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James Previti; the James Previti Family Trust; Previti Realty Fund v. National Union Fire Insurance Company of Pittsburgh Pa

August 7, 2012

JAMES PREVITI; THE JAMES PREVITI FAMILY TRUST; PREVITI REALTY FUND LLP; LARRY DAY; EMPIRE PATNERS INC.; EMPIRE RESIDENTIAL INC.; FORECAST CORPORATION; GUARDIAN COMMERCIAL REAL ESTATE LP; GUARDIN INVESTMENT CAPITAL LL; KMR AVIATION INC.; NEIL MILLER; PAUL ROMAN, PLAINTIFFS,
v.
NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH PA, DEFENDANT.



The opinion of the court was delivered by: Dean D. Pregerson United States District Judge

O

ORDER GRANTING DEFENDANT'S MOTION TO DISMISS [Dkt. No. 7, 10]

Presently before the court is Defendant National Union Fire Insurance Company of Pittsburgh, PA ("National Union")'s Motion to Dismiss. Having considered the submissions of the parties and heard oral argument, the court grants the motion and adopts the following order.

I. Background

National Union issued a Directors, Officers, and Private Company Liability Insurance Policy (the "First Policy") to Plaintiff Inland Empire Personnel, Inc. for the period of December 31, 2007 to April 28, 2009. (Complaint ¶ 19.) National Union issued a second, similar policy (the "Second Policy") to Plaintiff Forecast Corporation for the period from April 28, 2009 to April 28, 2010 and a third, similar policy to Forecast Corporation (the "Third Policy") for the period from April 28, 2010 to April 28, 2011.*fn1 (Compl. ¶¶ 20-21.)

Plaintiffs are defendants in twenty-five separate actions (the "Bankruptcy actions") currently pending in the United States Bankruptcy Court for the Central District of California, Riverside Division. (Compl. ¶ 47.) Plaintiffs reported the Bankruptcy Actions to National Union and claimed coverage under all three policies. (Compl. ¶ 52.) The Parties agree that Plaintiffs are insured under the First Policy, and National Union acknowledged potential coverage for the Bankruptcy Actions under the First Policy. (Compl. ¶¶ 33, 53.) National Union declined coverage, however, under the Second Policy and Third Policy.

Plaintiffs filed the instant suit on May 4, 2012. Plaintiffs seek a declaratory judgment that they are covered under all three policies, and that defense payments made in connection with the Bankruptcy Actions do not erode the liability limits of the policies. Plaintiffs also allege causes of action for breach of the duty to defend and tortious breach of the implied covenant of good faith. National Union now moves to dismiss the complaint on the ground that Plaintiffs have failed to satisfy the policies' conditions precedent to suit against the insurer.

II. Legal Standard

A complaint will survive a motion to dismiss when it contains "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, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). When considering a Rule 12(b)(6) motion, a court must "accept as true all allegations of material fact and must construe those facts in the light most favorable to the plaintiff." Resnick

v. Hayes, 213 F.3d 443, 447 (9th Cir. 2000). Although a complaint need not include "detailed factual allegations," it must offer "more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Iqbal, 556 U.S. at 678. Conclusory allegations or allegations that are no more than a statement of a legal conclusion "are not entitled to the assumption of truth." Id. at 679. In other words, a pleading that merely offers "labels and conclusions," a "formulaic recitation of the elements," or "naked assertions" will not be sufficient to state a claim upon which relief can be granted. Id. at 678 (citations and internal quotation marks omitted).

"When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement of relief." Id. at 679. Plaintiffs must allege "plausible grounds to infer" that their claims rise "above the speculative level." Twombly, 550 U.S. at 555-56. "Determining whether a complaint states a plausible claim for relief" is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal, 556 U.S. at 679.

III. Discussion

National Union argues that this suit should be dismissed as premature because Plaintiffs have not complied with the policies' conditions precedent to suit against the insurer.*fn2 (Mot. at 4.) All three policies state, at Clause 18:

Except as provided in Clause 17 of the policy, no action shall lie against the Insurer unless, as a condition precedent thereto, there shall have been full compliance with all of the terms of this policy, nor until the amount of the Insureds' obligation to pay shall have been finally determined either by judgment against the Insureds ...


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