Case Number: 19LBCV00471 Hearing Date: February 18, 2020 Dept: S27

RELEVANT BACKGROUND

On July 30, 2019, Plaintiffs filed a complaint in this action.

On October 31, 2019, Plaintiffs filed a first amended complaint, asserting causes of action for breach of contract, breach of the duty of good faith and fair dealing, fraud and conspiracy, negligent misrepresentation, intentional infliction of emotional distress, and negligent misrepresentation.

On December 4, 2019, Defendants Specialized Claims Synergy and Jason Vogel filed an answer to the first amended complaint.

On January 27, 2020, Plaintiffs filed a Request for Dismissal, dismissing Eric Broughard, Shelley Hockett, Marlon West, Michael Miller, and Lyddy Martin Insurance from this action.

INTRODUCTION

Defendants Hagerty Insurance Agency, LLC (“Hagerty”), McKeel Hagerty, Louise Hagerty, Michelle Ayers, Christina Verschaeve, Essentia Insurance Company (“Essentia”), Markel Corporation, Alan Kirshner, Anthony Markel, Steven Markel, Richard Whitt III, and Anne Waleski (collectively “Defendants”) demur to the 1st (breach of contract), 2nd (breach of the duty of good faith and fair dealing), 3rd (fraud and conspiracy), 4th (negligent misrepresentation), and 5th (intentional infliction of emotional distress) causes of action in the first amended complaint of Plaintiffs Richard Skaggs and Roberta Skaggs (collectively “Plaintiffs”). Defendants argue Plaintiffs failed to allege sufficient facts to constitute the 1st and 2nd causes of action against Hagerty. Defendants also argue Plaintiffs failed to allege sufficient facts to constitute the 3rd, 4th, and 5th causes of action against Defendants.

STANDARD

“‘A demurrer reaches only to the contents of the pleading and such matters as may be considered under the doctrine of judicial notice’ [Citations]; The allegations of the pleading demurred to must be regarded as true [Citations]; a demurrer does not, however, admit contentions, deductions or conclusions of fact or law alleged in the pleading [Citations], or the construction placed on an instrument pleaded therein [Citation], or facts impossible in law [Citation], or allegations contrary to facts of which a court may take judicial knowledge. [Citations]” (South Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 732.)

“The following basic principle is also applicable to general demurrers, to wit: all that is necessary against a general demurrer is that upon a consideration of all the facts stated, it appears that the party whose pleading is attacked by such a demurrer is entitled to any relief at the hands of the court against his adversary, notwithstanding the facts may not be clearly stated, or may be intermingled with a statement of other facts irrelevant to the cause of action or defense shown, or although the plaintiff, in his complaint, or the defendant, in his answer, may demand relief to which he is not entitled under the facts alleged. [Citation]” (Id. at 732-733.)

ANALYSIS

Request for Judicial Notice

Defendants’ request for judicial notice is granted. However, the Court will not take judicial notice of the truth of the matters asserted within the Application for Certificate of Authority to Transact Business in Michigan, DIFS Insurance and Financial Services Search results, and Form 10-Ks. (RJN, Exhibits A-D.)

Breach of Contract (1st COA) vs. Hagerty

“The standard elements of a claim for breach of contract are ‘(1) the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) damage to plaintiff therefrom. [Citation.]’ [Citation]” (Wall Street Network, Ltd. v. New York Times Co. (2008) 164 Cal.App.4th 1171, 1178.)

Plaintiffs failed to allege sufficient facts to constitute a cause of action for breach of contract against Hagerty. Specifically, Plaintiffs did not allege the existence of an agreement with Hagerty. Plaintiffs’ breach of contract cause of action is based on an insurance contract. (FAC ¶¶25, 30-34; Exhibit 1.) Plaintiffs alleged they entered into the insurance contract with Hagerty. (FAC ¶¶25, 31; Exhibit 1.) However, the judicially noticed documents suggest Hagerty is an insurance agency, not a licensed insurer. (RJN, Exhibits A-B.) Non-insurers are not parties to an insurance contract and, therefore, cannot be held liable for breach of an insurance agreement or breach of the implied covenant of good faith and fair dealing. (See Gruenberg v. Aetna Ins. Co. (1973) 9 Cal.3d 566, 576, and Filippo Industries, Inc. v. Sun Ins. Co. (1999) 74 Cal.App.4th 1429, 1442-1443.)

In opposition, Plaintiffs argue the insurance contract attached to the first amended complaint clearly shows Hagerty as an insurer. (Opposition, pg. 8.) However, the Classic Automobile Renewal Offer (“Offer”), attached as Exhibit 1 to the first amended complaint, does not establish Hagerty is the insurer. The Offer identifies Hagerty, but clearly states the insurance is underwritten by Essentia. Plaintiffs argue the question of whether Hagerty is an insurer is ambiguous at best based on the Offer and, therefore, there is a triable issue of material fact. (Opposition, pgs. 12-13.) However, as discussed above, the Offer identifies Essentia as the underwriter. Plaintiffs did not allege facts suggesting Hagerty was, held itself out as, or acted as the insurer. Plaintiffs argue Hagerty holds itself out as an insurer in advertising. (Opposition, pgs. 8-9.) However, Plaintiffs’ argument is improperly based on matters that are outside of the first amended complaint and not the subject of a proper request for judicial notice.

Based on the foregoing, Hagerty’s demurrer to the 1st COA is sustained with 30 days leave to amend.

Breach of the Duty of Good Faith & Fair Dealing (2nd COA) vs. Hagerty

Plaintiffs failed to allege sufficient facts to constitute a cause of action for breach of the implied covenant of good faith and fair dealing against Hagerty. As discussed above, Plaintiffs did not allege the existence of an insurance agreement with Hagerty. (FAC ¶¶35-40.) (See Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 349-350 (“The covenant of good faith and fair dealing, implied by law in every contract, exists merely to prevent one contracting party from unfairly frustrating the other party’s right to receive the benefits of the agreement actually made. [Citation] The covenant thus cannot ‘‘be endowed with an existence independent of its contractual underpinnings.’’ [Citation] It cannot impose substantive duties or limits on the contracting parties beyond those incorporated in the specific terms of their agreement.”).)

Based on the foregoing, Hagerty’s demurrer to the 2nd COA is sustained with 30 days leave to amend.

Fraud and Conspiracy (3rd COA) & Negligent Misrepresentation (4th COA) vs. the Insurance Defendants (Hagerty and Essentia) and the Individual Defendants (McKeel Hagerty, Louise Hagerty, Michelle Ayers, Christina Verschaeve, Alan Kirshner, Anthony Markel, Steven Markel, Richard Whitt III, and Anne Waleski) (FAC ¶¶25, 27.)

“‘‘The elements of fraud, which gives rise to the tort action for deceit, are

(a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.’’ [Citation] The tort of negligent misrepresentation does not require scienter or intent to defraud. [Citation] It encompasses ‘[t]he assertion, as a fact, of that which is not true, by one who has no reasonable ground for believing it to be true’ [Citation], and ‘[t]he positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true’ [Citations].” (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 173-174.)

Fraud and negligent misrepresentation causes of action must be alleged with

with factual specificity. (See Charnay v. Cobert (2006) 145 Cal.App.4th 170, 185, fn. 14.) “This particularity requirement necessitates pleading facts which ‘show how, when, where, to whom, and by what means the representations were tendered.’’ [Citation]” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.) “The requirement of specificity in a fraud action against a corporation requires the plaintiff to allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. [Citations]” (Tarmann v. State Farm Mutual Automobile Insurance Company (1991) 2 Cal.App.4th 153, 157.)

Plaintiffs failed to allege sufficient facts to constitute the fraud and conspiracy and negligent misrepresentation causes of action against Hagerty, Essentia, and the Individual Defendants. (FAC ¶¶25, 27, 41-48.) Specifically, Plaintiffs did not allege the causes of action with the requisite factual specificity. Plaintiffs did not identify each alleged misrepresentation made by Hagerty and Essentia and did not allege the names of the persons who made each misrepresentation, their authority to speak, to whom they spoke, what they said or wrote, and when each misrepresentation was said or written. Plaintiffs also did not identify each alleged misrepresentation made by the Individual Defendants, and did not allege facts showing how, when, where, to whom, and by what means each misrepresentation was tendered. Plaintiffs’ conclusory allegations, including lumping all of the Individual Defendants together, are insufficient.

Based on the foregoing, Hagerty, Essentia, and the Individual Defendants’ demurrer to the 3rd and 4th COAs is sustained with 30 days leave to amend.

Intentional Infliction of Emotional Distress (5th COA) vs. Hagerty, Essentia, and the Individual Defendants

“‘[T]o state a cause of action for intentional infliction of emotional distress a plaintiff must show: (1) outrageous conduct by the defendant; (2) the defendant’s intention of causing or reckless disregard of the probability of causing emotional distress; (3) the plaintiff’s suffering severe or extreme emotional distress; and (4) actual and proximate causation of the emotional distress by the defendant’s outrageous conduct.’ [Citation] ‘Conduct, to be ‘‘outrageous’’ must be so extreme as to exceed all bounds of that usually tolerated in a civilized society.’ [Citation]”

(Huntingdon Life Sciences, Inc. v. Stop Huntingdon Animal Cruelty USA, Inc. (2005) 129 Cal.App.4th 1228, 1259.)

Plaintiffs failed to allege sufficient facts to constitute a cause of action for intentional infliction of emotional distress against Hagerty, Essentia, and the Individual Defendants. Specifically, Plaintiffs did not allege facts showing Hagerty, Essentia, and the Individual Defendants engaged in outrageous conduct – conduct so extreme as to exceed all bounds of that usually tolerated in a civilized society. Plaintiffs also did not allege facts showing Hagerty, Essentia, and the Individual Defendants intended to cause or acted with reckless disregard of the probability of causing Plaintiffs emotional distress.

Based on the foregoing, Hagerty, Essentia, and the Individual Defendants’ demurrer to the 5th COA is sustained with 30 days leave to amend.

Markel Corporation

Plaintiffs failed to allege sufficient facts to constitute a cause of action against Markel Corporation. The 1st and 2nd causes of action are asserted against Insurance Defendants, which is defined in the first amended complaint as Hagerty and Essentia. (FAC ¶24.) The 3rd, 4th, and 5th causes of action are asserted against Insurance Defendants and Individual Defendants, which is defined in the first amended complaint as McKeel Hagerty, Louise Hagerty, Michelle Ayers, Christina Verschaeve, Alan Kirshner, Anthony Markel, Steven Markel, Richard Whitt III, and Anne Waleski. (FAC ¶27.) The 6th cause of action is asserted against the Lyddy Martin Defendants, which appears to be defined as Lyddy Martin Company and Does 11 through 20. (FAC ¶25.)

Even assuming, arguendo, Plaintiffs intended to include Markel Corporation in the definition of Individual Defendants, for the reasons discussed above, Plaintiffs failed to allege sufficient facts to constitute the 3rd, 4th, and 5th causes of action.

Based on the foregoing, Markel’s demurrer to the 3rd, 4th, and 5th COAs is sustained with 30 days leave to amend.

CONCLUSION

Defendant Hagerty Insurance Agency, LLC’s demurrer to the 1st, 2nd, 3rd, 4th, and 5th causes of action in the first amended complaint is sustained with 30 days leave to amend.

Defendants McKeel Hagerty, Louise Hagerty, Michelle Ayers, Christina Verschaeve, Essentia Insurance Company, Markel Corporation, Alan Kirshner, Anthony Markel, Steven

Markel, Richard Whitt III, and Anne Waleski’s demurrer to the 3rd, 4th, and 5th causes of action in the first amended complaint is sustained with 30 days leave to amend.