Judge Lynne M. Hobbs, Case Number: 24STCV01969, Date: 2024-05-23 Tentative Ruling

Judge: Lynne M. Hobbs, Case: 24STCV01969, Date: 2024-05-23 Tentative Ruling

Case Number: 24STCV01969 Hearing Date: May 23, 2024 Dept: 61

REGENCY THEATRES, INC., A CALIFORNIA CORPORATION vs AMORELLI, ROSEMANN & ASSOCIATES INSURANCE SERVICES, INC., A CALIFORNIA CORPORATION

TENTATIVE

Defendant Amorelli, Roseman & Associates Insurance Services, Inc.’s Demurrer and Motion to Strike Portions of the Complaint are OVERRULED and DENIED.

Plaintiff to provide notice.

DISCUSSION

I. DEMURRER

A demurrer should be sustained only where the defects appear on the face of the pleading or are judicially noticed. (Code Civ. Pro., §§ 430.30, et seq.) In particular, as is relevant here, a court should sustain a demurrer if a complaint does not allege facts that are legally sufficient to constitute a cause of action. (See id. § 430.10, subd. (e).) As the Supreme Court held in Blank v. Kirwan (1985) 39 Cal.3d 311: “We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. . . . Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context.” (Id. at p. 318; see also Hahn. v. Mirda (2007) 147 Cal.App.4th 740, 747 [“A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed. [Citation.]”)

“In determining whether the complaint is sufficient as against the demurrer … if on consideration of all the facts stated it appears the plaintiff is entitled to any relief at the hands of the court against the defendants the complaint will be held good although the facts may not be clearly stated.” (Gressley v. Williams (1961) 193 Cal.App.2d 636, 639.)

“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 Cal., Inc. (1993) 14 Cal.App.4th 612, 616.) Such demurrers “are disfavored, and are granted only if the pleading is so incomprehensible that a defendant cannot reasonably respond.” (Mahan v. Charles W. Chan Insurance Agency, Inc. (2017) 14 Cal.App.5th 841, 848.)

A demurrer should not be sustained without leave to amend if the complaint, liberally construed, can state a cause of action under any theory or if there is a reasonable possibility the defect can be cured by amendment. (Schifando v. City of Los Angeles, supra, 31 Cal.4th at p. 1081.) The demurrer also may be sustained without leave to amend where the nature of the defects and previous unsuccessful attempts to plead render it probable plaintiff cannot state a cause of action. (Krawitz v. Rusch (1989) 209 Cal.App.3d 957, 967.)

Defendant Amorelli, Roseman & Associates Insurance Services, Inc. (Defendant) demurrers to the second cause of action for negligent misrepresentation and fraudulent concealment contained in the Complaint of Plaintiff Regency Theatres, Inc. (Plaintiff) on the grounds that the fraud claims are not alleged with sufficient particularity. (Demurrer at pp. 2–3.)

The elements of negligent misrepresentation are “(1) the misrepresentation of a past or existing material fact, (2) without reasonable ground for believing it to be true, (3) with intent to induce another's reliance on the fact misrepresented, (4) justifiable reliance on the misrepresentation, and (5) resulting damage.” (National Union Fire Ins. Co. of Pittsburgh, PA v. Cambridge Integrated Services Group, Inc. (2009) 171 Cal.App.4th 35, 50.) “The required elements for fraudulent concealment are (1) concealment or suppression of a material fact; (2) by a defendant with a duty to disclose the fact to the plaintiff; (3) the defendant intended to defraud the plaintiff by intentionally concealing or suppressing the fact; (4) the plaintiff was unaware of the fact and would not have acted as he or she did if he or she had known of the concealed or suppressed fact; and (5) plaintiff sustained damage as a result of the concealment or suppression of the fact.” (Hambrick v. Healthcare Partners Medical Group, Inc. (2015) 238 Cal.App.4th 124, 162.)

It is well-established that “[t]o withstand a demurrer, the facts constituting every element of fraud must be alleged with particularity, and the claim cannot be salvaged by references to the general policy favoring the liberal construction of pleadings.” (Goldrich v. Natural Y Surgical Specialties, Inc. (1994) 25 Cal.App.4th 772, 782.) “This particularity requirement necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered.” (Lazar, supra, 12 Cal.4th at p. 645 (internal quotation marks omitted).)

Here, there is no defect of particularity in Plaintiff’s misrepresentation and concealment claims. The particular facts concerning the misrepresentations at issue are pleaded: Defendant allegedly misrepresented in its certificates of insurance on the 2021-2022 and 2022-2023 policies that the Lahaina theater was covered under these policies. (Complaint ¶ 26.) It is alleged that Defendant knew or should have known that the representations were false when made. (Complaint ¶ 26.) These allegations are sufficient to withstand demurrer, which "tests only the legal sufficiency of the pleading." (Schmier v. City of Berkeley (2022) 7 Cal.App.5th 549, 553.) At this procedural juncture, "we accept as true even the most improbable alleged facts, and we do not concern ourselves with the plaintiff's ability to prove its factual allegations." (Ibid.) Evidence-based challenges must await trial or the appropriate dispositive motion.

The demurrer is therefore OVERRULED.

II. MOTION TO STRIKE

Any party, within the time allowed to respond to a pleading, may serve and file a notice of motion to strike the whole or any part thereof. (Code Civ. Proc., § 435(b)(1)). The notice of motion to strike a portion of a pleading shall quote in full the portions sought to be stricken except where the motion is to strike an entire paragraph, cause of action, count or defense. (California Rules of Court Rule 3.1322.)

The grounds for a motion to strike shall appear on the face of the challenged pleading or form any matter of which the court is required to take judicial notice. (Code Civ. Proc., § 437(a)). The court then may strike out any irrelevant, false, or improper matter inserted in any pleading and strike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court. (Code Civ. Proc., § 436.) When the defect which justifies striking a complaint is capable of cure, the court should allow leave to amend. (Perlman v. Municipal Court (1979) 99 Cal.App.3d 568, 575.)

Defendant moves to strike the prayer for punitive damages, references to Defendant as a “fiduciary” of Plaintiff, and prayers for “interest” in the complaint. (Motion at pp. 4–6.)

Punitive damages are allowed in non-contract cases when a defendant is guilty of “oppression, fraud, or malice . . . .” (Civ. Code § 3294, subd. (a).) The terms are defined as:

1. “Malice” means conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.

2. “Oppression” means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person's rights.

3. “Fraud” means an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.

(Civ. Code § 3294, subd. (c).)

Something more than the mere commission of a tort is always required for punitive damages. (Taylor v. Superior Court (1979) 24 Cal.3d 890, 894.) Proof of negligence, gross negligence, or recklessness is insufficient to warrant an award of punitive damages. (Dawes v. Sup.Ct. (Mardian) (1980) 111 Cal.App.3d 82, 88–89.) Punitive damages may be recovered in an action for negligence or other nonintentional torts if the plaintiff pleads and proves that the defendant acted with the state of mind described as “conscious disregard” of the potential dangers to others. (Pfeifer v. John Crane, Inc. (2013) 220 Cal.App.4th 1270, 1299.) When malice is based on a defendant’s conscious disregard of Plaintiff’s rights, the conduct must be both despicable and willful. (College Hospital v. Superior Court (1994) 8 Cal.4th 794, 713 (“College Hospital”).)

Here, as Plaintiff has sufficiently alleged a cause of action for fraudulent concealment, there exists a factual basis for the “fraud” prong of Civil Code § 3294, subd. (a).

Defendant argues that allegations concerning the alleged “fiduciary” status of itself as Plaintiff’s insurance broker is unsound as a matter of law, because insurance brokers are not fiduciaries. (Motion at pp. 5–6.) But Defendant’s authority is more equivocal than its argument. Plaintiff relies on the following language:

From these cases we conclude that, other than when handling an insured's money, a broker's duty—whether or not phrased as a fiduciary duty—is no greater than the duty to use reasonable care and diligence in procuring insurance. As one leading treatise has observed: “It is not clear in what respect the ‘fiduciary duty’ owed by an independent insurance agent [broker] differs from the duty of due (reasonable) care. As used in respect to an independent agent, ‘fiduciary duty’ may refer merely to avoidance of conflict of interest, self-dealing, excessive compensation, etc.” (Croskey et al., Cal. Practice Guide: Insurance Litigation (The Rutter Group 2013) ¶ 11:166, p. 11-40 (rev. # 1, 2011).)

(Mark Tanner Constr. v. Hub Internat. Ins. Servs. (2014) 224 Cal.App.4th 574, 586.) This authority merely defines the scope of a broker’s practical duties; it does not hold that characterization of a broker as a “fiduciary” is improper, but rather expresses ambivalence about the use of the term. There is little cause here to police the use of “fiduciary” language with greater aggressiveness than in the authority that Defendant presents.

Defendant finally argues that a prayer for prejudgment interest is not available because Plaintiff’s damages are not certain or capable of being made certain. (Motion at p. 13; Civ. Code § 3287.)

Damages are deemed certain or capable of being made certain within the provisions of subdivision (a) of section 3287 where there is essentially no dispute between the parties concerning the basis of computation of damages if any are recoverable but where their dispute centers on the issue of liability giving rise to damage.’

(Duale v. Mercedes-Benz USA, LLC (2007) 148 Cal.App.4th 718, 729.)

Defendant’s motion with respect to prejudgment interest is premature. Defendant argues only that the Complaint does not state the precise amount of damages, but provides no authority for the proposition that precise pleading of the damages amount is necessary for an award of prejudgment interest. (Motion at p. 6.) Although Defendant contends that the damages are contested, there is no indication that this is the case other than the assertion in Defendant’s motion. Moreover, Defendant does not address the potential for recovery of prejudgment interest under Civil Code § 3288, which allows prejudgment interest in certain cases on unliquidated tort claims.

The motion to strike is therefore DENIED.