United States District Court, S.D. California
TRAVELERS PROPERTY CASUALTY COMPANY OF AMERICA, a Connecticut corporation, Plaintiff,
MOUNTAIN MOVERS ENGINEERING COMPANY, INC., a California corporation;, Defendants.
ORDER: (1) GRANTING, IN PART, AND DENYING, IN PART,
PLAINTIFF'S MOTION TO DISMISS (DOC. NO. 50) (2) DENYING
PLAINTIFF'S MOTION TO STRIKE (DOC. NO. 51)
Marilyn L. Huff United States District Judge.
April 3, 2017, Defendants Old Republic General Insurance
Corporation (“ORGENCO”) and Pacific Building
Group (“PBG”) (collectively,
“Defendants”), filed a motion for leave to file
counterclaims. (Doc. No. 41.) Plaintiff Travelers Property
Casualty Company of America (“Plaintiff”) opposed
Defendants' motion, arguing the motion should be denied
as futile. (Doc. No. 43.) On May 4, 2017, the Court granted
Defendants' motion in part, allowing them to file nine of
their counterclaims. (Doc. No. 46.)
11, 2017, Defendants filed their counterclaims. (Doc. No.
47.) On May 25, 2017, Plaintiff filed a motion to dismiss two
of Defendants' claims and their prayer for punitive
damages. (Doc. No. 50.) On the same day, Plaintiff also moved
to strike allegedly privileged material from Defendants'
counterclaims. (Doc. No. 51.) Defendants filed their
oppositions on June 1, 2017. (Doc. Nos. 53, 54.) Plaintiff
filed a reply on June 16, 2017. (Doc. No. 57.)
following facts are taken from the allegations in
Defendants' counterclaims. (Doc. No. 47.) Defendant PBG
was the general contractor hired to complete an improvement
of real property located in Carlsbad, California (the
“Carlsbad Property”). (Id. ¶ 11.)
PBG subsequently contracted Mountain Movers Engineering
Company, Inc. (“Mountain”) to perform work in
connection with the improvement. (Id. ¶ 13.) As
part of the agreement between PBG and Mountain, Mountain
agreed to indemnify PBG for any claims arising from
Mountain's performance. (Id. ¶ 14.)
Mountain also agreed to reimburse PBG for any loss, including
extra expenses and attorneys' fees, related to
Mountain's failure to perform. (Id. ¶ 15.)
As part of its contractual obligations, Mountain obtained a
commercial general liability insurance policy, No.
DTE-CO-9323B76 (the “Traveler's Policy”),
from Plaintiff. (Id. ¶ 16.)
September 8, 2012, while working at the Carlsbad Property,
Mountain damaged a sewer cleanout, causing a sewer backup and
flooding an adjacent building. (Id. ¶¶
17-18.) Plaintiff was notified promptly of the damage but did
not participate in, or fund, the repairs. (Id.
¶ 20.) The total cost of the damage was $141, 880.61, of
which ORGENCO paid $131, 880.61 (representing the cost minus
a $10, 000 deductible). (Id. ¶ 22.) Mountain
agreed to reimburse PBG for the $10, 000 deductible.
(Id. ¶ 23.)
October 8, 2012, Plaintiff informed Mountain that the
Traveler's Policy did not cover the September 8, 2012
damage because the policy included a Pollution Exclusion, as
well as a Bacteria/Fungi Exclusion. (Id. ¶ 24.)
On October 19, 2012, Defendants submitted a claim to
Plaintiff for the costs they incurred and were told that
Plaintiff was in the process of investigating the claim.
(Id. ¶¶ 25-26.) On December 11, 2012,
Plaintiff informed Defendants the Pollution Exclusion
precluded coverage under the Traveler's Policy because
the accident involved sewage. (Id. ¶ 27.)
the denial of coverage, Defendants filed suit in state court,
seeking indemnification and reimbursement from Plaintiff and
Mountain. (Id. ¶ 28.) Mountain retained The Law
Offices of Gregory Hout to defend it and, although Plaintiff
agreed to pay for Mountain's defense, Plaintiff's
payments were late and sporadic. (Id. ¶ 31.)
Throughout the course of the litigation, Plaintiff repeatedly
claimed that the September 8, 2012 incident was excluded from
coverage and refused Defendants' settlement offers.
(Id. ¶¶ 36-41.)
31, 2016, Defendants offered to settle with Mountain for a
stipulated judgment of $372, 000 against Mountain in exchange
for a covenant not to execute the judgment against Mountain.
(Id. ¶ 46.) Mountain reviewed the settlement
offer and forwarded it to Plaintiff. (Id.
¶¶ 47-48.) Plaintiff refused to fund the settlement
offer and threatened to sue Mountain if it settled with
Defendants. (Id. ¶ 49.) On August 2, 2016,
Mountain entered into the Settlement Agreement with
Defendants. (Doc. No. 48-2 at 4-14.) As part of the
Agreement, Mountain also assigned all of its claims against
Plaintiff to ORGENCO. (Id. at 10.)
now seek to assert Mountain's assigned claims, as well as
their own claim as judgment creditor, against Plaintiff.
Plaintiff moves to (1) dismiss certain claims and relief and
(2) to strike confidential information in the counterclaims.
MOTION TO DISMISS
motion to dismiss, pursuant to Federal Rule of Civil
Procedure 12(b)(6), tests the legal sufficiency of the
pleadings and allows a court to dismiss a complaint if the
claimant has failed to state a claim upon which relief can be
granted. Conservation Force v. Salazar, 646 F.3d
1240, 1241 (9th Cir. 2011). A complaint will survive a motion
to dismiss if it contains “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.” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009). The pleadings must go
beyond “labels and conclusions” and the
“[f]actual allegations must be enough to raise a right
to relief above the speculative level.”
Twombly, 550 U.S. at 555. A “formulaic
recitation of the elements” is not enough.
Id.; accord Iqbal, 556 U.S. at 678
(“Threadbare recitals of the elements of a cause of
action, supported by mere conclusory statements, do not
reviewing a motion to dismiss, a district court must accept
as true all facts alleged in the complaint, and draw all
reasonable inferences in favor of the claimant. Retail
Prop. Trust v. United Bhd. of Carpenters & Joiners of
Am., 768 F.3d 938, 945 (9th Cir. 2014). The court need
not, however, accept “legal conclusions” as true.
Iqbal, 556 U.S. at 678. Thus, pleadings unsupported
by factual allegations are not entitled to a presumption of
truth. Id. ...