• Bock et al. v. Hansen, (April 2, 2004) - Cal.Rptr.3d -, 2004 W.L. 1315314
  • May 2, 2014
  • Law Firm: McCormick Barstow Sheppard Wayte Carruth LLP - Fresno Office

    On September 9, 2010, a forty-one foot long, seventy-three hundred pound tree limb crashed into the home of Michael and Lorie Bock causing damage to their chimney, the front and interior of their house, their fence and Ms. Bock's car. The Bocks reported the incident to their homeowner's insurer, Travelers Property and Casualty Insurance Company ("Travelers"), whose adjuster inspected the loss. During the inspection, the adjuster allegedly moved limbs and branches prior to taking any photos of the damage. Further, the adjuster allegedly told Ms. Bock that the clean-up was not covered under the policy. Relying on the adjuster's statements, Ms. Bock cut her hand while attempting to clean up broken glass.

    The Bocks subsequently discovered that the fallen limbs caused significant damage to the chimney. During a second inspection of the Bocks' home, the adjuster and a field manager were allegedly shown cracks in the chimney as well as gouges where the limbs made contact. The adjuster allegedly told the Bocks again that their policy did not cover the clean-up. Travelers then provided the Bocks a revised estimate which allegedly eliminated amounts previously included based on an alleged false statement that the Bocks confirmed during the re-inspection that there was no damage to certain items. Travelers also allegedly retained an unlicensed contractor to inspect the Bocks' home. The contractor prepared a report following his inspection which allegedly concluded that there was no scarring, gouging, or scuff marks on the siding or trim materials on the northeast corner of the residence, that the fireplace appeared to be in good and serviceable condition, and that cracks were due to the age of the chimney. Travelers allegedly denied coverage for the chimney damage based on the contractor's report.

    The Bocks filed a complaint against Travelers, the adjuster and the contractor. Relevant to this decision, the Bocks alleged causes of action for negligent misrepresentation and intentional infliction of emotional distress ("IIED") against Travelers and the adjuster. The Bocks alleged that the adjuster falsely told them that their policy did not cover the cost of clean-up and that he either knew the representation was false or was made with reckless disregard for the truth. Further, the Bocks alleged that the actions of Travelers and the adjuster were extreme and outrageous in that they abused their position of power over the Bocks to falsely induce them to perform the clean-up, purposely ignored information demonstrating coverage and withheld information from the contractor to justify defendants' pre-determined course of denying payments due under the policy. The adjuster demurred to the negligent misrepresentation and IIED causes of action. The trial court sustained without leave to amend on the basis that the complaint does not, and cannot, state claims for negligent misrepresentation and IIED. The Bocks appealed.


    The court of appeal reversed and remanded the matter. On the negligent misrepresentation claim, the court of appeal rejected the adjuster's argument that he cannot be personally liable for negligent misrepresentation because he did not owe the Bocks a legal duty. The court of appeal relied upon Vu v. Prudential Prop. & Cas. Ins. Co.(2001) 26 Cal.4th 1142 to conclude that, because a special relationship existed between Travelers and the Bocks, and because the adjuster was Travelers' employee, he owed a duty to the Bocks. Further, the court of appeal noted that causes of action for negligent misrepresentation, i.e., the duty to communicate accurate information, arise in two situations: (1) where providing false information poses a risk of and results in physical harm to person or property; or (2) where information is conveyed in a commercial setting for a business purpose. See Friedman v. Merck & Co. (2003) 107 Cal.App.4th 454, 477. The court of appeal concluded that both settings were present as Mrs. Bock was injured as a result of the adjuster's alleged misrepresentation and that the adjuster's statements were made for a business purpose. The court of appeal also held that an employee can be personally liable for his or her own torts, including fraud. Consequently, the court of appeal held that the Bocks could legally maintain a cause of action against the adjuster and that the Bocks adequately alleged such a cause of action.

    On the IIED cause of action, the court of appeal held that, while the Bocks failed to allege reckless and outrageous conduct, they should have the opportunity to amend their complaint based on the Bocks' argument that they could allege additional outrageous conduct, including that the adjuster withheld information from the contractor to ensure that the contractor's report would support a pre-determined decision to deny coverage. Further, the Bocks argued that they could allege facts that show the adjuster abused the relationship of power over them and that he knew they were susceptible to injuries through mental distress. In light of the Bocks' contentions, the court of appeal reversed the trial court's ruling to allow the Bocks to amend their IIED claim.


    Following on the California Supreme Court's ruling in Vu, this decision emphasizes the special relationship or unequal bargaining position inherent in the insurer-insured relationship and establishes that the insurance adjuster, though not a party to the contract of insurance, is still potentially liable for independent torts against the insured. Policyholders can maintain causes of action for misrepresentation and IIED against insurance adjusters acting in the course of their employment for an insurance carrier in those instances in which the adjuster makes knowingly false statements regarding coverage which result in harm to the insured or such statements are made for a business purpose.

    This opinion is not final. It may be withdrawn from publication, modified upon rehearing, or review may be granted by the California Supreme Court. These events would render the opinion unavailable for use as legal authority.

    This publication is intended for informational purposes only and is not intended as legal advice or as a substitute for legal consultation in a particular case or circumstance. Transmission of this information is not intended to create, and receipt does not create, an attorney-client relationship.