Farzan v. Wescom Credit Union CA2/8 ( 2014 )

Filed 6/5/14 Farzan v. Wescom Credit Union CA2/8
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION EIGHT
YECHIEL FARZAN, B247479
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. BC479740)
v.
WESCOM CREDIT UNION et al.,
Defendants and Respondents.
APPEAL from judgments of the Superior Court of Los Angeles County.
Alan S. Rosenfield, Judge. Affirmed.
Kane Law Firm, Brad S. Kane and John M. Morris for Plaintiff and Appellant.
O’Connor, Schmeltzer & O’Connor, Lee P. O’Connor and Timothy J. O’Connor
for Defendant and Respondent Mercury Casualty Company.
Knapp, Petersen & Clarke, and Greta T. Hutton for Defendant and Respondent
Wescom Central Credit Union.
Wood, Smith, Henning & Berman, Seymour B. Everett and David L. Martin for
Defendant and Respondent Wescom Insurance Services, LLC.
_______________________________
Plaintiff and appellant Yechiel Farzan caused a traffic accident and did not have
automobile liability insurance, leaving him responsible for losses caused in the accident.
Farzan filed this lawsuit alleging that acts and omissions of others created the
circumstance of his lack of insurance. Farzan sued defendant and respondent Mercury
Casualty Company (Mercury), which cancelled Farzan’s automobile insurance policy
before the accident for non-payment of premiums. Farzan also sued defendants and
respondents Wescom Credit Union, which financed Farzan’s auto loan, and Wescom
Insurance Services, LLC, an insurance broker.
The trial court granted Mercury’s motion for summary judgment and sustained
without leave to amend a joint demurrer by Wescom Credit Union and Wescom
Insurance. Farzan appeals both judgments. We affirm.
FACTS
The Insurance Policy
In May 2010, Farzan purchased a used Porsche Boxster from a local dealership.
Wescom Credit Union financed the purchase with an auto loan. As a condition of the
financing, Wescom Credit Union required Farzan to purchase automobile liability
insurance, and to open a savings and checking account at Wescom Credit Union from
which his monthly auto loan payment would be debited. Wescom Insurance assisted
Farzan in obtaining the required auto insurance, arranging for him to purchase an auto
liability policy from Mercury.
On June 17, 2010, Farzan submitted an application for auto insurance to Mercury,
along with a check in the amount of $273.90 for the first month’s premium. Farzan also
executed an authorization form requesting Mercury to debit his Wescom Credit Union
account on a monthly basis for the policy premiums. Mercury promptly issued a six-
month auto insurance policy to Farzan for the period from June 19, 2010 to December 19,
2010. Beginning in July 2010, Farzan paid his monthly auto insurance premium to
Mercury by debit from his Wescom Credit Union account.
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In November 2010, Mercury sent documents to Farzan to renew his auto insurance
policy for a six-month period from December 19, 2010 to June 19, 2011. On December
18, 2010, Mercury debited Farzan’s monthly premium payment from his Wescom Credit
Union account. The payment on December 18, 2010 was for the premium for coverage
to be provided by Mercury for the period from December 19, 2010 to January 19, 2011.
On January 19, 2011, Mercury attempted to debit the next monthly premium, for
coverage to be provided for the period from January 19, 2011 to February 19, 2011, from
Farzan’s account at Wescom Credit Union. The attempted debit was rejected due to
insufficient funds. About four days later, Mercury again attempted to debit the monthly
premium payment from Farzan’s Wescom Credit Union account. Again, the attempted
debit was rejected due to insufficient funds.
On January 28, 2011, Mercury mailed a letter to Farzan advising him that his bank
had rejected his automatic premium payment due to insufficient funds, and that it was
enclosing a notice of cancellation of his policy to become effective on February 8, 2011.
Mercury advised Farzan that, to “reinstate” his policy, a payment in the amount of $232
had to be “received” before the February 8, 2011 date of cancellation. The enclosed
“Notice of Cancellation” document provided in relevant part:
“YOUR INSURANCE COVERAGE WILL TERMINATE ON FEBRUARY 8, 2011
AT 12:01 AM PT.
“[¶] . . . [¶]
“Cancellation Reason
“NON PAYMENT OF PREMIUM
“Important Messages
“This notice does not extend or reinstate this policy. . . . [¶] Your check or direct
debit has been returned unpaid by your bank. A $5.00 late fee and $15.00 returned check
fee has been added to the amount due. To reinstate your policy, a payment for the
amount due must be received in a Company office within 10 days of the mailing date
shown above. If payment is received after the 10 days and we are able to reinstate your
policy, there would be a lapse in coverage from 02/08/2011 12:01 AM until the payment
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is received. Your policy will not be reinstated if your payment is received more than 10
days after the Coverage Will Terminate Date and Time shown above. If your policy is
reinstated with a lapse in coverage a $5.00 reinstatement fee will be charged. This policy
will not be reinstated unless all past due payments have been received by the Company.”
Mercury did not receive any payment from Farzan prior to February 8, 2011, and,
in accord with the Notice of Cancellation previously sent to Farzan, his policy canceled
effective that date.
On February 22, 2011, Farzan was involved in a multi-vehicle accident. Farzan’s
roommate promptly reported the accident to Mercury.
On March 3, 2011, Mercury sent a bill to Farzan in the amount of $231 for the
coverage it had provided under his auto policy for the period from January 19, 2011 to
February 8, 2011. On March 7, 2011, Mercury received a payment from Farzan in the
amount of $231.
By letter dated March 31, 2011, Mercury denied coverage for Farzan’s accident
for the reason that his policy had been cancelled effective on February 8, 2011, prior to
the date of his accident.
Additional facts concerning Wescom Credit Union and Wescom Insurance are
discussed below in addressing the trial court’s ruling on their joint demurrer.
The Litigation
Farzan sued Mercury, Wescom Credit Union and Wescom Insurance. Farzan’s
operative first amended complaint (FAC) alleged two causes of action as to Mercury:
breach of insurance contract and tortious breach of the covenant of good faith and fair
dealing. Farzan’s FAC alleged a single cause of action jointly as to both Wescom Credit
Union and Wescom Insurance for professional negligence.
Mercury filed a motion for summary judgment or, alternatively, for summary
adjudication of issues to Farzan’s bad faith cause of action, and his claim for punitive
damages. Wescom Credit Union and Wescom Insurance filed a joint demurrer to
Farzan’s FAC.
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The trial court sustained the joint demurrer to Farzan’s FAC filed by Wescom
Credit Union and Wescom Insurance and entered a judgment of dismissal of Farzan’s
FAC as to Wescom Credit Union and Wescom Insurance. Thereafter, the court entered
an order granting Mercury’s motion for summary judgment.
DISCUSSION
I. Farzan’s Appeal From the Grant of Summary Judgment in
Favor of Mercury
Farzan first contends the trial court erred in granting Mercury’s motion for
summary judgment because he presented evidence showing the existence of disputed
issues of fact. Specifically, Farzan argues he presented evidence showing that Mercury
breached a contractual duty to continue attempting to debit his Wescom Credit Union
account right up to the date of cancellation of his auto policy. Farzan argues the evidence
shows that Mercury never alerted him that it would stop its attempts to debit his Wescom
Credit Union account without notifying him. Farzan asserts the evidence shows he
deposited sufficient funds in his Wescom Credit Union account as of January 26, 2011 to
cover payment of his then past-due monthly premium. Thus, Mercury could have debited
his payment from his Wescom Credit Union account before the cancellation date of
February 8, 2011, and his insurance policy would have remained in effect on February
22, 1011, the date of his accident. Farzan is wrong on the contractual duty element of his
argument, and thus wrong on his entire argument.
The authorization form executed by Farzan for his monthly premium payment to
Mercury provided:
“I authorize Mercury . . . to initiate monthly deductions from my
bank account when payments are due for my Mercury account. Payments
will be withdrawn on the payment due date or the following business
day. . . .”
The policy renewal documents that Mercury sent to Farzan in November 2010,
set forth various options for payment of his premiums for the policy period of December
19, 2010 to January 19, 2011. These options included “Full Pay” up front, or a “2 Pay”
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or “3 Pay” plan, or “Automatic [Monthly] Payment.” Mercury explained the
“Automatic Payment” plan as follows:
“First Payment (due December 18, 2010) $212.90
“$212.00 will be scheduled to be deducted on the 19th of each month.”
Farzan does not dispute that he elected the “Automatic Payment” plan.
We see no contract language or evidence in the record which supports Farzan’s
argument that Mercury had a contractual duty to keep attempting to debit his Wescom
Credit Union account to obtain his premium payment, day-after-day, right up to the date
of cancellation of his auto insurance policy. The contractual language and the facts are
not disputed; Farzan’s true argument is that there is an issue of interpretation as to what
Mercury was contractually obligated to do to obtain his monthly premium payment for
his auto insurance policy.
Farzan’s argument is that the term “payment due date” in the authorization form
he executed to allow Mercury to debit his Wescom Credit Union account is ambiguous,
and could be interpreted to equate the date of cancellation of his policy with the payment
due date of his monthly policy premium. Farzan’s argument is not persuasive. First, the
authorization form stated that Farzan authorized Mercury to debit his bank account when
“payments [were] due,” and that payment would be withdrawn “on the payment due date
or the following business day.” The payment authorization form must be interpreted in
relation to the unambiguous language in the policy renewal documents that Mercury sent
to Farzan in November 2011. Those documents stated that Mercury would schedule to
deduct each monthly payment “on the 19th of each month.” (Italics original). Plainly,
the payment due date for Farzan’s monthly premium was “the 19th of each month,” and
cannot reasonably be interpreted to be equated with the date of cancellation of his policy
as stated in Mercury’s Notice of Cancellation.
When Mercury’s first attempt to debit Farzan’s Wescom Credit Union account
was returned for insufficient funds on January 19, 2011, Farzan at that instant stood in
breach of his promise to pay his monthly premium on the payment due date. At that
instant, Mercury could have initiated the cancellation procedures in the parties’ contract
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of insurance. The fact that Mercury tried a second time a few days after January 19, 2001
to debit Farzans’ Wescom Credit Union account is not evidence tending to demonstrate
that the insurer had a continuing duty, day-after-day, right up to the date of cancellation
of Farzan’s auto policy, to keep attempting to debit his account for payment. We need
say no more.
Farzan next argues the trial court’s decision to grant Mercury’s motion for
summary must be reversed because Mercury “waived” its cancellation of the parties
insurance contract effective on February 8, 201, by accepting the payment he made on
March 7, 2011. We disagree.
The undisputed evidence in the record is that Farzan owed $231 to Mercury as of
the February 8, 2011 cancellation date of his policy –– the past-due, unpaid premium for
coverage extended by Mercury from January 19, 2011 to February 8, 2011. On March 3,
2011, Mercury sent a letter to Farzan advising him that his auto policy had been cancelled
and that he owed Mercury a past-due, unpaid balance of $231. When Farzan paid $231
to Mercury on March 7, 2011, he did no more than pay his past-due bill for coverage that
already been provided.
There is no evidence in the record to support a finding that Mercury waived the
cancellation of the parties’ insurance contract which had become effective on February 8,
2011. To accept Farzan’s argument would mean that no insurer could seek payment of a
past due bill on a cancelled policy without being charged with waiving cancellation of the
policy. Waiver is a surrender of a claim, right, or privilege by acts that are inconsistent
with the claim, right or privilege. Farzan is correct in the abstract that, when an insurer
accepts a premium payment that is not timely paid in strict accordance with the terms of
the parties’ contract of insurance, the insurer may be deemed to have waived the ill-made
payment. (See, e.g., Huber v. New York Life Ins. Co. (1936) 18 Cal. App. 2d 269, 274.)
The problem with Farzan’s statement of law is that it has no application to the facts in his
case. Here, there is no evidence tending to show that Mercury accepted a premium
payment from Farzan that was not timely paid in accordance with the terms of their
contract of insurance. On the contrary, the undisputed evidence shows that the parties’
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contract of insurance was cancelled effective February 8, 2011, and Mercury thereafter
sent Farzan a bill for coverage it had extended up to the date of the cancellation, which
Farzan paid after the cancellation date.
II. Farzan’s Appeal From Sustaining the Demurrer in Favor of
Wescom Insurance
Farzan claims the trial court erred in ruling that he failed to state a cause of action
for professional negligence against Wescom Insurance. We disagree.
To state a cause of action for professional negligence, a plaintiff must allege the
following elements: (1) the professional’s duty of care to use such skill, prudence, and
diligence as other members of his or her profession commonly possess and exercise;
(2) a breach of that duty; (3) a proximate causal connection between the negligent
conduct and the resulting injury; and (4) actual loss or damage resulting from the
professional’s negligence. (See, e.g., Mattco Forge, Inc. v. Arthur Young & Co. (1997)
52 Cal. App. 4th 820, 833 (Mattco) [duty of care of accountant]; and see, e.g. Jones v.
Grewe (1987) 189 Cal. App. 3d 950, 954-955 (Jones) [elements of claim for professional
negligence against insurance broker].)
Whether a defendant owes a duty of care in a given situation is a question of law
for the court to decide. (Wilson v. All Service Ins. Corp. (1979) 91 Cal. App. 3d 793, 796
(Wilson) [duty of care of insurance broker did not include duty to investigate a carrier’s
financial condition].) “A complaint which lacks facts to show that a duty of care was
owed is fatally defective.” (Jones, supra, 189 Cal.App.3d at p. 954.)
The published cases in our state impose a duty on an insurance broker “to use
reasonable care, diligence, and judgment in procuring the insurance requested by its
client.” (Kotlar v. Hartford Fire Ins. Co. (2000) 83 Cal. App. 4th 1116, 1123, emphasis
added [dismissing negligence claim against insurance broker based on alleged failure to
notify insured of policy cancellation]; see also Nowlon v. Koram Ins. Center, Inc. (1991)
1 Cal. App. 4th 1437, 1447 [the duty of an insurance “is incurred in the procurement or
issuance of an insurance policy”]; Paper Savers, Inc. v. Nacsa (1996) 51 Cal. App. 4th
1090, 1095-1096, italics omitted [an insurance broker’s duty of care “does not include
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responsibility for ensuring the insured has adequate coverage to protect against all
eventualities”]; Jones, supra, 189 Cal.App.3d at p. 954 [insurance broker does not have a
duty to advise the insured on specific insurance matters, nor to elicit information from the
insured that might be pertinent to coverage].)
The duty to provide the insured with a notice of cancellation is imposed solely
upon the insurance carrier, not the broker. (Ins. Code, § 677.2; Kotlar v. Hartford Fire
Ins. Co., supra, 83 Cal.App.4th at p. 1123.) A broker has no duty to notify the insured of
a carrier’s intent to cancel a policy. (Pacific Rim Mechanical Contractors, Inc. v. Aon
Risk Ins. Services West, Inc. (2012) 203 Cal. App. 4th 1278, 1285.) Basically, once a
policy has been obtained, the predominant relationship is between the insured and the
insurer; a broker does not have further obligations, unless they are assumed by express
agreement. (Fitzpatrick v. Hayes (1997) 57 Cal. App. 4th 916, 927.)
In the present matter, Farzan makes no allegations relating to any duty assumed by
Wescom Insurance. He has not alleged that Wescom Insurance made any representation
about coverage or payment of premiums. He claims his insurance should have been in
effect when his auto accident occurred, but there are no facts alleged to show how or why
Wescom Insurance had any involvement in keeping the policy in effect on the date of the
accident. Indeed, there are no actual allegations of any kind showing any fact concerning
Wescom Insurance. Farzan’s professional negligence cause of action is premised entirely
upon an alleged “agreement” to make payment of a premium created in the branch office
of Wescom Credit Union on January 26, 2011. The circumstances of the agreement as
alleged in Farzan’s FAC are as follows:
On January 26, 2011, Farzan went to a branch of Wescom Credit Union, where he
explained to a teller, “I am here to make my insurance payment.” In vaguely pleaded
language, Farzan alleged that the Wescom Credit Union teller “promised” to transmit
Farzan’s auto insurance premium payment to Mercury, and that, “[i]n reliance on [this]
promise,” he deposited $272 into his Wescom Credit Union account. Farzan alleged that
he asked the teller to “make sure Mercury was paid ‘right away,’” and the teller replied to
him, “You are all good now.”
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These alleged facts do not state a cause of action for professional negligence, or
even simple negligence, against Wescom Insurance. As noted above, a broker has no
duty with respect to keeping an insurance policy in effect; the broker’s duty is to use care
in procuring the policy in the first instance. (Kotlar v. Hartford Fire Ins. Co., supra,
83 Cal.App.4th at p. 1123; Pacific Rim Mechanical Contractors, Inc. v. Aon Risk Ins.
Services West, Inc., supra, 203 Cal.App.4th at p. 1285; Fitzpatrick v. Hayes, supra,
57 Cal.App.4th at p. 927.) Limiting a broker’s duty to the procurement of insurance
makes eminent sense. The insured and the insurer are in the best position to monitor and
ensure that premiums are paid. It is not reasonable to expect a broker to check with the
insured and or the insurer each month to confirm that a premium payment has been
timely made.
Farzan’s argument that he alleged facts showing Wescom Insurance entered into
an “agreement” to remit his premium payment to Mercury is not persuasive. The fatal
problem with Farzan’s argument is that his pleading alleged he spoke only with a teller at
Wescom Credit Union; Farzan did not allege that any person of authority affiliated with
Wescom Insurance participated in the conversation at Wescom Credit Union on January
26, 2011. Farzan does not allege that he was communicating with Wescom Insurance
regarding this payment, nor does he allege that he gave his premium payment to Wescom
Insurance. As a matter of law, Farzan did not allege that he entered into an agreement
with Wescom Insurance to pay his premium.
Farzan did not allege facts showing that Wescom Insurance knew or could have
known Farzan had not maintained a sufficient bank account balance to pay his monthly
Mercury premium, or that Wescom Insurance knew or could have known the payment to
Mercury had not been made to Wescom Credit Union due to insufficient funds. What
Farzan is attempting to do with Wescom Insurance is to shift the burden of making his
premium payments onto the broker. There are no facts in Farzan’s FAC to show that
Wescom Insurance, in assisting Farzan to obtain an auto insurance policy, agreed to
monitor each monthly payment and advise if it was not received properly. Such issues
are between the insured and the carrier. The duty that Farzan argues to be recognized in
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his case would fundamentally restructure the basic role of brokers into that of a personal
financial manager, and would increase the cost of insurance to the wider detriment of
society. Farzan’s duty argument implicates policy choices that should not be judicially
imposed. Unless the insurance broker assumes particular additional duties by contract, its
obligations to the insured do not continue after the insurance policy requested by the
client has been issued. To impose continuing duties upon the broker would transform the
broker-client relationship into an indefinite one that could only create problems.
It is the insurer who bargains to carry obligations after the policy issues, not the
broker. Farzan seeks to turn brokers into insurers. But California law and policy does
not support forcing insurance brokers to act as surrogate insurers to all insureds under the
policies they procure. We reject Farzan’s attempt to extend Wescom Insurance’s
common law duties beyond placement of the policy, contrary to the common law of
California.
Farzan next argues that none of this makes a difference because he alleged
sufficient facts to show that Wescom Credit Union –– more accurately, the teller at
Wescom Credit Union –– was acting an ostensible agent of Wescom Insurance.
Apparently, Farzan is arguing that because the Wescom Credit Union teller was an
ostensible agent of Wescom Insurance, the teller’s “agreement” to make Farzan’s
payment was binding on Wescom Insurance. Alternatively, Farzan argues he was
entitled to be granted leave to amend to expand upon his ostensible agency allegations.
We find neither argument persuasive.
There are no facts alleged in Farzan’s FAC to show that Wescom Credit Union’s
teller was acting as an ostensible agent of Wescom Insurance when the teller allegedly
promised to remit Farzan’s premium payment to Mercury. Farzan’s cause of action for
professional negligence merely refers to Wescom Credit Union and Wescom Insurance
collectively by a single name –– “Wescom” –– and alleges that “Wescom” is liable for
professional negligence for failing to remit payment of his premium to Mercury in a
timely manner. Simply compressing the two entities into a single name does allege facts
showing an ostensible agency relationship.
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At best, at Paragraph 6 of Farzan’s complaint, he alleges in conclusory terms that
“the Defendants, and each of them, were acting on behalf of each of the remaining
Defendants and were acting within the scope of their partnership, agency, employment
and/or representative capacity.” This is not sufficient. “In reviewing the sufficiency of a
complaint against a general demurrer, we . . . ‘treat the demurrer as admitting all material
facts properly pleaded, but not contentions, deductions or conclusions of fact or law.’”
(Blank v. Kirwan (1985) 39 Cal. 3d 311, 318 (Blank), italics added.) In short, to properly
allege ostensible agency, Farzan needed to allege facts supporting his conclusory
allegation that each defendant was an agent of the other. There simply are no facts
alleged in Farzan’s FAC to show a basis for Farzan to have believed that, when he was
talking to Wescom Credit Union’s teller, he was talking to someone with agency
authority to represent Wescom Insurance.
Perhaps of equal importance, the introductory allegations of Farzan’s FAC
identify Wescom Credit Union as a California corporation and Wescom Insurance as a
California limited liability corporation. California law presumes that a corporation is a
separate legal entity existing under the authority of the state. (Sonora Diamond Corp. v.
Superior Court (2000) 83 Cal. App. 4th 523, 538.) Farzan has failed to allege facts to
overcome the presumption that Wescom Credit Union and Wescom Insurance exist as
separate entities. Thus, to the extent Farzan impliedly argues that Wescom Credit Union
and Wescom Insurance are alter egos of each other, he has not alleged facts showing such
an alter ego relationship. The only alter ego allegations in Farzan’s FAC allege are that
“the Doe Defendants are alter egos of Mercury and/or Wescom.” (Paragraph 7.) Farzan
does not allege that Wescom Credit Union and Wescom Insurance are alter egos of each
other.
This brings us to Farzan’s argument that he should have been granted leave to
amend to correct any defects in his ostensible agency allegations. Farzan is correct that
leave to amend is liberally granted. (Price v. Dames & Moore (2001) 92 Cal. App. 4th
355, 360.) At the same time, a trial court may deny leave to amend where there is no
reasonable possibility that a defective pleading can be cured by further amendment.
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(Blank, supra, 39 Cal.3d at p. 318.) A trial court’s ruling to deny leave to amend is
reviewed for abuse of discretion. (Record v. Reason (1999) 73 Cal. App. 4th 472, 486.)
To demonstrate such an abuse of discretion , it is the plaintiff’s burden to show a
reasonable possibility that an adequate pleading could be alleged. (Blank, supra,
39 Cal.3d at p. 318; Community Cause v. Boatwright (1981) 124 Cal. App. 3d 888, 902.)
Farzan did not in the trial court, and has not on appeal, proffered any amended
language to show how he would allege that Wescom Credit Union and Wescom
Insurance were ostensible agents of each other. In his opening brief on appeal, he says
that no employee at either Wescom Credit Union or Wescom Insurance ever tells any of
their customers that Wescom Credit Union and Wescom Insurance are separate entities.
He argues that, as a result of this, employees at Wescom Credit Union’s employees and
Wescom Insurance’s employees had at least ostensible authority to collect and transmit
his monthly premium payment to Mercury. Farzan is missing a link in the chain. It may
well be that an employee at Wescom Credit Union, i.e., the teller, had ostensible
authority to bind Wescom Credit Union to an agreement to transmit Farzan’s premium
payment to Mercury. But the question here is whether the teller had ostensible authority
to bind Wescom Insurance to an agreement to transmit Farzan’s premium payment to
Mercury. We see nothing in Farzan’s arguments on appeal to show a possibility that he
can allege facts to make the teller at Wescom Credit Union an ostensible agent of
Wescom Insurance. The trial court did not abuse its discretion in denying leave to amend
as to Wescom Insurance.
III. Farzan’s Appeal as to Wescom Credit Union’s Demurrer
As noted above, Farzan’s cause of action for professional negligence against
Wescom Credit Union alleged that he went to a branch of the institution on January 26,
2011, and explained to a teller, “I am here to make my insurance payment.” In inartfully
pleaded language, Farzan alleged that the teller at Wescom Credit Union “promised” to
transmit Farzan’s insurance premium payment to Mercury, and that, “[i]n reliance on
[this] promise,” he deposited $272 into his Wescom Credit Union account. Farzan
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alleged that he asked the teller to “make sure Mercury was paid ‘right away,’” and the
teller represented to him, “You are all good now.”
The issue presented by Farzan’s appeal is whether these alleged facts state a cause
of action in tort as to Wescom Credit Union.1 Farzan intentionally or otherwise does not
differentiate Wescom Credit Union from Wescom Insurance, but argues he alleged
sufficient facts to state a cause of action for professional negligence against the
“Wescom defendants.” Here, we disagree as to Wescom Credit Union.
Farzan argues that Wescom Credit Union had an overall duty of care when
transmitting his premium payments to Mercury, and that Wescom had a “greater duty of
care” when transmitting his payment in January 2011 because it knew of his insufficient
funds debits problems and “expressly agreed to pay his premium to Mercury right away.”
Farzan argues Wescom Credit Union breached its duty of care by failing to remit
payment to Mercury in a timely manner.
We discussed the required elements for stating a cause of action for “professional
negligence” above in addressing Farzan’s appeal as to Wescom Insurance. We reiterate
in short that a plaintiff must allege the following elements: (1) duty; (2) breach;
(3) proximate causation; and (4) damages. (Mattco, supra, 52 Cal.App.4th at p. 833.)
In light of the way in which Wescom Credit Union presented is demurrer, the issue here
is duty.
Whether a defendant owes a duty of care in a given situation is an issue of law for
a court to decide. (See, e.g., Wilson, supra, 91 Cal.App.4th at p. 796 [ruling that that
insurance broker had no duty of care to client to investigate carrier’s financial
condition].) In determining whether a duty of care shall be imposed, a court is to
consider whether a party may be required to compensate another who has been injured,
based on a number of policy considerations involving the interests of the parties as well
as society at large. (Dillon v. Legg (1968) 68 Cal. 2d 728, 734.) “A complaint which
1
Farzan unmistakably does not want to allege a cause of action in contract against
Wescom Credit Union.
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lacks facts to show that a duty of care was owed is fatally defective.” (Jones v. Grewe,
supra, 189 Cal.App.3d at p. 954.)
Wescom Credit Union argues that financial institutions which hold savings and
checking accounts, of which it is one, do not owe a duty –– as duty is understood in tort
law –– to remit payments to their depositors’ creditors. Farzan’s argument does not
challenge this broad proposition. Rather, Farzan argues that the words spoken by
Wescom Credit Union’s teller created a contract that was binding on Wescom Credit
Union to remit payment of his policy premium to Mercury, and also created a duty
sounding in tort to perform the same task. Second, Farzan argues (he does so in the
context of arguing to be granted leave to amend) that Wescom Credit Union had a duty
“to notify [him] if he was actually required to go to Wescom Insurance’s . . . office to
make his premium payment or pay Mercury directly by a means other than auto debit.”
We dispatch with Farzan’s second duty argument first because it is the easiest to
reject. There are no facts alleged in Farzan’s pleading which would support a judicial
determination that Wescom Credit Union had a duty imposed by law to notify him if he
had to go to Wescom Insurance’s office to make his premium payment, or to make his
payment to Mercury directly by a means other than auto debit. The mode or manner for
Farzan to pay Mercury was a matter between Farzan and Mercury under their contract of
insurance.
Farzan’s complaint does even begin to suggest that there was any way for
Wescom Credit Union to have any knowledge about the manner in which Farzan was
supposed to make his premium payments apart from the debit arrangement, let alone that
would support imposition of a duty on Wescom Credit Union to advise Farzan on how to
make his payments.
This brings us to Farzan’s contract-based, negligence duty argument. The cases
cited by Farzan do not support the proposition that the a contract duty he claims here may
be bootstrapped to create a duty as duty is understood in negligence law. Duties arising
from a contract may be assumed, defined and delineated by the mutual agreement of the
contracting parties. A duty of care under negligence law is imposed, defined and
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delineated as a matter of law, and simply cannot be disclaimed. Farzan seems to be
arguing that Wescom Credit Union negligently performed a contract that it entered
through its teller. “Accompanying every contract is a common-law duty to perform with
care, skill, reasonable expedience, and faithfulness the thing agreed to be done, and a
negligent failure to observe any of these conditions is a tort as well as a breach of the
contract.” (Kuitems v. Covell (1951) 104 Cal. App. 2d 482, 485 [roofing contract].) The
problem with the Farzan’s pleading is that he has not alleged the formation of a definitive
contract. He has not alleged the teller’s authority to bind the credit union, nor any
definitive contract terms.
Farzan does not appear to want to state a claim for breach of contract. So be it.
But he has not alleged a cause of action for professional negligence.
DISPOSITION
The summary judgment entered in favor of Mercury is affirmed. The judgment of
dismissal as to Wescom Credit Union and Wescom Insurance is affirmed. Respondents
are awarded costs on appeal.
BIGELOW, P.J.
We concur:
RUBIN, J.
KUSSMAN, J.

Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to
article VI, section 6 of the California Constitution.
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