Preview
Electrunically
b}-Su penur Court nf-Eallfarnm, Cnu nry n! San Maren
EN 3/1 0/2020
By J's!Mia Marlowe
LORA D. HEMPHILL (SBN 214654) Deputy Clerk
KRISTINE N. ULRICH (SBN 310930)
HAGER & DOWLING
Professional Corporation
319 East Carrillo Street
Santa Barbara, California 93101
(805 966-4700 Fax: (805) 966-4120
mail hdlaw.c0m
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Attorneys for Defendants MERCURY CASUALTY COMPANY,
CALIFORNIA AUTOMOBILE INSURANCE COMPANY, AND
MERCURY INSURANCE SERVICES, LLC
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF SAN MATEO - COMPLEX CIVIL LITIGATION
DONNA MARIE MESCHI, AN CASE N0. 16CIV02607
INDIVIDUAL, VINCENT MESCHI, Assignedfor All Purposes t0 the Hon.
AN INDIVIDUAL, ON BEHALF OF Danny Y. Chou, Dept. 22
THEMSELVES AND A CLASS OF
SIMILARLY SITUATED PERSONS, DEFENDANTS MERCURY
AND ROES 1-10, CASUALTY COMPANY,
CALIFORNIA AUTOMOBILE
Plaintiffs, INSURANCE COMPANY AND
MERCURY INSURANCE SERVICES,
V. LLC'S NOTICE OF MOTION AND
MOTION TO STRIKE PORTIONS OF
MERCURY CASUALTY
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COMPANY, SECOND AMENDED COMPLAINT
A CORPORATION, CALIFORNIA OF PLAINTIFFS DONNA MARIE
AUTOMOBILE INSURANCE MESCHI, ET AL.; MEMORANDUM
COMPANY, A CORPORATION, OF POINTS AND AUTHORITIES;
MERCURY INSURANCE SERVICES, DECLARATION OF KRISTINE N.
LLC, A LIMITED CORPORATION ULRICH IN SUPPORT THEREOF
AND DOES 3 THROUGH
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10,
Filed concurrently with Defendants'Notice
Defendants. ofDemurrer and Demurrer
Date: April 3, 2020
Time: 1:30
Dept.: 22
Action Filed: November 29, 2016
Trial Date: Not Set
TO PLAINTIFFS AND THEIR COUNSEL OF RECORD:
PLEASE TAKE NOTICE THAT 0n April 3, 2020, at 1:30 p.m., 0r as soon
1
DEFENDANTS NOTICE OF MOTION AND MOTION TO STRIKE PORTIONS OF THE SECOND AMENDED
COMPLAINT OF PLAINTIFFS DONNA MARIE MESCHI, ET. AL.
thereafter as counsel may be heard, in Department 22 of the above-captioned Court, located
at 1050 Mission Road, South San Francisco, CA 94080, Defendants Mercury Casualty
Company, California Automobile Insurance Company and Mercury Insurance Services,
LLC will and hereby d0 jointly and severally move this Court to strike portions 0fthe Second
Amended
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Complaint ("SAC") filed by Plaintiffs Donna Marie Meschi, et. a1., filed on or
about February 10, 2020, 0n file herein, and for other relief as this Court may deem just and
proper.
The request is based on the grounds the SAC fails to allege facts sufficient to permit
this case t0 proceed as a class action, the SAC fails t0 allege adequate facts supporting
recovery for punitive damages and the relief sought on the sixth, seventh, and eighth causes
of action for Unfair Competition pursuant t0 Business & Professions Code § 17200 et seq.
("UCL") is improper and also not supported by the allegations 0f the SAC.
Specifically, Defendants move for an order striking the following portions from the
SAC:
CLASS ALLEGATIONS:
1. The following language at p. 3, 119, lines 4-6:
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Plaintiffs seek to represent the following class ("Declarative Relief Class"):
California residents insured under a CAIC 0r MCC property policy from
November 29, 2012 to the time of trial in this action.
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2. The following language at p. 3, 1110, line 7:
Plaintiffs seek t0 represent subclasses ("Injury Classes"):
3. The following language at p. 3, 1110(a), lines 8-13:
(a) The "ACV Claims Class," defined as:
California residents insured under a CAIC 0r MCC property policy Who
received a first party settlement, 0r offer for settlement, 0f a personal property
claim that was adjusted by MIS 0n an actual cash basis, for less than the
applicable policy limits, Which claims were open between November 29, 2012,
and the time 0f trial 0f this action; and
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DEFENDANTS’ NOTICE OF MOTION AND MOTION TO STRIKE PORTIONS OF PLAINTIFFS' SECOND
AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES
The following language at p. 3, 1110(b), lines 14-19:
(b) The "Replacement Cost Claims Class", [sic] defined as:
California residents insured under a CAIC 0r MCC property policy Who
received a first party settlement, 0r offer for settlement, of a personal property
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claim that was adjusted by MIS on an actual cash basis, for less than the
applicable policy limits, Which claims were open between November 29, 2012,
and the time of trial 0f this action.
The following language at p. 9, 1128, lines 15-16:
As holders 0f a Mercury policy, the Meschis are proper class representatives
for all class members under all property policies issued by MCC and CAIC
and managed by MIS.
The following language at p. 9, 1129, lines 17-18:
In the alternative, the ROE plaintiffs can represent class members With
policies issued by CAIC, and as t0 claims made under CAIC policies.
The following language at p. 47, 11 1, lines 20-21 of the Demand for Relief as
t0 Causes 0f Action 1-8:
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For the Court’s order certifying the Class and appropriate subclasses thereof
and appointing Plaintiffs and their counsel t0 represent the Class;
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IMPROPER UCL DAMAGES
8. The following language at p. 39, 11 174 [sic], lines 18-22; p. 42, 11 192 [sic],
lines 10-14; p. 44, 11205fsic], lines 20-24:
Plaintiffs and the Class additionally seek the Court’s order awarding
restitution in the form of payment t0 Plaintiffs and the Class for policy
benefits illegally withheld by Mercury and DOES 3-10, and/or the Court’s
order for disgorgement 0f profits, earnings and benefits, including interest
earned on such profits, earnings and benefits, resulting from Mercury and
DOES 3-10’s Violation of the Unfair Competition Laws.
3
DEFENDANTS’ NOTICE OF MOTION AND MOTION TO STRIKE PORTIONS OF PLAINTIFFS' SECOND
AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES
The following language at p. 38, fl 167 [sic], lines 18-20; p. 41, 11 184 [sic],
lines 8-1 1; p. 43, fiT202 [sic], lines 22-24; :
Mercury should be required t0 return t0 Plaintiffs and t0 each member 0f the
Class the amount improperly retained pursuant to § 17203 of the Business &
Professions Code.
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10. The following language at p. 47, 1T 3, line 23 0f the Demand for Relief as t0
Causes of Action 1-8:
For restitution to Plaintiffs and the Class 0f policy benefits illegally withheld;
11. The following language at p. 47, 11 3, line 24 0f the Demand for Relief as t0
Causes of Action 1-8:
For payment of policy benefits improperly Withheld in breach of the policy;
12. The following language at p. 47, 11 3, line 25 0f the Demand for Relief as t0
Causes of Action 1-8:
For damages consequential t0 breach 0f the policy;
13. The following language at p. 48 ,11 3, line 9:
for exemplary damages;
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PUNITIVE DAMAGES
14. The following language at p. 47, 11 71 [sic], lines 9-16:
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As a direct and proximate result 0f MCC, MIS and DOES 3-10’s breach of the
covenant of good faith and fair dealing, and because Defendants and their
managing agents acted with fraud, malice and oppression, and/or approved
acts amounting t0 fraud, malice and oppression, and/or ratified acts amounting
to fraud, malice and oppression, all to maximize Defendants' profits at the
expense of Plaintiffs’ rights under California law and regulations, and did so
as part 0f an institutional pattern 0f bad faith, malice, fraud and oppression,
Plaintiffs are entitled to punitive and exemplary damages in an amount in
accordance with the evidence introduced at trial.
4
DEFENDANTS’ NOTICE OF MOTION AND MOTION TO STRIKE PORTIONS OF PLAINTIFFS' SECOND
AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES
H 15. The following lmIgLJQ-ge at 48
13.. .
3'.
{l'
line 9:
for exemplary damages;
PREJUDGMENT INTEREST
16. The following language at p. 48 . 1T4. line 10:
\OOOQQUIAWN
for pre-judgment and post judgment interest;
This motion to strike is made pursuant t0 Code of Civil Procedure §§ 435-437 on the
grounds the SAC fails to allege adequate facts supporting recovery under the class action
allegations, the relief sought 0n the sixth, seventh, and eighth causes of action for Unfair
Competition pursuant to Business & Professions Code § 17200 et seq., the prejudgment
interest sought on the ninth cause of action for Breach of the Implied Covenant of Good
Faith and Fair Dealing, 0r recovery for punitive damages, and, accordingly, the above-
quoted portions 0f the SAC are improper and should be stricken.
This motion isbased on this Notice of Motion, the attached Memorandum 0f Points
and Authorities in support thereof, the Declaration of Kristine N. Ulrich filed concurrently
herewith, allofthe pleadings, files, and records in this proceeding, allother matters of which
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the Court may take judicial notice, and any argument or evidence that may be presented t0
0r considered by the Court prior to itsruling.
OOQQUl-bUDND—‘OOOOQQUI-PUJNHO
DATED: March 9, 2020 HAGER & DOWLING
By;
KR‘IS N. ULRICH
Atto eys for Defendants Mercury Casualty
Company, California Automobile Insurance
Company and Mercury Insurance Services, LLC
5
DEFENDANTS' NOTICE OF MOTION AND MOTION TO STRIKE PORTIONS OF PLAINTIFFS' SECOND
AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES
TABLE OF CONTENTS
Page
MEMORANDUM OF POINTS AND AUTHORITIES 9
.......................................................
I. INTRODUCTION 9
......................................................................................................
II. FACTUAL BACKGROUND 9
....................................................................................
III. SUMMARY OF ARGUMENT
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11
................................................................................
IV. LEGAL BASIS FOR MOTION TO STRIKE 11
..........................................................
V. ARGUMENT 13
............................................................................................................
A. THE CLASS ALLEGATIONS SHOULD BE STRICKEN 13
.........................
1. Plaintiffs Fail to Satisfy the Typicality Requirement ......................... 13
2. The Class Definitions are Overbroad and There is No
14
Ascertainable Class ............................................................................
3. The Duplicative Subclasses Do Not Satisfy the Commonality
Requirement 1 6
.......................................................................................
B. THE DAMAGES AND RELIEF SOUGHT ON THE UCL CAUSES
OF ACTION SHOULD BE STRICKEN 18
......................................................
1. Claims Arising Under the UCL are Equitable in Nature and
Recovery is Limited to Injunctive Relief and Restitution .................. 18
C. THE PRAYER FOR PUNITIVE
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DAMAGES SHOULD BE
STRICKEN ....................................................................................................
19
1. Plaintiffs Failed t0 Plead Sufficient Facts to Justify an Award
0f Punitive Damages 19
..........................................................................
D. THE PRAYER FOR PREJUDGMENT INTEREST ON
OOQONM-PUJNHOKOOONQUI#UJNHO
PLAINTIFFS' INDIVIDUAL BAD FAITH CLAIM SHOULD BE
STRICKEN ....................................................................................................
23
1. Prejudgment Interest under Civil Code § 3291 is Unavailable
in Insurance Bad-Faith Actions .......................................................... 23
VI. MOVING PARTY HAS MET AND CONFERRED IN ADVANCE OF
FILING THIS MOTION TO STRIKE 23
.....................................................................
VII. CONCLUSION 23
........................................................................................................
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DEFENDANTS’ NOTICE OF MOTION AND MOTION TO STRIKE PORTIONS OF PLAINTIFFS' SECOND
AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES
TABLE OF AUTHORITIES
flgg
M
Bank offhe West (1992) 2 Cal.4th 1254, 1266.)(In re Tobacco II Cases (2009) 46
Cal.4th 298 ................................................................................................................
19
\OOONQUI-PUJNH
Canon U.S.A., Inc. v. Superior Court (1998) 68 Cal.App.4th 12
1 ..........................................
Caro v. Procter & Gamble C0., (1993) 18 Cal.App.4th 644 13
..............................................
College Hospital Inc. v. Superior Court (1994) 34 Cal.App.4d 704 ................................... 21
Committee 0n Children's Television, Inc. v. General Foods Corp. (1983) 35
Cal.App.3d 197 ......................................................................................................... 22
CVS Pharmacy, Inc. v. Sup. Ct. (Deluca), (2015) 241 Cal.4th 300 13
....................................
Financial Corp. ofAmerica v. Wilbum (1987) 189 Cal.App.3d 764 ..................................12
First American Title Ins. C0. v. Superior Court (2007) 146 Cal.App.4th 1564 13
.................
Grieves v. Superior Court (1984) 157 Ca1.App.3d 159 12
......................................................
Kennedy v. Baxter Healthcare Corp, (1996) 43 Ca1.App.4th 799 13
.....................................
Kennedy v. Baxter Healthcare Corp, 43 Cal. App 4th 799 ................................................
16
Korea Supply C0. v. Lockheed Martin
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Corp. (2003) 29 Cal.4th 1134 ................................
18
Neal v. Farmers Ins. Exchange (1978) 21 Cal.App.3d 910 20
................................................
Newell v. State Farm Gen. Ins. C0,, (2004) 118 Cal.App.4th 1094 ..............................
13, 16
Ortega v. Topa Ins.
OOQONM-PUJNHOKOOONQUI#UJNHO
C0. (2012) 206 Cal.App.4th 463 12
.........................................................
Patrick v. Maryland Casually C0., (1990) 217 Cal.App3d 1566 ........................................ 20
Schroeder v. Auto Driveway C0. (1974) 11 Cal.App.3d 908 22
..............................................
Schwartz v. Provident Life & Accident Ins. C0. (2013) 216 Cal.App.4th 607 .................... 18
Sevidal v. Target Corp. (2010) 189 Cal.App.4th 905 14
.........................................................
Stevens v. Superior Court (1986) Ca1.App.3d 605, 21
.............................................................
Tarmann v. State Farm Mut. Auto. Ins. C0. (1991) 2 Cal.App.4d 153 22
...............................
Thampson v.Auto Club ofS. Cal, (2013) 217 Cal.App.4th 719 14
........................................
Tomaselli v. Transamerica Ins. C0., (1994) 25 Cal.App.4d 1269 20
......................................
7
DEFENDANTS’ NOTICE OF MOTION AND MOTION TO STRIKE PORTIONS OF PLAINTIFFS' SECOND
AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES
Turman v. Turning Point ofCentral Calif, Inc. (2010) 191 Cal.App.4th 53 12
.....................
Walnut Producers ofCal. v. Diamond Foods, Inc. (2010) 187 Cal.App.4th 634 ............... 12
Wilhelm v. Pray, Price, Williams & Russel (1986) 186 Ca1.App.3d 1324 .......................... 22
STATUTES
Bus. & Prof.
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Code § 17204 ..................................................................................................
13
Business & Professions Code § 17200 2, 5, 9
..........................................................................
C.C.R. § 2695.9 10
...................................................................................................................
CiV. Code § 3291 23
.................................................................................................................
Code CiV. Proc., § 431.10 ....................................................................................................
12
Code CiV. Proc., § 435 .........................................................................................................
12
Code 0f Civil Procedure § 436 12
............................................................................................
Ins. Code § 2051.5 10, 22
.........................................................................................................
Ins. Code §§ 2051, 2051.1, and 790.03 10
...............................................................................
Insurance Code § 2051.5 21
.....................................................................................................
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OOQONM-PUJNHOKOOONQUI#UJNHO
8
DEFENDANTS’ NOTICE OF MOTION AND MOTION TO STRIKE PORTIONS OF PLAINTIFFS' SECOND
AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES
MEMORANDUM OF POINTS AND AUTHORITIES
I.
INTRODUCTION
Plaintiffs Donna Marie Meschi and Vincent Meschi (collectively, "Plaintiffs"), 011
behalf 0f a
\OOONQUI-PUJNH
putative class of policy holders, have filed their Second Amended Complaint
("SAC") against Defendants Mercury Casualty Company ("MCC"), California Automobile
Insurance Company ("CAIC"), and Mercury Insurance Services, LLC ("MIS") (collectively,
"Defendants") alleging three causes 0f action for Declaratory Relief, two causes of action
for Breach 0f Contract relating t0 the adjustment and payment 0f contents claims, and three
causes 0f action for Violation of California's Unfair Competition Law ("UCL") as set forth
in Business & Professions Code § 17200, et seq. Curiously, Plaintiffs also maintain their
single individual claim for Breach of the Implied Covenant 0f Good Faith and Fair Dealing
("Bad Faith").
II.
FACTUAL BACKGROUND
Plaintiffs were issued a policy of insurance by MCC, (“Policy”). (SAC, p. 27, 1]83,
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lines 2-4.) The Policy contains a section entitled "CONDITIONS," one 0f which such
conditions states: "7. Suit Against Us. No action shall be brought unless there has been
compliance With policy provisions and the action is started within one year after the loss or
OOQONM-PUJNHOKOOONQUI#UJNHO
damage." (SAC, Exhibit A, Policy Provisions, p. 16, Condition 7.) The SAC alleges that 0n
or about June 25, 2015, Plaintiffs' dwelling, property and its contents insured under the
Policy were damaged by fire. (Ibid, 1] 84, lines 5-8.) Plaintiffs "promptly made a claim" to
MCC ("Claim"). (Ibid, line 6.) Plaintiffs allege their claim was settled in accordance with
"illegal practices" (Ibid, p. 27, 1]86, line 15) identified in the SAC as: a) calculating and
deducting depreciation from actual cash payments to Plaintiffs based not solely on the
condition 0f the contents, but rather entirely 0r in part based 0n the age 0f the contents —
allegedly in Violation of Ins. Code § 2051" (Ibid, 1]86(a), lines 16-19); b) paying Plaintiffs'
replacement cost claim for contents based 0n the lesser of the RCV estimate 0r the actual
9
DEFENDANTS’ NOTICE OF MOTION AND MOTION TO STRIKE PORTIONS OF PLAINTIFFS' SECOND
AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES
cost of repair — allegedly in Violation 0f Ins. Code § 2051.5 (Ibid, 86(b), lines 20-21); c)
1]
misrepresenting and concealing Plaintiffs' rights — allegedly in Violation 0f Ins. Code §§
2051, 2051.1, and 790.03(h); and 10 C.C.R. § 2695.4 (Ibid, 1] 86(0), lines 22-23); and d)
failing to communicate justification for depreciation calculations t0 Plaintiffs — allegedly in
Violation of 10 C.C.R. § 2695.9(f). (Ibid, 1] 86(d), lines 24-26.)
\OOONQUI-PUJNH
The SAC alleges every person Plaintiffs spoke With about their Claim "represented
him or herself as working for "Mercury" 0r "Mercury Insurance” (Ibid, p. 5, 1] 18, lines
17-18) but was "in fact employed by MIS" (Ibid, lines 19-20) and "MIS employees,
supervisors, and managers were solely responsible for accepting, investigating, and
adjusting [Plaintiffs'] claims." (Ibid, lines 11-12.) The SAC alleges Plaintiffs have never
"spoken with or communicated in writing with any employee 0f either MCC or CAIC"
(Ibid, lines 15-16), "[n]0 employee, manager, 0r supervisor 0f MCC 0r CAIC accepted,
investigated 0r adjusted [Plaintiffs'] property claims." (Ibid, lines 13-14.)
Based on these allegations, Plaintiffs purport t0 represent a class 0f "California
residents insured under a CAIC or MCC property policy from November 29, 2012 t0 the
time of trial in this action," (Ibid, p. 3, 1]9, lines 4-6; "Declarative Relief Class") and two
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subclasses 0f policyholders, "ACV Claims Class" ("ACV Subclass") and "Replacement
Cost Claims Class" ("RCV Subclass")(collectively, "Subclasses.) (Ibid, p. 3, 1] 10(a), line 8
and 1]10(b), line 14. Both subclasses are identically defined as "California residents
OOQONM-PUJNHOKOOONQUI#UJNHO
insured under a CAIC 0r MCC property policy Who received a first party settlement, 0r
offer for settlement, 0f a personal property claim that was adjusted by MIS 0n an actual
cash basis, for less than the applicable policy limits, which claims were open between
November 29, 2012, and the time 0f trial 0f this action." (SAC, p. 3, 1]10(a)—(b), lines 9-
19.) Plaintiffs also seek to represent "Plaintiffs ROES 1-10," ("ROE Plaintiffs") who
"made a claim for repair or replacement of contents under a property policy issued by
CAIC." (Ibid, p. 2, 1] 6, lines 18-20.)
Plaintiffs, on behalf 0f the Declarative Relief Class, and the Subclasses assert
against MCC, CAIC and MIS three causes 0f action for Declaratory Relief (SAC, pp. 32-
1 0
DEFENDANTS’ NOTICE OF MOTION AND MOTION TO STRIKE PORTIONS OF PLAINTIFFS' SECOND
AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES
34, W 104-124[sic], Causes 0f Action One — Three), two causes of action for Breach of
Contract (SAC, pp. 35-37, W 125-138[sic], Causes of Action Four -
Five; previously
Causes 0f Action Seven — Eight in the First Amended Complain ("FAC")), and three
causes 0f action for Violation of the UCL relating to the adjustment and payment of
contents claims. (SAC, pp. 37-44, 1H] 139-205[sic], Causes of Action SiX-Eight; previously
\OOONQUI-PUJNH
Causes 0f Action Four — Six in the FAC.)
Curiously, Plaintiffs maintain their individual claim for Breach 0f the Implied
Covenant of Good Faith and Fair Dealing ("Bad Faith") against MCC and MIS. (SAC,
pp.63-47, W 63-71[sic], Ninth Cause 0f Action .)
III.
SUMMARY OF ARGUMENT
Despite the additional twenty (20) pages 0f allegations added t0 the SAC, 0n its face,
the SAC still suffers from a number 0f pleading deficiencies. First, Plaintiffs' class and
subclass allegations fail t0 allege adequate facts t0 permit this case t0 proceed as a class
action as presently defined. Second, Plaintiffs still seek impermissible damages and relief
under the three UCL claims in the disguise of UCL restitution. Plaintiffs also fail to allege
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adequate facts supporting recovery for punitive damages. Finally, on their individual Bad
Faith claim, Plaintiffs seek prejudgment interest, Which isunavailable in insurance bad faith
actions. For the reasons set forth below, Defendants jointly and severally request Plaintiffs'
OOQONM-PUJNHOKOOONQUI#UJNHO
class action allegations (Motion t0 Strike ["MTS"] Class Allegations, nos. 1-7) and improper
prayers for relief sought on the UCL (MTS, Improper UCL Damages, nos. 8-13) and Bad
Faith causes of action (MTS, Prejudgment Interest, n0. 16) be stricken from the SAC.
Further, Defendants jointly and severally request Plaintiffs' prayer for punitive damages
(MTS, Punitive Damages, nos. 14-15) be stricken and no evidence relating t0 punitive
damages be allowed at the trial of this matter.
IV.
Preview
Electrunically b}-Su penur Court nf-Eallfarnm, Cnu nry n! San Maren EN 3/1 0/2020 By J's!Mia Marlowe LORA D. HEMPHILL (SBN 214654) Deputy Clerk KRISTINE N. ULRICH (SBN 310930) HAGER & DOWLING Professional Corporation 319 East Carrillo Street Santa Barbara, California 93101 (805 966-4700 Fax: (805) 966-4120 mail hdlaw.c0m \OOONQUI-PUJNH Attorneys for Defendants MERCURY CASUALTY COMPANY, CALIFORNIA AUTOMOBILE INSURANCE COMPANY, AND MERCURY INSURANCE SERVICES, LLC SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF SAN MATEO - COMPLEX CIVIL LITIGATION DONNA MARIE MESCHI, AN CASE N0. 16CIV02607 INDIVIDUAL, VINCENT MESCHI, Assignedfor All Purposes t0 the Hon. AN INDIVIDUAL, ON BEHALF OF Danny Y. Chou, Dept. 22 THEMSELVES AND A CLASS OF SIMILARLY SITUATED PERSONS, DEFENDANTS MERCURY AND ROES 1-10, CASUALTY COMPANY, CALIFORNIA AUTOMOBILE Plaintiffs, INSURANCE COMPANY AND MERCURY INSURANCE SERVICES, V. LLC'S NOTICE OF MOTION AND MOTION TO STRIKE PORTIONS OF MERCURY CASUALTY NNNNNNNNNv—tt—tt—ti—tt—tt—ti—tt—tt—tv—t COMPANY, SECOND AMENDED COMPLAINT A CORPORATION, CALIFORNIA OF PLAINTIFFS DONNA MARIE AUTOMOBILE INSURANCE MESCHI, ET AL.; MEMORANDUM COMPANY, A CORPORATION, OF POINTS AND AUTHORITIES; MERCURY INSURANCE SERVICES, DECLARATION OF KRISTINE N. LLC, A LIMITED CORPORATION ULRICH IN SUPPORT THEREOF AND DOES 3 THROUGH OOQONM-PUJNHOKOOONQUI#UJNHO 10, Filed concurrently with Defendants'Notice Defendants. ofDemurrer and Demurrer Date: April 3, 2020 Time: 1:30 Dept.: 22 Action Filed: November 29, 2016 Trial Date: Not Set TO PLAINTIFFS AND THEIR COUNSEL OF RECORD: PLEASE TAKE NOTICE THAT 0n April 3, 2020, at 1:30 p.m., 0r as soon 1 DEFENDANTS NOTICE OF MOTION AND MOTION TO STRIKE PORTIONS OF THE SECOND AMENDED COMPLAINT OF PLAINTIFFS DONNA MARIE MESCHI, ET. AL. thereafter as counsel may be heard, in Department 22 of the above-captioned Court, located at 1050 Mission Road, South San Francisco, CA 94080, Defendants Mercury Casualty Company, California Automobile Insurance Company and Mercury Insurance Services, LLC will and hereby d0 jointly and severally move this Court to strike portions 0fthe Second Amended \OOONQUI-PUJNH Complaint ("SAC") filed by Plaintiffs Donna Marie Meschi, et. a1., filed on or about February 10, 2020, 0n file herein, and for other relief as this Court may deem just and proper. The request is based on the grounds the SAC fails to allege facts sufficient to permit this case t0 proceed as a class action, the SAC fails t0 allege adequate facts supporting recovery for punitive damages and the relief sought on the sixth, seventh, and eighth causes of action for Unfair Competition pursuant t0 Business & Professions Code § 17200 et seq. ("UCL") is improper and also not supported by the allegations 0f the SAC. Specifically, Defendants move for an order striking the following portions from the SAC: CLASS ALLEGATIONS: 1. The following language at p. 3, 119, lines 4-6: NNNNNNNNNv—tt—tt—ti—tt—tt—ti—tt—tt—tv—t Plaintiffs seek to represent the following class ("Declarative Relief Class"): California residents insured under a CAIC 0r MCC property policy from November 29, 2012 to the time of trial in this action. OOQONM-PUJNHOKOOONQUI#UJNHO 2. The following language at p. 3, 1110, line 7: Plaintiffs seek t0 represent subclasses ("Injury Classes"): 3. The following language at p. 3, 1110(a), lines 8-13: (a) The "ACV Claims Class," defined as: California residents insured under a CAIC 0r MCC property policy Who received a first party settlement, 0r offer for settlement, 0f a personal property claim that was adjusted by MIS 0n an actual cash basis, for less than the applicable policy limits, Which claims were open between November 29, 2012, and the time 0f trial 0f this action; and 2 DEFENDANTS’ NOTICE OF MOTION AND MOTION TO STRIKE PORTIONS OF PLAINTIFFS' SECOND AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES The following language at p. 3, 1110(b), lines 14-19: (b) The "Replacement Cost Claims Class", [sic] defined as: California residents insured under a CAIC 0r MCC property policy Who received a first party settlement, 0r offer for settlement, of a personal property \OOONQUI-PUJNH claim that was adjusted by MIS on an actual cash basis, for less than the applicable policy limits, Which claims were open between November 29, 2012, and the time of trial 0f this action. The following language at p. 9, 1128, lines 15-16: As holders 0f a Mercury policy, the Meschis are proper class representatives for all class members under all property policies issued by MCC and CAIC and managed by MIS. The following language at p. 9, 1129, lines 17-18: In the alternative, the ROE plaintiffs can represent class members With policies issued by CAIC, and as t0 claims made under CAIC policies. The following language at p. 47, 11 1, lines 20-21 of the Demand for Relief as t0 Causes 0f Action 1-8: NNNNNNNNNv—tt—tt—ti—tt—tt—ti—tt—tt—tv—t For the Court’s order certifying the Class and appropriate subclasses thereof and appointing Plaintiffs and their counsel t0 represent the Class; OOQONM-PUJNHOKOOONQUI#UJNHO IMPROPER UCL DAMAGES 8. The following language at p. 39, 11 174 [sic], lines 18-22; p. 42, 11 192 [sic], lines 10-14; p. 44, 11205fsic], lines 20-24: Plaintiffs and the Class additionally seek the Court’s order awarding restitution in the form of payment t0 Plaintiffs and the Class for policy benefits illegally withheld by Mercury and DOES 3-10, and/or the Court’s order for disgorgement 0f profits, earnings and benefits, including interest earned on such profits, earnings and benefits, resulting from Mercury and DOES 3-10’s Violation of the Unfair Competition Laws. 3 DEFENDANTS’ NOTICE OF MOTION AND MOTION TO STRIKE PORTIONS OF PLAINTIFFS' SECOND AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES The following language at p. 38, fl 167 [sic], lines 18-20; p. 41, 11 184 [sic], lines 8-1 1; p. 43, fiT202 [sic], lines 22-24; : Mercury should be required t0 return t0 Plaintiffs and t0 each member 0f the Class the amount improperly retained pursuant to § 17203 of the Business & Professions Code. \OOONQUI-PUJNH 10. The following language at p. 47, 1T 3, line 23 0f the Demand for Relief as t0 Causes of Action 1-8: For restitution to Plaintiffs and the Class 0f policy benefits illegally withheld; 11. The following language at p. 47, 11 3, line 24 0f the Demand for Relief as t0 Causes of Action 1-8: For payment of policy benefits improperly Withheld in breach of the policy; 12. The following language at p. 47, 11 3, line 25 0f the Demand for Relief as t0 Causes of Action 1-8: For damages consequential t0 breach 0f the policy; 13. The following language at p. 48 ,11 3, line 9: for exemplary damages; NNNNNNNNNv—tt—tt—ti—tt—tt—ti—tt—tt—tv—t PUNITIVE DAMAGES 14. The following language at p. 47, 11 71 [sic], lines 9-16: OOQONM-PUJNHOKOOONQUI#UJNHO As a direct and proximate result 0f MCC, MIS and DOES 3-10’s breach of the covenant of good faith and fair dealing, and because Defendants and their managing agents acted with fraud, malice and oppression, and/or approved acts amounting t0 fraud, malice and oppression, and/or ratified acts amounting to fraud, malice and oppression, all to maximize Defendants' profits at the expense of Plaintiffs’ rights under California law and regulations, and did so as part 0f an institutional pattern 0f bad faith, malice, fraud and oppression, Plaintiffs are entitled to punitive and exemplary damages in an amount in accordance with the evidence introduced at trial. 4 DEFENDANTS’ NOTICE OF MOTION AND MOTION TO STRIKE PORTIONS OF PLAINTIFFS' SECOND AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES H 15. The following lmIgLJQ-ge at 48 13.. . 3'. {l' line 9: for exemplary damages; PREJUDGMENT INTEREST 16. The following language at p. 48 . 1T4. line 10: \OOOQQUIAWN for pre-judgment and post judgment interest; This motion to strike is made pursuant t0 Code of Civil Procedure §§ 435-437 on the grounds the SAC fails to allege adequate facts supporting recovery under the class action allegations, the relief sought 0n the sixth, seventh, and eighth causes of action for Unfair Competition pursuant to Business & Professions Code § 17200 et seq., the prejudgment interest sought on the ninth cause of action for Breach of the Implied Covenant of Good Faith and Fair Dealing, 0r recovery for punitive damages, and, accordingly, the above- quoted portions 0f the SAC are improper and should be stricken. This motion isbased on this Notice of Motion, the attached Memorandum 0f Points and Authorities in support thereof, the Declaration of Kristine N. Ulrich filed concurrently herewith, allofthe pleadings, files, and records in this proceeding, allother matters of which NNNNNNNNNv—AHr—It—‘Hr—Ap—IHr—Ap—A the Court may take judicial notice, and any argument or evidence that may be presented t0 0r considered by the Court prior to itsruling. OOQQUl-bUDND—‘OOOOQQUI-PUJNHO DATED: March 9, 2020 HAGER & DOWLING By; KR‘IS N. ULRICH Atto eys for Defendants Mercury Casualty Company, California Automobile Insurance Company and Mercury Insurance Services, LLC 5 DEFENDANTS' NOTICE OF MOTION AND MOTION TO STRIKE PORTIONS OF PLAINTIFFS' SECOND AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES TABLE OF CONTENTS Page MEMORANDUM OF POINTS AND AUTHORITIES 9 ....................................................... I. INTRODUCTION 9 ...................................................................................................... II. FACTUAL BACKGROUND 9 .................................................................................... III. SUMMARY OF ARGUMENT \OOONQUI-PUJNH 11 ................................................................................ IV. LEGAL BASIS FOR MOTION TO STRIKE 11 .......................................................... V. ARGUMENT 13 ............................................................................................................ A. THE CLASS ALLEGATIONS SHOULD BE STRICKEN 13 ......................... 1. Plaintiffs Fail to Satisfy the Typicality Requirement ......................... 13 2. The Class Definitions are Overbroad and There is No 14 Ascertainable Class ............................................................................ 3. The Duplicative Subclasses Do Not Satisfy the Commonality Requirement 1 6 ....................................................................................... B. THE DAMAGES AND RELIEF SOUGHT ON THE UCL CAUSES OF ACTION SHOULD BE STRICKEN 18 ...................................................... 1. Claims Arising Under the UCL are Equitable in Nature and Recovery is Limited to Injunctive Relief and Restitution .................. 18 C. THE PRAYER FOR PUNITIVE NNNNNNNNNv—tt—tt—ti—tt—tt—ti—tt—tt—tv—t DAMAGES SHOULD BE STRICKEN .................................................................................................... 19 1. Plaintiffs Failed t0 Plead Sufficient Facts to Justify an Award 0f Punitive Damages 19 .......................................................................... D. THE PRAYER FOR PREJUDGMENT INTEREST ON OOQONM-PUJNHOKOOONQUI#UJNHO PLAINTIFFS' INDIVIDUAL BAD FAITH CLAIM SHOULD BE STRICKEN .................................................................................................... 23 1. Prejudgment Interest under Civil Code § 3291 is Unavailable in Insurance Bad-Faith Actions .......................................................... 23 VI. MOVING PARTY HAS MET AND CONFERRED IN ADVANCE OF FILING THIS MOTION TO STRIKE 23 ..................................................................... VII. CONCLUSION 23 ........................................................................................................ 6 DEFENDANTS’ NOTICE OF MOTION AND MOTION TO STRIKE PORTIONS OF PLAINTIFFS' SECOND AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES TABLE OF AUTHORITIES flgg M Bank offhe West (1992) 2 Cal.4th 1254, 1266.)(In re Tobacco II Cases (2009) 46 Cal.4th 298 ................................................................................................................ 19 \OOONQUI-PUJNH Canon U.S.A., Inc. v. Superior Court (1998) 68 Cal.App.4th 12 1 .......................................... Caro v. Procter & Gamble C0., (1993) 18 Cal.App.4th 644 13 .............................................. College Hospital Inc. v. Superior Court (1994) 34 Cal.App.4d 704 ................................... 21 Committee 0n Children's Television, Inc. v. General Foods Corp. (1983) 35 Cal.App.3d 197 ......................................................................................................... 22 CVS Pharmacy, Inc. v. Sup. Ct. (Deluca), (2015) 241 Cal.4th 300 13 .................................... Financial Corp. ofAmerica v. Wilbum (1987) 189 Cal.App.3d 764 ..................................12 First American Title Ins. C0. v. Superior Court (2007) 146 Cal.App.4th 1564 13 ................. Grieves v. Superior Court (1984) 157 Ca1.App.3d 159 12 ...................................................... Kennedy v. Baxter Healthcare Corp, (1996) 43 Ca1.App.4th 799 13 ..................................... Kennedy v. Baxter Healthcare Corp, 43 Cal. App 4th 799 ................................................ 16 Korea Supply C0. v. Lockheed Martin NNNNNNNNNv—tt—tt—ti—tt—tt—ti—tt—tt—tv—t Corp. (2003) 29 Cal.4th 1134 ................................ 18 Neal v. Farmers Ins. Exchange (1978) 21 Cal.App.3d 910 20 ................................................ Newell v. State Farm Gen. Ins. C0,, (2004) 118 Cal.App.4th 1094 .............................. 13, 16 Ortega v. Topa Ins. OOQONM-PUJNHOKOOONQUI#UJNHO C0. (2012) 206 Cal.App.4th 463 12 ......................................................... Patrick v. Maryland Casually C0., (1990) 217 Cal.App3d 1566 ........................................ 20 Schroeder v. Auto Driveway C0. (1974) 11 Cal.App.3d 908 22 .............................................. Schwartz v. Provident Life & Accident Ins. C0. (2013) 216 Cal.App.4th 607 .................... 18 Sevidal v. Target Corp. (2010) 189 Cal.App.4th 905 14 ......................................................... Stevens v. Superior Court (1986) Ca1.App.3d 605, 21 ............................................................. Tarmann v. State Farm Mut. Auto. Ins. C0. (1991) 2 Cal.App.4d 153 22 ............................... Thampson v.Auto Club ofS. Cal, (2013) 217 Cal.App.4th 719 14 ........................................ Tomaselli v. Transamerica Ins. C0., (1994) 25 Cal.App.4d 1269 20 ...................................... 7 DEFENDANTS’ NOTICE OF MOTION AND MOTION TO STRIKE PORTIONS OF PLAINTIFFS' SECOND AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES Turman v. Turning Point ofCentral Calif, Inc. (2010) 191 Cal.App.4th 53 12 ..................... Walnut Producers ofCal. v. Diamond Foods, Inc. (2010) 187 Cal.App.4th 634 ............... 12 Wilhelm v. Pray, Price, Williams & Russel (1986) 186 Ca1.App.3d 1324 .......................... 22 STATUTES Bus. & Prof. \OOONQUI-PUJNH Code § 17204 .................................................................................................. 13 Business & Professions Code § 17200 2, 5, 9 .......................................................................... C.C.R. § 2695.9 10 ................................................................................................................... CiV. Code § 3291 23 ................................................................................................................. Code CiV. Proc., § 431.10 .................................................................................................... 12 Code CiV. Proc., § 435 ......................................................................................................... 12 Code 0f Civil Procedure § 436 12 ............................................................................................ Ins. Code § 2051.5 10, 22 ......................................................................................................... Ins. Code §§ 2051, 2051.1, and 790.03 10 ............................................................................... Insurance Code § 2051.5 21 ..................................................................................................... NNNNNNNNNv—tt—tt—ti—tt—tt—ti—tt—tt—tv—t OOQONM-PUJNHOKOOONQUI#UJNHO 8 DEFENDANTS’ NOTICE OF MOTION AND MOTION TO STRIKE PORTIONS OF PLAINTIFFS' SECOND AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION Plaintiffs Donna Marie Meschi and Vincent Meschi (collectively, "Plaintiffs"), 011 behalf 0f a \OOONQUI-PUJNH putative class of policy holders, have filed their Second Amended Complaint ("SAC") against Defendants Mercury Casualty Company ("MCC"), California Automobile Insurance Company ("CAIC"), and Mercury Insurance Services, LLC ("MIS") (collectively, "Defendants") alleging three causes 0f action for Declaratory Relief, two causes of action for Breach 0f Contract relating t0 the adjustment and payment 0f contents claims, and three causes 0f action for Violation of California's Unfair Competition Law ("UCL") as set forth in Business & Professions Code § 17200, et seq. Curiously, Plaintiffs also maintain their single individual claim for Breach of the Implied Covenant 0f Good Faith and Fair Dealing ("Bad Faith"). II. FACTUAL BACKGROUND Plaintiffs were issued a policy of insurance by MCC, (“Policy”). (SAC, p. 27, 1]83, NNNNNNNNNv—tt—tt—ti—tt—tt—ti—tt—tt—tv—t lines 2-4.) The Policy contains a section entitled "CONDITIONS," one 0f which such conditions states: "7. Suit Against Us. No action shall be brought unless there has been compliance With policy provisions and the action is started within one year after the loss or OOQONM-PUJNHOKOOONQUI#UJNHO damage." (SAC, Exhibit A, Policy Provisions, p. 16, Condition 7.) The SAC alleges that 0n or about June 25, 2015, Plaintiffs' dwelling, property and its contents insured under the Policy were damaged by fire. (Ibid, 1] 84, lines 5-8.) Plaintiffs "promptly made a claim" to MCC ("Claim"). (Ibid, line 6.) Plaintiffs allege their claim was settled in accordance with "illegal practices" (Ibid, p. 27, 1]86, line 15) identified in the SAC as: a) calculating and deducting depreciation from actual cash payments to Plaintiffs based not solely on the condition 0f the contents, but rather entirely 0r in part based 0n the age 0f the contents — allegedly in Violation of Ins. Code § 2051" (Ibid, 1]86(a), lines 16-19); b) paying Plaintiffs' replacement cost claim for contents based 0n the lesser of the RCV estimate 0r the actual 9 DEFENDANTS’ NOTICE OF MOTION AND MOTION TO STRIKE PORTIONS OF PLAINTIFFS' SECOND AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES cost of repair — allegedly in Violation 0f Ins. Code § 2051.5 (Ibid, 86(b), lines 20-21); c) 1] misrepresenting and concealing Plaintiffs' rights — allegedly in Violation 0f Ins. Code §§ 2051, 2051.1, and 790.03(h); and 10 C.C.R. § 2695.4 (Ibid, 1] 86(0), lines 22-23); and d) failing to communicate justification for depreciation calculations t0 Plaintiffs — allegedly in Violation of 10 C.C.R. § 2695.9(f). (Ibid, 1] 86(d), lines 24-26.) \OOONQUI-PUJNH The SAC alleges every person Plaintiffs spoke With about their Claim "represented him or herself as working for "Mercury" 0r "Mercury Insurance” (Ibid, p. 5, 1] 18, lines 17-18) but was "in fact employed by MIS" (Ibid, lines 19-20) and "MIS employees, supervisors, and managers were solely responsible for accepting, investigating, and adjusting [Plaintiffs'] claims." (Ibid, lines 11-12.) The SAC alleges Plaintiffs have never "spoken with or communicated in writing with any employee 0f either MCC or CAIC" (Ibid, lines 15-16), "[n]0 employee, manager, 0r supervisor 0f MCC 0r CAIC accepted, investigated 0r adjusted [Plaintiffs'] property claims." (Ibid, lines 13-14.) Based on these allegations, Plaintiffs purport t0 represent a class 0f "California residents insured under a CAIC or MCC property policy from November 29, 2012 t0 the time of trial in this action," (Ibid, p. 3, 1]9, lines 4-6; "Declarative Relief Class") and two NNNNNNNNNv—tt—tt—ti—tt—tt—ti—tt—tt—tv—t subclasses 0f policyholders, "ACV Claims Class" ("ACV Subclass") and "Replacement Cost Claims Class" ("RCV Subclass")(collectively, "Subclasses.) (Ibid, p. 3, 1] 10(a), line 8 and 1]10(b), line 14. Both subclasses are identically defined as "California residents OOQONM-PUJNHOKOOONQUI#UJNHO insured under a CAIC 0r MCC property policy Who received a first party settlement, 0r offer for settlement, 0f a personal property claim that was adjusted by MIS 0n an actual cash basis, for less than the applicable policy limits, which claims were open between November 29, 2012, and the time 0f trial 0f this action." (SAC, p. 3, 1]10(a)—(b), lines 9- 19.) Plaintiffs also seek to represent "Plaintiffs ROES 1-10," ("ROE Plaintiffs") who "made a claim for repair or replacement of contents under a property policy issued by CAIC." (Ibid, p. 2, 1] 6, lines 18-20.) Plaintiffs, on behalf 0f the Declarative Relief Class, and the Subclasses assert against MCC, CAIC and MIS three causes 0f action for Declaratory Relief (SAC, pp. 32- 1 0 DEFENDANTS’ NOTICE OF MOTION AND MOTION TO STRIKE PORTIONS OF PLAINTIFFS' SECOND AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES 34, W 104-124[sic], Causes 0f Action One — Three), two causes of action for Breach of Contract (SAC, pp. 35-37, W 125-138[sic], Causes of Action Four - Five; previously Causes 0f Action Seven — Eight in the First Amended Complain ("FAC")), and three causes 0f action for Violation of the UCL relating to the adjustment and payment of contents claims. (SAC, pp. 37-44, 1H] 139-205[sic], Causes of Action SiX-Eight; previously \OOONQUI-PUJNH Causes 0f Action Four — Six in the FAC.) Curiously, Plaintiffs maintain their individual claim for Breach 0f the Implied Covenant of Good Faith and Fair Dealing ("Bad Faith") against MCC and MIS. (SAC, pp.63-47, W 63-71[sic], Ninth Cause 0f Action .) III. SUMMARY OF ARGUMENT Despite the additional twenty (20) pages 0f allegations added t0 the SAC, 0n its face, the SAC still suffers from a number 0f pleading deficiencies. First, Plaintiffs' class and subclass allegations fail t0 allege adequate facts t0 permit this case t0 proceed as a class action as presently defined. Second, Plaintiffs still seek impermissible damages and relief under the three UCL claims in the disguise of UCL restitution. Plaintiffs also fail to allege NNNNNNNNNv—tt—tt—ti—tt—tt—ti—tt—tt—tv—t adequate facts supporting recovery for punitive damages. Finally, on their individual Bad Faith claim, Plaintiffs seek prejudgment interest, Which isunavailable in insurance bad faith actions. For the reasons set forth below, Defendants jointly and severally request Plaintiffs' OOQONM-PUJNHOKOOONQUI#UJNHO class action allegations (Motion t0 Strike ["MTS"] Class Allegations, nos. 1-7) and improper prayers for relief sought on the UCL (MTS, Improper UCL Damages, nos. 8-13) and Bad Faith causes of action (MTS, Prejudgment Interest, n0. 16) be stricken from the SAC. Further, Defendants jointly and severally request Plaintiffs' prayer for punitive damages (MTS, Punitive Damages, nos. 14-15) be stricken and no evidence relating t0 punitive damages be allowed at the trial of this matter. IV.