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DAVIS WRIGHT TREMAINE LLP
Joseph E. Addiego III (SBN 169522)
joeaddiego@dwt.com
50 Califomia St, Suite 2300
San Francisco, Califomia 94111
Telephone: (415) 276-6500
DAVIS WRIGHT TREMAINE LLP
James H. Moon (SBN 268215)
jamesmoon@dwt.com
Peter K. Bae (SBN 329158)
1e@dwt.com.
865 S. Figueroa St., Suite 2400
Los Angeles, Califomia 90017-2566
Telephone: (213) 633-6800
Facsimile: (213) 633-6899
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11 Attomeys for Defendant Brown & Brown
Insurance Services of California, Inc.
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13} SUPERIOR COURT OF THE STATE OF CALIFORNIA
14] FOR THE COUNTY OF SANTA BARBARA - ANACAPA DIVISION
15)
START INC., a Califomia corporation, Case No. 23CV00965
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Plaintiff, DECLARATION OF JAMES H. MOONIN
17 SUPPORT OF DEFENDANT BROWN &
vs.
18 BROWN INSURANCE SERVICES OF
CALIFORNIA, INC.’S DEMURRER TO
NATIONAL FIRE & MARINE INSURANCE
19} COMPLAINT
COMPANY; BROWN & BROWN
20 INSURANCE SERVICES OF CALIFORNIA.
[Denurrer, Request for Judicial Notice and
INC.; and DOES 1 through 100, inclusive,
Proposed Order Filed Concurrently
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Defendants. Date: July 31, 2023
Time: 10:00am.
Dept. 5
24 Action Filed: March 9, 2023
Trial Date: None
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DAVIS WRIGHT TREMAINE LLP
865S. FIGUEROA ST, SUITE 2400
LOS ANGELES, CALIFORNIA 90017-2566
DECLARATION OF JAMES H. MOON ISO DEMURRER TO COMPLAINT (213) 683-6800
Fax: (213) 633-6899
DECLARATION OF JAMES H. MOON
I, James H. Moon, declare as follows:
1 lam a partner at the law firm of Davis Wright Tremaine LLP, counsel of record for
Defendant Brown & Brown Insurance Services of California, Inc. (“Brown & Brown”) in this
action. This declaration is based on my own personal knowledge and if called as a witness, I
could and would testify competently to the information set forth herein.
2 On March 9, 2023, Plaintiff Start, Inc. (“Start”) filed the operative Complaint in
this action against Defendants National Fire & Marine Insurance Company (“National Fire”) and
Brown & Brown. A true and correct copy of Start’s Complaint is attached hereto as Exhibit A.
10) 3 A true and correct copy of the operative Second Amended Complaint Start filed in
11 Start, Inc. v. Lonmar Global Risks Ltd. et al., Case No. 19CV04891 (S.B. Superior Court) (the
12) “Lonmar Action”) is attached hereto as Exhibit B.
13 4 A true and correct copy of defendant All Risks, Ltd.’s (“All Risks”) demurrer to the
14 Second Amended Complaint in the Lonmar Action is attached hereto as Exhibit C.
15 5 A true and correct copy of the Court’s final order adopting its tentative ruling on
16) All Risks’ demurrer to the Second Amended Complaint and the tentative ruling in the Lonmar
17 Action is attached hereto as Exhibit D.
18) 6. A true and correct copy of Brown & Brown’s motion for judgment on the pleadings
19) in the Lonmar Action is attached hereto as Exhibit E.
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20) A true and correct copy of the Court’s final order adopting its tentative ruling on
21 Brown & Brown’s motion for judgment on the pleadings and the tentative ruling in the Lonmar
22) Action is attached hereto as Exhibit F.
23 8 A true and correct copy of the Court’s order granting Brown & Brown’s motion for
24 judgment on the pleadings is attached hereto as Exhibit G.
25 9 A true and correct copy of the operative Second Amended Complaint Start filed in
26) Start Inc. et al v. National Fire & Marine Insurance Co. et al., Case No. 19CV02637 (S.B.
27 Superior Court) (the “National Fire Action”) is attached hereto as Exhibit H.
28)
DAVIS WRIGHT TREMAINE LLP
865 S. FIGUEROA ST, SUITE 2400
2 LOS ANGELES, CALIFORNIA 90017-2566
DECLARATION OF JAMES H. MOON ISO DEMURRER TO COMPLAINT (213) 633-6800
Fax: (213) 633-6899
10. A true and correct copy of defendant National Fire’s Memorandum of Points and
Authorities in Support of its Motion to Consolidate the Lonmar Action with the National Fire
Action is attached hereto as Exhibit I.
11. A true and correct copy of the Court’s final order adopting its tentative ruling on
National Fire’s motion to consolidate the Lonmar Action with the National Fire Action and the
tentative ruling in the National Fire Action is attached hereto as Exhibit J.
12. On May 26, 2023, my colleague Peter K. Bae met and conferred telephonically
with counsel for Start regarding the issues raised in Brown & Brown’s concurrently filed
Demurrer to Start’s Complaint. Because the parties could not reach agreement on those issues,
10) Brown & Brown filed the demurrer. A true and correct copy of the email correspondence relating
11 to the conference is attached hereto as Exhibit K.
12) I declare under penalty of perjury under the laws of the State of California that the
13 foregoing is true and correct. Executed this 1st day of June, 2023, at Los Angeles, California.
aa
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15 “James H. Moon’
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DAVIS WRIGHT TREMAINE LLP
865 S. FIGUEROA ST, SUITE 2400
3 LOS ANGELES. FORNIA 90017-2566
DECLARATION OF JAMES H. MOON ISO DEMURRER TO COMPLAINT (213) 633-6800
Fax: (213) 633-6899
EXHIBIT A
—___________ SUM-100
SUMMONS ‘USE ONLY
(SOLO PARA USODE LA
(CITACION JUDICIAL) ELECTRONICALLY FILED
NOTICE TO DEFENDANT: ‘Superior Court of California
(AVISO AL DEMANDADO): County of Santa Barbara
Darrel E. Parker, Executive Officer
NATIONAL FIRE & MARINE INSURANCE COMPANY; BROWN & BROWN INSURANCE
SERVICES OF CALIFORNIA INC; and DOES 1 through 100, inclusive 3/9/2023 5:45 PM
By: Narzralli Baksh , Deputy
YOU ARE BEING SUED BY PLAINTIFF:
(LO ESTA DEMANDANDO EL DEMANDANTE):
START INC.,A CALIFORNIA CORPORATION
INOTICET You have been ‘sued. The court may decide against you without your being heard unless you respond within 30 days. Read the information
below.
You have 30 CALENDAR DAYS after this summons and legal papers are served on you to file a written response at this court and have a copy
|served on the plaintiff. A letter or phone call will not protect you. Your written response must be in proper legal form if you want the court to hear your
|case. There may be a court form that you can use for your response. You can find these court forms and more information at the Califomia Courts
|Online Self-Help Center (www.courtinfo.ca.gov/selthelp), your county law library, or the courthouse nearest you. If you cannot pay the filing fee, ask the
[court clerk for a fee waiver form. If you do not file your response on time, you may lose the case by default, and your wages, money, and property may
be taken without further warning from the court.
There are other legal requirements. You may want to call an attorney right away. If you do not know an attorney, you may wantto call an attorney
referral service. If you cannot afford an attorney, you may be eligible for free legal services from a nonprofit legal services program. You can locate
these nonprofit groups at the California Legal Services Web site (www.lawhelpcalifomia.org), the California Courts Online Self-Help Center
(www. courtinfo.ca. gov/selfhelp), or by contacting your local court or county bar association. NOTE: The court has a statutory lien for waived fees and
costs on any settlement or arbitration award of $10,000 or more in a civil case. The ‘court's lien must be paid before the court will dismiss the case.
|/AVISO! Lo han demandado. Si no responde dentro de 30 dias, la corte puede decidir en su contra sin escuchar su versi6n. Lea fa informacién a
|continuacién.
Tiene 30 DIAS DE CALENDARIO después de que le entreguen esta citaci6n y papeles legales para presentar una respuesta por escrito en esta
corte y hacer que se entregue una copia al demandante. Una carta o una llamada telefénica no lo protegen. Su respuesta por escrito tiene que estar
len formato legal correcto si desea que procesen su caso en la corte. Es posible que haya un formulario que usted pueda usar para su respuesta.
|Puede encontrar estos formularios de la corte y més informacién en el Centro de Ayuda de las Cortes de Califomia (www.sucorte.ca.gov), en la
lbiblioteca dé leyes de su condado o en la corte que-le quede més cerca. Si no puede pagar la cuota de presentacién, pida al secretario de /a corte que
fe dé un formulario de exencién de pago de cuotas. Sino presenta su respuesta a tiempo, puede perder el caso por incumplimifento y la corte le podré
'quitar su sueldo, dinero y bienes sin més advertencia.
Hay otros requisitos legales. Es recomendable que llame a un abogado inmediatamente. Sino conoce a un abogado, puede llamar a un servicio de
remisi6n a abogados. Si no puede pagar a un abogado, es posible que cumpla con los requisitos para obtener servicios legales gratuitos de un
rogam de servicios legales sin fines de lucro. Puede encontrar estos grupos sin fines de lucro en el sitio web de California Legal Services,
\(www.lawhelpcalifornia.org), en el Centro de Ayuda de las Cortesde California, (www.sucorte.ca.gov) o poniéndose en contacto con /a corte o ef
|colegio de abogados locales. AVISO: Por ley, la corte tiene derecho a reclamar las cuotas y los costos exentos por imponer un gravamen sobre
lcualquier racuperacién de $10,000 6 mas de valor recibida mediante un acuerdo o una concesién de arbitraje en un caso de derecho civil. Tiene que
\pagar el gravamen de Ia corte antes de que la corte pueda desechar el caso,
The name and address of the court is: CASE NUMBER: (Ndmero del Ca: 80):
(El nombre y direccién de la corte es): SANTA BARBARA SUPERIOR COURT 23CV00965
ANACAPA DIVISION
1100 ANCAPA ST, SANTA BARBARA, CA 93101
The name, address, and telephone number of plaintiff's attorney, or plaintiff without an attorney, is: (E! nombre, la direccién-y el numero
de teléfono del abogado del demandante, o del demandante que-no tiene abogado, es):
CAPPELLO & NOEL, LLP, 831 STATE STREET, SANTA BARBARA, CA 93101, 805-564-2444
DATE: 3/09/2023 Clerk, by /s/ Narzralli Baksh » Deputy
(Fecha) (Secretario) (Adjunto)
(For proof of service of this summons, use Proof of Service of Summons (form POS-010).)
(Para prueba de entrega de esta citation use el formulario Proof of Service of Summons, (POS-010)). -
ISEAL)
NOTICE TO THE PERSON SERVED: You are server
4. [) as an individual defendant. :
2. [_]as the person sued under the fictitious name of (specify):
BOR 3. [XX] on behalf
of (specify): Brown & Brown Insurance Services of California Inc.
Sy under: [X] CCP 416.10 (corporation) [1 cop 416.60 (minor)
[_] CCP 416.20 (defunct corporation) [_] cep 416.70 (conservatee)
[] CcP 416.40 (association or partnership) [] CCP 416.90 (authorized person)
.
=
55
by) 4.
[} other (specify):
[[_] by personal delivery on (date):
Pane
1 oft
Form Adopt SUMMONS Codie of civil Procedure §§ 412.20, 465
Judicial Council’ www.courts.ca.gov
‘SUM-100 [Rev. 2008]
For your protection and privacy, please press the Clea
This Form button after you have printed the form. Sa this f
~ Clear:
ELECTRONICALLY FILED
Superior Court of California
County of Santa Barbara
A. Barry Cappello (SBN 037835) Darrel E. Parker, Executive Officer
abc@cappellonoel.com 3/9/2023 5:45 PM
Leila J. Noél (SBN 114307) By: Narzralli Baksh , Deputy
Inoel@cappellonoel.com
David L. Cousineau (SBN 298801)
dcousineau@cappellonoel.com
G. Michael Brelje (SBN 269476)
mbrelje@cappellonoel.com
Richard Lloyd (SBN 332101)
rlloyd@cappellonoel.com
CAPPELLO & NOEL LLP
831 State Street
Santa Barbara, California 93101
Telephone: (805) 564-2444
8 Facsimile: (805) 965-5950
9 Attomeys for Plaintiff START INC.
w SUPERIOR COURT OF THE STATE OF CALIFORNIA
11
FOR THE COUNTY OF SANTA BARBARA — ANACAPA DIVISION
12
23CV00965
13 START INC., a California corporation, Case No.:
14 Plaintiff, COMPLAINT FOR:
15 vs. (1) Breach of Contract
(2) Breach of Implied Covenant of
16 NATIONAL FIRE & MARINE INSURANCE Good Faith and Fair Dealing
COMPANY; BROWN & BROWN (3) Professional Negligence
17 INSURANCE SERVICES OF CALIFORNIA
INC; and DOES 1 through 100, inclusive, DEMAND FOR JURY TRIAL
18
Defendants.
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CAPPELLO
& NOEL ws
TRIAL LAWYERS COMPLAINT
Nature of the Case
1 This case results from a wrongful and bad faith handling and denial of insurance
benefits by an insurer, and the professional negligence of an insurance broker in failing to procure
adequate coverage for their client. Plaintiff START, INC. (“Start” or “Plaintiff’) hired and relied on
Defendant BROWN & BROWN INSURANCE SERVICES OF CALIFORNIA, INC. (“Brown &
Brown”) to obtain insurance coverage for Start’s medical cannabis farm, commercial-scale nursery,
and plant and pharmaceutical drug research and development greenhouse, the core component of a
medical enterprise serving medical patients and business to business customers. Brown & Brown
procured an “all-risks” policy from Defendant NATIONAL FIRE & MARINE INSURANCE
10 COMPANY (“National Fire” or “Insurer”) (collectively with Brown & Brown, “Defendants”),
Il providing coverage for Start’s commercial property, business personal property, and business loss.
12 2. When Start’s valuable greenhouse, which housed Start’s inventory of annual mother
13 plants and monthly harvest of cuttings, was damaged after the Thomas Fire in 2017, Start promptly
14 notified National Fire of its claim, and sought reimbursement pursuant to the National Fire policy.
15 Despite reassurances that Start would be fully compensated, National Fire then unreasonably ignored
16 its own toxicology report, delayed releasing available funds, downplayed and undervalued Start’s
17 damaged business property, misidentified building elements, and, after months of unnecessary
18 requests for additional information and documentation, ultimately denied the majority of Start’s
19 business interruption claim. During the claim process, National Fire also (1) claimed that the
20 coverage provided by the policy which Brown & Brown had procured on Start’s behalf was
21 inadequate to cover the full amount of property damage suffered by Start and (2) referenced as part
22 of its denial a marijuana endorsement which it claimed limited the coverage which Start had hired
23 Brown & Brown to procure.
The Prior Action and this Complaint
25 3 On May 20, 2019, Start filed an action against the National Fire for breach of its
26 obligations under the insurance contract and fraud in the performance, and against Brown & Brown
27 for professional negligence. (Start Inc. et al y. Matt Porter et al, S.B. Superior Ct. Case No.
28 19CV02637 (hereinafter the “Prior Action”)). National Fire and Brown & Brown answered
2.
COMPLAINT
Plaintiff's Second Amended Complaint in the Prior Action, after which the Prior Action was
consolidated, over Plaintiffs objection, with Case No. 19CV04891, titled Start, Inc. et al. v. Lonmar
Global Risks Limited, et al. (hereinafter the “Lonmar Action”, and with the “Prior Action” the
“Consolidated Action”).
4. On April 20, 2021, Start, Defendants, and the defendants in the Lonmar Action
entered into a: stipulation and tolling agreement to dismiss the Consolidated Action without
prejudice, in order for Start to pursue its action against Southern California Edison Company and
Edison International for damages arising out of the Thomas Fire and subsequent mudslides, titled CA
Union Cooperative et al. vs. Southern California Edison Companyet al., pending in the Superior _
10 Court of Los Angeles as Case No. 20STCV44868 and consolidated into the Southern California Fire
11 Cases coordination proceeding, JCCP No. 4965 (the “SCE Action”). A true and correct copy of the
12 stipulation and signed order dismissing the Consolidated Action without prejudice, including the
13 tolling agreements entered into between Plaintiff and Defendants, is attached as Exhibit A and is
14 incorporated herein by reference.
15 The Partie:
16 5. Plaintiff START, INC. is now, and at all times mentioned herein was, an active
17 corporation in good standing and duly organized under the laws of California, with its principal
18 executive office location in Santa Barbara County, California. Plaintiff owned and/or had insurable /
19 interests in real property located at 1628 Cravens Lane, Carpinteria, Santa Barbara County — South
20 County, California 93103 (hereinafter the “Subject Property”).
21 6 Plaintiff is informed and believes and based thereon alleges that Defendant
22 NATIONAL FIRE & MARINE INSURANCE COMPANY and DOES 1 through 25 (hereinafter the
“Insurer” or “National Fire”) were corporations or other business entities that at all relevant times
24 were, and are, engaged in the business of insurance in Santa Barbara County in the State of
25 California.
26 7. Plaintiff is informed and believes and based thereon alleges that Defendant BROWN
27 & BROWN INSURANCE SERVICES OF CALIFORNIA, INC., and DOES 26 through 35
28 (hereinafter “Brown & Brown”), were corporations or other business entities that at-all relevant
3
COMPLAINT
times were, and are, engaged in the business of insurance agency or brokerage in Santa Barbara
County in the State of California.
8. The true names and capacities of Defendants named herein as DOES 1 through 100,
inclusive, are unknown to Plaintiff, who therefore sue said Defendants by such fictitious names.
Plaintiff is informed and believes and thereon alleges that each Defendant named herein as a DOE is
obligated in some aspect of law or fact to Plaintiff and is further ‘responsible and liable for the
damages sustained by Plaintiff, having legally and proximately caused the damages as herein
alleged. Plaintiff will amend this Complaint to allege the true names and capacities of said DOE
Defendants upon the ascertainment of proof thereof.
10 9 - Plaintiff is informed and believes and thereon alleges that each of the Defendants
ll sued herein, either named or unnamed, was the agent, servant, or employee of each of the remaining
12 Defendants and in doing the things. hereinafter alleged was acting within the scope of such agency,
13. service, and/or employment. Plaintiff is further informed and believes and thereon alleges that each
14 of the Defendants was acting within the authority and/or permission, and/or with the ratification of
15 each of the remaining Defendants.
16 The Insured Business of Plaintiff Start, Inc.
17 10. Start is a California corporation that operated a state-of-the-art medical cannabis
18 nursery with a growing inventory of select mother plants from which small cuttings were removed. as
19 needed to be rooted and then (1) sold as clones or teens or (2) used to. maintain a productive
20 inventory of mother plants. Patrick Lang began developing a “seed to patient” legal medical
21 cannabis enterprise in 1998, leased and operated the 55,000 square-foot greenhouse at 1628 Cravens
22 Lane, Carpinteria, California beginning in 2015 to research and develop a state-of-the-art farm and
23 nursery, and in 2017 founded Start Inc., acommercial nursery to serve as the core of the enterprise.
24 Start brought together an elite group of industry leading experts: Patrick Lang, John Stashenko IV,
25 Alfonso Navarro, and Michael Masterman-Smith, PhD, collectively had worked together in all
26 aspects of the legal cannabis industry, focusing on the scalable production, manufacturing, drug
27 delivery science, and distribution of accurately dosed cannabis medicines for treatment of serious
28 illness.
COMPLAINT
11, As industry leaders, with decades of experience, successful careers, families, and
hundreds of thousands of investment dollars at stake, Start’s founders were early adopters of
conventional business practices. They aimed to develop fully legalized and vertically integrated
medical operations, including using business attorneys, CPAs, an onsite controller, and procuring
first of its kind insurance coverage within this nascent industry. At the time, insurance was so new
to the cannabis industry that in 2017-2018 less than 1% of California cannabis farms were insured,
clearly an unprecedented opportunity for Brown and Brown and National Fire who were eager to
enter the burgeoning new market.
tart’s Insurance: overage
10 12. Part of Start’s cannabis-nursery insurance coverage was obtained from National Fire.
11 The-insurance policy had an effective date of June 9, 2017, to June 9, 2018, and had a policy number
12 of 12PRM039109-01 (hereinafter referred to as “the Policy”). A true and correct copy of the Policy
13 is attached to this Complaint as Exhibit B and is incorporated herein by reference. The Policy
14 included coverages for commercial property, business personal property, and business income.
15 During the procurement process, Start and its founders were transparent about their business, sale
16 projections, and actual sales, and National Fire knew it was insuring a burgeoning new industry. By
17 issuing its policy, National Fire agreed to cover Start’s medical cannabis nursery commercial
18 property, business personal property, and business income.
19 Start’s Covered Loss
20 13. _As a result of the smoke and ash created by the Thomas fire, Start’s greenhouse
21 sustained catastrophic toxic damage. Soot and ash coated the greenhouse and its climate-regulating
22 mechanisms, including the shade-clothi and air-vents. The toxic contamination of Start’s greenhouse
23 was particularly damaging because of the deep penetration into the building’s elements and surfaces.
24 The attempted remediation efforts were painstaking, labor-intensive, expensive, and hazardous.
25 14, On or about January 9, 2018, high winds and a torrential rainstorm caused further
26 damages, devastating mudslides, evacuations, and road and highway closures which blocked access
27 to the greenhouse for several days. The event exacerbated damage to the greenhouse and caused key
28 greenhouse infrastructure and equipment to malfunction. The totality of damages made it impossible
3
COMPLAINT
to maintain the greenhouse within the strict safe range of atmospheric conditions that are required to
sustain Start’s inventory. The greenhouse was unusable until extensive and expensive repairs could
be performed to restore the greenhouse to a safe and contamination-free operating condition. During
the period that the greenhouse was not safe, Start’s business was interrupted because a clean and
operating greenhouse was essential to its operations.
15. As national fire experts, National Fire and Brown & Brown knew (or should have
known) the catastrophic extent of ash and soot damage to the building based on their.core expertise -
and “Limited Wildfire Soot Assessment” report. They, in fact, hired American Environmental
Group, who collected on-site samples in December 2017 and prepared their final report dated
10 January 10, 2018. Then, after producing the report, National Fire and Brown & Brown, and their
il subsequent “experts,” ignored it, and instead produced and relied on later and irrelevant reports
12 made by the wrong experts (structural and mechanical engineers), thus obfuscating the primary issue
13 of toxic damage to the building.
14 Start’s Insurance Claim and the Insurer’s Respons:
15 16. When Start became aware that ash and soot from the Thomas fire had damaged the
16 greenhouse, it made a claim on the Policy for damage to its commercial property, business personal
17 property and business interruption caused by Start’s inability to use its greenhouse. The Insurer
18 designated Start’s claim with claim number 12-04-437357 (hereinafter referred to as “the Clai ”).
19 When Start regained access to the greenhouse after the mudslides, Start then timely notified National
20 Fire of the further damage it had suffered. Throughout the claims process, National Fire and its
21 agents engaged in dilatory tactics, pointless exercises, and used bad faith in its decision-making
22 process.
23 17. This included ignoring crucial contamination reports and hiring claim adjusters and
24 so-called “experts” who lacked knowledge and experience in the medical cannabis industry in
25 general and possessed even less knowledge of.the specific needs of a large-scale medical cannabis
26 nursery. National Fire’s dearth of knowledge and experience led to grossly inaccurate opinions and
27 evaluations, including insisting on ineffective and futile partial repairs; failing to pay out the policy
28 limit to Start when National Fire knew, or should have known, that Start’s damages significantly
6
COMPLAINT
exceeded coverage limits, and ultimately, the severe underpayment of Start’s building and business
interruption claim. National Fire also unreasonably maintained, in the face of evidence and technical
reports to the contrary, that Start’s greenhouse was “fully operational.” As a result, Start struggled
to obtain payment from National Fire for its ongoing business interruption losses, and to recover the
amounts required to fully restore its damaged business property.
18. National Fire’s conduct was particularly egregious because National Fire knew that-
Start, the core of the medical enterprise, was experiencing financial strain, which was explicitly
communicated to National Fire’s agents on multiple occasions. Despite these pleas, National Fire
continued to delay or outright deny benefits. As a result of National Fire’s dilatory and unreasonable
10 onduct, Start was deprived of the benefit of its Policy with National Fire, and Start’s principals
ll experienced significant emotional disturbance and distress arising out of National Fire’s misconduct.
12 Defendant Brown & Brown Ne; ently Procures Polic
13 19. Defendant Brown & Brown Insurance Services of California, Inc., acted as Plaintiff's
14 insurance agent or broker-in procuring the Policy from the Insurer. Start communicated to Brown &
15 Brown the details of its business, including that it operated a large-scale cannabis nursery that grows
16 mother plants producing clones, and teens. Start relied on Brown & Brown to secure an insurance
17 policy that would cover the full value of Start’s business property.
18 20. However, when Start made its claim on the Policy, National Fire claimed that Start
19 was underinsured, i.e., the Policy coverage limits were insufficient to cover the full extent of Start’s
20 losses. Start had relied on Brown & Brown to secure the proper amount of coverage, but Brown &
21 Brown, according
-to National Fire, failed to secure such coverage. As a result, Start suffered
22 significant uninsured losses that exceeded the amounts of coverage available under the Policy.
Additionally, even though Brown & Brown knew that Start was a legal medical marijuana business,
24 Brown &-Brown, according to National Fire, obtained a policy that contains a marijuana
25 endorsement that limits the coverage which Brown & Brown was hired to procure.
26 FIRST CAUSE OF ACTION — BREACH OF CONTRACT
27 (By Plaintiff against Defendants National Fire & Marine and DOES 1 through 50)
28 21. Plaintiff realleges and incorporates herein by reference each and every allegation as
1
COMPLAINT
though fully incorporated herein.
22. . As set forth above Start entered a written contract of insurance (with implied
provisions) with National Fire.
23. National Fire had fiduciary duties under the Policy, the law, and insurance industry
custom and practice to, among other'things, pay Start for the losses it suffered arising out of damage
to its commercial property, business personal property, and loss of business income. National Fire
likewise was obligated to conduct a thorough investigation of all bases that might support Start’s
claim for coverage, yet failed to do so.
24. National Fire breached its fiduciary duties under the Policy by engaging in dilatory _
10 tactics and failing to pay Start for the damage to its commercial property, business personal property
1 and loss of business income, including by: asserting grounds to avoid or. limit coverage that it knew
12 were not supported by, and are contrary to, the terms of the Policy, the law, industry standards and
13 practices, the parties’ course of dealings, and the facts; failing to conduct an honest evaluation of
14 Start’s claims and asserting grounds to avoid coverage based on its corrupt investigation; failing to
15 fully inquire into possible bases that might support coverage for Start; and-giving greater
16 consideration to its own interests than it gave to Start’s interests as National Fire’s insured.
17 25. Start has performed all covenants and conditions required under the Policy unless
18 otherwise excused by National Fire.
19 26. As a proximate cause of National Fire’s breach of contract, Start has suffered, and
20 continues to suffer, damages in an amount according to proof, but which exceeds the jurisdictional
21 limits of this Court.
22 SECOND CAUSE OF ACTION — BREACH OF THE IMPLIED COVENANT OF GOOD
FAITH AND FAIR DEALING‘
23
(By Plaintiff against Defendants National Fire & Marine and DOES 1 through 50)
24
27. Plaintiff realleges and incorporates herein by reference each and every allegation as
25
though fully incorporated herein.
26
28. During its processing of Start’s claim, National Fire, acting via and through its agents,
27
committed the acts described above, including but not limited to: (1) employing purportedly
28
COMPLAINT
“independent” adjusters with clear bias and limited expertise or knowledge of medical cannabis
businesses; (2) ignoring crucial toxicity reports; (3) employing unqualified so-called “experts” with a
clear bias against Start’s business; (4) withholding, “drip-feeding” and exhausting available coverage
amounts for futile remediation work; (5) bombarding Start with various meritless queries and
Tequests for documentation; and (6) ultimately largely denying Start’s business interruption claim for
the purpose of violating the rights and benefits to which Start is entitled under the Policy and without
considering Start’s interests and rights under the Policy.
29. As a direct and proximate result of National Fire’s unreasonable acts, Start has been.
damaged in an amountin excess of the Court’s jurisdictional limits.
10 30. National Fire’s acts are inconsistent with Start’s reasonable expectations, and are
11 contrary to established insurance claims practices and legal requirements, and constitute bad faith.
12 31. Pursuant to the holding in Brandt v. Superior Court (1985) 37 Cal. 3d 813, Start is
13 entitled to recover all attorneys’ fees that it reasonably incurred, and is incurring, in its efforts to
14 obtain the benefits of the coverage that National Fire wrongfully withheld, and is withholding, in bad
15 faith, plus interest. The total amount of these attorneys’ fees is currently unknown but will be
16 asserted according to:proof.
17 32. National Fire’s conduct is despicable and was conducted with a conscious disregard
18 of Start’s rights, constituting oppression, fraud, and/or malice. National Fire engaged in a series of
19 acts designed to wrongfully deny the benefits due under the Policy. Specifically, National Fire, in
20 acting as alleged above and in possession of information, facts, and law to the contrary, consciously
21 disregarded Start’s rights, and forced Start to incur substantial financial loss, without sufficient
22 assistance from National Fire, thereby inflicting substantial damages to Start. National Fire ignored
Start’s interests-and concerns, with the intent to injure and act fraudulently, within the meaning of
24 Civil Code, section 3294. Start is therefore entitled to recover punitive damages in an amount
25 sufficient to punish, make an example of, and to deter similar conduct.
26 THIRD CAUSE OF ACTION — PROFESSIONAL NEGLIGENCE -
27 (By Plaintiff against Defendants Brown & Brown Insurance Services of California, Inc.
28 and DOES 25 through 35)
9
COMPLAINT
33, Plaintiff realleges and incorporates herein by reference each and every allegation as
though fully incorporated herein.
34, Defendant Brown & Brown acted as Plaintiff's insurance agent in procuring the
Policy from the Insurer. Start communicated to Brown & Brown the details of its enterprise,
including that it operated a large-scale medical cannabis nursery that grows mother plants which
produce clones and teens, and relied on Brown & Brown to determine the proper insurance coverage
amounts for the policy secured through National Fire, and to secure such amounts of insurance
coverage as part of its agency or brokerage activities.
35. Through the claims process, Start was told by National Fire that it was underinsured,
10 meaning that Brown & Brown had failed to-secure the proper.amount of coverage. National Fire
11 also referenced as part of its partial denial a marijuana endorsement which it claimed limited the
12 coverage for which Brown & Brown was hired to procure. As a result, Start suffered losses which
13 allegedly were not covered by the Policy Brown. & Brown was hired to procure.
14 36. Brown & Brown owed Start a duty to use reasonable care, diligence, and judgment in
15 procuring insurance on behalf of-Start. Brown & Brown knew of the specific needs of Start’s
16 business, knew the particular type and extent of coverage, and Start reasonably relied on Brown &
17 Brown to properly secure insurance for Start’s business. As a proximate cause of Brown & Brown’s
18 conduct, Plaintiff suffered significant economic loss and damages in an amount according to proof,
19 but which exceeds the jurisdictional limits of this Court.
20
21 PRAYER FOR RELIEF
22 WHEREFORE, Start prays for judgment against as follows:
23 First Cause of Action
24 (Breach of Contract against National Fire)
25 For compensatory, general, consequential, and incidental damages, in an amount
26 according to proof; ~
27 For pre-judgment and post-judement interest at the legal rate;
28 For costs and expenses of suit; :
10
COMPLAINT
4. For such other further relief as the Court may deem just and proper.
Second Cause of Action
(reach of Implied Covenant of Good Faith and Fair Dealing against National Fire)
1 For compensatory, general, consequential, and incidental damages, in an amount
according to proof;
For pre-judgment and post-judgment interest at the legal rate;
For costs and expenses of suit, including attomney’s fees per Brandt v. Superior Court
(1985) 37 Cal.3d 813;
9 For exemplary/punitive damages pursuant to Civil Code § 3294, in an amount
10 appropriate to punish Defendant NATIONAL FIRE & MARINE INSURANCE
11 COMPANY and others from engaging in similar misconduct;.and
12, For such other further relief as the Court may deem just and proper.
13 ~ ‘Third Cause of Action
14 (Professional Negligence against Brown & Brown)
15 For compensatory, general, consequential, and incidental damages, in an amount
16 according to proof;
17 For pre-judgment and post-judgment interest at the legal rate;
18 For costs and expenses of suit;
~ ws
19 For such other further relief as the Court may deem just and proper.
20
21 Dated: March 9, 2023 CAPPELLO & NOEL LLP
22
By: /s/ Leila J. Noél_
23 G. Barry Cappello
Leila J. Noél_
24 David L. Cousineau
25 G. Michael Brelje
Richard Lloyd
26 Attomeys for Plaintiff START, INC.
27
28
i
COMPLAINT
DEMAND FOR TRIAL BY JURY
Plaintiff demands a trial by jury of all issues so triable in this action.
Dated: March 9, 2023 CAPPELLO & NOEL LLP
By: /s/ Leila J. Noél
A. Barry Cappello
Leila J. Noél
David L. Cousineau
G. Michael Brelje
Richard Lloyd
Attorneys for Plaintiff START, INC.
10
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12
COMPLAINT
EXHIBITA —
Pursuant to CRC 2.259 this document has been electronically filed by the
Superior Court of California, County of Santa Barbara, on 4/16/2021
A. Barry Cappello (CSB No. 037835)
abc@cappellonoel.com
Leila J. Noél (CSB No. 114307)
FILED.
SUPERIOR COURT of CALIFORNIA
Inoel@cappellonoel.com COUNTY of SANTA BARBARA
CAPPELLO & NOEL LLP 04/20/2021
831 State Street Darrel E. Parker, Executive Officer
Santa Barbara, California 93101 BY. Chavez, Terri
Telephone: (805) 564-2444 Deputy Clerk”
Facsimile: (805) 965-5950
Robert Nelson (SBN 132797)
melson@Ichb.com
Lexi J. Hazam (SBN 224457)
Ihazam@Ichb.com
Lieff, Cabraser, Heimann & Bernstein, LLP
275 Battery Street, 29th Floor,
San Francisco, CA 94111
10 Telephone: . (415) 956-1000
Fax: (415)'956-1008
11
12 Attorneys for Plaintiff
START, INC.
13
SUPERIOR COURT OF THE STATE OF CALIFORNIA
14
COUNTY OF SANTA BARBARA
15
START, INC., a California corporation, Case No.: 19CV02637
16
Plaintiff, [Consolidated with Case No. 19CV04891]
17 Vv,
Judge: Hon. Donna D. Geck
18 NATIONAL FIRE & MARINE INSURANCE :
COMPANY et al.
19 STIPULATION
ORDER TO DISMISS WITHOUT
20 PREJUDICE DEFENDANTS NATIONAL
Defendants. FIRE & MARINE INSURANCE
21 COMPANY; BROWN & BROWN
INSURANCE SERVICES OF -
22 CALIFORNIA, INC. AND ROYAL &
SUN ALLIANCE PLC, AND DISMISS
23 WITH PREJUDICE DEFENDANT
BRENT BUHRMAN ~
24
Complaint Filed: May 20, 2019
25 SAC Filed: November 22, 2019