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Rodis v. Allstate Insurance Co.

United States District Court, Ninth Circuit

December 12, 2013

JOSIE RODIS, an individual, and DANIEL KATZMAN, an individual, Plaintiffs,
v.
ALLSTATE INSURANCE COMPANY, an Illinois corporation; SERVICEMASTER PROFESSIONAL RESTORATION, a California entity of unknown form; ENVIROCHECK, INC., a California corporation, Defendants.

ORDER DENYING DEFENDANT ALLSTATE'S MOTION TO DISMISS FRAUDULENTLY JOINED DEFENDANTS AND GRANTING PLAINTIFFS' MOTION TO REMAND. [DKT Nos. 7, 8, 9]

DEAN D. PREGERSON, District Judge.

Before the court are Plaintiffs Jose Rodis and Daniel Katzman's Motion to Remand Action to State Court, Defendant Allstate Insurance Company's Motion to Dismiss Fraudulently Joined Defendants, and Defendant ServiceMaster Professional Restoration's Motion to Dismiss Pursuant to Rule 12(b)(6). The motions are fully briefed and suitable for adjudication without oral argument. The court now adopts the following order.

I. Background

The present motions arise from Plaintiffs' joining of two instate companies, ServiceMaster Professional Restoration ("ServiceMaster") and Envirocheck, Inc. ("Envirocheck"), with whom they dealt in pursuing property insurance claims under a policy issued by Allstate Insurance Company ("Allstate"). (First Amended Complaint ¶ 9.)

Plaintiffs allege the following in their First Amended Complaint. Plaintiffs insured their home with Allstate, which issued them an "Allstate Deluxe Homeowner Policy Plus" policy for their property at 6195 Rodgerton Drive in Los Angeles, California. ( Id. ¶ 10.) Two events in early 2012 led them to file claims under the policy. In April 2012, a wind and rain storm caused damage to the property's roof and various rooms' ceilings and walls. ( Id. ¶ 11.) In May 2012, Plaintiffs discovered that a pipe connected to the bathroom shower valve had suddenly broken and was leaking. ( Id. ¶ 12.)

Plaintiffs allege that, on June 5, 2012, Allstate dispatched ServiceMaster to the residence and directed ServiceMaster to conduct restoration and cleaning services with respect to the plumbing-related damage. ( Id. ¶ 15.) On the same day, Allstate and/or ServiceMaster dispatched Envirocheck to test for lead and asbestos in the bathroom, but not to test for mold. ( Id. ¶ 16.) Plaintiff Rodis allegedly signed a written "work order" form provided by Envirocheck stating that Rodis was the client, that she was responsible for paying for Envirocheck's services, and that the results of the company's testing would be for her sole and exclusive use and benefit. (Id.)

Subsequently ServiceMaster informed Plaintiffs that Allstate would not be covering the plumbing problem because the policy covered only burst pipes and there was no coverage for a leaking pipe. ( Id. ¶ 18.)

Plaintiffs assert that Envirocheck never submitted a bill to Plaintiffs and never reported the results of their testing to Plaintiffs. ( Id. ¶ 19.) Plaintiffs also assert that subsequent independent testing commissioned by Plaintiffs confirmed the existence of lead, asbestos, and mold at the property. Plaintiffs allege that Allstate paid Envirocheck directly in order to obtain the test results directly and hide them from Plaintiffs. (Id.)

Subsequently, following seven months of investigation and Plaintiffs' hiring of a public adjuster to present claims to Allstate, in January 2013 Allstate issued a partial letter of denial to Plaintiffs. ( Id. ¶ 20-26.) Allstate stated that it was extending coverage "only to the damaged living room ceiling" and stated that the loss was $800, below the policy's $1000 deductible. ( Id. ¶¶ 22-26.)

On September 17, 2013, Plaintiffs filed the instant suit, asserting causes of action for breach of contract (against Allstate), breach of the implied covenant of good faith and fair dealing (against Allstate), and civil conspiracy to defraud (against Allstate, ServiceMaster, and Envirocheck). ( Id. ¶¶ 28-48.)

As discussed below, the present motions primarily concern the civil conspiracy to defraud claim. Plaintiffs First Amended Complaint describes this claim as follows:

43. Upon information and belief, Envirocheck and ServiceMaster entered into a conspiracy with Allstate whereby Envirocheck and ServiceMaster would provide investigations and reports on damaged homes to Allstate that concealed the true nature and scope of damage so that damages appeared to be much less than actually incurred.
44. Upon information and belief, Envirocheck and ServiceMaster maintained an unwritten policy and agreement with Allstate whereby Allstate sends claimants to Envirocheck and ServiceMaster for inspections and/or reports. Envirocheck and ServiceMaster then either provide investigations or reports that conceal the true nature and scope of damage. Allstate then uses these inaccurate, fraudulent inspections or reports as an excuse to deny or delay claims, although benefits are justly due and owing. In exchange, Allstate directs claimants to undergo inspections by Envirocheck and ServiceMaster and pays Envirocheck and ServiceMaster substantial sums of money for conducting these inspections and preparing these false reports.
45. The systematic, methodical and institutional pattern and practice as described above was followed in relationship to plaintiffs' subject claims. Envirocheck took the lead and asbestos samples from plaintiffs' home, falsely lead [sic] plaintiffs to believe that the results of the testing would be for plaintiffs' sole and exclusive benefit, gave the test results directly to Allstate and/or ServiceMaster instead of plaintiffs, and then concealed the test results from Plaintiffs. ServiceMaster refused to provide restoration services to the storm-related damage, intentionally ...

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