Superior Court, State of California



|LINE # |CASE # |CASE TITLE |RULING |

|LINE 1 |19CV355065 |ON DECK CAPITAL, INC. vs LEON ZERBIB-BERDA et|OEX can proceed, as there previously had been personal service on the|

| | |al |examinee. The examinee can appear in person or by CourtCall. If the|

| | | |examinee does not appear, the stayed bench warrant will be “unstayed”|

| | | |and become active. |

|LINE 2 |19CV351016 |John Fernandez et al vs General Motors, LLC |There is no evidence that the moving party notified other parties of |

| | |et al (demurrer) |the 1/12/21 date for the motion (e.g., by filing and serving an |

| | | |amended notice of motion with the correct date). Therefore, the |

| | | |Court CONTINUES the motion to 3/2/21, with opposition and reply dates|

| | | |keyed off that hearing date in accordance with CCP section 1005. The|

| | | |Court also orders the moving party to promptly file and serve an |

| | | |amended notice of motion with the new hearing date. |

| | | | |

| | | |Also, the 2 hearings set for 2/9/21 are taken OFF CALENDAR as moot. |

|LINE 3 |19CV351016 |John Fernandez et al vs General Motors, LLC |Same as line 2. |

| | |et al (motion to strike) | |

|LINE 4 |20CV369218 |Wheeler Accountants, LLP vs CAMICO Mutual |See tentative ruling. The Court will prepare the final order. |

| | |Insurance Company | |

|LINE 5 |17CV312922 |Kenneth Speaks vs Apple Inc. et al |Apple s motion to compel responses to its RFAs is MOOT, as Plaintiff |

| | | |(belatedly) served RFA responses But that doesn’t render Apple’s |

| | | |request for sanctions moot. Plaintiff has not shown substantial |

| | | |justification for serving the RFAs so late. The Court therefore |

| | | |awards reasonable monetary sanctions of $500, payable by Plaintiff to|

| | | |Apple c/o Apple’s counsel within 30 days of the date of the order |

| | | |(1/12/21). |

|LINE 6 |18CV336878 |Baiting Jiang v. Jianjun Jiang |Defendant’s motion to compel further discovery responses was filed |

| | | |more than 45 days after the responses were sent. Normally, filing a |

| | | |motion after the 45-day deadline is not permitted. But because |

| | | |plaintiff did not provide verified responses, the deadline does not |

| | | |apply. |

| | | | |

| | | |The Court agrees that the discovery at issue is relevant and must be |

| | | |answered substantively. The Court therefore GRANTS the motion to |

| | | |compel and requires substantive, Code-compliant responses without |

| | | |objections to be served on defendant’s counsel within 30 days from |

| | | |today (1/12/21). And because plaintiff’s litigation position was not|

| | | |substantially justified, the Court assesses reasonable monetary |

| | | |sanctions of $1000, payable by plaintiff to defendant c/o defendant’s|

| | | |counsel within 30 days of today (1/12/21). |

| | | | |

| | | |The Court also notes that it is not considering plaintiff’s extremely|

| | | |late “second” opposition. |

|LINE 7 |18CV329302 |Dulce Valencia vs James Solar et al |Good cause appearing, the Court GRANTS plaintiff’s counsel’s motion |

| | | |to withdraw and sign the previously-submitted order. |

|LINE 8 |19CV348059 |Ayhan Menekshe et al vs Johnnell Alva et al |The Court previously found in its previous order setting aside the |

| | | |entry of default against defendant Fanny Esther Alva (“FEA”) that FEA|

| | | |was not properly served with the summons and complaint. There also |

| | | |is no evidence that she was properly served with the writ of |

| | | |attachment papers before the attachment occurred. Therefore, the |

| | | |Court GRANTS the motion to set aside the writ of attachment and right|

| | | |to attach order as to FEA. |

|LINE 9 |19CV348059 |Ayhan Menekshe et al vs Johnnell Alva et al |The Court finds that proper service of the renewed writ of attachment|

| | | |application on FEA has occurred. The Court also finds that all of |

| | | |the elements required for a writ of attachment under CCP section |

| | | |483.010 have been shown. Therefore, the Court GRANTS the application|

| | | |for a renewed writ of attachment and right to attach order for FEA. |

|LINE 10 |19CV355771 |Hector Mendez et al vs Price-Simms, Inc. et |Good cause appearing, the Court GRANTS plaintiff’s counsel’s motion |

| | |al |to withdraw and sign the previously-submitted order. |

|LINE 11 |2015-1-CV-275259 |S. Sharufa, Et Al Vs Raging Waters Of |CONTINUED TO 2/23/21 to join the other motion in this case. |

| | |California, Ltd. | |

|LINE 12 |19CV355202 |Unifund CCR, LLC vs Marilou Anderson |Good cause appearing, the Court GRANTS Plaintiff’s unopposed motion. |

| | | |The Court will enter judgment in favor of Plaintiff and against |

| | | |Defendant in the total amount of |

| | | |$2,432.25 based upon Defendant’s default under the terms of the |

| | | |written settlement agreement. |

| | | | |

| | | |Plaintiff to electronically file proposed order and judgment. |

|LINE 13 |20CV369300 |LVNV Funding LLC et al vs Kristie Prinz |There is no evidence that Ms. Prinz notified LVNV Funding of the |

| | | |1/12/21 date for her motion (e.g., by filing and serving an amended |

| | | |notice of motion with the correct date). Therefore, the Court |

| | | |CONTINUES the motion to 2/23/21, with opposition and reply dates |

| | | |keyed off that hearing date in accordance with CCP section 1005. The|

| | | |Court also orders Ms. Prinz to promptly file and serve an amended |

| | | |notice of motion with the new hearing date. |

|LINE 14 |1996-1-CV-759667 |City Of San Jose et al vs Martin C. Alvarez |The Court asks the relevant parties to appear by Zoom. (The link was|

| | |et al |previously circulated by counsel for the City.) |

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Case No.: 20CV369218

Defendant Camico Mutual Insurance Company (“Defendant”) moves to strike portions of the complaint (“Complaint”) filed by plaintiff Wheeler Accountants, LLP, f/k/a LMGW Certified Public Accountants, LLC (“Plaintiff”).

I. Background

A. Factual

This is an action for breach of contract and breach of the implied covenant of good faith and fair dealing arising out of the denial of an insurance claim. According to the allegations of the Complaint, for the last nine years, Defendant issued to Plaintiff an Accountants Professional Liability Insurance Policy which provided coverage for acts, errors, and omissions in the rendering of accounting services. (Complaint, ¶ 6.) The policy issued for the period 1/18/17 to 1/18/18 (the “Policy”) provided, in part, that Defendant would pay “those sums that an Insured becomes legally obligated to pay as Damages because of a Claim which arises from an Insured’s act, error or omission in rendering or failing to render Professional Services ….” (Id., ¶ 7.) On September 14, 2017, various entities (collectively, the “Underlying Plaintiffs/Claimants”) filed a lawsuit against Plaintiff and its partner Matthew Wheeler entitled Medimpact Healthcare Systems, Inc. v. LMGW Certified Public Accountants, LLP, et al. in San Diego County Superior Court (the “Medimpact Lawsuit”). (Id., ¶ 13.) The Underlying Plaintiffs/Claimants, along with the Howe Family Trust, also filed a demand for Arbitration with AAA on September 19, 2017, seeking $10 million in damages from Plaintiff and Matthew Wheeler (the “Medimpact Arbitration”). (Id., ¶ 14.) The Medimpact Lawsuit was stayed during the pendency of the Medimpact Arbitration and was later dismissed after the arbitrators entered their final award in favor of Plaintiff and Matthew Wheeler. (Id., ¶ 16.) The Medimpact Lawsuit and the Medimpact Arbitration are collectively referred to herein as the “Claim.” (Id., ¶ 15.)

The Medimpact Complaint and Demand for Arbitration were tendered to Defendant within approximately a week of their filing. (Complaint, ¶ 18.) Without performing any meaningful investigation, Defendant disclaimed all coverage, stating it was “unable to provide a defense or indemnity.” (Id.) Defendant asserted that several of the Policy’s exclusion provisions applied, particularly Exclusions A, D and F. (Id., ¶¶ 18-21.)

In subsequent correspondence from Defendant’s Claims Manager, Mark Aubrey (“Aubrey”), Defendant advised, without providing any meaningful analysis, that earlier-filed litigation involving Matthew Wheeler's ’father, David Wheeler, and the Claim for which Defendant was seeking coverage “constitute[d] a single Claim under the terms of the Policy” and that this informed Defendant’s coverage analysis and position. (Complaint, ¶ 22.) This conclusion was unreasonable in that it overlooked that (1) Matthew Wheeler was not named as a defendant in the litigation filed against his father in an entirely different lawsuit (the “Medimpact Cross-Complaint”), and (2) David Wheeler was not named as a defendant in the Medimpact Complaint. (Id.)

In correspondence dated July 9, 2018, Plaintiff challenged Defendant’s denial of coverage, citing a California Court of Appeal case which directly contradicted Defendant’s reading of Exclusion F and its contention that that exclusion negated its duty to defend. (Complaint, ¶ 24.) Plaintiff also explained that at the time of denial, Defendant did not have the type of evidence necessary for application of that exclusion. (Id.) Defendant nonetheless affirmed its denial in correspondence dated July 18, 2018, ridiculing Plaintiff’s analysis and ignoring the authority it cited. (Id., ¶ 25.) Defendant did, however, concede that Exclusion D was not applicable. (Id., ¶ 26.)

As a result of the foregoing, Plaintiff was left to hire defense counsel at its own expense. (Complaint, ¶ 28.) After 2.5 years and an eight-day arbitration, which resulted in significant fees and costs for Plaintiff which should have been borne by Defendant, Plaintiff and Matthew Wheeler prevailed on all claims. (Id, ¶ 29.)

B. Procedural

Based on the foregoing allegations, on August 6, 2020, Plaintiff filed the Complaint against Defendant for (1) breach of contract and (2) breach of the covenant of good faith and fair dealing. On October 30, 2020, Defendant filed the instant motion to strike portions of the Complaint. (Code Civ. Proc., §§ 435 and 436.) Plaintiff opposes the motion.

II. Defendant’s Motion to Strike

With the instant motion, Defendant moves to strike Plaintiff’s request for punitive damages and allegations relating thereto, arguing that Plaintiff has not pleaded sufficient facts to support such damages.

Generally, an insured may sue for breach of the duty of good faith and fair dealing on both contract and tort theories and thus punitive damages are potentially available. (Frazier v. Metro Life Ins. Co. (1985) 169 Cal.App.3d 90, 107.) However, the insured is not automatically entitled to punitive damages upon showing that the insurer breached the implied covenant of good faith and fair dealing; the insured must still establish that the insurer acted with the requisite intent to warrant such damages. (Delgado v. Heritage Life Ins. Co. (1984) 157 Cal.App.3d 262, 277.)

As a general matter, the right to recover punitive damages requires proof of “oppression, fraud, or malice” on the part of the defendant by “clear and convincing evidence.”  (Civ. Code, § 3294, subd. (a).)  For pleading purposes, in order to support a prayer for punitive or exemplary damages, the complaint must allege “ultimate facts of the defendant’s oppression, fraud or malice.”  (Cyrus v. Haveson (1976) 65 Cal.App.3d 306, 316-317.)  Simply pleading the statutory terms “oppression, fraud or malice” is insufficient to adequately allege punitive damages, but only to the extent that the complaint pleads facts to support those allegations.  (Blegen v. Superior Court (1986) 176 Cal.App.3d 503, 510-511.)  Therefore, specific factual allegations demonstrating oppression, fraud or malice are required.  (Brousseau v. Jarrett (1977) 73 Cal.App.3d 864, 872.)  However, the complaint will be read as a whole so that even conclusory allegations may suffice when read in context with facts alleged as to the defendant’s wrongful conduct.  (Perkins v. Super. Ct. (1981) 117 Cal.App.3d 1, 6-7; Clauson v. Super. Ct. (1998) 67 Cal.App.4th 1253, 1255).   

Additionally, where the defendant is a corporation, as it is here, an award of punitive damages will not lie unless the Plaintiff sets forth specific factual allegations demonstrating that the corporation’s officer, director, or managing agent authorized or ratified the conduct for which the damages are sought. (Code Civ. Proc., § 3294, subd. (b).)

In the Complaint, the bases alleged by Plaintiff in support of its request for punitive damages are oppression, fraud and malice. (Complaint, ¶ 40.) Under the punitive damages statute, Civil Code section 3294, “malice” is defined as conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.”  (Civ. Code, § 3294, subd. (c)(1).)  “Oppression” is defined as “despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights.”  (Id., § 3294, subd. (c)(2).)  “Despicable conduct,” in turn, has been described as conduct that is “so vile, base, contemptible, miserable, wretched or loathsome that it would be looked down upon and despised by ordinary decent people.”  (Mock v. Michigan Millers Mutual Ins. Co. (1992) 4 Cal.App.4th 306, 331.)  Finally, “fraud” is defined within the statute as “an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.”  (Civ. Code, § 3294, subd. (c)(3).)    

Defendant maintains that Plaintiff has failed to allege specific facts which evidence its alleged malice, oppression or fraud, instead setting forth what amounts to a mere restatement of the statutory components of punitive damages and conclusory, non-specific allegations. In opposition, Plaintiff maintains that it has pleaded sufficient facts to support its request by setting forth allegations that Defendant engaged in conduct towards it with an intent to injure. More specifically, Plaintiff maintains that allegations that Defendant engaged in bad faith by, among other things, taking an unreasonable and erroneous coverage position without performing an adequate investigation and unreasonably maintaining that position even after being advised that it contradicted applicable insurance law, are sufficient to support an award for punitive damages. Plaintiff also highlights allegations that Defendant continued to deny it insurance benefits despite possessing information that “clearly and unambiguously demonstrated that it was contractually obligated to defend [Plaintiff]” and did so in order to enrich itself, gambling that Defendant’s denial would go unchallenged. (Complaint, ¶ 40.) The Court does not find Plaintiff’s arguments persuasive.

As the Court reads the allegations of the Complaint, what Plaintiff has alleged is merely a contractual dispute regarding the interpretation (and application) of various exclusions contained within Plaintiff’s professional liability policy. Even if it is true that Defendant wrongfully denied Plaintiff’s claim, that would support a cause of action for bad faith and not, without specific facts demonstrating conduct by Defendant that is “so vile, base, contemptible, miserable, wretched or loathsome,” an award of punitive damages. The wrongfulness of conduct necessary to award punitive damages is greater than that necessary to find “bad faith.” (Tomeselli v Transamerica Ins. Co (1994) 25 Cal.App.4th 1269, 1286.) Moreover, Plaintiff has not pleaded facts which establish that an officer, director, or managing agent of Defendant authorized or ratified the conduct for which the damages are sought. While Claims Manager Aubrey is mentioned in the Complaint several times, there are no allegations that he was an officer, director or managing agent of Defendant within the meaning of the punitive damages statute.

Accordingly, based on the foregoing, Defendant’s motion to strike is GRANTED WITH 20 DAYS’ LEAVE TO AMEND.

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