Judge: John J. Kralik, Case: 24BBCV00113, Date: 2024-07-26 Tentative Ruling

Case Number: 24BBCV00113    Hearing Date: July 26, 2024    Dept: NCB

Superior Court of California

County of Los Angeles

North Central District

Department B

BACKGROUND

A.    Allegations

Plaintiff Cameron Berta (“Plaintiff”) alleges that this action involves an insurance breach of contract and bad faith arising from an insurance claim Plaintiff made to his insurer, Defendant State Farm Mutual Automobile Insurance Company (“State Farm”) in connection with sideswipe damage to Plaintiff’s 2017 Bentley Bentayga.  Plaintiff alleges that on March 28, 2022, while Plaintiff’s wife Emma Harutunyan was driving the vehicle, it was damaged as a result of a sideswipe collision with a dumpster that was jutting into Coldwater Canyon Avenue.  Plaintiff alleges that despite submitting a claim and overwhelming evidence of comprehensive automobile policy benefits due and owing, Defendant refused to pay the policy benefits owed to Plaintiff.  He alleges that Defendant was presented with evidence proving that the loss was caused by a covered event, including damage that directly corresponded point of impact, admission of fault by Plaintiff, and nearly 200 pages of testimony under oath, but Defendant did not adequately consider such information and evidence, and did not reasonably adjust the claim.  He alleges that Defendant has failed and refused to pay Plaintiff under the terms of his insurance policy for the damage caused to his vehicle and Defendant’s refusal to honor its clear obligations under the policy was unjustified and unacceptable.  Thus, Plaintiff filed this action to recover damages and punitive damages for Defendant’s bad faith mishandling of his insurance claim.

The complaint, filed January 16, 2024, alleges causes of action for: (1) breach of contract; and (2) tortious breach of the implied covenant of good faith and fair dealing.  

B.     Motion on Calendar

On June 18, 2024, Defendant filed a motion to strike the punitive damages portions of Plaintiff’s complaint. 

On July 15, 2024, Plaintiffs filed an opposition brief.

On July 18, 2024, Defendant filed a reply brief.

DISCUSSION

            Defendant moves to strike portions of the complaint alleging punitive damages.  (See Notice of Motion at pp. 2-4; Compl., ¶13 at lines 16-20, 4:11-12, 5:22-23, ¶ 48 at lines 5-7, 6:9, 49:11-13, ¶51, ¶52 at lines 19-21, ¶53, ¶55, 7:9-10, ¶78, and Item 2 of the prayer.)

A complaint including a request for punitive damages must include allegations showing that the plaintiff is entitled to an award of punitive damages.  (Clauson v. Superior Court (1998) 67 Cal.App.4th 1253, 1255.)  A claim for punitive damages cannot be pleaded generally and allegations that a defendant acted "with oppression, fraud and malice" toward plaintiff are insufficient legal conclusions to show that the plaintiff is entitled to an award of punitive damages.  (Brousseau v. Jarrett (1977) 73 Cal.App.3d 864, 872.)  Specific factual allegations are required to support a claim for punitive damages.  (Id.)

Civil Code § 3294 authorizes a plaintiff to obtain an award of punitive damages when there is clear and convincing evidence that the defendant engaged in malice, oppression, or fraud.  Section 3294(c) defines the terms in the following manner:

(1)   "Malice" means 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.

(2)   "Oppression" means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person's rights.

(3)   "Fraud" means an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury. 

In the complaint, Plaintiff alleges that Defendant unjustly, unreasonably, and maliciously denied Plaintiff’s claim for insurance benefits related to his covered loss after Plaintiff had promptly filed its claim with Defendant, Defendant without justification denied Plaintiff’s claim on April 29, 2022, and Defendant again denied Plaintiff’s claim on January 20, 2023 under the false pretenses that Plaintiff failed to cooperate with the investigation.  (Compl. at 4:11-12, ¶¶31-42, Ex. A [January 20, 2023 Denial Letter].)  Plaintiff alleges that Defendant knew Plaintiff’s claim was covered under the insurance policy prior to issuing the January 20, 2023 denial letter, Defendant had no reasonable basis to conclude that the damage was man-made and intentionally inflicted, such that Defendant’s denial was on pretextual grounds as an act of malice towards Plaintiff intended to subject him to unjust hardship in conscious disregard of his rights.  (Compl. at 5:22-23, ¶¶44-48.)  Plaintiff alleges that Defendant maliciously refused to tender the benefits to Plaintiff due to the high value of the vehicle and corresponding magnitude of loss and that Defendant’s denial demonstrated deliberate intent to cause injury to Plaintiff, the denial was a malicious effort to create artificial evidentiary hurdles to oppress Plaintiff and deprive him of the benefits under the policy, and Defendant knowingly and falsely asserted that the damage was man-made and intentionally inflicted to delay plaintiff from obtaining insurance benefits.  (Compl. at 6:9-10, ¶¶49-53.)  Paragraph 55 alleges: “Plaintiff is informed and believes that State Farm’s malicious, oppressive, and fraudulent attempts to deprive him of his rights under the insurance contract are part of a broader pattern and practice of denying high-value property damage claims in furtherance of an unlawful profit scheme, in violation of Insurance Code § 790.03(h), that deprives affected individuals of their contractual, common-law, and/or statutory rights by forcing them to engage in protracted and costly litigation against State Farm in situations where State Farm’s liability is reasonably clear.  (Compl., ¶55.)  In the 2^nd cause of action, he alleges that Defendant’s bad faith conduct was intentional malicious, wanton, and oppressive, with a willful and conscious disregard of Plaintiff’s rights under the policy and with intent to deprive Plaintiff of the coverage that Defendant represented Plaintiff would receive, such that section 3294 punitive damages are warranted to punish and deter Defendant from engaging in similar conduct in the future.  (Compl., ¶78.) 

            The January 20, 2023 letter is attached as Exhibit A to the complaint.  In the letter, Defendant states that it has completed its investigation regarding the claim and that Defendant has denied the claim due to a breach of the insured’s duties regarding the insured’s duty to cooperate and violation of the concealment or fraud provision in the policy.  Defendant states that its forensic automobile mechanical engineer thoroughly investigated the vehicle and obtained Plaintiff and Emma Harutyunyan’s examination under oath (EUO), which revealed that that damage did not occur as they claimed; rather, the physical evidence was “grossly inconsistent,” and the damage was “man-made” and “intentionally inflicted.”  The letter included portions of the policy stating that there was no coverage for intentionally damaged vehicles; delineated the insured’s duties regarding notice of the accident and the insured’s duties to cooperate; and that there is no coverage for false statements with the intent to conceal or misrepresent material facts or circumstances. 

            As currently worded, the complaint fails to allege specific facts that Defendant acted intentionally, maliciously, oppressively, or with fraud when denying Plaintiff’s claim.  Based on the allegations of the complaint, Defendant investigated Plaintiff’s claims, undertook their own analysis on how the accident occurred, requested documents from Plaintiff, and ultimately denied coverage after months of review.  At most, Plaintiff has alleged that he submitted an insurance claim to Defendant, Defendant conducted an investigation, and Defendant denied the claim, which was contrary to the result Plaintiff was anticipating.  While the Court takes the allegations of the complaint as true, including allegations regarding Defendant’s intentionality or malicious/oppressive behavior to deny the claim, such allegations must be alleged with the requisite specificity in order to pursue punitive damages.  Currently, the allegations are general and conclusory.  Moreover, the Plaintiff has attached Defendant’s position regarding the claim. Defendant’s position and Plaintiff’s position represent opposing viewpoints, and state mere opinions. There are no specific facts from which it can be determined whether either position is true or untrue. It may be that based on discovery the Plaintiff can show specific statements that are true or untrue and that were made knowing of their truth and for a malicious purposes, but for now what is shown from the few facts alleged is a conflict of opinions regarding the evidence.

            For these reasons, the motion to strike the allegations for punitive damages is granted with leave to amend.

CONCLUSION AND ORDER

Defendant State Farm Mutual Automobile Insurance Company’s motion to strike is granted with 20 days leave to amend.

Defendant shall give notice of this order. 

DATED: July 26, 2024                                                           ___________________________

                                                                                          John Kralik

                                                                                          Judge of the Superior Court