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Stephen Carter et al. v. Nationwide Ins. et al.

September 25, 2012

STEPHEN CARTER ET AL.
v.
NATIONWIDE INS. ET AL.



The opinion of the court was delivered by: Honorable Stephen V. Wilson, U.S. District Judge

CIVIL MINUTES - GENERAL

Present: The Honorable STEPHEN V. WILSON, U.S. DISTRICT JUDGE

Paul M. Cruz N/A

Deputy Clerk Court Reporter / Recorder Tape No.

Attorneys Present for Plaintiffs: Attorneys Present for Defendants:

N/A N/A

Proceedings: IN CHAMBERS ORDER re MOTION TO DISMISS [9]

INTRODUCTION

Plaintiffs Stephen and Deborah Carter, and their son, Matthew Rowley (collectively, "Plaintiffs") filed this action in California Superior Court against their home insurance carrier, Nationwide Insurance Company of America ("Nationwide"), and two Nationwide employees, Tracy Hanson and Lindsay Lathrum (collectively with Nationwide, "Defendants"). Plaintiffs allege that Defendants wrongfully denied and delayed insurance coverage for Plaintiffs. Specifically, Plaintiffs assert four causes of action: (1) breach of written contract against Nationwide only; (2) breach of covenants of good faith and fair dealing against Nationwide only; (3) declaratory relief against Nationwide only; and (4) intentional infliction of emotional distress ("IIED") against all Defendants. Defendants removed to this Court and filed this Motion to Dismiss the fourth cause of action. (Dkt. 9-1 at 1). Because the Court lacks subject matter jurisdiction, the Court DISMISSES the case and REMANDS to California Superior Court.

FACTUAL ALLEGATIONS*fn1

Plaintiffs are residents of Riverside County, California. (Compl. ¶ 1). Nationwide is a Wisconsin corporation with its principal place of business in Iowa. (Compl. ¶ 2). Defendants Hanson and Lathrum are residents of California and work at Nationwide's Orange County office. (Compl. ¶¶ 3-Defendants issued Plaintiffs a homeowners insurance policy ("the policy") for the period of August 5, 2009 to August 5, 2010, for Plaintiffs' home. (Compl. ¶ 15).*fn2 Stephen and Deborah Carter were the named insureds, and Matthew Rowley was listed as an additional insured. (Compl. ¶ 18, Ex. 1

In February 2011, water began leaking into Plaintiffs' pantry from behind a wall. In late February, Plaintiffs tendered a claim to Nationwide for the water damage to the property. (Compl. ¶ 20). Defendant Hanson, a Nationwide claims adjuster, telephoned Plaintiffs on March 3, 2011 to initiate the claims process and advised Plaintiffs to contact American Leak Detection Company to determine the source of the leak. (Compl. ¶ 21). During that conversation, Plaintiff Deborah Carter told Hanson that her son, Matthew, had a history of fungal infections. (Compl. ¶ 24 at 6:3-6). When the leak detectors visited the home later that evening, they located the leak and fixed the pipe. (Compl. ¶ 22).

On March 10, per Nationwide's request, American Environmental Group ("AEG") inspected Plaintiffs' house, taking air and swab samples for analysis of mold spore counts. (Compl. ¶ 25). On March 14, AEG issued its report to Nationwide, indicating the extent of water damage and fungal growth, and concluding that the samples revealed an elevated mold spore counts which were unacceptable and requiring remediation. (Compl. ¶ 26). Nationwide sent this report to Plaintiffs on March 23. Meanwhile, on March 22, Plaintiff Matthew Rowley was hospitalized because he was in pulmonary distress. (Compl. ¶ 27). Rowley had a history of fungal allergies and had just underwent surgery in December 2010 to remove a fungal ball from one of his lungs. (Compl. ¶ 23). On March 29, Rowley's treating physician advised Plaintiffs to evacuate the house because there was evidence that the child's allergy had worsened from exposure to mold. That evening, Deborah Carter related this advice to Defendant Hanson, who agreed that the family should vacate the house, but advised she would be unable to make arrangements for alternative lodging because she was "off work." (Compl. ¶ 28). That night, the family relocated to a local Marriot hotel room for $330 per night.

On March 30, Defendant Hanson, with the approval of her supervisor, Defendant Lathrum, issued Plaintiffs a letter regarding the "Coverage D - Loss of Use" provision of their homeowners policy. (Compl., Ex. 4). The letter did not mention any specific dollar cap on the loss of use coverage, and expressly stated, "We will reimburse you ...


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