225 Cal. App. 4th 215
Cal. Ct. App.2014Background
- A 41-foot, 7,300 lb. tree limb fell on the Bocks’ home (Sept. 2010). They reported the loss to Travelers, which assigned adjuster Craig Hansen.
- On his first 10–15 minute site visit Hansen moved debris before photographing, told the Bocks cleanup was not covered, urged them to remove debris themselves, and wrote a small check; Mrs. Bock cut her hand while cleaning.
- Hansen prepared a low estimate and later revised it to eliminate items despite visible damage; Travelers retained Vertex (an unlicensed contractor) whose report (allegedly false) concluded the chimney was not impacted.
- Travelers denied coverage for chimney damage relying on that report; the Bocks submitted contrary contractor reports and photographs which Travelers did not address.
- The Bocks sued Travelers, Hansen, and Vertex. After amendments, the FAC alleged negligent misrepresentation and intentional infliction of emotional distress against Hansen and Travelers. The trial court sustained Hansen’s demurrer without leave to amend; the Court of Appeal reversed in part.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether negligent misrepresentation can be pleaded against an insurance adjuster | Hansen falsely told Bocks cleanup wasn’t covered, they relied and were injured; adjuster owes duty and can be liable | Adjuster owes no independent duty; any remedy lies against insurer, not the adjuster (agency immunity) | Negligent misrepresentation can lie against an adjuster; claim adequately pleaded and may proceed |
| Whether the Bocks justifiably relied on Hansen’s statements about coverage | Bocks reasonably relied on adjuster’s oral coverage statements and acted immediately | Reliance unjustified because the policy terms contradict Hansen; insureds should read policy | Reliance was adequately alleged; insureds may rely on adjuster absent notice—claim survives pleading stage |
| Whether intentional infliction of emotional distress (IIED) can be asserted against an adjuster | Hansen’s conduct (scene alteration, false reports, conspiracy with unlicensed contractor, denials) was extreme and caused distress | Denial of benefits or ordinary claim-handling is insufficient; alleged conduct not extreme/outrageous as a matter of law | IIED against Hansen may lie in principle but FAC did not adequately plead outrageous conduct; trial court abused discretion by denying leave to amend |
| Whether trial court properly denied leave to amend after sustaining demurrer | Bocks sought leave and identified additional facts they could plead to support IIED | Defendants argued Plaintiffs previously amended and cannot cure defects; dismissal without leave appropriate | Denial of leave to amend was abuse of discretion as to IIED; appellate court remanded to allow amendment |
Key Cases Cited
- Vu v. Prudential Prop. & Cas. Ins. Co., 26 Cal.4th 1142 (recognizing a "special" insurer–insured relationship imposing heightened duties)
- Bily v. Arthur Young & Co., 3 Cal.4th 370 (distinguishing negligent misrepresentation from ordinary negligence)
- Sanchez v. Lindsey Morden Claims Servs., Inc., 72 Cal.App.4th 249 (adjuster duty analysis in negligence context; court distinguishes Sanchez as addressing negligence not negligent misrepresentation)
- Younan v. Equifax, Inc., 111 Cal.App.3d 498 (insurer/agent conduct supporting tort claims where claim handling involved misleading reports and denials)
- Little v. Stuyvesant Life Ins. Co., 67 Cal.App.3d 451 (outrageous insurer conduct—withholding medical info—to support IIED and related relief)
- Hughes v. Pair, 46 Cal.4th 1035 (standards for IIED: extreme/outrageous conduct and severe emotional distress)
- Ragland v. U.S. Bank Nat. Assn., 209 Cal.App.4th 182 (elements of negligent misrepresentation)