Judge: Kenneth J. Medel, Case: 37-2022-00009704-CU-IC-CTL, Date: 2024-02-23 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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HALL OF JUSTICE

TENTATIVE RULINGS - February 01, 2024

02/02/2024  09:30:00 AM  C-66 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Kenneth J Medel

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Civil - Unlimited  Insurance Coverage Summary Judgment / Summary Adjudication (Civil) 37-2022-00009704-CU-IC-CTL QUALITY RENTAL CARS INC VS WAWANESA GENERAL INSURANCE COMPANY CAUSAL DOCUMENT/DATE FILED: Motion for Summary Judgment and/or Adjudication, 11/07/2023

Wawanesa's Evidentiary Objections are DENIED. The cited evidence is to the summary of evidence in the Separate Statement. This does not comply with CRC 3.1354, which requires the actual evidence to be cited and quoted.

Wawanesa's Motion for Summary Judgment is GRANTED.

Plaintiff is a car rental company that filed a complaint related to a total loss of one of its vehicles. Plaintiff rented the vehicle to Defendant Dyrotha Moorman in July, 2021. Dyrotha's brother, who was not included as an authorized driver under the rental agreement, drove the vehicle that resulted in a total loss of the vehicle. Plaintiff sued not only Dyrotha and Dyrotha's brother, Quintin, but Dyrotha's insurer, Wawanesa, who ultimately denied coverage under the claim.

The original complaint filed in March, 2022, alleged Breach of Contract against Dyrotha (the contracting party for the vehicle) but also alleged Negligence, Bad Faith, Negligent Interference with Prospective Economic Advantage and Declaratory Relief against Wawanesa.

In February, 2023, Wawanesa demurred to the 2nd Cause of Action for Negligence, 3rd Cause of Action for Bad Faith, and 5th Cause of Action for Declaratory Relief on the ground the Complaint fails to state facts sufficient to constitute these causes of action. The Court agreed and SUSTAINED the demurrer.

The essential problem was that plaintiff – the car rental company – was not the named insured. The Court held there was no duty.

The only cause of action left against Wawanesa is the claim for Negligent Interference with Prospective Economic Advantage against Wawanesa. Wawanesa moves for summary judgment.

'The elements of negligent interference with prospective economic advantage are (1) the existence of an economic relationship between the plaintiff and a third party containing the probability of future economic benefit to the plaintiff; (2) the defendant's knowledge of the relationship; (3) the defendant's knowledge (actual or construed) that the relationship would be disrupted if the defendant failed to act with reasonable care; (4) the defendant's failure to act with reasonable care; (5) actual disruption of the relationship; (6) and economic harm proximately caused by the defendant's negligence.' Redfearn v. Trader Joe's Co., 20 Cal. App. 5th 989, 1005 (2018).

The first element requires that defendant engage in conduct that was 'independently wrongful.' Ixchel Pharma, LLC v. Biogen, Inc., 9 Cal.5th 1130, 1148 (2020) ('. . . the plaintiff must allege that the defendant engaged in an independently wrongful act.'); Della Penna v. Toyota Motor Sales, U.S.A., Inc., 11 Cal. 4th 376, 392-93 (1995) ('a plaintiff seeking to recover for alleged interference with prospective economic relations has the burden of pleading and proving that the defendant's interference was wrongful 'by some measure beyond the fact of the interference itself.'').

The problem is that there is no legal duty from Wawanesa to Quality Rental Car. In order to argue an 'independent wrong', plaintiff relies on the 'breach of the covenant of good faith and fair dealing.' Plaintiff alleges that triable issues of fact exist regarding 'whether Wawanesa breached the covenant of Calendar No.: Event ID:  TENTATIVE RULINGS

3033378  34 CASE NUMBER: CASE TITLE:  QUALITY RENTAL CARS INC VS WAWANESA GENERAL INSURANCE  37-2022-00009704-CU-IC-CTL good faith and fair dealing . . .' (Opp. 8:11-12, 9:21-11:22). Specifically, plaintiff argues that Wawanesa denied the insured's claim and quibbles about the length of the claim. (Undisputed Fact No. 30). Plaintiff alleges that it ''stood in the shoes' of Defendant D. Moorman for purposes of the Claim and Wawanesa's duty of good faith and fair dealing to Plaintiff . . .' (Opp. 13:11-13).

However, this Court has previously ruled: 'Plaintiff argues that because Dyrotha relied on her personal policy with Wawanesa in the rental agreement, Plaintiff can 'step into [Dyrotha's] shoes and initiate a claim for benefits under the policy. (citation omitted) Plaintiff's argument is unpersuasive.'' (NOFE Ex. 24, Court Ruling, p. 5).

The Court previously found that Plaintiff has no standing under Moorman's insurance policy with Wawanesa because Plaintiff is not a party to her contract: Plaintiff is not a party to the insurance policy.

'Someone who is not a party to the contract has no standing to enforce the contract or to recover extra- contract damages for wrongful withholding of benefits to the contracting party.' (Hatchwell v. Blue Shield of California (1988) 198 Cal.App.3d 1027, 1034; see also Wexler v. California Fair Plan Association (2021) 63 Cal.App.5th 55, 63.) 'Plaintiff's allegations in the Complaint acknowledge that Dyrotha, not Plaintiff, is the holder of the insurance policy. (Complaint, ¶¶ 11, 66.)' This Court also found that only Dyrotha Moorman can allege bad faith. As a third-party claimant, Plaintiff cannot allege bad faith liability. Plaintiff is not the named insured under Dyrotha's policy and otherwise lacks standing to bring a cause of action for bad faith. 'Only one with the right to sue an insurance company for contract damages for breach of the insurance policy can also sue the insurance company for tort damages for breach of the covenant of good faith.' (Wexler v. California Fair Plan Association (2021) 63 Cal. App. 5th 55, 62-63.) A third-party claimant is not in privity with an insurance contract issued to another. As such, a third-party claimant cannot bring an action for breach of the covenant of good faith and fair dealing implied in the contract. (Austero v. National Cas. Co. of Detroit, Mich. (1976) 62 Cal.App.3d 511, 515-516, 517; Seretti v. Superior Nat'l Ins. Co. (1999) 71 Cal.App.4th 920, 929-930).

The insured in this case was Dyrotha – not plaintiff. Plaintiff also is not a beneficiary under the policy. In reviewing the facts regarding the denial of the claim, Dyrotha's brother was not an authorized driver for Plaintiff's car under the policy. (Under Cal. Civ. Code § 1939.01, the 'authorized driver' of a rental car does not include the siblings of the renter.) Thus, Wawanesa concluded was no coverage for the loss.

Plaintiff's allegation is that investigation itself took too long. Based on the facts, a significant part of the delay involved an investigation into a potential false insurance claim. Dyrotha initially contended that the car was stolen. Wawanesa contends that it had a statutory obligation to investigate any potentially false insurance claim. (CCR §§ 2698.30(m)(q)). Dyrotha was required to answer questions under oath, but refused to cooperate. Wawanesa denied coverage based on Dyrotha's refusal to cooperate in answering Wawanesa's questions. Plaintiff concedes Dyrotha refused to answer questions about the loss.

Wawanesa takes the position that Dyrotha's false statements about the rental car being stolen independently voids coverage under the policy. Cummings v. Farmers Ins Exch., 202 Cal.App.3d 1407, 37 1231 Euclid Homeowners Ass'n v. State Farm Fire & Cas. Co., 135 Cal. App. 4th 1008, 1020-21 (2006) ('The failure of [a policy's] conditions precedent is a complete defense to [an insured's] breach of contract claim.') Plaintiff cannot establish either an 'actual disruption of [a] relationship.' Nor can it establish an 'economic harm proximately caused by the defendant's negligence.' Redfearn, 20 Cal. App. 5th at 1005.

Wawanesa did not cause Plaintiff to lose a rental car. Dyrotha's brother is the person who crashed the car and made it unavailable for rent. Nor has plaintiff identified a specific rental car customer relationship that Wawanesa interfered with because it denied Dyrotha's insurance claim. Merely alleging that Plaintiff might have rented a repaired or replacement car to a future customer does not meet this standard.

Packaging Sys., Inc. v. PRC-Desoto Int'l, Inc., 268 F. Supp. 3d 1071, 1090 (C.D. Cal. 2017) (applying the more rigorous test for intentional inference with prospective economic advantage: 'PPG argues that Plaintiff has not satisfied this element because it has not identified any specific customer or economic relationship with which PPG interfered. Plaintiff counters that its general identification of its present and potential future end-user customers is sufficient. PPG is correct. '[I]t is essential that the Plaintiff allege facts showing that Defendant interfered with Plaintiff's relationship with a particular individual.'' The basis for the damages is that 'it cannot be disputed that without the Vehicle Plaintiff could not enter into any rental agreements with renters seeking to drive a BMW 320i.' (Opp. 16:6). Even taking this at face value, Plaintiff has no record showing that the demand for its rental cars ever exceeded its supply.

Only before the July 17, 2021 loss did Plaintiff's supply of rental cars ever exceed its available supply.

Calendar No.: Event ID:  TENTATIVE RULINGS

3033378  34 CASE NUMBER: CASE TITLE:  QUALITY RENTAL CARS INC VS WAWANESA GENERAL INSURANCE  37-2022-00009704-CU-IC-CTL (UF Nos. 31-32).

Punitive Damages Wawanesa separately moves to adjudicate the claim for punitive damages. Plaintiff concedes that punitive damages are not available.

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3033378  34