O'Brien v. Continental Casualty Company, No. 5:2013cv01289 - Document 23 (N.D. Cal. 2013)

Court Description: ORDER granting 10 Motion to Dismiss; denying 14 Motion to Remand. The court will issue a separate scheduling order forthwith. Signed by Judge Edward J. Davila on 8/13/2013. (ejdlc1, COURT STAFF) (Filed on 8/13/2013)

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O'Brien v. Continental Casualty Company Doc. 23 1 2 3 4 5 6 7 IN THE UNITED STATES DISTRICT COURT 8 FOR THE NORTHERN DISTRICT OF CALIFORNIA 9 SAN JOSE DIVISION CASE NO. 5:13-cv-01289 EJD JANICE O’BRIEN, 11 ORDER DENYING PLAINTIFF’S MOTION TO REMAND; GRANTING DEFENDANT’S MOTION TO DISMISS Plaintiff(s), For the Northern District of California United States District Court 10 12 13 v. CONTINENTAL CASUALTY COMPANY, 14 15 [Docket Item No(s). 10, 14] Defendant(s). / 16 17 Plaintiff Janice O’Brien (“Plaintiff’) initiated the instant action in Monterey County Superior 18 Court against Defendant Continental Casualty Company (“Defendant”) for breach of contract, 19 breach of the covenant of good faith and fair dealing and financial elder abuse in violation of 20 California Welfare and Institutions Code § 15610.30 et. seq. See Not. of Removal, Docket Item No. 21 1, at Ex. A (“Compl.”). Defendant then removed the action to this court on March 21, 2013, 22 pursuant to 28 U.S.C. § 1441(b). 23 Presently before the court are two matters: (1) Plaintiff’s Motion to Remand, and (2) 24 Defendant’s Motion to Dismiss the claim for financial elder abuse. See Docket Item Nos. 10, 14. 25 The court found these matters suitable for decision without oral argument pursuant to Civil Local 26 Rule 7-1(b) and previously vacated the associated hearing dates. The court has carefully reviewed 27 the moving, opposing and reply papers filed for both motions. For the reasons explained below, 28 Plaintiff’s Motion to Remand will be denied and Defendant’s Motion to Dismiss will be granted 1 CASE NO. 5:13-cv-01289 EJD ORDER DENYING PLAINTIFF’S MOTION TO REMAND; GRANTING DEFENDANT’S MOTION TO DISMISS Dockets.Justia.com 1 2 I. BACKGROUND According to the Complaint, Plaintiff “is a 91-year old widow and mother of seven children.” 3 See Compl., at ¶ 6. In 1996, Plaintiff purchased a long-term care insurance policy from Defendant. 4 Id. at ¶ 16. She has paid all of her premiums on time and currently pays $4,998 annually. Id. at ¶ 5 17. The policy provides for long-term care benefits, including personal care services, up to $175 per 6 day. Id. at ¶ 18. Plaintiff is eligible to receive the benefit for life. Id. 7 After Plaintiff was hospitalized on July 15, 2011, her children and her primary care physician 8 determined that Plaintiff should not be permitted to live alone. Id. at ¶ 27. Plaintiff’s family hired 9 three personal caregivers to assist Plaintiff at her home, each of whom assist Plaintiff with her daily living activities. Id. According to Plaintiff, the caregivers meet all of Defendant’s policy 11 For the Northern District of California United States District Court 10 requirements. Id. at ¶ 28. Plaintiff pays them $20 to $24 per hour. Id. 12 Plaintiff was ultimately diagnosed with chronic cognitive impairment, mild dementia and 13 “probably has early Alzheimer’s.” Id. at ¶¶ 37, 38. She submitted a claim to Defendant to obtain 14 benefits under the long-term care policy. Id. at ¶ 30. Defendant denied the claim as well as 15 Plaintiff’s subsequent appeal of the denial. Id. at ¶¶ 34, 35. This lawsuit followed. 16 17 18 19 II. A. THE MOTION TO REMAND Legal Standard 1. Removal Jurisdiction Generally Removal jurisdiction is a creation of statute. See Libhart v. Santa Monica Dairy Co., 592 20 F.2d 1062, 1064 (9th Cir. 1979) (“The removal jurisdiction of the federal courts is derived entirely 21 from the statutory authorization of Congress.”). Only those state court actions that could have been 22 originally filed in federal court may be removed. 28 U.S.C. § 1441(a) (“Except as otherwise 23 expressly provided by Act of Congress, any civil action brought in a State court of which the district 24 courts of the United States have original jurisdiction, may be removed by the defendant.”); see also, 25 e.g., Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987) (“Only state-court actions that originally 26 could have been filed in federal court may be removed to federal court by defendant.”). 27 Accordingly, the removal statute provides two basic ways in which a state court action may be 28 removed to federal court: (1) the case presents a federal question, or (2) the case is between citizens 2 CASE NO. 5:13-cv-01289 EJD ORDER DENYING PLAINTIFF’S MOTION TO REMAND; GRANTING DEFENDANT’S MOTION TO DISMISS 1 2 of different states. 28 U.S.C. §§ 1441(a), (b). When, as here, the Notice of Removal relies on diversity as a basis for federal jurisdiction, 3 the “amount in controversy” must exceed $75,000, exclusive of interest and costs. 28 U.S.C. § 4 1332(a). If it appears at any time before final judgment that this requirement cannot be met, the case 5 must be remanded. See 28 U.S.C. § 1447(c). 6 7 2. Removal and Remand The party seeking removal must bear the burden to establish the basis for federal jurisdiction, 1988). If a plaintiff’s state court complaint does not specify the exact amount of damages sought, 10 the defendant must establish, by a preponderance of the evidence, that the amount in controversy 11 For the Northern District of California even on a motion to remand. See Emrich v. Touche Ross & Co., 846 F.2d 1190, 1195 (9th Cir. 9 United States District Court 8 exceeds the statutory minimum. See Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 404 (9th 12 Cir. 1996). This requires a defendant must to prove it is “more likely than not” that the amount in 13 controversy exceeds $75,000. See id. Satisfying this burden can sometimes be challenging since 14 removal statutes are strictly construed against removal. Emrich, 846 F.2d at 1195. “The ‘strong 15 presumption’ against removal jurisdiction means that the defendant always has the burden of 16 establishing that removal is proper.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). 17 In order to determine whether the defendant has made a sufficient showing, the court first 18 considers whether it is “facially apparent” from the complaint that the requisite amount in 19 controversy exists. See Singer v. State Farm Mutual Auto. Ins. Co., 116 F.3d 373, 377 (9th Cir. 20 1997). Where the amount of damages are not specified, the court may look to facts in the complaint, 21 and may require the parties to submit “summary-judgment-type evidence” relevant to the 22 jurisdictional question. See id. Amount in controversy is determined as of the date of removal, and 23 may include claims for general and special damages, any available attorneys fees, injunctive relief 24 and punitive damages if recoverable as a matter of law. See Valdez v. Allstate Ins. Co., 372 F.3d 25 1115, 1117 (9th Cir. 2004); see also In re Ford Motor Co., 264 F.3d 952, 958 (9th Cir. 2001); see 26 also Conrad Assocs. v. Hartford Accident & Indem. Co., 994 F. Supp. 1196, 1198-99 (N.D. Cal. 27 1998) (“The amount in controversy includes claims for general and special damages (excluding 28 costs and interests), including attorneys fees, if recoverable by statute or contract, and punitive 3 CASE NO. 5:13-cv-01289 EJD ORDER DENYING PLAINTIFF’S MOTION TO REMAND; GRANTING DEFENDANT’S MOTION TO DISMISS 1 damages, if recoverable as a matter of law.”) 2 3 A speculative argument as to the amount in controversy is insufficient. See Gaus, 980 F.2d at 567; see also Valdez, 372 F.3d at 1117. 4 B. Discussion 5 Since the parties do not dispute diversity of citizenship, this motion turns on whether 6 Defendant has met its burden to establish the requisite “amount in controversy.” On that issue, 7 Defendant contends it is “facially apparent” from the facts in the Complaint that the damages 8 associated with Plaintiff’s breach of contract claim will “more likely than not” exceed $75,000. The 9 court agrees. On a claim for the breach of a disability insurance contract, the “measure of liability and 11 For the Northern District of California United States District Court 10 damage is the sum or sums payable in the manner and at the times as provided in the policy to the 12 person entitled thereto.” Cal. Ins. Code § 10111. Further, breach of insurance contract damages are 13 limited to “the amount due by the terms of the obligation, with interest thereon.” Cal. Ins. Code § 14 3302. 15 Here, Plaintiff has included enough facts in the Compliant to reasonably determine the 16 amount of damages allegedly incurred as a result of Defendant’s purported breach of contract. 17 Plaintiff alleges that her long-term care insurance policy provides for a daily benefit $175 as of 18 February, 2012. See Compl., at ¶ 18. She also alleges that she has required in-home care since July 19 15, 2011, that Plaintiff’s family decided “she should no longer be permitted to live alone,” that 20 Plaintiff paid each of her caregivers approximately $20 to $24 per hour, and that, according to her 21 doctors, Plaintiff’s medical condition necessitates no less than 8 hours of in-home care every day. 22 Id. at ¶¶ 26, 28, 30, 43 (“Dr. Straface also marked that [Plaintiff] . . . ‘requires care and assistance . . 23 . with home health personnel on a daily basis for 8-12 hours each day in the setting of Plaintiff’s 24 home.’”); 44 (“Dr. Centurion also filed out a Plan of Care for [Defendant] in which he indicated . . . 25 ‘Patient requires assistance by a qualified caregiver 10-12 hours a day, seven days a week.’”). 26 Furthermore, Plaintiff alleges that Defendant has “refused to make a single payment.” Id. at ¶ 58. 27 28 Putting these allegations together, this means that from July 15, 2011, to the date of removal on March 21, 2013, Plaintiff had incurred in-home care costs of no less than $160 per day (8 hours x 4 CASE NO. 5:13-cv-01289 EJD ORDER DENYING PLAINTIFF’S MOTION TO REMAND; GRANTING DEFENDANT’S MOTION TO DISMISS 1 $20 per hour) for 615 days - or $98,400 - based on her own factual assertions. This amount is more 2 than sufficient to the meet the amount in controversy requirement and no other form of potential 3 damages or fees need be considered. 4 In the motion and again in her reply brief, Plaintiff argues that Defendant cannot meet its 5 burden to demonstrate federal jurisdiction based only on potential breach of contract damages 6 because Plaintiff did not allege, and Defendant has not shown, exactly how many hours per day and 7 exactly how many days she paid for in-home care. Such exactitude, however, is not required here. 8 As noted, the Complaint on its face contains sufficient information about the subject insurance 9 policy, Plaintiff’s medical needs and the payments already made to caregivers to calculate the minimum amount that could be awarded if Defendant is determined to have breached the insurance 11 For the Northern District of California United States District Court 10 contract. Plaintiff seeks to have the court ignore these allegations. It will not do so.1 12 In addition, it is not Defendant’s burden to prove damages with certainty, to the extent that is 13 the burden Plaintiff seeks to impose here. In opposing this motion, Defendant need only show that it 14 is “more likely than not” that the damages, or any part of them, will exceed the requisite amount in 15 controversy. See Sanchez, 102 F.3d at 404. Defendant has done so, albeit based only on Plaintiff’s 16 allegations with respect to one cause of action. 17 18 Since the court finds that Defendant has satisfied its burden with respect to the amount in controversy, Plaintiff’s Motion to Remand will be denied. III. 19 THE MOTION TO DISMISS 20 A. Legal Standard 21 Federal Rule of Civil Procedure 8(a) requires a plaintiff to plead each claim with sufficient 22 specificity to “give the defendant fair notice of what the . . . claim is and the grounds upon which it 23 rests.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal quotations omitted). A 24 complaint which falls short of the Rule 8(a) standard may be dismissed if it fails to state a claim 25 upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). “Dismissal under Rule 12(b)(6) is 26 27 28 1 Notably, Plaintiff does not contradict the apparent findings of her doctors concerning the amount of daily in-home care required or indicate that she has required or paid for anything less than 8 hours of care per day, every day, since July 15, 2011. 5 CASE NO. 5:13-cv-01289 EJD ORDER DENYING PLAINTIFF’S MOTION TO REMAND; GRANTING DEFENDANT’S MOTION TO DISMISS 1 appropriate only where the complaint lacks a cognizable legal theory or sufficient facts to support a 2 cognizable legal theory.” Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 3 2008). The factual allegations “must be enough to raise a right to relief above the speculative level” 4 such that the claim “is plausible on its face.” Twombly, 550 U.S. at 556-57. 5 When deciding whether to grant a motion to dismiss, the court generally “may not consider 1542, 1555 n. 19 (9th Cir. 1990). The court must accept as true all “well-pleaded factual 8 allegations.” Ashcroft v. Iqbal, 556 U.S. 662, 664 (2009). The court must also construe the alleged 9 facts in the light most favorable to the plaintiff. Love v. United States, 915 F.2d 1242, 1245 (9th 10 Cir. 1988). However, the court may consider material submitted as part of the complaint or relied 11 For the Northern District of California any material beyond the pleadings.” Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 7 United States District Court 6 upon in the complaint, and may also consider material subject to judicial notice. See Lee v. City of 12 Los Angeles, 250 F.3d 668, 688-69 (9th Cir. 2001). But “courts are not bound to accept as true a 13 legal conclusion couched as a factual allegation.” Twombly, 550 U.S. at 555. 14 B. Discussion 15 In its Motion to Dismiss, Defendant argues that Plaintiff did not and cannot state a claim for 16 financial elder abuse in violation of California Welfare and Institutions Code § 15610.30 based on 17 the gravamen of Plaintiff’s Complaint, which Defendant characterizes as one for breach of insurance 18 contract rather than one for abuse. 19 According to § 15610.30(a), “financial abuse” occurs when a person: (1) “[t]akes, secretes, 20 appropriates, obtains, or retains real or personal property of an elder or dependent adult for a 21 wrongful use or with intent to defraud, or both,” (2) “[a]ssists in taking, secreting, appropriating, 22 obtaining, or retaining real or personal property of an elder or dependent adult for a wrongful use or 23 with intent to defraud, or both, or (3) [t]akes, secretes, appropriates, obtains, or retains, or assists in 24 taking, secreting, appropriating, obtaining, or retaining, real or personal property of an elder or 25 dependent adult by undue influence.” The statute then defines two ways a person can “take, secrete, 26 appropriate, obtain or retain property,” the first being when “the person or entity knew or should 27 have known that this conduct is likely to be harmful to the elder or dependent adult,” and the second 28 being “when an elder or dependent adult is deprived of any property right, including by means of an 6 CASE NO. 5:13-cv-01289 EJD ORDER DENYING PLAINTIFF’S MOTION TO REMAND; GRANTING DEFENDANT’S MOTION TO DISMISS 1 agreement, donative transfer, or testamentary bequest, regardless of whether the property is held 2 directly or by a representative of an elder or dependent adult.” Cal. Welf. & Inst. Code § 3 15610.30(b), (c).2 4 Determining whether particular conduct can be classified as “financial elder abuse” as that subjected to significant interpretation. Those courts which have examined § 15610.30 have found 7 potential abuse where a mortgage broker persuaded an elderly woman to refinance her home on 8 terms inferior to those of her existing mortgage (Zimmer v. Nawabi, 566 F. Supp. 2d 1025 (E.D. 9 Cal. 2008)), where an attorney and another individual colluded to persuade an elderly woman to 10 make a significant monetary investment in a nightclub (Wood v. Jamison, 167 Cal. App. 4th 156 11 For the Northern District of California phrase is defined in the statute is not a straightforward prospect because the law has not been 6 United States District Court 5 (2008)), and where the beneficiaries of a family trust received property from an elderly relative 12 despite their knowledge that the property transfer was contrary to a trust amendment (Teselle v. 13 McLoughlin, 173 Cal. App. 4th 156 (2009)). 14 In contrast, “financial elder abuse” was not found against a bank who issued a loan to an 15 elderly man and transferred funds to foreign bank accounts pursuant to his instructions. Das v. Bank 16 of America, N.A., 186 Cal. App. 4th 727 (2010). In that case, the court affirmed a judgment of 17 dismissal because Plaintiff’s allegations failed to establish that the bank committed direct abuse or 18 assisted others in doing so. Id. at 744. As to direct abuse, the court found nothing in the Complaint 19 to demonstrate that the bank obtained property “for an improper use, or acted in bad faith or with a 20 fraudulent intent.” Id. As to assisting others in abusive conduct, the court found that § 15610.30 21 “cannot be understood to impose strict liability for assistance in an act of financial abuse” and held 22 that when “a bank provides ordinary services that effectuate financial abuse by a third party, the 23 bank may be found to have ‘assisted’ the financial abuse only if it knew of the third party’s wrongful 24 conduct.” Id. at 744-45. 25 These cases are instructive on the issue presented here. Plaintiff alleges that Defendant’s 26 27 28 2 It is undisputed that Plaintiff qualifies as an elder for the purposes of a claim under § 15610.30 since she resides in California and is over the age of 65. See Cal. Welf. & Inst. Code § 15610.27. 7 CASE NO. 5:13-cv-01289 EJD ORDER DENYING PLAINTIFF’S MOTION TO REMAND; GRANTING DEFENDANT’S MOTION TO DISMISS nothing more. See Compl., at ¶ 73. Although Plaintiff also alleges that Defendant’s “appropriation 3 and retention” of Plaintiff’s premium payments and the withholding of benefits under the policy “is 4 in bad faith and with an intent to defraud,” this contention is merely an unsupported legal conclusion 5 unentitled to an assumption of truth. See Twombly, 550 U.S. at 555. Indeed, the rather 6 straightforward contract breach described in the Complaint is distinguishable from the class of 7 conduct examined in Zimmer, Wood and Teselle, each of which was characterized by some indicia 8 of fraudulent or otherwise improper activity underlying the wrongful receipt of property. No such 9 activity is actually described here; in fact, Plaintiff alleges that Defendant denied her claim based on 10 provisions of the policy which could allow it to do so under appropriate circumstances. See Compl., 11 For the Northern District of California “failure to pay benefits due under the policy constitutes financial abuse” as defined by § 15610.30 - 2 United States District Court 1 at ¶ 34 (“[Defendant] rejected the information provided by Dr. Straface and denied [Plaintiff’s] 12 claim on the basis of its own nursing assessment. . . . The denial letter stated that [Plaintiff’s] 13 condition did not qualify under the policy’s definition for ‘Long-Term Care.’”). In that regard, this 14 case more closely resembles Das - there is nothing in this Complaint which supports Plaintiff’s 15 apparent theory that the denial of her claim was due to some improper or fraudulent motive on the 16 part of Defendant. 17 Without the necessary facts, Plaintiff essentially seeks to look beyond Defendant’s policy- 18 driven denial of benefits and impart impropriety. There is no reason to do so based on this 19 Complaint. Accordingly, the court concludes that Plaintiff has not stated a claim for “financial elder 20 abuse” under § 15610.30. 21 Looking further, it is also apparent that the instant factual scenario cannot support elder 22 abuse liability even with additional allegations describing the alleged contract breach. Section 23 15610.30 is part of the Elder Abuse Act, which was originally enacted to provide for the “private, 24 civil enforcement of laws against elder abuse and neglect.” Delaney v. Baker, 20 Cal. 4th 23, 33 25 (1999); see also Das, 186 Cal. App. 4th at 734-35 (“Since 1982, the Legislature has enacted 26 numerous measures to prevent the abuse of elders.”). In 2000, the California Legislature amended 27 the Act’s definition of “financial abuse” as part of a larger effort to combat “the problems of 28 financial fraud and misrepresentation directed against seniors.” See Assem. Comm. on Judiciary, 8 CASE NO. 5:13-cv-01289 EJD ORDER DENYING PLAINTIFF’S MOTION TO REMAND; GRANTING DEFENDANT’S MOTION TO DISMISS Specifically, the Legislature recognized that “California seniors [were] losing millions of dollars by 3 purchasing unnecessary financial products from attorneys and others who have a financial stake in 4 the sale.” Id. at p. 3. By adding language clarifying that someone can improvidently receive 5 property by “secreting, appropriating, obtaining, or retaining” such property, the amendment to § 6 15610.30 expanded the class of individuals or entities that could be held responsible for 7 misappropriation. Id. at p. 7. As the bill analysis suggests, this amendment was necessary because 8 attorneys representing abuse victims were “having trouble” imposing liability on anyone other than 9 the individual who actually took the property. Id. In 2008, § 15610.30 was expanded once again to 10 include the taking of property by undue influence as another possible basis for abuse liability. Sen. 11 For the Northern District of California Analysis of Assem. Bill No. 2107 (1999-2000 Reg. Sess.), as amended Apr. 3, 2000, p. 2. 2 United States District Court 1 Bill No. 1140 (2007-2008 Reg. Sess.) § 1. 12 Neither the language of § 15610.30 nor its accompanying legislative history indicate that a 13 basic denial of insurance coverage was ever contemplated as a form of “financial elder abuse.” 14 Plaintiff’s arguments to the contrary are unpersuasive.3 Thus, this court declines to extend the 15 statutory definition in such a manner. 16 The dismissal of Plaintiff’s claim for “financial elder abuse” under § 15610.30 will be 17 without leave to amend because the legislative history and interpretative case law reveal that 18 allowing for amendment under these circumstances would be futile. See Miller v. Rykoff-Sexton, 19 845 F.2d 209, 214 (9th Cir. 1988). 20 IV. ORDER 21 Based on the foregoing: 22 1. Plaintiff’s Motion to Remand (Docket Item No. 14) is DENIED; and 23 2. Defendant’s Motion to Dismiss (Docket Item No. 10) is GRANTED. The third claim 24 25 26 27 28 3 Plaintiff misreads the legislative history when she contends that the Legislature “specifically contemplated that long-term care insurance contracts would be deemed property when it introduced an amendment to § 15610.30 in 2000.” The references to long-term care insurance contracts were made in connection with proposed amendments to rectify disclosure requirements in the sale of these and related products. See Assem. Comm. on Judiciary, Analysis of Assem. Bill No. 2107 (1999-2000 Reg. Sess.), as amended Apr. 3, 2000, pp. 1, 5-6. Nothing about this history suggests that the Legislature intended to add long-term care insurance contracts to § 15610.30's definition of property. 9 CASE NO. 5:13-cv-01289 EJD ORDER DENYING PLAINTIFF’S MOTION TO REMAND; GRANTING DEFENDANT’S MOTION TO DISMISS 1 for financial elder abuse in violation of § 15610.30 is DISMISSED WITHOUT 2 LEAVE TO AMEND. 3 4 The court will issue a separate scheduling order forthwith. IT IS SO ORDERED. 5 6 Dated: August 13, 2013 EDWARD J. DAVILA United States District Judge 7 8 9 11 For the Northern District of California United States District Court 10 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 10 CASE NO. 5:13-cv-01289 EJD ORDER DENYING PLAINTIFF’S MOTION TO REMAND; GRANTING DEFENDANT’S MOTION TO DISMISS

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