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Estate of Emma Cartledge v. Columbia Casualty Company

November 22, 2011

ESTATE OF EMMA CARTLEDGE,
PLAINTIFF,
v.
COLUMBIA CASUALTY COMPANY, DEFENDANT,



ORDER RE: MOTION TO DISMISS

Plaintiff the Estate of Emma Cartledge, by and through her successor in interest, Kenny Cartledge, ("Cartledge") brought this action against defendant Columbia Casualty Company ("Columbia") alleging claims under California Insurance Code section 11580(b)(2) and for breach of the implied covenant of good faith and fair dealing. Defendant now moves to dismiss plaintiff's Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief may be granted.

I. Procedural and Factual Background Sierra Manor Associates, Inc. ("Sierra Manor Associates") is a residential elder care facility that does business as Sierra Manor. (Mem. of P. & A. in Supp. of Mot. to Dismiss at 1.) Cartledge obtained a default judgment in state court ("the underlying state action") against Sierra Manor Associates, Inc., individually and doing business as Sierra Manor, in the amount of $2,000,471.50 for claims arising from injuries allegedly sustained by Emma Cartledge while a resident at Sierra Manor. (Compl. at 2.) Sierra Manor Associates was the only defendant named in the underlying state action. (Id.)

Columbia issued a commercial liability policy to Attwal Enterprises, Inc. ("Attwal Enterprises"), a corporation that uses two fictitious business names--Sierra Manor and Woodson Lodge. (Id. at 3; Mem. of P. & A. in Supp. of Mot. to Dismiss at 1.) That policy was valid at the time of the acts under which the underlying state action arose. Sierra Manor Associates is not listed as an insured on the policy. (Miller Decl. ¶ 2; Ex. C.) Balwinder Attwal ("Mr. Attwal") is the CEO of both Attwal Enterprises and Sierra Manor Associates. (Pl.'s Opp'n to Def.'s Mot. to Dismiss at 2-3, Exs. 4, 5.)

Cartledge alleges that Columbia was aware of the underlying action, but did not participate in the underlying action and rejected Cartledge's offers to settle within policy limits. (Compl. at 3.)

Claiming that Sierra Manor Associates was an insured under the Columbia policy, Cartledge brought this action against Columbia as a judgment creditor seeking to collect on the default judgment against Sierra Manor Associates and bringing a claim for breach of the implied covenant of good faith and fair dealing.

II. Judicial Notice

In general, a court may not consider items outside the pleadings when deciding a motion to dismiss, but it may consider items of which it can take judicial notice. Barron v. Reich, 13 F.3d 1370, 1377 (9th Cir. 1994). A court may take judicial notice of facts "not subject to reasonable dispute" because they are either "(1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned." Fed. R. Evid. 201. Judicial notice may properly be taken of matters of public record outside the pleadings. See MGIC Indem. Corp. v. Weisman, 803 F.2d 500, 504 (9th Cir. 1986).

Defendant has requested that the court take judicial notice of five items: (1) the Complaint in the underlying state action; (2) the Complaint in the instant action; (3) a copy of the California Secretary of State Business Entity Detail for Sierra Manor Associates; (4) a copy of the California Secretary of State Business Entity Detail for Attwal Enterprises; and (5) the insurance policy issued to Attwal Enterprises. (Req. for Judicial Notice (Docket No. 7-1).)

To the extent that defendant requests that the court take judicial notice that the Complaint in the underlying state action was filed, the request is granted. See Burbank-Glendale-Pasadena Airport Auth. v. City of Burbank, 136 F.3d 1360, 1364 (9th Cir. 1998). However, the court will not take judicial notice of any disputed facts contained in the document. See Lee, 250 F.3d at 690. As to item two, the court does not need to judicially notice the pleading in the current proceeding to consider it. Judicial notice of items three and four is appropriate as both are public records. The insurance policy, item five, is neither generally known and capable of accurate and unquestionable determination nor a public record. Because the insurance policy is not attached to the Complaint, the court will not judicially notice it.*fn1

III. Discussion

On a motion to dismiss, the court must accept the allegations in the complaint as true and draw all reasonable inferences in favor of the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), overruled on other grounds by Davis v. Scherer, 468 U.S. 183 (1984); Cruz v. Beto, 405 U.S. 319, 322 (1972). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, ---, 129 S. Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Under this "plausibility standard," "[w]here a complaint pleads facts that are 'merely consistent with' a defendant's liability, it 'stops short of the line between possibility and plausibility of entitlement to relief.'" Id. at 1949 (quoting Twombly, 550 U.S. at 556-57).

A. Insurance Code section 11580(b)(2)

Under California Insurance Code section 11580, "whenever judgment is secured against the insured . . . in an action based upon bodily injury, death, or property damage . . . an action may be brought against the insurer on the policy and subject to its terms and limitations, by such judgment creditor to recover on the judgment." Cal. Ins. Code § 11580(b)(2). "The judgment creditor's right to sue is not derivative or dependent upon any assignment from the insured." Shafer v. Berger, Kahn, Shafton, Moss, Figler, Simon & Gladstone, 107 Cal. App. 4th 54, 68 (2d Dist. 2003) (quoting Croskey et al., Cal. Practice Guide: Insurance Litigation ¶ 15:1039 (The Rutter Group 2002)). In order to state a claim under section 11580(b)(2), a complaint must include allegations that a plaintiff (1) obtained a judgment for injury (2) against a party who is insured by an insurance policy that (3) would cover the injury. Garamendi v. Golden Eagle Ins. Co., 16 Cal. App. 4th 694, 710 (1st Dist. 2004) (quoting Wright v. Fireman's Fund Ins. Cos., 11 Cal. App. 4th 998, 1015 (4th Dist. 1992)). At issue in this case is whether plaintiff can be said to have obtained a judgment against a party insured by Columbia.

The Columbia policy was issued to Attwal Enterprises dba Sierra Manor. In the underlying action, the only named defendant was "Sierra Manor Associates, Inc., individually and doing business as Sierra Manor."*fn2 Plaintiff claims that because Sierra Manor Associates also does business under the fictional name "Sierra Manor," Sierra Manor Associates should be considered as an insured under the Columbia policy. A fictional business name, or dba, however, "does not create a separate legal identity." Pinkerton's Inc. v. Superior Ct. of Orange Cty., 49 Cal. App. 4th 1342, 1348 (4th Dist. 1996). Rather, the designation "dba" is "merely descriptive of the person or corporation who does business under some other name." Providence Wash. Ins. Co. v. Valley Forge Ins. Co., 42 Cal. App. 4th 1194, 1200 (1st Dist. 1996) (quoting Duval v. Midwest Auto City, Inc., 425 F. Supp. 1381, 1387 (D. Neb. 1977), affd. 578 F.2d 721 (8th Cir. 1978)). Further, because an "insured" must be a legal person, Sierra Manor the dba could never be an insured party under any policy. Providence, 42 Cal. App. 4th at 1200 ...


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