Judge Linda S. Marks, Case 2022-01262547 2022-12-19 Tentative Ruling

Judge: Linda S. Marks, Case: 2022-01262547, Date: 2022-12-19 Tentative Ruling

Demurrer to Complaint filed by Everest National Insurance Company on 8/12/22

Defendant, Everest National Insurance Company (“Everest National”) moves for an order sustaining its demurrer to the Second Cause of Action for Breach of Contract, Third Cause of Action for Breach of Implied Covenant of Good Faith and Fair Dealing, and Fourth Cause of Action for Declaratory Relief of the Complaint filed by Plaintiffs Harry V. Dawson, III (“Dawson”) and S&S Holdings Company (“S&S Holdings”) (collectively “Plaintiffs”).

Second Cause of Action

The allegations in the Complaint and the Everest National Policy, which is attached as Exhibit 2 to the Complaint, do not establish at this stage that the alleged wrongful acts by Plaintiffs that caused injury to the Claimants occurred on or before April 2018, before the effective date of the Everest National Policy, or that the “2018 Claim,” as identified in the Complaint, was first made in 2018. (See Complaint, ¶ 24.)

However, the alleged “renewed” claim made on November 5, 2020, to Everest National, after the Levy Action and the McDaid Action were filed on February 13, 2020, and April 27, 2020, respectively, was not made within the Policy Period. The Court initially notes that Plaintiffs do not address this argument thereby conceding the same. It is axiomatic the failure to challenge a contention in a brief results in the concession of that argument. (DuPont Merck Pharmaceutical Co. v. Sup. Ct. (2000) 78 Cal.App.4th 562, 566 [“By failing to argue the contrary, plaintiffs concede this issue”].)

The Complaint alleges that the Everest National Policy was effective October 1, 2019 to October 1, 2020. (Complaint, ¶ 11.) It also alleges that the Levy Action was filed on February 13, 2020, and that the McDaid Action was filed on April 27, 2020, and that “[o]n November 5, 2020, DAWSON renewed the 2018 Claim, and provided Defendants with additional information, including copies of the Complaints filed in the Levy Action and McDaid Action.” (Complaint, ¶¶ 26-28.)

“Policy Period means the period of time between the inception date shown in the Master Policy Declarations of this policy and the date this policy expires or is canceled, whichever occurs first; provided, in the case of a particular Insured, Policy Period shall mean the period of time between the Policy Effective date reflected on the Certificate for this policy with respect to that Insured and the date this policy expires, is canceled or coverage otherwise terminates with respect to that Insured, whichever occurs first. Policy Period specifically excludes any extended reporting period provided under the terms of an Extended Reporting Period Coverage Endorsement.” (Ex. 2 to Complaint, Everest National Policy at pp. 58-59, Section III, paragraph 22.) Item 2 of the Master Policy Declarations for the Everest National Policy contained in Exhibit 2 to the Complaint states, “ITEM 2. POLICY PERIOD: From 12:01 A.M. on October 1, 2019 To 12:01 A.M. on October 1, 2020.” (Ex. 2 to Complaint, Everest National Policy at p. 50.) The allegations in the Complaint are consistent with the language in the Everest National Policy.

Based on the language of the Everest National Policy and the allegations in the Complaint, the “Policy Period” was from October 1, 2019 to October 1, 2020, and Plaintiff did not present a claim concerning the Levy Action and McDaid Action to Everest National until November 5, 2020—after the end of the Policy Period on October 1, 2020, such that said claim does not fall within the insuring clause of the Everest National Policy, and there is no potential for coverage. It does not appear that that this deficiency could be cured by amendment.

Tentative Ruling: The demurrer as to the Second Cause of Action is SUSTAINED without leave to amend.

Third Cause of Action for Breach of Implied Covenant of Good Faith and Fair Dealing and Fourth Cause of Action for Declaratory Relief

“[I]f there is no potential for coverage and, hence, no duty to defend under the terms of the policy, there can be no action for breach of the implied covenant of good faith and fair dealing because the covenant is based on the contractual relationship between the insured and the insurer. [Citation.]” (Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 36.)

To qualify for declaratory relief under section 1060, plaintiffs are required to show their action presents 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.’. . .” (Lee v. Silveira (2016) 6 Cal.App.5th 527, 546.)

Since Plaintiffs’ claim for breach of contract fails and there is no potential for coverage, and in turn, duty to defend under the Everest National Policy, the breach of implied covenant of good faith and fair dealing and declaratory relief which are based upon the same facts as the breach of contract cause of action also fail. There is no longer an actual controversy concerning whether Plaintiffs are owed a duty to defend.

Tentative Ruling: The demurrer as to the Third and Fourth Causes of Action are SUSTAINED without leave to amend.

Everest National to give notice.