Case Name: Giuliani Construction and Restoration, Inc. v. Simoncini & Associates et al.
Case No: 17CV316089

This case arises from an alleged failure to pay on a construction contract and a subsequent dispute regarding the denial of an insurance claim.

The action was initiated by Giuliani Construction and Restoration, Inc. (“Giuliani”) by filing a Complaint against Simoncini & Associates, Kenneth Simoncini, and Nanette Ludec (collectively “Simoncini”) for breach of contract. According to the allegations of the Complaint, Simoncini’s property located at 1694 The Alameda, San Jose, California (the “Property”) suffered a “water loss” resulting in damage. Simoncini hired Giuliani to repair the damage. Giuliani performed the work contracted for but Simoncini did not pay it in full. Guiliani therefore sued Simoncini for breach of contract, among other things.

In turn, Simoncini filed a cross-complaint against Deans & Homer, DH Adjusting, LLC (“DH Adjusting”), and Greenwich Insurance Company for failure to pay its insurance claim associated with Giuliani. According to the allegations of the operative Amended Cross-Complaint (“ACC”), after the Property was damaged by the water loss, Simoncini submitted an insurance claim to Deans & Homer, which assigned the matter to DH Adjusting. DH Adjusting recommended that Giuliani perform repairs on the Property. Simoncini accepted and Giuliani began construction. Later, however, Giuliani walked off the project due to its inability to complete the necessary work. After abandoning the project, Giuliani issued Simoncini an invoice reflecting the project was fully completed even though it was not. Although Deans & Homer issued several checks to Simoncini to pay Giuliani for its work and cover other losses, the issues with Giuliani were never fully resolved by Deans & Homer.

Simoncini later received notice that Giuliani had filed the Complaint against it. In response, Simoncini tendered defense and indemnity of the Complaint to Deans & Homer, which was denied. In early 2018, Simoncini contacted Deans & Homer to resolve the matter with Giuliani. In response, Deans & Homer issued further payment to Simoncini, and Simoncini attempted to settle the matter with Giuliani. Giuliani, however, declined tender of the payment.

Simoncini asserts the following six causes of action: (1) Indemnity, (2) Comparative Indemnity, (3) Declaratory Relief, (4) Breach of Contract, (5) Breach of the Implied Covenant of Good Faith and Fair Dealing, and (6) Unfair Business Practices.

Deans & Homer presently demurs to all cause of action. Simoncini opposes the demurrer.

I. Procedural Issues

As a preliminary matter, Simoncini complains in opposition that Deans & Homer failed to meet and confer prior to bringing the demurrer.

Code of Civil Procedure section 430.41 states, “Before filing a demurrer pursuant to this chapter, the demurring party shall meet and confer in person or by telephone with the party who filed the pleading that is subject to demurrer” to attempt to resolve the matter. (Code Civ. Proc., § 430.41 subd. (a).) If the matter cannot be resolved, the demurring party shall file and serve a declaration stating either (1) the means by which the parties met and conferred and that they did not reach an agreement, or (2) the party who filed the subject pleading failed to respond to the meet and confer request or otherwise failed to meet and confer in good faith. (Code Civ. Proc., § 430.41 subd. (a)(3).)

Here, Deans & Homer filed a declaration stating it complied with the meet-and-confer requirement. In opposition, however, Simoncini insists that Deans & Homer never contacted him to discuss the objections raised by the demurrer, and instead only contacted him regarding extensions of time and possible resolution of the case. Indeed, there is no evidence Deans & Homer specifically contacted Simoncini to discuss its objections to the ACC. With that said, the Court may not overrule a demurrer on that basis. (Code Civ. Proc., § 430.41 subd. (a)(4).) As such, the Court will reach the merits of the demurrer. Deans & Homer is expected to fully comply with section 430.41 in the future.

II. Merits of Demurrer

Deans & Homer demurs to the first, second, third, fourth, fifth and sixth causes of action of the Cross-Complaint, on the ground of uncertainty. (See Code Civ. Proc., § 430.10, subd. (f).) In addition, it demurs on the fifth cause of action on the ground of failure to state sufficient facts to constitute a cause of action. (See Code Civ. Proc., § 430.10, subd. (e).)

As a threshold matter, the Court observes that Deans & Homer’s memorandum addresses an issue that does not correspond with the grounds stated in the demurrer. Deans & Homer’s discussion contains sections specifically addressing its demurrer to each cause of action on the ground of uncertainty as well as the demurrer to the fifth cause of action on the ground of failure to state sufficient facts. But Deans & Homer’s memorandum includes an additional discussion section, particularly Section V, wherein it argues Simoncini is precluded from maintaining any cause of action against it as a disclosed agent. This argument, in essence, challenges whether any cause of action has been stated. Deans & Homer, however, did not specify that it is demurring to the first, second, third, fourth or sixth causes of action on the ground of failure to state a cause of action. Although it does demur to the fifth cause of action on that ground, it identified an entirely different basis for the same in the demurrer itself. The Court therefore disregards the argument asserted in Section V of Deans & Homer’s memorandum. (See Code Civ. Proc., § 430.60 [demurrer that does not distinctly specify grounds may be disregarded].)

A. Uncertainty Re: First Through Sixth Causes of Action

Deans & Homer’s demurrer to each cause of action on the ground of uncertainty reflects an apparent misunderstanding of the nature of a demurrer on this basis. Indeed, it does not even include any law reciting the standards for a demurrer for uncertainty in its supporting memorandum.

Demurrers for uncertainty are disfavored and will be sustained only where the pleading is so unintelligible the defendant cannot reasonably respond, i.e., the party cannot reasonably determine what issues must be admitted or denied, or what counts or claims are directed against it. (Khoury v. Maly’s of Calif., Inc. (1993) 14 Cal.App.4th 612, 616.) “A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures.” (Ibid.; see also Beechnut Nutrition Corp. (1986) 185 Cal.App.3d 135, 139 fn. 2.) “[S]pecial demurrer for uncertainty is not intended to reach the failure to incorporate sufficient facts in the pleading, but is directed at the uncertainty existing in the allegations actually made.” (Butler v. Sequira (1950 100 Cal.App.2d 143, 145-146.) Therefore, a demurer for uncertainty “should not be sustained if the allegations are sufficiently clear to apprise the defendant of the issues that must be met, even if the allegations of the complaint may not be clear and as detailed as might be desired.” (Merlino v. West Coast Macaroni Mfg. Co. (1956) 90 Cal.App.2d 106, 108.)

Deans & Homer does not argue Simoncini’s claims are uncertain under applicable standards; rather, it contends in primary part that Simoncini failed to incorporate sufficient facts to state any viable claim. For example, with respect to the contract claims, Deans & Homer complains that Simoncini does not allege an agreement between the parties. That issue pertains to whether a cause of action has been stated (see, e.g., Jones v. Aetna Casualty & Surety Co. (1994) 26 Cal.App.4th 1717, 1722), not whether the pleading is so unintelligible it cannot reasonably respond. As another example, Deans & Homer argues relative to the third cause of action for declaratory relief that Simonicini “do[es] not set forth facts showing the existence of an actual controversy. (Simoncini Memo. Pts. & Auth., p. 5:27-28.) This argument, too, goes to the issue of whether a cause of action has been stated and is essentially framed as such by Deans & Homer. (See, e.g., D. Cummins Corp. v. United States Fidelity & Guaranty Co. (2016) 246 Cal.App.4th 1484, 1488.) These examples are illustrative of the nature of the arguments advanced relative to each cause of action. As indicated above, a demurrer for uncertainty is not intended to reach the failure to incorporate sufficient facts. Here, there is no basis for concluding the claims against Deans & Homer are fatally uncertain. Any uncertainties that may exist can be handled in the discovery process.

For these reasons, the demurrer to the first through sixth causes of action on the ground of uncertainty is OVERRULED.

B. Failure to State Sufficient Facts Re: Fifth Cause of Action

The fifth cause of action for breach of the implied covenant of good faith and fair dealing alleges the cross-defendants, including Deans & Homer, mishandled its insurance claim for a myriad of reasons.

“ ‘It is well settled that, in California, the law implies in every contract a covenant of good faith and fair dealing. [Citations.] Broadly stated, that covenant requires that neither party do anything which will deprive the other of the benefits of the agreement.’ [Citations.]” (Edmond’s of Fresno v. MacDonald Group, Ltd. (1985) 171 Cal.App.3d 598, 605.) “[T]he duty of good faith and fair dealing derives from and exists solely because of the contractual relationship between the parties. [Citations.] Thus, one who is not a party to the underlying contract may not be held liable for breach of an implied covenant of good faith and fair dealing for as to him no such implied covenant exists.” (Austero v. National Cas. Co. (1976) 62 Cal.App.3d 511, 515.)
Deans & Homer argues the fifth cause of action is improper if Simoncini is suing it as an insurance adjuster because of the absence of a contractual relationship. In support, it relies solely on Henry v. Associated Indemnity Corp. (1990) 217 Cal.App.3d 1405. In that case, the Court of Appeal held that an insurance adjuster cannot be sued by an insured for breach of the covenant of good faith and fair dealing because there is no direct contractual relationship between the adjuster and the insured. (Henry v. Associated Indemnity Corp. (1990) 217 Cal.App.3d 1405, 1416-1417 (Henry).)

As such, for Deans & Homer’s argument to be successful, Simoncini must be suing it as an insurance adjuster rather than another capacity. There is no indication in the pleading, however, that Simoncini is suing Deans & Homer as an adjuster. In fact, Simoncini explicitly characterizes Deans & Homer as an insurance managing underwriter. (Compl., p. 3:16, 20, 24.) An insurance adjuster differs significantly from an underwriter. Generally, insurance adjusters evaluate and resolve insurance claims.(39 Cal. Jur. 3d Insurance Adjusters § 1.) Underwriters, on the other hand, commonly control risk for the insurance company by evaluating applicants and determining whether the provider should issue policies. (Smith v. State Farm Mutual Automobile Ins. Co. (2001) 93 Cal.App.4th 700, 726 [“ ‘Underwriting’ is a label commonly applied to the process, fundamental to the concept of insurance, of deciding which risks to insure and which to reject in order to spread losses over risks in an economically feasible way.”].) Since Henry specifically dealt with insurance adjusters, not underwriters, there is no basis for concluding Plaintiff’s claim for breach of the implied covenant is barred.

Therefore, the demurrer to the fifth cause of action on the ground of failure to state facts sufficient to constitute a cause of action is OVERRULED.