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Raisin Bargaining Association v. Hartford Casualty Insurance Co.

September 27, 2010

THE RAISIN BARGAINING ASSOCIATION, ET AL., PLAINTIFF,
v.
HARTFORD CASUALTY INSURANCE CO., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Oliver W. Wanger United States District Judge

DEFENDANT'S MOTION TO DISMISS MEMORANDUM DECISION ON PLAINTIFFS' FAC (Docs. 7,8)

I. INTRODUCTION

On June 17, 2010, the Raisin Bargaining Association ("RBA"), Glen S. Goto, and Monte Schutz ("Plaintiffs") filed a first amended complaint ("FAC") against Hartford Casualty Insurance Company ("Defendant") alleging various state law causes of action. (Doc. 15). Defendant filed a motion to dismiss the FAC on July 2, 2010. (Doc. 16). Plaintiffs filed opposition to Defendant's motion to dismiss on September 3, 2010. (Doc. 18).

II. FACTUAL BACKGROUND

Plaintiff RBA is a nonprofit California cooperative association. (FAC at 2). Plaintiffs Glen Goto and Monte Schutz are and were, at all times relevant to this action, members of the Board of Directors of RBA. (FAC at 2).

Plaintiffs entered into contracts for insurance with Defendant whereby Defendant agreed to insure Plaintiffs against various claims brought against Plaintiffs for actions taken in RBA's business capacity. (FAC at 1, 3). The insurance policies relevant to this action encompass coverage periods from at least 2005 to the present and obligate Defendant to provide defense and indemnity for covered claims made against RBA. (FAC at 1-3).

Beginning in or about January 2007, Richard Garabedian ("Garabedian"), through counsel, sent several letters threatening litigation and demanding almost $900,000.00 to settle a dispute between RBA, Goto, and Schutz concerning the RBA Board of Director's decision not to recommend Garabedian to the Secretary of the U.S. Department of Agriculture ("USDA") for appointment to the RBA's reserved seats on the Raisin Administrative Committee of the USDA. (FAC at 3). On or about March 2, 2007, Garabedian filed a complaint against Plaintiffs alleging defamation, slander, and breach of the common law Fair Procedure Doctrine in Fresno County Superior Court. (FAC at 3).

In response to the Garabendian complaint, on or about April 4, 2007, Plaintiff's filed an Anti-SLAPP motion against Garabedian. (FAC at 3). On November 8, 2007, the Superior Court granted Plaintiffs' Anti-SLAPP motion and struck Garabedian's entire complaint. (FAC at 4).

The complaint alleges that upon receipt of Garabedian's complaint in March 2007, Plaintiffs immediately tendered the complaint to Defendant. (FAC at 4). On or about March 19, 2007, Plaintiffs received a letter from Defendant agreeing, without any reservations, to defend and provide indemnity to Plaintiffs. (FAC at 4). Plaintiffs met with Defendant's counsel, attorneys Gordon Park and Mohammed Mandegary of the Fresno law firm McCormick Barstow, who "requested" that Plaintiff's counsel, the law firm of Campagne, Campagne, & Lerner, continue working on defending against the Garabedian complaint until resolution of an Anti-SLAPP motion. (FAC at 4-5). The FAC alleges that Park and Mandegary promised they would recommend to Defendant that it should reimburse Plaintiffs for the fees incurred in defending the Garabedian complaint. (FAC at 5). According to the FAC, Defendant "affirmed that Plaintiff's counsel...would remain working on defending against the Garabedian Complaint." (FAC at 4-5).

Defendant paid Plaintiffs' invoices from March 2007 through September 2007 after taking additional write downs at the expense of Plaintiffs. (FAC at 5). Defendant reimbursed Plaintiffs $38,891.42. (FAC at 5).

On or about November 12, 2009, Defendant sent Plaintiffs a document entitled "Case Summary." (FAC at 6). The Case Summary refused full payment of legal fees incurred by Plaintiffs. (FAC at 6). Plaintiffs allege that the Case Summary set forth an incorrect account of the defense provided in connection with the Garabedian complaint. (FAC at 6). The Case Summary asserts that Defendant paid a total of $69,366.48 in legal fees. (FAC at 6). The Case Summary also indicated that Defendant intended to collect the attorneys' fees awarded by the Superior Court in connection with Plaintiffs successful Anti-SLAPP motion. (FAC at 6). Plaintiffs sent Defendant a written response to Defendant's Case Summary on December 16, 2009. (FAC at 7). Upon receipt of Plaintiff's response, Defendant asked Plaintiff to forward a copy of the Case Summary. (FAC at 8).

The total amount of fees and costs for work performed by Plaintiffs' counsel from January 2007 through September 2007 was $77,056.81. (FAC at 6). According to the FAC, none of the work performed by Plaintiffs' counsel was duplicative of the work performed by Defendant's counsel. (FAC at 6). Plaintiffs allege that Defendant's actions were taken in bad faith, and that Defendant had actual knowledge that its conduct constituted bad faith. (FAC at 7).

Plaintiffs allege they have incurred costs and attorney's fees as a result of Defendant's actions. (FAC at 7). Plaintiffs also contend they have suffered great emotional distress as a result fo Defendant's conduct. (FAC at 7). Plaintiffs contend that Defendant owes Plaintiffs $38,165.33, plus 10% APR as well as punitive damages ...


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