Case Number: BC522729 Hearing Date: May 02, 2014 Dept: 58

JUDGE ROLF TREU
DEPARTMENT 58
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Hearing Date: Friday, May 2, 2014
Calendar No: 5
Case Name: West L.A. Grill & Cafe v. LIG Insurance Company, Ltd.
Case No.: BC522729
Motion: Motion to Strike
Moving Party: Defendant LIG Insurance Company, Ltd. dba Leading Insurance Company
Responding Party: Plaintiff West L.A. Grill & Cafe
Notice: OK

Tentative Ruling: Motion to strike is denied. Defendant to answer within 10 days.
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Background –
On 9/26/13, Plaintiff West L.A. Grill & Cafe filed this action against Defendant LIG Insurance Company, Ltd. dba Leading Insurance Company arising out of the alleged failure to pay on a insurance contract for fire damages to Plaintiff’s business. On 1/28/14, in response but prior to the hearing on Defendant’s demurrer and motion to strike, Plaintiff filed a First Amended Complaint which asserts causes of action for (1) breach of contract and (2) breach of obligation of good faith.

Trial is set for 11/3/14; FSC for 10/9/14.

Motion to Strike –
Defendant moves to strike Plaintiff’s claim for punitive damages on the ground that Plaintiff fails to allege facts to support punitive damages based on oppression, fraud, or malice. Civil Code § 3294(a).

1. Factual Allegations of the FAC
Plaintiff alleges that on 12/24/12, it suffered a fire in the rear section of the dining room that was unconnected with the kitchen. ¶ 2. Plaintiff submitted to an examination under oath on 4/23/13 (¶ 4), and on 7/25/13, Defendant denied Plaintiff’s claim on the basis that kitchen equipment was not “UL-300 compliant” (¶ 7).

Defendant’s denial letter raised grounds as to noncompliant conditions of the kitchen which Plaintiff disputed. Defendant asserted that a pizza oven required fire suppression nozzles but Plaintiff explained that this is not required for a closed pizza oven. ¶¶ 9-10. Defendant asserted that the fire suppression nozzles were not angled correctly but Plaintiff explained they were of the swiveling type and were angled correctly at the time of the fire. ¶ 11. Defendant asserted that a “salamander” over a flat grill did not have a hood but Plaintiff explained that it was not functioning (¶¶ 12-13): Plaintiff noted that the landlord’s insurer had subsequently requested only a barrier be placed between the fryer and stovetops (¶ 14) and a fire suppression service company had subsequently only required replacement of a particular capsule (¶ 15). Defendant asserted that a stovetop did not have a hood but Plaintiff explained that this stovetop was not functioning and had never been used. ¶ 16. Defendant asserted that no changes were made as required by the landlord’s insurer which Plaintiff disputed and noted that the building was insured. ¶¶ 18-19.

Plaintiff submitted proof that the kitchen’s fire suppression system was UL-300 compliant (¶¶ 21-22) and that the seller of the restaurant had informed Plaintiff that the restaurant had been upgraded even though the seller could not provide documents or recall what work was performed (¶ 23).

2. Merits
Defendant correctly notes that bad faith alone is insufficient to support an award of punitive damages. See, e.g., Tomaselli v. Transamerica Ins. Co. (1994) 25 Cal.App.4th 1269, 1288 (finding sufficient evidence to support bad faith claims but no evidence to support punitive damages). Plaintiff’s facts do not reveal an undisputed valid insurance claim at the pleading stage. See, e.g., Richardson v. Employers Liability Assur. Corp. (1972) 25 Cal.App.3d 232, 239 (disapproved of on other grounds in Gruenberg v. Aetna Ins. Co. (1973) 9 Cal.3d 566, 580 n.10).

However, Plaintiff’s allegations support Defendant’s failure to investigate (see Tibbs v. Great American Ins. Co. (9th Cir. 1985) 755 F.2d 1370, 1375) or to take any meaningful action to reassess denial of Plaintiff’s claim (see Shade Foods, Inc. v. Innovative Product Sales & Marketing, Inc. (2000) 78 Cal.App.4th 847, 892). Notably, Plaintiff alleges that the fire was unconnected with Plaintiff’s kitchen and Defendant’s denial appears to be based solely on conditions of the kitchen, which Plaintiff disputed and explained.

At the pleading stage, Plaintiff’s allegations are sufficient to support malice or oppression. See College Hospital Inc. v. Superior Court (1994) 8 Cal.4th 704, 725 (malice); Civil Code § 3294(c)(2) (oppression); Mock v. Michigan Millers Mutual Ins. Co. (1992) 4 Cal.App.4th 306, 331 (despicable conduct). To the extent Defendant raises the genuine dispute doctrine (see, e.g., Chateau Chamberay Homeowners Ass’n v. Associated Int’l Ins. Co. (2001) 90 Cal.App.4th 335, 347), this issue is not properly resolved at the pleading stage.

Therefore, the motion to strike is denied.