Columbia Casualty Company v. Cottage Health System

Filing 22

ORDER GRANTING MOTION TO DISMISS 13 . The Court therefore DISMISSES the complaint WITHOUT PREJUDICE, so that the parties may pursue alternative dispute resolution under the terms of the policy by Judge Dean D. Pregerson . (MD JS-6. Case Terminated) . (lc) Modified on 7/17/2015 (lc).

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1 2 O JS-6 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 COLUMBIA CASUALTY COMPANY, an Illinois corporation, 12 Plaintiff, 13 v. 14 15 COTTAGE HEALTH SYSTEM, a California organization, 16 Defendant. ___________________________ ) ) ) ) ) ) ) ) ) ) ) ) Case No. CV 15-03432 DDP (AGRx) ORDER GRANTING MOTION TO DISMISS [Dkt. No. 13] 17 18 The parties in this action agree that they intend to attempt 19 to resolve their dispute via mediation, as provided for in the 20 insurance policy that is the subject of this action. 21 at 4; Opp’n at 1.) 22 dismiss the case altogether or to issue a stay. 23 the parties’ submissions, the Court concludes that dismissal is 24 appropriate. 25 (Mot. Dismiss The sole question in this motion is whether to Having considered The insurance policy provides that “[a]ll disputes and 26 differences between the Insured and the Insurer which may arise 27 under or in connection with this policy . . . shall be submitted to 28 the alternative dispute resolution (“ADR”) process” and that if 1 mediation is the chosen method of ADR “no . . . judicial proceeding 2 shall be commenced until the mediation shall have been terminated 3 and at least 60 days shall have elapsed from the date of the 4 termination . . . .” (Mot. Dismiss, Ex. A at 18.) 5 The Court concludes that the above language controls the 6 timing of suits arising out of the policy and requires that the ADR 7 process take place before a lawsuit is initiated. 8 no argument that the ADR provision is unconscionable or otherwise 9 unenforceable as a matter of contract, and the provision does not Plaintiff makes 10 deprive Plaintiff of the right to bring a lawsuit if mediation 11 fails. 12 agreement. 13 There is therefore no reason not to hold Plaintiff to its Faced with a nearly identical ADR clause in a previous case, 14 this Court concluded that dismissal was appropriate by treating the 15 motion as a “‘non-enumerated’ Rule 12(b) motion[]” based on, 16 essentially, “failure to exhaust non judicial remedies.” 17 v. Nat'l Union Fire Ins. Co. of Pittsburgh PA, No. EDCV 12-00704 18 DDP, 2012 WL 3257877, at *3 n.5 (C.D. Cal. Aug. 7, 2012). 19 the case the Court relied on in Previti has since been overruled. 20 Albino v. Baca, 747 F.3d 1162, 1171 (9th Cir. 2014) (overruling, 21 inter alia, Inlandboatmens Union of the Pac. v. Dutra Grp., 279 22 F.3d 1075, 1078 n. 2 (9th Cir.2002)). 23 “non-enumerated” Rule 12(b) motions altogether as “not contemplated 24 by” the Federal Rules, but in any event they are no longer a 25 feasible mechanism for dealing with exhaustion questions, including 26 failure to arbitrate or mediate. 27 28 Previti However, Albino appears to disfavor Id. at 1169. The Albino court therefore laid out two alternative procedures for dispensing with unexhausted claims. 2 First, “where a failure to 1 exhaust is clear from the face of the complaint, a defendant may 2 successfully move to dismiss under Rule 12(b)(6) for failure to 3 state a claim.” 4 judicial remedies is not clear on the face of the complaint, the 5 opposing party may move for summary judgment. 6 for summary judgment is denied, disputed factual questions relevant 7 to exhaustion should be decided by the judge, in the same manner a 8 judge rather than a jury decides disputed factual questions 9 relevant to jurisdiction and venue.” 10 11 Id. Second, where the failure to exhaust non- Id. “If a motion Id. at 1170-71. This should all take place, “if feasible,” at the start of litigation. Here, the Court concludes that failure to exhaust is clear 12 from the face of the complaint. 13 include the full policy or the ADR clause. 14 fundamentally relies on the policy, and it may therefore be 15 incorporated into the complaint by reference. 16 Ritchie, 342 F.3d 903, 908 (9th Cir. 2003) (“Even if a document is 17 not attached to a complaint, it may be incorporated by reference 18 into a complaint if the plaintiff refers extensively to the 19 document or the document forms the basis of the plaintiff's 20 claim.”). 21 the ADR clause in filing the action; nor, indeed, has Plaintiff 22 argued otherwise. 23 judicial remedies required by the contract is therefore apparent on 24 the face of the complaint.1 Plaintiff’s complaint does not However, the complaint United States v. The complaint does not allege that Plaintiff abided by That Plaintiff has not exhausted the non- 25 26 27 28 1 Plaintiff also provides no argument that it will suffer prejudice if the action is dismissed rather than stayed, such as the running of a statute of limitations. Thus, there is no equitable or other concern on the table that would counsel against dismissal. 3 1 The Court therefore DISMISSES the complaint WITHOUT PREJUDICE, 2 so that the parties may pursue alternative dispute resolution under 3 the terms of the policy. 4 5 IT IS SO ORDERED. 6 7 8 Dated: July 17, 2015 DEAN D. PREGERSON United States District Judge 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4

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