Deborah Stanley et al vs State Farm General Insurance Company

Case Number

23CV05532

Case Type

Hearing Date / Time

Mon, 05/13/2024 - 10:00

Nature of Proceedings

CMC; Demurrer; Motion to Strike

Tentative Ruling

Deborah Stanley, et al. v. State Farm General Insurance Co.  

Case No. 23CV05532

Hearing Date: May 13, 2024                                             

HEARINGS:             (1) Defendant State Farm General Insurance Company’s Demurrer to Plaintiffs’ First Amended Complaint;

(2) Defendant State Farm General Insurance Company’s Motion to Strike Portions of Plaintiffs’ First Amended Complaint.

                                   

ATTORNEYS:          For Plaintiffs Deborah Stanley and Ron Weiner: Evangeline F. Grossman, Tonna K. Faxon

For Defendant State Farm General Insurance Company: Matthew F. Batezel, Scharde C. Vallone

                       

TENTATIVE RULINGS:

1. State Farm General Insurance Company’s demurrer to plaintiffs’ first amended complaint is overruled.
2. State Farm General Insurance Company’s motion to strike portions of plaintiffs’ first amended complaint is denied.
3. State Farm General Insurance Company shall file and serve its answer to plaintiffs’ first amended complaint no later than May 24, 2024.

Background:

This action was commenced on December 14, 2023, by the filing of the complaint by plaintiffs Deborah Stanley and Ron Weiner against defendants State Farm General Insurance Company (State Farm) and Ernesto Chavez. Chavez was later dismissed and on January 25, 2024, plaintiffs filed the operative first amended complaint (FAC) naming only State Farm as a defendant. The FAC contains causes of action for: (1) Breach of contract; (2) Breach of the implied covenant of good faith and fair dealing; and (3) Financial elder abuse.

As alleged in the FAC:

Plaintiffs are both over the age of 65 years. (FAC, ¶ 6.)

“Plaintiffs suffered damage to their home as a result of rain, wind, hail, and debris from an atmospheric river over the Santa Barbara region during the period of January 1 through 5, 2023.” (FAC, ¶ 7.) Plaintiff had an insurance policy for their home through State Farm on the dates of loss. (FAC, ¶ 9.) Just prior to the loss, David Chase Construction completed a $1,200,000.00 remodel project at plaintiffs’ home. (FAC, ¶ 10.)

To summarize the series of events as alleged in the complaint:

During the storm, rain, hail, and debris were driven into plaintiffs’ home which caused significant damage to walls, decks, and yard. On January 11, 2023, plaintiffs contacted their State Farm agent who advised them to move ahead with repairs to mitigate damages. Before even inspecting the damage, State Farm attempted to find a reason to deny the claim based on policy exclusions including an exclusion for “wear/tear deterioration or improper design/construction.” When State Farm inspected the property for the first time, the agent stated that the damage most likely was the result of deferred maintenance. State Farm ignored plaintiffs’ contractor’s insistence that there was no issue with maintenance or disrepair because he had just completed a $1,200,000.00 remodel of the interior and exterior of the home.

State Farm made a series of misrepresentations regarding the cause of the damage, what was required to remedy the damage, and also misrepresented what plaintiffs’ contractor believed was the cause of the damage.

As a result, State Farm only paid $10,290.56 to plaintiffs, withholding more than $276,879.44 in additional benefits due to plaintiffs.

State Farm now demurs to plaintiffs’ third cause of action for financial elder abuse on the grounds that plaintiffs have failed to state facts sufficient to constitute a cause of action. State Farm also moves to strike 12 paragraphs of the FAC. No grounds are set forth for the motion to strike.

Plaintiffs oppose the demurrer and the motion to strike.

Analysis:

            Demurrer

“When any ground for objection to a complaint, cross-complaint, or answer appears on the face thereof, or from any matter of which the court is required to or may take judicial notice, the objection on that ground may be taken by a demurrer to the pleading.” (Code Civ. Proc., § 430.30, subd. (a).) “Our consideration of the facts alleged includes ‘those evidentiary facts found in recitals of exhibits attached to [the] complaint.’ [Citation.]” (Alexander v. Exxon Mobil (2013) 219 Cal.App.4th 1236, 1250.)

“[A] court must treat a demurrer as admitting all material facts properly pleaded, it does not, however, assume the truth of contentions, deductions or conclusions of law.” (Travelers Indem. Co. of Connecticut v. Navigators Specialty Ins. Co. (2021) 70 Cal.App.5th 341, 358, citing Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 967.)

“If the complaint states a cause of action under any theory, regardless of the title under which the factual basis for relief is stated, that aspect of the complaint is good against a demurrer. “ ‘[W]e are not limited to plaintiffs’ theory of recovery in testing the sufficiency of their complaint against a demurrer, but instead must determine if the factual allegations of the complaint are adequate to state a cause of action under any legal theory. The courts of this state have . . . long since departed from holding a plaintiff strictly to the ‘form of action’ he has pleaded and instead have adopted the more flexible approach of examining the facts alleged to determine if a demurrer should be sustained.’ ” [Citations.]” (Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 38-39.)

            Third Cause of Action for Financial Elder Abuse

State Farm argues that plaintiff’s cause of action for financial elder abuse fails to state facts sufficient to constitute a cause of action and that the cause of action is “not legally appropriate.” (Demurrer, p. 3, ll. 8-9.) In doing so, State Farm almost entirely argues the merits of plaintiffs’ case and focuses on what plaintiffs will be required to prove at the time of trial. What plaintiffs will be required to ultimately prove is not what is considered in ruling on a demurrer.

“To survive a demurrer, the complaint need only allege facts sufficient to state a cause of action; each evidentiary fact that might eventually form part of the plaintiff’s proof need not be alleged.” (C.A. v. William S. Hart Union High School Dist. (2012) 53 Cal.4th 861, 872.)

“The substantive law of elder abuse provides that financial abuse of an elder occurs when any person or entity takes, secretes, appropriates, or retains real or personal property of an elder adult to a wrongful use or with an intent to defraud, or both. A wrongful use is defined as taking, secreting, appropriating, or retaining property in bad faith. Bad faith occurs where the person or entity knew or should have known that the elder had the right to have the property transferred or made readily available to the elder or to his or her representative. (Welf. & Inst. Code, § 15610.30.)” (Teselle v. McLoughlin (2009) 173 Cal.App.4th 156, 174.)

“California’s Elder Abuse Act, Welfare and Institutions Code Section 15600, et seq., was enacted to protect elders by providing enhanced remedies which encourage private, civil enforcement of laws against elder abuse and neglect. [Citations.]” (Negrete v. Fidelity and Guar. Life Ins. Co. (2006) 444 F.Supp.2d 998, 1001.)

Welfare & Institutions Code section 15610.30 provides:

“(a) ‘Financial abuse’ of an elder or dependent adult occurs when a person or entity does any of the following:

“(1) Takes, secretes, appropriates, obtains, or retains real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both.

“(2) Assists in taking, secreting, appropriating, obtaining, or retaining real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both.

“(3) Takes, secretes, appropriates, obtains, or retains, or assists in taking, secreting, appropriating, obtaining, or retaining, real or personal property of an elder or dependent adult by undue influence, as defined in Section 15610.70.

“(b) A person or entity shall be deemed to have taken, secreted, appropriated, obtained, or retained property for a wrongful use if, among other things, the person or entity takes, secretes, appropriates, obtains, or retains the property and the person or entity knew or should have known that this conduct is likely to be harmful to the elder or dependent adult.

“(c) For purposes of this section, a person or entity takes, secretes, appropriates, obtains, or retains real or personal property when an elder or dependent adult is deprived of any property right, including by means of an agreement, donative transfer, or testamentary bequest, regardless of whether the property is held directly or by a representative of an elder or dependent adult.

“(d) For purposes of this section, ‘representative’ means a person or entity that is either of the following:

“(1) A conservator, trustee, or other representative of the estate of an elder or dependent adult.

“(2) An attorney-in-fact of an elder or dependent adult who acts within the authority of the power of attorney.”

“[A] party may engage in elder abuse by misappropriating funds to which an elder is entitled under a contract.” (Paslay v. State Farm General Ins. Co. (2016) 248 Cal.App.4th 639, 656.)

“In the insurance context, an elder abuse claim “ ‘stands and falls’ ” on whether the insurer denied plaintiff's valid claim in bad faith.” (Enciso v. Jackson National Life Insurance Company, 2024 WL 647653, app. pending.) Here, the FAC makes clear and unambiguous allegations that the claim was denied in bad faith.

In addition to the allegations set forth above, plaintiffs allege:

“Plaintiffs have vested personal property rights to money and benefits triggered under the Policy once their insured loss occurred, and had vested personal property rights to their home and personal belongings.” (FAC, ¶ 71.) “Defendants knew or reasonably should have known that their conduct was likely to be harmful to Plaintiffs, and knew from the under-writing information collected and maintained by State Farm and known to Chavez by and through the records maintained by State Farm that Plaintiffs were both over the age of 65, but Defendants nonetheless retained Plaintiffs’ property with the intent to deprive them of money and benefits, constituting financial abuse. All of the aforementioned acts were done with an intent to defraud, by undue influence, in a wrongful manner and with improper conduct.” (FAC, ¶ 72.)

“In failing, refusing and neglecting to pay funds owed under the Policy, Defendants committed financial elder abuse by withholding or misappropriating funds to which Plaintiffs were entitled to benefit from. All of the aforementioned acts were done with an intent to defraud, by undue influence, in a wrongful manner and with other improper conduct.” (FAC ¶ 73.) “Defendants knew or reasonably should have known that their conduct was likely to be harmful to Plaintiffs, but they nonetheless retained insurance benefits due and owing to Plaintiffs, with the intent to deprive Plaintiffs of money and benefits, constituting financial abuse. All of the aforementioned acts were done with an intent to defraud, by undue influence, in a wrongful manner and with other improper conduct.” (FAC, ¶ 74.)

“State Farm knowingly failed to provide Policy benefits sufficient to restore the subject properly to its pre-loss condition on a timely basis, and failed to pay adequate loss of use benefits to provide housing and care needed by Plaintiffs causing unnecessary hardship, distress, and expenditure of money due to Defendants’ conduct. All of the aforementioned acts were done with an intent to defraud, by undue influence, in a wrongful manner and with other.improper conduct.” (FAC, ¶ 75.)

“State Farm committed financial elder abuse when it (a) took Policy premiums from Plaintiffs with no intent of fully paying benefits promised under the Policy; (b) that State Farm intentionally under-scoped and under-adjusted the loss (or denied the loss all together); (c) State Farm wrongfully retained policy benefits by delaying and denying payment to the Plaintiffs and

paid less than what was due and owing to the Plaintiffs; and (d) State Farm did so with the explicit knowledge that the delayed benefits paid were insufficient and inadequate to restore Plaintiffs’ home to its pre-loss condition. All of the aforementioned acts were done with an intent to defraud, by undue influence, in a wrongful manner and with other improper conduct.” (FAC, ¶ 76.)

“Defendants knew or should have known that their conduct was directed to elders and knew or should have known that its conduct was likely to be harmful to Plaintiffs.” (FAC, ¶ 77.) “Defendants deliberately disregarded the high degree of probability that their conduct would injure Plaintiffs, in that Plaintiffs were not given sufficient insurance benefits to pay to have their home repaired and returned to its pre-loss condition.” (FAC, ¶ 78.)

“Defendants’ conduct caused Plaintiffs to suffer because their conduct was a substantial factor in causing them harm to Plaintiffs, causing an uncovered loss and/or the ability to use and enjoy their property, and a loss of assets essential for Plaintiffs’ health and welfare.” (FAC, ¶ 79.) Plaintiffs are substantially more vulnerable than other members of the public to Defendants’ conduct because of their age and disability, and they actually suffered substantial physical, emotional and economic damage resulting from Defendants' conduct.” (FAC, ¶ 80.)

“Defendants are guilty of recklessness, oppression, fraud and/or malice in the commission of financial elder abuse.” (FAC, ¶ 81.) “Defendants’ conduct was a substantial factor in causing Plaintiffs’ harm, including pain and suffering and emotional distress.” (FAC, ¶ 82.)

Allegations of “knowledge” and “intent” are allegations of facts, which are sufficiently alleged through use of the term. (See City of Pomona v. Superior Court (2001) 89 Cal.App.4th 793, 803 [“Allegations of the defendant’s knowledge and intent to deceive may use conclusive language.”].)

Plaintiffs have pled all of the necessary elements of financial elder abuse against State Farm, and that is all that is required of them at the pleading stage. The demurrer will be overruled.

            Motion to Strike

State Farm moves to strike 12 paragraphs of plaintiffs’ FAC related to punitive damages.

“The court may, upon a motion made pursuant to Section 435, or at any time in its discretion, and upon terms it deems proper: (a) Strike out any irrelevant, false, or improper matter inserted in any pleading.” (Code Civ. Proc., § 436.) “Irrelevant matter” includes a “demand for judgment requesting relief not supported by the allegations of the complaint.” (Code Civ. Proc., § 431.10, subds. (b)(3), (c).) “The grounds for a motion to strike shall appear on the face of the challenged pleading or from any matter of which the court is required to take judicial notice.” (Code Civ. Proc., § 437, subd. (a).)

“[J]udges read allegations of a pleading subject to a motion to strike as a whole, all parts in their context, and assume their truth.” (Clauson v. Superior Court (1998) 67 Cal.App.4th 1253, 1255.)

“Notices must be in writing, and the notice of a motion, other than for a new trial, must state when, and the grounds upon which it will be made, and the papers, if any, upon which it is to be based.” (Code Civ. Proc., § 1010.)

“A basic tenet of motion practice is that the notice of motion must state the grounds for the order being sought [citations], and courts generally may consider only the grounds stated in the notice of motion [citation].” (Kinda v. Carpenter (2016) 247 Cal.App.4th 1268, 1277.)

As stated above, State Farm’s notice of motion does not state any grounds upon which it moves to strike the paragraphs pertaining to punitive damages. The motion fails for that reason.

Even if State Farm had properly noticed the motion to strike, by including grounds for the motion in the notice, the motion would fail on substantive grounds. As with the demurrer, State Farm’s motion to strike is improperly based on arguments regarding the merits of plaintiffs’ claims rather than on the allegation of the FAC itself.

“Where it is proven by a preponderance of the evidence that a defendant is liable for financial abuse, as defined in Section 15610.30, and where it is proven by clear and convincing evidence that the defendant has been guilty of recklessness, oppression, fraud, or malice in the commission of the abuse, in addition to reasonable attorney’s fees and costs set forth in subdivision (a), compensatory damages, and all other remedies otherwise provided by law, the limitations imposed by Section 377.34 of the Code of Civil Procedure on the damages recoverable shall not apply.” (Welf. & Inst. Code, § 15657.5, subd. (b).)

If plaintiffs are successful in proving their allegations at the time of trial, a reasonable trier of fact could conclude that State Farm was “guilty of recklessness, oppression, fraud, or malice in the commission of the abuse.”

The allegations are sufficient and State Farm’s motion to strike will be denied.