TENTATIVE RULING

Calendar:    7

Date:          1/5/2024 

Case No: 23 GDCV02022 Trial Date: None Set 

Case Name: Abou-Chakra v. Bedikian, et al.

DEMURRER

Moving Party:            Defendant Hippo Analytics, Inc.       

Responding Party: Plaintiff Mae Abou-Chakra      

 

RELIEF REQUESTED:

CAUSES OF ACTION: from Complaint   

1) Nuisance Per Se v.   Bedikian Defendants 

2) Private Nuisance v.   Bedikian Defendants 

3) Public Nuisance v.   Bedikian Defendants 

4) Trespass v.   Bedikian Defendants

5) Negligence v.   Bedikian Defendants

6) Breach of Contract v.   Hippo 

7) Breach of Covenant of Good Faith and Fair Dealing v. Hippo  

8) Violation of Fair Housing Act v.   Hippo 

SUMMARY OF FACTS:

Plaintiff alleges that the adjacent property sits approximately twelve feet higher than plaintiff’s property, with its southeast yard sloping steeply toward plaintiff’s property, and that since defendants obtained the adjacent property in 2021, they have performed extensive yardwork, including tree removal, as a result of which plaintiff began to experience wet soil conditions and damage to her house and yard.   In May of 2023, plaintiff observed plumbers working on the adjoining property near plaintiff’s pool, and also observed uncapped pipes leaking liquid underground, and excessive water leakage coming from the adjoining property onto the street.  The complaint alleges that defendants have been cited by the County for the water leak, and that plaintiff made efforts to resolve the problem with defendants, but they have failed and refused to hire a competent plumber to remediate the problem.   Plaintiff has since noticed that after an extended spell of dry weather, in the mornings her patio and pool area adjacent to the sloping adjoining property would be wet.  Plaintiff alleges that the wet conditions, which are pervasive underground, have caused extensive damage to plaintiff’s home and to her drought-resistant landscaping. 

The complaint also alleges that in May of 2023 plaintiff filed a claim with her homeowner’s insurance company, defendant Hippo Analytics, Inc. (Hippo), which informed plaintiff it was closing her case at her requests, forcing plaintiff to reopen the case.  Plaintiff alleges that in June of 2023, Hippo denied plaintiff’s claim on the basis that the water damage was the result of ongoing seepage from an unknown source, quoting language from the insurance policy excluding such losses, when the language relied upon does not appear in the policy, which includes contrary language.  Plaintiff alleges that Hippo ignored certain endorsements in the policy and denied the claim despite its inability to ascertain the cause of the seepage. 

ANALYSIS:

Procedural

Untimely 

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.”

Substantive 

Sixth Cause of Action—Breach of Contract 

Defendant Hippo argues that the sixth cause of action for breach of contract is not sufficiently stated as against Hippo. 

To plead a cause of action for breach of contract, plaintiff must plead the following elements: Contract formed, and terms alleged verbatim or according to legal effect; plaintiff’s performance or excuse for nonperformance; defendant’s breach; and damage to plaintiff.  Walsh v. Standart (1917) 174 Cal. 807. 

Defendant Hippo argues that the complaint fails to sufficiently allege that defendant is a party to the insurance contract upon which the cause of action is based, as the insurance policy attached to the pleading expressly identifies the insurer as a party other than Hippo.  

It is held that “‘[w]here written documents are the foundation of an action and are attached to the complaint and incorporated therein by reference, they become a part of the complaint and may be considered on demurrer.’”   Qualcomm, Inc. v. Certain Underwriters at Lloyd’s, London (2008) 161 Cal.App.4th 184, 191, quoting City of Pomona v. Superior Court (2001, 2nd Dist.) 89 Cal.App.4th 793, 800.   

Defendant relies on Exhibit 1 to the Complaint, arguing that the document identifies on the first page of the policy plaintiff as the insured, and provides, “Company Name:  Underwritten by Spinnaker Insurance Company.  [Ex. 1, p. 001 (page numbers from Yanni Decl., Ex. A, Ex. 1)].  The policy Declarations Page also identifies “Spinnaker Insurance Company, A Stock Insurance Company,” and states that Hippo is the “Program Administrator.”  [Ex. 1, p. 003].  Defendant argues that the Homeowners’ Policy form defines “We”, “us” and “our” as “the Company providing this insurance.”  [Ex. 1, p. 033].   Defendant also argues that the policy is signed by representatives of “Spinnaker Insurance Company.”  [Ex. 1, p. 067]. 

Defendant argues that contract here, the policy, is between the insured and the insurer, in this case, Spinnaker, and that Hippo, as the program or claims administrator, cannot be liable for breach of a policy to which it is not a party.  See Henry v. Associated Indemnity Corp. (1990) 217 Cal.App.3d 1405, 1416-1417.   

Plaintiff in opposition argues that the policy documents themselves represent that Hippo is not just an agent but the insurance company, as page 1 of the document states, “Welcome to Hippo!... You chose US to protect the place where you live…we’re honored.  … From me and the whole team here at Hippo, thanks for trusting us with your home.  We’ll protect it like it’s our own.”  [Ex. 1, p. 001].   Plaintiff argues that the “We,” “us” and “our” referring to the “Company providing this insurance,” is unclear as “Underwritten by Spinnaker” is not a company name, and the policy does not include a definition of “Company,” with the capital “C.”   Plaintiff also points to a provision in the policy documents concerning an Agreement to Conduct Electronic Transactions, which states, “‘We’, ‘Us’, and ‘Our’ means the company that issues your Contract, including Hippo Insurance Services and all of its subsidiaries, affiliates and agents.”  [Ex. 1, p. 022].  The policy documents also include in the Policy Declaration a “Notice of Adverse Underwriting Decision” which indicates that “we have found it necessary to…Charge a Higher Rate,” and on the following page states:

“If you would like additional information concerning this action, please submit a written request within ninety (90) business days from the date this notice was provided to you. Please send your request by e-mail to hello@myhippo.com or regular mail to: 

Hippo Insurance Underwriting

  P.O. Box 390068

 Mountain View, CA 94039.”

[Ex. 1, p. 084-085]. 

Plaintiff argues that these seeming inconsistencies are because Hippo and Spinnaker are one and the same company. 

The opposition goes onto argue that there is a unity of interest and ownership between the two companies warranting a finding of alter ego liability, and also argues that defendant Hippo is an undisclosed principal.  The opposition relies on various documents such as Securities and Exchange Commission filings and other purported corporate documents to establish a relationship between Hippo and Spinnaker, arguing Spinnaker is a wholly owned subsidiary of Hippo which was merged into Hippo before the parties entered into the policy.  

As argued in the reply, these arguments go beyond what is currently alleged in the complaint, which does not include alter ego allegations, or allegations concerning an undisclosed principal, and beyond what can be permissibly considered on demurrer. 

Under CCP § 430.30(a), an objection to a pleading may be taken by a demurrer "[w]hen any ground for objection to a complaint...appears on the face thereof, or from any matter of which the court is required to or may take judicial notice…"  

The arguments relied on in the opposition primarily rely on facts and materials which are outside the complaint, to which objections have been asserted, which objections are sustained.  

While this posture is a situation where the policy documents attached to the pleading itself could be construed to not strictly contradict the allegations of the complaint that Hippo is the insurer under the policy, the policy does affirmatively identify Hippo as the “Program Administrator,” and the policy is executed by representatives of “Spinnaker Insurance Company,” not by Hippo.  [Ex. 1, pp. 003, 067].   

The opposition appears to rely on theories concerning the relationship of the two entities which are not alleged in the pleading itself.   

The demurrer accordingly is sustained with leave to amend to permit plaintiff the opportunity to allege facts supporting alter ego and/or undisclosed principal theories to support its breach of contract claim. 

Seventh Cause of Action—Breach of Implied Covenant of Good Faith and Fair Dealing 

Defendant argues that since the pleading fails to sufficiently allege that moving defendant is a party to the alleged insurance policy, plaintiff also has not sufficiently alleged a breach of the implied covenant of good faith and fair dealing implicit in such a contract.  

To plead a cause of action plaintiff must plead the existence of a contractual relationship, breach of an implied duty, and resulting damages.  See, e.g., Smith v. City and County of San Francisco (1990) 225 Cal.App.3d 38, 49; CACI 325. 

It is held that an essential element of a cause of action for a breach of the implied covenant of good faith and fair dealing is that a contract exists.   Foley v. Interactive Data Corp.  (1988) 47 Cal.3d 654, 682.  “Where there is no underlying contract there can be no duty of good faith arising from the implied covenant.”  Horn v. Cushman & Wakefield Western, Inc.  (1999) 72 Cal.App.4th 798, 819, citation omitted (or, citing Foley, at 684).  

Since, as discussed above, the complaint fails to adequately allege that moving defendant is a party to the contract, which is the subject of the action, the demurrer to this cause of action also is sustained with leave to amend.  

Plaintiff argues in the opposition that this is a case where plaintiff has alleged that Hippo engaged in independent torts in the course of handling plaintiff’s insurance claims, which has been recognized to give rise to duties owed to an insurer by a claims representative, even where the representative is not a party to the insurance contract.   Plaintiff relies on Kelso v. Hippo Analytics (2023 USDC Central Dist. Cal) 2023 U.S. Dist. LEXIS 90272, in which the federal district court, in determining whether diversity of citizenship supported federal jurisdiction, addressed the question of whether plaintiffs in that case could “possibly state a claim” against parties who were not the insurers, but adjusters, noting:

"The insurer's agents and employees may have committed some independent tort in the course of handling the third party claims, e.g., misrepresentation or deceit, invasion of privacy, intentional infliction of emotional distress, etc. In such event, they can be held personally liable, even though not parties to the insurance contract."”

Kelso, at 7, quoting Bock v. Hansen (2014) 225 Cal.App.4th 215, 228, quoting Croskey et al., Cal. Practice Guide: Insurance Litigation (The Rutter Group 2013) ¶ 12:104, p. 12A-36), emphasis in original.  Kelso applied the very liberal standard required in that case and did not find that a claim had been stated, but potentially could be stated.    

The cause of action here does not clearly allege independent duties which were breached, such as the misrepresentation claim contemplated in Kelso, or such as those duties plaintiff alleges in this action in her eighth cause of action against Hippo.  In any case, if the sixth cause of action is appropriately amended, defendant’s argument on this point will become moot.  The demurrer is sustained with leave to amend. 

RULING:

Demurrer by Defendant Hippo Analytics, Inc. to Plaintiff’s Complaint:

The Court notes that the demurrer is untimely, filed and served fourteen days late.  Counsel for plaintiff is cautioned that in the future the Court may refuse to consider pleadings not filed in conformity with the statutes, rules and procedures governing this litigation. 

Demurrer is SUSTAINED WITH LEAVE TO AMEND to the sixth cause of action for breach of contract and seventh cause of action for breach of the implied covenant of good faith and fair dealing on the ground the pleading fails to sufficiently allege that moving defendant is a party to the alleged contract or is otherwise responsible for the alleged breaches of the subject contract.   

Evidentiary Objections of Defendant Hippo Analytics, Inc. are SUSTAINED.  

Ten days leave to amend.  

The parties are ordered to meet and confer in full compliance with CCP § 430.41 before any further demurrer may be filed. 

 DEPARTMENT D IS CONTINUING TO CONDUCT AND ENCOURAGE 

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