David Zuccolotto v. Zurich American Insurance Company et al

NOTICE OF MOTION AND MOTION to Dismiss Claims for Fraud and Negligent Misrepresentation ; Memorandum of Points and Authorities

C.D. Cal.July 29, 2016

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 83592431v1 1 SEDGWICK LLP Susan Koehler Sullivan State Bar No. 156418 susan.sullivan@sedgwicklaw.com Patricia A. Daza-Luu State Bar No. 261564 patricia.daza-luu@sedgwicklaw.com 801 South Figueroa Street, 19th Floor Los Angeles, CA 90017-5556 Telephone: 213.426.6900 Facsimile: 877.547.6580 Attorneys for Defendant ZURICH AMERICAN INSURANCE COMPANY UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA DAVID ZUCCOLOTTO, an individual, Plaintiff, v. ZURICH AMERICAN INSURANCE COMPANY; LANCER CLAIMS SERVICES, a Division of Brown & Brown Program Insurance Services, Inc.; and DOES 1 through 100, Defendants. CASE NO. 8:16-cv-01277 JLS (KESx) NOTICE OF MOTION AND MOTION OF DEFENDANT ZURICH AMERICAN INSURANCE COMPANY TO DISMISS CLAIMS FOR FRAUD AND NEGLIGENT MISREPRESENTATION; MEMORANDUM OF POINTS AND AUTHORTIES [FED.R.CIV.PROC. 12(b)(6)] [[Proposed] Order Filed Concurrently Herewith] Judge: Hon. Josephine L. Staton Courtroom: 10A Hearing Date: August 26, 2016 Hearing Time: 2:30 p.m. Action Filed: 04/26/2016 Trial Date: None TO ALL PARTIES AND TO THEIR ATTORNEYS OF RECORD: PLEASE TAKE NOTICE that on August 26, 2016, at 2:30 p.m., or as soon thereafter as counsel can be heard in Courtroom 9-D of the United States District Court, Central District of California, Southern Division, located at 411 West Fourth Street, Santa Ana, CA 92701-4516, defendant Zurich American Insurance Company Case 8:16-cv-01277-JLS-KES Document 15 Filed 07/29/16 Page 1 of 16 Page ID #:279 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 83592431v1 2 ("Zurich") will move the Court to dismiss plaintiff David Zuccolotto's claims for fraud and negligent misrepresentation pursuant to Federal Rules of Civil Procedure, Rule 12(b)(6). The Motion is made on grounds that plaintiff has attempted to parlay his breach of contract and breach of the implied covenant of fair dealing claims against his insurer into fraud and misrepresentation claims – but has failed to allege any facts which would support these claims as a matter of law. Pursuant to L.R. 7-3, a conference of counsel was held on July 8, 2016 and further discussions were held on this topic thereafter. The parties were unable to reach a stipulation regarding this Motion. DATED: July 29, 2016 SEDGWICK LLP By: /s/Susan Koehler Sullivan Susan Koehler Sullivan Patricia A. Daza-Luu Attorneys for Defendant ZURICH AMERICAN INSURANCE COMPANY Case 8:16-cv-01277-JLS-KES Document 15 Filed 07/29/16 Page 2 of 16 Page ID #:280 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 83592431v1 i TABLE OF CONTENTS PAGE MEMORANDUM OF POINTS AND AUTHORITIES ............................................. 1 I. INTRODUCTION ............................................................................................. 1 II. BACKGROUND FACTS ................................................................................. 2 III. CONFERENCE OF COUNSEL PURSUANT TO L.R. 7-3 ............................ 4 IV. ZUCCOLOTTO FAILS TO ALLEGE A FRAUD OR NEGLIGENT MISREPRESENTATION CLAIM AGAINST ZURICH ................................ 4 A. Applicable Legal Standard ...................................................................... 4 B. Zuccolotto Fails to Allege a Fraud or Concealment Claim Against Zurich ...................................................................................................... 5 1. Legal Standard for Fraud .............................................................. 5 2. Zuccolotto's Fraud Allegations Are Insufficient And Cannot Be Cured ............................................................................................. 6 3. Zuccolotto's Concealment Allegations Are Insufficient .............. 7 C. Zuccolotto's Claim for Negligent Misrepresentation Fails Given the Lack of a Legal Duty Owed by Zurich to Zuccolotto. ............................ 8 V. CONCLUSION ................................................................................................. 9 Case 8:16-cv-01277-JLS-KES Document 15 Filed 07/29/16 Page 3 of 16 Page ID #:281 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 83592431v1 ii TABLE OF AUTHORITIES PAGE Federal Cases Aulson v. Blanchard (1st Cir. 1996) 3 F.3d 1 ............................................................................................ 5 Balistreri v. Pacifica Police Dep't (9th Cir. 1988) 901 F.2d 696 .................................................................................... 5 City of Arcadia v. United States EPA (9th Cir. 2005) 411 F.3d 1103 .................................................................................. 5 Decker v. GlenFed Inc. (9th Cir. 1994) 42 F.3d 1541 .................................................................................... 6 In re Burlington Coat Factory Sec. Litig. (3d Cir. 1997) 114 F.3d 1410 ................................................................................... 6 Maddux v. Philadelphia Life Ins. Co. (S.D. Cal. 1999) 77 F.Supp.2d 1123 ........................................................................ 6 MGIC Indem. Corp. v. Weisman (9th Cir. 1986) 803 F.2d 500 .................................................................................... 4 Paulson v. State Farm Mut. Auto. Ins. Co. (C.D. Cal. 1994) 867 F.Supp. 911 ........................................................................... 7 Schmier v. United States Court of Appeals (9th Cir. 2002) 279 F.3d 817 .................................................................................... 5 Schreiber Distrib. v. Serv-Well Furniture Co. (9th Cir. 1986) 806 F.2d 1393 .................................................................................. 5 U.S. Grant Hotel Ass’n, Ltd. Sec. Litig. (S.D. Cal. 1990) 740 F.Supp. 1460 .......................................................................... 6 Vess v. Ciba-Geigy Corp. USA (9th Cir. 2003) 317 F.3d 1097 .............................................................................. 5, 6 Case 8:16-cv-01277-JLS-KES Document 15 Filed 07/29/16 Page 4 of 16 Page ID #:282 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 83592431v1 iii State Cases Barnhouse v. City of Pinole (1982) 133 Cal.App.3d 171 ...................................................................................... 8 Bily v. Arthur Young & Co. (1992) 3 Cal.4th 370................................................................................................. 9 Brown v. Guarantee Ins. Co. (1957) 155 Cal.App.2d 679 .............................................................................. 1, 5, 9 Chase Chemical Co. v. Hartford Accident & Indemnity Co. (1984) 159 Cal.App.3d 229 ...................................................................................... 8 Crayton v. Superior Court (1984) 165 Cal.App.3d 443 ...................................................................................... 8 Eaton Hydraulics Inc. v. Continental Cas. Co. (2005) 132 Cal.App.4th 966 ................................................................................. 6, 7 Eddy v. Sharp (1988) 199 Cal.App.3d 858 ...................................................................................... 9 New Plumbing Contractors, Inc. v. Nationwide Mut. Ins. Co. (1992) 7 Cal.App.4th 1088 ....................................................................................... 8 Orient Handel v. U.S. Fid. & Guar. Co. (1987) 192 Cal.App.3d 684 ...................................................................................... 5 Roberts v. Ball, Hunt, Hart, Brown and Barwitz (1976) 57 Cal.App.3d 104 ........................................................................................ 5 Sanchez v. Lindsey Mordent Claims Services, Inc. (1999) 72 Cal.App.4th 249 ....................................................................................... 9 Scafidi v. Western Loan & Bldg. Co. (1946) 72 Cal.App.2d 550 ........................................................................................ 7 Stansfield v. Starkey (1990) 220 Cal.App.3d 59 ........................................................................................ 5 Case 8:16-cv-01277-JLS-KES Document 15 Filed 07/29/16 Page 5 of 16 Page ID #:283 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 83592431v1 iv Vu v. Prudential Prop. & Cas. Ins. Co. (2001) 26 Cal.4th 1142 ............................................................................................ 8 Federal Statutes Internal Revenue Code Section 419(e) ("Section 419 plan") ................................................................ 1, 2, 7 Other Authorities CACI Jury Instruction 1901 ........................................................................................ 8 Case 8:16-cv-01277-JLS-KES Document 15 Filed 07/29/16 Page 6 of 16 Page ID #:284 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 83592431v1 1 MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION Plaintiff David Zuccolotto ("Zuccolotto") has sued defendant Zurich American Insurance Company's ("Zurich") for failing to provide coverage including a defense, in the recently resolved underlying action against Zuccolotto captioned Genesis Specialty Tile, et al. v. Amerus Life Insurance Company of Iowa, et al., Sacramento Superior Court Case No. 34-2011-00106129 ("Underlying Action"). Zurich seeks dismissal of Zuccolotto's claims for fraud and negligent misrepresentation because Zuccolotto's garden variety claims for breach of contract and bad faith do not, as a matter of law, support these claims. In the Underlying Action, plaintiffs alleged that Zuccolotto (a life insurance agent) and other defendants sold them a "sham" Internal Revenue Code § 419(e) plan ("Section 419 plan"). In particular, the underlying plaintiffs alleged that Zuccolotto and others purported to sell them life insurance through the mechanism of an employee benefit plan which would provide various tax benefits (under Section 419), but instead resulted in a large tax bill from the IRS. Zuccolotto alleges that Zurich wrongfully denied coverage, including asserting that Zurich improperly based its denial on a policy exclusion for claims arising from advice regarding a Section 419 plan (the "419 exclusion"). Zurich does not seek dismissal of the breach of contract and bad faith claims at this time, but only of the fraud, and negligent misrepresentation claims which are not, and cannot be properly pled here. Zuccolotto's fraud and negligent misrepresentation claims are based on the following: 1) Allegations that Zurich wrongfully denied coverage (which are not actionable as fraud or misrepresentation as a matter of law); 2) Conclusory and unsupported allegations that Zurich misled Zuccolotto concerning the time within which he could file an action (which are also incorrect as Case 8:16-cv-01277-JLS-KES Document 15 Filed 07/29/16 Page 7 of 16 Page ID #:285 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 83592431v1 2 a matter of law because the time within which to sue Zurich was tolled until the Underlying Action was resolved earlier this year); and 3) Conclusory and unsupported allegations that Zurich "concealed" or misrepresented that it had no intention of providing coverage (which as a matter of law are insufficient to transform a coverage action into a fraud/misrepresentation action) Further, Zuccolotto fails to indicate how any of the purported "misrepresentations" giving rise to these claims were false. Zuccolotto admits that the Underlying Action alleged Zuccolotto sold a "sham" 419 plan, and the allegations to that effect are plainly contained in the underlying complaints. Zuccolotto simply takes issue with Zurich's denial based on the 419 exclusion, but his disagreement with Zurich's coverage position coupled with conclusory allegations regarding some purported "plan to deny the claim" are not sufficient to state a claim for fraud or negligent misrepresentation under California law. Accordingly, Zurich respectfully requests an order dismissing Zuccolotto's claims for fraud and negligent misrepresentation pursuant to Federal Rules of Civil Procedure, Rule 12(b)(6). II. BACKGROUND FACTS Zuccolotto alleges Zurich failed to provide coverage for Zuccolotto's defense and indemnity in the Underlying Action. Zuccolotto alleges that in the Underlying Action, plaintiffs alleged that Zuccolotto and other defendants purported to sell them a Section 419 plan which would provide various tax benefits (as allowed under the Code), but in truth, was a "sham…devised solely to facilitate the sale of life insurance policies which would generate exorbitant commissions." (Complaint, ¶ 26.) Because the plan sold was ultimately determined not to qualify as a Section 419 plan for tax purposes, plaintiffs alleged they were confronted with a large tax bill from the IRS, which they blamed on Zuccolotto and other co-defendants. Zuccolotto claims that upon tender, Zurich owed him a defense and indemnity Case 8:16-cv-01277-JLS-KES Document 15 Filed 07/29/16 Page 8 of 16 Page ID #:286 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 83592431v1 3 obligation in the Underlying Action under the Zurich policy. (Complaint, ¶ 8.) Zuccolotto further alleges that Zurich improperly relied on the 419 Exclusion. (See, Complaint, ¶ 12, Exh. A, Sect. VI(O)(9).) Zuccolotto alleges Lancer was hired by Zurich to adjust the claim,1 but that Lancer falsely advised Zurich that the Underlying Action was not covered pursuant to the 419 Exclusion. (Complaint, ¶ 11.) Zuccolotto further alleges that through Lancer Employee Todd Platt, Zurich made a number of misrepresentations of material fact, specifically:  On September 14, 2011, Todd Platt, misrepresented in writing that the [Underlying Action] involved a 419 plan…  On September 14, 2011…Todd Platt [] misrepresented in writing that according to its underwriting records, Plaintiff maintained insurance from July 1, 2011…  On September 14, 2011…Todd Platt [] misrepresented in writing that the [Underlying Action] involved [Zuccolotto] selling and servicing a 419 welfare benefit plan…  On October 2, 2012…Todd Platt [] misrepresented in writing that the [Underlying Action] alleges [Zuccolotto] sold a sham 419 plan, which is barred by [the 419 Exclusion]… 1 Zurich removed this action on July 8, 2016 based on diversity jurisdiction, including because Zuccolotto fraudulently joined Zurich's third party claim handler, Lancer Claims Services ("Lancer"). (ECF 1.) As of the filing of this Motion, Lancer has not been served with the Summons and Complaint in this action. Case 8:16-cv-01277-JLS-KES Document 15 Filed 07/29/16 Page 9 of 16 Page ID #:287 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 83592431v1 4  On October 2, 2012…Todd Platt [] misrepresented in writing that the [Underlying Action] did not contain allegations of wrongdoing involving the sale of the life insurance policies that were intended to fund the [419 plan]…. (Complaint, ¶ 41.) Zuccolotto further alleges that Zurich concealed that it never intended to conduct a fair and objective investigation, and purposely concealed the statute of limitations with regard to when Zuccolotto had to file this lawsuit. (Complaint, ¶ 43.) Zuccolotto alleges he relied on these misrepresentations, and as a result, did not file a lawsuit earlier. (Complaint, ¶ 44.) Zuccolotto claims that as a result of Zurich's misrepresentations regarding the nature of the Underlying Action, and its purported concealment of its plan to not conduct a fair investigation, that Zuccolotto failed to timely file suit, thereby suffering damages. (Complaint, ¶ 44.) Against Zurich, Zuccolotto alleges claims for breach of contract, bad faith, fraud, and negligent misrepresentation. For the reasons stated below, Zuccolotto fails to allege a valid fraud or negligent misrepresentation claim against Zurich. III. CONFERENCE OF COUNSEL PURSUANT TO L.R. 7-3 Pursuant to L.R. 7-3, a conference of counsel was held on July 8, 2016 with further discussions and correspondence after that date. However, the parties were unable to reach a stipulation regarding this Motion. IV. ZUCCOLOTTO FAILS TO ALLEGE A FRAUD OR NEGLIGENT MISREPRESENTATION CLAIM AGAINST ZURICH A. Applicable Legal Standard A Rule 12(b)(6) motion tests the legal sufficiency of the claims stated in the complaint. Claims may be dismissed under Rule 12(b)(6) if the defect appears on the face of the pleading or from a matter of which the court may take judicial notice. See, MGIC Indem. Corp. v. Weisman, (9th Cir. 1986) 803 F.2d 500, 504. A Case 8:16-cv-01277-JLS-KES Document 15 Filed 07/29/16 Page 10 of 16 Page ID #:288 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 83592431v1 5 dismissal is proper where there is either a “lack of a cognizable legal theory” or “the absence of sufficient facts alleged under a cognizable legal theory.” City of Arcadia v. United States EPA, (9th Cir. 2005) 411 F.3d 1103, 1106; Balistreri v. Pacifica Police Dep't, (9th Cir. 1988) 901 F.2d 696, 699. Moreover, in ruling on a Rule 12(b)(6) motion, the court need not accept as true conclusory allegations or unwarranted inferences. Schmier v. United States Court of Appeals, (9th Cir. 2002) 279 F.3d 817, 820. Bald assertions and unsupportable conclusions can be disregarded. Aulson v. Blanchard, (1st Cir. 1996) 3 F.3d 1, 3. B. Zuccolotto Fails to Allege a Fraud or Concealment Claim Against Zurich 1. Legal Standard for Fraud In order to state a cause of action for fraud, a plaintiff must plead that: (1) the defendant made false representations to plaintiff, (2) defendant knew the misrepresentations were false, (3) the misrepresentations were made with the intent to defraud, (4) plaintiff justifiably relied upon such misrepresentations, and (5) plaintiff suffered damages as a result of such reliance. Roberts v. Ball, Hunt, Hart, Brown and Barwitz, (1976) 57 Cal.App.3d 104, 109; Stansfield v. Starkey, (1990) 220 Cal.App.3d 59, 72-73; Orient Handel v. U.S. Fid. & Guar. Co., (1987) 192 Cal.App.3d 684, 692-693; Vess v. Ciba-Geigy Corp. USA, (9th Cir. 2003) 317 F.3d 1097, 1103 (federal court "will example state law to determine elements of fraud"). Fraud has a heightened pleading standard, requiring the plaintiff to describe the specific representations made and the grounds for their falsity. See, FRCP 9(b) ("In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake."); Vess, supra, 317 F.3d at 1103. Accordingly, a plaintiff must allege specific details about each purported fraudulent communication, including the date, place and specific content of the communication, as well as the parties to the communication. Schreiber Distrib. v. Serv-Well Furniture Co., (9th Cir. 1986) 806 F.2d 1393, 1401; U.S. Grant Hotel Case 8:16-cv-01277-JLS-KES Document 15 Filed 07/29/16 Page 11 of 16 Page ID #:289 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 83592431v1 6 Ass’n, Ltd. Sec. Litig., (S.D. Cal. 1990) 740 F.Supp. 1460, 1470. In addition, plaintiffs must allege what is false and misleading about a statement, and why it is false. Decker v. GlenFed Inc., (9th Cir. 1994) 42 F.3d 1541, 1548. When a plaintiff fails to satisfy the pleading standards of Rule 9(b), dismissal is appropriate. Vess, supra, 317 F.3d at 1107; In re Burlington Coat Factory Sec. Litig., (3d Cir. 1997) 114 F.3d 1410, 1424. 2. Zuccolotto's Fraud Allegations Are Insufficient And Cannot Be Cured Zuccolotto's fraud claim is nothing more than a repackaged breach of contract claim, coupled with a mistaken concern that he filed this action beyond the statute of limitations.2 Zuccolotto's complaint makes clear that he disagrees with Zurich's denial of his claim on the basis that it arose from the sale of a "sham" 419 plan. (Complaint, ¶ 10-11.) Zuccolotto also includes an allegation that Platt "misrepresented in writing that…[Zuccolotto] maintained insurance from July 1, 2011…" (Complaint, ¶ 41.) But Zuccolotto fails to allege any that he was misled or otherwise suffered any harm resulting from this purported misrepresentation other than the fact that he disputes Zurich's coverage position. These allegations do not satisfy the elements of a fraud claim listed above, but point only to a coverage dispute (plaintiff's breach of contract and bad faith claims). Zuccolotto's conclusory allegation that Zurich had a "plan" to deny his claim, is also patently insufficient to serve as a basis for a fraud or concealment claim. If that were the case, every insurer's denial of coverage would automatically be actionable as fraud – a result the courts have rejected. See, Maddux v. Philadelphia Life Ins. Co., (S.D. Cal. 1999) 77 F.Supp.2d 1123, 1131-32 (allegation that insurer did not intend to pay benefits under policy insufficient to serve as basis for fraud or 2 As discussed below, Zuccolotto appears to misunderstand that his time to file suit against Zurich was tolled until final resolution of the Underlying Action. See, Eaton Hydraulics Inc. v. Continental Cas. Co., (2005) 132 Cal.App.4th 966, 973. Case 8:16-cv-01277-JLS-KES Document 15 Filed 07/29/16 Page 12 of 16 Page ID #:290 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 83592431v1 7 concealment claim); Paulson v. State Farm Mut. Auto. Ins. Co., (C.D. Cal. 1994) 867 F.Supp. 911, 920 ("mere denial of coverage will not suffice [to establish fraud claim]"). Zuccolotto also alleges "fraud" based on his apparent mistaken assumption that his lawsuit is time-barred. (Complaint, ¶ 43-44.) However, Zuccolotto's allegation in this regard is erroneous as a matter of law. The statute of limitations has not run for him to file a bad faith lawsuit against Zurich, because the statute is tolled until the final resolution of the Underlying Action. See, Eaton Hydraulics Inc., 132 Cal.App.4th at 973 ("[I]t is settled that the duty to defend is continuing, and that the limitations period is equitably tolled…until the underlying lawsuit is terminated by a final judgment."). As the docket for the Underlying Action indicates the matter was only recently settled on or about June 1, 2016. Accordingly, the "clock" on Zuccolotto's time to file an action against Zurich has only recently commenced. (ECF 10-2, p. 11.) In addition to Zuccolotto's failure to plead the fraud claim with particularity, Zuccolotto fails to indicate how Platt's purported "misrepresentations" were false. Scafidi v. Western Loan & Bldg. Co., (1946) 72 Cal.App.2d 550, 558 (must describe the specific representations made and the grounds for their falsity). Zuccolotto readily admits in the Complaint that the Underlying Action alleged Zuccolotto sold a "sham" 419 plan, thus raising the issue of the applicability of the 419 Exclusion. (See, Complaint, ¶ 7.) The fact that Zuccolotto disagrees with the application of the 419 Exclusion here does not provide a factual basis for a fraud or misrepresentation claim. Further, Zurich could not have misrepresented or failed to disclose that the limitations period was running out – because it hasn't run out and in fact only started running shortly before this suit was filed. 3. Zuccolotto's Concealment Allegations Are Insufficient Zuccolotto also fails to state a claim for fraud based upon concealment or nondisclosure because he has not identified any duty to disclose on the part of Case 8:16-cv-01277-JLS-KES Document 15 Filed 07/29/16 Page 13 of 16 Page ID #:291 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 83592431v1 8 Zurich. Chase Chemical Co. v. Hartford Accident & Indemnity Co., (1984) 159 Cal.App.3d 229, 239. Absent an existing duty to volunteer information, and notice of such duty, mere failure to disclose does not constitute fraud. Crayton v. Superior Court, (1984) 165 Cal.App.3d 443, 451. The duty to disclose may arise by statute, the existence of a fiduciary relationship, or in the absence of a fiduciary relationship, “when one party to a transaction has sole knowledge or access to material facts and knows that such facts are not known or readily discoverable by the other party.” Barnhouse v. City of Pinole, (1982) 133 Cal.App.3d 171, 187; CACI Jury Instruction 1901. However, an insurer is not a fiduciary. Vu v. Prudential Prop. & Cas. Ins. Co., (2001) 26 Cal.4th 1142, 1151 (citations omitted). And it is well settled that, "[e]ven assuming a fiduciary-type relationship exists, neither the duty nor the covenant of good faith and fair dealing extend beyond the terms of the insurance contract in force between the parties.” New Plumbing Contractors, Inc. v. Nationwide Mut. Ins. Co., (1992) 7 Cal.App.4th 1088, 1096. Here, there are no "facts" alleged by Zuccolotto that Zurich was obligated to disclose per the terms of the policy attached to the complaint. Zuccolotto also fails to allege any representations of fact that Lancer had a duty to disclose. Instead, Zuccolotto makes conclusory arguments that: (1) Zurich never intended to provide coverage which, as described above, are not actionable as against Zurich as a matter of law; or (2) that Zurich misled Zuccolotto into missing the deadline to file suit which, as described above, is also without merit. Because Zuccolotto cannot state claims for fraud based on misrepresentation or concealment as a matter of law, those claims should be dismissed without leave to amend. C. Zuccolotto's Claim for Negligent Misrepresentation Fails Given the Lack of a Legal Duty Owed by Zurich to Zuccolotto. The elements of a claim for negligent misrepresentation mirror those of a fraud claim, but also require the existence of a legal duty owed by a defendant to the Case 8:16-cv-01277-JLS-KES Document 15 Filed 07/29/16 Page 14 of 16 Page ID #:292 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 83592431v1 9 injured person. See, CACI 1901; Bily v. Arthur Young & Co., (1992) 3 Cal.4th 370, 407-08. Since Zuccolotto's claim for negligent misrepresentation is based on exactly the same facts alleged in his fraud claim, his negligent misrepresentation claim similarly fails. (Complaint, ¶ 46.) Additionally, as discussed in connection with the concealment claim, there is no duty owed by Zurich to Zuccolotto with reference to any alleged representations or misrepresentations. The determination of whether a duty exists is primarily a question of law. Eddy v. Sharp, (1988) 199 Cal.App.3d 858, 864. And it is well settled that an insurer does not owe separate or additional duties to the insured – other than those based on and arising from the contract. See, e.g., Brown v. Guarantee Ins. Co., (1957) 155 Cal.App.2d 679, 688-89 (“we are convinced that only bad faith should be the basis of the insured’s cause of action”); Sanchez v. Lindsey Mordent Claims Services, Inc., (1999) 72 Cal.App.4th 249, 254 (“Negligence is not among the theories of recovery generally available against insurers.”). V. CONCLUSION Zuccolotto's Complaint fails to allege facts which satisfy the required elements of a claim for fraud or negligent misrepresentation. Plaintiff has alleged claims for breach of contract and bad faith, but his attempt to parlay this coverage dispute into additional misrepresentation-based tort claims is without merit. Because there are no factual allegations of any misrepresentations or concealments of fact which are or could be actionable as fraud or misrepresentation here, Defendant Zurich American Insurance Company respectfully requests that the Court dismiss Zuccolotto's claims for fraud and negligent misrepresentation without leave to amend. Case 8:16-cv-01277-JLS-KES Document 15 Filed 07/29/16 Page 15 of 16 Page ID #:293 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 83592431v1 10 DATED: July 29, 2016 SEDGWICK LLP By: /s/Susan Koehler Sullivan Susan Koehler Sullivan Patricia A. Daza-Luu Attorneys for Defendant ZURICH AMERICAN INSURANCE COMPANY Case 8:16-cv-01277-JLS-KES Document 15 Filed 07/29/16 Page 16 of 16 Page ID #:294 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 83595403v1 1 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA DAVID ZUCCOLOTTO, an individual, Plaintiff, v. ZURICH AMERICAN INSURANCE COMPANY; LANCER CLAIMS SERVICES, a Division of Brown & Brown Program Insurance Services, Inc.; and DOES 1 through 100, Defendants. CASE NO. 8:16-cv-01277 JLS (KESx) [PROPOSED] ORDER GRANTING DEFENDANT ZURICH AMERICAN INSURANCE COMPANY MOTION TO DISMISS CLAIMS FOR FRAUD AND NEGLIGENT MISREPRESENTATION [FED.R.CIV.PROC. 12(b)(6)] Judge: Hon. Josephine L. Staton Courtroom: 10A Hearing Date: August 26, 2016 Hearing Time: 2:30 p.m. Action Filed: 04/26/2016 Trial Date: None Defendant Zurich American Insurance Company's ("Zurich") motion to dismiss claims for fraud and negligent representation came on regularly for hearing in Courtroom 10A of the above-entitled Court, the Honorable Josephine L. Staton presiding. Evan M. Selik and Ari E. Moss appeared on behalf of Plaintiff David Zuccolotto ("Plaintiff"). Susan Koehler Sullivan of Sedgwick LLP appeared for Zurich. Case 8:16-cv-01277-JLS-KES Document 15-1 Filed 07/29/16 Page 1 of 2 Page ID #:295 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 83595403v1 2 After consideration of the moving papers and for good cause shown, the Court orders as follows: 1. Zurich's Motion to Dismiss Claims for Fraud and Negligent Misrepresentation is GRANTED. 2. Plaintiff's claims for fraud and negligent misrepresentation are hereby DISMISSED with prejudice without leave to amend. IT IS SO ORDERED. DATED: ___________, 2016 By: Honorable Josephine L. Staton Case 8:16-cv-01277-JLS-KES Document 15-1 Filed 07/29/16 Page 2 of 2 Page ID #:296