Porch et al v. Ochoa's Construction, Inc. et al

Filing 43

ORDER ADOPTING FINDINGS AND RECOMMENDATIONS IN FULL. DENYING 3 Motion to Dismiss for Failure to State a Claim. Signed by Judge Susan P. Watters on 2/26/2018. (AMC)

FILED
FEB 2 ,3 2018
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
BILLINGS DIVISION

KELLY D. PORCH and MICHELLE
R. PORCH,

Cler!<, l:J.S. District Court
D1stnct Of Montana
Billings

CV 17-93-BLG-SPW

Plaintiffs,
ORDER
vs.
OCHOA'S CONSTRUCTION, INC.,
PREFERRED CONTRACTORS
INSURANCE COMPANY RISK
RETENTION GROUP, GOLDEN
STATE CLAIMS ADJUSTERS, and
JOHNDOES 1-V,
Defendants.
I.

Introduction

Defendants Preferred Contractors Insurance Company Risk Retention Group
and Golden State Claims Adjusters ("Defendants") have moved to dismiss
Plaintiffs' Second Amended Complaint (Doc. 3). On January 22, 2018, Magistrate
Judge Timothy Cavan issued his Findings and Recommendations recommending
that this Court deny the motion to dismiss. (Doc. 38).

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When a party timely objects to any portion of the magistrate judge's
Findings and Recommendations, the district court must conduct a de novo review
of the portions of the Findings and Recommendations to which objections are
made. 28 U.S.C. § 636(b)(l)(C); McDonnell Douglas Corp. v. Commodore

Business Machines, 656 F.2d 1309, 1313 (9th Cir. 1981). The district court may
then "accept, reject, or modify the recommended decision, receive further
evidence, or recommit the matter to the magistrate with instructions." 28 U.S.C. §
636(b )(1 ).
Defendants filed timely objections to Judge Cavan's Findings and
Recommendations. (Doc. 40). After independently reviewing and considering
those objections, this Court adopts Judge Cavan's findings and recommendations,
as set forth below.

II.

Relevant Background
Defendants do not object to the factual history contained in the Background

section of Judge Cavan's Findings and Recommendations. Judge Cavan's
Background section is therefore adopted in full.

III.

Applicable Law
A.

Legal Standard

A defendant may move under Fed. R. Civ. Pro. 12(b)(6) to dismiss an action
for failure to allege "enough facts to state a claim to relief that is plausible on its
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face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). "A claim has facial
plausibility when the plaintiff pleads factual content that allows the court to draw
the reasonable inference that the defendant is liable for the misconduct alleged.
The plausibility standard is not akin to a 'probability requirement,' but it asks for
more than a sheer possibility that a defendant has acted unlawfully." Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (internal citations omitted). This plausibility

inquiry is "a context-specific task that requires the reviewing court to draw on its
judicial experience and common sense." Id. at 679.
For purposes of ruling on a Rule 12(b)(6) motion, a court must "accept
factual allegations in the complaint as true and construe the pleadings in the light
most favorable to the nonmoving party." Manzarek v. St. Paul Fire & Marine Ins.
Co., 519 F.3d 1025, 1031 (9th Cir. 2008). A court is not required to "assume the

truth of legal conclusions merely because they are cast in the form of factual
allegations," however. Fayer v. Vaughn, 649 F.3d 1061, 1064 (9th Cir. 2011). A
court may also reject factual allegations contradicted by judicially noticed material.
See Shwarz v. United States, 234 F.3d 428,435 (9th Cir. 2000) (citation omitted).

Finally, "'a plaintiff may plead [him]self out of court'" ifhe "plead[s] facts which
establish that he cannot prevail on his ... claim." Weisbuch v. Cnty. ofL.A., 119
F.3d 778, 783 n.1 (9th Cir. 1997) (quoting Warzon v. Drew, 60 F.3d 1234, 1239
(7th Cir. 1995)).
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IV.

Discussion
Defendants object to Judge Cavan's findings that (1) Defendants failed to

argue that Plaintiffs' Second Amended Complaint either lacked a cognizable legal
theory or failed to allege sufficient facts to support a cognizable legal theory, and
(2) that Defendants' motion was not a motion to dismiss. Defendants object to
Judge Cavan's recommendation that this Court deny their motion. (Doc. 40 at 3).
The Court addresses these objections together.
From the briefing, it appears to this Court that Defendants could not identify
any other mechanism to protest Judge Gustafson's order allowing Plaintiffs to
amend their complaint, so Defendants defaulted to moving to dismiss under Rule
l 2(b )(6). But, as Judge Cavan points out, Defendants completely failed to make a
12(b)(6) argument. Defendants do not allege anywhere in their briefing that
Plaintiffs failed to allege plausible facts in support of a cognizable legal theory.
Presumably this is because the Second Amended Complaint alleges facts that
plausibly entitle Plaintiffs to relief and contains cognizable legal claims against
both defendants. (See Doc. 4-4 at 5-10).
Instead, Defendants argue that the Second Amended Complaint was not
permissible or proper because it was amended post-judgment, in violation of Rule
15. (See Doc. 4 at 12, Doc. 36 at 2, 6; see gen. Doc. 40). While this is certainly

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true under the federal rules, 1 see Lindauer v. Rogers, 91 F.3d 1355, 1357 (9th Cir.
1996) ("a motion to amend the complaint can only be entertained if the judgment is
first reopened under a motion brought under Rule 59 or 60"), Judge Gustafson was
operating under the Montana Rules of Civil Procedure, and, in any event, the error
is not properly addressed through a Rule 12(b)(6) motion. See, e.g., County of

Santa Fe, N.M v. Public Service Co. ofNew Mexico, 311 F.3d 1031, 1035 (10th
Cir. 2002) (internal citations omitted) ("The court's function on a Rule 12(b)(6)
motion is .. to assess whether the plaintiffs complaint alone is legally sufficient to
state a claim for which relief may be granted.").
Rule 12(b )( 6) allows trial courts to terminate lawsuits "that are fatally
flawed in their legal premises and destined to fail, and thus to spare litigants the
burdens of unnecessary pretrial and trial activity." Advanced Cardiovascular

Systems, Inc. v. Scimed Life Systems, Inc., 988 F.2d 1157, 1160 (Fed. Cir. 1993).
While they argue that Judge Gustafson should not have allowed the amendment,
Defendants do not point to any flaws in the legal sufficiency of Plaintiffs' claims
alleged in the Second Amended Complaint. Nor do they allege that Plaintiffs are
factually unable to show the requisite plausible entitlement to relief in the Second

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Which now apply retroactively since this case has been removed to federal court,
so a motion to reconsider is not out of the question. See Butner v. Neustadter, 324
F.2d 783, 785 (9th Cir. 1963) (footnote omitted), "(t)he federal rules apply after
removal and (t )he federal court ... treats everything that occurred in the state court
as if it had taken place in federal court.")
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Amended Complaint. See Twombly, 550 U.S. at 558. On the contrary, Defendants
concede that Plaintiffs' claims are legally plausible but simply would prefer those
claims were brought in a new lawsuit. (See Doc. 4 at 12). With this concession,
Defendants admit that their argument is insufficient to obtain relief under Rule
12(b)(6).

V.

Conclusion
For the reasons set forth above, IT IS ORDERED that United States

Magistrate Judge Cavan's proposed Findings and Recommendations (Doc. 38) are
ADOPTED.
IT IS FURTHER ORDERED that Defendants' Motion to Dismiss (Doc. 3)
is DENIED.

DATED this4ta;ofFebruary 2018.

~c~
SUSANP. WATTERS
United States District Judge

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