Bagdasarian Insurance Group et al vs E&J Gallo Winery
Case No: 15CV03781
Hearing Date: Wed May 30, 2018 9:30

Nature of Proceedings: Motion: Judgment on the Pleadings; Trial Confirmation

TENTATIVE RULING:

The Motion for Judgment on the Pleadings does not comply with the pre-filing requirements of Code of Civil Procedure section 439, which expresses the Legislature’s clear preference that parties meet and confer regarding such motions before they are filed. The Court nonetheless has elected to treat it as a nonstatutory motion despite doubts that the nonstatutory motion survives the recent adoption of section 439.

The Court denies the Motion.

Background:

On October 29, 2015, plaintiffs Bagdasarian Insurance Group and Christopher Bagdasarian filed their original complaint in this action against defendant E. & J. Gallo Winery (Gallo).

Following multiple demurrers, plaintiffs filed their operative pleading, their third amended complaint on June 22, 2016.

On September 20, 2016, Gallo filed its answer to the third amended complaint. Gallo concurrently filed its cross-complaint against cross-defendants Bagdasarian Insurance Group, Christopher Bagdasarian, and Michael Bagdasarian. (Note: Bagdasarian Insurance Group and Christopher Bagdasarian, in their capacity as plaintiffs, are represented by separate counsel from joint counsel for all cross-defendants. Michael Bagdasarian is only a cross-defendant and not a plaintiff.)

On December 9, 2016, cross-defendants filed their answer to Gallo’s cross-complaint.

At a case management conference held on March 1, 2017, the court originally set trial for November 1, 2017.

On August 30, 2017, the court granted cross-defendants’ motion to continue trial to February 7, 2018.

On January 12, 2018, the court granted cross-defendants’ motion to continue trial, continuing trial to April 30, 2018. The Court was unavailable on that date, and a new date was set.

On March 19, 2018, cross-defendants filed this motion for judgment on the pleadings as to the causes of action of Gallo’s cross-complaint.

The motion is opposed by Gallo.

Analysis:

“A party may move for judgment on the pleadings.” (Code Civ. Proc., § 438, subd. (b)(1).) “The motion provided for in this section may only be made on one of the following grounds: [¶] … [¶] (B) If the moving party is a defendant, that either of the following conditions exist: [¶] … [¶] (ii) The complaint does not state facts sufficient to constitute a cause of action against that defendant.” (Code Civ. Proc., § 438, subd. (c)(1)(B)(ii).) “The motion provided for in this section may be made as to either of the following: [¶] (A) The entire complaint or cross-complaint or as to any of the causes of action stated therein.” (Code Civ. Proc., § 438, subd. (c)(2)(A).)

1. First Cause of Action for Professional Negligence.

“The elements of a cause of action in tort for professional negligence are: (1) the duty of the professional to use such skill, prudence and diligence as other members of his profession commonly possess and exercise; (2) a breach of that duty; (3) a proximate causal connection between the negligent conduct and the resulting injury; and (4) actual loss or damage resulting from the professional’s negligence.” (Turpin v. Sortini (1982) 31 Cal. 3d 220, 229–30.)

BIG asserts that an insurance broker owes only a limited duty, owes that duty only to its client, the insured, and the duty is limited to procuring insurance. But an insurance broker breaches its duty to clients to procure the requested insurance policy if “(a) the [broker] misrepresents the nature, extent or scope of the coverage being offered or provided … , (b) there is a request or inquiry by the insured for a particular type or extent of coverage … , or (c) the [broker] assumes an additional duty by either express agreement or by ‘holding himself out’ as having expertise in a given field of insurance being sought by the insured.” (Pac. Rim Mech. Contractors, Inc. v. Aon Risk Ins. Servs. W., Inc. (2012) 203 Cal. App. 4th 1278, 1283.)

Here, Gallo alleges that it expressed its objectives and needs with respect to the type of policy it desired to BIG, and BIG misrepresented the policy it recommended. There was a request for a particular type of policy – “a life insurance program and products that resulted in equitable distribution based on salary, rather than age.” Gallo alleges the policies it purchased based on BIG’s representations were inappropriate and overpriced. Accepting the allegations as true, which the Court must, Gallo has sufficiently pled the elements of a professional negligence cause of action.

BIG also argues that since Gallo sought life insurance products for its executives and merely paid for them, Gallo was not its client. But the question of whether a duty is owed to a nonclient requires analysis of many factors. See, e.g., Osornio v. Weingarten (2004) 124 Cal. App. 4th 304, 330–31: “[i]n the cases finding duties owed to nonclients, the nonclients were the intended beneficiaries of the attorney’s work or were relying on that work or were to be influenced by it (and the attorney knew or should have known this). . . In balancing the factors to resolve the question of duty, “[t]he predominant inquiry … is whether the principal purpose of the attorney’s retention [was] to provide legal services for the benefit of the plaintiff.” Here, it can be argued that the principal purpose of BIG’s retention was to provide services for the benefit of Gallo, i.e., to allow Gallo to offer a benefit to its executives, thereby allowing it to attract and retain qualified employees. Certainly Gallo was relying on BIG’s work and BIG knew or should have known this.

2. Fraudulent Deceit, Aiding and Abetting Fraudulent Deceit, and Negligent Misrepresentation.

Although many of the alleged misrepresentations alleged in the Cross-Complaint are either not actionable or do not appear to have caused damages, others do. For example, Gallo alleges that BIG stated “at the time of transition from Sun Life to Pacific Life that they had checked with other companies to find the best options, and that Pacific Life was 30%-50% cheaper than comparable options provided by other insurance companies, when the Pacific Life option was not cheaper than comparable options provided by other insurance companies.” If true, the statement would constitute a false representation that BIG knew (intentional) or should have known (negligent) was false. Gallo further alleges that it reasonably relied on this statement and as a result “suffered substantial monetary damages.” Gallo therefore states the elements of causes of action for fraudulent deceit and negligent misrepresentation. Since BIG’s challenge to the cause of action for aiding and abetting fraudulent deceit was based solely on a failure to state facts sufficient to constitute a cause of action for fraudulent deceit, the Court finds that Gallo has stated a cause of action for aiding and abetting.