Burris v. American Safety Indemnity Company

Filing 41

ORDER signed by Judge Garland E. Burrell, Jr on 5/11/11 GRANTING 27 Motion to Dismiss. CASE CLOSED. (Donati, J)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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MICHELLE BURRIS, dba SIERRA
BROKERS REAL ESTATE, INC.,

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Plaintiff,

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v.

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AMERICAN SAFETY INDEMNITY
COMPANY, an Oklahoma
corporation, and DOES 1 through
20, inclusive,

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Defendants.
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2:10-cv-01561-GEB-DAD
ORDER GRANTING DEFENDANT’S
MOTION TO DISMISS PLAINTIFF’S
FIRST AMENDED COMPLAINT WITH
PREJUDICE

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Defendant American Safety Indemnity Company (“ASIC”) moves

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under Federal Rule of Civil Procedure (“Rule”) 12(b)(6) for an order

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dismissing

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Complaint with prejudice. The issue is whether ASIC has a duty to defend

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Burris against a third-party complaint which the County of Placer

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(“Placer County”) filed against her in the Superior Court of California

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in Placer County. Placer County sues Burris based on her alleged

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unlawful subdivision of real property proscribed by the Subdivision Map

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Act and the Placer County Code. (First Am. Compl. (“FAC”) Ex. 7, ¶¶

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85-163,

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incorporates the allegation that Burris “was a real estate developer in

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the business of buying, parceling, selling and developing raw land.” Id.

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¶ 12 (emphasis added).

Plaintiff

83:19-85:19.)

Michelle

Each

Burris’s

claim

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1

in

(“Burris”)

the

First

third-party

Amended

complaint

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Burris tendered defense of the Placer County lawsuit to ASIC

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under an ASIC-issued errors and omissions policy (“Policy”). Id. ¶¶ 7,

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14. ASIC argues it does not owe Burris a duty to defend under the Policy

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since the claims in Placer County’s third-party complaint are excluded

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by “Exclusion K” in the Policy. This exclusion prescribes: ASIC “will

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not defend . . . under this policy for any ‘claim’ . . . based on or

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arising out of, or in connection with the activities of an ‘Insured’ as

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a . . . property developer.” Id. Ex. 1, at 26-27. ASIC argues Exclusion

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K applies since “the basis for each of the County’s [claims] against

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[Burris] is that she participated in the illegal subdivision of . . .

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various projects as a developer.” (Mem. of P. & A. in Supp. of Mot. to

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Dismiss

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inapplicable since she is sued by Placer County as a real estate broker,

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not a developer. (Pl.’s Mem. in Opp. to Def.’s Mot. to Dismiss Pl.’s FAC

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5:28-6:1.)

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Pl.’s

FAC

12:18-19.)

Burris

counters

that

Exclusion

K

is

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We look to the nature and kind of risk covered by
the policy as a limitation upon the duty to defend;
. . . [T]he insurer is not required to defend an
action against the insured when the complaint in
that action shows on its face that the injury
complained of is not only not covered by, but is
excluded from, the policy.

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California Ins. Guarantee Assn. v. Wood, 217 Cal. App. 3d 944, 947-48

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(1990) (internal citations and quotation marks omitted). “An insurer can

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exclude coverage by language which is conspicuous, plain and clear.” Id.

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at 948.

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Here, Placer County’s third-party complaint shows on its face

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that Exclusion K excludes coverage since each of Placer County’s claims

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against Burris alleges that she was acting as a property developer who

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unlawfully subdivided real property. Therefore, ASIC owes no defense

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duty to Burris, and Burris’s First Amended Complaint is dismissed.
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ASIC argues dismissal should be without leave to amend. “The

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power to grant leave to amend . . . is entrusted to the discretion of

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the

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amendment] . . . by ascertaining the presence of any of four factors:

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bad

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futility.’” Serra v. Lappin, 600 F.3d 1191, 1200 (9th Cir. 2010)

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(quoting William O. Gilley Enters. v. Atl. Richfield Co., 588 F.3d 659,

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669 n.8 (9th Cir. 2009)). It is evident from both Burris’s original

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Complaint and First Amended Complaint that her action against ASIC is

district

faith,

court,

undue

which

delay,

‘determines

prejudice

to

the

the

propriety

opposing

[of

allowing

party,

and/or

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dependent

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County’s third-party complaint shows on its face that Burris is not

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entitled

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amendment by Burris “would be futile, [and] there [is] no need to

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prolong the litigation by permitting further amendment.” Lipton v.

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Pathogenesis Corp., 284 F.3d 1027, 1039 (9th Cir. 2002).

upon

to

Placer

coverage

County’s

under

the

third-party

Policy.

complaint,

Accordingly,

and

any

Placer

further

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Therefore, ASIC’s motion to dismiss Burris’s First Amended

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Complaint is granted with prejudice, and judgment shall be entered in

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favor of ASIC.

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Dated:

May 11, 2011

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GARLAND E. BURRELL, JR.
United States District Judge

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