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CRAWFORD & COMPANY’S NOTICE OF MOTION AND MOTION TO DISMISS
Stephanie Alexander, State Bar No. 205701
Douglas J. Van Blarcom, State Bar No. 179611
GORDON & REES LLP
2211 Michelson Drive, Suite 400
Irvine, California 92612
Telephone: 949-255-6965
Facsimile: 949-474-2060
Email: salexander@gordonrees.com
Email: dvanblarcom@gordonrees.com
Attorneys for Defendant
CRAWFORD & COMPANY
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA - WESTERN DIVISION
ST. PAUL MERCURY INSURANCE
COMPANY, a Connecticut
corporation,
Plaintiff,
vs.
CRAWFORD & COMPANY, a
Georgia corporation; and DOES 1-25,
inclusive,
Defendants.
CASE NO: 2:16-cv-08462
Judge: Hon. John Kronstadt
Courtroom: 10B
CRAWFORD & COMPANY’S
NOTICE OF MOTION AND
MOTION TO DISMISS THE
BREACH OF ORAL CONTRACT
AND UNJUST ENRICHMENT
CLAIMS ALLEGED IN THE
COMPLAINT OF ST. PAUL
MERCURY INSURANCE COMPANY
Hearing Date: April 10, 2017
Time: 8:30 a.m.
Complaint Filed: November 14, 2016
Trial Date: None Set
///
///
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CRAWFORD & COMPANY’S NOTICE OF MOTION AND MOTION TO DISMISS
TO ALL INTERESTED PARTIES AND THEIR ATTORNEYS OF
RECORD:
PLEASE TAKE NOTICE that on April 10, 2017, at 8:30 a.m. in Courtroom
10B of the United States Courthouse, located at 350 W. First Street, Los Angeles,
California 90012, Defendant Crawford & Company (“Crawford” or “Defendant”),
will and hereby does move for an order dismissing the Breach of Oral Contract and
Unjust Enrichment claims alleged in the Complaint of plaintiff St. Paul Mercury
Insurance Company (“St. Paul” or “Plaintiff”). The Breach of Oral Contract claim
is barred by application of the statute of limitations set forth in California Code of
Civil Procedure § 339 and therefore fails to state a valid claim against Crawford.
Plaintiff’s Unjust Enrichment Claim also fails to state a valid claim against
Crawford as it fails to allege essential elements and is also duplicative of Plaintiff’s
claims for Equitable Indemnification and Contribution.
This Motion is brought pursuant to Rules 12(b)(6) of the Federal Rules of
Civil Procedure and is based upon this Notice of Motion and Motion, on the Court’s
file in the instant action, on matters subject to judicial notice, and on such other
argument as the Court may entertain at the hearing on this Motion.
This motion is being filed after good faith disputes remain as to the viability
of the claims sought to be dismissed herein following the parties engagement in
meet and confer efforts pursuant to L.R. 7-3 dated January 26, 2017; January 31,
2017; and by conference held on February 3, 2017.
Dated: February 3, 2017 GORDON & REES LLP
By: /s/ Douglas J. Van Blarcom
Stephanie P. Alexander
Douglas J. Van Blarcom
Attorneys for Defendant
CRAWFORD & COMPANY
Case 2:16-cv-08462-JAK-JPR Document 20 Filed 02/03/17 Page 2 of 14 Page ID #:150
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CRAWFORD & COMPANY’S NOTICE OF MOTION AND MOTION TO DISMISS
TABLE OF CONTENTS
Page(s)
I. SUMMARY OF ARGUMENT ......................................................................... 1
II. SUMMARY OF RELEVANT ALLEGATIONS ............................................. 1
III. LAW GOVERNING BREACH OF ORAL CONTRACT AND UNJUST
ENRICHMENT CLAIMS ................................................................................. 3
IV. ARGUMENT AND CITATION OF AUTHORITY ........................................ 3
A. Standard for Motion to Dismiss for Failure to State a Claim. ........................... 3
B. St. Paul’s Breach of Oral Contract Claim is Barred by California’s Statute of
Limitation. ......................................................................................................... 4
C. St. Paul Fails to State a Claim for Unjust Enrichment. ..................................... 6
D. St. Paul’s Claim for Unjust Enrichment is Duplicative of its Claims for
Equitable Indemnification and Contribution. .................................................... 8
V. CONCLUSION .................................................................................................. 9
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CRAWFORD & COMPANY’S NOTICE OF MOTION AND MOTION TO DISMISS
TABLE OF AUTHORITIES
Cases
Amerigas Propane, LP v. Landstar Ranger, Inc.
184 Cal.App.4th 981, 989 (2010) ............................................................................. 8
Ashcroft v. Iqbal
129 S.Ct. 1937, 1949 (2009) .................................................................................... 3
Boon Rawd Trading International Co., Ltd. v. Paleewong Trading Co., Inc.
688 F.Supp.2d 940, 956 (N.D. Cal.2010) ............................................................ 6, 7
Children’s Hospital v. Sedgwick
45 Cal.App.4th 1780, 1786 (1996) ........................................................................... 8
Cochran v. Cochran
56 Cal.App.4th 1115, 1124 (1997) ........................................................................... 5
Epstein v. Wash. Energy Co.
83 F.3d 1136, 1140 (9th Cir.1996) ........................................................................... 3
Erie Railroad Co. v. Tompkins
58 S.Ct. 817 (1938) .................................................................................................. 3
Fireman's Fund Ins. Co. v. Maryland Cas. Co.
65 Cal.App.4th 1279, 1292 (1998) ................................................................... 4, 5, 8
Guaranty Trust Co. v. York
65 S.Ct. 1464, 1470 (1945) ...................................................................................... 3
Gulf Ins. Co. v. TIG Ins. Co.
86 Cal.App.4th 422, 432 (2001) ............................................................................... 4
Jablon v. Dean Witter & Co.
614 F.2d 677, 682 (9th Cir.1980) ............................................................................. 4
Lindley v. General Elec. Co.
780 F.2d 797, 799–800 (9th Cir.1986) ..................................................................... 3
McBride v. Boughton
123 Cal.App.4th 379, 387 (2004) ..................................................................... 6, 7, 8
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Moss v. Infinity Insurance Co.
2016 WL 3753109 at *2 (N.D. Cal. July 14, 2016). ................................................ 5
Paracor Fin., Inc. v. Gen. Elec. Capital Corp.
96 F.3d 1151, 1167 (9th Cir.1996) ........................................................................... 7
Park v. Welch Foods, Inc.
2013 WL 5405318 at *5 (N.D. Cal. Sept. 26, 2013) ........................................... 8, 9
Remington Investments, Inc. v. Kadenacy
930 F.Supp. 446, 448 (C.D. Cal.1996)..................................................................... 3
State Farm Fire & Casualty Co. v. East Bay Municipal Utility Dist.
53 Cal.App. 4th 769, 774 (1997) .............................................................................. 4
Zecos v. Nicholas-Applegate Capital Management
42 Fed. App’x. 31, 31 (9th Cir.2002) ....................................................................... 5
Statutes
Cal. Code Civ. Pro. § 339 ........................................................................................ 2, 5
Rules
Fed. R. Civ. Pro. 12(b)(6) .................................................................................... 2, 1, 3
Fed. R. Civ. Pro. 15(c) ................................................................................................. 3
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COMES NOW Defendant Crawford & Company (“Crawford”) and submits
this Motion to Dismiss Plaintiff St. Paul Mercury Insurance Company’s (“St. Paul”
or “Plaintiff”) claims for Breach of Oral Contract and Unjust Enrichment as alleged
in its Complaint pursuant to Fed. R. Civ. Pro. 12(b)(6). In support of this Motion to
Dismiss, Crawford shows the following:
I. SUMMARY OF ARGUMENT
St. Paul’s claim for Breach of Oral Contract is time barred by the applicable
statute of limitations. Plaintiff’s claims are based upon Crawford’s alleged improper
administration, adjusting, and handling six workers’ compensation claims under the
direction of Baldwin & Lyon (“BL”) in California and Nevada. The first action on
the Breach of Oral Contract claim was filed on November 14, 2016, which is more
than two years after the alleged breach occurred. For this reason, St. Paul’s claim
for Breach of Oral Contract is barred by California’s applicable two (2) year statute
of limitation and must be dismissed.
In addition, St. Paul fails to state a claim for Unjust Enrichment. St. Paul has
alleged that an enforceable oral contract exists. There are no claims or allegations
that the express oral contract was procured by fraud or was ineffective. Further, to
the extent St. Paul’s claim for Unjust Enrichment relies solely on its payment of
defense and settlement costs in the underlying litigation with Knight Transportation,
Inc. (“Knight”), St. Paul’s claim for Unjust Enrichment is duplicative of St. Paul’s
Equitable Indemnification and Contribution claims. For these reasons, St. Paul’s
Unjust Enrichment claim must be dismissed.
II. SUMMARY OF RELEVANT ALLEGATIONS
St. Paul’s Complaint alleges the following: from 2001 through 2009, BL was
a Third Party Administrator (“TPA”) for Knight’s self-insured workers’
compensation program. (Complaint, ¶¶ 2, 19.) In 2010, Knight sued BL alleging
that BL negligently failed to properly, legally, and efficiently administer, adjust, and
handle 93 work-related injury claims assigned to BL by Knight (the “Underlying
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Litigation”). (Compl., ¶¶ 3, 20.) With regard to six of the 93 claims, Crawford was
hired as an in-state TPA by BL to adjust the claims. (Compl., ¶ 21.) Knight filed
the Underlying Litigation, in part, because of Crawford’s alleged improper
administration of the six claims. (Compl., ¶ 22.) Although BL moved to add
Crawford as a cross-defendant in the Underlying Litigation in 2013, the court denied
the motion without prejudice. (Compl., ¶ 24.) In April 2014, BL settled the
Underlying Litigation pursuant to a confidential settlement. (Compl., ¶ 26.)
By virtue of defending all 93 claims in the Underlying Litigation, BL and St.
Paul paid more than their equitable share of the attorneys’ fees, expert fees, costs,
damages, expenses, and other payments and conferred a substantial benefit on
Crawford. (Compl., ¶¶ 28-29.) To the extent defense fees, expert fees, costs,
expenses, damages, and settlement payments were made in the Underlying
Litigation on account of Crawford’s negligent claim handling and breach of its oral
contract with BL, St. Paul alleges that Crawford is liable for such payments.
(Compl., ¶¶ 30-31.)
St. Paul alleges six causes of action against Crawford: 1) Equitable
Indemnification, 2) Implied Indemnification, 3) Equitable Subrogation, 4)
Contribution, 5) Breach of Oral Contract, and 6) Unjust Enrichment. (Compl., ¶¶
32-67.) The Complaint further alleges that Crawford’s negligent handling of six
workers’ compensation claims on behalf of BL breached an oral contract with BL
and led to BL and St. Paul paying more than their fair share of defense and
settlement costs in the Underlying Litigation with Knight. (Id.)
Although Crawford denies any wrongdoing and all liability to St. Paul,
Crawford assumes for purposes of this motion only that St. Paul’s allegations are
true. Nonetheless, as explained herein, St. Paul’s claim for Breach of Oral Contract
is barred by the applicable statute of limitations. Additionally, St. Paul failed to
properly state a claim for Unjust Enrichment, and St. Paul’s Unjust Enrichment
claim is duplicative of St. Paul’s Equitable Indemnification and Contribution claims.
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Accordingly, St. Paul’s claims for Breach of Oral Contract and Unjust Enrichment
must be dismissed.
III. LAW GOVERNING BREACH OF ORAL CONTRACT AND
UNJUST ENRICHMENT CLAIMS
A district court sitting in diversity must apply the substantive law of the
forum state. Erie Railroad Co. v. Tompkins 58 S.Ct. 817 (1938). To the extent St.
Paul attempts to state claims for Breach of Oral Contract and Unjust Enrichment,
such claims are governed by the laws of California. Further, statutes of limitations
are substantive and not procedural. Guaranty Trust Co. v. York 65 S.Ct. 1464, 1470
(1945); see Lindley v. General Elec. Co. 780 F.2d 797, 799–800 (9th Cir.1986),
cert. denied, 106 S.Ct. 2926 (1986) (holding that California’s statute of limitations
applied when determining whether the plaintiffs’ action was time-barred pursuant to
Fed. R. Civ. Pro. 15(c)); Remington Investments, Inc. v. Kadenacy 930 F.Supp. 446,
448 (C.D. Cal.1996). As such, California’s relevant statute of limitations applies to
St. Paul’s claim for Breach of Oral Contract.
IV. ARGUMENT AND CITATION OF AUTHORITY
A. Standard for Motion to Dismiss for Failure to State a Claim.
To survive a motion to dismiss for failure to state a claim, a pleading must
contain sufficient factual matter, accepted as true, to state a claim that is plausible on
its face. Fed. R. Civ. Pro. 12(b)(6); Ashcroft v. Iqbal 129 S.Ct. 1937, 1949 (2009).
A claim is facially plausible when there is sufficient factual content to draw a
reasonable inference that the defendant is liable for the misconduct alleged. While
the Court “must take all of the factual allegations in the complaint as true,” it is “not
bound to accept as true a legal conclusion couched as a factual allegation.” Id. at
1949–50. “[C]onclusory allegations of law and unwarranted inferences are
insufficient to defeat a motion to dismiss for failure to state a claim.” Epstein v.
Wash. Energy Co. 83 F.3d 1136, 1140 (9th Cir.1996). Further, a statute of
limitations defense may be raised by motion to dismiss. Jablon v. Dean Witter &
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Co. 614 F.2d 677, 682 (9th Cir.1980). “If the running of the statute is apparent on
the face of the complaint, the defense may be raised by a motion to dismiss.” Id.
It is patently obvious on the face of St. Paul’s Complaint that the claim for
Breach of Oral Contract is barred by the applicable two (2) year statute of
limitations. Additionally, St. Paul’s Complaint fails to state a claim for Unjust
Enrichment, and St. Paul’s conclusory allegations of law and unwarranted
inferences in support of the claim for Unjust Enrichment are insufficient. Therefore,
St. Paul’s claims for Breach of Oral Contract and Unjust Enrichment must be
dismissed.
B. St. Paul’s Breach of Oral Contract Claim is Barred by California’s
Statute of Limitation.
As a preliminary matter, to demonstrate a claim for equitable subrogation, an
insurer must prove six elements: (1) the insured has suffered a loss for which the
party to be charged is liable; (2) the insurer has compensated for the loss; (3) the
insured has existing, assignable causes of action against the party to be charged,
which the insured could have pursued had the insurer not compensated the loss; (4)
the insurer has suffered damages caused by the act or omission which triggers the
liability of the party to be charged; (5) justice requires that the loss be shifted
entirely from the insurer to the party to be charged; and (6) the insurer’s damages
are in a stated sum, usually the amount paid to the insured, assuming the payment
was not voluntary and was reasonable. Gulf Ins. Co. v. TIG Ins. Co. 86 Cal.App.4th
422, 432 (2001) citing State Farm Fire & Casualty Co. v. East Bay Municipal
Utility Dist. 53 Cal.App. 4th 769, 774 (1997); Fireman’s Fund Ins. Co. v. Maryland
Casualty Co. 21 Cal.App.4th 1586, 1596 (1994). The right of subrogation is purely
derivative; an insurer claiming subrogation is in the same position as an assignee of
the insured’s claim and succeeds only to the rights of the insured. Fireman’s Fund
Ins. Co. v. Maryland Cas. Co. 65 Cal.App.4th 1279, 1292 (1998). “The subrogated
///
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insurer is said to ‘stand in the shoes’ of its insured, because it has no greater rights
than the insured and is subject to the same defenses” that were assertable against the
insured. Id. “Thus, an insurer cannot acquire by subrogation anything to which the
insured has no rights, and may claim no rights which the insured does not have.” Id.
To the extent St. Paul seeks to recover for Crawford’s alleged breach of its oral
contract with BL, St. Paul stands in the shoes of BL and is subject to the same
statute of limitations defenses.
St. Paul’s count for Breach of Oral Contract is time barred under California
law. Pursuant to Cal. Code Civ. Pro. § 339, a breach of oral contract claim must be
commenced within two years after the cause of action accrued. Cal. Code Civ. Pro.
§ 339 (“Within two years: 1. An action upon a contract, obligation or liability not
founded upon an instrument of writing”); Zecos v. Nicholas-Applegate Capital
Management 42 Fed. App’x. 31, 31 (9th Cir.2002). Thus, St. Paul must have
commenced its claim within two years after the alleged cause of action accrued to
avoid being time barred by Cal. Code Civ. Pro. § 339. A cause of action for a
breach of an oral contract accrues at the time of the breach when the party charged
with the duty to perform under the contract fails to perform. Zecos 42 Fed. App’x.
at 31; Cochran v. Cochran 56 Cal.App.4th 1115, 1124 (1997); Moss v. Infinity
Insurance Co. 2016 WL 3753109 at *2 (N.D. Cal. July 14, 2016).
St. Paul’s Complaint alleges that BL and Crawford entered into an oral
contract pursuant to which Crawford agreed to administer six workers’
compensation claims through Knight’s self-insured workers’ compensation program
on behalf of BL. (Compl., ¶ 59.) St. Paul further alleges that Crawford breached
the contract by failing to perform its duty to properly administer the six workers’
compensation claims. (Compl., ¶ 60.) However, BL was the TPA for Knight’s self-
insured workers’ compensation program from 2001 to 2009. (Compl., ¶¶ 2, 19.)
Therefore, Crawford’s alleged breach in failing to properly discharge its duties
under the oral contract with BL must have occurred no later than 2009.
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Accordingly, St. Paul’s Breach of Oral Contract claim accrued no later than 2009,
and the statute of limitations expired sometime in 2011.
To the extent St. Paul seeks the benefit of the “discovery rule” to postpone the
accrual of the Breach of Oral Contract claim, Knight filed the Underlying Litigation
asserting claims against BL for negligence, breach of fiduciary duty, breach of
contract, and breach of the implied covenant of good faith and fair dealing on July
2, 2010. (Compl., ¶ 18.) The Underlying Litigation included allegations that the six
claims at issue in the current lawsuit were negligently handled. (Compl., ¶¶ 20-21.)
Because St. Paul’s Breach of Oral Contract claim is premised on Crawford’s alleged
negligent handling of six of the claims involved in the Underlying Litigation, St.
Paul and BL must have discovered Crawford’s alleged breach in 2010 at the latest.
St. Paul did not enter into a tolling agreement with Crawford with respect to the
claims arising out of the Underlying Litigation until April 30, 2015 and did not
assert its Breach of Oral Contract claim in this Complaint until November 14, 2016.
(Compl., ¶ 27.) Because the two year statute of limitations for Breach of Oral
Contract must have expired at least three years prior to the tolling agreement and St.
Paul’s filing of this Complaint, St. Paul’s Breach of Oral Contract claim must be
dismissed.
C. St. Paul Fails to State a Claim for Unjust Enrichment.
St. Paul also fails to state a claim for Unjust Enrichment. Under California
law, unjust enrichment is “not a cause of action … or even a remedy, but rather a
general principle, underlying various legal doctrines and remedies. It is
synonymous with restitution.” McBride v. Boughton 123 Cal.App.4th 379, 387
(2004); see also Boon Rawd Trading International Co., Ltd. v. Paleewong Trading
Co., Inc. 688 F.Supp.2d 940, 956 (N.D. Cal.2010). A claim for unjust enrichment
“does not lie when an enforceable, binding agreement exists defining the rights of
the parties.” Paracor Fin., Inc. v. Gen. Elec. Capital Corp. 96 F.3d 1151, 1167 (9
th
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Cir.1996). However, restitution under an unjust enrichment claim “may be awarded
in lieu of breach of contract damages when the parties had an express contract, but it
was procured by fraud or is unenforceable or ineffective for some reason.” McBride
123 Cal.App.4th at 388.
Given this backdrop, to properly state a claim for unjust enrichment, St.
Paul’s Complaint must either 1) allege that Crawford and BL’s rights were not set
out in a binding contract, or 2) allege that any express contract was procured by
fraud or was ineffective for some reason. St. Paul fails on both counts.
The gravamen of St. Paul’s count for Unjust Enrichment is that BL conferred
a substantial benefit on Crawford by paying all of the attorneys’ fees, expert fees,
costs, and settlement payments in the Underlying Litigation – including the costs to
defend and settle the six workers’ compensation claims alleged to have been
negligently handled by Crawford. (Compl, ¶¶ 63-67.) According to the Complaint,
but for Crawford’s negligent claim handling in breach of its express oral contract
with BL, Knight would have not filed the Underlying Litigation against BL, and BL
and St. Paul would not have been compelled to pay more than their equitable share
of fees, expenses, and settlement payments in the Underlying Litigation. (Compl, ¶¶
3, 20-22, 34-36, 59-62.)
St Paul’s allegations, viewed in the aggregate, show that St. Paul’s cause of
action for Unjust Enrichment arises from Crawford’s alleged breach of its oral
contract with BL. As such, St. Paul failed to allege that Crawford and BL’s rights
were not set out in a binding contract in support of its claim for Unjust Enrichment.
Further, St. Paul does not allege that the oral contract was procured by fraud or was
ineffective. Accordingly, St. Paul failed to properly state a claim for unjust
enrichment as a matter of law, and therefore the claim must be dismissed. Boon
Rawd Trading International Co., Ltd. 688 F.Supp.2d at 956; McBride 123
Cal.App.4th at 388.
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D. St. Paul’s Claim for Unjust Enrichment is Duplicative of its Claims
for Equitable Indemnification and Contribution.
St. Paul’s claim for Unjust Enrichment must also be dismissed because it is
duplicative of St. Paul’s claims for Equitable Indemnification and Contribution.
Under California law, the “basis for the remedy of equitable indemnity is
restitution.” Children’s Hospital v. Sedgwick 45 Cal.App.4th 1780, 1786 (1996);
Amerigas Propane, LP v. Landstar Ranger, Inc. 184 Cal.App.4th 981, 989 (2010).
When a party is “unjustly enriched at the expense of another when the other
discharges liability that it should be his responsibility to pay,” California common
law recognizes a right of partial indemnity under which liability among multiple
tortfeasors may be apportioned. Amerigas Propane 184 Cal.App.4th at 989
(citations omitted). The aim of contribution is also to apportion liability among co-
obligors who share liability with the party seeking contribution so that each party
pays its fair share and one does not profit at the expense of the others. Fireman’s
Fund Ins. Co. 65 Cal.App.4th at 1293, 1296. Similarly, unjust enrichment is “a
general principle, underlying various legal doctrines and remedies. It is
synonymous with restitution.” McBride 123 Cal.App.4th at 387.
Here, St. Paul’s claims for Equitable Indemnification, Contribution, and
Unjust Enrichment are all premised on restitution. Each claim rests upon St. Paul’s
alleged payment of more than its equitable share of fees, costs, expenses, and
settlement payments in the Underlying Litigation. (Compl., ¶¶ 35-36, 54-55, 64-
66.) In Park v. Welch Foods, Inc. 2013 WL 5405318 at *5 (N.D. Cal. Sept. 26,
2013), the Northern District of California dismissed the plaintiffs’ quasi-contract
theory for unjust enrichment because it rested on the same set of facts giving rise to
their other claims and was merely duplicative of such claims. Given that St. Paul’s
theory of unjust enrichment rests on the same facts and legal principles covered by
its claims for Equitable Indemnification and Contribution, St. Paul’s Unjust
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CRAWFORD & COMPANY’S NOTICE OF MOTION AND MOTION TO DISMISS
Enrichment claim is merely duplicative and, like the plaintiffs’ claim in Park, must
be dismissed.
V. CONCLUSION
St. Paul’s Breach of Oral Contract claim is time barred under California’s
applicable statute of limitations. Additionally, St. Paul has failed to state a claim for
Unjust Enrichment under California law, and the claim is duplicative of St. Paul’s
claims for Equitable Indemnification and Contribution. For the foregoing reasons,
Crawford respectfully requests that the Court grant its Motion to Dismiss.
Dated: February 3, 2017
GORDON & REES, LLP
By: /s/ Douglas J. Van Blarcom
Stephanie P. Alexander
Douglas J. Van Blarcom
Attorneys for Defendant
CRAWFORD & COMPANY
Case 2:16-cv-08462-JAK-JPR Document 20 Filed 02/03/17 Page 14 of 14 Page ID #:162
