Delgadillo, et al. v. American Family Mut. Ins. Co.

LAW AND MOTION CALENDAR JUNE 26, 2026

1. DELGADILLO, ET AL. v. AMERICAN FAMILY MUT. INS. CO., 25CV1336

Demurrer

On March 27, 2026, pursuant to Code of Civil Procedure section 430.10,

subdivision (e), defendants American Family Mutual Insurance Company (“American

Family”) and Homesite Insurance Company of the Midwest (“Homesite;” collectively,

“defendants”) filed a general demurrer to plaintiffs Ana Delgadillo’s, Edelmira Barrera’s,

and Brandt Stites’s (collectively, “plaintiffs”) second amended complaint (“SAC”).

Defense counsel declares she sent each plaintiff a meet and confer letter and/or email.

(Meconis Decl., ¶ 3; see Code Civ. Proc., § 430.41, subd. (a).) Plaintiffs Stites and

Delgadillo responded that they believe the SAC is sufficient; plaintiff Barrera did not

respond. (Meconis Decl., ¶ 4.)

Plaintiffs, who are each proceeding in pro per, filed no opposition.

1. Legal Principles

“[A] demurrer challenges only the legal sufficiency of the complaint, not the truth or

the accuracy of its factual allegations or the plaintiff’s ability to prove those allegations.”

(Amarel v. Connell (1998) 202 Cal.App.3d 137, 140.) A demurrer is directed at the face of

the complaint and to matters subject to judicial notice. (Code Civ. Proc., § 430.30,

subd. (a).) All properly pleaded allegations of fact in the complaint are accepted as true,

however, improbable they may be, but not the contentions, deductions or conclusions

of fact or law. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318; Del E. Webb Corp. v. Structural

Materials Co. (1981) 123 Cal.App.3d 593, 604.) A judge gives “the complaint a

reasonable interpretation, reading it as a whole and its parts in their context.” (Blank,

supra, 39 Cal.3d at p. 318.)

2. Discussion

2.1. First C/A for Breach of Contract

With respect to plaintiff Barrera, defendants point out that the court sustained their

previous demurrer and denied Barrera leave to amend the first and second causes of

LAW AND MOTION CALENDAR JUNE 26, 2026

action. Despite this, plaintiff Barrera still alleges breach of contract against defendants

in the SAC.

The court’s reasoning in its previous ruling was that plaintiff Barrera was not a

contracting party, and, because Barrera did not own the home, there was no reasonable

likelihood that amendment could cure the defect. Upon further review,1 however, the

court finds that, although plaintiff Barrera may not have been a contracting party, the

SAC sufficiently alleges she is a third-party beneficiary because, as a resident-relative of

plaintiff Delgadillo, Barrera is one of a class for whose benefit the policy was expressly

made. (FAC, Ex. 1 at “Definitions,” ¶ B.5.(a)(1) [“ ‘Insured’ means: a. You and residents

of your household who are: (1) Your relatives....”]; Civ. Code, § 1559; Johnson v. Holmes

Tuttle Lincoln-Merc. (1964) 160 Cal.App.2d 290, 297.) A third-party beneficiary may

enforce a contract expressly made for her benefit. (Civ. Code, § 1559; Murphy v. Allstate

Ins. Co. (1976) 17 Cal.3d 937, 943; see also Northwestern Mut. Ins. Co. v. Farmers’ Ins.

Group (1978) 76 Cal.App.3d 1031, 1044 [“It is fundamental that the right of a third party

beneficiary to enforce a promise made for his benefit does not depend on his having

given consideration therefor.”].)

Therefore, the court, on its own motion, amends its previous order denying plaintiff

Barrera leave to amend. (Le Francois, supra, 35 Cal.4th at pp. 1108–1109.) Upon

request, the court would allow further briefing on the issue of plaintiff Barrera’s

contractual relationship with defendants. Absent such request, the court will proceed

based on the above-finding that, as an additional insured and a third-party beneficiary,

plaintiff Barrera may enforce the terms of the policy along with plaintiffs Delgadillo and

Stites.

1 A trial court has the inherent authority to alter or amend its own interim rulings in the

same case. (Le Francois v. Goel (2005) 35 Cal.4th 1094, 1096–1097; In re Marriage of Nicholas (2010) 186 Cal.App.4th 1566, 1577–1578.)

LAW AND MOTION CALENDAR JUNE 26, 2026

Next, American Family only (not Homesite) argues the first cause of action fails

because there is no contractual relationship between the plaintiffs and American Family.

The SAC alleges that both American Family and Homesite issued the subject-policy.

(SAC, ¶ 11.) The policy attached as an exhibit to the FAC, and incorporated into the SAC

by reference, however, provides otherwise. It omits any reference to American Family.

Facts appearing in exhibits attached to the complaint are given precedence over

inconsistent allegations in the complaint. (Genis v. Schainbaum (2021) 66 Cal.App.5th

1007, 1015; Moran v. Prime Healthcare Management, Inc. (2016) 3 Cal.App.5th 1131,

1145–1146.)

Here, the information on the four corners of the subject-policy show that only

Homesite issued the policy. Although the SAC alleges American Family issued the policy,

that allegation is inconsistent with the exhibit incorporated by reference. Therefore, in

this situation, the court must rely on the exhibit, not the allegation.

The SAC alternatively alleges that American Family is liable for breach of contract

under the “alter ego” doctrine:

In 2023, after the damages claim at issue in this action was submitted, every time Plaintiffs tried to contact Homesite they were always routed to [American Family] employees / claim adjusters / managers, who made the decisions on Plaintiffs’ roof-related damages claim and committed the wrongful acts complained of herein. Throughout the handling of the roof-related damages claim that gave rise to this action, [American Family] acted in such a way that any reasonable person like Plaintiffs would rationally believe Homesite was the mere alter ego of [American Family], and that [American Family] shared a unity of interest with Homesite in withholding and denying the Policy benefits that Plaintiffs needed to repair the Home.

Put simply, though Homesite’s name is on the Policy / contract at issue in this action, [American Family] called all the shots for Homesite that triggered this action. Therefore, to uphold the fiction of two separate corporate entities would promote injustice and essentially sanction a fraud by allowing [American Family] to hide behind one of its subsidiary corporations and use Homesite as a liability shield for [American Family’s] fraudulent and tortious actions. (SAC, ¶ 42.)

LAW AND MOTION CALENDAR JUNE 26, 2026

“The essence of the alter ego doctrine is that justice be done. ‘What the formula

comes down to, once shorn of verbiage about control, instrumentality, agency, and

corporate entity, is that liability is imposed to reach an equitable result.’ ” (Mesler v.

Bragg Management Co. (1985) 39 Cal.3d 290, 301.)

“ ‘In California, two conditions must be met before the alter ego doctrine will be

invoked. First, there must be such a unity of interest and ownership between the

corporation and its equitable owner that the separate personalities of the corporation

and the shareholder do not in reality exist. Second, there must be an inequitable result

if the acts in question are treated as those of the corporation alone.’ ” (Troyk v. Farmers

Group, Inc. (2009) 171 Cal.App.4th 1305, 1341.) “Factors for the trial court to consider

include the commingling of funds and assets of the two entities, identical equitable

ownership in the two entities, use of the same offices and employees, disregard of

corporate formalities, identical directors and officers, and use of one as a mere shell or

conduit for the affairs of the other. [Citation.] ‘No one characteristic governs, but the

courts must look at all the circumstances to determine whether the doctrine should be

applied.’ ” (Id., at p. 1342.)

American Family argues “[t]he SAC does not allege any facts, as opposed to

conclusions and speculation to meet” the pleading requirements of the alter ego

doctrine. (Dem. at 14:15–16.) The court disagrees. The SAC alleges that, American

Family bought Homesite in 2013. (SAC, ¶ 41.) Every time plaintiffs tried to contact

Homesite, plaintiffs were allegedly re-routed to American Family. (SAC, ¶ 42.)

Additionally, American Family allegedly “called all the shots for Homesite.” (SAC, ¶ 42.)

Liberally construing the allegations of the SAC, as the court must do on demurrer, the

court finds that the SAC sufficiently alleges American Family is liable for breach of

contract. Therefore, the demurrer is overruled as to all three plaintiffs, including plaintiff

Barrera.

LAW AND MOTION CALENDAR JUNE 26, 2026

2.2. Second C/A for Breach of Implied Covenant

For the same reasons as discussed under the first cause of action for breach of

contract, the court overrules the demurrer as to all three plaintiffs, including plaintiff

Barrera.

2.3. Third C/A for Fraud

Defendants argue that (1) the SAC still fails to plead fraud with specific particularity;

and (2) plaintiffs allege they did not believe defendants’ alleged misrepresentations

regarding the repair costs.

The court agrees that, with respect to the alleged misrepresentations regarding

repair costs, plaintiffs allege they did not believe defendants’ representations.

Therefore, plaintiffs have not stated a claim for fraud based on such representations.

However, the court focuses on the allegations in the SAC that, after receiving

Goldfarb’s bid in June 2023, American Family “reps” constantly claimed that “if Plaintiffs

provided Homesite with a competing Bid from a reputable local contractor [American

Family] / Homesite would work with Plaintiffs and the local contractor to resolve the

problems with Goldfarb’s Bid. These representations were knowingly false.” (SAC, ¶ 60.)

The SAC sufficiently alleges plaintiffs justifiably relied on these representations and

submitted a bid from a reputable local contractor. (SAC, ¶ 61.)

Still, plaintiffs have not met the requirement of specificity in this fraud action against

corporations. (See, Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153,

157.) The SAC does not allege the names of the persons who made the allegedly

fraudulent representation (plaintiffs merely allege “reps”), to whom they spoke, what

they said or wrote, and when it was said or written.

The court sustains defendants’ demurrer and will provide plaintiffs one further

opportunity to amend to cure these defects.

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LAW AND MOTION CALENDAR JUNE 26, 2026

2.4. Fourth C/A for Elder Abuse

Financial elder abuse of an elder is defined by statute: “ ‘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.” (Welf. & Inst.

Code, § 15610.30, subd. (a).) “ ‘Elder’ means any person residing in this state, 65 years

of age or older.” (Welf. & Ins. Code, § 15610.27.)

“The Elder Abuse Act ... authorizes an action to be brought not only by the elder, but

also by the elder’s ‘personal representative’ when the elder is alive but ‘lacks capacity

pursuant to [s]ection 812[2] of the Probate Code, or is of unsound mind, but not entirely

without understanding, pursuant to [section 38] of the Civil Code[3]....’ ” (Tepper v.

Wilkins (2017) 10 Cal.App.5th 1198, 1204.) For purposes of Welfare and Institutions

Code, section 15610.30, “representative” includes “[a]n attorney-in-fact of an elder or

dependent adult who acts within the authority of the power of attorney.” (Welf. & Inst.

Code, § 15610.30, subd. (d)(2).)

2 Probate Code section 812 provides in part, “[A] person lacks the capacity to make a

decision unless the person has the ability to communicate verbally, or by any other means, the decision, and to understand and appreciate, to the extent relevant, all of the following: [¶] (a) The rights, duties, and responsibilities created by, or affected by the decision[;] [¶] (b) [t]he probable consequences for the decisionmaker and, where appropriate, the person affected by the decision[;] [¶] (c) [t]he significant risks, benefits, and reasonable alternatives involved in the decision.” 3 Civil Code section 38 provides, “A person entirely without understanding has no power

to make a contract of any kind, but the person is liable for the reasonable value of things furnished to the person necessary for the support of the person or the person's family.”

LAW AND MOTION CALENDAR JUNE 26, 2026

Plaintiffs Barrera and Delgadillo both claim elder abuse against all defendants. The

SAC alleges Barrera is over the age of 65 and Delgadillo is Barrera’s attorney-in-fact

acting under a durable power of attorney. (SAC, ¶ 70.)

The SAC alleges that plaintiff Barrera’s bedroom in the home was damaged and

defendants wrongfully denied the policy benefits that Barrera had a contractual right to

collect under the policy. (SAC, ¶¶ 71–72.)

Importantly, however, the SAC does not allege that defendants took, secreted,

appropriated, or obtained plaintiff Barrera’s bedroom or any of her property contained

therein. The cause of action is, in effect, a breach of contract cause of action couched as

financial elder abuse—plaintiffs allege defendants failed to pay out the benefits plaintiff

Barrera was due for her damaged property under the terms of the policy. This does not

constitute financial elder abuse.

The demurrer is sustained without leave to amend, as plaintiffs have had a previous

opportunity to do so and there does not appear to be any reasonable possibility that

further amendment will cure the defect.

2.5. Fifth C/A for Unfair Business Practices

The court previously overruled defendants’ demurrer to this cause of action in the

FAC. There is a split of authority as to whether a defendant may properly demur to the

amended complaint on grounds that were overruled in a prior demurrer. At least some

courts have allowed demurrers to amended pleadings on grounds previously overruled

because “[t]he interests of all parties are advanced by avoiding a trial and reversal for

defect in pleadings.” (Pacific States Enterprises, Inc. v. City of Coachella (1993) 13

Cal.App.4th 1414, 1420 (citing text); see, Pavicich v. Santucci (2000) 85 Cal.App.4th 382,

389, fn. 3.) The court will follow this authority and permit defendants to demur to the

fifth cause of action in the SAC.

Defendants argue that plaintiffs’ fifth cause of action is based on alleged unfair

insurance claims handling under Insurance Code section 790.03, subdivision (h), and

LAW AND MOTION CALENDAR JUNE 26, 2026

there is no private civil cause of action against an insurer under this section. (Dem. at

17:2–7.) Plaintiffs’ fifth cause of action, however, is not brought under Insurance Code

section 790.03. It is brought under the Unfair Competition Law, Business and

Professions Code section 17200, et seq., which prohibits any unlawful, unfair or

fraudulent business act or practice.

The court also notes that Insurance Code section 790.03(h) prohibits various

practices that are committed or performed “with such frequency as to indicate a

general business practice.” (Ins. Code, § 790.03, subd. (h).) At least some of plaintiffs’

allegations under the fifth cause of action are specifically isolated to defendants’

business practices related to plaintiffs’ policy. (SAC, ¶ 76.)

The court overrules defendants’ demurrer to this cause of action.

2.6. Sixth C/A for IIED

Defendants generally demur to the sixth cause of action for IIED on the grounds that

the FAC fails to allege “extreme and outrageous” conduct.

The elements of a cause of action for IIED are: “(1) extreme and outrageous conduct

by the defendant with the intention of causing, or reckless disregard of the probability

of causing, emotional distress; (2) the plaintiff has suffered severe or extreme emotional

distress; and (3) the defendant’s outrageous conduct was the actual and proximate

causation of the emotional distress.” (Jackson v. Mayweather (2017) 10 Cal.App.5th

1240, 1265.) “A defendant’s conduct is ‘outrageous’ when it is so “ ‘ ‘extreme as to

exceed all bounds of that usually tolerated in a civilized community.’ ’ ” (Citation.] And

the defendant’s conduct must be “ ‘ ‘intended to inflict injury or engaged in with the

realization that injury will result.’ ’ ” [Citation.]” (Hughes v. Pair (2009) 46 Cal.4th 1035,

1050–1051.) “ ‘Liability for intentional infliction of emotional distress “ ‘does not extend

to mere insults, indignities, threats, annoyances, petty oppressions, or other trivialities.’

[Citation.]” [Citations.] ...’ ” (Bock v. Hansen (2014) 225 Cal.App.4th 215, 233.)

LAW AND MOTION CALENDAR JUNE 26, 2026

The SAC alleges defendants abused their position by intentionally and unreasonably

refusing policy benefits, knowing plaintiffs would be susceptible to injuries through

mental distress “due to Plaintiff Barrera’s fragile condition and the fact that Plaintiffs

Delgadillo and Stites had used their life-savings to fix-up the Home they bought with

Barrera.” (SAC, ¶ 79.)

It is generally true that “outrageous conduct” may be demonstrated where a

defendant (1) abuses a relation or position which gives him power to damage the

plaintiff’s interest; (2) knows the plaintiff is susceptible to injuries through mental

distress; or (3) acts intentionally or unreasonably with the recognition that the acts are

likely to result in illness through mental distress. (Bock v. Hansen (2014) 225 Cal.App.4th

215, 233, quoting Hailey v. California Physicians’ Service (2007) 158 Cal.App.4th 452,

474.) But, whether plaintiffs’ claim measures up is the question.

The court summarizes below the facts in two cases where the Court of Appeal did

find outrageous conduct.

In Younan v. Equifax, Inc. (1980) 111 Cal.App.3d 498, the Court of Appeal held that

the insured sufficiently pled outrageous conduct where he alleged that his disability

insurer required him to take a medical examination, but instead of sending him to a

medical doctor, sent him to several psychological clinicians, one of whom omitted the

results of certain tests in his report. (Id., at pp. 503–505.) After receiving the false

report, the insurer denied the insured's claim for disability benefits (id., at p. 506), which

denial occurred at a time when he was unable to earn a living to support himself and his

family. (Id., at p. 504.)

In Little v. Stuyvesant Life Ins. Co. (1977) 67 Cal.App.3d 451—which was not a

pleading case but followed a jury verdict for the insured—the Court of Appeal found

outrageous conduct when the defendant disability insurer “purposely ignored the great

bulk of the medical information it had and withheld that information ... to justify its

predetermined course of discontinuing disability benefit payments justly due” under the

LAW AND MOTION CALENDAR JUNE 26, 2026

insured's policy. Specifically, the disability insurer terminated benefits after ignoring

“overwhelming” evidence that the insured was totally disabled. (Id., at p. 457.) The

insurer then withheld from its evaluating physician information about the insured's job

duties and reports from other physicians in order to elicit a proinsurer opinion from the

evaluating physician. (Id., at pp. 459–460.) As a result of the termination of benefits, the

insured was forced to sell her home and subsequently attempted suicide by ingesting an

entire bottle of Valium. (Id., at p. 460.)

Here, plaintiffs do not allege they were disabled or facing a denial of benefits

necessary to pay for their daily living expenses. While plaintiffs allege defendants knew

plaintiffs Delgadillo and Stites were vulnerable because they had used their life-savings

to fix-up the home, they do not allege defendants knew plaintiffs would not have a

habitable place to live – nor that such event actually occurred.

The court finds that plaintiffs’ SAC still fails to plead outrageous conduct. Instead,

plaintiffs have pleaded circumstances constituting breach of contract, based on the

allegation that defendants failed to pay out benefits due and owing to plaintiffs under

the terms of the insurance policy.

The court sustains the demurrer with a final leave to amend.

TENTATIVE RULING # 1: THE DEMURRER IS SUSTAINED IN PART AND OVERRULED IN

PART. AS TO THE FIRST AND SECOND CAUSES OF ACTION, THE DEMURRER IS

OVERRULED (AS TO EACH PLAINTIFF’S CLAIM, INCLUDING PLAINTIFF BARRERA’S). AS

TO THE THIRD CAUSE OF ACTION, THE DEMURRER IS SUSTAINED WITH A FINAL LEAVE

TO AMEND. AS TO THE FOURTH CAUSE OF ACTION, THE DEMURRER IS SUSTAINED

WITHOUT LEAVE TO AMEND. AS TO THE FIFTH CAUSE OF ACTION, THE DEMURRER IS

OVERRULED. AS TO THE SIXTH CAUSE OF ACTION, THE DEMURRER IS SUSTAINED WITH

A FINAL LEAVE TO AMEND. PLAINTIFFS SHALL FILE THEIR AMENDED PLEADING WITHIN

30 DAYS AFTER THE DATE OF SERVICE OF THE NOTICE OF ENTRY OF ORDER.

LAW AND MOTION CALENDAR JUNE 26, 2026

NO HEARING ON THIS MATTER WILL BE HELD (LEWIS v. SUPERIOR COURT (1999) 19

CAL.4TH 1232, 1247), UNLESS A NOTICE OF INTENT TO APPEAR AND REQUEST FOR

ORAL ARGUMENT IS TRANSMITTED ELECTRONICALLY THROUGH THE COURT’S

WEBSITE OR BY TELEPHONE TO THE COURT AT (530) 573-3042 BY 4:00 P.M. ON THE

DAY THE TENTATIVE RULING IS ISSUED. NOTICE TO ALL PARTIES OF AN INTENT TO

APPEAR MUST BE MADE BY TELEPHONE OR IN PERSON. PROOF OF SERVICE OF SAID

NOTICE MUST BE FILED PRIOR TO OR AT THE HEARING.