Judge: Mark A. Young, Case: 24SMCV05671, Date: 2025-05-13 Tentative Ruling

Case Number: 24SMCV05671    Hearing Date: May 13, 2025    Dept: M

CASE NAME:             Sack v. Esurance Insurance Services Inc., et al. 

CASE NO.:                   24SMCV05671

MOTION:                     Demurrer and Motion to Strike the Complaint  

HEARING DATE:   5/13/2025

LEGAL STANDARD 

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. 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 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. (CCP §§ 430.30, 430.70.) At the pleading stage, a plaintiff need only allege ultimate facts sufficient to apprise the defendant of the factual basis for the claim against him. (Semole v. Sansoucie (1972) 28 Cal. App. 3d 714, 721.) A “demurrer does not, however, admit contentions, deductions or conclusions of fact or law alleged in the pleading, or the construction of instruments pleaded, or facts impossible in law.” (S. Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 732, internal citations omitted.) 

A special demurrer for uncertainty is disfavored and will only be sustained where the pleading is so bad that defendant cannot reasonably respond—i.e., cannot reasonably determine what issues must be admitted or denied, or what counts or claims are directed against him/her. (CCP § 430.10(f); Khoury v. Maly’s of Calif., Inc. (1993) 14 Cal.App.4th 612, 616.) Moreover, even if the pleading is somewhat vague, “ambiguities can be clarified under modern discovery procedures.” (Ibid.)  

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. (CCP § 435(b)(1); Cal. Rules of Court, Rule 3.1322(b).) The court may, upon a motion or at any time in its discretion and upon terms it deems proper: (1) strike out any irrelevant, false, or improper matter inserted in any pleading; or (2) strike out all or any part of any pleading not drawn or filed in conformity with the laws of California, a court rule, or an order of the court. (CCP §§ 436(a)-(b); Stafford v. Shultz (1954) 42 Cal.2d 767, 782 [“Matter in a pleading which is not essential to the claim is surplusage; probative facts are surplusage and may be stricken out or disregarded”].) 

“Liberality in permitting amendment is the rule, if a fair opportunity to correct any defect has not been given.” (Angie M. v. Superior Court (1995) 37 Cal.App.4th 1217, 1227.) It is an abuse of discretion for the court to deny leave to amend where there is any reasonable possibility that plaintiff can state a good cause of action. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.) The burden is on plaintiff to show¿in what manner¿plaintiff can amend the complaint, and¿how¿that amendment will change the legal effect of the pleading.¿(Id.) 

ANALYSIS 

Defendant Esurance Insurance Services Inc. demurs to the second cause of action in Plaintiff Mitchell Sack’s complaint, and moves to strike the complaint’s request for punitive damages.

Implied Covenant of Good Faith and Fair Dealing

Defendant argues that the second cause of action fails to plead sufficient facts to sustain a claim for breach of the Implied Covenant of Good Faith and Fair Dealing. Generally, the elements of an action for the breach of the implied covenant of good faith and fair dealing in the insurance context are: (1) insurer obligated under policy to first or third party; (2) implied duty; (3) unreasonable breach of that duty; and (4) causation of at least economic damages.  (Love v. Fire Exchange (1990) 221 Cal.App.3d 1136, 1151.) To breach the implied duty, benefits due under the policy must have been withheld, and the reason for withholding benefits must have been unreasonable or without proper cause. (Id.)

Every contract contains an implied-in-law covenant of good faith and fair dealing. (Hicks v. E.T. Legg & Associates (2001) 89 Cal.App.4th 496, 508.) “Simply stated, the burden imposed is that neither party will do anything which will injure the right of the other to receive the benefits of the agreement. Or to put it another way, the implied covenant imposes upon each party the obligation to do everything that the contract presupposes they will do to accomplish its purpose.” (Careau & Co. v. Sec. Pac. Bus. Credit, Inc., (1990) 222 Cal.App.3d 1371, 1393, citations and quotations omitted.) “A breach of the implied covenant of good faith and fair dealing involves something beyond breach of the contractual duty itself’ and it has been held that bad faith implies unfair dealing rather than mistaken judgment. (Id., at 1394.) “[A]llegations which assert such a claim must show that the conduct of the defendant, whether or not it also constitutes a breach of a consensual contract term, demonstrates a failure or refusal to discharge contractual responsibilities, prompted not by an honest mistake, bad judgment or negligence but rather by a conscious and deliberate act, which unfairly frustrates the agreed common purposes and disappoints the reasonable expectations of the other party thereby depriving that party of the benefits of the agreement. Just what conduct will meet this criteria must be determined on a case by case basis and will depend on the contractual purposes and reasonably justified expectations of the parties.” (Id., at 1395.) “If the allegations do not go beyond the statement of a mere contract breach and, relying on the same alleged acts, simply seek the same damages or other relief already claimed in a companion contract cause of action, they may be disregarded as superfluous as no additional claim is actually stated…  [T]he only justification for asserting a separate cause of action for breach of the implied covenant is to obtain a tort recovery… [I]t is essential to a recovery in tort that the insurer, in breaching the implied covenant, have acted unreasonably or without proper cause.” (Id., collecting cases, citations and quotations omitted.)

Defendant argues that the complaint fails to establish a breach of an express policy term or that Defendant’s alleged violation of the covenant was done by a conscious, deliberate act. Indeed, the Complaint fails to allege an unreasonable breach of the implied duty. The complaint alleges Defendant’s “unreasonable delay” in adjustment of the claim represents a violation of the covenant of good faith and fair dealing. (Compl., ¶ 25.) The complaint alleges no facts which establish that Defendant acted unreasonably or without proper cause in delaying the claim. Critically, the complaint does not allege that the delay was the result of a conscious and deliberate act which frustrated Plaintiff’s reasonable expectations. Plaintiff must therefore plead further facts.

Accordingly, the demurrer is SUSTAINED with leave to amend. The motion to strike is moot, but would be granted, with leave to amend, for failure to support the tortious breach of the implied covenant.