Abramyan et al. v. Geico Insurance Company

Filing 16

MEMORANDUM and ORDER signed by District Judge Morrison C. England, Jr. on 3/10/2017 ORDERING that Defendant GEICO's 5 Motion to Dismiss is GRANTED, with prejudice, as to Plaintiffs' Fourth Cause of Action but DENIED as to the Fifth Cause of Action. (Zignago, K.)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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ARSEN ABRAMYAN and NARINA
ZAKHARYAN,
Plaintiffs,

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MEMORANDUM AND ORDER
v.

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No. 2:16-cv-01069-MCE-AC

GEICO INSURANCE COMPANY, and
Does 1-40, inclusive,

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Defendants.

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In bringing the present action, Plaintiffs Arsen Abramyan and Narina Zakharyan

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(“Plaintiffs”) allege that their automobile insurance carrier, Defendant GEICO Insurance

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Company (“GEICO”) wrongfully denied a theft loss claim submitted by Plaintiffs as

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fraudulent. Plaintiffs’ resulting lawsuit, originally filed in state court, asserts five causes

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of action. Through the Motion to Dismiss now before the Court, GEICO contends that

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Plaintiffs’ claims for unfair competition, in violation of California Insurance Code § 790,

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and their claim for discrimination in contravention of California Civil Code §§ 51 and 52,

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fail to state a claim upon which relief can be granted and are therefore subject to

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dismissal under Federal Rule of Civil Procedure 12(b)(6).1 As set forth below, that

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Motion is GRANTED in part and DENIED in part.2

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BACKGROUND3

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According to Plaintiffs’ Complaint, they owned a 2011 BMW 335I insured by

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Defendant GEICO. On July 20, 2013, that vehicle was stolen from their home. Plaintiffs

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reported the theft to GEICO, who performed an investigation. On or about January 13,

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2014, Plaintiffs claim that GEICO wrongfully denied their claim for loss of the vehicle on

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grounds that they had engaged in fraud. According to Plaintiffs, that denial was

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premised on discriminatory animus by GEICO, who targeted them for investigation for

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fraud on the basis of their national origin as Armenians who previously resided in the

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former Soviet Union. Plaintiffs claim that GEICO did this in order to avoid paying claims.

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STANDARD

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On a motion to dismiss for failure to state a claim under Federal Rule of Civil

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Procedure 12(b)(6), all allegations of material fact must be accepted as true and

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construed in the light most favorable to the nonmoving party. Cahill v. Liberty Mut. Ins.

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Co., 80 F.3d 336, 337-38 (9th Cir. 1996). Rule 8(a)(2) “requires only ‘a short and plain

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statement of the claim showing that the pleader is entitled to relief’ in order to ‘give the

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defendant fair notice of what the . . . claim is and the grounds upon which it rests.’” Bell

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Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41,

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All further references to “Rule” or “Rules are to the Federal Rules of Civil Procedure unless
otherwise indicated.
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Because the Court determined that oral argument would not be of material assistance, this
Motion was submitted on the briefs in accordance with Local Rule 230(g).
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This section is taken directly, and in some instances verbatim, from the allegations contained in
Plaintiffs’ Complaint.

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47 (1957)). A complaint attacked by a Rule 12(b)(6) motion to dismiss does not require

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detailed factual allegations. However, “a plaintiff's obligation to provide the grounds of

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his entitlement to relief requires more than labels and conclusions, and a formulaic

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recitation of the elements of a cause of action will not do.” Id. (internal citations and

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quotations omitted). A court is not required to accept as true a “legal conclusion

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couched as a factual allegation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting

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Twombly, 550 U.S. at 555). “Factual allegations must be enough to raise a right to relief

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above the speculative level.” Twombly, 550 U.S. at 555 (citing 5 Charles Alan Wright &

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Arthur R. Miller, Federal Practice and Procedure § 1216 (3d ed. 2004) (stating that the

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pleading must contain something more than “a statement of facts that merely creates a

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suspicion [of] a legally cognizable right of action”)).

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Furthermore, “Rule 8(a)(2) . . . requires a showing, rather than a blanket

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assertion, of entitlement to relief.” Twombly, 550 U.S. at 555 n.3 (internal citations and

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quotations omitted). Thus, “[w]ithout some factual allegation in the complaint, it is hard

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to see how a claimant could satisfy the requirements of providing not only ‘fair notice’ of

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the nature of the claim, but also ‘grounds' on which the claim rests.” Id. (citing Wright &

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Miller, supra, at 94, 95). A pleading must contain “only enough facts to state a claim to

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relief that is plausible on its face.” Id. at 570. If the “plaintiffs . . . have not nudged their

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claims across the line from conceivable to plausible, their complaint must be dismissed.”

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Id. However, “[a] well-pleaded complaint may proceed even if it strikes a savvy judge

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that actual proof of those facts is improbable, and ‘that a recovery is very remote and

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unlikely.’” Id. at 556 (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)).

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A court granting a motion to dismiss a complaint must then decide whether to

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grant leave to amend. Leave to amend should be “freely given” where there is no

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“undue delay, bad faith or dilatory motive on the part of the movant, . . . undue prejudice

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to the opposing party by virtue of allowance of the amendment, [or] futility of the

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amendment . . . .” Foman v. Davis, 371 U.S. 178, 182 (1962); Eminence Capital, LLC v.

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Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003) (listing the Foman factors as those to
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be considered when deciding whether to grant leave to amend). Not all of these factors

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merit equal weight. Rather, “the consideration of prejudice to the opposing party . . .

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carries the greatest weight.” Id. (citing DCD Programs, Ltd. v. Leighton, 833 F.2d 183,

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185 (9th Cir. 1987)). Dismissal without leave to amend is proper only if it is clear that

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“the complaint could not be saved by any amendment.” Intri-Plex Techs. v. Crest Group,

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Inc., 499 F.3d 1048, 1056 (9th Cir. 2007) (citing In re Daou Sys., Inc., 411 F.3d 1006,

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1013 (9th Cir. 2005); Ascon Props., Inc. v. Mobil Oil Co., 866 F.2d 1149, 1160 (9th Cir.

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1989) (“Leave need not be granted where the amendment of the complaint . . .

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constitutes an exercise in futility . . . .”)).

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ANALYSIS

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A.

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GEICO moves to dismiss Plaintiffs’ Fourth Cause of Action, for Unfair Competition

California Insurance Code § 790

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in violation of California Insurance Code § 790. There, is however, no private cause of

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action for violations of § 790. King v. Nat’l Gen. Ins. Co., 129 F. Supp. 3d 925, 941 n.10

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(N.D. Cal. 2015) (citing Moradi-Shalal v. Fireman’s Fund Ins. Cos., 46 Cal. 3d 287, 304

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(1988)). Moreover, by a stipulation and order filed July 15, 2016, Plaintiffs agreed not to

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oppose GEICO’s Motion to Dismiss the Fourth Cause of Action, and have not done so.

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Plaintiffs’ claim for violation of § 790 is accordingly dismissed with prejudice.

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B.

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Plaintiffs’ Fifth Cause of Action is premised on California’s Unruh Civil Rights Act,

California Civil Code §§ 51 and 52

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which, at California Civil Code § 51, prohibits “business establishments of every kind

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whatsoever” from discriminating on the basis of national origin, among other things. The

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Fifth Cause of Action also invokes § 52, which provides a private cause of action to seek

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damages for violations of the Unruh Act.

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GEICO moves to dismiss Plaintiffs’ Fifth Cause of Action on grounds that it is time

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barred by the one-year statute of limitations on Unruh actions set forth in Gatto v. County
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of Sonoma, 98 Cal. App. 4th 744, 757-59 (2002), and Mitchell v. Sung, 816 F. Supp.

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597, 602 (N.D. Cal. 1993). According to GEICO, because it denied Plaintiffs’ claims on

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January 13, 2014, and Plaintiffs did not file their lawsuit until July 20, 2015—some 18

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months later—their Unruh Act claims run afoul of the one-year time bar.
As recognized by this Court in Hartline v. Nat’l Univ., No. 2:14-cv-0635 KJM AC,

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2015 WL 4716491 (E.D. Cal. August 7, 2015), however, California’s personal injury

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statute of limitations at California Code of Civil Procedure § 335.1 provides the limitation

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period for the Unruh Act. Id. at * 4 (‘[T]he Unruh Act and the personal injury statute are

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both subject to a two-year statute of limitations.”). Gatto and Mitchell, as relied upon by

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GEICO, were decided prior to January of 2003, when the California Legislature

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approved § 335.1, which expanded the statute of limitations for personal injury and

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wrongful death actions to two years. See Act of Sept. 10, 2002, ch. 448, 2002 Cal.

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Stats. 2521. Once the personal injury statute was extended to two years, the time within

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which an Unruh Action claim could be brought was likewise extended.4 Consequently,

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because the instant lawsuit was filed within two years of GEICO denying Plaintiffs’ theft

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claim on January 13, 2014, the Unruh Act claim is timely and GEICO’s motion to dismiss

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on that basis fails.

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The Court recognizes GEICO’s reliance on a 2015 decision by another court in this district,
Zochlinski v. Regents of the Univ. of California, No. 2:10-cv-1824 KJM-KJN PS, 2015 WL 6744654, at *5
(E.D. Cal. Nov. 4, 2015), continued to apply the one-year statute of limitations in reliance on Gatto. For
the reasons provided, this Court believes that Zochlinksi’s decision to enforce that one-year period after
the passage of § 335.1 was incorrect.

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CONCLUSION

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Based on all the foregoing, Defendant GEICO’s Motion to Dismiss (ECF No. 5) is

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GRANTED, with prejudice, as to Plaintiffs’ Fourth Cause of Action but DENIED as to the

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Fifth Cause of Action.

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IT IS SO ORDERED.
Dated: March 10, 2017

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