Judge Michael E. Whitaker, Case Number: 23SMCV03392, Date: 2023-12-14 Tentative Ruling

Judge: Michael E. Whitaker, Case: 23SMCV03392, Date: 2023-12-14 Tentative Ruling

On October 25, 2023, Plaintiff Erin Hughes (“Plaintiff”) filed a First Amended Complaint, alleging six causes of action: (1) breach of insurance policy contract; (2) breach of implied covenant of good faith and fair dealing; (3) negligence; (4) fraud; (5) negligent misrepresentation; and (6) unfair business practices.

Defendant California Fair Plan Association (“Defendant”) demurs to all six causes of action on the grounds that they fail to state a cause of action pursuant to Code of Civil Procedure section 430.10, subdivision (e). Defendant also moves to strike Plaintiff’s claims for mental and emotional distress damages, punitive damages, and attorneys’ fees.

1. Exhibit A – Insurance Policy No. CFP 2697143 00 issued by Defendant to Plaintiff for effective policy period December 12, 2020 to December 12, 2021.

Defendant makes the request pursuant to Evidence Code section 452, subdivision (h) as “facts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy.”

Evidence Code section 452 is not mandatory, but permissive, providing that judicial notice may be taken.

In support of Defendant’s request, Defendant cites to several cases as standing for the proposition that courts may properly take judicial notice of private contracts generally as facts and propositions not reasonably subject to dispute and capable of immediate and accurate determination by sources of reasonably indisputable accuracy. The Court disagrees that the cited cases establish such a principle.

In Sheet Metal Workers Internat. Assn., Local Union No. 104 v. Rea, the court took judicial notice of the prevailing wage determinations for San Mateo and Santa Clara Counties as “official acts of an executive department of this state” pursuant to Evidence Code section 452, subdivision (c), not as “facts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy” pursuant to subdivision (h). (Sheet Metal Workers Internat. Assn., Local Union No. 104 v. Rea (2007) 153 Cal.App.4th 1071, 1075.)

Similarly, in Scott v. JPMorgan Chase Bank, N.A., the court took judicial notice of the P & A Agreement posted on the official FDIC website and its legal effect, both as an official act of the executive branch pursuant to subdivision (c) and as facts and propositions not reasonably subject to dispute and capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy [the FDIC’s official website]. (Scott v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 743, 753.)

At issue in Ascherman v. General Reinsurance Corp was whether it was proper for the trial and appellate courts to consider judicially noticeable evidence at all in ruling on a demurrer, not whether the specific evidence at issue was properly subject to judicial notice. In any event, the appellate court noted that the trial court took judicial notice of the reinsurance contract pursuant to subdivisions (c) and (h), which suggests that the reinsurance contract at issue involved some official government act, which also made it capable of determination by resort to sources of reasonably indisputable accuracy. (Ascherman v. General Reinsurance Corp (1986) 183 Cal.App.3d 307, 311.)

Finally, in Hendy v. Losse, the parties did not dispute whether it was proper for the trial court to take judicial notice of the National Football League employment contract and collective bargaining agreement between the league’s management counsel and the National Football League Players Association, so the California Supreme Court did not analyze the issue. (Hendy v. Losse (1991) 54 Cal.3d 723, 728.)

Here, Defendant does not cite to any authority that a private contract between litigants is somehow capable of determination by resort to sources of reasonably indisputable accuracy.

“It is black letter law that a demurrer tests the legal sufficiency of the allegations in a complaint.” (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388.) In testing the sufficiency of a cause of action, a court accepts “[a]s true all material facts properly pled and matters which may be judicially noticed but disregard contentions, deductions or conclusions of fact or law. [A court also gives] the complaint a reasonable interpretation, reading it as a whole and its parts in their context.” (290 Division (EAT), LLC v. City & County of San Francisco (2022) 86 Cal.App.5th 439, 450 [cleaned up]; Hacker v. Homeward Residential, Inc. (2018) 26 Cal.App.5th 270, 280 [“in considering the merits of a demurrer, however, “the facts alleged in the pleading are deemed to be true, however improbable they may be”].)

Further, in ruling on a demurrer, a court must “liberally construe” the allegations of the complaint “with a view to substantial justice between the parties.” (See Code Civ. Proc., § 452.) “This rule of liberal construction means that the reviewing court draws inferences favorable to the plaintiff, not the defendant.” (Perez v. Golden Empire Transit Dist. (2012) 209 Cal.App.4th 1228, 1238.)

In summary, “[d]etermining whether the complaint is sufficient as against the demurrer on the ground that it does not state facts sufficient to constitute a cause of action, the rule is that if one 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, or may be intermingled with a statement of other facts irrelevant to the cause of action shown, or although the plaintiff may demand relief to which he is not entitled under the facts alleged.” (Gressley v. Williams (1961) 193 Cal.App.2d 636, 639.)

“To prevail on a cause of action for breach of contract, the plaintiff must prove (1) the contract, (2) the plaintiff's performance of the contract or excuse for nonperformance, (3) the defendant's breach, and (4) the resulting damage to the plaintiff.” (Richman v. Hartley (2014) 224 Cal.App.4th 1182, 1186.)

Defendant argues that Plaintiff fails to attach a copy of the insurance contract or plead its essential terms and that Plaintiff also fails to allege Defendant’s breach.

7. On or about December 12, 2020 The Defendant CFP issued to Plaintiff a Dwelling INSURANCE POLICY NO. 2697143 00. The policy coverage period was from December 12, 2020 through December 12, 2021. The policy inter alia covered among other conditions direct loss of dwelling from fire for an amount of $1,200,000, as well as, damage to plants and shrubs on the property for an amount of $100,000 (“POLICY”).

13. The Plaintiff and the Defendant entered into a written contractual agreement, with the Plaintiff being an insured under the POLICY which provided coverage for a loss caused by fire and granted $1.2 Million in dwelling coverage as well as $100,000 in plants and shrub damage. The POLICY was in effect on the date of the loss and is in the possession of CFP.

15. The Defendant breached the terms of the POLICY by unreasonably delaying investigation of the claim and the refusing to compensate Plaintiff for the covered loss pursuant to the terms of the policy including preparation of erroneous estimates for rebuild by William Ball and Crawford, failing to pay the 1.2 Million in insurance benefits, failing to pay Full Rental Value, failing to accurately allocate and define the insurance premium payment disbursements, failing to pay $100,000 in plants and shrub coverage, as well as engaging in actions described in Paragraph 10 of this Complaint.

Defendant contends “these bare allegations” are insufficient to put Plaintiff on notice of what breach occurred. The Court disagrees. There is no heightened pleading standard for breach of contract, and Plaintiff has adequately pleaded that Defendant beached the terms of the agreement by, among other things, (1) “unreasonably delaying investigation of the claim”; (2) “refusing to compensate Plaintiff for the covered loss pursuant to the terms of the policy”; (3) “failing to pay the 1.2 Million in insurance benefits”; (4) “failing to pay Full Rental Value”; (5) “failing to accurately allocate and define the insurance premium payment disbursements”; and (6) “failing to pay $100,000 in plants and shrub coverage[.]” This is sufficient at the pleadings stage.

Defendant also argues that it “actually paid Plaintiff the full $1,200,000 policy limits under Dwelling Coverage.” (Demurrer at p. 10, fn. 1.) However, there is no evidentiary basis for Defendant’s contention, and even if there were, the Court cannot properly consider extrinsic evidence when deciding a demurrer. (See, e.g., Childs v. State of California (1983) 144 Cal.App.3d 155, 163 [“It is an elementary rule that the sole function of a demurrer is to test the sufficiency of the challenged pleading. It cannot, properly, be addressed to or based upon evidence or other extrinsic matters”].)

Defendant also contends that Plaintiff’s action is time-barred by virtue of a clause in the policy requiring that claims be brought within one year. (Demurrer at pp. 10-11.) This argument is premised on an analysis of the policy agreement, which the Court has declined to take judicial notice of at this stage of the litigation. Therefore, the Court cannot sustain a demurrer on this basis.

ii. Second Cause of Action – Breach of Implied Covenant of Good Faith and Fair Dealing

“Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.” (Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 683.) “Because the covenant is a contract term, however, compensation for its breach has almost always been limited to contract rather than tort remedies.” (Id. at p. 684.) “As a contract concept, breach of the duty led to imposition of contract damages determined by the nature of the breach and standard contract principles.” (Ibid.)

A notable exception to this general rule is in the insurance contract context, where courts have determined, that due to the special fiduciary relationship between insurer and insured, breach of the implied covenant of good faith and fair dealing can sound in tort in such a context. (Foley v. Interactive Data Corp., supra, 47 Cal.3d at pp. 684-693.)

“[I]n a claim against an insurance carrier, ‘there are at least two separate requirements to establish breach of the implied covenant [of good faith and fair dealing]: (1) benefits due under the policy must have been withheld; and (2) the reason for withholding benefits must have been unreasonable or without proper cause.” (Shusha, Inc. v. Century-National Insurance Company (2022) 87 Cal.App.5th 250, 267.)

Defendant contends Plaintiff’s second cause of action for Breach of the Implied Covenant of Good Faith and Fair Dealing fails because (1) Plaintiff failed to state a claim for breach of contract; and (2) Plaintiff does not allege Defendant’s conduct was unreasonable.

With regard to Defendant’s first argument, as discussed above, Plaintiff adequately alleges a cause of action for breach of contract.

10. The Plaintiff timely made a claim to CFP, however, CFP negligently and in bad faith:

(a) Misrepresented the maximum available insurance coverage to Plaintiff and concealed that the maximum dwelling and property coverage available was $3,000,000;

(b) Wrongfully and in bad faith failed to Pay To Plaintiff the full $1.2 Million dwelling insurance coverage;

(c) Intentionally Misrepresented the estimates for rebuilding the dwelling it provided to Hughes with the help of William Ball and Crawford & Company. Instead of using the original floor plans provided to Mr. Ball by Plaintiff, William Ball and Crawford inserted the wrong description of Plaintiff’s property and used a computer program to generate an estimate with erroneous property description that was to be rebuilt. The property description in Ball’s estimate was starkly different from the original plans of the property given to him by Plaintiff. Ball wrote the first incorrect estimate with the wrong property description in May of 2021 where the rebuild cost was $650,000. After Plaintiff informed Ball of the mistakes in his estimates he delayed issuing another estimate until May 6 of 2022. The May 2022 estimate was for $1,536,86488 but still had the wrong description of the property which was to be rebuild. These mistakes by Ball caused an unreasonable delay in processing the claim and the claim is still not processed since the required insurance benefits have not been paid. Furthermore CARRINGTON insisted on using the erroneous estimate prepared by Ball in allocation of the insurance funds it held and refused to disburse such funds to the Plaintiff unless she followed the erroneous estimate. Based on information and belief the insurance funds were kept by CARRINGTON in an account where the interest was paid to the California State which indirectly benefits California Fair Plan .

(d) CFP and Carrington Unreasonably and fraudulently delayed payment of policy benefits and intentionally stalled the rebuild of the property to allow Carrington to foreclosure on the property and keep all the equity. This fraudulent plan was achieved by redirecting the Plaintiff with her requests to disburse funds for rebuild from CFP to Carrington and back based on the wrongful estimate of William Ball, as well as Crawford & Company who prepared incorrect estimates and floor plans of Plaintiff’s property which they refused to correct causing delay, ultimate seizure of $802,135.01 in insurance benefits payments by Plaintiff’s mortgagee Carrington Mortgage Services LLC and a judicial foreclosure complaint by Carrington;

(e) CFP Failed to accurately specify the allocation of approximately $225,000 in insurance benefits causing Carrington Mortgage to refuse to pay these funds to Plaintiff;

(f) CFP wrongfully refused to pay Fair Rental Value to Plaintiff for her relocation expenses. In fact based on a conversation overheard by Plaintiff between CFP and Carrington’s representative , Carrington instructed CFP and the latter agreed not to pay full Fair Rental Value to Plaintiff because Carrington wanted to keep more of the insurance proceeds to itself.

(g) CFP wrongfully issued a partial denial on Plaintiff s claim for fire damage to her plants and shrubs and refusing to pay approximately $51,000.00 in insurance benefits for damage to her plants

(h) While knowing that Plaintiff has suffered severe emotional distress and is experiencing extreme post-traumatic stress disorder due to the loss of her family home while having 4 young children to take care of, as well as her incapacitated by a stroke ex-husband, CFP intentionally and for several years since the fire occurred and reporting of the claim engaged in conduct described in paragraphs (a)-(h) despite numerous requests to cure their mistakes by the Plaintiff and her counsel.

(a) Unreasonably delayed payment of policy benefits and intentionally stalled the claim by issuing an erroneous estimate for rebuild of the dwelling, use of outdated and incorrect floor plans by Defendants CFP, WILLIAM BALL, as well as CRAWFORD & COMPANY who prepared incorrect estimates and floor plans of Plaintiff’s property which they refused to revise causing delay and ultimate freezing of $802,135.01 in insurance benefits payments by Plaintiff’s mortgagee Carrington Mortgage Services LLC ;

(b) Failed to accurately specify the allocation of approximately $225,000 in insurance benefits causing Carrington Mortgage to refuse to pay these funds to Plaintiff;

(c) Wrongfully issuing a partial denial on Plaintiff s claim for fire damage to her plants and shrubs and refusing to pay approximately $51,000.00 in insurance benefits for damage to her vegetation;

(d) Wrongfully and intentionally issuing faulty rebuild estimates through CRAWFORD & COMPANY as well as estimator/adjuster WILLIAM BALL which were lacking sufficient detail for allocation of insurance benefits and which caused Plaintiff’s mortgagee Carrington Mortgage Services LLC to refuse the release to Plaintiff of approximately $802,135.01 in insurance benefits;

(e) Failure of CRAWFORD & COMPANY and WILLIAM BALL to use accurate floor plans, blue prints and county records in their estimates for rebuild of the dwelling;

(f) Unreasonably and in bad faith failing to implement standards for the prompt investigation and processing of claims;

(g) Unreasonably and in bad faith denying coverage despite all uncontroverted evidence requiring coverage;

(h) Unreasonably and in bad faith failed to retain competent independent experts to ¿sist [sic] in the fair, reasonable, objective and prompt investigation of the claim;

(i) Unreasonably and in bad faith withheld payment of sums due and owing Plaintiff;

(j) Unreasonably and in bad faith failed to reasonably investigate and process Plaintiff’s claim for benefits;

(m) Unreasonably and in bad faith ignored evidence supporting coverage such as invoices, statements from witnesses, and photos of stolen items;

(n) Unreasonably and in bad faith failed to search diligently for evidence that supported payment of the claim; and

(o) Unreasonably and in bad faith compelled Plaintiff to institute litigation to recover amounts due under the Policy;

(FAC ¶¶ 10, 20.) Thus, the Complaint adequately alleges that Defendant unreasonably delayed and partially denied Plaintiff’s claim, despite possessing contrary information, by virtue of Plaintiff’s repeated communications with Defendant.

“The elements of any negligence cause of action are duty, breach of duty, proximate cause, and damages.” (Peredia v. HR Mobile Services, Inc. (2018) 25 Cal.App.5th 680, 687.)

Defendant contends that insurers owe no duty of care to insureds. (See Sanchez v. Lindsey Morden Claims Servs., Inc. (1999) 72 Cal.App.4th 249, 254 [“Negligence is not among the theories of recovery generally available against insurers”], citing Croskey et al., Cal. Practice Guide: Insurance Litigation 2 (The Rutter Group 1998) ¶¶ 12:818, 11:205, pp. 12C-6, 11-48 to 11-49, rev. #1, 1996] [outlining the few exceptions, such as duty to defend, not relevant here].)

Specifically, absent specific exceptions, not applicable here, insurers can be liable to insureds only on tort causes of action requiring bad faith, such as the breach of the implied covenant of good faith and fair dealing. (Ibid.)

Therefore, the Court sustains Defendant’s demurrer to the third cause of action for Negligence.

ii. Fourth and Fifth Causes of Action – Fraud & Negligent Misrepresentation

The elements for fraudulent misrepresentation are “(1) the defendant represented to the plaintiff that an important fact was true; (2) that representation was false; (3) the defendant knew that the representation was false when the defendant made it, or the defendant made the representation recklessly and without regard for its truth; (4) the defendant intended that the plaintiff rely on the representation; (5) the plaintiff reasonably relied on the representation; (6) the plaintiff was harmed; and (7) the plaintiff's reliance on the defendant's representation was a substantial factor in causing that harm to the plaintiff.” (Graham v. Bank of America, N.A. (2014) 226 Cal.App.4th 594, 605–606.)

“The essential elements of a count for negligent misrepresentation are the same [as intentional misrepresentation] except that it does not require knowledge of falsity but instead requires a misrepresentation of fact by a person who has no reasonable grounds for believing it to be true.” (Chapman v. Skype Inc. (2013) 220 Cal.App.4th 217, 230-231 (hereafter Chapman).) Like intentional misrepresentation, causes of action for negligent misrepresentation sound in fraud, and must also, therefore, be pleaded with particularity. (Ibid.)

“In California, fraud must be pled specifically; general and conclusory allegations do not suffice.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.) “This particularity requirement necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered.” (Ibid.) Causes of action for negligent misrepresentation sound in fraud, and must also, therefore, be pleaded with particularity. (Chapman v. Skype Inc., supra, 220 Cal.App.4th at pp. 230-231.)

Defendant contends Plaintiff fails to plead the fraud-based causes of action with requisite specificity -- Plaintiff fails to allege any misrepresentations Defendant made and Plaintiff fails to allege reliance.

10. The Plaintiff timely made a claim to CFP, however, CFP negligently and in bad faith:

(a) Misrepresented the maximum available insurance coverage to Plaintiff and concealed that the maximum dwelling and property coverage available was $3,000,000;

(c) Intentionally Misrepresented the estimates for rebuilding the dwelling it provided to Hughes with the help of William Ball and Crawford & Company. […]

(g) CFP wrongfully issued a partial denial on Plaintiff s claim for fire damage to her plants and shrubs and refusing to pay approximately $51,000.00 in insurance benefits for damage to her plants

(d) CFP Intentionally concealed and/or misrepresenting the allocation of approximately $225,000 in insurance benefits which resulted in Carrington Mortgage refusal to pay these funds to Plaintiff; Also fraudulently failed to pay the $1.2 Million in insurance proceeds to the Plaintiff

(e) CFP Wrongfully issuing a partial denial on Plaintiff s claim for fire damage to her plants and shrubs and refusing to pay approximately $51,000.00 in insurance benefits for damage to her vegetation;

(f) All Defendants Wrongfully and intentionally used and enforced faulty rebuild estimates through engagement of CRAWFORD & COMPANY as well as estimator/adjuster William Ball which were lacking sufficient detail for allocation of insurance benefits and which caused Plaintiff’s mortgagee Carrington Mortgage Services LLC to refuse the release to Plaintiff of approximately $802,135.01 in insurance benefits.

29. The Plaintiff relied on the above fraudulent representations by the Defendants and Does 2- 50, and was not aware of the true nature of the facts due to the half truth representation of CFP’s adjusters including Kwanza Johnson , Mandy Thornton, William Ball and other Does 1-50 who misrepresented the reason for partial denial of Plaintiff’s insurance benefits for damage to her vegetation, used inaccurate and false estimates for damages to Plaintiff’s dwelling prepared by William Ball and Does 1-50 who knew or should have known that these representations were not true.

(FAC ¶¶ 10, 28-29.) Although the FAC contains some specific facts about what Defendant’s alleged misrepresentations are, and the individuals who made the misrepresentations, it does not specify when the alleged misrepresentations were made, how some of them were made (e.g. orally, in writing, etc.), or to whom the misrepresentations were made. Thus, Plaintiff fails to plead her fraud and negligent misrepresentation claims with requisite specificity.

Therefore, the Court sustains Defendant’s demurrers to the fourth and fifth causes of action.

Business and Professions Code section 17200, known as the Unfair Competition Law, or “UCL,” bars unfair competition, defined as “any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising and any act prohibited by Chapter 1 (commencing with Section 17500) of Part 3 of Division 7 of the Business and Professions Code. “An ‘unlawful’ business practice or act within the meaning of the UCL is an act or practice, committed pursuant to business activity, that is at the same time forbidden by law.” (Bernardo v. Planned Parenthood Federation of America (2004) 115 Cal.App.4th 322, 351.) “By proscribing ‘any unlawful’ business practice, section 17200 borrows violations of other laws and treats them as unlawful practices that the unfair competition law makes independently actionable.” (Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 180.) Moreover, “a practice may be deemed unfair even if not specifically proscribed by some other law.” (Ibid.)

Defendant argues that (1) Plaintiff does not allege Defendant engaged in any unfair, unlawful, or fraudulent conduct; and (2) Plaintiff has not demonstrated an entitlement to restitution or injunctive relief.

35. The Defendants and each of them made false representations and engaged in deceptive business practices as stated in paragraphs 1-31which harmed the Plaintiff and require a restitution of the Plaintiff’s funds, compensatory and punitive damages due to malice of the Defendants.

As discussed above, Plaintiff fails to allege fraud with requisite specificity, and therefore, cannot predicate the UCL claim on the fraud-based causes of action. Moreover, while Plaintiff alleges other Defendants committed statutory violations, Plaintiff does not allege any unlawful behavior as to Defendant. Thus, Plaintiff’s UCL claim survives, only if Plaintiff has alleged Defendant engaged in an “unfair” business practice.

A business practice is “unfair” under the UCL if (1) it is within the “penumbra” of some other law and therefore violates public policy; (2) it is immoral, unethical, oppressive, or unscrupulous; or (3) causes substantial injury to consumers, competitors, or other businessmen.

Plaintiff does not allege any conduct that violates public policy under the penumbra of any other law, nor does Plaintiff allege immoral, unethical, oppressive, or unscrupulous conduct on behalf of Defendant.

Therefore, the Court sustains Defendant’s demurrer to the sixth cause of action.

Any party, within the time allowed to respond to a pleading, may serve and file a motion to strike the whole pleading or any part thereof. (Code Civ. Proc., § 435, subd. (b)(1); Cal. Rules of Court, rule 3.1322, subd. (b).) On a motion to strike, the court may: (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. (Code Civ. Proc., § 436, subd. (a)-(b); Stafford v. Shultz (1954) 42 Cal.2d 767, 782.) Here, Chan moves to strike from the complaint, references to and claims for punitive damages.

Defendant moves to strike Plaintiff’s references to and requests for punitive damages, attorneys’ fees, and emotional distress.

In ruling on a motion to strike punitive damages, “judges read allegations of a pleading subject to a motion to strike as a whole, all parts in their context, and assume their truth.” (Clauson v. Superior Court (1998) 67 Cal.App.4th 1253, 1255.) To state a prima facie claim for punitive damages, a plaintiff must allege the elements set forth in the punitive damages statute, Civil Code section 3294. (College Hosp., Inc. v. Superior Court (1994) 8 Cal.4th 704, 721.) Per Civil Code section 3294, a plaintiff must allege that the defendant has been guilty of oppression, fraud, or malice. (Civ. Code, § 3294, subd. (a).) As set forth in the Civil Code,

(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.

Further, a plaintiff must assert facts with specificity to support a conclusion that a defendant acted with oppression, fraud or malice. To wit, there is a heightened pleading requirement regarding a claim for punitive damages. (See Smith v. Superior Court (1992) 10 Cal.App.4th 1033, 1041-1042.) “When nondeliberate injury is charged, allegations that the defendant’s conduct was wrongful, willful, wanton, reckless or unlawful do not support a claim for exemplary damages; such allegations do not charge malice. When a defendant must produce evidence in defense of an exemplary damage claim, fairness demands that he receive adequate notice of the kind of conduct charged against him.” (G. D. Searle & Co. v. Superior Court (1975) 49 Cal.App.3d 22, 29 [cleaned up].) In Anschutz Entertainment Group, Inc. v. Snepp, the Court of Appeal noted that the plaintiffs’ assertions related to their claim for punitive damages were “insufficient to meet the specific pleading requirement.” (Anschutz Entertainment Group, Inc. v. Snepp (2009) 171 Cal.App.4th 598, 643 [plaintiffs alleged “the conduct of Defendants was intentional, and done willfully, maliciously, with ill will towards Plaintiffs, and with conscious disregard for Plaintiff's rights. Plaintiff's injuries were exacerbated by the malicious conduct of Defendants. Defendants' conduct justifies an award of exemplary and punitive damages”]; see also Grieves v. Superior Court (1984) 157 Cal.App.3d 159, 166 [“The mere allegation an intentional tort was committed is not sufficient to warrant an award of punitive damages. Not only must there be circumstances of oppression, fraud, or malice, but facts must be alleged in the pleading to support such a claim”].)

Here, as discussed above, Plaintiff has not alleged facts with requisite specificity to state the causes of action sounding in fraud against Defendant. Similarly, Plaintiff has not alleged facts with the requisite specificity demonstrating oppression or malice. As such, the Court finds that the allegations do not adequately support a claim for punitive damages against Defendant.

An insured can recovery attorneys’ fees incurred where the insurer is found to have acted in bad faith. (Brandt v. Superior Court (1985) 37 Cal.3d 813.) Because the Court overrules Defendant’s demurrer to Plaintiff’s second cause of action for breach of the implied warranty of good faith and fair dealing, Plaintiff’s request for attorneys’ fees is also proper.

Defendant contends that Plaintiff may not recover damages for emotional distress on claims for breach of contract or negligence. (Motion to Strike at pp. 10-12.) But where a Defendant’s breach of contract also constitutes a tort, the Plaintiff may recover damages for mental distress. (Crisci v. Security Ins. Co. of New Haven, Conn. (1967) 66 Cal.2d 425, 433-434.) Here, because Plaintiff has adequately alleged causes of action for breach of contract and breach of the implied warranty of good faith and fair dealing, Plaintiff may request damages for emotional distress.

A plaintiff has the burden of showing in what manner the complaint could be amended and how the amendment would change the legal effect of the complaint, i.e., state a cause of action. (See The Inland Oversight Committee v City of San Bernardino (2018) 27 Cal.App.5th 771, 779; PGA West Residential Assn., Inc. v Hulven Int'l, Inc. (2017) 14 Cal.App.5th 156, 189.) A plaintiff must not only state the legal basis for the amendment, but also the factual allegations sufficient to state a cause of action or claim. (See PGA West Residential Assn., Inc. v Hulven Int'l, Inc., supra, 14 Cal.App.5th at p. 189.) Moreover, a plaintiff does not meet his or her burden by merely stating in the opposition to a demurrer or motion to strike that “if the Court finds the operative complaint deficient, plaintiff respectfully requests leave to amend.” (See Major Clients Agency v Diemer (1998) 67 Cal.App.4th 1116, 1133; Graham v Bank of America (2014) 226 Cal.App.4th 594, 618 [asserting an abstract right to amend does not satisfy the burden].)

In the opposition, Plaintiff contends she can add additional facts demonstrating reliance, and alleging statutory violations and negligence by Defendants Crawford and Ball, but does not provide any more specific facts regarding Defendant California Fair Plan’s alleged misrepresentations or statutory violations

For the reasons stated, the Court sustains Defendant’s Demurrer to the third, fourth, fifth, and sixth causes of action without leave to amend, and overrules Defendant’s Demurrer to the first and second causes of action.

Further, the Court grants in part and denies in part Defendant’s motion to strike. The Court strikes from the first amended complaint Plaintiff’s requests for and references to punitive damages as follows without leave to amend:

1. “As a proximate result of the malicious, oppressive and fraudulent conduct,” (FAC ¶ 11, 5:24)

2. “Due to the malicious, oppressive, and fraudulent conduct of the Defendants, and Does 2-50, Plaintiff is entitled to exemplary damages.” (FAC, ¶ 22, 9:2-3.)

3. “Due to the malicious, oppressive, and fraudulent conduct of the Defendants, and Does 1-50, Plaintiff is entitled to exemplary damages.” (FAC, ¶ 31, 13:23-24.)

5. “2) For punitive damages.” (FAC, Prayer for Relief on the Second and Fourth Causes of Action, ¶ 2, 15:9.)

6. “3) Punitive Damages.” (FAC, Prayer for Relief on the Sixth Cause of Action, ¶ 3, 15:17.)

7. “5) Punitive and exemplary damages in an amount appropriate to punish or set an example of Farmers” [sic] (FAC, Prayer for Relief on All Causes of Action, ¶ 5, 16:3-4.)

Defendant shall file and serve an answer to the amended complaint as required under the Code of Civil Procedure.[1]

Defendant shall provide notice of the Court’s ruling and file a proof of service regarding the same.

[1] The Court notes that Plaintiff has until January 31, 2024 to file and serve a second amended complaint, as a result of the demurrers filed by Defendant Carrington and by Defendants William Ball and Crawford & Company. (See January 5, 2024 Minute Orders.) If Plaintiff files and serves the second amended complaint on or before January 31, 2024, Defendant shall have thirty-days from the service thereof to file and serve a responsive pleading thereto. (See Code Civ. Proc., § 471.5.)

DEPARTMENT	207
HEARING DATE	January 29, 2024
CASE NUMBER	23SMCV03392
MOTIONS	Demurrer and Motion to Strike Portions of the First Amended Complaint
MOVING PARTY	Defendant California Fair Plan Association
OPPOSING PARTY	Plaintiff Erin Hughes