Filed 6/29/26 Truck Ins. Exchange v. Martinez CA2/5
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FIVE
TRUCK INSURANCE EXCHANGE B344973
et al.,
(Los Angeles County
Plaintiffs and Appellants, Super. Ct.
No.22NWCV01386)
v.
ERNESTO MARTINEZ,
Defendant and Respondent.
APPEAL from an order of the Superior Court of
Los Angeles County, Lee W. Tsao, Judge. Affirmed.
Berger Kahn, David B. Ezra and Heather C. Whitmore for
Plaintiffs and Appellants.
Callahan & Blaine, Edward Susolik and Sharon T. Yuen for
Defendant and Respondent.
________________________
Appellants Fire Insurance Exchange and Truck Insurance
Exchange (collectively the insurers) provided a defense and paid
a settlement on behalf of respondent insured Ernesto Martinez in
a wrongful eviction lawsuit. When the insurers filed the instant
action for reimbursement, Martinez filed a cross-complaint
alleging that the insurers engaged in bad faith insurance claims
handling practices during the underlying lawsuit. The insurers
filed a special motion to strike the cross-complaint under Code of
Civil Procedure section 425.15 (the anti-SLAPP statute), which
the trial court denied.1 On appeal, the insurers contend all of the
claims alleged in the cross-complaint are based on protected
petitioning activity because any damages that Martinez incurred
are solely related to the insurers’ filing of the reimbursement
action. We conclude the cross-claims for breach of contract and
breach of the covenant of good faith and fair dealing arise from
alleged bad faith claims handling conduct, which is not protected
activity under the anti-SLAPP statute and is actionable even if
Martinez suffered only nominal damages. Martinez’s damages
are not predicated solely on the insurers’ filing of a
reimbursement action. Therefore, we affirm.
1 SLAPP is an acronym for “strategic lawsuit against public
participation.” (Equilon Enterprises v. Consumer Cause, Inc.
(2002) 29 Cal.4th 53, 57.) All further statutory references are to
the Code of Civil Procedure unless otherwise stated.
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FACTUAL AND PROCEDURAL BACKGROUND
A. Allegations of the Complaint
On November 21, 2022, the insurers filed an action against
Martinez for reimbursement, alleging the following facts.
Martinez owned a four-unit apartment building in Los Angeles,
California. Fire Insurance Exchange issued a landlord liability
policy for the property. The landlord policy did not cover
liabilities arising from the intentional acts of an insured person
when the results were reasonably foreseeable. Truck Insurance
Exchange issued a personal umbrella policy to Martinez. The
umbrella policy excluded damages that were either expected or
intended by an insured. Both policies excluded coverage for
punitive damages.
In May 2016, Martinez filed a Declaration of Intent to Evict
for Landlord Occupancy with the City of Los Angeles declaring
that his parents were going to live in one of the units. The tenant
renting the unit filed a complaint against Martinez for violation
of the Unruh Civil Rights Act (Civ. Code, § 51 et al.), trespass,
invasion of privacy, fraudulent eviction, and wrongful eviction.
The tenant alleged Martinez’s parents were not actually going to
live in the unit as required for a lawful eviction. Martinez
tendered the lawsuit to the insurers for defense and
indemnification, who agreed to defend him under a reservation of
rights. The insurers advised Martinez that they intended to
settle the case by paying $700,000 to the tenant, for which they
intended to seek reimbursement from Martinez. Martinez
refused to reimburse the insurers.
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B. Allegations of the Cross-Complaint
On May 29, 2024, Martinez filed a cross-complaint against
the insurers for breach of contract and breach of the implied
covenant of good faith and fair dealing based on the following
allegations. The insurers appointed counsel at the law firm of
Hartsuyker, Stratman & Williams-Abrego to defend Martinez
and protect their own interests in the underlying wrongful
eviction action. Martinez was not aware of his right to
independent counsel. Defense counsel advised Martinez that the
firm represented only his interests and advised him against
obtaining independent counsel.
The insurers subsequently appointed counsel at the law
firm Lewis Brisbois Bisgaard & Smith, LLP (the Lewis firm) to
defend Martinez. The Lewis firm sent a case evaluation letter to
Marcie Mendes, who was the adjuster for the insurers assigned to
Martinez’s claim. In the letter, which was not sent to Martinez,
the Lewis firm described him in extremely unfavorable terms,
questioning his statements and his credibility. Mendes, on behalf
of the insurers, retained the law firm Berger Kahn as coverage
counsel to protect the insurers’ interest in seeking
reimbursement from Martinez for damages paid in the
underlying action.
In September 2020, Berger Kahn introduced itself as
coverage counsel to the Lewis firm. In October 2020, Mendes also
advised the Lewis firm that there were coverage issues in the
case and requested inclusion of Berger Kahn in a mediation.
Upon receiving notice that the insurers had coverage counsel, the
Lewis firm was required to disclose the conflict of interest to
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Martinez and obtain his written consent, or withdraw as defense
counsel and advise Martinez to obtain independent Cumis
counsel. The Lewis firm did neither, but instead, sent an
updated evaluation report to Mendes, which was not
communicated to Martinez.
Mendes, on behalf of the insurers, conducted several
meetings with both the Lewis firm and Berger Kahn to discuss
the underlying action and to obtain information to support
coverage defenses against Martinez. Martinez was not aware of
any of the meetings.
After a mediation in December 2020, and receipt of a
settlement proposal of $700,000, Berger Kahn notified Martinez
that he had two options: accept the settlement offer and be
subject to a reimbursement action, or take over his own defense
and pay for his defense fees and costs himself. Martinez had
been led to believe the Lewis firm and the prior insurance
defense counsel represented his interests in the underlying action
and coverage issues, but it became clear that the Lewis firm
represented solely the insurers’ interests. Martinez demanded
independent counsel, but the insurers refused to pay a reasonable
hourly rate necessary to obtain an attorney.
In March 2021, Berger Kahn, on behalf of the insurers,
threatened to file a reimbursement action unless Martinez
contributed $332,000 toward the settlement amount, which
Martinez did not agree to pay.
Even after Berger Kahn filed the instant reimbursement
action against Martinez on behalf of the insurers, the firm
continued to communicate directly with Martinez and coerced
him to sign a confidentiality agreement and financial disclosure
form under the pretense that the information would allow for a
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five-figure settlement. Based on this understanding, Martinez
produced financial records, tax returns, loan information and
property values to the insurers. In May 2023, it became clear
that the insurers took advantage of Martinez’s financial
information to facilitate a settlement against him and
significantly increase their settlement demand in the
reimbursement action.
With respect to the cause of action for breach of contract,
the insurers breached the policies by: (1) refusing to appoint
Cumis counsel to provide a complete defense to Martinez in the
underlying action; (2) failing to conduct a fair and thorough
investigation of coverage for the claim; and (3) withholding
benefits due under the policy. As a result, Martinez had been
damaged in an amount in excess of $250,000.
The cause of action for breach of the implied covenant of
good faith and fair dealing alleged the insurers’ acts were
contrary to established claims practices and legal requirements,
inconsistent with Martinez’s reasonable expectations, and
constituted bad faith. The insurers refused to appoint
independent counsel, although they knew a conflict of interest
had arisen based on their reservation of rights. Instead, the
insurers continued working in concert with their coverage
counsel to protect the insurers’ interests alone. The insurers
further breached the covenant of good faith and fair dealing by:
(1) refusing to provide a complete defense in the underlying
action by misrepresenting his right to Cumis counsel and
refusing to appoint Cumis counsel; (2) misrepresenting the
coverage of the policies; (3) threatening and coercing Martinez to
provide information, which they used to increase their own
settlement demand; (4) failing to obtain Martinez’s written
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consent to allow defense counsel to continue representing him
after a clear conflict of interest emerged; (5) misrepresenting his
potential liability in the reimbursement action to force him to
agree to a significant settlement; (6) refusing to give a reasonable
interpretation to the policies’ coverage provisions or Martinez’s
reasonable expectation of coverage and acting to protect their
own financial interests at the expense of his rights; (7) failing to
acknowledge and act reasonably promptly in communications
with Martinez; (8) violating California’s administrative
regulations governing claims settlement practices in adjustment
of Martinez’s claim; (9) giving greater consideration to its own
interests that to Martinez’s interests; (10) failing to provide
Martinez with a reasonably justifiable basis for its pursuit of
reimbursement of amounts paid under the policies under the
policy language, the facts, or the applicable law; and (11)
compelling Martinez to engage legal counsel to defend himself
and to preserve benefits owed under the policies.
As damages, Martinez sought all of the attorney fees that
he incurred and continued to incur to keep the policy benefits
that the insurers sought reimbursement for in bad faith. In
addition, the insurers’ conduct was despicable, conducted with a
conscious disregard of Martinez’s rights, constituting oppression,
fraud, and/or malice, for which he sought punitive damages.
C. Anti-SLAPP Motion
On July 25, 2024, the insurers filed an anti-SLAPP motion
seeking to strike the entire complaint. They asserted that courts
consider the principal thrust or gravamen of a cause of action to
determine whether a claim arises from protected activity. They
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argued that all of the allegations in the cross-complaint arose
from the insurers’ exercise of their right to petition the court for
reimbursement, which is a protected activity under the anti-
SLAPP statute. They further argued under the second prong of
the anti-SLAPP analysis, Martinez could not show his claims had
the requisite minimal merit to succeed.
In support of the anti-SLAPP motion, the insurers filed a
declaration by Mendes. Mendes declared that Martinez was
provided at least five opportunities to retain independent
counsel. She attached two letters provided by the Lewis firm
assessing potential liability and damages. Fire Insurance
Exchange paid $300,000 and Truck Insurance Exchange paid
$400,000 to secure Martinez’s release from the underlying
wrongful eviction action.
They also filed a declaration by Berger Kahn attorney
Heather Whitmore. Whitmore declared that her office issued a
supplemental reservation of rights letter to Martinez in June
2020, which offered him an opportunity to select his own attorney
pursuant to Civil Code section 2860, but Martinez did not request
independent counsel. In February 2021, her office informed
Martinez that if the insurers and the tenant accepted the
proposed settlement, the insurers would fund the settlement of
$700,000 subject to a reservation of rights to seek reimbursement
of the full amount from him.
In March 2021, Whitmore’s office wrote a substantially
similar letter to Martinez confirming that they were accepting
the settlement proposal. Berger Kahn informed Martinez that if
he did not think the settlement amount was reasonable, or if he
objecting to the insurers settling the case, he was free to assume
to all responsibility for mounting and funding his own defense
8
from that point forward. The insurers also made a settlement
proposal that would require Martinez to personally pay $332,000
of the settlement amount in exchange for mutual waivers and no
reimbursement litigation. Martinez confirmed acceptance of the
$700,000 settlement proposal.
The insurers also submitted a compendium of evidence and
a request for judicial notice.
D. Opposition to Anti-SLAPP Motion
Martinez filed an opposition on the ground that bad faith
actions are not subject to anti-SLAPP motions. Moreover, the
insurers’ filing of a lawsuit for reimbursement was not the basis
of either cause of action alleged in the cross-complaint. The
cross-complaint alleged specific instances where the insurers
breached the contract and acted in bad faith by failing to provide
Martinez with a complete defense, while unfairly and in bad faith
acting in concert with appointed defense counsel to obtain
evidence to support the insurers’ coverage defenses. Lastly,
Martinez could show his claims had the requisite minimal merit
under the anti-SLAPP statute.
In support of his opposition, Martinez filed his own
declaration. Martinez believed the Lewis firm and Berger Kahn
represented his interests. He did not know of or participate in
any of the discussions held between the adjuster, the Lewis firm,
and Berger Kahn. He also did not receive any analysis reports
prepared by the Lewis firm related to Martinez’s defense in the
underlying wrongful eviction action. In March 2021, he received
a threat from the Berger Kahn firm on behalf of the insurers to
coerce him to pay $332,000 from his personal assets toward the
9
settlement of the underlying case. He was told the deadline to
respond to the settlement demand was three days later.
After the mediation, Martinez became aware that the
Lewis firm was working to protect solely the insurers’ interests.
No one working for the insurers or the Lewis firm advised him
about a conflict of interest, and he never signed any waiver of a
conflict of interest. He never waived his right to independent
counsel. Once he understood that the Lewis and Berger Kahn
firms represented the insurers in March 2021, he requested
independent counsel pursuant to Civil Code section 2860. He
located independent counsel to represent him, but the insurers
offered an unreasonably low hourly rate of $210 per hour for
attorneys. Martinez could not afford to pay the difference, so he
was unable to obtain independent counsel. Martinez did not
understand, nor did anyone explain, that he had a statutory right
to arbitrate the hourly rates agreed on by the insurers. Given the
short time frame to respond to the settlement offer and the
unreasonably low hourly rate offered by the insurers, Martinez
did not have time to obtain independent counsel.
Martinez allowed the insurers to accept the settlement in
the underlying action because he did not have funds to
immediately take over his own defense and could not financially
contribute the amount demanded by the insurers to avoid a
reimbursement action.
Before March 2021, he was not aware of, and did not
understand, his right to independent counsel. Although the
insurers and the Berger Kahn firm provided letters written to
Martinez in December 2018, August 2019, and June 2020,
Martinez does not believe he received those letters at the time
that they were written. He received the August 2019 and June
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2020 letters with an email from Berger Kahn in March 2021, but
did not recollect seeing the letters before March 2021.
E. Reply, Hearing, and Trial Court Ruling
The insurers filed a reply arguing that the cross-complaint
did not factually allege any valid cause of action, and at most,
asserted a defense to the reimbursement complaint. They also
argued that all of the communicative acts performed by attorneys
in their representation of a client in a judicial proceeding or other
petitioning context were protected petitioning activity under the
anti-SLAPP statute.
A hearing was held on the anti-SLAPP motion on
January 17, 2025. The insurers argued that the cross-complaint
contained conclusory allegations that were not supported by the
evidence. For example, the complaint alleged the insurers
refused and thwarted Martinez’s efforts to obtain independent
counsel, but the evidence showed the insurers offered him
independent counsel several times. No evidence showed the
insurers told him that he could not have independent counsel.
Even if the allegation were true, Martinez had not sustained any
damages because he had not paid any attorney fees. The
insurers believed the cross-complaint was based on protected
petitioning activity because all of the damages that Martinez
claimed he sustained, or would sustain, resulted from the
insurers filing a reimbursement action.
The insurers noted that the cross-complaint alleged that
they misrepresented the coverages under the policy, but they
argued there was no evidence of a misrepresentation, such as
what was said, who said it, or how Martinez was damaged by the
11
misrepresentation. The insurers also noted the cross-complaint
alleged they obtained information from Martinez through threats
and coercion, which they used to increase their own settlement
demand. They argued this allegation was related to the
reimbursement lawsuit and constituted protected settlement
communications under the anti-SLAPP statute. The insurers
argued that every allegation of the cross-complaint was
intertwined with their protected activity of filing the
reimbursement action.
The court explained that while the insurers’ factual
arguments might ultimately succeed, an anti-SLAPP motion was
not the proper vehicle to make those arguments. As the case law
made clear, the allegations were not based on protected activity.
The insurers’ arguments would be more appropriately addressed
through a different type of motion that could address the merits.
The same day, the trial court issued an order denying the
anti-SLAPP motion. The court listed various acts alleged in the
cross-complaint as the basis for each cause of action. Based on
these allegations, the court concluded the causes of action in the
cross-complaint arose from the manner in which the insurers
investigated and defended the claims against Martinez in the
underlying wrongful eviction lawsuit, not their act of petitioning
the court for reimbursement in the instant case. The court noted
that the mere fact Martinez’s causes of action were alleged in a
cross-complaint did not mean they arose from the insurers’
decision to seek reimbursement. Because the insurers did not
meet their initial burden to show the cross-complaint was based
on protected conduct, the burden did not shift to Martinez to
establish a probability of success on his claims. The insurers
filed a timely notice of appeal from the order.
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DISCUSSION
On appeal, the insurers contend: damages are an element
of each claim in the cross-complaint, Martinez’s alleged damages
are based entirely on legal fees and costs incurred in connection
with the reimbursement action, and therefore, each claim is
based on the insurers’ protected activity. We conclude the
insurers’ analysis is incorrect.
A. Statutory Scheme and Standard of Review
“[T]he anti-SLAPP statute is designed to protect
defendants from meritless lawsuits that might chill the exercise
of their rights to speak and petition on matters of public concern.”
(Wilson v. Cable News Network, Inc. (2019) 7 Cal.5th 871, 883–
884.) To accomplish this purpose, the statute authorizes a special
motion to strike a claim against a person “arising from any act of
that person in furtherance of the person’s right of petition or free
speech under the United States Constitution or the California
Constitution in connection with a public issue . . . unless the
court determines that the plaintiff has established that there is a
probability that the plaintiff will prevail on the claim.” (§ 425.16,
subd. (b)(1).)
Under section 425.16, subdivision (e), an “ ‘act in
furtherance of a person’s right of petition or free speech under the
United States or California Constitution in connection with a
public issue’ includes: (1) any written or oral statement or
writing made before a legislative, executive, or judicial
proceeding, or any other official proceeding authorized by law, (2)
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any written or oral statement or writing made in connection with
an issue under consideration or review by a legislative, executive,
or judicial body, or any other official proceeding authorized by
law, (3) any written or oral statement or writing made in a place
open to the public or a public forum in connection with an issue of
public interest, or (4) any other conduct in furtherance of the
exercise of the constitutional right of petition or the
constitutional right of free speech in connection with a public
issue or an issue of public interest.”
Courts apply a two-step analysis to evaluate anti-SLAPP
motions. (Bonni v. St. Joseph Health System (2021) 11 Cal.5th
995, 1011 (Bonni).) In the first step, the court determines
whether the plaintiff’s claims arise from protected activity. (Id.
at p. 1009.) “If the defendant makes the required showing, the
burden shifts to the plaintiff to demonstrate the merit of the
claim by establishing a probability of success.” (Baral v. Schnitt
(2016) 1 Cal.5th 376, 384 (Baral).) However, “[i]f the moving
party fails to demonstrate that any of the challenged claims for
relief arise from protected activity, the court properly denies the
motion to strike without addressing the second step (probability
of success). (City of Cotati v. Cashman (2002) 29 Cal.4th 69,
80−81; Trilogy at Glen Ivy Maintenance Assn. v. Shea Homes, Inc.
(2015) 235 Cal.App.4th 361, 367.)” (C.W. Howe Partners Inc. v.
Mooradian (2019) 43 Cal.App.5th 688, 698.)
“A claim arises from protected activity when that activity
underlies or forms the basis for the claim.” (Park v. Board of
Trustees of California State University (2017) 2 Cal.5th 1057,
1062–1063 (Park).) In the first step, the moving party’s burden is
“to identify what acts each challenged claim rests on and to show
how those acts are protected under a statutorily defined category
14
of protected activity.” (Bonni, supra, 11 Cal.5th at p. 1009.) “ ‘A
“claim may be struck only if the speech or petitioning activity
itself is the wrong complained of, and not just evidence of liability
or a step leading to some different act for which liability is
asserted.” ’ (Wilson v. Cable News Network, [supra, 7 Cal.5th at
p. 884]; accord, Park, at p. 1060.) ‘ “[T]he mere fact that an action
[or claim] was filed after protected activity took place does not
mean the action [or claim] arose from that activity for the
purposes of the anti-SLAPP statute.” ’ (Park, at pp. 1062–1063;
see Rand Resources, LLC v. City of Carson (2019) 6 Cal.5th 610,
621 [‘a claim does not “arise from” protected activity simply
because it was filed after, or because of, protected activity, or
when protected activity merely provides evidentiary support or
context for the claim’].) ‘To determine whether a claim arises
from protected activity, courts must “consider the elements of the
challenged claim and what actions by the defendant supply those
elements and consequently form the basis for liability.” ’ (Wilson
[v. Cable News Network, supra, 7 Cal.5th] at p. 884; accord, Park,
at p. 1063.)” (Mooradian, supra, 43 Cal.App.5th at p. 698.)
A count, as pled in the complaint, may contain allegations
of both protected and unprotected activity, loosely referred to as a
“mixed cause of action.” (Baral, supra, 1 Cal.5th at p. 382.) An
anti-SLAPP motion can reach a claim based on protected activity
regardless of how the pleading is organized (id. at p. 392), but if a
single count encompasses multiple claims, the moving party must
identify the claims arising from protected activity to be stricken
(Bonni, supra, 11 Cal.5th at p. 1011). When a party moves to
strike an entire complaint, rather than identifying specific claims
for relief asserted to arise from protected activity, and the
complaint presents at least one claim for relief that is not based
15
on protected activity, the anti-SLAPP motion will be denied.
(Park v. Nazari (2023) 93 Cal.App.5th 1099, 1107−1108.)
Similarly, if an anti-SLAPP motion is directed at a cause of
action that encompasses multiple claims, but the moving party
fails to identify how the speech or conduct underlying some of the
claims is protected activity, the anti-SLAPP motion will be denied
as to those claims. (Bonni, supra, 11 Cal.5th at p. 1011.)
The California Supreme Court has expressly rejected a
“gravamen test” to determine the primary focus of a mixed cause
of action that encompasses multiple claims. (Bonni, supra, 11
Cal.5th at pp. 1009−1012.) A court may still consider the
“gravamen” of a claim, however, to evaluate whether a particular
act or series of acts alleged within a cause of action supplies the
elements of a claim or simply provide incidental context. (Ibid. at
p. 1012.)
On appeal, we review an order granting or denying an anti-
SLAPP motion de novo. (Park, supra, 2 Cal.5th at p. 1067.) “We
exercise independent judgment in determining whether, based on
our own review of the record, the challenged claims arise from
protected activity.” (Ibid.) Considering the pleadings and the
affidavits concerning the facts, we accept the plaintiffs’
submissions as true “and consider only whether any contrary
evidence from the defendant establishes its entitlement to prevail
as a matter of law.” (Ibid.)
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B. Law Applicable to Breach of Insurance Contract,
Including Breach of Covenant of Good Faith and
Fair Dealing
The “elements of a cause of action for breach of contract are
(1) the existence of the contract, (2) plaintiff’s performance or
excuse of nonperformance, (3) defendant’s breach, and (4) the
resulting damages to the plaintiff.” (Oasis West Realty, LLC v.
Goldman (2011) 51 Cal.4th 811, 821.)
“The law implies in every contract, including insurance
policies, a covenant of good faith and fair dealing. ‘The implied
promise requires each contracting party to refrain from doing
anything to injure the right of the other to receive the
agreement’s benefits. To fulfill its implied obligation, an insurer
must give at least as much consideration to the interests of the
insured as it gives to its own interests.’ ” (Wilson v. 21st Century
Ins. Co. (2007) 42 Cal.4th 713, 720.)
“Although a breach of the implied covenant of good faith
and fair dealing is ‘necessarily a breach of contract,’ the scope of
conduct prohibited by the ‘implied covenant often is pleaded as a
separate count.’ [Citation.]” (Miller v. Zurich American Ins. Co.
(2019) 41 Cal.App.5th 247, 257 (Miller).)
Violations of the implied covenant include unreasonably
withholding benefits under the policy (Major v. Western Home
Ins. Co. (2009) 169 Cal.App.4th 1197, 1209), denying a claim
without fully investigating the grounds for denial (Wilson v. 21st
Century Ins. Co., supra, 42 Cal.4th at p. 720.), or an unreasonably
breach of an insurer’s contractual duty to defend its insured
(Miller, supra, 41 Cal.App.5th at p. 257).
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In Miller, the insurance company agreed to defend the
plaintiffs in an underlying nuisance action, subject to a
reservation of rights, but refused to provide independent counsel.
(Miller, supra, 41 Cal.App.5th at pp. 251−252.) While the
underlying action was pending, the plaintiffs filed an action
against the insurance company for breach of contract and breach
of the covenant of good faith and fair dealing based on several
acts by the insurer, including refusing to pay for independent
counsel. (Ibid.) The appellate court concluded the plaintiffs’
claims were based on allegations directly related to the insurance
company’s duty to defend and denial of the policy benefit of
independent legal services, not from specific allegations of
communications between counsel, and therefore, the insurance
company’s anti-SLAPP motion was properly denied. (Id. at
pp. 257−258.)
When an insurer tortiously withholds policy benefits, any
attorney fees that the policyholder reasonably incurs to obtain
benefits due under the policy are recoverable as an element of
damages resulting from the tortious conduct. (Brandt v. Superior
Court (1985) 37 Cal.3d 813, 815.)
Civil Code section 3360 provides: “When a breach of duty
has caused no appreciable detriment to the party affected, he
may yet recover nominal damages.” “California courts have
applied section 3360 to conclude that ‘[a] plaintiff is entitled to
recover nominal damages for the breach of a contract, despite
inability to show that actual damage was inflicted upon him.’
[Citation.] Nominal damages may be properly awarded for the
violation of a contractual right because ‘failure to perform a
contractual duty is, in itself, a legal wrong that is fully distinct
18
from the actual damages.’ [Citation.]” (Elation Systems, Inc. v.
Fenn Bridge LLC (2021) 71 Cal.App.5th 958, 965–966.)
C. Application
In this case, the insurers’ anti-SLAPP motion sought to
strike the complaint as a whole, rather than identifying specific
allegations within a cause of action that they asserted were based
on protected activity. The insurers’ contention is that damages
are an element of each cause of action, the damages alleged in the
complaint necessarily consist solely of attorney fees and costs
incurred in connection with the reimbursement action, and
therefore, Martinez’s claims arise from the insurers’ protected
petitioning activity. We disagree.
The cross-complaint alleges multiple acts of bad faith
claims handling by the insurers during settlement of the
underlying wrongful eviction action against Martinez, before the
reimbursement action was ever filed. These include, for example,
failing to provide Martinez with independent counsel. The cross-
complaint does not allege that by filing of a reimbursement
action, the insurers breached the policies or the covenant of good
faith and fair dealing.
The cross-complaint also alleges that Martinez incurred
damages of at least $250,000, as a result of various acts by the
insurers, including failing to provide independent counsel prior to
completion of the settlement in the underlying wrongful eviction
lawsuit. Even if Martinez cannot show he suffered any actual
damages as a result of the alleged breaches, however, he may still
recover nominal damages pursuant to Civil Code section 3360.
Martinez was required to file a cross-complaint alleging any
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related cause of action arising out of the same series of
transactions or his claims would be considered waived under
California’s compulsory cross-complaint statute. (Code Civ.
Proc., §§ 426.30, subd. (a), & 426.10, subd. (c).) The trial court
correctly concluded the claims alleged in the cross-complaint do
not arise from protected petitioning activity.
DISPOSITION
The January 17, 2025 order is affirmed. Respondent
Ernesto Martinez is awarded his costs on appeal.
NOT TO BE PUBLISHED.
MOOR, J.
WE CONCUR:
HOFFSTADT, P. J.
BAKER, J.
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