease for the Subject Property.

Plaintiffs allege the Subject Property became subjected to an endemic roach infestation, defective structures, and was exposed to an ongoing water intrusion issue which created mold and mildew. Plaintiffs further allege they complained of these conditions to Owner Defendants, but no repairs or clean were made.

Plaintiffs also allege they reported their losses to AAA, which did not inform Plaintiffs of any available benefits. On June 7, 2021, Plaintiffs hired an alleged expert who instructed Plaintiffs to vacate the Subject Property and, on July 1, 2021, Plaintiffs informed Owner Defendants they would be moving out. Plaintiffs allege after AAA received notice of the loss, AAA did not inspect or investigate the premises any of the alleged covered losses as part of their renters’ policy. Plaintiffs allege the ongoing defects and conditions cause them lasting health problems throughout their tenancy.

Plaintiffs’ initial Complaint alleges ten causes of action as follows: (1) breach of express and implied contract against all Defendants; (2) Breach of the Implied Covenant of Good Faith and Fair Dealing against all Defendants; (3) breach of express and implied warranty of habitability against Owner Defendants; (4) nuisance and trespass against Owner Defendants; (5) negligence —premises liability against Owner Defendants; (6) negligence, negligent supervision, negligent management against Owner Defendants; (7) violation of the consumer legal remedies act against Owner Defendants; (8) intentional infliction of emotional distress against all Defendants; (9) fraud, negligent misrepresentation and concealment against all Defendants; and (10) violation of Business & Professions Code §17200 against all Defendants.

On November 23, 2022, the court sustained Moving Defendants’ demurrer to the first, second, eighth, ninth, and tenth causes of action. The court also sustained the demurrer to all claims against ACSC without leave to amend.

On December 8, 2022, Plaintiffs filed their operative First Amended Complaint (“FAC”) alleging the following causes of action: (1) breach of express and implied contract against all Defendants; (2) Breach of the Implied Covenant of Good Faith and Fair Dealing against all Defendants; (3) breach of express and implied warranty of habitability against Owner Defendants; (4) nuisance and trespass against Owner Defendants; (5) negligence —premises liability against Owner Defendants; (6) negligence, negligent supervision, negligent management against Owner Defendants; (7) violation of the consumer legal remedies act against Owner Defendants; (8) intentional infliction of emotional distress against all Defendants; (9) fraud, negligent misrepresentation and concealment against all Defendants; (10) fraud; and (11) violation of Business & Professions Code § 17200 against all Defendants.

AAA now demurs to the first, second, eighth, tenth, and eleventh causes of action of the FAC on the grounds that each fails to allege facts sufficient to state a cause of action. Defendant also moves to strike portions of the Complaint. Plaintiffs oppose both motions.

A demurrer is an objection to a pleading, the grounds for which are apparent from either the face of the complaint or a matter of which the court may take judicial notice. (CCP § 430.30(a); see also Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The purpose of a demurrer is to challenge the sufficiency of a pleading “by raising questions of law.” (Postley v. Harvey (1984) 153 Cal.App. 3d 280, 286.) The court “treat[s] the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. . . .” (Berkley v. Dowds (2007) 152 Cal.App.4th 518, 525 (Berkley).) “In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.” (CCP § 452; see also Stevens v. Sup. Ct. (1999) 75 Cal.App.4th 594, 601.) “When a court evaluates a complaint, the plaintiff is entitled to reasonable inferences from the facts pled.” (Duval v. Board of Trustees (2001) 93 Cal.App.4th 902, 906.)

The general rule is that the plaintiff need only allege ultimate facts, not evidentiary facts. (Doe v. City of Los Angeles (2007) 42 Cal.4th 531, 550.) “All that is required of a plaintiff, as a matter of pleading, even as against a special demurrer, is that his complaint set forth the essential facts of the case with reasonable precision and with sufficient particularity to acquaint the defendant with the nature, source and extent of his cause of action.” (Rannard v. Lockheed Aircraft Corp. (1945) 26 Cal.2d 149, 156-157.) “[D]emurrers for uncertainty are disfavored and are granted only if the pleading is so incomprehensible that a defendant cannot reasonably respond.” (Mahan v. Charles W. Chan Ins. Agency, Inc. (2017) 14 Cal.App.5th 841, 848, fn. 3 (Mahan), citing Lickiss v. Fin. Indus. Regulatory Auth. (2012) 208 Cal.App.4th 1125, 1135.) In addition, even where a complaint is in some respects uncertain, courts strictly construe a demurrer for uncertainty “because ambiguities can be clarified under modern discovery procedures.” (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616.)

Demurrers do not lie as to only parts of causes of action where some valid claim is alleged but “must dispose of an entire cause of action to be sustained.” (Poizner v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 119.) “Generally it is an abuse of discretion to sustain a demurrer without leave to amend if there is any reasonable possibility that the defect can be cured by amendment.” (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.)

A cause of action for¿breach of contract consists of the following elements: (1) the existence of a contract; (2) the plaintiff’s performance or excuse for nonperformance; (3) the defendant’s breach; and (4) the resulting damages to the plaintiff.¿ (Oasis West Realty, LLC v. Goldman¿(2011) 51 Cal.4th 811, 821.)¿“The essence of a contract is the meeting of minds on the essential features of the agreement.” (Krasley¿v. Superior Court¿(1980) 101 Cal.App.3d 425, 431.) A contract “is unenforceable if the parties fail to agree on a material term or if a material term is not reasonably certain.” (Lindsay v. Lewandowski¿(2006) 139 Cal.App.4th 1618, 1623.)¿

A¿written¿contract must be pled verbatim in the body of the complaint, be attached to the complaint and incorporated by reference, or be pled according to its legal effect.¿¿(Bowden v. Robinson¿(1977) 67 Cal.App.3d 705, 718.)¿¿An allegation of an oral agreement must “set[] forth the substance of its relative terms.”¿ (Gautier v. General Tel. Co.¿(1965) 234 Cal.App.2d 302, 305.)¿¿¿

AAA here contends that an analysis of Plaintiffs’ attached policy shows “the Exchange only affords coverage for wind-driven rain when the direct force of wind or hail creates an opening in a roof or wall that allows the rain to enter.” (Dem., 11.) Instead, Plaintiffs’ Complaint alleges damage as a result of “structural defects causing water intrusion...” (Dem., 12; FAC ¶56, 58, 60.) Thus, AAA contends that while Plaintiffs have amended the FAC to incorporate the policy by reference as an exhibit, “these allegations only serve to establish that the claimed cause of loss and damage are excluded from coverage under the terms of Plaintiffs’ renters policy...” (Dem., 11.)

In opposition, Plaintiffs first contend the late-filled demurrer, following Defendant’s counsel’s timely filed declaration regarding efforts to meet and confer, should not be considered. (Opp., 2.) However, the court has discretion to consider late demurrers. (Tuck v. Thuesen (1970) 10 Cal.App.3d 193; McAllister v. County of Monterrey¿¿¿¿¿¿¿ (2007) 147 Cal.App.4th 253.) Therefore, the court exercises its discretion in hearing Defendant’s demurrer.

Plaintiffs then make the conclusory claim that the “FAC clearly alleges the existence of contract between Plaintiffs and Defendants, breach of that contract by Defendants, and resulting damages.” (Opp., 4.)

“First, Plaintiffs’ First Amended Complaint clearly alleges that the water intrusion was the result of ‘wind driven rain, wind damage and sudden and accidental discharges of water.’ See, First Amended Complaint, paragraphs 10, 12, 16. Defendant repeatedly admits these allegations, however, Defendant requests the Court ignore them in order to seek summary adjudication of Plaintiffs’ breach of contract claim by having this Court determine, without presentation of any evidence that there were no openings in any roof or wall caused by wind, and that the only water intrusion occurred through a ‘structurally defective window.’” (Opp., 4.)

However, as this court has previously explained, making conclusory allegations regarding an alleged breach by AAA does not have to be taken as true at this demurrer junction—Plaintiffs must plead sufficient facts, which if taken to be true, can establish a breach by AAA. Such sufficient factual allegations must include verbatim pleadings, or allegations of its legal effect and relative terms.

“Plaintiffs have intentionally misconstrued the Exchange’s argument. The Exchange has argued that Plaintiffs’ own factual allegations reflect that the claimed loss was not covered pursuant to the unambiguous terms of their renters policy. As such, the factual allegations of the FAC are insufficient to state any cause of action against the Exchange. This is the very purpose of a demurrer.

... Plaintiffs focus only on a portion of their allegations in an attempt to avoid the necessary conclusion clear from reading the FAC as a whole: Plaintiffs admit that the alleged damage to Plaintiffs’ property was caused by long-term water intrusion, not by sudden, wind-driven rain creating an opening in the walls or roof through which water entered, as is necessary for coverage.

Plaintiffs argue that they repeatedly allege that the claimed damage was caused by ‘wind driven rain, wind damage and sudden and accidental discharges of water,’ and, therefore, they have adequately alleged that the damage was covered pursuant to the terms of the policy. These general conclusory allegations are belied by the specific, factual allegations of the FAC. Plaintiffs repeatedly and specifically allege that the apartment was not ‘weather tight or water tight’ as ‘the windows did not close or lock,’ that the window was in need of repair, that the claimed damage resulted from ‘structural defects,’ and that the water intrusion was ‘ongoing’ and first began in March 2020.” (Reply, 6; FAC ¶¶ 10, 11, 12, 14, 16, 54, 60.)

Upon review of the FAC, the court agrees. While Plaintiffs’ FAC now attaches a copy of their policy as an incorporated exhibit, Plaintiffs’ conclusory allegations contradict the specific factual scenario as alleged in their pleadings. The FAC fails to plead sufficient facts to show that the losses were covered under the incorporated policy, and that AAA has a duty that it breached as a result. As such, Plaintiffs have plead insufficient facts to show the elements of a breach of contract claim have been met.

For these reasons, AAA’s demurrer is sustained as to the first cause of action.

b. Second Cause of Action: Breach of Covenant of Good Faith and Fair Dealing

In every contract there is an¿implied covenant¿of good faith and fair dealing. (Sutherland v. Barclays American/Mortgage Corp.¿(1997) 53 Cal.App.4th 299, 314.) The covenant of good faith and fair dealing imposes a general duty upon each contracting party “to perform faithfully and not to deprive the other party of the benefits of the contract.” (Floystrup¿v. City of Berkeley Rent Stabilization Bd.¿(1990) 219 Cal.App.3d 1309, 1318.)¿¿

A breach of the¿implied covenant¿of good faith and fair dealing requires something more than breach of the contractual duty itself. (Careau¿& Co v. Security Pacific Business Credit, Inc.¿(1990) 222 Cal.App.3d 1371, 1394 (Careau).) “Thus, allegations which assert such a claim must¿show that the conduct of the defendant, whether or not it also constitutes a breach of a consensual contract term, demonstrates a failure or refusal to discharge contractual responsibilities, prompted not by an honest mistake, bad judgment or negligence but rather by a conscious and deliberate act, which unfairly frustrates the agreed common purposes and disappoints the reasonable expectations of the other party thereby depriving that party of the benefits of the agreement.” (Id.¿at 1395.)¿

AAA again contends the second cause of action is also insufficiently pled, citing 1231 Euclid Homeowners Ass’n v. State Farm Fire & Cas. Co., (2006) 135 Cal. App. 4th 1008, 1021 to assert “a cause of action for bad faith cannot stand if there has been no breach of contract.” (Dem., 13.) AAA again also contends that even if a claim for breach of contract has been sufficiently pled, Plaintiffs’ FAC does not plead additional allegations to show extracontractual tortious conduct. (Dem., 13-15.) AAA contends the FAC fails to plead additional facts regarding any unreasonable conduct by the Exchange. (Dem., 14-15; citing Benavides v. State Farm Gen. Ins. Co., (2006) 136 Cal. App. 4th 1241, 1250; Jordan v. Allstate Ins. Co., (2007) 148 Cal. App. 4th 1062, 1074.)

The court agrees. Thus, having sustained AAA’s demurrer to the first cause of action for breach of contract, the court also finds the second cause of action to be insufficiently pled.

For these reasons, AAA’s demurrer to the second cause of action is also sustained.

The elements of a claim for intentional infliction of emotional distress (“IIED”) are: “(1) extreme and outrageous conduct by the defendant with the intention of causing, or reckless disregard of the probability of causing, emotional distress; (2) the plaintiff's suffering severe or extreme emotional distress; and (3) actual and proximate causation of the emotional distress by the defendant's outrageous conduct.” (Christensen v. Superior Court (1991) 54 Cal.3d 868, 903 (Christensen).)

Under California law, for conduct to be “outrageous” it must be “so extreme as to exceed all bounds of that usually tolerated in a civilized community.” (See Ess v. Eskaton Props., Inc. (2002) 97 Cal.App.4th 120, 130.) Liability does not extend to mere insults, indignities, threats, annoyances, petty oppressions, or other trivialities. (Hughes v. Pair (2009) 46 Cal.4th 1035, 1051.)

AAA again contends a delay or denial of insurance claims are not sufficiently outrageous to sustain a cause of action for IIED. (Dem., 16; citing Coleman v. Republic Indem. Ins. Co. of Cal., (2005) 132 Cal. App. 4th 403, 417.) Moving Defendants contend “There are also no facts indicating the Exchange acted with express intent to cause severe distress, and any assertion they acted recklessly holds little water. While Plaintiffs now insert that the Exchange’s conduct was ‘intentionally undertaken in bad faith’ (FAC, ¶ 149), California law explicitly holds that delay or other improper conduct in adjusting an insurance claim, even if done in bad faith, does not constitute outrageous conduct; as such, there was no probability the alleged adjustment of Plaintiffs’ claims would cause severe emotional distress.” (Id.)

In opposition, Plaintiffs again refer to paragraphs 8-26, 28, 31-35,147-152 of the FAC to contend they have sufficiently alleged “Defendants’ extreme and outrageous conduct justifying imposition of damages for emotional distress.” (Opp., 6-7.)

“Plaintiffs allege that Defendant ignored their claim; failed and refused to conduct any investigation, adjustment, or evaluation of Plaintiffs’ claim, knowing that Plaintiffs’ premises were uninhabitable, and that Plaintiffs were essentially homeless and had to live with their small children in motels during the COVID pandemic; and forcing Plaintiffs to act as Defendant’s claims adjusters; etc.” (Opp., 7.)

However, a review of those paragraphs, and Plaintiffs’ examples in their opposition, shows those allegations to solely involve the administration, and denial, of their insurance claim. (Opp., 7.)

In reply, AAA again reiterates that a denial or delay in investigation of an insurance claim cannot alone support a cause of action of IIED, also citing Schlauch v. Hartford Accident & Indem. Co., (1983) 146 Cal. App. 3d 926, 936 for the contention. (Reply, 9-10.)

Construing the allegations of the Complaint in favor of Plaintiffs, a review of the FAC’s allegations again shows Plaintiffs have merely alleged that the delay and ultimate denial of their insurance claim support their IIED claim, and have made conclusory contentions regarding Defendants’ intent and/or recklessness. (FAC ¶¶148-152.) Plaintiffs have failed to allege sufficient facts regarding the emotional distress they suffered, the extreme or outrageous conduct AAA committed, and the intent and/or recklessness AAA acted with. As such, the IIED claim is insufficiently pled.

For these reasons, AAA’s demurrer as to the eighth cause of action is also sustained.

The elements of a fraud cause of action are: (1) misrepresentation (false representation, concealment, or omission); (2) knowledge of falsity; (3) intent to induce reliance; (4) justifiable reliance; and (5) resulting damage. (Davis v. Southern California Edison Co. (2015) 236 Cal.App.4th 619.) “The defendant's intent to induce the plaintiff to alter his position can be inferred from the fact that defendant knew the plaintiff would act in reliance upon the representation.” (Eddy v. Sharp (1988) 199 Cal.App.3d 858, 864.)

Fraud must be pled in the complaint specifically. General and conclusory allegations are not sufficient. (Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 74; Nagy v. Nagy (1989) 210 Cal.App.3d 1262, 1268.) Unlike most causes of action where the “the policy of liberal construction of the pleadings,” fraud requires particularity, that is, “pleading facts which show how, when, where, to whom, and by what means the representations were tendered.” (Stansfield, supra, 220 Cal.App.3d at 73; Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.) Every element of a fraud cause of action must be alleged both factually and specifically. (Hall v. Department of Adoptions (1975) 47 Cal.App.3d 898, 904; Cooper v. Equity General Insurance (1990) 219 Cal.App.3d 1252, 1262.)

Here, AAA again contends they cannot be liable for any negligence as they owed no duty to Plaintiffs, beyond those contractual in nature. (Dem., 17-18.) AAA also contends the FAC again fails to meet the heightened pleading standard for fraud claims

“as Plaintiffs do not allege who made the statements, when they were made, in what manner, and the speaker’s authority to speak on behalf of Defendants as required by California law. Moreover, Plaintiffs do not sufficiently allege any misrepresentations by the Exchange. Rather, Plaintiffs allege that at the time they procured their policy, the Exchange ‘assured Plaintiffs that they would pay all covered losses and damages due under the renter’s policy, and would do so promptly as required by insurance statutes and regulations, even if the Plaintiffs had pending claims against the Landlord and its insurer.’ (FAC, ¶ 160.) Plaintiffs allege that the Exchange concealed its intent to delay, limit, restrict, and deny coverage to attempt to ‘benefit from the Landlord’s coverage among other reasons’ and upon improper claims handling practices. (Id.) Plaintiffs further allege that the Exchange ‘assured that the evaluation and appraisal of Plaintiffs’ losses and damages would be based upon skill and experience.’ (FAC, ¶ 163.) ...

Importantly, the alleged representations that the Exchange would pay all covered losses was not a representation of a past or existing material fact, nor was it false... As outlined above, Plaintiffs’ loss was not covered pursuant to the terms of the policy. Accordingly, there was no misrepresentation by the Exchange.” (Dem., 17-18.)

In opposition, Plaintiffs point to the alleged representations made by AAA regarding Plaintiffs’ insurance policy claims as enough to substantiate a claim for fraud. (Opp., 7-8.) Plaintiffs also point to paragraphs 3-4, 8-26, 28, 31-35, 159-177 as sufficiently pled to sustain a claim for the fraud cause of action. (Opp., 7-9.) However, a review of those paragraphs of the FAC shows Plaintiffs have again failed to plead facts regarding the “how, when, where, to whom, and by what means” of these alleged representations. (Stansfield, supra, 220 Cal.App.3d at 73.) As AAA mentions again in their reply, Plaintiffs allege insufficient facts to show an intent to deceive, “the individuals who made the representations, their authority to speak, to whom they spoke, what was said or written, and when the representation was made.” (Reply, 10-11.)

The court finds the tenth cause of action to be insufficiently pled. A review of Plaintiffs’ FAC shows Plaintiffs’ claim does not meet the heightened pleading standard required for a fraud cause of action, and asking the court to again take conclusory contentions as true does not alleviate these issues at the demurrer stage.

e. Eleventh Cause of Action: Violation of Business & Professions Code section 17200

Business & Professions Code § 17200 (“UCL”) prohibits “unfair competition,” which is defined to include “any unlawful, unfair or fraudulent business act or practice” and “unfair, deceptive, untrue or misleading advertising” and any act prohibited by Business & Professions Code § 17500. Business & Professions Code § 17500 prohibits false or misleading statements in connection with the disposal of property or performance of services. A cause of action under the UCL must be stated with “reasonable particularity.” (Gutierrez v. Carmax Auto Superstores California (2018) 19 Cal.App.5th 1234, 1261.)

The UCL prohibits: (1) unlawful conduct; (2) unfair business acts or practices; (3) fraudulent business acts or practices; (4) unfair, deceptive, untrue or misleading advertising; and (5) any act prohibited under sections 17500-77.5.¿ UCL actions based on “unlawful” conduct may be based on violations of other statutes.¿ (See¿Klein v. Chevron U.S.A., Inc. (2012) 202 Cal.App.4th 1342, 1383.)

AAA again contends Plaintiffs base their UCL claim on “the same conduct alleged to constitute breach of contract and bad faith.” (Opp., 19.) “Plaintiffs’ conclusory allegations fail to establish that the Exchange’s coverage position was wrongful, let alone any unreasonable or otherwise wrongful conduct by the Exchange in investigating and denying coverage for their claim.” (Id.)

In opposition, Plaintiffs concede the derivative nature of the UCL, contending the eleventh cause of action “is based upon this [conduct alleged as supporting the breach of contract and breach of implied covenant claims] and fraud...” (Opp., 8-9.) Plaintiffs also contend they are allowed to allege and “seek recovery for their damages under all possible theories.” (Opp., 9.)

As the court has sustained AAA’s demurrer to the other causes of action, and as Plaintiffs have conceded the derivative nature of their UCL claim, the court therefore also finds the eleventh cause of action to be insufficiently pled.

For these reasons, AAA’s demurrer to the eleventh cause of action is sustained.

Having sustained AAA’s demurrer, the court now finds AAA’s motion to strike moot.

AAA’s demurrer is sustained. Plaintiffs are granted 20 days leave to amend only as to the first, second, tenth, and eleventh causes of action against Defendant AAA. Having sustained AAA’s demurrer, the motion to strike is moot. Defendants are to provide notice.

[1] Defendant submits the declaration of their attorney, Celia Moutes-Lee (“Moutes-Lee”), to demonstrate that they has fulfilled its statutory meet and confer obligations pursuant to CCP § 430.41 prior to bringing the instant demurrer. Moutes-Lee attests that on January 3, 2023, counsel sent Plaintiffs’ counsel a meet and confer letter outlining the alleged deficiencies in Plaintiffs’ FAC. (Moutes-Lee Decl. ¶ 2.) Moutes-Lee attests Plaintiffs’ counsel later again responded to the correspondence stating she disagreed and would not be amending the Complaint. (Moutes-Lee Decl. ¶¶ 3-4.) As such, Moutes-Lee’s Declaration is sufficient for purposes of CCP § 430.41.