Judge: Mark C. Kim, Case: 20LBCV00504, Date: 2022-12-13 Tentative Ruling

Case Number: 20LBCV00504    Hearing Date: December 13, 2022    Dept: S27

1.     Background Facts

Plaintiff, Tokio Marine America Insurance Company filed this action against Defendant, Prestig, Inc. for carrier liability under the Carmack Amendment.  Plaintiff filed its original complaint on 11/19/20 and its operative First Amended Complaint on 1/19/21. 

Plaintiff alleges it insured Panasonic Corporation.  Defendant received a shipment of 1024 cartons of lithium ion batteries from Panasonic in Carson and was charged with taking the shipment to Kansas City.  However, the rig carrying the batteries was involved in a single vehicle accident, resulting in the vehicle over-turning and damaging the batteries.  Plaintiff alleges it suffered loss in the amount of $620,199.27, as it had to pay its insured for the damage to its goods.

On 5/06/21, the Court heard and denied Defendant’s special motion to strike.  Defendant appealed the ruling, and the Court of Appeals affirmed.  Both the trial court and the appellate court held that Defendant failed to show the complaint was based on protected conduct or speech, and therefore the anti-slapp statute did not apply; neither the trial court nor the appellate court reached the second prong of the analysis, where a determination of the probability of success on the merits would have been required. 

2.     Demurrer

a.     Parties’ Positions

Defendant demurs to the complaint as vague and ambiguous, contending it makes reference to “Defendants” and to agents, employees, etc., without distinguishing specifically what it, as opposed to some other defendant, did or did not do to form the basis of the complaint.  Additionally, Defendant contends Plaintiff has not pled the allegations required to state a claim under the Carmack Amendment.  Specifically, it contends Plaintiff has not pled that it is a person claiming rights under the bill of lading or compliance with regulatory freight claim assertion and exhaustion requirements.  It contends Plaintiff is improperly seeking redress for “actual damages” instead of “actual loss,” which is improper.  Additionally, Defendant contends Plaintiff has failed to attach its contract with its insured, which is necessary when an action sounds in contract.  Similarly, it contends Plaintiff has failed to attach a copy of the contract between its insured and Defendant.  Next, it contends the claims in the complaint are barred by the litigation privilege.  Additionally, it contends the claim cannot be maintained because the bill of lading states that it is not negotiable.  Finally, it contends Plaintiff lacks standing to pursue its claims. 

Plaintiff opposes the demurrer.  It contends there is no obligation to use the term “subrogation” in the complaint, and all of the arguments about it lacking standing are not well-taken.  It contends pleading claim compliance is not required.  It contends the prayer for damages is proper.  It contends its claim does not sound in contract and therefore no contract need be attached to the complaint.  It contends the litigation privilege is not relevant to the case.  It contends the non-negotiable clause is irrelevant.  Finally, it contends it has standing to pursue the subject claims. 

Defendant, in reply, contends any claim for subrogation is preempted.  It contends pleading the terms of the parties’ contract is necessary.  It contends all remedies are limited by the Carmack Amendment.  It reiterates its position that Plaintiff lacks standing.  It contends a written claim is a prerequisite to filing a complaint. 

b.     Uncertainty

Defendant’s demurrer on the ground of uncertainty is overruled.  Plaintiff’s standard pleading of the existence of doe defendants and their agency and/or employment relationship with Defendant does not render the complaint uncertain.  If it did, virtually every complaint filed in the State of California would be subject to a demurrer for uncertainty.  This is clearly not the case, as demurrers for uncertainty are disfavored. 

c.     Standing

Many of Defendant’s arguments are variations on the theme that Plaintiff, as the insurer of Panasonic, lacks standing to bring these claims.  The Court of Appeals opinion in this very case, Tokio Marine America Insurance Co. v. Prestig Inc. (2022) 2022 WL 2799484, directly addresses this issue.  It states, “Prestige’s analysis fundamentally misperceives the nature of Tokio Marine’s rights and the necessary elements of its cause of action against Prestige after paying its insured for the cargo loss.  An insurer-subrogee of the shipper identified on the bill of lading has standing to sue the carrier under the Carmack Amendment.” 

The Court therefore finds all arguments relating to standing lack merit, and the demurrer on those grounds is overruled.

d.     Damages

Defendant argues Plaintiff improperly seeks “actual damages” instead of “actual loss.”  At most, this could support a motion to strike the claim for damages.  Defendant did not show that Plaintiff’s complaint fails to state a cause of action or is otherwise defective on this ground.  The demurrer is overruled.

e.     Contract

CCP §430.10(g) requires an action “founded upon a contract” to state whether the contract is written, oral, or implied by conduct.”  Plaintiff’s complaint sounds in subrogation based on Defendant’s liability under the Carmack Amendment.  The complaint does not sound in contract.  The demurrer is overruled.

f.      Litigation Privilege

Defendant’s argument that the litigation privilege bars this action is overruled for the reasons discussed in the Court’s ruling on Defendant’s special motion to strike.  Plaintiff’s complaint clearly does not arise out of Defendant’s protected conduct.  It arises out of Defendant’s automobile accident.

g.     Regulatory Freight Claim

Defendant argues Plaintiff was required to allege it made a regulatory freight claim, and making such a claim was a prerequisite to filing this action.  Defendant’s moving papers fail to cite any authority for this position.  Defendant cites various federal district court opinions with its reply papers in this regard.  These citations are not binding authority, and the Court has not considered them.  Defendant failed to meet its burden to show Plaintiff was required to allege it made a regulatory freight claim prior to filing this litigation, and the demurrer in this regard is overruled. 

While not at issue on this demurrer, which is a pleading challenge, the Court notes that it appears Plaintiff’s insured made such a claim, as the claim was the subject of Defendant’s special motion to strike.  If Defendant believes Plaintiff cannot pursue litigation without making its own claim, and wishes to raise this issue at a later stage of this litigation, it must provide authority for the position that an insurer must make a separate claim from the claim of its insured before filing a subrogation complaint under the Carmack Amendment. 

h.     Non-Negotiable Bill of Lading

Defendant argues the bill of lading states it is non-negotiable.  It therefore contends Plaintiff cannot make a claim.  This is a variation on Defendant’s standing argument, addressed above.  Defendant cites no authority on point to the situation before the Court, and the demurrer is overruled for the reasons stated above. 

i.      Conclusion

The demurrer is overruled in its entirety.  Defendant is ordered to file an answer to the complaint within ten days. 

3.     Case Management Conference

The parties are reminded that there is a CMC on calendar concurrently with the hearing on the demurrer.  The Court asks Counsel to make arrangements to appear remotely at the hearing on the demurrer and the OSC.