Demurrer FiledCal. Super. - 5th Dist.February 10, 20214838-2577-6106.4 - 1 - NOTICE OF DEMURRER AND DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 A Pr of es sio na l C or po ra tio n Lo s An ge le s BLAKE J. RUSSUM (SBN 258031) JAMES G. BERNALD (SBN 205519) ROPERS MAJESKI PC 445 South Figueroa St, 30th Floor Los Angeles, CA 90071 Telephone: 213.312.2000 Facsimile: 213.312.2001 Email: blake.russum@ropers.com james.bernald@ropers.com Attorneys for Defendant LIBERTY MUTUAL INSURANCE COMPANY SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF FRESNO KAREN GUTILLA, Plaintiff, v. LIBERTY MUTUAL INSURANCE COMPANY and DOES 1-100, inclusive, Defendant. Case No. 21CECG00400 DEFENDANT LIBERTY MUTUAL INSURANCE COMPANY’S NOTICE OF DEMURRER AND DEMURRER TO PLAINTIFF’S COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES [Filed concurrently with Declaration of James G. Bernald] Date: March 2, 2022 Time: 3:30 p.m. Dept.: 502 Judge: Hon. Rosemary McGuire Trial Date: Not Set Date Action Filed: February 10, 2021 TO ALL PARTIES AND TO THEIR RESPECTIVE COUNSEL OF RECORD: PLEASE TAKE NOTICE that on March 2, 2022 at 3:30 p.m., or as soon as thereafter as the matter may be heard, in Department 502 of the above-entitled court, located at 1130 O Street, Fresno, California 93721-2220, Defendant LIBERTY MUTUAL INSURANCE COMPANY (“Liberty Mutual”) will and does hereby demur to Plaintiff KAREN GUTILLA’S Complaint, pursuant to Code of Civil Procedure sections 430.10 and 430.50. Liberty Mutual demurs on the grounds that, as more fully developed in the following Demurrer, the Complaint has a defect or misjoinder of parties, and, furthermore, fails to state E-FILED 7/21/2021 3:59 PM Superior Court of California County of Fresno By: C. York, Deputy 4838-2577-6106.4 - 2 - NOTICE OF DEMURRER AND DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 A Pr of es sio na l C or po ra tio n Lo s An ge le s facts sufficient to constitute causes of action against Liberty Mutual. Pursuant to California Code of Civil Procedure section 430.41, Liberty Mutual’s counsel attempted to meet and confer telephonically with Plaintiff’s counsel regarding the deficiencies in Plaintiff’s Complaint on several occasions, including, but not limited to, April 9, 2021, May 14, 2021 and June 30, 2021. Whereas Plaintiff’s counsel has granted extensions on the time for Liberty Mutual to respond to the Complaint, Plaintiff’s counsel was unavailable for a Section 430.41 telephone conference, and has not otherwise responded to Liberty Mutual’s repeated requests to meet and confer. The Demurrer is based upon this Notice, the attached Demurrer, the Memorandum of Points and Authorities filed herewith, the Declaration of James Bernald, all pleadings and papers filed herein, and upon such evidence, either oral or documentary, as may be introduced at the time of the hearing on the Demurrer. Dated: July 20, 2021 ROPERS MAJESKI PC By: JAMES G. BERNALD Attorneys for Defendant LIBERTY MUTUAL INSURANCE COMPANY 4838-2577-6106.4 - 3 - NOTICE OF DEMURRER AND DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 A Pr of es sio na l C or po ra tio n Lo s An ge le s DEMURRER TO COMPLAINT Defendant Liberty Mutual Insurance Company (“Liberty Mutual”) hereby demurs to Plaintiff’s Complaint, on the following grounds: 1. There is a defect or misjoinder of Liberty Mutual as a defendant in this action, and thus the entire Complaint must fail. (Code Civ. Proc., § 430.10(d).) 2. The First Cause of Action for Breach of Contract fails to state facts sufficient to constitute a cause of action against Liberty Mutual. (Code Civ. Proc., § 430.10(e).) 3. The First Cause of Action for Breach of Contract is uncertain. (Code Civ. Proc., § 430.10(f).) 4. The Second Cause of Action for Breach of the Covenant of Good Faith and Fair Dealing fails to state facts sufficient to constitute a cause of action against Liberty Mutual. (Code Civ. Proc. § 430.10(e).) 5. The Third Cause of Action for Violation of Business & Professions Code § 172000, et seq., fails to state facts sufficient to constitute a cause of action against Liberty Mutual. (Code Civ. Proc., § 430.10(e).) WHEREFORE, this demurring Defendant, Liberty Mutual, prays that its demurrer to the Complaint be sustained, without leave to amend; that Plaintiff take nothing by her Complaint; for costs of suit herein; and for such other further relief as the Court may deem just and proper. Dated: July 20, 2021 ROPERS MAJESKI PC By: JAMES G. BERNALD Attorneys for Defendant LIBERTY MUTUAL INSURANCE COMPANY 4838-2577-6106.4 - 4 - NOTICE OF DEMURRER AND DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 A Pr of es sio na l C or po ra tio n Lo s An ge le s MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION Plaintiff Karen Gutilla’s (“Plaintiff”) Complaint against Defendant Liberty Mutual Insurance Company (“Liberty Mutual”) alleges causes of action for breach of contract, breach of the implied covenant of good faith and fair dealing, and violation of Business & Professions Code section 17200, et seq. However, Plaintiff’s Complaint fails to allege facts sufficient to state any causes of action against Liberty Mutual, because Liberty Mutual is not a party to the insurance policy that is the central focus of this dispute. Consequently, Plaintiff’s breach of contract and implied convent claims must fail as a matter of law given that Plaintiff cannot possibly allege privity of contract with Liberty Mutual. Plaintiff’s Complaint must also fail because Plaintiff has not alleged, nor can she possible allege, facts sufficient to pursue an alter ego theory of liability against Liberty Mutual. Moreover, even if Liberty Mutual was a proper defendant, which it is not, Plaintiff’s first cause of action for breach of contract fails because she does not plead, nor can she possibly amend the Complaint to allege, any facts suggesting that underinsured motorist (“UIM”) benefits payable under the subject insurance policy have been withheld, and are somehow presently owed to Plaintiff. Thus, even if the privity of contract were present, which it is not, Plaintiff still cannot allege a breach, let alone damages in the form of unpaid UIM benefits resulting from any such breach, in order to substantiate a breach of contract claim. In addition, Plaintiff’s third cause of action for violation of the Unfair Competition Law (“UCL”) fails because Plaintiff’s claims are compensable through monetary damages, and, therefore, she cannot establish the absence of adequate remedies at law necessary to invoke the UCL’s equitable relief. Plaintiff’s UCL claim also fails because it is improperly based upon violations of the Unfair Insurance Practices Act (“UIPA”), Insurance Code section 790.03, which may support a breach of implied covenant of good faith and fair dealing claim against her insurer (and not Liberty Mutual), but not a UCL claim. Therefore, the dismissal of all claims is warranted as California law is clear that Plaintiff cannot recover from Liberty Mutual on any cognizable legal theory based upon the facts alleged 4838-2577-6106.4 - 5 - NOTICE OF DEMURRER AND DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 A Pr of es sio na l C or po ra tio n Lo s An ge le s in the Complaint. In light of these deficiencies, the demurrer should be sustained. II. ALLEGATIONS OF THE COMPLAINT Liberty Mutual wishes to emphasize that, by reciting the substance of the allegations of the Complaint herein, it does not admit, in whole or any part, the truth of any of those allegations made. The Complaint alleges that Plaintiff and her husband purchased an auto policy from Liberty Mutual’s “Golden Eagle brand,” policy number BA 8890438, which has uninsured/ underinsured motorist limits of $1,000,000 per person (the “Policy”). (Complaint ¶¶ 6; 10.) Plaintiff alleges that non-party Golden Eagle Insurance Company was a wholly owned subsidiary of Liberty Mutual, and that Liberty Mutual operated Golden Eagle Insurance Company as a part of a single business enterprise. (Complaint ¶ 3.) Plaintiff further alleges that Liberty Mutual ceased doing business under the Golden Eagle name, and that Golden Eagle policies, including the Policy, continued in full force and effect, with claims handled by Liberty Mutual following the cessation. (Complaint, ¶ 3.) Plaintiff alleges that, on April 4, 2012, she was riding a bicycle in rural Fresno County, California, when she was struck by a motorcycle being operated by Josh Spengeman. (Complaint ¶¶ 10-11.) As a result of the accident, Plaintiff alleges that she sustained serious bodily injuries. (Complaint ¶ 10.) Plaintiff made a third-party claim against Spengeman, which was submitted to Spengeman’s liability insurer, GEICO. (Complaint ¶ 13.) Plaintiff alleges that she settled her bodily injury claims against Spengeman in exchange for GEICO’s payment of Spengeman’s $15,000 bodily injury limits. (Complaint ¶ 13.) After settling with GEICO, Plaintiff made a claim for UIM benefits under the Policy. (Complaint ¶ 14.) Plaintiff ultimately demanded arbitration of her UIM claim in accordance with the terms of the Policy. (Complaint ¶ 16.) Plaintiff alleges that the parties reached a settlement of the UIM claim, effective May 14, 2020. (Complaint ¶ 27.) Whereas Plaintiff concedes that UIM benefits are no longer owing, Plaintiff alleges that the settlement of her UIM claim did not include a release of her extra-contractual claims concerning the manner in which her UIM claim was handled. (Id.) 4838-2577-6106.4 - 6 - NOTICE OF DEMURRER AND DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 A Pr of es sio na l C or po ra tio n Lo s An ge le s Based on these alleged facts, Plaintiff alleges a claim for breach of contract against Liberty Mutual, despite the absence of any alleged UIM benefits due and owing. (Complaint ¶¶ 28-31.) Plaintiff further contends that Liberty Mutual breached the implied covenant of good faith and fair dealing by failing and refusing to conduct a prompt, thorough and impartial investigation of her claim, and by unreasonably withholding payment of UIM benefits to Plaintiff, prior to the settlement of her UIM claim. (Complaint ¶ 33.) Plaintiff also contends that, by withholding payment of UIM benefits prior to the settlement, Liberty Mutual engaged in unlawful claims practices, and that she has no adequate remedy at law for Liberty Mutual’s “continuing violations.” (Complaint ¶¶ 40-41.) Whereas Plaintiff generally seeks monetary damages at law, Plaintiff additionally seeks equitable relief in connection with the UCL cause of action. (Complaint ¶ 41; Prayer for Damages.) III. THE POLICY Non-party Golden Eagle Insurance Corporation issued a commercial auto policy to Plaintiff and Steve Gutilla, policy no. BA 8890438, effective February 18, 2012 to February 18, 2013, which serves as the basis for the instant lawsuit. (Declaration of James Bernald, Ex. 13.) IV. LEGAL ARGUMENT A. A Demurrer May Be Sustained Where, as Here, the Pleading Fails to State Facts Sufficient to Constitute a Cause of Action against the Defendant, or the Defendant has been Misjoined to the Action California Code of Civil Procedure section 430.10 provides, in pertinent part, that the party against whom a complaint has been filed may object, by demurrer or answer, as provided in Section 430.30(e) where, “[t]he pleading does not state facts sufficient to constitute a cause of action.” The party may also object by demurrer where the claims asserted against it are fatally uncertain. (Code Civ. Proc. § 430.10(f).) Further, a party may object by demurrer when there is a misjoinder of parties. (Code Civ. Proc. § 430.10(d).) A complaint must set forth facts sufficient for a defendant to intelligently meet the charges brought against it. (Zumbrun v. University of Southern California (1972) 25 Cal.App.3d 1, 8.) A demurrer can be used 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 4838-2577-6106.4 - 7 - NOTICE OF DEMURRER AND DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 A Pr of es sio na l C or po ra tio n Lo s An ge le s Cal.3d 311, 318.) A demurrer is appropriate where the face of the complaint is incomplete, or discloses a defense that bars recovery, as here. (Guardian North Bay, Inc. v. Superior Court (2001) 94 Cal.App.4th 963, 971-972.) A general demurrer lies where, as here, the Complaint fails to state facts sufficient to constitute a cause of action. (Code of Civil Procedure section 430.10(e); Banerian v. O’Malley (1994) 42 Cal.App.3d 604, 610.) The issue on demurrer is whether the facts plead, if true, state a valid cause of action, i.e., if the complaint pleads facts which would entitle the complainant to relief. (Garcetti v. Superior Court (1996) 49 Cal.App.4th 1533, 1547.) Where the allegations fall short of this requirement, the complaint must be dismissed. B. The Court May Consider the Policy on this Demurrer A demurrer assumes the truth of all facts properly pled in the complaint. (Serrano v. Priest (1971) 5 Cal.3d 584, 591.) However, allegations are not accepted as true when they constitute mere conclusions of law. (Brousseau v. Jarrett (1977) 73 Cal.App.3d 864, 872.) Similarly, the court will not assume the truth of contentions, deductions, or conclusions of fact, and may disregard allegations that are contrary to facts that may be judicially noticed, or are otherwise properly before the Court. (Cochran v. Cochran (1997) 56 Cal.App.4th 1115, 1120.) In addition, because the Complaint cites to the Policy, the Court may properly consider the provisions of the Policy, and, namely, the insurer who issued the Policy, in ruling on the demurrer. (George v. Automobile Club of Southern Calif. (2012) 201 Cal.App.4th 1112, 1130.) The court need not accept as true allegations in the Complaint that are clearly contradicted by documents incorporated in the Complaint. (Id.) In this case, the Complaint cites to the commercial auto policy, which was issued by Golden Eagle Insurance Corporation, and not Liberty Mutual (or Golden Eagle Insurance Company).1 1 Should the Court be disinclined to consider the Policy submitted with the instant demurrer, Liberty Mutual respectfully requests that the Court order Plaintiff to amend the Complaint to attach a copy of the Policy, or set out, verbatim, the terms of the agreement, including Golden Eagle Insurance Corporation’s issuance of the Policy, in order for Liberty Mutual to demurrer on the clear absence of privity at the pleadings stage. (McKell v. Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1489.) 4838-2577-6106.4 - 8 - NOTICE OF DEMURRER AND DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 A Pr of es sio na l C or po ra tio n Lo s An ge le s C. Plaintiff’s Contract Based Causes of Action Fail to State Claims Upon Which Relief May Be Granted 1. Plaintiff’s Inability to Allege Privity of Contract is Fatal to her Claims for Breach of Contract and Breach of the Implied Covenant Preliminarily, Plaintiff cannot establish a cause of action for breach of contract against Liberty Mutual, because Liberty Mutual is not a party to the insurance contract alleged in the Complaint. Under California law, in order to establish a breach of the insurance contract, Plaintiff must establish the existence of the contract, Plaintiff’s performance or excuse for non- performance, Liberty Mutual’s breach of the insurance contract, and damages resulting therefrom. (Wall Street Network, Ltd. v. New York Times Co. (2008) 164 Cal.App.4th 1171, 1178; Abdelhamid v. Fire Ins. Exchange (2010) 182 Cal.App.4th 990, 999.) To be held liable for breach of contract, the defendant first must be a consenting party to the contract. (Cal. Civ. Code § 1550.) Thus, in order to establish a breach of contract against Liberty Mutual, Plaintiff must first establish a contractual relationship between Liberty Mutual and herself. (Austero v. National Casualty Company (1976) 62 Cal.App.3d 511, 515-517; Gruenberg v. Aetna Ins. Co. (1973) 9 Cal.3d 566, 573-574, 576.) Here, Plaintiff has not alleged a contractual relationship with Liberty Mutual, nor can she possibly amend her Complaint to do so. In fact, Plaintiff admits that Liberty Mutual is not a party to the insurance contract alleged in the Complaint. (Complaint, ¶¶ 3, 6.) Plaintiff’s cause of action for breach of the implied covenant of good faith and fair dealing against Liberty Mutual must fail for the same reasons. Simply put, Plaintiff’s inability to plead a contractual relationship with Liberty Mutual necessarily precludes her ability to prove a claim for breach of the implied covenant. (Austero, supra, 62 Cal.App.3d at 515-517; Gruenberg, supra, 9 Cal.3d at 573-574, 576.) In Austero, the court found that liability for breach of implied covenant of good faith and fair dealing is strictly tied to the implied-in-law covenant of good faith and fair dealing arising out of the underlying contractual relationship. Where no such relationship exists, no recovery for insurance bad faith may be had. (Austero, supra, 62 Cal.App.3d at 516-17.) The theory upon which liability for breach of implied covenant is predicated is that the insurer’s conduct constitutes a tortious breach of the implied-in-law duty of good faith and fair dealing arising out of the insurance policy. (Gruenberg, supra, 9 Cal.3d at 573-74.) While the 4838-2577-6106.4 - 9 - NOTICE OF DEMURRER AND DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 A Pr of es sio na l C or po ra tio n Lo s An ge le s cause of action may sound in tort, the duty of good faith and fair dealing derives from, and exists solely because of, the contractual relationship between the parties. (Id. at 577-78; Truestone, Inc. v. Travelers Ins. Co. (1976) 55 Cal.App.3d 165, 170.) Thus, a company who is not a party to the underlying insurance policy may not be held liable for breach of an implied covenant, for, as to that party, no such implied covenant exists. (Gruenberg, supra, 9 Cal.3d at 576; Austero, supra, 62 Cal.App.3d at 515.) Accordingly, Plaintiff has not pled facts sufficient to constitute causes of action for breach of contract, or breach of the implied covenant of good faith and fair dealing, against Liberty Mutual. Without so stating, Plaintiff may be attempting to allege that Liberty Mutual should be held liable for Golden Eagle Insurance Company’s alleged misconduct, on the basis of Liberty Mutual’s alleged status as its parent company. However, this theory is not alleged, and the Policy properly before the Court clearly establishes that the Policy was issued by Golden Eagle Insurance Corporation, and not Golden Eagle Insurance Company. Even so, any such theory of parental company liability has been uniformly rejected and is contrary to settled law on the issue. (Tomaselli v. Transamerica Ins. Co. (1994) 25 Cal. App. 4th 1269, 1283-85; Gerritsen v. Warner Bros. Entm’t Inc., 116 F. Supp. 3d 1104, 1128, 1141 (C.D. Cal. 2015); Winner Chevrolet, Inc. v. Universal Underwriters Ins. Co., 2008 WL 2693741, *4 (E.D. Cal. 2008); Pantoja v. Countrywide Home Loans, Inc., 640 F.Supp.2d 1177, 1192 (N.D. Cal. 2009).) It is a general principle of corporate law “ingrained in our economic and legal systems that a parent corporation . . . is not liable for the acts of its subsidiaries.” (Winner, supra, 2008 WL 2693741 at *2, citing United States v. Bestfoods, 524 U.S. 51, 61 (1998); see also, N. Natural Gas Co. v. Superior Court (1976) 64 Cal.App.3d 983, 991.) Thus, Liberty Mutual cannot possibly be held liable for breach of contract, or breach of the implied covenant, based upon the acts of a subsidiary. (Bestfoods, supra, 524 U.S. at 61; Tomaselli, supra, 25 Cal. App.4th at 1283-85; N. Natural Gas, supra, 64 Cal.App.3d at 991; Gerritsen, supra, 116 F. Supp. 3d at 1128, 1141; Winner, supra, 2008 WL 2693741 at *2-4.) Therefore, Plaintiff cannot establish claims for either breach of contract or breach of the implied covenant against Liberty Mutual, because Plaintiff admits that Liberty Mutual is not a 4838-2577-6106.4 - 10 - NOTICE OF DEMURRER AND DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 A Pr of es sio na l C or po ra tio n Lo s An ge le s party to the subject insurance policy, and Liberty Mutual’s alleged status as a parent company of the insurer is insufficient to state a cause of action, as a matter of law. 2. Plaintiff Does Not Allege Sufficient Facts to Establish Alter Ego Liability While not expressly alleged, Plaintiff’s theory of recovery against Liberty Mutual is essentially limited to its status as the parent company of her insurer. Liberty Mutual anticipates that Plaintiff, on opposition, may argue that she is additionally proceeding against Liberty Mutual on an alter ego theory. However, Plaintiff does not, and cannot possibly, allege facts necessary to establish alter ego liability. In order to state a viable claim, Plaintiff must have alleged facts to justify piercing the corporate veil, due to a unit of interest, ownership and control, such that the underwriting insurance company was nothing more than a mere instrumentality of Liberty Mutual. (Mesler v. Bragg Mgmt Co. (1985) 39 Cal.3d 290, 300.) Moreover, even if the first element were satisfied, Plaintiff must have alleged facts showing that an inequitable result would occur if the insurer who issued Policy was recognized as separate entity from Liberty Mutual, such that recognition of their corporate separateness would sanction a fraud or promote injustice. (Id.; Sonora Diamond Corp. v. Super. Ct. (2000) 83 Cal.App.4th 523, 538; NetApp, Inc. v. Nimble Storage, Inc., 2015 WL 400251, *5 (N.D. Cal. 2015); Meadows v. Emett & Chandler (1950) 99 Cal.App.2d 496, 499.) Given that the insurer who issued the policy, Golden Eagle Insurance Corporation, is an active corporation, subject to suit in this jurisdiction, Plaintiff cannot possibly establish the second prong of the test. In her Complaint, Plaintiff maintains that Liberty Mutual should be found to be a proper defendant on the basis that Golden Eagle Insurance Company was a wholly owned subsidiary of Liberty Mutual, Liberty Mutual operated Golden Eagle Insurance Company as part of a single business enterprise, and claims brought under Golden Eagle policies, including the Policy, were handled by Liberty Mutual. (Complaint, ¶ 3.) Setting aside the fact that Golden Eagle Insurance Corporation and Golden Eagle Insurance Company are separate entities, and Golden Eagle Insurance Company did not issue the subject insurance policy, the Complaint nevertheless fails to assert viable claims because mere allegations of the existence of a parent-subsidiary relationship, and a single business enterprise, is insufficient to satisfy the first prong of the two-part test. 4838-2577-6106.4 - 11 - NOTICE OF DEMURRER AND DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 A Pr of es sio na l C or po ra tio n Lo s An ge le s (Institute of Veterinary Pathology v. California Health Laboratories, Inc. (1981) 116 Cal.App.3d 111, 119-120.) “Conclusory allegations of ‘alter ego’ status are insufficient to state a claim.” (Gerritsen v. Warner Bros. Entm’t Inc., 116 F.Supp.3d 1104, 1136 (C.D. Cal. 2015); Sandoval v. Ali, 34 F.Supp.3d 1031, 1040 (N.D. Cal. 2014); Neilson v. Union Bank of Cal., N.A., 290 F.Supp.2d 1101, 1116 (C.D. Cal. 2003).) Indeed, when asserting alter ego liability, the plaintiff “must allege specific facts supporting both of the necessary elements.” (Gerritsen, supra, 116 F.Supp.3d at 1136; Wady v. Provident Life and Accident Ins. Co. of America, 216 F.Supp.2d 1060, 1067 (C.D. Cal. 2002); NetApp, Inc., supra, 2015 WL 400251 at *5.) Here, Plaintiff has not alleged any facts to satisfy either of the elements necessary to invoke the alter ego exception, nor can she possibly. Even if Plaintiff could somehow satisfy the first element, Plaintiff cannot possibly amend the Complaint to allege sufficient facts to establish that adherence to corporate separateness would somehow sanction a fraud or promote injustice. Here, the presence of Golden Eagle Insurance Corporation, a solvent insurer, precludes application of the alter ego doctrine as a matter of law. (Wady, supra, 216 F.Supp.2d at 1070; Salkin v. United Servs. Auto. Ass’n, 767 F.Supp.2d 1062, 1068 (C.D. Cal. 2011); See also, Mesler, supra, 39 Cal.3d at 301; [“The essence of the alter ego doctrine is that justice be done... Thus the corporate form will be disregarded only in narrowly defined circumstances and only when the ends of justice so require.”].) Plaintiff has not alleged, nor can she possibly amend her Complaint to allege, that Golden Eagle Insurance Corporation is unable to fully respond to any monetary award that Plaintiff might recover, should she prevail on a claim against her insurer. (Id.) Thus, amendment would be futile with respect to any alter ego liability, which is foreclosed as a matter of law. D. The Cause of Action for Breach of Contract Additionally Fails to State a Claim Upon Which Relief May Be Granted Because Plaintiff Cannot Allege Unpaid Benefits Owing on her Underinsured Motorist Claim As set forth above, the essential elements of a cause of action for breach of contract are (1) the contract, (2) the plaintiff’s performance of the contract or excuse for nonperformance, (3) the defendant’s breach, and (4) resulting harm to the plaintiff. (Careau & Co. v. Sec. Pacific Bus. 4838-2577-6106.4 - 12 - NOTICE OF DEMURRER AND DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 A Pr of es sio na l C or po ra tio n Lo s An ge le s Credit, Inc. (1990) 222 Cal.App.3d 1371, 1388.) In order to allege a viable claim, Plaintiff must identify the provisions in the insurance contract that were allegedly breached, as a breach of contract claim “necessarily relates only to the express promises made by [the insurer] in its policy.” (Archdale v. American Specialty Lines Ins. Co. (2007) 154 Cal.App.4th 449, 466.) Here, Plaintiff does not allege any express provisions of the Policy that were breached, which is fatal to her breach of contract claim. (Archdale, supra, 154 Cal.App.4th at 466.) Moreover, for a policyholder to establish a breach of contract, the insured must establish that she was entitled to benefits under the relevant policy of insurance, and, most importantly, that those benefits were not paid. (Carlton v. St. Paul Mercury Ins. Co. (1994) 30 Cal.App.4th 1450, 1454.) In this case, Plaintiff cannot possibly meet her burden. Indeed, in her complaint, Plaintiff alleges that she agreed to a settlement of her UIM claim, and thus she is not seeking to recover UIM benefits by way of this action. Consequently, given that Plaintiff’s UIM claim has been paid, California law is clear that Plaintiff cannot possibly recover for breach of contract. (Maxwell v. Fire Ins. Exch., 60 Cal.App.4th 1446, 1449 (1998) [holding that there can be no breach of contract where all contractual benefits have been paid, even if paid late]; Paulson v. State Farm Mut. Auto. Ins. Co., 867 F.Supp. 911, 917-18 (C.D. Cal. 1994).) As Plaintiff cannot possibly allege that benefits are owing on her UIM claim, Plaintiff’s breach of contract claim must fail as a matter of law. (See Behnke v. State Farm General Ins. Co. (2011) 196 Cal.App.4th 1443, 1470; see also, Carrillo v. Allstate Northbrook Indem. Co., 2021 WL 1658408, *2 (Cal. Super. Apr. 22, 2021).) E. The Cause of Action for Violation of Business & Professions Code § 17200, et seq. Fails to State a Claim Upon Which Relief May Be Granted 1. Plaintiff Cannot Rely on Violations of the UIPA as the Underlying Violation for Her UCL Claim. California’s UCL prohibits, and provides civil remedies for, “unfair competition,” defined as any unlawful, unfair or fraudulent business act or practice.” (Bus. & Prof. Code §§ 17200, et seq.) The Unfair Insurance Practices Act (“UIPA”) expressly prohibits “unfair claims settlement practices” by insurers. (Ins. Code § 790.03(h).) However, important there, there is no private right of action for violation of the UIPA (Moradi-Shalal v. Fireman’s Fund Ins. Cos. (1988) 46 4838-2577-6106.4 - 13- NOTICE OF DEMURRER AND DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 A Pr of es sio na l C or po ra tio n Lo s An ge le s Cal.3d 287, 304), and a plaintiff may not plead around that prohibition by characterizing a cause of action based upon UIPA violations as a separate UCL claim. (Manufacturers Life Ins. Co. v. Superior Court (1995) 10 Cal.4th 257, 283.) In this case, Plaintiff’s UCL cause of action incorporates, by reference, all allegations set forth in paragraphs 1 through 38, but does not allege any new facts. Indeed, the Complaint’s only allegations pertaining to Liberty Mutual’s alleged “unfair” business practices are that Liberty Mutual unreasonably failed to conduct a prompt, thorough, and impartial investigation of Plaintiff’s claim, and that Liberty Mutual unreasonably withheld payment on her UIM claim until the parties reached their settlement and the UIM claim was paid. (Complaint ¶ 33.) Of course, these allegations, if true, fall squarely within the conduct prohibited by the UIPA. (See Ins. Code, § 790.03(h)(3-6).) Thus, while Plaintiff’s allegations may support a claim for breach of the implied covenant against her insurer, they are fatally deficient to assert a UCL claim against Liberty Mutual. (Manufacturers Life, supra, 10 Cal.4th at 283.) Accordingly, Plaintiff’s UCL cause of action fails as a matter of law. 2. Plaintiff Has an Adequate Remedy at Law Plaintiff’s UCL claim must also fail for a separate and independently dispositive reason. California law authorizes an insured to plead a cause of action for unfair competition under the UCL when the insured is “seeking only injunctive and restitutive relief.” (Zhang v. Superior Court (2013) 57 Cal.4th 364, 375-76; citing with approval, State Farm Fire & Cas. Co. v. Superior Court (1996) 45 Cal.App.4th 1093, 1108-1109.) However, here, Plaintiff cannot possibly argue that she is “seeking only injunctive and restitutive relief.” Specifically, Plaintiff does not allege, nor can she possibly allege, the absence of an adequate remedy at law necessary to invoke the UCL’s equitable relief - indeed, to the contrary, Plaintiff is seeking to enforce the Policy, and recover monetary damages based upon an alleged breach of its express and implied covenants. Given that Plaintiff is seeking legal remedies in the form of monetary damages, which she contends will recompense her alleged injuries, Plaintiff is not “seeking only injunctive and restitutive relief,” as required by the California Supreme Court. (Id.) /// 4838-2577-6106.4 - 14 - NOTICE OF DEMURRER AND DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 A Pr of es sio na l C or po ra tio n Lo s An ge le s The elements of a cause of action for injunctive relief are (1) a tort or other wrongful act constituting a cause of action; and (2) irreparable injury, i.e., a factual showing that the wrongful act constitutes an actual or threatened injury to property or personal rights which cannot otherwise be compensated by an award of monetary damages. (Brownfield v. Daniel Freeman Marina Hospital (1989) 208 Cal.App.3d 405, 410.) Here, the face of the complaint clearly demonstrates that monetary damages, in the event that Plaintiff prevails on her contract and tort claims, will provide Plaintiff with an adequate remedy at law. (Prudential Home Mortg. Co. v. Sup. Ct. (1998) 66 Cal.App.4th 1236, 1249.) Therefore, Plaintiff cannot possibly establish the elements necessary to obtain the injunctive relief sought, as a matter of law. V. CONCLUSION For the foregoing reasons, this Court should grant the instant demurrer, without further leave to amend, as California law is clear that Plaintiff cannot recover against Liberty Mutual on any of the legal theories alleged in the Complaint. The Complaint fails to state facts sufficient to constitute any cause of action against Liberty Mutual, and further leave to amend would be futile, as the dispute is limited to legal issues ripe for determination, in Liberty Mutual’s favor, on the pleadings. Consequently, Liberty Mutual respectfully requests that judgment should be entered in its favor. Should the Court be inclined to grant leave to amend, Liberty Mutual respectfully requests that the Court order Plaintiff to attach a copy of the Policy to the Complaint, in further demonstrating the absence of privity of contract between Plaintiff and Liberty Mutual. Dated: July 20, 2021 ROPERS MAJESKI PC By: JAMES G. BERNALD Attorneys for Defendant LIBERTY MUTUAL INSURANCE COMPANY A Professional Corporation ROPERS Los Angeles 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CASE NAME: GUTILLA V LIBERTY MUTUAL INSURANCE COMPANY ACTION NO.: 21CECG00400 PROOF OF SERVICE METHOD OF SERVICE D First Class Mail D Facsimile D Messenger Service D Overnight Delivery E E-Mail/Electronic Delivery 1. At the time of service I was over 18 years of age and not a party to this action. 2. My business address is 445 S. Figueroa Street, 30th Floor, Los Angeles, California 90071, County of Los Angeles. 3. On July 20, 2021 I served the following documents: DEFENDANT LIBERTY MUTUAL INSURANCE COMPANY’S NOTICE OF DEMURRER AND DEMURRER TO PLAINTIFF’S COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES 4. I served the documents on the persons at the address below (along with their fax numbers and/or email addresses if service was by fax or email): Stuart R. Chandler Attorneyfor Plaintiff STUART R. CHANDLER, AFC KAREN GUTILLA 761 East Locust Avenue, Suite 101 Fresno, CA 93720 Tel: (559) 431-7770 Fax: (559) 43 1-7778 Email: stuart@chandlerlaw.com 5. I served the documents by the following means: a. D By United States mail: I enclosed the documents in a sealed envelope or package addressed to the persons at the addresses specified in item 4 and placed the envelope for collection and mailing, following our ordinary business practices I am readily familiar with this business’ s practice for collecting and processing correspondence for mailing On the same day that correspondence 1s placed for collection and mailing, it is deposited 1n the ordinary course of business with the United States Postal Service, in a sealed envelope with postage fully prepaid at the address listed in Paragraph 2 above. b. D By overnight delivery: I enclosed the documents 1n an envelope or package provided by an overnight delivery carrier and addressed t0 the persons at the addresses 1n item 4 Iplaced the envelope or package for collection and overnight delivery at an office or a regularly utilized drop box of the overnight delivery carrier. 4838-2577410“ _ 15 _ NOTICE OF DEMURRER AND DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES 4838-2577-6106.4 - 16 - NOTICE OF DEMURRER AND DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 A Pr of es sio na l C or po ra tio n Lo s An ge le s c. By messenger: I served the documents by placing them in an envelope or package addressed to the persons at the addresses listed in item 4 and providing them to a messenger for service. d. By fax transmission: Based on an agreement between the parties and in conformance with Rule 2.306, and/or as a courtesy, I faxed the documents to the persons at the fax numbers listed in item 4. No error was reported by the fax machine that I used. A copy of the record of the fax transmission is attached. e. I served the document(s) by electronic file transfer into the Court approved [File & Serve Xpress/Case Home Page/Case Anywhere/Ace Attorney Service eFile/One Legal]. In compliance with Code of Civil Procedure section § 1010.6, my electronic business address is: _________________. I caused the document(s) listed above to be electronically served through [File & Serve Xpress/Case Home Page/Case Anywhere/Ace Attorney Service eFile/One Legal] for the above-entitled case upon the parties o the Service List maintained by the provider. f. I served the documents by electronic service pursuant to Code of Civil Procedure section 1010.6 to the electronic service address(es) for counsel(s) being served as confirmed by telephone or email. I declare under penalty of perjury under the laws of the State of California that the above is true and correct. Date: July 20, 2021 TAMERON WATTS
