Plaintiffs v. American Zurich et al.

and when the unit is repaired. That might be a valid contractual offer, but it does not mean that the optionee is a tenant for life. One remaining question is whether, if it is a contract, whether Fairfax can be sued over it. Because the demurrer is resolved on statute of limitations grounds, the court does not need to reach the question whether such a contract would be binding on Fairfax. That leaves the section 1946.2 cause of action. It does not apply because it does not apply to residential real property subject to a local ordinance requiring just cause for termination adopted on or before September 1, 2019. It is alleged that there was such an ordinance at the time the alleged promise was made. The demurrer is therefore SUSTAINED. The court will discuss with cross complainants whether they believe that leave to amend would be fruitful. The motion to strike is MOOT.

They are OVERRULED. Plaintiffs brought this action alleging that they bought property in the Pacific Palisades to build a home. They retained a general contractor for that purpose. They allege that in September 2022, they engaged Cohen Insurance Agency to place and maintain builder's risk insurance coverage for the property. The policy was obtained and issued by American Zurich through US Assure. It was in effect from October 6, 2022, to October 6, 2023. Plaintiffs state that the construction loan lender was listed as the mortgage holder and loss payee.

The policy had a $4.3 million limit per structure. In August 2023, Cohen allegedly provided renewal quotes to plaintiffs that caused plaintiffs to look elsewhere for insurance. On September 5, 2023, plaintiffs received an email from US Assure reminding them of the coming expiration date. Plaintiffs claim they contacted US Assure about renewing the policy. Plaintiffs also reached out to Farmers Insurance's agent Khazin Agency on September 20, after being referred by plaintiffs' real estate agent.

Plaintiffs spoke with Ramirez and asked about having Khazin Agency renew the coverage with the same terms as the existing policy. Ramirez allegedly assured plaintiffs that this could be done. In the meantime, Cohen reached out to plaintiffs to tell them that US Assure had quoted an extension of the policy. Plaintiffs assert that they thought about returning to Cohen but elected not to do so due to fear of delays. But plaintiffs also claim that had they known of the relationship between Farmers Insurance Group and the Kraft and Khazin Agencies, plaintiffs would have gone with Cohen.

Plaintiffs continued to follow up with Khazin in early October, and Ramirez allegedly sent an email on October 6 stating that she was rewriting the policy. On October 6, American Zurich through US Assure issued a new policy. On October 12, Ramirez told plaintiffs that the policy was identical to the prior policy although, plaintiffs claim, First Republic Bank had been dropped and the policy limits had been reduced from $4.3 million to $2 million per structure. Plaintiffs noticed that Kraft Lake Insurance Agency was listed as plaintiffs' representative.

Plaintiffs

say that Ramirez told them that Kraft had expertise in this kind of coverage, but plaintiffs allege that they were never told that Kraft was a wholly-owned subsidiary of Farmers, that it was designed only to provide Farmers with another income stream, that Khazin and Kraft were operationally controlled by Farmers, that US Assure had an exclusive agreement to place the insurance with sister companies of Kraft and Assure, or that Khazin did not have the freedom to recommend another agent to place the policy.

Plaintiffs state that on October 14, they told Ramirez that their address needed to be updated. Construction continued. In 2024, plaintiffs emailed Ramirez and told her that the coverage needed to be renewed. At that time, the home was about 70% complete. Kraft submitted a request for another year of coverage and a renewal endorsement was issued by Zurich through US Assure. Ramirez told plaintiffs of that and stated that an invoice would be generated and mailed to them. On October 18, plaintiffs put First Republic in touch with Ramirez to get evidence of the insurance.

Plaintiffs followed up with Ramirez on November 10, indicating that they had not received the invoice and asking to confirm the New York address. Ramirez did not respond and plaintiffs followed up on November 30. Ramirez still did not respond. On December 11, US Assure sent an email to Khazin stating that the policy was cancelled. On December 12, Khazin emailed Ramirez stating that the insured wanted to renew. And then the house was destroyed in the Palisades fire. Plaintiffs allege that at no time before the fire had they been told that the policy had been cancelled.

On January 8, 2025, plaintiffs were informed that the policy had been cancelled due to nonpayment. Khazin contacted US Assure to see if the policy could be reinstated, but US Assure declined to do so. US Assure and Farmers demur; plaintiffs oppose. Preliminarily, the request for judicial notice is DENIED. The court will not judicially notice a LinkedIn page. Also preliminarily, after the demurrers were filed, plaintiffs dismissed the seventh and tenth causes of action against the demurring defendants (which essentially moots Kraft's prior demurrer).

The court disregards any arguments as to those causes of action. US Assure demurs to the eighth and tenth causes of action for failure to state a claim and misjoinder. The misjoinder argument is not well taken. That only applies where there is a party that needs to be in the action in order to proceed or where the plaintiffs lack sufficient unity of interest as to the defendants. There is no such showing here. Turning, then, to the merits, US Assure argues that it is just Zurich's program administrator, so it is not liable for Zurich's torts.

The theory is that where the agent signs as an agent and the agency relationship is fully disclosed, then the liability lies with the principal, not the agent. (Lippert v. Bailey (1966) 241 Cal.App.2d 376.) According to US Assure,

that is the case here; it was only Zurich's agent, and therefore not liable for the torts. US Assure is correct that the complaint alleges that it was Zurich's agent. But plaintiff argues that it alleges that US Assure was not merely an insurance agent, but also a sophisticated program administrator that exclusively distributes, underwrites, and services Zurich's builder's risk programs and that it holds itself out as having an independent expertise. Further, plaintiffs allege that US Assure communicated directly with plaintiff about the coverage and assumed independent obligations.

There is a factual element to this--to determine the full scope of the agency and whether US Assure stepped out of the agency role to assume for itself certain duties to plaintiffs. Where an agent holds itself out as having specific expertise and undertakes a duty, the duty does not disappear because the agent is also an agent. (Kurtz, Richards, Wilson & Co. v. Insurance Communicators Marketing Corp. (1993) 12 Cal.App.4th 1249.) The court agrees that the question is a close one. US Assure allegedly had certain expertise, but it is not clear that an expertise in communications is among them.

And US Assure allegedly mishandled the communications side of things--not just procurement. And there is the improper cancellation due to US Assure's alleged failure to communicate with plaintiffs. While close, the court believes that this is better left to a fuller factual record. And generally Lippert does not protect an agent from a tort that the agent itself committed. The doctrine is meant largely to enforce the logical rule that where one acts solely on behalf of another, it is the other that is bound, not the agent.

The demurrer is OVERRULED. Turning to Farmers' demurrer, it demurs to the eleventh and twelfth causes of action, both for failure to state a claim, but also for lack of jurisdiction as to the twelfth cause of action. The jurisdictional demurrer is OVERRULED. The court is not without power to decide this case. The allegations against Farmers is that Farmers allegedly had a system where Farmers utilized wholly owned subsidiaries to provide Farmers with additional income streams and that Kraft and Khazin were both controlled by Farmers and that US Assure had an exclusive agreement to place the coverage with sister companies, but plaintiffs were never informed of these facts.

Farmers complains that plaintiffs' complaint lacks specificity. But the amount of specificity Farmers seeks need not be alleged. Plaintiffs need not allege specific evidentiary items. They set forth their theory well enough: Farmers required that its agents only use its subsidiaries to place policies and service the coverage even though those subsidiaries did not have full training or expertise. Further, plaintiffs assert that this purportedly secret policy deprived them of the ability to find the best provider.

Farmers claims that Khazin and Kraft are not its agents just because they are authorized to sell insurance for other Farmers' entities. The court agrees that merely authorizing a person to sell a policy does not make that person your general agent (although the person may be an agent for some purposes).

But the court must read the complaint liberally. The complaint alleges that Farmers Insurance Group is a wholly owned subsidiary of Zurich Insurance Group and is the attorney in fact representative of several Farmers Insurers and entered into an agency agreement with Khazin and Ramirez. That is enough at least at the pleading stage. Farmers also argues that neither Khazin nor Kraft are in fact its actual or ostensible agents such that it can be vicariously liable. While it is true that plaintiffs have not alleged the evidentiary facts necessary to prove the agency, that is not required at the pleading stage.

An allegation of agency is enough. (Skopp v. Weaver (1976) 16 Cal.3d 432.) Farmers also asserts that under the UCL, plaintiffs mush allege that there is no adequate legal remedy but have failed to do so. But that is not the holding of the cases Farmers cites. A plaintiff need not so plead. Ultimately the court will not allow a double recovery. But the court is not convinced that more is required at this time. Of course, nothing herein precludes a motion for summary judgment or adjudication as the facts develop.

In short, the demurrer is OVERRULED. Farmers and US Assure have 30 days to answer. | Home -->)" -->