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Homesite Insurance Co. of Midwest v. Gree USA, Inc.

United States District Court, C.D. California

May 24, 2017

HOMESITE INSURANCE COMPANY OF THE MIDWEST; AMERICAN STRATEGIC INSURANCE CORPORATION; MILBANK INSURANCE COMPANY; and MERIDIAN SECURITY INSURANCE COMPANY; on their own behalves and behalf of all other similarly situated insurance companies which underwrite property insurance coverage in the United States, Plaintiffs,
v.
GREE USA, INC.; GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI; HONG KONG GREE ELECTRIC APPLIANCES SALES, LTD.; and MJC, AMERICA, LTD., Defendants.

          ORDER DENYING DEFENDANTS' MOTION TO DISMISS [34]

          Otis D. Wright, II, United States District Judge

         I. INTRODUCTION

         Before the Court is Defendants Gree USA, Inc., Gree Electric Appliances, Inc. of Zhuhai, and Hong Kong Gree Electric Appliance Sales, Ltd.'s (collectively for purposes of this Order, “Defendants”) Motion to Dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). (ECF No. 34.) For the reasons discussed below, the Court DENIES Defendants' Motion.[1]

         II. FACTUAL BACKGROUND

         This case is a putative class action brought by Plaintiffs Homesite Insurance Company of the Midwest, American Strategic Insurance Corporation, Meridian Security Insurance Company, and Milbank Insurance Company (collectively, “Plaintiffs”), on their own behalves and on behalf of all other similarly situated insurance companies which underwrite property insurance coverage in the United States. Plaintiffs allege that Defendants all played various roles in manufacturing and distributing defective dehumidifiers that caused house fires throughout the United States. (First Am. Compl. (“FAC”) ¶¶ 36-55, ECF No. 30.) Plaintiffs allege that those dehumidifiers were recalled on September 12, 2013, as serious fire hazards.[2](Id. ¶ 70.)

         Plaintiffs state that insured victims of the dehumidifier fires filed claims related to the fires after suffering property damage. (Id. ¶¶ 92, 101, 110, 119, 128, 137.) Plaintiffs allege that because they incurred adjustment and claim expenses which they would not otherwise have incurred as a result of the fires, they are subrogated to the claims of their insureds and are entitled to recover damages from Defendants. (See Id. ¶¶ 93-94, 102-104, 111-113, 120-122, 129-131, 138-140.) Plaintiffs assert causes of action for declaratory relief, negligence, violation of CLRA, California Civil Code §§ 1750 et seq., violation of California Business and Professional Code §§ 17200 et seq., and strict product liability. (See FAC.)

         Defendants base their Motion to Dismiss on two separate grounds: first, that Plaintiffs do not have standing to assert their causes of action on their own behalves or behalf of unnamed plaintiffs; and second, that Plaintiffs' various causes of action do not state cognizable claims upon which relief can be granted. (See generally Mot.)

         III. LEGAL STANDARD

         Federal Rule 12(b)(1) allows a party to raise the defense of subject matter jurisdiction in a Motion to Dismiss. “[T]hose who seek to invoke the jurisdiction of the federal courts must satisfy the threshhold requirement imposed by Article III of the Constitution by alleging an actual case or controversy.” City of Los Angeles v. Lyons, 461 U.S. 95, 101 (1983). Article III restricts the federal “judicial power” to the resolution of “Cases” and “Controversies, ” and this case-or-controversy requirement is met where the plaintiff has standing to bring his or her suit. Lujan v. Defenders of Wildlife, 504 U.S. 555, 559-60 (1992); see also Cetacean Cmty. v. Bush, 386 F.3d 1169, 1174 (9th Cir. 2004). To satisfy Article III standing, a plaintiff must show that (1) he has suffered an “injury in fact” that is concrete and particularized and actual or imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the challenged actions of the defendant; and (3) it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision. Bernhardt v. Cnty. of L.A., 279 F.3d 862, 868-69 (9th Cir. 2002) (citing Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., Inc., 528 U.S. 167, 180-81 (2000)). If a plaintiff fails to show that he has standing, his case should be dismissed. See Lyons, 461 U.S. at 101.

         In addition, a court may dismiss a complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for lack of a cognizable legal theory or insufficient facts pleaded to support an otherwise cognizable legal theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). To survive a motion to dismiss, a complaint need only satisfy the minimal notice pleading requirements of Rule 8(a)(2)-a short and plain statement of the claim. Porter v. Jones, 319 F.3d 483, 494 (9th Cir. 2003). The factual “allegations must be enough to raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). That is, the complaint must “contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

         The determination whether a complaint satisfies the plausibility standard is a “context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id. at 679. A court is generally limited to the pleadings and must construe all “factual allegations set forth in the complaint . . . as true and . . . in the light most favorable” to the plaintiff. Lee v. City of L.A., 250 F.3d 668, 688 (9th Cir. 2001). But a court need not blindly accept conclusory allegations, unwarranted deductions of fact, and unreasonable inferences. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001).

         IV. DISCUSSION

         The Court finds that Defendants' arguments fail under both Rules 12(b)(1) and 12(b)(6).

         A. ...


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