Judge Lee S. Arian, Case Number: 22STCV26277, Date: 2024-02-01 Tentative Ruling

On August 12, 2022, Plaintiff Gregory Dellio (“Plaintiff”) filed this action against Defendants Geico General Insurance Company (“Defendant”) and Does 1 to 100, inclusive, asserting causes of action for (1) breach of insurance contract, (2) bad faith breach of implied covenant of good faith and fair dealing, and (3) declaratory relief.

On June 16, 2023, Defendant filed its demurrer to the Complaint (the “First Demurrer”).

On July 25, 2023, the Court continued the hearing for the First Demurrer and asked the parties to submit supplemental papers. The parties subsequently filed supplemental papers.

On October 18, 2023, the Court sustained the First Demurrer with leave to amend.

On November 7, 2023, Plaintiff filed a First Amended Complaint (“FAC”) against Defendant and Does 1 to 100, inclusive, asserting causes of action for (1) breach of insurance contract, (2) bad faith breach of implied covenant of good faith and fair dealing, and (3) declaratory relief.

On December 5, 2023, Defendant filed its instant demurrer to the FAC (“FAC Demurrer”).

A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) When considering demurrers, courts read the allegations liberally and in context. (Wilson v. Transit Authority of City of Sacramento (1962) 199 Cal.App.2d 716, 720-21.)

In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) “A demurrer tests the pleading alone, and not on the evidence or facts alleged.” (E-Fab, Inc. v. Accountants, Inc. Servs. (2007) 153 Cal.App.4th 1308, 1315.) As such, the court assumes the truth of the complaint’s properly pleaded or implied factual allegations. (Ibid.) However, it does not accept as true deductions, contentions, or conclusions of law or fact. (Stonehouse Homes LLC v. City of Sierra Madre (2008) 167 Cal.App.4th 531, 538.)

A demurrer may be sustained “only if the complaint fails to state a cause of action under any possible legal theory.” (Sheehan v. San Francisco 49ers, Ltd. (2009) 45 Cal.4th 992, 998.)

On December 5, 2023, Defendant filed a request for judicial notice of Los Angeles County Ordinance No. 93-0034.

Plaintiff objects to the request, arguing that the ordinance is irrelevant to this action. (Opposition and Objection, filed January 19, 2024, p. 2:3-6.)

The Court GRANTS the request for judicial notice because an ordinance is subject to judicial notice. (See Trinity Park, L.P. v. City of Sunnyvale (2011) 193 Cal.App.4th 1014, 1027, disapproved on other grounds in Sterling Park, L.P. v. City of Palo Alto (2013) 57 Cal.4th 1193 [“The Evidence Code also expressly provides for judicial notice of a public entity’s legislative enactments (Evid. Code, § 452, subd. (b)) and official acts (id., subd. (c)). Thus, we may take notice of local ordinances [citation] and the official resolutions, reports, and other official acts of a city [citation]”]; see also Evid. Code, § 451, subd. (a) [stating that a Court may take judicial notice of “[t]he decisional, constitutional, and public statutory law of this state and of the United States and the provisions of any charter described in Section 3, 4, or 5 of Article XI of the California Constitution”]; Cal. Const., art. XI, § 5, subd. (a) [“It shall be competent in any city charter to provide that the city governed thereunder may make and enforce all ordinances and regulations in respect to municipal affairs, subject only to restrictions and limitations provided in their several charters and in respect to other matters they shall be subject to general laws”].)

“Before filing a demurrer pursuant to … [section 430.20], the demurring party shall meet and confer in person or by telephone with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer.” (Code Civ. Proc., § 430.41, subd. (a).)

“As part of the meet and confer process, the demurring party shall identify all of the specific causes of action that it believes are subject to demurrer and identify with legal support the basis of the deficiencies.” (Code Civ. Proc., § 430.41, subd. (a)(1).) On the other hand, “[t]he party who filed the … answer shall provide legal support for its position that the pleading is legally sufficient or, in the alternative, how the … answer could be amended to cure any legal insufficiency.” (Code Civ. Proc., § 430.41, subd. (a)(2).)

Here, Defendant has satisfied the meet and confer requirement. (Declaration of Jordan S. Derringer, filed December 5, 2023, ¶¶ 3-4.)

Defendant demurs to all three (3) causes of action in the FAC, arguing that they do not state facts sufficient to constitute a cause of action because an electric bike or e-bike does not qualify as an “uninsured motor vehicle” under the terms of the relevant insurance policy and under California law.

According to the Defendant, since the entire lawsuit is premised on the allegation that an e-bike is an “uninsured motor vehicle” under the insurance policy at issue and that allegation is false, the entire lawsuit fails. Therefore, Defendant concludes, that the Court should sustain the demurrer without leave to amend.

In opposition, Plaintiff argues, among other things, that the Court intended to overrule the First Demurrer because “the subject insurance policy did not unequivocally define a motor vehicle to the exclusion of an e-bike,” but decided to sustain the First Demurrer with leave to amend because the original Complaint did not explicitly allege that the bicycle at issue was an “e-bike.” (Opposition, p. 4:5-11.) The FAC now alleges that the instrument that struck Plaintiff was an electric bicycle/e-bike. (Opposition, p. 4:11-13.)

In its reply, Defendant insists that the alleged e-bike that struck Plaintiff was not an uninsured motor vehicle within the meaning of Plaintiff’s insurance policy and California law. Defendant fails to address or dispute (1) Plaintiff’s argument that the Court only sustained the First Demurrer because the original Complaint failed to specify that the bicycle was an “e-bike,” and (2) that the FAC now makes that allegation.

Contrary to Defendant’s argument, the issue at this stage of the case is not whether the alleged electric bicycle or e-bike that struck Plaintiff can be considered an uninsured motor vehicle. The issue is whether the FAC has alleged facts sufficient to constitute a cause of action. If it has, it is proper to overrule the demurrer.

Construction Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189 (“Construction Protective Services”) is instructive at this stage of the case. In that case, the California Supreme Court affirmed the Court of Appeal, holding that the appellate court was correct in reversing the trial court’s order sustaining a demurrer. (Id. at p. 198.) The Supreme Court explained: “In an action based on a written contract, a plaintiff may plead the legal effect of the contract rather than its precise language. [Citation.] [The plaintiff in that case] ha[d] chosen to proceed in [that] manner, and though the complaint could have been clearer, it satisfactorily alleged (1) that the insurance policy obligated [the defendant] to defend and indemnify [the plaintiff] against suits seeking damages, and (2) that under the terms of the[ir] policy, [a general contractor’s] setoff claim fell within the scope of that contractual obligation.” (Id. at pp. 198-199 [emphasis added].) “Whether [the plaintiff could] prove [those] allegations (that is, whether its interpretation of the applicable contractual language [was] correct …) remain[ed] to be seen, but the allegations [were] sufficient to establish a prima facie right to relief. [The defendant] may move for judgment on the pleadings or summary judgment, raising the same arguments it raised in its demurrer, and in support of its motion it may provide the court with a copy of the insurance policy in question.” (Id. at p. 199 [emphasis added].)

Plaintiff obtained an insurance policy from Defendant, Policy Number 4223-60-93-65 (the “Policy”). (FAC, ¶ 5.) The Policy was in effect between March 19 and September 19, 2020. (FAC, ¶ 5.) As part of the Policy, Defendant promised to pay up to $100,000 per person and $200,000 per accident for bodily injury claims under the Uninsured Motorist Coverage. (FAC, ¶ 6.)

On August 12, 2020, while Plaintiff was operating his vehicle (a 2019 Mercedes-Benz Metris) on the 101-Freeway, he was struck by a Los Angeles Metropolitan Transportation Authority (“METRO”) bicyclist. (FAC, ¶ 7.)

Upon information and belief, the bicycle involved in the incident was an electric bicycle or an “e-bike” owned and operated by METRO. (FAC, ¶ 8.) Given the severity of the impact, Plaintiff was injured and sought treatment for the injuries caused by the incident. (FAC, ¶ 9.) Plaintiff immediately informed Defendant of the incident and initiated a claim on August 13, 2020. (FAC, ¶ 10.)

Despite the Policy’s Uninsured Motorist Coverage, Defendant refused to pay for Plaintiff’s bodily injury claim caused by the bicyclist riding the METRO e-bike. (FAC, ¶ 11.)

The Policy states: “‘The term ‘uninsured motor vehicle’ does not include:

b. a motor vehicle owned or operated by a self-insurer within the meaning of any motor vehicle financial responsibility law, motor carrier law or any similar law;

c. a motor vehicle owned by the United States of America, any other national government, a state, or a political sub-division of any such government or its agencies;

d. a land motor vehicle or trailer while located for use as a residence or premises and not as a vehicle;

e. any equipment or vehicle designed or modified for use primarily off public roads, except while actually upon public roads; or

f. any motor vehicle owned or operated by the named insured or any resident of your household.’”

The electric bicycle in question does not belong to any of those exclusions; therefore, it is not excluded from the definition of “uninsured motor vehicle” in the Policy. (FAC, ¶ 26.)

“The electric bicycle involved in the subject incident would fall within the term ‘motor vehicle’ as defined by … [California Insurance Code section 11580.06, subdivision (a)], as it is a vehicle intended for use principally on streets and is subject to motor vehicle registration laws pursuant to California Vehicle Codes.” (FAC, ¶ 34.)

The defendants have breached the terms of the Policy by, for example, failing to pay for the loss. (FAC, ¶ 49.)

In addition, the parties entered the Policy with the understanding and expectation that Defendant would act in good faith and deal fairly pursuant to the insurance contract. (FAC, ¶ 55.)

Defendant has also tortuously breached its implied covenant of good faith and fair dealing arising from the Policy by, among other things, unreasonably withholding benefits due under the Policy. (FAC, ¶ 56.)

A dispute has also arisen, and an actual controversy exists between the parties in that Plaintiff contends that they were entitled to afford coverage under the Uninsured Motorist pursuant to the terms, conditions, and covenants of the POLICY without limitation. (FAC, ¶ 71.)

The Court finds that through the above facts, the FAC has alleged facts sufficient to constitute Plaintiff’s causes of action for (1) breach of insurance contract, (2) bad faith breach of implied covenant of good faith and fair dealing, and (3) declaratory relief. (Troyk v. Farmers Group, Inc. (2009) 171 Cal.App.4th 1305, 1352 [“‘To be entitled to damages for breach of contract, a plaintiff must plead and prove (1) a contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) damage to plaintiff. [Citations.]’ [Citation]”]; Archdale v. American Internat. Specialty Lines Ins. Co. (2007) 154 Cal.App.4th 449, 463 [“In every contract, including policies of insurance, there is an implied covenant of good faith and fair dealing that neither party will do anything which will injure the right of the other to receive the benefits of the agreement”]; Major v. Western Home Ins. Co. (2009) 169 Cal.App.4th 1197, 1209 [“[T]o establish the insurer’s ‘bad faith’ liability, the insured must show that the insurer has (1) withheld benefits due under the policy, and (2) that such withholding was ‘unreasonable’ or ‘without proper cause.’ [Citation.] The actionable withholding of benefits may consist of the denial of benefits due [citation] …”]; Lee v. Silveira (2016) 6 Cal.App.5th 527, 546 [“To qualify for declaratory relief …, plaintiffs [are] required to show their action … presented two essential elements: ‘(1) a proper subject of declaratory relief, and (2) an actual controversy involving justiciable questions relating to the rights or obligations of a party.’ [Citation]” (footnote omitted)] Fowler v. Ross (1983) 142 Cal.App.3d 472, 478 [“It is elementary that questions relating to the formation of a contract, its validity, its construction and effect, excuses for nonperformance, and termination are proper subjects for declaratory relief [citation]”].)

However, the Court must accept well-pleaded facts as true in a demurrer proceeding.

In addition, it is noteworthy that the cases that Defendant cites in its moving papers, Chong and Farmers, were not decided on the demurrer stage. Chong was an appeal from a summary judgment entered in favor of the defendant insurer. In Farmers, the insurer filed the lawsuit, seeking a declaration that the injury its insured’s son sustained while on a moped was excluded from uninsured coverage. (Farmers, supra, 170 Cal.App.3d at p. 1018.) The insurer appealed after the trial court issued “a declaratory judgment finding that [the insured’s] ‘moped’ [was] not a ‘motor vehicle’ within the meaning of [the] … insurance policy exclusion clause and that [the] defendants [were] entitled to uninsured motorist benefits.” (Id. at p. 1020.)

As the California Supreme Court explained in Construction Protective Services, it is proper to overrule a demurer where the complaint has alleged facts sufficient to constitute a cause of action in an action arising from a contract even though it is yet to be seen whether the plaintiff’s interpretation of the contractual language is correct. (Construction Protective Services, supra, 29 Cal.4th at pp. 198-199.)

Parties who intend to submit on this tentative must send an email to the Court at SSCDEPT27@lacourt.org indicating intention to submit on the tentative as directed by the instructions provided on the court’s website at www.lacourt.org. Please be advised that if you submit on the tentative and elect not to appear at the hearing, the opposing party may nevertheless appear at the hearing and argue the matter. Unless you receive a submission from all other parties in the matter, you should assume that others might appear at the hearing to argue. If the Court does not receive emails from the parties indicating submission on this tentative ruling and there are no appearances at the hearing, the Court may, at its discretion, adopt the tentative as the final order or place the motion off calendar.

Hon. Lee S. Arian

Judge of the Superior Court