Travelers Property Casualty Company of American v. Centex Homes et al

Filing 126

ORDER by Judge Samuel Conti granting in part and denying in part (94) Motion to Strike ; granting in part and denying in part (96) Motion to Dismiss; granting in part and denying in part (108) Motion to Amend/Correct ; in case 3:12-cv-00371-SC (sclc1, COURT STAFF) (Filed on 5/30/2013)

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IN THE UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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TRAVELERS PROPERTY CASUALTY
COMPANY OF AMERICA,

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Plaintiff,
Northern District of California

United States District Court

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v.
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CENTEX HOMES, NEWMEYER &
DILLION, RGL INC., RGL
FORENSICS, and DOES 1 through 10
inclusive,
Defendants.

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AND RELATED COUNTERCLAIMS.

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Case No. 12-0371-SC
Related Cases: 11-3638-SC,
13-0088-SC
ORDER RE: MOTIONS TO
DISMISS, STRIKE AND AMEND

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I.

INTRODUCTION

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Insurer Travelers Property Casualty Company of America

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("Travelers") brings this action against its insured Centex Homes

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("Centex") and Centex's counsel, Newmeyer & Dillion, LLP

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("Newmeyer") in connection with thirteen underlying construction

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defect actions Centex and Newmeyer tendered to Travelers for

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indemnity and defense, specifically the Adams, Adkins, Agles,

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Ahlberg, Akin, Allie, Balangue, Bradley, Briseno, Cooley, Garvey,

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Johnston, and Tapia actions.

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("3AC")).

ECF No. 76 (Third Amended Complaint

Travelers asserts claims for violation of the California

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Unfair Competition Law, breach of fiduciary duty, and

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reimbursement.

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against Travelers for breach of contract, breach of the implied

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covenant of good faith and fair dealing, and declaratory relief

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relating to a number of the construction defect actions involved in

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the 3AC, including the Acupan, Adkins, Ahlberg, Briseno, Cooley,

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Garvey, Johnston, and Tapia actions.1

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Now before the Court are Travelers' motions to dismiss and strike

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Centex's Counterclaim.

In response, Centex has asserted counterclaims

ECF No. 89 ("Countercl.").

ECF Nos. 94 ("MTD"), 96 ("MTS").

Also

United States District Court

For the Northern District of California

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before the Court is Travelers' motion to file a fourth amended

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complaint.

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below, these motions are GRANTED in part and DENIED in part.

ECF No. 108 ("4AC Mot.").2

For the reasons set forth

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II.

DISCUSSION

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A.

Travelers' Motions to Dismiss and Strike

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Travelers' motions to dismiss and strike are duplicative.

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two motions relate to the same issues, raise the same arguments,

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and essentially seek the same relief.

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of both motions is identical.

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motion to strike is predicated in part on the argument that

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Centex's counterclaim is redundant.

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strike when it should only be moving to dismiss and vice versa.

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The Court does its best to apply the appropriate standard to

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The

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For the most part, the text

Ironically, Travelers' Rule 12(f)

At times, Travelers moves to

Travelers and Centex also asserted claims and counterclaims in
connection with the Spicer action. On April 9, 2013, the parties
stipulated to dismiss their claims and counterclaims to the extent
they are predicated on the Spicer action. ECF No. 119 ("Apr. 9
Stip.").
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All three motions are fully briefed. ECF Nos. 101 ("Opp'n to
MTD/MTS"), 103 ("Reply ISO MTD/MTS"), 116 ("Opp'n to 4AC Mot."),
120 ("Reply ISO 4AC Mot.").

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Travelers' various arguments.

The Court urges Travelers to refrain

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from filing duplicative motions in the future, especially

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duplicative motions to strike, which are generally disfavored.

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i.

Legal standard

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A Rule 12(b)(6) motion to dismiss "tests the legal sufficiency
Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001).

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of a claim."

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"Dismissal can be based on the lack of a cognizable legal theory or

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the absence of sufficient facts alleged under a cognizable legal

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theory."

Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699

United States District Court

For the Northern District of California

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(9th Cir. 1988).

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a court should assume their veracity and then determine whether

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they plausibly give rise to an entitlement to relief."

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Iqbal, 556 U.S. 662, 664 (2009).

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must accept as true all of the allegations contained in a complaint

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is inapplicable to legal conclusions.

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elements of a cause of action, supported by mere conclusory

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statements, do not suffice."

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Twombly, 550 U.S. 544, 555 (2007)).

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complaint must be both "sufficiently detailed to give fair notice

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to the opposing party of the nature of the claim so that the party

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may effectively defend against it" and "sufficiently plausible"

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such that "it is not unfair to require the opposing party to be

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subjected to the expense of discovery."

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1191, 1204 (9th Cir. 2011).

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"When there are well-pleaded factual allegations,

Ashcroft v.

However, "the tenet that a court

Threadbare recitals of the

Id. at 663 (citing Bell Atl. Corp. v.
The allegations made in a

Starr v. Baca, 633 F.3d

Pursuant to Federal Rule of Civil Procedure 12(f), the Court

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may strike from a pleading "any redundant, immaterial, impertinent,

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or scandalous matter."

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avoid spending time and money litigating spurious issues."

"The purposes of a Rule 12(f) motion is to

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Barnes

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v. AT&T Pension Ben. Plan-Nonbargained Program, 718 F. Supp. 2d

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1167, 1170 (N.D. Cal. 2010).

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the means to excise improper materials from pleadings, such motions

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are generally disfavored because the motions may be used as

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delaying tactics and because of the strong policy favoring

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resolution on the merits."
ii.

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"While a Rule 12(f) motion provides

Id.

The Adkins and Garvey actions

Travelers moves to dismiss Centex's Counterclaim to the extent

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United States District Court

that is based on the Adkins and Garvey actions on the ground that

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For the Northern District of California

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Centex's claims are duplicative of claims raised in earlier-filed

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actions between the parties, specifically Travelers v. Centex, Case

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No. 11-3638-SC (N.D. Cal.) ("Travelers v. Centex II"), and

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Travelers v. Centex, 12-00496-VAP (C.D. Cal.) ("Travelers v. Centex

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IV").3,

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undersigned and has been related to the instant action, and

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Travelers v. Centex IV was pending before Judge Phillips in the

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Central District of California.

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stipulated to the dismissal with prejudice of their claims and

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counterclaims in Travelers v. Centex IV, and Judge Phillips

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approved the stipulation the following day.

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Travelers v. Centex II is currently pending before the

On April 30, 2013, the parties

Centex acknowledges that its counterclaims are duplicative

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with respect to the Adkins and Garvey actions.

MTD/MTS Opp'n at 8.

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However, Centex argues that Travelers' Adkins- and Garvey-related

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Travelers also argues that Centex's allegations relating to the
Spicer action are duplicative of Travelers v. Centex II and
Travelers v. Centex IV. In light of the parties' April 9
Stipulation, this issue is now moot.
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Travelers has filed at least seven separate actions against
Centex in California courts, all of them relating to disputes over
coverage for various underlying construction defect actions.

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claims are also duplicative.

Id.

As such, Centex reasons that the

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fairest solution would be either to dismiss the duplicative claims

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of both parties or to stay both parties' duplicative claims.

Id.

As Travelers points out, Centex raised an almost identical

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argument when it moved to dismiss Travelers' claims on October 26,

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2012.

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assigned to this case, apparently rejected the argument, as she

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denied Centex's motion and found that "disputed issues of fact

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preclude[d] dismissal."

See ECF No. 79 at 8-9.

Judge Hamilton, who was previously

ECF No. 87.

The law of the case doctrine

United States District Court

For the Northern District of California

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precludes the Court from reopening previously decided issues.

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While Judge Hamilton's order did not directly address Centex's

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arguments regarding duplication, "[t]he law of the case applies to

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issues decided explicitly or by necessary implication in [a]

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court's previous disposition."

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55 F.3d 1388, 1393 (9th Cir. 1995) (quotations omitted).

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of the case turns on whether a court previously decide[d] upon a

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rule of law . . . not on whether, or how well, it explained the

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decision."

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800, 817 (1988) (quotations omitted).

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to dismiss, Judge Hamilton necessarily reached a decision on

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Centex's argument regarding duplicative suits.

Leslie Salt Co. v. United States,
"The law

Christianson v. Colt Indus. Operating Corp., 486 U.S.
In denying Centex's motion

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In any event, contrary to Centex's argument, dismissing

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Centex's counterclaims regarding the Adkins and Garvey actions

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while retaining Travelers' Adkins- and Garvey-related claims will

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not lead to inequitable results.

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Adkins and Garvey related counterclaims in Travelers v. Centex II,

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which is currently pending before the undersigned.

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Centex may only pursue these counterclaims in one action -- as

Centex may still pursue identical

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The fact that

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opposed to two -- will not prejudice them in any way.

Even if all

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of Travelers' Adkins and Garvey related claims do arise from the

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same transaction or occurrence, Travelers is asserting different

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causes of action in its actions against Centex.

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only two remaining active cases concerning the Adkins and Garvey

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actions are both pending before the undersigned, the chance of

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inconsistent rulings is minimal.

Further, since the

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For these reasons, the Court GRANTS Travelers' motion to

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dismiss with respect to the aspects of Centex's Counterclaim which

United States District Court

For the Northern District of California

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relate to the Adkins and Garvey actions.
iii. The Acupan action
Travelers next moves to dismiss and strike all references to

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the Acupan action from Centex's Counterclaim.

MTD at 9, MTS at 10.

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Specifically, Travelers targets a portion of paragraph 115a of the

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Counterclaim, which states that Travelers waited 446 days to

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respond to Centex's tender of the Acupan action.

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contends that this reference is irrelevant, since Centex requests

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no relief in connection with the Acupan action.

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responds that its allegations concerning the Acupan action support

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its claim that Travelers has a pattern and practice of failing to

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immediately defend its insured.

Travelers

MTS at 10.

Centex

Opp'n to MTD/MTS at 17 n.7.

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As Centex's reference to the Acupan action does not undermine

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the plausibility of its Counterclaim, Travelers' motion to dismiss

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this reference lacks merit.

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conclusion with respect to Travelers' motion to strike.

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conduct with respect to the Acupan action is immaterial to the

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instant dispute.

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pattern or practice of failing to timely respond to the tender of

The Court reaches a different
Travelers'

If Centex wishes to show that Travelers has a

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construction defect actions, then Centex may attempt to draw from

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the numerous other construction defect actions that are actually at

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issue in this case.

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reference to the Acupan action.
iv.

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Accordingly, the Court strikes Centex's

The Ahlberg, Briseno, Cooley, Johnston, and Tapia
actions

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Travelers also moves to dismiss Centex's Counterclaim to the

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extent that it is predicated on the Ahlberg, Briseno, Cooley,

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Johnston, and Tapia actions.

After being sued by homeowners in

United States District Court

For the Northern District of California

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these underlying actions, Centex filed cross-complaints in each

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action asserting claims for breach of written, oral, and implied

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contract; equitable indemnity; contribution and repayment; and

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declaratory relief.

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state court actions, Centex seeks a declaration regarding the

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appropriate allocation of Centex's defense fees, as well as its

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right to independent counsel.

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complaints in state court, Centex filed the Counterclaim at issue

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here.

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dismissed because it is duplicative of the state court cross-

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complaints.

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ECF No. 97 ("MTD/MTS RJN") Exs. F-J.

Id.

In these

After filing these cross-

Travelers contends that Centex's Counterclaim should be

Centex does not dispute that its Counterclaim is redundant

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with respect to the Ahlberg, Briseno, Cooley, Johnston, and Tapia

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actions.

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aspects of the Counterclaim should not be dismissed because they

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are compulsory.

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that a counterclaim is compulsory if it (1) "arises out of the

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transaction or occurrence that is the subject matter of the

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opposing party's claim," and (2) "does not require adding another

See Opp'n to MTD/MTS at 8.

However, it argues that these

Federal Rule of Civil Procedure 13(a) provides

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party over whom the court cannot acquire jurisdiction."

These

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criteria appear to be met here.

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that a counterclaim is not compulsory if "when the action was

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commenced, the claim was the subject of another pending action."

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Fed. R. Civ. P. 13(a)(2)(A).

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open question whether this exception applies in this circumstance,"

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since its state court cross-complaints are limited to declaratory

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relief while its Counterclaim in this action seeks damages for

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breach of contract and bad faith.

However, Rule 13 also provides

Centex argues that "it remains an

Opp'n to MTD/MTS at 8.

United States District Court

For the Northern District of California

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Travelers does not address this argument other than to suggest that

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Centex may amend its cross-complaints in the underlying actions to

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add additional claims.

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Reply ISO MTD/MTS at 6.

Centex also argues that the Court should either dismiss both

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parties' duplicative claims regarding the Ahlberg, Briseno, Cooley,

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Johnston, and Tapia actions or stay this action, pending resolution

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of the earlier filed actions.

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contends that, under Adams v. California Department of Health

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Services, 487 F.3d 684, 688 (9th Cir. 2007), Travelers may not

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maintain separate actions involving the same subject matter at the

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same time in the same court.

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Briseno, Cooley, Johnston, and Tapia actions are pending before a

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state court, Adams is clearly inapposite here.

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standard for dealing with parallel state and federal actions was

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enunciated by the Supreme Court in Colorado River Water

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Conservation District v. United States, 424 U.S. 800, 813 (1976).

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Under Colorado River, courts consider eight factors when

Opp'n to MTD/MTS at 8.

Centex

However, since the Ahlberg,

Id.

The appropriate

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determining whether to dismiss or stay a parallel federal

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proceeding:

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(1) which court first assumed jurisdiction over any
property at stake; (2) the inconvenience of the
federal forum; (3) the desire to avoid piecemeal
litigation; (4) the order in which the forums obtained
jurisdiction; (5) whether federal law or state law
provides the rule of decision on the merits; (6)
whether the state court proceedings can adequately
protect the rights of the federal litigants; (7) the
desire to avoid forum shopping; and (8) whether the
state court proceedings will resolve all issues before
the federal court.

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R.R. St. & Co. Inc. v. Transp. Ins. Co., 656 F.3d 966, 978-79 (9th

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Cir. 2011).

Determination of whether to stay or dismiss a parallel

United States District Court

For the Northern District of California

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federal action does not rest on a mechanical checklist, but on

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careful balancing of the important factors relevant to the decision

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as they apply in a given case, which may vary from case to case.

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Moses H. Cone Mem'l Hosp. v. Mercury Const. Corp., 460 U.S. 1, 16

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(1983).

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The Court finds that the Colorado River factors favor staying

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Centex's Counterclaim as it relates to the Ahlberg, Briseno,

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Cooley, Johnston, and Tapia actions while allowing Travelers'

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claims to proceed as to those actions.

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factors in this case are the desire to avoid piecemeal litigation,

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and the order in which the forums obtained jurisdiction.

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The two most important

Centex's Counterclaim creates more than the mere possibility

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of piecemeal litigation.

The Counterclaim raises issues identical

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to those currently pending before the state court.

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may be seeking additional remedies in federal court, both this

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court and the state courts presiding over the Ahlberg, Briseno,

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Cooley, Johnston, and Tapia actions will need to address the same

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legal and factual issues.

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present a much more limited possibility of piecemeal litigation.

While Centex

On the other hand, Travelers' claims

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Most of the issues in the Ahlberg, Briseno, Cooley, Johnston, and

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Tapia cross-complaints -- whether Travelers owes Centex a duty to

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defend and indemnify and whether it actually breached those duties

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-- are irrelevant to the instant action.

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court's adjudication of these cross-complaints is unlikely to

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result in inconsistent rulings.

Accordingly, the state

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Further, Centex's cross-complaints in the underlying state

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actions were filed long before Centex filed its counterclaim in

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this action on January 23, 2013.

The Ahlberg, Briseno, Cooley,

United States District Court

For the Northern District of California

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Johnston, and Tapia cross-complaints were filed on June 4, 2012,

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March 12, 2012, September 10, 2012, and May 15, 2012, respectively.

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RJN Exs. G-J.

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January 24, 2012, well before Centex filed the cross-complaints in

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the underlying actions.

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In contrast, Travelers filed the instant action on

See ECF No. 1.

The Court finds that the most efficient and equitable remedy

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is to stay Centex's Counterclaim to the extent that it is

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predicated on the Ahlberg, Briseno, Cooley, Johnston, and Tapia

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actions pending the resolution of Centex's cross-complaints in

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those actions.

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proceed.
v.

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Travelers' claims with respect to these actions may

The Fair Claims Settlement Practices Act

In its Counterclaim, Centex alleges that Travelers violated

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the California Fair Claims Settlement Practices Act, Cal. Code

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Regs. tit. 10, § 2695 et seq., by failing to respond to Centex's

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tenders within forty calendar days.

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strike these claims on a number of grounds.

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argues that violation of the Act cannot support a private right of

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action.

MTD at 16.

Travelers moves to dismiss and
First, Travelers

Centex concedes this point and does not oppose

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the Court striking paragraphs of the Counterclaim that indicate

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that Centex is asserting an independent cause of action for

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violation of the Act.

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Court strikes paragraphs 123(b), 125(b), 131(b), 133(b), 135(b),

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137(b), 139(b), 141(b), 143(b), 145(b), 149(b), 151(b), 155(b),

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157(b), 161(b), 163(b), and 165(b).

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Opp'n to MTD/MTS at 16.

Accordingly, the

Travelers argues that the remaining references should also be

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struck because they do not support Centex's claims for bad faith or

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breach.

The provisions of the Act cited by Centex provide: "Upon

United States District Court

For the Northern District of California

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receiving proof of claim, every insurer . . . shall immediately,

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but in no event more than forty (40) calendar days later, accept or

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deny the claim, in whole or in part."

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2695.7(b).

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tender of the underlying construction defect actions constituted a

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proof of claim.

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of legal action," not a "proof of claim," and thus the forty-day

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requirement is inapplicable here.

Cal. Code Regs. tit. 10, §

Centex contends that these provisions apply because its

Travelers argues that Centex submitted a "notice

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The provisions of the Act define "proof of claim" as "any

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evidence or documentation in the possession of the insurer, whether

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as a result of its having been submitted by the claimant or

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obtained by the insurer in the course of its investigation, that

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provides any evidence of the claim and that reasonably supports the

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magnitude or the amount of the claimed loss."

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The regulations define "notice of legal action" as "notice of an

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action commenced against the insurer with respect to a claim, or

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notice of action against the insured received by the insurer, or

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notice of action against the principal under a bond, and includes

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any arbitration proceeding."

Id. § 2695.2(o).

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Id. § 2695.2(s).

The regulations

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require insurers to respond to communications regarding claims

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within certain time periods, but they relieve insurers from those

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requirements where a notice of legal action is involved.

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2695.5(b), (e).
Centex's reading of the statute is not convincing.

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Id. §

Under its

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interpretation, the tender of an action constitutes evidence that

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"reasonably supports the magnitude or amount of the claimed loss."

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However, at the time of the tender, the amount of the claimed loss

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is generally unknown.

The insured cannot possibly predict whether

United States District Court

For the Northern District of California

10

the plaintiff in the underlying action will prevail, and, in any

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event, the insured's position is generally that the plaintiff's

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claims lack merit.
That being said, Travelers' motion to strike is far too broad.

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Travelers asks the Court to strike a number of allegations that

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concern the timeliness of Travelers' response to Centex's tenders

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but do not expressly reference the Fair Claims Settlement Practices

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Act.

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Travelers owed Centex an "immediate" duty to defend all claims that

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were potentially covered under Travelers' policies.

Montrose Chem.

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Corp. v. Sup. Ct., 6 Cal. 4th 287, 295 (Cal. 1993).

At this stage

21

and in this posture, it would be inappropriate to determine whether

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Travelers breached its duty to provide an immediate defense and to

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determine whether this alleged breach supports a finding of bad

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faith.

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potentially divest Centex of the right to conduct discovery on this

26

issue.

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28

Regardless of whether the provisions of the Act apply,

Striking the other paragraphs targeted by Travelers could

Accordingly, the Court dismisses Centex's Counterclaim to the
extent that it asserts an independent cause of action for violation

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of the Fair Claims Settlement Practices Act.

2

dismisses Centex's counterclaim to the extent that it asserts that

3

a violation of the Act constitutes evidence of bad faith or

4

resulted in Travelers' forfeiture of its right to control Centex's

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defense.

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respect to paragraphs 123(b), 125(b), 131(b), 133(b), 135(b),

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137(b), 139(b), 141(b), 143(b), 145(b), 149(b), 151(b), 155(b),

8

157(b), 161(b), 163(b), and 165(b).

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B.

The Court also

Travelers motion to strike is granted, but only with

Motion for Leave to Amend

United States District Court

For the Northern District of California

10

Travelers moves to file a fourth amended counterclaim.

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amended complaint would (1) name RGL Forensics, Inc. ("RGL") as a

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defendant as to all existing causes of action, and (2) add fourth

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and fifth causes of action fraud and accounting against all

14

defendants, including RGL.

15

Travelers asserts that Centex and Newmeyer misrepresented

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Newmeyer's hourly rates.

17

allegedly reached a secret deal whereby Newmeyer would initially

18

bill Centex at $225 per hour for attorney time, but then charge a

19

higher rate once Centex's insurers, including Travelers, agreed to

20

contribute to Centex's legal defense in the underlying actions.

21

Travelers allegedly learned of this agreement at a deposition held

22

on May 11, 2011.

23

MTA at 1.

The

As part of its fraud claims,

Specifically, Centex and Newmeyer

The Court's decision to permit the amendment of a pleading is

24

governed by Federal Rule of Civil Procedure 15.

25

allows a party to amend its pleading as a matter of course in a

26

number of circumstances, none of which apply here.

27

cases, a party may amend its pleading with the opposing party's

28

written consent or the court's leave."

13

Rule 15(a)(1)

"In all other

Fed. R. Civ. P. 15(a)(2).

1

Leave to amend should be freely given when justice so requires,

2

id., and the general rule is that amendment is permitted unless the

3

opposing party can show undue delay, bad faith, undue prejudice, or

4

futility of amendment, SAES Getters S.p.A. v. Aeronex, Inc., 219 F.

5

Supp. 2d 1081, 1086 (S.D. Cal. 2002).

6

Centex opposes the proposed amendment on a number of grounds.

7

First, Centex argues that Travelers seeks to include allegations

8

relating to the Kent action that the Court already struck from an

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earlier pleading.

As Centex points out, Travelers does not seek

United States District Court

For the Northern District of California

10

any relief based upon Centex's tender of the Kent action.

11

Centex argues that Travelers could not have reasonably relied on

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its alleged misrepresentations concerning Newmeyer's hourly rates

13

since Travelers continued to pay those rates after it learned of

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the scheme on May 11, 2011.

15

proposed fourth amended complaint includes allegations regarding

16

the Spicer action, even though the parties have since stipulated to

17

the dismissal of all claims predicated on that action.

18

Second,

Third, Centex contends that Travelers

The Court agrees that many of the allegations in the proposed

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4AC constitute futile amendments.

20

allegations related to the Kent action from Travelers' first

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amended complaint.

22

Order issued in a related case, the undersigned also struck

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Travelers' Kent allegations.

24

no reason to reach a different result here.

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Travelers' 4AC shall not contain allegations related to the Kent

26

action.

27
28

ECF No. 53.

Judge Hamilton previously struck

Further, in a concurrently filed

See Case No. 13-0088.

The Court sees

Accordingly,

Certain aspects of Travelers' fraud claims also lack merit.
As explained in a concurrently filed Order in Case No. 13-0088,

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1

Centex cannot possibly state a clam for fraud based on allegations

2

that it was overbilled for attorney time after May 11, 2011.

3

Travelers argues that such challenges to the pleading should be

4

deferred until after the pleading has been amended.

5

at 4.

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here, Travelers is essentially asserting the same fraud claims

7

against the same Defendants in two different actions.

8

fraud claims fail in the other action, they fail here.

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Reply ISO 4AC

In most cases, the Court would be inclined to agree.

But

Since those

With respect to Centex's argument that the parties have

United States District Court

For the Northern District of California

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stipulated to the dismissal of all claims related to the Spicer

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action, Travelers argues that the Court is required to accept its

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allegations as true and that Centex's claims regarding an alleged

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settlement must be ignored.

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frivolous.

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factual allegations.

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parties have settled all claims related to the Spicer action.

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Court takes judicial notice of the fact that it approved this

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settlement on April 10, 2013.

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intent on litigating issues that have already been resolved.

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The Court also notes that many of Travelers' new claims

This argument borders on the

Centex is not challenging the validity of Travelers'
Rather, Centex is pointing out that the
The

It remains unclear why Travelers is

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against RGL are contrary to the court's concurrently filed decision

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in Case Number 13-0088.

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prejudice Travelers' claims for breach of fiduciary duty and

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reimbursement as to RGL.

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instant action.

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In that decision, the Court dismissed with

The same reasoning would apply in the

Accordingly, the Court GRANTS in part and DENIES in part

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Travelers motion for leave to amend.

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in Section V infra, Travelers shall file an amended complaint

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As set forth in more detail

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consistent with the guidance set forth in this order.

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V.

CONCLUSION
For the foregoing reasons, the Court GRANTS in part and DENIES

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in part Travelers motions to dismiss and strike Centex's

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Counterclaim.

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•

predicated on the Adkins and Garvey actions.

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•

United States District Court

For the Northern District of California

The Court strikes all references to the Acupan action from
Centex's Counterclaim.

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Centex's Counterclaim is dismissed to the extent that it is

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The Court declines to strike or dismiss Centex's counterclaim

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to the extent it is predicated on the Ahlberg, Briesno,

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Cooley, Johnston, and Tapia actions.

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stay its adjudication of Centex's Counterclaim as to the

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Ahlberg, Briesno, Cooley, Johnston, and Tapia actions pending

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the resolution of Centex's cross-complaints in those actions.

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•

However, the Court does

The Court DISMISSES Centex's Counterclaim to the extent that

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it asserts an independent cause of action for violation of the

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Fair Claims Settlement Practices Act and to the extent that it

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asserts that a violation of the Act constitutes evidence of

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bad faith or resulted in Travelers' forfeiture of its right to

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control Centex's defense.

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•

The Court also strikes paragraphs 123(b), 125(b), 131(b),

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133(b), 135(b), 137(b), 139(b), 141(b), 143(b), 145(b),

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149(b), 151(b), 155(b), 157(b), 161(b), 163(b), and 165(b) of

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Centex's Counterclaim.

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Travelers' motion for leave to file a fourth amended complaint is

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GRANTED in part and DENIED in part.

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Travelers shall file an

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amended complaint within thirty (30) days of the signature date of

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this Order.

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guidance set forth in this Order and the concurrently filed order

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in Case Number 13-0088-SC.

The amended complaint shall be consistent with the

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IT IS SO ORDERED.

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Dated: May 30, 2013
UNITED STATES DISTRICT JUDGE

United States District Court

For the Northern District of California

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