ORDER RE: MOTION TO DISMISS
Plaintiff the Estate of Emma Cartledge, by and through her successor in interest, Kenny 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 First Amended Complaint ("FAC") 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. (FAC at 2-3.) 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 she was a resident at Sierra Manor. (FAC at 2; Req. for Judicial Notice Ex. B.) Sierra Manor Associates was the only defendant named in the underlying state action. (Req. for Judicial Notice Ex. B.)
Columbia issued a commercial liability policy ("Columbia policy") to Attwal Enterprises, Inc. ("Attwal Enterprises"). (FAC at 3.) The Columbia policy lists both Sierra Manor and Woodson Lodge as dba's for Attwal Enterprises. (Miller Decl. Ex. C at 5.) However, "on-line corporation reports of the State of California" do not list "the dba SIERRA MANOR as an 'associated business' or 'fictitious business name' of Attwal Enterprises, Inc." (FAC at 5.) The address "2770 Sierra Ladera Lane, Bldg 1&2, Chico, CA," which is the address of the Sierra Manor facility run by Sierra Manor Associates, is noted in the policy as an insured location. (FAC at 3.) The other insured location is 3758 Illinois Ave, Corning, California, (Miller Decl. Ex. C at 9), which is the location of the Woodson Lodge facility, which is run by Balwinder Attwal ("Mr. Attwal"). (FAC at 4.) Sierra Manor Associates is not listed as an insured on the policy. (FAC at 4; Miller Decl. ¶ 2, Ex. C.)
Mr. Attwal is the CEO of both Attwal Enterprises and Sierra Manor Associates. (FAC at 5.) Plaintiff alleges that it was the intention of both parties to the Columbia policy that the commercial liability policy issued to Attwal Enterprises also cover claims made against Sierra Manor, the assisted living facility located at 2770 Sierra Ladera Lane. (FAC at 3.) Plaintiff claims that both parties intended for Sierra Manor Associates to be an insured under the policy and that the name of that corporation was not listed as an insured on the insurance contract as the result of a clerical error. (FAC at 4.)
In support of this alleged shared intent, the FAC notes that Mr. Attwal represented to the California Department of Social Services that, as the licensee/owner of Sierra Manor, he would add liability insurance to the coverage of Sierra Manor once the facility was opened and that "the only liability insurance policy found covering SIERRA MANOR is the aforementioned policy with defendant." (FAC at 5-6.) Additionally, plaintiff alleges that Columbia, in its initial communications with it regarding the underlying action, acknowledged coverage for Sierra Manor, and that according to the agent who purchased the policy and dealt directly with Mr. Attwal, "the parties intended to cover the dba SIERRA MANOR, located at 2770 Sierra Ladera Lane, Chico, California for professional and general negligence liability." (FAC at 4-5.) Finally, the FAC points out that because it was represented to the California Department of Social Services that the assisted living facility known as Sierra Lodge was run by Sierra Manor Associates and that the second facility referred to in the Columbia policy, Woodson Lodge, was run by Mr. Attwal personally, Attwal Enterprises did not run any assisted living facility that would be covered by the insurance policy as written. Therefore, under the policy as written, no coverage could ever be found despite the fact that Columbia was paid a premium of $22,571. (Compl. at 3:22-24.)
Plaintiff alleges that Columbia was aware of the judgment entered against Sierra Manor Associates in the underlying action and that Columbia was obligated by the terms of the insurance policy to provide coverage for that judgment. (FAC at 6.) Columbia, however, has yet to pay that judgment, in what plaintiff claims is a breach of the covenant of good faith and fair dealing. (FAC at 6.)
Claiming that Sierra Manor Associates was an insured under the Columbia policy, plaintiff 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.
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). The Ninth Circuit has also held that a court may "consider certain materials--documents attached to the complaint, documents incorporated by reference in the complaint, or matters of judicial notice--without converting the motion to dismiss into a motion for summary judgment." United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003).
Columbia has requested that the court take judicial notice of four items: (1) the Complaint in the underlying state action; (2) the amended judgment in the underlying state action; (3) a copy of the California Secretary of State Business Entity Detail for Attwal Enterprises; and (4) a copy of the California Secretary of State Business Entity Detail for Sierra Manor Associates. (Req. for Judicial Notice.)
As the Columbia policy is extensively referenced in the Complaint and neither party disputes its authenticity, the court will take judicial notice of it. See Ritchie, 342 F.3d at 909 ("The doctrine of incorporation by reference may apply, for example, when a plaintiff's claim about insurance coverage is based on the contents of a coverage plan . . . ." (citing Parrino v. FHP, Inc., 146 F.3d 699, 705-06 (9th Cir. 1998))).
To the extent that Columbia requests that the court take judicial notice that the Complaint in the underlying state action was filed and that an amended judgment was entered, 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. Judicial notice of the business entity details is appropriate as both are public records.
Plaintiff has attached a sixteen documents to its Opposition, but has not requested that the court take judicial notice of any of them. "When ruling on a Rule 12(b)(6) motion to dismiss, if a district court considers evidence outside the pleadings, it must normally convert the 12(b)(6) motion into a Rule 56 motion for summary judgment, and it must give the nonmoving party an opportunity to respond." Ritchie, 342 F.3d at 908. As the court does not rely on any of these materials and as Columbia has not had time to respond to them, ...