Davis Polk secured a victory for its client Xactware Solutions, Inc. in two cases brought in Sonoma County Superior Court. The cases arose from the fall 2017 wildfires in Sonoma County. Plaintiffs were a number of Sonoma County residents whose homes were destroyed. They filed lawsuits alleging that their insurance carrier had sold them insurance policies that undervalued the replacement costs of their homes, leaving them underinsured. They claimed that our client, which makes software tools used by insurance companies in estimating replacement costs, was also liable, based on theories of fraud and negligence, as well as under California consumer protection laws.

Davis Polk filed demurrers, which are akin to motions to dismiss, in both cases. We argued that under the “economic loss” rule, plaintiffs were precluded from seeking recovery in tort for their injuries because their claims arose exclusively from their contracts with their insurance carrier. We also argued that plaintiffs had failed to plead any misrepresentation involving our client; that there was no duty flowing from our client to plaintiffs; and that the consumer protection claims failed for similar reasons.

Both groups of plaintiffs sought lengthy extensions of their deadlines to respond to our demurrers, and then voluntarily dismissed all claims against our client. Prior to the entry of the requests for dismissal, the court entered a tentative ruling agreeing with all of our arguments and proposing to dismiss plaintiffs’ claims. Plaintiffs’ cases against their insurance carrier continue.

The Davis Polk litigation team included partner Neal A. Potischman, former partner Joel M. Cohen, associates Andrew Yaphe and Daryl K. Griglak and former associate Jana B. FitzGerald. Members of the Davis Polk team are based in the Northern California and New York offices.