United States District Court, S.D. California
ORDER DENYING DEFENDANT'S MOTION TO DISMISS THE
Gonzalo P. Curiel, United States District Judge.
the Court is the Defendant Lloyd's Syndicate 1458's
(“Lloyd's” or “Defendant”) motion
to dismiss the complaint. ECF No. 10. Renovate America, Inc.
(“Renovate” or “Plaintiff”) filed an
opposition on October 15, 2019. ECF No. 12. Defendant filed a
reply on October 22, 2019. ECF No. 14. For the reasons
discussed below the Court DENIES
Defendant's motion to dismiss.
is a Delaware corporation with its headquarters in San Diego,
California. ECF No. 1 (“Complaint”) ¶ 5.
Renovate provides services for homeowners, including the
administration of residential Property Assessed Clean Energy
programs for government entities under the Home Energy
Renovation Opportunity (“HERO”) program.
Id. ¶¶ 5, 10. As part of its insurance
portfolio, Renovate maintains a professional liability
insurance covering liabilities that it may face based on its
administration of loan programs. Id. ¶ 11.
Lloyd's, through its agent Euclid, issued the relevant
professional liability policy to Lloyd's with a policy
period of at least May 27, 2017 to May 27, 2018 (the
“Policy”). Id. ¶ 12.
filed the Complaint on August 2, 2019. ECF No. 1. According
to the Complaint, the Policy covers costs that Renovate would
incur from defending against claims for, inter alia,
“actual or alleged breach of duty, neglect, error,
misstatement, misleading statement, omission or act.”
Id. ¶ 13. Plaintiff alleges that the Policy
requires Lloyd's to pay defense costs while the
underlying claims are being litigated. Id. ¶
15. Under the Policy, coverage is limited to $2, 500, 000 and
Renovate assumes a $250, 000 retention, which increases to
$500, 000 for class actions. Id. ¶ 13, 14. Any
defense costs incurred by Renovate count against the
retention amounts. Id. ¶ 14.
January of 2018 and April of 2018, Renovate was served in two
separate lawsuits in California state court (the
“Underlying Actions”): All Pro Installation
v. Claude Rowe et al., Case No. 37-2016-00042327,
California Superior Court, County of San Diego (the
“Rowe Action”) and Reginald Nemore
et al. v. Renovate America, Inc., Case No. BC701810,
California Superior Court of California, County of Los
Angeles (the “Nemore Action”).
Id. ¶¶ 18, 19. In the Rowe
Action, defendants served a cross-complaint on Renovate on
January 23, 2018 for alleged elder abuse and other harms due
to Renovate's administration of the HERO programs.
Id. ¶ 18. In the Nemore Action, the
plaintiffs served Renovate on April 16, 2018, and in their
complaint they allege that participants of the HERO programs
also suffered elder abuse and various other harms due to
Renovate's administration of the program. Id.
April 14, 2018 and May 1, 2018 respectively, Renovate
tendered both Nemore and Rowe actions to
Lloyd's, seeking full coverage including payment of their
defense costs. Id. ¶ 20. Lloyd's did not
reply to Renovate within 40 days, which Renovate alleges is
the applicable period for coverage determinations.
Id. ¶ 21. Renovate selected defense counsel and
paid for its own defense costs. Id. Renovate also
used a broker to prod Lloyd's to provide a response and
pay for the defense costs incurred by Renovate. Id.
¶¶ 22-23. Lloyd's first responded in November
of 2018 by letters through counsel that acknowledged that the
Underlying Actions raised the potential for coverage under
the Policy, but stated that rates of Renovate's defense
counsel raised issues. Id. ¶ 25-26. After
Lloyd's reviewed the defense counsel invoices,
Lloyd's stated that it would not pay full rates for the
defense counsel services and that it may also take other
deductions on the invoices. Id. ¶ 28.
21, 2019, Renovate incurred over $750, 000 in costs ($500,
000 in excess of the applicable retention) from defending the
Rowe action, and over $570, 000 in costs ($70, 000
in excess of the applicable class action retention) from
defending the Nemore action. Id. ¶ 31.
At this time, Lloyd's informed Renovate that it would
reduce the invoices and apply other deductions, and
ultimately pay $70, 000 for the Rowe action but pay nothing
for the Nemore action. Id. ¶¶ 31,
33. Renovate contested Lloyd's proposed deductions and
requested that Lloyd's provide an accounting of the
deductions. Id. ¶ 34. Renovate also stated that
they still expected Lloyd's to pay the $70, 000 for the
Rowe action, and Lloyd's said that they would
make a partial payment within the next one to two weeks.
Id. ¶ 34. As of the date of filing of the
Complaint, Renovate had not received any payment from
Lloyd's. Id. ¶ 35.
alleges claims for breach of contract and breach of covenant
of good faith and dealing, and seeks declaratory relief and
to recover the costs incurred for defense counsel's
services arising from the Nemore and Rowe
litigations. Renovate additionally seeks to recover damages
for bad faith such as attorney fees required to prosecute
Rule of Civil Procedure (“Rule”) 12(b)(6) permits
dismissal for “failure to state a claim upon which
relief can be granted.” Fed.R.Civ.P. 12(b)(6).
Dismissal under Rule 12(b)(6) is appropriate where the
complaint lacks a cognizable legal theory or sufficient facts
to support a cognizable legal theory. See Balistreri v.
Pacifica Police Dep't., 901 F.2d 696, 699 (9th Cir.
1990). Under Rule 8(a)(2), the plaintiff is required only to
set forth a “short and plain statement of the claim
showing that the pleader is entitled to relief, ” and
“give the defendant fair notice of what the . . . claim
is and the grounds upon which it rests.” Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).
complaint may survive a motion to dismiss only if, taking all
well-pleaded factual allegations as true, it contains enough
facts to “state a claim to relief that is plausible on
its face.” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (quoting Twombly, 550 U.S. at 570).
“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.” Id. “Threadbare
recitals of the elements of a cause of action, supported by
mere conclusory statements, do not suffice.”
Id. “In sum, for a complaint to survive a
motion to dismiss, the non-conclusory factual content, and
reasonable inferences from that content, must be plausibly
suggestive of a claim entitling the plaintiff to
relief.” Moss v. U.S. Secret Serv., 572 F.3d
962, 969 (9th Cir. 2009) (quotations omitted). In reviewing a
Rule 12(b)(6) motion, the Court accepts as true all facts
alleged in the complaint, and draws all reasonable inferences
in favor of the plaintiff. al-Kidd v. Ashcroft, 580
F.3d 949, 956 (9th Cir. 2009). The court evaluates lack of
statutory standing under the Rule 12(b)(6) standard. Maya
v. Centex Corp., 658 F.3d 1060, 1067 (9th Cir. 2011).
Breach of Contract
California law, the elements required for a cause of action
for breach of contract are: (1) the existence of a contract,
(2) plaintiffs' performance or excuse of nonperformance,
(3) defendant's breach, and (4) resulting damages to
plaintiff. Reichert v. General Ins. Co., 442 P.2d
377 (Cal. 1968); McDonald v. John P. Scripps
Newspaper,210 Cal.App.3d 100, 104 (1989). Lloyd's
alleges that Renovate's claim for breach of contract
fails for two reasons: (1) Renovate's claims are not yet
at “final disposition” and ...