Tentative Rulings

Case Number: *******5841    Hearing Date: November 05, 2020    Dept: 26

IN ORDER TO IMPLEMENT PHYSICAL DISTANCING AND UNTIL FURTHER NOTICE, THE COURT STRONGLY ENCOURAGES ALL COUNSEL AND ALL PARTIES TO APPEAR REMOTELY FOR NON-TRIAL AND NON-EVIDENTIARY MATTERS, INCLUDING THIS MOTION.

Superior Court of California

County of Los Angeles

Department 26

Procedural Background

On April 24, 2020, Plaintiff Alex Weingarten (“Plaintiff”) filed the instant action against defendants Certain Underwriters at Lloyd’s London Subscribing to Policy Number IML-0114NO-190029 (“Lloyd’s”), Landmark American Insurance Company (“Landmark”), and Robert A. Cutbirth (“Cutbirth”) (collectively “Defendants”) alleging causes of action for (1) Breach of the Covenant of Good Faith and Fair Dealing; (2) Intentional Infliction of Emotional Distress, (3) Negligent Infliction of Emotional Distress, and (4) Negligent Misrepresentation.

On August 28, 2020, Defendant Cutbirth filed the instant demurrer to the second, third, and fourth causes of action. On October 16, 2020, Plaintiff filed an opposition. On October 29, 2020, Defendant Cutbirth filed his reply.

Factual Background

The complaint alleges as follows: Plaintiff was an attorney providing legal services to clients at a firm he founded. (Complaint ¶ 7.) Plaintiff obtained professional liability insurance through Defendant Lloyd and an excess policy of insurance through Defendant Landmark. (Complaint ¶¶ 7, 11, Exs. 1-2.) Defendant Cutbirth was an attorney and also the insurance adjuster with Lloyd’s assigned to and handing Plaintiff’s claim. (Id. ¶ 10.)

On February 25, 2015, Adam Levin (“Levin”) and Criterion Capital Partners, LLC, (“Criterion”) filed a lawsuit against Plaintiff for harm suffered as a result of Plaintiff’s professional representation of Levin and Criterion. (Id. ¶ 12.) Plaintiff informed Lloyd’s and Landmark about the action. (Id. ¶ 13.)

On March 16, 2015, Lloyd’s undertook the defense of Plaintiff. (Id. ¶ 14.) The action was transferred, by stipulation, to JAMS for arbitration. (Id. ¶ 15.) On January 11, 2016, counsel for Levin and Criterion made a demand for the limits of Plaintiff’s insurance policy. (Id. ¶ 16.) When counsel for Levin and Criterion (Ian Herzog) communicated with Plaintiff’s counsel (John Sheller) regarding the limits of Plaintiff’s insurance coverage, Sheller failed to inform Herzog that the Lloyd’s policy was a burning limits one. (Ibid.) On January 29, 2016, Plaintiff’s counsel Sheller, on behalf of Lloyd’s and Landmark, rejected Herzog’s written offer without a counteroffer. (Id. ¶ 17.)

On February 4, 2016, Herzog conveyed again to Lloyd’s and Landmark that Levin and Criterion remained willing to settle the action for policy limits and that to avoid a conflict of interest and potential future bad faith action, Lloyd’s and Landmark should accept Herzog’s demand or agree to indemnify Plaintiff for any exposure in excess of the insurance policies. (Id. ¶ 18.) Plaintiff informed his counsel that he desired to settle the action rather than proceed to arbitration. (Id. ¶¶ 19-20.) However, Defendant Cutbirth told Plaintiff that there was no viable avenue to settlement. (Id. ¶ 21.) Defendants refused to settle in bad faith despite the likelihood of an adverse judgment against Plaintiff. (Id. ¶ 23.)

On January 11, 2019, the arbitration findings were announced, which exceeded Plaintiff’s insurance policy limits. (Id. ¶ 25.) Plaintiff retained his own personal counsel, who on April 19, 2019 requested that Defendants indemnify Plaintiff for the amount of the award in excess of the policy limits. (Id. ¶¶ 26-28.) Due to Defendants’ conduct “[Plaintiff] suffered extreme emotional distress including anxiety, humiliation, fear, anguish, and emotional distress, and will continue to suffer emotional distress in the future[.]” (Id. ¶ 46.)

Request for Judicial Notice

Defendant Cutbirth requests that the court take judicial notice of a printout from Tucker Ellis LLP webpage “About Us” and a printout of the first page of Plaintiff’s bio page maintained on the Venable LLP website.

Neither of these requests is proper for judicial notice. “Judicial notice may not be taken of any matter unless authorized or required by law.” (Evid. Code, ; 450.) California has not recognized a provision for taking judicial notice of documents from websites. (See Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 888.) Information on website can be reasonably subject to dispute. (See id.; Huitt v. Southern Cal. Gas Co. (2010) 188 Cal.App.4th 1586, 1605 n.10 [“[s]imply because information is on the Internet does not mean that it is not reasonably subject to dispute.”]; Ragland v. U.S. Bank Nat. Assn. (2012) 209 Cal.App.4th 182, 194 [“Nor may we take judicial notice of the truth of the contents of the Web sites and blogs, including those of the Los Angeles Times and Orange County Register. . . The contents of the Web sites and blogs are ‘plainly subject to interpretation and for that reason not subject to judicial notice. [Citation omitted]’].)

Here, Defendant Cutbirth is requesting that the court take judicial notice of facts on website pages, which pursuant to the authorities above, is not authorized or required by law as the contents of a website and the facts and propositions contained therein are reasonably subject to dispute. Accordingly, Defendant’s request for judicial notice is denied.

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.) No other extrinsic evidence can be considered.

A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal. App. 4th 740, 747.) When considering demurrers, courts read the allegations liberally and in context. (Taylor v. City of Los Angeles Dep’t of Water & Power (2006) 144 Cal. App. 4th 1216, 1228.) In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal. App. 4th 968, 994.) “A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed.”  (SKF Farms v. Superior Ct. (1984) 153 Cal. App. 3d 902, 905.) “The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action.”  (Hahn, supra, 147 Cal.App.4th at 747.) 

A special demurrer for uncertainty, Code of Civil Procedure section 430.10 subdivision (f), is disfavored and will only be sustained where the pleading is so bad that defendant cannot reasonably respond—i.e., cannot reasonably determine what issues must be admitted or denied, or what counts or claims are directed against him/her. (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616.) Moreover, even if the pleading is somewhat vague, “ambiguities can be clarified under modern discovery procedures.” (Id.)

Discussion

Meet and Confer

Code of Civil Procedure section 430.41, subdivision (a) requires that “[b]efore 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 to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer.” The parties are to meet and confer at least five days before the date the responsive pleading is due and if they are unable to meet the demurring party shall be granted an automatic 30-day extension.  (CCP ; 430.41(a)(2).)  The demurring party must also file and serve a declaration detailing the meet and confer efforts.  (Id. ;at (a)(3).) ; If an amended pleading is filed, the parties must meet and confer again before a demurrer may be filed to the amended pleading.  (Id. ;at (a).)

The Court notes that Defendant has satisfied the meet and confer requirement. (Watkin Decl. ¶ 4.)

Entire Action Civil Code ; 47(b)

Defendant Cutbirth contends that each of the three actions alleged against Cutbirth is barred by the litigation privilege under Civil Code ; 47(b).

The litigation privilege of Civil Code section 47 pertains to any communication (1) made in judicial or quasi-judicial proceedings; (2) by litigants or other participants authorized by law; (3) to achieve the objects of the litigation; and (4) that have some connection or logical relation to the action. (Abuemeira v. Stephens (2016) 246 Cal.App.4th 1291, 1299 [citing GetFugu, Inc. v. Patton Boggs LLP (2013) 220 Cal.App.4th 141, 152].) The principal purpose of the litigation privilege is to afford litigants and witnesses the utmost freedom of access to the courts without fear of litigation reprisal. (Abuemeira, 246 Cal.App.4th at 1299.) However, this privilege only protects communications not alleged conduct. (Kimmel v. Goland (1990) 51 Cal.3d 202, 212.) Nor does it prevent the use of protected communications as evidence of prior misconduct. (White v. Western Title Ins. Co. (1985) 40 Cal.3d 870, 888 [“It is obvious, however, that even if liability cannot be founded upon a judicial communication, it can be proved by such a communication”].)

An insurer and its agents, including counsel of such insurer, cannot invoke the litigation privilege as a defense to fraud claims by its own insured as the duty owed by an insurer to its insured and persons standing in the insured’s shoes on matters relating to the insurance outweighs the litigation privilege. (Shafer v. Berger, Kahn, Shafton, Moss, Figler, Simon & Gladstone (2003) 107 Cal.App.4th 54, 80.) Further, “[a]s the Restatement indicates, ‘[a] lawyer communicating with a nonclient on behalf of a client is not privileged to make a material misrepresentation of fact ... to the nonclient.’ (Id. at p.81, [quoting Rest.3d, Law Governing Lawyers, ; 98, p. 58.].)

Here, as to second and third causes of action for intentional and negligent infliction of emotional distress, the alleged liability is based on conduct -- not communications. (Complaint ¶ 45.) Thus, the litigation privilege is inapplicable to these claims. The fourth cause of action -- negligent misrepresentation -- is a claim that sounds in fraud. (See e.g. Daniels v. Select Portfolio Servicing, Inc. Moreover, the complaint alleges that Defendant Cutbirth is the insurance adjuster for insurer Defendant Lloyd’s and was acting as an agent of Lloyd’s. (Complaint ¶¶ 6, 10.) As noted above, the insurer and agents of the insurer cannot raise the litigation privilege as a defense to their insured’s claims of fraud. Defendant Cutbirth’s reliance on Home Ins. Co. v. Zurich Ins. Co. (2002) 96 Cal.App.4th 17 is inapplicable as in that case the claim for fraud was raised by the insurer -- not the insured. “A case is not authority for points not decided.” (Paterno v. State of California (1999) 74 Cal.App.4th 68, 88.) Thus, Defendant Cutbirth has failed to demonstrate that the Code of Civil Procedure ; 47(b) bars the instant action at the pleading stage.

Accordingly, Defendant Cutbirth’s demurrer to the entirety of the complaint on grounds of litigation privilege is OVERRULED.

Entire Action: Statute of Limitations

Defendant Cutbirth contends that the entire action is time-barred. Specifically, Defendant Cutbirth states that the action is barred by Code of Civil Procedure ; 340.6(a).

“A demurrer based on a statute of limitations will not lie where the action may be, but is not necessarily, barred. In order for the bar ... to be raised by demurrer, the defect must clearly and affirmatively appear on the face of the complaint; it is not enough that the complaint shows that the action may be barred.” (Committee for Green Foothills v. Santa Clara County Bd. of Supervisors (2010) 48 Cal.4th 32, 42, [internal citations omitted].) “The statute of limitations usually commences when a cause of action ‘accrues,’ and it is generally said that ‘an action accrues on the date of injury.’” (Vaca v. Wachovia Mortgage Corp. (2011) 198 Cal.App.4th 737, 743, [internal citations omitted].)

Code of Civil Procedure ; 340.6(a) provides that “[a]n action against an attorney for a wrongful act or omission, other than for actual fraud, arising in the performance of professional services shall be commenced within one year after the plaintiff discovers, or through the use of reasonable diligence should have discovered, the facts constituting the wrongful act or omission, or four years from the date of the wrongful act or omission, whichever occurs first.” Here, the action is not clearly barred by the statute of limitations. Code of Civil Procedure ; 340.6 is inapplicable to Plaintiff’s claims. Though the complaint alleges that Defendant Cutbirth was an attorney, the complaint repeatedly alleges that Cutbirth was also an insurance adjuster. Notably, all of the conduct alleged against Defendant Cutbirth arises out of his actions in his capacity as the insurance adjuster for Plaintiff’s claim -- not Cutbirth’s performance of any legal services as an attorney on behalf of Plaintiff. (Complaint ¶¶ 10, 44, 50.) Thus, the action is not clearly barred by the statute of limitations.

Accordingly, Defendant Cutbirth’s demurrer as to the entire action based on the statute of limitations is OVERRULED.

Second Cause of Action: Intentional Infliction of Emotional Distress

Defendant Cutbirth contends that no extreme or outrageous conduct has been alleged and that Plaintiff has not alleged sufficient severe emotional distress.

A cause of action for intentional infliction of emotional distress exists when there is “‘(1) extreme and outrageous conduct by the defendant with the intention of causing, or reckless disregard of the probability of causing, emotional distress; (2) the plaintiff’s suffering severe or extreme emotional distress; and (3) actual and proximate causation of the emotional distress by the defendant’s outrageous conduct.’ A defendant’s conduct is ‘outrageous’ when it is so ‘extreme as to exceed all bounds of that usually tolerated in a civilized community.’ And the defendant’s conduct must be ‘intended to inflict injury or engaged in with the realization that injury will result.’” (Hughes v. Pair (2009) 46 Cal.4th 1035, 1050–1051.)

“Conduct to be outrageous must be so extreme as to exceed all bounds of that usually tolerated in a civilized community.” (Davidson v. City of Westminster (1982) 32 Cal.3d 197, 209.) “[W]hether conduct is outrageous is ‘usually a question of fact’ … [however] many cases have dismissed intentional infliction of emotional distress cases on demurrer, concluding that the facts alleged do not amount to outrageous conduct as a matter of law.” (Bock v. Hansen (2014) 225 Cal.App.4th 215, 235, [internal citations omitted].) “‘Behavior may be considered outrageous if a defendant (1) abuses a relation or position that gives him power to damage the plaintiff’s interests; (2) knows the plaintiff is susceptible to injuries through mental distress; or (3) acts intentionally or unreasonably with the recognition that the acts are likely to result in illness through mental distress. . . .’” (Molko v. Holy Spirit Assn. (1988) 46 Cal.3d 1092, 1122, [superseded by statute on other grounds].)

With regard to insurance claims, multiple courts have held that certain claims are not outrageous enough to support a claim for intentional infliction of emotional distress. Refusing to accept an insured parties’ settlement demand is not extreme or outrageous conduct. (Isaacson v. California Ins. Guarantee Assn. (1988) 44 Cal.3d 775, 788–789; see also Schlauch v. Hartford Accident & Indemnity Co. (1983) 146 Cal.App.3d 926, 936 [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.) Nor is it outrageous to fail to properly investigate and process an insured’s claim. (Ricard v. Pacific Indemnity Co. (1982) 132 Cal.App.3d 886, 895.) However, it has also been found that allegations alleging “in essence, that, knowing [the plaintiff’s] susceptibility to profound mental distress, and of her repeated attempts at suicide, as a result of the incidents which caused her disability, respondents intentionally delayed payments of approved benefits vital to the support of appellant and her three children … [T]hese allegations are sufficient to state a cause of action for intentional infliction of emotional distress.” (Hernandez v. General Adjustment Bureau (1988) 199 Cal.App.3d 999, 1007.)

Here, the complaint alleges that Defendant Cutbirth’s extreme and outrageous conduct consisted of:

1. Failing and refusing to conduct a comprehensive and accurate investigation of the merits and defenses available in the Action;

2. Ignoring [Plaintiff]’s repeatedly stated desire to settle the Action thereby prioritizing its interests over those of [Plaintiff];

3. Failing and refusing to acknowledge the potential damage to [Plaintiff]’s professional reputation that would be occasioned by the confirmation of the arbitration award;

4. Failing and refusing to take all necessary steps to resolve the action including refusing to tender the limits of the respective insurance policies when they had the opportunity to do so;

5. Depriving [Plaintiff] of the benefits of the Lloyd’s Policy and the Excess Policy that he had paid for; and

6. Failing and refusing to resolve this matter thereby causing [Plaintiff] to personally pay money to Levin, in excess of the jurisdictional limit of this Court, and that the same would cause emotional distress

(Complaint ¶ 45.) These allegations of extreme and outrageous conduct all relate to Defendant Cutbirth’s failure to settle and failure to properly process and investigate Plaintiff’s claims. These allegations do not point to any affirmative conduct by Defendant Cutbirth. Nor is there any allegation that Defendant Cutbirth knew of any susceptibly to emotional distress on Plaintiff’s part. Therefore, the alleged conduct by itself is insufficient to constitute extreme and outrageous conduct.

Accordingly, Defendant Cutbirth’s demurrer as to the second cause of action is SUSTAINED. As the court is sustaining on this ground, the court does not address Defendant Cutbirth’s additional argument.

Third Cause of Action: Negligent Infliction of Emotional Distress

Defendant argues that the third cause of action fails because as the insurance adjuster assigned to Plaintiff’s claim, Cutbirth owed no legal duty to Plaintiff for Plaintiff’s negligence causes of action.

“There is no independent tort of negligent infliction of emotional distress.” (Jackson v. Mayweather Rather it is “‘the tort of negligence....’ [Citation.] ‘The traditional elements of duty, breach of duty, causation, and damages apply.’” (Eriksson v. Nunnink

As noted by the Court of Appeal in Sanchez v. Lindsey Morden Claims Services, Inc. (Sanchez v. Lindsey Morden Claims Services, Inc.

Here, Plaintiff pleads that Defendant Cutbirth is an insurance adjuster for Defendant Lloyd’s, and all of the factual allegations involving Cutbirth relate to his actions as the adjuster for Plaintiff’s claim. For the purposes of any negligence claims, Defendant Cutbirth’s mere status as the adjuster assigned to Plaintiff’s claim does not by itself give rise to a duty to Plaintiff. In opposition Plaintiff contends that “California law makes clear that Cutbirth owed Plaintiff a duty.” (Opposition p.7:17.) However, Plaintiff fails to cite any valid authority to support this contention. Plaintiff cites solely to Fletcher v. Western National Life Ins. Co. However, Fletcher did not involve any claims for negligence. The only duty mentioned in Fletcher was the implied-in-law duty of good faith -- which in Plaintiff’s complaint here is encompassed in the first cause of action of the complaint. (Id. at p.401.) Nor was any negligence claim raised in Fletcher.

Accordingly, Defendant Cutbirth’s demurrer is SUSTAINED as to the third cause of action.

Fourth Cause of Action: Negligent Misrepresentation

Defendant Cutbirth contends that this cause of action fails because the complaint fails to allege a duty.

“The elements of negligent misrepresentation are similar to intentional fraud except for the requirement of scienter; in a claim for negligent misrepresentation, the plaintiff need not allege that the defendant made an intentionally false statement, but simply one as to which he or she lacked any reasonable ground for believing the statement to be true.” (Bains v. Moores (2009) 172 Cal.App.4th 445, 454 [internal citations omitted].) “‘The elements of negligent misrepresentation are (1) a misrepresentation of a past or existing material fact, (2) made without reasonable ground for believing it to be true, (3) made with the intent to induce another's reliance on the fact misrepresented, (4) justifiable reliance on the misrepresentation, and (5) resulting damage.’ [Citation.]” (Bock v. Hansen “Causes of action for intentional and negligent misrepresentation sound in fraud[.]” (Daniels v. Select Portfolio Servicing, Inc.

Defendant Cutbirth has misconstrued the fourth cause of action. Duty is not a requirement for negligent misrepresentation as it is not a claim for negligence but rather one based on fraud. The fourth cause of action is not a claim for negligence but is rather a separate tort based in deceit. (Bily v. Arthur Young & Co. (1992) 3 Cal.4th 370, 407.) Duty is only required when there is a failure to disclose. (See e.g. Levine v. Blue Shield of Calif. (2010) 189 Cal.App.4th 1117, 1127-1135.) Here, there is an allegation of affirmative misrepresentations by Defendant Cutbirth. (Complaint ¶ 55.) Plaintiff need not allege a duty.

Defendant Cutbirth’s demurrer as to the fourth cause of action is OVERRULED.

Leave to Amend

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 plaintiff to show the court that a pleading can be amended successfully. (Goodman v. Kennedy, supra, 18 Cal.3d at p. 348; Lewis v. YouTube, LLC (2015) 244 Cal.App.4th 118, 226.)

The burden is on Plaintiff to make an offer of proof at the hearing as to how the second and third causes of action can reasonably be amended to state claims against defendant Cutbirth.

Conclusion and ORDER

Defendant Robert A. Cutbirth’s demurrer is SUSTAINED as to the second and third causes of action. Defendant’s demurrer is otherwise OVERRULED.

The burden is on Plaintiff to make an offer of proof at the hearing as to how the second and third causes of action can reasonably be amended to state claims against defendant Cutbirth.

The Moving parties are ordered to give notice and file proof of service of such.

DATED: November 5, 2020 ___________________________

Elaine Lu

Judge of the Superior Court