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Durben v. State Farm General Ins. Co.

United States District Court, E.D. California

July 29, 2016




         Through this action, Plaintiffs Donald and Rebecca Durben (“Plaintiffs”) claim that Defendants State Farm General Insurance Company (“State Farm”) and Brenda Ericksen (“Ericksen”) forced them to sell their home at a loss by refusing to pay Plaintiffs’ preferred contractor to repair fire damage to their home under their homeowners’ insurance policy. Defendants seek to dismiss Plaintiffs’ claims for misrepresentation under Federal Rule of Civil Procedure 12(b)(6)[1] on the ground that Plaintiffs’ claims are insufficiently pleaded under Rule 9(b). They further argue that Ericksen is not a proper defendant. Defendants are correct, and their Motion to Dismiss (ECF No. 4) is GRANTED.


         Plaintiffs owned a home located at 12830 River Hills Drive, Bella Vista, CA (the “Home”) and purchased a homeowners insurance policy (the “Policy”) from State Farm. On February 1, 2014, a fire damaged the Home and Plaintiffs tendered a claim under the Policy. Defendant Ericksen, a State Farm employee, handled Plaintiffs’ claim in the normal course and scope of her employment with State Farm.

         At State Farm’s request, Plaintiffs hired Service Master by Chronic Disaster Services (“Service Master”) to estimate the cost of restoring the Home to its pre-fire condition. State Farm rejected Service Master’s $690, 000 estimate, and thereafter hired another contractor, Clean Rite/Build Rite (“Clean Rite”), to submit an estimate. In July of 2014, Clean Rite estimated the cost of repairing the Home at $272, 000. Plaintiffs allege that Defendant Ericksen told them that Clean Rite was ineligible to perform the repairs.[3]In the Spring of 2015, Clean Rite revised its repair estimate to $430, 000. State Farm then informed Plaintiffs that it would only pay for repair costs that did not exceed that sum.

         Instead of repairing the home, Plaintiffs sold it at a loss. They filed this lawsuit in Shasta County Superior Court bringing claims against State Farm for breach of contract, breach of the implied covenant of good faith and fair dealing, and declaratory relief and reformation. The Complaint also alleges claims for intentional misrepresentation and negligent misrepresentation against both State Farm and Ericksen. Those latter two claims are the subject of the pending Motion to Dismiss.


         On a motion to dismiss for failure to state a claim under Rule 12(b)(6), all allegations of material fact must be accepted as true and construed in the light most favorable to the nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). Rule 8(a)(2) “requires only ‘a short and plain statement of the claim showing that the pleader is entitled to relief’ in order to ‘give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.’” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). A complaint attacked by a Rule 12(b)(6) motion to dismiss does not require detailed factual allegations. However, “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.” Id. (internal citations and quotations omitted). A court is not required to accept as true a “legal conclusion couched as a factual allegation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555). “Factual allegations must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555 (citing 5 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1216 (3d ed. 2004) (stating that the pleading must contain something more than “a statement of facts that merely creates a suspicion [of] a legally cognizable right of action”)).

         Furthermore, “Rule 8(a)(2) . . . requires a showing, rather than a blanket assertion, of entitlement to relief.” Twombly, 550 U.S. at 555 n.3 (internal citations and quotations omitted). Thus, “[w]ithout some factual allegation in the complaint, it is hard to see how a claimant could satisfy the requirements of providing not only ‘fair notice’ of the nature of the claim, but also ‘grounds' on which the claim rests.” Id. (citing Wright & Miller, supra, at 94, 95). A pleading must contain “only enough facts to state a claim to relief that is plausible on its face.” Id. at 570. If the “plaintiffs . . . have not nudged their claims across the line from conceivable to plausible, their complaint must be dismissed.” Id. However, “[a] well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and ‘that a recovery is very remote and unlikely.’” Id. at 556 (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)).

         A court granting a motion to dismiss a complaint must then decide whether to grant leave to amend. Leave to amend should be “freely given” where there is no “undue delay, bad faith or dilatory motive on the part of the movant, . . . undue prejudice to the opposing party by virtue of allowance of the amendment, [or] futility of the amendment . . . .” Foman v. Davis, 371 U.S. 178, 182 (1962); Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003) (listing the Foman factors as those to be considered when deciding whether to grant leave to amend). Not all of these factors merit equal weight. Rather, “the consideration of prejudice to the opposing party . . . carries the greatest weight.” Id. (citing DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 185 (9th Cir. 1987)). Dismissal without leave to amend is proper only if it is clear that “the complaint could not be saved by any amendment.” Intri-Plex Techs. v. Crest Group, Inc., 499 F.3d 1048, 1056 (9th Cir. 2007) (citing In re Daou Sys., Inc., 411 F.3d 1006, 1013 (9th Cir. 2005); Ascon Props., Inc. v. Mobil Oil Co., 866 F.2d 1149, 1160 (9th Cir. 1989) (“Leave need not be granted where the amendment of the complaint . . . constitutes an exercise in futility . . . .”)).


         Plaintiffs’ misrepresentation claims cannot survive as to either defendant. Defendants argue that Plaintiffs cannot maintain a claim against Ericksen based on statements Plaintiffs specifically allege she made within the course and scope of her employment. Defendants also observe that the misrepresentation claims are too generally pleaded to pass muster under Rule 9(b). The Court agrees with both of Defendants’ arguments.

         A. Defendant Ericksen is not a proper defendant.

         Courts adjudicating insurance disputes under California law rarely permit direct claims against an insurer’s individual employees for conduct arising solely from the insurer’s performance under the policy. See Icasiano v. Allstate Ins. Co., 103 F.Supp.2d 1187, 1189 (N.D. Cal. June 23, 2000) (“An agent of an insurance company is generally immune from suits brought by claimants for actions taken while the agent was acting within the scope of its agency.”). Under California law, insurance company employees who act within the course and scope of their employment cannot be held individually liable for that conduct unless they act as a dual agent or for their own ...

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