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Evanston Insurance Co. v. Preferred Properties

September 8, 2008

EVANSTON INSURANCE COMPANY, AN ILLINOIS CORPORATION, PLAINTIFF,
v.
PREFERRED PROPERTIES, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY; DENNIS E. GRIFFIN, AN INDIVIDUAL; AND DOES 1-500, INCLUSIVE, DEFENDANTS.



The opinion of the court was delivered by: Frank C. Damrell, Jr. United States District Judge

MEMORANDUM AND ORDER

This matter is before the court on a motion to dismiss, pursuant to Federal Rule of Civil Procedure 12(b)(6), filed by defendants Preferred Properties, LLC ("Preferred") and Dennis E. Griffen (collectively, "defendants").*fn1 Plaintiff Evanston Insurance Company ("Evanston") opposes the motion. For the reasons set for below, defendants' motion to dismiss is DENIED.

BACKGROUND*fn2

Preferred is a limited liability company, with its principal place of business located in Sutter Creek, California. (FAC ¶ 5.) Evanston is an insurance provider, with its principal place of business located in Cook County, Illinois. (FAC ¶ 4.) At all times relevant to this motion, Preferred owned a mobile home park ("subject premises") in Sacramento, California.

On March 10, 2003, Preferred's tenants sent a pre-lawsuit notice to Preferred pursuant to California Civil Code, section 798.84, informing it of twenty-six separate maintenance problems, inadequate conditions, management problems, and the remedies sought from Preferred in response to the listed problems. (FAC ¶ 10.) Later that month, Preferred submitted an application to Evanston to renew its insurance policy on the subject premises. (FAC ¶ 11, 32(a).) Although Preferred had a duty to disclose the pre-lawsuit notice as a prerequisite to renewal, it did not do so. (Id. ¶ 11.) On April 30, 2003, Evanston issued an insurance policy to Preferred without actual or constructive notice that the tenants of the subject premises intended to file suit against Preferred. (Id. ¶ 12.)

On May 30, 2003, tenants of the subject premises filed a lawsuit against Preferred entitled Charlene A. Maryett, et al. v. Preferred Properties, LLC, et al., Case No. 03AS03046 (the "Maryett lawsuit"). (Id. ¶ 14.) Preferred initially retained outside counsel to represent it in the Maryett lawsuit. (Id.)

More than three years later, on July 20, 2006, Preferred tendered defense of the Maryett lawsuit to Evanston, requesting that Evanston defend and indemnify it as specified in the policies. (Id. ¶ 17.)

Evanston agreed to defend Preferred in the Maryett lawsuit under an express reservation of its rights to contest policy coverage, seek reimbursement, and rescind the policy. (Id. ¶ 18-20.) On October 11, 2007, Evanston settled with the plaintiffs in the Maryett lawsuit for $3,035,000. (Id. ¶ 25.) Evanston then entered into an oral agreement with Preferred, in which Preferred agreed to contribute $300,000 toward the amount owed on the settlement in exchange for Evanston's release of all claims against defendants. (Id. ¶ 25-26.) A written agreement later memorialized the oral agreement. (Id. ¶ 27.)

Preferred failed to contribute any money as required by the oral and written agreements. Subsequently, Evanston filed the instant action on May 7, 2008. An amended complaint was filed on May 22, 2008. The Amended Complaint asserts claims for rescission, declaratory relief, reimbursement, breach of contract, and fraud in the inducement. Defendants now move to dismiss Evanston's claims for declaratory relief, breach of contract, and fraud in the inducement. Defendants also move to strike Evanston's request for attorney's fees.

STANDARD

On a motion to dismiss, the allegations of the complaint must be accepted as true. Cruz v. Beto, 405 U.S. 319, 322 (1972). The court is bound to give plaintiff the benefit of every reasonable inference to be drawn from the "well-pleaded" allegations of the complaint. Retail Clerks Int'l Ass'n v. Schermerhorn, 373 U.S. 746, 753 n.6 (1963). Thus, the plaintiff need not necessarily plead a particular fact if that fact is a reasonable inference from facts properly alleged. See id.

Nevertheless, it is inappropriate to assume that the plaintiff "can prove facts which it has not alleged or that the defendants have violated the . . . laws in ways that have not been alleged." Associated Gen. Contractors of Calif., Inc. v. Calif. State Council of Carpenters, 459 U.S. 519, 526 (1983). Moreover, the court "need not assume the truth of legal conclusions cast in the form of factual allegations." United States ex rel. Chunie v. Ringrose, 788 F.2d 638, 643 n.2 (9th Cir. 1986).

Ultimately, the court may not dismiss a complaint in which the plaintiff alleged "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1973 (2007). Only where a plaintiff has not "nudged [his or her] claims across the line from conceivable to plausible," is the complaint properly dismissed. Id. "[A] court may dismiss a complaint only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514 (2002) (quoting Hudson v. King & Spalding, 467 U.S. 69, 73 (1984)).

In ruling upon a motion to dismiss, the court may consider only the complaint, any exhibits attached to the complaint, and matters which may be judicially noticed pursuant to Federal Rule of Evidence 201. See Mir v. Little Co. of Mary Hospital, 844 F.2d 646, 649 (9th Cir. 1988); Isuzu Motors Ltd. v. ...


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