Judge: Ralph C. Hofer, Case: 22GDCV00072, Date: 2022-08-05 Tentative Ruling

Case Number: 22GDCV00072    Hearing Date: August 5, 2022    Dept: D

TENTATIVE RULING

                                                                               

Calendar:         7                                             

Date:               8/5/2022                                                                     

Case No:        22 GDCV00072                                               Trial Date:       None Set

Case Name:   Stepanyan v. Topa Insurance Company          

 

DEMURRER

                                                                                               

Moving Party:            Defendant Topa Insurance Company      

Responding Party:       Plaintiff William Stepanyan     

 

RELIEF REQUESTED:        

             Sustain demurrer to third cause of action of Complaint

             

CAUSES OF ACTION:         from Complaint (from body of pleading, not caption)

1)      Breach of the Implied Covenant of Good Faith and Fair Dealing 

2)      Breach of Contract 

3)      Unfair Business Practices

 

SUMMARY OF FACTS:

            Plaintiffs William Stepanyan alleges that defendant Topa Insurance Company issued plaintiff a homeowner’s insurance policy for plaintiff’s home in Glendale, which was in full force and effect when, in April of 2021, a water loss occurred at the property.  

 

            The complaint alleges that plaintiff discovered the water leak, which had penetrated the majority of the interior of the property, and immediately turned off the water line and called a plumber.  The plumber hired to repair the leak determined that an angle stop under the sink had failed, and replaced the angle stop.  A restoration company then inspected the property, packed out most of the contents, and provided mitigation services to dry the water that had penetrated the subfloor and walls as a result of the incident.  Plaintiff and his family were required to relocate as a result of the incident.  

 

Plaintiff alleges that in April of 2021, plaintiff submitted a claim to defendant for the incident, and in July 2021 provided a notarized proof of loss, estimating plaintiff’s losses at $253,944.25.  

 

The complaint alleges that during the investigation of the claim, defendant requested documentation regarding the loss which had already been provided, or was not relevant or reasonably necessary to investigate the claim, in an effort to annoy, harass and vex plaintiff and his wife, and then falsely stated that plaintiff’s former counsel had failed to present plaintiff for an Examination Under Oath or an inspection of personal property, and accused plaintiff of failing to cooperate because defendant’s investigator was unable to obtain information from the plumber and remediation company.  The investigator scheduled an inspection at the property, but arrived seeking inspection of personal property only, which had been packed out and was being stored offsite.  Plaintiff alleges that plaintiff and his wife were assured that no further inspection of the property was necessary.  Plaintiff also alleges that the subsequent inspection of personal property improperly placed an onus on plaintiff’s wife with respect to the water damage to such property.  It is also alleged that plaintiff, after engaging new counsel, again produced 1,186 pages of documents.

 

Plaintiffs allege that defendant insisted that the Examinations Under Oath be conducted in person, despite the COVID pandemic, and that plaintiff and his wife not wear face coverings during their examinations, despite Los Angeles County Department of Health requirements that mask must be worn in all indoor public settings and public and private businesses. 

 

The complaint alleges that after the examinations were completed, neither plaintiff nor his wife were afforded an opportunity to review or correct the transcripts, in violation of the Insurance Code.   On December 28, 2021, defendant’s counsel sent a letter denying plaintiff’s claim, which plaintiff alleges failed to comply with insurance regulations. The complaint also alleges that defendant failed to follow fair claim settlement regulations, and other standards of conduct with regard to fair handling of claims. 

 

The complaint also alleges that plaintiff has a custom and practice of discriminating against its own insureds who are of Armenian and/or Middle Eastern descent, which violates the unfair competition law, and seeks injunctive relief to enjoin defendants from committing further unfair practices.    

 

ANALYSIS:

Procedural

Untimely

The demurrer is untimely.

 

            Under CCP §430.40, the time permitted to demur to a complaint is “within 30 days after service of the complaint…”

 

CRC Rule 3.110(d) provides:

“The parties may stipulate without leave of court to one 15-day extension beyond the 30-day time period prescribed for the response after service of the initial complaint.”

 

            Here, the complaint was personally served on defendant on March 23, 2022.    Thirty days from this date would have been April 22, 2023.  The demurrer was filed and served on May 13, 2022, twenty-one days late.  This time frame is beyond the permissible time for the parties to have stipulated to a fifteen-day extension beyond the 30-day time period, and, in any case, the motion does not indicate that any stipulation excuses the untimeliness.  There has been no leave of court for an extension to plead.   The demurrer is overruled as untimely. 

 

Substantive

Third Cause of Action—Unfair Business Practices

Defendant Topa Insurance argues that the third cause of action for unfair business practices fails to set forth facts sufficient to state a cause of action. 

           

To state a cause of action for Unfair Business Practices, a plaintiff must allege the following elements:

1) Defendant has engaged in more than one unlawful, unfair, or fraudulent transaction, including unfair, deceptive, untrue or misleading advertising

2) Plaintiff’s right to restitution, if any.  Damages are not recoverable.

3) Plaintiff’s right to injunctive relief, if any.

Business & Professions Code § 17200 et seq.; Dean Witter Reynolds, Inc. v. Superior Court (1989) 211 Cal.App.3d 758.

 

            To state a claim, there must be allegations showing unlawful, unfair or fraudulent business acts or practices.  Paulus v. Bob Lynch Ford, Inc. (2006) 139 Cal.App.4th 659, 676-677.  

 

With respect to when a practice is “unfair,” the Second District in Community Assisting Recovery, Inc. v. Aegis Security Ins. Co. (2001 2nd Dist.) 92 Cal.App.4th 886, 891 set forth the following definition:

“A business practice is ‘unfair’when it offends an established public policy or when the practice is immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers.” 

Community Assisting, at 894.

 

            The complaint here alleges that defendant engages in “a custom and practice of discriminating against its own insureds who are of Armenian descent.”  [Complaint, para. 87].  This allegation is sufficient to allege a practice which is unlawful and would also fall within the broad definition of unfair.   The complaint seeks injunctive relief to enjoin defendant from committing further unlawful and unfair practices.  [Complaint, para. 91]. 

 

            Defendant Topa Insurance does not argue that the elements have not been stated but argues that the complaint fails to allege the cause of action with sufficient specificity.   It is held that to state an unfair business practices claim, the pleading must state with reasonable particularity the facts supporting the alleged violation.  Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 619.

 

Defendant argues that plaintiff alleges defendant has a general practice of discriminating against insureds who are Armenian or Middle Easterners but does not allege that plaintiff is Armenian or Middle Eastern, and also fails to explain how allegedly deficient claim handling practices are discriminatory.

 

The pleading alleges that plaintiff has standing to pursue the cause of action by alleging that, “As a direct and proximate result of the unlawful, unfair, fraudulent and discriminatory conduct of Defendants, Plaintiff has suffered a loss of money and property.”  [Complaint, para. 90].   This statement is sufficient to give rise to an allegation that plaintiff has been subjected to the alleged discriminatory practices because he is of Armenian or Middle Eastern descent.  The complaint alleges in great detail that plaintiff has been subjected to the described improper practices.  [Complaint, para. 67]. 

 

The cause of action alleges that defendant engages in, and will continue to engage in, a custom and practice of discriminating by differentially treating first party claims by other insureds of Armenian and/or Middle Eastern descent.  [Complaint, paras. 87, 88]. The complaint alleges in some detail that in connection with such claims, defendant has a custom of following a practice in such cases of hiring attorneys, demanding lengthy examinations under oath by the insured and the spouse, demanding the production of excessive and unwarranted documents to harass the insureds and dissuade them from pursuing benefits, alleging that its insureds did not cooperate even where the insureds state that requested documents do not exist, and then using experts to fabricate a genuine dispute in order to deny the claims.  [Complaint, paras. 87 (a)-(e)]. 

 

There is only one defendant here, and it is sufficiently clearly alleged that defendant engages in these practices only when dealing with insureds of a particular racial or ethnic makeup or descent.  The conduct is sufficiently specifically alleged, and the demurrer is overruled.

 

RULING:

Topa Insurance Company’s Demurrer to Plaintiff’s Complaint is OVERRULED as untimely and on its merits. 

 

Ten days to answer. 

 

 

 GIVEN THE CORONAVIRUS CRISIS, AND TO ADHERE TO HEALTH GUIDANCE THAT DICTATES SAFETY MEASURES, DEPARTMENT D IS ENCOURAGING AUDIO OR VIDEO APPEARANCES

 

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