Case Number: BC476114    Hearing Date: October 31, 2014    Dept: 46

Case Number: BC476114
PROFESSIONAL UNDERWRITING GROUP INC VS MICHAEL FELDMAN INSUR
Filing Date: 12/29/2011
Case Type: Other Contract (General Jurisdiction)

10/31/2014
Hearing on Demurrer To Third Amended X-C

¿ This tentative ruling is posted at 2:05 p.m. on 10/30/2014 and the matter is set for hearing on 10/31/2014 at 8:30 a.m. / If there are no parties other than Plaintiff/Petitioner, then Plaintiff/Petitioner may submit to the tentative without appearance by telephonic notification to the clerk of Dept. 46 between 8:00 a.m. and 4:30 p.m. on a date prior to the hearing or morning prior to the hearing by calling (213) 974-5665, and the court will issue the tentative ruling as the final ruling. If the other parties have appeared in the action, then the parties must first confer and all agree that the tentative ruling will be the final ruling on the matter. If the parties to the matter before the court all agree, a representative of the parties may call the clerk and submit without an appearance, and the court will issue the tentative ruling as the final ruling. If an order is required, it should be lodged directly in Dept. 46 with a copy to adverse/other parties, if any.

TENTATIVE RULING: Plaintiff/Cross-Defendant Professional Underwriting Group, Inc. dba PUG Insurance Agency’s [“P/X-D”] Demurrer to Michael Feldman Insurance Services, Inc.’s [“MFIS”] Third Amended Cross-Complaint [“TACC”] is OVERRULED.

As a preliminary matter, Plaintiff/Cross-Defendant’s Request for Judicial Notice is GRANTED.

On 7/30/14, MFIS filed its TACC for (1) Breach of Contract; (2) Fraud; (3) Tortious Interference with Contract; (4) Negligent Interference with Prospective Economic Advantage; (5) Unfair Competition—Violation of B&P Code §§17200, et seq. and (6) Negligence against Plaintiff, Cross-Defendants Axis Insurance Company, Axis Surplus Insurance Company (hereinafter collectively, Axis”) and ROES 1-100. On 9/11/14, Axis answered the TACC.

The facts gleaned from the pleadings indicates that:

• Plaintiff is a provider of Insurance Agents and Brokers Errors & Omissions Professional Liability Insurance (“Insurance Agents and Brokers E&O Insurance”) to CA insurance agents and brokers. Specifically, Plaintiff is a program manager for the insurance company which underwrites or issues a particular policy to the policyholder.
• On/about 9/12/05, Plaintiff and MFIS entered into a Brokerage Agreement wherein MFIS agreed to place insurance for its client though Plaintiff [“P”].
• On/about 6/17/08, Plaintiff and MFIS entered into a Marketing Agreement to promote a Wholesale Program for Plaintiff.
• On/about 9/2/10, P and MFIS entered into a written Settlement Agreement of all written and verbal agreements in order to resolve a dispute over the amounts due under the Brokerage Agreement and Marketing Agreement, among others. Under the Settlement Agreement, MFIS agreed to waive any and all amounts then due in exchange for an increase in the commissions MFIS earned on direct placements by it through Plaintiff.
• P contends that Defendants have since sent numerous false and misleading e-mail “blasts” to prospective CA consumers, which were not authorized, improperly suggesting that Defendant Feldman was the representative or employee of Plaintiff and/or that he was authorized to speak on behalf of P, which he was not. P believes that Ds have done this in an attempt to improperly claim that any customer that somehow made their way to P, even through another entity, would entitle them to increased commissions.
• P also alleges that Defendants have sent numerous defamatory e-mail messages to producers which included false and misleading information about P.

1st Cause of Action [“COA”]: Breach of Contract

“’A cause of action for damages for breach of contract is comprised of the following elements: (1) the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to plaintiff.’ (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 C.A.3d 1371, 1388).” Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223 C.A.4th 221, 228.

P/X-D argues that this COA fails “to the extent that it asserts damages for a breach of the Marketing Agreement because MFIS admittedly entered into a settlement agreement waiving its right under the Marketing Agreement and, therefore, as a matter of law, MFIS cannot sue for breach of the Marketing Agreement until it rescinds the settlement agreement.” (Demurrer, 5:20-26). P/X-D, however, cannot demur to part of a COA. “A demurrer to a complaint or cross-complaint may be taken to the whole complaint or cross-complaint or to any of the causes of action stated therein.” CCP § 430.50(a). The 1st COA also asserts a breach of the Brokerage Agreement and a breach of the “January 2011 Promise,” which P/X-D does not address. Therefore, taken as a whole, there is an adequately pled cause of action for breach of contract.

2nd COA: Fraud

“’”The elements of fraud, which give 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.”’ (Lazar v. Superior Court (1996) 12 C.4th 631, 638). ‘”Every element of the cause of action for fraud must be alleged in the proper manner (i.e., factually and specifically), and the policy of liberal construction of the pleadings … will not ordinarily be invoked to sustain a pleading defective in any material respect.”’ (Committee On Children’s Television, Inc. v. General Foods Corp. (1983) 35 C.3d 197, 216).” Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223 C.A.4th 221, 234.

“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. authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. (Archuleta v. Grand Lodge etc. of Machinists (1968) 262 C.A.2d 202, 208–209; Gautier v. General Telephone Co. (1965) 234 C.A.2d 302, 308; Mason v. Drug, Inc. (1939) 31 C.A.2d 697, 703; Sanders v. Ford Motor Co. (1979) 96 C.A.3d Supp. 43, 46; see Grossman & Van Alstyne, California Practice (2d ed. 1976) § 984, pp. 111–114.).” Id.

MFIS explains, it “seeks contract damages for the claims that were not covered by the letter agreement…[i]n addition, MFIS seeks fraud damages for having been tricked into signing the release as a result of PUG’s misrepresentation that the PUG-SAIS contract had been terminated.” (Opposition, 13:7-11; emphasis in original). “When a party learns that he has been defrauded, he may, instead of rescinding, elect to stand on the contract and sue for damages, and in such case his continued performance of the agreement does not constitute a waiver of his action for damages. (Paolini v. Sulprizio [(1927)] 201 Cal. 683, 685-687; Thompson v. Modern School of B. & C. [(1920)] 183 Cal. 112, 117-118; see Prosser on Torts [1941], 775; 12 Cal.Jur. 782.).” Bagdasarian v. Gragnon (1948) 31 C.2d 744, 750. “[T]his rule requires the affirming party ‘”on his part [to] comply with the terms of the contract….”’ (Ibid., quoting Schmidt v. Mesmer (1897) 116 Cal. 267, 270-271).” Village Northridge Homeowners Ass’n v. State Farm Fire and Cas. Co. (2010) 50 C.4th 913, 926.

Here, MFIS is not seeking to avoid any part of the 9/2/10 release; as such, the CA Supreme Court’s holding in Village Northridge that “a release of a disputed claim…does not permit a party to elect the remedy of a suit for damages when the release itself bars that option” is not applicable. The release in the 9/2/10 letter did not release unknown, unsuspected, and future claims, but only claims for payments of the “amounts due under the above mentioned agreements.”

As such the demurrer to both causes of action is overruled. Professional Underwriting Group, Inc. dba PUG Insurance Agency’s to Answer the TACC within 10 days.

IT IS SO ORDERED:

Frederick C. Shaller, Judge