Asset Management Consultants, Inc. vs. Catlin Specialty Insurance Company

the notice deficiency. (Plaintiff’s Opp., Exh. E) Accordingly, the Court’s strong inclination is to deny leave to amend. 10 Roe 26 A.B. vs. Anaheim Union High School District

2025-01503960

Gizem Gures’s Motion to Be Relieved as Counsel of Record Motion to Be Relieved as Counsel of Record Slater, Slater & Schulman LLP moves to be relieved as counsel for Plaintiffs Jane Roe 27 M.M. and Jane Roe 33 B.G. The motion is GRANTED. Counsel has met the requirements of CCP § 284 and CRC 3.1362. The two orders will be effective upon the filing of proof of service on the clients. 11 Asset Management Consultants, Inc. vs. Catlin Specialty Insurance Company

2015-00824125

Defendant’s Demurrer to Complaint Defendant’s Motion to Strike Complaint CATLIN SPECIALTY INSURANCE’S DEMURRER TO THE SECOND AMENDED COMPLAINT (2AC) Catlin’s demurrer to the Basso Plaintiffs’ sixth cause of action (fraud) in the 2AC is SUSTAINED WITHOUT LEAVE TO AMEND.

The gist of the sixth cause of action is that Catlin (and insurance broker Brown and Riding Insurance Services, Inc.) fraudulently concealed the fact that, contrary to Plaintiffs’ instructions, the insurance policy at issue included a self-insured retention of $150,000 and excluded SLB from coverage. The Court previously sustained Catlin’s demurrer to this claim. In the First Amended Complaint, the Basso Plaintiffs pled they received letters in July and November 2013 informing them of the SIR and the exclusion of SLB. The FAC was filed in July 2018, more than three years later, and the fraud claim did not relate back to the original complaint. As a result, it was untimely. The Basso Plaintiffs were granted leave to amend.

The Basso Plaintiffs now argue the delayed discovery rule should toll accrual of the fraud claim. In the 2AC, the Basso Plaintiffs continue to admit that they received letters about the SIR and the exclusion of SLB in July and November 2013. However, they allege that they understood these letters to be mistakes or errors. With respect to the July 2013 letter, they allege: “Because the Policy did not actually reference any such retention and Plaintiffs had not been provided with any endorsement or other information suggesting that there was, in fact, a retention, this comment by Linville appeared to be a simple mistake and did not, in any way, suggest that Catlin and Brown were attempting to secretly modify the policy to add in a retention without the knowledge of Plaintiffs.

Plaintiffs did not first learn of this was not merely a typographical error but was, in fact, part of a scheme to create the illusion of a retention that did not actually exist until it was disclosed in discovery in this litigation less than three years before first alleging this cause of action.” (2AC ¶ 332.)

Similarly, with respect to the November 2013 letter, they allege: “In fact, because Plaintiffs understood that SLB was a named insured under the Policy at the time they paid their premium, they knew that the endorsement [deleting SLB] was an error and had not be[en] agreed to by the parties. Because they were unaware of the secret discussions between Brown and Catlin, they were unaware that this purported endorsement was actually a part of a long-standing fraud until those discussions were disclosed in discovery in this litigation less than three years before first alleging this cause of action.” (2AC ¶ 355.)

“An important exception to the general rule of accrual is the ‘discovery rule,’ which postpones accrual of a cause of action until the plaintiff discovers, or has reason to discover, the cause of action.” (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 807.) “The discovery rule only delays accrual until the plaintiff has, or should have, inquiry notice of the cause of action. . . . In other words, plaintiffs are required to conduct a reasonable investigation after becoming aware of an injury, and are charged with knowledge of the information that would have been revealed by such an investigation.” (Id., at pp. 807-808.)

“In order to rely on the discovery rule for delayed accrual of a cause of action, ‘[a] plaintiff whose complaint shows on its face that his claim would be barred without the benefit of the discovery rule must specifically plead facts to show (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence.’ In assessing the sufficiency of the allegations of delayed discovery, the court places the burden on the plaintiff to ‘show diligence’; ‘conclusory allegations will not withstand demurrer.’” (Id., at p. 808.)

The allegations of the 2AC do not meet this standard. The admitted content of the July and November 2013 letters, on its face, was enough to put the Basso Plaintiffs on inquiry notice that they were subject to an SIR and that SLB was no longer covered. At that point, the Basso Plaintiffs were required to conduct a reasonable investigation. For example, they could have called their broker to ask why the letters didn’t match what they understood the policy to say. But the 2AC contains no allegations of any investigation or diligence after receipt of the letters.

Rather, the Basso Plaintiffs plead that because they subjectively understood the letters to be a mistake, they had no need to further inquire. This is not the law. Fox requires a plaintiff invoking the discovery rule to plead reasonable diligence, not diligence based on the plaintiff’s subjective understanding of the facts. The demurrer is therefore sustained.

Because the Basso Plaintiffs have had multiple chances to plead the fraud claim’s timeliness, and because the Basso Plaintiffs propose no curative amendments in their opposition, leave to amend is denied. The Court does not reach Catlin’s alternative arguments in support of the demurrer.

CATLIN’S MOTION TO STRIKE PORTIONS OF 2AC Catlin’s motion to strike portions of the 2AC is GRANTED IN PART AND DENIED IN PART. Specifically, the motion is GRANTED WITHOUT LEAVE TO AMEND as to items 1, 2, 3, and 5 in the notice of motion (erroneously misnumbered 6) and DENIED as to item 4.

I. Standard of Review A court may strike “any irrelevant, false, or improper matter inserted in any pleading.” (CCP § 436(a).) A court may also strike “all or part of any pleading not drawn or filed in conformity with the laws of this state.” (Id., § 436(b).)

II. Wrongful Acts Exclusion Items 1, 3, and 5 in the notice of motion pertain to the so-called “Wrongful Acts Exclusion” in the operative insurance policy. Catlin seeks to strike all of count two of the fifth cause of action (seeking reformation to eliminate the Wrongful Acts Exclusion), other allegations that the Wrongful Acts Exclusion is not part of the policy or should be removed, and the prayer for reformation of the policy to eliminate the Wrongful Acts Exclusion. The Court previously struck allegations relating to the Wrongful Acts Exclusion on the grounds that they were untimely under the three-year limitations period for actions sounding in fraud.

As in the FAC, Plaintiffs admit the Wrongful Acts Exclusion was contained in the policy as issued in October 2012 and was sent to them by email in November 2012. (2AC ¶¶ 31, 266, 316.) This was sufficient to put them on inquiry notice, because insureds have a duty to read their policy documents. (See Aetna Casuatly & Surety Co. v. Richmond (1977) 76 Cal.App.3d 645, 652 (“It is a general rule that the receipt of a policy and its acceptance by the insured without an objection binds the insured as well as the insurer and he cannot thereafter complain that he did not read it or know its terms.

It is a duty of the insured to read his policy.”).) As a result, they had to file any action for reformation of the policy based on fraud by November 2015. They first sought reformation of the Wrongful Acts Exclusion in the FAC, filed in July 2018. The allegations are therefore untimely.

Citing Raulet v. Northwestern Nat. Ins. Co. of Milwaukee (1910) 157 Cal. 213 and Clement v. Smith (1993) 16 Cal.App.4th 39, Plaintiffs argue the rule that persons are presumed to be familiar with the terms of contracts to which they are party is inapplicable in the insurance context. Both cases are inapposite. Raulet is based on the principle that the ordinary insured is unsophisticated and lacks the knowledge necessary to understand the ins and outs of a policy drafted by company experts. (See Raulet, 157 Cal. at p. 230.)

Here, Plaintiffs were sophisticated participants in a series of complex commercial real estate investments. (2AC ¶¶ 14-15.) And while Clement holds that an insured may reasonably rely on an insurance agent’s representation of coverage as opposed to the terms of the underlying policy, that case was about the agent’s liability for misrepresentation. It was not a coverage dispute. (See Clement, 16 Cal.App.4th at p. 45.) Accordingly, the allegations relating to the Wrongful Acts Exclusion are struck as untimely.

III. Oral Contract Item 2 in the notice of motion pertains to an alleged oral contract between individual Plaintiffs and Catlin regarding the insurance policy. In the FAC, each of paragraphs 196, 197, and 199 said, “[Plaintiff] and Catlin are parties to a valid contract, a portion of which is written (Exhibit 1) and a portion of which is oral (to the extent agreed terms are not included in Exhibit 1).” The Court granted Catlin’s motion to strike the references to an oral contract from the FAC, explaining: “As to the oral contract allegations in Paragraphs 196, 197 and 199, Catlin Specialty’s grounds for the motion to strike is the claim is barred by the two-year statute of limitations based on (1) the statute of limitations for breach of an oral contract is two years, and (2) the lawsuit was originally filed more than two years after the denial of coverage.

Given this timing, the relation back doctrine—which causes an amended pleading to relate back to the date the original pleading was filed—would not seem to apply.” (ROA 469 at p. 3.)

In the 2AC, Plaintiffs make a single, identical change to all three paragraphs by adding the following language: “To the extent the language in Exhibit 1 is inconsistent with the earlier oral agreement, that written language is not, in fact, a part of the contract. For example, the Wrongful Acts Exclusion was never presented to Plaintiffs before they paid their premium and formed the contract. Accordingly, the Wrongful Acts Exclusion is not part of the contract.” Plaintiffs’ opposition discusses the oral contract allegations at page 9.

The opposition does not appear to explain how the additional language quoted above affects the relation back analysis. Accordingly, the Court finds Plaintiffs have not adequately pled relation back. To the extent Plaintiffs simply repeat arguments raised in their opposition to the first motion to strike, the Court refers to its prior ruling. The allegations relating to the oral contract are struck as untimely.

IV. Amendments Outside the Scope of the Prior Order Finally, item 4 in the notice of motion pertains to numerous allegations that Catlin contends are outside the scope of permitted amendment. The Court’s prior order permitted amendment “as to Count Two of Plaintiffs’ Fifth Cause of Action for Reformation based on fraud arising from Catlin Specialty’s inclusion in the insurance policy of the Wrongful Acts Exclusion, and as to the allegations in Paragraphs 196, 197 and 199 regarding an oral contract.” (ROA 469 at p. 3.)

Catlin appears to believe that because numerous amendments were made outside the charging allegations for Count Two, and outside paragraphs 196, 197, and 199, they are per se improper. The Court disagrees. The allegations at issue go to Plaintiffs’ contention that their claims are timely. Wherever in the 2AC they are found, they are within the scope of permitted amendment. The motion is denied as to these allegations.

V. Leave to Amend Plaintiffs have had multiple opportunities to plead viable allegations and have not done so. In addition, they propose no curative amendments in their opposition. Leave to amend is therefore denied. 10:00 AM 12 Albert vs. Tyler Technologies, Inc.

2025-01462434

Demurrer to Amended Complaint Demurrer to Amended Complaint Motion to Appear Pro Hac Vice Motion to Strike- Anit SLAPP Before the Court are four motions: 1. Defendants State Bar of California (including the Board Members of the State Bar of California), Brandon Stallings, Leah Wilson, George Cardona, Donna Hershkowitz, Suzanne Grandt, Cindy Chan, Benson Hom, Sunly Yap, and Sherell McFarlane’s (collectively, “State Bar Defendants”) demurrer to the second amended complaint (“2AC”) of Plaintiffs Lenore Albert, Chad Pratt, Theresa Marasco, Larry Tran, Ryan McMahon, James Ocon, and Leslie Westmoreland.

2. Defendant Tyler Technologies, Inc.’s (“Tyler”) demurrer to Plaintiffs’ 2AC.

3. The State Bar Defendants’ motion to strike Plaintiffs’ 2AC and portions thereof, pursuant to both CCP § 425.16 and CCP § 436.

4. Beth Petronio’s application for admission pro hac vice.

The Court rules on each motion as set forth below. The State Bar Defendants and Plaintiffs have filed requests for judicial notice. Tyler has filed a supporting declaration from its counsel, Zachary Timm, that the Court will construe as a request for judicial notice. Plaintiffs have objected to the State Bar Defendants’ and Tyler’s requests for judicial notice. To the extent the Court discusses Plaintiffs’ evidentiary objections in the below rulings, those objections are sustained or overruled accordingly.

The Court declines to rule on any objections not discussed on the grounds that the evidence objected to is immaterial to the Court’s rulings. Similarly, to the extent the Court discusses material in the requests for judicial notice below, the requests are granted (at least as to the existence of the documents and their contents, but not for the truth of any matter asserted therein). The Court declines to take notice of any material not discussed on the grounds that it is immaterial to the Court’s rulings.

Finally, Plaintiffs’ multiple requests for the Court to consider late-acquired evidence are denied.

GENERAL BACKGROUND Before addressing the details of the 2AC as pertinent to each motion, the Court offers the following general summary of Plaintiffs’ allegations.

I. Parties This lawsuit is brought by seven plaintiffs proceeding in propria persona: Lenore Albert, Leslie Westmoreland, James Ocon, Ryan McMahon, Chad Pratt, Larry Tran, and Theresa Marasco. Albert, Westmoreland, and Pratt are attorneys who were disbarred by the California Supreme Court. (2AC ¶¶ 27- 34, 204-08.) Ocon, Marasco, Tran, and McMahon are non-attorneys who had