Fields vs. Fidelity National Title Insurance Company

In Kwok, a title insurance policy was obtained by an LLC, in connection with the purchase of property. (Kwok v. Transnation Title Ins. Co. (2009) 170 Cal.App.4th 1562, 1565.) Similar to this action, the LLC was the only named insured on Schedule A of the policy and the policy defined “insured” to mean “the insured named in Schedule A, and...those who succeed to the interest of the named insured by operation of law as distinguished from purchase....” (Ibid.; See also ¶11 of FAC and Exhibit 5 thereto, at ¶1(a) of “Definitions of Terms.”)

Following purchase and issuance of the policy, the appellants in Kwok, who were the only members of the LLC, executed a grant deed which transferred the insured

property from the LLC to themselves, as trustees of their family trust. (Kwok v. Transnation Title Ins. Co. (2009) 170 Cal.App.4th 1562, 1565.) Thereafter, the appellants tendered a claim under the policy, which was denied on the basis the appellants did not become “insureds” by operation of law. (Id. at p. 1566.) A motion for summary judgment was granted by the trial court, in favor of the insurance company, for this same reason. (Id. at p. 1567.)

In affirming the above, the Court of Appeal noted: “Under the terms of the policy, appellants could only become insureds by operation of law. The transfer of property by an insured into a family trust is a voluntary act and not one that arises by operation of law.” (Kwok v. Transnation Title Ins. Co. (2009) 170 Cal.App.4th 1562, 1571.) The Court of Appeals further explained: “A transfer can occur that does not involve a purchase, but nevertheless does not arise by operation of law. For example, a gift of the property may not involve the exchange of any consideration, but a donee cannot be said to succeed to the property by operation of law. A transfer of property by gift is clearly a voluntary act that does not arise automatically upon death or dissolution.” (Id. at p. 1572.)

Applying the above herein, the voluntary assignment offered by Plaintiff is not a transfer “by operation of law” and did not transform Plaintiff into an “insured” under the policy; however, a distinction exists between coverage as an “insured” and the assignment of a pre-existing claim.

Pursuant to Civil Code section 1458, “[a] right arising out of an obligation is the property of the person to whom it is due, and may be transferred as such.” (Civ. Code, § 1458.) Similarly, “[a] thing in action, arising out of the violation of a right of property, or out of an obligation, may be transferred by the owner.” (Civ. Code, § 954.)

Based on the above, “[w]e start from the proposition that assignability is the rule.” (Essex Ins. Co. v. Five Star Dye House, Inc. (2006) 38 Cal.4th 1252, 1263.)

As explained by the California Supreme Court in Fluor Corp, while the substitution of one insured for another typically requires the consent of the insurer, “it is settled that the right to recover thereon after loss has occurred is assignable without company consent.” (Id. at p. 1190, fn. 10, citing with approval Greco v. Oregon Mut. Fire Ins. Co. (1961) 191 Cal.App.2d 674, 682.)

Similarly, “[a]ctions for bad faith against an insurer have generally been held to be assignable.” (Essex Ins. Co. v. Five Star Dye House, Inc. (2006) 38 Cal.4th 1252, 1263.)

Within the Reply, Defendant suggests title insurance policy claims, unlike claims made pursuant to a third-party liability policy, are not assignable (See Reply: 2:22-4:14); however, Defendant cites no authority which supports this position.

At best, Defendant cites Villanueva v. Fidelity National Title Co. (2021) 11 Cal.5th 104, for a general explanation as to how title insurance differs from other forms of insurance. (See Reply: 4:1-4, citing Villanueva v. Fidelity National Title Co. (2021) 11 Cal.5th 104, 113.)

Additionally, Defendant cites Dollinger DeAnza Associates v. Chicago Title Ins. Co. (2011) 199 Cal.App.4th 1132, wherein the Court noted an exception applicable only to liability insurers, with respect to the rule: “[T]he principles of estoppel and implied waiver do not operate to extend the coverage of an insurance

policy....” (Id. at p. 1154.) This authority, similar to Kwok, does not address assignment of a claim.

Within the Reply, Defendant also asserts that Civil Code section 954 does not apply, arguing the claim herein does not qualify as a “right to recover money or other personal property.” (Reply: 6:5-8.) Again, however, no authority is cited to support this assertion, and the Complaint expressly seeks to recover money pursuant to the Title Insurance Agreement. (See Prayer ¶26 of FAC.)

Thus, while Defendant repeatedly asserts the law of assignment differs in the context of title insurance, the argument is unsupported within this demurrer.

“Every brief should contain a legal argument with citation to authorities on the points made. If none is furnished on a particular point, the court may treat it as waived, and pass it without consideration.” (People v. Stanley (1995) 10 Cal.4th 764, 793.)

Based on the above, Defendant failed to challenge the standing allegations included within the First Amended Complaint; however, the above authority nonetheless reveals a significant defect in the pleading:

Per the First Amended Complaint, it was Plaintiff Leslie Fields, the individual, who submitted the underlying claim which was purportedly denied. (¶15 of FAC [“Plaintiff Fields, after consultation with Trustee Olivia McMullen Fields, filed a claim for benefits under the policy of title insurance issued by Defendant FNTIC. Plaintiff’s claim was denied by Defendant FNTIC.”])

The submission of the underlying claim appears to have predated the March 2026 assignment; however, regardless, per Kwok, Plaintiff was not an “insured” under the policy either pre- or post- assignment and, consequently, a claim made by Plaintiff would have been properly denied.

Based on the above, the First Amended Complaint does not allege, either, a breach of contract or bad faith.

“The essential elements of a claim of breach of contract, whether express or implied, are the contract, plaintiff’s performance or excuse for nonperformance, defendant’s breach, and the resulting damages to plaintiff.” (San Mateo Union High School Dist. v. County of San Mateo (2013) 213 Cal.App.4th 418, 439.)

Here, although not explicitly alleged, the First Amended Complaint suggests Defendant’s denial of Plaintiff’s insurance claim breached the agreement; however, as indicated above, Plaintiff the individual was not an insured under its terms. While the insured may have been able to assign a completed claim to Plaintiff, assignment would not have transferred to Plaintiff the ability to submit a claim in the first instance.

With respect to the second cause of action, “[a] mere breach of contract...is insufficient to determine bad faith.” (Dua v. Stillwater Ins. Co. (2023) 91 cal.App.5th 127, 138.) “To prevail at trial, the insured must also show that the insurer withheld that benefit unreasonably or without proper cause.” (Ibid.)

“Before an insurer can be found to have acted in bad faith for its delay or denial in the payment of policy benefits, it must be shown that the insurer acted unreasonably or without proper cause. Where there is a genuine issue as to the insurer’s liability under the policy for the claim asserted by the insured, there can

be no bad faith liability imposed on the insurer for advancing its side of that dispute.” (Jordan v. Allstate Ins. Co. (2007) 148 Cal.App.4th 1062, 1072.)

“Thus, allegations which assert such a claim must show that the conduct of the defendant, whether or not it also constitutes a breach of a consensual contract term, demonstrates a failure or refusal to discharge contractual responsibilities, promoted not by an honest mistake, bad judgment or negligence but rather by a conscious and deliberate act, which unfairly frustrates the agreed common purpose and disappoints the reasonable expectations of the other party thereby depriving that party of the benefits of the agreement.” (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1395.)

Here, the Complaint alleges only that Plaintiff’s claim was denied. (¶15 of FAC.)

The Complaint contains no allegations which suggest bad faith or an unreasonable denial and, in fact, as indicated above, the allegations suggest Defendant correctly denied a claim which was submitted by someone who was not an “insured.”

In addition to the above, Defendant asserts Plaintiff failed to allege a breach of the underlying Title Insurance Agreement, as the loss of title occurred only after the policy was issued.

“Title insurance is a contract to indemnify against loss through defects in the title or against liens or encumbrances that may affect the title at the time when the policy is issued.” (Liberty National Enterprises, L.P. v. Chicago Title Ins. Co. (2013) 217 Cal.App.4th 62, 75.) “Changes in the condition of the title after the insurer issues the policy are outside the scope of coverage.” (Ibid.)

The First Amended Complaint alleges marketable title was lost on August 9, 2022, after the policy was issued, but does not specify the facts that caused the loss of marketable title for this decision. (¶14 of FAC.) Title insurance does not insure against future events, it insures against losses resulting from differences between actual title and recorded title as of the date title is insured. (Quelimane Co. vs Stewart Title Guaranty Co. (1998) 19 Cal. 4th 26).

Based on all the above, the Demurrer to the First and Second Causes of Action is SUSTAINED without leave to amend.

Lastly, the Court notes that pleading challenges are limited to review of the complaint and judicially noticeable material. (See Code Civ. Proc., §430.30, subd. (a) and Code Civ. Proc., § 437, subd. (a).) The Court cannot consider declarations. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) Thus, the Declaration of Leslie Fields filed on June 23, 2026 (ROA No. 96) was not considered.

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The Motion to Strike brought by Fidelity National Title Insurance Company is DENIED.

In seeking to strike the First Amended Complaint, Defendant raises two arguments: (1) Firstly, Defendant asserts Plaintiff exceeded the scope of leave to amend previously granted, by filing contract claims in his individual capacity; and (2) Defendant repeats its assertion that Plaintiff lacks standing, pursuant to Kwok v. Transnation Title Ins. (2009) 170 Cal.App.4th 1562.

For the reasons stated above, Kwok does not address the assignment allegations relied on to establish standing and, consequently, this portion of the motion is denied.

Additionally, the Court finds that the First Amended Complaint falls within the scope of leave to amend previously granted. (See ROA No. 78 and Harris v. Wachovia Mortgage, FSB (2010) 185 Cal.App.4th 1018, 1023.)

57 Jack Mitchell Construction, Inc. vs. IM Painting, Inc.

25-01523321

1. Demurrer to Complaint 2. Motion to Strike Complaint

NO TENTATIVE RULING. Parties to Appear on Zoom or in person. 58 Palacios vs. Blue Link Wireless, LLC

25-01474388

Motion to Compel Arbitration

Tentative Ruling to be updated in the morning. 59 REYNOLDS REALTY ADVISORS, INC. vs. CAPITAL INSIGHTS

23-01359175

Motion for Attorney Fees

The unopposed Motion for Attorneys’ Fees brought by Defendant Capital Insights is GRANTED, in the reasonable amount of $29,383.00.

“In any action on a contract, where the contract specifically provides that attorney’s fees and costs, which are incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the party prevailing on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney’s fees in addition to other costs.” (Civ. Code, §1717, subd. (a).)

“The court, upon notice and motion by a party, shall determine who is the party prevailing on the contract for purposes of this section, whether or not the suit proceeds to final judgment.” (Civ. Code, §1717, subd. (b)(1).) “[T]he party prevailing on the contract shall be the party who recovered a greater relief in the action on the contract. The court may determine that there is no party prevailing on the contract for purposes of this section.” (Civ. Code, § 1717, subd. (b)(1).)

This action sought to enforce a Property Management Agreement executed between Reynolds Realty Advisors, Inc. and Capital Insights. (See Exhibit A of Complaint [ROA No. 2].) Included within this agreement was a provision providing for the recovery of attorney fees. (Id. at ¶14.) Consistent with the above, Plaintiff requested attorneys’ fees in the Complaint. (¶11(g) of Complaint [ROA No. 2].)

Nonetheless, there has been no showing Defendant is the prevailing party entitled to attorney fees, pursuant to the Property Management Agreement as: (1) It is undisputed Defendant Capital Insight settled Plaintiff’s claim based on the