United States District Court, S.D. California
WILLIAM EASTMAN, an individual, and PATRICIA EASTMAN, an individual, Plaintiff,
ALLSTATE INSURANCE COMPANY, an Illinois corporation, and DOES 1 through 50, inclusive, Defendant.
WILLIAM Q. HAYES, District Judge.
The matter before the Court is the Motion to Dismiss filed by Defendant Allstate Insurance Company. (ECF No. 5).
On or about January 9, 2013, Plaintiffs William and Patricia Eastman commenced this action by filing a Complaint in the Superior Court of the State of California for the County of San Diego. (ECF No. 1 at 2). On March 20, 2014, Plaintiffs filed a First Amended Complaint ("FAC"), which is the operative pleading. (ECF No. 1-2, Ex. B). On March 27, 2014, Defendant Allstate Insurance Company removed this action to this Court pursuant to 28 U.S.C. §§ 1441(b) and 1446 on the basis of diversity of citizenship. (ECF No. 1). On April 14, 2014, Defendant filed the Motion to Dismiss Plaintiffs' Third, Fourth, Fifth, Sixth, and Eighth Claims ("Motion to Dismiss"). (ECF No. 5). On April 28, 2014, Plaintiff's filed an opposition. (ECF No. 8). On May 5, 2014, Defendant filed a reply. (ECF No. 9).
II. Allegations of the FAC
In or around May 19, 2009, Plaintiffs purchased an "Allstate Insurance Company Deluxe Plus Homeowners Policy" (the "Policy"). (ECF No. 1-2 at 87-88). The Policy insured Plaintiffs' property located at 3046 Colley Lane, Escondido, CA 92025-7740 (the "Property"), which "is an approximate 3700 square foot residential home consisting of a very unique and architecturally interesting dome structure." Id. at 88. Plaintiffs paid a premium totaling $818.00 for the 2009-2010 Policy.
"On or about August 30, 2009, a fire erupted in or around the back deck of the subject property. On a very hot day in Escondido, the fire quickly spread and engulfed the master bedroom and other areas causing extensive damage inside and outside the home." Id. "The home was deemed uninhabitable. The Fire Marshall forbade the Plaintiffs from going anywhere past the kitchen as the floor was compromised." Id. "On Sunday, August 30, 2009, the same day as the fire, Plaintiff Patricia Eastman reported the fire to Allstate." Id.
"Since the date the loss was reported, Allstate has caused significant delays in handling and resolution of Plaintiffs' claim and had generally mishandled the claim." Id. Defendant "failed to immediately assign an experienced adjuster.... delayed in acknowledging, recognizing, or classifying Plaintiffs' loss as a major claim or major loss... failed to timely send a representative immediately after the fire to view the loss... [and] sent, hired, and/or retained vendors, consultants, contractors and/or engineers for the subject property that were not qualified and/or able to handle the claim." Id. at 89.
"Plaintiffs are informed and believe and thereon allege that the Defendants failed to conduct a prompt, full and complete investigation of the facts and circumstances giving rise to Plaintiffs' claims." Id. at 90. "Defendants failed in their duties and obligations by... [u]sing improper standards to deny Plaintiffs' claims.... [e]ngaging in improper claims handling... [and] [a]voiding payment of Plaintiffs' claim by accepting an incorrect version of facts or circumstances or contract interpretation that supported a basis to deny or improperly limit coverage under the Policy...." Id.
Initially, Defendant "grossly undervalued" the loss, "claiming the full cost of repair was $200, 105.44, " but later valued the loss at $373, 619.80. Id. Plaintiffs' contractor calculated the loss to be $618, 900.00, "far in excess of Allstate's estimate." Id. at 91. Pursuant to the Policy, "[t]he parties stipulated to a neutral appraiser and each party chose an appraiser to represent their positions." Id. Ten days prior to the set appraisal date, "Allstate unilaterally cancelled the appraisal and refused to further participate, in all direct violation of the terms of the policy and in further bad faith." Id. at 91. "Ultimately, the parties entered into a Stipulation for the Appointment of a Neutral General Contractor to Determine Binding Cost of Repair of the Eastmans' Fire Loss Damages, Claim Number XXXXXXXXXX." Id. at 91. On September 13, 2013, the neutral expert provided a report stating that the total cost was $718, 613.25.
"Prior to December 2013, Allstate only tendered to Plaintiffs the sum of $348, 888.38 for replacement cost; grossly under the actual amounts due to Plaintiffs under the Policy." Id. at 89. On December 2013, Defendant tendered an additional $191, 147.88. Defendant also paid Plaintiffs' storage fees of $1, 000.00 per month "for a time, and then without notice, ceased payment." Id. at 92.
Plaintiffs assert the following claims for relief: (1) breach of contract for breach of the Policy; (2) breach of the covenant of good faith and fair dealing related to the Policy ("bad faith breach of Policy"); (3) injunctive relief and restitution pursuant to California Business & Professions Code § 17200, et seq. (the "UCL"); (4) declaratory relief; (5) intentional infliction of emotional distress ("IIED"); (6) negligent infliction of emotional distress ("NIED"); (7) breach of contract for breaching the Appointment of a Neutral General Contractor to Determine Binding Cost of Repair of the Eastmans' Fire Loss Damages (the "Stipulation"); and (8) breach of the covenant of good faith and fair dealing related to the Stipulation ("bad faith breach of Stipulation"). Plaintiffs request economic and non-economic damages, breach of contract damages, general damages and compensatory damages, attorney fees, prejudgment interest, punitive damages, a permanent injunction enjoining Defendants from engaging in "unlawful practices, policies, usages and customs, " restitution, and costs of suit. Id. at 102.
Defendant moves to dismiss Plaintiff's Third, Fourth, Fifth, Sixth, and Eighth Claims for injunctive relief and restitution pursuant to the UCL, declaratory relief, IIED, NIED, and bad faith breach of the Stipulation, respectively.
A. 12(b)(6) Standard
Federal Rule of Civil Procedure 12(b)(6) permits dismissal for "failure to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). "A pleading that states a claim for relief must contain... a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). Dismissal under Rule 12(b)(6) is appropriate where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory. See Balistreri v. Pac. Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990).
"[A] plaintiff's obligation to provide the grounds' of his entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Fed.R.Civ.P. 8(a)(2)). When considering a motion to dismiss, a court must accept as true all "well-pleaded factual allegations." Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). However, a court is not "required to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). "In sum, for a complaint to survive a motion to dismiss, the non-conclusory factual content, and ...