Demurrer & Motion to Strike (Judge Deborah C. Servino) DEMURRER The court sustains Defendant State Farm General Insurance Company s ( State Farm ) Demurrer to Plaintiffs Robert Berry and Kristy Velasco-Berry and Marc and Mary Didomenico s First Amended Complaint ( FAC ) with 15 days leave to amend. Special Demurrer for Uncertainty The special demurrer for uncertainty is sustained with 15 days leave to amend. (Code Civ. Proc., 430.10, subd. (f)). A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures. (Khoury v. Maly s of California, Inc. (1993) 14 Cal.App.4th 612, 616.) Errors and confusion created by the inept pleader are to be forgiven if the pleading contains sufficient facts entitling plaintiff to relief. (Saunders v. Cariss (1990) 224 Cal.App.3d 905, 908.) A party attacking a pleading on uncertainty grounds must specify how and why the pleading is uncertain, and where that uncertainty can be found in the challenged pleading. (Fenton v. Groveland Community Services Dept. (1982) 135 Cal.App.3d 797, 809, disapproved on other grounds in Katzberg v. Regents of the University of California (2002) 29 Cal.4th 300.) Here, the Berrys assigned to the Didomenicos any and all claims relating to the Property or the Arbitration, bad faith or otherwise, against any and all insurance carriers, except their claims for emotion [sic] distress and any such claims as are not assignable under California law. (FAC, 16.) Yet, all Plaintiffs assert breach of contract and bad faith. Given the allegation in paragraph 16 of the FAC, Plaintiffs must delineate who is bringing each claim. Even though Defendants are grouped together in some allegations, the FAC is not so unintelligible that Defendants cannot reasonably respond. Each Defendant could have separately
failed to investigate and improperly denied its respective claim, as alleged. Any ambiguities can be clarified through discovery. (Lickiss v. Financial Industry Regulatory Authority (2012) 208 Cal.App.4th 1125, 1135; Khoury v. Maly s of California, Inc., supra, 14 Cal.App.4th at p. 616.) General Demurrer The court overrules the general demurrer. Had Plaintiffs been properly delineated, a claim for breach of contract would have been properly stated. A breach of the duty to defend in itself constitutes only a breach of contract. But, it may also violate the covenant of good faith and fair dealing where it involves unreasonable conduct or an action taken without proper cause. On the other hand, if the insurer s refusal to defend is reasonable, no liability will result. (Shade Foods, Inc. v. Innovative Products Sales & Marketing, Inc. (2000) 78 Cal.App.4th 847, 881.) Plaintiffs do allege facts in the background section, which are incorporated by reference. In the FAC, paragraphs 14 and 15, Plaintiffs allege that: On July 14, 2015 and January 28, 2016, following an inadequate investigation, STATE FARM issued a written denial of the property damage claim based on the erroneous conclusion that the water damage resulted from wear, tear, deterioration, latent defect and corrosion of the water supply line, and that the pipe failure resulted in repeated seepage and leakage of water. On April 13, 2015 and October 15, 2015, STATE FARM issued a written denial of their duty to defend the BERRYS erroneously stating that there was no occurrence, and that any property damage occurred to PROPERTY owned by the insured. Similarly, had the Plaintiffs been properly delineated, a claim for bad faith would have been properly alleged. An insurer may breach the covenant of good faith and fair dealing when it fails to properly investigate its insured s claim. (Egan v. Mutual of Omaha Insurance Co. (1979) 24 Cal.3d 809, 817.) In the FAC, paragraph
14, Plaintiffs allege that on July 14, 2015 and January 28, 2016, after an inadequate investigation by State Farm, State Farm denied the claim based on the erroneous conclusion that the water damage resulted from wear, tear, deterioration, latent defect, and corrosion of the water supply line, and that the pipe failure resulted in repeated seepage and leakage of water. Although this allegation is in the factual background, it is incorporated by reference into the otherwise generic bad faith claim. With this allegation, Plaintiffs have sufficiently alleged a failure to investigate, at a minimum, and therefore stated a claim. With regard to the declaratory relief claim, declaratory relief is available to any interested person to resolve an actual controversy about his or her rights or duties with respect to another. (Code Civ. Proc., 1060.) That there may be another remedy available other than declaratory relief does not warrant sustaining a demurrer as to this cause of action. MOTION TO STRIKE The court grants in part Defendant State Farm s Motion to Strike portions of the FAC as to punitive damages, with 15 days leave to amend. Prejudgment Interest [I]nterest traditionally has been denied on unliquidated claims because of the general equitable principle that a person who does not know what sum is owed cannot be in default for failure to pay. (Chesapeake Indus., Inc. v. Togova Enterprises, Inc. (1983) 149 Cal.App.3d 901, 906.) Even so, the court has discretion to award prejudgment interest in such cases: Every person who is entitled under any judgment to receive damages based upon a cause of action in contract where the claim was unliquidated, may also receive interest thereon from a date prior to the entry of judgment as the court may, in its
discretion, fix, but in no event earlier than the date the action was filed. (Civ. Code, 3287, subd. (b).) In making its determination, the court will consider such factors as the length of the delay in payment, the prevailing interest rates during the delay, rejection of the plaintiff s settlement offers, and principles of equity and fairness. (See A & M Produce Co. v. FMC Corp. (1982) 135 Cal.App.3d 473, 496.) Furthermore, whether prejudgment interest is awardable as a matter of right, or is merely discretionary, depends on whether the amount due under the policy is sufficiently certain. Thus, prejudgment interest may be available on the breach of contact claim. Accordingly, the motion to strike portions referring to prejudgment interest is denied. Insurance Code References Plaintiffs are not seeking damages under the Insurance Code, but rather specifying the types of things that State Farm has done wrong. The court finds these allegations are neither irrelevant nor improper. Accordingly, the motion to strike portions referring to the Insurance Code is denied. General/Incidental Damages An insurer sued for breach of contract may also be liable for foreseeable consequential damages i.e., those damages the parties should have foreseen as likely to result from the breach when they entered into the contract. (Civ. Code, 3300; Hunt Bros. Co. v. San Lorenzo Water Co.(1906) 150 Cal. 51, 56; Glendale Fed. Sav. & Loan Assoc. v. Marina View Heights Dev. Co. (1977) 66 Cal.App.3d 101, 125.) The court denies the motion to strike these damages at this stage of the case. Punitive Damages The FAC is very limited in allegations as to conduct to warrant punitive damages. A failure to properly investigate and denial of claims does not in and of itself show malice, fraud, or oppression. The court therefore strikes punitive damages, with 15 days leave to amend.
State Farm shall give notice of the ruling.