Judge: Robert B. Broadbelt, Case: 21STCV34332, Date: 2023-01-26 Tentative Ruling

Case Number: 21STCV34332    Hearing Date: January 26, 2023    Dept: 53

Superior Court of California

County of Los Angeles – Central District

Department 53

MOVING PARTY:                Plaintiff and cross-defendant Anchor General Insurance Company

RESPONDING PARTIES:    Defendants and cross-complainants Quincy Lee King and Reginald Dowdley

(1)   Demurrer to Cross-Complaint

(2)   Motion to Strike Punitive Damages from Cross-Complaint

The court considered the moving, opposition, and reply papers filed in connection with the demurrer and motion to strike.

BACKGROUND

Plaintiff Anchor General Insurance Company (“Anchor General”) filed this action on September 16, 2021, against defendants Quincy Lee King and Reginald Dowdley, alleging three causes of action for (1) declaratory relief, (2) permanent injunction, and (3) rescission.

On May 27, 2022, Quincy Lee King and Reginald Dowdley (“Cross-Complainants”) filed a Cross-Complaint against Anchor General, alleging five causes of action for (1) declaratory relief; (2) breach of the covenant of good faith and fair dealing; (3) breach of contract; (4) unfair business practices; and (5) violation of the Unruh Act.

Anchor General now moves the court for an order (1) sustaining its demurrer to the Cross-Complaint in its entirety, or as to the second, third, fourth, and fifth causes of action, and (2) striking Cross-Complainants’ request for punitive damages.

DEMURRER

The court overrules Anchor General’s demurrer to the Cross-Complaint on the ground that it was not filed within the statutory time period set forth in Code of Civil Procedure section 428.50 because it is not a ground for demurrer.  (Code Civ. Proc., § 430.10.)

However, the court acknowledges that Cross-Complainants filed their answer to Anchor General’s Complaint on December 28, 2021, and filed the Cross-Complaint on May 27, 2022, beyond the time allowed by statute.  (Code Civ. Proc., § 428.50, subd. (a) [“A party shall file a cross-complaint against any of the parties who filed the complaint or cross-complaint against him or her before or at the same time as the answer to the complaint or cross-complaint”].) Cross-Complainants have requested, in their opposition, that the court accept the Cross-Complaint as filed.  (Opp., p. 2:17-18.)  Anchor General does not oppose this request in its reply.  The court finds that it is in the interest of justice to permit Cross-Complainants to file a cross-complaint against Anchor General and therefore exercises its discretion to grant Cross-Complainants’ request to deem the Cross-Complaint properly filed.  (Code Civ. Proc., § 428.50, subd. (c).)

The court overrules Anchor General’s demurrer to the second cause of action for breach of the covenant of good faith and fair dealing because it states facts sufficient to constitute a cause of action since Cross-Complainants allege that Anchor General (1) agreed to pay the contractual benefits owed to Cross-Complainants only if they agreed to waive any tortious bad faith claims against Anchor General, and (2) breached their duty of good faith and fair dealing by harassing, delaying payment to, and discriminating against them.  (Cross-Compl., ¶¶ 4, 11-12, 16.)  The court finds that Cross-Complainants have therefore alleged that Anchor General “engag[ed] in conduct that frustrate[d] [Cross-Complainants’] rights to the benefits of” the insurance policy.  (Code Civ. Proc., § 430.10, subd. (e); Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1369 [the covenant of good faith and fair dealing exists to prevent one contracting party from frustrating the other party’s right to receive the benefits of the agreement].)

The court sustains Anchor General’s demurrer to the third cause of action for breach of contract because it does not state facts sufficient to constitute a cause of action since (1) this cause of action appears to be based on a written agreement, because it is based on the insurance policy issued to cross-complainant King (Cross-Compl., ¶ 4), but (2) Cross-Complainants did not set forth the terms of the policy verbatim in the Cross-Complaint, or attach a copy of the policy.  (Code Civ. Proc., § 430.10, subd. (e); Harris v. Rudin, Richman & Appel (1999) 74 Cal.App.4th 299, 307 [when a claim is based on the breach of a written agreement, either the terms must be set out verbatim in the complaint or a copy of the agreement must be attached].)

The court sustains Anchor General’s demurrer to the fourth cause of action for unfair business practices because it does not state facts sufficient to constitute a cause of action since Cross-Complainants do not allege facts showing that (1) Anchor General’s conduct “is tethered to an[] underlying constitutional, statutory or regulatory provision, or that it threatens an incipient violation of antitrust law, or violates the policy or spirit of an antitrust law[,]” and therefore have not alleged an unfair business practice, or (2) members of the public are likely to be deceived by Anchor General’s business practices, and therefore have not alleged a fraudulent business practice.  (Code Civ. Proc., § 430.10, subd. (e); Graham v. Bank of America, N.A. (2014) 226 Cal.App.4th 594, 613; Buller v. Sutter Health (2008) 160 Cal.App.4th 981, 986 [a UCL claim under the fraud prong requires a showing that members of the public are likely to be deceived]; Cross-Compl., ¶ 29 [alleging that Anchor General’s business practices are unfair and fraudulent].)

The court sustains Anchor General’s demurrer to the fifth cause of action for violation of Unruh Civil Rights Act because it does not state facts sufficient to constitute a cause of action since Cross-Complainants do not allege facts establishing that they were denied services based on their race, and instead only allege the conclusory fact that it became apparent that they were being singled out due to their race “[b]ased upon the questions that were asked” (Cross-Compl., ¶ 11).  (Code Civ. Proc., § 430.10, subd. (e).)  

MOTION TO STRIKE

Anchor General moves the court for an order striking Cross-Complainants’ requests for punitive damages.  (Cross-Compl., ¶ 19; Cross-Compl., Prayer, ¶ 4.)

The court denies Anchor General’s motion to strike punitive damages because Cross-Complainants have alleged facts establishing that Anchor General is guilty of oppression, fraud, or malice.  (Civ. Code, § 3294, subd. (a).)

ORDER

The court sustains cross-defendant Anchor General Insurance Company’s demurrer to the third, fourth, and fifth causes of action alleged in cross-complainants Quincy Lee King and Reginald Dowdley’s Cross-Complaint.

The court overrules cross-defendant Anchor General Insurance Company’s demurrer to the second cause of action alleged in cross-complainants Quincy Lee King and Reginald Dowdley’s Cross-Complaint.

The court denies cross-defendant Anchor General Insurance Company’s motion to strike.

The court grants cross-complainants Quincy Lee King and Reginald Dowdley 20 days leave to file a First Amended Cross-Complaint to cure the deficiencies set forth above.

The court orders Anchor General Insurance Company to give notice of this ruling.

IT IS SO ORDERED.

DATED:  January 26, 2023

_____________________________

Robert B. Broadbelt III

Judge of the Superior Court