Nor-Cal Products, Inc. v. XL Insurance America, Inc. et al
Filing
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ORDER signed by Judge John A. Mendez on 11/05/12 ORDERING that defendant's 6 Motion to Dismiss is GRANTED with prejudice. CASE CLOSED (Benson, A.)
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UNITED STATES DISTRICT COURT
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EASTERN DISTRICT OF CALIFORNIA
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NOR-CAL PRODUCTS, INC.,
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Plaintiff,
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v.
XL INSURANCE AMERICA, INC.,
GREENWICH INSURANCE, INC.;
WELLS FARGO INSURANCE
SERVICES USA, INC.; CHARLES
CUSHNER, and DOES 1-50,
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No.
2:12-cv-02193 JAM-CMK
ORDER GRANTING DEFENDANT’S
MOTION TO DISMISS
Defendants.
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This matter is before the Court on Defendant Wells Fargo
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Insurance Services USA, Inc.’s (“Defendant”) Motion to Dismiss
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(Doc. #6).
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opposes the motion (Doc. #10) and Defendant replied (Doc. #11).1
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For the following reasons, Defendant’s motion is granted.
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Plaintiff Nor-Cal Products, Inc. (“Plaintiff”)
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This motion was determined to be suitable for decision without
oral argument. E.D. Cal. L.R. 230(g). The hearing was scheduled
for October 17, 2012.
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I. FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND
Plaintiff originally filed this action on May 3, 2012, in
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Siskiyou County Superior Court against Defendant, Defendant’s
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employee Charles Cushner, XL Insurance America, Inc., and
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Greenwich Insurance, Inc.
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America and Greenwich Insurance, Inc. (collectively
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“XL/Greenwich”), and they were dismissed on July 10, 2012.
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Cushner was dismissed on August 17, 2012 (Doc. #1).
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removed this action to this Court on August 22, 2012.
Plaintiff settled with XL Insurance
Mr.
Defendant
Id.
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Plaintiff alleges one cause of action against Defendant for
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breach of an assumed additional duty.
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Id.
On July 31, 2007, Huston Lesley, an employee of Plaintiff,
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filed a complaint against Plaintiff with the California
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Department of Fair Employment and Housing (“DFEH”) alleging
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employment discrimination based on his disability.
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August 20, 2007, Plaintiff tendered the defense to XL/Greenwich.
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On or about June 15, 2009, after receiving his right to sue
On or about
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letter, Mr. Lesley filed an action in Siskiyou County Superior
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Court against Plaintiff.
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XL/Greenwich for the lawsuit and XL/Greenwich defended Plaintiff
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for several months.
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withdrew coverage for the lawsuit.
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Plaintiff tendered the defense to
On or about May 4, 2012, XL/Greenwich
After XL/Greenwich withdrew coverage, Plaintiff contacted
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Mr. Cushner, its insurance broker.
Mr. Cushner allegedly
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assured Plaintiff that he was exploring insurance coverage for
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the lawsuit.
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Plaintiff stating that he was “attempting to find a way this
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claim will be accepted by Navigators and/or XL.”
On June 16, 2012, Mr. Cushner sent an email to
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Compl. ¶ 24.
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Plaintiff alleges that there was no follow up
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correspondence between Mr. Cushner and Plaintiff regarding this
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matter.
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Defendant never contacted Navigators Group, Inc.,
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(“Navigators”), Plaintiff’s previous insurer, or XL/Greenwich to
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contest the denial of coverage.
Plaintiff further alleges that Mr. Cushner and
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Plaintiff alleges that it continued to defend itself in the
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underlying action and decided to settle the action out of court.
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II. OPINION
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A.
Legal Standard
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A party may move to dismiss an action for failure to state
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a claim upon which relief can be granted pursuant to Federal
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Rule of Civil Procedure 12(b)(6).
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dismiss, the court must accept the allegations in the complaint
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as true and draw all reasonable inferences in favor of the
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plaintiff.
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overruled on other grounds by Davis v. Scherer, 468 U.S. 183
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(1984); Cruz v. Beto, 405 U.S. 319, 322 (1972).
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are mere “legal conclusions,” however, are not entitled to the
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assumption of truth.
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(2009) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555
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(2007)).
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plead “enough facts to state a claim to relief that is plausible
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on its face.”
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appropriate where the plaintiff fails to state a claim
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supportable by a cognizable legal theory.
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Pacifica Police Department, 901 F.2d 696, 699 (9th Cir. 1990).
In considering a motion to
Scheuer v. Rhodes, 416 U.S. 232, 236 (1974),
Assertions that
Ashcroft v. Iqbal, 556 U.S. 662, 678
To survive a motion to dismiss, a plaintiff needs to
Twombly, 550 U.S. at 570.
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Dismissal is
Balistreri v.
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Upon granting a motion to dismiss for failure to state a
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claim, the court has discretion to allow leave to amend the
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complaint pursuant to Federal Rule of Civil Procedure 15(a).
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“Dismissal with prejudice and without leave to amend is not
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appropriate unless it is clear . . . that the complaint could
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not be saved by amendment.”
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Inc., 316 F.3d 1048, 1052 (9th Cir. 2003).
Eminence Capital, L.L.C. v. Aspeon,
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B.
Discussion
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Defendant contends that Plaintiff has failed to allege a
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breach of duty by Defendant or damages caused by Defendant.
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Plaintiff argues that Defendant’s employee, Mr. Cushner, assumed
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an additional duty by asserting that he would seek coverage for
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the underlying claim and as a result of Mr. Cushner and
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Defendant’s breach of that duty, Plaintiff was not defended in
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the underlying action.
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Plaintiff alleges that Defendant assumed a fiduciary duty
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to seek coverage for the underlying claim.
Because an insurance
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broker is not a fiduciary under California law, claims
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denominated “breach of fiduciary duty” are analyzed as
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professional negligence claims.
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Hayward, Tilton & Rolapp Ins. Associates, Inc., 115 Cal.App.4th
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1145, 1159-60 (2004).
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claim, a plaintiff must allege “(1) a legal duty to use due
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care, (2) a breach of that duty, and (3) the breach is a
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proximate cause of the resulting injury.”
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CALIFORNIA LAW: TORTS § 835 (10th ed. 2005); see also Jones v.
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Grewe, 189 Cal.App.3d 950, 954 (1987) (citation omitted).
Hydro-Mill Co., Inc. v.
To establish a professional negligence
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6 B.E. WITKIN, SUMMARY
OF
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1.
Legal Duty and Breach of that Duty
Generally, an insurance broker does not have a duty of care
to advise a client on insurance matters unless
(a) the agent misrepresents the nature, extent or
scope of the coverage being offered or provided . . .,
(b) there is a request or inquiry by the insured for a
particular type or extent of coverage . . ., or
(c) the agent assumes an additional duty by either
express agreement or by ‘holding himself out’ as
having expertise in a given field of insurance being
sought by the insured.
Fitzpatrick v. Hayes, 57 Cal.App.4th 916, 927 (1997) (citations
omitted).
In this case, Defendant argues that there is no breach of
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duty because Plaintiff does not allege that Defendant
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misrepresented insurance coverage or failed to obtain the
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coverage requested.
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Mr. Cushner, “expressly assur[ed] Nor-Cal that he would seek
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coverage” for the underlying lawsuit, and thereby assumed an
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additional brokerage duty, which was subsequently breached.
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Compl. ¶¶ 25, 65.
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contained in an email sent by Mr. Cushner to Plaintiff.
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However, in this email, Mr. Cushner stated only that he was
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“attempting to find a way that this claim will be accepted by
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Navigators and/or XL.”
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expressly agreed to contact XL/Greenwich and Navigators and he
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certainly did not expressly promise Plaintiff that he would
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obtain coverage from these insurers. At best, he simply stated
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that he would attempt to help Plaintiff, which does not amount
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to an express agreement. Moreover, as Defendant points out, the
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cases relied upon by Plaintiff in its opposition to this motion
Plaintiff alleges that Defendant’s agent,
This express assurance was allegedly
Compl.
¶ 24.
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Mr. Cushner never
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do not support its argument that under the facts of this case a
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legal duty can be imposed on Defendant’s broker. Plaintiff has
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failed to cite to any case where, after an insurance company has
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denied a claim, an insurance broker has a duty to attempt to
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convince the insurer to change its position.
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Court finds that Plaintiff has not sufficiently alleged a legal
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duty or a breach of that duty.
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Plaintiff’s invitation to recognize a new duty under these
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circumstances.
Therefore, the
Further, the Court declines
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2.
Proximate Cause
Defendant seeks to dismiss this case on the separate ground
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that Plaintiff has not alleged that it suffered damages caused
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by Defendant.
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of Mr. Cushner’s representations, Plaintiff did not pursue the
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matter with XL/Greenwich or Navigators and as a result, neither
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XL nor Navigators provided Plaintiff with a defense or
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indemnification.
Plaintiff argues in its opposition that because
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To establish causation, Plaintiff must allege facts which
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demonstrate that Defendant’s conduct contributed to the injury
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“so that ‘but for’ the conduct the injury would have not have
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occurred.”
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(1971).
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bringing about the result, it will be regarded as a legal cause
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of the injury.”
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found that but for the insurance’s misrepresentation that the
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plaintiff had coverage, the plaintiff would have acquired
Greenfield v. Ins. Inc., 19 Cal.App.3d 803, 810-11
“If the act or omission was a substantial factor in
Id.
For example, in Greenfield, the court
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adequate coverage.
Id.
In this case, Plaintiff alleges that “as a direct and
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proximate result of Mr. Cushner’s and [Defendant’s] breach of
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their additional duty, the denial of coverage was never
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reversed.”
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its face.
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here, the causal connection is speculative.
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or Defendant’s agent had acted, it is uncertain whether
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XL/Greenwich would have reversed its decision or Navigators
Compl. ¶ 66.
This allegation is not plausible on
Unlike the definite causal connection in Greenfield,
Even if Defendant
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would have decided to represent or indemnify Plaintiff because
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neither Mr. Cushner nor Defendant had control over that
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decision.
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confronted, as Mr. Cushner promised he would do, XL/Greenwich
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settled the litigation for failure to defend and indemnify.
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Court does not find Plaintiff’s argument persuasive because
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XL/Greenwich’s decision to settle after being threatened with
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litigation does not lead to the conclusion that it would have
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reversed its decision had Mr. Cushner or Defendant contacted
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XL/Greenwich. Given the uncertainty as to how XL/Greenwich or
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Navigators would have acted, the Court finds that Plaintiff has
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not alleged facts demonstrating that Defendant’s alleged breach
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was a proximate cause of Plaintiff’s alleged injury. Finally,
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the parties disagree on whether an insurer’s duty to defend can
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be determined on a motion to dismiss, but this argument is
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irrelevant because as mentioned above, Defendant had no control
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Plaintiff argues that once XL/Greenwich was
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The
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over XL/Greenwich’s or Navigator’s decision to defend.2
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Accordingly, the Court finds that Plaintiff cannot allege
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that there was any additional duty or that it suffered damages
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caused by Defendant. The Court further finds that the Complaint
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cannot be saved by amendment and therefore granting Plaintiff
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leave to amend would be futile.
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III. ORDER
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For
reasons
set
forth
above,
Defendant’s
Motion
Dismiss is GRANTED WITH PREJUDICE.
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the
IT IS SO ORDERED.
Dated: November 5, 2012
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____________________________
JOHN A. MENDEZ,
UNITED STATES DISTRICT JUDGE
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In the reply, Defendant requests judicial notice of the
insurance policy Navigators issued to Plaintiff. However, the
Court finds it unnecessary to take judicial notice in order for
it to determine this motion and therefore, Defendant’s request
for judicial notice is denied.
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