2013-00669547
TENTAIVE RULING:

The second amended complaint seeks damages for the inability of the plaintiff to build a 2 two story residence in an area that may have been restricted by the CC&Rs in the community.

There are 2 causes of action alleged against First American Title Insurance Company (Insurance Co.) and First American Title Company (Agent of the Insurance Co. or FATCO) for 1. Breach of Contract and 2. Professional Negligence.

The Breach of Contract claim alleges that an oral contract was offered and accepted to issue an endorsement to included additional coverage against violations of the CC&R on the completed project. Even though the contract was written and contains an integration clause, the plaintiff alleges that the parol evidence rule and equitable estoppel permits the creation of an enforceable contract including the additional endorsement.

The problem with the first cause of action is that there are not sufficient allegations to support the creation of an enforceable contract. While it is possible that an oral contract may be formed, the facts that are included and/or omitted fail to provide sufficient basis to state a cause of action in these circumstances. The defendant offers to provide a verbatim transcript of the conversation that created the alleged agreement. The terms as included in the second amended complaint are incomplete.

Additionally, defendants argue that oral contracts of insurance must be definite and certain and the parties must agree on all the essential terms. Apparel Mfrs’ Supply co. v. National Auto &Cas. Ins (1961) 189 CA 2d 443, 449.

The parties seem to agree that the allegations of the offer and acceptance in the pleading are uncertain. The alleged offer by Goldman did not identify which endorsement would be issued. It did not specify terms and conditions. There was no agreement as to the premium alleged in the pleading. The acceptance of the offer is on information and belief and not on actual knowledge. Matters within plaintiff’s knowledge cannot be alleged to be on information and belief. Thompson v. Sutton (1942) 50 CA 2d 272, 279

Further, the moving party points out that the endorsement referred to contains blanks in the form that require that the insurer to review the plans and compare them to the recorded CC&Rs. An insurer may refuse to insure. Just because the endorsement was referred to as being accepted, there were additional requirements that were never completed to include the protection from CC&R violations. This could make pleading of definite contract terms insurmountable.

The moving party makes a compelling argument that the alleged oral agreement was merely an agreement to agree since important items were left for future determination. This demurrer is sustained because the pleadings are insufficient to allege the creation of an oral contract for insurance.

The demurrer to this First Cause of Action is sustained. 20 days leave to amend to provide additional facts to the First Cause of Action is granted.

The Second cause of action seeks to state a claim for professional negligence against First American Title Company as the agent, for failure to provide the requested coverage. The moving papers argue that an agent as an underwriting company cannot issue any policies. While that may be true, the complaint does contain proper agency allegations between the defendants. Para 9.

However, the Defendant also argues that there is no duty to provide coverage. The pleading alleges in conclusory nature that a duty to provide the subject addendum exists. However, the same facts needed to support the creation of an oral contract must be pled to establish the duty of the agent to provide that same coverage.

The demurrer to this Second Cause of Action is sustained. 20 days leave to amend to provide additional facts to the Second Cause of Action is granted.