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M Resorts, Ltd. v. New England Life Insurance Co.

United States District Court, S.D. California

December 16, 2019

M RESORTS, LTD., an Idaho Limited Partnership, Plaintiff,
v.
NEW ENGLAND LIFE INSURANCE COMPANY AKA NEW ENGLAND VARIABLE LIFE INSURANCE COMPANY, et al., Defendants.

          ORDER

          Hon. William Q. Hayes United States District Court

         The matter before the Court is the Motion to Strike and Dismiss Portions of Complaint filed by Defendants New England Life Insurance Company a.k.a. New England Variable Life Insurance Company, Brighthouse Life Insurance Company, and MetLife Auto & Home Insurance Agency, Inc. (ECF No. 3).

         I. BACKGROUND

         On July 8, 2019, Plaintiff M Resorts, Ltd., (“M Resorts”) initiated this action by filing a Complaint in the Superior Court for the State of California, County of San Diego, against Defendants New England Life Insurance Company a.k.a. New England Variable Life Insurance Company (“New England Life”), Brighthouse Life Insurance Company (“Brighthouse”), MetLife Auto & Home Insurance Agency, Inc. (“MetLife”), and New England Financial.[1] (ECF No. 1-2). In the Complaint, M Resorts alleges that it purchased a $5, 000, 000 life insurance policy from New England Life on the life of “key member” Richard V. Gibbons, effective April 27, 2000. (Id. ¶¶ 8-9).

         M Resorts alleges that in February 2019, it received a Notice of Lapse from Defendants stating that the policy had been terminated “due to insufficient cash value required to purchase an additional month's cost of insurance due on November 27, 2018.” (Id. ¶ 13). M Resorts alleges that the Notice of Lapse stated the policy could be reinstated if M Resorts made a premium payment of $33, 943.88 and submitted additional forms. M Resorts alleges that it made the $33, 943.88 payment on March 8, 2019, but did not submit any forms. M Resorts alleges that Defendants cashed the $33, 943.88 check. M Resorts alleges that it paid a total of $570, 017.99 to Defendants on the policy from the policy's inception through March 2019.

         M Resorts alleges that it received a letter from Defendants in April 2019, stating that Defendants had “received $33, 943.88 toward the total premium needed” to reinstate the Policy. (Id. ¶ 15 (emphasis in original)). M Resorts alleges that the letter stated M Resorts needed to complete and return an Application for Life Insurance Policy Reinstatement. M Resorts alleges that the letter stated that once Defendants received the “‘requested information' they would ‘consider' the Policy for reinstatement.” (Id. ¶ 15). M Resorts alleges that it “advised Defendants that it had no advance notice of the premiums due, the overdue premiums, the running of the grace period, and/or the pending lapse . . . and demanded immediate reinstatement of the Policy in its original form.” (Id. ¶ 16). M Resorts alleges that Defendants refused to reinstate the policy.

         M Resorts brings claims against Defendants for 1) declaratory judgment or relief; 2) breach of contract; 3) negligence; and 4) violation of California's Unfair Competition Law (“UCL”), California Business and Professions Code §§ 17200 et. seq. M Resorts seeks “a declaration of the rights and duties of the Parties, including an Order that Defendants have waived any alleged right to additional application, medical records or underwriting and that the Policy is in full force and effect on its original terms and provisions.” (Id. at 18). M Resorts seeks damages and “restoration of money damages” “personally, and on behalf of the general public.” (See Id. ¶ 46). M Resorts seeks “personal and public injunctive relief against Defendants' ongoing business practices.” (Id.). M Resorts seeks punitive and exemplary damages and attorneys' fees, costs, and prejudgment interest.

         On August 16, 2019, Defendants removed this action to this Court on the basis of diversity jurisdiction pursuant to 28 U.S.C. §§ 1441(b) and 1332(a)(1). (ECF No. 1).

         On August 23, 2019, Defendants filed a Motion to Strike and Dismiss Portions of Complaint. (ECF No. 3). On September 13, 2019, M Resorts filed a Response in opposition to Defendants' Motion to Strike and Dismiss. (ECF No. 5). On September 23, 2019, Defendants filed a Reply. (ECF No. 6).

         II. MOTION TO STRIKE

         Defendants move the Court to strike under Rule 12(f) of the Federal Rules of Civil Procedure 1) M Resorts' request for injunctive relief and damages on behalf of the general public; 2) M Resorts' request for attorneys' fees pursuant to section 1021.5 of the California Code of Civil Procedure; 3) M Resorts' request for attorneys' fees pursuant to the UCL; and 4) M Resorts' request for attorneys' fees “as permitted by law and contract” and pursuant to M Resorts' breach of contract claim (ECF No. 3-1 at 2).

         Rule 12(f) of the Federal Rules of Civil Procedure provides that “[t]he court may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” “Redundant” matter is needlessly repetitive. See Cal. Dep't of Toxic Substances Control v. Alco Pac., Inc., 217 F.Supp.2d 1028, 1033 (C.D. Cal. 2002). “Immaterial” matter “has no essential or important relationship to the claim for relief or the defenses being pleaded.” Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993) (quoting 5 Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1382, at 706-07 (1990)), rev'd on other grounds, 510 U.S. 517 (1994). “‘Impertinent' matter consists of statements that do not pertain, and are not necessary, to the issues in question.” Id. at 711. Scandalous matter “cast a cruelly derogatory light on a party or other person.” In re 2TheMart.com, Inc. Sec. Litig., 114 F.Supp.2d 955, 965 (C.D. Cal. 2000). Motions to strike are generally disfavored. See Petrie v. Elec. Game Card, Inc., 761 F.3d 959 at 965 (9th Cir. 2014).

         “Rule 12(f) does not authorize district courts to strike claims for damages on the ground that such claims are precluded as a matter of law.” Whittlestone, Inc. v. Handi-Craft Co., 618 F.3d 970, 975 (9th Cir. 2010). Rule 12(f) is “neither an authorized nor a proper way to procure the dismissal of all or a part of a complaint.” Id. (citing Yamamoto v. Omiya, 564 F.2d 1319, 1327 (9th Cir.1977)).

         In this case, each portion of the Complaint Defendants request the Court strike is a request for relief. The Ninth Circuit Court of Appeals in Whittlestone, Inc., denied a similar request by the defendant to strike the plaintiff's request for lost profits and consequential damages. 618 F.3d at 976. The court stated:

It is quite clear that none of the five categories [in Rule 12(f)] covers the allegations in the pleading sought to be stricken by HandiCraft. First, the claim for damages is clearly not an insufficient defense; nobody has suggested otherwise. Second, the claim for damages could not be redundant, as it does not appear anywhere else in the complaint. Third, the claim for damages is not immaterial, because whether these damages are recoverable relates directly to the plaintiff's underlying claim for relief. See Fogerty, 984 F.2d at 1527 (‘Immaterial matter is that which has no essential or important relationship to the claim for relief or the defenses being plead.') (quoting 5A Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1382, at 706-07 (1990) (quotation marks omitted)). Fourth, the claim for damages is not impertinent, because whether these damages are recoverable pertains directly to the harm being alleged. Id. (‘Impertinent matter consists of statements that do not pertain, and are not necessary, to the issues in question.') (quotation marks and citation omitted). Finally, a claim for damages is not scandalous, and Handi-Craft has not alleged as much.

Id. at 974. The court determined that the defendant's claim that the plaintiff's request for damages should be stricken was “really an attempt to have certain portions of [the] complaint dismissed” and was “better suited for a Rule 12(b)(6) motion.” Id. (citations omitted); see Rutman Wine Co. v. E. & J. Gallo Winery, 829 F.2d 729 (9th Cir. 1987) (“The purpose of [Rule] 12(b)(6) is to enable defendants to challenge the legal sufficiency of complaints . . . .”).

         Defendants assert that the Court should strike M Resorts' requests for attorneys' fees and public damages and injunctive relief because M Resorts does not meet the legal requirements to recover the requested relief. See ECF No. 3-1 at 5 (“[A]n award of fees is not authorized by either of the cited statutes nor pursuant to any other applicable law or content.”); id. at 6 (“Plaintiff has failed to allege that it is entitled to fees under section 1021.5.”); id. at 7 (contending M Resorts cannot request public injunctive relief and damages because “Plaintiff must pursue class action relief in order to seek benefits or remedies on behalf of the general public”). Defendants challenge the legal sufficiency of the requests for relief, which is not appropriate for a motion to strike.[2]See, e.g., Ferretti v. Pfizer Inc., 855 F.Supp.2d 1017, 1029 (N.D. Cal. 2012) (denying motion to strike request for attorneys' fees pursuant to the Whittlestone rule); In re ...


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