Judge Randolph M. Hammock, Case 21STCV16492 2022-09-08 Tentative Ruling

Judge: Randolph M. Hammock, Case: 21STCV16492, Date: 2022-09-08 Tentative Ruling

Plaintiff Noah Saeedy brings this action against United Services Automobile Association (“USAA”) for monetary and injunctive relief. Plaintiff alleges he is a veteran who retained USAA to provide him various financial services. Plaintiff alleges that on or about May of 2017, he noticed incorrect charges on a USAA credit card in the name of his mother. Plaintiff notified USAA that the charges were incorrect, and USAA reversed the charges. However, USAA then reached the determination that the charges were in fact proper and reinstated the charges on the credit account. USAA went further and closed down the account, and then reported Plaintiff to Elder Protective Services for purported Elder Abuse of his mother. Plaintiff says USAA did this despite Plaintiff’s mother being entirely competent and of sound mind, and directly informing USAA that Plaintiff had not influenced or taken advantage of her or subjected her to any duress whatsoever. USAA went on to classify Plaintiff in a form of “restricted status,” essentially constituting a lower class of USAA membership, with less rights and privileges. As a result, Plaintiff is unable to access his financial services. He brings causes of action against USAA for (1) Breach of Written Contracts, (2) Breach of Fiduciary Duties, (3) IIED, and (4) Violation of Cal. Bus. & Prof. Code Section 17200 et seq.

A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal. App. 4th 740, 747.) When considering demurrers, courts read the allegations liberally and in context. (Taylor v. City of Los Angeles Dept. of Water and Power (2006) 144 Cal. App. 4th 1216, 1228.) In a demurrer proceeding, the defects must be apparent on the face of the pleading or by proper judicial notice. (CCP § 430.30(a).) A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. (SKF Farms v. Superior Court (1984) 153 Cal. App. 3d 902, 905.) Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed. (Id.) The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action. (Hahn, 147 Cal.App.4th at 747.)

Defendant demurs to the first cause of action on the grounds it fails to allege facts sufficient to constitute a cause of action. Plaintiff alleges that since 2004 he received financial services from Defendant USAA, including “bank accounts, credit cards, auto finance, home insurance, auto insurance, life insurance, stock market and investment brokerage services.” (FAC ¶ 8.)

Plaintiff alleges that he notified USAA that charges on his mother’s credit account were incorrect. USAA, however, “reached the determination that the charges were in fact proper and reinstated the charges on the credit account.” (Id. at ¶ 11.) USAA then “closed down the account, and then reported Plaintiff to Elder Protective Services for purported Elder Abuse of his mother.” Plaintiff says his mother was “entirely competent and of sound mind, and directly informing USAA that Plaintiff had not influenced or taken advantage of her or subjected her to any duress whatsoever.” USAA went even further and branded Plaintiff as “unacceptable,” a restricted status with less rights and privileges. This happened “without any semblance of due process, and without any corresponding reduction in the compensation afforded to USAA with respect to the Financial Services and the Governing Documents.” (Id. at ¶ 13.) Plaintiff pled that he “has certainly never committed Elder Abuse towards his mother… [and] was entirely in the right with respect to the original dispute over credit card charges.” (Id. at ¶ 14.)

As a result of USAA placing Plaintiff in a lower class of membership, Plaintiff “is now unable to access his Financial Services.” (Id. at ¶ 15.) USAA also declared that the USAA-specific power of attorney executed by Plaintiff’s mother in favor of Plaintiff was terminated. (Id.) USAA continues to do this without any written explanation to Plaintiff. (Id. at ¶ 16.)

Based on the above actions, Plaintiff alleges Defendant USAA breached the “Governing Documents” addressing his membership with USAA. The Governing Documents at issue apparently include [1] “the bylaws of USAA, which provide that the members of USAA have all such rights as are afforded to subscribers of a reciprocal interinsurance exchange under the laws of the State of Texas, [2] the USAA subscriber declaration, [3] subscriber’s agreement and power of attorney, and [4] the bylaws.” (Compl. ¶ 21.) These documents are not attached to the FAC.

The elements of breach of contract are: “(1) the existence of the contract, (2) the plaintiff's performance or excuse for nonperformance, (3) the defendant's breach, and (4) resulting damages.” (Maxwell v. Dolezal (2014) 231 Cal.App.4th 93, 97–98.) The rule in California is that “[a] written contract may be pleaded either by its terms—set out verbatim in the complaint or a copy of the contract attached to the complaint and incorporated therein by reference—or by its legal effect. [Citation.] In order to plead a contract by its legal effect, plaintiff must ‘allege the substance of its relevant terms. This is more difficult, for it requires a careful analysis of the instrument, comprehensiveness in statement, and avoidance of legal conclusions.’ [Citation.]” (Heritage Pac. Fin., LLC v. Monroy, (2013) 215 Cal. App. 4th 972, 993.)

Here, Plaintiff is attempting to plead the contract(s) by their legal effect. There is no dispute that a contract can be plead by its legal effect. (Construction Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 198–199.) However, even reading the FAC “liberally and in context,” it is difficult to parse the substance of the contracts’ relevant terms. Indeed, it is unclear which contracts exist and what they say, much less how any specific provisions have been breached. The court and Defendant are left to speculate. Plaintiff has thus failed to intelligibly plead at least two elements of his claim, namely (1) the existence of a contract and (2) breach of the same. Because there can be no “careful analysis of the instrument,” in this case, the current pleading presents the risk of becoming a moving target.

Accordingly, the demurrer to the First Cause of Action is SUSTAINED, with leave to amend. Plaintiff should amend to attach the relevant contract(s) and/or clearly plead each parties’ material obligations under the contracts. Additionally, he must also specifically plead how said obligations were breached.

“The elements of a claim for breach of fiduciary duty are (1) the existence of a fiduciary relationship, (2) its breach, and (3) damage proximately caused by that breach.” (O'Neal v. Stanislaus Cnty. Employees' Ret. Assn. (2017) 8 Cal. App. 5th 1184, 1215.) Whether a fiduciary duty exists is generally a question of law. (Id.) Whether the defendant breached that duty towards the plaintiff is a question of fact. (Id.)

Plaintiff alleges that “USAA stands as a fiduciary to Plaintiff and owes Plaintiff fiduciary duties. Furthermore USAA, as a reciprocal interinsurance exchange, operates by entering into powers of attorney with each member of the exchange (as described in the bylaws) creating an attorney-in-fact relationship. This relationship is a fiduciary relationship where the

duties to Plaintiff on this basis as well.” (Compl. ¶ 29.) Plaintiff alleges these fiduciary duties “include the duty to treat Plaintiff with the utmost good faith, the duty to manage the subject matter of the relationship with good faith, and the duty to disclose all information in USAA’s possession relevant to the subject matter of the relationship or to Plaintiff’s interests.” (Id.) Plaintiff alleges USAA breached these duties by engaging in the conduct discussed above. (Id. ¶ 30.)

Defendant argues that “Plaintiff fails to explain how the allegations in the FAC show that USAA breached any fiduciary duties that USAA may have owed Plaintiff through its investment brokerage services or via its power of attorney.” (Opp. 6: 8-10.) Thus, Defendant apparently does not argue that no fiduciary duties exist, but only that Defendant did not breach those existing duties.

Plaintiff, however, has sufficiently pled the acts which he contends give rise to a breach of fiduciary duty. Whether Defendant breached those duties is a question of fact that cannot be resolved on demurrer. Instead, this court must “accept properly pleaded facts as true” as this stage. (Czajkowski v. Haskell & White, LLP (2012) 208 Cal. App. 4th 166.)

“A cause of action for intentional infliction of emotional distress exists when there is ‘(1) extreme and outrageous conduct by the defendant with the intention of causing, or reckless disregard of the probability of causing, emotional distress; (2) the plaintiff's suffering severe or extreme emotional distress; and (3) actual and proximate causation of the emotional distress by the defendant's outrageous conduct. A defendant's conduct is ‘outrageous’ when it is so ‘extreme as to exceed all bounds of that usually tolerated in a civilized community. And the defendant's conduct must be ‘intended to inflict injury or engaged in with the realization that injury will result.’” (Hughes v. Pair (2009) 46 Cal.4th 1035, 1050-51, quoting Potter v. Firestone Tire & Rubber Co. (1993) 6 Cal.4th 965, 1001) (internal citations omitted). “Liability for intentional infliction of emotional distress ‘ “does not extend to mere insults, indignities, threats, annoyances, petty oppressions, or other trivialities.” (Bock v. Hansen (2014) 225 Cal. App. 4th 215, 233.) Severe emotional distress means “ ‘emotional distress of such substantial quality or enduring quality that no reasonable [person] in civilized society should be expected to endure it.’” (Id.)

Plaintiff alleges that “USAA has committed an unrelenting and intentional campaign of terrorizing Plaintiff by making him unable to use his membership services”; that USAA branded him “UNACCEPTABLE,” “by deeming his mother incompetent and dishonest”; “by contacting his father [] and interjecting the bad faith and false issue of Elder Abuse into a divorced family relationship”; “and by forcing him to toil endlessly through run-arounds and rigamarole wasting endless hours of his life.” (FAC ¶ 34.) Plaintiff also allege that USAA “intentionally mocks Plaintiff by sending him emails with notifications of ‘important’ documents, while preventing Plaintiff from actually reading the documents because they can only be accessed through the mobile app or the website.” (Id.) This conduct causes Plaintiff anxiety and distress. (Id. at ¶ 35.)

Defendant argues the allegations as alleged do not amount to “outrageous” conduct. Although a claim for IIED will generally present multiple questions of fact, a court may sustain a demurrer to the claim when “the facts alleged do not amount to outrageous conduct as a matter of law.” (Bock, supra, 225 Cal. App. 4th at 235.) The process has been described as “more intuitive than analytical.” (So v. Shin (2013) 212 Cal.App.4th 652, 671–672.)

If Plaintiff can prove at trial that Defendant did, in fact, engage in an “unrelenting and intentional campaign of terror[]” against him, this could support a claim for IIED. (FAC ¶ 34.) Defendant’s cited case authority does not evince a different conclusion. (See Yurick v. Super. Ct. (1989) 209 Cal.App.3d 1116, 1124-1130 [allegations that a supervisor repeatedly made public comments towards a plaintiff regarding her age and called her a liar were deemed to be insufficient to justify an IIED claim]; McCoy v. Pacific Maritime Assn. (App. 2. Dist.

2013) 216 Cal.App.4th 283, 295 [isolation and ostracism of a female employee as retaliation for the employee’s prior discrimination lawsuit were found to be insufficient to constitute “extreme” or “outrageous” conduct; Hughes, supra, 46 Cal.4th at pp. 1050-1051 [Allegations that trustee of a decedent’s trust made inappropriate sexual comments and advances towards the decedent’s former wife were found to be insufficient to establish an IIED claim].)

Finally, Plaintiff alleges Defendant’s conduct has caused him “years and years” of “embarrassment, humiliation, anguish, distrust, hatred, contempt, ridicule, and disgrace, from third parties as well as from family members.” (FAC 35, 37.) Again, if Plaintiff can prove this at trial, it could amount to the requisite “emotional distress” to support a claim for IIED.

Business and Professions Code section 17200 defines “unfair competition” to include “any unlawful, unfair or fraudulent business act or practice....” “The scope of section 17200 is broad, encompassing ‘anything that can properly be called a business practice and that at the same time is forbidden by law.’ ... It governs ‘anti-competitive business practices’ as well as injuries to consumers and has as a major purpose ‘the preservation of fair business competition.’” [Citations.] (Linear Tech. Corp. v. Applied Materials, Inc., (2007) 152 Cal. App. 4th 115, 133). Whether a practice violates the section “is generally a question of fact which requires ‘consideration and weighing of evidence from both sides’ and which usually cannot be made on demurrer.” [Citation]. (Id.)

Defendant’s only argument in support of its demurrer is that the UCL claim is derivative of the first three causes of action, and if those fail, so should the UCL claim. However, this court has overruled the demurrer as to the Second and Third Causes of Action. Thus, the UCL claim survives.

Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept49@lacourt.org by no later than 4:00 p.m. the day before the hearing. All interested parties must be copied on the email. It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.