(PS) Stiles v. Safeco Insurance et al

Filing 21

FINDINGS and RECOMMENDATIONS signed by Magistrate Judge Dennis M. Cota on 9/9/2021 RECOMMENDING 11 that the Motion to Dismiss be granted. Plaintiff's negligence claim be dismissed with prejudice. Plaintiff's intentional tort claim be dism issed with prejudice, and Plaintiff's breach of contract, bad faith, and defamation claims be dismissed with leave to amend. Referred to Judge Kimberly J. Mueller. Objections due within 14 days after being served with these F & R's. (Reader, L)

Case 2:20-cv-01731-KJM-DMC Document 21 Filed 09/09/21 Page 1 of 7
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IN THE UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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SHARIDAN STILES,

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No. 2:20-CV-1731-KJM-DMC

Plaintiff,
v.

FINDINGS AND RECOMMENDATIONS

SAFECO INSURANCE,
Defendant.

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Plaintiff, who is proceeding pro se, brings this civil action. Pending before the

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Court is Defendant’s motion to dismiss, ECF No. 11. The matter was submitted on the briefs

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without oral argument.

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In considering a motion to dismiss, the Court must accept all allegations of

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material fact in the complaint as true. See Erickson v. Pardus, 551 U.S. 89, 93-94 (2007). The

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Court must also construe the alleged facts in the light most favorable to the plaintiff. See Scheuer

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v. Rhodes, 416 U.S. 232, 236 (1974); see also Hosp. Bldg. Co. v. Rex Hosp. Trustees, 425 U.S.

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738, 740 (1976); Barnett v. Centoni, 31 F.3d 813, 816 (9th Cir. 1994) (per curiam). All

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ambiguities or doubts must also be resolved in the plaintiff's favor. See Jenkins v. McKeithen,

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395 U.S. 411, 421 (1969). However, legally conclusory statements, not supported by actual

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factual allegations, need not be accepted. See Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949-50 (2009).

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In addition, pro se pleadings are held to a less stringent standard than those drafted by lawyers.
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Case 2:20-cv-01731-KJM-DMC Document 21 Filed 09/09/21 Page 2 of 7
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See Haines v. Kerner, 404 U.S. 519, 520 (1972).
Federal Rule of Civil Procedure 8(a)(2) requires only “a short and plain statement

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of the claim showing that the pleader is entitled to relief” in order to “give the defendant fair

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notice of what the . . . claim is and the grounds upon which it rests.” Bell Atl. Corp v. Twombly,

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550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). However, in order

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to survive dismissal for failure to state a claim under Rule 12(b)(6), a complaint must contain

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more than “a formulaic recitation of the elements of a cause of action;” it must contain factual

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allegations sufficient “to raise a right to relief above the speculative level.” Id. at 555-56. The

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complaint must contain “enough facts to state a claim to relief that is plausible on its face.” Id. at

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570. “A claim has facial plausibility when the plaintiff pleads factual content that allows the

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court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”

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Iqbal, 129 S. Ct. at 1949. “The plausibility standard is not akin to a ‘probability requirement,’ but

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it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (quoting

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Twombly, 550 U.S. at 556). “Where a complaint pleads facts that are ‘merely consistent with’ a

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defendant’s liability, it ‘stops short of the line between possibility and plausibility for entitlement

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to relief.” Id. (quoting Twombly, 550 U.S. at 557).

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In deciding a Rule 12(b)(6) motion, the Court generally may not consider materials

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outside the complaint and pleadings. See Cooper v. Pickett, 137 F.3d 616, 622 (9th Cir. 1998);

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Branch v. Tunnell, 14 F.3d 449, 453 (9th Cir. 1994). The Court may, however, consider: (1)

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documents whose contents are alleged in or attached to the complaint and whose authenticity no

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party questions, see Branch, 14 F.3d at 454; (2) documents whose authenticity is not in question,

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and upon which the complaint necessarily relies, but which are not attached to the complaint, see

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Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001); and (3) documents and materials

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of which the court may take judicial notice, see Barron v. Reich, 13 F.3d 1370, 1377 (9th Cir.

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1994).

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Finally, leave to amend must be granted “[u]nless it is absolutely clear that no

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amendment can cure the defects.” Lucas v. Dep’t of Corr., 66 F.3d 245, 248 (9th Cir. 1995) (per

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curiam); see also Lopez v. Smith, 203 F.3d 1122, 1126 (9th Cir. 2000) (en banc).
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Case 2:20-cv-01731-KJM-DMC Document 21 Filed 09/09/21 Page 3 of 7
I. PLAINTIFF’S ALLEGATIONS

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This action proceeds on Plaintiff’s original complaint, which was removed to this

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Court from the Shasta County Superior Court. See ECF No. 1. Plaintiff names Safeco Insurance

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Company and Select Portfolio Servicing, Inc., as defendants. See id. at 9. Plaintiff has

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voluntarily dismissed Select Portfolio Servicing, Inc. See ECF No. 18.

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On the form complaint, Plaintiff states she is asserting claims for: (1) general

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negligence; (2) intentional tort; (3) breach of contract; (4) bad faith; and (5) and defamation. See

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id. at 11. For relief, Plaintiff seeks compensatory and punitive damages according to proof. See

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id.

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For her general negligence claim, Plaintiff alleges:

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Defendants, and each of them, failed to act in a timely manner to protect
and provide compensation to Plaintiff to be used for rehabilitation of
Plaintiff’s home following the CARR FIRE in July 2018. Defendants’
negligence actions have directly and indirectly affected Plaintiff’s ability
to move on with her life and other business affairs, which have damaged
her.

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Id. at 12.

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For her intentional tort claim, Plaintiff alleges:

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Defendants, SAFECO INSURANCE, a LIBERTY MUTUAL Company,
doing business as GENERAL INSURANCE COMPANY OF AMERICA;
and, SELECT PORTFOLIO SERVICING, Inc. . . . have led Plaintiff on,
promising to honor their contract with her and then deliberately refusing to
do so following the CARR FIRE. Defendants’ actions have been with
wanton disregard for Plaintiff’s welfare and well-being and for wanton
disregard for the care and maintenance of her home, which Defendants
contracted with Plaintiff to protect. Defendants’ actions have been
intentional and have caused Plaintiff physical injury to her health,
psychological, emotional and economic.

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Id. at 13.

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On the same attachment to her form complaint, entitled “CAUSE OF ACTION – Intentional

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Tort,” Plaintiff adds:

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BAD FAITH: By not honoring their agreement to protect and provide
monies to make reparations to Plaintiff’s home, Defendants, and each of
them, have acted in bad faith with the intent of causing Plaintiff harm,
both physically and financially.
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DEFAMATION: Plaintiff is informed and believes and thereon alleges
that Defendants hired persons to spy on her and/or conspired with
Plaintiff’s neighbors to gather and report any information about Plaintiff
with the intent of harming her reputation.

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Id. at 13.
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Finally, on an attachment to the form complaint entitled “Exemplary Damages

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Attachment,” Plaintiff alleges Defendants are guilty of malice, fraud, and oppression, for which

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she seeks punitive damages. Id. at 14. Plaintiff alleges the following additional facts:

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Plaintiff has made numerous attempts to work with Defendants, and each
of them, since the CARR Fire damaged her home at 2570 Harlan Drive,
Redding. Her initial insurance carrier, GENERAL INSURANCE
COMPANY OF AMERICA (a SAFECO Company and a LIBERTY
MUTUAL Company), refused to honor her insurance claim for damages
done; therefor, Plaintiff refused to continue to pay insurance premiums to
said Defendants. Thereafter, her mortgage carrier, SELECT PORTFOLIO
SERVICING, Inc, stepped in and added their own coverage to Plaintiff’s
home; however, they, too, refused to make reparations to Plaintiff’s home.
As a result, Plaintiff’s home is uninhabitable and unsaleable. Defendants’
actions, or lack thereof, have cause the value of Plaintiff’s home to
plummet.

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Id.
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II. DISCUSSION

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In its motion to dismiss, Defendant argues Plaintiff cannot sustain a claim on any

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of the legal theories indicated in the complaint – general negligence, intentional tort, breach of

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contract, bad faith, and defamation.

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A.

General Negligence
Defendant argues Plaintiff cannot sustain a stand-alone negligence claim against

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an insurer. See ECF No. 11-1, pgs. 12-13. The Court agrees. Under California law, any alleged

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negligent claims handling is subsumed in Plaintiff’s breach of contract and bad faith claims. See

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Sanchez v. Lindsey Morden Claims Servs., Inc., 72 Cal. App. 4th 249, 254 (1999); Everett

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Assocs., Inc. v. Transcontinental Ins. Co., 159 F. Supp. 2d 1196, 1201-04 (N.D. Cal. 2001);

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Doyle v. Safeco Ins. Co. of Am., 2008 WL 5070055, *6 (E.D. Cal. 2008); Redjai v. Hartford Cas.

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Ins. Co., 2013 WL 12129649, *4 (C.D. Cal. 2013). Plaintiff’s negligence claim should be
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Case 2:20-cv-01731-KJM-DMC Document 21 Filed 09/09/21 Page 5 of 7
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dismissed with prejudice.
B.

Intentional Tort
Defendant contends Plaintiff’s complaint fails to allege facts to support any claim

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based on an intentional tort. See ECF No. 11-1, pgs. 10-11. The Court agrees. According to

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Plaintiff:

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Defendants, SAFECO INSURANCE, a LIBERTY MUTUAL Company,
doing business as GENERAL INSURANCE COMPANY OF AMERICA;
and, SELECT PORTFOLIO SERVICING, Inc. . . . have led Plaintiff on,
promising to honor their contract with her and then deliberately refusing to
do so following the CARR FIRE. Defendants’ actions have been with
wanton disregard for Plaintiff’s welfare and well-being and for wanton
disregard for the care and maintenance of her home, which Defendants
contracted with Plaintiff to protect. Defendants’ actions have been
intentional and have caused Plaintiff physical injury to her health,
psychological, emotional and economic.

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ECF No. 1, pg. 13.

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These allegations fail to identify any intentional tort committed by Defendant. Generally,

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breaches of contractual promises are resolved under contract law, not tort law, except when the

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actions that constitute the breach violate social policy meriting the imposition of tort remedies.

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See Robinson Helicopter Co., Inc. v. Dana Corp., 24 Cal. App. 4th 979, 991-92 (2004). Here,

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Plaintiff has not alleged that Defendant’s conduct violated social policy.

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To the extent Plaintiff is alleging the intentional infliction of emotional distress,

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the Court also agrees with Defendant that any such claim is subsumed in her breach of contract

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and bad faith claims. See Pestmaster Services, Inc. v. Travelers Casualty and Surety Company of

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America, 2013 WL 12147583, *4 (C.D. Cal. 2013).
Plaintiff’s intentional tort claim should be dismissed with prejudice.

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C.

Breach of Contract
According to Defendant, Plaintiff cannot sustain a claim for breach of contract

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under California law because she has not proved the existence of a contract. See ECF No. 11-1,

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pgs. 8-10. The Court agrees. Specifically, while Plaintiff’s allegations indicate the existence of a

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contract for insurance coverage on Plaintiff’s home, Plaintiff has not proved the existence of the

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contract by attaching a copy to her complaint or alleged any facts whatsoever explaining how
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Defendant breached the terms of the contract or how such breach, if it occurred, caused Plaintiff

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to suffer damages. See Reichert v. Gen. Ins. Co. of Am., 68 Cal. 2d 822, 830 (1968). Because it

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is possible for Plaintiff to cure these defects, Plaintiff’s breach of contract claim should be

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dismissed with leave to amend.

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D.

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Bad Faith
Defendant argues that Plaintiff cannot sustain a claim for insurance bad faith

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without first establishing the existence of the insurance contract that has allegedly been breached.

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See ECF No. 11-1, pgs. 11-12. The Court agrees. Under California law, because the implied

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covenant of good faith and fair dealing derives from the contractual relationship between the

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insured and insurer, a plaintiff cannot proceed on a bad faith claim without first proving a breach

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of contract. See Waller v. Truck Ins. Exchange, Inc., 11 Cal. 4th 1, 36 (1995). As discussed

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above, Plaintiff has not proved the existence of an insurance contract with Defendant. Therefore,

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Plaintiff’s bad faith claim should be dismissed with leave to amend.

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E.

Defamation
Defendant contends Plaintiff’s allegations fail to state a claim for defamation. See

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ECF No. 11-1, pgs. 13-14. The Court agrees. Under California Law, defamation is the

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intentional publication of a statement of fact that is false, unprivileged, and has a natural tendency

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to injury or that causes special damage. See Gilbert v. Sykes, 147 Cal. App. 4th 13, 27 (2007).

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Here, Plaintiff alleges: “Plaintiff is informed and believes and thereon alleges that Defendants

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hired persons to spy on her and/or conspired with Plaintiff’s neighbors to gather and report any

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information about Plaintiff with the intent of harming her reputation.” ECF No. 1, pg. 13.

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Plaintiff has not alleged publication of statements of fact which are false. More to the point,

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Plaintiff does not identify what information that is false that Defendant allegedly gathered and

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reported. Because Plaintiff has failed to identify the allegedly defamatory statements, Plaintiff

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has also failed to allege that such statements are not privileged. Nor has Plaintiff alleged facts to

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show that any defamatory statements had a natural tendency to injury Plaintiff or actually caused

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special damages. Contrary to Defendant’s assertion, the Court does not find that it is impossible

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for Plaintiff to cure these defects. Plaintiff’s defamation claim should, therefore, be dismissed
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Case 2:20-cv-01731-KJM-DMC Document 21 Filed 09/09/21 Page 7 of 7
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with leave to amend.

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III. CONCLUSION

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Based on the foregoing, the undersigned recommends that:

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Defendant’s motion to dismiss, ECF No. 11, be granted;

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2.

Plaintiff’s negligence claim be dismissed with prejudice;

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3.

Plaintiff’s intentional tort claim be dismissed with prejudice; and

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4.

Plaintiff’s breach of contract, bad faith, and defamation claims be

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dismissed with leave to amend.

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These findings and recommendations are submitted to the United States District

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Judge assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(l). Within 14 days

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after being served with these findings and recommendations, any party may file written objections

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with the Court. Responses to objections shall be filed within 14 days after service of objections.

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Failure to file objections within the specified time may waive the right to appeal. See Martinez v.

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Ylst, 951 F.2d 1153 (9th Cir. 1991).

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Dated: September 9, 2021
____________________________________
DENNIS M. COTA
UNITED STATES MAGISTRATE JUDGE

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