Demurrer in CHARLOTTE HORNE ET AL VS. CSAA INSURANCE EXCHANGE ET AL| Trellis.Law

On April 28, 2020 a Motion-Secondary was filed involving a dispute between Horne, Charlotte, Horne, Wilbert, and Csaa Insurance Exchange, Does 1 To 100, Inclusive, for SUBROGATION/INSURANCE in the District Court of San Francisco County.

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1 MATTHEW S. FOY (SBN: 187238)
FLETCHER C. ALFORD (SBN: 152314)
2 MOLLY J. MROWKA (SBN: 190133)
ELECTRONICALLY
GORDON REES SCULLY MANSUKHANI, LLP
3 275 Battery Street, Suite 2000 F I L E D
Superior Court of California,
San Francisco, CA 94111 County of San Francisco
4 Telephone: (415) 875-3174
Facsimile: (415) 986-8054 09/29/2020
5 mfoy@grsm.com Clerk of the Court
BY: EDNALEEN ALEGRE
falford@grsm.com Deputy Clerk
6 mmrowka@grsm.com

7 Attorneys for Defendant
CSAA INSURANCE EXCHANGE
8

9 SUPERIOR COURT OF CALIFORNIA
10 COUNTY OF SAN FRANCISCO

11 CHARLOTTE HORNE and WILBERT ) CASE NO. CGC-20-584261
Gordon Rees Scully Mansukhani, LLP

HORNE, individually and On Behalf of All )
275 Battery Street, Suite 2000

12 Others Similarly Situated, ) DECLARATION OF DANIEL
San Francisco, CA 94111

) KUBASAK IN SUPPORT OF
13 Plaintiffs, ) DEFENDANT CSAA INSURANCE
) EXCHANGE’S DEMURRER
14 vs. ) Complaint Filed: April 28, 2020
15 CSAA INSURANCE Exchange and DOES 1 )
to 100, inclusive, ) Hearing:
16 )
Defendants. ) Date: November 4, 2020
17 ) Time: 9:30 a.m.
) Dept: 302
18 )
) Accompanying Documents
19 ) Notice of Motion and Motion;
) Memorandum of Points and Authorities;
20 Request for Judicial Notice; [Proposed]
)
Order
21 )

22
I, Daniel Kubasak, declare:
23
1. I am an attorney licensed to practice law before all courts of the State of
24
California, and senior counsel at the law firm of Gordon Rees Scully & Mansuhkani LLP,
25
attorneys for Defendant CSAA INSURANCE EXCHANGE in the above-entitled lawsuit. I have
26
personal knowledge of the following facts, and if called upon to testify, I could and would
27
competently testify to their truth and accuracy.
28

-1-
DECLARATION IN SUPPORT OF CSAA’S DEMURRER
1 2. Attached as Exhibit A is a true and correct copy of Plaintiff Charlotte Horne and

2 Wilbert Horne’s Class Action Complaint for Damages [C.C.P. §382] and Demand for Jury Trial,

3 filed on July 2, 2020. This version of the Complaint contains amendments to the original

4 Complaint filed on April 28, 2020. Because it is not titled “First Amended Complaint,” it will be

5 referred to as the “Complaint.”

6 3. Attached hereto as Exhibit B is a true and correct copy of AB-1797 Assembly

7 Floor Analysis on Insurance Code Section 10103.4.

8 4. Attached hereto as Exhibit C is a true and correct copy of California Department

9 of Insurance (“DOI”)’s Final Statement of Reasons, File No. REG-2010-00001, Regulations on
10 Standards and Training for Estimating Replacement Value on Homeowner’s Insurance,

11 Summary and Response to Comments, dated November 17, 2010.
Gordon Rees Scully Mansukhani, LLP
275 Battery Street, Suite 2000

12 5. Attached hereto as Exhibit D is a true and correct copy of the Homeowners
San Francisco, CA 94111

13 Policy Declaration page and AAA California Homeowners Policy Special Form HO-3 for

14 Homeowners Policy Number HO-21-98-72-9, the Plaintiffs’ policy at issue for the events

15 described in the Complaint.

16 6. After accepting service of the Complaint, counsel for CSAA sent Plaintiffs’

17 counsel a meet and confer letter outlining CSAA’s perspective regarding deficiencies in the

18 Complaint. Attached hereto as Exhibit E is a true and correct copy of the July 31, 2020 letter.

19 7. On August 18, 2020, Plaintiffs’ counsel sent a responsive letter outlining their
20 positions. Attached hereto as Exhibit F is a true and correct copy of that August 18, 2020 letter.

21 8. Thereafter, on August 26, 2020, I met and conferred with Plaintiffs’ counsel

22 telephonically to discuss the demurrer and motion to strike. It was during that discussion that I

23 indicated to Plaintiffs’ counsel that, based upon issues raised in their meet and confer letter,

24 CSAA would be moving to strike references to the Insurance Code and Code of Regulations

25 2695.183 in lieu of demurring to the first cause of action. Plaintiffs’ counsel acknowledged this

26 change in procedure. The parties were unable to reach an agreement as to the rest of the issues
27 raised by CSAA.

-2-
DECLARATION IN SUPPORT OF CSAA’S DEMURRER
1 9. On the morning of Thursday, September 24, I contacted Plaintiffs’ counsel in

2 order to confer on a hearing date. Not receiving a response, on the afternoon of Friday,

3 September 25, I sent a follow up request by email regarding selection of a hearing date.

4 Attached hereto as Exhibit G is a true and correct copy of the correspondence regarding

5 selection of a hearing date.

6 I declare under penalty of perjury under the laws of the State of California that the

7 foregoing is true and correct.

8 Executed this 28th day of September, 2020 at Walnut Creek, California.

9
10 Daniel Kubasak
11
Gordon Rees Scully Mansukhani, LLP
275 Battery Street, Suite 2000

12
San Francisco, CA 94111

19
20

26
27

-3-
DECLARATION IN SUPPORT OF CSAA’S DEMURRER
EXHIBIT A
1 Robert S. Arns, State Bar No. 65071 (rsa@arnslaw.com)
Jonathan E. Davis, State Bar No. 191346 (jed@arnslaw.com)
2 Shounak S. Dharap, State Bar No. 311557 (ssd@arnslaw.com) ELECTRONICALLY
3
THE ARNS LAW FIRM F I L E D
A Professional Corporation Superior Court of California,

4 515 Folsom St., 3rd Floor County of San Francisco

San Francisco, CA 94109 07/02/2020
5 Clerk of the Court
Tel: (415) 495-7800 BY: JUDITH NUNEZ

6
Fax: (415) 495-7888 Deputy Clerk

7 E. Gerard Mannion, State Bar No. 77287 (gerry@mlolawyers.com)
Demián I. Oksenendler, State Bar No. 233416 (demian@mlolawyers.com)
8 MANNION LOWE & OKSENENDLER
655 Montgomery Street, Suite #1900
9
San Francisco, California 94111
10 Tel: (415) 733-1050
Fax: (415) 434-4810
11
Attorneys for Plaintiffs
12

13 IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA
IN AND FOR THE COUNTY OF SAN FRANCISCO
14 CIVIL UNLIMITED
15
Case No. CGC-20-584261
16 CHARLOTTE HORNE and WILBERT CLASS ACTION COMPLAINT FOR
HORNE, individually and On Behalf of All DAMAGES [C.C.P. § 382] AND DEMAND
17 Others Similarly Situated, FOR JURY TRIAL
18
Plaintiffs, COMPLAINT FOR VIOLATIONS OF:
19 1. Violation of the UCL (Bus. & Prof. Code,
vs. §§ 17200, et seq.) – Unlawful Business
20 Acts and Practices
CSAA INSURANCE Exchange and DOES 1 2. Violation of the UCL (Bus. & Prof. Code,
21
to 100, inclusive, §§ 17200, et seq.) – Unfair Business
22 Acts and Practices
Defendants. 3. Violation of the UCL (Bus. & Prof. Code,
23 §§ 17200, et seq.) – Fraudulent Business
Acts and Practices
24
4. Breach of Contract
25 5. Breach of the Implied Covenant of Good
Faith and Fair Dealing
26 6. Fraud—Intentional Misrepresentation
7. Concealment
27
8. Fraud—False Promise
28 9. Negligent Misrepresentation

CLASS ACTION COMPLAINT
1 10. Negligence
11. Reformation
2 12. Declaratory Relief
3
AMOUNT EXCEEDS $10,000
4

CLASS ACTION COMPLAINT
1 Plaintiffs, CHARLOTTE and WILBERT HORNE, on behalf of themselves and all others
2 similarly situated (collectively “Plaintiffs”), bring this action against Defendants CSAA Insurance
3 Group and Does 1 through 100 (collectively “Defendants”). Plaintiffs allege, upon information and
4 belief, the investigation of their counsel, and the facts that are a matter of public record, as follows:
5 1. Plaintiffs bring this action to obtain damages and restitution, as well as injunctive and other
6 relief, individually and on behalf of a proposed class defined below (“the Class”).
7 2. As alleged herein, Plaintiffs are homeowners and purchasers of written policies of insurance
8 (“the policies”) by or through Defendants. While the policies were in full force and effect, the
9 structures and other property insured under the policies were destroyed by events covered under
10 the policies. Plaintiffs recovered funds from the policies representing only a small portion of their
11 total costs associated with the loss, resulting in past and ongoing economic injury.
12 3. Prior to the destruction of Plaintiffs’ property, Defendants delivered to Plaintiffs
13 documents, including the written copies of the policies, stating the replacement cost of the property
14 covered by the policies. Defendants were obligated to comply with the requirements of California
15 Code of Regulations, Title 10, section 2695.183 in calculating the replacement costs of the property
16 and setting the limits of the policies. Defendants were similarly obligated to describe to Plaintiffs
17 how they determined the properties’ replacement costs and provide Plaintiffs with documentation
18 regarding the calculation of the replacement costs.
19 4. Defendants failed to meet any of the regulatory obligations imposed on them by section
20 2695.183. Plaintiffs did not seek to purchase other insurance or increase their policy limits because
21 Defendants failed to advise Plaintiffs and fully provide Plaintiffs with the information required by
22 law.
23 5. Due to their failure, Defendants are equitably estopped from using or relying on inadequate
24 policy limits in the funding of these claims. Instead, the limits should be properly calculated
25 pursuant to the law, regulations, and the actual costs of replacement of the lost property.
26 6. Plaintiffs assert claims individually and collectively under Business & Professions Code,
27 sections 17200 et seq., and for breach of contract and the covenant of good faith and fair dealing,
28 fraud, negligent misrepresentation, negligence, concealment, reformation, breach of the reformed

CLASS ACTION COMPLAINT
1
1 contract, estoppel, and declaratory relief.
2 7. Plaintiffs seek actual and compensatory damages, civil penalties, punitive damages,
3 restitution, equitable relief, costs and expenses of litigation including attorneys’ fees, and all
4 additional and further relief that may be available and that the Court may deem appropriate and just
5 under all of the circumstances.
6 JURISDICTION AND VENUE
7 8. This class action is brought pursuant to California Code of Civil Procedure section 382 and
8 seeks to remedy Defendants’ violations of state law, including the Business & Professions Code
9 and California common law, arising from and related to Defendants’ misrepresentations regarding
10 their homeowners’ insurance policies, as well as related misconduct.
11 9. Venue is proper in Napa County, California because, inter alia, Defendants engage and
12 perform business activities in and throughout the State of California, including Napa County; and
13 Class members, including Plaintiff, entered into agreements to purchase Defendants’ homeowners’
14 insurance while in the County of Napa. However, due to the current court closures caused by the
15 novel coronavirus/COVID-19 pandemic, Plaintiffs are unable to file their complaint in Napa
16 Superior Court, as it is not accepting any filings at this time. Many other Superior Courts for other
17 counties in the Bay Area are undergoing similar closures and are not accepting new filings. As a
18 result, Plaintiffs file their complaint in this Court in order to preserve their statute of limitations.
19 Venue is proper in this Court under these circumstances because, inter alia, Defendants engage and
20 perform business activities in and throughout the State of California and because it would prejudice
21 Plaintiffs if they were not allowed to file their complaint to preserve their statute of limitations.
22 PARTIES
23 10. Plaintiffs Charlotte Horne and Wilbert Horne are, and at all times relevant herein were,
24 residents of Napa County, California. Plaintiffs own property, including buildings or other
25 structures and personal property, located at 265 Wall Road, Napa, California 94558. This property
26 was covered under a written homeowners’ insurance policy, identified by policy number HO-21-
27 98-72-9, purchased from CSAA Insurance Exchange in 1984 and renewed on July 1, 2017. At the
28 time Plaintiffs renewed their policy, on an annual basis since the policy was created, CSAA made

CLASS ACTION COMPLAINT
2
1 statements regarding the property’s replacement cost but failed to describe to Plaintiffs how it
2 determined the replacement cost and failed to provide Plaintiffs with documentation regarding the
3 replacement cost calculations. On or around October 8, 2017, Plaintiffs’ property was destroyed.
4 The event that caused the loss was covered under the Horne’s homeowners’ insurance policy. The
5 replacement cost of the loss exceeded the policy limits of Plaintiffs’ policy, resulting in past and
6 ongoing economic injury.
7 11. Defendant CSAA Insurance Exchange (“CSAA”) is a California corporation with its
8 principal place of business located in Walnut Creek, California. CSAA maintains substantial
9 ongoing business operations throughout California, including in the County of Napa, and is in the
10 business of selling and administering insurance policies.
11 12. The true names and capacities of DOES 1 through 100, inclusive, are unknown to Plaintiffs
12 who sue such Defendants by use of such fictitious names. Plaintiffs will amend this complaint to
13 add the true names when they are ascertained. Plaintiffs are informed and believe and thereon allege
14 that each of the fictitiously named Defendants is legally responsible for the occurrences herein
15 alleged, and that Plaintiffs’ damages as herein alleged were proximately caused by their conduct
16 13. On information and belief, at all times herein mentioned, each Defendant was the agent,
17 partner, joint venturer, representative, or employee of the remaining Defendants, and was acting
18 within the course and scope of such agency, partnership, joint venture, or employment.
19 Furthermore, in engaging in the conduct described below, the Defendants were all acting with the
20 express or implied knowledge, consent, authorization, approval, or ratification of their co-
21 Defendants.
22 CLASS ACTION ALLEGATIONS
23 14. Plaintiffs bring this action as a class action pursuant to Code of Civil Procedure, section
24 382 and Civil Code, section 1781, on behalf of themselves and the following Class:
25 All California residents who owned property insured by a homeowners’ insurance
policy sold or renewed by Defendants; who were not provided an explanation or
26 documentation regarding the replacement costs calculations for said insurance
27
policy; and who, at any time from November 5, 2015 to present, suffered a total
loss of said property, the value of which exceeded the limits of said policy.
28

CLASS ACTION COMPLAINT
3
1 Plaintiffs further bring this action on behalf of themselves and the following Sub-class:
2 California Elder Sub-class: Members of the Class who are 65 years of age or older.
3 Plaintiffs reserve the right to amend these Class and Sub-class definitions if discovery or further
4 investigation demonstrates that the Class or Sub-class should be expanded or otherwise modified.
5 15. The members of the Class are so numerous that joinder of all members would be
6 impracticable.
7 16. There are questions of law and fact common to the members of the Class that predominate
8 over any questions affecting only individual members, including:
9 a. Whether Defendants failed to properly calculate the replacement cost of the insured
10 property;
11 b. Whether Defendants failed to describe to their insureds how they determined the
12 replacement cost of the insured property;
13 c. Whether Defendants failed to provide to their insureds documentation regarding the
14 replacement cost of the insured property;
15 d. Whether Defendants misrepresented, concealed, or failed to disclose to their
16 insureds the terms of the policies governing of their insureds’ policies;
17 e. Whether Defendants’ misrepresentations, concealments, or failures to disclose the
18 were negligent in nature, in violation of California law;
19 f. Whether Defendants failed to communicate to Plaintiffs, in good faith, facts or
20 material terms of the policies their insureds purchased;
21 g. Whether Defendants’ conduct constitutes fraudulent, unlawful, or unfair business
22 practices in violation of Business & Professions Code, sections 17200, et seq.;
23 h. Whether Defendants’ conduct otherwise violates California law; and
24 i. Whether, as a result of Defendants’ conduct, Plaintiffs are entitled to damages,
25 restitution, equitable relief and/or other damages and relief, and, if so, the amount and nature
26 of such relief.
27 17. Plaintiffs bring claims that are typical of the claims of the members of the Class. Plaintiffs
28 have no interests antagonistic to those of the Class and are not subject to any unique defenses.
CLASS ACTION COMPLAINT
4
1 18. Plaintiffs will fairly and adequately protect the interests of all members of the Class and
2 have retained attorneys experienced in class action and complex litigation.
3 19. A class action is superior to all other available methods for the fair and efficient adjudication
4 of this controversy for, inter alia, the following reasons:
5 a. The Class is readily definable;
6 b. Prosecution as a class action will eliminate the possibility of repetitious litigation;
7 and
8 c. It is economically impractical for any or all of the members of the Class to prosecute
9 individual actions;
10 d. A class action will enable claims to be handled in an orderly and expeditious
11 manner, will save time and expense, and will ensure uniformity of decisions.
12 20. Plaintiffs do not anticipate any difficulty in the management of this litigation.
13 REGULATORY BACKGROUND
14 21. California, like many areas in the western United States, has recently seen increasingly
15 intense drought, wildfires, storms, and other disastrous events. After every catastrophic wildfire
16 since 2003, California’s Department of Insurance has received complaints from homeowners
17 stating they relied on their insurers’ representations regarding the replacement cost estimates of
18 their homes only to learn after suffering a loss that the estimates used to set policy limits fell far
19 short of the actual cost of their loss. (See, e.g., Rulemaking File [“RF”], Vol. I, 64-67, 78-119; Vol.
20 II, 418-488; Vol. III, 616-718, 616-651; Vol. IV, 917-919, 957-987.) A survey of homeowners
21 conducted after the 2007 wildfires showed that 74% of the responding fire victims’ limits were
22 insufficient to cover the cost of rebuilding the property and the amount at which they were
23 underinsured averaged more than $200,000. (United Policyholders, 2007 Wildfires Insurance
24 Claim Status Survey (2008) pp. 1-8.)
25 22. In response to findings that the tools used by insurers were “inadequate for formulating a
26 realistic dwelling rebuilding cost,” California’s Insurance Commissioner proposed a new
27 regulation in 2010 intended to ensure that homeowners receive more complete information from
28 insurers explaining the estimates of the replacement cost of their homes. (RF, Vol. IV, 1030.) The

CLASS ACTION COMPLAINT
5
1 Insurance Commissioner’s stated reasons for the proposed regulation was to establish that estimates
2 for replacement costs “not comporting with the applicable provision of the regulation will
3 constitute making a statement with respect to the business of insurance which is misleading and
4 which by the exercise of reasonable care should be known to be misleading, pursuant to Insurance
5 Code section 790.03.” (Dept. of Ins., Initial Statement of Reasons, Standards and Training for
6 Estimating Replacement Value on Homeowners' Insurance (Apr. 2, 2010) pp. 1, 20.) That
7 regulation, California Code of Regulations, title 10, section 2596.183 (“CCR 2695.183”), requires
8 insurers communicate to their insureds how they estimate the replacement cost used to set the
9 policy limit for homeowner’s insurance, including an itemized estimate considering the basic cost
10 components the homeowner would reasonably incur in rebuilding a home.
11 23. On December 29, 2010, the Office of Administrative Law approved CCR 2695.183, among
12 others, pursuant to Government Code section 11349.3. On June 26, 2011, the regulations became
13 effective.
14 24. The Insurance Commissioner promulgated CCR 2695.183 under the broad authority
15 delegated to the office of the Insurance Commissioner under the Unfair Insurance Practices Act,
16 Insurance Code section 790 et seq., which, among other things, prohibits insurers from making
17 untrue, deceptive or misleading statements to the public.
18 25. Before CCR 2695.183 was even enacted, it was challenged by a declaratory relief action by
19 the insurance industry. In January 2017, the California Supreme Court unanimously held the
20 Insurance Commissioner acted within his authority in promulgating CCR 2695.183 and upheld the
21 regulation’s validity. (Association of California Ins. Companies v. Jones (2017) 2 Cal.5th 376.)
22 26. Nevertheless, as Californians continue to see catastrophic events devastate their homes and
23 communities, the insurance industry has refused to adopt the requirements of CCR 2695.183.
24 FACTUAL ALLEGATIONS
25 27. CSAA sells and deals in insurance, which is a quasi-public service. As such, CSAA must
26 treat the interests of its policyholders with the same care and concern as its own. Further, the duty
27 of good faith and fair dealing obligates CSAA to not only meet the reasonable expectations of
28 coverage but also to treat its insureds with decency and honesty. In fact, insurers, like CSAA, hold

CLASS ACTION COMPLAINT
6
1 themselves out as fiduciaries and holders of the public’s trust and must perform their obligations
2 in good faith. The relationship between CSAA and its insureds is therefore, at a minimum, a quasi-
3 fiduciary relationship which imposes fiduciary-like duties on CSAA.
4 28. Further, CSAA, like other insurers, is held to special and heightened duties akin to fiduciary
5 duties due to the well-recognized unequal bargaining power inherent in the relationship between
6 insurers and insureds. This duty applies to CSAA’s conduct in offering and selling a policy or
7 certificate of insurance, as per Section 785, subdivision (b), of the California Insurance Code.
8 29. Under California Insurance Code section 785, insurers, brokers, and agents owe a special
9 duty of honesty, good faith, and fair dealing to prospective insureds who are 65 years old or older.
10 This is in addition to all other express and implied duties owed.
11 30. At all relevant times, CSAA has controlled no less than a 6% share of California’s
12 homeowners’ insurance market.
13 31. At all relevant times, CSAA had or should have had full knowledge of its obligations in
14 how replacement costs were to be calculated and what information regarding replacement cost
15 calculations was to be shared with its insureds.
16 32. However, upon renewing homeowners’ insurance policies, CSAA did not accurately
17 calculate replacement costs as mandated by CCR § 2695.183(a); that is, CSAA did not properly
18 include expenses that would reasonably incurred to insure the structures in their entirety, including
19 costs associated with labor, building materials and supplies, demolition and debris removal, permits
20 and architect plans; and consideration of components and features of the insured structure,
21 including the type of foundation, type of frame, roofing materials and type of roof, siding materials
22 and type of siding, whether the structure is located on a slope, the square footage of the living
23 space, geographic location of the property, number of stories and nonstandard wall height,
24 materials used in and generic types of interior features and finishes, age of the structure or year it
25 was built, and size and type of attached garage.
26 33. In addition, CSAA provided little to no information to its insureds regarding the factors it
27 used in calculating replacement cost. Insureds were not apprised of the information CSAA used in
28 calculating the estimates, as mandated by CCR § 2695.183(g), including itemized costs associated

CLASS ACTION COMPLAINT
7
1 with labor, building materials and supplies, demolition and debris removal, and permits and
2 architect plans– all factors specifically included in the language of CCR §§ 2695.183(a)(1)-(4).
3 34. Additionally, Defendants made uniform misleading and fraudulent communications to
4 Plaintiffs and the class, some of whom are 65 and older, including statements in the copies of
5 policies sent to Plaintiffs regarding the replacement costs Defendants used to set Plaintiffs’ policy
6 limits. Defendants uniformly stated that the replacement estimate on insureds’ homeowners’
7 insurance policy renewal was “based on an estimate of the cost to rebuild your home, including an
8 approximate cost for labor and materials in your area.” However, Defendants’ estimates greatly
9 undervalued the cost to rebuild insureds’ homes.
10 35. Defendants knew or should have known that their conduct was directed to one or more
11 senior citizens or disabled persons.
12 36. Plaintiffs purchased or renewed homeowners’ insurance policies from CSAA based on the
13 misrepresentations, concealments, and failures to disclose material facts described above. Had
14 Plaintiffs known that CSAA had not considered the relevant factors in calculating the properties’
15 replacement costs or setting their policies’ limits, and that CSAA’s estimate was not an accurate
16 estimate, they would not have entered into these transactions. As it happened, Plaintiffs purchased
17 policies that were inferior to and of lesser economic value than that which Defendants led Plaintiffs
18 to believe they were purchasing.
19 37. Based on the facts stated herein, Plaintiffs suffered actual, measurable economic injury in
20 fact in various forms including, but not limited to, out-of-pocket expenses for replacing their lost
21 property and payment of monthly premiums for a product that was of a lesser value than that which
22 they contracted to purchase.
23 38. In many instances, Plaintiffs made reasonable efforts to ameliorate their loss, including, but
24 not limited to, submitting requests to CSAA to obtain payment or reimbursement for rebuilding
25 expenses, but were refused by CSAA, thus requiring the Plaintiffs to hire attorneys to recover their
26 damages.
27 39. In misrepresenting, concealing, or failing to disclose to Plaintiffs the material terms of their
28 policies, as well as by committing the numerous other violations detailed below, CSAA, by and

CLASS ACTION COMPLAINT
8
1 through their officers, directors or managing agents, acted with malice, oppression and or conscious
2 disregard for the statutory, regulatory, or other rights of Plaintiffs, and committed fraud by
3 knowingly making false misrepresentations to Plaintiffs with the intent to defraud and to the
4 detriment of Plaintiffs. Given the number and magnitude of the violations, as well as the nature of
5 the conduct, an award of punitive damages under Civil Code, sections 3294, et seq. and as otherwise
6 permitted by applicable law is appropriate under all of the circumstances.
7 FIRST CAUSE OF ACTION
Violation of the UCL (Bus. & Prof. Code, §§ 17200, et seq.) –
8 Unlawful Business Acts and Practices
9 40. Plaintiffs hereby reallege and incorporate by reference all paragraphs above as if set forth
10 in detail herein.
11 41. Business & Professions Code sections 17200 et seq. prohibits acts of “unfair competition”
12 which is defined by Business & Professions Code section 17200 as including “any unlawful, unfair
13 or fraudulent business act or practice.” Defendants’ conduct, as described above, constitutes
14 unlawful business acts and practices.
15 42. Defendants have violated and continue to violate Business & Professions Code section
16 17200’s prohibition against engaging in “unlawful” business acts or practices by, inter alia,
17 violating 10 CCR § 2695.183 and committing fraud, as alleged below.
18 43. Additionally, Defendants’ conduct constitutes “unlawful” acts and practices as defined by
19 Business & Professions Code sections 17200 et seq., in that it violated and continues to violate the
20 regulations promulgated by the California Insurance Commissioner under the Unfair Insurance
21 Practices Act, Insurance Code section 790 et seq.
22 44. Section 790.03 of the Unfair Insurance Practices Act prohibits Defendants from making a
23 statement with respect to the business of insurance that is misleading and that by the exercise of
24 reasonable care should be known to be misleading.
25 45. California Code of Regulations, title 10, section 2695.183 further establishes specific
26 regulatory obligations on the part of Defendants to communicate to their insureds how they
27 estimate the replacement cost used to set the policy limit for homeowner’s insurance, including by
28 providing an itemized estimate considering the basic cost components the homeowner would
CLASS ACTION COMPLAINT
9
1 reasonably incur in rebuilding a home.
2 46. Defendants made statements to Plaintiffs regarding the replacement cost of their properties
3 that, when taken in the total context in which the statements were made, were untrue, misleading,
4 or deceptive, or amounted to representations or concealments about the homeowners’ insurance
5 policies Plaintiffs purchased that did not conform to fact, or could be understood by a person not
6 possessing special knowledge about homeowners’ insurance to confer a level of value for the
7 replacement cost of their property that was not in fact available to Plaintiffs. This conduct was
8 unlawful and violated the Unfair Insurance Practices Act (Ins. Code, § 790, et seq.) and CCR
9 2695.183.
10 47. Plaintiffs suffered concrete and identifiable economic injuries as a consequence of
11 Defendants’ unlawful conduct, including but not limited to out-of-pocket expenses for rebuilding
12 and expenses for the purchase or renewal of a homeowners’ insurance policy that was a different
13 or lesser product than that for which they bargained.
14 48. As a result of Defendants’ conduct, Plaintiffs are entitled to all monetary and other damages
15 permitted under the law, including, but not limited to full partial restitution of all monies paid as
16 premiums for insurance policies inferior in value to the policies promised by Defendants.
17 49. Plaintiffs also seek on behalf of the general public an order enjoining Defendants from
18 continuing its unlawful business practices and from such future conduct.
19 SECOND CAUSE OF ACTION
Violation of the UCL (Bus. & Prof. Code, §§ 17200, et seq.) –
20 Unfair Business Acts and Practices
21 50. Plaintiffs reallege and incorporate the above allegations by reference as if set forth fully
22 herein.
23 51. Defendants’ acts and practices, as described above, constitute unfair business practices
24 within the meaning of Business & Professions Code, sections 17200, et seq.
25 52. Plaintiff and other members of the class suffered a substantial injury in fact resulting in the
26 loss of money or property by virtue of Defendants’ conduct.
27 53. Defendants’ conduct does not benefit consumers or competition. Indeed, the injury to
28 consumers and competition is substantial.
CLASS ACTION COMPLAINT
10
1 54. Plaintiffs and class members could not have reasonably avoided the injury each of them
2 suffered.
3 55. The gravity of the consequences of Defendants’ conduct as described above outweighs any
4 justification, motive or reason therefore, is immoral, unethical, oppressive, unscrupulous, and
5 offends the public policy established by the State of California, which, among other things, seeks
6 to protect the reasonable expectations of consumers concerning the nature, extent and quality of
7 their care coverage.
8 56. Defendants’ conduct also violates the public policy delineated in the Unfair Insurance
9 Practices Act. In adopting the Unfair Insurance Practices Act, it was the intent and purpose of the
10 Legislature to regulate trade practices in the business of insurance “by defining, or providing for
11 the determination of, all such practices in this State which constitute unfair methods of competition
12 or unfair or deceptive acts or practices and by prohibiting the trade practices so defined or
13 determined.” (Ins. Code, § 790.) Section 790.0

Case Info

Judge

Ethan P. Schulman Track Judge’s New Case

Case No.

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Document Filed Date

September 29, 2020

Case Filing Date

April 28, 2020

County

Parties

ARNS, ROBERT STEPHEN Attorney for the Plaintiff
CSAA INSURANCE EXCHANGE Defendant
DOES 1 TO 100, INCLUSIVE Defendant
FOY, MATTHEW S Attorney for the Defendant
HORNE, CHARLOTTE Plaintiff
HORNE, WILBERT Plaintiff
MANNION, EDWARD GERARD Attorney for the Plaintiff
Jonathan Davis Attorneys for Plaintiffs
Shounak Dharap Attorney
Katherine Rabago Attorney
Demian Oksenendler Attorneys for Plaintiffs
Fletcher Alford Attorneys for Defendants
Molly Mrowka Attorneys for Defendants
Daniel Kubasak Attorneys for Defendants

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Motion-Secondary: CHARLOTTE HORNE ET AL VS. CSAA INSURANCE EXCHANGE ET AL

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