Case 3:21-cv-00490-BEN-BGS Document 1 Filed 03/18/21 PageID.1 Page 1 of 16
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`Cheryl L. Kozdrey (State Bar No. 323308)
`ckozdrey@sdvlaw.com
`Jesse K. Hidell-Carrijo (State Bar No. 331377)
`jhidell-carrijo@sdvlaw.com
`SAXE DOERNBERGER & VITA
`Two Better World Circle, Suite 200
`Temecula, CA 92590
`Ph: (951) 365-3145; Fax: (203) 287-8847
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`Attorneys for Plaintiff, Palomar Health
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`
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`UNITED STATES DISTRICT COURT
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`SOUTHERN DISTRICT OF CALIFORNIA
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`PALOMAR HEALTH,
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`Case No.:
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`Plaintiff,
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`vs.
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`AMERICAN GUARANTEE AND LIABILITY
`INSURANCE COMPANY, MORGAN
`JACKSON, and DOES 1 through 10, inclusive.
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`Defendants.
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`COMPLAINT FOR BREACH OF
`CONTRACT, DECLARATORY RELIEF,
`BREACH OF THE DUTY OF GOOD
`FAITH AND FAIR DEALING,
`NEGLIGENT MISREPRESENTATION,
`AND DEMAND FOR JURY TRIAL
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`WHEREFORE Plaintiff, PALOMAR HEALTH, (“Palomar”) by and through its
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`attorneys, Saxe, Doernberger & Vita, P.C., hereby complains and alleges as follows against
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`Defendant AMERICAN GUARANTEE AND LIABILITY INSURANCE COMPANY
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`(“American Guarantee”) for whom:
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`JURISDICTION AND VENUE
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`1.
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`Subject matter jurisdiction is founded in diversity of citizenship pursuant to 28
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`U.S.C. § 1332, based on the facts more specifically alleged in paragraphs 4 and 5 below.
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`2.
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`The amount in controversy, exclusive of interest and costs, exceeds the sum of
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`$75,000.
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`3.
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`Venue lies in this district pursuant to 28 U.S.C.A. § 1391, in that a substantial part
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`of the events or omissions giving rise to this action, including issuance of the insurance policies
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`PALOMAR HEALTH’S COMPLAINT AND DEMAND FOR JURY TRIAL
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`'21
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`CV490
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`BGS
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`BEN
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`

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`at issue, occurred in San Diego County, California, and/or a substantial part of the insurance
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`claims that are the subject of this action pertain to property that is situated in San Diego County,
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`California.
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`PARTIES
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`4.
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` Palomar is a governmental party, which, at all relevant times herein, was and is a
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`California local healthcare district organized under Division 23 of the California Health & Safety
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`Code, with its principal place of business at 456 E. Grand Avenue, Escondido, CA 92025.
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`5.
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`Palomar is informed and believes and thereon alleges that, at all relevant times
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`herein, American Guarantee was and is an entity formed and existing under the laws of the State
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`of New York, with its principal place of business at 1299 Zurich Way, Schaumburg, Illinois
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`60196.
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`FACTUAL ALLEGATIONS
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`6.
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`Palomar operates several healthcare facilities throughout San Diego County and is
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`in the business of providing healthcare services to the community, including, but not limited to,
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`elective surgical services, women’s health services, cardiac rehabilitation, and community health
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`education classes; Palomar also operates a gift shop at its Palomar Medical Center location in
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`Poway, California.
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`7.
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`American Guarantee is an insurance carrier engaged in the business of providing
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`insurance coverage to healthcare providers, including Palomar.
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`8.
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`Palomar and American Guarantee issued two separate insurance contracts
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`covering consecutive policy periods in consideration of premiums paid by Palomar.
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`9.
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`Palomar procured “The Zurich EDGE Healthcare Policy” from American
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`The Policies
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`Guarantee, bearing Policy No. ZMD0198013-03, with an effective Policy Period of July 1, 2019
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`through July 1, 2020 (the “2019-2020 Policy”), which was renewed via Policy No. ZMD-
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`0198013-04 for the Policy Period of July 1, 2020 through July 1, 2021 (the “2020-2021 Policy”)
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`(collectively, the “Policies”).
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`PALOMAR HEALTH’S COMPLAINT AND DEMAND FOR JURY TRIAL
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`10.
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`The Policies obligate American Guarantee to indemnify and/or reimburse
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`Palomar for loss of or damage to its healthcare facilities and/or business activities caused by “all
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`risks of direct physical loss of or damage from any cause unless excluded,” including, but not
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`limited to, the following risks specifically covered by the Policies (emphasis added):
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`a. “TIME ELEMENT” losses provided by Section 4.01. of the Policies,
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`including loss of “Gross Earnings” and “Extra Expenses” resulting from the
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`necessary Suspension, meaning the “slow down or cessation,” of Palomar’s
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`business activities “due to direct physical loss of or damage to Property (of the
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`type insurable under th[e] Polic[ies] . . .),” including, but not limited to,
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`Palomar’s “interest in Personal Property” and/or “interest in buildings (or
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`structures).”
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`b. “INTERRUPTION BY COMMUNICABLE DISEASE” provided by
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`Section 5.02.35 of the Policies, including “loss resulting from the necessary
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`Suspension [i.e., ‘slow down or cessation’] of the Insured’s business activities
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`at an Insured Location if the Suspension is caused by order of an authorized
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`governmental agency enforcing any law regulating communicable diseases
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`and that [sic] such portions of the location are declared uninhabitable due to
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`the threat of spread of communicable disease prohibiting access to those
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`portions of the Location.”
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`c. “DECONTAMINATION COSTS” provided by Section 5.02.07 of the
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`Policies, including the increased cost of decontamination and/or removal of
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`“Contaminated Covered Property” (defined as “[a]ny condition of property
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`due to the actual presence of any foreign substance . . . pathogen, pathogenic
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`organism, bacteria, virus, disease causing or illness causing agent . . .”) when
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`such “Covered Property is Contaminated from direct physical loss of or
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`damage caused by a Covered Cause of Loss [defined as ‘all risks of direct
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`physical loss of or damage from any cause unless excluded’] and there is a
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`law or ordinance regulating Contamination due to the actual not suspected
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`presence of Contaminant(s).”
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`d. “PROTECTION AND PRESERVATION OF PROPERTY” provided by
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`Section 5.02.24 of the Policies, including “reasonable and necessary costs
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`incurred for actions to temporarily protect or preserve Covered Property,
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`[including Personal Property, buildings, and Palomar’s “interest in” Personal
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`Property and/or buildings]; provided such actions are necessary due to actual
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`or imminent physical loss or damage due to a Covered Cause of Loss to such
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`Covered Property; . . . .”
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`e. “CIVIL OR MILITARY AUTHORITY” losses provided by Section
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`5.02.03 of the Policies, including loss of “Gross Earnings” and “Extra
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`Expenses” resulting from the necessary Suspension (i.e., “slow down or
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`cessation”) of Palomar’s business activities at an Insured Location if the
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`Suspension is caused by order of civil or military authority that prohibits
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`access to the Location, provided that such order must result from a civil
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`authority’s response to direct physical loss of or damage caused by a Covered
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`Cause of Loss to property not owned or occupied by Palomar and located
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`within five (5) miles of the Insured’s Location.
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`f. “PROTECTION OF PATIENTS” provided by Section 5.02.37 of the
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`Policies, including reasonable and necessary costs incurred for actions to
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`temporarily remove and return patients at the Insured Location; provided such
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`actions are necessary “due to impending physical loss or damage due to a
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`Covered Cause of Loss to Covered Property,” which includes Personal
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`Property, buildings, and/or Palomar’s “interest in” Personal Property or
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`buildings.
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`g. “PROFESSIONAL FEES” provided by Section 5.02.23 of the Policies,
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`including “the actual costs incurred by [Palomar], of reasonable fees paid to
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`[Palomar’s] accountants, . . . auditors, . . . or other professional[s] and the cost
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`PALOMAR HEALTH’S COMPLAINT AND DEMAND FOR JURY TRIAL
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`of using the Insured’s employees, for producing and certifying any details
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`contained in the Insured’s books or documents, or such other proofs,
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`information or evidence required by [American Guarantee] resulting from loss
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`or damage payable under this Policy for which [American Guarantee] accepts
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`liability.”
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`11.
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`Under certain limited conditions, which are not applicable here, Sections
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`3.03.01.01 of the Policies purports to exclude coverage for costs due to “Contamination.”
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`12.
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`Also under certain limited conditions, which are not applicable here, Section
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`3.03.02.05 of the Policies purports to exclude coverage for loss or damages arising from the
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`enforcement of specific laws and ordinance.
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`13.
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`The exclusions cited in paragraphs 11 and 12 above do not apply if coverage for
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`such losses is “specifically stated elsewhere in the Policy,” and if such losses “result[ ] from direct
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`physical loss or damage not excluded by the Policy;” for these reasons and others, the exclusions
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`do not apply to limit or bar coverage for Palomar’s claims.
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`14.
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`On March 19, 2020, the Executive Department for the State of California issued
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`The Claims
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`Executive Order N-33-20, mandating certain state-wide action to preserve public health and
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`safety in response to the COVID-19 pandemic.
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`15.
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`Specifically, Order N-33-20 mandated that “[t]he healthcare delivery system shall
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`prioritize services to serving those who are the sickest and shall prioritize resources, including
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`personal protective equipment, for the providers providing direct care to them.”
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`16.
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`Several other government orders followed, including, but not limited to, March
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`29, 2020 and December 10, 2020 Orders issued by the County of San Diego Health and Human
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`Services Agency, entitled “Order of the Health Officer and Emergency Regulations” (the
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`“County Orders”).
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`17.
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`The County Orders mandated, among other things, that “[h]ospitals and
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`healthcare providers shall take measures to preserve and prioritize resources including delaying
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`non-emergent or elective surgeries and procedures where feasible.”
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`PALOMAR HEALTH’S COMPLAINT AND DEMAND FOR JURY TRIAL
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`18.
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`County Orders also mandated that “’[n]on-essential personnel,’ . . . are prohibited
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`from entry into any hospital or long-term care facility. All essential personnel who show any
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`potential signs or symptoms of COVID-19 shall be strictly prohibited from entry into hospitals or
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`long-term care facilities.”
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`19.
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`In addition, the County Orders required the closure of certain non-essential indoor
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`facilities.
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`20.
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`As a result of Order N-33-20 and the County Orders, Palomar suffered, among
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`other covered losses, a “direct physical loss of” and/or “damage to” its “interest in Personal
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`Property and/or its “interest in buildings (or structures),” including, but not limited to, its interest
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`in the discretionary use of personal protective equipment and other resources, buildings, and
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`facilities.
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`21.
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`Palomar’s usual business activities, including but not limited to, elective surgical
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`services, women’s health services, cardiac rehabilitation, community health education classes,
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`and gift shop operations, were Suspended, within the meaning of the Policies (i.e., slowed down
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`or ceased), due to Palomar’s “direct physical loss of” and/or “damage to” its “interest in Personal
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`Property and/or its “interest in buildings (or structures).”
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`22.
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`Palomar suffered losses arising from the slow down or cessation of business
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`activities because Order N-33-20 and the County Order rendered portions of its facilities
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`uninhabitable due to the threat of spread of COVID-19.
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`23.
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`Palomar suffered losses arising from the slow down or cessation of business
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`activities because Order N-33-20 and the County Order prohibited access to property within five
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`(5) miles of Palomar’s Insured Locations as a result of the Executive Department for the State of
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`California’s and the County of San Diego Health and Human Services Agency’s response to
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`direct physical loss of or damage caused by COVID-19 to property not owned or occupied by
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`Palomar and located within five (5) miles of the Palomar’s Insured Locations.
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`24.
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`Palomar incurred costs to decontaminate its facilities due to the actual presence of
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`COVID-19.
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`25.
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`Palomar suffered losses as a result of its efforts to protect its patients.
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`26.
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`Palomar has and will continue to incur professional fees and costs to pay its
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`employees and/or other professionals for producing and certifying details, information, or
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`evidence required by American Guarantee resulting from covered losses or damages identified in
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`the preceding paragraphs.
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`27.
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`The losses identified in the preceding paragraphs, and other losses sustained by
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`Palomar (the “Losses”), are expressly covered under the Policies pursuant to, but not limited to,
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`the coverage parts cited in paragraphs 10.a. through 10.g. above and are not otherwise limited or
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`excluded by the Policies.
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`American Guarantee’s Conduct
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`28.
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`On April 20, 2020, by and through its insurance broker, Palomar tendered notice
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`of the aforementioned Losses to American Guarantee, seeking full coverage under the 2019-
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`2020 Policy (the “Claims”).
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`29.
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`On April 21, 2020, American Guarantee formally acknowledged receipt of the
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`Claims and assigned National General Adjuster, Corey Canipe, to adjust the Claims.
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`30.
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` On May 1, 2020, American Guarantee issued a reservation of rights letter,
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`denoting potentially applicable policy provisions and asserting that American Guarantee’s
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`investigation of the claim was still ongoing, and that it would provide Palomar “with [its]
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`coverage position as soon as [its] investigation is complete.”
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`31.
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`On May 20, 2020, Palomar provided American Guarantee with a Statement of
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`Values associated with its Claims, as well as a response to a COVID-19 Questionnaire requested
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`by American Guarantee.
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`32.
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`From May 2020 through present, Palomar communicated with American
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`Guarantee on multiple occasions, providing all information and documentation requested by
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`American Guarantee with respect to the Claims.
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`33.
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`American Guarantee claimed, on multiple occasions, to be investigating the
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`Claims during this timeframe.
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`34.
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`On or about September 28, 2020, American Guarantee reassigned adjustment of
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`the Claims to Morgan Jackson in her capacity as National General Adjuster, Large Property
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`Claims for American Guarantee.
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`35.
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`On September 28, 2020, Ms. Jackson called Palomar and left a voicemail stating,
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`in part, that it was her “goal to not really have you spinning your wheels on all the locations,”
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`referring to Palomar’s pursuit of coverage under the Policies for "all facility locations” that
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`sustained loss and damage due to the COVID-19 pandemic and related government Orders.
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`36.
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`This narrative is consistent with other telephone conversations in which Ms.
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`Jackson intended to deter Palomar from pursuing Claims, and/or asked Palomar to reconsider its
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`prior Claim submissions, for certain locations and/or for certain business activities as, according
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`to Ms. Jackson’s representations, the Policies would not coverer those Claims and/or locations.
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`37.
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`As one example, Palomar sought coverage for its loss of “Gross Earnings” and
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`“Extra Expenses” related to elective surgeries at various Palomar locations under the TIME
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`ELEMENT coverage part in Section 4.01.01 of the Policies, the INTERRUPTION BY
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`COMMUNICABLE DISEASE coverage part in Section 5.02.35, and other coverage parts
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`including, but not limited to, those identified in paragraphs 10.a. through 10.g. above.
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`38.
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` However, on November 12, 2020, Ms. Jackson called Palomar and left another
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`voicemail indicating that, per her last conversation with Palomar, Palomar “was going to go back
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`to the Statement of Values and see which locations, if any, would be applicable based on
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`Zurich’s coverage parameters and, just to recap that, it would be your stand-alone surgery centers
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`or any department specifically that you did close down 100% because the services that were
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`provided by that location were, in fact, Suspended by an executive order,” further stating that
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`“the ultimate [factor] is, was there an order in effect that caused suspension of basically 100%
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`of the book of business? Because the idea is that if you are still operating services at a location
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`or in a department, then you are not prohibited access into it.”
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`39.
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`Notably, the Policies’ definition of Suspension does not require a 100% closure of
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`properties or services in order to trigger coverage under the TIME ELEMENT coverage part, the
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`INTERRUPTION BY COMMUNICABLE DISEASE, or other coverage parts because the
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`Policies expressly define Suspension as “the slow down or cessation of the Insured’s business
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`activities.”
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`40.
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`Similarly, the TIME ELEMENT coverage does not require that Palomar be 100%
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`“prohibited access” to its locations in order to trigger coverage.
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`41.
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`Instead, the TIME ELEMENT coverage part states that Palomar must suffer a loss
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`“due to direct physical loss of or damage to Property (of the type insurable under this
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`Policy . . .),” which expressly includes Palomar’s “interest in Personal Property” and/or its
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`“interest in buildings (or structures).”
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`42.
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`The INTERRUPTION BY COMMUNICABLE DISEASE coverage part also
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`does not require that Palomar be 100% “prohibited access” to its location in order to trigger
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`coverage.
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`43.
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`Instead, the INTERRUPTION BY COMMUNICABLE DISEASE coverage part
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`covers losses “resulting from the necessary Suspension of business activities at an Insured
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`Location if the Suspension is caused by order of an authorized governmental agency enforcing
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`any law regulating communicable diseases and that such portions of the location are declared
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`uninhabitable due to the threat of spread of communicable disease prohibiting access to those
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`portions of the Location.”
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`44.
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`At the time Ms. Jackson’s representations were made, American Guarantee still
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`had not issued a substantive coverage position either accepting or denying coverage and/or
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`explaining its position based on the express language of the Policies.
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`45.
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`Palomar relied on Ms. Jackson’s representations to its detriment in making
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`decisions about how and/or which Claims to pursue, as well as making other business decisions,
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`including, but not limited to, staff reduction decisions and providing associated severance and
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`benefits payouts, with the understanding – per Ms. Jackson’s assertions – that several of
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`Palomar’s losses would not or may not be covered under the Policies.
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`46.
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`On March 10, 2021, American Guarantee issued a letter to Palomar rejecting
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`Palomar’s request to engage in a tolling agreement to permit more time to process the Claims
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`without the threat of impending litigation.
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`PALOMAR HEALTH’S COMPLAINT AND DEMAND FOR JURY TRIAL
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`47.
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`American Guarantee issued its first substantive coverage position to Palomar on
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`March 17, 2021, nearly a year after it first acknowledged receipt of the Claims, and on the cusp
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`of Palomar having to file the present action because of American Guarantee’s refusal to enter
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`into a tolling agreement.
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`48. Ms. Jackson issued the March 17, 2021 letter on behalf of American Guarantee,
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`which states, in part, that “[i]t was confirmed out of all the locations Palomar owns and operates
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`only 5 locations closed including a cardiac rehab center, gift shop, and 3 locations which provide
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`various community classes. All other locations including the hospital, several medical centers,
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`offices and surgery centers were not at any time prohibited access as they remained open and
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`accessible.”
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`49.
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`American Guarantee’s March 17, 2021 letter indicated that these were the only
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`five (5) locations evaluated for coverage under the Policies, despite Palomar having sought
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`coverage for “all facility locations,” as indicated on the COVID-19 Questionnaire provided to
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`American Guarantee on May 20, 2021.
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`50.
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`The March 17, 2021 letter states that American Guarantee is “prepared to move
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`forward with evaluating the financial loss of gross earnings for the gift shop,” but otherwise
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`denies coverage for the other locations it evaluated.
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`51.
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`American Guarantee’s coverage positions and conclusions are inconsistent with
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`the Policies’ express language and constitute a wrongful and unreasonable refusal to provide
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`Palomar with benefits due and owing under the Policies.
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`52.
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`In addition, American Guarantee’s negligent misrepresentations and mishandling
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`of the Claims, including through the conduct of its agent, Ms. Jackson, constitutes bad faith.
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`53.
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`As a foreseeable consequence of American Guarantee’s wrongful and
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`unreasonable refusal to provide Palomar with benefits due and owing under the Policies, as well
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`as American Guarantee’s and/or Ms. Jackson’s negligent misrepresentations and mishandling of
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`the Claims, Palomar has suffered and will continue to suffer harm.
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`PALOMAR HEALTH’S COMPLAINT AND DEMAND FOR JURY TRIAL
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`COUNT I
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`BREACH OF CONTRACT AGAINST DEFENDANT AMERICAN GUARANTEE
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`54.
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`Palomar hereby incorporates paragraphs 1 through 53, inclusive, as though fully
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`set forth herein.
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`55.
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`American Guarantee, in consideration for premiums paid by Palomar, delivered
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`the Policies to Palomar.
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`56.
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`The Policies are valid and enforceable written contracts of insurance which were
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`in full force and effect at all relevant times referenced herein.
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`57.
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`Palomar is, and at all relevant times was, in compliance with all conditions
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`precedent for coverage under the Policies, including, but not limited to, having provided timely
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`notice of the Claims.
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`58.
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`American Guarantee is obligated, pursuant to the terms of the Policies, to pay for
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`all “direct physical loss of or damage” caused by “all risk of direct physical loss of or damage
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`from any cause unless excluded,” including but not limited to the risks covered by the following
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`coverage parts identified in paragraph 10.a. through 10.g. above: “Time Element,” “Interruption
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`by Communicable Disease,” “Decontamination Costs,” “Protection and Preservation Costs,”
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`“Civil or Military Authority,” “Research and Development,” “Protection of Patients,” and/or
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`“Professional Fees.”
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`59.
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`Despite demands, American Guarantee unreasonably refused and/or otherwise
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`failed to pay Palomar for coverage benefits due and owing to Palomar under the Policies’ terms.
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`60.
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`American Guarantee’s refusal and/or failure to pay coverage benefits due and
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`owing to Palomar constitutes a breach of the Policies.
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`61.
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`As a result of American Guarantee’s refusal to provide coverage, Palomar has
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`suffered damages and will continue to suffer damages in the future.
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`COUNT II
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`DECLARATORY JUDGMENT AGAINST DEFENDANT AMERICAN GUARANTEE
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`62.
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`Palomar hereby incorporates paragraphs 1 through 61, inclusive, as though fully
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`set forth herein.
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`PALOMAR HEALTH’S COMPLAINT AND DEMAND FOR JURY TRIAL
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`Case 3:21-cv-00490-BEN-BGS Document 1 Filed 03/18/21 PageID.12 Page 12 of 16
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`63.
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`A dispute has arisen between Palomar and American Guarantee regarding
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`whether American Guarantee is obligated to pay benefits to Palomar for past and ongoing losses
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`arising from the Claims.
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`64.
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`An actual case and justiciable controversy exists regarding American Guarantee’s
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`obligations under the Policies with respect to whether benefits arising from the Claims are due
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`and owing to Palomar.
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`65.
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`A declaratory judgement pursuant to 28 U.S.C. § 2201 is necessary and
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`appropriate to determine the rights and duties of American Guarantee and Palomar pursuant to
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`the Policies.
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`COUNT III
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`BREACH OF DUTY OF GOOD FAITH AND FAIR DEALING AGAINST DEFENDANT
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`AMERICAN GUARANTEE
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`66.
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`Palomar hereby incorporates paragraphs 1 through 65, inclusive as though fully
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`set forth herein.
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`67.
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`By operation of law, American Guarantee and its agents are under an implied duty
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`of good faith and fair dealing, requiring American Guarantee to deal honestly and in good faith
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`with Palomar.
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`68.
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`The implied duty of good faith and fair dealing includes the duty to perform a
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`prompt and objective investigation, and to pay benefits due and owing to its insured, Palomar,
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`without unreasonably withholding or delaying such benefits.
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`69.
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`American Guarantee breached its implied covenant of good faith and fair dealing
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`in various ways, including, but not limited to:
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`a. By failing to promptly indemnify and/or otherwise reimburse Palomar under
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`applicable coverages;
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`b. By unreasonably delaying payment of benefits owed to Palomar;
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`c. By failing and refusing to conduct a fair, thorough, prompt, and objective
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`investigation of Palomar’s Claim;
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`PALOMAR HEALTH’S COMPLAINT AND DEMAND FOR JURY TRIAL
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`d. By violating various aspects of the California Insurance Code (the “Code”),
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`including § 790.03(h)(1) (by knowingly committing and fully
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`“misrepresenting to claimant’s pertinent facts or insurance policy provisions
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`applicable to any coverage at issue”);
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`e. By violating § 790.03(h)(2) of the Code (requiring an insurer to promptly
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`acknowledge and act reasonably promptly upon communications with respect
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`to claims arising under insurance policies”);
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`f. By violating § 790.03(h)(5) of the Code (by failing to attempt “in good faith
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`to effectuate prompt, fair and equitable settlement of claims in which liability
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`has become reasonably clear”);
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`g. By violating § 790.03(h)(6) of the Code (by requiring Palomar to institute
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`litigation in order to obtain a fair payment of benefits);
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`h. By violating § 790.03(h)(12) of the Code (by failing to settle the claim
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`promptly);
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`i. By violating § 790.03(h)(13) of the Code (by failing to “provide promptly a
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`reasonable explanation of the basis relied on in the insurance policy, in
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`relation to the facts or applicable law, for the denial of a claim or for the offer
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`of a compromise settlement”);
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`j. By violating various aspects of the 1993 Department of Insurance
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`Regulations, and subsequent amendments thereto, (the “Regulations”)
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`including § 2695.5(e) (requiring the provision of claim forms, instructions,
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`and reasonable assistance within fifteen calendar days);
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`k. By violating § 2695.4(a) of the Regulations (by failing to affirmatively
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`disclose all benefits, coverage, time limits or other provisions of any insurance
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`term that may apply to the claim);
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`l. By violating § 2695.7(d) of the Regulations (by failing to “diligently pursue a
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`thorough, fair, and objective investigation”);
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`PALOMAR HEALTH’S COMPLAINT AND DEMAND FOR JURY TRIAL
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`m. By violating § 2695.7(c)(1) of the Regulations (by failing to provide a
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`statement in writing explaining the status of the claim within forty days and
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`then on a thirty-day continuing basis); and
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`n. By engaging in the conduct described in the paragraphs incorporated by
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`reference to this cause of action or otherwise contained herein.
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`70.
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`Palomar is informed and believes and thereon alleges that American Guarantee
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`breached its duty of good faith and fair dealing by other acts or omissions of which it is presently
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`unaware, but which it will show according to proof at trial.
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`71.
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`American Guarantee’s conduct was undertaken by its agents and representatives,
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`who were responsible for claims, supervision, operations, communications, and decisions on
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`behalf of American Guarantee, which had advanced knowledge of said actions and conduct, and
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`ratified, authorized, and approved the same.
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`72.
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`As a direct and proximate result of the aforementioned unreasonable conduct by
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`American Guarantee, Palomar has suffered, and will continue to suffer, damages in a sum to be
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`determined at trial.
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`73.
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`As a further proximate result of the aforementioned unreasonable conduct by
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`American Guarantee, Palomar was compelled to retain legal counsel to obtain the benefits due
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`under the Policies.
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`74.
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`As such, American Guarantee is liable to Palomar for the attorneys’ fees and costs
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`incurred by Palomar in order to obtain the benefits under the Policy, in addition to Palomar’s
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`actual and consequential losses sustained as a result of American Guarantee’s breach of the duty
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`of good faith and fair dealing.
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`75.
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`American Guarantee’s conduct was done with conscious disregard of Palomar’s
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`rights and with an intent to vex, injure, and annoy Palomar such as to constitute oppression,
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`fraud, or malice pursuant to California Civil Code § 3294, thereby entitling Palomar to punitive
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`damages.
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`76.
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`Alternatively, American Guarantee’s conduct constitutes intentional
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`misrepresentations, deceit, or concealment of material facts known to American Guarantee with
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`PALOMAR HEALTH’S COMPLAINT AND DEMAND FOR JURY TRIAL
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`Case 3:21-cv-00490-BEN-BGS Document 1 Filed 03/18/21 PageID.15 Page 15 of 16
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`the intent to deprive Palomar of property, legal rights, or to otherwise cause injury such as to
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`constitute oppression, fraud, or malice pursuant to California Civil Code § 3294, thereby
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`entitling Palomar to punitive damages.
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`COUNT IV
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`NEGLIGENT MISREPRESENTATION AGAINST DEFENDANTS AMERICAN
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`GUARANTEE & MORGAN JACKSON
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`77.
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`Palomar hereby incorporates paragraphs 1 through 76, inclusive as though fully
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`set forth herein.
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`78. Ms. Jackson, in her individual capacity, and on behalf of American Guarantee,
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`made representations to Pa