BURKE, et al. vs PACIFIC MODERN HOMES, INC., et al.

A Stipulation and Appointment of Official Reporter Pro Tempore (CV/E-206) is required to be signed by each party, the private court reporter, and the Judge prior to the hearing, if not using a reporter from the Court’s Approved Official Reporter Pro Tempore list.

Once the form is signed it must be filed with the clerk. If a litigant has been granted a fee waiver and requests a court reporter, the party must submit a Request for Court Reporter by a Party with

24CV023959: BURKE, et al. vs PACIFIC MODERN HOMES, INC., et al. 06/18/2026 Hearing on Demurrer to First Amended Complaint in Department 16D

a Fee Waiver (CV/E-211) and it must be filed with the clerk at least 10 days prior to the hearing or at the time the proceeding is scheduled if less than 10 days away. Once approved, the clerk will forward the form to the Court Reporter’s Office and an official reporter will be provided.

*** NOTICE: EFFECTIVE APRIL 13, 2026, THIS DEPARTMENT HAS MOVED TO THE TANI G. CANTIL-SAKAUYE COURTHOUSE LOCATED AT 500 G. ST. SACRAMENTO, CA. ALL MOTIONS NOTICED FOR DEPARTMENT 53 WILL BE HEARD IN DEPARTMENT 16D OF THE NEW COURTHOUSE. ALL PAPERS FOR THIS DEPARTMENT MUST BE FILED AT THIS NEW LOCATION AND WILL NOT BE ACCEPTED AT THE HALL OF JUSTICE. ALL HEARINGS WILL TAKE PLACE AT THIS NEW LOCATION. PARTIES MAY CONTINUE TO APPEAR REMOTELY IN DEPARTMENT 16D UNLESS SPECIFICALLY ORDERED OTHERWISE. ***

TENTATIVE RULING: Defendant CM Vantage Insurance Company’s demurrer to self-represented Plaintiffs Griffin and Gregory Burke’s first amended complaint (“FAC”) is ruled upon as follows.

In this action, Plaintiffs Gregory and Griffin Burke allege they were defrauded in connection with a construction project for a family home. With respect to Defendant, Plaintiffs allege a single cause of action for declaratory relief. They allege that Defendant owes a duty to defend Ludwick Construction, LLC, (“Ludwick”) in connection with the claims asserted against it in this action.

Defendant demurs to Plaintiffs’ eleventh cause of action for declaratory relief.

A demurrer “tests the pleadings alone and not the evidence or other extrinsic matters.” (SKF Farms v. Superior Court (1984) 153 Cal.App.3d 902, 905.) The purpose of a demurrer is to test the legal sufficiency of a claim. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal. App. 4th 968, 994.) For the purpose of determining the effect of a complaint, its allegations are liberally construed, with a view toward substantial justice. (CCP § 452; Amarel v. Connell (1988) 202 Cal.App.3d 137, 140-141; Quelimane Co. v.

Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 43, fn. 7.) The Court treats the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law, and considers matters which may be judicially noticed. (Blank v. Kirwan (1985) 39 Cal.3d at 318; Poseidon Development, Inc. v. Woodland Lane Estates, LLC (2007) 152 Cal.App.4th 1106, 1111-1112.) A general demurrer does not admit contentions, deductions, or conclusions of fact or law alleged in the complaint; facts impossible in law; or allegations contrary to facts of which a court may take judicial notice. (Blank, supra, 39 Cal. 3d at 318, William S.

Hart Union High School Dist. v. Regional Planning Com. (1991) 226 Cal. App. 3d 1612, 1616

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

24CV023959: BURKE, et al. vs PACIFIC MODERN HOMES, INC., et al. 06/18/2026 Hearing on Demurrer to First Amended Complaint in Department 16D

fn.2.) Extrinsic evidence may not properly be considered on demurrer or on a motion to strike. (Ion Equipment Corp. v. Nelson (1980) 110 Cal. App. 3d 868, 881; Hibernia Savings & Loan Soc. v. Thornton (1897) 117 Cal. 481, 482.)

A demurrer may be sustained only if the complaint lacks any sufficient allegations to entitle the plaintiff to relief. (Financial Corp. of America v. Wilburn (1987) 189 Cal. App. 3d 764, 778.) “Plaintiff need only plead facts showing that he may be entitled to some relief . . ., we are not concerned with plaintiff's possible inability or difficulty in proving the allegations of the complaint.” (Highlanders, Inc. v. Olsan (1978) 77 Cal. App. 3d 690, 696-697.) “[Courts] are required to construe the complaint liberally to determine whether a cause of action has been stated, given the assumed truth of the facts pleaded.” (Picton v.

Anderson Union High School Dist. (1996) 50 Cal. App. 4th 726.) A demurrer admits the truth of all material facts properly pled and the sole issue raised by a general demurrer is whether the facts pled state a valid cause of action - not whether they are true. (Serrano v. Priest (1971) 5 Cal. 3d 584, 591.)

Eleventh Cause of Action (Declaratory Relief)

Defendant’s demurrer is sustained with leave to amend.

Plaintiffs allege that Defendant issued an insurance policy to Ludwick. (FAC ¶ 266.) Plaintiffs allege that the claims asserted against Ludwick in the FAC fall within the scope of coverage provided by the policy issued to Ludwick. (Id. ¶¶ 267-269.) Plaintiffs allege that Defendant has wrongfully denied coverage and refused to defend Ludwick. (Id. ¶¶ 271-272.) Plaintiffs seek a declaration that the policy issued to Ludwick covers the claims in this action and that Defendant owes Ludwick a duty to defend. (Id. ¶ 277.)

CCP § 1060 provides that “[a]ny person interested under a written instrument.or under a contract, or who desires a declaration of his or her rights or duties with respect to another may, in cases of actual controversy relating to the legal rights and duties of the respective parties, bring an original action or cross-complaint in the superior court for a declaration of his or her rights and duties including a determination of any question of construction or validity arising under the instrument or contract.” “To assert a cause of action for declaratory relief, Code of Civil Procedure section 1060 requires that there be ‘an actual controversy relating to the legal rights and duties of the respective parties,’ ” (Id. [quoting Connerly v.

Schwarzenegger (2007) 146 Cal.App.4th 739, 746- 747.) “The fundamental basis of declaratory relief is the existence of an actual, present controversy over a proper subject.” (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 79 [emphasis in original].)

Defendant argues that cause of action fails because Plaintiffs lack standing to bring a cause of action against it based on a policy issued to Ludwick, its insured. Indeed,

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

24CV023959: BURKE, et al. vs PACIFIC MODERN HOMES, INC., et al. 06/18/2026 Hearing on Demurrer to First Amended Complaint in Department 16D

“California law generally prohibits third parties from suing an insurer when they are not in contractual privity.” (Otay Land Co. v. Royal Indem. Co. (2008) 169 Cal.App.4th 556, 561.) “Liability insurance is not a contract for the benefit of the injured party so as to allow it to sue the insurer directly.” (Royal Surplus Lines Ins. Co., Inc. v. Ranger Ins. Co. (2002) 100 Cal.App.4th 193, 200.) There are exceptions to this rule. An injured third party may directly sue another’s insured if the injured party has obtained a judgment against the insured on a claim covered by the insurance policy; (b) if the insured has assigned to the injured third party its claims against the insurer for failure to defend or indemnify the insured against the third party’s claims; and if the liability policy provides that the injured party is an express intended beneficiary. (Royal Indemnity Co. v.

United Enterprises, Inc. (2008) 162 Cal.App.4th 194, 205-207.) Defendant argues that Plaintiffs have not alleged any facts implicating any exception and thus, there is no actual controversy alleged by Plaintiffs as between Defendant and Plaintiffs.

In opposition, Plaintiffs first contend that the demurrer is premature because they have a motion for leave to file a second amended complaint set to be heard on July 7, 2026. Plaintiffs argue that if that motion succeeds it could result in a second amended complaint that supersedes the FAC. That would be true if Defendant’s demurrer was not set to be heard before Plaintiffs’ motion. The demurrer, which is directed at the FAC, the current operative pleading, is not premature.

Plaintiffs then argue that Defendant has recently agreed to provide a defense to Ludwick which confirms the existence of an actual present controversy. However, none of this alleged in the FAC and all of the arguments raised in this regard rely on extrinsic evidence which cannot be considered on the demurrer. (Ion Equipment Corp., supra, 110 Cal. App. 3d at 881.)

To the extent that Plaintiffs contend that they have alleged an actual controversy, the Court disagrees. Indeed, the declaratory cause of action itself does not contain any allegations that there is an actual controversy between Plaintiffs and Defendant. At most Plaintiffs alleges that “[a]n actual controversy exists between the parties concerning CM Vantage’s duties and obligations under the Policy with respect to the claims alleged in this Complaint.” (FAC ¶ 276.) But any controversy as to whether coverage exists under the Policy is between Defendant and Ludwick, not Plaintiffs and Defendant. “A cause of action for declaratory relief may adjudicate future rights and liability between parties who have a relationship, either contractual or otherwise.” (Centex Homes v.

St. Paul Fire & Marine Ins. Co. (2015) 237 Cal.App.4th 23, 28.) Plaintiffs make no allegations in the declaratory relief cause of action as to any relationship between themselves and Defendant, or even any communication between themselves and Defendant. As currently pled, Plaintiffs have not alleged an actual controversy between themselves and Defendant.

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

24CV023959: BURKE, et al. vs PACIFIC MODERN HOMES, INC., et al. 06/18/2026 Hearing on Demurrer to First Amended Complaint in Department 16D

Finally, Plaintiffs contend that they will have direct standing as a judgment creditor of Ludwick once the underlying claims are resolved. That may be true, but there are no allegations in the FAC that they are in fact judgment creditors such that they can bring a direct action against Ludwick’s insured.

Defendant’s demurrer to the eleventh cause of action is sustained with leave to amend. While it is questionable whether Plaintiffs are able to allege facts to maintain this cause of action, the Court declines to deny leave to amend at this time. However, leave to amend is granted as to the eleventh cause of action only as this is Defendant’s first challenge to the complaint on which the Court has ruled. The Court rejects Defendant’s request to sustain its demurrer without leave to amend at this juncture.

The Court will not sign the proposed order as it is inconsistent with this ruling.

The Court expresses no opinion on Plaintiff’s pending motion for leave to file an amended complaint at this time. To the extent that motion seeks leave to amend beyond the eleventh cause of action, the Court will address those issues when ruling upon that motion, if that motion is not made moot by such time.

Plaintiffs may file and serve an amended complaint no later than July 2, 2026. Defendant shall file and serve its response within 30 days thereafter, 35 days if the amended complaint is served by mail as modified by the CCP 430.41 extension if necessary.

The notice of demurrer does not provide notice of the Court’s tentative ruling system as required by Local Rule 1.06(D). Defendant’s counsel is ordered to notify Plaintiffs immediately of the tentative ruling system and to be available at the hearing in person, via Zoom or by telephone, in the event Plaintiffs appear without following the procedures set forth in Local Rule 1.06(B).

This minute order is effective immediately. No formal order pursuant to CRC Rule 3.1312 or further notice is required.