Judge: Mel Red Recana, Case: 20STCV37506, Date: 2024-06-26 Tentative Ruling
Case Number: 20STCV37506 Hearing Date: June 26, 2024 Dept: 45
Hearing
date: June 26, 2024
Moving
Party: Defendant/Cros-Complainant
Evanston Insurance Company
Responding
Party: Plaintiff Universal Garment Wash
& Dye, LLC
Motion
for Judgment on the Pleadings
The Court
considered the moving papers, opposition, and reply papers.
The
motion is GRANTED.
Background
This
is a professional malpractice case. Plaintiff Universal Garment Wash & Dye,
LLC (“Plaintiff”) filed the operative First Amended Complaint (“FAC”) on December
14, 2021, against Defendants Susan Sirkin dba Sirkin Insurance Agency, Evanston
Insurance Company (sued as DOE 1) (“Defendants”), and DOES 2 to 20. The FAC
allege causes of action for: (1) Professional Malpractice; (2) Breach of
Contract; (3)Intentional Misrepresentation; and (4) Negligent Misrepresentation.
The FAC alleges
the following: In 2017, Plaintiff accepted an order from non-party, Five Star
26, LLC (“Five Star”) for the treatment of garments and performed the requested
services. (FAC ¶6.) The garments were subsequently damaged due to an unexpected
malfunction of Plaintiff’s equipment. (Id.) Thereafter, Five Star made a
claim against Plaintiff based upon the damage to the goods which were no longer
merchantable and caused Five Star to be unable to use the goods or fulfill its
order to its own client. (Id.) Plaintiff presented Five Star’s claim to
the insurance company under the Commercial General Liability and Inland
Maritime policies. (FAC ¶¶5, 7.) Plaintiff was denied coverage under both
policies on the grounds that the claims were not covered under the terms of the
policies. (Id.) Plaintiff was then forced to settle Five Star’s claim
without insurance for $330,000.00. (Id.)
On May 6, 2022,
Defendant Evanston Insurance Company (“EIC”) filed a Cross-Complaint against
Plaintiff for Declaratory Relief.
On
August 23, 2023, Defendant EIC filed the instant Motion for Judgment on the
Pleadings. On June 12, 2024, Plaintiff filed an opposition. On June 18, 2024,
Defendant EIC filed a reply.
Legal
Standard
The
standard for ruling on a motion for judgment on the pleadings is essentially
the same as that applicable to a general demurrer, that is, under the state of
the pleadings, together with matters that may be judicially noticed, it appears
that a party is entitled to judgment as a matter of law.¿(Bezirdjian v.
O'Reilly (2010) 183 Cal.App.4th 316, 321-322, citing Schabarum v.
California Legislature (1998) 60 Cal.App.4th 1205, 1216.)¿Matters which are
subject to mandatory judicial notice may be treated as part of the complaint
and may be considered without notice to the parties. Matters which are subject
to permissive judicial notice must be specified in the notice of motion, the
supporting points and authorities, or as the court otherwise permits. (Id.)¿The
motion may not be supported by extrinsic evidence. (Barker v. Hull
(1987) 191 Cal.App.3d 221, 236.)¿
When the moving
party is a defendant, he or she must demonstrate that “The court has no
jurisdiction of the subject of the cause of action alleged in the complaint” or
“The complaint does not state facts sufficient to constitute a cause of action
against that defendant.” (Code Civ. Proc., § 438(c)(1)(B)(i)-(ii).)¿¿
Meet and Confer
Before filing a
judgment on the pleadings pursuant to this chapter, the moving party shall meet
and confer in person or by telephone with the party who filed the pleading that
is subject to the motion for judgment on the pleadings for the purpose of determining
whether an agreement can be reached that would resolve the objections to be
raised in the motion for judgment on the pleadings...” (Code Civ. Proc., §
439(a).) The moving party shall file and serve with the motion for judgment on
the pleadings a declaration concerning the parties meet and confer
efforts. (Code Civ. Proc., § 439(a)(3).)
Defendant EIC advances
the declaration of its attorney of record, Ray Tamaddon, attesting to meet and
confer efforts made prior to bringing the instant motion.
Here,
Tamaddon states he telephonically met and conferred with Plaintiff’s counsel,
John Burgee, on July 19, 2022, regarding the grounds for the present motion.
(Tamaddon Decl., ¶2.) Tamaddon avers the parties debated the issues now raised
on the present motion but could not reach an agreement to resolve the claims
informally. (Id.)
Therefore, Defendant
EIC sufficiently met and conferred with Plaintiff’s counsel prior to bringing
the instant motion.
Discussion
Defendant
EIC moves for judgment on the pleadings of all claims asserted against it in
the FAC, specifically, the second, third, and fourth causes of action. The
motion is made on the grounds that (1) the absence of a “suit” against
Plaintiff negates coverage under the Commercial General Liability Policy
(“Policy”) and/or (2) coverage under the Policy is barred by the “personal
property in care, custody, or control” exclusion.
Absence of
“Suit” against Plaintiff
Defendant EIC
argues in the absence of a lawsuit filed against Plaintiff, it has no duty to
defend or indemnify Plaintiff. Furthermore, Defendant EIC argues Five Star’s
claim for damaged garments by itself does not trigger the Policy’s insuring
clause. In opposition, Plaintiff asserts that no “suit” was required since
Defendant EIC denied coverage. Plaintiff also argues that the cases cited by
Defendant EIC are all in the context of disputes involving administrative
claims. In reply, Defendant EIC contends the express terms of the policy shows
that there is no obligation to defend or indemnify in absence of a lawsuit
because Five Star never filed a lawsuit against Plaintiff and no money was
ordered by a court for Plaintiff to pay damages to Five Star. Additionally,
Defendant EIC asserts the cases it cited in support of the instant motion on
point because they involved insurance policies where the insurers were required
to defend a lawsuit and indemnify where the insured had become legally
obligated to pay a sum of damages ordered by a court.
To prevail on a
breach of contract claim, plaintiff must prove “(1) the existence of the
contract, (2) plaintiff's performance or excuse for nonperformance, (3)
defendant's breach, and (4) the resulting damages to the plaintiff.” (D’Arrigo
Bros. of California v. United Farmworkers of America (2014) 224 Cal.App.4th
790, 800.) “While insurance contracts have special features, they are still
contracts to which the ordinary rules of contractual interpretation apply.” (Foster-Gardner,
Inc. v. National Union Fire Ins. Co. (1998) 18 Cal.4th 857, 868 (Foster-Gardner).)
As such, “[i]f contractual language is clear and explicit, it governs.” (Id.)
In Foster-Gardner,
the court held “[t]he duty to defend arises when the insured tenders defense of
the third party lawsuit to the insurer.” (Foster-Gardner, supra, 18
Cal.4th at 886.) “Prior to the filing of a complaint, there is nothing for the
insured to tender defense of, and hence no duty to defend arises.” (Id.)
“Proceeding from
Foster–Gardner to this case…the insurer’s duty to indemnify the insured
for ‘all sums that the insured becomes legally obligated to pay as damages’
under the standard comprehensive general liability insurance policy is limited
to money ordered by a court.” (Certain Underwriters at Lloyd's of London v.
Superior Court (2001) 24 Cal.4th 945, 960.)
Here, the Policy
provided by Defendant EIC to Plaintiff explicitly states that Defendant
EIC “We will pay those sums that the
insured becomes legally obligated to pay as damages because of “bodily injury”
or “property damage” to which this insurance applies. We will have the right
and duty to defend the insured against any “suit” seeking those damages.” (FAC,
Ex. A.) Essentially, the Policy indicates that Defendant EIC will pay Plaintiff
any amount as damages that Plaintiff has become legally obligated to pay, i.e.,
ordered by a court to pay because of “bodily injury” or “property damage,”
which is covered by the Policy. The Policy also demonstrates that Defendant EIC
will have a duty to defend Plaintiff against any civil proceeding seeking those
damages. On the face of the FAC, Plaintiff does not allege and in its
opposition concedes that Five Star did not file a lawsuit against Plaintiff for
damages caused to the garments during Plaintiff’s performance of the requested
services. Furthermore, Plaintiff does not allege and concedes the $330,000.00
it paid to Five Star were not ordered by a court.
Thus, Defendant
EIC did not breach any obligation under the Policy as alleged in the second
cause of action for breach of contract in the FAC because it had no duty to
defend or indemnify Plaintiff absent Five Star filing a lawsuit against
Plaintiff for damages caused to the garments and a court ordering Plaintiff to
pay Five Star money damages as a result.
“Personal
Property in Care, Custody or Control” Exclusion
Defendant
EIC argues even if the Policy’s insuring clause were somehow triggered, the
claim would be barred because it is undisputed that the garments were damaged
while plaintiff was performing services on them. In opposition, Plaintiff
asserts Defendant fails to show that Five Star’s claim is not covered by an
exclusion to its insurance policies citing to the Policy’s “Building and Person
Property Coverage Form” and “Equipment Breakdown Enhancement Endorsement.”
Plaintiff further asserts that the Inland Marine policy provides coverage for
damage of personal property of others that is in Plaintiff’s care, custody or
control. In reply, Defendant EIC contends that Plaintiff’s reliance on these
policy provisions are misleading and misplaced because they omit relevant,
applicable exclusions thereunder. Likewise, Defendant EIC contends the FAC does
not allege breach of the Inland Marine Policy, thus reference to its provisions
are improper.
“The elements of
intentional misrepresentation ‘are (1) a misrepresentation, (2) knowledge of
falsity, (3) intent to induce reliance, (4) actual and justifiable reliance,
and (5) resulting damage.’” (Aton Center, Inc. v. United Healthcare Ins. Co.
(2023) 93 Cal.App.5th 1214, 1245.)
“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.)
In Karpe v.
Great American Indem. Co. (1961) 190 Cal.App.2d 226, the court held that “an
insurer is not required to defend an action against its insured when the
complaint in that action shows on its face that the injury complained of is
excluded from policy coverage.” (Karpe v. Great American Indem. Co.
(1961) 190 Cal.App.2d 226, 234.)
Here,
the Policy’s “Equipment Breakdown Enhancement Endorsement” provides that
Defendant EIC will pay for the following that result from an equipment
breakdown: pollutant clean up and removal; expediting expenses; refrigerant
contamination; spoilage service interruption; CFC refrigerants; computer
equipment; media or data; environmental improvement; wear and tear; rust or
other corrosion; smog; settling; nesting or infestation; mechanical breakdown;
dampness of dryness of atmosphere; changes in or extremes of temperatures; and
marring or scratching. (Cross-Complaint, Ex. A at pp. 78, 99-101, 107-113.)
Although Plaintiff’s conduct in causing damage to the personal property of Five
Star constitutes covered property under the Policy, Defendant EIC has shown
that it is not mentioned as a basis for payment resulting from equipment
breakdown (covered cause of loss). (Id.)
Thus,
assuming arguendo that Five Star had commenced civil proceedings against
Plaintiff, the third and fourth causes of action for intentional
misrepresentation and negligent misrepresentation would fail because Defendant
EIC did not mispresent to Plaintiff that there is no coverage for Five Star’s
claim.
Therefore,
Defendant Evanston Insurance Company’s Motion for Judgment on the Pleadings is
GRANTED.
It
is so ordered.
Dated: June 26, 2024
_______________________
MEL RED RECANA
Judge of the
Superior Court