Axiom Repertory Theatre v. Charity One Insurance Agency, et al.

CASE NUMBER: 26CV-0209907 Tentative Ruling on Charity One Demurrer: Defendant Charity One Insurance Agency (“Charity One”), Caroline O’Connor, Sarai Zamora, Claudine Ford, and Lisa Delgado demur to Plaintiff Axiom Repertory Theatre’s (“Axiom”) First Amended Complaint. Axiom opposes the demurrer.

The FAC generally alleges that Axiom, a nonprofit theater company in Redding, suffered losses due to an October 30, 2024, fire. Axiom alleges its insurance broker Charity One Insurance Agency, several of Charity One’s employees, and Great American Insurance Company are liable for damages on claims including negligence, breach of contract, fraud, and other causes of action relating to Axiom’s insurance coverage.

The Complaint includes fifteen causes of action. This demurrer concerns the following nine: First (Professional Negligence against O’Connor and Zamora), Second (Heightened Duty against Charity One, O’Connor and Zamora), Third (Declaratory Relief), Fifth (Breach of Contract), Sixth (Breath of Implied Covenant of Good Faith and Fair Dealing), Seventh (Negligent Misrepresentation and constructive Fraud against Charity One, O’Connor, Zamora, and Delgado), Eighth (Intentional Misrepresentation and Constructive Fraud); Eleventh (Aiding and Abetting), and Thirteenth (Restitution and Unjust Enrichment).

Meet and Confer: CCP § 430.41 requires the demurring party to “meet and confer in person or by telephone with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer.” The Declaration of Khodadad Sharif establishes compliance with this requirement.

Merits: A demurrer should be sustained if the complaint fails to “state facts sufficient to constitute a valid cause of action.” CCP § 430.10(e). A demurrer can be used to challenge defects that appear on the face of the complaint or from matters that may be subject to judicial notice. Blank v. Kirwan (1985) 39 Cal. 3d 311, 318. The court “treat[s] the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law.” Hood v. Hacienda La Puente Unified School District (1998) 65 Cal. App. 4th 435, 438. No matter how unlikely, a plaintiff’s allegations must be accepted as true for the purpose of ruling on a demurrer. Del. E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal. App. 3d 593, 604. A plaintiff must plead ultimate facts that acquaint the defendant with the nature, source and extent of plaintiff’s causes of action. 1

Doe v. City of Los Angeles (2007) 42 Cal. 4th 542, 550.

First COA – Professional Negligence. Charity One argues that the individually named Defendants O’Connor and Zamora cannot be held individually liable as agents of the principal. “When supported by appropriate facts, an insurer's mishandling of a claim ... may also be actionable under one or more of the following alternative tort theories: [¶] ... [¶] ... Negligent Misrepresentation.” (Croskey et al., Cal. Practice Guide: Insurance Litigation (The Rutter Group 2013) ¶ 11:9, p. 11-3 (rev. # 1, 2011) (Croskey).)

And the treatise goes on to state, in pointblank terms: “The insurer's agents and employees may have committed some independent tort in the course of handling the third party claims; e.g., misrepresentation or deceit, invasion of privacy, intentional infliction of emotional distress, etc. In such event, they can be held personally liable, even though not parties to the insurance contract. Bock v. Hansen (2014) 225 Cal.App.4th 215, 228.

The FAC alleges that O'Connor and Zamora personally failed to timely process the renewal application, failed to bind coverage before the lapse date, failed to update coverage per Axiom's specific requests, and personally participated in the solicitation of no-loss letters with knowledge of the fire loss. These are allegations of personal tortious conduct, not vicarious liability for Charity One's contractual obligations. The demurrer as to O'Connor and Zamora on this cause of action is OVERRULED.

Second COA – Heightened Duty. Charity One argues that there is no heightened duty or presumption of expertise for O’Connor and Zamora. “[A]s a general proposition, an insurance agent does not have a duty to volunteer to an insured that the latter should procure additional or different insurance coverage. ... The rule changes, however, when--but only when--one of the following three things happens: (a) the agent misrepresents the nature, extent or scope of the coverage being offered or provided (as in Free, Desai and Nacsa), (b) there is a request or inquiry by the insured for a particular type or extent of coverage (as in Westrick), or (c) the agent assumes an additional duty by either express agreement or by "holding himself out" as having expertise in a given field of insurance being sought by the insured (as in Kurtz). Fitzpatrick v. Hayes (1997) 57 Cal.App.4th 916, 927.

All three Fitzpatrick exceptions are pled in the FAC: 1) Charity One holds itself out as an exclusive nonprofit insurance specialist with risk management expertise; 2) Axiom's specific requests for additional coverage including liquor liability and updated property limits; and 3) Charity One's alleged misrepresentation of the scope of coverage by concealing underinsurance clauses. Whether the facts are sufficient to establish heightened duty is a fact-intensive inquiry that cannot be resolved as a matter of law on demurrer. The demurrer as to O’Connor and Zamora on this cause of action is OVERRULED.

Third COA – Declaratory Judgment. Charity One argues that this claim is not necessary or proper under CCP 1060, as it brings no new issues that are not already to be decided by the Court. Axiom is entitled to plead legal theories in the alternative without rendering the pleading defective. An election cannot be forced by demurrer. Steiner v. Rowley (1950) 35 Cal.2d 713, 718–19. A declaration here would determine the operative policy, the legal effect of Great American's rescission, its continuing obligations to adjust and pay remaining benefits, and the prospective duty to disclose material contract terms. Haynes v. Farmers Ins. Exchange (2004) 32 Cal.4th 1198. The cause of action is sufficiently pled. The demurrer as to the Third Cause of Action is OVERRULED.

Fifth COA – Breach of Contract. Charity One argues that the Complaint fails to plead any elements of this claim and that the allegations are uncertain and ambiguous. The elements of a cause of action for breach of an insurance contract are (1) the contract, (2) the insured's performance or excuse for nonperformance, (3) the insurer's breach, and (4) resulting damages. Gharibian v. Wawanesa General Ins. Co. (2025) 108 Cal.App.5th 730, 737.

The FAC alleges Axiom retained Charity One as its broker for years, that Charity One undertook to procure, renew, and maintain insurance coverage for Axiom, that Axiom submitted renewal materials through Charity One, that Charity One accepted and processed those materials, transmitted renewal offers and premium payment 2

links, and that Axiom paid premiums in reliance on Charity One's role in securing coverage. These allegations are sufficient at the pleading stage to allege a contractual relationship formed through conduct, course of dealing, and payment. Breach and damages are clearly alleged. The demurrer as to this cause of action is OVERRULED.

Sixth COA – Breach of Implied Covenant. Charity One argues that this cause of action is uncertain and fails to state sufficient facts, as it just restates the breach of contract claim. The elements of a cause of action for breach of the implied covenant of good faith and fair dealing are: (1) the insurer was obligated under the policy to the insured, (2) the implied duty of good faith and fair dealing arose, (3) the insurer unreasonably breached that duty, and (4) the breach caused damages. Love v. Fire Ins. Exchange (1990) 221 Cal.App.3d 1136, 115; Waters v. United Services Auto. Assn. (1996) 41 Cal.App.4th 1063, 1079.

The special relationship supporting a tort claim for breach of the implied covenant in the insurance context exists between an insured and its insurer, not between an insured and its broker. See Gruenberg v. Aetna Ins. Co. (1973) 9 Cal.3d 566, 576 (the non-insurer defendants were not parties to the agreements for insurance; therefore, they are not, as such, subject to an implied duty of good faith and fair dealing). Charity One is not the insurer. Axiom's special relationship for purposes of bad faith is with Great American. The demurrer to this cause of action is SUSTAINED without leave to amend.

Seventh COA – Negligent Misrepresentation/Constructive Fraud. Charity One argues that this cause of action will not lie against O’Connor, Zamora, Ford, and Delgado because they cannot be personally liable in this litigation. Charity One also argues that Charity One owes no fiduciary duty to Plaintiff.

The FAC adequately pleads a fiduciary relationship. Under California Insurance Code section 1733, those who accept premium payments hold those funds in a fiduciary capacity. Charity One alleges it accepted premium payment from Axiom on October 31, 2024, for a policy it did not timely bind and at a time it allegedly knew of the fire loss. An insurance broker acts in a fiduciary capacity when receiving and holding premiums. Mark Tanner Constr. v. Hub Internat. Ins. Servs. (2014) 224 Cal.App.4th 574, 585. That is sufficient at the pleading stage to allege a fiduciary relationship from which constructive fraud may arise.

As to the liability of individual defendants O'Connor, Zamora, Ford, and Delgado, the FAC pleads their personal participation in the post-loss conduct and the no-loss letter scheme. Allegations of that personal participation, combined with the fiduciary relationship arising from the premium payment they facilitated, is sufficient to survive demurrer. The demurrer as to this cause of action is OVERRULED.

Eighth COA – Intentional Misrepresentation/Constructive Fraud. Charity One argues the FAC does not allege facts with the required specificity to state a fraud claim. Fraud must be pleaded with particularity. Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 63. Where fraud is alleged against a corporation or its employees, the plaintiff must allege the names of the persons who made the fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.

The FAC satisfies this standard. Paragraphs 69 through 113, under the section heading "Axiom's Fire and Charity One's Fraudulent Renewal Attempt," identify O'Connor and Zamora by name, allege specific dates and times of communications, describe the content of emails soliciting no-loss letters, and allege that these representations were made with actual knowledge of the October 30, 2024 fire loss. Fraud is alleged with the requisite specificity. The demurrer as to this cause of action is OVERRULED.

Eleventh COA – Aiding and Abetting. Charity One argues this cause of action is deficient for failing to allege knowledge of the actual wrongful act. Aiding and abetting requires that a defendant knowingly give substantial assistance to someone who performed wrongful conduct, with actual knowledge of the specific primary violation. 3

Casey v. U.S. Bank Nat. Assn. (2005) 127 Cal.App.4th 1138, 1148. General allegations of actual knowledge of a specific primary violation are sufficient. Ibid. The FAC alleges Ford and Delgado had actual knowledge of O'Connor and Zamora's fraudulent conduct and provided substantial assistance through ratification and approval of fraudulent communications. (FAC ¶¶ 262-264.) These general allegations of actual knowledge of the specific primary violation are sufficient to survive the demurrer. The demurrer as to this cause of action is OVERRULED.

Thirteenth COA – Restitution/Unjust Enrichment. (Unjust Enrichment is listed as the fourteenth on the caption page, but as the thirteenth in the body of the FAC.) Charity One argues that unjust enrichment is not a stand-alone cause of action, and there is no basis for restitution.

“Unjust enrichment is generally an inapplicable basis for restitution where the parties have an enforceable express contract; however, restitution may be awarded in lieu of breach of contract damages when the parties had an express contract, but it was procured by fraud or is unenforceable or ineffective for some reason, or where the defendant obtained a benefit from the plaintiff by fraud, duress, conversion, or similar conduct. Common law principles of restitution require a party to return a benefit when the retention of such benefit would unjustly enrich the recipient; a typical cause of action involving such remedy is ‘quasi-contract.

Thus, Sepanossian's “unjust enrichment” claim does not properly state a cause of action. Because Sepanossian does not dispute there were express form contracts in this case, he cannot assert a quasi-contract claim for restitution based on unjust enrichment. “Although a plaintiff may plead inconsistent claims that allege both the existence of an enforceable agreement and the absence of an enforceable agreement, that is not what occurred here. Instead, [Sepanossian‘s] breach of contract claim pleaded the existence of ... enforceable agreement[s] and [his] unjust enrichment claim did not deny the existence or enforceability of [those] agreement[s]. [Sepanossian is] therefore precluded from asserting a quasi-contract claim under the theory of unjust enrichment.”

Sepanossian v. National Ready Mixed Concrete Co. (2023) 97 Cal.App.5th 192, 207 (internal quotations and citations omitted).

Here, Plaintiff has plead inconsistent claims that allege both the existence of an enforceable agreement and the absence of an enforceable agreement, which gives rise to the quasi-contract claim under the theory of unjust enrichment. This is permissible as discussed in Sepanossian. The cause of action is adequately pled. The demurrer as to the Thirteenth Cause of Action is OVERRULED

Charity One’s Demurrer is sustained without leave to amend as to the sixth cause of action and is overruled as to all other contested causes of action. Charity One is directed to submit a new proposed order consistent with this ruling. Plaintiff will have 20 days’ leave to file a Second Amended Complaint from notice of entry of order.

AXIOM REPERTORY THEATRE VS. CHARITY ONE INSURANCE AGENCY, ET AL. CASE NUMBER: 26CV-0209907 Tentative Ruling on Great American’s Demurrer: Defendant Great American Assurance Company (“Great American”) demurs to six of the twelve causes of action alleged against it by Plaintiff Axiom Repertory Theatre (“Axiom”) in the First Amended Complaint (“FAC”). Axiom opposes the demurrer.

The FAC generally alleges that Axiom, a nonprofit theater company in Redding, suffered losses due to an October 30, 2024 fire. Axiom alleges its insurance broker Charity One Insurance Agency, several of Charity One’s employees, and Great American Insurance Company are liable for damages on claims including negligence, breach of contract, fraud, and other causes of action relating to Axiom’s insurance coverage.

The Complaint includes fifteen causes of action, twelve of which are alleged against Great American. This demurrer concerns the following six: the Third Cause of Action (Declaratory Judgement), Fourth (Reformation), Fifth (Breach of Contract), Sixth (Breach of Implied Covenant of Good Faith and Fair Dealing), Ninth (Conspiracy), and Thirteenth (Unjust Enrichment). Great American demurs on the grounds that the Third, Fourth, 4

Fifth, Sixth, Ninth, and Thirteenth Causes of Action fail to state facts sufficient to constitute a cause of action pursuant to CCP 430.10(e); and on the grounds that the Fifth Cause of Action is uncertain, and it cannot be ascertained whether the alleged contract is written, oral, or implied by conduct pursuant to CCP 430.10(f) and (g). The Court will address each challenged cause of action in the order the parties presented their arguments in the briefing.

Meet and Confer: CCP § 430.41 requires the demurring party to “meet and confer in person or by telephone with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer.” The Declaration of Andrew Downs establishes compliance with this requirement.

Merits: A demurrer should be sustained if the complaint fails to “state facts sufficient to constitute a valid cause of action.” CCP § 430.10(e). A demurrer can be used to challenge defects that appear on the face of the complaint or from matters that may be subject to judicial notice. Blank v. Kirwan (1985) 39 Cal. 3d 311, 318. The court “treat[s] the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law.” Hood v. Hacienda La Puente Unified School District (1998) 65 Cal.

App. 4th 435, 438. No matter how unlikely, a plaintiff’s allegations must be accepted as true for the purpose of ruling on a demurrer. Del. E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal. App. 3d 593, 604. A plaintiff must plead ultimate facts that acquaint the defendant with the nature, source and extent of plaintiff’s causes of action. Doe v. City of Los Angeles (2007) 42 Cal. 4th 542, 550.

Fourth COA – Reformation. Civ. Code § 3399 provides: “When, through fraud or a mutual mistake of the parties, or a mistake of one party, which the other at the time knew or suspected, a written contract does not truly express the intention of the parties, it may be revised on the application of a party aggrieved, so as to express that intention, so far as it can be done without prejudice to rights acquired by third persons, in good faith and for value.”

“The allegations necessary to state a cause of action for reformation are ... as follows: "A complaint for the reformation of a contract should allege what the real agreement was, what the agreement as reduced to writing was, and where the writing fails to embody the real agreement. It is also necessary to aver facts showing how the mistake was made, whose mistake it was and what brought it about, so that mutuality may appear." Lane v. Davis (1959) 172 Cal.App.2d 302, 309.

Great American argues that Axiom has only alleged an implied policy, and that relief cannot be had for an alleged unwritten policy. This cause of action alleges Plaintiff had an “actual insurance contract for the October 2023- October 2024 term” and an “implied insurance contract for the October 2024-October 2025 year term.” (FAC ¶ 183.) “The 2024 Contract is implied from Axiom’s application for an updated policy with higher limits than the 2023 Contract ...”) (FAC ¶ 184.) “Due to mistake and/or the inequitable conduct of Defendants and their agents ... the insurance contract that governed Plaintiff’s coverage at the time of loss did not reflect the coverage limits that were intended by Plaintiff.” (FAC ¶ 187.)

As pled, Plaintiff has not alleged an actual agreement, reduced to writing, which fails to embody the real agreement. Instead, Plaintiff alleges that the agreement should have been reduced to writing, but was not. This is insufficient to state a claim for reformation. “Reformation is an equitable remedy the essential purpose of which is to ensure the contract, as reformed, reflects the parties' mutual intention. [Citations.] “In reforming the written agreement, a court may ‘transpose[], reject[], or suppl[y]’ words [citation], but has ‘“no power to make new contracts for the parties”’ [citation].

Rather, the court may only reform the writing to conform with the mutual understanding of the parties at the time they entered into it, if such an understanding exists. [Citation.]” Komorsky v. Farmers Ins. Exchange (2019) 33 Cal.App.5th 960, 974. To state a cause of action for reformation, a party must allege an agreement reduced to writing. As pled, the FAC seeks to reform an implied contract, one which was not reduced to writing. The demurrer as to the Fourth Cause of Action is SUSTAINED with leave to amend. 5

Fifth COA – Breach of Contract. The elements of a cause of action for breach of an insurance contract are (1) the contract, (2) the insured's performance or excuse for nonperformance, (3) the insurer's breach, and (4) resulting damages. Gharibian v. Wawanesa General Ins. Co. (2025) 108 Cal.App.5th 730, 737. Great American argues that Axiom’s breach of contract claim is based on a defective reformation theory, and that it is uncertain because Axiom does not attach or allege all material terms of the alleged implied contract. Plaintiff’s FAC adequately alleges each of the requirement elements. In contrast to reformation, breach of contract is an available cause of action for an implied contract.

“A contract may be written, oral or inferred from the parties' conduct as an “implied-in-fact” contract. ... An implied contract must be founded upon an ascertained agreement of the parties to perform it. ...Accordingly, an implied-in-fact contract “‘consists of obligations arising from a mutual agreement and intent to promise where the agreement and promise have not been expressed in words.’” Siskiyou Hospital, Inc. v. County of Siskiyou (2025) 109 Cal.App.5th 14, 52. The breach of contract cause of action is not dependent on the reformation theory. The cause of action is sufficiently pled. The demurrer as to the Fifth Cause of Action is OVERRULED.

Third COA – Declaratory Judgment. Great American argues that this claim is duplicative of Axiom’s breach of contract claim, and that it is prospective only, while Axiom’s grievances all concern the past. Axiom is entitled to plead legal theories in the alternative without rendering the pleading defective. An election cannot be forced by demurrer. Steiner v. Rowley (1950) 35 Cal.2d 713, 718–19. A declaration here would determine the operative policy, the legal effect of Great American's rescission, its continuing obligations to adjust and pay remaining benefits, and the prospective duty to disclose material contract terms. Haynes v. Farmers Ins. Exchange (2004) 32 Cal.4th 1198. The cause of action is sufficiently pled. The demurrer as to the Third Cause of Action is OVERRULED.

Sixth COA – Breach of Implied Covenant of Good Faith and Fair Dealing. The elements of a cause of action for breach of the implied covenant of good faith and fair dealing are: (1) the insurer was obligated under the policy to the insured, (2) the implied duty of good faith and fair dealing arose, (3) the insurer unreasonably breached that duty, and (4) the breach caused damages. Love v. Fire Ins. Exchange (1990) 221 Cal.App.3d 1136, 115; Waters v. United Services Auto. Assn. (1996) 41 Cal.App.4th 1063, 1079.

Great American argues that this claim concerns alleged mishandling of a renewal application, and the implied covenant is based on contractual performance, not contractual formation. As discussed above, Plaintiff has properly alleged an implied contract. If Great American is found to be obligated under that contract to the insured, then the implied duty arose. Additionally, Plaintiff alleges Great American was obligated under the prior year’s policy, and that the breach related to acts or omissions during renewal of that policy and prior to its expiration. The claim is adequately pled. The demurrer as to the Sixth Cause of Action is OVERRULED.

Thirteenth COA – Restitution/Unjust Enrichment (Unjust Enrichment is listed as the fourteenth on the caption page, but as the thirteenth in the body of the FAC.) Great American argues that this is not a stand-alone cause of action.

“Unjust enrichment is generally an inapplicable basis for restitution where the parties have an enforceable express contract; however, restitution may be awarded in lieu of breach of contract damages when the parties had an express contract, but it was procured by fraud or is unenforceable or ineffective for some reason, or where the defendant obtained a benefit from the plaintiff by fraud, duress, conversion, or similar conduct. Common law principles of restitution require a party to return a benefit when the retention of such benefit would unjustly enrich the recipient; a typical cause of action involving such remedy is ‘quasi-contract.

Thus, Sepanossian's “unjust enrichment” claim does not properly state a cause of action. Because Sepanossian does not dispute there were express form contracts in this case, he cannot assert a quasi-contract claim for restitution based on unjust enrichment. “Although a plaintiff may plead inconsistent claims that allege both the existence of an enforceable 6

agreement and the absence of an enforceable agreement, that is not what occurred here. Instead, [Sepanossian‘s] breach of contract claim pleaded the existence of ... enforceable agreement[s] and [his] unjust enrichment claim did not deny the existence or enforceability of [those] agreement[s]. [Sepanossian is] therefore precluded from asserting a quasi-contract claim under the theory of unjust enrichment.” Sepanossian v. National Ready Mixed Concrete Co. (2023) 97 Cal.App.5th 192, 207 (internal quotations and citations omitted).

Here, Plaintiff has plead inconsistent claims that allege both the existence of an enforceable agreement and the absence of an enforceable agreement, which gives rise to the quasi-contract claim under the theory of unjust enrichment. This is permissible as discussed in Sepanossian. The cause of action is adequately pled. The demurrer as to the Thirteenth Cause of Action is OVERRULED

Ninth COA – Conspiracy. Great American argues that this is not a stand-alone cause of action. “Conspiracy is not a cause of action, but a legal doctrine that imposes liability on persons who, although not actually committing a tort themselves, share with the immediate tortfeasors a common plan or design in its perpetration. (Wyatt v. Union Mortgage Co. (1979) 24 Cal.3d 773, 784.) By participation in a civil conspiracy, a coconspirator effectively adopts as his or her own the torts of other coconspirators within the ambit of the conspiracy. (Ibid.)

In this way, a coconspirator incurs tort liability co-equal with the immediate tortfeasors.” Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 510-511. “Conspiracy is not an independent tort; it cannot create a duty or abrogate an immunity. It allows tort recovery only against a party who already owes the duty and is not immune from liability based on applicable substantive tort law principles.” Id. at 514. Plaintiff’s ninth cause of action for conspiracy fails to state sufficient facts to constitute a cause of action, because it does not specify the underlying tort theory that is the basis for the claim.

The demurrer as to the Ninth Cause of Action is SUSTAINED with leave to amend.

Great American’s Demurrer is sustained with leave to amend as to the fourth and ninth causes of action, and is overruled as to the third, fifth, sixth, and thirteenth causes of action. Great American is directed to submit a new proposed order consistent with this ruling. Plaintiff will have 20 days’ leave to file a Second Amended Complaint from notice of entry of order.

AXIOM REPERTORY THEATRE VS. CHARITY ONE INSURANCE AGENCY, ET AL. CASE NUMBER: 26CV-0209907 Tentative Ruling on Motion to Strike: Defendant Great American Assurance Company (“Great American”) moves pursuant to CCP 435 and 436 to strike paragraphs 164, 165, 208, 272, 273, and 274 (except the last sentence) from the First Amended Complaint. Plaintiff concedes with respect to paragraph 208 and opposes as to the rest.

Meet and Confer. “Before filing a motion to strike pursuant to this chapter, the moving party shall meet and confer in person, by telephone, or by video conference with the party who filed the pleading that is subject to the motion to strike for the purpose of determining if an agreement can be reached that resolves the objections to be raised in the motion to strike.” CCP § 435.5(a). The Court finds that Defendant has satisfied the meet and confer requirement.

Request for Judicial Notice: Great American requests the Court take judicial notice of: 1) the records of the California Dept. of Insurance relating to Charity One Insurance Agency, attached as Exhibit 1; 2) That Charity One has held licenses issued by the Dept. of Insurance to act as an agent-broker since June 28, 2025, as shown by Exhibit 1. The request is denied as it is not clear that this document qualifies as an “official act of the legislative, executive, and judicial departments of the state,” and is not capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy.

Merits. The Court may, upon a motion made pursuant to Section 435, or at any time in its discretion, and upon 7

terms it deems proper: (a) Strike out any irrelevant, false, or improper matter inserted in any pleading. (b) Strike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court. CCP § 436

A motion to strike can be used to attack the entire pleading, or any part thereof, including single words or phrases. Stearns Ranchos v. Atchison Topeka & Santa Fe Railway (1981) 19 Cal. App. 3d 24. “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.” CCP § 437(a).

Great American Moves to strike the following from the First Amended Complaint: 1) paragraphs 164, 165 on the grounds that Great American has no negligence duty of care; 2) paragraph 208 because “Brandt fees” are not a proper remedy for breach of contract; 3) paragraph 272-274 (except for last sentence) because Great American can’t be held liable for complying with the statutory mandate that it only issue policies through licensed brokers and agents, because it has no duty to investigate or verify the accuracy of representations made to it by Axiom or any other policy holder represented by Charity One.

Paragraphs 164 and 165: Great American moves to strike paragraphs 164 and 165 on the ground that insurers owe no direct negligence duty of care to their policyholders in connection with claim handling or underwriting.

Insurers and their adjusters generally owe no negligence duty of care to policyholders. Sanchez v. Linsey Morden Claims Services, Inc. (1999) 72 Cal.App.4th 249, 253-254; Chateau Chamberay Homeowners Ass'n v. Associated International Ins. Co. (2001) 90 Cal.App.4th 335, 351. The remedy for improper claim handling is a claim for breach of the implied covenant of good faith and fair dealing. Id.

Axiom argues that tort claims are available where the insurer's wrongful acts are independent of the contract, citing Bock v. Hansen (2014) 225 Cal.App.4th 215. Bock is distinguishable. Bock addressed a claim for negligent misrepresentation brought against an individual insurance adjuster, expressly distinguishing that claim from one for negligent adjusting. The allegations in paragraphs 164 and 165 concern Great American's conduct in its role as an insurer, specifically the investigation of the claim, the sending of a fraud accusation letter, and the denial of coverage. These are claim-handling functions governed by the implied covenant of good faith and fair dealing, not by a negligence duty of care.

To the extent Axiom wishes to pursue a negligent misrepresentation theory grounded in specific affirmative false statements independent of the claim-handling process, that claim is not what is pleaded in these paragraphs, and such a theory would need to be specifically alleged. The Motion to Strike is GRANTED with leave to amend as to Paragraphs 164 and 165.

Paragraph 208: Plaintiff concedes that the Brandt fee demand is misplaced in the breach of contract count. According to Plaintiff, the parties discussed this in meet and confer, and Plaintiff agreed to re-plead under the breach of implied covenant claim. The Motion to Strike is GRANTED as to Paragraph 208. Leave to amend is granted to include the Brandt fee demand under the breach of implied covenant claim.

Paragraphs 272-274: Great American moves to strike paragraphs 272 through 274 of the Twelfth Cause of Action, which allege that Great American engaged in unfair business practices by relying on intermediaries without adequate oversight, failing to maintain feedback mechanisms to identify defective policies placed by Charity One, and failing to address foreseeable underinsurance outcomes. Great American contends these allegations are irrelevant and improper because the conduct described is either legally mandated or prohibited by settled law. The Court finds that the FAC alleges systemic failures in oversight, knowing exposure of insureds to undisclosed 8

underinsurance risk, and the maintenance of a distribution system with known defects. Those allegations do not describe conduct that is legally mandated. They describe the manner in which Great American allegedly operated within the permitted structure. These paragraphs are not false, irrelevant, or improper. Court finds no basis to strike these paragraphs under CCP § 436. The Motion to Strike is DENIED as to Paragraphs 272-274.

Great American’s Motion to Strike is granted in part and denied in part as detailed above. Great American is directed to submit a new proposed order consistent with this ruling. Plaintiff will have 20 days’ leave to file a Second Amended Complaint from notice of entry of order.

BUTLER, III VS. SHOEMAKER