Where Cause of Action Arises Out Of Failure to Procure Insurance, Dismissal Of Claim Based On Notion That It Asserted Breach of Insurance Contract Improper
In the unpublished case of Hernandez, et al, v. Magat, No. E047081 (March 2), Division Two of the Fourth Appellate District reversed a dismissal of a claim against Magat after finding that the claim alleged rested not on an alleged breach of an insurance contract, but, rather breach of an agreement to obtain insurance. The case arose out of a sewage back-up at the plaintiffs’ home. Plaintiffs thought they had obtained a Farmers Insurance policy via an insurance agency recommended by their escrow company. After at first acknowledging that insurance and beginning the claims process, Farmers then told plaintiffs they in fact had no insurance. Farmers then reversed itself again. A month later, however, it then began a collection action against plaintiffs and declined to proceed with their claim. Plaintiffs sued all involved.
Magat, an individual Farmers agent, obtained a judgment of dismissal from the trial court. He argued that he was only an insurance agent, and therefore could not be held liable for any breach of an insurance contract. The Court of Appeal found that the trial court had misunderstood plaintiffs’ claim. The complaint actually sought damages for failure to procure the requested coverage. Magat next argued that that such duty lay with the insurance agency recommended by the escrow company, but the Court of Appeal found that the insurance could only be obtained through a Farmers agent himself or herself, which Magat was conceded to be. The insurance agency could not have obtained the insurance without him. Magat also argued that the coverage requested had in fact been ultimately obtained. The appellate court, however, found that plaintiffs’ position below was alternative: either the policy purportedly procured for which plaintiffs paid had not been procured or, alternatively, it had been procured but Farmers improperly denied coverage. While the second possibility is consistent with Magat’s defense that he did procure the insurance and that the fault, if any, lay in the denial of the claim, the Court found that at the demurrer stage alternative pleading is permissible, and the first factual alternative does not give rise an absolute defense such as Magat argued as a matter of law.
March 2, 2010
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