Dennis Gillio, et al. v. Nationwide Mutual Insurance Company, et al

Nationwide Mutual Insurance breached its obligations owed under the Policy by failing and refusing to recognize, or to make a timely and objective investigation of, the nature and extent of the damage that occurred at the Property and the structure of Plaintiffs' house; by failing to fairly investigate potential factors which would trigger additional coverage as required by California law; by failing to recognize policy provisions that indicated coverage existed for portions of the loss; by denying or underpaying coverage under the Policy for damage to the Property and Plaintiffs' home and its contents; by delaying payment for damages; by failing to make payment for the expenses of a public insurance adjuster or construction contractors; and by continuing to fail or refuse to make fair and reasonable payment for the damage to the Property. (Complaint, P.P. 7-10 & 30-39.)

On November 17, 2025, Plaintiffs filed their complaint against Defendants Nationwide Mutual Insurance Company (Nationwide) and Byers, asserting four causes of action: (1) breach of insurance contract (against Nationwide only); (2) insurance "bad faith" or breach of the implied covenant of good faith and fair dealing (against Nationwide only); (3) financial elder abuse (against Nationwide only); and (4) fraud (against Byers only).

On January 2, 2026, Plaintiffs filed a motion for an order granting trial preference pursuant to Code of Civil Procedure section 36, subdivisions (a) and (e) (the preference motion). Nationwide filed an opposition to the preference motion.

On January 28, Nationwide filed a petition for an order compelling Nationwide and Plaintiffs to complete the appraisal process demanded by Plaintiffs pursuant to the terms of their insurance policy and California law, and dismissing or, in the alternative, staying these proceedings pending completion of the appraisal (the petition to compel). Plaintiffs filed a declaration of their counsel in opposition to the petition to compel.

On February 18, after a hearing, the Court issued a minute order denying the preference motion, and granting the petition to compel.

On March 4, the default of Byers was entered as requested by Plaintiffs.

On March 10, Nationwide filed a demurrer to the first, second, and third causes of action asserted in Plaintiffs' complaint, and separately filed a motion to strike portions of Plaintiffs' complaint. Plaintiffs have filed opposition to the demurrer and to the motion to strike of Nationwide.

Analysis

(1) Demurrer

"In reviewing the sufficiency of a complaint against a general demurrer, we are guided by long-settled rules. 'We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. [Citation.] We also consider matters which may be judicially noticed.' [Citation.] Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context." (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) "].)

Nationwide demurs to the entire complaint on the grounds that the Policy contains a provision mandated by Insurance Code section 2071, that requires any action against Nationwide to be commenced within two years after the date of loss. Nationwide contends that, because the Policy provision mandated by Insurance Code section 2071 requires Plaintiffs to have filed this lawsuit by August 8, 2022, the action is time barred. Nationwide further contends that the complaint fails to allege facts showing why these proceedings are not barred by the applicable statute of limitations or the doctrine of laches.

In support, Nationwide requests that the Court take judicial notice of the Declaration of Darrell Bowles (the Bowles declaration) submitted by Nationwide in support of its petition to compel, and its exhibits which include a copy of the Policy for the period August 8, 2020, to August 8, 2021. (Nationwide RJN [demurrer], P. 1 & exhibit 1.)

Absent a dispute by Plaintiffs, as the Policy is alleged in the complaint, and was submitted as a basis for adjudication of the petition to compel, the Court will grant judicial notice of that document. (Evid. Code, Evid. Code, Sec. 452, subd. (d)(1); Ingram v. Flippo (1999) 74 Cal.App.4th 1280, 1285, fn. 3, disapproved on another ground in Leon v. County of Riverside (2023) 14 Cal.5th 910, 1106 [granting judicial notice of documents summarized in complaint].)

Judicial notice of the Policy does not extend to its proper interpretation. (Fremont Indemnity Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 114 ["The hearing on demurrer may not be turned into a contested evidentiary hearing through the guise of having the Court take judicial notice of documents whose truthfulness or proper interpretation are disputable."].)

In their opposition to the demurrer, Plaintiffs argue that the time to bring suit is tolled by the continuing adjustment of the loss at issue, which includes the appraisal process which the complaint shows was abandoned by Byers, was not continued by Nationwide, and remains ongoing. Plaintiffs further contend that Nationwide is collaterally estopped from asserting a position inconsistent with the position asserted by Nationwide in its petition to compel.

"A demurrer based on a statute of limitations will not lie where the action may be, but is not necessarily, barred. [Citation.] In order for the bar of the statute of limitations to be raised by demurrer, the defect must clearly and affirmatively appear on the face of the complaint; it is not enough that the complaint shows that the action may be barred." (Marshall v. Gibson, Dunn & Crutcher (1995) 37 Cal.App.4th 1397, 1403.)

"If the dates establishing the running of the statute of limitations do not clearly appear in the complaint, there is no ground for general demurrer. The proper remedy 'is to ascertain the factual basis of the contention through discovery and, if necessary, file a motion for summary judgment ....' [Citation.]" (Roman v. County of Los Angeles (2000) 85 Cal.App.4th 316, 324-325, italics omitted.)

Plaintiffs do not appear to dispute Nationwide's assertion that the Policy is a fire policy, or that Insurance Code section 2070 requires that the Policy conform to the provisions of Insurance Code section 2071, which sets forth "the standard form of fire insurance policy for this state...." (Ins. Code, Sec. 2071; see also Ins. Code, Sec. 2070 "All fire policies on subject matter in California shall be on the standard form, and, except as provided by this article shall not contain additions thereto...."].)

Relevant here, Insurance Code section 2071 requires that a fire insurance policy include the following language: "No suit or action on this policy for the recovery of any claim shall be sustainable in any Court of law or equity unless all the requirements of this policy shall have been complied with, and unless commenced within 12 months next after inception of the loss." (Ins. Code, Sec. 2071 [section entitled "Suit"].)

The language of the Policy relied on by Nationwide provides: "No action can be brought against us unless there has been full compliance with all of the terms under Section I of this policy and the action is started within two years after the date of loss." (Nationwide RJN, exhibit 1 [Bowles Declaration] at pdf p. 54, P. H.)

Though that language does not conform to the standard form set forth in Insurance Code section 2071, "any policy providing coverage against the peril of fire only, or in combination with coverage against other perils, need not comply with the provisions of the standard form of fire insurance policy ...; provided, that coverage with respect to the peril of fire, when viewed in its entirety, is substantially equivalent to or more favorable to the insured than that contained in such standard form fire insurance policy." (Ins. Code, Sec. 2070; see also Fire Ins. Exchange v. Superior Court (2004) 116 Cal.App.4th 446, 459 [general discussion].)

The allegations of the complaint show or suggest that the water intrusion event which caused the losses at issue occurred on August 8, 2020. Though Nationwide contends that Plaintiffs were required, under the terms of the Policy, to file this lawsuit no later than August 8, 2022, "[m]ore recent cases have applied the equitable doctrines of waiver and estoppel to allow a suit filed after the limitation period expired to proceed." (Prudential-LMI Com. Insurance v. Superior Court (1990) 51 Cal.3d 674, 689 (Prudential).)

Relevant here, the suit provision of Insurance Code section 2071 that is incorporated into the Policy may be tolled "from the time an insured gives notice of the damage to his insurer, pursuant to applicable policy notice provisions, until coverage is denied. '[I]n this manner, the literal language of the limitation provision is given effect; the insured is not penalized for the time consumed by the company while it pursues its contractual and statutory rights to have a proof of loss, call the insured in for examination, and consider what amount to pay; and the central idea of the limitation provision is preserved since an insured will have only 12 months to institute suit.' [Citation.] [S]uch an approach to the limitation provision is more easily applied than the concepts of waiver and estoppel in the many different fact patterns that may arise." (Prudential, supra, 51 Cal.3d at p. 693.)

Wholly absent from the demurrer is any reasoned argument showing why the complaint alleges a date on which Nationwide denied coverage for Plaintiffs' claim, or shows that any denial of coverage occurred before the limitations period prescribed under the Policy expired. (See Prudential, supra, 51 Cal.3d at pp. 692-693 [discussing the anomaly that may be caused by a "literal" application of the section 2071 suit provision if equitable tolling were not applied].)

Furthermore, "[i]n determining the merits of a demurrer, all material facts pleaded in the complaint and those that arise by reasonable implication, but not conclusions of fact or law, are deemed admitted by the demurring party. [Citations.] The complaint must be construed liberally by drawing reasonable inferences from the facts pleaded." (Rodas v. Spiegel (2001) 87 Cal.App.4th 513, 517.)

Noted above, the complaint alleges that Nationwide failed to continue to participate in the appraisal process after Byers abandoned their job. Those allegations are sufficient, for pleading purposes, to give rise to a reasonable inference that, at the time the complaint was filed, Nationwide had not notified Plaintiffs that their claim was "denied unequivocally." (Prudential, supra, 51 Cal.3d at p. 692.)

The Court also considers matters which may be judicially noticed, which "will be dispositive only in those instances where there is not or cannot be a factual dispute concerning that which is sought to be judicially noticed." (Cruz v. County of Los Angeles (1985) 173 Cal.App.3d 1131, 1134.)

Nationwide also requests that the Court take judicial notice of the Court's February 18, 2026, order granting the petition to compel (the February Order). (Nationwide RJN, P. 2 & exhibit 2.) The Court will grant Nationwide's request for judicial notice of the February Order (Evid. Code, Sec. 452, subd. (d)(1).)

The February Order shows that the points advanced by Nationwide in support of its petition to compel include that "Plaintiffs demanded the appraisal in August 2023", that "[t]he process stalled for more than 2 years amid Plaintiffs' multiple appraiser changes and related delays", that "Plaintiffs filed this lawsuit 3 days after Nationwide expressed concerns regarding yet another appraiser change", and that "Plaintiffs are barred from bringing any lawsuit against Nationwide unless they comply with all the conditions of their policy". (Nationwide RJN, exhibit 2.)

As Nationwide does not effectively dispute that it advanced those points in support of its petition to compel, the matters which may be judicially noticed are also sufficient to show or suggest that, at the time of filing of the complaint, Nationwide had not provided Plaintiffs with appropriate notice of an unequivocal denial of coverage for the claim alleged in the complaint.

In addition, "it is well-established, both in California and generally, that laches applies to equitable actions, not actions at law." (Connolly v. Trabue (2012) 204 Cal.App.4th 1154, 1164.) Considering the allegations of the complaint and the filing of the petition to compel by Nationwide as reflected in the February Order, the demurrer fails to show why Nationwide suffered prejudice, or why the doctrine of laches applies here. (Id. at p. 1166.)

For all reasons discussed above, and notwithstanding whether the complaint shows that this action may be barred, the demurrer fails to show why any bar of the limitations period set forth in the Policy or under Insurance Code section 2017, clearly and affirmatively appears on the face of the complaint.

(a) Demurrer to the first cause of action

As grounds for its general demurrer to the first cause of action for breach of contract, Nationwide asserts that Plaintiffs have failed to attach a copy of the Policy to their complaint, or to plead its material terms verbatim; that the complaint fails to allege Plaintiffs' performance under the Policy with respect to the completion of the appraisal process; and that the complaint fails to specifically identify the provisions of the Policy breached by Nationwide. For these reasons, Nationwide argues, the complaint fails to state facts sufficient to constitute a cause of action for breach of contract.

"A breach of contract is '[t]he wrongful, i.e., the unjustified or unexcused, failure to perform' the terms of a contract. [Citation.]" (Chen v. PayPal, Inc. (2021) 61 Cal.App.5th 559, 570.)

"A cause of action for breach of contract requires pleading of a contract, Plaintiff's performance or excuse for failure to perform, Defendant's breach and damage to Plaintiff resulting therefrom. [Citation.] A written contract may be pleaded either by its terms--set out verbatim in the complaint or a copy of the contract attached to the complaint and incorporated therein by reference--or by its legal effect. [Citation.]" (McKell v. Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1489.)

The complaint expressly alleges that the terms of the Policy provide: (1) "Coverage A" insurance for physical damage to the house, which Plaintiffs assert is "also commonly called structural or construction damage;" (2) "Coverage C" for damage to or loss of personal property located at Plaintiff's residence; and (3) "Coverage D" which provides compensation for any necessary increase in living expense where the "residence premises" is damaged and not fit to live in, and which Plaintiffs allege "is often referred to as 'Additional Living Expense' coverage." (Complaint, P. 5.)

The complaint further alleges, expressly and by inference, that Nationwide breached the Policy by purportedly failing to make adequate payment for structural damage to Plaintiffs' home and its contents pursuant to the coverages provided under the Policy. (Complaint, P.P. 4, 9-10.)

The allegations of the complaint described above are sufficient to plead the relevant terms of the Policy, including their legal effect, as well as the terms of the Policy that Plaintiffs assert Nationwide breached by the acts or conduct also described in the complaint in regard to making adequate payments under the Policy, among other conduct including those acts further described above. (Holcomb v. Wells Fargo Bank, N.A. (2007) 155 Cal.App.4th 490, 501.)

To the extent the complaint is in some respects uncertain in this regard, those "ambiguities can be clarified under modern discovery procedures." (Khoury v. Maly's of California, Inc. (1993) 14 Cal.App.4th 612, 616.)

The complaint also alleges that Plaintiffs performed their obligations under the Policy by hiring an independent appraiser, and by "paying premiums when due, attempting to mitigate their damages, and cooperating in the claims process." (Complaint, P. 6.) Those allegations are sufficient, at the pleading stage, to show performance by Plaintiffs under the Policy.

Moreover, the Court does not consider, at the pleading stage, whether Plaintiffs can prove their allegations. (Berg & Berg Enterprises, LLC v. Boyle (2009) 178 Cal.App.4th 1020, 1034.)

In addition, "[w]hen a party's failure to perform a contractual obligation constitutes a material breach of the contract, the other party may be discharged from its duty to perform under the contract." (Brown v. Grimes (2011) 192 Cal.App.4th 265, 277.) The demurrer fails to address whether the allegations of the complaint are sufficient to show that Plaintiffs were discharged from any duty of performance under the Policy. (See also Patrick J. Ruane, Inc. v. Parker (1960) 185 Cal.App.2d 488, 504 [excuse need not be pleaded where Plaintiff pleads their performance].)

In addition, to the extent Nationwide relies on the Bowles declaration or its exhibits to argue that Plaintiffs failed to complete the appraisal process, "[t]he hearing on demurrer may not be turned into a contested evidentiary hearing through the guise of having the Court take judicial notice of documents whose truthfulness or proper interpretation are disputable." (Joslin v. H.A.S. Ins. Brokerage (1986) 184 Cal.App.3d 369, 374 (Joslin).)

For these and all further reasons discussed above, the Court will overrule the demurrer to the first cause of action for breach of contract on the grounds stated.

(b) Demurrer to the second cause of action

As grounds for its demurrer to the second cause of action for breach of the implied covenant of good faith and fair dealing, Nationwide contends that, without a breach of the Policy, there can be no breach of that implied covenant. The demurrer further argues that the cause of action for breach of the implied covenant of good faith and fair dealing is derivative of the breach of contract claim, and fails for the same reasons further discussed above.

"The implied covenant of good faith and fair dealing does not impose substantive terms and conditions beyond those to which the parties actually agreed. [Citation.] 'The covenant of good faith and fair dealing, implied by law in every contract, exists merely to prevent one contracting party from unfairly frustrating the other party's right to receive the benefits of the agreement actually made. [Citation.] The covenant thus cannot " 'be endowed with an existence independent of its contractual underpinnings." ' [Citation.] It cannot impose substantive duties or limits on the contracting parties beyond those incorporated in the specific terms of their agreement.' [Citation.]" (Avidity Partners, LLC v. State of California (2013) 221 Cal.App.4th 1180, 1204, original italics.)

As the general demurrer to the second cause of action for breach of the implied covenant of good faith and fair dealing is based on effectively the same arguments further discussed above, the same reasoning and analysis apply. As the Court will overrule the demurrer to the first cause of action for breach of contract, the Court will also overrule the general demurrer to the second cause of action on the grounds stated.

(c) Demurrer to the third cause of action

The grounds for demurrer to the third cause of action for financial elder abuse include that, absent bad faith, the underpayment or denial of insurance benefits alone does not constitute elder abuse, and that the complaint pleads no facts demonstrating any wrongful taking or retention, intent to defraud, undue influence, or conduct by Nationwide which it knew or should have known was likely to harm an elder. For these reasons, Nationwide argues, the complaint fails to state facts sufficient to constitute a cause of action for financial elder abuse.

Welfare and Institutions Code section 15600 et seq. (the Elder Abuse and Dependent Adult Civil Protection Act or the Act) "affords certain protections to elders and dependent adults." (Winn v. Pioneer Medical Group, Inc. (2016) 63 Cal.4th 148, 152.)

"'Elder' means any person residing in this state, 65 years of age or older." (Welf. & Inst. Code, Sec. 15610.27.) Noted above, the complaint alleges that Plaintiffs each reside in this state and are sixty-five years of age or older.

The Act defines " '[a]buse of an elder or a dependent adult' " to include "[f]inancial abuse, as defined in [Welfare and Institutions Code] [s]ection 15610.30." (Welf. & Inst. Code, Sec. 15610.07, subd. (a)(3).)

"(a) 'Financial abuse' of an elder or dependent adult occurs when a person or entity does any of the following: "(1) Takes, secretes, appropriates, obtains, or retains real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both. "(2) Assists in taking, secreting, appropriating, obtaining, or retaining real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both. "(3) Takes, secretes, appropriates, obtains, or retains, or assists in taking, secreting, appropriating, obtaining, or retaining, real or personal property of an elder or dependent adult by undue influence, as defined in Section 15610.70." (Welf. & Inst. Code, Sec. 15610.30, subd. (a)(1)-(3).)

The Act further provides: "a person or entity takes, secretes, appropriates, obtains, or retains real or personal property when an elder or dependent adult is deprived of any property right, including by means of an agreement, donative transfer, or testamentary bequest, regardless of whether the property is held directly or by a representative of an elder or dependent adult." (Welf. & Inst. Code, Sec. 15610.30, subd. (c).)

A person is "deemed to have taken, secreted, appropriated, obtained, or retained property for a wrongful use if, among other things, the person or entity takes, secretes, appropriates, obtains, or retains the property and the person or entity knew or should have known that this conduct is likely to be harmful to the elder or dependent adult." (Welf. & Inst. Code, Sec. 15610.30, subd. (b).)

Relevant here, "to establish a 'wrongful use' of property to which an elder has a contract right, the elder must demonstrate a breach of the contract, or other improper conduct." (Paslay v. State Farm General Ins. Co. (2016) 248 Cal.App.4th 639, 657.)

"An insurer's bad faith denial of a claim can support a cause of action for financial elder abuse." (Strawn v. Morris, Polich & Purdy, LLP (2019) 30 Cal.App.5th 1087, 1102.)

"The term 'bad faith,' as used in the context of an insured's claim against his or her insurer, is simply a shorthand reference to a claimed breach by the insurer of the covenant of good faith and fair dealing that is implied in every contract of insurance." (Bosetti v. United States Life Ins. Co. in City of New York (2009) 175 Cal.App.4th 1208, 1235.)

The Court, for present purposes, gives the complaint a reasonable and liberal construction, and accepts the truth of its well pleaded facts including those "that reasonably can be inferred from those expressly pleaded...." (Regents of University of California v. Superior Court (2013) 220 Cal.App.4th 549, 558.)

A reasonable interpretation of the complaint shows that the third cause of action arises from the same purported acts and omissions by Nationwide in regard to making payments under the Policy for the losses sustained by Plaintiffs as a result of the water intrusion event at issue. (See, e.g., Complaint, P.P. 30-38.)

As further discussed above, the Court will overrule the demurrer to the first and second causes of action for, respectively, breach of contract and of the implied covenant of good faith and fair dealing. Considering that any purported bad faith denial by Nationwide of the claim alleged in the complaint can support a cause of action for financial abuse for reasons further discussed above, the Court will overrule the third cause of action for financial elder abuse on the grounds stated.

(d) Special demurrer for uncertainty

Nationwide specially demurs to each cause of action alleged in the complaint on the grounds of uncertainty. A demurrer may be made on the grounds that "[t]he pleading is uncertain." (Code Civ. Proc., Sec. 430.10, subd. (f).)

" '[U]ncertain' includes ambiguous and unintelligible." (Smith v. Kern County Land Co. (1958) 51 Cal.2d 205, 209.)

"A special demurrer on the ground that [a pleading] is (a) ambiguous, (b) unintelligible, or (c) uncertain is insufficient unless the demurrer points out specifically wherein the pleading is ambiguous, uncertain or unintelligible." (Coons v. Thompson (1946) 75 Cal.App.2d 687, 690.)

The Court's review of the allegations of the complaint further described above shows that the pleading is not so incomprehensible that Nationwide cannot reasonably respond to its allegations. (Morris v. JPMorgan Chase Bank, N.A. (2022) 78 Cal.App.5th 279, 292.)

In addition, the description of the allegations of the complaint contained in the demurrer of Nationwide indicates or suggests that the complaint is not so unintelligible or ambiguous that Nationwide cannot understand the issues or the nature of the claims alleged by Plaintiffs. (Youngman v. Nevada Irrigation Dist. (1969) 70 Cal.2d 240, 245 ["a Plaintiff is required only to set forth the essential facts of his case with reasonable precision and with particularity sufficient to acquaint a Defendant with the nature, source and extent of his cause of action"].)

For these and all further reasons discussed above, the Court will overrule the special demurrer of Nationwide on the grounds stated.

(e) Request for judicial notice

For the reasons described above, the Court will grant Nationwide's request for judicial notice of the Policy and the February Order. To the extent Nationwide also requests judicial notice of additional exhibits attached to the Bowles declaration apart from the Policy, those exhibits do not appear to be relevant to the issue of whether the complaint states facts sufficient to constitute a cause of action, or is uncertain. (See Evid. Code, Sec. 350; Mangini v. R. J. Reynolds Tobacco Co. (1994) 7 Cal.4th 1057, 1063, overruled on other grounds in In re Tobacco Cases II (2007) 41 Cal.4th 1257, 1276.) For these reasons, the Court will deny any request for judicial notice of those exhibits.

(2) Motion to Strike

"The Court may, upon a motion made pursuant to Section 435, or at any time in its discretion, and upon terms it deems proper: "(a) Strike out any irrelevant, false, or improper matter inserted in any pleading. "(b) Strike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a Court rule, or an order of the Court." (Code Civ. Proc., Sec. 436.)

"The grounds for a motion to strike shall appear on the face of the challenged pleading or from any matter of which the Court is required to take judicial notice." (Code Civ. Proc., Sec. 437, subd. (a).)

In its motion to strike, Nationwide seeks an order striking allegations of punitive damages contained in the complaint, on the grounds that the complaint presents a formulaic recitations of the applicable legal standard only, and fails to allege specific facts sufficient to support the recovery of punitive damages. Nationwide further asserts that, because Plaintiffs' cause of action for bad faith is fatally flawed, the complaint fails to allege any tortious conduct justifying the imposition of punitive damages.

"In an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the Defendant has been guilty of oppression, fraud, or malice, the Plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the Defendant." (Civ. Code, Sec. 3294, subd. (a).)

The term "malice" refers to "conduct which is intended by the Defendant to cause injury to the Plaintiff or despicable conduct which is carried on by the Defendant with a willful and conscious disregard of the rights or safety of others." (Civ. Code, Sec. 3294, subd. (c)(1).)

As used in Civil Code section 3294, "the following definitions shall apply: "(1) 'Malice' means conduct which is intended by the Defendant to cause injury to the Plaintiff or despicable conduct which is carried on by the Defendant with a willful and conscious disregard of the rights or safety of others. "(2) 'Oppression' means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person's rights. "(3) 'Fraud' means an intentional misrepresentation, deceit, or concealment of a material fact known to the Defendant with the intention on the part of the Defendant of thereby depriving a person of property or legal rights or otherwise causing injury." (Civ. Code, Sec. 3294, subd. (c)(1)-(3).)

Also relevant here, "[a]n employer shall not be liable for damages pursuant to subdivision (a), based upon acts of an employee of the employer, unless the employer had advance knowledge of the unfitness of the employee and employed him or her with a conscious disregard of the rights or safety of others or authorized or ratified the wrongful conduct for which the damages are awarded or was personally guilty of oppression, fraud, or malice. With respect to a corporate employer, the advance knowledge and conscious disregard, authorization, ratification or act of oppression, fraud, or malice must be on the part of an officer, director, or managing agent of the corporation." (Civ. Code, Sec. 3294, subd. (b).)

The facts and circumstances constituting the claim for punitive damages must be set forth "with sufficient particularity to apprise the opposite party of what he is called on to answer, and to enable the Court to determine whether, on the facts pleaded, there is any foundation [for the claim]." (Lehto v. Underground Construction Company (1977) 69 Cal.App.3d 933, 944.)

The portions of the complaint to which the motion to strike is directed include allegations that the acts or omissions of Nationwide in failing to make adequate payment under the Policy were "undertaken with the deliberate purpose and intention of reducing the amount paid on [Plaintiffs'] claim, as part of a pattern of increasing Nationwide's profits by limiting, or unreasonably reducing, the amount paid on claims[]", and were "part of a pattern and practice approved, accepted, endorsed, conceived, ratified and adopted by the Officers, Directors, 'control group' and Management of Nationwide ... with the purpose and intent to deliberately reduce the amount paid out on claims to an amount below the reasonable sum which should have been paid to their policy holders, all to the detriment of their policyholders including Plaintiffs in this action." (Complaint, P.P. 16 & 18.)

The complaint also alleges that the acts or omissions by Nationwide at issue were undertaken with "the deliberate intent to cheat [Plaintiffs] out of the policy benefits to which they are entitled...", and that "[e]ach of the deliberate actions, omissions, denial of coverage ... [were] done with the knowledge, consent, authorization, ratification and approval of the managers, claims managers, managing adjusters, directors, officers, and 'control group' of Nationwide ... and was adopted, approved, condoned, accepted and ratified by those officers, managers and directors." (Complaint, P. 43.)

" ' "[P]unitive damages should not be allowable upon evidence that is merely consistent with the hypothesis of malice, fraud, gross negligence or oppressiveness. Rather some evidence should be required that is inconsistent with the hypothesis that the tortious conduct was the result of a mistake of law or fact, honest error of judgment, over-zealousness, mere negligence or other such noniniquitous human failing." ' [Citation.]" (Cameron v. Las Orchidias Properties, LLC (2022) 82 Cal.App.5th 481, 520, original italics.)

The allegations of the complaint described above, if proven, are sufficient to show conduct which a reasonable trier of fact could find constitutes malice rather than a mistake, honest error, or negligence. (See also Tomaselli v. Transamerica Ins. Co. (1994) 25 Cal.App.4th 1269, 1288, fn. 14.)

Furthermore, "[a]n insurer is not permitted to rely selectively on facts that support its position and ignore those facts that support a claim. Doing so may constitute bad faith. [Citations.] When sufficiently egregious, an insurer's intentional disregard of facts supporting a claim also meets the standard for punitive damages." (Mazik v. Geico General Ins. Co. (2019) 35 Cal.App.5th 455, 470.)

In addition, "claims managers that exercise substantial discretionary authority to pay or deny claims exercise 'substantial discretionary authority over decisions that ultimately determine corporate policy.' [Citation.]" (Major v. Western Home Ins. Co. (2009) 169 Cal.App.4th 1197, 1221.) To the extent such agents exercise that substantial discretionary authority to pay or deny Plaintiffs' claim, they "could be managing agents." (White v. Ultramar, Inc. (1999) 21 Cal.4th 563, 577.)

For all reasons discussed above, the allegations of the complaint, if proven, are sufficient to permit a reasonable trier of fact to find that Nationwide approved or ratified conduct by its putative agents with substantial discretionary authority to pay or deny Plaintiffs' claim, and to meet the standard for an award of punitive damages. As further discussed above, the Court does not consider whether Plaintiffs can prove their allegations.

The motion also seeks an order striking allegations that Nationwide failed to continue to participate, or cancelled its participation, in the appraisal process, and that Nationwide breached the Policy by violating provisions of the Insurance Code. (Notice at p. 1, ll. 10-16.)

Notwithstanding whether a violation of any provision of the Insurance Code is sufficient to constitute a breach of contract, or whether extrinsic evidence demonstrates that Nationwide did not refuse to participate in the appraisal process, the allegations at issue appear necessary to other causes of action. "[M]atter that is essential to a cause of action should not be struck and it is error to do so." (Quiroz v. Seventh Ave. Center (2006) 140 Cal.App.4th 1256, 1281.)

Moreover, though the February Order includes summaries of the contentions advanced by the parties in support of and in opposition to the petition to compel, wholly absent from the February Order is any factual findings in regard to whether Nationwide abandoned or refused to participate in the appraisal process. For all reasons discussed above, the Court will deny the motion to strike on the grounds stated.

Request for judicial notice: In support of its motion to strike, Nationwide requests judicial notice of the February Order. (Nationwide RJN [motion to strike], P. 2 & exhibit 2.) The same reasoning and analysis apply.

Nationwide also requests judicial notice of a declaration of Plaintiffs' counsel, Stephen White, filed with the Court in support of Plaintiffs' opposition to the petition to compel. (Nationwide RJN [motion to strike], P. 1 & exhibit 1.) Though the Court will grant the request for judicial notice of attorney White's declaration, judicial notice of that Court record "is not the same as accepting the truth of its contents or accepting a particular interpretation of its meaning." (Joslin, supra, 184 Cal.App.3d at p. 374; see also Evid. Code, Sec. 452, subd. (d)(1).)

Tentative Ruling: Dian Gardner v James Paul Gardner, Lucas Ray Merrick, all persons unknown claiming any interest in the property Tentative Ruling: Dian Gardner v James Paul Gardner, Lucas Ray Merrick, all persons unknown claiming any interest in the property