MWE Services, Inc. et al v. California Department of Forestry and Fire Protection et al

Filing 27

ORDER signed by Judge John A. Mendez on 6/11/14 GRANTING 18 Motion to Dismiss for Lack of Jurisdiction and DENYING AS MOOT 12 Motion for Judgment; CASE CLOSED. (Meuleman, A)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 12 MWE SERVICES, INC., a Nebraska corporation; CHRISTOPHER J. MARTIN, 13 14 15 16 17 18 19 20 21 22 23 24 25 Plaintiffs, v. CALIFORNIA DEPARTMENT OF FORESTRY AND FIRE PROTECTION; CALIFORNIA DEPARTMENT OF CORRECTIONS; CALIFORNIA HIGHWAY PATROL; CAMPTONVILLE FIRE DEPARTMENT; DOBBINS/OREGON HOUSE FIRE PROTECTION DISTRICT; GRASS VALLEY FIRE DEPARTMENT; LINDA FIRE PROTECTION DISTRICT; NORTH SAN JUAN FIRE PROTECTION DISTRICT; PACIFIC GAS AND ELECTRIC COMPANY; PENN VALLEY FIRE PROTECTION DISTRICT; UNITED STATES DEPARTMENT OF AGRICULTURE FOREST SERVICE; UNITED STATES GEOLOGICAL SURVEY; and DOES 1 through 2500, inclusive, No. 2:14-cv-00010-JAM-KJN ORDER GRANTING DEFENDANT UNITED STATES’ MOTION TO DISMISS AND DENYING DEFENDANT CALIFORNIA DEPARTMENT OF FORESTRY AND FIRE PROTECTION’S MOTION AS MOOT Defendants. 26 27 28 Two motions are before the Court in this matter: (1)Defendant California Department of Forestry and Fire 1 1 Protection’s (“Cal Fire”) Motion for Judgment on the Pleadings, 2 Or Alternatively, Motion to Dismiss (Doc. #12) Plaintiffs MWE 3 Services, Inc. (“MWE”) and Christopher Martin’s (collectively 4 “Plaintiffs”) First Amended Complaint in Interpleader (Doc. #1-1, 5 Exh. A) (“FAC”); and (2) Defendants United States Department of 6 Agriculture Forest Service and United States Geological Survey’s 7 (collectively “United States”) Motion to Dismiss (Doc. # 18) the 8 FAC for lack of Subject Matter Jurisdiction. 1 9 a Reply (Doc. #23) to the United States’ motion, and the United Cal Fire submitted 10 States filed a statement of non-opposition (Doc. #20) to Cal 11 Fire’s motion. Plaintiffs filed a joint and several opposition 12 (Doc. #21) to both motions. 13 (Doc. #24) to the opposition. The United States filed a reply 14 15 I. 16 FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND On December 10, 2012, Plaintiffs filed the First Amended 17 Complaint in Interpleader (Doc. 1-1, Exh. A) in Yuba County 18 Superior Court. 19 this Court on January 2, 2014. 20 The United States removed the case (Doc. #1) to According to the FAC, Plaintiff Christopher Martin is a 21 resident of the State of Missouri and MWE is a corporation 22 organized under the laws of the State of Nebraska. 23 Plaintiffs are the insureds under a commercial general liability 24 policy in which the insurer is Berkley Regional Specialty 25 Insurance Company. Id. ¶ 5. FAC ¶¶ 1-2. Plaintiffs allege that Defendants 26 27 28 1 This motion was determined to be suitable for decision without oral argument. E.D. Cal. L.R. 230(g). The hearing was scheduled for May 21, 2014. 2 1 have claimed or may claim that they are entitled to the funds 2 from the policy, which may subject Plaintiffs to multiple 3 liability under 28 U.S.C. § 1335 and Federal Rules of Civil 4 Procedure Rule 22. 5 from a fire that occurred in and around Yuba County, California. 6 Id. ¶ 3. 7 complaint against Plaintiffs for damages as a result of the fire. 8 Plaintiffs claim no interest in the funds except for attorneys’ 9 fees and costs and request the Court to determine the persons who Id. ¶¶ 6-7. They indicate the claims arise The FAC indicates that Cal Fire has already filed a 10 are legally entitled to receive the funds. 11 Plaintiffs state they are ready and willing to tender the funds 12 to the Court “with their insurer’s consent.” Id. ¶¶ 9-10. Id. 13 14 II. OPINION 15 A. Requests for Judicial Notice 16 The United States requests the Court judicially notice (Doc. 17 #18-2) two documents, (1) the FAC (RJN Exh. 1) and (2) a 18 complaint filed by Cal Fire against Plaintiffs for “fire 19 suppression, investigation, auditing, and litigation fees and 20 costs” (RJN Exh. 2). 21 Generally, the Court may not consider material beyond the 22 pleadings in ruling on a motion to dismiss. 23 material attached to, or relied on by, the complaint so long as 24 authenticity is not disputed, or matters of public record, 25 provided that they are not subject to reasonable dispute. 26 Sherman v. Stryker Corp., 2009 WL 2241664 at *2 (C.D. Cal. Mar. 27 30, 2009) (citing Lee v. City of Los Angeles, 250 F.3d 668, 688 28 (9th Cir. 2001) and Fed. R. Evid. 201). 3 The exceptions are E.g., The first document is 1 the operative complaint in this action. 2 the Court will rely on in ruling on the motions, and as such, the 3 request is granted as to it. 4 It is clearly a document The second document is a complaint filed in another action 5 in the Yuba County Superior Court. 6 in Plaintiffs’ FAC and relied on by Plaintiffs. 7 Court will take judicial notice of it. 8 9 It is specifically referenced As such, the Cal Fire seeks judicial notice (Doc. #14) of four documents. The first is the complaint already discussed above, filed by Cal 10 Fire against Plaintiffs in the Yuba County Superior Court. 11 other three documents concern the removal and subsequent remand 12 of the other action. 13 documents necessary in ruling on the motions before it, and as 14 such, denies Cal Fire’s request. 15 The The Court does not find notice of these Plaintiffs seek judicial notice (Doc. #21-4) of two 16 documents. 17 above. 18 statement filed in connection with the other action. 19 does not find either necessary in ruling on the motions currently 20 before it, and therefore denies Plaintiffs’ request. The first is their answer to the complaint noticed The second is Plaintiff MWE’s case management conference The Court 21 B. Legal Standard 22 There are two forms of interpleader, “rule interpleader,” 23 under Rule 22 of the Federal Rules of Civil Procedure, and 24 “statutory interpleader,” pursuant to 28 U.S.C. § 1335. 25 allow a party to file a claim for interpleader if there is a 26 possibility of exposure to double or multiple liability. 27 W. Coast Life Ins. Co., 688 F.3d 1004, 1009 (9th Cir. 2012). 28 “The purpose of interpleader is for the stakeholder to ‘protect 4 Both Lee v. 1 itself against the problems posed by multiple claimants to a 2 single fund.’” 3 Cir. 2010) (quoting Minn. Mut. Life Ins. Co. v. Ensley, 174 F.3d 4 977, 980 (9th Cir.1999)). 5 Mack v. Kuckenmeister, 619 F.3d 1010, 1024 (9th When a person holding funds or property encounters other 6 parties who are making conflicting possessory claims for those 7 funds or property, he may join the parties as defendants and 8 require them to litigate who is entitled to the funds or 9 property. Michelman v. Lincoln Nat. life Ins. Co., 685 F.3d 887, 10 893 (9th Cir. 2012); ReliaStar Life Ins. Co. v. Northam, 2:13-CV- 11 00063-TLN, 2013 WL 5703341, at *2 (E.D. Cal. 2013). 12 There are some general requirements for interpleader. 13 Interpleader requires that the plaintiff-stakeholder have in its 14 possession, custody or control, a particular fund or property. 15 Mock v. Collins, No. EDCV 04–395–VAP SGLX, 2004 WL 3619122, at *2 16 (C.D. Cal. 2004); ReliaStar Life Ins., 2013 WL 5703341, at *2; 28 17 U.S.C. § 1335(a). 18 claims made to that same property or fund. 19 at *2. 20 fear of multiple liability; that is, the stakeholder must have “a 21 good faith belief that there are or may be colorable competing 22 claims to the stake,” based on “a real and reasonable fear of 23 exposure to double liability or the vexation of conflicting 24 claims.” Further, there must be multiple, adverse ReliaStar Life Ins., Finally, the plaintiff stakeholder must have a reasonable Michelman, 685 F.3d at 894. 25 C. Analysis 26 Both Cal Fire’s and the United States’ motions attack 27 Plaintiffs’ FAC as failing to meet the requirements discussed 28 above. The Court first addresses the United States’ contention 5 1 that the FAC must be dismissed because Plaintiffs do not have 2 control or possession over the insurance funds that serve as the 3 basis for this interpleader action. 4 5 1. Possession or Control In its Motion to Dismiss, the United States contends 6 Plaintiffs do not have possession or control over the policy 7 proceeds at issue and therefore lack standing to bring the 8 present action. 9 that Plaintiffs are merely insureds named in the policy, and any U.S. MTD at pp. 4-5. The United States argues 10 control over the policy funds is subject to the consent of the 11 insurance company. 12 Plaintiffs respond that they are the beneficiaries of the 13 policy, are entitled to the full amount provided under it, but 14 admit they can only interplead the funds “with their insurer’s 15 consent.” 16 insurer’s consent is “reasonably inferred” to have been given due 17 to the fact that no reservation of rights exists on the policy. 18 However, no legal authority supporting this specific contention 19 is provided. 20 decision not to reserve rights to assert coverage defenses does 21 not afford the insured any control over the actual insurance 22 proceeds. 23 Opp. at p. 4; see also FAC ¶ 9. They contend their In its Reply, Cal Fire argues that an insurer’s Cal Fire Reply at p. 3. The Court finds Defendants’arguments persuasive. Plaintiffs 24 have failed to meet this foundational element of interpleader 25 actions. 26 inferences, they have not adequately demonstrated that they have 27 possession of the policy funds or provided evidence that their 28 insurer has placed the funds within Plaintiffs’ custody or Despite Plaintiffs’ arguments regarding reasonable 6 1 control. 2 action. 3 to Dismiss, without prejudice, as Plaintiffs may at some point 4 gain the necessary control over the policy funds. 5 As such, they lack standing to bring this interpleader Accordingly, the Court GRANTS the United States’ Motion The Court need not address the United States’ remaining 6 contentions in support of its motion and DENIES Cal Fire’s 7 motion as moot. 8 9 10 III. ORDER For the reasons set forth above, the Court GRANTS the United 11 States’ Motion to Dismiss the FAC. 12 as moot. 13 14 IT IS SO ORDERED. Dated: June 11, 2014 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7 Cal Fire’s motion is DENIED

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