Case Number: BC534983 Hearing Date: July 02, 2014 Dept: 34

Moving Party: Defendants William H. Gaines Jr. and W.H. Gaines Company (“defendants”)

Resp. Party: Plaintiffs John P. McNicholas and Diana S. McNicholas (“plaintiffs”)

Defendants’ demurrer to the second cause of action in plaintiffs’ first amended complaint is SUSTAINED, with leave to amend.

PRELIMINARY COMMENTS:

The Court is not sure why the parties were unable to meet and confer in order to obviate the need for this demurrer. Defendants demur to the second cause of action for elder abuse. Plaintiffs admit that the “second cause of action . . . is not eloquently drafted and if the court were to surmise that it was played in haste, the court would be correct.” (Opp., p. 1:23-27.) Plaintiffs then indicate how they would amend the second cause of action if (when) the demurrer is sustained. In effect, Plaintiffs “opposition” is basically an admission that the Court should sustain the demurrer to the second cause of action.

Given these admissions, the court is at a loss to understand why plaintiffs’ counsel did not call defendants’ counsel and stipulate to the filing of a second amended complaint. Such professional cooperation on the part of both counsel would have saved this court several hours of time analyzing a demurrer that need not have been filed.

BACKGROUND:

Plaintiffs commenced this action on 1/31/14 against defendants for professional negligence. On 3/14/14, plaintiffs filed a first amended complaint (“FAC”) against defendants for professional negligence and elder abuse. Plaintiffs allege that defendants sold a life insurance policy to plaintiffs insuring John P. McNicholas’s life for $2,000,000.00. (FAC ¶ 5.) Plaintiffs allege that they reasonably relied on defendants to identify and procure the correct type of life insurance. (Id., ¶ 6.) In 2008, defendants sold plaintiff a new life insurance policy for $4,000,000.00 by, in part, “settling” the previous policy. (Id., ¶¶ 9-10.) As part of the settlement of the previous policy, defendants hired and had plaintiffs apply to Credit Suisse Life Settlements, Inc. (Id., ¶ 10.) Plaintiffs allege that Credit Suisse paid Leisure, Werden and Terry Agency a commission of $10,000.00 from the previous policy face value. (Id., ¶ 12.) Plaintiffs did not know that the sale price to settle the previous policy included the commission. (Id., ¶ 13.) Plaintiffs paid the premiums on the new policy until it was unexpectedly and unilaterally canceled on 7/10/13. (Id., ¶ 14.) Defendants told plaintiff that this was a mistake that he would correct. (Id., ¶ 15.) Defendants have not corrected the mistake and plaintiffs lost the settlement value of the previous policy and remain uninsured. (Id., ¶ 16.)

ANALYSIS:

Defendants demur to the second cause of action for elder abuse on the ground that plaintiffs fail to allege sufficient facts. As indicated in the above Preliminary Comments, Plaintiffs basically admit that the demurrer should be sustained.

Welfare & Institutions Code section 15610.30(a) provides in part

(a) “Financial abuse” of an elder or dependent adult occurs when a person or entity does any of the following: [¶] (1) Takes, secretes, appropriates, or retains real or personal property of an elder … to a wrongful use or with intent to defraud, or both. [¶] (2) Assists in taking, secreting, appropriating, or retaining real or personal property of an elder … to a wrongful use or with intent to defraud, or both.

(Welf & Inst. Code, § 15610.30(a).) ” ‘Elder’ means any person residing in this state, 65 years of age or older.” (Welf. & Inst. Code, § 15610.27.) “A person or entity shall be deemed to have taken, secreted, appropriated, obtained, or retained property for a wrongful use if, among other things, the person or entity takes, secretes, appropriates, obtains, or retains the property and the person or entity knew or should have known that this conduct is likely to be harmful to the elder or dependent adult.” (Welf. & Inst. Code, § 15610.30(b). “For purposes of this section, a person or entity takes, secretes, appropriates, obtains, or retains real or personal property when an elder or dependent adult is deprived of any property right, including by means of an agreement, donative transfer, or testamentary bequest, regardless of whether the property is held directly or by a representative of an elder or dependent adult.” (Welf. & Inst. Code, § 15610.30(c).) Because the second cause of action is based on statute, it must be pleaded with particularity. (See Covenant Care Inc. v. Superior Court (2004) 32 Cal.4th 771, 790.)

Plaintiffs allege that at the time of the misconduct John McNicholas was 72 years old. (FAC ¶ 20.) Plaintiffs allege that defendants’ misconduct caused plaintiff’s property to misappropriate, and that plaintiffs lost the bargained for $4,000,000.00 life insurance policy. (Id., ¶¶ 21-22.) Plaintiffs allege that defendants sold plaintiffs a new policy with non-party John Hancock Life Insurance Co. by settling the previous policy. (Id., ¶ 9.) Plaintiffs allege that the sales price to settle the previous policy was $530,000.00 instead of $540,000.00 because a $10,000.00 commission was paid to non-party Leisure, Werden and Terry Agency, and that defendants kept this information from plaintiffs. (Id., ¶¶ 12-13.) Plaintiffs allege that John Hancock “suddenly and unexpectedly unilaterally” canceled the new policy. (Id., ¶ 14.) Plaintiffs allege that defendants attempted to, but failed to correct the mistake that caused the cancellation. (Id., ¶¶ 15-16.) Plaintiffs fail to allege facts which show that defendants caused John Hancock to cancel the policy. Plaintiffs’ assertion that it was caused by some unidentified “mistake” is not sufficient to show that defendants assisted in the taking, etc., of plaintiffs’ property.

Accordingly, defendants’ demurrer to the second cause of action in plaintiffs’ first amended complaint is SUSTAINED, with leave to amend.