Case Name: Seyed Sadeghi v. Geico General Insurance Company
Case No.: 2019-CV-349725

Demurrer to the Complaint by Defendant Geico General Insurance Company

Factual and Procedural Background

This is a declaratory relief action. Plaintiff Seyed Sadeghi (“Plaintiff”) and defendant Geico General Insurance Company (“GEICO” or “Defendant”) entered into an insurance contract concerning GEICO’s promise to pay uninsured motorist benefits. (Complaint at ¶¶ 7-8.) In particular, the contract promised that “[GEICO] will pay damages for bodily injury to an insured, caused by accident which the insured is legally entitled to recover from the owner or operator of an uninsured motor vehicle, underinsured vehicle, or a hit-and-run motor vehicle arising out of the ownership, maintenance or use of that motor vehicle.” (Id. at ¶ 8.)

In addition, the contract provides that if the parties “do not agree that [the insured] is legally entitled to recover damages under this Coverage from the owner or operator of an uninsured/underinsured motor vehicle because of bodily injury to the insured, or do not agree as to the amount payable, either party will have the right to demand arbitration.” (Complaint at ¶ 9.) The contract concludes that “[t]he matter(s) in dispute shall then be settled according to American Arbitration Association (“AAA”) rules. One neutral arbitrator will conduct the arbitration.” (Ibid.) The arbitrator shall decide Plaintiff’s damages caused by the third party without knowledge of the applicable policy limits. (Id. at ¶ 14.)

On November 30, 2016, Plaintiff sustained injuries in a hit and run incident. (Complaint at ¶¶ 15-23.) On April 3, 2018, GEICO sent a letter stating it found no liability on the hit and run vehicle and denied Plaintiff’s claim. (Id. at ¶ 26.)

On April 1, 2019, Plaintiff demanded arbitration be conducted by a single neutral arbitrator selected jointly by the parties. (Complaint at ¶ 28.) GEICO however stated the terms of the contract mandate that arbitration be conducted using AAA. (Id. at ¶¶ 29, 34.) Plaintiff is not agreeable to using AAA and insists the policy provision is void and must be ignored in favor of the terms of the Insurance Code and California Arbitration Act. (Id. at ¶¶ 30-31.)

Plaintiff also demands that GEICO not disclose available policy limits to any arbitrator selected per the terms of the policy and prevailing law. (Complaint at ¶ 35.) Conversely, GEICO insists it will disclose policy limits to the selected arbitrator and not allow the issue to be resolved by motion in limine. (Ibid.)

On June 7, 2019, Plaintiff filed a Complaint against GEICO alleging a cause of action for declaratory relief.
Demurrer to the Complaint

Currently before the Court is a demurrer by defendant GEICO to the Complaint on the grounds of uncertainty and failure to state a cause of action. (Code Civ. Proc., § 430.10, subds. (e), (f).) GEICO filed a request for judicial notice in conjunction with the motion. Plaintiff filed written opposition. GEICO filed reply papers.

Meet and Confer

As a preliminary matter, the Court notes defendant GEICO did not meet and confer with Plaintiff with respect to issues regarding the demurrer before filing the motion.

Before filing a demurrer, a demurring party must “meet and confer in person or by telephone” with the opposing party to determine “whether an agreement can be reached that would resolve the objections to be raised in the demurrer.” (Code Civ. Proc., § 430.41, subd. (a).) This conference should occur at least five days before the deadline to file. (Code Civ. Proc., § 430.41, subd. (a)(2).)

When filing the demurrer, the demurring party must include a declaration stating either “the means by which the demurring party met and conferred with [the other party] and that the party did not reach an agreement resolving the objections raised in the demurrer” or “[the other party] failed to respond to the meet and confer request of the demurring party or otherwise failed to meet in good faith.” (Code Civ. Proc., § 430.41, subd. (a)(3).) A court’s determination that the meet and confer process was insufficient is not a ground to sustain or overrule a demurrer. (Code Civ. Proc., § 430.41, subd. (a)(4).)

Here, counsel for GEICO did not submit any declaration to the Court showing efforts to meet and confer with Plaintiff on issues related to the demurrer. However, because a deficient meet and confer process is not a ground to sustain or overrule a demurrer, the Court will consider the merits of the motion. Counsel for GEICO is admonished to comply with court rules and procedures with respect to future filings.

Request for Judicial Notice

In support of the motion, defendant GEICO requests judicial notice of the American Arbitration Association’s Consumer Arbitration Rules, which are available online at https://www.adr.org/activerules. (See Request for Judicial Notice at Ex. A.) The request for judicial notice is unopposed. The Court may take judicial notice of these rules under Evidence Code section 452, subdivision (h). (See Boghos v. Certain Underwriters at Lloyd’s of London (2005) 36 Cal.4th 495, 505, fn. 6 [California Supreme Court takes judicial notice of AAA’s commercial arbitration rules under Evidence Code section 452, subdivision (h); see also Century City Medical Plaza v. Sperling, Isaacs & Eisenberg (2001) 86 Cal.App.4th 865, 869-870 [appellate court takes judicial notice of AAA Rules under Evidence Code section 452, subdivisions (g) and (h)].) Furthermore, the request appears relevant to issues raised in the demurrer. (See Jordache Enterprises, Inc. v. Brobeck, Phleger & Harrison (1998) 18 Cal.4th 739, 748, fn. 6 [a court need not take judicial notice of a matter unless it “is necessary, helpful, or relevant”].)

Accordingly, the request for judicial notice is GRANTED.

Legal Standard

“In reviewing the sufficiency of a complaint against a general demurer, we are guided by long settled rules. ‘We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. We also consider matters which may be judicially noticed.’” (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “A demurrer tests only the legal sufficiency of the pleading. It admits the truth of all material factual allegations in the complaint; the question of plaintiff’s ability to prove these allegations, or the possible difficulty in making such proof does not concern the reviewing court.” (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 213–214.)

“The reviewing court gives the complaint a reasonable interpretation, and treats the demurrer as admitting all material facts properly pleaded. The court does not, however, assume the truth of contentions, deductions or conclusions of law. … [I]t is error for a trial court to sustain a demurrer when the plaintiff has stated a cause of action under any possible legal theory. And it is an abuse of discretion to sustain a demurrer without leave to amend if the plaintiff shows there is a reasonable possibility any defect identified by the defendant can be cured by amendment.” (Gregory v. Albertson’s, Inc. (2002) 104 Cal.App.4th 845, 850.)

Complaint for Declaratory Relief

Defendant GEICO demurs to the Complaint on the grounds of uncertainty and failure to state a cause of action.

Uncertainty

Defendant GEICO demurs to the Complaint for declaratory relief on the ground of uncertainty.

Uncertainty is a disfavored ground for demurrer; it is typically sustained only where the pleading is so unintelligible and uncertain that the responding party cannot reasonably respond to or recognize the claims alleged against it. (See Khoury v. Maly’s of Cal., Inc. (1993) 14 Cal.App.4th 612, 616.) “[T]he failure to specify the uncertain aspects of a complaint will defeat a demurrer based on the grounds of uncertainty.” (Fenton v. Groveland Community Services Dist. (1982) 135 Cal.App.3d 797, 809, overruled on other grounds by Katzberg v. Regents of University of California (2002) 29 Cal.4th 300, 328, fn. 30.)

Here, defendant GEICO’s memorandum of points and authorities fails to directly address the ground of uncertainty. Defendant does not present any argument demonstrating the declaratory relief cause of action is so unintelligible and uncertain that it cannot reasonably respond to or recognize the claim asserted against it. Instead, defendant GEICO challenges the declaratory relief claim on the ground that it fails to state a valid cause of action. The law however is settled that “[a] special 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. Sequeira (1950) 100 Cal.App.2d 143, 145-146.)

Accordingly, the demurrer to the Complaint on the ground of uncertainty is OVERRULED.

Failure to State a Cause of Action

The Complaint alleges a single claim for declaratory relief.

“Code of Civil Procedure section 1060 authorizes actions for declaratory relief under a ‘written instrument’ or ‘contract.’ Declaratory relief generally operates prospectively to declare future rights, rather than to redress past wrongs. [Citations.] It serves to set controversies at rest before they lead to repudiation of obligations, invasion of rights or commission of wrongs. In short, the remedy is to be used in the interests of preventative justice, to declare rights rather than execute them. [Citations.]” (Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 909 (Jolley).)

To qualify for declaratory relief, a party must present two essential elements: (1) a proper subject of declaratory relief; and (2) an actual controversy involving justiciable questions relating to the party’s rights or obligations. (Jolley, supra, 213 Cal.App.4th at p. 909.)

“A complaint for declaratory relief is legally sufficient if it sets forth facts showing the existence of an actual controversy relating to the legal rights and duties of the parties under a written instrument or with respect to property and requests that the rights and duties of the parties be adjudged by the court. [Citations.] If these requirements are met and no basis for declining declaratory relief appears, the court should declare the rights of the parties whether or not the facts alleged establish that the plaintiff is entitled to favorable declaration. [Citations.]” (Wellenkamp v. Bank of America (1978) 21 Cal.3d 943, 947.)

Here, the Complaint alleges there is an actual controversy between Plaintiff and Defendant: (1) relating to the legal rights and duties of each party under the motor vehicle insurance contract that Plaintiff entered with Defendant on July 1, 2016; (2) concerning their respective rights, duties, and obligations in the insurance contract with regard to the parties submitting the underlying matters to arbitration only through AAA services and not through a joint selection of a neutral arbitrator as required by Insurance Code section 11580.2; and (3) concerning their respective rights, duties, and obligations in the insurance contract with regard to whether GEICO can disclose to the selected arbitrator the applicable policy limits. (Complaint at ¶¶ 38-40.)

“A judicial determination of these issues and of the respective duties of Plaintiff and Defendant is necessary and appropriate at this time under the circumstances because this uninsured motorist matter does not appear likely to resolve without arbitration and Plaintiff desires to arbitrate this matter without delay before a jointly selected single neutral arbitrator.” (Complaint at ¶ 41.)

Defendant GEICO argues there is no actual controversy to support declaratory relief. In particular, GEICO contends that, by invoking the policy’s arbitration provision, Plaintiff agreed to be subject to arbitration through AAA and has thus waived any right to challenge the provision’s mandate. By contrast, Plaintiff argues the contractual provision requiring him to submit to AAA arbitration is void and violates Insurance Code section 11580.2(f). Plaintiff therefore claims the parties are required to select a neutral arbitrator and if not seek Court intervention to do so.

But, the Court does not need to consider this argument as it is directed only at a portion of a cause of action. A defendant cannot demur to a portion of a cause of action. (See Financial Corp. of America v. Wilburn (1987) 189 Cal.App.3d 764, 778 [“[A] defendant cannot demur generally to part of a cause of action”] see also PH II, Inc. v. Super. Ct. (1995) 33 Cal.App.4th 1680, 1682 [“A demurrer does not lie to a portion of a cause of action”]; Pointe San Diego Residential Community, L.P. v. Procopio, Cory, Hargreaves & Savitch, LLP (2011) 195 Cal.App.4th 265, 274 [“A demurrer challenges a cause of action and cannot be used to attack a portion of a cause of action”].) As stated above, Plaintiff also alleges an actual controversy exists relating to the legal rights and duties of each party under the motor vehicle insurance contract that Plaintiff entered with Defendant on July 1, 2016. (Complaint at ¶ 38.) The moving papers fail to address this allegation in its entirety in support of the demurrer. Furthermore, Plaintiff alleges an actual controversy exists concerning their respective rights, duties, and obligations in the insurance contract with regard to whether GEICO can disclose to the selected arbitrator the applicable policy limits. (Id. at ¶ 40.) As to this allegation, defendant GEICO argues only that Plaintiff fails to provide any legal basis for this demand. (See Memo of P’s & A’s at p. 7:25-26.) However, as the moving party, it is GEICO’s burden to show this allegation fails to state a cause of action. GEICO does not carry this burden as it fails to present any legal authority in support of its position. (See In re Marriage of Falcone & Fyke (2008) 164 Cal.App.4th 814, 830 [“absence of cogent legal argument or citation to authority allows this court to treat the contentions as waived”]; see also T.P. v. T.W. (2011) 191 Cal.App.4th 1428, 1440, fn. 12 [court may decline to consider argument that is not sufficiently developed and is unsupported by citation to authority].)

Accordingly, the demurrer to the Complaint on the ground that it fails to state a claim is OVERRULED.

Disposition

The request for judicial notice is GRANTED.

The demurrer to the Complaint on the ground of uncertainty is OVERRULED.

The demurrer to the Complaint on the ground that it fails to state a claim is OVERRULED.