Yoshimoto v. Safeco Insurance Company Of Illinois

Filing 17

ORDER granting 7 Motion to Dismiss; Plaintiff's claims are DISMISSED without prejudice. Plaintiff shall have twenty-one days from the filing of this Order to file an amended complaint. Signed by Chief Judge Gloria M. Navarro on 9/25/2017. (Copies have been distributed pursuant to the NEF - JM)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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WAYNE YOSHIMOTO,
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Plaintiff,

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vs.

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SAFECO INSURANCE COMPANY OF
ILLINOIS,

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Defendant.

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Case No.: 2:17-cv-00382-GMN-CWH
ORDER

Pending before the Court is the Motion to Dismiss, (ECF No. 7), filed by Defendant

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Safeco Insurance Company of Illinois (“Defendant”). Plaintiff Wayne Yoshimoto (“Plaintiff”)

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filed a response, (ECF No. 9), and Defendant filed a reply, (ECF No. 11). For the reasons

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discussed herein, Defendant’s Motion to Dismiss is GRANTED.

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I.

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BACKGROUND
This case arises out of a car accident that took place on or about September 12, 2013.

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(Compl. ¶¶ 7–9, Ex. 1 to Pet. of Removal, ECF No. 1-1). As a result of the accident, Plaintiff

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claims to have sustained both physical and mental injuries, disability, and medical expenses.

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(Id. ¶¶ 9–11). Plaintiff further claims that he could not recover the full amount of damages

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from the negligent parties because they were underinsured motorists. (Id. ¶ 22).

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At the time of the accident, Plaintiff was allegedly covered under an insurance policy

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with Defendant. (Id. ¶¶ 12, 13). According to Plaintiff, Defendant “refused to properly and

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fairly compensate Plaintiff under the terms of the contract, and specifically the [underinsured

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motorist coverage] portion of the insurance policy.” (Id. ¶ 14). Based on these allegations,

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Plaintiff filed a Complaint asserting the following causes of action: (1) breach of contract; (2)

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Page 1 of 6

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violation of the Unfair Claims Practices Act; and (3) breach of the covenant of good faith and

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fair dealing/bad faith.

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II.

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LEGAL STANDARD
Rule 12(b)(6) of the Federal Rules of Civil Procedure mandates that a court dismiss a

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cause of action that fails to state a claim upon which relief can be granted. See North Star Int’l

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v. Ariz. Corp. Comm’n, 720 F.2d 578, 581 (9th Cir. 1983). When considering a motion to

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dismiss under Rule 12(b)(6) for failure to state a claim, dismissal is appropriate only when the

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complaint does not give the defendant fair notice of a legally cognizable claim and the grounds

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on which it rests. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). In considering

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whether the complaint is sufficient to state a claim, the Court will take all material allegations

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as true and construe them in the light most favorable to the plaintiff. See NL Indus., Inc. v.

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Kaplan, 792 F.2d 896, 898 (9th Cir. 1986).

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The Court, however, is not required to accept as true allegations that are merely

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conclusory, unwarranted deductions of fact, or unreasonable inferences. See Sprewell v. Golden

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State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). A formulaic recitation of a cause of action

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with conclusory allegations is not sufficient; a plaintiff must plead facts showing that a

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violation is plausible, not just possible. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing

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Twombly, 550 U.S. at 555) (emphasis added). In order to survive a motion to dismiss, a

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complaint must allege “sufficient factual matter, accepted as true, to state a claim to relief that

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is plausible on its face.” Id. “A claim has facial plausibility when the plaintiff pleads factual

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content that allows the court to draw the reasonable inference that the defendant is liable for the

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misconduct alleged.” Id.

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“Generally, a district court may not consider any material beyond the pleadings in ruling

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on a Rule 12(b)(6) motion . . . . However, material which is properly submitted as part of the

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complaint may be considered on a motion to dismiss.” Hal Roach Studios, Inc. v. Richard

Page 2 of 6

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Feiner & Co., 896 F.2d 1542, 1555 n.19 (9th Cir. 1990) (citations omitted). Similarly,

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“documents whose contents are alleged in a complaint and whose authenticity no party

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questions, but which are not physically attached to the pleading, may be considered in ruling on

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a Rule 12(b)(6) motion to dismiss” without converting the motion to dismiss into a motion for

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summary judgment. Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994). Under Federal Rule

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of Evidence 201, a court may take judicial notice of “matters of public record.” Mack v. S. Bay

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Beer Distrib., 798 F.2d 1279, 1282 (9th Cir. 1986). Otherwise, if the district court considers

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materials outside of the pleadings, the motion to dismiss is converted into a motion for

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summary judgment. See Fed. R. Civ. P. 12(d); Arpin v. Santa Clara Valley Transp. Agency, 261

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F.3d 912, 925 (9th Cir. 2001).

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If the court grants a motion to dismiss, it must then decide whether to grant leave to

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amend. Pursuant to Rule 15(a), the court should “freely” give leave to amend “when justice so

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requires,” and in the absence of a reason such as “undue delay, bad faith or dilatory motive on

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the part of the movant, repeated failure to cure deficiencies by amendments previously allowed,

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undue prejudice to the opposing party by virtue of allowance of the amendment, futility of the

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amendment, etc.” Foman v. Davis, 371 U.S. 178, 182 (1962). Generally, leave to amend is

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only denied when it is clear that the deficiencies of the complaint cannot be cured by

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amendment. See DeSoto v. Yellow Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992).

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III.

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DISCUSSION
In the instant Motion, Defendant argues that each of Plaintiff’s causes of action should

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be dismissed for failure to state a claim. (See Def.’s Mot. to Dismiss, ECF No. 7). Specifically,

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Defendant argues that the Complaint is overly “vague and general” and therefore falls short of

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the pleading standards. (See id. 5:3–5). The Court addresses the sufficiency of each cause of

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action in turn.

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A. Breach of Contract

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In his first cause of action, Plaintiff broadly alleges that the underinsured motorist

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coverage (“UIM”) claim is one of a “contractual nature,” and “Plaintiff was insured under the

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policy.” (Compl. ¶¶ 18–21, Ex. 1 to Pet. of Removal). Plaintiff further alleges that Defendant

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breached the insurance contract by failing to “fully compensate Plaintiff for damages under the

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terms of the uninsured motorist policy.” (Id. ¶ 24).

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To state a claim for a breach of contract in Nevada, the plaintiff must allege: (1) the

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existence of a valid agreement between the plaintiff and defendant; (2) a breach by the

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defendant; and (3) damages as a result of the breach. See Brown v. Kinross Gold U.S.A., Inc.,

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531 F. Supp. 2d 1234, 1240 (D. Nev. 2008). While Plaintiff adequately alleges the existence of

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an insurance contract, Plaintiff’s conclusory assertion that Defendant “breached” the agreement

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by failing to pay damages under the UIM provision is insufficient to satisfy the remaining

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elements. Notably, Plaintiff provides no allegations as to the terms of the agreement, the

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manner in which Defendant allegedly breached the agreement, or the coverage allegedly

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available under the agreement. Without factual context, Plaintiff’s assertion that Defendant

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breached the UIM portion of the agreement is nothing more than a legal conclusion and

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therefore insufficient under the pleading standards. See Ashcroft, 556 U.S. at 678. The Court

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therefore grants Defendant’s Motion to Dismiss as to this claim.

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B. Violation of the Unfair Claims Practices Act

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Plaintiff’s second cause of action alleges that Defendant breached the Unfair Claims

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Practices Act, NRS 686A.310. (Compl. ¶¶ 27–29, Ex. 1 to Pet. of Removal). This statute

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concerns the manner in which an insurer handles an insured’s claim. Zurich Am. Ins. Co. v.

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Coeur Rochester, Inc., 720 F. Supp. 2d 1223, 1236 (D. Nev. 2010). To state a claim under

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NRS 686A.310, a plaintiff must allege a violation of one of the statute’s sixteen enumerated

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activities that constitute unfair practice in the insurance context. See NRS 686A.310(1)(a)-(p).

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Here, much like the breach of contract claim, Plaintiff provides insufficient factual

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context to raise a claim under this statute. Plaintiff vaguely alleges that Defendant’s “actions”

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were in violation of provisions of the Unfair Claims Practices Act. (Compl. ¶ 28, Ex. 1 to Pet.

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of Removal). Yet, the only “action” raised as to Defendant is its alleged failure to compensate

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Plaintiff pursuant to the UIM. Even assuming this allegation were sufficient to raise a breach

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of contract claim, the mere act of breaching a contract does not give rise to a cause of action for

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unfair claim practices. Accordingly, the Court grants Defendant’s Motion to Dismiss as to this

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claim.

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C. Breach of the Covenant of Good Faith and Fair Dealing/Bad Faith
Plaintiff’s third cause of action alleges that Defendant acted in bad faith and breached

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the covenant of good faith and fair dealing by “denying, and/or delaying payment of, benefits

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due under the insurance policy without proper cause.” (Id. ¶ 31). “An implied covenant of

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good faith and fair dealing is recognized in every contract under Nevada law.” Consol.

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Generator-Nevada, Inc. v. Cummins Engine Co., 971 P.2d 1251, 1256 (Nev. 1998). A breach

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occurs where “the terms of a contract are literally complied with but one party to the contract

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deliberately contravenes the intention and spirit of the contract.” Hilton Hotels Corp. v. Butch

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Lewis Prods., Inc., 808 P.2d 919, 922 (Nev. 1991). Furthermore, “[b]ad faith is established

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where the insurer acts unreasonably and with knowledge that there is no reasonable basis for its

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conduct.” See American Excess Ins. Co. v. MGM Grand Hotels, Inc., 729 P.2d 1352, 1354–55

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(1986).

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Here, the crux of Plaintiff’s claim is that Defendant denied payments “without proper

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cause.” Refusal to compensate a loss “without proper cause,” however, does not constitute a

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breach of the covenant of good faith and fair dealing unless the insurer “knew or recklessly

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disregarded the fact that there was no reasonable basis for disputing coverage.” Powers v.

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Page 5 of 6

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United Servs. Auto. Ass’n, 962 P.2d 596, 604 (Nev. 1998). Plaintiff fails to provide sufficient

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allegations as to this issue. Accordingly, the Court grants Defendant’s Motion to Dismiss.

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D. Leave to Amend

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Rule 15(a)(2) of the Federal Rules of Civil Procedure permits courts to “freely give

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leave [to amend] when justice so requires.” Fed. R. Civ. P. 15(a)(2). The Ninth Circuit “ha[s]

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held that in dismissing for failure to state a claim under Rule 12(b)(6), ‘a district court should

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grant leave to amend even if no request to amend the pleading was made, unless it determines

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that the pleading could not possibly be cured by the allegation of other facts.’” Lopez v. Smith,

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203 F.3d 1122, 1127 (9th Cir. 2000) (quoting Doe v. United States, 58 F.3d 494, 497 (9th Cir.

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1995)).

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The Court finds that Plaintiff may be able to plead additional facts to support the above

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causes of action. Accordingly, the Court will grant Plaintiff leave to file an amended

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complaint. Plaintiff shall file his amended complaint within twenty-one days of the date of this

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Order if he can allege sufficient facts that plausibly establish his claims against Defendant.

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IV.

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CONCLUSION
IT IS HEREBY ORDERED that Defendant’s Motion to Dismiss, (ECF No. 7), is

GRANTED.
IT IS FURTHER ORDERED that Plaintiff’s claims are DISMISSED without

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prejudice. Plaintiff shall have twenty-one days from the filing of this Order to file an amended

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complaint. Failure to file an amended complaint by this date shall result in the Court

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dismissing this action.

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DATED this _____ day of September, 2017.

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___________________________________
Gloria M. Navarro, Chief Judge
United States District Judge
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