Eghtesad v. State Farm Gen. Ins. Co.

51 Cal.App.5th 406

265 Cal.Rptr.3d 227

Nader EGHTESAD, Plaintiff and Appellant,

v.STATE FARM GENERAL INSURANCE COMPANY, Defendant and Respondent.

A147481

Court of Appeal, First District, Division 2, California.

Filed June 29, 2020

Law Offices of John T. Schreiber, John T. Schreiber, Benicia, for Plaintiff and Appellant.

Rogers Joseph O’ Donnell, John G. Heller, Whitney R. Miner, San Francisco, for Defendant and Respondent.

Miller, J. Representing himself, Nader Eghtesad filed a Judicial Council form complaint against State Farm General Insurance Company (State Farm) alleging he was an insured and asserting causes of action including breach of contract and fraud. State Farm demurred. Although Eghtesad obtained two brief continuances from the trial court, including one on account of medical issues arising from an accident, he did not file any written response to the demurrer. The trial court sustained the demurrer and entered a judgment of dismissal, never giving Eghtesad an opportunity to amend his original complaint. This was error. We reverse the judgment and remand for the trial court to allow Eghtesad leave to amend his complaint against State Farm.

FACTUAL AND PROCEDURAL BACKGROUND

A. Allegations in the Complaint

The first two pages of Eghtesad's complaint bear the preprinted Judicial Council footer "COMPLAINT—Contract." The caption identifies State Farm and Does 1 to 20 as defendants, with a box checked to indicate that Does 1 to 20 were "the agents or employees of [State Farm] and acted within the scope of that agency and employment."

Eghtesad checked boxes indicating that he was attaching a cause of action for breach of contract, as well as "(Defamation) Slandering my name Intentional misrepresentation Unfair Business Practice," and that he was also alleging "Denying me from the insurance coverage (Fraud)." He sought damages with interest, and attorney fees.

On the form complaint for breach of contract, Eghtesad alleged the following. In 2012 he leased property to Pablo Martinez. The signed lease, which Eghtesad attached, stated that the premises were to be used for shoe repair and recycling. Before Eghtesad signed the lease, he required Martinez to obtain fire and liability insurance and to add Eghtesad, as landlord, to the policy.¹ Martinez added him to the policy as an additional insured, and Martinez's insurance agent confirmed this to Eghtesad over the phone. In May 2014, Eghtesad made a claim to State Farm for damage to the property, but State Farm told him "the only coverage [I] can make claim is Slander." Eghtesad claimed that the breach of the contract damaged him to the extent of the money he paid for repairs to fix the building.

Eghtesad also alleged that State Farm defrauded him in May 2014. On the form complaint for fraud, in spaces provided to allege misrepresentation, Eghtesad stated that a State Farm agent verified that a policy was issued and Eghtesad was added as an additional insured. In spaces provided to allege concealment, Eghtesad stated that State Farm concealed the fact that State Farm had a copy of the lease between Eghtesad and Martinez and knew that the lease required specific insurance coverage. Eghtesad also checked a box to allege that State Farm had made a promise without an intention to perform. And Eghtesad alleged that as a result of his reliance on State Farm's conduct he had been damaged with respect to money paid (presumably the amount he paid for repairs) and loss of rent.

B. Procedural Background

State Farm filed a general and special demurrer on the grounds that Eghtesad failed to plead sufficient facts to state causes of action for fraud, defamation, and breach of contract, and that each of the claims was uncertain. ( Code Civ. Proc., § 430.10, subds. (e) & (f).² )

Eghtesad did not file an opposition to the demurrer. He did, however, appear at a case management conference two days before the originally scheduled hearing, at which he asked the court for 60 days to try to settle with State Farm and get counsel. The trial court continued the hearing on the demurrer for approximately three weeks, with Eghtesad's opposition due ten days before the hearing.

On the day his opposition was due, Eghtesad, still representing himself, filed a request for a further continuance of 90 days, informing the court that three days before he had been involved in an auto accident. He attached a note from his doctor placing him off work for three days and instructing him to take two medications for pain and muscle stiffness and avoid heavy lifting.

The trial court granted Eghtesad "one final continuance" and set the hearing out for two additional weeks.

Three days before the new hearing date (and without having filed a response to the demurrer), Eghtesad filed another request for a continuance to respond to the demurrer on the grounds that he had now been ordered by his doctor to rest for 90 days. The request was accompanied by a doctor's note stating that the car accident had "exacerbated" Eghtesad's back pain, such that he was unable to sit for long time without changing position, and that the doctor expected him to recover in three months.

The trial court did not grant a further continuance: the court sustained the demurrer without leave to amend and directed State Farm to prepare an order and judgment of dismissal. Eghtesad now appeals.³

DISCUSSION

A. Scope of Review

When we review a judgment dismissing a complaint after the trial court has sustained a demurrer without leave to amend, our first step is to review the complaint de novo, assuming the truth of properly pleaded or implied factual allegations, to determine whether the complaint states facts sufficient to state a cause of action. ( Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081, 6 Cal.Rptr.3d 457, 79 P.3d 569.) Then, if we conclude that the complaint does not state a cause of action, "we must decide whether there is a reasonable possibility the plaintiff could cure the defect with an amendment. [Citation.] If we find that an amendment could cure the defect, we conclude that the trial court has abused its discretion and we reverse; if not, no abuse of discretion has occurred. [Citation.]" ( Ibid. )

Although our review is de novo, it remains the burden of the plaintiff/appellant "to show either that the demurrer was sustained erroneously or that the trial court's denial of leave to amend was an abuse of discretion." ( Keyes v. Bowen (2010) 189 Cal.App.4th 647, 655, 117 Cal.Rptr.3d 207.) In the case before us, Eghtesad does not directly argue that the complaint he filed stated a cause of action or that the trial court erred in sustaining State Farm's demurrer: his argument on appeal is that the trial court should have granted him leave to amend his complaint. Accordingly, we address only the issue of leave to amend.

Eghtesad did not ask the trial court for leave to amend his complaint, but that does not prevent him from raising the issue for the first time on appeal. ( § 472c, subd. (a).) Ordinarily, an appellant who seeks leave to amend attempts to show that the trial court's denial of leave to amend was error by showing on appeal what facts could be pleaded to cure defects in the complaint and how they state a cause of action. ( Total Call International, Inc. v. Peerless Insurance Co. (2010) 181 Cal.App.4th 161, 166, 104 Cal.Rptr.3d 319.) But for an original complaint, regardless whether the plaintiff has requested leave to amend, it has long been the rule that a trial court's denial of leave to amend constitutes an abuse of discretion unless the complaint "shows on its face that it is incapable of amendment." ( King v. Mortimer (1948) 83 Cal.App.2d 153, 158, 188 P.2d 502 ( King ); see also Adkins v City & County of San Francisco (1935) 8 Cal.App.2d 620, 621, 47 P.2d 751 [where it appeared that plaintiff attempted in good faith to state a cause of action and it was "not at all clear that plaintiff could not have amended" to overcome the demurrer, it was error for the trial court to refuse to grant plaintiff at least one opportunity to amend].)

This long-standing rule remains valid. The current edition of a leading practical treatise explains, "[I]n the case of an original complaint, plaintiff need not even request leave to amend. ‘Unless the complaint shows on its face that it is incapable of amendment, denial of leave to amend constitutes an abuse of discretion, irrespective of whether leave to amend is requested or not.’ " (Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2019) ¶ 7:129, p. 7(I)-58 (Weil & Brown), quoting McDonald v. Superior Court (1986) 180 Cal.App.3d 297, 303-304, 225 Cal.Rptr. 394 ( McDonald ).) And the California Judges Benchbook, Civil Proceedings Before Trial (CJER 2019) (Judges Benchbook), instructs, "Rarely should a judge sustain a demurrer to an initial complaint without granting leave to amend. Cabral v. Soares (2007) 157 [Cal.App.]4th 1234, 1240 [69 Cal.Rptr.3d 242]. Denial of leave to amend is appropriate only when it conclusively appears that there is no possibility of alleging facts under which recovery can be obtained. [ Ibid. ]" (Judges Benchbook, § 12.52, p. 1023.)⁴

This rule advances the policy goal of deciding cases on the merits and serves the interest of fairness. Our Supreme Court has observed that where "plaintiff has not had an opportunity to amend the complaint in response to the demurrer, leave to amend is liberally allowed as a matter of fairness, unless the complaint shows on its face that it is incapable of amendment." ( City of Stockton v. Superior Court (2007) 42 Cal.4th 730, 747, 68 Cal.Rptr.3d 295, 171 P.3d 20.) Our concerns about fairness are heightened in cases like Eghtesad's, where Eghtesad represented himself, informed the court he intended to oppose the demurrer to his original complaint, gave the court documentation of his injury, and received continuances amounting to less than six weeks to respond to State Farm's demurrer....