Judge: Virginia Keeny, Case: 22VECV01434, Date: 2023-05-18 Tentative Ruling
Case Number: 22VECV01434 Hearing Date: May 18, 2023 Dept: W
khachik
garabidian jr. v. progressive west insurance co.
demurrer to first amended complaint
Date of Hearing: May
18, 2023 Trial
Date: None Set
Department: W Case
No.: 22VECV01434
Moving
Party: Defendant
Progressive West Insurance Co.
Responding
Party: Plaintiff Khachik Garabidian
Jr.
BACKGROUND
Plaintiff Khachik Garabidian Jr. was the holder of an auto
insurance policy, i.e., Policy No. 923764921 (Policy) with Defendant
Progressive West Insurance Company. On May 23, 2022, plaintiff purchased a 011
Mercedes-Benz G55 (Vehicle) and on June 14, 2022, while the Vehicle was parked
at the dealership, a pedestrian passing by lit the Vehicle on fire and
inflicted damage to it. Plaintiff filed a claim with defendant on June 16, 2022
to cover the damage to the Vehicle. On August 10, 2022, defendant denied plaintiff’s
claim on the grounds that plaintiff owns “three additional vehicles, a 2007
Mercedes Benz… a 2013 BMW… and a 2012 Toyota which were not insured by [Defendant],
but by State Farm Insurance.” Plaintiff alleges he had 30 days from the date of
becoming owner of the Vehicle to add it to the Policy and the Vehicle was
subject to coverage because it was still within the 30-day limit to formally
add the Vehicle to the Policy.
On September 28, 2022, plaintiff filed this action against defendant,
alleging causes of action for bad-faith and breach of contract. Plaintiff filed
the operative First Amended Complaint (FAC) on March 21, 2023.
On April 17, 2023, defendant filed the instant demurrer to
the FAC on the grounds that it fails to state a cause of action. Specifically,
the FAC focuses on the 30-day time limit for adding the Vehicle to the Policy
when the issue is that Policy does not include coverage for additional vehicles
if the policy holder owns other vehicles covered by policies with different
insurers, which was the stated basis for the denial of coverage. Plaintiff has
opposed the demurrer, contending defendant is attempting to introduce facts
outside the FAC and that plaintiff has otherwise adequately pled claims for
breach of contract and bad faith. Defendant has replied, arguing that the FAC
states the bases for the denial of coverage but fails to allege facts showing
that the basis for the denial was factually false or legally insufficient under
the terms of the Policy.
[Tentative] Ruling
DEMURRER IS SUSTAINED WITH LEAVE TO AMEND
LEGAL STANDARD
A demurrer is an objection to a pleading, the grounds for which are
apparent from either the face of the complaint or a matter of which the court
may take judicial notice. (Code Civ.
Proc., § 430.30, subd. (a); see also Blank v. Kirwan (1985) 39 Cal.3d
311, 318.) The purpose of a demurrer is
to challenge the sufficiency of a pleading “by raising questions of law.” (Postley v. Harvey (1984) 153
Cal.App.3d 280, 286.) “In the
construction of a pleading, for the purpose of determining its effect, its
allegations must be liberally construed, with a view to substantial justice
between the parties.” (Code Civ. Proc.,
§ 452.) The court “ ‘ “treat[s] the
demurrer as admitting all material facts properly pleaded, but not contentions,
deductions or conclusions of fact or law . . ..” ’ ” (Berkley v. Dowds
(2007) 152 Cal.App.4th 518, 525.)
“The law implies
in every contract,
including insurance
policies, a covenant of good faith and fair dealing. ‘The implied promise requires
each contracting party to refrain from doing anything to injure the right of
the other to receive the agreement's benefits. To fulfill its implied obligation,
an insurer must give at least
as much consideration
to the interests of the insured
as it gives
to its own interests. When
the insurer unreasonably
and in bad faith withholds payment
of the claim of its insured, it is subject
to liability in tort.’”
(Maslo v. Ameriprise Auto & Home Ins. (2014) 227
Cal.App.4th 626, 633) [internal citations omitted].
“To prevail on a cause of
action for breach of contract, the plaintiff must prove (1) the contract, (2)
the plaintiff's performance of the contract or excuse for nonperformance, (3)
the defendant's breach, and (4) the resulting damage to the plaintiff.” (Richman
v. Hartley (2014) 224 Cal.App.4th 1182, 1186) [internal citation omitted].
The interpretation of an insurance contract is generally a
question of law for the court governed by rules of contract interpretation. (Waller
v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 18-19.)
ANALYSIS
The Policy
provides the following conditions for extending coverage to an additional vehicle:
’Additional
auto’ means an auto you become the owner of during the policy
period that
does not permanently replace an auto expressly identified on the declarations
page if:
a. we
insure all other autos You own;
b. the
additional auto is not covered by any other insurance policy;
c. you
notify us within 30 days of becoming the owner of the additional auto;
and
d.
you pay any additional premium due.
(FAC, Ex. B)
[bold omitted from original].
Defendant
argues that the Policy only affords coverage to newly acquired vehicles, among
other qualifying conditions, if Defendant insures all other vehicles owned by
the policy holder. The FAC fails to address this point or allege facts
demonstrating that this requirement has been met, but instead focuses solely on
the 30-day time limit to add the Vehicle to the Policy, which is not the issue.
Plaintiff
contends he has pled sufficient facts to state claims for breach of contract
and bad faith, arguing that the demurrer is attempting to include facts outside
the four corners of the FAC regarding ownership of other vehicles covered by an
unrelated State Form policy. This argument assumes various facts not alleged in
the FAC or subject to judicial notice, such as the existence of the alleged
State Farm policy, that the Vehicle was covered by another insurance policy,
that Plaintiff owns any of the cars covered by any other alleged insurance
policy, that the Vehicle does not replace one of the automobiles insured by the
Defendant, and that the provisions of the Policy are unambiguous with respect
to whether the Vehicle is covered as an additional auto. Plaintiff further
contends he has clearly alleged defendant engaged in bad faith by denying
coverage with no factual basis to do so.
Defendant, in
reply, argued that the FAC is completely silent on whether the stated grounds
for the denial were factually false or legally insufficient under the terms of
the Policy. Defendant further argues that the issue of plaintiff’s ownership of
other vehicles and insurance policies for same being outside the four corners
of the FAC are without merit considering that plaintiff specifically mentions
the basis for the denial in the FAC.
The court
agrees with defendant. The Policy expressly provides that for coverage of an
additional vehicle, the policy holder must at least have all of its other vehicles
insured with defendant. (FAC, Ex. B.) Plaintiff alleges in the FAC that
defendant’s stated basis for denying coverage was that plaintiff owned other
vehicles insured by a different carrier, and says nothing of the 30-day
deadline. (FAC, ¶ 14.) The FAC contains no allegations that the stated basis
for the denial was false or otherwise legally insufficient. The FAC instead
focuses on the 30-day deadline for such coverage, which was not the basis for
the denial and is therefore irrelevant. Defendant did not have to request
judicial notice or introduce any facts outside the four corners of the FAC
because the FAC contained everything to demonstrate the pleading defects
therein. Plaintiff included the terms of the Policy by attaching a copy of it
to the FAC and alleged that defendant told plaintiff it was denying coverage
precisely because he owned other vehicles not insured by defendant, which the
Policy says is a disqualifying condition for coverage.
Accordingly,
the court will SUSTAIN the demurrer as to both causes of action with leave to
amend.