Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_06-cv-01909/USCOURTS-cand-3_06-cv-01909-19/pdf.json

Nature of Suit Code: 443
Nature of Suit: Civil Rights Accommodations
Cause of Action: 42:1981 Housing Discrimination

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 Plaintiffs are “LaRell Franklin, individually and as executor and testamentary

trustee of the Estate of Maggie Ivory, LaRon Franklin, Deborah Spade, Lisa Lemmons,

Dorothy Sewell, as guardian of the estate of her wards, Amber Franklin, Deaneer Franklin

and Coti Alexander.” (See SAC ¶ 2.)

United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

LaRELL FRANKLIN et al.,

Plaintiffs,

 v.

ALLSTATE CORPORATION et al.,

Defendants.

 /

No. C-06-1909 MMC

ORDER GRANTING IN PART AND

DENYING IN PART EFI AND ALBOFF’S

MOTION TO DISMISS

(Docket No. 69)

Before the Court is the motion (“Motion”) filed July 27, 2006 by defendants EFI

Global, Inc. (“EFI”) and George Alboff (“Alboff”) to dismiss, pursuant to Rule 12(b)(6) of the

Federal Rules of Civil Procedure, the claims asserted against them in plaintiffs’ Second

Amended Complaint (“SAC”). Plaintiffs1

 have filed opposition to the motion. EFI and Alboff

have filed a reply. Having considered the papers filed in support of and in opposition to the

motion, the Court finds the matter appropriate for resolution without oral argument, see

Civil L.R. 7-1(b), and rules as follows.

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BACKGROUND

The instant action arises out of an insurance dispute over coverage for fire damage

to residential property at 778 Lakeview Avenue in San Francisco (“Lakeview Property”).

According to plaintiffs, a fire occurred on March 1, 2005 around 4:00 p.m. at the

Lakeview Property. (See SAC ¶ 8.) Plaintiffs allege that Allstate Insurance Company

(“Allstate”) originally issued an insurance policy covering the Lakeview Property to

decedent Maggie Ivory (“Ivory”) in 1992. (See id. ¶ 4.) After Ivory’s death, LaRell Franklin

was appointed executor of the Ivory estate and the subject policy, Allstate Insurance

Company Deluxe Plus Homeowners Policy No. 37300564 (“Policy”), was reissued to him

on September 5, 2004 as personal representative of the Ivory estate. (See id. ¶ 4 and

Ex. A.) On November 25, 2004, the Policy was amended to change the named insured to

“LaRell Franklin, a single man.” (See id. ¶ 5 and Ex. A.) After the fire, LaRell Franklin filed

a claim for benefits under the Policy, and Allstate, in a letter dated March 10, 2006, denied

the claim. (See id. ¶¶ 12, 16 and Ex. B.) In said letter, Allstate concluded that “the insured[

] violated the ‘Concealment or Fraud’ provision of the policy by setting fire to the house;

submitting a false claim and testifying falsely regarding the fire and the claim at [his]

examinations under oath . . . [and] violated the ‘What You Must Do After A Loss’ and ‘Suit

Against Us’ provisions of the policy.” (See id. ¶ 16 and Ex. B at 1.) 

With respect to EFI and Alboff, plaintiffs allege that on March 2, 2005, the day after

the fire, Allstate retained EFI to investigate the origin and cause of the fire. (See id. ¶ 13.) 

Plaintiffs further allege that EFI conducted an investigation on March 3, 2005, and

submitted a report, prepared by Alboff (“EFI/Alboff Report”), concluding the fire was

incendiary or caused by arson. (See id.) In particular, according to plaintiffs, the EFI/Alboff

Report states:

The physical evidence strongly supports an incendiary fire. The fire

originated in a location where common fires of accidental origin do not

typically originate. A flammable liquid identified as mineral spirits were placed

or poured on an interior staircase of this two-story, three-bedroom, two-bath

single-family dwelling. The ignition source is unknown, however believed to

be an ordinary open flame; possibly a candle. Once the flammable, heavier

than air, vapors ignited the resulting fireball flashed over the entire staircase

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area, spreading out into two directions.

(See id.) By contrast, plaintiffs allege, a San Francisco Fire Department (“SFFD”) fire

investigation report (“SFFD Report”), dated March 1, 2005, two days before EFI conducted

its investigation, concluded that “the fire appeare[d] to be caused by an electrical failure,”

and that “[p]oor housekeeping contributed to the spread of th[e] fire to the upper sections of

the dwelling.” (See id. ¶ 11 and Ex. C.) 

According to plaintiffs, the “flammable liquid” referenced in the EFI/Alboff Report was

later identified by Alboff as “paint thinner” contained in a plastic bucket that had been

placed on the stairs. (See id. ¶¶ 14,15 and Ex. B at 1.) Plaintiffs deny that a plastic bucket

having paint thinner was on the staircase on the date of fire, (see id. ¶ 14), and accuse EFI

and Alboff of “planting a plastic bucket in the stair well March 3, 2005, to fabricate an arson

charge against LaRell” and to “pave the way for Alboff/EFI’s client Allstate to deny [the] fire

loss.” (See id. ¶ 19.)

According to plaintiffs, flammable liquid cited in the EFI/Alboff Report was not noted

by the SFFD arson investigators, and that the conclusion reached in the EFI/Alboff Report

was “controverted by every witness that testified in the Allstate investigation.” (See id.

¶ 15.) Plaintiffs further allege that Allstate’s counsel, defendant Scott D. Schwartz

(“Schwartz”), “agreed with Alboff/EFI to ascribe a false and pretextual origin and cause

investigation into the fire.” (See id. ¶ 17.) In that regard, Schwartz is alleged to have

sought to “bolster” the EFI/Alboff Report by (1) obtaining a report, dated October 18, 2005,

from Jeffrey Goode (“Goode”), an electrical engineer, in which Goode purported to

conclude that the fire was not ignited by the electrical system, (see id. ¶ 27); and

(2) arranging to have Alboff interview Lieutenant Mike Reynolds of the SFFD, who led the

first engine company to respond to the fire, and that Alboff “purportedly got Reynolds to

opine (in contradiction of the SFFD arson report) that ‘the fire started at the bottom of the

stairs.’” (See id. ¶ 28.)

Plaintiffs claim that Schwartz intended to deny the subject claim on the basis of

LaRell Franklin’s criminal history and the EFI/Alboff Report. (See id. ¶ 20.) Plaintiffs are

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African-American, (see id. ¶¶ 31, 38), and contend that Allstate’s denial of their claim was

purposefully motivated by the “racial stigma attached to crack offenses by African

Americans,” (see id. ¶ 18).

Plaintiffs assert causes of action against EFI and Alboff, for (1) conspiracy to violate

and violation of 42 U.S.C. § 1981 (First Claim); (2) conspiracy to violate and violation of

42 U.S.C. § 1982 (Second Claim); (3) conspiracy to violate and violation of 42 U.S.C.

§ 3604 (Third Claim); (4) violation of 42 U.S.C. § 1985 (Fourth Claim); and (5) conspiracy to

interfere and interference with plaintiffs’ prospective economic advantage and right to

inherit under California state law (Sixth Claim).

LEGAL STANDARD

Dismissal under Rule 12(b)(6) can be based on the lack of a cognizable legal theory

or the absence of sufficient facts alleged under a cognizable legal theory. See Balistreri v.

Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir. 1990). Rule 8(a)(2) of the Federal Rules

of Civil Procedure requires only “a short and plain statement of the claim showing that the

pleader is entitled to relief.” See Fed. R. Civ. P. 8(a)(2). Consequently, “a complaint

attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations.” 

See Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1964 (2007). Nonetheless, “a

plaintiff’s obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than

labels and conclusions, and a formulaic recitation of the elements of a cause of action will

not do.” See id. at 1965. “Factual allegations must be enough to raise a right to relief

above the speculative level[.]” Id. 

Generally, a district court, in ruling on a Rule 12(b)(6) motion, may not consider any

material beyond the pleadings. See Hal Roach Studios, Inc. v. Richard Feiner And Co.,

Inc., 896 F.2d 1542, 1555 n. 19 (9th Cir. 1990). Material that is properly submitted as part

of the complaint, however, may be considered. See id. Documents whose contents are

alleged in the complaint, and whose authenticity no party questions, but which are not

physically attached to the pleading, also may be considered. See Branch v. Tunnell, 14

F.3d 449, 454 (9th Cir. 1994). In addition, the Court may consider any document “the

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authenticity of which is not contested, and upon which the plaintiff’s complaint necessarily

relies,” regardless of whether the document is referred to in the complaint. See Parrino v.

FHP, Inc., 146 F.3d 699, 706 (9th Cir. 1998). Finally, the Court may consider matters that

are subject to judicial notice. See Mack v. South Bay Beer Distributors, Inc., 798 F.2d

1279, 1282 (9th Cir. 1986).

In analyzing a motion to dismiss, the Court must accept as true all material

allegations in the complaint, and construe them in the light most favorable to the

nonmoving party. See NL Industries, Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986). 

The Court may disregard factual allegations if such allegations are contradicted by the facts

established by reference to exhibits attached to the complaint. See Durning v. First Boston

Corp., 815 F.2d 1265, 1267 (9th Cir. 1987). Conclusory allegations, unsupported by the

facts alleged, need not be accepted as true. See Holden v. Hagopian, 978 F.2d 1115,

1121 (9th Cir. 1992). Courts “are not bound to accept as true a legal conclusion couched as

a factual allegation.” See Bell Atlantic Corp. v. Twombly, 127 S.Ct. at 1965 (internal

quotation and citation omitted).

DISCUSSION

A. Section 47(c) Privilege

EFI and Alboff’s first argument in support of dismissal is that the EFI/Alboff Report is

privileged, pursuant to Section 47(c) of the California Civil Code, and, consequently, cannot

constitute the basis of any of plaintiffs’ claims. Section 47(c) provides, in relevant part: “A

privileged publication or broadcast is one made . . . [i]n a communication, without malice, to

a person interested therein, (1) by one who is also interested, or (2) by one who stands in

such a relation to the person interested as to afford a reasonable ground for supposing the

motive for the communication to be innocent, or (3) who is requested by the person

interested to give the information.” See Cal. Civ. Code § 47(c). 

1. Federal Claims

“[T]he federal courts will recognize state privileges only in cases in which state law

supplies the rule of decision.” Religious Technology Center v. Wollersheim, 971 F.2d 364,

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367 n.10 (9th Cir. 1992). EFI and Alboff argue, without citation to supporting authority, that

§ 47(c) applies to the federal claims herein because “California law controls the true heart

of the dispute.” (See Reply at 8:12-14.) In federal question cases, however, “the law of

privilege is governed by ‘the principles of common law as they may be interpreted by the

courts of the United States in the light of reason and experience.’” See id. (quoting Fed. R.

Evid. 501) (declining to apply § 47(b) litigation privilege to federal claim under Copyright

Act). EFI and Alboff cite no case in which § 47(c) has been held to bar a federal claim. 

Accordingly, EFI and Alboff have not demonstrated that plaintiffs’ federal claims are

subject to dismissal by reason of privilege under § 47(c).

2. State Law Claims

With respect to state law claims, the privilege under § 47(c), as noted, applies only

to statements made “without malice.” See Cal. Civ. Code § 47(c). If “malice is shown, the

privilege is not merely overcome; it never arises in the first instance.” See Noel, 113 Cal.

App. 4th at 1368 (internal quotation and citation omitted). “Malice,” within the meaning of

§ 47(c), is “established by a showing that the publication was motivated by hatred or ill will

towards the plaintiff or by a showing that the defendant lacked reasonable grounds for

belief in the truth of the publication and therefore acted in reckless disregard of the

plaintiff’s rights.” See Noel v. River Hills Wilsons, Inc., 113 Cal. App. 4th 1363, 1370 (2003)

(quoting Sanborn v. Chronicle Pub. Co., 18 Cal. 3d 406, 413 (1976)) (internal quotation and

citation omitted) (emphasis in original). “In demonstrating reckless disregard, it is not

sufficient that the statements are shown to be inaccurate, or even unreasonable”; rather,

“[o]nly willful falsity or recklessness will suffice.” See Glenn K. Jackson Inc. v. Roe, 273

F.3d 1192, 1202 (9th Cir. 2001) (internal quotation and citation omitted). 

In the instant action, plaintiffs allege that EFI and Alboff “plant[ed] a plastic bucket in

the stair well March 3, 2005, to fabricate an arson charge . . . and pave the way for

Alboff/EFI’s client Allstate to deny [the] fire loss.” (See SAC ¶ 19.) Plaintiffs have

adequately alleged facts from which an inference of malice may be drawn.

Accordingly, EFI and Alboff have not demonstrated that plaintiffs’ state law claims

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are subject to dismissal by reason of privilege under § 47(c).

B. § 1981 claim

Plaintiffs’ first claim alleges a conspiracy to violate and violation of 42 U.S.C. § 1981. 

Section 1981, in relevant part, guarantees “[a]ll persons . . . the same right in every State

and Territory to make and enforce contracts . . .” See 42 U.S.C. § 1981(a). The phrase

“make and enforce contracts” includes “the enjoyment of all benefits, privileges, terms, and

conditions of the contractual relationship.” See 42 U.S.C. § 1981(b). 

At the outset, EFI and Alboff argue that the § 1981 claim against them should be

dismissed because “nowhere in the claim . . . do plaintiffs even mention EFI or Alboff.” 

(See Motion at 4:28-5:1.) The first claim, however, expressly incorporates allegations in

the preceding paragraphs, including the allegations that “Allstate and its agent conspirators

including . . . Alboff agreed to discriminate against Plaintiffs on the basis of race to deny the

fire loss claim for false and pretextual reasons,” (see SAC ¶ 13), and that “Alboff/EFI

plant[ed] a plastic bucket in the stair well March 3, 2005, to fabricate an arson charge,” (see

id. ¶ 19). Additionally, the first claim itself alleges that “[a]ll defendants, including

Alboff/EFI, . . . deprived Plaintiffs of their constitutionally protected property interest in

inheriting Lakeview, home ownership, and the right to occupy Lakeview as a residence.” 

(See id. ¶ 36.) 

EFI and Alboff further argue that plaintiffs fail to allege the existence of a contract

between plaintiffs and EFI and/or Alboff. EFI and Alboff cite no authority, however, for the

proposition that persons other than parties to a contract cannot be held liable under § 1981,

and, indeed, the authority is to the contrary. See, e.g., Imagineering, Inc. v. Kiewit Pacific

Co., 976 F.2d 1303, 1313 (9th Cir. 1992) (“[C]ourts have not imposed a privity of contract

type requirement that would otherwise protect third parties from section 1981 liability.”).

Accordingly, EFI and Alboff are not entitled to dismissal of plaintiffs’ § 1981 claim.

C. § 1982 claim

Plaintiffs’ second claim alleges a conspiracy to violate and violation of 42 U.S.C.

§ 1982. Section 1982 provides that “[a]ll citizens of the United States shall have the same

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right, in every State and Territory, as is enjoyed by white citizens thereof to inherit,

purchase, lease, sell, hold, and convey real and personal property.” See 42 U.S.C. § 1982. 

EFI and Alboff move to dismiss the § 1982 claim on the grounds they “had nothing to

do with plaintiffs’ inheritance, purchase, lease, sale, holding or conveyance of the subject

property,” (see Motion at 6:3-5), that plaintiffs “do not connect the EFI/Alboff investigation

and resulting report to the replacement housing issue,” (see id. at 5:28 - 6:2), and that

plaintiffs have not demonstrated that EFI and Alboff were aware of their race. 

Section 1982 addresses “the right of black persons to hold and acquire property on

an equal basis with white persons and the right of blacks not to have property interests

impaired because of their race.” See City of Memphis v. Greene, 451 U.S. 100, 122

(1981). Those property interests, as expressly set forth in § 1982, include personal

property as well as real property. See 42 U.S.C. § 1982. In Greene, the Supreme Court

itemized the various types of property interests that have been held to be protected by

§ 1982; in doing so the Supreme Court specifically noted that insurance contracts had been

held to constitute property for purposes of § 1982, citing in that regard Sims v. Order of

Commercial Travelers of America, 343 F. Supp. 112 (D. Mass. 1972). See Greene, 451

U.S. at 122 n.35. In Sims, the district court denied a motion to dismiss a § 1982 claim

based on alleged racial discrimination in the sale of insurance. See Sims, 343 F. Supp. at

115 (holding insurer’s “promise to pay is ‘property’ of substantial value to the purchaser . . .

within the meaning of § 1982”). Consequently, in order to state a claim under § 1982,

plaintiffs need not allege that EFI and Alboff were involved in plaintiffs’ inheritance,

purchase, lease, sale, holding or conveyance of the Lakeview Property, or of any

replacement housing; rather, plaintiffs need only allege that EFI and Alboff impaired some

real or personal property interest owned by plaintiffs. See Greene, 451 U.S. at 122. 

Here, plaintiffs base their § 1982 claim on defendants’ interference with their interest

in the Policy, i.e., Allstate’s promise to pay benefits. (See SAC ¶¶ 38, 39.) That promise to

pay is “property . . . within the meaning of § 1982.” See Sims, 343 F. Supp. at 115. As

noted, plaintiffs allege that EFI and Alboff participated in the impairment of said property

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EFI and Alboff do not discuss whether such interference with plaintiffs’ property

interest constitutes interference with plaintiffs’ ability to “inherit, purchase, lease, sell, hold,

[or] convey,” see 42 U.S.C. § 1982, that interest, and consequently, the Court does not

address the issue herein.

3

The authority on which EFI and Alboff rely, West Coast Theater Corp. v. City of

Portland, 897 F.2d 1519 (9th Cir. 1990), is distinguishable. In that case, the issue was not

the sufficiency of the plaintiff’s pleadings, but rather whether Rule 11 sanctions should be

imposed based on plaintiff’s lack of evidence to support those pleadings.

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interest by planting flammable liquid on the Lakeview Property and then drafting a false

report to the effect that plaintiffs deliberately set the fire with such flammable liquid. (See

id. ¶¶ 13, 16, 19.)2 To the extent EFI and Alboff contend plaintiffs have failed to adequately

plead racial motivation for such interference, defendants’ argument likewise fails. Plaintiffs,

as noted, have expressly alleged that race was the motivating factor behind EFI and

Alboff’s actions; EFI and Alboff cite no case requiring plaintiffs to plead with particularity the

facts supporting such allegation.3

Accordingly, EFI and Alboff are not entitled to dismissal of plaintiffs’ § 1982 claim.

D. § 3604 claim

Plaintiffs’ third claim alleges a conspiracy to violate and violation of 42 U.S.C.

§ 3604. Section 3604 is part of the Fair Housing Act (“FHA”), and provides, in relevant

part, that it is unlawful “[t]o discriminate against any person in the terms, conditions, or

privileges of sale or rental of a dwelling, or in the provision of services or facilities in

connection therewith, because of race, color, religion, sex, familial status, or national

origin.” See 42 U.S.C. § 3604(b). Plaintiffs assert that the racially discriminatory denial of

a homeowner’s insurance claim violates the FHA because insurance proceeds permit the

homeowner to rebuild and sell a home previously damaged. (See SAC ¶ 44.) According to

plaintiffs, such denial of a homeowner’s insurance claim restricts the “terms, conditions, or

privileges of sale or rental of a dwelling” in violation of § 3604(b). (See id.) EFI and Alboff

move to dismiss plaintiffs’ § 3604 claim on the grounds that EFI and Alboff are not

mentioned in the claim and are neither an insurer nor a financing institution, and that

plaintiffs thus have failed to sufficiently “connect” EFI and Alboff to plaintiffs’ § 3604 claim. 

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(See Motion 6:20-7:2.) 

EFI and Alboff fail to address plaintiffs’ allegation that the assertedly discriminatory

denial of their insurance claim interfered with plaintiffs’ ability to repair and sell the

Lakeview Property, and that EFI and Alboff participated in such denial by planting

flammable liquid on the Lakeview Property and then submitting a report to Allstate ascribing

a false cause and origin to the fire. (See SAC ¶¶ 13, 16, 19.) As plaintiffs note in their

complaint, the regulations promulgated by the Department of Housing and Urban

Development (“HUD”) pursuant to the FHA make it unlawful to refuse to provide “property

or hazard insurance for dwellings or [to] provid[e] such services or insurance differently

because of race . . .” (See id. ¶ 43); see also 24 C.F.R. §§ 100.70(b), 100.70(d)(4);

Nationwide Mut. Ins. Co. v. Cisneros, 52 F.3d 1351, 1360 (6th Cir. 1995) (holding HUD

regulation precluding racially discriminatory practices in provision of property and hazard

insurance to be “consistent with the goals of the [FHA] and a reasonable interpretation of

the statute”). 

Accordingly, EFI and Alboff are not entitled to dismissal of plaintiffs’ § 3604 claim.

E. § 1985 claim

Plaintiffs’ fourth claim against EFI and Alboff alleges a violation of 42 U.S.C. § 1985.

Section 1985(3) provides, in relevant part: “If two or more persons in any State or Territory

conspire . . . for the purpose of depriving, either directly or indirectly, any person or class of

persons of the equal protection of the laws, . . . [and] one or more persons engaged therein

do, or cause to be done, any act in furtherance of such conspiracy, whereby another is

injured in his person or property, . . . the party so injured or deprived may have an action

for the recovery of damages occasioned by such injury or deprivation, against any one or

more of the conspirators.” See 42 U.S.C. § 1985(3). EFI and Alboff move to dismiss the

§ 1985 claim on the grounds that plaintiffs’ allegations of conspiracy are conclusory and

insufficient to support a § 1985 claim, and that “an agent of an insurance company is

generally immune from suits brought by claimants for actions taken while the agent was

acting within the scope of his agency.” (See Motion 7:7-21, 8:1-14.)

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The Ninth Circuit has held that a plaintiff asserting a claim under § 1985 “must allege

facts to support the allegation that [the] defendants conspired together”; a “mere allegation

of conspiracy without factual specificity is insufficient.” See Karim-Panahi v. Los Angeles

Police Department, 839 F.2d 621, 626 (9th Cir. 1988) (affirming dismissal of § 1985 claim

where complaint “contain[ed] legal conclusions but no specification of any facts to support

the claim of conspiracy”). There is no requirement, however, that a plaintiff allege specific

facts with respect to how the alleged conspiracy was formed; it is sufficient to allege facts

from which the existence of a conspiracy may be inferred. See, e.g., Griffin v.

Breckenridge, 403 U.S. 88, 90-91, 103 (1971) (holding § 1985(3) claim sufficiently pleaded

where African-American plaintiffs therein alleged they were stopped and assaulted by

defendants and that such assault was result of conspiracy to prevent “plaintiffs and other

Negro-Americans, through such force, violence and intimidation, from seeking the equal

protection of the laws”); see also Johnson v. State of California, 207 F.3d 650, 655 (9th Cir.

2000) (reversing dismissal of § 1985(3) claim where plaintiff alleged policy of racial

segregation of prisoners; noting complaint “contains more than a bare allegation of

conspiracy, and additional facts in support of the alleged conspiracy may develop as

[plaintiff] proceeds with discovery”); Scott v. Ross, 140 F.3d 1275, 1284 (9th Cir. 1998)

(noting conspiracy under § 1985(3) “can be inferred from conduct and need not be proven

by evidence of an express agreement”); Fobbs v. Holy Cross Health System Corp., 29 F.3d

1439, 1448-50 (9th Cir. 1994), overruled on other grounds by Daviton v. Columbia/HCA

Healthcare Corp., 241 F.3d 1131 (9th Cir. 2001) (reversing dismissal of § 1985(3) claim;

finding allegation of racially motivated conspiracy plus allegation of “allegedly

discriminatorily motivated overt acts give defendants fair notice as to the specific acts which

[plaintiff] contends demonstrate a conspiracy to interfere with his right and privilege to

practice medicine based on his race and the race of his patients”).

Here, plaintiffs expressly allege that all of the defendants, including EFI and Alboff,

conspired “to discriminate against Plaintiffs on the basis of race to deny the fire loss claim

for pretextual and false reasons,” (see SAC ¶ 16), and, as overt acts in furtherance of the

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conspiracy, allege that EFI and Alboff were hired by Allstate to investigate the fire, that EFI

and Alboff planted flammable liquid on the Lakeview Property, that EFI and Alboff falsely

reported that plaintiffs intentionally set the fire with said flammable liquid, and that Allstate’s

counsel, Schwartz, agreed with EFI and Alboff “to ascribe a false and pretextual origin and

cause investigation into the fire.” (See id. ¶¶ 13, 16, 17, 19.) These allegations suffice to

state a claim against EFI and Alboff for violation of § 1985(3).

EFI and Alboff’s next argument, based on the “agent’s immunity rule,” (see Motion at

8:6-13), likewise fails. The cases on which EFI and Alboff rely concern professional

negligence claims against insurance agents, not intentional tort claims against an

independent contractor. See Lippert v. Bailey, 241 Cal. App. 2d 376, 378 (1966); Good v.

Prudential Ins. Co. of America, 5 F. Supp. 2d 804, 807 (1998); Gasnik v. State Farm Ins.

Co., 825 F. Supp. 245, 249 (E.D. Cal. 1992). EFI and Alboff’s reliance on the “intracorporate conspiracy doctrine” similarly is misplaced. (See Motion 7:22-8:14.) Under that

doctrine “a corporation or enterprise cannot conspire with its agents acting within the scope

of their employment.” See Washington v. Duty Free Shoppers, 696 F. Supp. 1323, 1325

(N.D. Cal. 1988) (collecting cases). The Ninth Circuit has expressly declined to resolve the

question of whether the intra-corporate conspiracy doctrine applies to conspiracy claims

brought under § 1985, see Portman v. County of Santa Clara, 995 F.2d 898, 910 (9th Cir.

1993), and other circuits are split on the issue, see id. (comparing cases). For purposes of

the instant motion, however, the Court need not determine the applicability of the intracorporate conspiracy doctrine to § 1985 claims. As denoted by its name, the doctrine is

applicable to “intra-corporate” conspiracies, i.e., conspiracies between a corporation and its

officers and employees, not to conspiracies, such as that alleged here, between two

independent corporations. See, e.g., Davis & Cox v. Summa Corp., 751 F.2d 1507, 1526

(9th Cir. 1985); Washington, 696 F. Supp. at 1324.

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 In so ruling, the Court ordinarily would not reach EFI and Alboff’s additional

argument that § 1985(3) claims are confined to questions of involuntary servitude and

interstate travel, as such argument was raised for the first time in EFI and Alboff’s reply. 

See, e.g., Lentini v. California Center for the Arts, Escondido, 370 F.3d 837, 843 n.6 (9th

Cir. 2004) (refusing to consider argument raised for the first time in reply because opposing

party had no opportunity to respond). Because such argument also was raised by

defendants Rust, Armenis & Schwartz and Scott D. Schwartz in their motion to dismiss,

however, and for the reasons set forth in the Court’s Order Granting in Part and Denying in

Part Defendants Rust, Armenis & Schwartz and Scott D. Schwartz’s Motion to Dismiss

(“Schwartz Order”), filed concurrently herewith, the Court finds such argument

unpersuasive. (See Schwartz Order at 9.)

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Accordingly, EFI and Alboff are not entitled to dismissal of plaintiffs’ § 1985 claim.4

F. Interference with Prospective Economic Advantage and Inheritance

Plaintiffs’ fifth and final claim against EFI and Alboff alleges a conspiracy to interfere

and interference with plaintiffs’ prospective economic advantage and right to inherit. Under

California law, the elements of the tort of intentional interference with prospective economic

advantage are: (1) an economic relationship between the plaintiff and some third party, with

the probability of future economic benefit to the plaintiff; (2) the defendant’s knowledge of

the relationship; (3) intentional acts on the part of the defendant designed to disrupt the

relationship; (4) actual disruption of the relationship; and (5) economic harm to the plaintiff

proximately caused by the acts of the defendant. See Korea Supply Co. v. Lockheed

Martin Corp., 29 Cal. 4th 1134, 1153 (2003) (citing Buckaloo v. Johnson, 14 Cal. 3d 815,

827 (1975)). Additionally, a plaintiff seeking to recover damages for interference with

prospective economic advantage must plead and prove as part of its case-in-chief that the

defendant’s conduct was wrongful by some legal measure other than the fact of the

interference itself. See Della Penna v. Toyota Motor Sales, U.S.A., Inc., 11 Cal. 4th 376,

393 (1995).

EFI and Alboff argue there is no “third party” here because plaintiffs allege the

existence of an economic relationship “between Plaintiffs and all Defendants, with the

probability of future economic benefit to Plaintiffs.” (See Motion at 8-9 (citing SAC ¶ 48).) 

Irrespective of such conclusory allegation, however, plaintiffs have pleaded facts supporting

a claim for intentional interference. In particular, plaintiffs allege a contractual relationship

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between LaRell Franklin and Allstate; plaintiffs have alleged no similar relationship with EFI

and/or Alboff. For the reasons set forth in the Schwartz Order, however, to the extent

plaintiffs seek to bring such claim on behalf of any plaintiff other than LaRell Franklin, the

claim is subject to dismissal. (See Schwartz Order at 10.)

Defendants next argue that to the extent plaintiffs’ claim of interference with a

prospective economic advantage is based on interference with a contractual relationship,

the claim is “mislabeled,” (see Motion at 9:9), noting the two causes of action are distinct.

The Court agrees that the two claims are distinguishable, see Della Penna, 11 Cal. 4th at

392, but declines to dismiss on such ground; as noted, plaintiffs have adequately pleaded a

claim for interference with a contractual relationship.

To the extent plaintiffs allege that EFI and Alboff interfered with plaintiffs’ inheritance,

however, plaintiffs have cited no case that recognizes tortious interference with inheritance

as a cause of action in California, and the Court has located none. In any event, the

authority on which plaintiffs rely is distinguishable. Those cases concern interference with

the relationship between a testator and a prospective beneficiary, not the relationship

between a beneficiary and a third party. See Marshall v. Marshall, 126 S. Ct. 1735, 1749

(2006) (noting “Texas courts have recognized a state-law tort action for interference with an

expected inheritance or gift . . . .”); Allen v. Hall, 139 F.3d 716 (9th Cir. 1998) (certifying to

Oregon Supreme Court issue of whether state of Oregon recognizes cause of action for

tortious interference, where complaint alleged defendant prevented testator from changing

will to provide for plaintiffs).

Accordingly, EFI and Alboff are not entitled to dismissal of plaintiffs’ sixth claim to the

extent it pleads interference with a contractual relationship on behalf of LaRell Franklin; EFI

and Alboff are entitled to dismissal, as to all plaintiffs, to the extent such claim is based on

interference with an inheritance.

CONCLUSION

For the reasons set forth above, EFI and Alboff’s motion to dismiss is hereby

GRANTED with respect to plaintiffs’ claim for conspiracy to interfere and interference with

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plaintiffs’ prospective economic advantage to the extent such claim is brought on behalf of

any plaintiff other than LaRell Franklin and GRANTED with respect to plaintiffs’ claim for

conspiracy to interfere and interference with their right to inherit; in all other respects, the

motion is hereby DENIED.

This order terminates Docket No. 69.

IT IS SO ORDERED.

Dated: July 3, 2007 

MAXINE M. CHESNEY

United States District Judge

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