Kane v. United Services Automobile Association et al, No. 3:2017cv02581 - Document 9 (S.D. Cal. 2018)
Court Description: ORDER granting in part and denying in part defendants' Motion to Dismiss 2 . Signed by Judge John A. Houston on 9/25/2018. (sjm)
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Kane v. United Services Automobile Association et al Doc. 9 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 Case No.: 17cv02581-JAH-AGS RUSSELL KANE, Plaintiff, 12 13 v. 14 UNITED SERVICES AUTOMOBILE ASSOCIATION, and DOES 1 to 50, 15 ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTION TO DISMISS [Doc. No. 2] Defendants. 16 17 18 INTRODUCTION 19 Plaintiff, Russell Kane, originally filed a complaint in Superior Court on November 20 27, 2017, asserting claims for breach of the implied covenant of good faith and fair dealing, 21 negligent infliction of emotional distress and intentional infliction of emotional distress. 22 Plaintiff names United Services Automobile and Does 1 through 50 as defendants. Plaintiff 23 alleges he was severely injured in an automobile accident on August 15, 2013, and opened 24 an Underinsured Motorist (“UIM”) claim with Defendant, with whom he had entered into 25 a contract for insurance, and Defendant refused to make an attempt to settle the claim, and 26 fraudulently and maliciously withheld benefits due under the policy. Complaint ¶¶ 11, 16, 27 25, 48, 51, 56 (Doc. No. 1-2). 28 1 17cv02581-JAH-AGS Dockets.Justia.com 1 Defendant removed the action to federal court on December 28, 2017. Thereafter, 2 Defendant filed the pending motion to dismiss. Plaintiff filed a response and Defendant 3 filed a reply. Finding the matter suitable for disposition on the papers, the Court took the 4 matter under submission. 5 LEGAL STANDARD 6 Defendant seek dismissal pursuant to Federal Rule of Civil Procedure 12(b)(6). Rule 7 12(b)(6) tests the sufficiency of the complaint. Navarro v. Block, 250 F.3d 729, 732 (9th 8 Cir. 2001). Dismissal is warranted under Rule 12(b)(6) where the complaint lacks a 9 cognizable legal theory. Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 534 (9th 10 Cir. 1984); see Neitzke v. Williams, 490 U.S. 319, 326 (1989) (“Rule 12(b)(6) authorizes 11 a court to dismiss a claim on the basis of a dispositive issue of law.”). Alternatively, a 12 complaint may be dismissed where it presents a cognizable legal theory yet fails to plead 13 essential facts under that theory. Robertson, 749 F.2d at 534. While a plaintiff need not 14 give “detailed factual allegations,” he must plead sufficient facts that, if true, “raise a right 15 to relief above the speculative level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 545 16 (2007). 17 “To survive a motion to dismiss, a complaint must contain sufficient factual matter, 18 accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 19 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 547). A claim is facially 20 plausible when the factual allegations permit “the court to draw the reasonable inference 21 that the defendant is liable for the misconduct alleged.” Id. In other words, “the non- 22 conclusory ‘factual content,’ and reasonable inferences from that content, must be 23 plausibly suggestive of a claim entitling the plaintiff to relief. Moss v. U.S. Secret Service, 24 572 F.3d 962, 969 (9th Cir. 2009). “Determining whether a complaint states a plausible 25 claim for relief will ... be a context-specific task that requires the reviewing court to draw 26 on its judicial experience and common sense.” Iqbal, 556 U.S. at 679. 27 In reviewing a motion to dismiss under Rule 12(b)(6), the court must assume the 28 truth of all factual allegations and must construe all inferences from them in the light most 2 17cv02581-JAH-AGS 1 favorable to the nonmoving party. Thompson v. Davis, 295 F.3d 890, 895 (9th Cir. 2002); 2 Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). However, legal 3 conclusions need not be taken as true merely because they are cast in the form of factual 4 allegations. Ileto v. Glock, Inc., 349 F.3d 1191, 1200 (9th Cir. 2003); Western Mining 5 Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981). When ruling on a motion to dismiss, 6 the Court may consider the facts alleged in the complaint, documents attached to the 7 complaint, documents relied upon but not attached to the complaint when authenticity is 8 not contested, and matters of which the Court takes judicial notice. Lee v. City of Los 9 Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001). If a court determines that a complaint fails 10 to state a claim, the court should grant leave to amend unless it determines that the pleading 11 could not possibly be cured by the allegation of other facts. See Doe v. United States, 58 12 F.3d 494, 497 (9th Cir. 1995). 13 DISCUSSION 14 Defendant moves to dismiss the second cause of action for negligent infliction of 15 emotional distress and the third cause of action for intentional infliction of emotion distress. 16 Defendant argues, under California law, Plaintiff cannot pursue his negligent infliction of 17 emotion distress claim because the parties have a contractual relationship. Additionally, 18 Defendant argues Plaintiff fails to plead the necessary elements for intentional infliction of 19 emotional distress. 20 I. Negligent Infliction of Emotional Distress 21 Defendant argues Plaintiff’s claim for negligent infliction of emotional distress is 22 not cognizable because negligent infliction of emotional distress does not exist as an 23 independent tort and, instead, is simply negligence. Defendant contends Plaintiff attempts 24 to impose negligence liability against it based on its handling of his claim, but, under 25 California law, a plaintiff may not pursue negligence claims against an insurer on those 26 grounds. Defendant also contends Plaintiff only provides conclusory statements that he 27 suffered serious emotional distress. Defendant argues Plaintiff’s claim for negligent 28 infliction of emotional distress fails. 3 17cv02581-JAH-AGS 1 Plaintiff argues, in opposition, Defendant owed him a duty, under California law, to 2 deal with him in good faith. He maintains he sufficiently pleads, with specificity, facts 3 concerning the emotional distress underlying his cause of action and specifically alleges a 4 course of conduct by Defendant which evinced a conscious disregard for his rights, 5 including, repeatedly refusing to make any offers on his UIM. 6 In reply, Defendant argues Plaintiff fails to cite any support for his contention that 7 his claim for negligent infliction of emotional distress is a proper cause of action against 8 an insurer for alleged claim mishandling.5 9 Under California law, “[t]he negligent causing of emotional distress is not an 10 independent tort but the tort of negligence.” Marlene F. v. Alliance Psychiatric Medical 11 Clinic, Inc., 48 Cal. 3d 583, 588 (1989) (quoting 6 Witkin, Summary of Cal. Law (9th ed. 12 1988) Torts, § 838, p. 195). Thus, the traditional elements of duty, breach of duty, 13 causation, and damages apply. Id. Whether a defendant owes a duty of care is a question 14 of law. Id. “Absent the existence of duty . . .there can be no breach and no negligence.” 15 Nichols v. Keller, 15 Cal. App. 4th 1672, 1683 (1993). 16 In support of its contention that Plaintiff cannot assert a claim for negligent infliction 17 of emotional distress based upon the mishandling of his claim, Defendant cites to cases 18 addressing claims for breach of the implied covenant of good faith and fair dealing,6 and 19 dicta in an action addressing whether an insurer may be liable to a non-insured third party 20 for negligent performance of its indemnity obligations.7 Defendant also cites to cases 21 addressing a third party’s failure to establish a duty in support of their negligent infliction 22 23 24 5 25 26 27 28 Defendant also argues Plaintiff fails to plead causation. The Court will not address this argument because it is a new argument not made in the motion and for which Plaintiff did not have an opportunity to address. See Zamani v. Carnes, 491 F.3d 990, 997 (2007). 6 Aceves v. Allstate Ins. Co., 68 F.3d 1160 (9th Cir. 1995); National Life & Accident Insurance Company v. Edwards, 119 Cal.App.3d 326 (1981); Century Surety Co. v. Polisso, 139 Cal.App.4th 922 (2006). 7 Adleman v. Associated Intern. Ins. Co., 90 Cal.App.4th 352 (2001). 4 17cv02581-JAH-AGS 1 of emotional distress claim against the tortfeasor’s insurance company and an employee’s 2 family’s claim against the employer’s worker’s compensation carrier.8 The Court does not 3 find these clearly distinguishable cases persuasive. Furthermore, courts have permitted 4 negligent infliction of emotional distress claims against an insurer based on alleged 5 mishandling of an insured's claim for policy benefits under California law. See Johnson v. 6 Mutual Benefit Life Ins. Co., 847 F.2d 600 (9th Cir.1988) (discussing insured’s negligent 7 infliction of emotional distress claim against insurer); Bogard v. Employers Casualty Co., 8 164 Cal.App.3d 602 (1985) (recognizing insureds’ negligent infliction of emotional 9 distress claim against insurer). As such, Defendant’s motion to dismiss the negligent 10 infliction of emotional distress claim as a matter of law is DENIED. 11 Defendant also seeks to dismiss the claim for failure to allege sufficient facts 12 demonstrating Plaintiff suffered severe emotional distress. “Serious emotional distress is 13 an essential element of a cause of action for negligent infliction of emotional distress.” 14 Kelly v. General Telephone Co., 136 Cal.App.3d 278, 286 (1982). In the complaint, 15 Plaintiff alleges he suffered “depression, anxiety, sleeplessness, irritability, financial stress, 16 nervousness, humiliations and grief, beyond what a reasonable person would be able to 17 cope with.” Complat ¶ 52. The Court finds Plaintiff sufficiently alleges severe emotional 18 distress. Accordingly, Defendant’s motion to dismiss Plaintiff negligent infliction of 19 emotional distress claim is DENIED. 20 II. Intentional Infliction of Emotional Distress 21 Defendant argues the claim for intentional infliction of emotional distress fails 22 because Plaintiff’s allegations that Defendant misrepresented the applicable statute of 23 limitations and advised him against retaining counsel do not rise to the level of outrageous 24 conduct by an insurer. Defendant contends Plaintiff simply reiterates his first cause of 25 action for breach of the implied covenant, but titles it intentional infliction of emotional 26 27 28 Krupnick v. Hartford Accident and Indemnity Co., 28 Cal.App.4th 185 (1994); Soto v. Royal Globe Ins. Corp., 184 Cal.App.3d 420 (1986). 8 5 17cv02581-JAH-AGS 1 distress. Defendant further contends Plaintiff fails to allege any extreme or outrageous 2 conduct sufficient to state a claim for intentional infliction of emotional distress, fails to 3 include any allegations regarding Defendant’s intent to cause harm him, and fails to 4 sufficiently allege he suffered emotional distress. 5 Plaintiff argues the underlying insurance contract created a position of power over 6 him because Defendant had the power to investigate, to determine liability, and to remit 7 payment, and the sensitive nature of the relationship between the parties is supported by 8 the fact that the insurer owes the insured a fiduciary duty. He further argues, after he 9 opened his UIM claim, Defendant took advantage of its position of authority by wrongfully 10 delaying the UIM claim when liability was reasonably clear, intentionally withholding 11 benefits at a time when Defendant knew, or should have known that Plaintiff and his wife 12 had their first child approximately one month after the motor vehicle accident, and as a 13 result Plaintiff was more susceptible to injury due to emotional distress, Plaintiff was 14 unable to do his job and declared he was temporarily totally disabled and his income 15 decreased to $0 the second year following the accident. He maintains the complaint 16 alleges, in detail, his severe emotional distress, including depression, anxiety, 17 sleeplessness, irritability, financial stress, nervousness, humiliation and grief, beyond what 18 a reasonable person would be able to cope with. Additionally, Plaintiff maintains his 19 communications with Defendant became increasingly desperate, and as a result of 20 Defendant’s delay, he was forced to liquidate his assets, enroll in Medi-Cal, and receive 21 threatening calls from collections agencies. 22 In reply, Defendant argues the complaint alleges Defendant made a prompt 23 determination of liability. Defendant maintains even if liability was not disputed, it does 24 not mean the nature and extent of Plaintiff’s injuries were not disputed, and it cannot be 25 expected to remit payment without an investigation. Defendant also argues Plaintiff’s 26 argument regarding the existence of a fiduciary duty is irrelevant because he does not assert 27 a claim for breach of fiduciary duty. Additionally, Defendant argues Plaintiff’s allegations 28 6 17cv02581-JAH-AGS 1 regarding misleading him as to the applicable statute of limitations and advising him not 2 to obtain an attorney do not rise to the level of outrageous conduct by an insurer. 3 To state a claim for intentional infliction of emotional distress, a plaintiff must allege 4 facts showing: (1) extreme and outrageous conduct by the defendant, (2) intention to cause 5 or reckless disregard of the probability of causing emotional distress, (3) severe emotional 6 suffering, and (4) actual and proximate causation of the emotional distress. Austin v. 7 Terhune, 367 F.3d 1167, 1172 (9th Cir. 2004); Christensen v. Superior Court, 54 Cal.3d 8 868, 903-04 (1991). “Outrageous conduct” is that which exceeds all bounds usually 9 tolerated by a decent society, and is of a nature which is especially calculated to cause, and 10 does cause, mental distress. McDaniel v. Gile, 230 Cal.App.3d 363, 372 (1991). While 11 the issue of outrageousness is normally an issue of fact to be determined by the trier of fact, 12 the court may determine in the first instance whether the defendant’s conduct may 13 reasonably be regarded as so extreme and outrageous as to permit recovery. Trerice v. 14 Blue Cross of California, 209 Cal.App.3d 878, 883 (1989). 15 16 In support of the intentional infliction of emotional distress claim, Plaintiff alleges 24 DEFENDANT intentionally failed to deal with PLAINTIFF in good faith by including, but not limited to, engaging in outrageous conduct by unreasonably, maliciously, oppressively and fraudulently withholding benefits under PLAINTIFF’s policy by refusing to negotiate in good faith, ignoring evidence presented to it, misleading him concerning the statute of limitations, telling him not to hire an attorney, failing to conduct a prompt investigation, refusing to attempt to settle his claim when liability was reasonably clear, withholding policy benefits, forcing PLAINTIFF to liquidate assets, enroll in Medi-Cal, receive calls from collection agencies, accuse PLAINTIFF of attempting to interfere with subpoenas without grounds, damaging his professional reputation by DEFENDANT’s agents harassing and threatening his co-workers, and ultimately reducing their payment after the arbitration, in violation of the agreement of the parties. Complaint ¶ 56. 25 Plaintiff fails to sufficiently allege extreme or outrageous conduct to state a claim 26 for intentional infliction of emotional distress. His allegations assert conduct to delay or 27 deny insurance benefits, including misleading him about the statute of limitations and 28 advising him against obtaining the services of an attorney, which are insufficient to 17 18 19 20 21 22 23 7 17cv02581-JAH-AGS 1 properly assert a claim. See Coleman v. Republic Indemnity Ins. Co., 132 Cal.App.4th 2 403, 417 (2005). Additionally, Plaintiff’s allegations of intentional conduct are conclusory 3 and insufficient to state a claim. 4 intentional infliction of emotional distress claim is GRANTED. 5 Accordingly, Defendant’s motion to dismiss the CONCLUSION AND ORDER 6 Based on the foregoing, IT IS HEREBY ORDERED: 7 1. Defendant’s motion to dismiss is GRANTED IN PART AND DENIED IN 8 PART. The motion is GRANTED as to the intentional infliction of emotional distress 9 claim and DENIED as to the negligent infliction of emotional distress claim; 10 2. If Plaintiff wishes to file an amended complaint to address the deficiencies 11 noted above, he shall file a First Amended Complaint on or before November 9, 2018. 12 DATED: September 25, 2018 13 14 15 _________________________________ JOHN A. HOUSTON United States District Judge 16 17 18 19 20 21 22 23 24 25 26 27 28 8 17cv02581-JAH-AGS
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