Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_06-cv-02694/USCOURTS-caed-2_06-cv-02694-2/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1332 Diversity-Insurance Contract

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

JANE MARIE FILITI,

Individually and on Behalf of

All Others Similarly Situated,

NO. CIV. S-06-2694 WBS DAD

Plaintiff,

v. MEMORANDUM AND ORDER RE:

MOTION TO DISMISS

USAA CASUALTY INSURANCE

COMPANY, Foreign Corporation,

and DOES 1-50,

Defendants.

----oo0oo----

Plaintiff Jane Marie Filiti (“plaintiff”) challenges

defendant USAA Casualty Insurance Company’s (“defendant”)

handling of her claim for automobile repairs, alleging breach of

contract, breach of the implied covenant of good faith and fair

dealing and unfair competition. Defendant moves to dismiss the

complaint for failure to state a claim pursuant to Federal Rule

of Civil Procedure 12(b)(6). 

I. Allegations of the Complaint

Plaintiff purchased an automobile insurance policy from

defendant. (Compl. ¶ 9.) In October 2004, plaintiff’s car was

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damaged. (Id. ¶ 10.) Plaintiff went to an auto body repair shop

of her choice and obtained a written estimate for the cost to

repair the damage to her car. (Id. ¶ 11.) The labor rate

included in the auto body repair shop’s cost estimate was $78.00

per hour. (Id.) Plaintiff made a claim to defendant for the

damage to her vehicle, but defendant agreed only to pay a $65.00

per hour labor rate stating that was the prevailing labor rate

for auto body repair shops in plaintiff’s geographic area. (Id.

¶¶ 10, 12, 13.) Plaintiff paid the difference between the labor

rate defendant agreed to pay and the rate charged to her by the

auto body repair shop. (Id. ¶ 17.) 

Plaintiff alleges that defendant breached the

provisions of the insurance policy “by denying {plaintiff’s] for

insurance benefits and refusing to pay the reasonable hourly

labor rate for repairs, and compelling their insureds to pay, or

become indebted for, the difference between that reasonable rate

and the rates that [defendant] actually paid.” (Id. ¶ 69.) 

Plaintiff also alleges that defendant “tortiously breached the

implied covenant of good faith and fair dealing arising from such

automobile insurance contracts by unreasonably denying auto

repair benefits . . . which were due. . .” (Id. ¶ 69.) Plaintiff

further alleges defendant violated California’s unfair

competition law (“UCL”) (California Business and Professions Code

section 17200, et seq.) and requests a preliminary and permanent

injunction to enjoin defendant from “underpaying insurance

benefits.” (Id. ¶¶ 45-58.) 

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II. Discussion

A. Legal Standard

On a motion to dismiss, the court must accept the

allegations in the complaint as true and draw all reasonable

inferences in favor of the pleader. Scheuer v. Rhodes, 416 U.S.

232, 236 (1974); Cruz v. Beto, 405 U.S. 319 (1972). The court

may not dismiss for failure to state a claim unless “it appears

beyond doubt that plaintiff can prove no set of facts in support

of his claim which would entitle him to relief.” Van Buskirk v.

CNN, Inc., 284 F.3d 977, 980 (9th Cir. 2002). Dismissal is

appropriate, however, where the pleader fails to state a claim

supportable by a cognizable legal theory. Balistreri v. Pacifica

Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1988); see also Conley

v. Gibson, 355 U.S. 41, 47 (1957) (complaint must “give the

defendant fair notice of what the plaintiff’s claim is and the

grounds upon which it rests”). 

In general, the court may not consider material other

than the facts alleged in the complaint when deciding a motion to

dismiss. Anderson v. Angelone, 86 F.3d 932, 934 (9th Cir. 1996)

(“A motion to dismiss . . . must be treated as a motion for

summary judgment . . . if either party . . . submits materials

outside the pleadings in support or opposition to the motion, and

if the district court relies on those materials.”). However, the

court may consider extrinsic documents when “the plaintiff’s

claim depends on the contents of a document, the defendant

attaches the document to its motion to dismiss, and the parties

do not dispute the authenticity of the document . . . .” Knievel

v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005). Here, the court

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considers the insurance policy attached to defendant’s motion. 

B. Breach of Contract

Quite simply, under the terms of the policy, defendant

was obligated to pay the amount necessary to repair the damaged

property, which means restoring it to its pre-accident

operational safety, function, and appearance. The court cannot

conclude beyond doubt that under the allegations of the complaint

there is no set of facts plaintiff could present to prove

defendant breached that obligation. The complaint alleges that

defendant breached the provisions of the policy “by denying

[plaintiff’s] claim[] for insurance benefits and refusing to pay

the reasonable hourly labor rate and compelling [plaintiff] to

pay, or become indebted for, the difference between that

reasonable rate and the rates that [defendant] actually paid.” 

That is sufficient to meet the liberal pleading requirements of

Rule 8(a) of the Federal Rules of Civil Procedure. 

C. Breach of Implied Covenant of Good Faith and Fair

Dealing

Defendant’s argument with respect to plaintiff’s claim

for breach of the implied covenant of good faith and fair dealing

rests essentially on its argument that the complaint fails to

state a claim for breach of contract. Because the court finds

that the complaint does state a claim for breach of contract,

defendant’s argument with respect to the claim for breach of the

implied covenant also fails.

C. UCL

Defendant argues that plaintiff cannot state a claim

under the UCL because she cannot meet the “lost money or

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property” prong of the statute’s recently imposed standing

requirement. California’s UCL prohibits unfair competition,

defined to “include any unlawful, unfair or fraudulent business

act or practice.” Cal. Bus. & Prof. Code § 17200. Prior to the

passage of Proposition 64, approved by California voters in the

November 2004 elections, “any person,” independent of “a showing

of injury or damage,” had standing to bring a claim under the

UCL. Californians for Disability Rights v. Mervyn's, LLC, 39

Cal. 4th 223, 228 (2006). However, since the passage of

Proposition 64, plaintiff may only bring a claim under the UCL if

she “has suffered injury in fact and has lost money or property

as a result of such unfair competition.” Cal. Bus. & Prof. Code

§ 17204. 

Plaintiff alleges that she has lost insurance benefits

due under her policy which defendant failed to pay when it denied

her claim in part. Those allegations are sufficient to state an

injury or loss sufficient to give rise to standing under the UCL

for purposes a motion to dismiss under Rule 12(b)(6).

D. Preliminary and Permanent Injunction

Defendant argues that plaintiff does not have Article

III standing to seek an injunction because she cannot meet the

requirements of City of Los Angeles v. Lyons, 461 U.S. 95, 101-02

(1983). However, under the allegations of the complaint, the

court cannot conclude beyond doubt that plaintiff will be unable

to establish (1) that she is likely to suffer a future injury

that is both (a) concrete and particularized and (b) real and

immediate; (2) that the future injury is likely to result from

the defendant’s acts; and (3) that the injunctive relief sought

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will likely prevent the future injury form occurring. It appears

that plaintiff is still insured by defendant and thus would be

likely to suffer the same kind of loss if her car is damaged in

the future.

IT IS THEREFORE ORDERED that defendant’s motion to

dismiss be, and the same hereby is, DENIED. 

DATED: June 19, 2007

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