Case Number: BC495864    Hearing Date: July 29, 2014    Dept: 40

NARINDER S. GREWAL, M.D., et.al. v. NATIONAL WESTERN LIFE INSUR. CO, et.al.
MOTION FOR LEAVE TO FILE A FIFTH AMENDED COMPLAINT

Case No: BC495864
Date: July 29, 2014
Tentative Ruling: The motion for leave to file a fifth amended complaint is DENIED.

On April 3, 2014, Plaintiffs filed a Motion for Leave to File a Fifth Amended Complaint. On June 5, 2014, Defendants Columbus Life Insurance Company and National Western Life Insurance Company filed oppositions. A reply was filed on June 11, 2014. A supplemental reply was filed on June 30, 2014.

Cal. Rules of Court, Rule 3.1324 provides certain procedural requirements which the amending party must meet in filing their motion. A motion to amend must include a copy of the proposed amended pleading and state which allegations are proposed to be added and which are proposed to be deleted. (CRC, rule 3.1324(a).) The motion must also be accompanied by a separate declaration specifying (1) the effect of the amendment, (2) why the amendment is necessary and proper, (3) when the facts giving rise to the amended allegations were discovered, and (4) the reasons why the request for amendment was not made earlier. (CRC, rule 3.1324(b).)

The motion indicates the fifth amended complaint contains three changes: (1) Defendants Fidelity Guaranty and Life Insurance Company; Edwards, Wildman & Palmer LLP fka Edwards & Angell, LLP; and Ira Stechel will be removed from the Complaint; (2) new factual allegations will be asserted to support the causes of action alleged against the remaining parties; and (3) the fifth amended complaint will correct some language/wording in the pleadings which does not change or alter the causes of action initially asserted.

The motion does nothing more than list the changes to be made to the complaint, offering no argument or explanation for why these amendments are necessary. Attorney Vitullo’s Declaration does not offer a full explanation of the effect of the amendments, some of which appear to be substantive, as his declaration merely restates the general statement offered in the notice of motion. (Vitullo Decl. ¶3, p.1:15:27.) The Declaration provides the facts contained in the amendments came to light through the depositions of Defendants Howard, Columbus Life, and NWLIC which were conducted in December 2013 and Plaintiff’s deposition which was conducted in February 2014. (Vitullo Decl. ¶3 p.2:5-9.) The Plaintiff explains this information was obtained from discovery responses served in February and March 2014 and the amendments could not have been made earlier because Edwards, Wildman & Palmer LLP fka Edwards & Angell, LLP and Ira Stechel were not removed from the action until recently and the Fourth Amended Complaint was not filed long ago.

The Columbus Life opposition challenges the assertion that the facts presented are recently discovered, arguing it is unclear how Plaintiff could have only recently become aware of issues he testified to in his own deposition. A review of the amendments indicates this is well taken as several of the allegations are about misrepresentations made to Plaintiff. Plaintiff also adds allegations concerning the recovery of interest owed to the IRS and back taxes, an issue previously addressed by this Court in a motion to strike. The reply only addresses the issue of back taxes and interest, arguing these damages may be properly recoverable, without explanation.

The National Western opposition raises the valid point that the allegations concerning William Alexander are entirely new and no explanation as to their necessity or factual source has been provided. The opposition relies on the Persson Declaration and supporting exhibits to argue that the allegations asserted against Alexander are not meritorious. This is not a valid basis for denying a motion to amend. The reply does not address this issue other than to argue that at Plaintiff Grewal’s deposition, he was explicitly asked questions regarding Alexander. The supplemental reply provides additional facts to show that Plaintiff deposed Karen Johnston, representative of National Western Life Insurance Company, on December 11, 2013. Therein, Ms. Johnston testified as to Agent William Alexander and his dealings in the transactions at issue herein. Plaintiff also provides that their ability to amend the prior pleadings were restricted by the Court’s prior rulings on demurrers against the prior complaints. As such, Plaintiff is now seeking to amend again. Finally, Plaintiff provides that the US Tax Court entered its decision on May 22, 2014 as the amount of back taxes, penalties owed by Plaintiff. The ruling provides an ability to calculate the interest owed.

California Civil Procedure allows liberal amendment of pleadings. Code Civil Procedure, section 473 states that the court may allow a party to amend any pleading if amendment is in the furtherance of justice. Code Civil Procedure, section 576 also permits amendment of a pleading before or after commencement of a trial if amendment is in the furtherance of justice. When ruling on a motion for leave to amend a pleading, the trial court has “wide discretion” and the ruling will be upheld “unless a manifest or gross abuse of discretion” is shown. (Record v. Reason (1999) 73 Cal.App.4th 472, 486.) Leave to amend at any time is liberally allowed in the interests of justice and in the absence of prejudice to another party, even up to the time of trial. (CCP §§ 473(a)(1) & 576; Magpali v. Farmers Group, Inc. (1996) 48 Cal.App.4th 471, 487.) Denial of leave is rarely justified. However, where there is “probable prejudice” to an opposing party, the amendment appears to be a sham amendment, or is otherwise legally defective and unable to be cured by amendment, the court has discretion to deny leave. (Id. at ¶¶ 6:640-662; Magpali, supra, 48 Cal.App.4th at p. 487.)

The motion argues that the amendments will not result in any prejudice to Defendants because while factual allegations are added, no new causes of action are asserted and no substantive changes are made to the existing causes of action. The trial date was vacated on the date this motion was originally sent and a trial setting conference will be conducted. Therefore, prejudice from an upcoming trial date is no longer an issue

However, both Columbia Life and National Western Life Insurance Company have pending motions for summary judgment.

As to the Defendants’ arguments regarding their motions for summary judgment and being required to file new answers and cross-complaints, the court balances Plaintiff’s proffer that there are no substantive changes and no new causes of action against the fact that motion for summary judgment/adjudication are weighty motions requiring substantial resources and costs. The court finds that this balancing weighs in favor of Defendants and that they would be prejudiced in having expended such resources and costs to file their motions all for naught due to the filing of an amended complaint that makes no new substantive changes or adds no new causes of action. The changes presented by Plaintiff’s motions are minor and technical that do not necessitate the filing of an amended pleading.

Accordingly, the Motion for Leave is DENIED.

NARINDER S. GREWAL, M.D., et.al. v. NATIONAL WESTERN LIFE INSUR. CO, et.al.
MOTION FOR SUMMARY JUDGMENT/ADJUDICATION

Case No: BC495864
Date: July 29, 2014
Tentative Ruling: The motion of Columbia Life Insurance Company (hereinafter CLIC) for summary judgment or, in the alternative, summary adjudication is DENIED.

The Court notes that the Plaintiff’s opposition exceeds the 20-page limit and Plaintiffs failed to request relief to file a longer brief. This is a violation of CRC 3.1113(d).

Defendant requests judicial notice of a declaration by Kathleen Kehoe filed in this action on April 11, 2014 to support Cross-Defendant Nova Benefit Plans LLC’s Motion for Good Faith Determination. “The declaration of an adverse party is not a proper subject for judicial notice.” Big Valley Band of Pomo Indians v. Sup. Ct. (2005) 133 Cal.App.4th 1185, 1192 (declaration was reasonably subject to dispute, because parties could question accuracy of records and searches). As such, the request is denied.
Statute of Limitations as to all three causes of action

Defendant CLIC argues that the three causes of action based upon fraud and negligence are time barred by their respective statutes of limitations – 3 years and 2 years respectively. CCP §§338 & 339. Further, the delayed discovery rule does not postpone the accrual of these claims. Defendant provides that Plaintiff either knew or should have known about their claims when the IRS started questioning the investments made in the 2005 NOVA SADI Plan. The IRS made its first Request for Documents questioning these investments on or about October 25, 2007. (Defendant’s Fact 63). Further, as late as August 7, 2009, Plaintiff’s accountant informed him that the IRS was disallowing the deductions for Plaintiff Grewal Medical Corporation’s (“Corporation”) contributions to the 2005 NOVA SADI Plan on its 2005 tax return. (Defendant’s Fact 69). Plaintiff does not dispute these two facts. This action was filed on November 16, 2012 and thus beyond two and three years of both October 25, 2007 and August 7, 2009. As such, Defendant has met its initial burden to show that no triable issue of material fact exists regarding the statute of limitations.

However, Plaintiff provides evidence and authority to show that accrual of these causes of action was not at either of Defendant’s purported dates because there was no actual injury on either of those dates. Accrual of the statute of limitations occurs when Plaintiff suffers actual and appreciable harm (i.e.: the IRS notice of deficiency). A cause of action “accrues” when, under the substantive law, the wrongful act is done or the wrongful result occurs, and the consequent liability arises. Norgart v. Upjohn Co. (1999) 21 Cal 4th 383, 397. A cause of action accrues: (1) “upon the occurrence of the last element essential to the cause of action” Howard Jarvis Taxpayers Ass’n v. City of La Habra (2001) 25 Cal 4th 809, 815 or (2) when the cause of action is “complete with all of its elements” Fox v. Ethicon Endo–Surgery, Inc. (2005) 35 Cal 4th 797, 807. “When damages are an element of a cause of action, the cause of action does not accrue until the damages have been sustained.” City of Vista v. Robert Thomas Securities, Inc. (2000) 84 Cal App 4th 882, 886; International Engine Parts Inc v Fedderson & Co (1995) 9 Cal 4th 606, 608-9. Plaintiff provides that it was not until June 27, 2011 that the IRS issued its Notice of Deficiency upon Plaintiff Narinder & Pritpal Grewal (“Grewal”) (Plaintiff’s Fact 47) Because there are facts showing that the actual and appreciable harm was not sustained until June 27, 2011 when the IRS issued its notice of tax deficiency upon Plaintiffs, there is a triable issue of material fact regarding “accrual” of the fraud and negligence claims herein. In that the last element of the fraud and negligence claims is damages and those damages were not incurred until June 27, 2011, the filing of the instant action on November 16, 2012 is within the respective statutes of limitations herein. Therefore, Plaintiff has met its burden to show a triable issue of material fact regarding the statute of limitations.

Therefore, the motion for summary judgment and summary adjudication as to Issues 1, 2 and 3 are DENIED as to the issue of statute of limitations.

Vicarious Liability as to all three causes of action

Defendant CLIC argues that Defendants Howard, Willett and Edwards & Angell LLP are not the agents of Defendant but the agents of Plaintiff.

“Insurance agent” means “a person authorized, by and on behalf of an insurer, to transact all classes of insurance other than life, disability, or health insurance, on behalf of an admitted insurance company.” Ins.C. § 31; Krumme v. Mercury Ins. Co., (2004) 123 CA4th 924, 929. (emphasis supplied) A “general agent” is one who manages one or more classes of fire or casualty insurance on behalf of an admitted insurer and has the power to hire and fire local agents, accept or decline risks, collect premiums, and furnish notices to the insured on behalf of the insurer. Ins.C. § 769.55

The status of insurance salespersons as “agents” is determined by what they say and do, not by what they are called. Maloney v. Rhode Island Ins. Co. (1953) 115 Cal App 2d 238, 244; Loehr v. Great Republic Ins. Co. (1990) 226 Cal App 3d 727, 733. The existence and scope of agency in each case are questions of fact. Arocho v. California Fair Plan Ins. Co. (2005) 134 Cal App 4th 461, 466.

“The definitive characteristic” of an insurance agent is the authority to bind the insurer. An insurance broker ordinarily has no such authority: “A broker does not execute a policy with a prior authorization from the insurer. In contrast, the agent is authorized to execute the policy himself.” Marsh & McLennan of Calif., Inc. v. City of Los Angeles (1976) 62 Cal App 3d 108, 117–118; Rios v. Scottsdale Ins. Co. (2004) 119 Cal App 4th 1020, 1026.

“Independent agents” sell and service policies written by many insurance companies and can place insurance with any company that has filed a notice of appointment for the agent. An independent agent may thus solicit business on behalf of a variety of different insurance companies and still technically be an agent of each of those companies. Loehr v. Great Republic Ins. Co. (1990) 226 Cal App 3d 727, 733

“If an insurance agent is the agent for several companies and selects the company with which to place the insurance or insures with one of them according to directions (from the insured), the insurance agent is the agent of the insured.“ Eddy v. Sharp (1988) 199 Cal App 3d 858, 865. But an “independent agent” may also be treated as the agent of the insurance company, so that it is bound by his or her acts or omissions in selling the policy: “The fact that Doyle was an ‘independent’ insurance agent so licensed to transact insurance business for several different carriers did not insulate Great Republic from responsibility for Doyle’s actions as its agent, or make (the insured) liable therefor.” Loehr v. Great Republic Ins. Co., supra, 226 Cal App 3d at 734; see Arocho v. California Fair Plan Ins. Co., supra, 134 Cal App 4th at 466, fn. 12

On the other hand, if the producer performs acts outside the scope of authority granted by the insurer, the insurer generally has no responsibility. Loehr v. Great Republic Ins. Co., supra, 226 Cal App 3d at 734.

Defendant provides that none of their life insurance policies were purchased by the 2007 NOVA SADI Plan and the only plan that purchased a life insurance policy issued by Defendant is the 2005 NOVA SADI Plan. (Defendant’s Facts 24-26, 30, 32-35) Defendants Howard and Willett were “independent insurance agents” for Defendant CILC (Defendant’s Fact 36-37). Further, Howard and Willett were insurance agents of other life insurance companies. (Defendant’s Fact 38) Howard was the agent that sold the CILC policy to the 2005 NOVA SADI Plan. (Defendant’s Fact 39-41) The title given to the agent is not determinative of whether the agent binds the insurer. As such, the fact that Howard and Willett were “independent insurance agents” is insufficient to show that no triable issue of fact exists herein. Further, the fact that Howard and Willett sold policies for multiple life insurance companies is also not determinative that Howard and Willett could not bind Defendant herein.

The determinative factors to show whether an ‘agent’ binds the insurer is what is “said and done”. The only fact presented in Defendant’s separate statement as to what was “said and done” is seen in Fact 30, wherein Howard and Willett “advised” Plaintiffs to select various life insurance policies and annuities for the 2005 NOVA SADI Plan. Defendant’s separate statement fails to present any other facts as to what was “said and done” by Howard and Willet at the time the policy was either sold to or purchased by the 2005 NOVA SADI Plan. Defendant’s Facts 1-29 only present facts regarding Howard and Willett’s representations made in 2005 to persuade Plaintiffs to purchase the 2005 NOVA SADI Plans. The arguments herein fail to present any facts as to which party instructed Plaintiff to purchase the insurance policy – Plaintiff or Howard/Willett. There are no facts to show which party, Plaintiff or Howard/Willett, chose the insurer. There are no facts to show if the policies were sold or purchased at the instruction of Plaintiff or Howard/Willett. Nothing in Defendant’s separate statement present any facts to show the details of the transaction herein. In fact, Defendant’s Fact 42 expressly provides that Plaintiff did not have any knowledge that Howard/Willett were acting as insurance agents. As such, Defendant has failed to meet its burden of proof to show that there is no triable issue of material fact regarding vicarious liability. In that Defendant failed to meet its initial burden of proof, the burden on this issue does not transfer to Plaintiff.

Further, even if Defendant had met their burden of proof on this issue, Plaintiff provides that it was Howard/Willett that represented at a December 2005 meeting that the 2005 NOVA SADI Plan “included a life insurance policy” and that “the life insurance policy and/or annuity was an essential element of the Plan – it was needed to fund the Plan”. (See Plaintiff’s Additional Facts 15-16) As such, there is evidence that the policy was presented by Howard/Willett and not chosen by Plaintiff or purchased by the Plan at the direction of Plaintiff.

Accordingly, the motion for summary judgment and summary adjudication as to Issues 1, 2 and 3 regarding vicarious liability is DENIED.

No duty to disclose facts regarding 419A plan
Defendant provides that they had no duty to disclose the facts herein in that it is insurance company that did not have any involvement with the creation, sale or marketing of the 2005 NOVA SADI Plan. (Defendant’s Fact 50-51) Further, Defendant the claim that Defendant failed to disclose the commissions paid to Howard/Willett are belied by Plaintiff’s deposition. Additionally regarding the failure to disclose the commissions paid to Howard/Willett, Defendant argues that it is the corporate entity Plaintiff and not the individual Plaintiff that paid the commissions. (Defendant’s Facts 32, 34, 35, 43-44)

However, the duty to disclose requires a fiduciary relationship or another relationship involving some sort of transaction between the parties, such as contracts, purchases and services. LiMandri v. Judkins (1997) 52 Cal.App.4th 326, 337. “‘In transactions which do not involve fiduciary or confidential relations, a duty supporting a cause of action for non-disclosure of material facts may arise in at least three instances: (1) the defendant makes representations but does not disclose facts which materially qualify the facts disclosed, or which render his disclosure likely to mislead; (2) the facts are known or accessible only to defendant, and defendant knows they are not known to or reasonably discoverable by the plaintiff; (3) the defendant actively conceals discovery from the plaintiff.’” Linear Technology Corp. v. Applied Materials, Inc. (2007) 152 Cal.App.4th 115, 132.

The fact that Defendant, an insurance company, did not create, sell or market the 2005 NOVA SADI Plan is insufficient to support Defendant’s contention of lack of duty. The disclosures at issue herein are not solely based upon creation, sale or marketing of the Plan. The failures to disclose are based upon the legality of using Defendant’s insurance policy as an investment vehicle to fund the Plan. Specifically, Defendant, through its agents Howard/Willett failed to disclose:

1) prior IRS pronouncements at that time were against 419A(f)(6) plans, similar to the 2005 NOVA SADI Plan;
2) that the NOVA SADI Plans were substantially similar to the plans identified in Notice 95-34 that are “listed transactions” and thus prohibited;
3) that Plaintiff was legally able to fund only sufficient insurance to provide an incidental death benefit as defined by the Treasury Regulations;
4) that Plaintiff’s investment in the defective NOVA SADI Plans would be audited by the IRS, incur expenses in defending the audit and be penalized as a result of the audit;
5) that the IRS perceived these type of plans as abusive tax shelters and not compliant with IRC 419A(f)(6);
6) that the courts supported the position of the IRS that contributions to 419A(f)(6) plans are not ordinary and necessary business expenses deductible under IRC § 162;
7) that the federal tax authorities prevent an employer from sponsoring a welfare benefit plan with the pre-conceived intention of terminating the plan;
8) that contribution made to these type of plans are deemed disguised (constructive) distributions of income that are not deductible by the company and that must also be reported as income by the individual recipients;
9) that the IRS promulgated proposed IRS regulations in July 2002 which made most of the 419A(f)(6) Plans in existence non-compliant and that according to the IRS, the IRS proposed regulations of July 2002 made the investment non-compliant with IRS regulation 419A(f)(6); and
10) that Plaintiff would not achieve the economic results as represented during the sale. (Plaintiff’s Facts 22, 24-33)

Further, Plaintiff has submitted evidence to show that Defendant did market the 419A plans (i.e.: Defendant’s life insurance policy was proper for use as an investment vehicle in the 419A Plans) but not specifically the 2005 NOVA SADI Plan. Plaintiffs provide documents that have Defendant’s letterhead on it and provide an explanation of 419A Plans and the benefits it provides. (Defendant’s Fact 50-51). The fact that these marketing materials do not expressly identify the 2005 NOVA SADI Plan is a distinction without a difference because the 2005 NOVA SADI Plan is a 419A Plan. Further, the allegations herein are not based upon the allegation that the IRS had deemed the 2005 NOVA SADI Plan, specifically, was in violation of the tax code but that similar plans were in violation of the tax code and thus increased the riskiness of the Plan’s use of the insurance policy as an investment vehicle.

Specifically as to Defendant’s arguments regarding the failure to disclose the commissions received by Howard/Willett, this is only but one of the alleged failures to disclose. In that this argument fails to completely negate the element of duty as to all alleged failures to disclose, Defendant fails to meet its burden herein.

As such, there is a triable issue of fact as to duty herein.

The motion for summary judgment and summary adjudication of Issues 1, 2 and 3 regarding duty is DENIED.

Justifiable Reliance, Knowledge of the Falsity & Intent to Defraud

Defendant argues that there can be no justifiable reliance upon representations regarding future tax consequences to contributions made to the 2005 NOVA SADI Plan due to the contract provisions found in the Disclosure and Acknowledgement Statement signed by Plaintiff. (Defendant’s Facts 27-29) However, Defendant’s citation to the Disclosure and Acknowledgement Statement mischaracterizes the claims herein. Plaintiff’s claims are not based upon future tax consequences. Plaintiff’s allegations are based upon Defendant’s failure to disclose past facts regarding the Plan’s compliance with the statute. Defendant, through its agents Howard/Willett failed to disclose:

1) prior IRS pronouncements at that time were against 419A(f)(6) plans, similar to the 2005 NOVA SADI Plan;
2) that the NOVA SADI Plans were substantially similar to the plans identified in Notice 95-34 that are “listed transactions” and thus prohibited;
3) that Plaintiff was legally able to fund only sufficient insurance to provide an incidental death benefit as defined by the Treasury Regulations;
4) that Plaintiff’s investment in the defective NOVA SADI Plans would be audited by the IRS, incur expenses in defending the audit and be penalized as a result of the audit;
5) that the IRS perceived these type of plans as abusive tax shelters and not compliant with IRC 419A(f)(6);
6) that the courts supported the position of the IRS that contributions to 419A(f)(6) plans are not ordinary and necessary business expenses deductible under IRC § 162;
7) that the federal tax authorities prevent an employer from sponsoring a welfare benefit plan with the pre-conceived intention of terminating the plan;
8) that contribution made to these type of plans are deemed disguised (constructive) distributions of income that are not deductible by the company and that must also be reported as income by the individual recipients;
9) that the IRS promulgated proposed IRS regulations in July 2002 which made most of the 419A(f)(6) Plans in existence non-compliant and that according to the IRS, the IRS proposed regulations of July 2002 made the investment non-compliant with IRS regulation 419A(f)(6); and
10) that Plaintiff would not achieve the economic results as represented during the sale. (Plaintiff’s Facts 22, 24-33)

As such, Defendant’s argument that there are no facts to show justifiable reliance based upon the Disclosure and Acknowledgement Statement provision regarding “future tax consequences” is not persuasive.

Further, contractual disclaimers are reviewed based upon subjective standard where defendant contends its disclaimers defeat reasonable reliance. OCM Principal Opportunities Fund v. CIBC World Markets Corp. (2007) 157 Cal App 4th 835, 867–869. Trier of fact must decide whether insurer’s disclaimers, “buried in a sea of same-sized, capitalized print,” made it manifestly unreasonable for an insured to rely on deceptive language in a different part of the policy and on agent’s assurance consistent with that language. Broberg v. Guardian Life Ins. Co. of America (2009) 171 Cal App 4th 912, 921–922. Defendant’s citation to the disclaimer provisions are found in a three page document. (Defendant’s Fact 29). However, Plaintiff provides that when he signed the 2005 NOVA SADI Plan in December 2005, Howard/Willett presented him with “ream of paperwork”. (Plaintiff’s Fact 39-40) As such, there are facts herein to show that the disclaimer may not have been readily apparent to Plaintiff.

Defendant also argues that there are no facts to show knowledge of the falsity and intent to defraud herein. Defendant provides facts to show that Howard reviewed the 2003 Final Regulations and concluded that the 2005 NOVA SADI Plan was compliant with §419A(f)(6) and was not a “listed transaction” which would make the 2005 SADI Plan violate the statute. Further, Howard relied upon Edwards & Angell’s April 2005 opinion letter also opining that the 2005 NOVA SADI Plan was not in violation of §419A(f)(6) or the 2003 Final Regulations. (See Defendant’s Facts 10-16, 72-76, 77). Based upon these facts, Defendant argues that there was no knowledge of the falsity or intent to defraud. However, the fact that Howard/Willett had grounds to believe that the 2005 NOVA SADI Plan was in compliance with §419A and other tax codes/regulations misses the mark. It is undisputed that Howard/Willett represented the validity of the 2005 NOVA SADI Plan and its use of an insurance policy as its investment vehicle. The allegations herein are based upon the fact that similar plans were in violation of the tax code and thus increased the riskiness of the Plan’s use of the insurance policy as an investment vehicle. The failure to disclose the level of risk in investing in an insurance policy through the 2005 NOVA SADI Plan is the issue presented. Thus, the fact that Howard/Willett reviewed the 2003 Final Regulations and obtained an opinion letter showing that the 2005 NOVA SADI Plan were compliant is insufficient to show a lack of knowledge of the falsity and lack of intent.

Therefore, the motion for summary judgment and summary adjudication of Issues 1, 2 and 3 regarding justifiable reliance, knowledge of the falsity and intent are DENIED.

Negligent Misrepresentation & Negligence

Defendant’s arguments as to these two causes of action are based upon the facts and arguments analyzed herein. In that the Court finds that the facts and arguments either do not carry Defendant’s initial burden of proof and/or Plaintiff has carried its burden of proof, the motion for summary judgment and summary adjudication of Issues 2 and 3 are DENIED.

Punitive Damages

As the intentional misrepresentation cause of action survived the instant motion, there are grounds under the fraud prong of the statute to support the claim for punitive damages.
The motion for summary adjudication of Issue 4 is DENIED.