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Kenneth Wayne Johnson v. Liberty Mutual Insurance


January 31, 2013


The opinion of the court was delivered by: Lucy H. Koh United States District Judge

For the Northern District of California


Plaintiff Kenneth W. Johnson ("Plaintiff"), proceeding pro se, brings this action against Liberty Mutual Insurance Company ("LMI") alleging fraud, misrepresentation, and negligence. 19

See Second Amended Complaint ("SAC"), ECF No. 12, at 3. Having considered the submissions 20 of the parties and the relevant law, the Court hereby GRANTS LMI's Motion to Dismiss Plaintiff's 21 SAC without leave to amend. 22


A.Factual Allegations

This diversity action arises from LMI's alleged false statements that were contained in certain financial and medical documents provided to the Santa Clara County Superior Court in 26 connection with a juvenile delinquency proceeding. See SAC at 5.

On February 18, 2010, Plaintiff's minor son was arrested at a local mall and charged with 2 assaulting a security guard, Shawn Johnson ("Johnson"), with a deadly weapon. SAC at 4. Due to 3 the attack, Johnson sustained injuries to his head and back, as well as damage to his iPhone. Id. 4 LMI-the insurance company for Johnson's employer-was responsible for providing Johnson 5 with worker's compensation, and therefore indemnifying Johnson for his losses. See id.; Motion to 6 Dismiss Pl.'s SAC ("Mot."), ECF No. 20, at 2 n.3. 7

On June 7, 2010, a Santa Clara County probation officer contacted Johnson to find out 8 whether he sought restitution for harm sustained as a result of the assault. SAC at 4. Johnson 9 expressed an interest in seeking restitution in the amount of $3,061.72 for personal replacement of 10 his iPhone and iPhone case, as well as reimbursement for a medical bill and for two days of lost wages. SAC at 4. That same day, Plaintiff learned that LMI intended to seek reimbursement for Johnson's claims. Id. 13

During the months thereafter, the probation officer contacted LMI to determine how much LMI paid for Johnson's medical expenses and other indemnity costs. See SAC at 4. LMI 15 subsequently faxed the probation officer documentation of medical payments, a list of physician's 16 names, and a schedule of indemnity payments, all of which LMI allegedly paid to Johnson. Id. 17

The purpose of providing this information was to enable the investigating probation officer to 18 "report accurate medical treatment and indemnity payments to the plaintiff and the court." SAC at 19 14 5. 20

Plaintiff alleges that LMI knowingly made false and misleading statements to the probation 21 officer regarding the amount of money LMI paid Johnson to cover his medical treatment and lost 22 wages. See SAC at 5. He contends that LMI's documentation was misleading because "there is no 23 verifiable description of treatments provided by those listed physicians to support the $9,785.80 24 claims for medical payments. And the indemnity payments only shows [sic] schedule payments in 25 the amount paid to [Johnson]." Id. at 4. As a result of LMI's representations to the probation 26 officer and the Superior Court, Plaintiff allegedly suffered emotional distress, inconvenience, and lost wages. SAC a 5. Plaintiff now seeks $1,500,000.00 in recovery losses, as well as 2 $3,500,000.00 in punitive damages. Id. 3

B.Procedural History

Plaintiff filed this action against LMI in the Superior Court of California for the County of Santa Clara on December 2, 2011. ECF No. 1. LMI removed the case to this Court on April 13, 6 2012, based on diversity jurisdiction. Id. 7

Plaintiff filed a First Amended Complaint ("FAC") on July 10, 2012, see ECF No. 11, and a 5 Second Amended Complaint on July 11, 2012, see ECF No. 12.*fn1 On August 20, 2012, LMI moved 9 to dismiss Plaintiff's SAC pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Mot. 10 at 1. Plaintiff did not file an opposition during the time provided under Rule 7-3 of the Northern District of California's Civil Local Rules. See N.D. Cal. Local R. 7-3 (stating that an "opposition must be filed and served not more than 14 days after th[e] motion was filed."). Consequently, on 13 September 14, 2012, LMI filed a notice of non-opposition and a reply in support of its Motion to 14 Dismiss. See ECF No. 24. 15

On October 1, 2012, Plaintiff filed an untimely opposition, see ECF No. 27, as well as a "Factual Statement" that introduces a large amount of new facts that were not included in the SAC, 17 see Pl.'s Factual Statement Against Dismissal of SAC ("Factual Statement"), ECF No. 28. LMI 18 filed a reply on October 10, 2012. Df.'s Reply Supp. Mot. to Dismiss ("Reply"), ECF No. 30, at 1. 19 where it requested this Court to strike Plaintiff's late-filed opposition or, in the alternative, to grant 20 LMI leave to file the reply to Plaintiff's arguments. See Df.'s Reply Supp. Mot. to Dismiss 21 ("Reply"), ECF No. 30, at 1. 22

The untimeliness of Plaintiff's Opposition justifies striking his motion in its entirety.

However, the Court recognizes that "Plaintiff is representing himself pro se, which 'entitles him to 24 a certain degree of leniency so as to ensure that his case is justly resolved on its merits rather than 25 on the basis of procedural technicalities to the extent possible.'" Peinado v. City and County of 26 San Francisco, No. 11-1799, 2013 WL 163473, at *5 (N.D. Cal. Jan. 15, 2013) (quoting Poulakis v. Amtrak, 139 F.R.D. 107, 109 (N.D. Ill.1991)). Moreover, because LMI requested "that this 2 Court strike Plaintiff's late-filed Opposition in its entirety or, in the alternative, that the Court grant 3 Liberty Mutual leave to file this reply to Plaintiff's arguments," Reply at 1 (emphasis added), the 4 Court finds no prejudice to LMI so long as it grants LMI's request for the Court to consider its 5 Reply. Therefore, in the interest of resolving this case on the merits rather than on a procedural 6 technicality, the Court DENIES LMI's request to strike Plaintiff's late-filed Opposition, but 7 GRANTS LMI's request for leave to file its Reply to Plaintiff's arguments. See Reply at 1. 8

For the purpose of resolving this Motion to Dismiss, the Court does not consider any of Plaintiff's new factual allegations contained in either Plaintiff's Opposition or his Factual 10 Statement. See Broam v. Bogan, 320 F.3d 1023, 1026 n.2 (9th Cir. 2003) ("In determining the propriety of a Rule 12(b)(6) dismissal, a court may not look beyond the complaint to a plaintiff's moving papers, such as a memorandum in opposition to a defendant's motion to dismiss.") (internal 13 quotation marks and citation omitted) (emphasis in original). 14

However, the Court will consider Plaintiff's new factual allegations for the limited purpose 15 of determining whether Plaintiff would be able to cure the deficiencies in his SAC through 16 amendment. See Broam, 320 F.3d at 1026 n.2 ("Facts raised for the first time in plaintiff's 17 opposition papers should be considered by the court in determining whether to grant leave to 18 amend or to dismiss the complaint with or without prejudice." ); see also Orion Tire Corp. v. 19

Goodyear Tire & Rubber Co., 268 F.3d 1133, 1137-38 (9th Cir. 2001) ("Where counsel is able to 20 posit possible amendments that would be consistent with the operative complaint and could also 21 possibly state a claim for relief, the complaint should not be dismissed on its face with prejudice."). 22


A.Rule 12(b)(6)

Pursuant to Federal Rule of Civil Procedure 12(b)(6), a defendant may move to dismiss an 25 action for failure to allege "enough facts to state a claim to relief that is plausible on its face." Bell 26 Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). "A claim has facial plausibility when the 27 plaintiff pleads factual content that allows the court to draw the reasonable inference that the 28 defendant is liable for the misconduct alleged. The plausibility standard is not akin to a 2 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted 3 unlawfully." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal citation omitted). For purposes 4 of ruling on a Rule 12(b)(6) motion, the Court "accept[s] factual allegations in the complaint as 5 true and construe[s] the pleadings in the light most favorable to the nonmoving party." Manzarek 6 v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). 7

Nonetheless, the Court need not accept as true allegations contradicted by judicially 8 noticeable facts, Schwarz v. United States, 234 F.3d 428, 435 (9th Cir. 2000), and the "[C]court may 9 look beyond the plaintiff's complaint to matters of public record" without converting the Rule 10 12(b)(6) motion into one for summary judgment, Shaw v. Hahn, 56 F.3d 1128, 1129 n.1 (9th Cir. 1995). Nor is the Court required to "'assume the truth of legal conclusions merely because they are cast in the form of factual allegations.'" Fayer v. Vaughn, 649 F.3d 1061, 1064 (9th Cir. 2011) 13 (per curiam) (quoting W. Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981)). Mere 14 "conclusory allegations of law and unwarranted inferences are insufficient to defeat a motion to 15 dismiss." Adams v. Johnson, 355 F.3d 1179, 1183 (9th Cir. 2004); accord Iqbal, 556 U.S. at 678 16 (stating that "a complaint [does not] suffice if it tenders 'naked assertion[s]' devoid of 'further 17 factual enhancement.'") (internal citation omitted). Furthermore, "a plaintiff may plead [him]self 18 out of court" if he "plead[s] facts which establish that he cannot prevail on his . . . claim." 19 Weisbuch v. Cnty. of L.A., 119 F.3d 778, 783 n.1 (9th Cir. 1997) (internal quotation marks and 20 citation omitted). 21

B.Leave to Amend

If the Court determines that the complaint should be dismissed, it must then decide whethe

23 to grant leave to amend. Under Rule 15(a) of the Federal Rules of Civil Procedure, leave to amend 24 should "be freely granted when justice so requires," bearing in mind "the underlying purpose of 25

Rule 15 . . . [is] to facilitate decision on the merits, rather than on the pleadings or technicalities." 2

Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (en banc) (internal quotation marks and 27 citation omitted). Nonetheless, a court "may exercise its discretion to deny leave to amend due to 28 'undue delay, bad faith or dilatory motive on part of the movant, repeated failure to cure 2 deficiencies by amendments previously allowed, undue prejudice to the opposing party. . . [and] 3 futility of amendment.'" Carvalho v. Equifax Info. Servs., LLC, 629 F.3d 876, 892--93 (9th Cir. 4 2010) (quoting Foman v. Davis, 371 U.S. 178, 182 (1962)) (alterations in original). 5


Plaintiff's SAC alleges that LMI committed fraud, misrepresentation, and negligence when 7 it provided the probation officer with "misleading . . . facts" upon which the Superior Court relied 8 when considering whether to grant restitution. SAC at 3. LMI contends that Plaintiff's SAC fails 9 to state a claim for which relief can be granted. Mot. at 1. Specifically, LMI argues that the 10 financial and medical documents it provided to the probation officer fall under California's "litigation privilege," thereby protecting LMI from any tort liability in this case. Mot. at 4. In addition, LMI identifies several deficiencies in Plaintiff's claims, such as Plaintiff's failure to 13 allege inducement, reliance, or damage for the fraud claim, as well as failure to allege breach of 14 duty for the negligence claim. Mot. at 5, 7-8; Reply at 3-5. Consequently, LMI requests that the 15

Court dismiss Plaintiff's SAC with prejudice. 16

The Court finds that LMI's alleged false communications are protected by California's 17 litigation privilege. As LMI is immunized from each of Plaintiff's claims, Plaintiff has failed to 18 state a claim for which relief may be granted. Moreover, the Court concludes that Plaintiff cannot 19 cure this defect by pleading additional facts. Accordingly, for the reasons stated below, the Court 20

GRANTS Defendant's Motion to Dismiss with prejudice. 21

A.Litigation Privilege

California's litigation privilege is codified in California Civil Code Section 47. Section 47 23 creates a privilege for a "publication or broadcast" made in "any . . . judicial proceeding." Cal. 24 Civ.Code § 47(b).*fn2 In order to fall under the privilege, a communication must be: "(1) made in [a] 25 judicial or quasi-judicial proceeding[]; (2) by litigants or other participants authorized by law; (3) 2 to achieve the objects of the litigation; and (4) . . . have some connection or logical relation to the 3 action." Silberg v. Anderson, 50 Cal. 3d 205, 212 (1990). If there is no dispute as to the operative 4 facts, the applicability of the litigation privilege is a question of law." Kashian v. Harriman, 98 5 Cal. App. 4th 892, 913 (2002). "Any doubt about whether the privilege applies is resolved in favor 6 of applying it." Id. 7

"The principal purpose of [the litigation privilege] is to afford litigants and witnesses the

8 utmost freedom of access to the courts without fear of being harassed subsequently by derivative 9 tort actions." Id. at 213 (internal quotation marks and citation omitted) (emphasis added); see 10 generally Briscoe v. LaHue, 460 U.S. 325, 333 (1983) (echoing the policy considerations 11

underlying a common law litigation privilege by stating that, the claims of the individual must 12 yield to the dictates of public policy, which requires that the paths which lead to the ascertainment 13 of truth should be left as free and unobstructed as possible") (internal quotation marks and citation 14 omitted). "Since the 'external threat of liability is destructive of th[e] fundamental right [of access 15 to the courts] and inconsistent with the effective administration of justice,' courts have applied the 16 privilege to eliminate the threat of liability for communications made during all kinds of truth-17 seeking proceedings: judicial, quasi-judicial, legislative and other official proceedings." Silberg, 18 50 Cal. 3d at 213. 19

Furthermore, for communications made in relation to judicial and quasi-judiical 20 proceedings, the litigation privilege grants "absolute immunity" from "all torts other than malicious 21 prosecution, including fraud, negligence and negligent misrepresentation." Harris v. King, 60 Cal. 22 App. 4th 1185, 1188 (1998) (emphasis added); Mindys Cosmetics, Inc. v. Dakar, 611 F.3d 590, 599 23

(9th Cir. 2010). Moreover, the privilege applies "regardless [of] whether the communication was 24 made with malice or the intent to harm . . . it does not depend on the publisher's motives, morals, 25 ethics or intent." Kashian v, 98 Cal. App. 4th at 913 (internal quotation marks and citations 26 omitted).

Here, the facts alleged in Plaintiff's SAC establish each and every element of the litigation

2 privilege. First, Defendant's statements were made during an active judicial proceeding where 3

Plaintiff's juvenile son was charged with assault with a deadly weapon. See Silberg, 50 Cal. 3d at 4 212; SAC at 4. Second, LMI was authorized by law to provide the financial documents and 5 medical bills to the probation officer in support of Johnson's restitution claim. See Silberg, 50 Cal. 6

3d at 212; SAC at 3. Third, the statements were provided for the court to resolve a substantial 7 issue of the case, i.e., the amount of restitution that Johnson was entitled to as victim of the crime. 8

See Silberg, 50 Cal. 3d at 212; see also SAC at 5.Finally, LMI's communication was clearly 9 connected to the underlying action. Id. 10

Plaintiff admits that LMI provided the financial and medical documents while participating in an active judicial proceeding, and that LMI was authorized to do so. See SAC at 4-5 (stating that LMI's documentation "was relied upon so the investigating officers could report accurate 13 medical treatment and indemnity payments to the plaintiff and the court."); see also Opp'n at 4 14

("The financial statements and medical documents, at the time, were provided to the plaintiff as a 15 participant of an active restitution judicial proceeding."). 16

However, to rebut the applicability of the litigation privilege, Plaintiff argues that the case 17 was vacated on November 17, 2011. Opp'n at 4. Plaintiff seems to suggest that the litigation 18 privilege ceases to exist once the relevant judicial proceeding is resolved. This is not so. 19

The litigation privilege protects litigants and witnesses beyond resolution of the relevant

20 proceeding. See, e.g., Silberg, 50 Cal. 3d at 214 (holding that the litigation privilege applied, even 21 after the finality of a marriage dissolution decree, to an attorney who made statements during a 22 marriage dissolution proceeding); Moore v. Conliffe, 7 Cal. 4th 634, 638-640 (1994) (litigation 23 privilege protects witness after arbitrators have rendered their final judgments in an arbitration 24 proceeding); Cang Wang v. Heck, 203 Cal. App. 4th 677 (2012) (litigation privilege applies to 25 evaluating neurologist after the relevant DMV proceeding has concluded); cf. Action Apartment 26 Assn., Inc. v. City of Santa Monica,41 Cal.4th 1232, 1241 (2007) ("The [litigation] privilege is not 27 limited to statements made during a trial or other proceedings, but may extend to steps taken prior 28 thereto, or afterwards."). As the California Supreme Court noted in Silberg, "[t]o allow a litigant to 2 attack the integrity of evidence after the proceedings have concluded . . . would impermissibly 3 burden, if not inundate, our justice system." Silberg, 50 Cal. 3d at 214. Therefore, the litigation 4 privilege protects Defendant's statements in the financial and medical documents provided to the 5 probation officer. The fact that Plaintiff alleges in his Opposition that the underlying case was 6 vacated "because there was no official proof that the [P]laintiff . . . owed restitution," Opp'n at 2, 7 does not change the result. Silberg, 50 Cal. 3d at 213; see Rusheen v. Cohen,37 Cal.4th 1048, 8 1057 (2006). LMI is thus immunized from any tort liability arising from these statements. 9

Accordingly, Plaintiff's complaint alleging fraud, misrepresentation, and negligence-all of 10 which are based upon LMI's communication of allegedly "misleading . . . material facts"-fails, as a matter of law, to state a claim upon which relief can be granted. See Harris, 60 Cal. App. 4th at 1188; Kashian, 98 Cal. App. 4th at 913. Nothing Plaintiff states in his Opposition or Factual 13 Statement cures this defect. The Court therefore GRANTS LMI's Motion to Dismiss Plaintiff's 14 SAC with prejudice.*fn3 15


For the foregoing reasons, the Court GRANTS LMI's Motion to Dismiss Plaintiff's SAC 17 without leave to amend. The Clerk shall close the file. 18


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