Castro v. Lincoln General Insurance Company

Filing 17

ORDER signed by Judge Kimberly J. Mueller on 5/15/15. Having considered the parties' briefs, record, and arguments at the hearing regarding the 7 Motion to Dismiss, the court SEVERS and STAYS plaintiff's claim for breach of the implied covenant of good faith and fair dealing and DIRECTS the parties to meet and confer and file a stipulation as to plaintiff's claim for declaratory relief within 7 days, along with a proposed schedule for motion practice. (Manzer, C)

1
2
3
4
5
6
7
8

UNITED STATES DISTRICT COURT

9

EASTERN DISTRICT OF CALIFORNIA

10
11

MARTHA CASTRO,

12

Plaintiff,

13
14
15

No. 1:15-cv-00331-KJM-GSA

v.

ORDER

LINCOLN GENERAL INSURANCE
COMPANY,
Defendant.

16

This matter is before the court on the motion by defendant Lincoln General

17
18

Insurance Company to dismiss plaintiff Martha Castro’s complaint. (ECF No. 7.) Plaintiff

19

opposes the motion. (ECF No. 14.) The court held a hearing on the matter on May 8, 2015.

20

Robert Williams and Marla Garcia appeared for plaintiff, and Jonathan Carlson appeared for

21

defendant. After having considered the parties’ briefs, record, and arguments at the hearing, the

22

court SEVERS and STAYS plaintiff’s claim for breach of the implied covenant of good faith and

23

fair dealing and DIRECTS the parties to file a stipulation as to plaintiff’s claim for declaratory

24

relief.

25

I.

26

BACKGROUND
Defendant issued commercial automobile insurance policy number 63100408101

27

(the Policy), naming FM Diaz Construction, Inc. as the insured. (ECF No. 1, Ex. A, Compl. ¶ 4.)

28

The Policy provided for underinsured motorist coverage in the amount of $1,000,000. (Id. ¶ 5.)
1

1

The Policy provided coverage for a 2006 Chevrolet Colorado (VIN number

2

1GCCS136668125916) for the period of June 1, 2007 through June 1, 2008. (Id.)

3

On November 1, 2007, plaintiff was involved in a car accident in Fresno,

4

California, caused by one Manuel Reyes.1 (Id. ¶ 6.) At that time, plaintiff was operating the

5

insured vehicle noted above (id.) and was in the scope of her employment with FM Diaz (id. ¶ 7).

6

After the accident, plaintiff filed a workers’ compensation claim for injuries she sustained in the

7

accident.2 (Id. ¶ 9.) Subsequently, the State Compensation Insurance Fund (SCIF), the workers’

8

compensation insurer of FM Diaz, notified American Commercial Management (ACM), the third

9

party administrator for defendant, that SCIF had a subrogation claim for any benefits to which

10

plaintiff might be entitled. (Id.) On November 7, 2007, ACM acknowledged the claim and

11

confirmed that uninsured and underinsured coverage was available for the loss. (Id.)

12

On October 21, 2008, plaintiff put ACM on notice of representation and asked for

13

available coverage for the underlying accident. (Id. ¶ 10.) On September 9, 2009, Mr. Reyes’

14

insurance carrier, Infinity Insurance, offered its policy limits to settle plaintiff’s claim. (Id. ¶ 11.)

15

On September 30, 2009, plaintiff notified ACM that Infinity Insurance had tendered the policy

16

limits of $15,000 to settle the claim. (Id. ¶ 12.) On October 15, 2009, plaintiff settled that claim

17

against Mr. Reyes for the available $15,000. (Id. ¶ 14.) On February 26, 2013, plaintiff settled

18

her workers’ compensation claim. (Id. ¶ 15.) Accordingly, plaintiff made a demand for

19

underinsured motorist benefits to defendant, but received no response. (Id. ¶¶ 16–17.) Plaintiff

20

served defendant with a notice of institution of arbitration and the parties then engaged in

21

arbitration. (Id. ¶¶ 17–18.)

22

Plaintiff commenced this action in the Fresno County Superior Court on January 9,

23

2015, alleging two claims: (1) breach of the implied covenant of good faith and fair dealing and

24

(2) declaratory relief. (See generally Compl.) Defendant subsequently removed the case on

25

March 3, 2015, asserting diversity-of-citizenship jurisdiction. (ECF No. 1.) Defendant now

26
27
28

1

The parties’ filings refer to this individual by the last name Reyes and Reyna. Future
filings should clarify the correct last name.
2

The workers’ compensation case number is ADJ6614150. (Compl. ¶ 9.)
2

1

moves to dismiss plaintiff’s complaint. (ECF No. 7.) Plaintiff opposes the motion (ECF No. 14),

2

and defendant has replied (ECF No. 15).

3

II.

4

JUDICIAL NOTICE
Defendant requests that this court judicially notice the complaint filed in Martha

5

Castro v. Lincoln General Insurance Company, commenced in the Fresno County Superior

6

Court, case number 15-CECG-00091. (ECF No. 8, Ex. A.) Plaintiff does not oppose defendant’s

7

request. The court need not take judicial notice of that complaint because the same complaint is

8

attached to defendant’s notice of removal, which is filed on the docket of the instant case. In

9

ruling on defendant’s motion, the court can rely on the filings made in the case before it.

10

III.

11

MEET AND CONFER EFFORTS
From the parties’ briefing, it is clear they have not exhausted their meet and confer

12

efforts. This case was transferred from this court’s Fresno division, and this court’s Standing

13

Order requiring certification of meaningful meet and confer efforts was not issued until after

14

defendant had filed the instant motion. The court cautions the parties, however, that they may

15

face sanctions for future failures to comply with this court’s Standing Order.

16

IV.

17
18

DISCUSSION
A. First Claim: Breach of the Implied Covenant of Good Faith and Fair Dealing
At the hearing, the court and the parties discussed the practical implications of

19

staying this claim while plaintiff’s declaratory claim is litigated. To prevent plaintiff from paying

20

another filing fee, the court elects to stay plaintiff’s first claim, rather than dismiss it in

21

accordance with the terms of the parties’ stipulation. Accordingly, the court hereby SEVERS and

22

STAYS plaintiff’s claim for breach of the implied covenant of good faith and fair dealing until a

23

final judgment is entered as to plaintiff’s claim for declaratory relief.

24
25

B. Second Claim: Declaratory Relief
At the hearing, the parties stated they could reach a stipulation to stay the

26

arbitration pending the outcome of the declaratory relief claim and toll any statute of limitations

27

pertaining to commencement and completion of arbitration. The parties are hereby ordered to

28

meet and confer and file their stipulation and proposed order within seven (7) days from the date
3

1

of this order. The parties are also directed to submit a proposed schedule for motion practice

2

along with their stipulation.

3
4

IT IS SO ORDERED.
DATED: May 15, 2015.

5
6

UNITED STATES DISTRICT JUDGE

7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
4