Reichert v. General Ins. Co. of America
| Decision Date | 28 September 1966 |
| Court | California Court of Appeals Court of Appeals |
| Parties | Ronald O. REICHERT, Plaintiff and Appellant, v. GENERAL INSURANCE COMPANY OF AMERICA, Industrial Indemnity Company, Insurance Company of North America, and National Union Fire Insurance Company, Defendants and Respondents. Civ. 606. |
Plaintiff appeals from a judgment of dismissal after the court sustained demurrers to the second amended complaint without leave to amend. Plaintiff sued for $1,500,000, besides $5,000,000 punitive damages in an action initiated as the result of a fire followed by a foreclosure and bankruptcy in connection with the Bakersfield Inn (said to have been the first motel in North America).
The original complaint denominated "Complaint for Fraud and Conspiracy to Defraud" was filed by the plaintiff on December 11, 1964. It contained a single cause of action which alleged that four of the defendants had issued insurance policies covering fire damage to the Inn bought from defendant American National Insurance Company by the plaintiff on February 1, 1964. It was alleged that the plaintiff spent the approximate sum of $500,000 as part payment of the purchase price and for improvements, repairs and renovations, and that the property was of the value of $1,500,000 as of the date of purchase. At that time, plaintiff secured by assignment insurance policies then in full force and effect by the payment of the following premiums:
1) Industrial Indemnity Company, premium $7,184.60 for full replacement coverage in the sum of $280,000.
2) Insurance Company of North America, premium $4,370.20, full replacement coverage $240,000.
3) National Union Fire Insurance Company, premium $12,316.50, full replacement coverage $480,000.
4) General Insurance Company of America, premium $7,859.15, full replacement coverage $375,000.
It was thus stated that the total premium paid on all policies was $31,730.55, and that the total coverage on the structures and contents was $1,375,000.
A fire occurred on the premises on the 19th day of February, 1964, causing damage to part of the buildings and their contents; due notice was given to the insurance carriers of a loss in excess of $424,000, but the defendant American National Insurance Company, the holder of the first deed of trust for $850,000" * * * acting in concert with the other defendants with the intent and purpose of causing plaintiff to lose his equity in the Bakersfield Inn" allegedly caused such other defendants to refuse to recognize plaintiff's claim promptly and to cooperate to save the property; it was claimed the plaintiff was thereby caused to lose possession of the Inn, and that, as a consequent victim of his creditors, " * * * plaintiff was adjudicated [an involuntary] bankrupt on July 24, 1964."
Paragraph VIII of the first complaint alleges that at the time of purchase of the Inn the defendant insurance carriers and the defendant American National Insurance Company, through their agent, Wallace Moir Company, " * * * offered to and did sell, transfer and assign to plaintiff the insurance policies set forth above," and assured plaintiff that they "would give plaintiff all of the coverage and protection he needed." "That in order to induce plaintiff to enter into said contracts, and * * * to purchase the property and [take over] the policies, the defendants and their agent, their employees and representatives, orally and in writing, represented to plaintiff, that the defendants, and each of them, would stand behind and indemnify plaintiff from any damage or loss arising from fire or explosion to the extent of policy limits." The paragraph continues:
The pleading alleges that the representations made by defendants were false and fraudulent, and made pursuant to a conspiracy to defraud the plaintiff and to induce him to purchase the property and the policies of insurance, but that the said representations were false and fraudulent in that the defendants did not intend promptly and fairly to indemnify the plaintiff in case of fire, or to make a prompt and forthright payment for loss by fire, or promptly to settle and adjust any loss.
The pleading further states that if the representations had been true plaintiff's loss would have been fairly and promptly settled and plaintiff would not have lost the property nor would he have been forced into bankruptcy; "[t]hat as a direct and proximate result of said fraud and misrepresentations on the part of the defendants, and each of them, plaintiff has been deprived of and caused to lose a property reasonably worth $1,500,000.00 all to his actual damage in that sum"; that what was done by defendants was done maliciously and oppressively and in wanton disregard of plaintiff's rights, and that by reason thereof, plaintiff has been damaged in the further sum of $5,000,000 as penal damages.
The respondents' demurrers to the complaint were sustained but leave to amend was granted.
At this point in the litigation, the action was dismissed by stipulation as to American National Insurance Company.
A first amended complaint containing eight counts for money had and received and for fraudulent failure to adjust the fire loss promptly was filed by the plaintiff against the remaining defendants and again demurrers were interposed by all of the respondents and sustained. The court, however, gave plaintiff leave to amend a second time in response to the request of his counsel that he be allowed to put his pleading in what he should consider to be optimum shape. The second amended complaint realleged the eight counts and added a ninth cause of action for "bad faith" in which the alleged failure of all the respondents " * * * to exercise the highest degree, or an ordinary degree, of good faith, care, skill, or diligence for the protection of plaintiff's rights * * * " was set forth; actual damages of $1,500,000 and punitive damages of $5,000,000 were prayed for.
Again the respondents filed demurrers to the second amended complaint, accompanied by motions to strike, which latter were never ruled upon; the demurrers were argued and were sustained without leave to amend, " * * * on the grounds that (1) the complaint, and each and every cause of action thereof, does not state facts sufficient to constitute a cause of action against said defendants or any of them, and (2) the complaint and each and every cause of action thereof does not state facts sufficient to constitute a cause of action in plaintiff against said defendants or any of them."
The trial court's memorandum with respect to its rulings states that the first, second, third and fourth causes of action of the second amended complaint are common counts seeking the return of insurance premiums for the various fire policies which form the bases for the causes of action set forth in the fifth, sixth, seventh, eighth and ninth causes of action, saying that these common counts are "in truth, in fact reliant upon the factual allegations contained in the other causes of action, and that they should stand or fall with actions in which the facts are specifically pleaded." The court cites the applicable cases of Fruns v. Albertsworth, 71 Cal.App.2d 318, 321, 162 P.2d 666, and Orloff v. Metropolitan Trust Company, 17 Cal.2d 484, 489, 110 P.2d 396, in support of this ruling and no opposition to this conclusion is expressed in appellant's brief.
The memorandum says further that each of the fifth to ninth causes of action contains by direct allegation or by reference paragraph V of the fifth cause of action, which states that the plaintiff was adjudicated a bankrupt, and comments that those causes of action, if any, arise out of alleged breach of contract of the various policies of insurance, and, that they consequently passed to the trustee in bankruptcy. The court holds that each cause of action is " * * * contractual in origin and specifically within the terms of Section 70 of the Bankruptcy Act," and that even if these claims were considered to be ex delicto section 688.1 of the Code of Civil Procedure grants a creditor a lien upon a cause of action of such a nature, and has made such rights of action "subject to attachment, execution, garnishment, sequestration, or other judicial process and, therefore, within the meaning of Section 70, [subdivision] a(5) of the Bankruptcy Act."
The court also expressed its opinion that the plaintiff did not allege in those causes of action any damage for breach of contract.
Appellant first asserts, as a ground for reversal, that his oral motion to disqualify Judge Borton made just prior to the argument of the demurrers to the second amended complaint should have been granted. The appellant also purports to appeal separately "from a denial by the trial court of plaintiff's motion under CCP 170 [subdivision] 4, and the refusal of the trial judge to disqualify himself after motion by plaintiff under section 170 [subdivision] 4 of the California Code of Civil Procedure," but as...
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