Judge: John J. Kralik, Case: 24BBCV00063, Date: 2024-04-05 Tentative Ruling
Case Number: 24BBCV00063 Hearing Date: April 5, 2024 Dept: NCB
North Central District
PATRICK ABELAR,
Plaintiff, v.
STATE FARM GENERAL INSURANCE COMPANY, et al.,
Defendants. |
Case No.: 24BBCV00063
Hearing Date: April 5, 2024 [TENTATIVE] ORDER RE: DEMURRER |
BACKGROUND
A. Allegations
Plaintiff Patrick Abelar (“Plaintiff”) alleges that in 1994, he wanted an umbrella policy in the amount of $2,000,000 to extend all coverages on his existing automobile policy no. P74 1741-815-751, which he purchased through Defendant State Farm Mutual Automobile Insurance Company (“State Farm Mutual”), and which included uninsured motorist coverage (“Auto Policy”). He alleges that he was thus referred to Defendants Auzat Insurance Agency, Inc. and Doug W. Auzat (“Auzat Defendants”) as his State Farm agents. He alleges that he has had a relationship with Auzat Defendants for over 30 years and that Auzat Defendants held themselves out to be an insurance broker and agent with the ability to procure and place sufficient and appropriate insurance coverage for Plaintiff. Plaintiff alleges that Auzat Defendants were informed about the nature of his business and personal insurance needs and that he sought to purchase an Umbrella Policy in the amount of $2,000,000, which included both liability and same coverage as his Auto Policy, which included Uninsured Motorist Coverage. Plaintiff, through Auzat Defendants, procured a State Farm General Umbrella Policy, which was to provide excess coverage for liability beyond the Auto Policy’s coverage, all on the exclusive advice of the Auzat Defendants. Plaintiff alleges he had the Auto Policy (policy no. P74 1741-815-751) and the State Farm General Umbrella Policy (policy no. 71-CR-E249-4) with a $2,000,000 limit per occurrence and payable upon any insurance event. (Compl., ¶19, Exs. A-B.)
Plaintiff alleges that on December 16, 2020, he was in a trench laying down conduit when a third party driving a Dodge Ram 2500 pickup truck struck Plaintiff, running him over. Plaintiff alleges his medical bills are over $2,000,000. Plaintiff alleges that there was a lawsuit against the at-fault parties in the Ventura County Superior Court (Abelar v. Juan Delacruzgonzalez et al., Case No. 56-2021-00560106-CU-PA-VTA) and the parties settled for Delacruzgonzalez’s full policy limits of $15,000. Plaintiff alleges that at the time of the accident, he had underinsured motorist coverage under State Farm Mutual (policy no. 140-5411-815-758), which provided $100,000/$300,000 coverage for an underinsured motorist claim. Plaintiff alleges that he made a claim under the underinsured motorist provision with State Farm Automobile and written/procured by Auzat Defendants. Plaintiff alleges that after giving State Farm the requisite credit of the first recovery of $150,000, he was paid an additional $85,000 on May 25, 2023 under the underinsured motorist provision. On August 24, 2023, Plaintiff made a claim under the underinsured motorist provision of his $2,000,000 Umbrella Policy with State Farm General Insurance Co. (“State Farm General”) and written/procured by Auzat Defendants (policy no. 71-CRE249-4), but State Farm General claimed that the Umbrella Policy did not provide coverage for the December 16, 2020 incident.
The complaint, filed January 9, 2024, alleges causes of action for: (1) breach of contract; (2) negligence; (3) breach of implied covenant of good faith and fair dealing (insurance bad faith); and (4) declaratory relief.
B. Demurrer on Calendar
On February 13, 2024, Defendants filed a demurrer to the 1st, 3rd, and 4th causes of action in the complaint.
On March 22, 2024, Plaintiffs filed an opposition brief.
On March 28, 2024, Defendants filed a reply brief.
DISCUSSION
Defendants State Farm General, State Farm Mutual, Auzat Insurance, and Auzat (“Defendants”) demur to the 1st, 3rd, and 4th cause of action alleged in the complaint.
1. 1st cause of action for breach of contract
The essential elements of a cause of action for breach of contract are: “(1) the existence of the contract, (2) plaintiff's performance or excuse for nonperformance, (3) defendant's breach, and (4) the resulting damages to plaintiff.” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.)
Defendants argue that the breach of contract claim against Auzat Defendants, State Farm General, and State Farm Mutual each fail.
First, Defendants argue that Plaintiff has not alleged a claim against Auzat Defendants as Plaintiff has not alleged what contract existed between Plaintiff and Auzat Defendants. The insurance policies name Plaintiff as the insured, State Farm, and agent Auzat. (See Compl., Exs. A-B.) In the 1st cause of action, Plaintiff alleges that Auzat Defendants were a captive agent for State Farm General and State Farm Mutual and they held themselves out as an insurance broker and agent with the ability to procure and place sufficient and appropriate insurance coverage for Plaintiff, but that Auzat Defendants failed to offer, inform, provide, suggest, and use their expertise and knowledge as a captive insurance agent by not providing Plaintiff with all the property coverage. (Compl., ¶¶39-40.) “California recognizes the general rule that an agent or broker who intentionally or negligently fails to procure insurance as requested by a client--either an insured or an applicant for insurance--will be liable to the client in tort for the resulting damages. [Citation.] Also, a breach of contract cause of action arises where the agent or broker breaches an oral agreement to obtain insurance as requested by the client.” (AMCO Ins. Co. v. All Solutions Ins. Agency, LLC (2016) 244 Cal.App.4th 883, 890.) Here, there may be a claim for breach of contract against Auzat Defendants, but the allegations regarding a contract to obtain insurance on behalf of Plaintiff—whether written or oral—should be more fully alleged. The demurrer to the 1st cause of action as alleged against Auzat Defendants is sustained with leave to amend.
Second, Defendants argue that Plaintiff has not alleged a claim against State Farm Mutual because the complaint establishes that State Farm Mutual satisfied its obligations under the insurance contract. Defendants argue that Plaintiff had an automobile policy with State Farm Mutual which included $100,000 for underinsured motorist claims and $15,000 in settlement funds regarding Delacruzgonzalez’s policy limits was credited, such that State Farm Mutual only had to pay $85,000 under the policy terms. (Compl., ¶¶22-25, Ex. A.) Defendants argue that while Plaintiff seeks additional funds from State Farm General, State Farm Mutual satisfied its obligations under the policy. Based on Exhibit A and the allegations of the complaint, it appears that State Farm Mutual satisfied its obligations under the automobile policy. (Compl., Ex. A [State Farm Mutual Automobile Policy].) The Umbrella Policy is entered between Plaintiff and State Farm General, which is a separate policy. (Compl., Ex. B [State Farm General Umbrella Policy].) Thus, as currently alleged and considering the policies attached to the complaint, Plaintiff has not alleged sufficient facts to state a breach of contract claim against State Farm Mutual. The demurrer to the 1st cause of action as alleged against State Farm Mutual is sustained. As this is the first attempt at the pleading, the Court will allow Plaintiff an opportunity to amend the 1st cause of action as alleged against State Farm Mutual, though it appears unlikely that this cause of action is proper against State Farm Mutual.
Third, Defendants argue that Plaintiff has not alleged a claim against State Farm General because it was Auzat Defendants’ fault for not procuring the correct insurance policy and State Farm General complied with its obligations under the policy that was issued. Defendants argue that the declarations page of the Umbrella Policy show that there is no umbrella coverage in the amount of $2,000,000 for underinsured/uninsured motorist coverage. Indeed, the policy does not include any showing of underinsured/uninsured motorist coverage. (Compl., Ex. B.) Based on the policies attached to the complaint, State Farm General did not have an obligation to cover Plaintiff pursuant to an underinsured/uninsured motorist policy as it did not issue such a policy to Plaintiff. The heart of the issue in the complaint appears to be that Auzat Defendants did not procure the correct insurance as requested by Plaintiff. The demurrer to the 1st cause of action as alleged against State Farm General is sustained. As this is the first attempt at the pleading, the Court will allow Plaintiff an opportunity to amend the 1st cause of action as alleged against State Farm General, though it appears unlikely that this cause of action is proper against State Farm General.
The demurrer to the 1st cause of action is sustained with leave to amend.
2. 3rd cause of action for breach of implied covenant of good faith and fair dealing (insurance bad faith)
“There is an implied covenant of good faith and fair dealing in every contract that neither party will do anything which will injure the right of the other to receive the benefits of the agreement.” (Comunale v. Traders & General Ins. Co. (1958) 50 Cal.2d 654, 658.) “Without a contractual underpinning, there is no independent claim for breach of the implied covenant.” (Fireman's Fund Ins. Co. v. Maryland Casualty Co. (1994) 21 Cal.App.4th 1586, 1599.)
In light of the ruling on the demurrer to the 1st cause of action, the demurrer to the 3rd cause of action is sustained with leave to amend.
3. 4th cause of action for declaratory relief
A cause of action for declaratory relief is a remedy created by CCP § 1060 and it is pleaded if it: (1) sets forth facts showing the existence of an actual controversy relating to the legal rights and duties of the respective parties and (2) requests that the rights and duties be adjudged. (City of Tiburon v. Northwestern Pac. R.R. Co. (1970) 4 Cal.App.3d 160, 170; see CCP § 1060 [identifying the remedy of declaratory relief].) If these requirements are met, the Court must declare the rights of the parties whether or not the facts alleged establish that the plaintiff is entitled to a favorable declaration. (Id.) Declaratory relief is a broad remedy, and the rule that a complaint is to be liberally construed is particularly applicable to one for declaratory relief. (Id.) “Declaratory relief generally operates prospectively to declare future rights, rather than to redress past wrongs” and is a remedy in the interests of “... preventative justice, to declare rights rather than execute them.” (Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 909; Babb v. Superior Court (1971) 3 Cal.3d 841, 848.)
In the 4th cause of action, Plaintiff alleges that by issuing the Umbrella Policy, Defendants represented that Plaintiff was fully covered and that all coverage on the underlying policy would be picked up and extended by the Umbrella Policy. (Compl., ¶70.) Plaintiff alleges that Defendants were obligated to provide Plaintiff with the appropriate coverage under the Umbrella Policy but Defendants breached their duties by failing to provide the proper coverage. (Id., ¶71.) Plaintiff alleges that an actual controversy exists between Plaintiff and Defendants that requires a judicial declaration of the parties’ rights and duties—namely, whether Defendants had a duty to insure and pay benefits to Plaintiff under the Umbrella Policy and their failure to provide the requested and adequate coverage as requested by Plaintiff. (Id., ¶73.)
Defendants argue that Plaintiff has an adequate remedy under the negligence cause of action (for failure to procure the correct policy) and that Plaintiff seeks to redress a past wrong. The Court notes that Plaintiff has not addressed the 4th cause of action in his demurrer.
As pointed out by Defendants, Plaintiff seeks to redress a past wrong by way of the declaratory relief cause of action, which is improper. Further, a review of the 2nd cause of action for negligence addresses the same issues regarding whether Defendants were obligated to procure and provide a different kind of policy and whether they failed to do so. As such, the demurrer to the 4th cause of action is sustained without leave to amend.
CONCLUSION AND ORDER
Defendants State Farm Mutual Automobile Insurance Company, State Farm General Insurance Co., Auzat Insurance Agency, Inc., and Doug W. Auzat’s demurrer to the 1st and 3rd causes of action in the complaint is sustained with 20 days leave to amend. Defendants’ demurrer to the 4th cause of action is sustained without leave to amend.