Moss v. Infinity Insurance Company, et al
Filing
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ORDER REVIEWING THIRD AMENDED COMPLAINT AND ORDERING SERVICE BY THE MARSHALS. Signed by Magistrate Judge Jacqueline Scott Corley on 12/7/2015. (ahm, COURT STAFF) (Filed on 12/7/2015)
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UNITED STATES DISTRICT COURT
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NORTHERN DISTRICT OF CALIFORNIA
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ARRYANNE MOSS,
Plaintiff,
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United States District Court
Northern District of California
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Case No. 15-cv-03456-JSC
v.
INFINITY INSURANCE COMPANY, et al.,
Defendants.
ORDER REVIEWING THIRD
AMENDED COMPLAINT AND
ORDERING SERVICE BY THE
MARSHALS
Re: Dkt. No. 15
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This matter involves insurance claims arising from an automobile collision. Plaintiff
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Arryanne Moss (“Plaintiff”), proceeding in forma pauperis (“IFP”), filed this action against
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Defendants Infinity Insurance Company (“Infinity”), AWS Insurance Company (“AWS”), Lithia
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Chrysler, Jeep, Dodge of Santa Rosa (“Lithia”), and a number of Doe Defendants (collectively,
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“Defendants”). The Court previously granted Plaintiff’s application to proceed IFP, but, upon the
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review required by 28 U.S.C. § 1915(e)(2), dismissed Plaintiff’s first two complaints with leave to
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amend, finding that they failed to establish a basis for subject matter jurisdiction. See Moss v.
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Infinity Ins. Co., No. 15-cv-03456-JSC, 2015 WL 6095254, at *1 (N.D. Cal. Oct. 16, 2015)
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(“Moss II”); Moss v. Infinity Ins. Co., No. 15-cv-03456-JSC, 2015 WL 5360294, at *1 (N.D. Cal.
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Sept. 11, 2015) (“Moss I”). Then, in its Order reviewing the Second Amended Complaint
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(“SAC”), the Court concluded that Plaintiff had cured the jurisdictional defects identified in her
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earlier pleadings, and stated a claim as to certain causes of action, but not the breach of contract
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causes of action against Infinity and AWS or her breach of the implied covenant of good faith and
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fair dealing causes of action against all Defendants. Moss v. Infinity Ins. Co., No. 15-cv-03456-
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JSC, 2015 WL 7351395, at *6 (N.D. Cal. Nov. 20, 2015) (“Moss III”). Plaintiff has since filed a
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Third Amended Complaint (“TAC”). (Dkt. No. 15.) For the reasons discussed below, the TAC
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passes Section 1915 review and must proceed to service by the Marshals.
DISCUSSION
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The factual background of this matter was addressed in the Court’s Orders dismissing the
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earlier complaints. Moss II, 2015 WL 6095254, at *1-2; Moss I, 2015 WL 5360294, at *1-2; see
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also Moss III, 2015 WL 7351395, at *1 (incorporating by reference the facts described in the
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earlier Orders). Aside from slight additions, described below, the TAC does not allege new facts
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that alter the substance of the claims. The Court will not reiterate the factual allegations here and
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instead incorporates the factual background of the earlier Orders in full.
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I.
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Breach of Contract
The elements of a breach of contract action under California law are: (1) the existence of a
United States District Court
Northern District of California
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contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4)
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damages to plaintiff as a result of the breach. Buschman v. Anesthesia Bus. Consultants, LLC, 42
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F. Supp. 3d 1244, 1250 (N.D. Cal. 2014) (citing CDF Firefighters v. Maldonado, 158 Cal. App.
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4th 1226, 1239 (2008)).
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A.
Infinity
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In reviewing the SAC, the Court concluded that Plaintiff had alleged the first, second, and
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fourth elements of a contract claim by alleging that she and Infinity entered into an automobile
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liability insurance contract, that she made full payments on the policy, and suffered damages equal
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to the cost of her Jeep that she was unable to recover. Moss, 2015 WL 7351395, at *3. But the
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Court concluded that the SAC had failed to adequately allege that Infinity breached the contract
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and instead appeared to allege a valid contractual basis for the denial: that the policy excluded
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from coverage loss caused to the insured automobile when driven by a person who resides in the
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policy holder’s household but who is not listed or endorsed on the policy prior to use. Id.
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Now, in the TAC, Plaintiff alleges that during the initial purchase of the car, when Plaintiff
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signed up for insurance, Toth informed her that she did not need to list her minor children on the
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policy because they were minors. (Dkt. No. 15 ¶ 20.) Thus, she alleges, the policy exclusion that
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Infinity cited as a basis for withholding coverage does not actually apply. (Id. ¶ 28.) Whether this
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explanation is legally sufficient is an issue to be decided by the Court with the benefit of briefing
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from all parties; accordingly, the allegations are sufficient to pass muster under Section 1915 for
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the claim to proceed to service without prejudice to Defendants moving to dismiss for failure to
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state a claim.
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B.
AWS
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The Court concluded that the breach of contract claim against AWS suffered from the
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same defect: failure to plausibly plead the element of breach insofar as the allegations support the
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inference that AWS validly denied coverage pursuant to a written policy exclusion. Moss, 2015
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WL 7351395, at *4. The claim against AWS has been adequately amended for the purposes of
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Section 1915 review for the same reason as the claim against Infinity: Toth informed Plaintiff that
there was no need to list her minor children on the policy, therefore the policy exclusion did not
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United States District Court
Northern District of California
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apply, so Infinity should have covered the loss and AWS should have covered any gap between
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what Infinity paid and the value of the car. This claim may now proceed to service without
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prejudice to Defendants moving to dismiss for failure to state a claim.
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II.
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Breach of the Implied Covenant of Good Faith and Fair Dealing
The Court concluded that Plaintiff had not pled a bad faith claim against Infinity or AWS
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because the SAC did not plausibly allege that either Infinity or AWS actually owed Plaintiff
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benefits under the contract and instead the allegations alleged that the terms of her written contract
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excluded from coverage the particular situation for which Plaintiff sought benefits. Moss, 2015
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WL 7351395, at *5. Now, for the same reasons described above, because in the TAC Plaintiff has
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alleged that the written exclusion on which Infinity and AWS relied does not apply to the scenario
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for which Plaintiff sought coverage, her bad faith claim against Infinity and AWS may proceed to
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service, but Defendants may move to dismiss this cause of action for failure to state a claim.
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The Court had also concluded that Plaintiff had not pled a plausible bad faith claim against
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Lithia and Toth, which was an identical claim to the ones against Infinity and AWS. The Court
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noted that the allegations and the written contract at issue, on which the bad faith claim against
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Lithia and Toth was based, did not contain any terms requiring Lithia or Toth to investigate,
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determine, or provide insurance benefits in the event of a collision. Moss, 2015 WL 7351395, at
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*5. Nor did the SAC contain any facts that demonstrated how Lithia or Toth frustrated the terms
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of that written agreement. Id.
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Now, in the TAC, Plaintiff has reframed the bad faith claim against Lithia and Toth
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slightly: instead of basing it on the same written insurance contract, Plaintiff contends that the bad
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faith claim against Lithia and Toth arises out of their oral agreement to assist Plaintiff in securing
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the proceeds of the insurance policies. (Dkt. No. 15 ¶ 75.) The alleged bad faith breach, however,
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is still identical to those alleged against Infinity and AWS. Specifically, Plaintiff alleges that
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Lithia and Toth breached the implied covenant by, among other things, failing and refusing to
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adequately investigate before denying Plaintiff’s benefits, refusing to reasonably interpret the
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provisions of her policy, failing to provide a reasonable basis for denying her claim, withholding
payments knowing her claim was valid, misrepresenting the policy provisions. (Id. ¶ 76.) But the
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United States District Court
Northern District of California
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claim against Lithia and Toth still fails because the implied covenant “cannot be extended to
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create obligations not contemplated in the contract.” Racine & Laramie, Ltd. v. Cal. Dep’t of
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Parks & Recreation, 11 Cal. App. 4th 1026, 1031-32 (1992). The TAC does not allege that Lithia
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and Toth actually owed Plaintiff the benefits, so it is not plausible that Lithia or Toth could act in
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bad faith to actually withhold the payments or to decline to provide a basis for the denial, since the
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TAC does not allege that the denial was not theirs to give, to give just two examples.
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Accordingly, the TAC does not plausibly allege that Lithia or Toth breached the implied covenant
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associated with their oral agreement to assist Plaintiff in obtaining benefits. This cause of action
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therefore may not proceed to service.
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CONCLUSION
For the reasons explained above and in the Court’s Order reviewing the SAC, the TAC
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appears to state a claim upon which relief can be granted as to most of the causes of action, and
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therefore passes Section 1915 review. The seventh cause of action, which alleges breach of the
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implied covenant of good faith and fair dealing against Lithia and Toth, is dismissed without leave
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to amend. The Clerk of Court shall issue the summons. Further, the U.S. Marshal for the
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Northern District of California shall serve, without prepayment of fees, a copy of the TAC, any
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amendments or attachments, and this Order upon Defendants. The Court’s decision to allow the
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TAC to proceed to service is without prejudice to Defendants moving to dismiss for failure to state
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a claim.
IT IS SO ORDERED.
Dated: December 7, 2015
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________________________
JACQUELINE SCOTT CORLEY
United States Magistrate Judge
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United States District Court
Northern District of California
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