Johnson v. Nationwide Insurance Company

Filing 45

ORDER GRANTING 18 19 Amended Motion to Dismiss; DENYING as MOOT 37 Motion to Amend/Correct ; Plaintiff may file a Third Amended Complaint within 14 days of the date of this order. Signed by Magistrate Judge Howard R. Lloyd on 10/31/2011. (hrllc1, COURT STAFF) (Filed on 10/31/2011)

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** E-filed October 31, 2011 **

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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For the Northern District of California

NOT FOR CITATION

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United States District Court

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SAN JOSE DIVISION

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DWIGHT JOHNSON,
Plaintiffs,

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v.
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NATIONWIDE MUTUAL INSURANCE
CO.,

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Defendants.
____________________________________/

No. C11-02913 HRL
ORDER (1) GRANTING
DEFENDANT’S MOTION TO
DISMISS WITH LEAVE TO AMEND
AND (2) DENYING AS MOOT
PLAINTIFF’S MOTION FOR LEAVE
TO AMEND
[Re: Docket No. 18, 19, 37]

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Plaintiff Dwight Johnson has worked as an independent contractor for Nationwide Mutual

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Insurance Co. (“Nationwide”) since 2006 as manager of its San Jose Urban Office. The relationship

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between the parties broke down in 2009, due to a disagreement about Nationwide’s obligations to

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Johnson. Johnson subsequently sued Nationwide in this court on the basis of diversity jurisdiction,

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alleging nine claims: three counts of breach of contract; two counts of fraud; two counts of breach of

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the covenant of good faith and fair dealing; one count for violations of the California Unfair

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Competition Act, Cal. Bus. & Prof. Code § 17200, et seq.; and one count for declaratory relief.

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Johnson voluntarily amended his complaint twice within a month of filing this action. Nationwide

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now moves to dismiss the Second Amended Complaint for failure to state a claim under Fed. R.

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Civ. P. 12(b)(6). Upon consideration of the motion papers and the arguments made at the hearing,

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the court GRANTS defendant’s motion.

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LEGAL STANDARD

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On motion, a court may dismiss a complaint for failure to state a claim. Fed. R. Civ. P.

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12(b)(6). The federal rules require that a complaint include a “short and plain statement” showing

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the plaintiff is entitled to relief. Fed. R. Civ. P. 8(a)(2). The statement must “raise a right to relief

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above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). However, only

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plausible claims for relief will survive a motion to dismiss. Ashcroft v. Iqbal, 556 U.S. 662, 129

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S.Ct. 1937, 1950, 173 L.Ed.2d 868 (2009). A claim is plausible if its factual content “allows the

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

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1949. A plaintiff does not have to provide detailed facts, but the pleading must include “more than

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an unadorned, the-defendant-unlawfully-harmed-me accusation.” Id. at 1950.

For the Northern District of California

United States District Court

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DISCUSSION

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Defendant Nationwide’s primary argument is that all of Johnson’s claims are time-barred by

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a release clause in the contract amendment, executed in 2009. It further asserts that even if the

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release clause does not effect a waiver of Johnson’s claims, all of his claims suffer from defects that

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cannot withstand a motion to dismiss. Johnson contends that his execution of the amended contract

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was induced by fraud that should render the amended contract and its release clause unenforceable.

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Further, he argues that his proffered Third Amended Complaint (“TAC”), filed as an exhibit to his

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opposition to defendant’s motion to dismiss, cures any inadequacies in his Second Amended

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Complaint.

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The court’s review of plaintiff’s Second Amended Complaint supports Nationwide’s

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assertions. In the Second Amended Complaint, plaintiff’s claims, as alleged, are sketchy to the point

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of obscurity, and fail on all counts to adequately state claims upon which relief can be granted. For

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instance, Johnson’s breach of contract claims assert that the parties had oral and implied contracts

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that required Nationwide to abide by the terms of an outdated Consent Decree and to pay certain of

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Johnson’s business expenses that were not included in the written contracts. Yet, he does not allege

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any conduct by Nationwide representatives that would have created such contracts. Similarly, his

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claims for breach of implied covenants fail to allege the creation of any contracts that would give

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rise to those covenants. Johnson’s claims for fraud, in particular, fall far short of the pleading

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standard set forth in Fed. R. Civ. P. 9(b) (requiring that the circumstances of the alleged fraud be

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pled “with particularity”). Claims of fraud must be pled “with a high degree of meticulousness.”

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Desaigoudar v. Meyercord, 223 F.3d 1020, 1022-23 (9th Cir. 2000). Johnson claims Nationwide

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misled him at various stages of contract negotiation and throughout his tenure as an independent

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contractor, but he fails to allege what was said, by whom, and how it misled him.

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Johnson attempts to cure these deficiencies with his proffered TAC. He has filed a motion to

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amend the complaint, in which he asserts that the TAC constitutes the amended pleading he would

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file. A court cannot look beyond the plaintiff’s pleadings when determining the propriety of a

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motion to dismiss for failure to state a claim. Broam v. Bogan, 320 F.3d 1023, 1026 n.2 (9th Cir.

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2003). However, the court can consider more for the purpose of determining whether it will grant

For the Northern District of California

United States District Court

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plaintiff leave to amend. Orion Tire Corp. v. Goodyear Tire & Rubber Co., 268 F.3d 1133, 1137–38

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(9th Cir. 2001). “Complaints may not be dismissed with prejudice unless the allegations of the

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complaint make clear that plaintiff cannot state a claim.” Id. at 1137. Reviewing the TAC, the court

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feels that, although it is stronger than its predecessor, it would not cure all of the deficiencies noted

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herein. For example, the claims for fraud must be pled with a high level of particularity, alleging

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specifically what misrepresentations were made, by whom, and how they resulted in misleading the

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plaintiff. Additionally, the court considers the arguments that plaintiff’s counsel made at the

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hearing, which appeared to offer a wholly new set of facts and legal theories for relief, in support of

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allowing plaintiff to amend. The court concludes that it is not impossible that plaintiff might be able

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to state some claim upon which relief may be granted.

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CONCLUSION

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Based on the foregoing, Defendant’s Motion to Dismiss is GRANTED WITH LEAVE TO

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AMEND. In light of this ruling, plaintiff’s Motion to Amend is DENIED as MOOT. Plaintiff may

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file an Amended Complaint within 14 days of the date of this order.

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IT IS SO ORDERED.
Dated: October 31, 2011
HOWARD R. LLOYD
UNITED STATES MAGISTRATE JUDGE

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C11-02913 Notice will be electronically mailed to:

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Frank Edward Mayo
Karyne T. Ghantous
Renee Welze Livingston
James P. Schuck
Quintin F. Lindsmith

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[e-mail]
[e-mail]
[e-mail]
[e-mail]
[e-mail]

Counsel are responsible for distributing copies of this document to co-counsel who have not
registered for e-filing under the court’s CM/ECF program.

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For the Northern District of California

United States District Court

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