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Arthur Diamond v. State Farm Mutual Automobile Insurance Company

May 11, 2011

ARTHUR DIAMOND, PLAINTIFF,
v.
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, ET AL., DEFENDANTS.



FINDINGS AND RECOMMENDATIONS

This matter came before the court for hearing of defendant State Farm Mutual Automobile Insurance Company's amended motion for summary judgment (Doc. No. 80), defendant Mediterranean Shipping Company's motion to dismiss plaintiff's complaint for lack of subject matter jurisdiction, or in the alternative for partial summary judgment, (Doc. No. 104), and defendant CSE Insurance Group's motion to dismiss plaintiff's complaint for lack of subject matter jurisdiction, or in the alternative for summary judgment. (Doc. No. 113.)

Attorney Stephen M. Hayes appeared on behalf of defendant State Farm Mutual Automobile Insurance Company ("State Farm") at the October 25, 2010 hearing on State Farm's motion for summary judgment. Attorney Mark de Langis appeared on behalf of defendant Mediterranean Shipping Company ("MSC") at the February 11, 2011 hearing on MSC's motion to dismiss, or in the alternative for partial summary judgment. Attorney Devera Petak appeared on behalf of defendant CSE Insurance Group ("CSE") at the April 1, 2011 hearing on CSE's motion to dismiss, or in the alternative motion for summary judgment. Plaintiff Arthur Diamond, proceeding pro se, appeared on his own behalf at each hearing. Oral argument was heard, and defendants' motions were thereafter taken under submission.

BACKGROUND

Plaintiff originally commenced this action by filing a complaint in the Sacramento County Superior Court on January 12, 2009. (Doc. No. 2 at 4.) On April 21, 2009, defendant MSC removed the action to this court pursuant to 28 U.S.C. § 1441(a). (Doc. No. 1.) On April 27, 2009, defendant MSC filed an answer, (Doc. No. 9), and on April 29, 2009, the undersigned issued a scheduling order. (Doc. No. 10.)

On May 7, 2009, defendant State Farm filed a motion to dismiss plaintiff's second cause of action. (Doc. No. 14.) On May 15, 2009, plaintiff filed a motion to remand this matter back to state court pursuant to 28 U.S.C. § 1446. (Doc. No. 18.) On June 5, 2009, defendant MSC filed an opposition to plaintiff's motion to remand. (Doc. No. 20.)

On March 31, 2010, the undersigned issued findings and recommendations recommending that plaintiff's motion to remand this action to state court be granted. (Doc. No. 58.) On April 14, 2010, defendant MSC filed objections to those findings and recommendations, raising new arguments not originally presented in opposition to the motion. (Doc. No. 60.) On April 29, 2010, defendant State Farm filed a motion for summary judgment. (Doc. No. 62.) On July 26, 2010, the undersigned vacated the March 31, 2010 findings and recommendations, and issued new findings and recommendations, recommending that plaintiff's May 15, 2009 motion for remand be denied and that defendant State Farm's May 7, 2009 motion to dismiss plaintiff's second cause of action be granted. (Doc. No. 75.) Those findings and recommendations were adopted by the assigned District Judge on August 26, 2010. (Doc. No. 78.) /////

On August 30, 2010, the court issued a second amended pretrial scheduling order. (Doc. No. 79.) On September 14, 2010, defendant State Farm filed an amended motion for summary judgment which is now pending before the court. ("State Farm MSJ" (Doc. Nos. 63 and 80.))*fn1 Plaintiff filed a belated opposition to that motion on October 27, 2010. ("Pl's Opp.'n. to State Farm" (Doc. No. 93.)) Defendant State Farm filed a reply on November 5, 2010. ("State Farm Reply" (Doc. No. 95.)) Plaintiff filed an unauthorized response to defendant State Farm's reply on November 29, 2010.*fn2 (Doc. No. 101.)

On January 10, 2011, defendant MSC filed a motion to dismiss for lack of subject matter jurisdiction, or alternatively for partial summary judgment. ("MSC MTD" (Doc. No. 104.)) That motion is also now pending before the court. Plaintiff filed an opposition to that motion on February 10, 2011. ("Pl's Opp'n. to MSC" (Doc. No. 111.)) MSC did not file a reply.

On February 28, 2011, defendant CSE filed a motion to dismiss or alternatively for partial summary judgment which is also now pending before the court. ("CSE MSJ" (Doc. No. 113.)) Plaintiff filed an opposition to CSE's motion on March 21, 2011. ("Pl's Opp'n. to CSE" (Doc. Nos. 115 and 116.)) Defendant CSE filed a reply on March 22, 2011. ("CSE Reply" (Doc. No. 114.))

PLAINTIFF'S CLAIMS

In his complaint plaintiff alleges as follows. In 2006 plaintiff contacted Charles Boateng, who had claimed to be a shipping agent for Transglobal International Shipping ("Transglobal"). Plaintiff sought the services of Transglobal to ship plaintiff's 1999 Mercedes Benz ML320, loaded with plaintiff's personal property, to Kampala, Uganda. On September 3, 2006, plaintiff turned his vehicle and its contents over to Boateng for shipment. The following day plaintiff attempted to contact Boateng by telephone but received no response. At some point, plaintiff reported to defendant State Farm, the issuer of plaintiff's automobile insurance policy, and defendant CSE, the issuer of plaintiff's homeowners insurance policy, that Boateng had stolen plaintiff's vehicle and its contents. Plaintiff also filed a loss report with the Elk Grove Police Department, in Elk Grove, California.

In October of 2006, the Elk Grove Police Department informed plaintiff and defendant State Farm that they had reliable information that a vehicle fitting the description of plaintiff's vehicle was located at the Houston office of defendant MSC. Defendant MSC provides international shipping services. When contacted by the police, defendant MSC refused to cooperate with the investigation by the Elk Grove Police Department.

Eventually, Mr. Herve Torlotting, a deputy office manager at MSC's office in Houston, Texas, acknowledged that his records reflected that MSC had a container that apparently contained plaintiff's vehicle, although Torlotting could not be certain, since the shipping containers are delivered to MSC sealed and are not opened or inspected. Torlotting. however, refused to release the container to anyone other then the possessor of the original bill of lading, which was given to Boateng. Torlotting eventually allowed the container to be shipped to Dar Es Salaam, Tanzania.

In the meantime, defendant State Farm notified plaintiff that State Farm would not pay a claim based on the loss of his vehicle because the vehicle was shipped overseas and vehicles located outside the United States are excluded from coverage under plaintiff's automobile insurance policy. Similarly, defendant CSE notified plaintiff that they were refusing to pay his claim based upon the loss of his personal property loaded inside the vehicle, because plaintiff's homeowners insurance policy did not cover items stolen from inside a vehicle and because plaintiff's initial loss report to the Elk Grove Police Department did not mention any personal property inside the vehicle. Edmond Wade, a private attorney retained by State Farm, later contacted plaintiff and informed him that an investigator for State Farm had located his vehicle in a shipping container in Dar Es Salaam at a shipping yard operated by MSC. Plaintiff thereafter contacted the International Criminal Police Organization ("INTERPOL").

INTERPOL contacted the manager of MSC's Dar Es Salaam shipping yard, but the manager refused to release the shipping container without authorization from MSC's headquarters, located in Geneva, Switzerland. Plaintiff's repeated attempts to obtain his possessions from MSC were unsuccessful. Plaintiff expended considerable effort and costs in attempting to recover his possessions and suffered over $186,000 in property loss.

Based on these factual allegations, plaintiff raises claims for breach of contract, professional negligence, breach of the implied covenant of good faith and fair dealing*fn3 , and the intentional infliction of emotional distress. Plaintiff seeks compensatory and punitive damages in excess of $276,000. (Notice of Removal, ("Compl." (Doc. No. 2), at 5-27.)*fn4

DEFENDANTS' MOTIONS

Defendants MSC and CSE have brought motions to dismiss pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure. Defendants MSC, CSE and State Farm have also moved for summary judgment in their favor. The court will first address motions to dismiss brought pursuant to Rule 12(b)(1) by defendants MSC and CSE before turning to the defendants' motions for summary judgment.

I. Motions to Dismiss Pursuant to 12(b)(1)

A. Legal Standards

Federal Rule of Civil Procedure 12(b)(1) allows a defendant to raise by motion the

defense that the court lacks jurisdiction over the subject matter of an entire action or over specific claims. "A motion to dismiss for lack of subject matter jurisdiction may either attack the allegations of the complaint or may be made as a 'speaking motion' attacking the existence of subject matter jurisdiction in fact." Thornhill Publ'g Co. v. Gen. Tel. & Elecs. Corp., 594 F.2d 730, 733 (9th Cir. 1979).

When a party brings a facial attack to subject matter jurisdiction, the issue is whether the allegations of jurisdiction contained in the complaint are insufficient on their face to demonstrate the existence of jurisdiction. Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). In a Rule 12(b)(1) motion of this type, the plaintiff is entitled to safeguards similar to those applicable when a Rule 12(b)(6) motion is made. See Sea Vessel Inc. v. Reyes, 23 F.3d 345, 347 (11th Cir. 1994); Osborn v. United States, 918 F.2d 724, 729 n. 6 (8th Cir. 1990). The factual allegations of the complaint are presumed to be true, and the motion is granted only if the plaintiff fails to allege an element necessary for subject matter jurisdiction. Savage v. Glendale Union High Sch. Dist. No. 205, 343 F.3d 1036, 1039 n. 1 (9th Cir. 2003), Miranda v. Reno, 238 F.3d 1156, 1157 n. 1 (9th Cir. 2001). Nonetheless, district courts "may review evidence beyond the complaint without converting the motion to dismiss into a motion for summary judgment" when resolving a facial attack. Safe Air for Everyone, 373 F.3d at 1039.

Alternatively, when a Rule 12(b)(1) motion attacks the existence of subject matter jurisdiction in fact, no presumption of truthfulness attaches to the plaintiff's allegations. Safe Air for Everyone, 373 F.3d at 1039; Thornhill Publ'g Co., 594 F.2d at 733. Under such a factual attack, the "dispute [concerns] the truth of the allegations that, by themselves, would otherwise invoke federal jurisdiction." Safe Air for Everyone, 373 F.3d at 1039. In the case of such a factual attack, "the district court is not restricted to the face of the pleadings, but may review any evidence, such as affidavits and testimony, to resolve factual disputes concerning the existence of jurisdiction." McCarthy v. United States, 850 F.2d 558, 560 (9th Cir. 1988). When deciding a factual challenge to subject matter jurisdiction, the court may only rely on facts that are not intertwined with the merits of the action. Safe Air for Everyone, 373 F.3d at 1039. Finally, when a Rule 12(b)(1) motion attacks the existence of subject matter jurisdiction in fact, plaintiff has the burden of proving that jurisdiction does in fact exist. Thornhill Publ'g Co., 594 F.2d at 733.*fn5

B. Defendant MSC's Motion to Dismiss

Defendant MSC seeks dismissal of plaintiff's claims pursuant to Federal Rule of Civil Procedure 12(b)(1) on the ground that the court lacks subject matter jurisdiction over this action. Specifically, defendant MSC argues that plaintiff's claims are time barred by the one-year statute of limitations contained in the Carriage of Goods By Sea Act ("COGSA"). In this regard, counsel for defendant MSC contends that plaintiff's possessions were discharged and available for delivery in Dar Es Salaam as of January 1, 2007. Moreover, defense counsel argues, the MSC bill of lading obligated plaintiff to file suit within one-year after the date that his goods should have been delivered.*fn6 (Def. MSC's Mem. of P. & A. (Doc. No. 104) at 8-10.)

In opposing defendant's motion to dismiss plaintiff argues that: 1) defendant MSC was not even sure of the location of plaintiff's goods as of April of 2008; 2) defendant knowingly and willfully participated in defrauding plaintiff; and 3) despite plaintiff's repeated attempts, defendant MSC refused to surrender plaintiff's possessions to him before ultimately turning them over for auction. (Pl.'s Opp.'n. to MSC (Doc. No. 111) at 2-33.)

COGSA applies to "[e]very bill of lading . . . which is evidence of a contract for the carriage of goods by sea to or from ports of the United States, in foreign trade . . . ." Note following 46 U.S.C. § 30701. "The time bar provisions in COGSA state that: '[i]n any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one-year after delivery of the goods or the date when the goods should have been delivered.'" Underwood Cotton Co., Inc. v. Hyundai Merchant Marine (American), Inc., 288 F.3d 405, 408 (9th Cir. 2002) (quoting 46 U.S.C. app. § 1303(6)).*fn7

"The cases discussing the meaning of 'delivery' under the COGSA have held that 'delivery' occurs upon notification of the consignee that the goods arrived and after a reasonable opportunity for the consignee to obtain or inspect the goods." Starrag v. Maersk, Inc., 486 F.3d 607, 617 (9th Cir. 2007). See also The Eddy, 72 U.S. 481, 495 (1866) (holding that actual delivery to the owner is not required and that valid delivery occurs where the shipper gave due and reasonable notice to consignee affording him a fair opportunity to remove the goods); The Tangier, 64 U.S. 28, 39 (1859) (holding that the cargo is delivered once due and reasonable notice is given to the consignee such that the consignee has a fair opportunity to arrange for proper care and custody of the goods); Servicios-Expoarma v. Indus. Mar. Carriers, Inc., 135 F.3d 984, 992 (5th Cir. 1998) ("'Delivery' occurs when the carrier places the cargo into the custody of whomever is legally entitled to receive it from the carrier"); Metro. Wholesale Supply, Inc. v. M/V Royal Rainbow, 12 F.3d 58, 61 (5th Cir. 1994) (deciding that "proper delivery" occurs when the consignee has notice of arrival and a reasonable opportunity to pick up the goods); Capital Partners Int'l Ventures, Inc. v. Danzas Corp., 309 F. Supp.2d 1138, 1146 (N.D. Cal. 2004) (discussing constructive delivery of cargo under both the Harter Act and COGSA, concluding that "[g]oods are constructively delivered once they are placed upon a fit wharf and the consignee receives both due and reasonable notice that the goods have been discharged and a reasonable opportunity to remove them"); National Packaging Corp. v. Nippon Yusen Kaisha, 354 F. Supp. 986, 987 (N.D. Cal. 1972) (a consignee should receive notice of discharge and "a reasonable opportunity to remove the goods or place them under proper care and custody").

The undisputed evidence before the court establishes that MSC transported plaintiff's possessions in a container from Houston, Texas on November 4, 2006, to Dar Es Salaam, Tanzania on January 1, 2007. (Torlotting Decl. Part 1 (Doc. No. 107) at 2-4.) On October 31, 2007, MSC's agent Herve Torlotting e-mailed plaintiff and informed him that his possessions were in a sealed container in Dar Es Salaam and that plaintiff should contact the MSC shipping yard there "to get more info on what needs to be done to get the cargo released." (Torlotting Decl. Part 1 (Doc. No. 107) at 4; Torlotting Decl. Part 2 (Doc. No. 108) at 7.) On November 9, 2007, plaintiff emailed Torlotting, thanking him for the information provided, asking for the storage and customs charges with respect to his possessions and for a copy of the bill of lading. (Torlotting Decl. Part 2 (Doc. No. 108) at 3.)

Sometime thereafter plaintiff emailed a person named Shirima in Dar Es Salaam, indicating that plaintiff was given Shirima's name by Torlotting.*fn8 (de Langis Decl. (Doc. No. 106) at 49.) Plaintiff asked Shirima to confirm that plaintiff's vehicle was inside the container and to provide plaintiff with the applicable port and customs charges. (Id.) Shirima responded that the container arrived in Dar Es Salaam on January 1, 2007, and that no original bill of lading had been presented for release of the contents of the container. (Id. at 48-49.) Shirima also provided an estimate of the storage and customs charges. (Id.)

Plaintiff replied to Shirima, stating:

In your email you did not state that you have looked in that container and confirmed that my vehicle is inside. Remember I did not ship the container and I am not responsible for it. Mr. Torlotting, the MSC manager in Houston believes that my vehicle is in that container. Someone obviously was attempting to divert it and steal it. As such, you don't expect me to pay for storage charges for the thief who tried to steal the car. So, I need to negotiate with you the release of the vehicle and anything else that belongs to me but I am not responsible for the container as I explained to Mr. Torlotting because I did not ship it.

(Id. at 48.)

Shirima responded, thanking plaintiff for his email message and stating: First of all, once a container is discharged/landed here from ship it is placed under the custody of the landing contractor (in this case the port container terminal operator) pending customs clearance and delivery of the cargo by the consignee. As shipping agents we are not allowed access to the container at any intermediate stage to establish position of contents there in. As I told you earlier since arrival of this container no one has presented original bills of lading to us for release of the cargo and therefore the container is deemed to be full in port, apparently with contents thereof intact. Notwithstanding circumstances that may have led to the correct or incorrect shipment of the container from USA to Dar Es Salaam port, as agents for the carrier we will handle this matter strictly within the terms of the bill of lading unless there is a court order from Dar Es Salaam court that directs MSC to act otherwise. In any case MSC is an innocent carrier and is not party to whatever theft that may have taken place in USA, leading to the shipment of the subject cargo to Dar Es Salaam.

Since you do not seem to possess original bills of lading covering this cargo you are advised to take unilateral legal recourse seeking a court order for release of the cargo in your favor having satisfied the court that you are a bonafide owner of the same.

FYI MSC will not involve itself to such proceedings. Do not hesitate to contact us here in Dar Es Salaam or our principals in Geneva for further clarification.

(Id.)

On December 12, 2007, plaintiff sent a lengthy email to Shirima, Torlotting and one "M Waclawek USNYC CLAIMS ASST MGR," saying that he was getting "very frustrated" with a perceived lack of communication between Shirima and Torlotting. Plaintiff went on to state that:

MR. TORLOTTING SHOULD HAVE COMMUNICATED TO YOU THAT IT IS MY VEHICLE IN THAT CONTAINER. HE KNOWS THAT! HE HAS TOLD BOTH ME AND STATE FARM INSURANCE THAT IT IS MY VEHICLE IN THAT CONTAINER. SO, THERE IS NO SENSE IN SAYING THAT YOU DO NOT KNOW WHO THE OWNER IS AND THAT I SHOULD GET A COURT ORDER IN DAR ES SALAAM.

If you do not release my vehicle and other belongings soon, I will take the following steps:

1. I will file a court order in Sacramento, California ... requesting that MSC return my vehicle and other property to Elk Grove, CA., and

2. I will write a letter to the U.S. State Department requesting a full investigation of MSC and its activities in shipping vehicles outside the USA. It appears MSC's profit motive supersedes its moral and ethical obligations; if indeed it is determined that MSC tries to benefit economically even after determining who the rightful owner of the goods shipped is; given that many U.S. citizens are getting their vehicle and other goods stolen and shipped overseas. The Elk Grove Police Department has informed me that the State Department is currently compiling data to ascertain these thefts and determine to what extent the shipping companies are involved;

3. In the alternative I will file a court order in Houston, TX to request that the goods be shipped back to the port in Houston.

I DO NOT EXPECT ANY MORE HASSLES FROM YOU IN RELEASING MY VEHICLE AND PROPERTY AND I AM NOT IN ANY WAY PLEASED WITH THE SERVICE I AM GETTING IN TRYING TO DETERMINE WHETHER MY VEHICLE IS STILL IN THAT CONTAINER IN DAR ES SALAAM SO THAT I CAN RELEASE STATE FARM FROM ITS INSURANCE RESPONSIBILITY.

(Id. at 46-47.)

Plaintiff ultimately filed this civil action in the Sacramento County Superior Court in January of 2009. There is no evidence before the court indicating that plaintiff ever obtained, or attempted to obtain, a court order in Dar Es Salaam ordering MSC to release plaintiff's vehicle and personal property to him.

Based on this evidence it is clear that as of November 9, 2007, at the latest, plaintiff was aware that his goods had been discharged in Dar Es Salaam and were waiting to be claimed via the proper legal channels. Thus, plaintiff's goods were constructively delivered by MSC, at the very latest, as of November 9, 2007. See Danzas, 309 F. Supp.2d at 1146 ("Goods are constructively delivered once they are placed upon a fit wharf and the consignee receives both due and reasonable notice that the goods have been discharged and a reasonable opportunity to remove them.")

While plaintiff argues that MSC's refused to confirm that his possessions were in the container and to release his possessions to him without an original bill of lading or Dar Es Salaam court order, plaintiff was well aware of these issues by December of 2007. Nonetheless, plaintiff did not file suit in the Sacramento County Superior Court until January 9, 2009, after COGSA's one-year statute of limitations for the filing of an action had expired.

Accordingly, defendant MSC's motion to dismiss for lack of subject matter jurisdiction based upon the applicable statute of limitations should be granted.*fn9

C. Defendant CSE's Motion

Defendant CSE seeks dismissal of plaintiff's claims pursuant to Federal Rule of Civil Procedure 12(b)(1) on the ground that the court lacks subject matter jurisdiction. Specifically, counsel for defendant CSE argues that plaintiff's claims are time barred under the terms of his homeowners insurance policy with CSE, which provided that plaintiff must file suit within one-year after the date his loss claim was denied. In this regard, counsel for CSE contends that on August 14, 2007, plaintiff was notified in writing that CSE was "not in the position to resolve or settle" plaintiff's claim. Defendant CSE contends that plaintiff interpreted CSE's statement as a denial which triggered the running of the one-year statute of limitations. Because plaintiff did not file this action until January of 2009, CSE contends that plaintiff's claims are barred by the one-year statute of limitations found in his homeowners insurance policy. (Def. CSE's Mem. of P. & A. (Doc. No. 113) at 15-16.)

Plaintiff opposes defendant's motion, arguing that the August 14, 2007 letter did not deny plaintiff's loss claim but merely notified plaintiff that CSE needed more time to investigate. Moreover, plaintiff asserts that he called the CSE Claims Department several times after he received the August 14, 2007 letter inquiring about the status of his claim and was repeatedly told that CSE was still investigating the claim. (Pl.'s Opp.'n. to CSE (Doc. No. 115) at 4-5.)

Defendant CSE's argument in this regard is unpersuasive. The August 14, 2007 letter from CSE to plaintiff clearly stated:

We are in receipt of your letter dated July 20, 2007, and we appreciate your patience as we continue to investigate your claim. Although we are empathetic to your concerns for resolving this matter as expeditiously as possible, we are not in the position to resolve or settle your claim.

We will continue to verify all leads and information that has been presented regarding this claim and will keep you updated on our progress as it becomes available. (Taylor Decl., Ex. C (Doc. No. 113-4) at 34) (emphasis added). No rational person would interpret the statement "as we ...


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