PHILIPPOS GRATSINOPOULOS, ET AL VS. FRANK RAMIREZ, ET AL

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2:00 PM LINE: 9 25-CIV-05899 PHILIPPOS GRATSINOPOULOS, ET AL VS. FRANK RAMIREZ, ET AL

PHILIPPOS GRATSINOPOULOS MARCIA A. WALLIS FRANK RAMIREZ CANDICE S. NAM

DEFENDANTS FARMERS GROUP, INC., FARMERS INSURANCE COMPANY OF OREGON, FARMERS INSURANCE COMPANY OF WASHINGTON, FARMERS INSURANCE COMPANY, INC., FARMERS INSURANCE EXCHANGE, FARMERS INSURANCE OF COLUMBIA, INC., FARMERS NEW WORLD LIFE INSURANCE COMPANY, FIRE INSURANCE EXCHANGE, MID-CENTURY INSURANCE COMPANY AND TRUCK INSURANCE EXCHANGE’S DEMURRER TO FIRST AMENDED COMPLAINT

TENTATIVE RULING:

Defendants Farmers Insurance Exchange, Fire Insurance Exchange, Truck Insurance Exchange, Mid-Century Insurance Company, Farmers New World Life Insurance Company, Farmers Insurance Company, Inc., Farmers Insurance Company of Oregon, Farmers Insurance Company of Washington, and Farmers Insurance of Columbus, Inc.’s demurrer to the First, Second, Eighth, Tenth, and Eleventh Causes of Action in Plaintiff’s First Amended Complaint (“FAC”) is SUSTAINED IN PART WITH LEAVE TO AMEND and OVERRULED IN PART pursuant to Code of Civil Procedure section 430.10, subdivision (e), as follows.

The demurrer to the First Cause of Action for Wrongful Termination in Violation of Public Policy is SUSTAINED WITH LEAVE TO AMEND. The demurrer to the Second Cause of Action for Violation of Penal Code section 632 is SUSTAINED WITH LEAVE TO AMEND. The demurrer to the Eighth Cause of Action for Promissory Estoppel is SUSTAINED WITH LEAVE TO AMEND. The demurrer to the Tenth Cause of Action for Breach of Contract and the Eleventh Cause of Action for Breach of the Implied Covenant of Good Faith and Fair Dealing is OVERRULED as to the Farmers Defendants generally, but SUSTAINED WITHOUT LEAVE TO AMEND as to Defendant FGI only.

FIRST CAUSE OF ACTION FOR WRONGFUL TERMINATION

The elements of a cause of action for wrongful termination in violation of public policy are: (1) an employer-employee relationship; (2) termination of the plaintiff’s employment; (3) a termination substantially motivated by a violation of public policy; and (4) resulting harm. (McDoniel v. Kavry Management, LLC (2025) 114 Cal.App.5th 949, 962-963; Garcia- Brower v. Premier Automotive Imports of CA, LLC (2020) 55 Cal.App.5th 961, 973.) To support a tortious discharge claim, the policy must be supported by constitutional or statutory provisions, inure to the benefit of the public rather than merely serve private interests, have been articulated at the time of discharge, and be fundamental and substantial. (Stevenson v. Superior Court (1997) 16 Cal.4th 880, 889-890.)

Plaintiff alleges that, in or about August 2024, Defendant Ideal Traits unknowingly recorded him; that a Farmers HR manager later played the recording on a call with Plaintiff, Defendant Ramirez, and Farmers representative Edwin Kerr; and that Farmers then terminated Plaintiff for cause based on the recording. (FAC, ¶¶ 76, 82-86.) Defendants argue that this cause of action fails because the FAC does not allege that Farmers made the recording and because Penal Code

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section 632 does not, on these pleaded facts, supply a sufficient public policy to support the claim. Plaintiff responds that Farmers knowingly exploited and relied on an illegally recorded communication in connection with his termination.

The sufficiency of the asserted public policy is a question of law. The FAC does not allege facts showing that Farmers itself violated Penal Code section 632 by intentionally eavesdropping on or recording a confidential communication without consent. Nor does the FAC identify authority establishing that a termination based on a recording allegedly made unlawfully by a third party, without more, violates a fundamental public policy sufficient to support a Tameny claim. To the extent Plaintiff contends Farmers violated a different statutory provision by later using, disclosing, or replaying the recording, that theory is not adequately pleaded in the FAC.

Accordingly, the demurrer to the First Cause of Action is SUSTAINED WITH LEAVE TO AMEND.

SECOND CAUSE OF ACTION FOR VIOLATION OF PENAL CODE SECTION 632

Penal Code section 632 prohibits a person from intentionally using an electronic amplifying or recording device to eavesdrop upon or record a confidential communication without the consent of all parties. (Pen. Code, § 632, subd. (a).) Subdivision (d) provides an evidentiary exclusion rule for evidence obtained as a result of eavesdropping upon or recording a confidential communication in violation of section 632. (Id., subd. (d).) Penal Code section 637.2 provides a civil remedy for a person injured by a violation of Chapter 1.5 of Title 15 of Part 1 of the Penal Code, but it does not itself define the underlying substantive violation. (Pen. Code, § 637.2, subd. (a).)

The FAC alleges that Ideal Traits recorded Plaintiff without his knowledge or consent. (FAC, ¶ 76.) As to the Farmers Defendants, Plaintiff alleges that they used the recording to launch an investigation and ultimately as a basis to terminate Plaintiff. (FAC, ¶¶ 104, 113.) Those allegations do not state that Farmers used an electronic device to eavesdrop upon or record Plaintiff’s confidential communication. The FAC therefore does not state a violation of Penal Code section 632 by Farmers.

Plaintiff argues in opposition that Farmers may be liable under Penal Code sections 637 and 637.2. However, the FAC does not plead a section 637 theory or allege facts specifically directed to each element of that statute. Plaintiff may not avoid demurrer by relying on an unpleaded statutory theory raised for the first time in opposition. Because Plaintiff may be able to plead an applicable statutory theory, leave to amend is appropriate.

Accordingly, the demurrer to the Second Cause of Action is SUSTAINED WITH LEAVE TO AMEND.

EIGHTH CAUSE OF ACTION FOR PROMISSORY ESTOPPEL

The elements of promissory estoppel are: (1) a clear promise; (2) reliance; (3) substantial detriment; and (4) damages measured by the extent of the obligation assumed but not performed. (Coyote Aviation Corp. v. City of Redlands (2025) 111 Cal.App.5th 955, 987; Toscano v. Greene Music (2004) 124 Cal.App.4th 685, 692.) The promise must be clear and unambiguous, and the reliance must be reasonable and foreseeable. (Clarke v. Yu (2026) 119 Cal.App.5th 19, 38-39.)

The FAC alleges that, after the termination meeting and receipt of the termination notice, Defendant Ramirez and Farmers promised Plaintiff that he could sell his book of business and/or receive contract value if he resigned and obtained a qualified buyer. Plaintiff alleges that, based on those promises, he did not appeal his termination within 10 days. (FAC, ¶ 173.)

As pleaded, the alleged promise is conditional and incomplete. The FAC does not allege a clear and unambiguous promise that Farmers would approve a sale, pay contract value, or waive any contractual conditions regardless of the approval rights and terms in the Agent Appointment Agreement. Rather, the alleged promise depended on Plaintiff

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resigning, obtaining a qualified buyer, and obtaining approval under the governing agreement. Those allegations do not adequately plead a clear promise sufficient to support promissory estoppel.

Accordingly, the demurrer to the Eighth Cause of Action is SUSTAINED WITH LEAVE TO AMEND.

TENTH CAUSE OF ACTION FOR BREACH OF CONTRACT

The elements of a breach of contract claim are: (1) the existence of a contract; (2) plaintiff’s performance or excuse for nonperformance; (3) defendant’s breach; and (4) damages resulting from the breach. (Coyote Aviation Corp. v. City of Redlands, supra, 111 Cal.App.5th at p. 982; Naranjo v. Doctors Medical Center of Modesto, Inc. (2025) 111 Cal.App.5th 408, 439.)

Plaintiff alleges an agreement to act as a Farmers agent, that the agreement permitted termination only for cause, that Farmers terminated him for cause based on the recording made by Ideal Traits, and that termination based on the allegedly illegal recording breached the contract. (FAC, ¶¶ 191-196.) Plaintiff also alleges that Farmers breached the contract by telling him he could sell his business and/or receive contract value, later rescinding approval of the sale after Plaintiff waived his right to appeal the termination, and withholding money from his final paycheck for “Miscellaneous” charges when the contract limited deductions to client chargebacks. (FAC, ¶¶ 204, 208.)

Defendants argue that the allegations concerning the sale of the business fail because the AAA restricted sale of Plaintiff’s agency to a family member. However, the FAC alleges that Farmers approved the sale and later rescinded that approval. At the pleading stage, and in light of the additional allegation concerning withheld monies, the Court cannot determine as a matter of law that Plaintiff cannot state a breach of contract claim against the Farmers Defendants generally.

Accordingly, the demurrer to the Tenth Cause of Action is OVERRULED as to the Farmers Defendants generally, subject to the ruling below as to Defendant FGI.

ELEVENTH CAUSE OF ACTION

Every contract contains an implied covenant of good faith and fair dealing. (Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 349.) The implied covenant prevents a contracting party from unfairly frustrating the other party’s right to receive the benefits of the agreement, but it cannot impose substantive duties or limits beyond those incorporated in the specific terms of the parties’ contract. (Ibid.; Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1393-1395.)

For the same reasons stated regarding the breach of contract claim, the FAC pleads facts sufficient at the demurrer stage to support an implied covenant claim against the Farmers Defendants generally. Plaintiff alleges that Farmers exercised contractual discretion and termination-related rights in a manner that deprived him of contractual benefits, including the ability to sell the book of business, receive contract value, and avoid improper deductions. Whether Plaintiff can prove bad faith, and whether the challenged conduct was permitted by the express terms of the AAA, cannot be resolved on this demurrer on the present pleadings.

Accordingly, the demurrer to the Eleventh Cause of Action is OVERRULED as to the Farmers Defendants generally, subject to the ruling below as to Defendant FGI.

DEFENDANT FGI

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Defendants separately argue that the Tenth and Eleventh Causes of Action fail as to Defendant FGI because FGI is not a party to the AAA. The AAA does not list FGI as a signatory. (FAC, Ex. A.) Plaintiff does not address this issue in opposition and does not identify any basis to impose contract or implied covenant liability on FGI despite its nonsignatory status.

Accordingly, the demurrer to the Tenth and Eleventh Causes of Action is SUSTAINED WITHOUT LEAVE TO AMEND as to Defendant FGI only.

DISPOSITION

The demurrer to the First Cause of Action for Wrongful Termination in Violation of Public Policy, Second Cause of Action for Violation of Penal Code section 632, and Eighth Cause of Action for Promissory Estoppel is SUSTAINED WITH LEAVE TO AMEND.

The demurrer to the Tenth Cause of Action for Breach of Contract and Eleventh Cause of Action for Breach of the Implied Covenant of Good Faith and Fair Dealing is OVERRULED as to the Farmers Defendants generally and SUSTAINED WITHOUT LEAVE TO AMEND as to Defendant FGI only.

Plaintiff may file and serve a second amended complaint within 10 days after service of notice of entry of the order. (Cal. Rules of Court, rule 3.1320(g).)

If the tentative ruling is uncontested, it shall become the order of the Court. Thereafter, counsel for Defendants shall prepare a written order consistent with the Court’s ruling for the Court’s signature pursuant to California Rules of Court, rule 3.1312, and shall provide written notice of the ruling to all parties who have appeared in the action, as required by law and the California Rules of Court.