Opinion
No. 2:12-cv-03105 JAM-DAD
01-28-2014
BROOKE POLAND, Plaintiff, v. LIBERTY MUTUAL FIRE INSURANCE COMPANY, an entity of unknown form, and DOES 1 through 30, Defendants.
ORDER GRANTING DEFENDANT'S
MOTION TO STRIKE AND GRANTING IN
PART AND DENYING IN PART
DEFENDANT'S MOTION TO DISMISS
This matter is before the Court on Defendant Liberty Mutual Fire Insurance Company's ("Defendant") Motion to Strike and Dismiss Plaintiff's Claims in the First Amended Complaint ("FAC") (Doc. #35). Plaintiff Brooke Poland ("Plaintiff") opposes the motion (Doc. #42) and Defendant replied (Doc. #44). For the reasons set forth below, Defendant's motion to strike is GRANTED and Defendant's motion to dismiss is GRANTED in part and DENIED in part.
This motion was determined to be suitable for decision without oral argument. E.D. Cal. L.R. 230(g). The hearing was scheduled for December 11, 2013.
I. FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND
Plaintiff originally filed this action on October 1, 2012, in Sacramento County Superior Court against Defendant (Doc. #1). Defendant removed this action to this Court on December 28, 2012, based on diversity jurisdiction, 28 U.S.C. § 1332. Id. On January 4, 2013, Defendant moved to dismiss Plaintiff's punitive damages claim (Doc. #6). The Court granted Defendant's motion to dismiss with leave to amend (Doc. #22). On June 20, 2013, Plaintiff filed an FAC with a new cause of action not in the original complaint (Doc. #24). Defendant objected to the additional cause of action in the FAC; therefore, Plaintiff moved for leave to file the proposed FAC on July 2, 2013 (Doc. #26). During the September 18, 2013, hearing on Plaintiff's Motion to Amend ("September 18 Hearing"), the Court gave Plaintiff leave to file a new FAC because Plaintiff needed to allege more facts and the proposed FAC included improper remedies (Doc. #32). On October 8, 2013, Plaintiff filed her FAC (Doc. #33), alleging three causes of action: (1) breach of an insurance contract; (2) breach of the implied covenant of good faith and fair dealing; and (3) violation of California Business and Professional Code Section 17200 ("UCL claim"). FAC ¶¶ 33-58.
According to the allegations in the FAC, on or about October 4, 2010, Plaintiff was turning into a gas station when another vehicle struck her truck. Id. ¶¶ 14-15. The other vehicle fled the scene. Id. ¶ 16. Plaintiff allegedly maintained a valid automobile insurance with Defendant. Id. ¶ 18. On October 4, 2010, Plaintiff made a claim to Defendant and demanded arbitration pursuant to the uninsured motorist liability provision of her policy. Id. ¶ 17. Defendant allegedly refused her claim and failed to respond to Plaintiff's demand for arbitration. Id. ¶ 10. On January 24, 2012, Plaintiff sent another letter to Defendant demanding arbitration; Defendant allegedly ignored the demand. Id. ¶ 11.
II. OPINION
A. Legal Standard
1. Standard for a Motion to Strike
Federal Rule of Civil Procedure 12(f) permits the Court to "strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." Fed. R. Civ. P. 12(f). "Redundant allegations are those that are needlessly repetitive or wholly foreign to the issues involved in the action." Cal. Dept. of Toxic Substances Control v. Alco Pacific, Inc., 217 F. Supp. 2d 1028, 1033 (C.D. Cal. 2002) (internal quotation marks and citations omitted). Immaterial matter is "that which has no essential or important relationship to the claim for relief or the defenses being pleaded." Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993) (internal quotation marks and citations omitted), rev'd on other grounds, 510 U.S. 517 (1994). Impertinent matter "consists of statements that do not pertain, and are not necessary, to the issues in question." Id. Scandalous matter is that which "improperly casts a derogatory light on someone, most typically on a party to the action." Germaine Music v. Universal Songs of Polygram, 275 F. Supp. 2d 1288, 1300 (D. Nev. 2003).
2. Standard for a Motion to Dismiss
A party may move to dismiss an action for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). To survive a motion to dismiss a plaintiff must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 556 U.S. 662, 570 (2007). In considering a motion to dismiss, a district court must accept all the allegations in the complaint as true and draw all reasonable inferences in favor of the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), overruled on other grounds by Davis v. Scherer, 468 U.S. 183 (1984); Cruz v. Beto, 405 U.S. 319, 322 (1972). "First, to be entitled to the presumption of truth, allegations in a complaint or counterclaim may not simply recite the elements of a cause of action, but must sufficiently allege underlying facts to give fair notice and enable the opposing party to defend itself effectively." Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011) , cert. denied, 132 S. Ct. 2101, 182 L. Ed. 2d 882 (U.S. 2012) . "Second, the factual allegations that are taken as true must plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation." Id. Assertions that are mere "legal conclusions" are therefore not entitled to the presumption of truth. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 555). Dismissal is appropriate when a plaintiff fails to state a claim supportable by a cognizable legal theory. Balistreri v. Pacifica Police Department, 901 F.2d 696, 699 (9th Cir. 1990).
Upon granting a motion to dismiss for failure to state a claim, a court has discretion to allow leave to amend the complaint pursuant to Federal Rule of Civil Procedure 15(a). "Dismissal with prejudice and without leave to amend is not appropriate unless it is clear . . . that the complaint could not be saved by amendment." Eminence Capital, L.L.C. v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003).
B. Judicial Notice
Defendant seeks judicial notice of the transcript for the September 18 Hearing. RJN, Doc. #36, Ex. 1. The transcript is the proper subject of judicial notice under Federal Rules of Evidence Rule 201 because a court may take judicial notice of "matters of public record." Lee v. City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001) (citation omitted).
Accordingly, the Court GRANTS Defendant's request for judicial notice.
C. Discussion
1. Motion to Strike
Defendant moves to strike Plaintiff's UCL Claim on behalf of the general public. Plaintiff argues that she may pursue the claim on behalf of the public at large without class certification, relying on Stop Youth Addiction, Inc. v. Lucky Stores, Inc., 17 Cal. 4th 553, 561-67 (1998).
In Stop Youth Addiction, the court held that a private party has UCL standing regardless of whether he or she is directly aggrieved. Stop Youth Addiction, 17 Cal. 4th at 561. However, after the State of California adopted Proposition 64, "private persons may no longer sue on behalf of the general public." Branick v. Downey Sav. & Loan Ass'n, 39 Cal. 4th 235, 240, 138 P.3d 214, 217 (2006). "Therefore, a private plaintiff must file a class action in order to represent the interests of others." Yanting Zhang v. Superior Court, 57 Cal. 4th 364, 372 (2013) (citing Arias v. Superior Court, 46 Cal. 4th 969, 980 (2009)).
Accordingly, Plaintiff cannot pursue this claim on behalf of the general public without certifying a class. In addition, Plaintiff clarified during the September 18 Hearing that she is not bringing a class action at this time and she does not claim to bring a class action in her opposition to the motion to strike. See September 18 Hearing transcript, Ex. 1, Doc. #36, at 3-4. Accordingly, the Court strikes her UCL Claim on behalf of the general public.
2. Motion to Dismiss
Defendant also moves to dismiss Plaintiff's request for attorney's fees under the breach of contract cause of action; attorney's fees pursuant to California Code of Civil Procedure Section 1021.5 ("Section 1021.5"); an "order enjoining Defendant from engaging in further false or deceptive advertising practices"; punitive damages pursuant to California Civil Code Section 3294; and disgorgement of all profits. Mot. at 1-2. Plaintiff concedes that her request for an "order enjoining Defendant from engaging in further false or deceptive advertising practices" and request for punitive damages pursuant to California Civil Code Section 3294 should be dismissed. Opp. at 2-3. Plaintiff opposes Defendant's motion to dismiss the other requested remedies.
Plaintiff also argues that the punitive damages claim under her bad faith cause of action is properly alleged. Defendant, however, moved to dismiss Plaintiff's claim for punitive damages under her UCL cause of action not under her bad faith cause of action. See Reply at 4.
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a. Breach of Contract Attorney's Fees
Plaintiff seeks attorney's fees for the breach of contract claim. However, Defendant argues that there is no allegation in the FAC that the underlying contract contains an attorney's fee provision. In her opposition, Plaintiff does not claim that the underlying contract has an attorney's fee provision, but instead argues that Plaintiff is entitled to attorney's fees and litigation costs pursuant to Brandt v. Superior Court, 37 Cal. 3d 813, 817 (1985). In Brandt, the California Supreme Court held that attorney's fees reasonably incurred to compel payment of insurance policy benefits are recoverable as an element of tort damages if the insured proves breach of the covenant of good faith and fair dealing. Id. Therefore, under Brandt, Plaintiff may recover attorney's fees under her bad faith claim, which she is already seeking. See Compl. at 15. However, Brandt does not apply to Plaintiff's breach of contract claim and attorney's fees are not recoverable for breach of contract claims "unless a statute or the agreement of the parties provides otherwise." Boles v. Merscorp, Inc., CV 08-1989 PSG (EX), 2009 WL 734135, at *4 (C.D. Cal. Mar. 18, 2009) (quoting Gray v. Don Miller & Assocs., Inc., 35 Cal.3d 498, 504 (1998)).
Accordingly, the Court dismisses Plaintiff's request for attorney's fees for the breach of contract claim. Because Plaintiff's request is legally foreclosed, the Court does not grant leave to amend.
b. Section 1021.5
Defendant moves to dismiss Plaintiff's request for attorney's fees pursuant to Section 1021.5 for the UCL claim. See Compl. at 15. Attorney's fees under Section 1021.5 are permissible "in any action which has resulted in the enforcement of an important right affecting the public interest." Cal. Civ. Proc. Code § 1021.5. Moreover, courts have recognized that under certain circumstances, attorney's fees under Section 1021.5 may be awarded in connection with a claim for violating California's UCL. See, e.g., Jackson v. Sturkie, 255 F. Supp. 2d 1096, 1107-08 (N.D. Cal. 2003). Defendant argues that Plaintiff cannot claim that this action was motivated by the public interest because she pursued this action on her own behalf for eight months. However, this eight-month period does not demonstrate that Plaintiff will not be able to show that her action resulted in the enforcement of an important right affecting the public interest if she is the prevailing party. In addition, "whether attorney's fees are appropriate under Section 1021.5 is an issue that is ordinarily decided after judgment has been entered." Ferretti v. Pfizer Inc., 11-CV-04486, 2013 WL 140088, at *22 (N.D. Cal. Jan. 10, 2013) (citation omitted).
Accordingly, the Court denies Defendant's motion to dismiss Plaintiff's request for attorney's fees under Section 1021.5.
c. Disgorgement of All Profits
Defendant moves to dismiss Plaintiff's request under the UCL claim for "disgorgement of all profits Defendant has earned for the period of 4 years prior . . . derived from the unlawful, unfair, and fraudulent practices complained of herein." Compl. at 16. Plaintiff opposes Defendant's motion but provides no grounds. See Opp. at 2, 12-14. Under the UCL, the available remedies are generally limited to injunctive relief and restitution. Zhang, 57 Cal. 4th at 372. The California Supreme Court has defined an order for "restitution" as one "compelling a UCL defendant to return money obtained through an unfair business practice to those persons in interest from whom the property was taken, that is, to persons who had an ownership interest in the property or those claiming through that person." Korea Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134, 1144-45 (2003) (quoting Kraus v. Trinity Mgmt. Servs., Inc., 23 Cal. 4th 116, 126-27 (2000)). In addition, "disgorgement" is a broader remedy than restitution and therefore, the court clarified that it "has never approved of nonrestitutionary disgorgement of profits as a remedy under the UCL." Id. at 1148.
Here, Plaintiff's request for disgorgement of all of Defendant's profits for the last four years is a request for nonrestitutionary disgorgement because Plaintiff has no ownership interest in all the profits. Therefore, Plaintiff's request is impermissible under the UCL. Accordingly, the Court grants Defendant's motion to dismiss Plaintiff's request for disgorgement of all profits Defendant has earned for the period of four years prior. The Court does not grant leave to amend because Plaintiff's request cannot be saved by amendment.
III. ORDER
For the reasons set forth above, the Court GRANTS Defendant's motion to strike and GRANTS in part and DENIES in part Defendant's motion to dismiss. The Court strikes Plaintiff's UCL claim on behalf of the general public and dismisses without leave to amend Plaintiff's request for attorney's fees for the breach of contract claim and Plaintiff's request for disgorgement of all profits. The Court denies Defendant's motion to dismiss Plaintiff's request for attorney's fees under Section 1021.5. The case will proceed on the First Amended Complaint without the UCL claim on behalf of the general public, the attorney's fees request for the breach of contract claim, and the disgorgement of all profits request. Defendant shall file its Answer to the FAC within twenty(20) days of the date of this Order.
IT IS SO ORDERED.
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JOHN A. MENDEZ,
UNITED STATES DISTRICT JUDGE