Judge: Robert B. Broadbelt, Case: 21STCV37002, Date: 2022-09-09 Tentative Ruling

Case Number: 21STCV37002    Hearing Date: September 9, 2022    Dept: 53

Superior Court of California

County of Los Angeles – Central District

Department 53

MOVING PARTIES:             Defendants Beneviste & Francke Insurance Services, and Daniel Francke, aka Dan Francke

RESPONDING PARTY:       Plaintiff RIFM Properties, LLC

(1)   Demurrer to First Amended Complaint

(2)   Motion to Strike Portions of First Amended Complaint

MOVING PARTY:                Defendant Navigators Specialty Insurance Company

RESPONDING PARTY:       Plaintiff RIFM Properties, LLC

(3)   Demurrer to First Amended Complaint

(4)   Motion to Strike Portions of First Amended Complaint

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

BACKGROUND

Plaintiff RIFM Properties, LLC (“Plaintiff”) filed this action on October 6, 2021.  On February 9, 2022, Plaintiff filed its operative First Amended Complaint against defendants Hartford Financial Services Group, Inc., Navigators Specialty Insurance Company, Benveniste & Francke Insurance Services, and Daniel Francke, aka Dan Francke.  Plaintiff’s First Amended Complaint alleges five causes of action for (1) breach of contract, (2) breach of implied covenant of good faith and fair dealing, (3) tortious breach of implied covenant of good faith and fair dealing, (4) negligence, and (5) intentional misrepresentation.

Two sets of demurrers and motions to strike are pending before the court.  First, defendants Benveniste & Francke Insurance Services (“B&F”) and Daniel Francke aka Dan Francke (“Francke”) (collectively, “Francke Defendants”) move the court for an order (1) sustaining their demurrer to Plaintiff’s fourth and fifth causes of action, and (2) granting their motion to strike Plaintiff’s requests for punitive damages and attorney’s fees.  Second, defendant Navigators Specialty Insurance Company (“Navigators”) moves the court for an order (1) sustaining its demurrer to Plaintiff’s first, second, and third causes of action, and (2) granting its motion to strike Plaintiff’s requests for punitive damages and attorney’s fees.

REQUEST FOR JUDICIAL NOTICE

The court denies Navigators’ request for judicial notice.  (Evid. Code, § 452.)

DEMURRER FILED BY FRANCKE DEFENDANTS

The court overrules Francke Defendants’ demurrer to Plaintiff’s fourth cause of action for negligence because it states facts sufficient to constitute a cause of action since Plaintiff sufficiently alleges that Francke Defendants had a legal duty to use care in providing the Certificate of Liability Insurance (the “Certificate”), and that they breached that duty “by failing to ensure that the certificate was issued in accordance with Navigators’ policies and was accepted by Navigators.”  (Code Civ. Proc., § 430.10, subd. (e); FAC ¶¶ 38-39.)  The court notes that Francke Defendants argue that this cause of action should be sustained because it (1) refers to defendant B&F as “B&R” and (2) the Certificate states that it confers no rights on Plaintiff. 

First, although the court notes these typographical errors, Francke Defendants do not demur on the ground of uncertainty, or otherwise contend that these errors do not sufficiently put B&F on notice of the claims against it.  Second, while the court acknowledges that the Certificate does not confer rights on Plaintiff, the basis of Plaintiff’s cause of action against Francke Defendants is that they breached their duties to Plaintiff by failing to ensure that the Certificate was issued in accordance with Navigators’ policies, accepted by Navigators, and provided Plaintiff with coverage.  (FAC ¶ 39.)  The court finds that these facts are sufficient to constitute a cause of action for negligence, and therefore overrules the demurrer.

The court sustains Francke Defendants’ demurrer to Plaintiff’s fifth cause of action for intentional misrepresentation because it does not state facts sufficient to constitute a cause of action since Plaintiff fails to allege each element of the cause of action for intentional misrepresentation with the particularity required by California law, including facts establishing when, where, to whom, and by what means the allegedly intentional misrepresentations were tendered.  (Code Civ. Proc., § 430.10, subd. (e); Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73.)

The burden is on the plaintiff “to articulate how it could amend its pleading to render it sufficient.”  (Palm Springs Villas II Homeowners Assn., Inc. v. Parth (2016) 248 Cal.App.4th 268, 290.)  To satisfy that burden, a plaintiff “must show in what manner he can amend his complaint and how that amendment will change the legal effect of his pleading.”  (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.)  Here, Plaintiff requests leave to amend.  The court grants Plaintiff leave to amend its complaint to sufficiently allege its fifth cause of action for intentional misrepresentation against Francke Defendants.

MOTION TO STRIKE FILED BY FRANCKE DEFENDANTS

Francke Defendants move the court for an order striking (1) Plaintiff’s prayer for punitive damages, (2) Plaintiff’s request and allegation for punitive damages in its fifth cause of action, and (3) Plaintiff’s prayer for attorney’s fees.  (FAC Prayer, ¶ 5, subd. (a), (c), FAC ¶ 50.)

The court grants Francke Defendants’ motion to strike Plaintiff’s prayer for punitive damages because the court has sustained Francke Defendants’ demurrer to Plaintiff’s fifth cause of action for intentional misrepresentation, which is the only cause of action that can support Plaintiff’s request for punitive damages.  (Code Civ. Proc., § 436.)

The court denies as moot Francke Defendants’ motion to strike Plaintiff’s additional allegation and request for punitive damages in paragraph 50 of the First Amended Complaint, because that allegation appears in the fifth cause of action for intentional misrepresentation, which has been removed from the First Amended Complaint because the court has sustained Francke Defendants’ demurrer to that cause of action.

The court grants Francke Defendants’ motion to strike Plaintiff’s prayer for attorney’s fees because Plaintiff has not identified a statute or contract entitling Plaintiff to an award of attorney’s fees.  (Code Civ. Proc., §§ 1021, 436.)

DEMURRER FILED BY DEFENDANT NAVIGATORS

The court overrules defendant Navigators’ demurrer to Plaintiff’s first cause of action for breach of contract on the ground that Plaintiff did not attach a copy of the contract between Plaintiff and US Home Pros, Inc., dba Cal Retrofit, because the contract upon which this action is founded is alleged to be the Certificate.  (FAC ¶ 22 [“RIFM was entitled to benefits under the Certificate of Liability Insurance”].)

The court sustains Navigators’ demurrer to Plaintiff’s first cause of action for breach of contract on the ground that it does not state facts sufficient to constitute a cause of action since Plaintiff cannot allege that a contract for insurance existed between Plaintiff and Navigators based on the face of the First Amended Complaint and the exhibits attached thereto.  (Code Civ. Proc., § 430.10, subd. (e); Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 921 [setting forth elements for cause of action for breach of contract].)

As noted by Navigators, the Certificate (1) is itself not a contract between the parties, and (2) expressly states that “[a] statement on this certificate does not confer rights to the certificate holder in lieu of” endorsements to the policy.  (Pardee Const. Co. v. Insurance Co. of the West (2000) 77 Cal.App.4th 1340, 1347 fn. 2; FAC Ex. A., Certificate of Liability Insurance.)  The court acknowledges, as Plaintiff argues, that a certificate of liability insurance is evidence that a policy has been issued.  (Pardee Const. Co., supra, 77 Cal.App.4th at p. 1347, fn. 2; Empire Fire & Marine Ins. Co. v. Bell (1997) 55 Cal.App.4th 1410, 1423 fn. 25 [“A certificate of insurance is merely evidence that a policy has been issued.  (Ins. Code, § 384.)”].)  However, the Certificate itself states that (1) it has been issued “as a matter of information only[;]” (2) if the certificate holder is an additional insured, any policies must be endorsed; and (3) any statements on the Certificate do not confer rights on the holder in lieu of such endorsements.  (FAC, Ex. A.) 

Accordingly, the terms of the Certificate establish that no contract for insurance exists between Plaintiff and Navigators unless the policy has been endorsed.  (Ibid.)  Thus, although the court agrees that certificates of liability insurance constitute evidence that a policy has been issued, the Certificate here constitutes evidence that an insurance policy has been issued, but that coverage to Plaintiff, as an additional insured, exists only upon satisfaction of its terms (i.e., that the policy has been endorsed).

Here, Plaintiff has not alleged (1) that the policy was endorsed, or (2) facts establishing that it met the requirements for endorsement under the terms of Navigators’ policy.  As to the second issue, Navigators’ policy, as attached to the First Amended Complaint, contains two relevant endorsements.  The first endorsement provision is entitled “Additional Insured—Owners, Lessees or Contractors—Automatic Status for Other Parties When Required in Written Construction Agreement.”  (FAC Ex. E, p. CG 20 38 04 13.)  This provision states that the policy is amended to include, as an additional insured, any person or organization for whom the insured is performing operations, when the insured “and such person or organization have agreed in writing in a contract or agreement that such person or organization be added as an additional insured on [the] policy; and [¶] [a]ny other person or organization [the insured is] required to add as an additional insured under the contract or agreement described” above.  (Id. at § A, subds. (1)-(2).)  The second endorsement provision is entitled “Additional Insured—Owners, Lessees or Contractors—Completed Operations.”  (FAC Ex. E, p. CG 20 37 04 13.)  This provision states that an additional insured includes any person or organization to whom the named insured has agreed, by a written contract, that such person is to be added as an additional insured for completed operations coverage, as with respect to “commercial construction.”  (Id. at p. 1.)  While Plaintiff alleges that it and US Home Pros, Inc. agreed to add Plaintiff as an additional insured to its policy issued by Navigators, Plaintiff does not allege that the parties agreed to this term in a written contract as required by both relevant endorsement provisions.  (FAC ¶ 14.)

The court therefore finds that Plaintiff has not alleged the existence of a contract between it and Navigators because (1) the Certificate itself does not reflect that a policy has been issued to Plaintiff as an additional insured, since it expressly states that it confers no rights on the certificate holders, and (2) Plaintiff does not allege (a) that the policy was endorsed, or (b) facts establishing that it met the conditions to qualify as an additional insured under the terms of the policy.

Finally, as briefly mentioned by Navigators in reply, the court notes that the Certificate does not name plaintiff RIFM Properties, LLC as an additional insured and certificate holder; instead, the Certificate identifies the holders and additional insureds to be Michael Tsvilik and RIFM Family, LLC.  (FAC, Ex. A [emphasis added].)  Although Plaintiff may have changed its name, or may be considered to be the same entity as RIFM Family, LLC, Plaintiff has not alleged this fact in its complaint.  

The court sustains Navigators’ demurrer to Plaintiff’s second cause of action for breach of the implied covenant of good faith and fair dealing because it does not state facts sufficient to constitute a cause of action since Plaintiff has not alleged the existence of an insurance contract between it and Navigators for the reasons set forth above.  (Code Civ. Proc., § 430.10, subd. (e); Major v. Western Home Ins. Co. (2009) 169 Cal.App.4th 1197, 1207-1208 [an implied covenant of good faith and fair dealing is implied in an insurance contract].)

The court sustains Navigators’ demurrer to Plaintiff’s third cause of action for tortious breach of the implied covenant of good faith and fair dealing (insurance bad faith) because it does not state facts sufficient to constitute a cause of action since Plaintiff has not alleged that it was an additional insured under Navigators’ policy, and therefore has not alleged that Navigators withheld benefits due to Plaintiff under the policy.  (Code Civ. Proc., § 430.10, subd. (e); Major v. Western Home Ins. Co. (2009) 169 Cal.App.4th 1197, 1209 [“to establish the insurer’s ‘bad faith’ liability, the insured must show that the insurer has (1) withheld benefits due under the policy, and (2) that such withholding was ‘unreasonable’ or ‘without proper cause’”].)

The burden is on the plaintiff “to articulate how it could amend its pleading to render it sufficient.”  (Palm Springs Villas II Homeowners Assn., Inc., supra, 248 Cal.App.4th at p. 290.)  To satisfy that burden, a plaintiff “must show in what manner he can amend his complaint and how that amendment will change the legal effect of his pleading.”  (Goodman, supra, 18 Cal.3d at p. 349.)  Here, Plaintiff requests leave to amend.  The court notes that Plaintiff has argued, in its opposition, that Plaintiff and US Home Pros, Inc. entered into an oral agreement to provide insurance coverage to Plaintiff, which indicates that Plaintiff may not be able to amend its complaint to allege facts establishing that Plaintiff met the conditions set forth in Navigators’ policy to be considered an additional insured.  However, the court exercises its discretion to grant Plaintiff leave to amend, to the extent that it can, to sufficiently allege the existence of an insurance contract between Plaintiff and Navigators.

MOTION TO STRIKE FILED BY DEFENDANT NAVIGATORS

Navigators moves the court for an order striking (1) Plaintiff’s prayer for punitive damages, (2) Plaintiff’s allegation that Navigators acted with oppression, fraud, or malice and request for punitive damages in connection with its third cause of action, and (3) Plaintiff’s prayer for attorney’s fees and costs.  (FAC ¶ 35, FAC Prayer, ¶ 5, subds. (a), (c).)

The court grants Navigators’ motion to strike Plaintiff’s prayer for punitive damages, because the court has sustained Navigators’ demurrer to Plaintiff’s third cause of action for tortious breach of the implied covenant of good faith and fair dealing (insurance bad faith), which is the only cause of action that can support Plaintiff’s request for punitive damages.  (Code Civ. Proc., § 436.)

The court denies as moot Navigators’ motion to strike Plaintiff’s additional allegation and request for punitive damages in paragraph 35 of the First Amended Complaint, because that allegation appears in the third cause of action for tortious breach of the implied covenant of good faith and fair dealing (insurance bad faith),  which has been removed from the First Amended Complaint because the court has sustained Navigators’ demurrer to that cause of action.

The court grants Navigators’ motion to strike Plaintiff’s prayer for attorney’s fees because Plaintiff has not identified a statute or contract entitling Plaintiff to an award of attorney’s fees.  (Code Civ. Proc., §§ 1021, 436.)

ORDER

            The court overrules defendants Benveniste & Francke Insurance Services and Daniel Francke aka Dan Francke’s demurrer to Plaintiff’s fourth cause of action for negligence.  (Code Civ. Proc., § 430.10, subd. (e).

The court sustains defendants Benveniste & Francke Insurance Services and Daniel Francke aka Dan Francke’s demurrer to Plaintiff’s fifth cause of action for intentional misrepresentation with leave to amend.  (Code Civ. Proc., § 430.10, subd. (e).)

The court grants defendants Benveniste & Francke Insurance Services and Daniel Francke aka Dan Francke’s motion to strike Plaintiff’s prayer for punitive damages and for attorney’s fees.  (Code Civ. Proc., § 436.)

The court sustains defendant Navigators Specialty Insurance Company’s demurrer to Plaintiff’s first, second, and third causes of action with leave to amend.  (Code Civ. Proc., § 430.10, subd. (e).)

The court grants defendant Navigators Specialty Insurance Company’s motion to strike Plaintiff’s prayer for punitive damages and for attorney’s fees.  (Code Civ. Proc., § 436.)

The court orders that plaintiff RIFM Properties, LLC has 20 days leave to file a Second Amended Complaint that cures the defects discussed in this order.

The court orders defendant Navigators Specialty Insurance Company to give notice of this order.

IT IS SO ORDERED.

DATED:  September 9, 2022

_____________________________

Robert B. Broadbelt III

Judge of the Superior Court