Opinion
B323726
09-26-2023
PIH HEALTH HOSPITAL-WHITTIER et al., Plaintiffs and Appellants, v. CIGNA HEALTHCARE OF CALIFORNIA, INC., et al., Defendants and Respondents.
Payne &Fears, C. Darryl Cordero, Damon Rubin, and Scott O. Luskin, for Plaintiffs and Appellants. Hinshaw &Culbertson, Robert C. Bohner and Robert R. Pohls, for Defendants and Respondents.
NOT TO BE PUBLISHED
APPEAL from orders of the Superior Court of Los Angeles County, No. 22NWCV00410 Olivia Rosales, Judge. Reversed and remanded, with directions.
Payne &Fears, C. Darryl Cordero, Damon Rubin, and Scott O. Luskin, for Plaintiffs and Appellants.
Hinshaw &Culbertson, Robert C. Bohner and Robert R. Pohls, for Defendants and Respondents.
MORI, J.
Plaintiffs and appellants PIH Health Hospital-Whittier (PIH Whittier) and PIH Health Hospital-Downey (PIH Downey) (collectively, PIH), and their trial counsel, Payne &Fears and Damon Rubin (collectively, trial counsel), appeal from trial court orders in favor of defendants and respondents Cigna Healthcare of California, Inc. (Cigna Healthcare), Cigna Health and Life Insurance Company (Cigna Life), and Connecticut General Life Insurance Company (Connecticut General) (collectively, Cigna). The orders (1) sustained Cigna's special demurrer to PIH's complaint on the basis "another action [was] pending between the same parties on the same cause of action" (Code Civ. Proc., § 430.10, subd. (c)), (2) held this action in abatement pending final determination in the prior lawsuit, and (3) imposed monetary sanctions against PIH and trial counsel for filing the complaint for an improper purpose (§ 128.7).
Unspecified statutory references are to the Code of Civil Procedure.
On appeal, PIH and its trial counsel contend the trial court erred in sustaining Cigna's demurrer and granting Cigna's motion for sanctions. We agree and reverse both orders.
FACTUAL AND PROCEDURAL BACKGROUND
A. The Prior Action (Cigna I)
1. The Complaint
PIH Whittier and PIH Downey are hospitals. Cigna California is a health care service plan, and Cigna Life and Connecticut General are health insurers. On November 20, 2020, PIH filed a complaint against Cigna for the failure to pay PIH for emergency medical services it provided to hundreds of Cigna- insured patients between January 2, 2018, and September 30, 2020.
In the complaint, PIH identified three contracts it had with Cigna for the payment of claims, which had been extended over the years but terminated around August 2019. PIH alleged that despite their termination, the contracts set forth payment conditions for post-termination claims. PIH also alleged Cigna was subject to the Knox-Keene Health Care Service Plan Act of 1975 (Health &Saf. Code, § 1340 et seq.), which regulates payments of claims made by non-contracted healthcare providers. PIH asserted that, despite Cigna's duties to pay PIH for services provided to Cigna-insured patients, Cigna refused to fully pay PIH billed charges for post-termination emergency services, which varied "widely for the claims at issue," and Cigna failed to dispute PIH's claims as prescribed by law. The complaint asserted 10 causes of action and alleged a total of $11,125,630 in compensatory damages.
The first contract between PIH Whittier and Cigna Healthcare was a health maintenance organization (HMO) agreement. The second contract was a preferred provider (PPO) agreement between PIH Whittier and Connecticut General. The third contract between PIH Downey and Cigna Healthcare, Cigna Life, and Connecticut General, was an HMO/PPO agreement.
The first three causes of action alleged breaches of each written contract between PIH and Cigna. In each cause of action, PIH alleged Cigna had underpaid PIH Whittier and PIH Downey on claims covered by a particular contract during a particular period. The first cause of action sought $1,495,465 in damages reflecting underpayment of claims for 84 Cigna-insured patients treated between March 18, 2019, and June 15, 2020. The second cause of action sought $479,816 for underpaid claims related to 20 Cigna-insured patients treated between January 2, 2018, and January 7, 2020. The third cause of action sought $45,317 in damages for underpaid claims submitted on seven Cigna-insured patients treated between April 26, 2019, and August 15, 2019.
The fourth, fifth, sixth, and seventh causes of action for breaches of implied contract and services rendered also sought compensatory damages for the underpayment of claims by Cigna, but for a different set of patient claims PIH submitted for Cigna-insured patients who received treatment between August 1, 2019, and September 30, 2020.
In the eighth cause of action, PIH alleged Cigna intentionally failed to pay for services rendered in violation of its duty to do so under the Knox-Keene Health Care Service Plan Act of 1975. PIH did not allege dates on which Cigna violated this duty, but sought damages in an amount "not less than $9,105,030." The ninth and tenth causes of action for violating section 17200 of the Business and Professions Code (hereinafter section 17200) alleged Cigna had systematically failed to pay, underpaid, or delayed payment to PIH, and Cigna failed to provide "the specific basis for denying all or part of the claims at issue in this lawsuit...."
2. PIH's Motion for Leave to File an Amended Complaint and Cigna's Prior Appeal
Approximately one year after PIH filed the operative complaint, Cigna filed a petition to compel arbitration, and the trial court denied it on February 4, 2022. On April 1, 2022, PIH filed a motion for leave to file a first amended complaint (FAC). Four days later, on April 5, 2022, Cigna filed a notice of appeal from the order denying its petition to compel arbitration. In light of the pending appeal, the parties stipulated to an order staying the case.
This court recently affirmed the order denying Cigna's petition to compel arbitration. (PIH Health Hospital-Whittier v. Cigna Healthcare of California, Inc. (Mar. 22, 2023, B320294) [nonpub. opn.].)
Due to the stay of the case, PIH's motion for leave to amend was not ruled upon. In its motion, PIH requested leave to add three causes of action-injurious falsehood, fraud, and violations of section 17200-for false and misleading Explanations of Benefits (EOBs) and Explanations of Payments (EOPs) Cigna Life and Connecticut General sent to Cigna-insured patients and PIH "in connection with the claims at issue in this lawsuit." The proposed FAC, attached as an exhibit, alleged the same factual predicate as the operative complaint, covering the same periods of treatment.
B. The Instant Action (Cigna II)
1. The Complaint
On May 25, 2022, PIH filed a complaint in this action (Cigna II) and a notice of related cases in Cigna I and II. In the introduction section of the complaint, PIH alleged the same underpayment of billed claims for patients who received emergency medical services, but "during the time period of this Complaint (October 1, 2020, to December 31, 2021)." PIH also alleged Cigna had violated its own methodology for paying PIH for out-of-contract services, and fraudulently issued misleading EOBs and EOPs, which prevented PIH from "balance billing" the patients for the difference between PIH's charges and Cigna's payments. Based on the number of claims covered, PIH sought a total of $17,000,000 in damages. The Cigna II complaint asserted nine causes of action.
The first, second, third, and fourth causes of action for breach of implied contract and services rendered alleged PIH Whittier and PIH Downey had provided emergency medical services to Cigna-insured patients during the time period in the complaint (October 1, 2020, to December 31, 2021). The first and third causes of action on behalf of PIH Whittier sought $785,000 from Cigna for underpaid claims for "at least 82" Cigna-insured patients, whereas the second and fourth causes of action on behalf of PIH Downey sought $229,000 for underpaid claims for "over 50" Cigna-insured patients.
In the fifth cause of action for violation of section 17200, PIH alleged unfair competition against Cigna Healthcare for "systematically failing to pay, underpaying, or delaying payment to [PIH], even though there is a statutory obligation to compensate" PIH under the Knox-Keene Health Care Service Plan Act of 1975.
In the sixth and seventh causes of action for injurious falsehood and fraud against Cigna Healthcare and Connecticut General, PIH alleged both defendants knowingly sent false EOBs and EOPs to Cigna-insured patients and PIH. PIH sought $15,000,000 in damages on each cause of action as well as punitive damages for fraudulent conduct.
In the eighth cause of action for violation of section 17200 against Cigna Health and Connecticut General, PIH alleged both defendants "engag[ed] in a fraudulent scheme to obtain the benefits of having negotiated an agreed upon payment for [PIH's] services without having actually negotiated or paid an agreed upon rate."
In the ninth cause of action for violation of section 17200 against Cigna, PIH alleged Cigna systematically violated the Knox-Keene Health Care Service Plan Act of 1975 and corresponding regulations by "denying, adjusting or contesting all or a portion of [PIH's] claims without adequately explaining the reasons for its refusal to pay the claim as submitted."
2. The Special Demurrer and Motion for Sanctions
By way of special demurrer, Cigna sought abatement of the Cigna II complaint based on "another action pending between the same parties on the same causes of action." (§ 430.10, subd. (c).) Cigna characterized the causes of action in the Cigna II complaint as "rel[ying] on the charging allegations which are exactly the same as charging allegations" made in the Cigna I complaint.
Cigna also filed a motion for sanctions against PIH and its trial counsel for filing the Cigna II complaint for an improper purpose. (§ 128.7.) Cigna contended PIH was attempting to litigate the same claims in a new lawsuit and filed the Cigna II complaint to "circumvent the [c]ourt's order staying the related case." Cigna argued that if PIH "were truly interested in adjudicating the claims set forth in [Cigna II], the sensible approach would have been for them to wait until the stay in the related case [was] lifted, then ask that the [c]ourt rule on their motion for leave."
In opposition to Cigna's demurrer, PIH argued the two lawsuits were different, as each lawsuit concerned different transactions or accounts and different patient claims. PIH also noted the different time periods (Cigna I: January 2, 2018, to September 30, 2020; and Cigna II: October 1, 2020, to December 31, 2021), and different evidence required to support the claims raised in each lawsuit. In opposition to Cigna's sanctions motion, PIH argued in relevant part that because it was legally entitled to file a complaint for new underpaid claims, the Cigna II complaint was not filed for an improper purpose.
PIH also argued its proposed FAC in Cigna I, which had not been accepted for filing, alleged underpaid claims during the same time period in the Cigna I complaint but during a different period in this case.
3. Orders Sustaining the Demurrer and Imposing Sanctions
Following a hearing, the trial court issued an order sustaining the demurrer and staying this action in abatement pending disposition of Cigna I. The court also awarded Cigna $5,050 in sanctions against PIH and its trial counsel for filing the Cigna II complaint for an improper purpose.
The court found "the underlying injury to [PIH] is essentially the same in both cases-that [Cigna] engaged in an alleged series of acts of improper out-of-network payment determinations and made false statements to prevent [PIH] from obtaining the reasonable value for their out-of-network services. Nevertheless, [PIH] filed a new action alleging separate claims for the same injuries in an attempt to circumvent the stay in the related action rather than waiting until the stay is lifted, and then seeking leave to amend their causes of action." PIH and its trial counsel appealed.
DISCUSSION
A. The Special Demurrer Should Not Have Been Sustained
1. The Rule Against Splitting Causes of Action in Separate Lawsuits
"A single cause of action cannot be the basis for more than one lawsuit." (Pitts v. City of Sacramento (2006) 138 Cal.App.4th 853, 856 (Pitts); Hamilton v. Asbestos Corp., Ltd. (2000) 22 Cal.4th 1127, 1145 (Hamilton).) This rule, which prohibits "splitting" a cause of action into separate actions, derives "in part [from] a rule of abatement and in part a rule of res judicata." (Hamilton, supra, at p. 1146, italics omitted.) Two actions embody the same cause of action if res judicata (claim preclusion) on causes of action raised in the prior action would bar suit in the second action. (Brenelli Amedeo, S.P.A. v. Bakara Furniture, Inc. (1994) 29 Cal.App.4th 1828, 1838 (Brenelli).) If claim preclusion were to apply, the rule of abatement requires abating the second action pending disposition of the first action. (Leadford v. Leadford (1992) 6 Cal.App.4th 571, 574 ["[a]batement . . . is a matter of right"].)
Our Supreme Court "now refer[s] to 'claim preclusion' rather than 'res judicata' [citation] and use[s] 'issue preclusion' in place of 'direct or collateral estoppel' [citations]." (Samara v. Matar (2018) 5 Cal.5th 322, 326, fn. omitted.) "Claim and issue preclusion have different requirements and effects. Claim preclusion prevents relitigation of entire causes of action.... Issue preclusion, by contrast, prevents 'relitigation of previously decided issues,' rather than causes of action as a whole." (Id. at pp. 326-327, citations omitted.)
Section 430.10, subdivision (c), codifies the rule against splitting a cause of action and contemplates a defense by way of demurrer or answer that "there is another action pending between the same parties on the same cause of action." (§ 430.10, subd. (c); Crowley v. Katleman (1994) 8 Cal.4th 666, 681-682.) Where a demurrer is sustained on the ground of another action pending, the proper order is not a dismissal but an order abating further proceedings. (Lord v. Garland (1946) 27 Cal.2d 840, 850 (Lord).)
If the first action goes to judgment on the merits, "the party asserting the plea in abatement should be granted leave to amend to plead the res judicata effect of the judgment in bar of the subsequent action." (Lord, supra, 27 Cal.2d at p. 851; see DKN Holdings LLC v. Faerber (2015) 61 Cal.4th 813, 824 [if claim preclusion is established, "it operates to bar relitigation of the claim altogether"].)
We review the court's interlocutory order sustaining the demurrer and ordering the action abated de novo. (See T.H. v. Novartis Pharmaceuticals Corp. (2017) 4 Cal.5th 145, 162; see also § 597 [interlocutory abatement orders are appealable].)
2. Cigna I and II Do Not Involve the Same Causes of Action
PIH does not dispute the parties are the same in Cigna I and II. Instead, it contends the actions do not share the same causes of action. We agree.
Two actions share the same causes of action under section 430.10, subdivision (c), if "a judgment in the first action would be a complete bar to the second action." (Plant Insulation Co. v. Fibreboard Corp. (1990) 224 Cal.App.3d 781, 787-788; accord, Bush v. Superior Court (1992) 10 Cal.App.4th 1374, 1384.) To make this determination, we look to principles of claim preclusion, which "'precludes parties or their privies from relitigating the same cause of action that has been finally determined by a court of competent jurisdiction . . . .' [Citation.] California law defines a cause of action 'by focusing on the "primary right" at stake: if two actions involve the same injury to the plaintiff and the same wrong by the defendant then the same primary right is at stake even if in the second suit the plaintiff pleads different theories of recovery, seeks different forms of relief and/or adds new facts supporting recovery. [Citations.] A cause of action is based upon the nature of a plaintiff's injury.'" (Tensor Group v. City of Glendale (1993) 14 Cal.App.4th 154, 160 (Tensor Group).) To determine any primary right, we must look to the well pleaded facts from which the plaintiffs primary right and the defendant's corresponding primary duty have arisen, together with any facts alleged concerning the defendant's wrongdoing. (Ibid.)
Here, claim preclusion would not apply to the causes of action raised in the Cigna II complaint because they are not identical to those asserted in Cigna I. To begin with, the complaints in both actions allege separate causes of action for distinct injuries or harms. The Cigna I complaint seeks damages for breaches of express and implied contracts. The complaint in this action does not allege a breach of any express contract, and instead adds causes of action for fraudulent representations Cigna made in EOBs/EOPs, which unfairly deprived PIH of its right to recoup reimbursement by balance billing each patient. (Compare Brenelli, supra, 29 Cal.App.4th at p. 1837 ["the right to have contractual obligations performed is distinct from the right to be free from tortious behavior preventing collection of a judgment"]; Fujifilm Corp. v. Yang (2014) 223 Cal.App.4th 326, 332 [distinguishing primary rights for breaches of contract and tortious interference]; Sawyer v. First City Financial Corp. (1981) 124 Cal.App.3d 390, 402-403 [subsequent action "highlight[ed] other conduct of the parties alleged to be tortious"].)
Contrary to Cigna's suggestion, the operative complaint in the prior action is the original complaint and not the proposed FAC, which was never ruled on by the court, accepted for filing, or admitted for use at the demurrer hearing as a matter of proof. (See In re Marriage of Eustice (2015) 242 Cal.App.4th 1291, 1302, fn. 3 [appellate courts will not judicially notice evidence not properly before the trial court].)
As Cigna itself acknowledges, many of the primary rights at issue in Cigna I and II involve PIH's "interest in being reimbursed for the reasonable and customary value of their out-of-network emergency hospital services in accordance with statutory and regulatory law...." Adjudicating those rights will depend on what those services were, when they were rendered, to whom they were rendered, and any other fact bearing on the reasonable values of the services PIH rendered. And because the facts from which PIH's primary rights and Cigna's corresponding duty and breach arose are different, so too are the causes of action. (Tensor Group, supra, 14 Cal.App.4th at p. 160.)
Indeed, a majority of the billed claims raised in this action are for services PIH rendered after it had filed the operative complaint in Cigna I. "As a cause of action is framed by the facts in existence when the underlying complaint is filed, res judicata 'is not a bar to claims that arise after the initial complaint is filed.' (Allied Fire Protection v. Diede Construction, Inc. (2005) 127 Cal.App.4th 150, 155 (Allied Fire Protection); see Yager v. Yager (1936) 7 Cal.2d 213, 217 [(Yager)].) For this reason, the doctrine [(res judicata)] may not apply when 'there are changed conditions and new facts which were not in existence at the time the action was filed upon which the prior judgment is based. [Citations.]' (McGaffey v. Sudowitz (1961) 189 Cal.App.2d 215, 217-218.)" (Planning &Conservation League v. Castaic Lake Water Agency (2010) 180 Cal.App.4th 210, 227-228.)
This principle applies with equal force to successive causes of action for breaches "from a single contract with continuing obligations." (§ 1047; Jenni Rivera Enterprises, LLC v. Latin World Entertainment Holdings, Inc. (2019) 36 Cal.App.5th 766, 784 (Jenni Rivera).) As each breach of a continuing or ongoing obligation "'gives rise to a separate cause of action'" (Jenni Rivera, supra, at p. 784, quoting 31 Williston on Contracts (4th ed. 2004) § 79:23, p. 379), "res judicata is not a bar to [any] claims that arise after the initial complaint was filed." (McCready v. Whorf (2015) 235 Cal.App.4th 478, 482; accord, Lucky Brand Dungarees, Inc. v. Marcel Fashions Group, Inc. (2020) 140 S.Ct. 1589, 1596; Hogar Dulce Hogar v. Community Development Commission (2003) 110 Cal.App.4th 1288, 1295-1296 [citing cases]; Yates v. Kuhl (1955) 130 Cal.App.2d 536, 537-540.)
In relevant part, the Restatement of Judgments provides that for any claim in "a case involving a continuing or recurrent wrong, the plaintiff is given an option to sue once for the total harm, both past and prospective, or to sue from time to time for the damages incurred to the date of suit, ...." (Restatement (Second) of Judgments § 26 (1982).)
The avenues for seeking redress for successive causes of action are twofold: the litigant can either (1) file a supplemental pleading in the pending action or (2) assert the rights in a subsequent action. (Allied Fire Protection, supra, 127 Cal.App.4th at p. 155, citing Yager, supra, 7 Cal.2d at p. 217 [permitting both procedures for "rights acquired pendente lite"].)
These principles were explored in circumstances similar to this case in Security Trust &Savings Bank v. Claussen (1919) 44 Cal.App. 730 (Claussen), and Frommhagen v. Board of Supervisors (1987) 197 Cal.App.3d 1292 (Frommhagen). Because the appeal in Claussen arose in the same procedural posture as this case, we address it first.
In Claussen, the plaintiff filed a complaint for accrued rent under the terms of a written lease during a certain period of time (November and December 1918, and January and February 1919), and the defendant filed an answer raising a plea in abatement as a defense. (Claussen, supra, 44 Cal.App. at p. 731.) In support, the defendant referenced a pending action between the parties for rent accrued during a different period. (Id. at p. 732.) The trial court rejected the defendant's argument and entered judgment in favor of the plaintiff for $600. (Id. at pp. 731-732.)
On appeal, the court recognized "[t]he facts presented, other than the months for which the recovery of rent is sought, are identical with those involved" in the prior action. (Claussen, supra, 44 Cal.App. at pp. 731-732.) Nevertheless, the court rejected the notion that both actions involved the same causes of action. (Id. at p. 732.) "Assuming the judgment to be a final determination of the subject of that [former] action, the lease would constitute the basis of subsequent actions by plaintiff upon which to assert its right to recovery of rent for subsequent months of the term." (Id. at p. 733.) In addition, the court noted ongoing contingencies and market fluctuations in which "the rental value of the property might be impaired," such that the parties would be "unable to agree upon the reduction proper to be made, the subject, . . . should be submitted to the court in an action to have it determine the reasonable rental value of the premises ...." (Id. at p. 734.)
In Frommhagen, the plaintiff filed a lawsuit against a county board of supervisors to invalidate service charges the board had levied during a particular fiscal year (1984-1985) under a charge methodology enacted by statute (Gov. Code, § 25210.1 et seq.). (Frommhagen, supra, 197 Cal.App.3d at p. 1296.) Under that statutory scheme, the county was required to calculate and assess charges "each year." (Ibid.) The trial court rejected each ground on which the plaintiff sought to invalidate the charges and dismissed the first action. (Id. at pp. 1297-1298.) The plaintiff then filed a second action challenging the same "charges established for the 1985-1986 fiscal year" under the same statutes. (Id. at p. 1298.) The plaintiff admitted the allegations in the second complaint were, "with three exceptions, identical in substance to those alleged in the previous complaint ...." (Ibid.) The trial court sustained the defendant's demurrer on res judicata grounds and dismissed the complaint. (Ibid.)
The appellate court reversed, finding under the relevant statutes that "service area charges are calculated each year .... Thus, each year is the origin of a new charge fixing procedure, new charge liability, and, we believe, a new cause of action. In the parlance of the 'primary right theory,' those paying charges have a primary right to have the charges properly calculated and imposed each year. Consequently, we believe [the plaintiff's] second complaint attacking the 1985-1986 charges is not based on the same cause of action as that underlying his first complaint. It follows that [his] first action is not a complete bar to his second action." (Frommhagen, supra, 197 Cal.App.3d at p. 1300.)
We apply the reasoning in Claussen and Frommhagen to the facts before us in this case. Any adjudication in Cigna I would not bar the claims for reimbursement in this case, which accrued whenever PIH billed Cigna for each claim. Further, because "Cigna's payments vary widely for the claims at issue" in this case, resolution of each billed claim may also vary. (Compare Claussen, supra, 44 Cal.App. at p. 734.) That both cases implicate PIH's rights to out-of-contract reimbursement under the Knox-Keane Health Care Service Plan of 1975 is not determinative. PIH maintained its statutory rights to proper reimbursement for each claim it submitted to Cigna. The complaints clarify this distinction by alleging a distinct series of underpaid claims: the Cigna I complaint covers underpaid claims between January 2, 2018, and September 30, 2020, while the Cigna II complaint covers underpaid claims between October 1, 2020, and December 31, 2021. Because the series of underpaid claims involve a distinct breach of duty and corresponding damages, they constitute separate causes of action for purposes of section 430.10, subdivision (c).
3. Cigna's Arguments to the Contrary are Unpersuasive Cigna raises several arguments in opposition to our conclusion above. We address each in turn.
a. Related Acts Causing the Same Injury
Relying first on Miller v. Collectors Universe, Inc. (2008) 159 Cal.App.4th 988 (Miller), Cigna contends that "a series of related acts, having a common purpose or committed pursuant to a common plan or scheme, but resulting in the same injury or harm, give rise to but a single cause of action for purposes of determining whether a plaintiff is impermissibly splitting a single cause of action by filing multiple lawsuits."
Cigna construes Miller too broadly. The court in Miller never addressed claim preclusion or a plea in abatement. (See Mercury Ins. Group v. Superior Court (1998) 19 Cal.4th 332, 348 ["[a] decision, of course, is not authority for what it does not consider"].) Instead, the court was required to determine how to calculate statutory damages under Civil Code section 3344 for the misappropriation of the plaintiff's name on 14,060 separate certificates of authenticity. (Miller, supra, 159 Cal.App.4th at pp. 991, 995-996.) After construing the statute "as authorizing minimum damages of $750 for each cause of action from each prohibited use," the court considered whether the plaintiff stated "14,060 causes of action." (Id. at p. 1004.) The court found the "statutory minimum damages were meant to compensate noncelebrity plaintiffs who suffer . . . mental anguish yet no discernible commercial loss. To the extent Miller suffered commercial loss . . . his recourse was to prove actual damages like any other plaintiff whose name has commercial value." (Id. at p. 1006.) The court then viewed the factual predicate for the plaintiff's harm, finding all of the certificates "were printed at the same time . . . and they were issued seriatim as authentication services were purchased by the customers." (Id. at p. 1008.) In view of legislative intent and the facts underlying the plaintiff's harm, the court found his claim "constitutes a single cause of action for which his statutory damages are $750." (Ibid.) Thus, Miller never analyzed whether the filing of one complaint barred the filing of a second complaint.
The statute under which the plaintiff prevailed provided, inter alia, that any "person who knowingly uses another's name, . . . or likeness, in any manner, on or in products, . . . without such person's prior consent, . . . shall be liable for any damages sustained by the person or persons injured as a result thereof. In addition, in any action brought under this section, the person who violated the section shall be liable to the injured party or parties in an amount equal to the greater of seven hundred fifty dollars ($750) or the actual damages suffered by him or her as a result of the unauthorized use, ...." (Civ. Code, § 3344, subd. (a).)
The other cases on which Cigna relies, which were discussed in Miller (see Miller, supra, 159 Cal.App.4th at pp. 1006-1008), are equally inapposite. One case analyzed the definition of a "claim" in an attorney liability insurance policy. (Bay Cities Paving &Grading, Inc. v. Lawyers' Mutual Ins. Co. (1993) 5 Cal.4th 854, 859 [deciding "narrow issue" of what constitutes a claim for purposes of policy limiting coverage to $250,000 "for each claim"].) Another case considered whether a plaintiff's cause of action was timely if certain acts related to it occurred at more remote times in the past, or whether defendants could be liable for a cause of action based upon a collective series of events. (Oppenheimer v. City of Los Angeles (1951) 104 Cal.App.2d 551, 552-553 [reversing decision to dismiss third amended complaint on statute of limitation grounds].)
Other cases addressed whether demurrers could be sustained for alleging duplicative causes of action in a single complaint. (See Conger v. White (1945) 69 Cal.App.2d 28, 41 [construing various causes of action as single claim for conspiracy to commit fraud]; Tooke v. Allen (1948) 85 Cal.App.2d 230, 231, 235-236 [rejecting defendant's argument that plaintiff "improperly united" several causes of action in her complaint, as "the gravamen" of the claim "was not for injuries to either person or property in a strict sense, but for interference with [the plaintiff's] right of peaceful possession" of her apartment]; but see McDonell v. American Trust Co. (1955) 130 Cal.App.2d 296, 303 ["'redundancy' is not a cause for demurrer"].)
b. Supplemental Complaint
Cigna further contends that even if PIH asserted new causes of action for subsequent breaches of an ongoing obligation in this action, under Yager, supra, 71 Cal.2d 213, PIH already elected to file a supplemental complaint in Cigna I. In support, Cigna points to PIH's pending motion for leave to file the proposed FAC.
Though we agree Yager enabled PIH to file a "supplemental pleading" in the prior action or file a complaint in this "subsequent action" (Yager, supra, 7 Cal.2d at p. 217), we disagree with Cigna's position that PIH filed a supplemental complaint in Cigna I. A "complaint, whether original or amended, can properly speak only of things which occurred either before or concurrently with the commencement of the action." (California Farm &Fruit Co. v. Schiappa-Pietra (1907) 151 Cal. 732, 742-743.) A supplemental complaint brings into the action events that occurred after the filing of the original complaint, which "may affect the rights asserted and the relief asked in the action as originally instituted." (Ibid.; accord, ITT Gilfillan, Inc. v. City of Los Angeles (1982) 136 Cal.App.3d 581, 588-589; compare §§ 464, subd. (a), 472, subd. (a), 473, subd. (a).)
The proposed FAC, which was never ruled on by the trial court, accepted for filing, or admitted for use at the demurrer hearing as a matter of proof, covered the same claims for underpayment of services as provided in the original complaint. The proposed FAC did not expand the action to cover claims accruing after PIH filed the prior action. PIH did not pursue a supplemental complaint in Cigna I and was therefore entitled to file a complaint in this action.
In sum, PIH filed a complaint in this action covering causes of action that are separate from those pursued in Cigna I. Thus, the trial court "erred as a result in sustaining a demurrer on the basis of a plea in abatement." (Pitts, supra, 138 Cal.App.4th at p. 857.)
C. The Sanctions Order Must be Reversed
Whenever an attorney presents a pleading to the court, he or she is certifying, "to the best of the person's knowledge, information, and belief, formed after an inquiry reasonable under the circumstances," that it is "not being presented primarily for an improper purpose," and the claims therein "are warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of a new law." (§ 128.7, subd. (b).) A defendant who is served with a complaint in violation of section 128.7 may seek monetary sanctions against the parties and attorneys who violated the statute. (§ 128.7, subd. (c).) To recover sanctions, the movant must show the challenged conduct was "'"objectively unreasonable."'" (In re Marriage of Corona (2009) 172 Cal.App.4th 1205, 1225, fn. 7.) We review an order for monetary sanctions under section 128.7 for abuse of discretion. (Martorana v. Marlin &Saltzman (2009) 175 Cal.App.4th 685, 698.)
Here, the trial court awarded Cigna $5,050 in sanctions against PIH and its trial counsel for filing the Cigna II complaint. In light of our conclusion above, we conclude PIH and its trial counsel did not engage in objectively unreasonable conduct by filing a complaint they were legally entitled to file. The court abused its discretion by issuing the sanctions order. (See Patel v. Crown Diamonds, Inc. (2016) 247 Cal.App.4th 29, 37 [judicial action "'that transgresses the confines of the applicable principles of law is outside the scope of discretion'"].)
DISPOSITION
The interlocutory order staying the complaint in abatement is reversed. The order imposing sanctions against PIH and its trial counsel in the amount of $5,050 is also reversed. The trial court is directed to vacate its orders sustaining the demurrer and imposing monetary sanctions. Upon vacating its orders, the court shall enter new orders overruling the demurrer, denying the motion for sanctions, and reinstating PIH's complaint. Costs on appeal are awarded to appellants.
We concur: CURREY, P. J. ZUKIN, J.