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Silcox v. State Farm Mutual Automobile Insurance Co.

United States District Court, S.D. California

December 22, 2014

MADELINE SILCOX, as successor-in-interest to the Estate of Philip Silcox, individually and on behalf of all others similarly situated, Plaintiffs,
v.
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS AND MOTION TO STRIKE (Doc. No. 4.)

ANTHONY J. BATTAGLIA, District Judge.

Presently before the Court is Defendant State Farm Mutual Automobile Insurance Company's (hereinafter referred to as "State Farm") motion to dismiss and/or strike portions of Plaintiff Madeline Silcox's ("Plaintiff") complaint. (Doc. No. 4.) For the reasons set forth below, State Farm's motion to dismiss and/or strike is GRANTED IN PART and DENIED IN PART.

I. BACKGROUND

On or about August 25, 2000, Philip Silcox ("Philip") purchased an insurance policy (policy number HLF271485553, and hereinafter referred to as the "Policy") from State Farm to provide long-term care insurance with Philip Silcox as the insured. (Doc. 1-1, ¶ 17.) The Policy covers expenses incurred if the insured requires "Qualified Long-Term Care" in a "Long-Term Care Facility." ( Id. ¶ 18.) "Qualified Long-Term Care" is defined in the Policy as "necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, and rehabilitative services and Maintenance or Personal Services which are required by a Chronically Ill. individual, and are provided pursuant to a Plan of Care prescribed by a Licensed Health Care Practitioner." ( Id. ) The Policy defines "Long-Term Care Facility" as a facility that is "engaged primarily in providing Long-Term Care and related services to inpatients in one location and is licensed and accredited by the appropriate agency to provide such care if required by the state where it is located." (Doc. No. 1-1, ¶ 18, Doc. No. 4-3, p. 8.)

Plaintiff alleges that Philip relied upon State Farm's representations and sales presentation in deciding to purchase long-term care insurance from State Farm. (Doc. No. 1-1, ¶ 19.) Specifically, Plaintiff alleges that Philip purchased the Policy from State Farm because of State Farm's representations that the Policy was a "Qualified Long-Term Insurance Contract" as defined by the Internal Revenue Code of 1986 and other-wise complied with federal and state law. ( Id. ¶ 20.) After purchasing the Policy, Philip complied with and performed all obligations under the Policy, including the payment of all required premiums. ( Id. ¶ 21.)

On or around July 30, 2012, Philip was admitted to a licensed Residential Care Facility, ActiveCare, which is located in San Diego County. ( Id. ¶¶ 22, 23.) Plaintiff alleges that ActiveCare is a "Long-Term Care Facility" as defined by California law and provides "Qualified Long-Term Care" as defined in the Policy. ( Id. ¶¶ 24, 25.) After being admitted to ActiveCare, Philip timely requested benefits under the terms of the Policy. ( Id. ¶ 26.) In response, State Farm sent Philip a written denial of the full benefits under the Policy on September 4, 2012. ( Id. ¶ 27.) Plaintiff alleges that the denial of full policy benefits was due to State Farm's false representation that the licensure of ActiveCare fell within the Home and Community-Based Benefit under the terms of the Policy. ( Id. ) Accordingly, State Farm paid eighty percent of Philip's long-term care charges at ActiveCare. ( Id. ¶ 27.) Thereafter, State Farm continued to pay eighty percent of the monthly long-term care charges incurred by Philip leaving Plaintiff and or Philip to pay the remaining twenty percent. ( Id. ¶ 28.) The monthly charges for Philip's long-term care was $4, 800 per month, of which State Farm paid $3, 839.92, leaving an unpaid monthly amount of $960.08. ( Id. ) Philip remained at ActiveCare from July 2012 until he passed away in August 2014. ( Id. ¶ 5.) Plaintiff alleges approximately $23, 000 in policy benefits as damages. ( Id. ¶ 14.)

On August 29, 2014, Plaintiff filed a class action complaint in San Diego Superior Court alleging claims for violation of California's Unfair Competition Law (Bus. & Prof. Code § 17200, et. seq.), False Advertising Law (Bus. & Prof. Code § 17500, et. seq.), breach of contract, breach of the implied covenant of good faith and fair dealing, intentional misrepresentation, and negligent misrepresentation. ( See Doc. No. 1-1.) Plaintiff asserts the first and second causes of action for violation of the Unfair Competition Law ("UCL") and False Advertising Law ("FAL") on behalf of class plaintiffs, and the remaining causes of action individually. On October 3, 2014, [1] State Farm removed the case to federal district court under the Class Action Fairness Act. ( See Doc. No. 1.) On October 10, 2014, State Farm filed the instant motion to dismiss and/or strike portions of Plaintiff's complaint. (Doc. No. 4.) State Farm moves to dismiss the unfair competition, false advertising, and misrepresentation causes of action for failure to state a claim. State Farm also requests the Court strike or dismiss the class definitions set forth in Plaintiff's complaint and Plaintiff's request for damages in connection with the UCL and FAL claims.

II. MOTION TO DISMISS

LEGAL STANDARD

A motion to dismiss pursuant to Rule 12(b)(6) tests the legal sufficiency of the claims asserted in the complaint. Fed.R.Civ.P. 12(b)(6); Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). When ruling on a motion to dismiss under Rule 12(b)(6), the court must accept all factual allegations pleaded in the complaint as true, and must construe them and draw all reasonable inferences from them in favor of the nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). In doing so however, the court is not bound to accept legal conclusions as true. Ashcroft v. Iqbal, 556 U.S. 662, 664 (2009).

A complaint 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). In the context of a Rule 12(b)(6) motion to dismiss, this means a complaint need not contain detailed factual allegations; rather, the complaint must plead "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 plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678. "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. "Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief." Id. (quoting Twombly, 550 U.S. at 557) (internal citations omitted). As a result, it is not proper for a court to assume a plaintiff can prove facts not alleged in the complaint or that a defendant has violated the law in ways that have not been alleged. Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983).

Further, complaints alleging fraud must satisfy the heightened pleading standard of Rule 9(b). Rule 9(b) requires that in all averments of fraud or mistake, the circumstances constituting that fraud or mistake should be stated with particularity. Fed.R.Civ.P. 9(b). Malice, intent, knowledge, and other conditions of a person's mind may be alleged generally. Id. Particularity under 9(b) requires the plaintiff to plead the "who, what, when, where, and how" of the misconduct alleged. Kearns v. Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009.); see also Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003) (quoting Cooper v. Pickett, 137 F.3d 616, 627 (9th Cir. 1997)). Regardless of the title given to a particular claim, allegations grounded in fraud are subject to Rule 9(b)'s pleading requirements. Vess, 317 F.3d at 1103-04.

DISCUSSION

A. Request For Judicial Notice

Filed concurrently with the instant motion, State Farm filed a request for judicial notice pursuant to Federal Rule of Evidence 201. (Doc. No. 4-2.) State Farm requests the Court take judicial notice of the Policy issued to Philip along with Philip's application for insurance coverage. ( Id. at 2.) "A district court ruling on a motion to dismiss may consider a document the authenticity of which is not contested, and upon which the plaintiff's complaint necessarily relies." Parrino v. FHP, Inc., 146 F.3d 699, 706 (9th Cir. 1998), superseded by statute on other grounds as recognized in Abrego Abrego v. The Dow Chem. Co., 443 F.3d 676, 681 (9th Cir. 2006); Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005). Further, when ruling on a Rule 12(b)(6) motion to dismiss, courts may consider material properly subject to judicial notice without converting the motion into one for summary judgment. Barron v. Reich, 13 F.3d 1370, 1377 (9th Cir. 1994).

Plaintiff's claims arise out of the contract entered into between State Farm and Plaintiff as evidenced by the Policy. To prevail, Plaintiff is required to show, at least in part, that benefits were due under the terms of the Policy and such benefits were wrongfully withheld by State Farm. Further, Plaintiff does not dispute the authenticity of the Policy or the application for insurance completed by Philip, and frequently references the Policy in both the complaint and opposition to State Farm's motion. Thus, taking judicial notice of the Policy is appropriate in the instant case and State Farm's request for judicial notice is GRANTED.

B. Capacity To Sue

As an initial matter, State Farm argues Plaintiff's claims should be dismissed because Plaintiff failed to file a declaration as required by California Code of Civil Procedure Section 377.32[2] and thus lacks capacity to sue. (Doc. No. 4-1, p. 24-25.) Such a defect, however, may be cured by promptly filing the required declaration. See Stoddard Nunez v. City of Hayward, No. 3:13CV4490, 2013 WL 6776189, at *8 (N.D. Cal. Dec. 23, 2013); Estate of Burkhart v. United States, 7-5467, 2008 WL 4067429 at * 10 (N.D. Cal. Aug. 26, 2008) (directing the plaintiff to file a declaration establishing capacity to sue after ruling on defendant's motion to dismiss). On November 17, 2014, Plaintiff filed a declaration setting forth the requirements for establishing capacity to sue under California Code of Civil Procedure 377.32. (Doc. No. 12.) Accordingly, State Farm's Motion to dismiss on this ground is DENIED as moot.

C. Unfair Competition Law (Bus. & Prof. Code § 17200)

State Farm moves to dismiss Plaintiff's first cause of action for violation of the UCL on the grounds Plaintiff does not adequately plead a fraudulent, unfair, or unlawful predicate act. (Doc. No. 4-1, p. 16.) The UCL is a broad remedial statute that permits individuals to challenge "unfair competition" practices, which are broadly defined as including "any unlawful, unfair, or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising...." Lozano v. AT & T Wireless Services, Inc., 504 F.3d 718, 731 (9th Cir. 2007); Cal. Bus. & Prof. Code § 17200. Plaintiff alleges fraudulent, unfair, and unlawful predicate acts as the basis for State Farm's liability under the UCL.

1. Fraudulent Practices

To state a claim under the fraudulent prong of the UCL a plaintiff must show that members of the public are likely to be deceived. Berryman v. Merit Prop. Mgmt., Inc., 152 Cal.App.4th 1544, 1556 (2007). Sybersound Records, Inc. v. UAV Corp., 517 F.3d 1137, 1152 (9th Cir. 2008). Heightened pleading requirements under Rule 9(b) apply to UCL claims under the fraudulent prong. Kearns, 567 F.3d at 1124-25. Accordingly, claims sounding in fraud must allege "an account of the time, place, and specific content of the false representations as well as the identities of the parties to the representations." Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007).

State Farm argues that Plaintiff has failed to state a claim under the fraudulent prong because the complaint does not identify any statements that constitute fraudulent representations and otherwise only sets forth conclusory allegations. (Doc. No. 4-1, p. 19-20.) The Court agrees. Plaintiff's complaint alleges that State Farm represented that the Policy pays the expenses incurred for each day, up to the maximum daily benefit for long-term care and that this representation was a significant factor in Philip's decision to purchase the Policy. (Doc. No. 1-1, ¶ 42.) Additionally, Plaintiff alleges that the representations were made with the knowledge that the information was "false, with a reckless disregard to its truth, and/or with knowledge that it was deceptively incomplete." ( Id. ¶¶ 44, 47.) Plaintiff also alleges that State Farm's conduct was likely to deceive Philip and members of the general public regarding the scope of insurance coverage. ( Id. ¶ 45.) Looking at the complaint in its entirety, however, it is unclear who made the representations, when the representations were made, and what the specific representations were that constituted fraudulent activity. Such allegations are little more than a recitation of the necessary elements and will not defeat a motion to dismiss. See Iqbal, 556 at U.S. at 663. As such, Plaintiff's complaint does not adequately plead a predicate violation of fraudulent activity under the UCL.

2. Unfair Practices

"Unfair" within the context of the UCL means "conduct that threatens an incipient violation of an antitrust law, or violates the policy or spirit of one of those laws because its effects are comparable to or the same as a violation of the law, or otherwise significantly threatens or harms competition." Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co., 20 Cal.4th 163, 187 (1999). California courts have also held that "unfair" conduct occurs when a practice "offends an established public policy or when the practice is immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers." S. Bay Chevrolet v. Gen. Motors Acceptance Corp., 72 Cal.App.4th 861, 887 (1999).

State Farm argues that Plaintiff has failed to state a claim under the "unfair" prong because the Court is prohibited from imposing its own notion of fairness upon the allegations in Plaintiff's complaint. (Doc. No. 4-1, p. 21.) Plaintiff alleges that the individuals who purchase long-term care insurance coverage are elderly, physically and mentally incapacitated or disabled, and that State Farm preyed on these individuals for financial gain. (Doc. No. 1-1, ¶ 46.) Plaintiff further alleges that State Farm's conduct offends established public policy and is immoral or unethical. ( Id. )

The Court is not convinced Plaintiff has alleged sufficient facts to trigger a claim for relief under the unfair prong. Plaintiff's primary allegation with regard to State Farm's alleged violation of the UCL focuses on State Farm's misrepresentations regarding the Policy, however no factual allegations are set forth to support a conclusion that the misrepresentations violated public policy or were immoral, unethical, or oppressive. For the same reasons the Court is unable to determine whether State Farm allegedly engaged in fraudulent conduct, the Court is unable to determine whether Plaintiff has sufficiently alleged unfair conduct. Accordingly, Plaintiff has failed to allege a predicate unfair act under the UCL.

3. Unlawful Practices

By proscribing "any unlawful" business practice, Section 17200 "borrows" violations of other laws and treats them as unlawful practices that the unfair competition law makes independently actionable. Cel-Tech Communications, Inc., 20 Cal.4th at 180. A "violation of almost any federal, state, or local law may serve as the basis for a[n] [unfair competition] claim." Plascencia v. Lending 1st Mortg., 583 F.Supp.2d 1090, 1098 (N.D. Cal. 2008) (citing Saunders v. Super. Ct., 27 Cal.App.4th 832, 838-39 (1994)); Munson v. Del Taco, Inc., 46 Cal.4th 661, 676 (2009).

Plaintiff's complaint alleges State Farm's conduct was unlawful because its conduct violated 28 U.S.C. Section 7702B, California Insurance Code Section 10232.92, and California Welfare and Institutions Code Section 9701(b)(2). ( See Doc. No. 1-1, ¶ 47.) State Farm's motion to dismiss argues that these statutes and code sections do not regulate State Farm's conduct or the benefit amounts due to insureds and thus cannot be used to establish "unlawful conduct" under the UCL. (Doc. No. 4-1, p. 8.)

Each of the three alleged statutory violations fail for lack of specificity as to how these statutes or code sections are applicable and were allegedly violated by State Farm's denial of policy benefits. For example, Section 7702B defines qualified long-term care insurance in the context of the Internal Revenue Code, but in her opposition Plaintiff admits the tax treatment of Qualified Long-Term Insurance is not at issue nor does Plaintiff allege that the coverage represented in the Policy does not comply with Section 7702B. (Doc. No. 11, p. 10.) Likewise, Insurance Code Section 10232.32 appears to provide certain coverage requirements for long-term care insurance, but it is unclear which provision was violated and how the California Insurance Code section applies to the Policy which was issued in Texas. Welfare and Institutions Code Section 9701(b)(2) defines long-term care insurance in the context of the Mello-Granlund Older Californians Act, and Plaintiff references this code section to provide a definition for long-term care insurance, but otherwise provides little basis from which the Court can conclude a violation occurred. Although the "unlawful" prong of the UCL "borrows" violations of other laws and makes them independently actionable, Plaintiff's complaint must set forth facts from which the Court can conclude a violation occurred. Where a plaintiff cannot state a claim under the "borrowed" law, she cannot state a UCL claim either. See, e.g., Smith v. State Farm Mutual Automobile Ins. Co., 93 Cal.App.4th 700, 718 (2001); Phipps v. Wells Fargo Bank, N.A., No. 10 2025, 2011 WL 302803, at *17 (E.D. Cal. Jan. 27, 2011). Accordingly, Plaintiff's complaint fails to state a predicate unlawful act under any of the identified statutes.

Based on the foregoing, Plaintiff's UCL claim is DISMISSED with leave to amend to more adequately allege violations under any or all of the UCL prongs.

D. False Advertising Law (Bus. & Prof. Code § 17500)

Plaintiff's second cause of action is for violation of the FAL, which prohibits false or misleading statements "made or disseminated before the public in this state" and "from this state before the public in any state." Cal. Bus. & Prof. Code § 17500. This statute "makes it unlawful for a business to disseminate any statement which is untrue or misleading, and which is known, or which by the exercise of reasonable care should be known, to be untrue or misleading....'" Ariz. Cartridge Remanufacturers Ass'n, Inc. v. Lexmark Intern., Inc., 421 F.3d 981, 985 (9th Cir. 2005) (quoting the FAL). "The law encompasses not just false statements but those statements which may be accurate on some level, but will nonetheless tend to mislead or deceive'...." Id. A perfectly true statement couched in such a manner that it is likely to mislead or deceive the consumer, such as by failure to disclose other relevant information, is actionable under the FAL. Day v. AT & T Corp., 63 Cal.App.4th 325, 333 (1998)); Arevalo v. Bank of Am. Corp., 850 F.Supp.2d 1008, 1024 (N.D. Cal. 2011).

State Farm moves to dismiss this claim on the grounds that the Policy was issued in Texas and therefore Plaintiff cannot allege that Philip relied on any false advertising in California or from California before purchasing the Policy. (Doc. No. 4-1, p. 24.) In opposition, Plaintiff claims there are sufficient facts pleaded to support the FAL claim as Philip and Plaintiff maintained the Policy after moving to California in reliance on State Farm's representations. (Doc. No. 11, p. 19-20.) Plaintiff also alleges that "it is reasonable to infer that Defendant marketed the same product in California, made the same representations in California and such false representations were observed and relied upon for the purchase of insurance policies by California citizens." ( Id. )

A review of Plaintiff's complaint presents a more significant issue than just the location in which the Policy was issued. As noted in the analysis of whether Plaintiff properly pled fraudulent activity as a predicate violation of the UCL, Plaintiff's FAL allegations are generic in nature and provide no basis from which the Court can conclude what representations State Farm allegedly made regarding long-term care insurance. Plaintiff's complaint repeatedly references State Farm's website and sales presentation but provides no details regarding what representations were allegedly made. ( See Doc. No. 1-1, ¶ 53.) Without the ability to analyze the representations allegedly made by State Farm in violation of the FAL, the Court is without a means to analyze where those alleged misrepresentations occurred and whether "it is reasonable to infer" that such representations were made in California.

Accordingly, Plaintiff's second cause of action for violation of the FAL is DISMISSED with leave to amend. Should Plaintiff amend her complaint to properly allege a violation of the FAL, Plaintiff should also specify how the FAL applies to a policy issued in Texas.[3]

E. Misrepresentations claims

Economic Loss Rule

State Farm moves to dismiss Plaintiff's misrepresentation claims as barred by the economic loss. (Doc. No. 4-1 at 23.) Specifically, State Farm argues that Plaintiff fails to allege any damages "independent" of the breach of contract claim and thus Plaintiff should not be allowed to recover in tort for the alleged insurance benefits due under the Policy. ( Id. ) In opposition, Plaintiff claims that she has properly pled "economic loss" in the form of policy premiums to support her misrepresentation claims. (Doc. No. 11 at 19.)

Under California law, the economic loss doctrine bars tort claims based on the same facts and damages as breach of contract claims. The doctrine "precludes recovery for purely economic loss due to disappointed expectations, ' unless the plaintiff can demonstrate harm above and beyond a broken contractual promise.'" Multifamily Captive Grp., LLC v. Assurance Risk Managers, Inc., 629 F.Supp.2d 1135, 1146 (E.D. Cal. 2009) (quoting Robinson Helicopter Co. v. Dana Corp., 34 Cal.4th 979, 988 (2004)); see also Cnty. of Santa Clara v. Atlantic Richfield Co., 137 Cal.App.4th 292, 328 (2006) (stating that the economic loss rule applies unless "the plaintiff can establish that the fraud exposed the plaintiff to liability"). The rule seeks to "prevent the law of contract and the law of tort from dissolving one into the other." Robinson Helicopter, 34 Cal.4th at 988 (internal quotation marks omitted). "To allow a fraud claim [where the false representations underlying it are those made in the contract itself] would open the door to tort claims in virtually every case in which a party promised to make payments under a contract but failed to do so.'" Multifamily Captive Group, 629 F.Supp.2d at 1146 (quoting Intelligraphics, Inc. v. Marvell Semiconductor, Inc., No. C07-02499, 2009 WL 330259, at *17 (N.D. Cal. Feb. 10, 2009)).

Upon review of Plaintiff's complaint, the Court finds both the negligent and intentional misrepresentation claims are merely restatements of the contract claims. Plaintiff does not allege any specific injury distinct from the breach of contract claim. In connection with the fifth cause of action for intentional misrepresentation, Plaintiff alleges that State Farm "wrongfully and intentionally misrepresented California law relating to the coverage at issue and the licensure of residential care facilities for the elderly under California law." ( See Doc. No. 1-1 at ¶ 69.) Plaintiff makes similar allegations with respect to the sixth cause of action for negligent misrepresentation, namely that Plaintiff has harmed as a result of State Farm's misrepresentations about the terms of the Policy and accordingly, Plaintiff was required to pay money allegedly owed under the terms of the Policy which State Farm. (Doc. No. 1-1, ¶ 77.) There is no separate allegation of tortious conduct independent of Plaintiff's breach of contract claim. Further, the only damages Plaintiff alleges in the complaint are the benefits due under the Policy. Accordingly, the Court finds that as currently pleaded, Plaintiff's fifth cause of action for negligent misrepresentation and sixth cause of action for intentional misrepresentation are barred by the economic loss doctrine. Plaintiff's fifth and sixth causes of action are therefore DISMISSED with leave to amend.[4]

III. MOTION TO STRIKE

LEGAL STANDARD

Under Rule 12(f), "the court may order stricken from any pleading any insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." Rule 12(f) is a vehicle by which to "avoid the expenditure of time and money that must arise from litigating spurious issues by dispensing with those issues prior to trial." Sidney-Vinstein v. A.H. Robins Co., Inc., 697 F.2d 880, 885 (9th Cir. 1983). Whether to strike a matter pursuant to Rule 12(f) is within a court's discretion. See Nurse v. United States, 226 F.3d 996, 1000 (9th Cir. 2000); Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993), rev'd on other grounds, 510 U.S. 517 (1994).

DISCUSSION

Class Definitions

State Farm requests the Court strike or dismiss the class definitions set forth in Plaintiff's complaint. (Doc. No. 4-1, p. 27.) State Farm claims Plaintiff alleges two different class definitions, one in paragraph six of the complaint, and the other in paragraph twenty-nine. ( Id. ) Paragraph six of Plaintiff's complaint defines the class as "all individuals who have purchased a long-term care insurance policy from State Farm Mutual Automobile Insurance Company intended to be a Qualified Long-Term Care Insurance Contract as defined by the Internal Revenue Code of 1986." (Doc. No. 1-1, ¶ 6.) Paragraph twenty-nine of Plaintiff's complaint defines the class as "all California residents who purchased a State Farm Mutual Automobile Insurance Company policy intended to be a qualified long-term insurance contract as defined by the Internal Revenue Code of 1986, but were denied full policy benefits due to State Farm's unreasonable and unlawful characterization of residential care facilities as alternative care facilities rather than long-term care facilities as provided by California law." ( Id. ¶ 29.) In addition to arguing the above class definitions should be dismissed or struck as inconsistent and unclear, State Farm argues the definition in paragraph six is over broad, and the definition in paragraph twenty-nine is an improper "fail safe" class. (Doc. No. 4-1, p. 28.) In her opposition, Plaintiff clarifies that the intended class definition is the one set forth in paragraph twenty-nine, but Plaintiff does not address the argument that paragraph twenty-nine defines an impermissible "fail safe" class. (Doc. No. 11, p. 20.)

Class allegations can be stricken at the pleading stage. See Kay v. Wells Fargo & Co. N.A., Case No. 07-1351, 2007 WL 2141292, at *2 (N.D. Cal. July 24, 2007). However, generally courts review class allegations and definitions through a motion for class certification. Velasquez v. HSBC Fin. Corp., No. 08 4592, 2009 WL 112919, at *4 (N.D. Cal. Jan. 16, 2009); Thorpe v. Abbott Labs., Inc., 534 F.Supp.2d 1120, 1125 (N.D. Cal. 2008) ("Motions to strike class allegations are disfavored because a motion for class certification is a more appropriate vehicle for the arguments."); see also In re: Wal-Mart, Inc. Wage & Hour Litig., 505 F.Supp.2d 609, 614-16 (N.D. Cal. 2007) (collecting cases).

The Court agrees that a motion for class certification is a more appropriate time to consider the class allegations in Plaintiff's complaint. At this time, State Farm has not answered, no discovery has been conducted, and a motion for class certification is not presently before the Court. However, State Farm's arguments regarding the propriety of the class definitions are well taken. As currently defined, it is difficult to ascertain not only who would comprise the proposed class, but also how a class action could adequately account for individual claims of proposed plaintiffs who obtained services from different long-term care facilities. Yet, while Plaintiff's class definition may require further clarification, Plaintiff should be given the opportunity to make the case for certification in a later motion where such issues can be evaluated by the Court in their entirety. Accordingly, State Farm's motion to strike the class allegations is DENIED without prejudice.

IV. CONCLUSION

Based on the foregoing, the Court GRANTS IN PART and DENIES IN PART State Farm's motion to dismiss and/or strike portions of Plaintiff's complaint as follows:

1. State Farm's request for judicial notice filed concurrently with the instant motion is GRANTED.
2. State Farm's motion to dismiss Plaintiff's complaint for lack of capacity to sue is DENIED as moot.
3. State Farm's motion to dismiss Plaintiff's first cause of action for violation of California's Unfair Competition Law is GRANTED with leave to amend.
4. State Farm's motion to dismiss Plaintiff's second cause of action for violation of California's False Advertising Law is GRANTED with leave to amend.
5. State Farm's motion to dismiss Plaintiff's fifth and sixth causes of action as barred by the economic loss rule is GRANTED with leave to amend.
6. State Farm's motion to strike the class allegations in Plaintiff's complaint is DENIED without prejudice.

IT IS SO ORDERED.


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