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Enger v. Allstate Insurance Co.

December 8, 2009


The opinion of the court was delivered by: Garland E. Burrell, Jr. United States District Judge


On October 15, 2009, Defendants Allstate Insurance Company ("Allstate") and Allstate Property and Casualty Company filed a motion under Federal Rule of Civil Procedure 12(b)(6) in which they seek an order dismissing Plaintiff's complaint, or alternatively, an order compelling appraisal and staying this action pending completion of the appraisal process. (Docket No. 16). At issue in this motion is whether Plaintiff must complete the appraisal process in her insurance policy before her claims may be heard by a court.*fn2 For the reasons stated below, Defendants' motion to dismiss is GRANTED.

I. Legal Standard

"In deciding . . . a [Federal Rule of Civil Procedure 12(b)(6) dismissal] motion, all material allegations of the complaint are accepted as true, as well as all reasonable inferences to be drawn from them. Dismissal is proper only where there is no cognizable legal theory or an absence of sufficient facts alleged to support a cognizable legal theory." Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). To avoid dismissal, plaintiff must allege "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 (2007).

Defendants request that judicial notice be taken of the insurance policy referenced in Plaintiff's complaint as well as a letter sent by Allstate to Plaintiff. (Request for Judicial Notice, Ex. A and B.) Plaintiff does not dispute the authenticity of either document. "[T]he incorporation by reference doctrine [applies] to situations in which the plaintiff's claim depends on the contents of a document, the defendant attaches the document to its motion to dismiss, and the parties do not dispute the authenticity of the document, even though the plaintiff does not explicitly allege the contents of that document in the complaint." Kneivel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005)(citations and quotations omitted). This doctrine applies to the referenced insurance policy and letter. Therefore, the court "take[s] into account" the insurance policy and letter as though they were incorporated into the complaint. Id. "In doing so, [the court] deviate[s] from the general rule that courts, when ruling on a motion to dismiss, must disregard facts that are not alleged on the face of the complaint or contained in documents attached to the complaint." Id.

II. Background

Plaintiff's home and "the personal property therein" was damaged by a fire on May 15, 2007. (Compl. ¶ 21.) At the time of the fire, Plaintiff was insured under a Deluxe Plus Homeowner's Policy issued by Allstate. After the fire, Allstate and Plaintiff were unable to agree on the value of Plaintiff's damaged or destroyed personal property, allegedly due to Allstate's method of calculating depreciation. (Compl. ¶¶ 24-37.)

Plaintiff filed a complaint in the Superior Court for the State of California in the County of Sacramento on August 12, 2009, alleging claims for breach of contract, breach of the covenant of good-faith and fair dealing and violation of California Business and Professions Code Section 17200 et seq. and California Civil Code Section 1770 et seq. Plaintiff seeks declaratory and injunctive relief, and actual and punitive damages. (Compl. ¶¶ 48-53, Prayer for Relief.) Defendants removed the case to this federal district court on September 18, 2009.

Plaintiff's claims relate to her allegation that Allstate's use of standardized depreciation schedules to calculate the depreciation of damaged or destroyed personal property violates both the parties' contract and applicable California law. (Id. ¶ 13.) Specifically, Plaintiff alleges that "instead of considering the actual condition of the lost or destroyed items of personal property, Allstate uses a standard Contents Estimating System ("CES") that depreciates all items based on standardized depreciation tables built into its computer systems . . . . Through use of its CES, Allstate is [allegedly] able to substantially reduce the amount of money it pays its insureds by assuming high levels of depreciation irrespective of the actual physical condition of the lost property." (Id. ¶¶ 12-13.) Plaintiff alleges that as a result of Allstate's improper method of calculating depreciation, "Allstate failed to pay [her] approximately $23,300 in lost value [for her personal property] that it should have paid under [her insurance] policy and applicable law." (Id. ¶ 39.)

Plaintiff also seeks to bring her claims against Defendants as a class action, through which she would represent a class defined as "[a]ll California residents insured under an Allstate homeowners insurance policy who received a first party settlement, or offer for settlement, of a personal property claim for less than the applicable policy limits between July 27, 2005 and the time of trial of this action." (Compl. ¶ 2.)

Allstate contends that under California law and Plaintiff's insurance policy, Plaintiff is obligated to follow the appraisal procedure applicable to the parties disagreement. Allstate "invok[ed] the appraisal clause" of the parties' insurance policy in a letter to Plaintiff dated September 29, 2009. (Request for Judicial Notice, Ex. B.)

III. Discussion

Defendants argue Plaintiff's complaint should be dismissed because "Plaintiff is obligated [under her insurance policy with Allstate] to complete the appraisal process before bringing suit . . . ." (Mot. to Dismiss 6:16-17.) Plaintiff counters her claims "are prerequisites to the appraisal process" since a court "must first determine the proper standard" to be applied. (Opp'n. 5:14-18.) Plaintiff also argues she may not be compelled to go through the appraisal process since an appraiser would have no authority to consider her claims. (Opp'n. 5.)

California "Insurance Code sections 2070 and 2071 mandate a standard form of fire insurance policy, which under section 2071, must contain, among other things, a standard appraisal clause which provides if the insured and the company disagree as to the actual cash value of a loss, then each shall select a competent and disinterested appraiser and the two selected appraisers then choose a third such appraiser." Figi v. New Hampshire Ins. Co., 108 ...

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