Hearing DemurrerCal. Super. - 6th Dist.November 8, 2016SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER Amtrust North America Inc. vs CaI-Coast Custom Hearing Start Time; 9:00 AM Drywall Construction Inc. 16CV302621 Hearing Type: Hearing: Demurrer Date 0f Hearing: 06/16/2020 Comments: Heard By: Kulkarni, Sunil R Location: Department 8 Courtroom Reporter: - No Court Reporter Courtroom Clerk: Maggie Castellon Court Interpreter: Court Investigator: Parties Present: Future Hearings: Exhibits: - Jack D. Lynch for Defendant(s), CaI-Coast Custom Drywall Construction Inc. via courtcall. Timothy C. Aires for: Plaintiffls), Amtrust North America Inc. via courtcall. Tentative ruling not contested, tentative ruling adopted as follows; Currently before the Court is the demurrer by defendant Cal-Coast Custom Drywall Construction Inc. (Cal- Coast ) t0 the second amended complaint ( SAC ) 0f plaintiff Amtrust North America Inc. ( Amtrust ). Factual and Procedural Background This action for breach 0f contract arises out 0f Cal-Coast s alleged breach 0f an insura nce policy issued t0 'It by Tower Select lnsu ra nce Com pa ny. On November 8, 2016, Tower Select Insura nce Company filed a complaint against Cal-Coast, alleging a single cause of action for breach of contract. The complaint alleged that Cal-Coast breached the insurance policy between 'It and Tower Select Insurance by failing t0 make premium payments due and owing under the terms 0fthe policy. (Complaint, 9-13.) On November 28, 2016, Amtrust filed a first amended complaint( FAC ) against Cal-Coast, alleging a single cause of action for breach of contract. The FAC alleged that Amtrust is now, and at all times relevant hereto was, a corporation duly organized and existing under the laws 0f the State 0f Delaware and is administrator for Castlepoint National Insurance Compa nv, the surviving corporation from a merger 0f all former affiliated insura nce companies, including Tower Select insurance Compa ny. (FAC, 1.) Thereafter, CaI-Coast demurred to the FAC on numerous grounds. CaI-Coast argued, among other things, that Amtrust failed t0 allege sufficient facts showing that 'It had standing t0 bring the lawsuit. Amtrust did not oppose the demurrer. On January 7, 2020, the Court sustained the demurrer with leave t0 amend. The Court opined that it was not ready to conclude that as a matter of law, [Amtrust] cannot rectify through an amended pleading the standing and other problems identified 'In the demurrer. On February 7, 2020, Amtrust filed the operative SAC against CaI-Coast, again alleging a single cause of action for breach 0f contract. According t0 the allegations 0f the SAC, Amtrust 'Is now, and at all times relevant hereto was, a corporation duly organized and existing under the laws of the State of Delaware, acting by assignment from the Conservation and Liquidation Office on behalf 0f the Insura nce Commissioner 0f the State 0f California, as conservator for Castlepoint National Insurance Compa nv, the surviving corporation Primed: 66 1662020 0631632020 Hearing: Delmm‘er - 16CV302621 Page l Df-l SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER from a merger of all former affiliated insurance companies, including Tower Select Insurance Company (collectively Plaintiff ). (SAC, 1.) Cal-Coast filed the instant demurrer t0 the SAC on March 11, 2020. On April 10, 2020, Amtrust filed an opposition. Cal-Cost filed a reply on June 9, 2020. Discussion Cal-Coast demurs to the SAC on several grou nds, including failure to allege sufficient facts to constitute a cause of action. (See Code Civ. Proc., 430.10, subd. (e).) I. Procedural Issues A. Meet and Confer As an initial matter, though not addressed by the parties, Cal-Coast failed to comply with Code of Civil Procedu re section 430.41. That statute requires a demurring party t0 meet and confer with the party who filed the challenged pleading to seek informal resolution of the demurring party s objections. (Code Civ. Proc., 430.41, subd. (a) [Before filing a demurrer pursuant to this chapter, the demurring party shall meet and confer in person or by telephone with the party who filed the pleading that is subject t0 demurrer for the purpose 0f determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer. ].) The meet and confer must be conducted in person or by telephone, and must address each cause of action or defense to be included in the demurrer. (|bid.) If these efforts fail, the demurring party must file and serve a declaration regarding the meet and confer process with the demurrer. (Code Civ. Proc., 430.41, subd. (a)(3).) Here, CaI-Coast did not file a meet and confer declaration with its demurrer and the record does not otherwise indicate that Cal-Coast attempted to meet and confer before filing the demurrer. Thus, CaI-Coast failed t0 comply with Code 0f Civil Procedure section 430.41. Although a court cannot overrule a demurrer for insufficient meet and confer efforts, a court may continue the hearing and order the parties to meet and confer. (Code Civ. Proc., 430.41, subd. (a)(4); Assem. Com. on Judiciary, Rep. on Sen. Bill No. 383 (2015-2016 Reg. 5e55,), p. 2.) In furthera nce ofjudicial economy, the Court will overlook Cal-Coast s failure t0 comply with Code 0f Civil Procedure section 430.41 'In this insta nce only. Cal-Coast is admonished that all future filings should comply with the Code of Civil Procedure. B. Evidence Submitted in Opposition The Court cannot consider extrinsic evidence in ruling on a demurrer. (Hilltop Properties, Inc. v. State (1965) 233 Cal.App.2d 349, 353 (Hilltop)[ [a] demurrer reaches only to the contents of the pleading and such matters as may be considered under the doctrine ofjudicial notice [citation] ],' Code Civ. Proc., 430.30, subd. (a).) Consequently, the Court has not considered the declaration ofAmtrust s counsel submitted with the opposition or any of the attached exhibits. ||. Request for Judicial Notice Cal-Coast asks the Court to takejudicial notice of: (1) the complaint; (2) the FAC; (3) the SAC; and (4) the Liquidation Order for Castlepoint National Insurance Compa ny filed 'In Dave Jones, Insurance Commissioner 0f the State of California v. Castlepoint National Insurance Company (San Francisco Cou nty Superior, Case No.: CPF-16-515183) 0n March 30, 2017. The docu ments are proper subjects ofjudicial notice because they are court records relevant to a material issue raised in the pending demurrer. (See Evid. Code, 452, subd. (d) [permittingjudicial notice 0f court records]; see also Silverado Modjeska Recreation & Park Dist. v. County of Ora nge (2011) 197 Cal.App.4th 282, 307, fn. 18[ There is a precondition to the taking of judicial notice in either its mandatory or permissive form any matter to bejudicially noticed must be relevant Primed: 66 1662020 063162020 Hearing: Delmm‘er - 16CV302621 Page 2 Df-l SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER to a material issue. [Citations.] ].) Accordingly, Cal-Coast s request forjudicial notice is GRANTED. |||. Legal Standard The fu nction of a demurrer is to test the legal sufficiency of a pleading. (Trs. Of Capital Wholesale Elec. Etc. Fund v. Shearson Lehman Bros. (1990) 221 Cal.App.3d 617, 621.) Consequently, [a] demurrer reaches only to the contents of the pleading and such matters as may be considered under the doctrine ofjudicial notice [citation]. (Hilltop, supra, 233 Cal.App.2d at p. 353,- see Code Civ. Proc., 430.30, subd. (3).) It is not the ordinary function 0f a demurrer t0 test the truth 0fthe [] allegations ['In the challenged pleading] 0r the accuracy with which [the plaintiff] describes the defendant s conduct. []Thus, [] the facts alleged in the pleading are deemed to be true, however improbable they may be. (Align Technology, Inc. v. Tran (2009) 179 Cal.App.4th 949, 958, internal citations and quotations omitted.) However, while [a] demurrer admits all facts properly pleaded, [it does] not [admit] contentions, deductions or conclusions of law or fact. (George v. Automobile Club 0f Southern California (2011) 201 Cal.App.4th 1112, 1120.) IV. Merits of the Demurrer Cal-Coast argues, among other things, that the SAC fails to state a claim because Amtrust does not allege sufficient facts showing that it has standing to bring the lawsuit.1 Standing is the threshold element required to state a cause of action and, thus, lack of sta nding may be raised by demurrer. [Citations.] To have sta nding to sue, a person, or those whom he properly represents, must have a real interest in the ultimate adjudication because [he] has [either] suffered [or] is about to suffer any injury of sufficient magnitude reasonably to assure that all of the relevant facts and issues will be adequately presented. [Citation] [Citation] Code of Civil Procedure section 367 establishes the rule that [e]very action must be prosecuted in the name of the real party in interest, except as otherwise 1 At times, CaI-Coast frames its sta nding argu ment in terms of whether Amtrust has legal ca pacity to sue. Legal capacity t0 sue is the right t0 come into cou rt. (Friendly Village Community Assn, Inc. v. Silva & Hill Constr. Co. (1973) 31 Cal.App.3d 220, 224.) Lack of legal capacity usually refers to the party being a minor, deceased, or having been adjudicated incompetent or insa ne. (See Color-Vue, Inc. v. Abrams (1996) 44 Cal.App.4th 1599, 1604 (Color-vue); see also Robertson v. Burrell (1895) 110 Cal. 568.) Here, there 'Is n0 indication that Amtrust lacks the requisite legal capacity to sue. Instead, Amtrust s purported Iackof standing is grounds for a general demurrer, not a special demurrer. (See Color-Vue, supra, 44 Cal.App.4th at p. 1604, fn. 4 [stating that lack 0f standing only goes t0 the existence 0f a cause 0f action ]; see also Tarr v. Merco Constr. Engineers, Inc. (1978) 84 Cal.App.3d 707, 713 [The defect of a lack of sta nding to sue makes a complaint subject to general demurrer for failure to state a cause of action. ].) Consequently, the Court considers CaI-Coast s Sta nding argument 'In the context 0f its demurrer t0 the SAC on the ground 0f failure t0 allege sufficient facts to constitute a cause of action. provided by statute. A real party in interest is one who has an actual and substantial interest in the subject matter of the action and who would be benefited or injured by thejudgment in the action. [Citation] (Martin v. Bridgeport Community Assn, Inc. (2009) 173 Cal.App.4th 1024, 1031-1032.) With respect to Amtrust s standing, the SAC alleges the following releva nt facts: Tower Select Insurance Compa ny issued the subject insura nce policy t0 CaI-Coast. (SAC, Ex. A.) Castlepoint National Insurance Company is the surviving corporation from a merger of all former affiliated insurance companies, including Tower Select Insura nce Company. (Id. at 1.) Amtrust is now, and at all times relevant hereto was, acting by assignment from the Conservation and Liquidation Office on behalf 0f the Insura nce Commissioner 0f the State of California, as conservator for Castlepoint National Insurance Compa ny. (|bid.) These allegations are inadequate to establish that Amtrust has standing to bring this action for breach of the insura nce policy. At most, Amtrust alleges it has been gra nted some type of right by virtue of an assignment Primed: 66 1662020 06:‘16s‘2020 Hearing: Delmm‘er - 16CV’302621 Page 3 Df-l SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER that it received from the Insurance Commissioner of the State of California, the conservator for Castlepoint National Insurance Company. Amtrust does not plead any facts about the nature 0f the right that was assigned to it by the conservator. (See Heritage Pacific Financial, LLC v. Monroy (2013) 215 Cal.App.4th 972, 988[ The burden of proving an assignment falls upon the party asserting rights thereunder [citations]. [Citation] An assignment agreement must describe the subject matter of the assignment with sufficient particularity to identify the rights assigned. [Citation] ].) For example, Amtrust does not allege the conservator assigned it claims that Castlepoint National Insurance Compa ny had arising out of the insurance policy, 0r that the conservator assigned it the right t0 prosecute actions 0n behalf 0f Castlepoint National Insurance Company. In addition, thejudicially noticeable materials establish that the Insurance Commissioner of the State of California s status as conservator for Castlepoint National Insurance Compa ny was terminated effective April 1, 2017 (CaI-Coast s RJN, Ex. D, pp. 3 & 9), and Amtrust does not plead facts showing that the conservator had authority to assign the unspecified right to Amtrust at the time the assignment was made. Thus, Amtrust has not alleged sufficient facts to establish that it has standing to bring the lawsuit. For these reasons, CaI-Coast s demurrer to the SAC on the ground of failure to state a cause of action is well- taken and the Court need not address the remaining grounds for demurrer. Finally, the Court believes Amtrust should be given an another opportunity t0 cure the defects 'In its pleading because the declaration submitted by its cou nsel suggests that Amtrust may be able to plead additional facts and remedy the deficiencies identified in the demurrer. Accordingly, Cal-Coast s demurrer to the SAC is SUSTAINED, with 30 days leave to amend. - 00000 - Primed: 66 1662020 06$ 1662020 Hearing: Delmm‘er - 16CV302621 Page 4 Df-l
