2017-00213375-CU-BT

Sione Tenefufu vs. First American Specialty Insurance Co.

Nature of Proceeding: Hearing on Demurrer to the 2nd Am. Complaint and Motion to Strike

Filed By: Martin, Sonia

Defendant First American Specialty Insurance Company’s Demurrer to Plaintiff’s Second Amended Complaint is SUSTAINED, with leave to amend.

Defendant First American Specialty Insurance Company’s Motion to Strike Specified Portions of Plaintiff’s Second Amended Complaint is GRANTED, with leave to amend.

Counsel has filed a meet and confer declaration reflecting compliance with C.C.P., sec. 430.41.

A prior demurrer to the First Amended Complaint was dropped, and counsel stipulated to the filing of the Second Amended Complaint.

Plaintiff’s Second Amended Class Action Complaint (“SAC”) sets forth four causes of action against defendant: the 1st for Unfair Business Practices (Bus. & Prof Code §17200 et seq.), the 2nd for Declaratory Relief, the 3rd for Breach of Contract and the 4 th for Breach of Implied Covenant (“Bad Faith”). Defendant demurs to each cause of action.

Demurrer

Demurrers to the 1st for Unfair Business Practices (Bus. & Prof Code §17200 et seq.), the 2nd for Declaratory Relief, the 3rd for Breach of Contract and the 4th for Breach of Implied Covenant (“Bad Faith”) all rest upon the assertion that the putative class definition is time-barred on its face.

On November 5, 2015, a fire damaged plaintiff Sione Tenefufu’s rental property, which was insured by defendant First American Specialty Insurance Company. In her SAC, plaintiff alleges that First American underpays property insurance claims by depreciating “components of a structure that are normally subject to repair and replacement during the useful life of that structure.” Ins. Code § 2051 (b) (2).

Plaintiff’s putative class consists of all people who made claims to First American “for damage to real property” that “were open as of June 1, 2013, and whose indemnity payment for the structure was decreased as a result of depreciation of one or more components of the structure.” (SAC, ¶ 3)

Plaintiff designates two subclasses: Subclass 1 is First American insureds whose “indemnity payment for repairs to the structure was decreased as a result of one or more” specific components identified in the SAC. (SAC ¶ 4.) Subclass 2 is First American insureds whose repair payments were “reduced because [it] calculated depreciation of components of the structure according to a straight line schedule based on the age of each item, rather than by reference to the actual physical

condition and deterioration of the component prior to the loss.” (SAC, ¶ 5.)

In California, fire insurance policies are regulated by the Insurance Code. Ins. Code, sec. 2070 provides: “All fire policies … shall be on the standard form, … provided, that coverage with respect to the peril of fire, when viewed in its entirety, is substantially equivalent to or more favorable to the insured than that contained in such standard form fire insurance policy.” (Century-National Ins. Co. v. Garcia (2011) 51 Cal.4th 564, 567.)

California Ins. Code, § 2071 provides in pertinent part “No suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity unless all the requirements of this policy shall have been complied with, and unless commenced within 12 months next after inception of the loss.”

Defendant’s Request for Judicial Notice of its own policy issued to plaintiff, on page 11 of 13, reflects that it provides that “No action can be brought against us unless there has been full compliance with all the terms under this policy and the action is started within two years after the date of loss.”

It appears to the Court that the total fire coverage provided is at least “substantially equivalent” to coverage provided by the standard form of Ins. Code, sec. 2071. ( Century-National Ins. Co. v. Garcia (2011) 51 Cal.4th 564, 567.)

As plaintiff’s policy contains a contractual suit limitation provision requiring any suit against First American to be brought within two years of a loss, in accord with Insurance Code section 2071, Plaintiff’s proposed class definition, is overbroad as it includes claims dating back more than four years before she filed suit.”

Plaintiff asserts that this Court is not permitted to address the propriety of the class allegations at the pleading stage.

However, in Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 440, the Calif. Supreme Court held that when the substantive theories and claims of a proposed class suit are alleged to be without legal or factual merit, the interests of fairness and efficiency are furthered when the contention is resolved in the context of a formal pleading (demurrer) or motion (judgment on the pleadings, summary judgment, or summary adjudication) that affords proper notice and employs clear standards. Id.

It agreed that the important interests of fairness and efficiency sometimes may be served better when class causes of action are screened for legal sufficiency before the matter of certification is decided. Nothing prevents a court from weeding out legally meritless suits prior to certification via a defendant’s demurrer or pretrial motion. In fact, it is settled that courts are authorized to do so. (See Employment Development Dept. v. Superior Court (1981) 30 Cal. 3d 256, 263-265; Civil Service Employees Ins. Co. v. Superior Court, supra, 22 Cal. 3d at pp. 373-374; cf. § 1781, subd. (c)(3).) (Linder, supra.)

The Court sustains the demurrer to each cause of action on the grounds that the plaintiff cannot plead a cause of action “on the policy” representing a class defined as exceeding both the statutory limitations of Ins. Code, sec. 2071 and the language of the policy itself.

Plaintiff has failed to allege equitable estoppel in her complaint; therefore the Court need not address the assertion that the suit limitations period is not barred by equitable tolling. It is the complainant’s burden to plead not merely the ultimate fact of reasonable delay in discovery, but specific facts which allow a legitimate inference that the delay was reasonable. (Saliter v. Pierce Brothers Mortuaries (1978) 81 Cal.App.3d 292, 299.)

The 2nd cause of action for declaratory relief is improper for past claims, as to which plaintiff seeks damages. Plaintiff appears to concede as much, although she asserts there may be future claims. Plaintiff has failed to adequately allege future claims. The demurrer is sustained with leave to amend.

Plaintiff may have leave to amend all causes of action in her Third Amended Class Action complaint to be filed and served not later than Monday, March 19, 2018. The responsive pleading shall be due filed and served 30 days later (35 days if service is by mail).