Centex Homes v. Everest National Insurance Company et al

Filing 53

ORDER. IT IS HEREBY ORDERED that 19 the Motion to Dismiss is DENIED in part and GRANTED in part. IT IS FURTHER ORDERED that 50 Plaintiffs' Motion for Leave to File Supplemental Points and Authorities is GRANTED. IT IS FURTHER ORDERED that Plaintiff shall file its amended complaint fourteen days following the issuance of this Order. See Order for details. Signed by Chief Judge Gloria M. Navarro on 9/29/17. (Copies have been distributed pursuant to the NEF - MR)

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1 UNITED STATES DISTRICT COURT 2 DISTRICT OF NEVADA 3 4 CENTEX HOMES, Plaintiff, 5 vs. 6 7 EVEREST NATIONAL INSURANCE COMPANY, et al., 8 Defendants. 9 ) ) ) ) ) ) ) ) ) ) Case No.: 2:16-cv-01275-GMN-CWH ORDER Pending before the Court is the Motion to Dismiss, (ECF No. 19), filed by Defendant 10 11 Lexington Insurance Company (“Defendant”). Plaintiff Centex Homes (“Plaintiff”) filed a 12 Response, (ECF No. 28), and Defendant filed a Reply, (ECF No. 34).1 For the following 13 reasons, the Motion to Dismiss is DENIED in part and GRANTED in part. 14 I. 15 BACKGROUND The instant dispute arises out of a state court action involving property damage from 16 subcontractors that worked for Plaintiff to build a housing development (“the development”). 17 On February 15, 2013, homeowners in the development filed an amended complaint in state 18 court against Plaintiff alleging that Plaintiff is liable for defective and negligent engineering 19 and construction on homes in the development. (See Compl. ¶ 43, ECF No. 1); See Pensi 20 Callaway, et al. v. Centex Homes, Eighth Judicial District Court, Clark County, Nevada, Case 21 No. A-13-674439-D (“Callaway action”). Plaintiff alleges that the Callaway action seeks 22 damages arising out of the work or ongoing operations of various subcontractors that were 23 24 25 1 Also pending before the Court is Plaintiff’s Motion for Leave to File Supplemental Points and Authorities, (ECF No. 50), to which Defendant filed a Response, (ECF No. 51), and Plaintiff filed a Reply, (ECF No. 52). For good cause appearing, Plaintiff’s Motion for Leave to File Supplemental Points and Authorities is GRANTED. Page 1 of 14 1 insured through Defendant. (Id. ¶ 44). As a result of the Callaway action, Plaintiff claims that 2 it has incurred significant costs. (Id. ¶ 45). 3 Defendant issued insurance policies to the subcontractors Desert Plastering, LLC, and 4 L&S Air Conditioning, Inc. (collectively the “subcontractors”) that worked on the 5 development. (Id. ¶¶ 31–35). Defendant’s polices were endorsed to cover Plaintiff as an 6 “additional insured” with respect to liability arising out of the subcontractor’s respective work. 7 (Id. ¶ 36). Plaintiff alleges that the policies required Defendant to defend Plaintiff against all 8 claims that create potential liability for covered property damage or bodily injury. (Id. ¶ 37). 9 On September, 11, 2012, Plaintiff tendered the defense and indemnity of the Callaway action to 10 Defendant under the policies that were issued to the subcontractors. (Id. ¶ 56). Plaintiff claims 11 that on December 12, 2012, and February 8, 2013, Defendant improperly breached its duty to 12 defend Plaintiff in the Callaway action under the insurance policies issued to the 13 subcontractors. (Id. ¶¶ 57–60). Specifically, Plaintiff alleges that it was forced to spend 14 significant time and money defending itself against the Callaway action because Defendant 15 failed to meet its duty pursuant to the policies. (Id. ¶ 61). 16 Based on these allegations, Plaintiff asserts the following causes of action against 17 Defendant: (1) breach of contract; (2) breach of the implied duty of good faith and fair dealing; 18 (3) violations of Nevada’s Unfair Claims Settlement Practices Action under NRS § 686A.310; 19 and (4) declaratory relief. (Id. ¶¶ 67–88). In the instant motion, Defendant requests that the 20 Court dismiss all of Plaintiff’s claims, as well as Plaintiff’s prayer for attorney’s fees and 21 punitive damages. (Mot. to Dismiss 2:3–7, ECF No. 19). 22 II. 23 LEGAL STANDARD Dismissal is appropriate under Rule 12(b)(6) where a pleader fails to state a claim upon 24 which relief can be granted. Fed. R. Civ. P. 12(b)(6); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 25 555 (2007). A pleading must give fair notice of a legally cognizable claim and the grounds on Page 2 of 14 1 which it rests, and although a court must take all factual allegations as true, legal conclusions 2 couched as factual allegations are insufficient. Twombly, 550 U.S. at 555. Accordingly, Rule 3 12(b)(6) requires “more than labels and conclusions, and a formulaic recitation of the elements 4 of a cause of action will not do.” Id. “To survive a motion to dismiss, a complaint must contain 5 sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its 6 face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). “A 7 claim has facial plausibility when the plaintiff pleads factual content that allows the court to 8 draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. This 9 standard “asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. 10 If the Court grants a motion to dismiss for failure to state a claim, leave to amend should 11 be granted unless it is clear that the deficiencies of the complaint cannot be cured by 12 amendment. DeSoto v. Yellow Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992). Pursuant 13 to Rule 15(a), the court should “freely” give leave to amend “when justice so requires,” and in 14 the absence of a reason such as “undue delay, bad faith or dilatory motive on the part of the 15 movant, repeated failure to cure deficiencies by amendments previously allowed, undue 16 prejudice to the opposing party by virtue of allowance of the amendment, futility of the 17 amendment, etc.” Foman v. Davis, 371 U.S. 178, 182 (1962). 18 III. DISCUSSION 19 A. Breach of Contract 20 In Nevada, to succeed on a claim for breach of contract a plaintiff must show: (1) the 21 existence of a valid contract; (2) that the plaintiff performed or was excused from performance; 22 (3) that the defendant breached the terms of the contract; and (4) that the plaintiff was damaged 23 as a result of the breach. See Restatement (Second) of Contracts § 203 (2007); see also Bernard 24 v. Rockhill Dev. Co., 734 P.2d 1238, 1240 (Nev. 1987); see also Brochu v. Foote Enterprises, 25 Inc., No. 55963, 2012 WL 5991571 at *5 (Nev. 2012) (“To prove a breach of contract, the Page 3 of 14 1 plaintiff must show an existing valid agreement with the defendant, the defendant’s material 2 breach, and damages.”). 3 Under Nevada law, “an insurer bears a duty to defend its insured whenever it ascertains 4 facts which give rise to the potential of liability under the policy.” United Nat’l Ins. Co. v. 5 Frontier Ins. Co., 99 P.3d 1153, 1158 (Nev. 2004). “If there is any doubt about whether the 6 duty to defend arises, this doubt must be resolved in favor of the insured.” Id. Additionally, 7 “[w]hile clauses providing coverage are interpreted broadly so as to afford the greatest possible 8 coverage to the insured, clauses excluding coverage are interpreted narrowly against the 9 insurer.” Nat’l Union Fire Ins. Co. of State of Pa. v. Reno’s Exec. Air, Inc., 682 P.2d 1380, 10 11 1383 (Nev. 1984). Plaintiff’s first cause of action alleges that it is covered under Defendant’s insurance 12 policies as “additional insureds,” and that Plaintiff “performed all obligations owing under each 13 of the policies in connection with its tender of defense, and [Plaintiff] has satisfied all relevant 14 conditions precedent.” (Compl. ¶¶ 31–37, 68, ECF No. 1). 15 Defendant claims that Plaintiff “alleged only conclusions in support of its breach of 16 contract claim.” (Mot. to Dismiss 12:20). Moreover, Defendant avers that the insurance 17 policies’ language demonstrates that Plaintiff’s breach of contract claim fails. (See id. 13:6). 18 Specifically, the parties dispute whether or not the Callaway action involves construction 19 defects from ongoing operations or completed work because the policies only cover ongoing 20 construction. (See id. 14:15–23); (see also Resp. 6:4–9, ECF No. 28); (see also Ex. 1 to App. to 21 Mot. to Dismiss at 6, ECF No. 20-1) (emphasis added). 22 Neither party disputes the existence of a valid contract. Because a valid contract exists 23 and Plaintiff alleges that the contract was breached, Plaintiff has met the first and second 24 requirements for a breach of contract claim. Additionally, Plaintiff claims that Defendant 25 “failed to discharge [its] contractual duties to defend [Plaintiff] against the Callaway action. Page 4 of 14 1 More particularly, Defendant[ ]: (1) breached [its] contracts by failing to promptly respond to 2 [Plaintiff’s] tenders; and (2) breached [its] contracts by refusing to defend [Plaintiff].” (Compl. 3 ¶ 69, ECF No. 1). Based on this allegation, Plaintiff sufficiently alleges the third requirement 4 for breach of contract. Lastly, Plaintiff contends that “[a]s a direct and proximate result of 5 Defendant[’s] conduct as alleged in [the] Complaint, [Plaintiff] has been damaged in an amount 6 to be proven at trial.” (Id. ¶ 70). Accordingly, Plaintiff meets the fourth requirement in alleging 7 damages and therefore has sufficiently pled the elements for a breach of contract claim. 8 9 As to the alleged ongoing defects, Plaintiff asserts that “the Callaway complaint alleges both kinds of property damage—i.e., property damage that may have occurred while operations 10 were ongoing as well as property damage that may have begun after operations were 11 completed.” (Resp. 6:24–26).2 Because Plaintiff sufficiently alleges that the Callaway action 12 involves ongoing operations covered by the policies, the Court denies Defendant’s Motion to 13 Dismiss the breach of contract claim. 14 B. Breach of the Implied Covenant of Good Faith and Fair Dealing 15 Nevada has “adopt[ed] the rule that allows recovery of consequential damages where 16 there has been a showing of bad faith by the insurer.” U.S. Fidelity & Guar. Co. v. Peterson, 17 540 P.2d 1070, 1071 (Nev. 1975). “Where an insurer fails to deal fairly and in good faith with 18 its insured by refusing without proper cause to compensate its insured for a loss covered by the 19 policy[,] such conduct may give rise to a cause of action in tort for breach of an implied 20 covenant of good faith and fair dealing.” Id. “The duty violated arises not from the terms of the 21 insurance contract but is a duty imposed by law, the violation of which is a tort.” Id. “To 22 23 24 25 2 Plaintiff contends that the California Court of Appeals “considered and rejected the very argument that is the crux of [Defendant’s] motion: That construction defect claims are inherently ‘completed operations’ claims.” (Reply 1:25–27, ECF No. 50). The Court notes, however, that the Nevada Supreme Court has not addressed the issue of Nevada State Law raised in the California Court of Appeals case provided by Plaintiff. (See Ex. 1 to Mot. for Leave to File Suppl. P. & A., ECF No. 50-1); (see also Resp. 1:27–28, ECF No. 51). Moreover, at this point in the proceedings, Plaintiff sufficiently alleges that the Callaway action involves ongoing operations covered by Defendant’s policies. Page 5 of 14 1 establish a prima facie case of bad-faith refusal to pay an insurance claim, the plaintiff must 2 establish that the insurer had no reasonable basis for disputing coverage, and that the insurer 3 knew or recklessly disregarded the fact that there was no reasonable basis for disputing 4 coverage.” Powers v. United Servs. Auto. Ass’n, 962 P.2d 596, 603 (Nev. 1998), opinion 5 modified on denial of reh’g, 979 P.2d 1286 (Nev. 1999). 6 Plaintiff’s second cause of action alleges that Defendant owes Plaintiff “a duty of good 7 faith and fair dealing, obligating Defendant[ ] to put [Plaintiff’s] interests equal with or ahead 8 of [its] own interests and to do nothing to deprive [Plaintiff] of policy benefits.” (Compl. ¶ 72). 9 Plaintiff’s Complaint asserts that Defendant has “deprived [Plaintiff] of its rights and benefits 10 under [its] policies.” (Id. ¶ 75). Moreover, Plaintiff claims that as a result of this deprivation, 11 Defendant failed to “discharge contractual duties without reasonable grounds for good cause” 12 instead of honoring its obligations under the policies. (Id. ¶ 73). 13 Defendant argues that Plaintiff’s “allegations fall short of plausibly stating a claim for 14 bad faith, given they are completely devoid of a single fact which would suggest any knowing 15 or unreasonable denial of benefits by” Defendant. (Mot. to Dismiss 23:21–23). However, 16 Plaintiff explains that Defendant did not deal fairly with Plaintiff because it failed “to respond 17 to [Plaintiff’s] tenders in a timely fashion, or at all” and delayed coverage decisions. (Compl. 18 ¶ 75). Because Plaintiff alleges that Defendant failed to meet its duty by refusing without 19 proper cause to compensate Plaintiff for the loss allegedly covered by the policies, Plaintiff has 20 sufficiently pled its breach of the implied covenant of good faith and fair dealing claim. 21 Moreover, Plaintiff contends that Defendant’s deprivation of benefits is intentional in 22 order to enhance Defendant’s own profits despite Defendant’s alleged knowledge that “this 23 behavior violates the rights of” Plaintiff. (Id.). Plaintiff alleges that “Defendant[ ] acted in a 24 deliberate and concerted fashion to achieve this self-serving economic objective” and, as such, 25 “recklessly disregards [Plaintiff’s] economic and property rights.” (Id.). Essentially, Plaintiff Page 6 of 14 1 alleges that Defendant recklessly disregarded the fact that there was no reasonable basis for 2 disputing coverage. This further bolsters Plaintiff’s claim for breach of the implied covenant of 3 good faith and fair dealing. As such, the Court denies the Motion to Dismiss Plaintiff’s second 4 cause of action. 5 C. Violations of Nevada’s Unfair Claims Settlement Practices Action 6 Plaintiff’s third cause of action alleges violations under the Unfair Claims Practices 7 Action (“UCPA”) under Nevada Revised Statute (“NRS”) § 686A.310(1)(b)–(f). (Compl. ¶¶ 8 80–83). NRS § 686A.310 specifies certain unfair practices by insurance companies and 9 provides a cause of action for an insured to enforce these provisions against an insurer. See 10 NRS § 686A.310; Hart v. Prudential, 848 F. Supp. 900, 903 (D. Nev. 1994). “Unlike a cause 11 of action for bad faith, the provisions of NRS § 686A.310 address the manner in which an 12 insurer handles an insured’s claim whether or not the claim is denied.” Zurich Am. Ins. Co. v. 13 Coeur Rochester, Inc., 720 F. Supp. 2d 1223, 1236 (D. Nev. 2010). 14 Plaintiff alleges that Defendant engaged in the following unfair practices under NRS 15 § 686A.310: (1) Defendant failed to acknowledge and act reasonably promptly upon 16 communications with respect to claims arising under insurance policies; (2) Defendant failed to 17 implement reasonable standards for the prompt investigation and processing of claims under 18 insurance policies; (3) Defendant failed to affirm or deny coverage of claims within a 19 reasonable time after proof of loss requirements were completed and submitted by the insured; 20 (4) Defendant failed to effectuate prompt, fair, and equitable settlements of claims in which 21 liability of the insurer has become reasonably clear; and (5) Defendant compelled insureds to 22 institute litigation to recover amounts due under an insurance policy by offering substantially 23 less than the amounts ultimately recovered in actions brought by such insureds when the 24 insureds have made claims for amounts reasonably similar to the amounts ultimately recovered. 25 (Compl. ¶ 81); see NRS § 686A.310(1)(b)–(f). Page 7 of 14 1 Defendant argues that Plaintiff’s “unfair claim practices claim fails because [Plaintiff] 2 has not alleged facts supporting the claim, but merely that it suffered damages as a result of all 3 [D]efendants’ violations of ‘one or more’” of NRS § 686A.310(1) subsections (b) through (f). 4 (Mot. to Dismiss 24:7–9). Moreover, Defendant contends that Plaintiff “does not allege any 5 facts as to how [Defendant] violated the Act beyond parroting the statutory language.” (See id. 6 24:20–22). 7 First, Plaintiff claims that “Defendant[ ] delayed responding to [Plaintiff’s] tenders and 8 ignored [Plaintiff’s] numerous requests.” (Compl. ¶ 79). Plaintiff explains that it tendered the 9 defense of the Callaway action on September 11, 2012, for two separate policies, and it was not 10 until December 12, 2012, and February 8, 2013, that Defendant denied the individual requests 11 under each subcontractor’s policy. (Compl. ¶¶ 56–59). Under Nevada’s Administrative Code, 12 “[e]very insurer shall acknowledge the receipt of a claim notice within 20 working days after 13 receipt of the claim notice unless payment of the claim is made within that time.” Nev. Admin. 14 Code (“NAC”) § 686A.665. Moreover, an insurer should make a decision of the acceptance or 15 denial within thirty days, or notify the insured that more time is required. NAC § 686A.675. 16 Because Defendant did not respond within the twenty-day window or deny within the thirty- 17 day window, Plaintiff has provided sufficient factual allegations regarding Defendant’s failure 18 to “act reasonably promptly upon communications with respect to claims.” NRS 19 § 686A.310(1)(b). 20 Second, Plaintiff alleges that “Defendant[ ] delayed rendering coverage decisions in 21 conscious disregard of the risk that these delays would jeopardize [Plaintiff’s] ability to 22 adequately defend itself against the Callaway action, and would jeopardize [Plaintiff’s] ability 23 to settle those matters.” (Compl. ¶ 75). This allegation successfully pleads that Defendant 24 failed “to adopt and implement reasonable standards for the prompt investigation and 25 processing of claims arising under insurance policies.” NRS § 686A.310(1)(c). Plaintiff has Page 8 of 14 1 alleged unreasonable standards for prompt investigation based on Defendant’s delay in 2 rendering a decision. Moreover, these allegations also support a claim that Defendant failed to 3 “affirm or deny coverage of claims within a reasonable time after proof of loss requirements 4 have been completed and submitted by the insured.” NRS § 686A.310(1)(d). As such, Plaintiff 5 has sufficiently pled its first three allegations under the UCPA. 6 Turning to the fourth allegation, Plaintiff avers that Defendant is “fully aware of [its] 7 duty to defend additional insureds, like [Plaintiff], against claims alleging potential liability 8 arising out of the work of their named insureds[,]” and by neglecting its duty, Defendant 9 jeopardized Plaintiff’s ability to settle matters in the Callaway action. (Compl. ¶¶ 75–79). 10 Therefore, Plaintiff has adequately pled that Defendant failed “to effectuate prompt, fair and 11 equitable settlements of claims in which liability of the insurer has become reasonably clear.” 12 NRS § 686A.310(1)(e). 13 Lastly, Plaintiff contends that because Defendant refused to assist in its defense, Plaintiff 14 was compelled to litigate the matter. (Compl. ¶ 79). However, this allegation is insufficient to 15 plead a claim under NRS § 686A.310(1)(f). Plaintiff has failed to provide factual allegations 16 beyond a conclusory assertion that it was compelled “to institute litigation to recover amounts 17 due under an insurance policy by offering substantially less than the amounts ultimately 18 recovered in actions brought by such insureds, when the insureds have made claims for 19 amounts reasonably similar to the amounts ultimately recovered.” NRS § 686A.310(1)(f). 20 Accordingly, Plaintiff’s last allegation under the UCPA fails. 21 For these reasons, the Motion to Dismiss Plaintiff’s alleged violations under the UCPA 22 for NRS § 686A.310(1)(b)–(e) is denied. However, the Court grants the Motion to Dismiss 23 Plaintiff’s claim under NRS § 686A.310(1)(f) for Plaintiff’s fifth allegation. 24 25 Page 9 of 14 1 D. Declaratory Relief 2 Indeed, declaratory relief is not a cause of action, but a remedy that may be afforded to a 3 party after it has sufficiently established and proven its claims. See Sands v. Wynn Las Vegas, 4 LLC, No. 210-CV-00297-RLH-PAL, 2010 WL 2348633 (D. Nev. June 9, 2010); see also 5 Freeto v. Litton Loan Serviving LP, No. 3:09-CV-00754-LRH, 2011 WL 112183, at *3 (D. 6 Nev. Jan. 12, 2011). 7 Even though declaratory relief is a remedy, the Court denies Defendant’s Motion to 8 Dismiss because Plaintiff’s claims are still before the Court. See Sands v. Wynn Las Vegas, 9 LLC, No. 210-CV-00297-RLH-PAL, 2010 WL 2348633, (D. Nev. June 9, 2010) (finding “the 10 Court is not required to dismiss” a claim for declaratory relief “under the law cited by Wynn or 11 any other law of which the Court is aware.”). Thus, if Plaintiff succeeds on these claims it may 12 very well be entitled to the declaratory relief it seeks. Given this fact, the Court sees no reason 13 to dismiss Plaintiff’s claims for declaratory relief. Accordingly, the Court will interpret 14 Plaintiff’s claim for declaratory relief as a request for a remedy rather than a separate cause of 15 action, and Defendant’s Motion to Dismiss this claim is denied on this basis. 16 E. Prayer for Attorney’s Fees and Punitive Damages 17 In the instant Motion, Defendant also seeks to strike or dismiss Plaintiff’s prayer for 18 attorney’s fees and punitive damages. (Mot. to Dismiss 27:16–18, ECF No. 19). Federal Rule 19 of Civil Procedure 12(f) provides that the Court may strike “any redundant, immaterial, 20 impertinent, or scandalous matter.” Additionally, a motion to strike properly may be directed at 21 damages which are not recoverable as a matter of law, as such allegations would be immaterial 22 to the action. See Flynn v. Liner Grode Stein Yankelevitz Sunshine Regenstreif & Taylor LLP., 23 No. 3:09-CV-00422-PMP, 2010 WL 4339368, at *12 (D. Nev. Oct. 15, 2010). However, when 24 the defendant challenges the sufficiency of the factual allegations supporting damages, the 25 motion should be made pursuant to Federal Rule of Civil Procedure 12(b)(6), rather than Rule Page 10 of 14 1 12(f). Paul v. Gomez, 190 F.R.D. 402, 404 (W.D.Va.2000); see Flynn, No. 3:09-CV-00422- 2 PMP, 2010 WL 4339368 (D. Nev. Oct. 15, 2010). The Court will first address the argument 3 for attorney’s fees and then address the argument for punitive damages. 4 5 a. Attorney’s Fees Under the American Rule, litigants generally must pay their own attorney’s fees in 6 absence of a rule, statute, or contract authorizing such an award. See Alyeska Pipeline Co. v. 7 Wilderness Soc’y, 421 U.S. 240, 247 (1975); see also MRO Commc’ns, Inc. v. Am. Tel. & Tel. 8 Co., 197 F.3d 1276, 1280–81 (9th Cir. 1999). Nonetheless, the decision to award attorney’s 9 fees is left to the sound discretion of the district court. See Flamingo Realty, Inc. v. Midwest 10 Dev., Inc., 879 P.2d 69, 73 (Nev. 1994); see also Jiangmen Kinwai Furniture Decoration Co. 11 Ltd v. Int’l Mkt. Centers, Inc., No. 215-CV-1419J-CM-PAL, 2016 WL 6637699 (D. Nev. Nov. 12 8, 2016). Moreover, contrary to the American Rule, under Nevada law, attorney’s fees are 13 available only when “authorized by rule, statute, or contract.” Flamingo Realty, Inc., 879 P.2d 14 at 73; NRS § 18.010. 15 Here, Plaintiff seeks attorney’s fees for all four causes of action. The Court finds that it 16 is too early in the litigation to determine whether or not Plaintiff would be entitled to attorney’s 17 fees in this action. See Weisshaar v. Sierra Pac. Power Co., No. 3:11-CV-0360-LRH-WGC, 18 2011 WL 6400281, at 1 (D. Nev. Dec. 20, 2011) (denying a motion to strike attorney’s fees 19 after denying a motion to dismiss and reviewing the pleadings because it was too early in the 20 litigation process to determine if attorney’s fees were appropriate). Therefore, the Court shall 21 also deny the motion to dismiss attorney’s fees. 22 23 b. Punitive Damages In Nevada, punitive damages may only be awarded “where it is proven by clear and 24 convincing evidence that the defendant has been guilty of oppression, fraud or malice, express 25 or implied.” NRS § 42.005(1). “‘Oppression’ means despicable conduct that subjects a person Page 11 of 14 1 to cruel and unjust hardship with conscious disregard of the rights of the person.” NRS 2 § 42.001(4). “‘Fraud’ means an intentional misrepresentation, deception or concealment of a 3 material fact known to the person with the intent to deprive another person of his or her rights 4 or property or to otherwise injure another person.” NRS § 42.001(2). “‘Malice, express or 5 implied’ means conduct which is intended to injure a person or despicable conduct which is 6 engaged in with a conscious disregard of the rights or safety of others.” NRS § 42.001(3). 7 “‘Conscious disregard’ means the knowledge of the probable harmful consequences of a 8 wrongful act and a willful and deliberate failure to act to avoid those consequences.” NRS 9 § 42.001(1). “[Conscious disregard] plainly requires evidence that a defendant acted with a 10 culpable state of mind. . . . [A]t a minimum, [it] must exceed mere recklessness or gross 11 negligence.” Countrywide Home Loans, Inc. v. Thitchener, 192 P.3d 243, 255 (Nev. 2008). 12 Here, Plaintiff seeks punitive damages for the second and third causes of action. 13 Moreover, both the second and third causes of action give rise to potential punitive damages. 14 See Pioneer Chlor Alkali Co. v. Nat’l Union Fire Ins. Co. of Pittsburgh, Pennsylvania, 863 F. 15 Supp. 1237, 1246 (D. Nev. 1994) (“[A]n award of punitive damages is possible for a violation 16 of NRS [§] 686A.310.”); see also Guar. Nat. Ins. Co. v. Potter, 912 P.2d 267, 273 (Nev. 1996) 17 (showing that bad faith claims may give rise to punitive damages). 18 Plaintiff’s Complaint alleges that Defendant’s conduct “is part of a pattern of unfair 19 claims practices intentionally engaged in by Defendant[ ] to enhance unfairly their own profits 20 by avoiding contractual obligations and ignoring the contractual rights and economic interests 21 of [Plaintiff] and other additional insureds.” (Compl. ¶ 76). The practices that Plaintiff 22 specifically lists are: “(1) failing to respond promptly to tenders from additional insureds; (2) 23 wrongfully denying additional insureds coverage owed under policies; and (3) refusing to 24 supply a full defense to additional insureds as required by law and instead trying to limit 25 coverage obligations to funding only a small fraction of the additional insured’s defense.” (Id.). Page 12 of 14 1 Further, Plaintiff claims that Defendant’s “conduct as alleged in [the] Complaint is despicable 2 and has been carried out in willful and conscious disregard of [Plaintiff’s] rights and economic 3 interests, and is malicious, fraudulent and oppressive.” (Compl. ¶ 78). Plaintiff’s statements 4 sufficiently plead oppression based on the alleged unjust hardship placed on Plaintiff when 5 Defendant did not assist in its defense. (Compl. ¶ 79). The Court finds that the Complaint 6 provides sufficient factual basis to support a claim for punitive damages in relation to the 7 surviving second and third causes of action. Therefore, Defendant’s Motion to Dismiss 8 Plaintiff’s punitive damages is denied. For these reasons, the Court denies in part and grants in 9 part Defendant’s Motion to Dismiss. 10 F. Leave to Amend 11 Rule 15(a)(2) of the Federal Rules of Civil Procedure permits courts to “freely give 12 leave [to amend] when justice so requires.” Fed. R. Civ. P. 15(a)(2). The Ninth Circuit “ha[s] 13 held that in dismissing for failure to state a claim under Rule 12(b)(6), ‘a district court should 14 grant leave to amend even if no request to amend the pleading was made, unless it determines 15 that the pleading could not possibly be cured by the allegation of other facts.’” Lopez v. Smith, 16 203 F.3d 1122, 1127 (9th Cir. 2000) (quoting Doe v. United States, 58 F.3d 494, 497 (9th Cir. 17 1995)). 18 The Court finds that Plaintiff may be able to plead additional facts to support its fifth 19 allegation under the UCPA cause of action. Accordingly, the Court will grant Plaintiff leave to 20 file an amended complaint only with amendment to this claim. Plaintiff shall file its amended 21 complaint within fourteen days of the date of this Order. 22 IV. 23 CONCLUSION IT IS HEREBY ORDERED that the Motion to Dismiss, (ECF No. 19), is DENIED in 24 part and GRANTED in part. Plaintiff’s cause of action under NRS § 686A.310(1)(f) is 25 dismissed without prejudice and all other claims survive. Page 13 of 14 1 2 3 IT IS FURTHER ORDERED that Plaintiffs’ Motion for Leave to File Supplemental Points and Authorities, (ECF No. 50), is GRANTED. IT IS FURTHER ORDERED that Plaintiff shall file its amended complaint fourteen 4 days following the issuance of this Order. Failure to file an amended complaint by this date 5 shall result in the Court dismissing this portion of Plaintiff’s UCPA claim. 6 29 DATED this _____ day of September, 2017. 7 8 9 ___________________________________ Gloria M. Navarro, Chief Judge United States District Judge 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 14 of 14

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