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Filed 11/23/20 Reliance Steel & Aluminum etc. v. IntelliLUM CA1/5

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for 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

FIRST APPELLATE DISTRICT

DIVISION FIVE

Reliance Steel & Aluminum Co. dba 

MetalCenter,

Plaintiff and Appellant,

v.

IntelliLUM, Inc. et al.,

Defendants and Respondents.

 

 A157239

 (Alameda County

 Super. Ct. No. 

 HG17858476)

When one company sues another, may it also directly sue 

an insurer whose policy would cover the claim? Case law in 

California makes clear that the answer is generally “no” because 

the insurer’s duties flow to the insured alone and not to the 

injured party. (Royal Indemnity Co. v. United Enterprises, Inc.

(2008) 162 Cal.App.4th 194, 205 (Royal Indemnity).) We conclude 

that none of the possible exceptions to this rule have been shown 

to apply in this case, and therefore affirm the trial court’s order

dismissing defendants Nationwide Insurance (Nationwide) and 

Scottsdale Indemnity Company (Scottsdale) from this action filed 

by plaintiff Reliance Steel & Aluminum Co. dba MetalCenter 

(Reliance) after the court sustained their demurrer without leave 

to amend to the second amended complaint (SAC).
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I. BACKGROUND

On April 28, 2017, Reliance filed a complaint for breach of 

contract and related common counts against IntelliLUM, Inc., 

(IntelliLUM) its owner, Gregory Brown, and Does 1–50. The 

complaint alleged that defendants owed Reliance $66,790.03 for 

the reasonable value of goods and services provided in 2015 and 

2016, plus interest. IntelliLUM did not respond to the complaint 

and a default was entered on July 21, 2017. 

IntelliLUM filed for Chapter 7 bankruptcy in the United 

States Bankruptcy Court for the District of Nevada on August 3, 

2017. Reliance filed a notice of the bankruptcy with the superior 

court stating that actions against IntelliLUM were temporarily 

stayed; IntelliLUM also filed a notice of the bankruptcy.

IntelliLUM was apparently insured by Nationwide and 

Scottsdale under one or more policies.1 Reliance alleges that its 

claims against IntelliLUM are covered by this policy or by these 

policies. In April 2018, the bankruptcy trustee issued an order 

stating that the automatic stay “does not apply to prevent 

Reliance Steel & Aluminum from naming IntelliLUM as a 

nominal defendant and pursuing a claim against Nationwide 

1 The SAC alleges that IntelliLUM and Brown were insured 

by “one or more insurance policies” issued by Nationwide and 

Scottsdale, and that “Nationwide and Scottsdale are related 

business entities by ownership, management, and/or control, and 

Nationwide issues policies through Scottsdale and vice versa.” It 

is unclear from the record whether one or more policies is 

involved in this case.
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Insurance; however, Reliance is precluded from asserting any 

claim against the bankruptcy estate.”2

On September 4 2018, Reliance filed a first amended 

complaint (FAC) adding Nationwide as a defendant and adding 

causes of action for misrepresentation, negligence and “Liability 

of Nationwide Insurance.” Only this last cause of action was 

asserted against Nationwide. 

Nationwide filed a demurrer to the cause of action alleging 

Nationwide’s liability, arguing: (1) it was not the insurer because 

Scottsdale actually issued the policy at issue; and (2) Reliance 

was not in privity of contract with Nationwide and could not 

assert a direct cause of action unless there had been a judgment 

for bodily injury, death or property damage under Insurance 

Code section 11580 (hereafter “section 11580”), and a breach of 

contract claim did not qualify. 

In an order issued December 21, 2018, the court sustained 

the demurrer without leave to amend. It rejected Nationwide’s 

2 On July 26, 2020, Reliance submitted a request that we 

take judicial notice of six documents from the bankruptcy case: 

(1) a proof of claim by Reliance against IntelliLUM; (2) Reliance’s 

motion for an order authorizing claims against the insurance 

companies; (3) a notice of hearing on that motion; (4) an order 

granting the motion; (5) a docket showing there was no objection 

filed to Reliance’s claim; and (6) a final decree. It also requests 

that we take judicial notice of three documents from the superior 

court case: (1) an order dropping IntelliLUM’s demurrer to the 

second amended complaint due to its suspended corporate status; 

(2) an order deeming admitted certain requests for admission 

propounded to IntelliLUM; and an entry of default against 

IntelliLUM dated July 21, 2020. We grant the request. (Evid. 

Code, §§ 452, subd. (d), 459.) 
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argument that it was not IntelliLUM’s insurer, noting that 

IntelliLUM had asserted several times that Nationwide was its 

insurer and that Reliance had alleged the same in its FAC. The 

court found, however, that the second argument had merit. It 

reasoned that this was an action for failure to pay under a 

contract, not for “bodily injury, death, or property damage” as 

required for a direct action under section 11580. It additionally 

noted that Reliance had not obtained a judgment against 

IntelliLUM, as section 11580 requires. The court found that no 

amendment by Reliance could cure the defect. It did not reach 

the issue of whether there was coverage under the Nationwide 

policy. 

On January 14, 2019, Reliance filed the SAC, which names 

IntelliLUM, Brown, Nationwide and Scottsdale as defendants. It 

alleged causes of action for breach of contract, common counts, 

intentional misrepresentation, negligent misrepresentation, and 

breach of the implied covenant of good faith and fair dealing 

against IntelliLUM and Brown, causes of action for declaratory 

relief and enforcement of judgment against Nationwide and 

Scottsdale, and a cause of action for “Strike Sham Pleadings” 

against all defendants. 

The cause of action for declaratory relief alleged that 

Nationwide and Scottsdale were related entities that had issued 

one or more insurance policies to IntelliLUM and Brown, that the 

claims by Reliance against IntelliLUM and Brown were covered 

by these policies, and that Nationwide and Scottsdale were 

providing IntelliLUM and Brown with a defense. The cause of 
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action for enforcement of judgment alleged that Reliance was a 

judgment creditor of IntelliLUM because Reliance had filed a 

proof of claim against IntelliLUM in the bankruptcy case that 

was deemed admitted, and that Reliance was entitled to enforce 

this judgment against Nationwide and Scottsdale under section 

11580, subdivision (b)(1) and (2). Under the cause of action for 

“Strike Sham Pleadings,” Reliance alleged that IntelliLUM and 

Brown had moved to set aside a default in this case at 

Nationwide and Scottsdale’s direction and that Nationwide and 

Scottsdale had falsely denied coverage.

Nationwide and Scottsdale filed a demurrer alleging: (1) 

Nationwide had already been dismissed from the lawsuit when 

the demurrer to the FAC was sustained without leave to amend;

(2) the SAC did not allege “wrongful death, bodily injury, or 

property damage” as necessary to bring an action directly against 

the insurer under section 11580; (3) there was no coverage under 

the insurance policy for breach of contract claims; and (4) the 

claims for “Enforcement Of Judgment” and “Strike Sham 

Pleadings” were not legally cognizable. The trial court sustained 

the demurrer without leave to amend and entered judgment in 

favor of Nationwide and Scottsdale. 

II. DISCUSSION

A. Violation of Rules of Court

We begin by addressing a significant flaw in Reliance’s 

appellate briefing. The California Rules of Court require 

litigants to “[s]upport any reference to a matter in the record by a 

citation to the volume and page number of the record where the 
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matter appears.” (Cal. Rules of Court, rule 8.204(a)(1)(C).) Thus, 

stating facts—whether in the statement of facts, the procedural 

history, or the argument portion of the brief—without providing 

any record cite, or citing to only a document rather than to a page

in the record, violates this rule. (See, e.g., Evans v. Centerstone 

Development Co. (2005) 134 Cal.App.4th 151, 166–167 (Evans); 

Doppes v. Bentley Motors, Inc. (2009) 174 Cal.App.4th 967, 990.)

Reliance’s opening and reply briefs do not contain citations 

to the appellate record. When, as here, a litigant repeatedly 

provides no page citations to the record, the rule violation is 

egregious, significantly burdening the opposing party and the 

court. (Evans, supra, 134 Cal.App.4th at pp. 166–167.) The 

consequences of violating the Rules of Court can be severe. “[I]t 

is counsel’s duty to point out portions of the record that support 

the position taken on appeal,” and “[t]he appellate court is not

required to search the record on its own seeking error.” (Del Real 

v. City of Riverside (2002) 95 Cal.App.4th 761, 768.) Accordingly, 

“[a] violation of the rules of court may result in the striking of the 

offending document, the waiver of the arguments made therein, 

the imposition of fines and/or the dismissal of the appeal.” (Ibid.; 

see also Cal. Rules of Court, rule 8.204(e) [court may decline to 

file noncomplying brief, or may file it but return it for corrections,

strike it with leave to file a new brief, or disregard the 

noncompliance].) 

Although it is within our discretion to strike Reliance’s 

briefing and order it to file amended briefs, we will not do so. 

Having reviewed the record, we are convinced that complete and 
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accurate record citations would not change our conclusion about 

the merits of Reliance’s appeal. We admonish counsel and warn 

that future violations of this sort may result in sanctions or other 

consequences. (See Evans, supra, 134 Cal.App.4th at p. 166.)

B. Standard of Review

“Because the function of a demurrer is to test the 

sufficiency of a pleading as a matter of law, we apply the de novo 

standard of review in an appeal following the sustaining of a 

demurrer without leave to amend. [Citation.] We assume the 

truth of the allegations in the complaint, but do not assume the 

truth of contentions, deductions, or conclusions of law. [Citation.] 

It is error for the trial court to sustain a demurrer if the plaintiff 

has stated a cause of action under any possible legal theory, and 

it is an abuse of discretion for the court to sustain a demurrer 

without leave to amend if the plaintiff has shown there is a 

reasonable possibility a defect can be cured by amendment.” 

(California Logistics, Inc. v. State of California (2008) 161 

Cal.App.4th 242, 247.) An argument that leave to amend should 

have been granted can be raised for the first time on appeal. 

(Eghtesad v. State Farm Gen. Ins. Co. (2020) 51 Cal. App. 5th 

406, 411 (Eghtesad).)

C. Order Sustaining Demurrer to FAC Without Leave to 

Amend

Nationwide argued below that because the court had 

sustained the demurrer to the FAC without leave to amend, it 

could not be named as a defendant in the SAC. The trial court 

did not, in its order, state the reasons it sustained the demurrer 
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to the SAC, and did not reference its previous order sustaining 

Nationwide’s demurrer to the FAC without leave to amend. The 

court’s failure to mention this ground in its order sustaining the 

demurrer to the SAC would not preclude us from considering the 

issue in our de novo review of that ruling. (Aubry v. Tri–City 

Hospital Dist. (1992) 2 Cal.4th 962, 967; Fremont Indemnity Co. 

v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 111.) But 

Nationwide and Scottsdale have not raised the issue on appeal, 

and it has therefore been abandoned and forfeited. (Davies v. 

Sallie Mae, Inc. (2008) 168 Cal.App.4th 1086, 1096 [issue not 

raised in opening brief was abandoned].) We therefore consider 

whether the SAC states a cause of action against the two 

insurers. 

D. General Rule: Third Party Claimants May Not Directly 

Sue Liability Insurers

Generally, an insurer may not be joined as a 

party-defendant in the underlying action against the insured by 

the injured third party. (Royal Indemnity, supra, 162 

Cal.App.4th at p. 205; Shaolian v. Safeco Ins. Co. (1999) 71 

Cal.App.4th 268, 271 (Shaolian).) This is because the insurer’s 

duties flow to the insured. (Shaolian at p. 271; San Diego 

Housing Com. v. Industrial Indemnity Co. (2002) 95 Cal.App.4th 

669, 685 (San Diego Housing); Harper v. Wasau Ins. Co. (1997) 56 

Cal.App.4th 1079, 1086 (Harper).) “[E]ven though a third party 

making a liability claim against an insured will benefit from the 

insurer’s payment under the policy, the benefit is only incidental, 

and the claimant is not a third party beneficiary of the contract.” 
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(Fireman's Fund Ins. Co. v. Maryland Casualty Co. (1994) 21 

Cal.App.4th 1586, 1600, see Murphy v. Allstate Ins. Co. (1976) 17 

Cal.3d 937, 944.)

There are exceptions to this general rule. A party may 

obtain an assignment that allows a suit against the insurer

directly. (San Diego Housing, supra, 95 Cal.App.4th at p. 685; 

Shaolian, supra, 71 Cal.App.4th at p. 271.) A claimant may also 

sue the insurer as a third party beneficiary utilizing traditional 

contract principles when the claim involves a policy provision 

that flows directly in favor of a third party (e.g., a provision 

requiring the payment of a third party’s medical payments, 

regardless of fault). (Id. at pp. 271–272.) “This is because the 

medical coverage provisions provide direct obligations on the part 

of the insurer to the intended beneficiaries.” (Harper, supra, 56 

Cal.App.4th at p. 1089.) And once a party has a final judgment 

against the insured, the claimant becomes a third party 

beneficiary of the insurance policy and may enforce the terms 

which flow to its benefit pursuant to Insurance Code section 

11580 if the judgment is for “bodily injury, death or property 

damage.” (Id. at p. 1086, fn. 2.) 

Thus, a pleading in which a third party purports also to sue 

the defendant’s insurer directly does not state a cause of action 

unless it alleges facts showing that one of these exceptions 

applies. The SAC does not allege that Reliance obtained an 

assignment from IntelliLUM or some other party that allowed it 

to sue under IntelliLUM’s policy. Nor does it allege facts showing 

that the policy or policies issued by Nationwide and Scottsdale 
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contained a provision conferring third party beneficiary rights to 

Reliance.

3 This leaves section 11580.

E. Section 11580

Section 11580, subdivisions (a) and (b)(2) require that an 

insurance policy “shall not be issued or delivered to any person in 

this state unless it contains the provision” “that whenever 

judgment is secured against the insured or the executor or 

administrator of a deceased insured in an action based upon 

bodily injury, death, or property damage, then an action may be 

brought against the insurer on the policy and subject to its terms 

and limitations, by such judgment creditor to recover on the 

judgment.” “If this direct action provision is not included in the 

policy, it is read into the policy.” (People ex rel. City of Willits v. 

Certain Underwriters at Lloyd’s of London (2002) 97 Cal.App.4th 

1125, 1127.)

The SAC alleged that Reliance obtained a “judgment 

against IntelliLUM” as contemplated by section 11580 because 

its claim against IntelliLUM in bankruptcy court was approved. 

We assume, without deciding, that the allegation of an approved 

bankruptcy claim was sufficient to allege a final judgment within 

the meaning of section 11580. (See Nathansan v. Hecker (2002)

99 Cal.App.4th 1158, 1163–1166 [bankruptcy court’s allowance of 

claim is final judgment for purposes of res judicata].) 

Even assuming there is a judgment, that judgment was 

based on money owed under a contract and did not arise from a 

3 Reliance has not attached a copy of the insurance policy or 

policies to the SAC as an exhibit.
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claim for “bodily injury, death or property damage” under section 

11580, subdivision (b)(2). (See Xebec Development Partners, Ltd.

v. National Union Fire Ins. Co. (1993) 12 Cal.App.4th 501, 527, 

disapproved on other grounds in Essex Ins. Co. v. Five Star Dye 

House, Inc. (2006) 38 Cal.4th 1252, 1265, fn. 4. [§ 11580 did not 

authorize direct action because lawsuit for diversion of research 

and development funds was not based upon “bodily injury, death 

or property damage”]; Rolf Homes, Inc. v, Superior Court of San 

Mateo County (1960) 186 Cal.App.2d 876, 880–881 [action for 

malpractice and fraud did not allow action under § 11580].)

Reliance argues that its case against IntelliLUM and Brown 

includes torts as well as an alleged breach of contract, but none of 

the torts (intentional misrepresentation, negligent 

misrepresentation, breach of implied covenant of good faith and 

fair dealing) involve “bodily injury, death or property damage.” A

direct action against the insurer is not authorized by section 

11580 for the claims in this case.

F. Does section 11580 Even Apply, And What is the Effect 

of This?

Although Reliance alleged in the SAC that section 11580 

authorized the present direct action, it now argues on appeal that 

it is not constrained by this provision because the insurance 

policy at issue was not “issued or delivered to any person in this 

state.” (§ 11580,subd. (a).) It does not indicate in its opening 

brief where the operative policy or policies were “issued or 

delivered,” but asserts that IntelliLUM is incorporated and does 
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business in Nevada, and that Nationwide and Scottsdale are 

Ohio insurers.

The SAC did not allege where Nationwide and Scottsdale 

are incorporated or do business, or where the policy or policies at 

issue were issued or delivered.

4 Reliance appears to be correct 

that section 11580 does not apply to policies not issued or 

delivered in California. (Roberts v. Home Ins. Indem. Co. (1975) 

48 Cal.App.3d 313, 318 (Roberts) [in case involving California 

action for injuries suffered by California resident against 

Louisiana hotel insured by a policy issued in Louisiana, section 

11580 did not apply]; Phillips v. Noetic Specialty Ins. Co. (S.D. 

Cal. 2013) 919 F.Supp.2d 1089, 1094 [section 11580 did not apply 

to policy issued in Virginia and delivered in Pennsylvania to New 

Jersey corporation]; see Ahern v. Dillenback (1991) 1 Cal.App.4th 

36, 49 [only policies issued or delivered in California are subject 

to section 11580.2 and its requirement that a policy contain 

uninsured motorists coverage].) 

But allegations supporting the application of a law other 

than section 11580 only assist Reliance if that other law supports 

a direct action against the insurers. Reliance has not 

demonstrated that this is the case. Other than alleging in the 

SAC that section 11580 authorizes the present action (which it 

now disavows), Reliance did not argue in the trial court that the 

law of any particular forum should be applied. And on appeal,

4 The SAC alleges that IntelliLUM is qualified to do 

business in California and is incorporated in Nevada (though its 

corporate status is suspended) and that Brown has conducted 

business in both California and Nevada. 
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Reliance has failed to argue in favor of one state law over another

and has not explained how the application of that law allows the 

instant action. It simply asserts that the parties are from 

jurisdictions other than California, that the insurance policy at 

issue was delivered and issued outside California and that 

section 11580 does not apply. 

It is one thing to say that an appellate court can consider 

the issue of leave to amend for the first time on appeal when the 

question is whether the plaintiff could allege facts showing that 

an issue is controlled by another state’s law. (Eghtesad, supra, 

51 Cal.App.5th at p. 411.) It is another to absolve a party from 

explaining on appeal how the pleading could be amended. To the 

extent some other state’s law would be beneficial to Reliance (a 

fact not demonstrated), Reliance has forfeited its claim on appeal.

(See AICCO, Inc. v. Insurance Co. of North America (2001) 90 

Cal.App.4th 579, 595 [rejecting argument by defendant on 

demurrer that Pennsylvania law should apply: It “has not made 

a serious attempt to support its argument. It does not discuss 

conflict of laws, comity, or full faith and credit in any detail, or 

analyze why, under each principle, Pennsylvania, as opposed to 

California law would apply. We deem the issue waived.”].) And 

to the extent it argues that some California law other than 

section 11580 should apply, we would default to the general rule 

of this state that third parties may not directly sue a liability 

insurance company. (Royal Indemnity, supra, 162 Cal. App. 4th 

at p. 205.)
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G. Joinder and Intervention

Reliance contends that because IntelliLUM’s corporate

status was suspended, Nationwide and Scottsdale had a right to 

intervene in the lawsuit Reliance filed against IntelliLUM and 

Brown. (Reliance Ins. Co. v. Superior Court (Wells) (2000) 84 

Cal.App.4th 383, 386–388.) Neither Nationwide nor Scottsdale 

did intervene, and Reliance cites no authority for the proposition

that they could be required to do so. Reliance cites Royal Surplus 

Lines Ins. Co. v. Ranger Ins. Co. (2002) 100 Cal.App.4th 193, 199, 

for the proposition that an insurer may be joined in a suit when 

insurance issues are “inextricably intertwined” with liability 

issues. That case, however, involved a first party insurance 

claim, which the court contrasted with the general rule that an 

insurer may not be joined with its insured in a case involving 

third party liability. (Id. at p. 200.) Moreover, Reliance alleges 

no facts suggesting coverage in this case was inextricably

intertwined with liability issues.

Reliance also suggests that because Nationwide and 

Scottsdale have provided a defense to IntelliLUM and Brown, it 

has demonstrated that they issued an insurance policy or policies 

that obligate them to indemnify IntelliLUM and Brown for 

Reliance’s claims. To the extent this point is relevant, we 

disagree. The duty to defend is broader than the duty to 

indemnify and defending an action is not the same as admitting 

an obligation to indemnify. (Scottsdale Ins. Co. v. MV Transp.

(2005) 36 Cal.4th 643, 657; Buss v. Superior Court (1997) 16 

Cal.4th 35, 46.)
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H. Bankruptcy Order That Action Against Insurers Does 

Not Violate Stay

The order of the bankruptcy court allowing Reliance to 

pursue the insurance proceeds without violating the automatic 

bankruptcy stay does not authorize the current action. While it 

allows Reliance to proceed directly against the insurers to the 

extent authorized by law, it does not purport to independently 

authorize an action in state court which state court does not 

allow.

I. Conclusion

The trial court did not err in sustaining the demurrer to the 

SAC and did not abuse its discretion in doing so without leave to 

amend. Reliance has not made any showing, either in the trial 

court or on appeal, that it could amend the second amended 

complaint to state facts sufficient to constitute a cause of action. 

Given our ruling, we need not address the elements of the causes 

of action individually.

III. DISPOSITION

The judgment is affirmed. Costs to respondents.
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NEEDHAM, J.

We concur.

SIMONS, Acting P. J.

BURNS, J.

Reliance Steel & Aluminum Co. v. IntelliLUM, Inc. / A157239