Judge Kerry Bensinger, Case Number: 23STCV20030, Date: 2024-02-13 Tentative Ruling

MOVING PARTY: Defendants Automobile Club of Southern California and Interinsurance Exchange of the Automobile Club

This is a breach of contract action. On November 1, 2023, Plaintiff, Neil H. Cogan, filed the operative First Amended Complaint (FAC) against Defendants Automobile Club of Southern California (“Auto Club”), Interinsurance Exchange of the Automobile Club (“Interinsurance”), and American Automobile Association, alleging causes of action for (1) Breach of Contract, (2) Breach of Implied Covenant of Good Faith & Fair Dealing; Violation of Unfair Insurance Practices Act & Ins. Code Sections 785, 790, (3) Fraudulent Business Practice: Violation of Unfair Competition Law, Business and Professions Code Section 17200, (4) Breach of the Unruh Civil Rights Act; Failure to Protect Against Discrimination, and (5) Tortious Breach of Land and Privacy.[1] Attached as Exhibit A to the FAC are various documents including, but not limited to, a renewal offer, renewal bill, renewal declarations, building ordinance or law coverage disclosure, residential insurance disclosure.[2] The policy is not included. Plaintiff is self-represented.

As stated in the “Factual Allegations” section in the FAC, Plaintiff purchased homeowners’ insurance from Defendants. Thereafter, a patio wall at Plaintiff’s residence collapsed due to poor weather conditions. Plaintiff submitted a claim. Four claims adjusters reviewed the claim. The first, second, and third claims adjusters determined there was coverage. However, more than five months after the collapse occurred, the fourth claims adjuster determined the collapse of the patio wall was either not covered because 1) the wall collapse or 2) the patio was not covered under the policy.

Plaintiff alleges the denial was erroneous because the fourth claims adjuster ignored relevant weather reports, overruled contemporaneous decisions of the three prior claims adjusters, and hired a civil engineer to justify the false conclusion that the collapse took place on March 1, 2023 when the weather was mild. Plaintiff also alleges the civil engineer trespassed onto Plaintiff’s property and the fourth claims adjuster denied the claim, in part, because of Plaintiff’s religion (Plaintiff is an Orthodox Jew) and age (Plaintiff is 79 years old).

On December 22, 2023, Auto Club and Interinsurance (hereafter, “Defendants”) filed this demurrer to each cause of action, and concurrently filed a motion to strike the requests for punitive damages in the FAC.

A demurrer tests the legal sufficiency of the pleadings and will be sustained only where the pleading is defective on its face. (City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (1998) 68 Cal.App.4th 445, 459.) “We treat the demurrer as admitting all material facts properly pleaded but not contentions, deductions or conclusions of fact or law. We accept the factual allegations of the complaint as true and also consider matters which may be judicially noticed. [Citation.]” (Mitchell v. California Department of Public Health (2016) 1 Cal.App.5th 1000, 1007; Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.App.3d 593, 604 (Del E. Webb Corp.) [“the facts alleged in the pleading are deemed to be true, however improbable they may be”].) Allegations are to be liberally construed. (Code Civ. Proc., § 452.) In construing the allegations, the court is to give effect to specific factual allegations that may modify or limit inconsistent general or conclusory allegations. (Financial Corporation of America v. Wilburn (1987) 189 Cal.App.3d 764, 769.)

A demurrer may be brought if insufficient facts are stated to support the cause of action asserted. (Code Civ. Proc., § 430.10, subd. (e).) “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 California, Inc. (1993) 14 Cal.App.4th 612, 616.)

Leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.) The burden is on the complainant to show the Court that a pleading can be amended successfully. (Ibid.)

Defense counsel has complied with the meet and confer requirement. (See Declaration of Colin Adkins, ¶ 12; Code Civ. Proc., § 430.41, subd. (a).)

Defendants’ argument that the FAC is uncertain is well taken. With respect to each cause of action, Plaintiff fails to distinguish between Defendants. This renders the entirety of the FAC uncertain. This will have to be corrected. Plaintiff will need to identify Defendant’s separately and connect the Defendant’s conduct to their liability. Plaintiff is encouraged to track the elements of each cause of action when assembling his complaint.

In anticipation of an amended complaint, the court offers its observations to assist the parties.

The elements of a breach of contract cause of action are: (1) the existence of a valid contract between the plaintiff and the defendant, (2) the plaintiff’s performance, (3) the defendant’s unjustified failure to perform, and (4) damages to the plaintiff caused by the defendant’s breach. (CACI No. 303; Careau & Co. v. Security Pacific Business, Inc. (1990) 222 Cal.App.3d 1371, 1388 (Careau); Otworth v. Southern Pac. Transportation (1985) 166 Cal.App.3d 452, 458.) In an action founded upon a contract, the complaint must indicate whether the contract is written, oral, or implied by conduct. (Code Civ. Proc., 430.10, subd. (g).) The elements of a breach of oral contract claim are the same as those for a breach of written contract. (Careau, 222 Cal.App.3d at p. 1388.)

Auto Club’s argument is straightforward: Plaintiff cannot state a breach of contract cause of action against Auto Club because Interinsurance issued the written insurance policy, not Auto Club. As such, there is no contractual relationship between Auto Club and Plaintiff arising from the written insurance policy. In support, Auto Club points to Exhibit A to the FAC, which states at the bottom of the first page, “Insurance provided to qualified Auto Club members by the Interinsurance Exchange of the Automobile Club.” (See Exhibit Errata.) Plaintiff did not attach a copy of the insurance policy. Based upon the allegations in the FAC and Exhibit A, the court agrees with Auto Club.

A defendant cannot be held liable for breach of a written contract or for breach of the covenant of good faith and fair dealing when there is no direct relationship between the defendant and the plaintiff. (See, e.g., Henry v. Associated Indemnity Corp. (1990) 217 Cal.App.3d 1405, 1416-17 (Henry) (holding that there is neither a breach of the covenant of good faith and fair dealing or breach of contract action in the absence of a direct contractual relationship between the insured and the claims adjuster).)

To the extent Plaintiff argues there was an oral contract based upon representations made by Auto Club and/or its representatives, Plaintiff fails to plead a breach of an oral contract.

Interinsurance argues the First Cause of Action is uncertain for two reasons. First, the FAC does not sufficiently plead the terms of the contract and Exhibit A is not a copy of the policy but rather an offer for renewal of the policy. For this proposition, Interinsurance cites Otworth v. Southern Pac. Transportation Co. (1985) 166 Cal.App.3d 452 (Otworth). In Otworth, the appellate court held, in relevant part, “[i]f the action is based on an alleged breach of a written contract, the terms must be set out verbatim in the body of the complaint or a copy of the written instrument must be attached and incorporated by reference.” (Otworth, at p. 459.)

The Fourth District Court of Appeal in Miles v. Deutsche Bank National Trust Co. (2015) 236 Cal.App.4th 394 (Miles) disagreed with Otworth:

“The Otworth court did not offer any analysis to support that proposition. Instead, it simply cited Wise v. Southern Pacific Co. (1963) 223 Cal.App.2d 50, 59, 35 Cal.Rptr. 652 (Wise) (overruled on other grounds in Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 510, 521, 28 Cal.Rptr.2d 475, 869 P.2d 454). The Wise court stated, “where a written instrument is the foundation of a cause of action, it may be pleaded in haec verba by attaching a copy as an exhibit and incorporating it by proper reference.” (Wise, at p. 59, 35 Cal.Rptr. 652.) It is readily apparent that the Otworth court read more into that statement than is actually there. The Wise court was simply stating one available method of pleading the contract—it was not specifying the exclusive means of pleading a contract. The correct rule is that “a plaintiff may plead the legal effect of the contract rather than its precise language.” (Construction Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 199, 126 Cal.Rptr.2d 908, 57 P.3d 372.) Because it is apparent that the Otworth court misread Wise, and because, in any event, we are bound by our Supreme Court, we decline to follow Otworth.

(Miles, at pp. 401-402.) This court is similarly bound by the California Supreme Court and elects to follow Miles.[3]

The FAC sufficiently pleads the legal effect of the contract. The allegations suggest that property damage caused by the weather is a covered loss. Plaintiff’s patio wall collapsed because of weather conditions. According to Plaintiff, his claim should have been approved because he suffered a covered loss. Interinsurance breached the policy by not honoring that provision and improperly attributing the damage to wear and tear. (See FAC, ¶¶ 8, 11-13, 23.)

Nonetheless the breach of contract claim is uncertain because Plaintiff suggests but does not plead a tortious breach, i.e. bad faith breach of an insurance contract. Plaintiff appears to plead both causes of action without so stating. This Plaintiff cannot do. If Plaintiff intends to pursue a tortious breach, Plaintiff must not only state the cause of action but also must plead and include facts meeting the requisite elements. The First Cause of Action improperly combines causes of action for breach of contract with tortious breach of the implied covenant of good faith and fair dealing. For example, Defendants argue emotional distress is not recoverable for a breach of an insurance contract[4] but may be recoverable in insurance bad faith actions[5]. While the “purpose of a demurrer is to test whether, as a matter of law, the properly pleaded facts in the complaint state a cause of action under any legal theory,” (Olson v. Hornbrook Cmty. Servs. Dist. (2019) 33 Cal.App.5th 502, 516.), here the first cause of action for breach of contract is both factually and legally uncertain.

2. Second Cause of Action for Violation of Unfair Insurance Practices Act & Ins. Code Sections 785, 790.[6]

The Second Cause of Action alleges violations of Insurance Code sections 785 and 790.

Let’s start with Insurance Code section 785. That section provides: “All insurers, brokers, agents, and others engaged in the transaction of insurance owe a prospective insured who is 65 years of age or older, a duty of honesty, good faith, and fair dealing. This duty is in addition to any other duty, whether express or implied, that may exist.” (Ins. Code, § 785, subd. (a).) “Conduct of an insurer, broker, or agent, or other person engaged in the transaction of insurance, during the offer and sale of a policy or certificate previous to the purchase is relevant to any action alleging a breach of the duty of good faith and fair dealing.” (Ins. Code, § 785, subd. (b).)

As to Section 785, multiple federal courts have concluded that section 785 does not create a private right of action. (See, e.g., In re Nat. Western Life Ins. Deferred Annuities (S.D.Cal. 2006) 467 F.Supp.2d 1071, 1088; Abbit v. ING USA Annuity & Life Ins. Co. (S.D.Cal. 2014) 999 F.Supp.2d 1189, 1198; Parducci v. Overland Solutions, Inc. (N.D.Cal. 2019) 399 F.Supp.3d 969, 979.) But the California courts have not squarely addressed the question. (See Mahan v. Charles W. Chan Ins. Agency, Inc. (2017) 14 Cal.App.5th 841, 868, fn. 27 [declining to take judicial notice of the DOI's letter opinion whether Ins. Code, § 785 provides a private right of action because the issue was not raised in the trial court and declining to address it for the first time on appeal].)

Plaintiff urges the court to consider the Department of Insurance’s Legal Opinion dated August 7, 2015. In the Legal Opinion, the Department of Insurance purportedly recognizes a private right of action under Section 785. Under Section 785, a duty of honesty, good faith, and fair dealing is owed to prospective insureds over the age of 65. At this juncture the court need not resolve the question whether a private right of action exists because the Second Cause of Action is uncertain.

Ins. Code section 785 concerns the “[c]onduct of an insurer, broker, or agent, or other person engaged in the transaction of insurance, during the offer and sale of a policy or certificate previous to the purchase is relevant to any action alleging a breach of the duty of good faith and fair dealing.” Here, the FAC alleges that Plaintiff purchased an insurance policy from Defendants (without identifying which Defendant) and that, thereafter, Defendants (without identifying which Defendant) breached the agreement. Moreover, Plaintiff does not allege whether Interinsurance’s broker or agent or other person who were engaged in the transaction of insurance had any contact with Plaintiff. Based upon the allegations in the FAC, it appears Auto Club’s agents and representatives dealt with Plaintiff as a prospective insured, not Interinsurance. It is unclear and uncertain if Interinsurance’s representatives made any representations at all. And as previously stated, to state breach of an implied covenant of good faith and fair dealing, Plaintiff must proceed based upon a written contract. Plaintiff’s Ins. Code section 785 is uncertain.

Turning to Insurance Code section 790, Interinsurance cites Moradi-Shalal v. Fireman's Fund Ins. Companies (1988) 46 Cal.3d 287 (Moradi-Shalal) for the proposition that there is no private right of action under Section 790. Interinsurance is correct. In that case, the California Supreme Court reexamined its decision in Royal Globe Ins. Co. v. Superior Court (1979) 23 Cal.3d 880 and concluded the Royal Globe court incorrectly evaluated the legislative intent underlying the passage of section 790.03, subdivision (h). The Moradi-Shalal Court stated in no uncertain terms: “Neither section 790.03 nor section 790.09 was intended to create a private civil cause of action against an insurer that commits one of the various acts listed in section 790.03, subdivision (h).” (Moradi-Shalal, at p. 304.) Plaintiff does not offer any argument or authority to contrary.

3. Third Cause of Action for Violation the Unfair Competition Law, California Business and Professions Code Section 17200

The Unfair Competition Law (UCL) is codified at Business and Professions Code, section 17200 et seq.¿ Section 17204 of the UCL provides that a private person “who has suffered injury in fact and has lost money or property as a result of the unfair competition” may bring a 17200 action.¿ (Bus. & Prof. Code, § 17204.)¿ In an action against an insurer, the essential allegations to plead a claim for violation of the UCL include:

· plaintiff's status as an insured or intended beneficiary of the insurer's policy;

· the insurer's conduct and that such conduct was an “unfair, unlawful or fraudulent” business practice in violation of section 17200;

· plaintiff sustained injury and/or loss of money or property as a result of the insured's “unfair, unlawful or fraudulent” business practice;

· a request for injunctive relief and/or restitution (again, monetary damages are not recoverable under the UCL; see ¶ 15:110); and

(Croskey, Heeseman, Ehrlich, and Klee, Cal Prac. Guide: Insurance Litigation (The Rutter Group 2023) ¶ 15.112.)

The cause of action is uncertain because Plaintiff does not identify Interinsurances unfair, unlawful, and fraudulent business practice. Again, Plaintiff fails to differentiate between the Defendants. Moreover, as pointed out by Interinsurance, Plaintiff appears to have an adequate remedy at law. Plaintiff fails to address this argument.

The Unruh Act provides that “[a]ll persons within the jurisdiction of this state are free and equal, and no matter what their sex, race, color, religion, ancestry, national origin, disability, medical condition, genetic information, marital status, sexual orientation, citizenship, primary language, or immigration status are entitled to the full and equal accommodations, advantages, facilities, privileges, or services in all business establishments of every kind whatsoever.” (Civ. Code, § 51, subd. (b); see Civ. Code, § 52.) Moreover, a violation of the ADA also qualifies as a violation of Unruh. (Civ. Code, § 51, subd. (f).)¿¿

To state a cause of action for violation of the Unruh Act, a plaintiff must show that: (1) defendant denied, aided or incited a denial of or discriminated against plaintiff with respect to full and equal accommodations, advantages, facilities, privileges, or services; (2) the substantial motivating reason for defendant’s conduct was due to its perception of an actionable characteristic; (3) the actionable characteristic was a substantial motivating reason for defendant’s conduct; and (4) defendant was a substantial factor in causing plaintiff’s harm. (CACI No. 3060.)

This cause of action is uncertain because Plaintiff fails to quote the operative language of the insurance policy or to attach the policy. Plaintiff’s argument turns upon the language of the policy and the claims adjuster’s interpretation of the policy. But the language of the policy is not included. And, as previously discussed, Plaintiff fails to distinguish and identify which Defendant engaged in the conduct that is subject to this cause of action. Plaintiff argues, “Based upon the fourth adjuster’s interpretation of the residence insurance policy, the manner in which Plaintiff constructs his Sukhot (“Tabernacles”) excludes Sukhot from coverage.” This allegation, however, does not appear in the FAC. Moreover, Plaintiff’s argument appears to advance the position that the insurance policy should be interpreted in a manner that considers the religious significance of a residential structure. But Plaintiff does not include the predicate and specific language from the policy. The FAC is deficient.

On the face page, Plaintiff captions the Fifth Cause of Action as “Tort of Trespass.” In the body of the FAC, however, Plaintiff refers to the Fifth Cause of Action as “Tortious Breaches of Land and Privacy.” Plaintiff does not cite authority that supports a single cause of action for Tortious Breaches of Land and Privacy. If Plaintiff intended to conflate the three causes of action on the face page (causes of action 5-7) into a single cause of action, doing so renders the Fifth Cause of Action uncertain.[7]

Leave to amend is granted. Plaintiff is ordered to file and serve his Second Amended Complaint within 30 days of this order.

Defendants are to file and service their responsive pleading within 30 days of service of Plaintiff’s amended complaint.

[1] Although the caption of the FAC identifies seven causes of action, the body of the FAC sets forth only the five causes of action. Plaintiff may have tried to sweep the Sixth and Seventh captioned causes of action into the Fifth Cause of Action and by doing so made the Fifth Cause of action uncertain. Nonetheless, the Sixth and Seventh Causes of Action are not pleaded.

[2] On January 12, 2024, Plaintiff filed an Exhibit Errata. Plaintiff states Exhibit A to the FAC was omitted due to inadvertence. Defendants’ demurrer indicates they received the FAC with the attached exhibit.

[3] The full quotation from the California Supreme Court case is: “In an action based on a written contract, a plaintiff may plead the legal effect of the contract rather than its precise language.” (Construction Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 198–199.)

[4] See, e.g., Sawyer v. Bank of America (1978) 83 Cal.App.3d 135, 141 (holding that damages for insomnia and emotional distress “are not to be awarded on a cause of action for breach of contract.”).

[5] See, e.g., Gourley v State Farm Mut. Auto. Ins. Co. (1991) 53 Cal.3d 121, 127-28 (noting insureds have been allowed to recover in tort for emotional distress damages flowing from an insurer’s breach of the implied covenant of good faith and fair dealing).)

[6] On the face page of the FAC, Plaintiff captions this cause of action as “Violation of Unfair Insurance Practices Act and Insurance Code 785, 790.” In the body of the FAC, however, Plaintiff identifies the cause of action as “Breach of Implied Covenant of Good Faith and Fair Dealing: violation of Unfair Business Practices Act, Ins. Code 785 and 790.” To state a cause of action for a breach of a written contract and its implied covenant of good faith and fair dealing Plaintiff must proceed based upon a written contract. As stated previously, the written contract was entered into with Interinsurance, not Auto Club. The court will address the second cause of action as if it were based upon alleged violations of Ins. Code sections 785 and 790.

[7] With respect to trespass, the elements of trespass are: (1) the plaintiff's ownership or control of the property; (2) the defendant's intentional, reckless, or negligent entry onto the property; (3) lack of permission for the entry or acts in excess of permission; (4) harm; and (5) the defendant's conduct was a substantial factor in causing the harm. (See CACI No. 2000.)” (Ralphs Grocery Co. v. Victory Consultants, Inc. (2017) 17 Cal.App.5th 245, 262.) A claim for invasion of privacy based upon a common law tort of intrusion has two elements. First, the defendant must intentionally intrude into a place, conversation, or matter as to which the plaintiff has a reasonable expectation of privacy. Second, the intrusion must occur in a manner highly offensive to a reasonable person. (Hernandez v. Hillsides, Inc. (2009) 47 Cal.4th 272, 286.)

[8] Given that the court has sustained the Demurrer, the court need not address the motion to strike. The court notes, however, that punitive damages cannot be recovered for breach of contract. “Punitive damages may not be awarded as relief in a breach of contract claim.” (Ginsberg v. Gamson (2012) 205 Cal.App.4th 873, 896, citing Civ. Code, § 3294, subd. (a).)