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BERNSTEIN v. TRAVELERS INSURANCE COMPANY

October 17, 2005.

RONALD BERNSTEIN, et al., Plaintiffs,
v.
THE TRAVELERS INSURANCE COMPANY, et al., Defendants.



The opinion of the court was delivered by: SAUNDRA ARMSTRONG, District Judge

ORDER

This matter comes before the Court on Defendants' The Travelers Insurance Company, The Travelers Indemnity Company, The Travelers Indemnity Company of Connecticut, and The St. Paul Travelers Companies, Inc. (collectively "Defendants") consolidated Rule 12 motions against Plaintiffs Ronald and Toni Bernstein, and United Signs, Inc. ("United Signs") (collectively "Plaintiffs"). In this motion Defendants seek: (a) to dismiss certain causes of action pursuant to Fed.R.Civ.P. 12(b)(6); (b) to strike certain allegations pursuant Fed.R.Civ.P. 12(f); and (c) to require a more definite statement pursuant to Fed.R.Civ.P. 12(e). The Court has considered all of the papers submitted and has heard oral argument. The Court finds that Defendants' motion to strike should be GRANTED and Defendants' motion to dismiss should be GRANTED with leave to amend. Defendants' alternative motion for a more definite statement is DENIED as moot.

  BACKGROUND

  A. Facts*fn1

  Plaintiffs Ronald and Toni Bernstein wholly own the California corporation United Signs. Beginning in March 2001, United Signs' building was damaged by water intrusion and mold. (First Amended Complaint ("FAC") ¶ 11 et seq.) As a result, United Signs suspended its operations in the building and vacated the property in June 2001. (Id. at ¶ 14.) In May 2001, United Signs gave notice of claim to Defendants for repair costs and business interruption. (Id. ¶¶ 11-14.) As of February 2003, Defendants had paid to United Signs at least $376,387 in insurance payments. (Id. ¶ 24(c).) However, United Signs asserted it was owed additional monies. In accordance with the policy between United Signs and Defendants, the parties agreed to an independent appraisal, pursuant to Insurance Code § 2071. The appraisal award was issued on or about May 3, 2004 and ultimately established that in addition to the monies already paid to United Signs, Plaintiffs were due an additional payment of just under $225,000. (Id. ¶¶ 26 & 32.)

  In December 2001, Harrison Construction, the party Plaintiffs allege is primarily responsible for the water damage, brought a lawsuit against Plaintiffs in San Francisco Superior Court. (Id. ¶ 36.) Around that same time, Asbestos Management Group ("AMG") sued Plaintiffs to recover payments allegedly owed for the construction work it performed for Plaintiffs. (Id. ¶ 42.) Plaintiffs refused to pay AMG because the extensive damages AMG caused in its construction exceeded the amount ostensibly due them. (Id.)

  In January 2002, Plaintiffs brought an action in San Mateo Superior Court ("the tortfeasor action") against the adjoining landowner and agents they believed responsible for the water damage, and the Harrison Construction suit was eventually transferred to the San Mateo Superior Court. (Id. ¶¶ 29 & 36.) In September 2003, Defendants filed a complaint in intervention in the tortfeasor action, asserting their subrogation rights against Harrison Construction and other tortfeasors. (Id. ¶ 30.) Defendants settled the matter for $200,000. (Id. ¶ 32.) Plaintiffs ultimately recovered against the tortfeasors for their non-covered/non-subrogated damages. (Id. ¶ 33.)

  Plaintiffs' policy with Defendants expired in September 2001, and Defendants issued them a short-term policy in exchange for premium payments by Plaintiffs. (Id. ¶ 46.) In August 2003, when Plaintiffs failed to make the required payments, Defendants sued Plaintiffs in San Mateo Superior Court for approximately $7,500 in unpaid insurance premiums. (Id. ¶ 45.) Plaintiffs did nothing in the action and Defendants obtained a default judgment against Plaintiffs in October 2003. (Id. ¶ 47.) In or about November 2004, that matter was finally resolved. (Id.)

  B. Procedural History

  On February 14, 2005, Plaintiffs filed a complaint against Defendants in Alameda County Superior Court which was then subsequently removed by Defendants to this Court on April 14, 2005 [Docket No. 1.] On May 26, 2005 Plaintiffs filed a First Amended Complaint ("FAC") which alleged, among other things, claims for breach of insurance contract, breach of duty of good faith and fair dealing, negligence, deceit and intentional infliction of emotional distress ("IIED"). (FAC ¶¶ 55-76.) Defendants now move pursuant to Federal Rule of Civil Procedure 12(f) to strike the allegations concerning the Defendants' lawsuit against Plaintiffs on the grounds that they are impertinent and immaterial. Defendants also move pursuant to Federal Rule of Civil Procedure 12(b) to dismiss the claims for negligence, deceit, and IIED on the grounds that they barred under the statute of limitations, and lack essential elements.

  MOTION TO STRIKE

  Legal Standard

  Under Federal Rule of Civil Procedure 12(f) the Court has the discretion to strike a pleading or portions thereof. Federal Sav. and Loan v. Gemini Management, 921 F.2d 241, 243 (9th Cir. 1990). Rule 12(f) provides that a court "may order stricken from any pleading . . . any redundant, immaterial, impertinent or scandalous matter." "`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). "`Impertinent' matter consists of statements that do not pertain, and are not necessary, to the issues in question." Id. "[T]he function of a Rule 12(f) motion to strike is to avoid the expenditure of ...


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