United States District Court, E.D. California
October 9, 2014
TRAVELERS PROPERTY CASUALTY COMPANY OF AMERICA, Plaintiff,
CENTEX HOMES, et al., Defendants.
MEMORANDUM DECISION AND ORDER RE DEFENDANT'S MOTION TO DISMISS (DOC. 7)
LAWRENCE J. O'NEILL, District Judge.
I. FACTUAL AND PROCEDURAL BACKGROUND
This case concerns a dispute between the parties regarding their rights and duties in an underlying action currently pending in Placer County Superior Court. See Doc. 1 at 4. On June 17, 2014, Plaintiff brought suit against Defendants in this Court based on the undisputed diversity of citizenship between the parties. Id. at 1.
Defendants Centex Homes and Centex Real Estate Corporation (collectively, "Centex") obtained commercial general liability insurance ("the policies") from Plaintiff. Id. at 3. In February 2014, homeowners brought suit against Centex in Placer County Superior Court for alleged construction defects in homes that Centex built ("the Griggs action"). Id. at 4. Centex tendered the Griggs action to Plaintiff pursuant to the policies. Id.
Plaintiff brought suit in this Court over disputes that arose between the parties regarding their respective rights and duties in handling Centex's defense in the Griggs action. Plaintiff alleges causes of action for (1) declaratory relief; (2) breach of contract; and (3) equitable reimbursement. Id. at 5-8.
Currently before the Court is Centex's motion to dismiss the complaint on the ground that (1) this Court does not have jurisdiction over the complaint; (2) Plaintiff's first and second causes of action are not ripe; and (3) all three causes of action fail to state a claim for relief. Doc. 7. The Court has reviewed the papers and has determined that the matter is suitable for decision without oral argument pursuant to Local Rule 230(g).
II. STANDARD OF DECISION
Federal Rule of Civil Procedure 12(b)(1) provides for dismissal of an action for "lack of subject-matter jurisdiction." Faced with a Rule 12(b)(1) motion, a plaintiff bears the burden of proving the existence of the court's subject matter jurisdiction. Thompson v. McCombe, 99 F.3d 352, 353 (9th Cir. 1996). A federal court is presumed to lack jurisdiction in a particular case unless the contrary affirmatively appears. Gen. Atomic Co. v. United Nuclear Corp., 655 F.2d 968, 968-69 (9th Cir. 1981). A challenge to subject matter jurisdiction may be facial or factual. White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000). As explained in Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1038 (9th Cir. 2004):
In a facial attack, the challenger asserts that the allegations contained in a complaint are insufficient on their face to invoke federal jurisdiction. By contrast, in a factual attack, the challenger disputes the truth of the allegations that, by themselves, would otherwise invoke federal jurisdiction.
A Rule 12(b)(1) motion can be made as a speaking motion-or factual attack-when the defendant submits evidence challenging the jurisdiction along with its motion to dismiss. Thornhill Publ'g Co. v. Gen. Tel. & Elecs. Corp., 594 F.2d 730, 733 (9th Cir. 1979); see Savage, 343 F.3d at 1039-40 & n. 2. A proper speaking motion allows the court to consider evidence outside the complaint without converting the motion into a summary judgment motion. See Safe Air, 373 F.3d at 1039. "Once the moving party has converted the motion to dismiss into a factual motion by presenting affidavits or other evidence properly brought before the court, the party opposing the motion must furnish affidavits or other evidence necessary to satisfy its burden of establishing subject matter jurisdiction." Savage, 343 F.3d at 1039-40, n. 2. In a speaking motion, "[t]he court need not presume the truthfulness of the plaintiff's allegations." Safe Air, 373 F.3d at 1039.
A motion to dismiss pursuant to Fed R. Civ. P. 12(b)(6) is a challenge to the sufficiency of the allegations set forth in the complaint. A 12(b)(6) dismissal is proper where there is either a "lack of a cognizable legal theory" or "the absence of sufficient facts alleged under a cognizable legal theory." Balisteri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir. 1990). In considering a motion to dismiss for failure to state a claim, the court generally accepts as true the allegations in the complaint, construes the pleading in the light most favorable to the party opposing the motion, and resolves all doubts in the pleader's favor. Lazy Y. Ranch LTD v. Behrens, 546 F.3d 580, 588 (9th Cir. 2008).
To survive a 12(b)(6) motion to dismiss, the Plaintiffs must allege "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). "A claim has facial plausibility when the Plaintiffs pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). "The plausibility standard is not akin to a probability requirement, ' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. (quoting Twombly, 550 U.S. at 556). "Where a complaint pleads facts that are merely consistent with' a defendant's liability, it stops short of the line between possibility and plausibility for entitlement to relief.'" Id. (quoting Twombly, 550 U.S. at 557).
"While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a Plaintiff's obligation to provide the grounds' of his entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. 544, 555 (2007) (internal citations omitted). Thus, "bare assertions... amount[ing] to nothing more than a formulaic recitation of the elements'... are not entitled to be assumed true." Iqbal, 556 U.S. at 681. In practice, "a complaint... must contain either direct or inferential allegations respecting all the material elements necessary to sustain recovery under some viable legal theory." Twombly, 550 U.S. at 562. To the extent that the pleadings can be cured by the allegation of additional facts, the Plaintiffs should be afforded leave to amend. Cook, Perkiss and Liehe, Inc. v. Northern California Collection Serv., Inc., 911 F.2d 242, 247 (9th Cir. 1990) (citations omitted).
This case is one of many between the parties currently pending in this Court and elsewhere. The Court already has ruled on Centex's motions to dismiss in other cases between the parties that often are identical to one another. See, e.g., Travelers Indem. Co. of Conn. v. Centex Homes, No. 14-cv-217-LJO-GSA, 2014 WL 2002320 (E.D. Cal. May 15, 2014); Fidelity & Guar. Ins. Co. v. Centex Homes, 1:14-cv-826-LJO-GSA, 2014 WL 4075999 (E.D. Cal. Aug. 15, 2014). As in this case, Plaintiff brought those cases against Centex due to Centex's alleged refusal to allow Plaintiff to control Centex's defense in underlying litigation. That allegation is the crux of Plaintiff's claims against Centex in all of Plaintiff's cases against Centex, including this one.
As a threshold matter, Centex asserts that this Court lacks subject matter jurisdiction over the complaint because the amount in controversy does not exceed $75, 000.00. Doc. 7 at 25. This Court and others have addressed this precise argument on multiple occasions and have uniformly rejected it. See, e.g., Travelers Indem. Co. of Conn. v. Centex Homes, No. 1:14-cv-217-LJO-GSA, 2014 WL 2002320, at *3-5 (E.D. Cal. May 15, 2014); Doc. 22-1, Travelers Indem. Co. of Conn. v. Centex Homes, 14-cv-906 JGB (SPx) (C.D. Cal. Oct. 2, 2014), at 5-7. This Court has subject matter jurisdiction over the complaint. Accordingly, the Court DENIES Centex's motion to dismiss the entire complaint for lack of subject matter jurisdiction.
Plaintiff likewise alleges in this case that Centex refused to permit Plaintiff to appoint its counsel of choice in the Griggs case. Doc. 1 at ¶¶ 13-14. Here, however, Centex moves to dismiss Plaintiff's first (declaratory judgment) and second (breach of contract) causes of action on the ground those claims are not ripe because Centex in fact allowed Plaintiff to appoint counsel of its choosing to defend Centex in the Griggs case. See Doc. 7 at 14. Centex further argues that Plaintiff's first and second claims are not ripe because Plaintiff filed its complaint before Centex sent Plaintiff a reservation of rights in which it agreed to allow Plaintiff to appoint its counsel of choice in defending the Griggs case. Id. Centex moves to dismiss Plaintiff's third cause of action (equitable reimbursement) on the ground Plaintiff fails to allege that Plaintiff agreed to defend Centex immediately after Centex tendered the Griggs action to Plaintiff and that they defended the Griggs action in its entirety. Id. at 22.
The Court already has ruled on the exact issues presented in Centex's motion to dismiss. See generally Fidelity, 2014 WL 4075999. In Fidelity, this Court dismissed Plaintiff's declaratory relief and breach of contract claims on the ground they were unripe because Plaintiff filed its complaint before Centex sent Plaintiff its reservation of rights in which it agreed to allow Plaintiff to appoint its counsel of choice to defend Centex in underlying litigation. See id. at *3-4. Although squarely on point here, Plaintiff does not address Fidelity in its opposition. See Doc. 17.
Further, another court recently presented with "virtually identical allegations" explicitly relied on Fidelity in dismissing as unripe Plaintiff's causes of action for declaratory relief and breach of contract. See St. Paul Fire & Marine Ins. Co. v. Centex Homes, 14-cv-1216 AB (JCx) (C.D. Cal. Oct. 7, 2014), Doc. 28 at 5-6 ("Central District case"). The court, "agree[ing] with the reasoning in Fidelity, " found that Plaintiff's complaint was not ripe because it was filed before Centex had sent Plaintiff its reservation of rights in which it agreed to let Plaintiff choose counsel to defend the underlying lawsuit against Centex. Id. at 6. The court noted that Plaintiff did "not address Centex's contention that the first and second causes of action are unripe" in its opposition. Id.
The Court finds that Plaintiff's first and second claims were not ripe at the time the complaint was filed. Accordingly, the Court GRANTS WITH LEAVE TO AMEND Centex's motion to dismiss Plaintiff's first and second causes of action for lack of subject matter jurisdiction.
The court in the Central District case also dismissed Plaintiff's third and final cause of action for equitable reimbursement for the same reasons that this Court has done so on multiple occasions. See Central District case at 7-9; see, e.g., Fidelity, 2014 WL 4075999, at *4; Travelers Indem. Co. of Conn. v. Centex Homes, No. 1:14-cv-217-LJO-GSA, 2014 WL 3778269, at *3-5 (E.D. Cal. July 30, 2014), amended on reconsideration, 2014 WL 4081861 (E.D. Cal. Aug. 19, 2014). Namely, Plaintiff failed to allege facts showing that it immediately agreed to defend Centex in the underlying lawsuit or that it did so entirely. See Central District case at 7-9.
Plaintiff likewise fails to do so here. See Travelers, 2014 WL 3778269, at *4. Accordingly, the Court GRANTS WITH LEAVE TO AMEND Centex's motion to dismiss Plaintiff's third cause of action.
IV. CONCLUSION AND ORDER
For the reasons more fully discussed in Fidelity and the Central District case, the Court GRANTS Centex's motion to dismiss Plaintiff's first and second causes of action WITH LEAVE TO AMEND only if and when those claims become ripe. The Court GRANTS WITH LEAVE TO AMEND Centex's motion to dismiss Plaintiff's third cause of action. Centex's motion to dismiss is DENIED in all other respects. Plaintiff's claims are DISMISSED WITHOUT PREJUDICE. Plaintiff shall file any further amended complaint on or before October 31, 2014.
IT IS SO ORDERED.