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Zaghi v. State Farm General Insurance Co.

United States District Court, N.D. California, San Jose Division

January 9, 2015

FARHAD ZAGHI, Plaintiff,
v.
STATE FARM GENERAL INSURANCE COMPANY and DOES 1 through 50, inclusive, Defendants

For Farhad Zaghi, Plaintiff: Martin Robert Deutsch, LEAD ATTORNEY, Law Offices of Martin Deutsch, San Jose, CA.

For State Farm General Insurance Company, Defendant: Stephen P. Ellingson, Hayes, Scott, Bonino, Ellingson & McLay, LLP, Redwood City, CA.

Page 975

ORDER GRANTING DEFENDANTS' MOTION TO DISMISS

Ronald M. Whyte, United States District Judge.

[Re: Docket No. 4]

Defendant State Farm General Insurance Company (" State Farm" ) moves to dismiss the complaint. Dkt. No. 4. The court held a hearing on this motion on January 9, 2015. For the reasons explained below, the court GRANTS State Farm's motion to dismiss.

I. Background

This case arises out of the parties' dispute over insurance proceeds paid by State

Page 976

Farm to its insureds, Karapet Gayanya and Karine Osmanyen (" the insureds" ), following the destruction of their house by fire on January 4, 2014. Dkt. No. 1, Ex. 1, at ¶ 7. The insureds purchased the house by means of a hard money mortgage from plaintiff Farhad Zaghi, secured by a deed of trust on the property. Id. at ¶ ¶ 6, 9. The house was insured by State Farm under Policy of Insurance No. 71-CR-KR247-7 (" the policy" ). Id. at ¶ 5. As of the date the fire occurred--January 4, 2014--plaintiff was not listed on the policy, despite a requirement in the deed of trust held by plaintiff that the insureds name plaintiff as an additional insured. Id. at ¶ ¶ 6, 8.

Plaintiff alleges that on January 13, 2014, following a conference call with plaintiff and the insureds, an agent for State Farm, Rosey Gyadakyan, agreed to and issued an amended declaration page designating plaintiff as a mortgagee and an additional insured under the policy. Id. at ¶ 8. The complaint alleges that State Farm subsequently received a fire report stating that plaintiff was the first mortgagee on the property and made a written notation in their file confirming that plaintiff had been added as an additional insured and that plaintiff had a hard money loan secured by a deed of trust on the property. Id. at ¶ 9, 10. The complaint also alleges that on February 25, 2014 State Farm and its adjuster Dan Corona received a copy of plaintiff's deed of trust. Id. at ¶ 11. Finally, on March 10, 2014 State Farm issued a check in the amount of $2,850,000.00 to the insureds alone, without including plaintiff's name. Id. at ¶ 12.

Plaintiff filed this suit in Santa Clara County Superior Court on September 19, 2014. See Dkt. No. 1, Ex. 1. Defendant removed the case to this court on October 30, 2014. Id. The complaint recites causes of action for breach of contract and negligence, and seeks punitive damages. Id. State Farm moved to dismiss the complaint, Dkt. No. 4, and requested the court take judicial notice of the insurance policy and the deed of trust, Dkt. Nos. 5, 5-1, 5-2. Plaintiff filed an opposition, Dkt. No. 10, and a request for judicial notice of various internal state farm documents, Dkt. No. 11. State farm filed a reply, Dkt. No. 15, and a request for judicial notice of a state court complaint filed by plaintiff against the insureds in a separate case, Dkt. No. 16.

II. Analysis

A motion to dismiss for failure to state a claim under Rule 12(b)(6) tests the legal sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). In considering whether the complaint is sufficient to state a claim, the court must accept as true all of the factual allegations contained in the complaint. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). However, the Court need not accept as true " allegations that contradict matters properly subject to judicial notice or by exhibit" or " allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008). While a complaint need not allege detailed factual allegations, it " must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Iqbal, 556 U.S. at 678 (quoting Bell A. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). A claim is facially plausible when it " allows the court to draw the ...


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