Linn v. Am. Econ. Ins. Co.

1

NANCY P. LINN, Plaintiff and Appellant, v. AMERICAN ECONOMY INSURANCE COMPANY et al., Defendants and Respondents.

E073105

California Court of Appeals, Fourth District, Second Division

October 18, 2021

NOT TO BE PUBLISHED

APPEAL from the Superior Court of Riverside County No. PSC1804649. David M. Chapman, Judge. Affirmed.

Nancy P. Linn, in pro. per., for Plaintiff and Appellant.

Bullivant Houser Bailey, Samuel H. Ruby, Raymund Deng and Matthew A. Trejo for Defendants and Respondents.

OPINION

FIELDS J.

I. INTRODUCTION

Nancy P. Linn (plaintiff) is the general manager of International Apparel & Accessories, Inc. (IAA), a women's retail clothing and accessory business. In March 2014, a fire occurred in the business adjacent to IAA's retail premises; and in April 2014, a flood occurred within IAA's retail premises. As a result of these incidents plaintiff submitted two insurance claims to American Economy Insurance Company (AEIC). One claim sought recovery on behalf of IAA for damage to property in the amount of $148, 177, and the second claim sought recovery on behalf of plaintiff for $174, 106.75 in damage to property she had loaned to IAA. On June 6, 2017, AEIC obtained a judgment against IAA in an action for declaratory relief, stating AEIC had no duty to pay any of the claims brought by IAA under the terms of IAA's insurance policy (IAA policy). Thereafter, AEIC denied plaintiff's separate claim for damage to her personal property.

Plaintiff proceeded to file a complaint against AEIC and various affiliated persons and entities^[1] (defendants), claiming they breached obligations owed directly to her under the IAA policy of insurance. The trial court granted a motion for judgment on the pleadings brought by AEIC and sustained a demurrer brought by the remaining defendants, concluding that plaintiff lacked standing to pursue her claims, and that her claims were barred by the contractual statute of limitations. Plaintiff appeals from the judgments entered against her following these orders. We conclude the trial court did not err when it determined that plaintiff lacked standing, and we further conclude plaintiff has not shown an abuse of discretion in the trial court's denial of leave to amend.

II. FACTS AND PROCEDURAL HISTORY

A. Complaint

On October 5, 2018, plaintiff filed a civil complaint against defendants. The complaint alleged IAA operated a women's retail clothing and accessory business, and that plaintiff was IAA's general manager.

It further alleged that on March 28, 2014, a fire occurred in the business adjacent to IAA's retail store, and that on April 23, 2014, a flood occurred within IAA's retail store. As a result of these incidents, IAA allegedly suffered $148, 177 in property damage, and plaintiff personally suffered an additional $174, 106.75 in property damage. The complaint also identified a bodily injury suffered by plaintiff, resulting in more than $150, 000 in medical expenses due to "smoke and noxious odors, which emanated from the fire and flood."

The complaint alleged that IAA held an insurance policy with AEIC that covered the time period of the fire and flood; and it attached a copy of the policy. According to the pleading, plaintiff submitted two written claims for loss to AEIC on August 8, 2016- one claim for IAA's damages, and a third party claim for the damages plaintiff personally suffered. In response, defendants allegedly engaged in various tactics to avoid payment on these claims. Eventually, AEIC filed a declaratory relief action against IAA in federal district court, which was dismissed. AEIC then refiled its declaratory relief action in the Superior Court of Riverside County, resulting in a default judgment in favor of AEIC and against IAA on June 6, 2017. AEIC then proceeded to deny plaintiff's third party claim on June 11, 2018. Based upon these alleged facts, the complaint purported to state causes of action for breach of contract, fraud, and negligence.

B. Judgment on the Pleadings and Demurrer^[2]

On April 26, 2019, the trial court granted a motion for judgment on the pleadings and entered judgment in favor of AEIC. On June 24, 2019, the trial court sustained a demurrer brought by Liberty Mutual Insurance Company and Jason Rein, and it entered judgment in their favor. Plaintiff appeals from these two judgments.

III. DISCUSSION

A. General Legal Principles and Standard of Review

"A demurrer tests the legal sufficiency of factual allegations in a complaint. [Citation.] In reviewing the sufficiency of a complaint against a general demurrer, [the] court treats the demurrer as admitting all material facts properly pleaded, but not contentions, deductions, or conclusions of fact or law." (Rakestraw v. California Physicians' Service (2000) 81 Cal.App.4th 39, 42-43.) "A motion for judgment on the pleadings is tantamount to a general demurrer" and is governed by the same rules. (Orange Unified Sch. Dist. v. Rancho Santiago Cmty. College Dist. (1997) 54 Cal.App.4th 750, 764.)

"The standard of review on appeal from a judgment dismissing an action after the sustaining of a demurrer without leave to amend is well established. 'The function of a demurrer is to test the sufficiency of the [pleading] as a matter of law, and it raises only a question of law. [Citations.] On a question of law, we apply a de novo standard of review on appeal.'" (First Aid Services of San Diego, Inc. v. California Employment Development Dept. (2005) 133 Cal.App.4th 1470, 1476.) The same de novo standard of review applies on appeal from an order granting a motion for judgment on the pleadings. (People ex rel. Harris v. Pac Anchor Transportation, Inc. (2014) 59 Cal.4th 772, 777; Adams v. Bank of America, N.A. (2020) 51 Cal.App.5th 666, 670.)

Because both the motion for judgment on the pleadings and demurrer test the sufficiency of the same pleading, the validity of both judgments identified in plaintiff's notice of appeal turn on the same legal issues. On appeal, we independently consider whether the complaint alleges facts to state a valid cause of action. However, as explained post, we conclude plaintiff's complaint fails to do so, and the trial court did not err in granting the motion for judgment on the pleadings or in sustaining the demurrer. B. The Trial Court Did Not Err in Concluding Plaintiff Failed To State a Cause of Action

1. We Are Not Bound by Plaintiff's Characterization of Her Claims

In conducting our independent review on appeal," '[w]e are not limited to [a plaintiff's] theory of recovery in testing the sufficiency of [his] complaint against a demurrer, but instead must determine if the factual allegations of the complaint are adequate to state a cause of action under any legal theory. The courts of this state have . . . long since departed from holding a plaintiff strictly to the "form of action" he has pleaded and instead have adopted the more flexible approach of examining the facts alleged to determine if a demurrer should be sustained.'" (Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 38-39.)" 'Regardless of the label attached to the cause of action, we examine the complaint's factual allegations to determine whether they state a cause of action on any available legal theory.'" (Jackson v. Doe (2011) 192 Cal.App.4th 742, 750.) "We ignore erroneous or confusing labels in the pleading and look to its gravamen to determine what cause of action is stated." (Navarrete v. Meyer (2015) 237 Cal.App.4th 1276, 1283.)

Here, the complaint purports to state three "causes of action": breach of contract, fraud, and negligence. However, the factual allegations in support of each cause of action state that defendants are liable for the manner in which they handled and denied plaintiffs claim for property damage under the IAA policy.^[3] Other than plaintiffs inability to recover insurance payments for her property damage claim, the only other injury identified in the complaint is a reference to bodily injury in the negligence cause of action. Thus, the complaint is more properly read as stating two claims: one for damages arising out of defendants' alleged failure to abide by obligations arising from the IAA policy, and another for bodily injury. We proceed to consider whether the complaint states a valid cause of action allowing for recovery on either claim.

2. The Complaint Fails to State a Cause of Action for Recovery of Bodily Injury

To the extent plaintiff seeks recovery for any bodily injury, we conclude the complaint fails to allege facts disclosing defendants owed plaintiff a legal duty, and that any such claim appears barred by the statute of limitations.

"A complaint which lacks allegations of fact to show that a legal duty of care was owed is fatally defective. [Citation.] The existence of such a duty is properly challenged by demurrer and is a question of law for the court." (Hegyes v. Unjian Enters. (1991) 234 Cal.App.3d 1103, 1111.)

With respect to plaintiffs bodily injury claim, the complaint alleges plaintiff suffered from a preexisting pulmonary condition, and that the March 2014 fire and April 2014 flood in IAA's retail premises created "smoke and noxious odors" that exacerbated her condition. However, the complaint does not allege that defendants caused the flood or fire. Nor does the complaint allege that defendants owned, possessed, or controlled the property such that they would have a general tort duty to address any conditions on the premises. Absent factual allegations that suggest defendants owed a duty of care, the complaint fails to state a cause of action with respect to plaintiffs alleged bodily injury.

Additionally "[a] complaint disclosing on its face that the limitations period has expired in connection with one...