Jerome GRUENBERG, Plaintiff and Appellant, v. AETNA INSURANCE COMPANY et al., Defendants and Respondents.
Action for damages resulting from alleged bad faith and outrageous conduct of the defendants in denying to plaintiff Gruenberg payment on three policies of fire insurance. General demurrers of all the defendants were sustained by the trial court with leave to amend. Plaintiff elected to stand on the complaint and appeals from the order of dismissal entered for the defendants.
The issue to be determined on this appeal is whether plaintiff's complaint has stated a cause of action. If the facts alleged support some theory of recovery against the defendants, or any of them, the complaint will be adjudged sufficient. For this purpose, allegations made in the complaint will be accepted as true; conclusions of fact or law will not be considered. (Marin v. Jacuzzi, 224 Cal.App.2d 549, 36 Cal.Rptr. 880.)
Plaintiff's case is contained in one count. He alleged that: on November 9, 1969, there was a fire at ‘The Brass Rail’, a restaurant owned and operated by him; he notified the three insurance companies (hereinafter known as Aetna, Yosemite and American) who had previously issued an aggregate of $35,000 fire insurance on the premises; they in turn hired P. E. Brown Co. to evaluate the damage and Brown Co. sent its employee adjuster, Carl Busching, to investigate the scene; during his investigation, Busching told an arson investigator for the Los Angeles Fire Department that plaintiff was carrying excessive fire insurance on the restaurant; he knew, or had reason to know at the time this statement was made, that plaintiff, who had only recently purchased the restaurant, had changed his coverage by cancelling some fire insurance policies and obtaining others.
He further alleged that on November 13, 1969, a felony complaint was issued, charging plaintiff with violation of Penal Code section 448a, arson, and Penal Code section 548, burning insured property, ‘The Brass Rail’; preliminary hearing was set for January 12, 1970; commencing November 25, 1969, and shortly thereafter, plaintiff received written communications from the law firm representing the three insurance companies; in these letters demand was made to take plaintiff's account of the fire under oath and also for certain listed financial records;1 plaintiff's counsel advised the attorneys that plaintiff faced criminal charges concerning the fire; he requested that the examination be delayed ‘until after a final disposition of criminal proceedings.’
The complaint then alleges that attorney Ricketts (an employee of the insurers' law firm) refused this request, scheduling the oral examination of plaintiff for December 12, 1970, and warned plaintiff that the insurers would decline coverage and liability for the fire damage should plaintiff fail to appear at the appointed time; plaintiff, fearing the possibility of self-incrimination and acting upon the advice of counsel, did not appear; he was immediately notified by the insurers through their attorneys that coverage and liability would be denied due to his nonappearance; on January 12, 1970, adjuster Busching testified for the People at plaintiff's preliminary hearing; the felony complaint was dismissed for lack of probable cause; plaintiff told the insurers, shortly thereafter, that he was available for oral examination but they reaffirmed their decision denying coverage and liability.
Assuming that the allegations of the complaint are true, as we must, the defendant insurers Aetna, Yosemite and American, wrote policies of fire insurance, there was a fire loss, plaintiffs presented proofs of loss2 but the insurers refused to pay. These allegations are sufficient to support an action for breach of contract against the insurers and we interpret the complaint in this way. It is immaterial that the plaintiff's counsel insists that plaintiff is not suing on the policies themselves. An attorney has no implied authority to surrender his client's substantial rights. (Gagnon Co., Inc. v. Nevada Desert Inn, 45 Cal.2d 448, 460, 289 P.2d 466.) ‘The pleading speaks for itself, and its interpretation is the business of the court.’ (See Merchants Fire Assur. Corp. v. Retail Credit Co., Inc., 206 Cal.App.2d 55, 62, 23 Cal.Rptr. 544, 549 and cases cited.) We need not speculate on what kind of damages plaintiff may be entitled to recover from the insurers in the contract action.
The trial court sustained the demurrers because it believed plaintiff was barred from any recovery inasmuch as he had refused to submit to examination at the time set by the defendant attorneys (pursuant to Insurance Code § 2071), and thus decided the matter ‘under the compulsion of Hickman v. London Assurance Co. [Corp.], 184 Cal. 524 [195 P. 45].’ While we do not regard Hickman as necessarily compelling the same result in the instant case, this is a matter of defense and cannot be properly decided in considering the demurrer.3
The complaint alleges that the acts of all the defendants including the three insurers, the insurers's attorneys (including attorney-employee Ricketts) and the insurers's adjusters (including employee Busching), were done in bad faith, with malice, and constituted outrageous conduct, damaging the plaintiff economically, emotionally and physically. In essence, he is attempting to plead the tort of intentional infliction of emotional distress. (Fletcher v. Western Nat. Life Insurance Co., 10 Cal.App.3d 376, 89 Cal.Rptr. 78.)
In paragraph XVII of the complaint plaintiff sets forth the specific acts upon which he relies to establish the tort: (1) the statement concerning excessive coverage made by Busching, the adjuster, to the official investigator on the arson squad; (2) the demand of the insurers, through their attorneys, that plaintiff submit to oral examination under oath and their request for his records; (3) their refusal to delay that examination until the criminal matter had been heard, and to pay on the policies due to plaintiff's failure to appear for the examination; (4) and the testimony of Busching at the preliminary hearing ‘essentially to the same effect’ (re coverage) as his original statement to the arson investigator.
The question is thus presented as to whether the defendant insurers and their representatives, by allegedly wilfully refusing the payment of the policies which they knew was due the plaintiff, were acting in such an ‘outrageous' fashion that they can be held liable in tory. It appears to us that the letters of demand written plaintiff, the allegedly false statements made and the excuses given for nonpayment do not, without more, constitute conduct sufficiently extreme, or ‘atrocious' and ‘utterly intolerable in a civilized community’ to be actionable. (1 Rest. of Torts 2d, § 46.)
While the complaint alleges that the defendant, adjuster Busching, made a false statement to an arson investigator for the Los Angels Fire Department on November 10, 1969, and testified for the People at plaintiff's preliminary hearing on January 12, 1970, there is no allegation that the plaintiff suffered damage from these activities. It is not alleged that any of the defendants caused the plaintiff to be prosecuted for arson.
Our conclusion is that the pleadings have not established a case of sufficient severity to impose liability in tort. In the Fletcher case, cited supra, the conduct of the insurer in refusing payment to the insured consisted of threats, the manufacture of a nonexistent dispute over liability and efforts to handle the claim of the insured under a clause of his disability insurance policy in a way that would give him far less than he was entitled to under the applicable clause of the policy. The conduct of the insurer in that case was of such a heinous character that it met the rather stringent requirements of the tort of intentional infliction of emotional distress. (See Fletcher, cited supra, at 394, 89 Cal.Rptr. 78.) The conduct of the defendants, as pleaded in the instant case, cannot be equated with the conduct of the insurer in Fletcher and, therefore, if that were the only consideration here, the order of dismissal would be affirmed with respect to all the defendants.
The defendants, representing the insurers, were acting within the scope of their employment; committed no torts; are not answerable to plaintiff on the policies of insurance; and cannot be held personally liable for their conduct in connection with the refusal of the insurers to pay on the policies.
With respect to the defendants Aetna Insurance Company, Yosemite Insurance Company and American Home Assurance Company, the judgment is reversed with instructions to overrule the demurrer to the complaint; as to all other defendants, the judgment is affirmed.
1. The Insurance Code provides, in pertinent part:§ 2070: ‘All fire policies on subject matter in California shall be on the standard form, and, except as provided by this article shall not contain additions thereto. . . .’§ 2071: [Setting forth the standard form of fire insurance policy for California; the policies also contained this language:](Requirements in case a loss occurred:)‘The insured, as often as may be reasonably required, shall exhibit to any person designated by this company all that remains of any property herein described, and submit to examinations under oath by any person named by this company, and subscribe the same; and, as often as may be reasonably required, shall produce for examination all books of account, bills, invoices and other vouchers, or certified copies thereof if originals be lost, at such reasonable time and place as may be designated by this company or its representative, and shall permit extracts and copies thereof to be made.’
2. Insurance Code § 2071 provides that proof of loss must be submitted within 60 days of the loss. The complaint merely alleges that proofs of loss were submitted ‘in accordance with the requirements of their respective policies.’ Since the policies are not attached nor is this provision otherwise pleaded, a question of fact seemingly could be raised about this point.
3. In Hickman, a judgment in favor of the insured (Hickman) was reversed upon the ground that Hickman had refused to submit to examination by the company's adjuster while arson charges were pending against him. At the time of his refusal he said he would comply if the arson charges were dismissed. However, he did not renew his offer after the criminal case was dismissed, which may distinguish that situation from the case at bar. (See particularly the discussion of the Supreme Court of this point at pp. 533–534, 195 P. 45.)
JEFFERSON, Associate Justice.
FILES, P. J., and DUNN, J., concur.