Ali v. Humana Inc.

Filing 15

ORDER RE: Motion to Dismiss 13 Amended Complaint signed by Chief Judge Anthony W. Ishii on 08/07/2012. Amended Complaint due by 9/10/2012. (Flores, E)

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IN THE UNITED STATES DISTRICT COURT FOR THE

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EASTERN DISTRICT OF CALIFORNIA

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KARIMA ALI,

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Plaintiff,
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v.
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HUMANA, INC.,
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Defendant.
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____________________________________)

1:12-cv-00509-AWI-GSA
ORDER RE: MOTION TO
DISMISS AMENDED
COMPLAINT
(Doc. 13)

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I. INTRODUCTION
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Defendant Humana, Inc. (hereinafter referred to as “Defendant”) has filed a motion to dismiss the
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first, second and fourth through seventh causes of action in the first amended complaint of plaintiff
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Karima Ali (hereinafter referred to as “Plaintiff”) pursuant to Federal Rule of Civil Procedure
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12(b)(6) or for a more definite statement in the alternative pursuant to Federal Rule of Civil
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Procedure 12(e). For reasons discussed below, the motion to dismiss shall be granted.
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II. FACTS AND PROCEDURAL BACKGROUND
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The Court refers the parties to previous orders for a complete chronology of the proceedings. On
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July 3, 2012, Plaintiff filed her first amended complaint (FAC) against Defendant asserting causes

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of action for (1) breach of written contract, (2) conversion, (3) defamation, (4) negligence, (5) fraud

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and deceit by intentional conversion, (6) unfair competition and (7) loss of opportunity. On July 17,

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2012, Defendant filed its motion to dismiss the first, second and fourth through seventh causes of

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action in the FAC pursuant to Rule 12(b)(6) or for a more definite statement in the alternative

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pursuant to Rule 12(e). Plaintiff filed her opposition to Defendant’s motion on August 6, 2012.

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III. LEGAL STANDARD

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A complaint must contain “a short and plain statement of the claim showing that the pleader is

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entitled to relief.” Fed. R. Civ. P. 8(a)(2). Where the plaintiff fails to allege “enough facts to state

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a claim to relief that is plausible on its face,” the complaint may be dismissed for failure to allege

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facts sufficient to state a claim upon which relief may be granted. Bell Atlantic Corp. v. Twombly,

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550 U.S. 544, 570, 127 S.Ct. 1955, 1974, 167 L.Ed.2d 929 (2007); see Fed. R. Civ. P. 12(b)(6). “A

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claim has facial plausibility,” and thus survives a motion to dismiss, “when the pleaded factual

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content allows the court to draw the reasonable inference that the defendant is liable for the

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misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1940, 173 L.Ed.2d 868

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(2009). On a Rule 12(b)(6) motion to dismiss, the court accepts all material facts alleged in the

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complaint as true and construes them in the light most favorable to the plaintiff. Knievel v. ESPN,

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393 F.3d 1068, 1072 (9th Cir. 2005). However, the court need not accept conclusory allegations,

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allegations contradicted by exhibits attached to the complaint or matters properly subject to judicial

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notice, unwarranted deductions of fact or unreasonable inferences. Daniels-Hall v. National Educ.

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Ass’n, 629 F.3d 992, 998 (9th Cir. 2010). “Dismissal with prejudice and without leave to amend is

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not appropriate unless it is clear . . . the complaint could not be saved by amendment.” Eminence

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Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003). “If a pleading fails to specify

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the allegations in a manner that provides sufficient notice, a defendant [may also] move for a more

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definite statement under [Federal] Rule [of Civil Procedure] 12(e) before responding.” Swierkiewicz

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v. Sorema, N.A., 534 U.S. 506, 514, 122 S.Ct. 992, 152 L.Ed.2d 1 (2002).

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IV. DISCUSSION

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Plaintiff’s first cause of action (breach of written contract) – Plaintiff first asserts a cause of action

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against Defendant for breach of written contract. In California, the elements of a cause of action for

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breach of contract are (1) the existence of a contract, (2) the plaintiff’s performance or excuse for

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nonperformance, (3) the defendant’s breach and (4) resulting damages to the plaintiff. Oasis West

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Realty, LLC v. Goldman, 51 Cal.4th 811, 821, 124 Cal.Rptr.3d 256, 250 P.3d 1115 (2011). Having

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reviewed the FAC in its entirety, the Court finds Plaintiff has failed to allege facts sufficient to

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establish the threshold element for such a claim – namely, the existence of a contract. “If the action

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is based on alleged breach of a written contract,” as in this case, “the terms must be set out verbatim

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in the body of the complaint or a copy of the written agreement must be attached and incorporated

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by reference.” Harris v. Rudin, Richman & Appel, 74 Cal.App.4th 299, 307, 87 Cal.Rptr.2d 822

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(1999). That was not done here. Plaintiff does attach as an exhibit to her opposition a copy of what

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appears to be a “Group Producing Agent or Agency Contract” between her and Defendant. That

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contract, however, must be appended to the complaint or the subject of a request for judicial notice

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for the Court to consider it. Accordingly, dismissal of this cause of action shall be GRANTED.

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Plaintiff’s second cause of action (conversion) – Plaintiff further asserts a cause of action against

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Defendant for conversion. In California, conversion is “the wrongful exercise of dominion over”

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property belonging to another. Burlesci v. Petersen, 68 Cal.App.4th 1062, 1066, 80 Cal.Rptr.2d 704

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(1998). The elements of the tort of conversion are “(1) the plaintiff’s ownership or right to

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possession of personal property, (2) the defendant’s disposition of the property in a manner that is

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inconsistent with the plaintiff’s property rights; and (3) resulting damages.” Fremont Indemnity Co.

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v. Fremont General Corp., 148 Cal.App.4th 97, 119, 55 Cal.Rptr.3d 621 (2007). Having reviewed

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the FAC, the Court finds Plaintiff has failed to allege facts sufficient to state a plausible claim to

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relief for conversion. Plaintiff alleges Defendant “received well over $40,000.00 for 2012

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enrollments from the US Government [sic] on behalf of Plaintiff as commission,” but alleges no

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facts to establish her ownership or right to possession of these funds other than to suggest Defendant

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had an obligation under its contract with Plaintiff to pay Plaintiff “$100 override on every enrollment

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Plaintiff’s agents submit[.]” Plaintiff further alleges her agents “submitted 400 enrollments.”

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Problematically for Plaintiff, as the Court concluded above, no facts have been alleged to establish

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the existence of a contract between the parties, let alone one imposing such an obligation on

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Defendant. Accordingly, dismissal of this cause of action shall be GRANTED.

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Plaintiff’s fourth cause of action (negligence) – Plaintiff further asserts a cause of action against

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Defendant sounding in negligence. “The elements of a cause of action for negligence are ‘ “ ‘(a)

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a legal duty to use due care; (b) a breach of such legal duty; [and] (c) the breach [was] the proximate

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or legal cause of the resulting injury.’ ” [Citation.]’ [Citation.]” Walker v. Sonora Regional Medical

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Center, 202 Cal.App.4th 948, 958, 135 Cal.Rptr.3d 876 (2012). Having reviewed the FAC, the

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Court finds Plaintiff has failed to allege facts sufficient to state a plausible claim to relief for

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negligence. Plaintiff alleges Defendant “[o]we[d] Plaintiff a duty to investigate and correct any

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discrepancies on any statement” and also “ha[d] a legal duty to use due care in handling any [a]udit

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request[.]” Plaintiff further alleges Defendant breached these duties by not responding to “any of

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the 10 audit trails” filed by Plaintiff “to inquire about her commission which exceeds $40,000.00.”

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Plaintiff has not, however, alleged facts to establish Defendant owed her the asserted duties or that

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it breached any of the duties owed; the foregoing allegations are simply conclusory. Accordingly,

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dismissal of this cause of action shall be GRANTED in favor of Defendant.

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Plaintiff’s fifth cause of action (fraud and deceit by intentional conversion) – Plaintiff further

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asserts a cause of action against Defendant for fraud and deceit by intentional conversion. In

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California, “ ‘fraud is an intentional tort, the elements of which are (1) misrepresentation; (2)

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knowledge of falsity; (3) intent to defraud, i.e., to induce reliance; (4) justifiable reliance; and (5)

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resulting damage. [Citation.]’ [Citation.]” Intrieri v. Superior Court, 117 Cal.App.4th 72, 85-86,

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12 Cal.Rptr.3d 97 (2004). Federal Rule of Civil Procedure 9(b) requires that, in alleging fraud, “a

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party must state with particularity the circumstances constituting fraud or mistake.” Fed. R. Civ. P.

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9(b). “To comply with Rule 9(b), allegations of fraud must be ‘specific enough to give defendants

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notice of the particular misconduct which is alleged to constitute the fraud charged so they can

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defend against the charge and not just deny that they have done anything wrong.’ [Citation.]” Bly-

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Magee v. California, 236 F.3d 1014, 1019 (9th Cir. 2001). “Averments of fraud must be

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accompanied by ‘the who, what, when, where, and how’ of the misconduct charged. [Citation.] ‘[A]

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plaintiff must set forth more than the neutral facts necessary to identify the transaction. The plaintiff

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must set forth what is false or misleading about a statement, and why it is false.’ [Citation.]” Vess

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v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003); see Lazar v. Superior Court, 12

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Cal.4th 631, 645, 49 Cal.Rptr.2d 377, 909 P.2d 981 (1996); Tarmann v. State Farm Mut. Auto Ins.

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Co., 2 Cal.App.4th 153, 157, 2 Cal.Rptr.2d 861 (1991) (“requirement of specificity in a fraud action

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against a corporation requires the plaintiff to allege the names of the persons who made the allegedly

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fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and

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when . . . .”). Having reviewed the FAC, the Court finds Plaintiff has failed to allege facts sufficient

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to state a plausible claim to relief for fraud against Defendant. Plaintiff has not provided the

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requisite specificity for the allegations, and thus the allegations are simply too vague and generalized

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to support a claim. Accordingly, dismissal of this cause of action shall be GRANTED.

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Plaintiff’s sixth cause of action (unfair competition) – Plaintiff further asserts a cause of action

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against Defendant for unfair competition, presumably in violation of California’s Unfair Competition

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Law (UCL), Cal. Bus. & Prof. Code §§ 17200 et seq. “In order to state a claim for a violation of the

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[UCL], a plaintiff must allege that the defendant committed a business act that is either fraudulent,

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unlawful, or unfair.” Levine v. Blue Shield of California, 189 Cal.App.4th 1117, 1136, 117

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Cal.Rptr.3d 262 (2010). The purpose of the UCL “is to protect both consumers and competitors by

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promoting fair competition in commercial markets for goods and services.” Kasky v. Nike, Inc., 27

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Cal.4th 939, 949, 119 Cal.Rptr.2d 296, 45 P.3d 243 (2002). “ ‘Because [the UCL] is written in the

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disjunctive, it establishes three varieties of unfair competition – acts or practices which are unlawful,

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or unfair, or fraudulent. “In other words, a practice is prohibited as ‘unfair’ or ‘deceptive’ even if

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not ‘unlawful’ and vice versa.” ’ ” Cel-Tech Communications, Inc. v. Los Angeles Cellular

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Telephone Co., 20 Cal.4th 163, 180, 83 Cal.Rptr.2d 548, 973 P.2d 527 (1999).

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An unlawful business practice is one that “ ‘is forbidden by any law’ ” (Olszewski v. Scripps

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Health, 30 Cal.4th 798, 827, 135 Cal.Rptr.2d 1, 69 P.3d 927 (2003)), and “[v]irtually any law –

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federal, state or local – can serve as a predicate for a section 17200 action” (State Farm Fire &

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Casualty Co. v. Superior Court, 45 Cal.App.4th 1093, 1102-03, 53 Cal.Rptr.2d 229 (1996)

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(abrogated on other grounds by Cel-Tech Communications, Inc., supra, 20 Cal.4th at 180)). “ ‘[A]

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fraudulent business practice is one that is likely to deceive members of the public.’ [Citation.] ‘A

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claim based upon the fraudulent business practice prong of the UCL is “distinct from common law

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fraud. ‘A [common law] fraudulent deception must be actually false, known to be false by the

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perpetrator and reasonably relied upon by a victim who incurs damages. None of these elements are

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required to state a claim for . . . relief’ under the UCL. [Citations.] This distinction reflects the

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UCL’s focus on the defendant’s conduct, rather than the plaintiff’s damages, in service of the

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statute’s larger purpose of protecting the general public against unscrupulous business practices.”’

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[Citation.] A fraudulent business practice ‘ “ ‘may be accurate on some level, but will nonetheless

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tend to mislead or deceive . . . . A perfectly true statement couched in such a manner that is likely

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to mislead or deceive the consumer, such as by failure to disclose other relevant information, is

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actionable under’ ” the UCL.’ [Citation.]” Boschma v. Home Loan Center, Inc., 198 Cal.App.4th

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230, 252-53, 129 Cal.Rptr.3d 874 (2011). Lastly, “an ‘unfair’ business practice is actionable under

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the [UCL] even if it is not ‘deceptive’ or ‘unlawful.’ [Citations.]” Countrywide Financial Corp. v.

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Bundy, 187 Cal.App.4th 234, 257, 113 Cal.Rptr.3d 705 (2010).

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intentionally broad to allow courts to have maximum discretion to prohibit schemes to defraud,” and

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“[t]he unfairness test has been described as follows: ‘Determination of whether a business practice

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or act is ‘unfair’ within the meaning of the [UCL] entails examination of the impact of the practice

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or act on its victim, “ ‘. . . balanced against the reasons, justifications and motives of the alleged

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wrongdoers. In brief, the court must weigh the utility of the defendant’s conduct against the gravity

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of the harm to the alleged victim . . . .’ [Citation.]” [Citations.]’ ” Id.

“The ‘unfair’ standard is

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Having reviewed the FAC in its entirety, the Court finds Plaintiff has failed to allege facts

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sufficient to plead a violation of the UCL’s unlawful, fraudulent or unfair prongs. Accordingly,

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dismissal of the unfair competition cause of action must be GRANTED.

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Plaintiff’ seventh cause of action (loss of opportunity) – Lastly, Plaintiff asserts a cause of action

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against Defendant for loss of opportunity, alleging Defendant’s “breach of contract and the duty of

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care for the purposes of negligence deprived Plaintiff the opportunity to participate in the open

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enrollment process.” Plaintiff further alleges, “Plaintiff[’s] not being able to participate in the Open

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Enrollment caused her to lose her 52 agents and incurred a loss of well over One Million Dollars.”

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Plaintiff has provided no authority – and the Court’s research reveals no authority – to

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suggest “loss of opportunity” is a recognized cause of action in California. To the extent Plaintiff

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intends to allege loss of opportunity as a component of damages, the claim fails, as Plaintiff has no

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viable causes of action for which she could recover such damages. To the extent Plaintiff intends

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to allege intentional interference with prospective economic advantage (IIPEA), the claim likewise

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fails. The elements of IIPEA are: “(1) an economic relationship between plaintiff and a third party,

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with the probability of future economic benefit to the plaintiff; (2) defendant’s knowledge of the

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relationship; (3) an intentional act by the defendant, designed to disrupt the relationship; (4) actual

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disruption of the relationship; and (5) economic harm to the plaintiff proximately caused by the

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defendant that is designed to disrupt the relationship between the plaintiff and a third party.” Edward

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v. Arthur Andersen LLP, 44 Cal.4th 937, 944, 81 Cal.Rptr.3d 382, 189 P.3d 285 (2008). Plaintiff

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has failed to allege facts sufficient to establish one or more of the foregoing elements. Accordingly,

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dismissal of this cause of action must be GRANTED.

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V. DISPOSITION

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Based on the foregoing, Defendant’s motion to dismiss the first, second and fourth through seventh

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cause of action in the first amended complaint as against it is GRANTED with leave to amend.

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Plaintiff shall have one final opportunity to amend within thirty days of entry of this order. The

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hearing date of August 27, 2012 is hereby VACATED.

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IT IS SO ORDERED.

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Dated:
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August 7, 2012
CHIEF UNITED STATES DISTRICT JUDGE

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