Judge: Michael E. Whitaker, Case: 24SMCV03909, Date: 2024-10-29 Tentative Ruling

Case Number: 24SMCV03909    Hearing Date: October 29, 2024    Dept: 207

TENTATIVE RULING

MOTIONS

This case arises from a dispute concerning an automobile collision.  On August 13, 2024, Plaintiff Sean Tabibian (“Plaintiff”) brought suit against Defendants Geico General Insurance Company (“Geico” or “Defendant”); Dipak Savani (“Dipak”); and Vishwa Savani (“Vishwa”) (collectively, “Defendants”), alleging five causes of action for (1) breach of contract; (2) breach of the implied covenant of good faith and fair dealing; (3) negligence; (4) unfair business practices; and (5) declaratory relief.  The third cause of action is not alleged against Geico.

Geico now demurs to the first, second, fourth, and fifth causes of action (all causes of action alleged against it) for failure to state facts sufficient to constitute a cause of action pursuant to Code of Civil Procedure section 430.10, subdivision (e).  Geico additionally demurs to the fourth cause of action on the grounds of uncertainty pursuant to Section 430.10, subdivision (f).  Geico further moves to strike allegations pertaining to and requests for punitive damages, injunctive relief, and attorneys’ fees.

Plaintiff opposes both motions and Geico replies.

ANALYSIS

1.     DEMURRER

“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 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, 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.)

A.    UNCERTAINTY

“[D]emurrers for uncertainty are disfavored.”  (Lickiss v. Financial Industry Regulatory Authority (2012) 208 Cal.App.4th 1125, 1135.)  A demurrer for uncertainty will be sustained only where the pleading is so bad that the responding party cannot reasonably respond - i.e., he or she cannot reasonably determine what issues must be admitted or denied, or what claims are directed against him or her.  (Khoury v. Maly’s of California (1993) 14 Cal.App.4th 612, 616.)  Where a demurrer is made upon the ground of uncertainty, the demurrer must distinctly specify exactly how or why the pleading is uncertain, and where such uncertainty appears by reference to page and line numbers.  (See Fenton v. Groveland Comm. Services Dist. (1982) 135 Cal.App.3d 797, 809.) 

                                                         i.          First Cause of Action – Breach of Contract and Breach of the Implied Covenant of Good Faith and Fair Dealing

Although Geico’s Notice of Demurrer only indicates Geico demurs to the first cause of action for failure to state facts sufficient to constitute a cause of action, pursuant to Code of Civil Procedure section 430.10, subdivision (e), the memorandum contains an argument that Plaintiff’s breach of contract cause of action is “uncertain” because it fails to indicate whether the contract is written, oral, or implied by conduct. 

The Court notes that a demurrer on the grounds of uncertainty is brought under subdivision (f), whereas a demurrer on the grounds that the Complaint does not allege whether the contract at issue is written, oral, or implied by conduct, is brought under subdivision (g), neither of which subdivision is listed in Geico’s notice of demurrer, and therefore, Geico has not properly raised a demurrer pursuant to subdivisions (f) or (g).

Moreover, Geico does not demonstrate that the first cause of action is so bad that Geico cannot reasonably determine what issues must be admitted or denied, or what claims are directed against it, to sustain a demurrer for uncertainty under subdivision (f).

Further, Plaintiff alleges the specific claim number under which Plaintiff alleges Defendant Dipak is insured.  (Complaint ¶ 6.)  In light of the ordinary practice of insurance companies to provide written insurance policies, the reasonable inference from these specific allegations is that Dipak’s insurance policy is written. 

Therefore, the Court declines to sustain a demurrer to the first cause of action for “uncertainty” or failure to indicate whether the contract at issue is written, oral, or implied by conduct, pursuant to Code of Civil Procedure section 430.10, subdivisions (f) and/or (g).

Plaintiff has adequately alleged specific details about the insurance contract at issue between Geico and the insured, Defendant Dipak, including the claim number, that the essential terms and legal effect of the contract are not uncertain.  (Twaite v. Allstate Ins. Co. (1989) 216 Cal.App.3d 239, 252 [“To state a cause of action for breach of contract, it is absolutely essential to plead the terms of the contract either in haec verba or according to legal effect”].)  Further, the reasonable inference from the allegations is that the insurance policy is written.

                                                       ii.           Fourth Cause of Action – Unfair Business Practices

Geico argues the fourth cause of action for unfair business practices is uncertain because Plaintiff fails to identify which specific predicate law Geico is alleged to have violated.  The Complaint alleges as follows: “Defendant GEICO has engaged in unlawful, unfair, and fraudulent business practices in violation of California Business and Professions Code § 17200, by unreasonably denying valid insurance claims, failing to conduct proper investigations, and not providing adequate explanations for denials.”  (Complaint ¶ 32.)

Ultimately, Geico has not demonstrated that the Complaint is so bad that Geico cannot reasonably determine what issues must be admitted or denied, or what claims are directed against it.  Therefore, the Court overrules Geico’s demurrer on the basis of uncertainty.

B.    FAILURE TO STATE A CAUSE OF ACTION

                                                         i.          First and Second Causes of Action – Breach of Contract and Breach of the Implied Covenant of Good Faith and Fair Dealing

“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.) 

“To state a cause of action for breach of contract, it is absolutely essential to plead the terms of the contract either in haec verba or according to legal effect.”  (Twaite v. Allstate Ins. Co. (1989) 216 Cal.App.3d 239, 252.)

Similarly, “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.)

The Complaint generally alleges the following:

6. On or about May 14, 2024, Plaintiff’s 2024 BMW M2 was involved in an automobile accident caused by Defendant Vishwa Savani, who was driving a vehicle owned by Defendant Dipak Savani and insured by GEICO under claim number 0260497500101099.

7. The accident resulted in significant damage to Plaintiff’s vehicle, which required extensive repairs. Despite being repaired, the vehicle’s inherent value was substantially diminished due to the nature of the damages.

8. Plaintiff’s vehicle is a limited-edition high-performance model, and its market value prior to the accident was approximately $86,000. Post-repair, the vehicle’s value was appraised at approximately $51,500, resulting in a diminished value of $34,500.

9. Plaintiff was deprived of the use of his vehicle for 39 days during the repair period. The rental value of a comparable vehicle is approximately $250 per day, leading to a loss of use claim amounting to $9,750.

10. On June 24, 2024, Plaintiff submitted a demand letter to GEICO seeking compensation for the diminished value of his vehicle and loss of use, totaling $44,250. GEICO unreasonably denied this claim, breaching its obligations under the insurance policy and acting in bad faith.

11. Plaintiff is an intended third-party beneficiary of the insurance contract between Defendant GEICO General Insurance Company and Defendant Dipak Savani. The liability coverage provided by this policy was intended to indemnify and provide compensation to third parties, such as Plaintiff, who suffer damages directly caused by the insured’s actions.

12. The insurance policy at issue includes coverage for property damage caused by the insured, indicating an intent to benefit individuals, like Plaintiff, who are harmed by the insured’s actions.

13. As a direct result of the actions of Defendant Vishwa Savani, who was driving the vehicle owned and insured by Defendant Dipak Savani, Plaintiff suffered significant property damage. The insurance policy in question was intended to protect Plaintiff from precisely this type of harm, thereby establishing his status as an intended third-party beneficiary.

14. By failing to compensate Plaintiff for his damages, GEICO has breached its obligations under the insurance policy and the implied covenant of good faith and fair dealing, causing Plaintiff to suffer significant economic losses.

(Complaint ¶¶ 6-14.)   With respect to the first cause of action for breach of contract, the Complaint additionally alleges:

16. Defendant GEICO entered into a contract with its insured, Dipak Savani, to provide automobile liability coverage, including coverage for damages caused by the insured’s negligence.

17. Plaintiff is a third-party beneficiary of this contract, as the insurance policy is intended to indemnify and provide compensation to individuals who suffer damages due to the actions of GEICO’s insureds.

18. GEICO breached the contract by failing to pay the diminished value of Plaintiff’s vehicle and the loss of use damages, as required under the policy.

19. As a direct and proximate result of GEICO’s breach, Plaintiff has suffered damages in an amount not less than $44,250.

(Complaint ¶¶ 16-19.)    Regarding the second cause of action for breach of the implied covenant of good faith and fair dealing, the Complaint further alleges:

21. Every contract, including insurance policies, contains an implied covenant of good faith and fair dealing, which requires that the parties act fairly and in good faith toward one another.

22. In Royal Globe Ins. Co. v. Superior Court (1979) 23 Cal.3d 880, the California Supreme Court initially recognized the ability of third-party claimants to bring bad faith claims against insurers. Although Moradi-Shalal v. Fireman's Fund Ins. Companies (1988) 46 Cal.3d 287 later restricted such claims under the Unfair Insurance Practices Act (California Insurance Code Section 790.03), the possibility of pursuing a bad faith claim under common law principles remains intact. Plaintiff asserts that Defendant GEICO’s actions in unreasonably denying his claim and failing to properly investigate constitute a breach of the implied covenant of good faith and fair dealing under these common law principles.

23. GEICO breached this implied covenant by unreasonably denying Plaintiff’s claim for the diminished value of his vehicle and loss of use, failing to properly investigate the claim, and failing to provide a reasonable explanation for the denial.

24. GEICO’s actions were intentional, willful, and in conscious disregard of Plaintiff’s rights, entitling Plaintiff to recover compensatory and punitive damages.

25. As a direct and proximate result of GEICO’s breach of the implied covenant of good faith and fair dealing, Plaintiff has suffered damages in an amount not less than $44,250.

(Complaint ¶¶ 21-25.)

Geico argues Plaintiff’s first cause of action for breach of contract fails, because (1) Plaintiff is not a party to the contract; (2) Moradi-Shalal v. Fireman’s Fund Ins. Co. (1988) 46 Cal.3d 287, 304-305 prohibits breach of contract or breach of implied covenant of good faith and fair dealing actions against insurers by third parties; and (3) Plaintiff does not adequately allege that the objectives of the contract and the reasonable expectations of the contracting parties support Plaintiff enforcing the contract as an intended third party beneficiary.

In general, “California law permits third party beneficiaries to enforce the terms of a contract made for their benefit.”  (Spinks v. Equity Residential Briarwood Apartments (2009) 171 Cal.App.4th 1004, 1021 (hereafter Spinks).)  However, “The circumstance that a literal contract interpretation would result in a benefit to the third party is not enough to entitle that party to demand enforcement. The contracting parties must have intended to confer a benefit on the third party.”  (Id. at p. 1022.)  But “the third person need not be named or identified individually to be an express beneficiary.”  (Id. at p. 1023.)  “A third party may enforce a contract where he shows that he is a member of a class of persons for whose benefit it was made.”  (Ibid.)

“Ultimately, the determination turns on the manifestation of intent to confer a benefit on the third party.”  (Spinks, supra, 171 Cal.App.4th at p. 1023.)  But “there is no requirement that both of the contracting parties must intend to benefit the third party.”  (Ibid.)  It suffices that the promisor understood the promise had such intent at the time of contracting.  (Ibid.)  “Ascertaining intent is a question of ordinary contract interpretation.”  (Ibid.)

“Intent is to be inferred, if possible, solely from the language of the written contract.”  (Spinks, supra, 171 Cal.App.4th at p. 1023.)  However, “[i]n determining the meaning of a written contract allegedly made, in part, for the benefit of a third party, evidence of the circumstances and negotiations of the parties in making the contract is both relevant and admissible.”  (Id. at p. 1024.)

An auto insurance policy is, by its nature, designed to provide financial payouts in the event of an automobile collision.  Automobile collisions frequently either involve third parties or involve damage to the property of third parties.  Here, Plaintiff alleges, “The insurance policy at issue includes coverage for property damage caused by the insured, indicating an intent to benefit individuals, like Plaintiff, who are harmed by the insured’s actions.”  (Complaint ¶ 12.) 

As such, Plaintiff has adequately alleged facts suggesting that Plaintiff is a member of the class of persons Dipak’s insurance policy was designed to benefit, sufficient to state a cause of action to enforce the contract.  Whether Dipak’s insurance policy with Geico in fact covered the type of collision and damage that occurred here is a factual question to be determined at later stages of the litigation.

Geico argues that Moradi-Shalal prohibits third parties from bringing breach of contract or breach of the implied covenant of good faith and fair dealing causes of action against insurers.  Moradi-Shalal’s holding was slightly different.  It held that the Unfair Practices Act (Ins. Code., §§ 790 et seq.) did not create a private right of action for third parties to bring a cause of action against an insurer for bad faith.  In so holding, it elaborated, “the courts retain jurisdiction to impose civil damages or other remedies against insurers in appropriate common law actions, based on such traditional theories as fraud, infliction of emotional distress, and (as to the insured) either breach of contract or breach of the implied covenant of good faith and fair dealing.”  (Moradi-Shalal, supra, 46 Cal.3d at pp. 303-305.) 

The Court does not interpret this passage as creating an affirmative rule that third parties may not sue insurers for breach of contract or breach of the implied covenant of good faith and fair dealing.  Rather, in context, Moradi-Shalal’s holding that the Unfair Practices Act does not create a private right of action for third parties to sue insurers for bad faith is not meant to disturb the availability of other common law causes of action brought against insurers, either by the insured or by affected third parties. 

Thus, the Court finds no basis to sustain Geico’s demurrer to the first cause of action for breach of contract on the basis of Moradi-Shalal alone.

However, with respect to the second cause of action, a common law cause of action for the tortious breach of the implied covenant is available in the insurance context because of the special fiduciary relationship between insurer and insured. (Foley, supra, 47 Cal.3d at pp. 684-693.)  No such special fiduciary relationship exists as between insurer and a third party.

Therefore, the Court sustains Geico’s demurrer to the second cause of action for breach of the implied covenant of good faith and fair dealing, on the grounds that Plaintiff is not the insured.

Accordingly, the Court overrules Geico’s demurrer to the first cause of action for breach of contract, but sustains Geico’s demurrer to the second cause of action for breach of the implied covenant of good faith and fair dealing.

                                                       ii.          Fourth Cause of Action – Unfair Business Practices

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 Am. (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.)  Here, Plaintiff alleges:

32. Defendant GEICO has engaged in unlawful, unfair, and fraudulent business practices in violation of California Business and Professions Code § 17200, by unreasonably denying valid insurance claims, failing to conduct proper investigations, and not providing adequate explanations for denials.

33. Defendant’s practices are likely to deceive members of the public and have caused substantial harm to Plaintiff and others similarly situated.

34. Plaintiff seeks injunctive relief to prevent Defendant GEICO from continuing to engage in these unlawful business practices, as well as restitution and any other relief the Court deems appropriate.

(Complaint ¶¶ 32-34.)

            Geico argues that the Complaint fails to state facts sufficient to constitute a cause of action for violation of the UCL because (1) Plaintiff does not specify what law Geico either violated or violated the spirit of to constitute unlawful or unfair behavior; and (2) the Complaint lacks specificity about how members of the public are likely to be deceived to allege fraudulent conduct.

“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.) 

“One of the purposes of the specificity requirement is notice to the defendant, to furnish the defendant with certain definite charges which can be intelligently met.”  (Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1384.)  As such, less specificity is required “when it appears from the nature of the allegations that the defendant must necessarily possess full information concerning the facts of the controversy[.]”  (Ibid.)  “Even under the strict rules of common law pleading, one of the canons was that less particularity is required when the facts lie more in the knowledge of the opposite party.”  (Ibid.)

            The Court agrees that the Complaint lacks the specificity necessary to allege fraudulent conduct against Geico.  There are simply no allegations about who at Geico knew what, how they knew it, or when they knew it, to support an allegation that Geico’s denial of the claim constituted fraud.

            Similarly, the Court agrees that the Complaint has not identified any predicate law Geico is alleged to have either violated outright or violated the spirit of to constitute unlawful or unfair conduct. 

            Therefore, the Court sustains Geico’s demurrer to the fourth cause of action for unfair business practices. 

                                                     iii.          Fifth Cause of Action – Declaratory Relief

To qualify for declaratory relief, a plaintiff must show their action presents two essential elements: “(1) a proper subject of declaratory relief, and (2) an actual controversy involving justiciable questions relating to the rights or obligations of a party.”  (Lee v. Silveira (2016) 6 Cal.App.5th 527, 546.)  Here, Plaintiff asserts:

36. An actual controversy has arisen and now exists between Plaintiff and Defendant GEICO concerning their respective rights and obligations under the insurance policy issued to Defendant Dipak Savani.

37. Plaintiff contends that he is an intended third-party beneficiary of the insurance policy and that GEICO is obligated to indemnify him for the damages he has suffered, including the diminished value of his vehicle and loss of use.

38. Defendant GEICO disputes this contention and denies that it has any obligation to compensate Plaintiff under the policy.

39. Plaintiff seeks a judicial determination of his rights under the insurance policy, including a declaration that he is an intended third-party beneficiary and that GEICO is obligated to compensate him for his damages. This determination is necessary to clarify the parties’ rights and obligations under the insurance policy and to resolve the ongoing dispute regarding GEICO’s liability to Plaintiff. Without such a determination, Plaintiff remains uncertain of his rights and is unable to obtain the compensation he is entitled to under the policy.

(Complaint, ¶¶ 36-39.)

            Geico contends that (1) because all of Plaintiff’s other causes of action fail, there is no justiciable controversy between the parties to support a claim for declaratory relief; and (2) Plaintiff has failed to allege it exhausted its administrative remedies.

            As discussed above, because the Court overrules Geico’s demurrer to the first cause of action for breach of contract, there exists a justiciable controversy between the parties regarding Plaintiff’s right and obligations under the insurance policy.

            Regarding, Geico’s second argument, “It is firmly established in this state that a litigant must exhaust an administrative remedy provided by statute before he may resort to the courts and that jurisdiction to entertain an action for judicial relief is conditioned upon a completion of the administrative procedure.”  (Walker v. Munro (1960) 178 Cal.App.2d 67, 71.)  But Geico does not indicate what administrative remedy provided by statute Plaintiff is required to have exhausted, and it is not otherwise immediately apparent to the Court.

            Therefore, the Court overrules Geico’s demurrer to the fifth cause of action for declaratory relief.

2.     MOTION TO STRIKE

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, Geico moves to strike from the complaint, references to and claims for punitive damages.    

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.

(Civ. Code, § 3294, subd. (c)(1)-(3), emphasis added.) 

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”].) 

Moreover, “the imposition of punitive damages upon a corporation is based upon its own fault.  It is not imposed vicariously by virtue of the fault of others.”  (City Products Corp. v. Globe Indemnity Co. (1979) 88 Cal.App.3d 31, 36.)  “Corporations are legal entities which do not have minds capable of recklessness, wickedness, or intent to injure or deceive.  An award of punitive damages against a corporation therefore must rest on the malice of the corporation’s employees.  But the law does not impute every employee’s malice to the corporation.  Instead, the punitive damages statute requires proof of malice among corporate leaders:  the officers, directors, or managing agents.”  (Cruz v. Home Base (2000) 83 Cal.App.4th 160, 167 [cleaned up].) 

            Geico moves to strike the following from the Complaint:

1. Paragraph 24: “GEICO’s actions were intentional, willful, and in conscious disregard of Plaintiff’s rights, entitling Plaintiff recover . . . and punitive damages”;

2. Complaint’s Prayer for Relief, p. 6, lines 26-27: “2. For punitive damages against Defendant GEICO General Insurance Company in an amount sufficient to punish and deter such conduct”;

3. Complaint’s Prayer for Relief, p. 7, lines 1-2: “3. For injunctive relief, enjoining Defendant GEICO from continuing to engage in unlawful business practices”; and,

4. Complaint’s Prayer for Relief, p. 7, line 3: “4. For attorney’s fees . . .”

            As for the first two items, as discussed above, the Complaint lacks specific factual detail regarding who at Geico knew what, how they knew it, and when they knew it to allege fraud.  For the same reasons, Plaintiff has not alleged oppression or malice with requisite detail, nor has Plaintiff alleged any such conduct on the part of one of Geico’s corporate leaders to substantiate a request for punitive damages.  Therefore, the Court grants Geico’s motion to strike as to the first two items. 

            As for the third item, because the Court sustains Geico’s demurrer to the fourth cause of action for unlawful business practices, the Court similarly strikes Plaintiff’s request for injunctive relief thereunder.

As for the fourth item, the only causes of action that remain are breach of contract and declaratory relief. 

Code of Civil Procedure section 1033.5, which outlines recoverable costs to a prevailing party under Code of Civil Procedure section 1032, permits the recovery of attorneys’ fees only when authorized by contract, statute, or law.  (Code Civ. Proc., § 1033.5, subd. (a)(10).)  Similarly, Code of Civil Procedure section 1021 provides “[e]xcept as attorney’s fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties [….]”  Civil Code section 1717 provides “[i]n any action on a contract, where the contract specifically provides that attorney’s fees and costs, which are incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the party prevailing on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney’s fees in addition to other costs.”  (Civ. Code, § 1717, subd. (a).)

            Without a copy of the insurance policy (contract) or an allegation that the insurance policy (contract) contains an attorneys’ fees provision, the Court finds there is no legal or contractual basis entitling Plaintiff to attorneys’ fees.  Therefore, the Court will strike item four from the complaint.

3.     LEAVE TO AMEND

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].)

Here, Plaintiff has failed to meet its burden as he does not address whether leave should be granted if either the demurrer is sustained or the motion to strike is granted. 

CONCLUSION AND ORDER

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

Further, the Court grants Geico’s motion to strike in its entirety without leave to amend, and strikes the following from the Complaint:

1. Paragraph 24: “GEICO’s actions were intentional, willful, and in conscious disregard of Plaintiff’s rights, entitling Plaintiff recover . . . and punitive damages”;

2. Complaint’s Prayer for Relief, p. 6, lines 26-27: “2. For punitive damages against Defendant GEICO General Insurance Company in an amount sufficient to punish and deter such conduct”;

3. Complaint’s Prayer for Relief, p. 7, lines 1-2: “3. For injunctive relief, enjoining Defendant GEICO from continuing to engage in unlawful business practices”; and,

4. Complaint’s Prayer for Relief, p. 7, line 3: “4. For attorney’s fees . . .”

Further, the Court orders Geico to file an Answer to the Complaint on or before November 19, 2024.

Geico shall provide notice of the Court’s ruling and file the notice with a proof of service forthwith. 

DATED:  October 29, 2024                                                   ___________________________

                                                                                          Michael E. Whitaker

                                                                                          Judge of the Superior Court