2017-00215110-CU-PN

916 Poker Depot, Inc. vs. Jan Michael Marroquin

Nature of Proceeding: Hearing on Demurrer

Filed By: Berumen, Beatriz

*** If oral argument is requested, the parties must at the time oral argument is requested notify the clerk and opposing counsel of the causes of action that will be addressed at the hearing. Counsel are also reminded that pursuant to local court rules, only limited oral argument is permitted on law and motion matters.

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Defendants’ demurrer to the complaint is OVERRULED, as follows.

Although the notice of demurrer provided notice of the court’s tentative ruling system as required by Local Rule 1.06(D), the notice does not comply with that rule. Moving counsel is directed to review the Local Rules, effective 1/1/2018.

Plaintiff’s counsel failed to comply with CRC Rule 2.111(3) and Rule 3.1110(b)(3)-(4).

Factual Background

According to the complaint, plaintiff is a Folsom-based the manufacturer of various products for use in casinos while defendant Marroquin (“Mike”) is a “sales agent” with defendant Blue-Grace Logistics, LLC (“LLC”). The complaint asserts that plaintiff had a long-term business relationship with Mike, with the latter providing “all of [plaintiff’s] transportation insurance needs.” In 2016 plaintiff manufactured gaming chips for a customer in Oklahoma but during shipment, some were damaged and others were “lost.” The customer rejected the shipment and returned it to plaintiff, causing the later to suffer a loss of the $14,345 manufacturing cost. Plaintiff also claims two podiums were damaged during shipment.

Plaintiff subsequently filed two claims with defendants for the damaged/lost chips and the damaged podiums. With respect to the latter, plaintiff sought reimbursement of $3,900 for the two podiums plus the shipping costs of $811 but defendants issued a check for only $3,443, which is $1,267 less than the amount claimed by plaintiff. Plaintiff submitted a claim of $14,700 for the chips, representing the $14,345 manufacturing cost plus the shipping costs, but defendants paid on $10,000 on this claim.

The complaint purports to assert four causes of action. The first is labeled “Professional Negligence” and it alleges that defendants held themselves out as skilled insurance brokers, plaintiff relied on their expertise but defendants failed to exercise reasonable case in that they misrepresented the coverage obtained for plaintiff, failed to obtain the coverage requested by plaintiff, failed to “acquire the best terms available for the policy coverages,” failed to provide plaintiff with a copy of the insurance policy, failed to adequately explain the coverage and advise plaintiff the coverage might be

inadequate, and/or charged plaintiff more than the actual premium for the coverage obtained.

The second cause of action is identified as breach of oral contract (although it appears to be in part based on the implied covenant of good faith and fair dealing) and it asserts that the variety of conduct described in the preceding paragraph constituted a breach of the parties’ oral contract.

The third cause of action is for negligent misrepresentation and in short, it alleges that “Defendants negligently represented to [plaintiff] that they had procured the coverage requested by [plaintiff].”

The final cause of action is labeled as breach of fiduciary duty and it is substantively identical to the first for professional negligence.

Moving Papers. Defendants now demur to all causes of action on the ground that plaintiff’s state law claims are preempted by the Carmack Amendment to the Interstate Commerce Act (“ICA”), which controls all claims arising from the losses and damages suffered in the course of interstate shipping even when couched in terms of breach of contract or fraud. The moving papers also describe LLC as “a broker of motor freight services” throughout the country, while Mike is one of the many motor carriers with whom LLC contracts to provide delivery services.

Opposition. Plaintiff opposes, essentially arguing that this action is not one for the damages suffered as a result of the damaged chips and podiums but rather one against an insurance company and its broker for the losses incurred by plaintiff as a result of defendants’ repeated breaches of their duty of care and their contract with plaintiff as well as their misrepresentations over the course of the parties’ long-term relationship. As support for this assertion, plaintiff contends the two incidents alleged in the complaint are mere examples of defendants’ long-term wrongdoing for which plaintiff now seeks compensation. Thus, according to the opposition, the Carmack Amendment is inapplicable to the facts of this case but regardless, neither defendant is either a “motor carrier” or “freight forwarder” within the meaning of the Carmack Amendment.

Reply. According to the reply, the opposition attempts to re-characterize the plain allegations of the complaint which by its own terms focuses on two particular losses suffered by plaintiff during interstate shipping and does not cite these as mere examples of ongoing wrongdoing by defendants. The reply also points out that the defendants here are, contrary to the opposition’s suggestion, not an insurance company and a broker and the “policies” described in the complaint are actually bills of lading, not insurance policies.

Analysis

Since the court’s consideration on this demurrer is limited to those facts alleged in the complaint and those for which judicial notice is requested and granted, defendants’ demurrer must be overruled. While defendants insist that (1) LLC is “a broker of motor freight services,” (2) Mike is a motor carrier who provides delivery services for LLC and

(3) plaintiff’s claims against both are preempted by the Carmack Amendment to the ICA, the complaint in this case specifically alleges that Mike obtained on behalf of plaintiff at least two insurance policies from LLC to cover any damage which occurred

to products plaintiff was shipping. These factual allegations must be accepted as true for purposes of this demurrer regardless of whether plaintiff may ultimately prove such allegations and since the moving papers have not offered any legal authority for the proposition that the claims for losses alleged to have not been covered by an insurance policy obtained for products being shipped are also encompassed by the Carmack Amendment, the demurrer is this case will be overruled.

Defendants’ suggestion that plaintiff’s mischaracterization of the defendants as an insurer and its broker may support the imposition of sanctions under Code of Civil Procedure §128.7 does not, without more, alter the outcome of this demurrer.

However, defendants remain free to pursue such sanctions if they maintain they are appropriate in this case.

Conclusion

For the reasons explained above, defendants’ demurrer is overruled.

If not already done, defendants may file and serve their answer to complaint no later than 3/26/2018.