Mynor Ortiz v. JEP Capital, Inc. et al

As both parties acknowledge, “[a]n insurance agent has an ‘obligation to use reasonable care, diligence, and judgment in procuring insurance requested by an insured.’ [Citation.] “A broker’s failure to obtain the type of insurance requested by an insured may constitute actionable negligence and the proximate cause of injury. [Citation.] Moreover, if the agent fails to exercise reasonable care in procuring the type of insurance that the insured demanded and bargained for, the cases hold that the insurer may be liable under theories of ratification and ostensible authority.” (Desai v. Farmers Ins. Exchange (1996) 47 Cal.App.4th 1110, 1119-1120.)

Here, however, it appears that while the TAC alleges Drake is a licensed broker and/or agent of CCIS (TAC ¶11), the TAC does not contain sufficient allegations that show that he was

the broker or insurance agent that helped facilitate procuring the alleged defective insurance.1 As alleged, Plaintiff relied on representations made on behalf of JEP by an electronic portal and Kawasmi, and paid premiums accordingly, believing that he had insurance coverage from April 26, 2022, through April 26, 2023. (TAC ¶¶32-36.) Part of his belief that he had this coverage was because he received a “Certificate of Liability Insurance produced and authorized by” Drake. (TAC ¶35.) Although Drake is named as part of the “Broker Defendants,” and lumped into general allegations, the TAC does not sufficiently allege that Drake was indeed the broker or insurance agent that worked with Plaintiff to procure requested insurance, and then erred in doing so.

As such, because Drake is not alleged to have been the insurance agent working on behalf of JEP to help Plaintiff procure the at-issue insurance policy, no claim of negligence or professional negligence is sufficiently plead against him. Although an insurance agent has an “obligation to use reasonable care, diligence, and judgment in procuring the insurance requested by an insured,” Plaintiff has not alleged Drake to be that insurance agent owing him this responsibility. (Jones v. Grewe (1987) 189 Cal.App.3d 950, 954.)

Consequently, the Court sustains the demurrer against causes of action one and three.

Breach of Fiduciary Duties – COA 2 Drake argues that Plaintiff’s second cause of action fails because it is not alleged that Drake and Plaintiff were in a fiduciary relationship. “The elements of a cause of action for breach of fiduciary duty are: (1) existence of a fiduciary duty; (2) breach of the fiduciary duty; and (3) damage proximately caused by the breach.” (Stanley v. Richmond (1995) 35 Cal.App.4th 1070, 1086.) An insurance broker can have a fiduciary duty “when he receives and holds premiums or premium refunds.” (Mark Tanner Constr. v. Hub Internat. Ins. Servs. (2014) 224 Cal.App.4th 574, 585.) Further, “[w]hether or not the broker-insured relationship is a fiduciary one, a broker still has certain fiduciary duties.” (Hydro-Mill Co., Inc. v. Hayward, Tilton & Rolapp Ins. Associates, Inc. (2004) 115 Cal.App.4th 1145, 1158 (emphasis in original).)

As such, while it is possible for Drake to have breached his fiduciary duties if he was acting as an insurance agent or broker for Plaintiff, the TAC does not allege he was Plaintiff’s insurance agent or broker. The TAC alleges that JEP accepted the payments Plaintiff made towards the premium of the alleged party. (TAC ¶36.) Although Plaintiff includes allegations that point to an alter-ego theory, that allegation addresses the Carrier Defendants, and not Drake or Kawasmi. (TAC ¶21.)

Therefore, the Court sustains the demurrer to Plaintiff’s second cause of action as well.

Fraud – COA 5 Defendant also challenges Plaintiff’s fifth cause of action for fraud. “The elements of fraud are (a) a misrepresentation (false representation, concealment, or nondisclosure); (b) scienter or knowledge of its falsity; (c) intent to induce reliance; (d) justifiable reliance; and (e) resulting damage.” (Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294.) “[F]raud must be specifically pleaded. This means: (1) general pleading of the legal conclusion of fraud is insufficient; and (2) every element of the cause of action for fraud must be alleged in full, factually 1 In the TAC, Drake is identified as “Drake” or as part of the “Broker Defendants”.

and specifically, and the policy of liberal construction of pleading will not usually be invoked to sustain a pleading that is defective in any material respect.” (Wilhelm v. Pray, Price, Williams & Russell (1986) 186 Cal.App.3d 1324, 1331.)

Here, while Plaintiff does allege that “[s]pecifically, Defendants, including Defendant Drake and Defendant Kawasmi, stated in written communications that the Policy was bound and effective,” (TAC ¶83 (emphasis in original)), the TAC does not include any specific allegations to Drake’s intent or scienter. Therefore, the demurrer is sustained as to the 5th cause of action.

Leave to Amend is granted Though Plaintiff is on his third amended complaint, this is the first time Plaintiff is confronted with the deficiencies as they apply to claims against Drake. Therefore, leave to amend within 30 days is granted.

Dated: May 28, 2026

____________________________ Judge Kory Mathewson

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