Judge Holly J. Fujie, Case Number: 21STCV33381, Date: 2023-11-01 Tentative Ruling

DEPARTMENT 56 JUDGE HOLLY J. FUJIE, LAW AND MOTION RULINGS. The court makes every effort to post tentative rulings by 5.00 pm of the court day before the hearing. The tentative ruling will not become the final ruling until the hearing [see CRC 3.1308(a)(2)], and are also available in the courtroom on the day of the hearing [see CRC 3.1308(b)]. If the parties wish to submit on the tentative ruling and avoid a court appearance, all counsel must agree and choose which counsel will give notice. That counsel must 1) call Dept 56 by 8:30 a.m. on the day of the hearing (213/633-0656) and state that all parties will submit on the tentative ruling, and 2) serve notice of the ruling on all parties. If any party declines to submit on the tentative ruling, then no telephone call is necessary and all parties should appear at the hearing in person or by Court Call. Court reporters are not provided, and parties who want a record of motions and other proceedings must hire a privately retained certified court reporter.

MOVING PARTY: Cross-Defendant Certain Underwriters at Lloyd’s of London (“Moving Defendant”)

RESPONDING PARTY: Defendant/Cross-Complainant Caring Heart In Home-Care Services, Inc. (“Caring Heart”)

This action arises from alleged misconduct by Plaintiff’s home-care providers. Plaintiff’s complaint (the “Complaint”) alleges: (1) breach of contract; (2) negligence; (3) elder abuse – financial abuse; and (4) breach of covenant of good faith and fair dealing.

The currently operative first amended cross-complaint (the “FAXC”) alleges: (1) breach of contract; (2) breach of implied covenant of good faith and fair dealing; (3) breach of fiduciary duty; and (4) declaratory relief.

In relevant part, the FAXC alleges: Caring Heart has had a professional liability insurance policy (the “Policy”) with Moving Defendant since August 2016. (FAXC ¶ 16.) The Policy sets forth Moving Defendant’s responsibilities to insure and indemnify Caring Heart in the event of a professional liability incident. (See FAXC ¶¶ 20-24.)[1] In response to the claims raised in the Complaint, Caring Heart tendered its defense to Moving Defendant on or about June 7, 2022. (FAXC ¶ 26.) In October of 2022, Moving Defendant denied Caring Heart’s claim and has since refused to defend Caring Heart in this action. (FAXC ¶¶ 26-27.)

Moving Defendant filed a demurrer (the “Demurrer”) on the grounds that the first and second causes of action are uncertain due to Caring Heart’s failure to attach a copy of the Policy to the FAXC and fail to state sufficient facts to constitute a cause of action, and the FAXC fails to state facts sufficient to constitute a cause of action with respect to the third and fourth causes of action. Moving Defendant also filed a motion to strike (the “Motion”) portions of the FAXC concerning several forms of damages requested in the FAXC.[2]

Moving Defendant’s Requests for Judicial Notice are GRANTED as to the existence of the court documents, but not to the truth of the matters stated therein. (Fremont Indemnity Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 113.)

A demurrer tests the sufficiency of a complaint as a matter of law. (Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1358.) The court accepts as true all material factual allegations and affords them a liberal construction, but it does not consider conclusions of fact or law, opinions, speculation, or allegations contrary to law or judicially noticed facts. (Shea Homes Limited Partnership v. County of Alameda (2003) 110 Cal.App.4th 1246, 1254.) With respect to a demurrer, the complaint must be construed liberally by drawing reasonable inferences from the facts pleaded. (Rodas v. Spiegel (2001) 87 Cal.App.4th 513, 517.) A demurrer will be sustained without leave to amend if there exists no reasonable possibility that the defect can be cured by amendment. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)

Demurrers for uncertainty are disfavored. (Chen v. Berenjian (2019) 33 Cal.App.5th 811, 822.) 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. (Id.)

The elements of a claim for breach of contract are: (1) the contract; (2) the plaintiff’s performance or excuse for nonperformance; (3) the defendant’s breach; and (4) damage to plaintiff therefrom. (Wall Street Network, Ltd. v. New York Times Co. (2008) 164 Cal.App.4th 1171, 1178.) A plaintiff may plead the legal effect of the contract rather than its precise language. (See Construction Protective Services, Inc. v. TIG Specialty Insurance Co. (2002) 29 Cal.4th 189, 198-99.)

Moving Defendant’s arguments regarding the sufficiency of the first and second causes of action are based on Caring Heart’s failure to attach a copy of the Policy to the FAXC. The Court finds that the absence of the Policy’s full text from the FAXC does not render the first and second causes of action uncertain. The FAXC identifies and quotes relevant provisions of the Policy that Moving Defendant allegedly breached. Accordingly, the Court finds that the omission of a full copy of the Policy is not fatal to Caring Heart’s contractual claims because the FAXC sufficiently alleges the legal effect of the Policy’s terms. (See Miles v. Deutsche Bank National Trust Co. (2015) 236 Cal.App.4th 394, 402; Construction Protective Services, Inc. v. TIG Specialty Insurance Co. (2002) 29 Cal.4th 189, 198-99.) The Court therefore OVERRULES the Demurrer to the first and second causes of action.

To state a cause of action for breach of fiduciary duty, a plaintiff must allege: (1) the existence of a fiduciary relationship; (2) breach of that relationship; and (3) damages. (Shopoff & Cavallo LLP v. Hyon (2008) 167 Cal.App.4th 1489, 1509.)

A fiduciary relationship is any relation existing between parties to a transaction wherein one of the parties is in duty bound to act with the utmost good faith for the benefit of the other party. (Wolf v. Superior Court (2003) 107 Cal.App.4th 25, 29.) Such a relation ordinarily arises where a confidence is reposed by one person in the integrity of another, and in such a relation the party in whom the confidence is reposed, if he voluntarily accepts or assumes to accept the confidence, can take no advantage from his acts relating to the interest of the other party without the latter's knowledge or consent. (Id.) Before a person can be charged with a fiduciary obligation, he must either knowingly undertake to act on behalf and for the benefit of another or must enter into a relationship which imposes that undertaking as a matter of law. (Hasso v. Hapke (2014) 227 Cal.App.4th 107, 140.) Fiduciary duties are imposed by law in certain technical, legal relationships such as those between partners or joint venturers, trustees and beneficiaries, principals and agents, and attorneys and clients. (Id.) An insurer is not a fiduciary, and owes no obligation to consider the interests of its insured above its own. (Morris v. Paul Revere Life Ins. Co. (2003) 109 Cal.App.4th 966, 973.) An insurer's breach of its “fiduciary-like duties” is adequately redressed by a claim for breach of the covenant of good faith and fair dealing implied in the insurance contract. (Tran v. Farmers Group, Inc. (2002) 104 Cal.App.4th 1202, 1212.)

Moving Defendant argues that the FAXC fails to allege the existence of a fiduciary relationship because an insurer and its insured are not fiduciaries as a matter of law. The Opposition does not raise arguments that refute or respond to Moving Defendant’s position, and the Court accordingly finds that Caring Heart has conceded this issue to Moving Defendant. (See Nelson v. Pearson Ford Co. (2010) 186 Cal.App.4th 983, 1021.) Nor does the Opposition provide facts that suggest this deficiency in the FAXC may be cured by further amendment. The Court therefore SUSTAINS the Demurrer to the third cause of action without leave to amend.

Under CCP section 1060, any person interested under a written instrument, excluding a will or a trust, or under a contract, or who desires a declaration of his or her rights or duties with respect to another, or in respect to, in, over or upon property, or with respect to the location of the natural channel of a watercourse, may, in cases of actual controversy relating to the legal rights and duties of the respective parties, bring an original action or cross-complaint in the superior court for a declaration of his or her rights and duties in the premises, including a determination of any question of construction or validity arising under the instrument or contract. (CCP § 1060.) The remedy of declaratory relief is cumulative and does not restrict other remedies. (See id.)

To state a declaratory relief claim, the plaintiff must allege a proper subject of declaratory relief and an actual controversy involving justiciable questions relating to the party’s rights or obligations. (See Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 909.) Declaratory relief operates prospectively, serving to set controversies at rest before obligations are repudiated, rights are invaded or wrongs are committed. (Kirkwood v. California State Automobile Assn. Inter-Ins. Bureau (2011) 193 Cal.App.4th 49, 59.) Thus, the remedy is to be used to advance preventive justice, to declare rather than execute rights. (Id.)

The Demurrer argues that the declaratory relief claim is insufficient because it is duplicative of the first and second causes of action. CCP section 1060 permits declaratory relief as a cumulative remedy. Furthermore, as discussed above, the contractual dispute at the heart of the declaratory relief claim is sufficiently alleged. The Court therefore OVERRULES the Demurrer to the fourth cause of action.

Under CCP section 436, a motion to strike either: (1) strikes any irrelevant, false or improper matter inserted in any pleading; or (2) strikes any pleading or part thereof not drawn or filed in conformity with the laws of this state, a court rule or order of court. (CCP § 436, subds. (a)-(b).) “Irrelevant” matters include: allegations not essential to the claim, allegations neither pertinent to nor supported by an otherwise sufficient claim or a demand for judgment requesting relief not support by the allegations of the complaint. (CCP § 431.10, subd. (b).)

Moving Defendant seeks to strike allegations concerning emotional damages, punitive damages, and attorney’s fees from the FAXC.

As an initial matter, emotional damages are only alleged in connection with the breach of fiduciary duty cause of action. In light of the Court’s analysis of the sufficiency of this claim in its consideration of the Demurrer, the Motion is MOOT with respect to the damages alleged in connection with the third cause of action.

Under Civil Code section 3294, subdivision (a), a plaintiff may recover punitive damages in an action for breach of an obligation not arising from contract when the plaintiff proves by clear and convincing evidence that the defendant has been guilty of oppression, fraud or malice. (Civ. Code § 3294, subd. (a).) Malice is conduct which is intended by the defendant to cause injury to the plaintiff, or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others. (Civ. Code § 3294, subd. (c)(1).) Despicable conduct is conduct which is so vile, base, contemptible, miserable, wretched or loathsome that it would be looked down upon and despised by ordinary decent people. (Mock v. Michigan Millers Mutual Ins. Co. (1992) 4 Cal.App.4th 306, 331.) Oppression is defined as despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights. (Civ. Code § 3294, subd. (c)(2).) To state a claim for punitive damages against an employer based upon the acts of the employees, the plaintiff must plead that the employer had advance knowledge of the unfitness of the employee and employed him or her with a conscious disregard of the rights or safety of others or authorized or ratified the wrongful conduct for which the damages are awarded or was personally guilty of oppression, fraud, or malice. (Civ. Code § 3294, subd. (b).) With respect to a corporate employer, the advance knowledge and conscious disregard, authorization, ratification or act of oppression, fraud, or malice must be on the part of an officer, director, or managing agent of the corporation. (Id.)

To state a prima facie claim for punitive damages, the plaintiff must both allege the elements set forth in Civil Code section 3294 and include specific allegations showing that the defendant’s conduct was oppressive, fraudulent, or malicious. (See Today’s IV, Inc. v. Los Angeles County Metropolitan Transportation Authority (2022) 83 Cal.App.5th 1137, 1193.) Punitive damages may not be pleaded generally. (Id.) In order to survive a motion to strike an allegation of punitive damages, the ultimate facts showing an entitlement to such relief must be pled by a plaintiff. (Clauson v. Superior Court (1998) 67 Cal.App.4th 1253, 1255.) In passing on the correctness of a ruling on a motion to strike, judges read allegations of a pleading subject to a motion to strike as a whole, all parts in their context, and assume their truth. (Id.)

The allegations regarding punitive damages are conclusory and are insufficient to satisfy the heightened standard for alleging an entitlement to punitive damages, particularly against a corporate entity. (See FAXC ¶ 47.) The Court therefore GRANTS the Motion with respect to the allegations concerning punitive damages.[3]

Attorney’s Fees
Attorney’s fees are generally not recoverable unless authorized by a contract, statute or law. (CCP § 1033.5, subd. (a)(10).) When an insurer's tortious conduct reasonably compels the insured to retain an attorney to obtain the benefits due under a policy, it follows that the insurer should be liable in a tort action for that expense. The attorney's fees are an economic loss—damages—proximately caused by the tort. (Brandt v. Superior Court (1985) 37 Cal.3d 813, 817 (“Brandt”).) These fees must be distinguished from recovery of attorney's fees qua attorney's fees, such as those attributable to the bringing of the bad faith action itself. (Id.)

Attorney’s fees are alleged with in connection with the first and second causes of action. Caring Heart may allege attorney’s fees as an element of damages with respect to the breach of good faith and fair dealing claim under Brandt. With respect to the breach of contract claim, the FAXC does not allege that the Policy includes a provision providing for recoverable attorney’s fees in the event of a dispute concerning its terms. The Court therefore GRANTS the Motion with respect to the allegation regarding attorney’s fees stated in connection with the first cause of action with 20 days leave to amend.

Parties who intend to submit on this tentative must send an email to the Court at SMC_DEPT56@lacourt.org as directed by the instructions provided on the court website at www.lacourt.org. If the department does not receive an email and there are no appearances at the hearing, the motion will be placed off calendar.

[1] Although the pleading alleges that the Policy is included as an attachment, the FAXC does not include a copy of the document. (See FAXC ¶ 19.) The body of the FAXC includes the text of certain provisions of the Policy. (See FAXC ¶¶ 20-24.)

[2] The Motion is unopposed. Any opposition papers were required to have been filed and served at least nine court days before the hearing under California Code of Civil Procedure (“CCP”) section 1005, subdivision (b). The Court notes that Caring Heart’s opposition to the demurrer (the “Opposition”) includes arguments that respond to the points raised in the Motion.

[3] The Court has not considered the extrinsic evidence presented in the Opposition.