Opinion
C082975
02-20-2018
HANK R. PRITCHARD, Plaintiff and Appellant, v. ANDY HOUGHTON INSURANCE AGENCY et al., Defendants and Respondents.
NOT TO BE PUBLISHED California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. SC RD CV-PO-15-0183082)
Plaintiff and appellant Hank R. Pritchard appeals from a judgment entered following the trial court's order sustaining a demurrer to his second amended complaint without leave to amend. In sustaining the demurrer, the trial court concluded that Pritchard's claims were time-barred by Code of Civil Procedure section 339, subdivision 1 (hereafter section 339(1)). We agree and shall affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
Pritchard owns real property located in Manton, California (the Manton property). On or about June 25, 2012, Pritchard requested insurance coverage for the replacement of said property in the event of a total loss by fire. That same day, in response to his request, defendants assured him that they were experts in the field of obtaining fire insurance coverage for rural property such as the Manton property. Pritchard obtained an insurance policy for the Manton property on or about June 25, 2012, from Andy Houghton and the Andy Houghton Insurance Agency (collectively defendants).
On August 8, 2012, a wildfire damaged the Manton property. On October 9, 2012, Pritchard received a contractor's bid of $206,521.79 to rebuild the structures on his property that were damaged or destroyed. The same day, Pritchard discovered the policy limit for the insurance he obtained from defendants was only $172,800.
In his first amended complaint, Pritchard alleged he discovered "his policy limits for both his real and personal property coverages were far too low" on October 9, 2012. He omitted this allegation from the second amended complaint. However, one cannot amend his or her complaint to omit a previously pleaded allegation simply to avoid a demurrer. (See Berg & Berg Enterprises, LLC v. Boyle (2009) 178 Cal.App.4th 1020, 1034.)
On August 20, 2015, approximately three years after the wildfire, Pritchard filed his original complaint. On December 1, 2015, Pritchard filed his first amended complaint, to which defendants demurred. The trial court sustained defendants' demurrer with leave to amend. On June 3, 2016, Pritchard filed a second amended complaint, which is the operative complaint for our purposes. In it, he asserted causes of action for breach of fiduciary duty and financial elder abuse. He claimed he "entrusted [d]efendants with the task of obtaining . . . insurance coverage that would completely pay for the replacement of all of the subject property in the event of destruction by fire" but that the "policy was inadequate to completely replace the destroyed or damaged structures on the subject property." Therefore, he alleges defendants are liable for the difference.
Defendants demurred to the second amended complaint, arguing, inter alia, that Pritchard's causes of action were time-barred by section 339(1) and that he did not state facts sufficient to support the causes of action. The trial court sustained defendants' demurrer to the second amended complaint without leave to amend. In its tentative ruling, the trial court found the gravamen of both the breach of fiduciary duty claim and the financial elder abuse claim was professional negligence. Thus, it found both causes of action were barred by the statute of limitations set forth in section 339(1).
Because Pritchard did not designate the trial court's tentative ruling on the demurrer to the second amended complaint, it was not included in the record on appeal. We augment the record on our own motion to include the tentative ruling. (Cal. Rules of Court, rule 8.155(a)(1)(A).)
DISCUSSION
Pritchard contends the trial court improperly sustained the demurrer to his second amended complaint without leave to amend. He does not dispute that the applicable statute of limitations for a cause of action sounding in professional negligence is two years as set forth in section 339(1). (Hydro-Mill Co., Inc. v. Hayward, Tilton and Rolapp Ins. Associates, Inc. (2004) 115 Cal.App.4th 1145, 1159 (Hydro-Mill); see Thomson v. Canyon (2011) 198 Cal.App.4th 594, 606 (Thomson).) Rather, he contends the trial court mischaracterized his lawsuit as being one for professional negligence. We conclude the trial court did not err in sustaining the demurrer to Pritchard's complaint without leave to amend because the gravamen of both of Pritchard's claims is for professional negligence.
Section 339(1) provides for a two-year statute of limitations for "[a]n action upon a contract, obligation or liability not founded upon an instrument of writing, except as provided in . . . subdivision 2 of Section 337 of this code; . . ."
1.0 Legal Principles
Since this is an appeal following an order sustaining a demurrer, we accept the truth of all well-pleaded factual allegations of the subject complaint. (Shoemaker v. Myers (1990) 52 Cal.3d 1, 7; Fuller v. First Franklin Financial Corporation (2013) 216 Cal.App.4th 955, 959 (Fuller).) However, we do not assume the truth of contentions, deductions, or conclusions of law. (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 967.)
A complaint disclosing on its face that the limitations period has expired in connection with one or more counts is subject to demurrer. (Fuller, supra, 216 Cal.App.4th at p. 962.) The gravamen of the complaint, not the cause of action pleaded, determines the applicable statute of limitations. (Hensler v. City of Glendale (1994) 8 Cal.4th 1, 22; City of Vista v. Robert Thomas Securities, Inc. (2000) 84 Cal.App.4th 882, 889.) We look to the operative complaint as a whole to determine the gravamen of Pritchard's claims. (See PGA West Residential Association, Inc. v. Hulven International, Inc. (2017) 14 Cal.App.5th 156, 172.) For, "a plaintiff is not permitted to evade a statute of limitations by artful pleading that labels a cause of action one thing while actually stating another." (Thomson, supra, 198 Cal.App.4th at p. 606.)
2.0 The Gravamen of the Complaint Is Professional Negligence
On appeal, we are called upon to determine whether Pritchard's claims for breach of fiduciary duty and financial elder abuse as alleged in the second amended complaint sound in professional negligence. We conclude that Pritchard's allegations under the guise of causes of action for breach of fiduciary duty and financial elder abuse actually amounted to professional negligence, subject to the two-year statute of limitations under section 339(1). We address each nominal cause of action in turn to explain our conclusion.
2.1 Breach of Fiduciary Duty
Pritchard pursued his action against defendants on the theory they owed him a fiduciary duty of care as his insurance broker to procure adequate coverage for his Manton property. We conclude that this claim sounds in professional negligence, regardless whether defendants assumed additional duties. Accordingly, section 339(1) renders the cause of action untimely.
"The duty of a broker, by and large, is to use reasonable care, diligence, and judgment in procuring the insurance requested by its client." (Kotlar v. Hartford Fire Ins. Co. (2000) 83 Cal.App.4th 1116, 1123.) A broker who intentionally or negligently fails to procure insurance as requested will be liable to the client in tort for the resulting damages. (AMCO Ins. Co. v. All Solutions Ins. Agency, LLC (2016) 244 Cal.App.4th 883, 890; Butcher v. Truck Ins. Exchange (2000) 77 Cal.App.4th 1442, 1461; Nowlon v. Koram Ins. Center, Inc. (1991) 1 Cal.App.4th 1437, 1447.) Additionally, an " 'agent who assumes additional duties, by holding herself [or himself] out as having expertise in the insurance being sought by the insured, "may be liable to the insured for losses which resulted as a breach of that special duty." ' " (Travelers Property Casualty Co. of America v. Superior Court (2013) 215 Cal.App.4th 561, 578-579.)
Here, Pritchard's claim is predicated on defendants' failure to procure the specific type of coverage he requested, leaving Pritchard to pay the difference upon discovering that his loss arising from the fire destruction would not be fully covered. Hydro-Mill, supra, 115 Cal.App.4th 1145 supports the conclusion that the gravamen of such a claim sounds in professional negligence. In Hydro-Mill, the plaintiff corporation requested that its insurance broker procure earthquake coverage for its three manufacturing facilities at different locations. (Id. at p. 1149.) However, the broker failed to obtain coverage for two of the three facilities. (Ibid.) When the corporation suffered losses not covered by insurance, it alleged a cause of action against the broker for breach of fiduciary duty. (Id. at p. 1156.) Hydro-Mill concluded that the insurer-insured relationship is not a true fiduciary relationship, and therefore the cause of action for breach of fiduciary duty, regardless of its labeling in the complaint, amounted to professional negligence because the insurance broker failed to "execute its obligations as an insurance broker." (Id. at pp. 1159-1160.) Similarly, Pritchard's claim is based on the insurance broker's failure to execute its obligations in procuring insurance coverage for him. This claim sounds in negligence, and Pritchard cannot evade the applicable statute of limitations by putting another label on the cause of action. (Ibid.) Consequently, the applicable statute of limitations period is two years. (§ 339(1).)
This conclusion is not altered by Pritchard's allegation that defendants assured him "they were experts in the field of obtaining fire insurance coverage" in response to his "specific request for a policy that would reimburse him fully" in case of a total loss by fire. While these facts, if true, would establish that defendants assumed an additional duty, the liability for this cause of action is still derived from a negligence theory, namely, the failure to procure the requested insurance coverage. "[O]ther than when handling an insured's money, a broker's duty—whether or not phrased as a fiduciary duty—is no greater than the duty to use reasonable care and diligence in procuring insurance." (Mark Tanner Construction, Inc. v. HUB International Insurance Services, Inc. (2014) 224 Cal.App.4th 574, 586 (Mark Tanner).) Pritchard has provided us no authority that any fiduciary duty owed by an insurance broker would extend to areas beyond the duty to use reasonable care and diligence in the procuring of insurance at the insured's request, and we have found none. (Id. at p. 588.)
We additionally reject Pritchard's argument based on Eddy v. Sharp (1988) 199 Cal.App.3d 858 (Eddy) that California recognizes a fiduciary duty between an insurance broker and the insured. Eddy states in dicta that "[w]here the agency relationship exists there is not only a fiduciary duty but an obligation to use due care." (Id. at p. 865.) Courts have rejected similar arguments based on this language in Eddy. (See Mark Tanner, supra, 224 Cal.App.4th at p. 585; see also Hydro-Mill, supra, 115 Cal.App.4th at p. 1158.) Pritchard also cites Westrec Marina Management, Inc., v. Jardine Ins. Brokers Orange County, Inc. (2000) 85 Cal.App.4th 1042 to demonstrate brokers can be liable for breach of fiduciary duty. However, Prichard's reliance on Westrec is misguided. Westrec did not consider whether a duty beyond reasonable care and diligence in procuring insurance exists. An opinion is not authority for a proposition not considered. (Cicairos v. Summit Logistics, Inc. (2005) 133 Cal.App.4th 949, 957.)
Thus, we conclude the gravamen of Pritchard's cause of action labeled as breach of fiduciary duty is professional negligence, making the applicable statute of limitations two years. (§ 339, subd. (1).) As Pritchard sustained damage no later than October 9, 2012, the latest he could have filed this lawsuit was October 9, 2014. Accordingly, Pritchard's action was not filed within the applicable statute of limitations period.
2.2 Financial Elder Abuse
Pritchard also argues he adequately alleged a viable cause of action for financial elder abuse separate from professional negligence. We disagree.
Financial elder abuse "occurs when a person or entity does any of the following: (1) [t]akes, secretes, appropriates, obtains, or retains real or personal property of an elder . . . for a wrongful use or with intent to defraud, or both[;] [¶] (2) [a]ssists in taking, secreting, appropriating, obtaining, or retaining real or personal property of an elder . . . for a wrongful use or with intent to defraud, or both[; or] [¶] (3) [t]akes, secretes, appropriates, obtains, or retains, or assists in taking, secreting, appropriating, obtaining, or retaining, real or personal property of an elder . . . by undue influence . . . ." (Welf. & Inst. Code, § 15610.30, subd. (a)(1)-(3).) Liability for elder abuse may be imposed, even in the absence of an intent to defraud, "if it can be shown that the person took the property for a wrongful use and 'knew or should have known that [his or her] conduct is likely to be harmful to the elder . . . .' " (Bonfigli v. Strachan (2011) 192 Cal.App.4th 1302, 1315.)
Here, as part of his cause of action entitled financial elder abuse, Pritchard alleges defendants knew that wrongfully taking Pritchard's money would cause him to suffer harm in that he would not have sufficient insurance proceeds to completely rebuild his property. However, Pritchard does not explain how defendants' procurement of inadequate insurance coverage demonstrates "wrongful use." Nothing in the record indicates that the premiums Pritchard paid were used for anything other than towards insuring the Manton property. And, we decline to find that merely procuring inadequate insurance coverage constitutes a "wrongful use" of the funds for purposes of an elder abuse claim. Moreover, we find Pritchard's allegations in this regard lack particularity as to how defendants defrauded Pritchard of the premiums.
That Pritchard did not have adequate coverage may be a type of damage; but this damage arose from a breach of the limited duty that insurance brokers owe in providing the specified amount of coverage. Accordingly, we disregard Pritchard's labeling and instead conclude the gravamen of this claim, like the gravamen of his fiduciary duty claim, is professional negligence. Thus, a viable claim of negligence became available to Pritchard when he discovered the inadequate policy limit in October 2012, triggering the two-year statute of limitations of section 339(1). (See Desai v. Farmers Ins. Exchange (1996) 47 Cal.App.4th 1110, 1119-1120 [a broker's failure to obtain the type of insurance requested by an insured constitutes actionable negligence].) Therefore, Pritchard's claim was untimely filed, and the trial court did not err in sustaining the demurrer to his second amended complaint without leave to amend.
DISPOSITION
The judgment is affirmed. Defendants are entitled to their costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1), (2).)
BUTZ, J. We concur: ROBIE, Acting P. J. MAURO, J.