The Raisin Bargaining Association et al v. Hartford Casualty Insurance Company, No. 1:2010cv00370 - Document 21 (E.D. Cal. 2010)
Court Description: MEMORANDUM DECISION on Defendant's Motion To Dismiss Plaintiffs' FAC 7 and 8 , signed by Judge Oliver W. Wanger on 9/27/2010. (Gaumnitz, R)
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The Raisin Bargaining Association et al v. Hartford Casualty Insurance Company Doc. 21 1 2 3 4 UNITED STATES DISTRICT COURT 5 EASTERN DISTRICT OF CALIFORNIA 6 7 8 THE RAISIN BARGAINING ASSOCIATION, et al., 1:10-cv-00370-OWW-DLB MEMORANDUM DECISION ON DEFENDANT’S MOTION TO DISMISS PLAINTIFFS’ FAC (Docs. 7,8) 9 Plaintiff, 10 11 v. 12 13 HARTFORD CASUALTY INSURANCE CO., et al., 14 Defendants. 15 I. 16 INTRODUCTION. 17 On June 17, 2010, the Raisin Bargaining Association (“RBA”), 18 Glen S. Goto, and Monte Schutz (“Plaintiffs”) filed a first amended 19 complaint 20 (“Defendant”) alleging various state law causes of action. 21 15). 22 (Doc. 16). 23 dismiss on September 3, 2010. (“FAC”) against Casualty Insurance Company (Doc. Defendant filed a motion to dismiss the FAC on July 2, 2010. Plaintiffs filed opposition to Defendant’s motion to (Doc. 18). II. FACTUAL BACKGROUND. 24 25 Hartford Plaintiff RBA is a nonprofit California cooperative 26 association. (FAC at 2). Plaintiffs Glen Goto and Monte Schutz are 27 and were, at all times relevant to this action, members of the 28 Board of Directors of RBA. (FAC at 2). 1 Dockets.Justia.com 1 Plaintiffs entered into contracts for insurance with Defendant 2 whereby Defendant agreed to insure Plaintiffs against various 3 claims brought against Plaintiffs for actions taken in RBA’s 4 business capacity. (FAC at 1, 3). The insurance policies relevant 5 to this action encompass coverage periods from at least 2005 to the 6 present and obligate Defendant to provide defense and indemnity for 7 covered claims made against RBA. 8 Beginning in or about (FAC at 1-3). January 2007, Richard Garabedian 9 (“Garabedian”), through counsel, sent several letters threatening 10 litigation and demanding almost $900,000.00 to settle a dispute 11 between 12 Director’s decision not to recommend Garabedian to the Secretary of 13 the U.S. Department of Agriculture (“USDA”) for appointment to the 14 RBA’s reserved seats on the Raisin Administrative Committee of the 15 USDA. 16 complaint against Plaintiffs alleging defamation, slander, and 17 breach of the common law Fair Procedure Doctrine in Fresno County 18 Superior Court. RBA, Goto, (FAC at 3). and Schutz concerning the RBA Board of On or about March 2, 2007, Garabedian filed a (FAC at 3). 19 In response to the Garabendian complaint, on or about April 4, 20 2007, Plaintiff’s filed an Anti-SLAPP motion against Garabedian. 21 (FAC at 3). 22 Plaintiffs’ Anti-SLAPP 23 complaint. (FAC at 4). 24 The On November 8, 2007, the Superior Court granted complaint in March motion alleges 2007, and that struck upon Plaintiffs Garabedian’s receipt of Garabedian’s 25 complaint 26 complaint to Defendant. 27 Plaintiffs received a letter from Defendant agreeing, without any 28 reservations, to defend and provide indemnity to Plaintiffs. (FAC at 4). 2 immediately entire tendered the On or about March 19, 2007, (FAC 1 at 4). Plaintiffs met with Defendant’s counsel, attorneys Gordon 2 Park and Mohammed Mandegary of the Fresno law firm McCormick 3 Barstow, who “requested” that Plaintiff’s counsel, the law firm of 4 Campagne, Campagne, & Lerner, continue working on defending against 5 the Garabedian complaint until resolution of an Anti-SLAPP motion. 6 (FAC at 4-5). 7 they 8 Plaintiffs for the fees incurred in defending the Garabedian 9 complaint. would The FAC alleges that Park and Mandegary promised recommend to (FAC at 5). Plaintiff’s Defendant that it should reimburse According to the FAC, Defendant “affirmed 10 that counsel...would 11 against the Garabedian Complaint.” remain working on defending (FAC at 4-5). 12 Defendant paid Plaintiffs’ invoices from March 2007 through 13 September 2007 after taking additional write downs at the expense 14 of 15 $38,891.42. 16 Plaintiffs. (FAC at 5). Defendant reimbursed Plaintiffs (FAC at 5). On or about November 12, 2009, Defendant sent Plaintiffs a 17 document entitled “Case Summary.” (FAC at 6). 18 refused full payment of legal fees incurred by Plaintiffs. (FAC at 19 6). Plaintiffs allege that the Case Summary set forth an incorrect 20 account of the defense provided in connection with the Garabedian 21 complaint. 22 paid a total of $69,366.48 in legal fees. 23 Summary also indicated that Defendant intended to collect the 24 attorneys’ fees awarded by the Superior Court in connection with 25 Plaintiffs successful Anti-SLAPP motion. 26 sent Defendant a written response to Defendant’s Case Summary on 27 December 16, 2009. 28 response, Defendant asked Plaintiff to forward a copy of the Case (FAC at 6). The Case Summary The Case Summary asserts that Defendant (FAC at 7). 3 (FAC at 6). (FAC at 6). The Case Plaintiffs Upon receipt of Plaintiff’s 1 Summary. (FAC at 8). 2 The total amount of fees and costs for work performed by 3 Plaintiffs’ counsel from January 2007 through September 2007 was 4 $77,056.81. (FAC at 6). 5 performed by Plaintiffs’ counsel was duplicative of the work 6 performed by Defendant’s counsel. (FAC at 6). Plaintiffs allege 7 that 8 Defendant had actual knowledge that its conduct constituted bad 9 faith. 10 Defendant’s According to the FAC, none of the work actions were taken in bad faith, and that (FAC at 7). Plaintiffs allege they have incurred costs and attorney’s fees 11 as a result of Defendant’s actions. 12 contend they have suffered great emotional distress as a result fo 13 Defendant’s 14 Defendant owes Plaintiffs $38,165.33, plus 10% APR as well as 15 punitive damages and attorneys’ fees incurred in the prosecution of 16 the instant law suit. conduct. at 7). Plaintiffs also Plaintiffs contend that (FAC at 5-6). III. LEGAL STANDARD. 17 18 (FAC (FAC at 7). Dismissal under Rule 12(b)(6) is appropriate where the 19 complaint lacks sufficient facts to support a cognizable legal 20 theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th 21 Cir.1990). To sufficiently state a claim to relief and survive a 22 12(b) (6) motion, the pleading “does not need detailed factual 23 allegations” but the “[f]actual allegations must be enough to raise 24 a right to relief above the speculative level.” Bell Atl. Corp. v. 25 Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). 26 Mere “labels and conclusions” or a “formulaic recitation of the 27 elements of a cause of action will not do.” Id. 28 be “enough facts to state a claim to relief that is plausible on 4 Rather, there must 1 its face.” Id. at 570. In other words, the “complaint must contain 2 sufficient factual matter, accepted as true, to state a claim to 3 relief that is plausible on its face.” Ashcroft v. Iqbal, --- U.S. 4 ----, ----, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (internal 5 quotation marks omitted). 6 The Ninth Circuit has summarized the governing standard, in 7 light of Twombly and Iqbal, as follows: “In sum, for a complaint to 8 survive a motion to dismiss, the nonconclusory factual content, and 9 reasonable inferences from that content, must be plausibly 10 suggestive of a claim entitling the plaintiff to relief.” Moss v. 11 U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir.2009) (internal 12 quotation marks omitted). Apart from factual insufficiency, a 13 complaint is also subject to dismissal under Rule 12(b)(6) where it 14 lacks a cognizable legal theory, Balistreri, 901 F.2d at 699, or 15 where the allegations on their face “show that relief is barred” 16 for some legal reason, Jones v. Bock, 549 U.S. 199, 215, 127 S.Ct. 17 910, 166 L.Ed.2d 798 (2007). 18 In deciding whether to grant a motion to dismiss, the court 19 must accept as true all “well-pleaded factual allegations” in the 20 pleading under attack. Iqbal, 129 S.Ct. at 1950. A court is not, 21 however, “required to accept as true allegations that are merely 22 conclusory, 23 inferences.” Sprewell v. Golden State Warriors, 266 F.3d 979, 988 24 (9th Cir.2001). “When ruling on a Rule 12(b)(6) motion to dismiss, 25 if a district court considers evidence outside the pleadings, it 26 must normally convert the 12(b)(6) motion into a Rule 56 motion for 27 summary 28 opportunity to respond.” unwarranted judgment, and deductions it must of give fact, the or unreasonable nonmoving party an United States v. Ritchie, 342 F.3d 903, 5 1 907 (9th Cir. 2003). “A court may, however, consider certain 2 materials-documents 3 incorporated by reference in the complaint, or matters of judicial 4 notice-without converting the motion to dismiss into a motion for 5 summary judgment.” Id. at 908. attached complaint, documents A. Plaintiffs’ Quasi-Contract Claim 8 9 the IV. Discussion 6 7 to California courts turn to the legal contract” to prevent unjust enrichment. 25 Cal.3d 503, 515 n.10 fiction of “quasi- Earhart v. William Low 10 Co., (Cal. 1979). Although a 11 quasi-contract action “cannot lie where there exists between the 12 parties a valid express contract covering the same subject matter,” 13 e.g. Lance Camper Manufacturing Corp. v. Republic Indemnity Co., 44 14 Cal. App. 4th 194, 203 (Cal. Ct. App. 1996), quasi-contract actions 15 may be utilized to prevent unjust enrichment regarding disputes 16 between contracting parties that are related to, but outside the 17 scope of, the parties’ contract, see Aerojet-General Corp. v. 18 Transport Indemnity Co., 17 Cal. 4th 38, 69 (Cal. 1998) (insurer 19 could recover costs from insured based on quasi-contract theory, 20 despite the existence of a valid contract). 21 The Memorandum Decision dismissing Plaintiff’s quasi-contract 22 claim as pled in the original complaint provides in pertinent part: 23 The precise nature of Plaintiffs’ quasi-contract claim is unclear, as Plaintiffs’ fail to allege facts sufficient to establish that Defendant ever consented to have Plaintiffs’ private counsel conduct work on Defendant’s behalf. To the extent Plaintiffs’ quasi-contract claim is based on the insurance agreement, “it is well settled that an action based on an implied-in-fact or quasi-contract cannot lie where there exists between the parties a valid express contract covering the same subject matter.” 24 25 26 27 28 /// 6 1 (Doc. 12 at 15) (citation omitted). The FAC fails to remedy the 2 deficiencies identified in the Memorandum Decision. 3 Although the FAC contains a new allegation that Defendant 4 requested that Plaintiffs’ counsel continue working on the anti- 5 SLAPP motion, the FAC fails to clearly assert that this purported 6 agreement is the basis for Plaintiffs’ quasi-contract claim. 7 the contrary, the FAC asserts that the basis for Plaintiffs’ quasi- 8 contract claim is Plaintiffs’ performance of its obligations under 9 a valid contract, and Defendant’s breach of its duties under a 10 valid contract. 11 Decision, California law does not permit a party to maintain a 12 quasi-contract 13 contract: 14 action based on an As noted by the Memorandum alleged breach of a valid [A]s to the Insured's claim of unjust enrichment resulting in an implied-in-fact contract, it is well settled that an action based on an implied-in-fact or quasi-contract cannot lie where there exists between the parties a valid express contract covering the same subject matter. Here, the Insured has alleged the existence and validity of an enforceable written contract between the parties in its first two causes of action. The Insured then realleges the existence of the written contract in its claim of a quasi-contract. This is internally inconsistent. 15 16 17 18 19 20 (FAC at 12-13). To Lance Camper Manufacturing Corp., 44 Cal. App. 4th at 203. 21 The FAC’s new allegations are not properly incorporated into 22 a cognizable theory of quasi-contract under California law. 23 fact, the FAC’s quasi-contract claim is identical to the deficient 24 quasi-contract 25 (Compare Doc 1., Ex. B at with FAC at 12-13). 26 given one more opportunity to properly plead a quasi-contract 27 claim. 28 /// claim pled in Plaintiff’s 7 original In complaint. Plaintiffs will be 1 B. 2 Breach of Oral Contract Claim The FAC’s oral contract claim is identical to the deficient 3 oral contract claim pled in Plaintiff’s original complaint. 4 (Compare Doc 1., Ex. B at with FAC at ). 5 are not properly incorporated into a cognizable theory of oral 6 contract. The FAC’s new allegations 7 The FAC is ambiguous as to whether Plaintiffs seek to assert 8 a claim for breach of an oral agreement independent of the parties’ 9 written contract. As pled in the FAC, Plaintiffs’ oral contract 10 claim is merely a claim that Defendant’s orally agreed to reimburse 11 Plaintiff’s counsel within the framework of the parties’ written 12 contract; to the extent Plaintiffs’ claim is based on the parties’ 13 written agreement, Plaintiffs do not have a separate oral contract 14 claim. 15 plead the existence of a separate oral agreement. 16 C. Cumis Counsel Claim 17 18 19 20 21 Plaintiff will be given one more opportunity to properly Plaintiffs’ “cumis counsel” claim is unintelligible, as the FAC provides only a single conclusory sentence: Plaintiffs are entitled to attorneys’ fees as costs for Defendant Hartford’s failure to reimburse Plaintiffs as previously agreed and in having to bring the instant Complaint for the recovery of the expended fees and costs as agreed and/or entitled to the reasonable value of the services rendered. 22 23 (FAC at 15). At oral argument, Plaintiffs conceded that the cumis 24 counsel claim should be dismissed with prejudice. V. CONCLUSION 25 26 27 28 For the reasons stated, IT IS ORDERED: 1) Plaintiffs’ quasi-contract claim is DISMISSED, without prejudice; 8 1 2) 2 Plaintiffs’ oral contract claim is DISMISSED, without prejudice; 3 3) 4 Plaintiffs’ “cumis” claim is DISMISSED, with prejudice; and 5 4) Plaintiffs shall lodge a formal order consistent with 6 this decision within five (5) days following electronic 7 service of this decision by the clerk. 8 file an amended complaint within fifteen (15) days of the 9 filing of the order. Plaintiff shall Defendant shall file a response 10 within fifteen (15) days of receipt of the amended 11 complaint. 12 13 14 IT IS SO ORDERED. Dated: hkh80h September 27, 2010 /s/ Oliver W. Wanger UNITED STATES DISTRICT JUDGE 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9
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