Opinion
Review Granted July 31, 1986.
Opinion on pages 189-334 omitted.
[224 Cal.Rptr. 596]Clayton D. Calhoun, Jr., Inglewood, for plaintiff and appellant.
Fisher & Prager, David J. Prager and George K. Perlee, Los Angeles, for defendant and respondent.
LUI, Associate Justice.
SUMMARY
Appellant George E. Nelson sued insurance adjuster GAB Business Services, Inc. (respondent), and National Union Fire Insurance Company of Pittsburgh, who is not a party to this appeal, for breach of statutory duty under Insurance Code section 790.03, subdivision (h)(5) (bad faith failure to settle), and for intentional infliction of emotional distress. Respondent's demurrer to the first amended complaint was sustained without leave to amend, and the case was dismissed as to respondent.
Insurance Code section 790.03 provides, in pertinent part: "The following are hereby defined as unfair methods of competition and unfair and deceptive acts or practices in the business of insurance .... [p] (h) Knowingly committing or performing with such frequency as to indicate a general business practice any of the following unfair claims settlement practices: ... [p] (5) Not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear."
Appellant appeals from the order of dismissal following the sustaining of respondent's demurrer. For the reasons stated below, we hold that the facts alleged satisfy the requirements of Royal Globe v. Superior Court (1979) 23 Cal.3d 880, 153 Cal.Rptr. 842, 592 P.2d 329; that Insurance Code section 790.03, subdivision (h), applies to independent adjusters hired by insurers; and that appellant has adequately pleaded a cause of action for intentional infliction of emotional distress. We therefore conclude that the trial court erred in sustaining respondent's demurrer.
PROCEDURAL AND FACTUAL BACKGROUND
A. Appellant's First Amended Complaint
Appellant alleged in his first amended complaint that National Union Fire Insurance Company (National Union) insured E.B. Lewis Corporation (doing business as McDonald's) and retained respondent, an independent adjustment firm engaged in the business of investigating and adjusting claims, to investigate appellant's claim of bodily injury sustained in a slip and fall accident at a McDonald's Restaurant on October 19, 1978. Respondent began to investigate the facts of the accident on or about October 20, 1978.
[224 Cal.Rptr. 597]Appellant alleged that he filed his underlying lawsuit for negligence against the insured on or before October 19, 1979. He further alleged that on or before January 1980, each defendant knew that the insured was solely negligent for the accident and injuries caused to appellant. They made advance payments to appellant of travel, hospital, and medical care expenses and knew that the liability of their insured was "reasonably clear."
We use the term "defendant," as appellant did in his first amended complaint, to designate respondent, National Union, and the Doe defendants.
After taking depositions in 1980 and 1981, they also allegedly knew that appellant's medical specials were in the neighborhood of $30,000; he had suffered severe permanent disabling physical injuries; he had undergone two major laminectomy operations; he was unable to engage in gainful employment; he was in dire need of money for living expenses and medical care and treatment; his injury and associated complications, along with his tremendous need for money, was causing a personality change; and he was experiencing great fear, anxiety, worry, grief, humiliation and terror attendant to the anxiety and confusion of emotional distress, loss of self-esteem, and self-image. Nevertheless, defendants offered to settle the claim in January 1982 in the amount of $50,000, knowing that the reasonable value of his claim greatly exceeded that sum and knowing that the policy limit available through the insurer was $500,000.
Appellant additionally alleged that defendants advocated the false, unreasonable, and totally unsupportable position that appellant's claim was a "fraud" claim and that appellant herein " '... needed money and decided to "fall down" at McDonald's.' " This position was totally false, in bad faith, and was unsupportable by defendants' own independent investigation; it was created solely for the purpose of delay and to defeat a valid claim so as to relieve the insurer of its duty to pay a fair compensation for injuries because of the insured's negligence. Defendants allegedly developed this approach in the hope that appellant would "go away" or "give in" to the defendants' inadequate and unjust offer of settlement, knowing that such delay would increase the strain and hardship on appellant and would diminish his bargaining power and position.
Part of defendants' plan was initially to mislead appellant into believing that the insurer was going to process his claim in good faith and be fair so that appellant would not secure the services of an attorney. After he secured the services of an attorney, a strong position would be taken that his claim was a "fraud" claim. No good faith offer to settle would be made and defendants would continue to make inadequate and unreasonable offers to force appellant to "give in." Defendants would invest the amount that was owed and stall the payment in such a way that within five years the invested reserve would have doubled and the underlying civil action would have cost defendants nothing. If appellant did not give in and the matter proceeded to trial, defendants were willing to take that gamble in the expectation that appellant would be so upset, mad, angry, and confused, that he would probably hurt his own case. They would request a bifurcated trial and if they lost on the issue of liability, defendants would immediately make an offer to pay what the claim was worth, that is, the policy limit of $500,000, which would not cost defendants anything because of the interest made from the invested reserve.
In March 1984, defendants filed a statutory offer to compromise in the amount of $50,000. When the case went to trial, defendants requested that the liability and damage portion be bifurcated. The jury verdict was 11 to 1 in favor of appellant and against the insurer on the issue of liability. Defendants immediately made an offer to settle the damages for $500,000. "The settlement on damages was made in [224 Cal.Rptr. 598] open court and the attorney for the defendants stated that his principal had authorized him to offer the sum of $500,000 for harm caused to [appellant] because of the negligence of their insured...." (Emphasis in original.) Appellant filed a request for dismissal with prejudice in the underlying civil action on or about August 7, 1984.
Realleging the above facts, appellant's second cause of action in the first amended complaint pleaded a theory of intentional infliction of mental distress.
B. Respondent's Demurrer to the First Amended Complaint
Respondent's demurrer to the first amended complaint argued that both causes of action failed to state facts sufficient to constitute a cause of action and both causes of action were "uncertain." As to the first cause of action, respondent argued that there was no allegation that the underlying civil action was concluded with an admission of liability for any amount of damages; that there was no express reservation of rights by appellant in the settlement, a necessary condition to bringing this cause of action; that appellant had not alleged when and in what amount respondent was authorized to pay on appellant's claim; and that an adjuster such as respondent is not regulated by Insurance Code section 790.03, subdivision (h)(5).
As to the second cause of action, respondent argued that there were no facts alleged showing outrageous conduct by respondent. Respondent further argued that if there is no cause of action against respondent pursuant to Insurance Code section 790.03, subdivision (h)(5), one cannot bring a cause of action for intentional infliction of emotional distress.
C. Trial Court's Ruling on the Demurrer
Extensive opposition to the demurrer was filed by appellant. The trial court, in an order dated May 16, 1985, sustained respondent's demurrer without leave to amend. The order stated: "SUSTAINED as to the 1st. and 2nd. cause[s] of action without leave to amend for reasons stated in the moving papers. Primarily: 1st. cause of action--Failure to reserve right to proceed after settlement. [Under] William[s] vs. Transport Indemnity Co. (1984) 157 [Cal.App.3d] 953, [203 Cal.Rptr. 868] [there] must be an admission or verdict with both liability and damages in the underlying law suit. An independent adjustor does not come within Insurance Code [section] 790.03 [subdivision] (h). 2nd. cause of action--Insufficient facts alleged showing outrageous conduct by GAB. Delay in paying a claim is not outrageous behavior in order to support an action for Intentional Infliction of Emotional Distress."
CONTENTIONS ON APPEAL
Appellant contends that the first cause of action in his first amended complaint meets the requirements stated in Royal Globe v. Superior Court, supra, 23 Cal.3d 880, 153 Cal.Rptr. 842, 592 P.2d 329. He specifically argues:
1. A reservation of right is not necessary. He recognizes a split of authority from the Courts of Appeal but argues that the reservation of right is specifically not required where there has been a judicial adjudication of liability and the plaintiff thereafter accepts the belated tender of the policy limits.
2. A final judgment or admission of damages is not required prior to the initiation of a bad faith lawsuit against a carrier under the facts of this case.
3. An independent adjuster is subject to Insurance Code section 790.03, subdivision (h).
Regarding the second cause of action, appellant argues that respondent's conduct was more than delay in paying a good, valid, and substantial claim. The conduct [224 Cal.Rptr. 599] was intended to defeat appellant's claim and was done for the express purpose of causing emotional harm; it was also in reckless disregard of causing appellant emotional harm.
Respondent contends:
1. An independent adjuster is not regulated by Insurance Code section 790.03, subdivision (h), or, at a minimum, there is no private right of action under that statute against an independent adjuster.
2. In addition, appellant cannot bring this cause of action because:
(a) There was no admission of liability as to any amount of damages in the underlying action; and
(b) Appellant did not expressly reserve the right to seek more from defendants in settling the underlying suit with the insured.
3. Since it is not alleged that respondent was authorized by its principal, the insurer, to pay on appellant's underlying claim, respondent cannot be held liable for failure to settle the claim.
4. Appellant does not state a cause of action for intentional infliction of emotional distress since he failed to allege facts showing "outrageous conduct" by respondent. Failure to pay on a claim does not constitute outrageous conduct.
DISCUSSION
1. The Underlying Lawsuit Against the Insured Was Appropriately "Concluded" Within the Meaning of Royal Globe Ins. Co. v. Superior Court (1979) Supra, 23 Cal.3d 880
Royal Globe, supra, is the seminal case in recognizing that the Unfair Trade Practices Act (Ins. Code, § 790 et seq.) permits a plaintiff injured by the negligence of an insured to bring an action against the negligent party's liability insurer for refusal to attempt a prompt, fair, and equitable settlement of plaintiff's claim. Our Supreme Court held "that the third party's suit may not be brought until the action between the injured party and the insured is concluded." (Royal Globe, supra, 23 Cal.3d at pp. 880-881, 153 Cal.Rptr. 842, 592 P.2d 329.) Furthermore, the third party claimant may not sue both the insurer and the insured in the same lawsuit. (Id., at p. 891, 153 Cal.Rptr. 842, 592 P.2d 329.) In so holding, the Supreme Court stated: "Section 1155 of the Evidence Code provides that evidence of insurance is inadmissible to prove negligence or wrongdoing. The obvious purpose of the provision is to prevent the prejudicial use of evidence of liability insurance in an action against an insured. [Citations.] A joint trial against the insured for negligence and against the insurer for violating its duties under subdivision (h) would obviously violate both the letter and spirit of the section. [Fn. omitted.] " (Ibid.)
We note that the injured plaintiff in Royal Globe sued both the insurer and an independent adjusting company that provided adjustment services to the insurer and was alleged to be its agent. (Id., at p. 884, 153 Cal.Rptr. 842, 592 P.2d 329.)
"Moreover, unless the trial against the insurer is postponed until the liability of the insured is first determined, the defense of the insured may be seriously hampered by discovery initiated by the injured claimant against the insurer. In addition, damages suffered by the injured party as a result of the insurer's violation of subdivisions (h)(5) and (h)(14) [of § 790.03 of the Ins. Code] may best be determined after the conclusion of the action by the third party claimant against the insured." (Id., at p. 892, 153 Cal.Rptr. 842, 592 P.2d 329.)
Many cases have discussed and argued what that "conclusion of the action by the third party claimant against the insured" must be. In Nationwide Ins. Co. v. Superior Court (1982) 128 Cal.App.3d 711, 714, 180 Cal.Rptr. 464, the underlying case was still on appeal and therefore there was no "conclusion" under Royal Globe. To be sure, in Royal Globe itself, the court found the claim was brought prematurely and [224 Cal.Rptr. 600] that the underlying action had not yet been concluded against the insured.
Division Five of this court in Rodriguez v. Fireman's Fund Ins. Co. (1983) 142 Cal.App.3d 46, 53, 190 Cal.Rptr. 705, held that " [w]hile a preferred conclusion of an action is by final judgment, in cases where the liability of the insured is admitted and the underlying lawsuit is concluded by the statutory acceptance of an offer (Code Civ.Proc., § 998) followed by a judgment entered thereafter or an injured plaintiff's motion to dismiss with prejudice, the requirements of Royal Globe are satisfied." (Emphasis in original.) Division Four of this court in Trujillo v. Yosemite-Great Falls Ins. Co. (1984) 153 Cal.App.3d 26, 200 Cal.Rptr. 26, accepts the Rodriguez theory that "a bad faith action may be instituted even though the underlying action was finally determined by settlement rather than by trial and findings or verdict ..." (id., at p. 28, 200 Cal.Rptr. 26.), as long as there is an express reservation of the right to claim more in a bad faith action, a condition that we will discuss below. The Fourth District has held that settlement of the personal injury claim, accompanied by execution of a release of all claims, is sufficient to constitute "conclusion" of the underlying action under Royal Globe. (Afuso v. United States Fid. & Guar. Co. (1985) 169 Cal.App.3d 859, 863, 215 Cal.Rptr. 490; Vega v. Western Employers Insurance Co. (1985) 170 Cal.App.3d 922, 216 Cal.Rptr. 592.)
Respondent relies on Doser v. Middlesex Mutual Ins. Co. (1980) 101 Cal.App.3d 883, 162 Cal.Rptr. 115, and Williams v. Transport Indemnity Co. (1984) 157 Cal.App.3d 953, 203 Cal.Rptr. 868, to justify the trial court's sustaining of the demurrer in that "conclusion" of the action under Royal Globe purportedly requires either a final judgment or an admission as to both liability and the amount of damages.
While this Division's opinion in Doser states that "[t]he rationale of the cases requiring a judgment as a condition precedent to an insured's cause of action against an insurer becomes manifest when we deal with the issue of damages in this case" (id., 101 Cal.App.3d at p. 892, 162 Cal.Rptr. 115), Doser does not hold that a judgment is always required. The "glaring flaw" in Doser was the method at which the damage figure was obtained. "No judge or jury ever considered the facts of the wrongful death case and came up with an appropriate verdict on which a judgment could be based. No agreement as to damages was ever reached in which a representative of the insurance company participated." (Id., at p. 892, 162 Cal.Rptr. 115, emphasis added.) The Doser case involved an assignment and not a lawsuit under the Unfair Trade Practices Act. In the case at bench, unlike Doser, an agreement as to damages was in fact reached while a representative of the insurance company participated.
Similarly, while some of the dicta in Williams v. Transport Indemnity Co., supra, 157 Cal.App.3d 953, 203 Cal.Rptr. 868, is helpful to respondent, its holding is clearly distinguishable. Plaintiff in Williams was the widow of an injured decedent. Her husband had never initiated any legal action to establish the liability of the insured nor did his estate initiate any such action after his death. Plaintiff brought suit under section 790.03, subdivision (h), following the expiration of the one-year statute of limitations period applicable to personal injury actions. (Id., at p. 956, 203 Cal.Rptr. 868.) There was neither a final judgment nor a settlement of any type in Williams. In the case at bench, there was a jury verdict of 11 to 1 in favor of plaintiff and against the defendant on the liability issue and then a settlement in which appellant accepted the policy limits.
It is our view that Royal Globe requires conclusion of the underlying action but not necessarily the insurer's express admission of the insured's liability. The alleged facts in the case at bench demonstrate [224 Cal.Rptr. 601] why such an admission should not be necessary. If appellant can indeed prove bad faith in the settlement process and an offer of the policy limits after the jury came back with a plaintiff's verdict, all insurers could pursue that route, preventing a final judgment in the plaintiff's favor and, through a settlement that is not an admission, prevent a purportedly crucial condition precedent to a lawsuit by the third party claimant against the insurer. Such tactics would foreclose all such claimants, who have no real choice except to accept the policy limits offer even at the late date of their trial, from ever pursuing the insurer under the Unfair Trade Practices Act. We do not believe that Royal Globe envisioned such a result.
Rodriguez, supra, 142 Cal.App.3d at page 55, 190 Cal.Rptr. 705, noting that "[g]enerally, a settlement will not act as an admission of liability of either the insured or the insurer with respect to any other claim arising from the same accident or event [citations]," nevertheless found that Nationwide's (128 Cal.App.3d at p. 714, 180 Cal.Rptr. 464) need to find the liability of the insured was met in Rodriguez by the complaint's allegation that the insurer had admitted the liability of its insured. Williams, supra, 157 Cal.App.3d at page 961, 203 Cal.Rptr. 868, interpreted Rodriguez as requiring an allegation of the insurer's express admission of the insured's liability. Whether or not Rodriguez so held, we do not believe that Royal Globe requires an admission of liability by the insurer.
Rather, we believe the reasons given by our Supreme Court in Royal Globe, supra, 23 Cal.3d at pages 891-892, 153 Cal.Rptr. 842, 592 P.2d 329, regarding the necessity of "conclusion" of the action against the insured are met by the facts alleged in the first amended complaint.
2. No Express Reservation of Rights is Required
Respondent next contends that for the claimant to sue the tortfeasor's insurer under the Unfair Trade Practices Act following a settlement, the claimant must allege that he or she expressly reserved rights against the liability insurer as part of the settlement. Respondent relies primarily on Trujillo v. Yosemite-Great Falls Ins. Co., supra, 153 Cal.App.3d at page 28, 200 Cal.Rptr. 26, and asks this court to accept Trujillo and reject the Fourth District's determination in Vega v. Western Employers Insurance Co., supra, 170 Cal.App.3d at pages 927-928, 216 Cal.Rptr. 592, and Afuso v. United States Fid. & Guar. Co., supra, 169 Cal.App.3d at pages 863-864, 215 Cal.Rptr. 490. We agree with the reasoning in Afuso and Vega and reject the reasoning in Trujillo that states Rodriguez, supra, 142 Cal.App.3d 46, 190 Cal.Rptr. 705, requires an express reservation of the right to sue under the Unfair Trade Practices Act.
In Rodriguez, supra, plaintiff had notified the insurer of her intention to reserve her rights to proceed against it for bad faith prior to the settlement, and the insurer made no attempt to withdraw the offer or condition it upon full release of itself and its insured. (Id., at p. 56, fn. 7, 190 Cal.Rptr. 705.) Rodriguez recognized that such express reservation was helpful since the insurer "must have known that the settlement reached was not the end of the matter" (ibid.); however, Rodriguez in no way made such express reservation of rights mandatory.
We agree with the court in Vega, supra, 170 Cal.App.3d at page 926, 216 Cal.Rptr. 592, that "Rodriguez stands only for the rather pedestrian notion that actions specifically reserved are not released; ..." Furthermore, "[i]n refusing to follow Trujillo, we ... emphasize that portion of Rodriguez in which the court recognized the possibility that a decision in plaintiff's favor might encourage the filing of bad faith lawsuits and discourage settlement, but noted it was '... not so naive as to not recognize the equal if not greater possibility of abuse by insurance companies who might entice a settlement by unfair practices, then seek to hide behind the cloak of that settlement.' (Rodriguez v. Fireman's Fund Ins. Co., supra, 142 Cal.App.3d at p. 56, 190 Cal.Rptr. 705.) Accordingly, we hold a plaintiff's failure to plead a reservation of [his] right to pursue a bad faith action does not render [his] complaint for unfair claims practices demurrable." (Afuso, supra, 169 Cal.App.3d at p. 864, 215 Cal.Rptr. 490.)
[224 Cal.Rptr. 602]3. Section 790.03, Subdivision (h), Applies to Respondent, and Appellant Has a Private Right of Action Against Respondent for Violation of that Section
One of the reasons the trial court asserted for sustaining respondent's demurrer was that an independent adjuster does not come within Insurance Code section 790.03, subdivision (h). In our view, claims adjusters working for insurance companies fall within that section.
In Bodenhamer v. Superior Court (GAB, real party in interest) (1986) 178 Cal.App.3d 180, 223 Cal.Rptr. 486, brought to our attention at oral argument, Division Four of the First Appellate District came to the same conclusion.
Insurance Code section 790.01 states that the article in which section 790.03, subdivision (h), appears "applies to reciprocal and interinsurance exchanges, Lloyds insurers, fraternal benefits societies, fraternal fire insurers, grants and annuities societies, insurers holding certificates of exemptions, motor clubs, nonprofit hospital associations, agents, brokers, solicitors, surplus line brokers and special lines surplus line brokers as well as all other persons engaged in the business of insurance." (Emphasis added.)
We conclude that when respondent is acting as a claims adjuster for an insurance company, respondent is a person "engaged in the business of insurance" for the purposes of the Unfair Trade Practices Act. Such a resolution is especially relevant for purposes of section 790.03, subdivision (h), which involved "[k]nowingly committing or performing with such frequency as to indicate a general business practice any of the following unfair claims settlement practices: ... [p] (5) Not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear." (Emphasis added.)
As noted in Bodenhamer, supra, 178 Cal.App.3d 180, ----, 223 Cal.Rptr. 486 [typed opn. p. 7], "[t]here is nothing novel or incongruous in subjecting a business to the regulation of more than one agency or more than one code."
We must next decide a second related issue, that is, whether there is a private right of action for violation of section 790.03, subdivision (h), against an independent adjuster under Royal Globe, supra. As respondent indicates, the specific holding of Royal Globe, supra, 23 Cal.3d at page 884, 153 Cal.Rptr. 842, 592 P.2d 329, is that "a third party claimant may sue an insurer, for violating subdivisions (h)(5) and (h)(14), but that the third party's suit may not be brought until the action between the injured party and the insured is concluded." (Emphasis added.) Respondent argues that the court in Royal Globe intended to restrict the private right act of action under section 790.03, subdivision (h), to cases where insurers, and not adjusters and others, are the defendants. There is certainly no explicit language to that effect in Royal Globe.
The Fifth District considered but did not reach the issue in Richardson v. GAB Business Services, Inc. (1984) 161 Cal.App.3d 519, 525, 207 Cal.Rptr. 519. In Richardson, the tortfeasor was self-insured, and GAB was employed by the tortfeasor directly. The court held "[a]bsent an employer who was engaged in the business of insurance, we cannot envision how section 790.03 could be applicable to an independent adjusting firm." (Id., at p. 525, 207 Cal.Rptr. 519.) In doing so, the court stated: "Assuming, without concluding, that such a result [placing GAB within section 790.03] might be possible if GAB had been employed by an insurance company because claims investigation, processing and handling are inextricably wound up with the business of an insurance company, in the case before us GAB was not retained by an insurance company [viz., Safeway Stores, Inc., which was self-insured]...." (Ibid.) In the case before us, GAB was so retained.
Respondent's reliance on Santiago v. Employee Benefits Services (1985) 168 Cal.App.3d 898, 904, 214 Cal.Rptr. 679, and [224 Cal.Rptr. 603] Gruenberg v. Aetna Ins. Co. (1973) 9 Cal.3d 566, 576, 108 Cal.Rptr. 480, 510 P.2d 1032, is misplaced. Gruenberg is pre-Royal Globe and does not consider the applicability of section 790.03 to the insurance adjusting firm. Dicta in Santiago, supra, seems to favor respondent's position, but Santiago is distinguishable from the case at bench. Its holding is that, within the workers' compensation context, a claimant's remedy for delay or refusal to make payment of a compensation award by independent adjusters for the employer is with the Workers' Compensation Appeals Board and not in a civil action brought pursuant to section 790.03, subdivision (h). There are policy reasons to keep such disputes within the workers' compensation system. No such compelling policy reasons apply in the instant case.
We conclude that respondent is subject to regulation by Insurance Code section 790.03, subdivision (h), and that, as an independent adjuster, it is not immune from a private cause of action brought by the insured's victim.
4. Assuming, Arguendo, There Are Insufficient Allegations that Respondent Was Authorized by the Insurer to Pay an Appellant's Underlying Claim, the Demurrer Should Not Have Been Sustained Without Leave to Amend to Permit Appellant to So Allege
Respondent further contends that the demurrer should be sustained because the complaint does not allege that respondent was authorized by the insurer to pay on appellant's underlying claim and, therefore, cannot be held liable for failure to settle the claim. Assuming without deciding that the complaint was defective in this respect, the trial court would have abused its discretion in sustaining the demurrer without leave to amend to allege the requisite authorization.
5. The Trial Court Erred in Sustaining the Demurrer to the Second Cause of Action
The second cause of action alleged intentional infliction of emotional distress. Respondent contends that no such cause of action has been stated in that no "outrageous conduct," required for the torts of intentional infliction of emotional distress, has been alleged. Respondent claims that failure to pay on an insurance claim does not constitute the type of conduct that gives rise to a cause of action for intentional infliction of emotional distress. (See Schlauch v. Hartford Accident & Indemnity Co. (1983) 146 Cal.App.3d 926, 936, 194 Cal.Rptr. 658.)
The court in Schlauch, supra, 146 Cal.App.3d, states at page 936, 194 Cal.Rptr. 658: "The failure to accept an offer of settlement or the violation of statutory duties under Insurance Code section 790.03 does not in itself constitute the type of outrageous conduct which will support a cause of action for intentional infliction of emotional distress. (See Ricard v. Pacific Indemnity Co. (1982) 132 Cal.App.3d 886, 894 [183 Cal.Rptr. 502] ...; Beckham v. Safeco Ins. Co. of America (9th Cir.1982) 691 F.2d 898, 904.) ... If plaintiff is to state a cause of action on amendment of the pleadings he must allege with greater specificity the acts which are ' "so extreme as to exceed all bounds of that usually tolerated in a civilized community." ' (Ricard v. Pacific Indemnity Co., supra, 132 Cal.App.3d at p. 894 [183 Cal.Rptr. 502].)"
"Outrageous conduct has been defined as conduct that is 'so extreme as to exceed all bounds of that usually tolerated in a civilized community' [citation] and 'so extreme and outrageous "as to go beyond all possible bonds [sic ] of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community." ' [Citations.] As the court observed in Newby v. Alto Riviera Apartments [1976] 60 Cal.App.3d [288,] 297, 131 Cal.Rptr. 547, '[b]ehavior may be considered outrageous if a defendant (1) abuses a relation or position which gives him power to damage the plaintiff's interest; (2) knows the plaintiff is susceptible to injuries through mental distress; or (3) acts intentionally or unreasonably [224 Cal.Rptr. 604] with the recognition that the acts are likely to result in illness through mental distress.' " (Bogard v. Employers Casualty Co. (1985) 164 Cal.App.3d 602, 616, 210 Cal.Rptr. 578.)
If appellant can prove the allegations regarding respondent's intentional scheme of maligning appellant, falsely and unreasonably asserting his claim was fraudulent, and then knowingly offering inadequate payment and attempting to coerce acceptance thereof from a seriously disabled plaintiff in order to defeat a valid claim, he has demonstrated far more than mere delay in payment or failure to settle. A trier of fact might well decide such a scenario falls within the "outrageous conduct" proscribed by the tort of intentional infliction of emotional distress. Therefore, the trial court erred in sustaining the demurrer to appellant's second cause of action.
The judgment is reversed.
KLEIN, P.J., and ARABIAN, J., concur.