Judge: William D. Claster, Case: 20-01135752, Date: 2023-01-06 Tentative Ruling
Defendants Soss & Churton Insurance Services; Kathy Zail; and Brianne Band's Notice of Motion and Motion for Judgment on the Pleadings as to Plaintiffs' Complaint, and the Single Remaining Cause of Action Therein, The Third Cause of Action for Negligence ROA 286
Defendants Soss & Churston Insurance Services dba Pacific Partners Insurance Agency, Kathy Zail, and Brianne Band (erroneously sued as “Brianne Bann”) move for judgment on the pleadings on the complaint of plaintiffs Matthew Manning, Jr., Kaeyln Manning, Julia Manning, and Paige Manning (through her guardian ad litem, Erica Mitchell). The motion is DENIED. Defendants’ request for judicial notice is GRANTED.
I. Background
As explained in prior orders and judicially noticeable documents:
This case arises from a 2014 automobile accident that resulted in the death of Matthew Manning, plaintiffs’ father. In 2015, the Mannings filed suit against Marcello’s Pizza and Pasta, its owner Joseph Muirhead (who did business as Marcello’s), and Marcello’s employee Kylie Stevenson. They argued that Stevenson, while delivering pizza for Marcello’s, struck and killed Matthew Manning.
The Mannings eventually reached a settlement with Muirhead. They agreed the case would be sent to binding arbitration, but the Mannings would covenant not to execute on any award entered against Muirhead. In exchange, Muirhead would assign to the Mannings his rights against his insurer (Mercury Casualty Company) and his insurance agents (Defendants here).
At some point prior to the arbitration, the Mannings settled with Stevenson for $100,000. In December 2019, the arbitrator entered an award against Muirhead in excess of $2,000,000. The Mannings, as Muirhead’s assignees, filed this suit in June 2020. Among other things, they alleged Defendants were negligent in failing to procure the coverage Muirhead requested.
Defendants moved for summary judgment or adjudication. The Court granted summary adjudication on two claims no longer at issue, but it denied summary adjudication on the negligence claim. Defendants’ sole argument on the negligence claim was that the statute of limitations ran before the Mannings filed suit. The Court held that on the summary judgment record, because the claim accrued when the arbitration award was entered in December 2019, the claim was timely filed.
II. Standard of Review
“A motion for judgment on the pleadings is akin to a general demurrer; it tests the sufficiency of the complaint to state a cause of action.” (Wise v. Pacific Gas & Electric Co. (2005) 132 Cal.App.4th 725, 738.) Because motions for judgment on the pleadings are subject to the same standards as general demurrers, the Court is guided by long-settled rules. The Court “treat[s] the [motion] as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law.” (Serrano v. Priest (1971) 5 Cal.3d 584, 591.) “The complaint must be construed liberally by drawing reasonable inferences from the facts pleaded.” (Rodas v. Spiegel (2001) 87 Cal.App.4th 513, 517.) “Further, [the Court] gives the complaint a reasonable interpretation, reading it as a whole and its parts in their context.” (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “To survive a [motion for judgment on the pleadings], 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.)
III. Discussion
A. Judicial Estoppel
Defendants’ judicial estoppel argument runs as follows:
Judicial estoppel applies when: “(1) the same party has taken two positions; (2) the positions were taken in judicial or quasi-judicial administrative proceedings; (3) the party was successful in asserting the first position (i.e., the tribunal adopted the position or accepted it as true); (4) the two positions are totally inconsistent; and (5) the first position was not taken as a result of ignorance, fraud, or mistake.” (Jackson v. County of Los Angeles (1997) 60 Cal.App.4th 171, 183.)
Defendants’ argument fails because the Mannings never argued a cause of action doesn’t accrue until out-of-pocket expenses are incurred. In support of their contention that the Mannings so argued, Defendants cite page 5, lines 25-26 of the Mannings’ MSJ opposition. This line, from the “Statement of Facts” section, says: “As a result, Muirhead did not pay any money out of pocket relating to any aspect of the accident litigation.” This statement is not found in a section devoted to legal argument, nor does it state that the only way a claim accrues is when out-of-pocket expenses are incurred.
B. Covenant Not to Execute
Defendants also argue that because the Mannings have covenanted not to execute on the judgment, Muirhead will never incur any damages. Since damages are an element of a negligence claim, Defendants contend no negligence claim will ever accrue.
In opposition, the Mannings cite among other things Ivy v. Pacific Auto. Ins. Co. (1958) 156 Cal.App.2d 652, which states: “The covenant not to execute is similar to the covenant not to sue. Whatever the legal effect of such covenants may be, and the law is not too clear on this subject, it can at least be said that such a covenant does not amount to a release or satisfaction of the debt. It does not extinguish the cause of action or the judgment.” (Id., at p. 662.)
In this case, there is an enforceable judgment against Muirhead. The Mannings have covenanted not to execute on that judgment, but under Ivy, the covenant does not affect the judgment, nor does it release the debt. As explained in the summary judgment ruling, a cause of action may accrue when judgment is entered. (See ROA 274 at pp. 6-8 [discussing Williams v. Hilb, Rogal & Hobbs Ins. Services of California, Inc. (2009) 177 Cal.App.4th 624].) For the reasons discussed in the summary judgment ruling, on the record before the Court at that time, the arbitration award against Muirhead was sufficient to trigger the statute of limitations.
Defendants argue that Ivy (and similar cases cited by the Mannings) are limited to the bad faith context. The Court sees nothing in those cases that so limits them. Defendants, for their part, rely on general discussions of the policy underlying bad faith claims, not cases specifically limiting the reach of Ivy. Because the covenant to execute has no effect on Muirhead’s debt to the Mannings, the motion for judgment on the pleadings is denied.