Judge Teresa A. Beaudet, Case 22STCV03454 2022-08-29 Tentative Ruling

Plaintiffs Amir Nayebdadash (“Amir”) and Danielle Nayebdadash (“Danielle”) (jointly, “Plaintiffs”) filed this action on January 27, 2022 against Defendants Inszone Insurance Services LLC (“Inszone”), Pat Grignon (“Grignon”), and Corey Elsasser (“Elsasser”) (collectively, “Defendants”). The operative First Amended Complaint (“FAC”) was filed on March 18, 2022, and asserts causes of action for (1) intentional misrepresentation, (2) negligent misrepresentation, (3) negligence, (4) breach of contract, (5) breach of the covenant of good faith and fair dealing, and (6) fraud and conspiracy.[1]

Defendants now demur to each of the causes of action of the FAC. Plaintiffs oppose.

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.)

In the FAC, Plaintiffs alleges that in or about June 2020, they spoke with Elsasser and Inszone about renewing their homeowner’s insurance policy with the Standard Fire Insurance Company, a subsidiary or affiliate of The Travelers Indemnity Company (“Travelers”). (FAC, ¶¶ 11, 12.) Elsasser and Grignon are personal insurance specialists with Inszone. (FAC, ¶¶ 7, 8.)

Plaintiffs explained to Elsasser that they have a substantial amount of valuable personal items such as watches, bags, shoes, jewelry, and clothing that they want insured by Travelers. (FAC, ¶ 12.) On June 9, 2020, Elsasser and Inszone gave Plaintiffs copies of their “Home Owner

Application,” “Evidence of Property Insurance,” and “Insurance Binders” (the “Policy”). (FAC, ¶ 14.) Inszone and Elsasser represented that Defendants were able to procure insurance coverage for Plaintiffs’ personal property and that said property would have a coverage limit of $433,500. (FAC, ¶ 14.)

On June 12, 2020, Elsasser and Inszone advised Plaintiffs in a written e-mail that the Policy would be “actual cash value” for the loss of personal property and offered replacement

cost for an additional premium. (FAC, ¶ 15.) On June 12, 2020, Travelers insured Plaintiffs with a Policy period that started on June 12, 2020 and extended to June 12, 2022. (FAC, ¶ 17.)

On February 2, 2021, Plaintiffs notified Inszone that the property address referenced

in the Policy was wrong. (FAC, ¶ 18.) Elsasser stated that “Travelers was able to do an internal rewrite of this policy so no signatures will be needed in this case.” (the “Rewritten Policy”). (FAC, ¶ 18.) The Rewritten Policy now included a “special limit” on personal property claims. (FAC, ¶ 18.)

On July 10, 2021, Plaintiffs’ personal property was stolen from Amir’s Las Vegas hotel room. (FAC, ¶ 20.) The following items were stolen: (1) Audemars Piguet watch; (2) Panerai watch; (3) Tom Ford sunglasses; and (4) three thousand dollars ($3,000) in cash (collectively, the “Stolen Items”). (FAC, ¶ 20.) Plaintiffs notified Elsasser and Inszone of their loss on July 10, 2021. (FAC, ¶ 20.)

On July 11, 2021, Plaintiffs contacted Elsasser to confirm that the Stolen Items were fully covered by the Rewritten Policy. (FAC, ¶ 21.) Elsasser denied the items were fully covered and informed them that a “special limit” applied and capped the benefit at $1,500. (FAC, ¶ 21.)

Plaintiffs allege that (1) in June 2020, Elsasser misrepresented the terms of the Policy when he intentionally or negligently failed to disclose the existence of a “special limit” and/or requirements to obtain the “actual cash value” or “replacement value” for personal property claims; or, (2) in February 2021, Elsasser and Inszone acted fraudulently and outside the scope of their authority as agents for Plaintiffs when they agreed to bind Plaintiffs without their consent (or signature) to the Rewritten Policy that now included a “special limit” for personal property claims. (FAC, ¶ 19.)

As an initial matter, the Court does not find that any of the causes of action are ambiguous or unintelligible. Therefore, the special demurrer on the basis of uncertainty is overruled.¿

D. Causes of Action for Intentional Misrepresentation, Negligent Misrepresentation, and Fraud and Conspiracy

Defendants assert that Plaintiffs’ first and second causes of action for intentional and negligent misrepresentation are not sufficiently specific and “improperly lump Elsasser and Inszone together.” Defendants assert that Plaintiffs’ sixth cause of action for fraud and conspiracy is similarly defective.

“The elements of fraud are (a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or scienter); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage. The elements of negligent misrepresentation are similar to intentional fraud except for the requirement of scienter; in a claim for negligent misrepresentation, the plaintiff need not allege the defendant made an intentionally false statement, but simply one as to which he or she lacked any reasonable ground for believing the statement to be true.” (Charnay v. Cobert (2006) 145 Cal.App.4th 170, 184 [internal quotations and citations omitted].) “In California, fraud must be pled specifically; general and conclusory allegations do not suffice…This particularity requirement necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645 [internal quotations omitted].)

Defendants assert that absent from Plaintiff’s allegations “[i]s whether Amir, Danielle, or both were the recipient of this purported ‘misrepresentation,’ where it took place, or how Plaintiffs can reconcile the contradictory allegations that they were ‘misled’ about the requirements of the Policy while at the same time admitting that they were told about the Special Sublimit, the requirements to itemize and schedule items to be covered, and that the Policy was ‘rewritten’ to include the $1,500 sublimit months before the [l]oss.” (Demurrer at p. 15:3-8.)

As to whether Amir, Danielle, or both were the recipient of the alleged misrepresentations, Plaintiffs assert that Elsasser and Inszone are responsible for any representation that they knew or expected a husband would repeat to his wife (and vice versa).[2] Plaintiffs cite to CACI 1906, which concerns misrepresentations made to persons other than the plaintiff, and provides “[defendant] is responsible for a representation that was not made directly to [plaintiff] if [defendant] made the representation [to a group of persons including [plaintiff]] [or] [to another person, intending or reasonably expecting that it would be repeated to [plaintiff]].” Defendants do not respond to this point in the reply. Plaintiffs also note that they allege that “[i]n or about June 2020, the Plaintiffs spoke with Elsasser and Inszone about renewing their homeowner’s insurance policy with Travelers.” (FAC, ¶ 12, emphasis added.)

As to the “where” element and Plaintiffs’ purportedly contradictory allegations, Plaintiffs counter that they allege Elsasser misrepresented the terms of the Policy to Plaintiffs when he failed to disclose the existence of a “special limit” and/or requirements to obtain the “actual cash value” or “replacement value” for personal property claims in June 2020 over a series of phone calls and email communications. (Citing to FAC, ¶¶ 12-17; see, e.g., FAC, ¶ 16, which alleges, “[o]n or about June 12, 2020, Plaintiffs spoke to Elsasser on a recorded phone call to seek clarification about the coverages. During that call, Elsasser confirmed that Plaintiffs did not have to provide him with a list of valuables he previously requested. Elsasser did not advise Plaintiffs that Travelers could apply a ‘special limit’ to personal property rather than pay the ‘actual cash value’ or ‘replacement cost’ as he represented in his e-mail dated June 12, 2020. Indeed, Elsasser’s written representation was the opposite: ‘[c]urrently it is written as Actual Cash Value’ and ‘did not include replacement cost on personal property.’”) The Court does not find that the “where” element is deficient. The Court also does not find that Defendants have shown that the first, second, and sixth causes of action must fail because they purportedly contain contradictory allegations.

Next, the Court does not see how Plaintiffs “improperly lump Elsasser and Inszone together,” in the intentional and negligent misrepresentation causes of action or in the fraud and conspiracy cause of action. These causes of action refer to Elsasser, Inszone, and Grignon individually, and also refer to “Defendants.” Plaintiffs allege that “Defendants Inszone, Elsasser, Grignon and Doe Defendants 1 through 25 are collectively referred to herein as ‘Defendants.’” (FAC, ¶ 10.)

Defendants also assert that the sixth cause of action for “fraud and conspiracy” is duplicative of the first and second causes of action for intentional and negligent misrepresentation. But as Plaintiffs note, the sixth cause of action is alleged against all Defendants. It alleges that “Defendants attempted to conceal their misleading and materially false statements by withholding and destroying the recorded phone lines that memorialize their fraudulent conduct as alleged herein.” (FAC, ¶ 55.) The sixth cause of action further alleges that “Defendants, and each of them, acted in concert together as co-venturer, and/or co-conspirator of

each of the other Defendants.” (FAC, ¶ 57.) Such allegations are not included in the first and second causes of action.

Defendants also argue that “Elsasser, who is an individual agent performing services on behalf of the principal, cannot be held liable by Plaintiffs…Thus, Elsasser should be dismissed from all fraud claims.” (Demurrer at p. 15:9-11.) In support of this assertion, Defendants cite to Lippert v. Bailey (1966) 241 Cal.App.2d 376. In Lippert, the plaintiffs purchased a property in Los Angeles County. (Id. at p. 378.) Defendant “Bailey” was a licensed general insurance agent doing business under the name of Bailey and Company, and Bailey was an authorized agent for Fireman’s Fund Insurance Company. (Ibid.) Bailey “issued, or procured and signed as agent,” a three-year Fireman’s Fund Homeowners’ Policy insuring the subject real property. (Ibid.) Subsequently, a fire on the insured premises occurred, the plaintiffs’ claim for the loss was denied, and the plaintiffs filed an action against defendants Fireman’s Fund, Bailey, and “Roy Marcom, Jr.” (Id. at p. 379.)

“The plaintiffs contend[ed] that if defendants, Bailey and Marcom, were negligent in their primary obligation in regard to maintaining and providing insurance coverage for plaintiffs, they were primarily liable, and if they were negligent while acting as agent for Fireman’s Fund, the Company would be secondarily liable for such negligence.” (Id. at p. 382 [internal quotations omitted].) The Court of Appeal found that “[w]hile an insurance agent may be personally liable to the insured for damages which are the result of the agent’s negligent failure to insure property as contracted, the agent’s personal liability is dependent upon the extent of the disclosure of his agency. The rule is correctly stated in 44 Corpus Juris Secundum, Insurance, section 165, page 852: [Liability] to the applicant or insured for acts or contracts of an insurance agent within the scope of his agency, with a full disclosure of the principal, rests on the company, . . . This requirement was upheld in Gibbs v. Home Ins. Co. of New York, 252 App.Div. 805 [298 N.Y.S. 856]. The plaintiff sought a judgment reforming an insurance policy issued by the insurance company, and in the alternative, damages against the agent for negligently failing to provide an adequate insurance policy. The court held: Where an agent is duly constituted and names his principal and contracts in his name and does not exceed his authority, the principal is responsible and not the agent. This view has been adopted in California. Where the signature as agent and not as a principal appears on the face of the contract, the principal is liable and not the agent.” (Id. at p. 382 [internal quotations omitted].) The Court of Appeal found that “[t]he action against defendants, Bailey and Marcom, is not maintainable as it appears from the plaintiffs’ complaint that the defendants, Bailey and Barcom, were known to the plaintiffs to be the agents of the codefendant, Fireman’s Fund…” (Id. at p. 383.)

Plaintiffs assert that they “do not allege that Inszone, Elsasser or Grignon were agents of Travelers; rather, Plaintiffs entered into an agreement with Inszone for it to act as their insurance broker empowered to obtain and procure insurance for their real estate and personal property.” (Opp’n at p. 10:10-13.) But the Court does not see how this argument distinguishes Lippert. As set forth above, the Lippert Court noted that “[Liability] to the applicant or insured for acts or contracts of an insurance agent within the scope of his agency, with a full disclosure of the principal, rests on the company…” (Lippert v. Bailey, supra, 241 Cal.App.2d 376, 382.) Plaintiffs allege that Elsasser “was a personal insurance specialist with Inszone acting within the course and scope of his employment at all times…” (FAC, ¶ 7.) Plaintiffs do not assert that there was not a full disclosure of the principal here.

Lastly, Defendants assert that Plaintiffs’ conspiracy cause of action should be dismissed. They note that “[c]ivil conspiracy is not an independent tort. Instead, it is a legal doctrine that imposes liability on persons who, although not actually committing a tort themselves, share with the immediate tortfeasors a common plan or design in its perpetration.” (City of Industry v. City of Fillmore (2011) 198 Cal.App.4th 191, 211-212 [internal quotations omitted].) However, Plaintiffs’ sixth cause of action is for “fraud and conspiracy.” The Court notes that “a demurrer cannot rightfully be sustained to part of a cause of action or to a particular type of damage or remedy.” (Kong v. City of Hawaiian Gardens Redevelopment Agency (2002) 108 Cal.App.4th 1028, 1047; see also PH II, Inc. v. Superior Court (1995) 33 Cal.App.4th 1680, 1682 [“A demurrer does not lie to a portion of a cause of action.”].)

In light of the foregoing, the Court sustains the demurrer to the first, second, and sixth causes of action as to Elsasser only.[3] The Court otherwise overrules the demurrer to the first, second, and sixth causes of action.

In support of the third cause of action for negligence, Plaintiffs allege that Elsasser breached his duty of care owed to Plaintiffs by either: (1) in June 2020, misrepresenting the terms of the Policy when he negligently failed to disclose the existence of a “special limit” and/or requirements to obtain the “actual cash value” or “replacement value” for personal property claims; or, (2) in February 2021, acting negligently and outside the scope of his authority (along with Inszone) by agreeing to bind Plaintiffs without their consent (or signature) to the Rewritten Policy that included a “special limit” for personal property claims. (FAC, ¶ 42.) Plaintiffs allege that Elsasser also negligently failed to communicate the requirements necessary for Plaintiffs to obtain the “actual cash value” or “replacement cost” for the Stolen Items. (FAC, ¶ 42.)

Defendants argue that the negligence cause of action fails against Elsasser under Lippert.

Plaintiffs counter that the Lippert Court found that “an insurance agent may be personally liable to the insured for damages which are the result of the agent’s negligent failure to insure property as contracted…” (Opp’n at p. 14:1-3, citing Lippert v. Bailey, supra, 241 Cal.App.2d 376, 382.) But Plaintiffs do not cite to the entirety of the sentence, which provides “[w]hile an insurance agent may be personally liable to the insured for damages which are the result of the agent’s negligent failure to insure property as contracted, the agent’s personal liability is dependent upon the extent of the disclosure of his agency.” (Lippert v. Bailey, supra, 241 Cal.App.2d 376, 382.) “Where the signature as agent and not as a principal appears on the face of the contract, the principal is liable and not the agent.” (Ibid.) Plaintiffs do not allege that Elsasser is acting as a principal. As set forth above, Plaintiffs allege that Elsasser was a personal insurance specialist with Inszone acting within the course and scope of his employment at all times. (FAC, ¶ 7.) Plaintiffs also allege that Inszone is a licensed brokerage firm that employed Elsasser, a licensed insurance agent. (FAC, ¶ 29.)

In light of the foregoing, the Court sustains Defendants’ demurrer to the third cause of action for negligence as to Elsasser only.

Defendants assert that Plaintiffs’ fourth cause of action for breach of contract against Inszone is deficient. First, Defendants assert that the FAC fails to allege whether the contract was written, oral, or was otherwise implied by conduct. Pursuant to Code of Civil Procedure section 430.10, subdivision (g), a party may demur to a pleading on the grounds that “[i]n an action founded upon a contract, it cannot be ascertained from the pleading whether the contract is written, is oral, or is implied by conduct.” Defendants also argue that Inszone is an insurance broker, not the insurer. They assert that the subject contract for insurance is between Plaintiffs and Travelers, not Inszone.

Plaintiffs counter that paragraph 12 of the FAC is clear that an oral agreement was entered into between Inszone and Plaintiffs in June 2020. In paragraph 12, Plaintiffs allege that “[i]n or about June 2020, the Plaintiffs spoke with Elsasser and Inszone about renewing their homeowner’s insurance policy with Travelers…During these calls, Plaintiffs explained to Elsasser that they have a substantial amount of valuable personal items…that they want insured by Travelers. At that time, Plaintiffs entered into an agreement with Inszone for it to act as their insurance broker empowered to obtain and procure insurance for their real estate and personal property.” (FAC, ¶ 12.) Defendants appear to concede in the reply that these allegations are sufficient, stating, “[t]he FAC itself does not specify anywhere whether the purported contract is written, oral, or implied by conduct, though Plaintiffs’ Opposition apparently now clarifies it may be an oral agreement.” (Reply at p. 2:24-26.)

Defendants also contend that the FAC fails to allege whether the parties performed, how the purported contract was breached, and who breached the purported contract.[4] Plaintiffs allege that “Inszone contracted with Plaintiffs to obtain insurance coverage for Plaintiffs’ personal property. Specifically, Inszone agreed to procure a policy that paid either the ‘actual cash value’ or the ‘replacement cost’ for the Stolen Items.” (FAC, ¶ 45.) Plaintiffs allege that “Inszone breached that duty by procuring the Rewritten Policy from Travelers that applied a ‘special limit’ of $1500 to the loss of the Stolen Items rather than the ‘actual cash value’ or ‘replacement cost’ of the Stolen Items.” (FAC, ¶ 46.) However, Plaintiffs do not allege in the fourth cause of action that they performed their obligations under the alleged contract. Plaintiffs’ opposition does not point to any allegations regarding their alleged performance.

Thus, the Court sustains the demurrer to the fourth cause of action for breach of contract.

Defendants first assert that Plaintiffs’ fifth cause of action for breach of the covenant of good faith and fair dealing fails because Plaintiffs fail to allege any “contract” between Plaintiffs and Inszone. As discussed above, the FAC does contain allegations regarding a contract between Plaintiffs and Inszone. (See FAC, ¶ 12.)

Next, Defendants argue that “[i]n the event the ‘bad faith’ claim is based on the insurer’s (Traveler’s) refusal to settle a claim, again, Inszone is an insurance brokerage, not an insurer.” (Demurrer at p. 18:14-15.) But Plaintiffs allege that “Inszone breached its agreement in bad faith by fraudulently inducing Plaintiffs to purchase the Policy and Rewritten Policy when it knew that Plaintiffs would not receive the replacement cost or actual value [sic] the Stolen Items.” (FAC, ¶ 50.) Defendants do not cite to any legal authority indicating that Plaintiffs may not allege a cause of action for breach of the covenant of good faith and fair dealing against an insurance broker (as opposed to the insurer).

Lastly, Defendants assert that there can be no bad faith action against an insurer’s officers, agents, or employees. But the fifth cause of action for breach of the covenant of good faith and fair dealing is only alleged against Inszone.

In light of the foregoing, the Court overrules the demurrer to the fifth cause of action for breach of the covenant of good faith and fair dealing.

Based on the foregoing, Defendants’ demurrer to the FAC is sustained in part and overruled in part.

The Court sustains the demurrer to the first, second, third, and sixth causes of action as to Elsasser only, with leave to amend. The Court sustains the demurrer to the fourth cause of action in its entirety, with leave to amend. The Court overrules the demurrer to the fifth cause of action.

The Court orders Plaintiffs to file and serve an amended complaint, if any, within 20 days of the date of this order. If no amended complaint is filed within 20 days, the Court orders Defendants to file and serve their answer to the FAC within 30 days of the date of this order.

[1]The first, second, and third causes of action are alleged against Inszone and Elsasser. The fourth and fifth causes of action are alleged against Inszone only. The sixth cause of action is alleged against all Defendants.

[2]Plaintiffs allege they are married. (FAC, ¶¶ 4-5.)

[3]The Court notes that the demurrer does not argue that Grignon should be dismissed from the sixth cause of action under Lippert v. Bailey (1966) 241 Cal.App.2d 376. The demurrer does not contain arguments concerning Grignon specifically.

[4]The essential elements of cause of action for breach of contract are “(1) the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to plaintiff.” (Reichert v. General Ins. Co . (1968) 68 Cal.2d 822, 830 [69 Cal.Rptr. 321, 442 P.2d 377].)

AMIR NAYEBDADASH, et al., Plaintiffs, vs. INSZONE INSURANCE SERVICES LLC, et al., Defendants.	Case No.:	22STCV03454
	Hearing Date:	August 29, 2022
	Hearing Time:	2:00 p.m.
	[TENTATIVE] ORDER RE: DEFENDANTS INSZONE INSURANCE SERVICES, PAT GRIGNON, AND COREY ELSASSER’S DEMURRER TO PLAINTIFFS’ FIRST AMENDED COMPLAINT

Superior Court of California

County of Los Angeles

Department 50