Judge: Michael Shultz, Case: 22CMCV00407, Date: 2023-03-14 Tentative Ruling
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Case Number: 22CMCV00407 Hearing Date: March 14, 2023 Dept: A
[TENTATIVE] ORDER
I.
BACKGROUND
Plaintiff alleges
that Defendant, Travelers Casualty Insurance Co. (“Travelers”), wrongfully and
in bad faith denied coverage to Plaintiff for fire damage that occurred at Plaintiff’s
multi-family apartment building. Plaintiff alleges insurance bad faith and
related claims against Travelers and one cause of action against Defendant,
Garzella Group (“GG”), an insurance broker, for negligence for failing to
obtain the proper insurance to cover Plaintiff for fire loss.
II. ARGUMENTS
Defendant argues
that the seventh cause of action for negligence fails to state a claim against
GG, as Plaintiff did not allege sufficient facts to support that GG owed a duty
to Plaintiff to procure requested insurance or for a specific coverage amount. The
facts do not support causation.
In opposition,
Plaintiff argues that the FAC alleges sufficient facts to support a negligence
claim since GG breached its duty to procure insurance requested by the insured.
In reply, GG
argues that Travelers denied coverage to Plaintiff because Plaintiff failed to
communicate to Travelers regarding Plaintiff’s failure to maintain sprinklers. Plaintiff
cannot plead that GG failed to procure insurance because it did. Therefore, GG did
not cause damage.
III. LEGAL STANDARDS
The bases for
demurrer are limited by statute and may be sustained where the pleading fails
to state a cause of action (among other grounds). (Code Civ. Proc., § 430.10). A demurrer
“tests the sufficiency of a complaint as a matter of law and raises only
questions of law.” (Schmidt v. Foundation Health
(1995) 35 Cal.App.4th 1702, 1706). The court assumes the truth of (1) the
properly pleaded factual allegations; (2) facts that can be reasonably inferred
from those expressly pleaded; and (3) judicially noticed matters. (Blank v. Kirwan (1985) 39
Cal.3d 311, 318). The plaintiff must show that the pleading alleges facts
sufficient to establish every element of each cause of action. (Rakestraw v.
California Physicians Service (2000) 81 Cal.App.4th 39, 43).
IV.
DISCUSSION
Whether a duty of care exists is a question of law for the Court.
(Murray v. UPS Capital Insurance Agency, Inc. (2020) 54 Cal.App.5th 628, 639). A complaint that lacks allegations of fact to show that
Defendant owed a legal duty is fatally defective. (Hegyes v. Unjian Enterprises, Inc. (1991) 234 Cal.App.3d 1103, 1111). The existence of such a duty is properly challenged by
demurrer. (Hegyes at 1111).
The parties do not dispute that an
insurance broker acting as an agent for the Plaintiff, “who intentionally or
negligently fails to procure insurance as requested by a client--either an
insured or an applicant for insurance--will be liable to the client in tort for
the resulting damages.” (AMCO Ins. Co. v. All Solutions Ins. Agency, LLC (2016) 244 Cal.App.4th 883, 890). Liability will be imposed where "(a) the agent
misrepresents the nature, extent or scope of the coverage being offered or
provided (as in Free, Desai and Nacsa), (b) there
is a request or inquiry by the insured for a particular type or extent of
coverage (as in Westrick), or (c) the agent assumes an additional
duty by either express agreement or by ‘holding himself out’ as having
expertise in a given field of insurance being sought by the insured (as
in Kurtz)." (Fitzpatrick v. Hayes (1997)
57 Cal.App.4th 916, 927).
Plaintiff alleges that Plaintiff’s
lender, CBRE/FreddieMac were in direct communication with GG and advised GG of
the requirements of fire loss insurance that Plaintiff was required to maintain
as part of Plaintiff’s loan agreement with CBRE/FreddieMac. (FAC ¶ 85). Plaintiff alleges that it
“effectively had no insurance coverage for fire and business loss despite
paying premiums … .” (FAC ¶ 86).
Facts appearing in attachments to a
pleading that contradict expressly alleged facts are given precedence. (Mead v. Sanwa Bank California (1998)
61 Cal.App.4th 561, 567–568). The
insurance policy provided that as a condition of fire loss coverage, the
insured was required to provide and maintain protective safeguards such as
sprinkler systems. (FAC, Ex. B, p. 183-183). Plaintiff
alleges that GG knew or should have known that Travelers would refuse to
provide coverage for fire loss, presumably because the building did not have
automatic sprinklers. (FAC ¶ 87). Plaintiff did not allege that
either Plaintiff or its lenders requested that GG procure insurance that would
protect against fire loss although the building did not have sprinklers. An
insurance agent “does not owe a duty to volunteer to an insured that the latter
should procure additional or different insurance coverage." (Fitzpatrick at 927).
V.
CONCLUSION
As the FAC does
not allege facts to support a duty owed by GG under the circumstances, the
demurrer is SUSTAINED. Leave to amend is proper where
Plaintiff has not had a fair opportunity to amend, and the defect is capable of
being cured. (Colvig v.
RKO General, Inc. (1965) 232 Cal.App.2d 56, 69–70). Accordingly,
the Court allows 10 days leave to amend to allege a factual basis for a duty
owed by GG.