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Budway Enterprises, Inc. v. Federal Insurance Co.

April 14, 2009

BUDWAY ENTERPRISES, INC., A CALIFORNIA CORPORATION, PLAINTIFF,
v.
FEDERAL INSURANCE COMPANY, A NEW JERSEY CORPORATION; CHUBB NATIONAL INSURANCE COMPANY, AN INDIANA CORPORATION, DOING BUSINESS AS CHUBB GROUP OF INSURANCE COMPANIES; AND DOES 1 THROUGH 10, INCLUSIVE, DEFENDANTS.



The opinion of the court was delivered by: VIRGINIA A. Phillips United States District Judge

[Motion filed on March 9, 2009]

ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS

Defendants Federal Insurance Company and Chubb National Insurance Company's Motion to Dismiss came before the Court for hearing on April 6, 2009. After reviewing and considering all papers filed in support of, and in opposition to, the Motion, as well as the arguments advanced by counsel at the hearing, the Court GRANTS IN PART and DENIES IN PART the Motion.

I. BACKGROUND

A. Factual Allegations

On or about June 5, 2007, Plaintiff Budway Enterprises, Inc. ("Plaintiff") purchased a written policy of motor truck cargo insurance, bearing number 0662-66-34 LAO ("the policy") from Defendants Federal Insurance Company and Chubb National Insurance Company ("Defendants"). (See Compl. at ¶ 7.) The policy covered all damages Plaintiff would become legally obligated to pay to "a common carrier truckman, a contract truckman, or other truckman for hire because of the direct physical loss or damage to freight being transported by Plaintiff." (Id.) Under the policy, Defendants agreed to pay or indemnify Plaintiff up to the sum of $100,000 per occurrence and up to $25,2000 for loss of earned freight charges. (Id.) The policy was effective from June 1, 1007 through June 1, 2008. (Id. at ¶ 8.)

On or about December 21, 2007, Plaintiff's shipper and customer ALCOA tendered two shipments, with separate Bills of Lading and separate delivery numbers, of aluminum products to Plaintiff for transportation. (Id. at ¶¶ 9, 10.) Plaintiff loaded the shipments into two separate trailers, attached to and pulled by two separate tractors. (Id. at ¶¶ 11, 12.) On or about December 26, 2007, the tractors and trailers filled with ALCOA's aluminum shipments were stolen from the freight yard by persons unknown. Police later located the tractors and trailers, but not the aluminum cargo. (Id. at ¶ 13.)

ALCOA submitted to Plaintiff a "written Loss and Damage Claim" for each shipment, totaling $150,679.43. (Id. at ¶¶ 14, 15.) Plaintiff provided timely notice to Defendants of its request to "pay the cargo loss and damage claims against [P]laintiff" for the loss to ALCOA, but Defendants have refused to pay Plaintiff, contending there was only one occurrence of theft, thereby triggering the $100,000 per occurrence policy limit. (Id. at ¶ 17.)

B. Procedural History

Plaintiff filed a Complaint in the California Superior Court against Defendants on January 27, 2009. The Complaint contained the following claims against both Defendants: (1) Breach of Contract; and (2) Breach of the Implied Covenant of Good Faith and Fair Dealing. In addition, Plaintiff also seeks punitive damages and attorneys' fees. Defendants removed the action to this Court on the basis of diversity jurisdiction, 28 U.S.C. § 1332.

On March 9, 2009, Defendants filed a Motion to Dismiss Plaintiff's Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) ("Rule 12(b)(6)"), a Request for Judicial Notice,*fn1 the Declaration of Neil S. Lerner ("Lerner Declaration"), and the Declaration of Jolene R. Rice ("Rice Declaration").*fn2 On March 20, 2009, Plaintiff filed Opposition and the Declaration of John F. Oakes ("Oakes Declaration").*fn3 On March 30, 2009, Defendants filed a Reply and "Objections to Extrinsic Evidence Proffered by Plaintiff" ("Objections").*fn4

II. LEGAL STANDARD

Under Rule 12(b)(6), a party may bring a motion to dismiss for failure to state a claim upon which relief can be granted. As a general matter, the Federal Rules require only that a plaintiff provide "'a short and plain statement of the claim' that will give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." Conley v. Gibson, 355 U.S. 41, 47 (1957) (quoting Fed. R. Civ. P. 8(a)(2)); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1964 (2007). In addition, the Court must accept all material allegations in the complaint - as well as any reasonable inferences to be drawn from them - as true. See Doe v. United States, 419 F.3d 1058, 1062 (9th Cir. 2005); ARC Ecology v. U.S. Dep't of Air Force, 411 F.3d 1092, 1096 (9th Cir. 2005).

"While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the 'grounds' of his 'entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atlantic, 127 S.Ct. at 1964-65 (citations omitted). Rather, the allegations in ...


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