Judge: George F. Bird, Jr., Case: 22CMCV00205, Date: 2022-10-20 Tentative Ruling
Case Number: 22CMCV00205 Hearing Date: October 20, 2022 Dept: B
SUPERIOR COURT OF
THE STATE OF CALIFORNIA
FOR THE COUNTY OF
LOS ANGELES – SOUTH CENTRAL DISTRICT
I. BACKGROUND
Nakia Coward and
Justin Williams (“Plaintiffs”) filed this action on July 8, 2022. The Complaint
(“Compl.”) alleges that on June 26, 2018, Plaintiff Nakia Coward purchased a
homeowner’s insurance policy for her home in Carson, California (“The Home”) and
an automobile insurance policy from Mercury Insurance Services, LLC
(“Defendant”) for a term of one year. (Compl. ¶ 10.) Plaintiff Nakia Coward
alleges that on June 1, 2019, the Home suffered water damage in the walls and
floors. (Ibid.) Plaintiff Nakia Coward filed a claim with Defendant, but
Plaintiffs allege that Defendant fraudulently denied the claim. Defendant cited
the cause of the water damage to be “a leaking roof” and later citing “a preexisting
flat roof.” (Ibid.)
Additionally, on
October 1, 2019, Plaintiff Nakia Coward alleges that, while driving with her
son Plaintiff Justin Williams, their car was struck by another driver. (Compl.
¶ 11.) Plaintiffs reported the accident to Defendant and law enforcement within
48 hours. (Ibid.) Plaintiffs allege that Defendant acted in bad faith
for denying the claim and “pretextually claiming that Mercury’s policies
require that the accident be reported to law enforcement agents within
twenty-four (24) hours of its occurrence.” (Ibid.)
Finally, on
October 1, 2019, Plaintiff Nakia Coward alleges that she had packed the car for
a family vacation and during the night the car was burglarized. (Compl. ¶ 12.) Plaintiffs
reported the theft to law enforcement and Defendant. (Ibid.) Defendant
investigated the incident and Plaintiffs allege that Defendant illegitimately
determined that the burglary report by Plaintiffs was fraudulent. (Ibid.)
Defendant denied the Plaintiffs claim. (Ibid.)
Plaintiffs allege
claims for:
1.
Violation of Article I, §7 of the California Constitution, via California Civil
Code §§ 51, 52, the Unruh Civil Rights Act
2. Breach of
Written Contract
3. Breach of the
Covenant of Good Faith and Fair Dealing
4. Unfair
Competition in Violation of Business & Professions Code §17200, et seq.
5. Bad Faith
Failure to Properly Investigate Insurance Claims
Cause of action four,
for Unfair Competition in Violation of Business & Professions code §17200,
et seq., is set out in the caption of the Complaint, but Plaintiffs do not
address the cause of action in the body of the Complaint. Plaintiffs
continually address cause of action five for Bad Faith Failure to Properly
investigate Insurance Claims as cause of action four. The Court will recognize
cause of action four as Bad Faith Failure to Properly Investigate Insurance
Claims and disregard the caption’s claim for unfair competition.
Plaintiffs should
also note that the first page of each paper filed with the court must leave the
first two inches of space between lines 1 and 7 to the right of the center of
the page blank as space for the use of the clerk. California Rules of Court Rule
2.111(2).
II. DEMURRER TO THE
COMPLAINT
A. Demurrer filed on
September 14, 2022.
Defendant demurrers
to all five causes of action. Defendant argues that the first cause of action
is fatally uncertain because it does not allege facts that Defendant was
motivated in its actions by Plaintiffs membership in a protected class.
(Demurrer, ¶ 1.) Defendant argues that the second and third causes of action
are defective as to Justin Williams, because he is not a party to the insurance
policies, and to Nakia Coward, because the Complaint does not allege dates of
the breach so that Defendant can determine if the action is timely filed. (Demurrer,
¶¶ 2,3.)
Defendant alleges
that the fourth cause of action, Bad Faith Failure to Properly Investigate
Insurance Claims, is uncertain and violates Moradi-Shalal v. Fireman's Fund
Insurance Companies (1988) 46 Cal.3d 287, 304, because it improperly
attempts to assert a private cause of action based on alleged violations of
Insurance Code § 790.03. (Demurrer, ¶ 4.)
B. No opposition to
the demurrer.
Plaintiffs did not
file an opposition to the demurrer.
III. LEGAL STANDARD FOR
EVALUATING A DEMURRER
A demurrer reaches
defects that appear on the face of the complaint. The court considers the
allegations and matters that are subject to judicial notice. All facts are
accepted as true for purposes of the demurrer. Saunders v. Superior Court
(1994) 27 Cal.App.4th 832, 838. A demurrer tests the legal sufficiency of the
allegations. It does not test their truth, the Plaintiff’s ability to prove
them, or the possible difficulty in making such proof. (Id. at 840.)
In testing the
sufficiency of the complaint, the court must assume the truth of (1) the
properly pleaded factual allegations; (2) facts that can be reasonably inferred
from those expressly pleaded; and (3) judicially noticed matters. Blank v.
Kirwan (1985) 39 Cal.3d 311, 318. The court may not consider contentions,
deductions, or conclusions of fact or law. Moore v. Conliffe (1994) 7
Cal.App.4th 634, 638.
Because a demurrer
tests the legal sufficiency of a pleading, the plaintiff must show that the
pleading alleges facts sufficient to establish every element of each cause of
action. Rakestraw v. California Physicians Service (2000) 81 Cal.App.4th
39, 43. Where the pleading fails to state facts sufficient to constitute a
cause of action, courts should sustain the demurrer. Code Civ. Proc., § 430.10,
subd. (e); Zelig v. County of Los Angeles (2002) 27 Cal.App.4th 1112,
1126.
Sufficient facts
are the essential facts of the case "with reasonable precision and with
particularity sufficiently specific to acquaint the defendant with the nature,
source, and extent of his cause of action.” Gressley v. Williams (1961)
193 Cal.App.2d 636, 643-644. Whether the Plaintiff will be able to prove the
pleaded facts is irrelevant. Stevens v. Superior Court (1986) 180
Cal.App.3d 605, 609–610.
A demurrer may also
be sustained if a complaint is “uncertain.” Uncertainty exists where a
complaint’s factual allegations are so confusing, they do not sufficiently
apprise a defendant of the issues it is being asked to meet. Williams v.
Beechnut Nutrition Corp. (1986) 185 Cal.App.3d 135, 139; Code Civ. Proc., §
430.10, subd. (f). A pleading is required to assert general allegations of
ultimate fact. Evidentiary facts are not required. Quelimane Co. v. Stewart
Title Guaranty Co. (1998) 19 Cal.4th 26, 47; Lim v. The.TV Corp.
Internat. (2002) 99 Cal.App.4th 684, 690. However, unlike federal courts,
California state courts are not a notice-pleading jurisdiction; notice alone is
not a sufficient basis for any pleading. California is a fact-pleading
jurisdiction. Merely putting an opposing party on notice is not sufficient. Bach
v. County of Butte (1983) 147 Cal.App.3d 554, 561; See Diodes, Inc. v.
Franzen (1968) 260 Cal.App.2d 244, 250.
IV. DISCUSSION
A. Demurrer to 1st
claim for Violation of Article I, §7 of the California Constitution is SUSTAINED.
“Whoever denies,
aids or incites a denial, or makes any discrimination or distinction contrary
to [the Unruh Act]” is liable for damages and penalties. Code Civ. Proc., § 52,
subd. (a). Plaintiffs must allege facts showing Defendant denied, aided,
incited a denial, and/or made any discrimination or distinction on the basis of
a protected class within the Unruh Act. Here, Plaintiffs do not allege
sufficient facts to demonstrate that Defendant denied their insurance claims on
the basis of their race. For denial of the homeowner’s insurance, Plaintiffs
claim that Defendant investigated the water damage and denied the claim based
on either a leaking roof or a preexisting flat roof. (Compl. ¶ 10.)
Additionally,
Plaintiffs claim that the automobile accident claim was denied because of a “pretextual”
policy denying claims that are not filed with law enforcement within 24 hours.
(Compl. ¶ 11.) The Code of Civ. Proc., § 52, subd. (b) states that the Unruh
Act is not applicable to policies that treat everyone alike. See Turner
v. Ass'n of Am. Med. Colleges (2008) 167 Cal.App.4th 1401, 1408 [“A policy
that is neutral on its face is not actionable under the Unruh Act, even when it
has a disproportionate impact on a protected class”]. Both policies at issue
here, denying a homeowner’s claim based on a preexisting flat roof that is
leaking and denying the automobile claim based on a 24-hour reporting rule, are
neutral on their face. Plaintiffs have not alleged the policies aren’t
generally applicable to policyholders.
Finally,
Plaintiffs claim of burglary was denied after an investigation and
determination that the report was fraudulent. (Compl. ¶ 12.) Though Plaintiffs
strongly contest the conclusion of this investigation as unfounded, Plaintiffs
do not allege that the denial of the claim was due to Defendant’s
discrimination on the basis of a protected class.
Without proper
factual allegations to sustain the claim, the demurrer to the claim of Violation
of Article I, §7 of the California Constitution, via California Civil Code §§
51, 52, the Unruh Civil Rights Act is SUSTAINED.
B. Demurrer to 2nd
and 3rd claims for Breach of Contract and Breach of the Covenant of
Good Faith and Fair Dealing are SUSTAINED.
A claim for breach of contract can be
alleged either verbatim or by stating its legal effect. Plaintiff may also
attach a copy of the contract as an exhibit. Twaite v. Allstate Ins. Co.
(1989) 216 Cal.App.3d 239, 252; Holly Sugar Corp. v. Johnson, (1941) 18
Cal.2d 218, 225; Otworth v. Southern Pacific Transportation Co. (1985)
166 Cal.App.3d 452, 458-459. Here, Plaintiffs do not attach either the
homeowner’s insurance policy nor the automobile insurance policy. Even taking
the factual allegations as alleged in the Complaint as true, which is required
in a demurrer pursuant to Saunders v. Superior Court (1994) 27
Cal.App.4th 832, 838, Plaintiffs fail to quote any portions of the policies
which Defendant has violated.
Plaintiffs simply allege that Defendant
did not comply with the insurance policies because Defendant denied Plaintiffs
claims, but this is a factual conclusion which Plaintiffs do not offer adequate
support for. Defendant investigated both the homeowner’s policy claim and the
burglary of the automobile claim and decided to deny the claims. Plaintiffs do
not offer why such denials would be a breach of the contract. Plaintiffs also state
that their automobile accident claim was denied in compliance with the
contract’s 24-hour reporting to law enforcement rule.
Additionally, Defendant points out that
Plaintiff Justin Williams is not alleged to be a party to any contract with
Defendant, but he was riding in the car with Plaintiff Nakia Coward at the time
she was in an accident. Plaintiffs must allege that Justin Williams is somehow
party to or covered by the automobile insurance contract so that he may have a
claim against Defendant. Without any allegations in the Complaint that Justin
Williams is party to a contract with Defendant, the demurrer to the claims for
Breach of Contract and Breach of the Covenant of Good Faith and Fair Dealing
are SUSTAINED as to Justin Williams.
Because Plaintiffs fail to provide the
contracts or contract language that Defendant allegedly breached, the demurrer to
the claims for Breach of Contract and Breach of the Covenant of Good Faith and
Fair Dealing are SUSTAINED as to all Plaintiffs.
C. Demurrer to the 4th
claim for Bad Faith Failure to Properly Investigate
Insurance Claims is SUSTAINED.
“An unreasonable
failure to investigate amounting to unfair dealing may be found when an insurer
fails to consider, or seek to discover, evidence relevant to the issues of
liability and damages. An insurer's willingness to reconsider its denial of
coverage and to continue an investigation into a claim weighs in favor of its
good faith, while its early closure of an investigation and unwillingness to
reconsider a denial when presented with evidence of factual errors will fortify
a finding of bad faith.” Shade Foods, Inc. v. Innovative Products Sales
& Marketing, Inc. (2000) 78 Cal.App.4th 847, 851, as modified on denial
of reh'g (Mar. 29, 2000). Defendant correctly argues that this claim is
duplicative of a claim for breach of the covenant of good faith and fair
dealing, but the Court recognizes this failure to investigate may be one of
many grounds for a finding of bad faith.
Even if this is construed
as a ground for a claim of a breach of the covenant of good faith and fair
dealing, the complaint fails to allege facts demonstrating that the
investigations performed by Defendant were inadequate. Plaintiffs most detailed
allegation only states that Defendant did not conduct a “full, fair, prompt and
thorough investigation.” (Compl. ¶ 31.) This statement is simply a conclusion
unsupported by any factual allegations and the court will not accept them as
true when evaluating the demurrer. See Moore v. Conliffe (1994) 7
Cal.App.4th 634, 638 [“The court may not consider contentions, deductions, or
conclusions of fact or law”].
The demurrer to
the claim for Bad Faith Failure to Properly Investigate Insurance Claims is
SUSTAINED.
V. LEAVE TO AMEND
“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) 10 Cal.3d 335, 348. Here, Plaintiffs may be able to cure the defects in
the current Complaint by making proper factual allegations and presenting
either the contracts or language from the policies. Though Defendant attempts
to argue that a claim for Bad Faith Failure to Properly Investigate Insurance
Claims is improper under Moradi-Shalal v. Fireman's Fund Insurance Companies
(1988) 46 Cal.3d 287, 304, the case is inapplicable here. Insurance Code §
790.03 is never cited by Plaintiffs as authority which they are bringing their
claim under. Leave to amend is GRANTED for all causes of action.
VI.
MOTION TO STRIKE
A.
Motion
to Strike filed on September 14, 2022.
Defendant filed a separate motion to
strike all punitive damage allegations as well as a motion to strike the
general damages and emotional distress damages allegations under the breach of
contract claim. Defendant contends Plaintiffs did not allege specific facts
showing malice, fraud, or oppression that would support the prayer for punitive
damages. Additionally, Defendant alleges that punitive damages and emotional
distress damages cannot be awarded for a breach of contract claim.
B.
No
opposition to the motion to strike.
Plaintiff did not file an opposition.
VII.
LEGAL STANDARD FOR EVALUATING A MOTION TO STRIKE
Any party, within the time allowed to
respond to a pleading, may serve and file a notice of motion to strike the
whole or any part of the pleading. Code Civ. Proc., § 435, subd. (b)(1). The
court may, upon a motion or at any time in its discretion and upon terms it
deems proper: (1) strike out any irrelevant, false, or improper matter inserted
in any pleading; or (2) strike out all or any part of the pleading not drawn or
filed in conformity with the laws of California, a court rule, or an order of
the court. Code Civ. Proc., § 436, subd. (a)-(b); Stafford v. Schultz
(1954) 42 Cal.2d 767, 782. Grounds for a motion to strike are limited to
matters that appear on the face of the pleading or on any matter of which the
court shall or may take judicial notice. Code Civ. Proc., §437, subd. (a).
To support a claim for punitive damages,
Plaintiff must allege facts and circumstances showing conduct constituting
malice, fraud or oppression. Grieves v. Superior Court (1984) 157
Cal.App.3d 159, 166. In considering a motion to strike punitive damage allegations,
the court considers the complaint as a whole and assumes the allegations are
true. Clauson v. Superior Court (1998) 67 Cal.App.4th 1253, 1255.
The predicate acts to support a claim for
punitive damages must be intended to cause injury or must constitute “malicious
conduct,” defined as “despicable conduct” carried on by Defendant with a
willful and conscious disregard of the rights of others. Civ. Code, § 3294,
subd. (a). Oppressive conduct is defined as “despicable conduct” that subjects
a person to cruel and unjust hardship in conscious disregard of a person’s
rights. Civ. Code, § 3294, subd. (c).
VIII. DISCUSSION
Plaintiffs’ allegations against Defendant do
not identify for the Court any malicious or despicable actions taken by
Defendant. Plaintiffs’ state that Defendant did not fully investigate the
claims, but Plaintiffs do not offer facts as to what conduct Defendant engaged
in that was malicious to constitute an award for punitive damages. Plaintiffs
also allege that Defendant wrongfully denied their claims, but Plaintiffs do
not allege what actions by Defendant made the denial so egregious that it
entitled Plaintiffs to punitive damages.
Moreover, punitive damages are proper in
an action for “breach of an obligation not arising from contract.” Civ. Code, §
3294, subd. (a). “Damages for mental suffering and emotional distress are
generally not recoverable in an action for breach of an ordinary commercial
contract in California.” Erlich v. Menezes (1999) 17 Cal.4th 543, 558. Plaintiff
has pleaded damages on their breach of contract claim that are not recoverable.
For all the foregoing reasons, the motion to strike is GRANTED.
IX.
CONCLUSION
The Demurrer is SUSTAIED with leave to
amend for all causes of action.
The Motion to Strike is GRANTED.
Dated:
October 20, 2022
_________________________
Hon.
George Bird
Judge
of the Superior Court