Judge Yolanda Orozco, Case BC631370 2022-09-07 Tentative Ruling

Judge: Yolanda Orozco, Case: BC631370, Date: 2022-09-07 Tentative Ruling

Case Number: BC631370 Hearing Date: September 7, 2022 Dept: 31

DEMURRER IS OVERRULED

Background

This case arises out of allegations that non-party Carla Noble was driving a 2005 Jeep Liberty with a U-Haul Trailer and lost control of the vehicle causing a vehicle crash. Plaintiff Susan Abusamra-Pixler was a passenger in the Jeep driven by Noble.

On August 23, 2016, Plaintiffs Susan Abusamra-Pixler and Charles Pixler filed the instant action against Defendants U-Haul International, Inc; Government Employees Insurance Company; Geico General Insurance Company; Dawn M. Grant Insurance Services, Inc; FCA US LLC (f/k/a Chrysler Group, LLC); and Does 1 to 100. The Complaint asserts causes of action for:

1. Strict Products Liability;

2. Negligence;

3. Breach of Contract;

4. Breach of the Implied Covenant of Good Faith and Fair Dealing;

5. Declaratory Relief;

6. Negligent Infliction of Emotional Distress;

7. Violation of California Unfair Competition Law; and

8. Quasi-Contract/Unjust Enrichment.

On March 6, 2017, the Court granted Defendant U-Haul International, Inc.’s (hereinafter “Defendant”) motion to compel arbitration and stay the action pending the completion of arbitration. On October 24, 2019, the Arbitrator, issued a Final Award.

The Plaintiffs appealed, and on February 10, 2022, the Appeals Court confirmed the Arbitration Award.

On August 15, 2022, Geico General Insurance Company and Government Employees Insurance (collectively “Defendants”) renewed their Demurrer to Plaintiff’s Complaint.

The Demurrer was filed and served on December 20, 2016 (Mot. Ex. A.) Plaintiff’s Opposition was filed and served on January 13, 2017. (Mot. Ex. B.) Defendants’ Reply was filed and served on January 20, 2017. (Ex. C.)

Legal Standard

A demurrer can be used only to challenge defects that appear on the face of the pleading under attack or from matters outside the pleading that are judicially noticeable.¿ (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)¿ “To survive a demurrer, 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.)¿ For the purpose of testing the sufficiency of the cause of action, the demurrer admits the truth of all material facts properly pleaded. (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-967.) A demurrer “does not admit contentions, deductions or conclusions of fact or law.” (Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 713.)¿¿¿

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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. (Id.)¿¿

Meet and Confer Requirement

Before filing a demurrer, the demurring party is required to meet and confer with the party who filed the pleading demurred, in person or telephonically, to determine whether an agreement can be reached through a filing of an amended pleading that would resolve the objections to be raised in the demurrer. (Code Civ. Proc. (CCP) § 430.41.)¿¿¿

Defense counsel, Alina Mooradian, attests to Defendants’ meet and confer efforts. (Mooradian Decl. ¶¶ 3, 4.) Accordingly, the meet and confer requirement is met.

Discussion

Defendant's demurrer to Plaintiff’s fourth cause of action for breach of the implied covenant of good faith and fair dealing.

“As with all contracts, insurance contracts include an implied covenant of good faith and fair dealing, which requires that each contracting party refrain from doing anything to injure the right of the other party to receive the benefits of the agreement.” (Century Surety Co. v. Polisso (2006) 139 Cal.App.4th 922, 948.) “‘When the insurer unreasonably and in bad faith withholds payment of the claim of its insured, it is subject to liability in tort.’ [Citations.] For the insurer to fulfill its obligation not to impair the right of the insured to receive the benefits of the agreement, it again must give at least as much consideration to the latter's interests as it does to its own.’ [Citation.]” (Id. at 948–949, citing Egan v. Mutual of Omaha ins. Co. (1979) 24 Cal.3d. 809, 818.)

Plaintiffs’ Complaint alleges that after Carla Nobel exhausted the $100,000.000 insurance policy limit, Geico was required to pay the entire policy limit available under Plaintiffs Geico Policy. (Compl. ¶ 48, 49.) Geico’s policy included a limit of $300,000.00 for each person and $500,000.00 for each occurrence. (Id. ¶ 48.) Therefore, Plaintiffs allege Geico “fail[ed] to pay the amount due” under the policy and “in a manner that is inconsistent with and contrary to Insurance Code Section 11580.2. (Id. at ¶ 52(a)-(b).) Plaintiffs allege that under the facts of the case, coverage for bodily injury cannot be denied and Geico denied coverage by relying on an inapplicable portion of Geico policy. (Id. at ¶ 53.) Accordingly, Defendants breached the implied covenant of good faith and fair dealing by “unreasonably and in bad faith” denying Plaintiffs’ claims based on a policy exclusion that is not what Geico asserts it to be. (Id. at ¶ 57(a)-(d).)

Defendants allege that Plaintiffs have failed to plead facts to establish that Defendants acted in bad faith by withholding benefits. (See California Shoppers, Inc. v. Royal Globe Ins. Co. (1985) 175 Cal.App.3d 1, 15 [“The mere denial of benefits, however, does not demonstrate bad faith.”].) However, the Court notes that “[t]he withholding of benefits due under the policy may constitute a breach of contract even if the conduct was reasonable, but liability in tort arises only if the conduct was unreasonable, that is, without proper cause.” (Rappaport-Scott v. Interinsurance Exchange of the Automobile Club (2007) 146 Cal.App.4th 831, 837.)

At dispute is whether Geico unreasonably denied the Plaintiffs’ claim. For purposes of a demurrer, Plaintiff’s allegations are taken as true and any defects in the complaint must be apparent on its face. The Court finds that the Plaintiffs have articulated sufficient facts to support a cause of action for breach of the implied covenant of good faith and fair dealing.

Defendants’ demurrer to the fourth cause of action is OVERRULED.

Conclusion

Defendants’ demurrer to Plaintiffs’ Complaint is OVERRULED.

Defendants to give notice.

The parties are strongly encouraged to attend all scheduled hearings virtually or by audio. Effective July 20, 2020, all matters will be scheduled virtually and/or with audio through the Court’s LACourtConnect technology. The parties are strongly encouraged to use LACourtConnect for all their matters. All masking protocols will be observed at the Courthouse and in the courtrooms.