Judge: Stephen I. Goorvitch, Case: 23STCV14800, Date: 2024-02-05 Tentative Ruling

Case Number: 23STCV14800    Hearing Date: February 5, 2024    Dept: 39

Noreen Entertainment, Inc. v. State Farm General Insurance Company

Case Number 23STCV14800

Demurrer and Motion to Strike

Case Management Conference

            Plaintiff Noreen Entertainment, Inc. (“Plaintiff”) filed this action against State Farm General Insurance Company (“Defendant”) asserting a single cause of action for breach of the implied covenant of good faith and fair dealing.  Plaintiff alleges that it was sued twice in 2001, and properly informed its insurer—Defendant—of the lawsuit.  Plaintiff alleges that Defendant wrongfully, unreasonably, and intentionally refused to honor its duty to investigate and defend.

Defendant demurs to the complaint.  “It is black letter law that a demurrer tests the legal sufficiency of the allegations in a complaint.”  (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388.)  In ruling on a demurrer, the court must “liberally construe[]” the allegations of the complaint.  (Code Civ. Proc., § 452.)  “This rule of liberal construction means that the reviewing court draws inferences favorable to the plaintiff, not the defendant.”  (Perez v. Golden Empire Transit Dist. (2012) 209 Cal.App.4th 1228, 1238.)  Plaintiff’s allegations suffice for pleading purposes.  Defendant may obtain further information regarding Plaintiff’s claim in discovery.  (Khoury v. Maly’s of Cal., Inc. (1993) 14 Cal.App.4th 612, 616.)

             Defendant also moves to strike the prayer for punitive damages.  In ruling on a motion to strike punitive damages, “judges read allegations of a pleading subject to a motion to strike as a whole, all parts in their context, and assume their truth.” (Clauson v. Superior Court (1998) 67 Cal.App.4th 1253, 1255.)  To state a prima facie claim for punitive damages, a plaintiff must allege the elements set forth in the punitive damages statute, Civil Code section 3294. (Coll. Hosp., Inc. v. Superior Court (1994) 8 Cal.4th 704, 721.) Per Civil Code section 3294, a plaintiff must allege that the defendant has been guilty of oppression, fraud or malice.  (Civ. Code, § 3294, subd. (a).)  “Malice is defined in the statute as conduct intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.” (Coll. Hosp., Inc. v. Superior Court (1994) 8 Cal.4th 704, 725.) “The mere allegation an intentional tort was committed is not sufficient to warrant an award of punitive damages. Not only must there be circumstances of oppression, fraud or malice, but facts must be alleged in the pleading to support such a claim.” (Grieves v. Superior Ct. (1984) 157 Cal.App.3d 159, 166, internal citations and footnotes omitted.)  In this case, Plaintiff fails to allege specific facts to show that Defendant acted with malice, which is fatal to its claim.

            Nor does Plaintiff allege facts suggesting that officers, directors, or managing agents acted with malice.  “[T]he imposition of punitive damages upon a corporation is based upon its own fault.  It is not imposed vicariously by virtue of the fault of others.”  (City Products Corp. v. Globe Indemnity Co. (1979) 88 Cal. App. 3d 31, 36.)  “Corporations are legal entities which do not have minds capable of recklessness, wickedness, or intent to injure or deceive.  An award of punitive damages against a corporation therefore must rest on the malice of the corporation’s employees.  But the law does not impute every employee’s malice to the corporation.  Instead, the punitive damages statute requires proof of malice among corporate leaders:  the officers, directors, or managing agents.”  (Cruz v. Home Base (2000) 83 Cal. App. 4th 160, 167, internal quotations and citation omitted.)  This also is fatal to Plaintiff’s claim.

            Based upon the foregoing, the Court orders as follows:

            1.         Defendant’s demurrer is overruled.  Defendant shall file an answer within thirty (30) days.

            2.         Defendant’s motion to strike is granted.  The Court denies leave to amend, as Plaintiff’s counsel articulates nothing suggesting that an amendment would be successful.

            3.         The Court sets the following dates:

                        Final Status Conference:        July 18, 2025, at 9:00 a.m.

                        Trial Date:                               July 29, 2025, at 9:30 a.m.

The parties shall file joint trial documents on or before July 11, 2025.  The Court orders the parties to identify all witnesses they intend to call in their respective cases-in-chief, and identify and produce all exhibits they intend to introduce in their respective cases-in-chief, on or before July 11, 2025. 

            4.         Jury fees shall be posted on or before February 29, 2024, or the parties shall waive jury.

            5.         The parties shall comply with all courtroom procedures for Department #39.

            6.         Defendant’s counsel shall provide notice and file proof of such with the Court.