Brafman v. Nationwide Mutual Insurance Company
Filing
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MEMORANDUM and ORDER signed by Judge Morrison C. England, Jr on 11/2/11: Defendant's Motion to Dismiss is GRANTED with leave to amend 6 . Defendant's Objections/Motion to Strike are OVERRULED/DENIED as moot 14 . Not later than twenty (2 0) days following the date this Memorandum and Order is electronically filed, Plaintiff may (but is not required to) file an amended complaint. If no amended complaint is filed within said twenty (20)-day period, without further notice to the parties, those causes of action dismissed by virtue of this Order will be deemed dismissed with prejudice. (Kaminski, H)
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UNITED STATES DISTRICT COURT
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EASTERN DISTRICT OF CALIFORNIA
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ROBERTA BRAFMAN,
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No. 2:11-cv-01627-MCE-GGH
Plaintiff,
v.
MEMORANDUM AND ORDER
NATIONWIDE MUTUAL INSURANCE
COMPANY & ITS AFFILIATES,
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Defendant.
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----oo0oo----
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Plaintiff Roberta Brafman (“Plaintiff”) filed this action
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challenging Defendant Nationwide Mutual Insurance Company’s
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(“Defendant”) denial of insurance benefits allegedly owed to her
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under her homeowner’s insurance policy.
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Court is Defendant’s Motion to Dismiss Plaintiff’s Complaint as
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untimely.
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granted with leave to amend.1
Presently before the
For the following reasons, Defendant’s Motion is
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Because oral argument will not be of material assistance,
the Court orders this matter submitted on the briefs. E.D. Cal.
Local Rule 78-230(h).
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BACKGROUND2
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Plaintiff is the owner of a small ranch property located in
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Sacramento, California (the “Property”).
Plaintiff has both a
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home (the “Dwelling”) and a rental unit (the “Rental”) on the
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Property.
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structures via a Farm Policy of Insurance (the “Policy”), which
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included homeowner’s insurance coverage.
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“all perils” coverage for the Property and the structures unless
Plaintiff purchased insurance coverage on both
The Policy provided
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the cause of any claimed loss was otherwise excluded from
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coverage.
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under the terms of the Policy.
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Losses caused by “fungus” were specifically excluded
Plaintiff alleges, however, that Defendant induced her to
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purchase an additional endorsement to the Policy, namely a
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Limited Fungi or Bacteria Coverage Endorsement (the
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“Endorsement”).
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representations in the Endorsement and on her own reading of the
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Policy that the Endorsement extended coverage under the Policy to
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her buildings for losses caused by mold.
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Plaintiff believed, based on Defendant’s
In August 2009, Plaintiff began to feel the effects of what
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turned out to be exposure to toxic mold in the Dwelling.
The
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mold purportedly attacked Plaintiff’s respiratory system, and she
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was subsequently hospitalized.
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Plaintiff stopped breathing and had to be resuscitated.
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///
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On the way to the hospital,
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Unless otherwise stated, the following facts are derived
from Plaintiff’s Complaint.
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On September 1, 2009, Plaintiff made a claim under the
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Policy for structural damage and personal property loss to the
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Dwelling.
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Defendant denied Plaintiff’s claim, asserting that the mold was
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caused by “dampness of atmosphere,” which was not a covered cause
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of loss under the Policy or the Endorsement.
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nonetheless renewed her claim to Defendant on December 15, 2009.
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Defendant again denied Plaintiff’s requested benefits on
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January 8, 2010.
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Just over two months later, on November 5, 2009,
Plaintiff
Also in January 2010, Plaintiff became aware of separate
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mold problems in the Rental.
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on the Policy to Defendant pertaining to those losses.
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to Plaintiff, she thereafter “became engaged in coverage issues
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with defendant respecting the mold burdening the rental and
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related claims from February, 2010 through the end of June,
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2010.”
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faith conduct and resulting controversy in handling [the Rental]
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claim consumed the plaintiff’s resources and attention for the
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next six months and had the effect of impeding the plaintiff’s
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ability to pursue investigation of defendant’s bad faith conduct
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in the mold loss claim to [the Dwelling].”
Complaint, ¶ 38.
She then made an independent claim
According
Plaintiff alleges that “Defendant’s bad
Id., ¶ 52.
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More specifically as to the Rental coverage dispute,
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Plaintiff expected that the full amount of damage to that
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building, approximately $25,020, would be covered under the
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Policy.
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On March 4, 2010, however, Defendant explained it would pay
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$7,041 for the portion of the claim covering loss due to mold
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from rain, but that it would not cover the remaining $17,979
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because, as with the Dwelling claim, that portion of the Rental
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claim arose out of mold that had been caused by “dampness of
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atmosphere.”
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Eventually, in July 2010, after failing to reach a
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settlement with Defendant as to her Rental claim, Plaintiff
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returned her attention to her Dwelling claim.
In August 2010,
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Plaintiff hired her own expert to evaluate the condition of the
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Dwelling.
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investigative report finding that the cause of the mold was a
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failure/breakage of the hot water pipe delivery system, not
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“dampness of atmosphere.”
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2010, Plaintiff forwarded Defendant her expert’s report and
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supporting documentation seeking to have Defendant revisit her
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claim.
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Plaintiff’s request for benefits.
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On October 14, 2010, Plaintiff’s expert issued an
Over two months later, on December 23,
On January 6, 2011, Defendant reiterated its denial of
Plaintiff’s Policy includes a one-year limitations provision
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stating, “No one may bring a legal action against us under this
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Coverage Form unless...[t]he action is brought within 1 year
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after the date on which the direct physical loss or damage
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occurred.”
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denied coverage to Plaintiff, Defendant reminded Plaintiff in
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writing about this limitations provision.
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Complaint, Exh. A, p. 33-34.
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Each time Defendant
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On May 12, 2011, Plaintiff initiated the instant action
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seeking to recover from Defendant pursuant to two claims for
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fraudulent inducement (First and Second Causes of Action), a
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claim for fraudulent and deceitful claims practices as to the
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Dwelling (Third Cause of Action), a claim for fraudulent and
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deceitful claims practices as to the Rental (Fourth Cause of
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Action), a claim for breach of the implied covenant of good faith
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and fair dealing (Fifth Cause of Action), and a claim for
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declaratory relief (Sixth Cause of Action).
Defendant
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subsequently moved to dismiss each of Plaintiff’s causes of
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action as time-barred.3
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leave to amend.
Defendant’s Motion is now GRANTED with
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STANDARD
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On a motion to dismiss for failure to state a claim under
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Federal Rule of Civil Procedure 12(b)(6),4 all allegations of
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material fact must be accepted as true and construed in the light
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most favorable to the nonmoving party.
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Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996).
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Cahill v. Liberty Mut.
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The Court is also in receipt of Defendant’s
Objections/Motion to Strike a supplemental brief filed by
Plaintiff. Plaintiff’s supplemental filing did nothing to change
this Court’s decision and Defendant’s Objections/Motion to Strike
are overruled/denied as moot. the Court has read and considered
all papers filed by the parties.
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All further references to “Rule” or “Rules” are to the
Federal Rules of Civil Procedure unless otherwise noted.
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Rule 8(a)(2) “requires only ‘a short and plain statement of the
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claim showing that the pleader is entitled to relief,’ in order
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to ‘give the defendant fair notice of what the [...] claim is and
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the grounds upon which it rests.’”
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550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41,
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47 (1957)).
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dismiss does not require detailed factual allegations.
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“a plaintiff’s obligation to provide the grounds of his
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entitlement to relief requires more than labels and conclusions,
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and a formulaic recitation of the elements of a cause of action
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will not do.”
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A court is not required to accept as true a “legal conclusion
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couched as a factual allegation.”
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____, 129 S. Ct. 1937, 1950 (2009) (quoting Twombly, 550 U.S. at
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555).
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relief above the speculative level.”
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(citing 5 Charles Alan Wright & Arthur R. Miller, Federal
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Practice and Procedure § 1216 (3d ed. 2004) (stating that the
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pleading must contain something more than “a statement of facts
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that merely creates a suspicion [of] a legally cognizable right
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of action.”)).
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Bell Atl. Corp. v. Twombly,
A complaint attacked by a Rule 12(b)(6) motion to
However,
Id. (internal citations and quotations omitted).
Ashcroft v. Iqbal, ___ U.S.
“Factual allegations must be enough to raise a right to
Twombly, 550 U.S. at 555
If the court grants a motion to dismiss a complaint, it must
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then decide whether to grant leave to amend.
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“freely give[]” leave to amend when there is no “undue delay, bad
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faith[,] dilatory motive on the part of the movant,...undue
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prejudice to the opposing party by virtue of...the amendment,
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[or] futility of the amendment....”
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Foman v. Davis, 371 U.S. 178, 182 (1962).
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The court should
Fed. R. Civ. P. 15(a)(2);
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Generally, leave to amend is only denied when it is clear that
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the deficiencies of the complaint cannot be cured by amendment.
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DeSoto v. Yellow Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir.
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1992).
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ANALYSIS
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According to Defendant, Plaintiff’s claims are each barred
by the one-year contractual limitations period included in the
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Policy.
Private limitations provisions have “long been
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recognized as valid in California.”
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Ins. Co., 163 Cal. App. 3d 1055, 1064 (1984).
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covenants are “valid provision[s] of an insurance contract and
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cannot be ignored with impunity as long as the limitation is not
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so unreasonable as to show imposition or undue advantage.”
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(citing Fageol T. & C. Co. v. Pacific Indemnity Co., 18 Cal. 2d
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748, 753 (1941)).
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limitations period in California as well.
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Allstate Ins. Co., 594 F. Supp. 2d 1131, 1135 (C.D. Cal. 2009);
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Spray, Gould & Bowers v. Associated Int’l Ins. Co., 71 Cal. App.
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4th 1260, 1267 (1999); see also California Insurance Code
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§§ 2070-71 (insurance policies providing fire coverage must
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contain at least a one-year limitations period).
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Policy in this case contains clear language delineating a
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reasonable one-year limitations period and since Defendant
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advised Plaintiff of that one-year period in writing on multiple
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occasions, the Court now finds that the parties are bound by this
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provision to the extent it is applicable to Plaintiff’s claims.
C&H Foods Co. v. Hartford
Indeed, such
Id.
One year has been held to be a reasonable
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Id.; Shugerman v.
Since the
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Contractual limitations provisions such as the one included
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in the Policy are applicable, however, only to claims actually
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brought “on the policy.”
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322 F.3d 1086, 1093 (9th Cir. 2003).
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is broadly construed to include those claims that are generally
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“grounded in a failure to pay benefits that are due under the
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policy.”
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Co., 225 Cal. App. 3d 1188, 1195 (1990)); see also Shugerman v.
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Allstate Ins. Co., 594 F. Supp. 2d 1131, 1135 (C.D. Cal. 2009)
Campanelli v. Allstate Life Ins. Co.,
The phrase “on the policy”
Id. at 1096 (citing Prieto v. State Farm Fire & Cas.
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(internal citations and quotations omitted).
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action seeking damages recoverable under the policy for a risk
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insured under the policy’ is ‘on the policy’ and covered by the
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one-year limitations period.”
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(quoting Jang v. State Farm Fire & Cas. Co., 80 Cal. App. 4th
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1291 (2000)).
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Likewise, “‘[a]n
Campanelli, 322 F.3d at 1086
Accordingly, under the facts of this case, then, “any claim
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that is on the policy must be brought within 12 months of the
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‘inception of the loss’ or it is time-barred.”
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322 F.3d at 1093.
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appreciable damage occurs and is or should be known to the
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insured, such that a reasonable insured would be aware that his
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notification duty under the policy has been triggered.’”
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(citing Prudential-LMI Commercial Ins. v. Superior Court, 51 Cal.
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3d 674, 687 (1990)).
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tolled, however, “from the time an insured gives notice of the
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damage to his insurer, pursuant to applicable policy notice
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provisions, until coverage is denied.” Prudential-LMI Com. Ins.,
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51 Cal. 3d at 693.
Campanelli,
Inception of loss is “‘that point in time when
Id.
The applicable limitations period is
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Plaintiff here was aware of the damage to the Dwelling and
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the Rental, and thus inception of loss had occurred, in
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approximately August or September of 2009 and January of 2010,
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respectively.
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each claim on these respective dates.
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were tolled, however, through, at the latest, November 5, 2009,
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for Plaintiff’s Dwelling claim and March 4, 2010, for Plaintiff’s
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Rental claim, the dates Defendant denied Plaintiff benefits.
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Accordingly, the applicable one-year limitations periods covering
The one-year period would have begun to run for
These limitations periods
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each claim had run by the time Plaintiff initiated this action,
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over one year later, on May 12, 2011.
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that are “on the policy” are thus time-barred.5
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Any of Plaintiff’s claims
In reaching this holding, the Court rejects Plaintiff’s
convoluted attempt to make an equitable estoppel argument. “An
estoppel arises as a result of some conduct by the defendant,
relied on by the plaintiff, which induces the belated filing of
the action.” Prudential-LMI Commercial Ins., 51 Cal. 3d at 690.
Plaintiff appears to argue that Defendant should be estopped from
relying on the contractual limitations period because Defendant
induced Plaintiff to dispute the Rental claim and thus to turn
her attention away from her Dwelling claim. According to
Plaintiff, because she was distracted by the Rental claim, she
had no time to continue investigation on the Dwelling claim and
was thus unable to hire an independent investigator until the
time for filing her Complaint had almost run. Plaintiff’s
argument is fatally flawed because, among other things, she has
not alleged in her Complaint that Defendant attempted to induce
her to forego investigation of her Dwelling claim, nor does she
allege she relied on any statement by Defendant in waiting to
file this action. Plaintiff provides no justifiable reason why,
despite her immediate disagreement with Defendant’s denial of her
claims, she waited so many months to hire an expert investigator
or why she could not have pursued legal relief as to either of
her claims sooner. Accordingly, on the facts alleged, there is
no basis on which to estop Defendant from asserting the
contractual limitations provision as a defense.
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A.
Plaintiffs’ First And Second Causes Of Action For
Fraudulent Inducement
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Plaintiff’s first and second causes of action for fraudulent
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inducement are not “on the policy,” and thus are not barred by
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the one-year limitations provision.
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Plaintiff asserts that Defendant fraudulently induced Plaintiff
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to purchase the Endorsement, and fraudulently represented to
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Plaintiff that in paying the additional premium for the
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Endorsement, the ranch dwellings would be covered for damages or
By way of these claims,
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losses caused by mold.
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Plaintiff’s fraudulent inducement claims thus go to the accuracy
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and truthfulness of the discussion and negotiations of the
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parties prior to the contractual agreement and to intentional
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misrepresentations of material fact allegedly made by Defendant
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to Plaintiff and upon which Plaintiff relied in agreeing to enter
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the contract.
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types of claims arising out of Defendant’s actions in inducing
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Plaintiff to contract, as opposed to a failure to pay policy
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benefits, are not “on the policy.”
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Equitable Assur. Co. of New York, 87 Cal. App. 28, 31-32 (1927);
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see also, Bankers Trust Co. v. Pac. Emp’rs Ins. Co., 282 F.2d
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106, 112-13 (9th Cir. 1960) (“action in tort for deceit in
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inducing the contract is not an action on the contract”)
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(interpreting similar language in a Nevada contract).
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As is clear from these allegations,
See 48 Am. Jur. Proof of Facts 3d 329 § 1.
These
See Harlow v. American
Regardless, however, Plaintiff has failed to plead her
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fraudulent inducement claims with the particularity required
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under Federal Rule of Civil Procedure 9(b).
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Illinois Cent. R. Co., 2008 WL 4964774, *3 (E.D. Cal.).
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See, e.g., Doyle v.
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Rule 9(b) requires that “[i]n alleging fraud or mistake, a party
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must state with particularity the circumstances constituting
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fraud or mistake.”
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Rule 9(b), [the] complaint would need to state the time, place,
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and specific content of the false representations as well as the
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identities of the parties to the misrepresentation.”
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Marin Park, Inc., 356 F.3d 1058, 1066 (9th Cir. 2008) (internal
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citations and quotations omitted).
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specific allegations as to the content of Defendant’s allegedly
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false representations, she does not allege the time, place, or
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identities of the parties to the misrepresentation.
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first and second causes of action for fraudulent inducement are
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thus dismissed with leave to amend for failure to state a claim.
“[T]o avoid dismissal for inadequacy under
Edwards v.
While Plaintiff makes
Plaintiff’s
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B.
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Plaintiff’s Third And Fourth Causes Of Action For
Fraudulent And Deceitful Claims Practices And Fifth
Cause Of Action For Breach Of The Implied Covenant Of
Good Faith And Fair Dealing
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Plaintiff’s third through fifth causes of action are “on the
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policy” and are thus time-barred.
Intentional misrepresentation
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and misrepresentations that involve the “scope, competence and
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fairness of the investigations into the [Homeowner’s] claim for
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covered loss under the policy” are considered on the policy.
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Campanelli, 322 F.3d at 1097.
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“grounded in a failure to pay benefits that are due under the
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policy” are “on the policy” as well.
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Likewise, as stated above, claims
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Id.
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Moreover, “on the policy” claims include breach of the implied
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covenant of good faith causes of action when based on the
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mishandling of a homeowner’s claims and recovery of damages for
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the underpayment of claims.
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Fireman’s Fund Ins. Co., 70 Cal. App. 4th 1075, 1086 (1999)
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(holding action for breach of good faith and fair dealing was “on
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the policy”).
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addition to those covered by the policy will not render the cause
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of action ‘off the policy.’”
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Id.; see also CBS Broad. Inc. v.
“The fact that an insured seeks damages in
Campanelli, 322 F.3d at 1096-97.
In this case Plaintiff’s fraudulent and deceitful claims
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practices causes of action arise out of Plaintiff’s contention
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that Defendant wrongfully investigated and denied her claims.
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Plaintiff’s breach of the implied covenant cause of action is
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likewise based upon allegations that Defendant failed to pay
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benefits as a result of its bad faith investigation and denial of
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benefits.
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Defendant’s failure to pay benefits and its alleged mishandling
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of its investigation into Plaintiff’s claims.
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action is therefore “on the policy” and is consequently barred by
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the one-year limitations provision.
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Dismiss Plaintiff’s third and fourth causes of action for
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fraudulent and deceitful claims practices and fifth cause of
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action for breach of the implied covenant of good faith and fair
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dealing is thus granted with leave to amend.
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Accordingly, these causes of action are grounded in
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Each cause of
Defendant’s Motion to
C.
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Plaintiff’s Sixth Cause Of Action For Declaratory
Relief
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To the extent each of Plaintiff’s other claims have been
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dismissed, there exists no remaining case or controversy capable
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of supporting an independent claim for declaratory relief.
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28 U.S.C. § 2201(a) (“In a case of actual controversy within its
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jurisdiction...any court of the United States, upon the filing of
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an appropriate pleading, may declare the rights and other legal
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relations of any interested party seeking such declaration.”)
See
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(emphasis added).
Moreover, even if there remained a case or
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controversy to support Plaintiff’s declaratory relief cause of
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action, it, like the majority of Plaintiff’s other claims,
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challenges only Defendant’s allegedly improper claims handling
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and wrongful denial of benefits.
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“on the policy” and is barred as untimely as well.
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Defendant’s Motion to Dismiss Plaintiff’s sixth cause of action
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for declaratory relief is granted with leave to amend.
This cause of action is thus
Accordingly,
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CONCLUSION
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For the foregoing reasons, Defendant’s Motion to Dismiss
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(ECF No. 6) is GRANTED with leave to amend.
Defendant’s
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Objections/Motion to Strike (ECF No. 14) are OVERRULED/DENIED as
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moot.
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Memorandum and Order is electronically filed, Plaintiff may (but
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is not required to) file an amended complaint.
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Not later than twenty (20) days following the date this
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If no amended complaint is filed within said twenty (20)-day
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period, without further notice to the parties, those causes of
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action dismissed by virtue of this Order will be deemed dismissed
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with prejudice.
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IT IS SO ORDERED.
Dated: November 2, 2011
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_____________________________
MORRISON C. ENGLAND, JR.
UNITED STATES DISTRICT JUDGE
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