Judge: Lee W. Tsao, Case: 22NWCV00309, Date: 2023-06-29 Tentative Ruling

Case Number: 22NWCV00309    Hearing Date: June 29, 2023    Dept: C

AGUILA v. AMERICAN ZURICH INSURANCE COMPANY

CASE NO.:  22NWCV00309

HEARING:  06/29/23

#4

Defendant AMERICAN ZURICH INSURANCE COMPANY’s Demurrer to Plaintiff’s Second Amended Complaint is SUSTAINED without leave to amend.  

Moving Party to give Notice.

This breach of contract action was filed by Plaintiff HENRY AGUILA (pro per) (“Plaintiff”) on April 25, 2022. On January 3, 2023, the operative Second Amended Complaint (“SAC”) was filed.

The SAC alleges, in pertinent part, “Pursuant to the terms of the purchase agreement, if the Property suffered a loss which exceeded $10,000.00 during escrow, TAI had the right to cancel the purchase of the Property or elect to proceed with the sale. The purchase agreement further provided that, if the loss of repairs exceeded $10,000.00, and TAI elected not to cancel the purchase, TAI would be entitled to any insurance proceeds applicable to said loss. TAI elected not to cancel the purchase of other Property and TAI instructed Investel to file a claim with Zurich for the respective losses (the ‘Claim’).” (SAC ¶8.) “On January 9, 2020, after the claim was opened, Investel assigned its rights tot eh Claim to TAI…. Once Investel realized the size of the Claim, Investel demanded fifty (50%) of the Claim proceeds from TAI to pursue the Claim. TAI rebuffed Investel’s demand and Investel cancelled the Claim.” (SAC ¶9.) “TAI as the assignee of the insurance proceeds to the Claim objected to the cancellation of the Claim to Zurich. TAI represented to Zurich that Investel, Schoon and TAI had provided to Zurich all the information necessary for Zurich to adjust the Claim and that Zurich had in fact adjusted the Claim over several months. Zurich cancelled the Claim and asserted a non-assignability clause in the insurance policy as a defense to TAI’s protest to the cancellation of the Claim. Zurich at no time asserted that it did not have the necessary information needed to adjust the Claim or that it was prejudiced by Investel’s cancellation of the Claim. TAI thereafter assigned its rights to the Claim to Plaintiff. It is Plaintiff’s contention that the non-assignability clause in the insurance policy does not apply to the assignment of the proceeds of an insured loss.” (SAC ¶`10.)

The SAC asserts the following causes of action: (1) Breach of Contract (against Zurich); (2) Breach of Covenant of Good Faith and Fair Dealing (against Zurich); and (3) Negligence (against Schoon).

Defendant AMERICAN ZURICH INSURANCE COMPANY (“Defendant”) specially and generally demurs to the first and second causes of action.

First and Second Causes of Action – Breach of Contract and Breach of Covenant of Good Faith and Fair Dealing

“[T]he voluntary withdrawal of a damage claim by an insured arguably has the same legal consequence as the failure to file any claim at all or, after filing a claim, the failure or refusal to provide to the insurer the information necessary to adjust the claim.” (1231 Euclid Homeowners Assn. v. State Farm Fire & Casualty Co. (2006) 135 Cal.App.4th 1008, 1018.) The voluntary withdrawal of a claim effectively resolves the original claim. (Id. at 1019.)

Here, Plaintiff specifically alleges that Investel withdrew it’s claim. Consequently, pursuant to 1231 Euclid Homeowners Assn., Zurich’s obligations under the policy were terminated. Plaintiff has not pled facts to establish the element of “breach” necessary to maintain a breach of contract claim.

Moreover, since Plaintiff has not adequately alleged a claim for breach of contract against Zurich—as alleged, Zurich “owes no policy benefits [and]… its failure to pay such benefits cannot serve as a basis for a claim for bad faith.” (Id. at 1019-1021.)

Plaintiff has failed to allege any new facts to remedy the defects identified by the instant Demurrer (or this Court in its previous ruling). The demurrer is SUSTAINED without further leave to amend.