Demurrer in Start Inc vs National Fire & Marine Insurance Company et al| Trellis.Law

On March 09, 2023 a Motion-Secondary was filed involving a dispute between Start Inc, and Brown & Brown Insurance Services Of California Inc, National Fire & Marine Insurance Company, for Unlimited Insurance Coverage (18) in the District Court of Santa Barbara County.

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DAVIS WRIGHT TREMAINE LLP ELECTRONICALLY FILED
Joseph E. Addiego III (SBN 169522) Superior Court of California
joeaddi \dwt.com. County of Santa Barbara
50 Califomia St, Suite 2300 Darrel E. Parker, Executive Officer
San Francisco, Califomia 94111 6/1/2023 3:13 PM
Telephone: (415) 276-6500 By: Gabriel Moreno , Deputy

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
10

11 Attomeys for Defendant Brown & Brown
Insurance Services of California, Inc.
12

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
16
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
21
Defendants. Date: July 31, 2023
Time: 10:00am.
Dept. 5

24 Action Filed: March 9, 2023
Trial Date: None
25

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.
7
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
14

15 “James H. Moon’
16)

18)

19)

20)

22)

26)

28)

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.
19
20

21
22

23
“24
25

28
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.

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
11
12

19
20
21

23
24
25

26
27

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

Case Info

Judge

Sterne, Colleen K Track Judge’s New Case

Case No.

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Document Filed Date

June 01, 2023

Case Filing Date

March 09, 2023

County

Parties

Addiego, Joseph E, III Attorney for the Defendant
Brown & Brown Insurance Services of California Inc Defendant
Dowling, Thomas J Attorney for the Defendant
Moon, James H Attorney for the Defendant
Moon, James H Attorney for the Plaintiff
National Fire & Marine Insurance Company Defendant
Noel, Leila J Attorney for the Plaintiff
Start Inc Plaintiff
A Cappello Attorneys for Plaintiffs
Natalia Duque Mejia Attorneys for Defendants
Kihyun Bae Attorneys for Defendants
David Cousineau Attorneys for Plaintiffs
Brelje Attorneys for Plaintiffs
Richard Lloyd Attorneys for Plaintiffs
Robert Nelson Attorneys for Plaintiffs
Lexi Hazam Attorneys for Plaintiffs
Conte Cicala Attorney
Dianne Meconis Attorneys for Defendants
Natalie Mutz Attorneys for Defendants
Hossain Shokouhi Attorneys for Plaintiffs
Evan Selik Attorneys for Plaintiffs
James Parker Attorneys for Defendants
Sonya Tamiry Attorneys for Defendants
Donna Geck Attorney

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Motion-Secondary: Start Inc vs National Fire & Marine Insurance Company et al

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