Preview
7/23/2020
J. Edward Kerley (175695) Superior Court of California
Dylan L. Schaffer (153612) County of Butte
Kerley Schaffer LLP
1939 Harrison Street, #500 07/24/2020
Oakland, Califomia 94612
Telephone: (510) 379-5801 Kimberly Flener, Clerk
Facsimile: (510) 228-0350
By Ch0ane Deputy
Attomeys for Plaintiffs Electronically FILED
Hyon M. Kientzy (209579)
Jaime Y . Ritton (303483)
CODDINGTON, HICKS & DANFORTH
555 Twin Dolphin Drive, Suite 300
Redwood City, CA 94065-2133
Telephone: (650) 592-5400
Facsimile: (650) 592-5027
10 Attomeys for Defendant
CSAA Insurance Exchange
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SUPERIOR COURT FOR THE STATE OF CALIFORNIA
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FOR THE COUNTY OF BUTTE
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PHILIP WYSOCKI an individual, and Case No. 19CV02710
15 MICHELLE WYSOCKL an individual
STIPULATION TO PERMIT
16 Plaintiffs, PLAINTIFFS’ LEAVE TO FILE A
FIRST AMENDED COMPLAINT
17 Vv. AND [PROPOSED] ORDER
18 CSAA INSURANCE EXCHANGE, an Assigned to Hon. Judge Tamara L. Mosbarger
unincorporated association, and DOES 1-20,
19 Date Filed: September 6, 2019
Defendants. Trial Date: February 8, 2021
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Stipulation to File FAC and PROPOSED Order
THE PARTIES, BY AND THROUGH THEIR RESPECTIVE COUNSEL,
AGREE AND STIPULATE AS FOLLOWS:
Whereas the parties agree Plaintiffs should be granted leave to file their First
Amended Complaint, the parties stipulate as follows:
1 With the Court’s approval, Plaintiffs Philip and Michelle Wysocki shall be
granted leave to file a First Amended Complaint. A copy of the proposed First
Amended Complaint is attached hereto as Exhibit A;
Plaintiffs shall file their First Amended Complaint within ten (10) days of the
Court’s entry of an order permitting such filing;
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11 Defendants’ responsive pleading to the First Amended Complaint shall be due
12 thirty (30) days after the First Amended Complaint is filed;
13 The stipulation to permit filing of the First Amended Complaint does not
14 forfeit or waive CSAA Insurance Exchange’s rights to challenge the amended
15 pleading or otherwise;
16 This stipulation may be signed in counterparts and facsimile, electronic and/or
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scanned/emailed signatures shall be treated as originals.
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IT IS SO STIPULATED.
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Dated: July 15, 2020 KERLEY SCHAFFER LLP
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oy
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an L. Schaffer
24 Attomeys for Plaintiffs
Phillip and Michelle Wysocki
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Stipulation to File FAC and PROPOSED Order
Dated: July 22, 2020 CODDINGTON, HICKS & DANFORTH
Al aime Y, Bitton
By aaa
Jaime Y. Ritton
Attomeys for Defendant
CSAA Insurance Exchange
ORDER
Pursuant to the stipulated request by the Parties to this action and good cause appearing,
10 the Court ORDERS as follows:
11 Plaintiffs are granted leave to file a First Amended Complaint.
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13 IT IS SO ORDERED
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Dated: 712412020
Anim Dcboe
Hon. Tamara. Mosbarger
16 Judge of the Superior Court
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Stipulation to File FAC and PROPOSED Order
EXHIBIT A
EXHIBIT A
J. Edward Kerley (175695)
Dylan L. Schaffer (153612)
Kerley Schaffer LLP
1939 Harrison Street, #500
Oakland, Califomia 94612
Telephone: (510) 379-5801
Facsimile: (510) 228-0350
Attomeys for Plaintiffs
SUPERIOR COURT FOR THE STATE OF CALIFORNIA
FOR THE COUNTY OF BUTTE
PHILIP WYSOCKI, an individual, and Case No. Case No. 19CV 02710
10 MICHELLE WYSOCKI, an individual
First Amended Complaint and Demand for
11 Plaintiffs, Jury Trial
12 Vv.
13 CSAA INSURANCE EXCHANGE, an
unincorporated association, and DOES 1-20,
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Defendants.
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First Amended Complaint and Demand for Jury Trial
VENUE AND JURISDICTION
1 Plaintiffs are residents of Paradise, in Butte County California.
2 CSAA Insurance Exchange (““CSAA”) is an unincorporated association domiciled
in California. CSAA is authorized to transact business in the State of California, and was, and is,
transacting the business of insurance in the State of Califomia. CSAA is headquartered in
Walnut Creek, Califomia, with its primary office location and principal place of business located
at 3055 Oak Road, Walnut Creek, CA 94597.
3 Venue is proper in the Superior Court of California for the County of Butte as it is
the county in which the occurrences and events giving rise to Plaintiffs’ injuries occurred. The
10 allegations and claims for relief set forth herein arise out of unlawful acts committed in part in
11 that county. V enue is further predicated on the fact that CSAA transacts business in Butte
12 County and that CSAA derives substantial revenue from its activities in California.
13 4 The true names and capacities of defendants DOES 1 through 20 are unknown
14 and are they are therefore sued by fictitious names. Each of the DOE defendants is, in some
15 manner, responsible for the damages alleged.
16 FIRST CAUSE OF ACTION
17 INSURANCE BAD FAITH
18 (AGAINST CSAA AND DOES 1-20)
19 5. Plaintiffs incorporate by reference the preceding paragraphs as though fully set
20 forth in this first cause of action.
21 6 CSAA sold Plaintiffs a policy of insurance, identified as policy number
22 CAH3105096210 (“Policy”), insuring all risks of loss at Plaintiffs’ home located at 588 Golden
23 Oaks Road, Paradise, CA (“Property”).
24 7 While the Policy was in effect, on or about November 8, 2018, the Property
25 suffered significant damage from fire (“Loss”).
26 8 Plaintiffs provided prompt notice to CSAA, which CSAA assigned claim number
27 1002-97-3737 (“Claim”) and otherwise satisfied all conditions precedent to coverage.
28 9 CSAA and DOES 1-20 breached the covenant of good faith and fair dealing by,
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First Amended Complaint and Demand for Jury Trial
among other things:
(a) improperly, unreasonably, and maliciously delaying, denying and/or underpaying
the Claim, including but not limited to benefits for loss of us, dwelling and other
structure repairs, and contents repair and replacement;
(b) failing to diligently conduct a thorough, fair, and objective investigation of the
loss;
(c) fraudulently misrepresenting and/or concealing pertinent facts and benefits under
the Policy for the Claim, as well as Plaintiffs’ rights under California law and
regulations as applies to homeowners’ property claims;
10 (d) intentionally violating Insurance Code §790.03(h) and the Fair Claims Settlement
11 Practices Regulations §§ 2695.1 et seq. in settling the Claim;
12 (e) fraudulently causing its insured to expend money in investigative costs with the
13 assurance that those costs would be reimbursed, and then refusing to reimburse
14 such investigative costs that should have been born by CSAA’
15 (f) requiring Plaintiffs to obtain counsel and file a lawsuit in order to obtain amounts
16 owed under the Policy.
17 10. As a direct and proximate result of CSAA and DOES 1-20's breach of the
18 covenant of good faith and fair dealing, malice, fraud, and oppression by the intentional delay
19 and withholding of benefits under the Policy, Plaintiffs have lost contract benefits under the
20 Policy, sustained consequential damages, and incurred attorney's fees and costs in seeking
21 enforcement of the rights under Policy.
22 11. In doing the things set forth above, CSAA and DOES 1-20 acted intentionally
23 with fraud, malice, and oppression in that they knowingly and intentionally violated Plaintiffs’
24 rights under the Policy for the purpose of depriving Plaintiffs of the Policy benefits. Plaintiffs are
25 therefore entitled to exemplary damages in an amount in accordance with the evidence
26 introduced at trial.
27 12. On information and belief, as further evidence that the various acts of bad faith,
28 malice, fraud, and oppression set forth above were done knowingly, deliberately, and
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First Amended Complaint and Demand for Jury Trial
intentionally, each of the acts of bad faith, malice, fraud, and oppression set forth above are part
of a pattern of institutional bad faith by CSAA, designed to reduce claims costs and expenses.
Specifically, in the investigation and adjustment of first-party property claims in California,
CSAA routinely engages in the following acts of bad faith, which violate California law:
(a) illegally incentivizing claims personnel to minimize the payment of policy
benefits by awarding bonuses, financial incentives, and raises to claims
employees in violation of Insurance Code §816;
(b) misrepresenting pertinent facts in violation of Insurance Code §790.03(h)(1) and
10 CCR §2695.4(a) regarding CSAA’s obligation under Insurance Code §2051 to
10 pay the amount it would cost an insured to repair or replace damaged property;
11 (c) misrepresenting pertinent facts in violation of Insurance Code §790.03(h)(1) and
12 10 CCR §2695.4(a) regarding CSAA’s obligation under Insurance Code §2051.5
13 to pay the amount insureds reasonably spend to repair or replace damaged
14 property;
15 (d) misrepresenting pertinent facts in violation of Insurance Code §790.03(h)(1) and
16 10 CCR §2695.4(a) regarding CSAA’s lack of obligation to pay replacement and
17 repair costs under Insurance Code §2051.5 in the event insureds do not seek
18 approval from CSAA before undertaking repairs or in the event insureds replace
19 their total loss property at a separate location;
20 (e) misrepresenting pertinent facts in violation of Insurance Code §790.03(h)(1) and
21 10 CCR §2695.4(a) insureds right to recover, upon repair or replacement of the
22 property, more than recoverable depreciation;
23 (f) unreasonably delaying payment of policy benefits by insisting that insureds
24 satisfy conditions not required by the policy or the law;
25 (g) failing to pay policy benefits for repair of the dwelling in violation of
26 §790.03(h)(5) and §2051;
27 (h) failing to pay policy benefits or delaying payment of policy benefits for repair or
28 replacement of contents in violation of §790.03(h)(5);
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First Amended Complaint and Demand for Jury Trial
(i) failing to pay policy benefits for loss of use and additional living expenses in
violation of §790.03(h)(5);
) taking illegal depreciation in paying actual cash value under Insurance Code
§2051(b);
(k) failing to adequately explain in writing to insureds the basis for depreciation taken
in adjusting the actual cash value of insureds’ dwelling repairs in violation of 10
CCR §2695.9(f);
(I) failing to diligently conduct a fair, thorough, and objective investigation of the
claim in violation of 10 CCR §2695.7(d); and
10 requiring insureds to obtain counsel and file a lawsuit in order to obtain amounts
11 owed under the Policy in violation of Insurance Code §790.03(h)(6).
12 13. On information and belief, the CSAA claims personnel who participated in the
13 investigation and adjusting of Plaintiffs’ Claim are likewise part of CSAA institutional bad faith
14 and have themselves engaged in each of the foregoing practices deliberately designed by CSAA
15 to increase its profitability by reducing indemnity payments and claims expenses.
16 14, Nancy Nelson, Susan Colby, Courtney Powell, Charles Stewart, and Terri Doyle,
17 among others, either made, authorized, or ratified all the investigation, claims handling, claims
18 adjustment, and payment decisions vis a vis Plaintiffs’ claim. They are the managing agents of
19 CSAA pursuant to Civil Code §3294 because they exercised substantial independent authority
20 and judgment in their corporate decision-making such that their decisions ultimately determined
21 corporate policy for Plaintiffs’ claim.
22 SECOND CAUSE OF ACTION FOR FALSE PROMISE
23 (AGAINST CSAA AND DOES 1-20)
24 15. Plaintiffs incorporate the preceding paragraphs as though fully set forth in this
25 Second Cause of Action against Defendants.
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First Amended Complaint and Demand for Jury Trial
16. In the course of the claim Plaintiffs sought approval from Defendants for testing
of the Property by a certified industrial hygienist to determine the scope of damage and to
provide information to determine the cost of repairs.
17. Defendants refused to conduct such testing, unreasonably and maliciously relying
on provisions in the policy relating to excluded perils, as opposed to investigative costs, and thus
failing to conduct a thorough and objective investigation of the scope of the loss and cost to
make repairs consistent with the requirements of the Policy and California law and regulations.
18. Without withdrawing its prior denial, or explaining the basis for its prior improper
refusal to conduct a thorough and objective investigation of the scope of the loss and cost to
10 repair the home, on or about May 30, 2019, Terri Doyle, on behalf of Defendants, and with the
11 prior approval of her supervisors, approved Plaintiffs’ request to retain a certified industrial
12 hygienist to fully investigate the scope of damage to the Property caused by the fire.
13 19. On or about May 30, 2019, Ms. Doyle, on behalf of Defendants and with the prior
14 approval of her supervisors, expressly promised to pay the cost of such testing to be organized by
15 Plaintiffs.
16 20. Defendants intended Plaintiffs to rely on the promise to pay for the testing by
17 their retained industrial hygienist, going so far as to insist that Plaintiffs provide the invoice for
18 testing from the industrial hygienist.
19 21. Having previously and improperly refused to pay for such testing, in fact
20 Defendants never intended to perform the promised act — that is, Defendants never intended to
21 pay for the cost of testing incurred by Plaintiffs.
22 22. Plaintiffs reasonably relied on the promise. Specifically, after Defendants
23 withdrew their prior refusal to pay for investigation of the scope of the loss by an industrial
24 hygienist, approved such testing, and promised to pay for the testing, Plaintiffs retained a
25 certified industrial hygienist, incurred costs for that testing, and consistent with Defendants’
26 request, submitted the invoice for those incurred costs to Defendants.
27 23. Based on Defendants’ prior promise to pay for the testing, Plaintiffs reasonably
28 believed that Defendants would pay those incurred costs.
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First Amended Complaint and Demand for Jury Trial
24. Defendants nevertheless refused to pay for the testing, without proper cause and
with the intention of further driving Plaintiffs into a financial hole, conduct which was consistent
with Defendants’ investigation and adjusting of Plaintiffs’ insurance claim.
25. As aresult of the foregoing false promises, Plaintiffs were harmed. Specifically,
they incurred the cost of testing without reimbursement by Defendants, and experienced further
emotional distress, including anxiety over incurring many thousands of dollars in investigative
costs Defendants refused to reimburse.
26. Plaintiffs’ reliance on the false promise was a substantial factor in causing the
harm suffered.
10 27. In doing the things set forth above, Defendants and their managing agents acted
11 intentionally and with fraud, malice, and oppression. Specifically, Defendants and their
12 managing agents made, approved, and ratified the false promise. Plaintiffs are therefore entitled
13 to exemplary damages in an amount in accordance with the evidence introduced at trial.
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15 PRAYER FOR RELIEF
16 Plaintiffs pray for judgment against CSAA and DOES 1-20 as follows:
17 1 for general, special, economic, and consequential damages;
18 2 for attorneys’ and expert fees required to recover Policy benefits;
19 3 for pre-judgment interest;
20 4 for costs of suit;
21 5. for exemplary damages for fraud, oppression, and malice;
22 6 for trebling of punitive damages pursuant to Civil Code §3345; and
23 7 for such other relief the Court finds just and proper.
24 Dated: July 23, 2020 KERLEY SCHAFFER LLP
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Dylan/Schaffer
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First Amended Complaint and Demand for Jury Trial
PROOF OF SERVICE
iv. CSAA Insurance
Superior Court of Butte County
Case No. 19CV02710
I declare that I am over the age of 18 years and not a party to this action. My business
address is 1939 Harrison Street, #500, Oakland, CA 94612. On July 23, 2020, I served the following
on the interested parties in this action:
STIPULATION TO PERMIT PLAINTIFFS’ LEAVE TO FILE A FIRST
AMENDED COMPLAINT AND [PROPOSED] ORDER
Hyon M. Kientzy, Esq.
aime Y. Ritton, Esq.
CODDINGTON, HICKS & DANFORTH
10 A Professional Corporation, Lawyers
555 Twin Dolphin Drive, Suite 300
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Redwood City, CA 94065-2133
12 Tel.: (650) 592-5400
Fax: (650) 592-5027
13 hkientzy@ chdlawyers.com
jritton@ chdlawyers.com
14 loveland@ chdlawyers.com
15 mkang@ chdlawyers.com
eoliveira@ chdlawyers.com
16 sdarbonne@ chdlawyers.com
Attorneys for CSAA Insurance Exchange
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MAIL: By placing such documents(s) in a sealed envelope, with postage prepaid for
19 first class mail, for collection and mailing at Oakland California following ordinary business
practice for deposit with United States Postal Service.
20 FAX: By causing to be transmitted the documents by use of fax machine telephone
21 number (510)228-0350 to the parties at the facsimile numbers listed on the service list above
The fax machine used complies with California Rule of Court 2.301. The transmission was
22 reported as complete and no error was reported by the machine. I caused the transmitting
machine to print a record of the transmission, a copy of which is attached to this declaration.
23 E-MAIL: By electronic mail to the addresses noted above.
24 Oo FEDEX: By placing for overnight delivery such documents(s) in a facility or box that is
regularly maintained by FedEx.
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Oo HAND DELIVERY: Caused to be hand delivered.
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I declare under penalty of perjury under the laws of the State of California and the United
27 States that the foregoing is true, and if called as a witness I could testify competently thereto. This
declaration was executed July 23, 2020, at Oakland, Califomia.
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Preview
7/23/2020 J. Edward Kerley (175695) Superior Court of California Dylan L. Schaffer (153612) County of Butte Kerley Schaffer LLP 1939 Harrison Street, #500 07/24/2020 Oakland, Califomia 94612 Telephone: (510) 379-5801 Kimberly Flener, Clerk Facsimile: (510) 228-0350 By Ch0ane Deputy Attomeys for Plaintiffs Electronically FILED Hyon M. Kientzy (209579) Jaime Y . Ritton (303483) CODDINGTON, HICKS & DANFORTH 555 Twin Dolphin Drive, Suite 300 Redwood City, CA 94065-2133 Telephone: (650) 592-5400 Facsimile: (650) 592-5027 10 Attomeys for Defendant CSAA Insurance Exchange 11 12 SUPERIOR COURT FOR THE STATE OF CALIFORNIA 13 FOR THE COUNTY OF BUTTE 14 PHILIP WYSOCKI an individual, and Case No. 19CV02710 15 MICHELLE WYSOCKL an individual STIPULATION TO PERMIT 16 Plaintiffs, PLAINTIFFS’ LEAVE TO FILE A FIRST AMENDED COMPLAINT 17 Vv. AND [PROPOSED] ORDER 18 CSAA INSURANCE EXCHANGE, an Assigned to Hon. Judge Tamara L. Mosbarger unincorporated association, and DOES 1-20, 19 Date Filed: September 6, 2019 Defendants. Trial Date: February 8, 2021 20 21 22 23 24 25 26 27 28 1 Stipulation to File FAC and PROPOSED Order THE PARTIES, BY AND THROUGH THEIR RESPECTIVE COUNSEL, AGREE AND STIPULATE AS FOLLOWS: Whereas the parties agree Plaintiffs should be granted leave to file their First Amended Complaint, the parties stipulate as follows: 1 With the Court’s approval, Plaintiffs Philip and Michelle Wysocki shall be granted leave to file a First Amended Complaint. A copy of the proposed First Amended Complaint is attached hereto as Exhibit A; Plaintiffs shall file their First Amended Complaint within ten (10) days of the Court’s entry of an order permitting such filing; 10 11 Defendants’ responsive pleading to the First Amended Complaint shall be due 12 thirty (30) days after the First Amended Complaint is filed; 13 The stipulation to permit filing of the First Amended Complaint does not 14 forfeit or waive CSAA Insurance Exchange’s rights to challenge the amended 15 pleading or otherwise; 16 This stipulation may be signed in counterparts and facsimile, electronic and/or 17 scanned/emailed signatures shall be treated as originals. 18 IT IS SO STIPULATED. 19 Dated: July 15, 2020 KERLEY SCHAFFER LLP 21 22 oy 0 Lh 23 mo, fe an L. Schaffer 24 Attomeys for Plaintiffs Phillip and Michelle Wysocki 25 26 27 28 2 Stipulation to File FAC and PROPOSED Order Dated: July 22, 2020 CODDINGTON, HICKS & DANFORTH Al aime Y, Bitton By aaa Jaime Y. Ritton Attomeys for Defendant CSAA Insurance Exchange ORDER Pursuant to the stipulated request by the Parties to this action and good cause appearing, 10 the Court ORDERS as follows: 11 Plaintiffs are granted leave to file a First Amended Complaint. 12 13 IT IS SO ORDERED 14 15 Dated: 712412020 Anim Dcboe Hon. Tamara. Mosbarger 16 Judge of the Superior Court 17 18 19 20 21 22 23 24 25 26 27 28 3 Stipulation to File FAC and PROPOSED Order EXHIBIT A EXHIBIT A J. Edward Kerley (175695) Dylan L. Schaffer (153612) Kerley Schaffer LLP 1939 Harrison Street, #500 Oakland, Califomia 94612 Telephone: (510) 379-5801 Facsimile: (510) 228-0350 Attomeys for Plaintiffs SUPERIOR COURT FOR THE STATE OF CALIFORNIA FOR THE COUNTY OF BUTTE PHILIP WYSOCKI, an individual, and Case No. Case No. 19CV 02710 10 MICHELLE WYSOCKI, an individual First Amended Complaint and Demand for 11 Plaintiffs, Jury Trial 12 Vv. 13 CSAA INSURANCE EXCHANGE, an unincorporated association, and DOES 1-20, 14 Defendants. 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 First Amended Complaint and Demand for Jury Trial VENUE AND JURISDICTION 1 Plaintiffs are residents of Paradise, in Butte County California. 2 CSAA Insurance Exchange (““CSAA”) is an unincorporated association domiciled in California. CSAA is authorized to transact business in the State of California, and was, and is, transacting the business of insurance in the State of Califomia. CSAA is headquartered in Walnut Creek, Califomia, with its primary office location and principal place of business located at 3055 Oak Road, Walnut Creek, CA 94597. 3 Venue is proper in the Superior Court of California for the County of Butte as it is the county in which the occurrences and events giving rise to Plaintiffs’ injuries occurred. The 10 allegations and claims for relief set forth herein arise out of unlawful acts committed in part in 11 that county. V enue is further predicated on the fact that CSAA transacts business in Butte 12 County and that CSAA derives substantial revenue from its activities in California. 13 4 The true names and capacities of defendants DOES 1 through 20 are unknown 14 and are they are therefore sued by fictitious names. Each of the DOE defendants is, in some 15 manner, responsible for the damages alleged. 16 FIRST CAUSE OF ACTION 17 INSURANCE BAD FAITH 18 (AGAINST CSAA AND DOES 1-20) 19 5. Plaintiffs incorporate by reference the preceding paragraphs as though fully set 20 forth in this first cause of action. 21 6 CSAA sold Plaintiffs a policy of insurance, identified as policy number 22 CAH3105096210 (“Policy”), insuring all risks of loss at Plaintiffs’ home located at 588 Golden 23 Oaks Road, Paradise, CA (“Property”). 24 7 While the Policy was in effect, on or about November 8, 2018, the Property 25 suffered significant damage from fire (“Loss”). 26 8 Plaintiffs provided prompt notice to CSAA, which CSAA assigned claim number 27 1002-97-3737 (“Claim”) and otherwise satisfied all conditions precedent to coverage. 28 9 CSAA and DOES 1-20 breached the covenant of good faith and fair dealing by, 2 First Amended Complaint and Demand for Jury Trial among other things: (a) improperly, unreasonably, and maliciously delaying, denying and/or underpaying the Claim, including but not limited to benefits for loss of us, dwelling and other structure repairs, and contents repair and replacement; (b) failing to diligently conduct a thorough, fair, and objective investigation of the loss; (c) fraudulently misrepresenting and/or concealing pertinent facts and benefits under the Policy for the Claim, as well as Plaintiffs’ rights under California law and regulations as applies to homeowners’ property claims; 10 (d) intentionally violating Insurance Code §790.03(h) and the Fair Claims Settlement 11 Practices Regulations §§ 2695.1 et seq. in settling the Claim; 12 (e) fraudulently causing its insured to expend money in investigative costs with the 13 assurance that those costs would be reimbursed, and then refusing to reimburse 14 such investigative costs that should have been born by CSAA’ 15 (f) requiring Plaintiffs to obtain counsel and file a lawsuit in order to obtain amounts 16 owed under the Policy. 17 10. As a direct and proximate result of CSAA and DOES 1-20's breach of the 18 covenant of good faith and fair dealing, malice, fraud, and oppression by the intentional delay 19 and withholding of benefits under the Policy, Plaintiffs have lost contract benefits under the 20 Policy, sustained consequential damages, and incurred attorney's fees and costs in seeking 21 enforcement of the rights under Policy. 22 11. In doing the things set forth above, CSAA and DOES 1-20 acted intentionally 23 with fraud, malice, and oppression in that they knowingly and intentionally violated Plaintiffs’ 24 rights under the Policy for the purpose of depriving Plaintiffs of the Policy benefits. Plaintiffs are 25 therefore entitled to exemplary damages in an amount in accordance with the evidence 26 introduced at trial. 27 12. On information and belief, as further evidence that the various acts of bad faith, 28 malice, fraud, and oppression set forth above were done knowingly, deliberately, and 3 First Amended Complaint and Demand for Jury Trial intentionally, each of the acts of bad faith, malice, fraud, and oppression set forth above are part of a pattern of institutional bad faith by CSAA, designed to reduce claims costs and expenses. Specifically, in the investigation and adjustment of first-party property claims in California, CSAA routinely engages in the following acts of bad faith, which violate California law: (a) illegally incentivizing claims personnel to minimize the payment of policy benefits by awarding bonuses, financial incentives, and raises to claims employees in violation of Insurance Code §816; (b) misrepresenting pertinent facts in violation of Insurance Code §790.03(h)(1) and 10 CCR §2695.4(a) regarding CSAA’s obligation under Insurance Code §2051 to 10 pay the amount it would cost an insured to repair or replace damaged property; 11 (c) misrepresenting pertinent facts in violation of Insurance Code §790.03(h)(1) and 12 10 CCR §2695.4(a) regarding CSAA’s obligation under Insurance Code §2051.5 13 to pay the amount insureds reasonably spend to repair or replace damaged 14 property; 15 (d) misrepresenting pertinent facts in violation of Insurance Code §790.03(h)(1) and 16 10 CCR §2695.4(a) regarding CSAA’s lack of obligation to pay replacement and 17 repair costs under Insurance Code §2051.5 in the event insureds do not seek 18 approval from CSAA before undertaking repairs or in the event insureds replace 19 their total loss property at a separate location; 20 (e) misrepresenting pertinent facts in violation of Insurance Code §790.03(h)(1) and 21 10 CCR §2695.4(a) insureds right to recover, upon repair or replacement of the 22 property, more than recoverable depreciation; 23 (f) unreasonably delaying payment of policy benefits by insisting that insureds 24 satisfy conditions not required by the policy or the law; 25 (g) failing to pay policy benefits for repair of the dwelling in violation of 26 §790.03(h)(5) and §2051; 27 (h) failing to pay policy benefits or delaying payment of policy benefits for repair or 28 replacement of contents in violation of §790.03(h)(5); 4 First Amended Complaint and Demand for Jury Trial (i) failing to pay policy benefits for loss of use and additional living expenses in violation of §790.03(h)(5); ) taking illegal depreciation in paying actual cash value under Insurance Code §2051(b); (k) failing to adequately explain in writing to insureds the basis for depreciation taken in adjusting the actual cash value of insureds’ dwelling repairs in violation of 10 CCR §2695.9(f); (I) failing to diligently conduct a fair, thorough, and objective investigation of the claim in violation of 10 CCR §2695.7(d); and 10 requiring insureds to obtain counsel and file a lawsuit in order to obtain amounts 11 owed under the Policy in violation of Insurance Code §790.03(h)(6). 12 13. On information and belief, the CSAA claims personnel who participated in the 13 investigation and adjusting of Plaintiffs’ Claim are likewise part of CSAA institutional bad faith 14 and have themselves engaged in each of the foregoing practices deliberately designed by CSAA 15 to increase its profitability by reducing indemnity payments and claims expenses. 16 14, Nancy Nelson, Susan Colby, Courtney Powell, Charles Stewart, and Terri Doyle, 17 among others, either made, authorized, or ratified all the investigation, claims handling, claims 18 adjustment, and payment decisions vis a vis Plaintiffs’ claim. They are the managing agents of 19 CSAA pursuant to Civil Code §3294 because they exercised substantial independent authority 20 and judgment in their corporate decision-making such that their decisions ultimately determined 21 corporate policy for Plaintiffs’ claim. 22 SECOND CAUSE OF ACTION FOR FALSE PROMISE 23 (AGAINST CSAA AND DOES 1-20) 24 15. Plaintiffs incorporate the preceding paragraphs as though fully set forth in this 25 Second Cause of Action against Defendants. 26 27 28 5 First Amended Complaint and Demand for Jury Trial 16. In the course of the claim Plaintiffs sought approval from Defendants for testing of the Property by a certified industrial hygienist to determine the scope of damage and to provide information to determine the cost of repairs. 17. Defendants refused to conduct such testing, unreasonably and maliciously relying on provisions in the policy relating to excluded perils, as opposed to investigative costs, and thus failing to conduct a thorough and objective investigation of the scope of the loss and cost to make repairs consistent with the requirements of the Policy and California law and regulations. 18. Without withdrawing its prior denial, or explaining the basis for its prior improper refusal to conduct a thorough and objective investigation of the scope of the loss and cost to 10 repair the home, on or about May 30, 2019, Terri Doyle, on behalf of Defendants, and with the 11 prior approval of her supervisors, approved Plaintiffs’ request to retain a certified industrial 12 hygienist to fully investigate the scope of damage to the Property caused by the fire. 13 19. On or about May 30, 2019, Ms. Doyle, on behalf of Defendants and with the prior 14 approval of her supervisors, expressly promised to pay the cost of such testing to be organized by 15 Plaintiffs. 16 20. Defendants intended Plaintiffs to rely on the promise to pay for the testing by 17 their retained industrial hygienist, going so far as to insist that Plaintiffs provide the invoice for 18 testing from the industrial hygienist. 19 21. Having previously and improperly refused to pay for such testing, in fact 20 Defendants never intended to perform the promised act — that is, Defendants never intended to 21 pay for the cost of testing incurred by Plaintiffs. 22 22. Plaintiffs reasonably relied on the promise. Specifically, after Defendants 23 withdrew their prior refusal to pay for investigation of the scope of the loss by an industrial 24 hygienist, approved such testing, and promised to pay for the testing, Plaintiffs retained a 25 certified industrial hygienist, incurred costs for that testing, and consistent with Defendants’ 26 request, submitted the invoice for those incurred costs to Defendants. 27 23. Based on Defendants’ prior promise to pay for the testing, Plaintiffs reasonably 28 believed that Defendants would pay those incurred costs. 6 First Amended Complaint and Demand for Jury Trial 24. Defendants nevertheless refused to pay for the testing, without proper cause and with the intention of further driving Plaintiffs into a financial hole, conduct which was consistent with Defendants’ investigation and adjusting of Plaintiffs’ insurance claim. 25. As aresult of the foregoing false promises, Plaintiffs were harmed. Specifically, they incurred the cost of testing without reimbursement by Defendants, and experienced further emotional distress, including anxiety over incurring many thousands of dollars in investigative costs Defendants refused to reimburse. 26. Plaintiffs’ reliance on the false promise was a substantial factor in causing the harm suffered. 10 27. In doing the things set forth above, Defendants and their managing agents acted 11 intentionally and with fraud, malice, and oppression. Specifically, Defendants and their 12 managing agents made, approved, and ratified the false promise. Plaintiffs are therefore entitled 13 to exemplary damages in an amount in accordance with the evidence introduced at trial. 14 15 PRAYER FOR RELIEF 16 Plaintiffs pray for judgment against CSAA and DOES 1-20 as follows: 17 1 for general, special, economic, and consequential damages; 18 2 for attorneys’ and expert fees required to recover Policy benefits; 19 3 for pre-judgment interest; 20 4 for costs of suit; 21 5. for exemplary damages for fraud, oppression, and malice; 22 6 for trebling of punitive damages pursuant to Civil Code §3345; and 23 7 for such other relief the Court finds just and proper. 24 Dated: July 23, 2020 KERLEY SCHAFFER LLP 25 26 27 =< ZA I. ee = Dylan/Schaffer 28 Attomeys for Plaintiffs 7 First Amended Complaint and Demand for Jury Trial PROOF OF SERVICE iv. CSAA Insurance Superior Court of Butte County Case No. 19CV02710 I declare that I am over the age of 18 years and not a party to this action. My business address is 1939 Harrison Street, #500, Oakland, CA 94612. On July 23, 2020, I served the following on the interested parties in this action: STIPULATION TO PERMIT PLAINTIFFS’ LEAVE TO FILE A FIRST AMENDED COMPLAINT AND [PROPOSED] ORDER Hyon M. Kientzy, Esq. aime Y. Ritton, Esq. CODDINGTON, HICKS & DANFORTH 10 A Professional Corporation, Lawyers 555 Twin Dolphin Drive, Suite 300 11 Redwood City, CA 94065-2133 12 Tel.: (650) 592-5400 Fax: (650) 592-5027 13 hkientzy@ chdlawyers.com jritton@ chdlawyers.com 14 loveland@ chdlawyers.com 15 mkang@ chdlawyers.com eoliveira@ chdlawyers.com 16 sdarbonne@ chdlawyers.com Attorneys for CSAA Insurance Exchange 17 18 MAIL: By placing such documents(s) in a sealed envelope, with postage prepaid for 19 first class mail, for collection and mailing at Oakland California following ordinary business practice for deposit with United States Postal Service. 20 FAX: By causing to be transmitted the documents by use of fax machine telephone 21 number (510)228-0350 to the parties at the facsimile numbers listed on the service list above The fax machine used complies with California Rule of Court 2.301. The transmission was 22 reported as complete and no error was reported by the machine. I caused the transmitting machine to print a record of the transmission, a copy of which is attached to this declaration. 23 E-MAIL: By electronic mail to the addresses noted above. 24 Oo FEDEX: By placing for overnight delivery such documents(s) in a facility or box that is regularly maintained by FedEx. 25 Oo HAND DELIVERY: Caused to be hand delivered. 26 I declare under penalty of perjury under the laws of the State of California and the United 27 States that the foregoing is true, and if called as a witness I could testify competently thereto. This declaration was executed July 23, 2020, at Oakland, Califomia. 28 -1- Tiffany Chan 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -2