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United Specialty Insurance Co. v. Meridian Management Group, Inc.

United States District Court, N.D. California

August 7, 2015



HAYWOOD S. GILLIAM, Jr., District Judge.

This is an insurance coverage action arising out of an underlying lawsuit (the " Geyer Action") brought by tenants at 305 Hyde Street in San Francisco against Defendants Meridian Management Group, Inc. ("Meridian") and HAL 305 Hyde SF, LLC ("HAL 305"). Plaintiff United Specialty Insurance Co. ("USIC") seeks a declaration from the Court that: (1) it has no obligation to defend or indemnify Meridian and HAL 305 in connection with the Geyer Action; (2) another insurer, Defendant National Union Fire Insurance Company of Pittsburgh, PA ("National Union"), is obligated to defend; and (3) either Meridian or National Union must reimburse USIC for all or part of the defense costs it has paid and continues to pay for the defense of Geyer Action. See Dkt. No. 1 ("Compl.").

National Union moves to dismiss the Complaint under Rule 12(b)(6), arguing that USIC has not sufficiently pled the terms of its insurance policies and that California law precludes USIC's claim for equitable subrogation against National Union under the circumstances alleged. See Dkt. No. 15 ("Mot."). Alternatively, National Union moves for a more definitive statement under Rule 12(e). Id. USIC has opposed both motions. Dkt. No. 18 ("Opp."). The Court has carefully considered the arguments offered by the parties and, for the reasons set forth below, DENIES National Union's motion to dismiss and motion for a more definitive statement.


On December 27, 2012, Gabriela and Travis Geyer, tenants at 305 Hyde Street in San Francisco, filed a lawsuit against Meridian in San Francisco County Superior Court. The Geyer Action concerned personal injury and property damage from bedbug infestations at the apartment building located at 305 Hyde Street. The Geyers amended their complaint to include a request for class action certification against Meridian for unlawful business practices and added HAL 305 (the owner of their building) as a defendant. The Geyers then settled their individual claims with defendants; Jessica Narog, another tenant at 305 Hyde Street, was substituted as the plaintiff. Narog filed an amended complaint seeking certification of the same class, as well as damages for the bedbug infestations in the apartment she rented at 305 Hyde Street.

USIC insured Meridian from October 25, 2009 to October 25, 2011. USIC agreed to defend Meridian in the Geyer Action subject to a reservation of rights, which included a reservation of the right to deny coverage based on its policies' schedule of apartment buildings, which limited coverage to claims arising out of buildings identified on that schedule. USIC alleges that 305 Hyde Street was not listed as one of the covered buildings. National Union insured Meridian and HAL 305 as insureds under various policies effective from November 2006 through March 2013. Meridian tendered its defense to National Union, but National Union offered to pay only 1/24th of the defense expenses being incurred by USIC.

On March 5, 2013, USIC brought this action for declaratory relief against National Union (which USIC alleges also insures Meridian and HAL 305) and the underlying defendants. USIC's Complaint asks the Court to find that it has no obligation to defend Meridian or HAL 305 in the Geyer Action and that National Union or Meridian has an obligation to reimburse USIC for the defense costs it has paid and continues to pay.


A court may dismiss a complaint under Federal Rule of Civil Procedure 12(b)(6) when it does not contain sufficient facts to state a plausible claim on its face. See Bell Atlantic 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." 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 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 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. Factual allegations must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555 (internal citations and parentheticals omitted).

In considering a motion to dismiss, a court must accept the plaintiff's factual allegations as true and construe them in the light most favorable to the plaintiff. See Moore v. Kayport Package Exp., Inc., 885 F.2d 531, 550 (9th Cir. 1989). However, "the tenet that a court must accept a complaint's allegations as true is inapplicable to threadbare recitals of a cause of action's elements, supported by mere conclusory statements." Iqbal, 556 U.S. at 678. If the Court dismisses the complaint, it will generally grant leave to amend "unless it determines that the pleading could not possibly be cured by the allegation of other facts." Lopez v. Smith, 203 F.3d 122, 1127 (9th Cir. 2000) (citation omitted). When a party repeatedly fails to cure deficiencies, however, the court may order dismissal without leave to amend. See Ferdik v. Bonzelet, 963 F.2d 1258, 1261 (9th Cir. 1992).


A. Sufficiency of USIC's Allegations

National Union moves to dismiss USIC's First, Third, and Fifth Claims for Relief for failure to meet the pleading requirements of Rule 8 of the Federal Rules of Civil Procedure. Both parties appear to agree that the only possible basis for USIC's position that it never had a duty to defend Meridian at any point during the Geyer Action is USIC's contention that its policies are limited to specified buildings contained in a schedule of apartment buildings. Mot. at 7; Compl. ΒΆ10. National Union argues that USIC must therefore attach or quote this essential contractual term in its Complaint in order to move past the pleading stage. Mot. at 7. USIC responds that the precise language of the policies giving rise to alleged contractual obligations need not be specifically alleged. Opp. at 9.

The Court agrees with USIC. Although relevant terms of a contract must be adequately described in order to meet Rule 8's pleading requirements, there is no requirement that the contract be attached to the complaint or that the complaint quote each relevant provision verbatim. See, e.g., Garibaldi v. Bank of Am. Corp., No. 13-cv-02223-SI, 2014 WL 172284, at *3 (N.D. Cal. Jan. 15, 2014) ("While a plaintiff need not attach a copy of the allegedly breached contract to the complaint, mere legal conclusions that a contract existed and was breached will be insufficient to survive a motion to dismiss."); Park v. Morgan Stanley & Co., No. 11-cv-9466-ODW, 2012 WL 589653, at *3 (C.D. Cal. Feb. 22, 2012) ("Although Plaintiff need not set out the terms of the contract in detail, Plaintiff must identify enough contractual terms with sufficient factual specificity to render his claim more than a formalistic recitation of the elements' of a breach of contract claim.") (citation omitted). Claims involving contractual language are generally dismissed for want of detail only where the complaint fails to identify and describe the ...

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