Judge Upinder S. Kalra, Case Number: 22STCV34213, Date: 2023-05-22 Tentative Ruling

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CASE NAME: Jem Community Center, et al. v. Philadelphia Indemnity Insurance Company, et al.

RESPONDING PARTY(S): Plaintiffs Jem Community Center and BSD Properties, LLC

1. Demurrer as to the first cause of action for breach of contract for failure to state facts sufficient. CCP § 430.10(e).

2. Demurrer as to the second cause of action for breach of covenant of good faith and fair dealing for failure to state facts sufficient. CCP § 430.10(e).

Plaintiffs Jem Community Center and BSD Properties, LLC (Plaintiffs) filed a complaint on October 24, 2022. Defendants Philadelphia Insurance Indemnity Insurance Company and Tokio Marine Specialty Insurance Company (Defendants) filed a Demurrer and Motion to Strike that the court sustained with leave to amend on May 22, 2023 (motion to strike mooted). Plaintiff filed a First Amended Complaint (FAC) on June 13, 2013 with two causes of action for: (1) Breach of Contract; and (2) Breach of Obligation of Good Faith.

The complaint alleges that Plaintiff and Defendants had an insurance policy whereby Defendants would indemnify Plaintiff for fire damages. In October 2020, Plaintiffs’ structure suffered damage from a fire. However, in August 2022, Defendants refused to reimburse Plaintiffs for the damage.

Defendant Tokio Marine Specialty Insurance Company (Moving Defendant) timely filed a Demurrer on July 28, 2023.[1]

Plaintiffs filed a Notice of Attachment, pursuant to the court’s order, on October 25, 2023 to attach the insurance policy purportedly attached to the FAC as Exhibit 1.

The court grants Defendants’ request for judicial notice as to Exhibits A. (Evid. Code § 452(c), (h); See Kalnoki v. First American Trustee Servicing Solutions, LLC (2017) 8 Cal.App.5th 23,37.) However, the court only takes judicial notice of the foregoing documents only as to “the existence, content and authenticity of public records and other specified documents”; it does not take judicial notice of the truth of the factual matters asserted in those documents. (Dominguez v. Bonta (2022) 87 Cal. App. 5th 389, 400.)¿

Prior to filing a demurrer, the demurring party is required to satisfy their meet and confer obligations pursuant to Code of Civ. Proc. (CCP) §430.41 and demonstrate that they so satisfied their meet and confer obligation by submitting a declaration pursuant to CCP §430.41(a)(2) & (3). Here, the parties sufficiently met and conferred via several email exchanges. (Greer Decl. ¶¶ 2-4.) Therefore, the meet and confer requirement is met.

A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) When considering demurrers, courts read the allegations liberally and in context. In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) “A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. …. The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action.” (Hahn 147 Cal.App.4th at 747.)

Moving Defendant contends that it is not a party to the insurance policy subject to the FAC and, as such, it has no contractual relationship with Plaintiffs.[2] Additionally, Moving Defendant argues it did not issue the policy and its name does not appear on the policy. Plaintiffs argue that the phrase “A member of the Tokio Marine Group” is designed to impart substance and solidity to the insurance being provided.[3]

“To establish a cause of action for breach of contract, the plaintiff must plead and prove (1) the existence of the contract, (2) the plaintiff’s performance or excuse for nonperformance, (3) the defendant’s breach, and (4) resulting damages to the plaintiff. [Citation.]” (Maxwell v. Dolezal (2014) 231 Cal.App.4th 93, 97-98.) “A written contract may be pleaded either by its terms – set out verbatim in the complaint or a copy of the contract attached to the complaint and incorporated therein by reference – or by its legal effect. [Citation.] In order to plead a contract by its legal effect, plaintiff must ‘allege the substance of its relevant terms.’” (Heritage Pacific Financial, LLC v. Monroy (2013) 215 Cal.App.4th 972, 993.)

As a threshold matter, the court does not consider unpublished opinions in its analysis. (Cal. Rules of Court, Rule 8.115(a).) Accordingly, the court disregards Moving Defendant’s authority to the extent it is inconsistent with this rule.

Upon reviewing the FAC and the Insurance Policy Plaintiffs filed with their Notice of Attachment on October 25, 2023, the court agrees with Moving Defendant that it is not a party to the subject insurance policy.[4] Accordingly, Plaintiffs have not pleaded or proved that a contract exists between themselves and Moving Defendant.

Therefore, Moving Defendant’s Demurrer to the First Cause of Action is SUSTAINED with leave to amend.

Because Plaintiffs’ claim for breach of the obligation of good faith depends on the existence of a contract, it fails without an underlying contract.

Therefore, Moving Defendant’s Demurrer to the Second Cause of Action is SUSTAINED with leave to amend.

[1] The parties agreed to extend Moving Defendant’s responsive pleading deadline until July 28, 2023. (Greer Decl. ¶ 3.) Defendant Philadelphia Indemnity Insurance Company filed an Answer on July 28, 2023.

[2] Moving Defendant notes that the trademark “Philadelphia Insurance Companies A member of the Tokio Marine Group” appears on the subject insurance policy, but it is not the name of the insurer of those policies.

[3] Plaintiffs cite no authority to support their position. Indeed, Plaintiffs’ opposition is one paragraph.

[4] Indeed, the court questions whether Plaintiffs attached the correct policy for the court’s review as “Tokio Marine” was not mentioned on any page the court could see. Notably, the policy starts at page 3 of 9.