Judge Ronald F. Frank, Case 22STCV17938 2023-01-06 Tentative Ruling

Judge: Ronald F. Frank, Case: 22STCV17938, Date: 2023-01-06 Tentative Ruling

Case Number: 22STCV17938 Hearing Date: January 6, 2023 Dept: 8

Tentative Ruling¿

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HEARING DATE: January 6, 2023¿¿

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CASE NUMBER: 22STCV17938

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CASE NAME: Voyager Indemnity Insurance Company v. Smiley Sean, et al. .¿¿¿

MOVING PARTY: Defendants, Smiley Sean and Ramsey Sean as surviving heirs of Mark S. Sean, deceased

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RESPONDING PARTY: Plaintiff, Voyager Indemnity Insurance Company

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TRIAL DATE: None set¿

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MOTION:¿ (1) Demurrer¿to FAC for Declaratory Relief

Tentative Ruling: (1) ARGUE

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I. BACKGROUND¿¿

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A. Factual¿¿

On June 1, 2022, Plaintiff, Voyager Indemnity Insurance Company (“Plaintiff”) filed this action against Defendants, Smiley Sean and Ramsey Sean as surviving heirs of Mark S. Sean, deceased (collectively “Defendants”). On July 20, 2022, Plaintiff filed a First Amended Complaint (“FAC”) alleging a cause of action for Declaratory Relief.

This action arises out of an auto collision on August 11, 2019, that resulted in the death of Mark Sean. Mark Sean’s surviving heirs are Defendants Smiley and Ramsey Sean. Defendants have filed two lawsuits in this Court against Samantha Herasme and Fair Titling Trust—neither Herasme nor Fair Titling Trust are parties to this declaratory relief action. The first lawsuit was filed by the Defendants’ prior counsel, Charles Koro and Andrew Myers of Brown, Koro & Romag, LLP under case number 20STCV41562, and was initiated on October 29, 2020, and was dismissed on January 25, 2021. (Complaint, ¶ 20, 29.)

The second lawsuit was filed by the Defendants’ current counsel Ernest Algorri and Alex Lopez of DeWitt Algorri & Algorri, LLP, under case number 20STCV48987 (the “Related Action”). The Related Action was initiated about a month before the first lawsuit was dismissed, on December 23, 2020, and is active. (Complaint, ¶ 29.) Both lawsuits bring a single cause of action for wrongful death against Herasme and Fair Titling Trust, although only Herasme has ever been served. Plaintiff Voyager Indemnity Insurance Company (“Voyager”) accepted coverage of Herasme for both lawsuits and is paying for Herasme’s defense. (Complaint, ¶ 18.) The applicable insurance policy (the “Policy”) covering Herasme has a $50,000 policy limit. (Complaint, ¶ 8.)

The Complaint alleges that about month and a half before filing the Related Action, on November 10, 2020, Defendants, through their attorneys at the time (Koro and Myers), sent a policy-limits settlement demand to Voyager, providing less than three days to respond. (Complaint, ¶¶ 21-24.) Plaintiff asserts Voyager timely manifested acceptance of the demand on November 13, 2020—agreeing to the demand’s terms, conditions, and payment amount—and complying with the demand’s numerous requests. However, Plaintiff notes that Voyager was unable to issue a check and ship it from its offices in Florida to Defendants’ counsel in California within the three-day deadline.

Plaintiff notes that sometime after Voyager manifested acceptance of the demand, Defendants found new lawyers (Algori and Lopez). Plaintiff argues that through their new counsel, Defendants unreasonably construed Voyager’s acceptance as a “counter-offer” and “rejected” it. (Complaint, ¶¶ 28-30.) Plaintiff contends that on January 4, 2021, Voyager reiterated its acceptance. (Complaint, ¶ 31.) Plaintiff further contends that on January 5, 2021, the Seans, through their counsel, insisted that “there is NO settlement” and went on to say—despite Voyager’s acceptance—that “your principal’s rejection of our clients’ demand is egregious.” (Complaint, Exhibit 6.) Plaintiff claims that on January 15, 2021, counsel for the Seans revealed the intent of their unreasonable mischaracterization of Voyager’s acceptance. Plaintiff argues that when asked to confirm the Seans “contend that Voyager Indemnity’s $50,000 policy limit is ‘open’ and you will never in the future agree to resolve for the policy limit,” the Seans responded: “My clients are now ready to settle for the actual value of their claim.” (Complaint, Exhibits 7, 8.)

B. Procedural¿¿

On August 9, 2022, Defendants filed a demurrer. On September 30, 2022, Plaintiff filed an opposition. On October 6, 2022, Defendants replied.

¿II. MOVING PARTY’S GROUNDS FOR THE DEMURRER¿¿

¿¿Defendants demur to Plaintiff’s FAC on the following grounds: (1) The First Amended Complaint fails to state a facts sufficient to constitute a cause of action; and (2) Indispensable parties to this declaratory relief action involving an insurance coverage dispute between an automobile insurance company and its insured driver are missing, namely the insureds of the Plaintiff – Samantha N. Herasme.

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¿III. ANALYSIS¿

A. Demurrer¿¿¿

A demurrer can be used only to challenge defects that appear on the face of the pleading under attack or from matters outside the pleading that are judicially noticeable. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “To survive a demurrer, the complaint need only allege facts sufficient to state a cause of action; each evidentiary fact that might eventually form part of the plaintiff’s proof need not be alleged.” (C.A. v. William S. Hart Union High School Dist. (2012) 53 Cal.4th 861, 872.) For the purpose of testing the sufficiency of the cause of action, the demurrer admits the truth of all material facts properly pleaded. (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-967.) A demurrer “does not admit contentions, deductions or conclusions of fact or law.” (Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 713.)¿¿¿

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A pleading is uncertain if it is ambiguous or unintelligible. (Code Civ. Proc., § 430.10, subd. (f).) A demurrer for uncertainty may lie if the failure to label the parties and claims renders the complaint so confusing defendant cannot tell what he or she is supposed to respond to.¿ (Williams v. Beechnut Nutrition Corp. (1986) 185 Cal.App.3d 135, 139, fn. 2.) However, “[a] demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures.” (Khoury v. Maly's of California, Inc. (1993) 14 Cal.App.4th 612, 616.)¿¿

B. ¿¿ Discussion

Declaratory Relief

According to Code of Civil Procedure § 1060:

Any person interested under a written instrument, excluding a will or a trust, or under a contract, or who desires a declaration of his or her rights or duties with respect to another…may, in cases of actual controversy relating to the legal rights and duties of the respective parties, bring an original action or cross-complaint in the superior court for a declaration of his or her rights and duties in the premises, including a determination of any question of construction or validity arising under the instrument or contract. He or she may ask for a declaration of rights or duties, either alone or with other relief; and the court may make a binding declaration of these rights or duties, whether or not further relief is or could be claimed at the time. The declaration may be either affirmative or negative in form and effect, and the declaration shall have the force of a final judgment. The declaration may be had before there has been any breach of the obligation in respect to which said declaration is sought.

Thus, action for declaratory relief under § 1060 requires two things: “(1) a proper subject of declaratory relief and (2) an actual controversy involving justiciable questions relating to the rights or obligations of a party. [Citation.]” (Lee v. Silveira (2016) 6 Cal.App.5th 527, 546; Brownfield v. Daniel Freeman Marina Hospital (1989) 208 Cal.App.3d 405, 410.) The requirement that an “actual controversy” exists “concerns the existence of present controversy relating to the legal rights and duties of the respective parties pursuant to contract (Code Civ. Proc. § 1060), statute, or order,” instead of a controversy that is “conjectural, anticipated to occur in the future, or an attempt to obtain an advisory opinion from the court.” (Brownfield, 208 Cal.App.3d at 410.) “One test of the right to institute proceedings for declaratory judgment is the necessity of present adjudication as a guide for plaintiff's future conduct in order to preserve his legal rights.” (Osseous Technologies of America, Inc. v. DiscoveryOrtho Partners, LLC (2010) 191 Cal.App.4th 357, 364-365.) In Osseous, the Court notes that “when there is accrued cause of action for an actual breach of contract or other wrongful act,” the court may exercise its discretion under Code of Civil Procedure § 1061 to deny declaratory relief.” (Osseous, 191 Cal.App.4th at 366.) Code of Civil Procedure § 1061 states that “[t]he court may refuse to exercise the power granted by this chapter in any case where its declaration or determination is not necessary or proper at the time under all the circumstances.” The Court in Osseous found that the demurrer was properly sustained because there were “no allegations of an ongoing contractual relationship” between the parties and “[t]he future impact of any declaratory relief on the parties’ behavior is speculative.” (Osseous, 191 Cal.App.4th at 376-77.)

Plaintiff’s First Amended Complaint asserts that an actual controversy has arisen and now exists between Voyager, on the one hand, and Defendants, on the other hand, as to whether Voyager accepted Defendants’ November 10 Settlement Demand. (Complaint, ¶ 41.) Voyager asserts that it accepted the November 10 Settlement Demand by means of the November 13 Acceptance, which stated that Voyager accepted the settlement demand and communicated Voyager’s acceptance of and commitment to comply with those portions of the settlement demand that could not reasonably be met within the three-day window dictated by Defendants. (Complaint, ¶ 42.) Plaintiff’s complaint further contends that Defendants assert that Voyager failed to accept the November 10 Settlement Demand and the November Acceptance constituted a counteroffer. (Complaint, ¶ 43.)

Plaintiff’s complaint also alleges that an actual controversy has arisen and now exists between Voyager, on the one hand, and Defendants, on the other hand, as to whether Voyager’s duty to indemnify Herasme with respect to the Underlying Action is subject to the Policy’s Liability Coverage Limit of Insurance. (Complaint, ¶ 46.)

In their Demurrer, Defendants, Smiley Sean and Rasmey Sean argue that they have no case or controversy with Voyager. Their lawsuit (Case No. 20STCV48987) is against Ms. Herasme. Voyager’s First Amended Complaint alleges that “an actual controversy has arisen” between the parties as to whether Voyager accepted Defendants’ Nov. 10 Settlement Demand and whether Voyager’s policy limit still applies, (Complaint, ¶¶ 40, 45.) however Defendants assert that the face of the complaint demonstrates their assertions are contradictory and false on their face. Defendants contend that they do not have a contract with Voyager, nor have they sued Voyager. Instead, Defendants have sued Ms. Herasme. Defendants argue that it is Ms. Herasme who has a contractual relationship with Voyager and there has been no assignment by her of any rights to moving parties herein.

Defendants also assert that Declaratory relief is unripe for adjudication. Defendants contend that what Voyager may be anticipating is the potential “bad faith” insurance claim that their insured – Ms. Herasme – may one day have against Voyager. Defendants argue, however, that a series of events would have to occur in the underlying case before any such dispute materializes. The Seans would have to (1) go to trial in the case against Ms. Herasme, (2) obtain a verdict against Ms. Herasme, (3) that verdict would have to be in excess of Ms. Herasme’s insurance policy, and (4) judgement in excess of that policy would have to be entered against Ms. Herasme. Defendants claim that only at that point would Ms. Herasme have a claim to bring against her insurance carrier. Defendants assert that they would have nothing to do with this, and thus, the instant demurrer must be sustained without leave to amend and the entire matter dismissed.

In opposition, Plaintiff contends that this action is ripe and ready for judicial intervention. Plaintiff asserts that its two causes of action alleged in its Complaint pass this two-pronged test because the facts supporting both causes of action—Defendants’ offer and Voyager’s acceptance—are set in the past and captured in writing. Plaintiff also contends that Defendants readily admit that they will seek a multi-million-dollar verdict from Herasme, and that they expect Plaintiff to pay it. Plaintiff claims Voyager suffers hardship by continuing to cover the cost of litigating a matter that already settled, and by remaining theoretically liable for a multi-million excess judgment on a $50,000 policy.

THE COURT WILL TAKE ORAL ARGUMENT as to the issue of whether a sufficient controversy has been alleged for the Court to proceed with the declaratory relief action as currently pleaded, such as to schedule cross-motions for summary judgment as to whether the policy limits demand was or was not accepted, and whether Voyager’s policy limits cap its exposure, i.e., whether the “policy has been opened” by the claimed ploy of a 3-day limited time to accept the wrongful death plaintiffs’ pre-litigation demand.

Indispensable Party

Defendant’s demurrer also asserts that Voyager’s failure to include its insured, Herasme, in this claimed insurance coverage dispute warrants the sustaining of this demurrer because she is an indispensable party. Defendants claim that Herasme’s rights will be at issue here and this action directly prejudices her by attempting to saddle her with a multi-million-dollar judgment without an opportunity to be heard. In Plaintiff’s opposition, it claims that Herasme is aligned with Voyager in seeking enforcement of the settlement agreement, because her interests are adequately represented, and she resides within this Court’s jurisdiction.

¿¿ THE COURT WILL TAKE ORAL ARGUMENT as to the issue of whether a sufficient Voyager’s insured should or must be added as a defendant in this declaratory relief action. The Court will also entertain argument as to whether the insured would be required to have separate, independent counsel in the declaratory relief action versus the wrongful death action if the insured is to be added as a defendant in the declaratory relief case.