The opinion of the court was delivered by: Whelan, District Judge.
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION
This matter comes before the Court on a motion to strike filed
by Defendant Allstate Insurance Company ("Allstate"). Plaintiff
John T. Clark ("Plaintiff") opposes. Both parties are
represented by counsel.
On April 7, 2000 Plaintiff commenced this action in San Diego
Superior Court against Allstate alleging claims for breach of
contract and breach of the implied covenant of good faith and
fair dealing. On May 31, 2000 Allstate timely removed this case
to district court. (See Not. of Removal ¶ 1).
On June 8, 2000 Allstate filed a motion to strike pursuant to
Rule 12(f) of the Federal Rules of Civil Procedure. Plaintiff
filed its opposition on July 17, 2000 and Allstate replied on
July 24, 2000. The Court thereafter took the motion under
submission and issues this Order on the papers submitted
pursuant to Civil Local Rule 7.1.d.1.*fn1
Allstate's motion seeks to strike (1) Plaintiffs prayer for
punitive damages and (2) Plaintiffs attorney's fees request
arising under his breach of contract claim. The Court will
address each argument in turn.
1. MOTION TO STRIKE PUNITIVE DAMAGES PRAYER
Allstate's motion first seeks an order striking any references
in Plaintiffs Complaint to punitive damages. Allstate contends
the conclusory allegations and facts pled in Plaintiffs'
Complaint are inadequate to establish entitlement to punitive
damages under California law.
Under California law, when a defendant "has been [found]
guilty of oppression, fraud, or malice," the court may award
punitive damages. See Cal. Civ. Code § 3294. "Malice" is
defined as "conduct which is intended to cause injury to the
plaintiff" or "despicable conduct which is carried on by the
defendant with a willful and conscious disregard of the rights
or safety of others." Id. § 3294(c)(1). "Oppression" is
defined as "despicable conduct that subjects a person to cruel
and unjust hardship in conscious disregard of that person's
rights." Id. § 3294(c)(2). A plaintiff may collect punitive
damages for an insurer's breach of the implied covenant of good
faith and fair dealing where the plaintiff also establishes the
requirements of Section 3294. See, e.g., PPG Indus., Inc. v.
Transamerica Ins. Co., 20 Cal.4th 310, 319, 975 P.2d 652, 658,
84 Cal.Rptr.2d 455, 461 (1999); Egan v. Mutual of Omaha, Ins.
Co., 24 Cal.3d 809, 820-822, 620 P.2d 141, 147-48,
169 Cal.Rptr. 691, 696-698 (1979).
Allstate points to several California decisions that subject
punitive damage prayers to a heightened pleading standard. These
decisions generally require a plaintiff to allege specific
evidentiary facts to support allegations of malice, oppression
or fraudulent intent. See, e.g., Smith v. Superior Court,
10 Cal.App.4th 1033, 1041-42, 13 Cal.Rptr.2d 133, 136 (1992);
Brousseau v. Jarrett, 73 Cal.App.3d 864, 872,
141 Cal.Rptr. 200, 205 (1977); Lehto v. Underground Constr. Co.,
69 Cal.App.3d 933, 944, 138 Cal.Rptr. 419, 426 (1977); G.D. Searle
& Co. v. Superior Court, 49 Cal.App.3d 22, 122 Cal.Rptr. 218
(1975). Citing these cases, Allstate argues that Plaintiff "must
allege specific facts that actually show oppression, fraud or
malice to support the punitive damages claim." (Def.'s Mot. at 5
(emphasis in original)). Allstate claims Plaintiffs Complaint
does not provide the factual specificity required by California
law, requiring the Court to strike the prayer for punitive
It is well-established that federal courts sitting in
diversity must apply state substantive law and federal
procedural rules. See Computer Economics, Inc. v. Gartner
Group, Inc., 50 F. Supp.2d 980, 986 (S.D.Cal. 1999) (citing
Erie R.R. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 822, 82
L.Ed. 1188 (1938)). Where state law directly conflicts with
applicable provisions of the Federal Rules of Civil Procedure,
federal courts must apply the Federal Rules — not state law.
Id. (citing Hanna v. Plumer, 380 U.S. 460, 471, 85 S.Ct.
1136, 1143-44, 14 L.Ed.2d 8 (1965)).*fn2
Although Section 3294 provides the governing substantive law
for punitive damages, California's heightened pleading standard
irreconcilably conflicts with Rules 8 and 9 of the Federal Rules
of Civil Procedure — the provisions governing the adequacy of
pleadings in federal court. See, e.g., Bureerong v. Uvawas,
922 F. Supp. 1450, 1480 (C.D.Cal. 1996). Specifically, Rule 8(a)
requires only that Plaintiffs Complaint include "a short and
plain statement of the claim showing that [Plaintiff] is
entitled to relief, and . . . a demand for judgment for the
relief [he] seeks." Fed.R.Civ.P. 8(a). The second sentence of
Rule 9(b) further provides that "[m]alice, intent, knowledge,
and other conditions of mind of a person may be averred
generally." Fed.R.Civ.P. 9(b). As interpreted by
the Ninth Circuit, this provision "does not require `any
particularity in connection with an averment of intent,
knowledge or condition of the mind.'" In re GlenFed, Inc. Sec.
Litig., 42 F.3d 1541, 1547 (9th Cir. 1994) (en banc) (quoting
Walling v. Beverly Enters., 476 F.2d 393, 397 (9th Cir. 1973))
(emphasis in GlenFed); Gottreich v. San Francisco Inv. Corp.,
552 F.2d 866, 866-67 (9th Cir. 1977) (sustaining conclusory
allegation that defendants "knew" their representations were
false as sufficient to plead element of fraudulent intent).
Rules 8(a) and 9(b) therefore preclude district courts from
applying a heightened pleading for allegations of malice or
fraudulent intent. Cf. Leatherman v. Tarrant County Narcotics
Intelligence & Coordination Unit, 507 U.S. 163, 168, 113 ...