Judge William A. Crowfoot, Case Number: 23AHCV00202, Date: 2023-09-12 Tentative Ruling

Judge: William A. Crowfoot, Case: 23AHCV00202, Date: 2023-09-12 Tentative Ruling

On January 30, 2023, plaintiffs Suzanne Dunaians and Deanne Bilemjian (collectively, “Plaintiffs”) filed this action asserting claims for breach of insurance contract, bad faith breach of implied covenant of good faith and fair dealing, conversion, and negligence against Transamerica Life Insurance Company (“Transamerica”). On March 21, 2023, Plaintiffs added Leisure Werden & Terry Agency (“Defendant”) as Doe 1.

On September 28, 2023, Plaintiffs filed the operative First Amended Complaint (“FAC”).

Plaintiffs allege that their parents, now deceased, purchased a life insurance policy from Transamerica for Plaintiffs’ benefit. (FAC, ¶ 10.) After their parents passed away, Transamerica refused to tender the policy proceeds and claimed that the proceeds needed to be paid to an irrevocable trust created in 1990 that allegedly does not exist. Plaintiffs allege that they are beneficiaries of a different trust that was amended in 2004 and that they were unaware of a trust formed in 1990. (FAC, ¶¶ 17-24.) Transamerica paid the life insurance proceeds on April 11, 2023, but Plaintiffs assert a claim for tortious breach of implied covenant of good faith and fair dealing for unreasonably delaying and withholding the proceeds in bad faith. Plaintiffs also assert a claim for negligence against Defendant because their parents purchased the life insurance policy through Defendant. Plaintiffs allege that Defendant had a duty to request, obtain and secure a copy of any irrevocable trust for which a policy was issued since the life insurance policy dictated the manner in which proceeds were to be distributed in the case of irrevocable designations. (FAC, ¶ 51.) Plaintiffs allege Defendant breached this duty by failing to obtain a copy of the necessary documents and that Plaintiffs have been damaged in an amount to be determined at trial. (FAC, ¶¶ 52-53.)

On November 3, 2023, Defendant filed this demurrer and motion to strike. Defendant demurs to the second cause of action on the grounds that it fails to state a cause of action and is uncertain. Defendant further moves to strike Plaintiffs’ requests for bad faith damages, consequential damages, and attorneys’ fees.

A demurrer tests the legal sufficiency of the pleadings and will be sustained only where the pleading is defective on its face. (City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (1998) 68 Cal.App.4th 445, 459.) “We treat the demurrer as admitting all material facts properly pleaded but not contentions, deductions or conclusions of fact or law. We accept the factual allegations of the complaint as true and also consider matters which may be judicially noticed. [Citation.]” (Mitchell v. California Department of Public Health (2016) 1 Cal.App.5th 1000, 1007; Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.App.3d 593, 604 [“the facts alleged in the pleading are deemed to be true, however improbable they may be”].) Allegations are to be liberally construed. (Code Civ. Proc., § 452.) A demurrer may be brought if insufficient facts are stated to support the cause of action asserted. (Code Civ. Proc., § 430.10, subd. (e).) Leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.) The burden is on the complainant to show the Court that a pleading can be amended successfully. (Ibid.)

The necessary elements for a claim of negligence are “(a) a legal duty to use due care; (b) a breach of such legal duty; [and] (c) the breach as the proximate or legal cause of the resulting injury.” (Ladd v. County of San Mateo (1996) 12 Cal.4th 913, 917 (internal quotations omitted).)

Plaintiffs allege that Defendant “had a duty to request, obtain and secure a copy of any irrevocable trust for which a policy was issued since the life insurance policy dictated the manner in which proceeds were to be distributed in the case of irrevocable designations.” (FAC, ¶ 51.) Plaintiffs also allege that Defendant, “whether agent and/or insurance broker owed a duty to both decedents and Plaintiff’s [sic] herein to use reasonable care, diligence, and judgment in procuring the insurance requested by an insured and obtain and preserve any and all documents material and necessary to determine the proper payment of policy proceeds upon the event and/or date set forth in the policies.” (FAC, ¶¶ 52-53.) Defendant disputes the existence of any duty, which is a matter of law. (Ky. Fried Chicken of Cal. v. Superior Court (1997) 14 Cal.4th 814, 819.)

Defendant argues that the FAC is devoid of any allegations that demonstrate a relationship between Plaintiffs and Defendant which would impose an independent duty in tort upon Defendant. Defendant states that it is a “noncaptive general agent – essentially a wholesaler of insurance policies acting as the middleman between insurers and independent insurance sales brokers/agents – that deals directly with various independent insurance sales brokers, not potential insureds.” (Demurrer, p. 7.) Defendant explains that “[a]s a noncaptive general agent, [it] is free to work with multiple insurance carriers and not tied solely to one insurance company, including, among others, TransAmerica.” Defendant emphasizes that it “did not sell the Policy to the Decedents nor to Plaintiffs” and that Plaintiffs fail to allege otherwise.

Plaintiffs do not allege facts establishing a client relationship; instead they allege that they were the beneficiaries of the policies and that their parents were the insureds who purchased the policies which were issued by TransAmerica. However, cases cited by Defendant in their brief show that even if Defendant were an insurance broker (which it is unclear whether Plaintiffs are asserting), it would owe no duty to Plaintiffs, who are the beneficiaries. (Demurrer, pp. 14-15; The Mega Life and Health Insurance Company v. Sup. Ct. (2009) 172 Cal.App.4th 1522, 1525.)

The Court previously granted leave to amend for Plaintiffs to include allegations demonstrating Defendant’s involvement in the transaction and any legal duty which would arise from their involvement. Plaintiffs contend that additional discovery is needed to determine the relationship between TransAmerica and Defendant to determine whether additional causes of action based on fiduciary duty and negligent misrepresentation exist. Plaintiff state that they have been provided with “at least one audio recording where someone, relationship not yet identified, called TransAmerica to discuss the policy at issue in this action.” (Opp., p. 6.) However, Plaintiffs do not explain how they would have standing to assert any claim for negligent misrepresentation because any misrepresentations would have been made to their parents. Also, it is unclear how Defendant would owe a fiduciary duty to Plaintiffs, the insurance policy beneficiaries, based on the authorities cited by Defendant in its demurrer.

Accordingly, the demurrer to the Second Cause of Action is SUSTAINED without leave to amend

Defendant’s demurrer to Plaintiff’s Second Cause of Action is SUSTAINED without leave to amend. Defendant’s motion to strike is taken off calendar as moot.

William A. Crowfoot

Judge of the Superior Court

Parties who intend to submit on this tentative must send an email to the Court at ALHDEPT3@lacourt.org indicating intention to submit on the tentative as directed by the instructions provided on the court website at www.lacourt.org. Please be advised that if you submit on the tentative and elect not to appear at the hearing, the opposing party may nevertheless appear at the hearing and argue the matter. Unless you receive a submission from all other parties in the matter, you should assume that others might appear at the hearing to argue. If the Court does not receive emails from the parties indicating submission on this tentative ruling and there are no appearances at the hearing, the Court may, at its discretion, adopt the tentative as the final order or place the motion off calendar.