Judge: Virginia Keeny, Case: 22VECV00913, Date: 2022-10-31 Tentative Ruling
Case Number: 22VECV00913 Hearing Date: October 31, 2022 Dept: W
barry kagasoff, et al. V. state farm general insurance
demurrer to Plaintiff’s first amended complaint
Date of Hearing: October 31, 2022 Trial Date:
Department: W Case No.: 22VECV00913
Moving Party: Defendant, State Farm General Insurance Company
Responding Party: Plaintiffs, Barry Kagasoff and Elise Kagasoff
BACKGROUND
Plaintiffs Barry Kagasoff and Elise Kagasoff (collectively, “Plaintiffs”) filed an insurance claim with Defendant, State Farm General Insurance Company (“Defendant”) when a hot water pipe allegedly burst, causing water damage to their Property. Plaintiffs state that a representative of Defendant told them that all necessary mitigation and demolition work would be performed and all repairs and replacements would be covered by the policy. However, Defendant subsequently stated that the Property damage was not covered by the Policy and refused to pay for additional expenses, forcing Plaintiffs to remain living in their home while mitigation efforts were taking place.
Plaintiffs commenced this action on July 1, 2022. On September 13, 2022, Plaintiffs filed the operative First Amended Complaint (“FAC”) alleging: (1) Breach of Contract; (2) Breach of Implied Covenant of Good Faith and Fair Dealing; (3) Fraud; (4) Negligent Misrepresentation; (5) Intentional Infliction of Emotional Distress; and (6) Financial Elder Abuse.
On September 20, 2022, Defendant filed a Demurrer with Motion to Strike. Defendant demurs to the fifth and sixth causes of action on the basis that they fail to state facts sufficient to constitute a cause of action. Defendants additionally move to strike portions of the FAC relating to punitive damages.
[TENTATIVE] RULING
1. Defendant’s Demurrer to the Fifth Cause of Action for Intentional Infliction of Emotional Distress is OVERRULED.
2. Defendant’s Demurrer to the Sixth Cause of Action for Financial Elder Abuse is OVERRULED.
3. Defendant’s Motion to Strike is GRANTED in part and DENIED in part.
LEGAL STANDARD
A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. Therefore, the defects must be apparent on the face of the pleading or via proper judicial notice. (Code Civ. Proc., §§ 430.30, 430.70; Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) At the pleading stage, a plaintiff need only allege ultimate facts sufficient to apprise the defendant of the factual basis for the claim against him. (Semole v. Sansoucie (1972) 28 Cal. App. 3d 714, 721.) The court assumes the truth of the complaint’s properly pleaded or implied factual allegations. (E-Fab, Inc. v. Accountants, Inc. Servs. (2007) 153 Cal.App.4th 1308, 1315.) A “demurrer does not, however, admit contentions, deductions or conclusions of fact or law alleged in the pleading, or the construction of instruments pleaded, or facts impossible in law.” (S. Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 732.)
ANALYSIS
Meet and Confer
Defendant has filed a declaration showing an attempt to meet and confer. (McKeon Decl. ¶ 7). Defendant states that the parties met and conferred over the phone about issues with the initial Complaint. (McKeon Decl. ¶ 5.) Following the filing of the FAC, defense counsel sent Plaintiffs a letter advising that the issues persisted and asked for a response by September 19, 2022. (McKeon Decl. Exh. D.) However, Plaintiffs did not respond, (McKeon Decl. ¶ 7,) and Defendant filed this Motion on September 20, 2022.
Defendant has complied with the meet and confer requirement.
Fifth Cause of Action – Intentional Infliction of Emotional Distress
To state a cause of action for intentional infliction of emotional distress a plaintiff must show: “(1) outrageous conduct by the defendant; (2) the defendant's intention of causing or reckless disregard of the probability of causing emotional distress; (3) the plaintiff's suffering severe or extreme emotional distress; and (4) actual and proximate causation of the emotional distress by the defendant's outrageous conduct.” (Huntingdon Life Sciences, Inc. v. Stop Huntingdon Animal Cruelty USA, Inc. (2005) 129 Cal.App.4th 1228, 1259.) “In order to avoid a demurrer, the plaintiff must allege with great specificity the acts which he or she believes are so extreme as to exceed all bounds of that usually tolerated in a civilized community.” (Vasquez v. Franklin Management Real Estate Fund, Inc. (2013) 222 Cal.App.4th 819, 832 (citations omitted).)
The question of whether conduct is outrageous is usually a question of fact to be determined beyond the pleading stage. (So v. Shin (2013) 212 Cal.App.4th 652.) It is appropriate for a court to dismiss a claim for IIED on demurrer if the facts alleged do not amount to outrageous conduct as a matter of law. (Mintz v. Blue Cross of California (2009) 172 Cal.App.4th 1594, 1608-1609.)
Here, the Court finds that the FAC adequately alleges facts to support a finding of outrageous conduct. The FAC alleges that Defendant’s conduct was outrageous, specifically: “a. the manner in which State Farm handled the claim; b. the unreasonable delays State Farm caused in the resolution of the claim; and c. State Farm’s untruthfulness regarding the facts and circumstances surrounding the claim and the policy have been outrageous.” (FAC ¶ 112.)
The FAC further alleges that Defendant “held up the mitigation process by refusing to allow mitigation efforts to move forward, knowing that Plaintiffs have medical issues such as asthma and an ill adult child and knowing that Plaintiffs and the property could be exposed to secondary damages such as mold,” (FAC ¶ 27.) These allegations, combined with the allegations of fraud and intentional financial abuse of an elder (discussed below), are sufficient to allege outrageous conduct.
Defendant’s demur as to the Fifth Cause of Action is OVERRULED.
Sixth Cause of Action – Financial Elder Abuse
Financial abuse of an elder occurs when a person or entity does any of the following: “(1) Takes, secretes, appropriates, obtains, or retains real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both; (2) Assists in taking, secreting, appropriating, obtaining, or retaining real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both; (3) Takes, secretes, appropriates, obtains, or retains, or assists in taking, secreting, appropriating, obtaining, or retaining, real or personal property of an elder or dependent adult by undue influence, as defined in Section 15610.70.” (Welf. & Inst. Code, § 15610.30.) “A person or entity shall be deemed to have taken, secreted, appropriated, obtained, or retained property for a wrongful use if, among other things, the person or entity takes, secretes appropriates, obtains, or retains the property and the person or entity knew or should have known that this conduct is likely to be harmful to the elder or dependent adult.” (Id.)
Defendant argues that the FAC does not show a “taking, secreting, appropriating, obtaining, or retaining” as required. Defendant relies upon Paslay to assert that the elder abuse statute does not apply to insurers denying coverage because the case states, “[i]n our view, the legislative history does not demonstrate an intent to deem mere breaches of contract actionable instances of elder abuse.” (Palsay v. State Farm General Insurance Co. 248 Cal.App.4th 639, 658.) However, Defendant misrepresents this case because Palsay clearly states that “a party may engage in elder abuse by misappropriating funds to which an elder is entitled under a contract.” (Id. at 656.) However, along with showing a mere breach of contract, there also needs to be a showing of subjective bad faith or wrongful conduct in denying coverage. (Id. at 658-659.) The court in Palsay referenced a federal court case that concluded that the fraud allegations in the complaint were sufficient to state an elder abuse claim. (Id. at 659 (citing Negrete v. Fidelity and Guardian Life Insurance Co. (C.D.Cal.2006) 444 F.Supp.2d 998, 1001-1003).)
Here, Plaintiff alleges that Defendant “(a) Took policy premiums from Plaintiffs with no intent of fully paying benefits promised under the insurance policy; (b) That by and through the insurance application process and internal company records, State Farm has or had knowledge that Plaintiff Barry Kagasoff is an elder; (c) That State Farm intentionally denied the loss altogether; and (d) That State Farm wrongfully retained policy benefits by delaying and denying payment to Plaintiff Barry Kagasoff and did not pay what was due and owing to him for the covered water damage claim.” (FAC ¶ 127). Here, Plaintiffs allege more than a mere breach of contract by alleging bad faith by Defendant, including allegations of fraud. (FAC ¶ 81-95.)
Defendant’s demurrer as to the sixth cause of action is overruled.
Defendant’s Motion to Strike
Defendant moves to strike the claims for punitive damages on the grounds that the Complaint does not plead facts sufficient to support a claim for punitive damages.
California Civil Code § 3294 authorizes punitive damages upon a showing of malice, fraud, or oppression. Malice is defined as either “conduct which is 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.” (Civil Code § 3294(c)(1).) “Despicable conduct is conduct which is so vile, base, contemptible, miserable, wretched or loathsome that it would be looked down upon and despised by ordinary decent people.” (Mock v. Michigan Millers Mutual Ins. Co. (1992) 4 Cal. App. 4th 306, 331.) Fraud under California Civil Code § 3294(c)(3) “means an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.” California Civil Code § 3294(2) defines oppression as “despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights.” Punitive damages thus require more than the mere commission of a tort. (See Taylor v. Superior Court (1979) 24 Cal.3d 890, 894-95.) Specific facts must be pled in support of punitive damages. (Hillard v. A.H. Robins Co. (1983) 148 Cal.App.3d 374, 391-392.)
Defendant argues that Plaintiffs have not stated facts with sufficient particularity to support punitive damages.
The FAC alleges that: “State Farm’s conduct in refusing to honor its policy obligations was outrageous, despicable, malicious and fraudulent as its conduct left Plaintiffs’ home in a damaged condition.” (FAC ¶ 52.) The Court finds that the sufficiently plead causes of action for breach of implied covenant of good faith and fair dealing, fraud, intentional infliction of emotional distress and elder abuse support punitive damages awards because they additionally allege either fraud, malice, or oppression. Thus, the court grants the motion to strike only as to the cause of action for negligent misrepresentation.
CONCLUSION
Defendant’s Demurrer to the Fifth and Sixth Causes of Action is OVERRULED. Defendant’s Motion to Strike is granted only as to the request for punitive damages in the Fourth Cause of Action.