General Insurance Company of America v. Di Nalli Construction

(Santa Monica Courthouse: Dept. P) September 8, 2026 DEPARTMENT P LAW AND MOTION RULINGS

Ruling General Insurance Company of America v. Di Nalli Construction, Case no. 25SMCV06348 Defendants' Demurrer Hearing Date: September 8, 2026 Background Plaintiff General Insurance Company of America ("GICA") sues Defendants Di Nalli Consulting, LLC; Farbod "Phil" Rezvani; Sentinel Environmental Solutions, Inc.; Spy Rooter, Inc.; Heart & Soul Custom Windows & Glass Door Installation Inc.; for negligence and breach of the implied warranty of good workmanship. GICA alleges that it insured Keith and Gelena Wasserman's property at 514 Via De La Paz, Pacific Palisades, CA 90272. (Complaint, P. 14.)

GICA alleges that in 2020, the Wassermans hired Defendants to build the property and in 2023, while they were installing a new or repaired roof, the property sustained extensive water damage because Defendants failed to prevent water intrusion. (Id. at P.P. 15-20.) On November 8, 2023, the Wassermans sued Defendants over this same damage in LASC Case No. 23SMCV04230. On July 16, 2024, the Court granted GCIA's application to file a complaint in intervention in that action. On December 4, 2024, the Court sustained the Wassermans' demurrer to GCIA's complaint in intervention with leave to amend, finding that GCIA failed to state a claim because GCIA's insured, the Wassermans, had not yet been made whole.

On February 18, 2025, the Court again sustained the Wassermans' demurrer to GCIA's complaint in intervention with leave to amend on the same grounds, holding that "intervenor's claims are not ripe until plaintiffs have been made whole." (Minute Order (2/18/2025), p. 2.) On February 20, 2025, GCIA filed the Amended Complaint, the operative pleading in that case. On April 19, 2024, Di Nalli sued the Wassermans for breach of contract, goods and services rendered, and quantum meruit over the same alleged construction defect in related LASC Case No. 24SMCV01873.

On June 9, 2026, the Court granted Di Nalli leave to file a first amended complaint. On December 8, 2025, GICA filed the complaint in this case. It has since dismissed Defendants Sentinel Environmental Solutions, Inc. and Spy Rooter, Inc. On August 10, 2026, Di Nalli filed this demurrer. On August 26, 2026, GCIA filed opposition. On August 31, 2026, Di Nalli replied. On August 10, 2026, the GICA filed this demurrer. Arguments Di Nalli demurs to both of GICA's claims arguing that they are barred by the made-whole

doctrine. Di Nalli argues that, absent an agreement to the contrary, an insurance company cannot enforce a right to subrogation until the insured has been fully compensated for their injuries. (Demurrer, p. 6.) Di Nalli argues that in this case, the Wassermans have not yet been fully compensated, so GICA's claims are not ripe. (Id. at p. 7.) Di Nalli also argues that GCIA's negligence claim is barred by the statute of limitations because the complaint alleges that the water damage occurred on January 1, 2022, and GCIA did not file this complaint until December 8, 2025, more than a year after the three-year statute of limitations expired. (Ibid.)

In opposition, GICA argues that the made whole doctrine regulates priority of recovery, not standing to bring a claim. (Opposition, p. 2.) GICA argues that Di Nalli's case law is about the allocation of recovery, not standing. (Ibid.) GICA argues that Progressive West Co. v. Superior Ct. (2005) 135 Cal.App.4 th 26, the case the Court relied on in the Wassermans' demurrers to GICA's complaint, is distinguishable from this case because the issue only arose following a jury trial awarding the insured less than his damages. (Id. at p. 3.)

GICA argues that Di Nalli raises this issue prematurely. (Id. at p. 5.) GICA argues that the Courts' 2024 and 2025 rulings on the Wasserman demurrers do not preclude this ruling because they were not final judgments and that its negligence claim is timely because the damage occurred in 2023 and the initial complaint contained a typo that GCIA was corrected through a notice of errata. (Id. at p. 6.) GCIA argues that it adequately alleges breach of the implied warranty of good workmanship and that the complaint is not uncertain. (Id. at p. 7.)

In the alternative, GCIA requests leave to amend. (Ibid.) In reply, Di Nalli argues that GCIA does not respond to Di Nalli's central argument, which is that GICA does not have a presently enforceable subrogation claim while its insured's action is pending. (Reply, p. 2.) Di Nalli cites Sapiano v. Williamsburg Nat. Ins. Co. (1994) 28 Cal.App.4th 533 and Plut v. Fireman's Fund Ins. Co. (2000) 85 Cal.App.4th 98. (Ibid.) Di Nalli next argues that the made whole doctrine is dispositive, so the Court does not need to rule on the statute of limitations issue, but preserves its position, arguing that GCIA never served it with the notice of errata and that a notice of errata cannot substantively alter an operative factual allegation that bears directly on the statute of limitations. (Id. at pp. 3-4.)

Finally, Di Nalli argues that GICA's second cause of action for breach of implied warranty fails because it does not allege privity of contract. (Id. at p. 5.) Governing Law- Demurrer In a demurrer proceeding, the defects in the complaint must be apparent on the face of the pleading or via proper judicial notice. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) "A demurrer tests the pleading alone, and not the evidence or facts alleged." (E-Fab, Inc. v. Accountants, Inc. Servs. (2007) 153 Cal.App.4th 1308, 1315.)

As such, the court assumes the truth of the complaint's properly pleaded or implied factual allegations. (Ibid.) The only issue a demurrer is concerned with is whether the complaint, as it stands, states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.)

Where a demurrer is sustained, leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.) The burden is on the plaintiff to show the court that a pleading can be amended successfully. (Id.; Lewis v. YouTube, LLC (2015) 244 Cal.App.4th 118, 226.) However, "[i]f there is any reasonable possibility that the plaintiff can state a good cause of action, it is error to sustain a demurrer without leave to amend." (Youngman v. Nevada Irrigation Dist. (1969) 70 Cal.2d 240, 245). Before filing a demurrer, parties must meet and confer in person or by phone. (Code Civ. Proc. Sec. 430.41.)

Discussion

Procedural Issues Di Nalli attempted to meet and confer with GCIA on August 4 and August 6, 2026, but received no response. (Coppola Decl., P. 11.) The meet and confer requirement is not satisfied. However, failure to meet and confer is not grounds for overruling a demurrer. Made-Whole Doctrine "The general rule is that an insurer that pays a portion of the debt owed to the insured is not entitled to subrogation for that portion of the debt until the debt is fully discharged. . . . Until the creditor has been made whole for its loss, the subrogee may not enforce its claim based on its rights of subrogation." (Sapiano v.

Williamsburg Nat. Ins. Co. (1994) 28 Cal.App.4th 533, 536 [Holding that an insurer who paid out $15,000 towards its insured's $20,000 in damages was not entitled to the insured's subsequent $10,000 recovery on the same accident in an action the insurer was not a party to until the insured was made whole.].) Subrogation is the insurer's right to be put in the position of the insured. (Plut v. Fireman's Ins. Co. (2000) 85 Cal.App.4th 98, 104.) An insurer may recoup its payments directly from the tortfeasor or from the proceeds of the insured's action against the tortfeasor. (Ibid.)

Generally, to preserve its subrogation rights, the insurer seeks intervention in the underlying action brought by the insured against the tortfeasor. (Ibid.) The made-whole rule provides that when an insurer does not participate in the insured's action against a tortfeasor, the insurer cannot recover funds obtained through any settlement unless the amount exceeds the insured's actual loss and cannot recover until the insured is made whole. (Progressive West Ins. Co. v. Superior Court (2005) 135 Cal.App.4th 263, 274.)

However, none of Di Nalli's case law holds that the made-whole rule is enforceable at the demurrer stage. Though Progressive West came up for appeal on a demurrer, the made-whole rule was part of Plaintiff's claim for breach of the covenant of good faith and fair dealing claim, not separate grounds for sustaining the demurrer. (Id. at 271.) It would, in fact, be contrary to the purpose of the

made whole doctrine to enforce it at such an early stage in litigation. If the made-whole doctrine only allowed an insurer to sue once the insured has been made whole by suing the tortfeasor, the statute of limitations would often have run on the underlying claims against the tortfeasor. Though damages are not fully ascertainable until the insured is made whole, it does not necessarily follow that the claim does not survive a demurrer. Therefore, Di Nalli's demurrer under the made-whole rule is OVERRULED.

Statute of Limitations GCIA's notice of errata adequately amended the typo in the First Amended Complaint to claim that the water damage occurred in 2023, not 2022. This is also consistent with the timeline GCIA alleges in paragraph 31 of the FAC and with the Wassermans' complaint in the related action. (See LASC Case No. 23SMCV04230, Complaint, P. 24 [asserting that the injuries are progressive and developed over time].) Defendants' demurrer under the statute of limitations is OVERRULED. Breach of Implied Warranty of Good Workmanship Di Nalli contends that GCIA cannot state a claim for breach of the implied warranty of good workmanship because it was not in privity with Di Nalli.

On a subrogation action, the insurer stands in the shoes of the insured. (Plut v. Fireman's Ins. Co. (2000) 85 Cal.App.4th 98, 104.) GCIA alleges that Di Nalli entered into a contract with GCIA's insured and that Di Nalli breached an implied warranty under that contract by removing the roof and causing water intrusion. (FAC, P.P. 15, 31, 32.) Di Nalli's Demurrer to Plaintiffs' claim for breach of the implied warranty of good workmanship is OVERRULED.

Conclusion

Di Nalli raises a real issue under the made-whole doctrine, but a demurrer is not the proper procedural vehicle to address those issues. There are already three cases arising out of the same alleged construction defects. While it is true that this case seemingly depends on the outcome of at least one of those cases, a stay or consolidation may be a better vehicle to address Di Nalli's concerns. Di Nalli's Demurrer is OVERRULED. | Home -->)" -->