Judge Gregory Keosian, Case Number: 23STCV30516, Date: 2024-04-08 Tentative Ruling

Defendants State Farm General Insurance Company and Tina Magee’s Demurrer to the Complaint is SUSTAINED as to the third cause of action for negligent misrepresentation, with 30 days leave to amend.

A demurrer should be sustained only where the defects appear on the face of the pleading or are judicially noticed. (Code Civ. Pro., §§ 430.30, et seq.) In particular, as is relevant here, a court should sustain a demurrer if a complaint does not allege facts that are legally sufficient to constitute a cause of action. (See id. § 430.10, subd. (e).) As the Supreme Court held in Blank v. Kirwan (1985) 39 Cal.3d 311: “We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. . . . Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context.” (Id. at p. 318; see also Hahn. v. Mirda (2007) 147 Cal.App.4th 740, 747 [“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. [Citation.]”)

“In determining whether the complaint is sufficient as against the demurrer … if on consideration of all the facts stated it appears the plaintiff is entitled to any relief at the hands of the court against the defendants the complaint will be held good although the facts may not be clearly stated.” (Gressley v. Williams (1961) 193 Cal.App.2d 636, 639.)

“A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures.” (Khoury v. Maly’s of Cal., Inc. (1993) 14 Cal.App.4th 612, 616.) Such demurrers “are disfavored, and are granted only if the pleading is so incomprehensible that a defendant cannot reasonably respond.” (Mahan v. Charles W. Chan Insurance Agency, Inc. (2017) 14 Cal.App.5th 841, 848.)

A demurrer should not be sustained without leave to amend if the complaint, liberally construed, can state a cause of action under any theory or if there is a reasonable possibility the defect can be cured by amendment. (Schifando v. City of Los Angeles, supra, 31 Cal.4th at p. 1081.) The demurrer also may be sustained without leave to amend where the nature of the defects and previous unsuccessful attempts to plead render it probable plaintiff cannot state a cause of action. (Krawitz v. Rusch (1989) 209 Cal.App.3d 957, 967.)

Defendants State Farm General Insurance Company (State Farm) and Tina Magee (Magee) demurrer to the third cause of action for negligent misrepresentation against Magee. They argue that no claim for negligent misrepresentation can be pleaded against Magee for misconduct committed in the scope of her agency relationship with State Farm. (Demurrer at pp. 3–6.) Defendants also argue that Plaintiffs have not sufficiently pleaded the elements of negligent misrepresentation, including justifiable reliance. (Demurrer at pp. 7–9.)

Defendants’ argument as to Magee’s potential liability for torts committed in the scope of employment is unpersuasive and contradicted by authority. Specifically, the court in Bock v. Hansen (2014) 225 Cal.App.4^th 215, held that “a cause of action for negligent misrepresentation can lie against an insurance adjuster.” Defendants attempt to distinguish this holding by noting that the misrepresentations at issue in Bock ultimately resulted in physical injury. (Demurrer at p. 5.)[1] But the Bock court recognized that liability for negligent misrepresentation could also arise “where information is conveyed in a commercial setting for a business purpose,” which was the context in which the adjuster made the communication. (Id. at p. 229.) Defendants cite an unpublished federal case embracing their interpretation of Bock (Feizbakhsh v. Travelers Commercial Insurance Company (C.D. Cal., Sept. 9, 2016, No. LACV1602165JAKEX) 2016 WL 8732296, at *6), the reasoning of which has since faced criticism from other federal decisions. (See Njoku v. GEICO General Insurance Company (N.D. Cal., May 6, 2020, No. 19-CV-07757-JST) 2020 WL 4915433, at *3.) There is no reason to doubt that the Bock court held other than what it expressly indicated. Adjuster liability for negligent misrepresentation is consistent with the ordinary rule that an insurer’s agents have “a duty to abstain from injuring the plaintiff through express misrepresentation, independent of the insurer's implied covenant of good faith and fair dealing.” (Doctors' Co. v. Superior Court (1989) 49 Cal.3d 39, 48.)

However, Defendants are correct that no claim for negligent misrepresentation is stated here. “The elements of negligent misrepresentation are (1) a misrepresentation of a past or existing material fact, (2) made without reasonable ground for believing it to be true, (3) made with the intent to induce another's reliance on the fact misrepresented, (4) justifiable reliance on the misrepresentation, and (5) resulting damage.” (Bock, supra, 225 Cal.App.4^th at p. 231.) Here, although Plaintiffs plead in conclusory terms that they “reasonably relied” on Magee’s denial of their claim, this allegation is not only unsupported by the particularity of pleading required for negligent misrepresentation (See National Union Fire Ins. Co. of Pittsburgh, PA v. Cambridge Integrated Services Group, Inc. (2009) 171 Cal.App.4th 35, 50 [“[T]he causal elements, particularly the allegations of reliance, must be specifically pleaded.”]), but is also affirmatively rebutted by the allegations that Plaintiffs do include. Indeed, immediately after Plaintiffs allege that Magee misrepresented the nature of their damages, there is an allegation — not that they acted in reliance on the claim — but that they directly contested Magee’s denial, demanded that the claim be reopened, demanded a copy of the report upon which Magee purported to rely, and filed a complaint with the Department of Insurance.(Complaint ¶¶ 14–18.)

The demurrer is therefore SUSTAINED with leave to amend to the third cause of action.

[1] The adjuster had communicated a denial of coverage to damage from a falling tree, and recommended that the insureds clean up the damage themselves, during which cleanup one of the plaintiffs was injured. (Bock, supra, 225 Cal.App.4^th at p. 219.)