Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_14-cv-05158/USCOURTS-cand-5_14-cv-05158-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1441 Petition for Removal- Insurance Contract

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

PETER KLEIDMAN,

Plaintiff,

v.

U.S. SPECIALTY INSURANCE 

COMPANY; DOES 1 through 100,

Defendants.

Case No. 5:14-cv-05158 HRL

ORDER GRANTING DEFENDANT’S

MOTION TO DISMISS WITHOUT 

LEAVE TO AMEND

[Re: Dkt. No. 22]

This lawsuit arises out of a separate state court action filed by pro se plaintiff Peter 

Kleidman against Feeva Technology, Inc. (Feeva) and certain of its former officers and directors. 

That other lawsuit will be referred to here as the “Underlying Action.” Pursuant to an insurance 

policy issued to Feeva, U.S. Specialty Insurance Company (U.S. Specialty) retained the Kaufhold 

Gaskin LLP law firm (Kaufhold Gaskin) to represent certain of the defendants in the Underlying 

Action.

Kleidman subsequently filed the instant lawsuit against U.S. Specialty in state court, 

claiming that the tender of the defense of the Underlying Action is invalid. In sum, plaintiff says 

that all of Feeva’s directors, officers, and employees left the company in 2010, leaving no one 

with authority to act on Feeva’s behalf to tender the defense of the Underlying Action, which was 

filed in 2013. Maintaining that U.S. Specialty unlawfully assumed the defense of the Underlying 

Action, Kleidman asserts two claims for relief: one for alleged violation of California’s Unfair 

Case 5:14-cv-05158-HRL Document 42 Filed 02/10/15 Page 1 of 7
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Competition Law (UCL), Cal. Bus. & Prof. Code § 17200, and the other for declaratory relief 

under Cal. Code Civ. Proc. § 1060. He seeks an order enjoining U.S. Specialty from assuming the 

defense of the Underlying Action, as well as a declaration that tender of the defense of the 

Underlying Action is invalid.

U.S. Specialty removed the matter here, asserting diversity jurisdiction, 28 U.S.C. § 1332. 

Pursuant to Fed. R. Civ. P. 12(b)(6), U.S. Specialty now moves to dismiss the complaint on the 

grounds that Kleidman has no standing to assert, and is also collaterally estopped from asserting, 

that U.S. Specialty’s defense of the Underlying Action is improper. Plaintiff opposes the motion. 

All parties have expressly consented that all proceedings in this matter may be heard and finally 

adjudicated by the undersigned. 28 U.S.C. § 636(c); Fed. R. Civ. P. 73. Upon consideration of 

the moving and responding papers, as well as the arguments of counsel, this court grants the 

motion without leave to amend.

LEGAL STANDARD

A motion to dismiss for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6) tests 

the legal sufficiency of the claims in the complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 

2001). Dismissal is appropriate where there is no cognizable legal theory or an absence of 

sufficient facts alleged to support a cognizable legal theory. Id. (citing Balistreri v. Pacifica Police 

Dep’t, 901 F.2d 696, 699 (9th Cir. 1990)). In such a motion, all material allegations in the 

complaint must be taken as true and construed in the light most favorable to the claimant. Id. 

However, “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory 

statements, do not suffice.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). Moreover, “the court 

is not required to accept legal conclusions cast in the form of factual allegations if those 

conclusions cannot reasonably be drawn from the facts alleged.” Clegg v. Cult Awareness 

Network, 18 F.3d 752, 754-55 (9th Cir. 1994).

Federal Rule of Civil Procedure 8(a)(2) requires only “a short and plain statement of the 

claim showing that the pleader is entitled to relief.” This means that the “[f]actual allegations 

must be enough to raise a right to relief above the speculative level.” Bell Atlantic Corp. v. 

Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (citations omitted) 

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However, only plausible claims for relief will survive a motion to dismiss. Iqbal, 129 S.Ct. at 

1950. A claim is plausible if its factual content permits the court to draw a reasonable inference 

that the defendant is liable for the alleged misconduct. Id. A plaintiff does not have to provide 

detailed facts, but the pleading must include “more than an unadorned, the-defendant-unlawfullyharmed-me accusation.” Id. at 1949.

Documents appended to the complaint or which properly are the subject of judicial notice 

may be considered along with the complaint when deciding a Fed. R. Civ. P. 12(b)(6) motion. See

Hal Roach Studios, Inc. v. Richard Feiner & Co., Inc., 896 F.2d 1542, 1555 n.19 (9th Cir. 1990); 

MGIC Indem. Corp. v. Weisman, 803 F.2d 500, 504 (9th Cir. 1986).1

While leave to amend generally is granted liberally, the court has discretion to dismiss a 

claim without leave to amend if amendment would be futile. Rivera v. BAC Home Loans 

Servicing, L.P., 756 F. Supp.2d 1193, 1997 (N.D. Cal. 2010) (citing Dumas v. Kipp, 90 F.3d 386, 

393 (9th Cir. 1996)).

DISCUSSION

A. Plaintiff Lacks Standing

To claim that U.S. Specialty violated the “unlawful” prong of the UCL, Kleidman must 

demonstrate how defendant’s conduct amounts to a predicate violation of some other law. See

Cel-Tech Commc’ns, Inc. v. Los Angeles Cellular Tel. Co., 20 Cal.4th 163, 180, 83 Cal. Rptr.2d 

548 (1999) (the UCL “borrows violations of other laws and treats them as unlawful practices that 

the unfair competition law makes independently actionable”) (citations and quotation marks 

omitted). Kleidman does not clearly identify what law U.S. Specialty purportedly violated, but his

allegations indicate that the only ostensible basis for U.S. Specialty’s supposed “unlawful” 

conduct is contractual in nature. The gravamen of his allegations is that U.S. Specialty did not 

properly undertake the defense of the Underlying Action in accordance with the terms of Feeva’s 

 1 U.S. Specialty’s request for judicial notice (RJN) is granted. Fed. R. Evid. 201. The court has 

not considered the actual insurance policy submitted by defendant as Exhibit A to its motion 

because the court found it unnecessary to do so in resolving this motion. Additionally, the court 

has not considered plaintiff’s declaration, which is extra-pleading material that cannot properly be 

considered on a Fed. R. Civ. P. 12(b)(6) motion to dismiss.

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policy---in particular, the policy’s “Option to Tender Defense of Claims to Insurer” clause. (See

Complaint ¶¶ 6-12). Kleidman is not an insured under that insurance policy. Nor is he seeking 

relief on behalf of any insureds. He has no standing to challenge U.S. Specialty’s contractual 

obligations under that contract. See generally Republic Indemnity Co. of Am. v. Schofield, 47 

Cal. App.4th 220, 227, 54 Cal. Rptr.2d 637 (1996) (“Moreover, a person who is not insured under 

a policy has no standing to bring an action based on a breach of the contract of insurance.”) (citing 

Gantman v. United Pacific Ins. Co., 232 Cal. App.3d 1560, 1566, 284 Cal. Rptr. 188 (1991)).

In his opposition brief, plaintiff now says he is not claiming any breach of Feeva’s 

insurance policy. Instead, he says he “is seeking to enjoin U.S. Specialty from the commission of 

extra-contractual unlawful acts.” (Opp. at 7). Plaintiff explains that what he is actually claiming 

is that U.S. Specialty unlawfully retained Kaufhold Gaskin to defend parties in the Underlying 

Action, without the parties’ consent to an attorney-client relationship with that firm. Thus, in 

Kleidman’s view, Kaufhold Gaskin does not actually represent the parties in the Underlying 

Action and therefore cannot lawfully act on the parties’ behalf in that suit. Plaintiff’s arguments 

are unpersuasive. His newly articulated theory of liability is just another way of saying that since 

there was no one to act on Feeva’s behalf, Feeva could not have properly tendered the defense

under the terms of its insurance policy and hence, U.S. Specialty was not contractually authorized 

to undertake the defense of the Underlying Action. For the reasons discussed above, Kleidman 

has no standing to make that claim. Plaintiff is not aided by his citation to In re Barnett, 31 

Cal.4th 466 (2003). That case simply held that a litigant who was represented by counsel could 

not submit pro se petitions that otherwise fell within the scope of his attorney’s representation. 

Plaintiff’s UCL claim is dismissed.

Nor does plaintiff have standing to bring his declaratory relief claim under California Code 

of Civil Procedure § 1060. That statute provides, in relevant part:

Any person interested under a written instrument, excluding a will 

or a trust, or under a contract, or who desires a declaration of his or 

her rights or duties with respect to another, . . . may, in cases of 

actual controversy relating to the legal rights and duties of the 

respective parties, bring an original action or cross-complaint in the 

superior court for a declaration of his or her rights and duties in the 

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premises, including a determination of any question of construction 

or validity arising under the instrument or contract.

Cal. Code Civ. Proc. § 1060. In his opposition brief, Kleidman now says that he is not seeking 

relief with respect to the insurance policy, but rather, the written tender of the defense of the 

Underlying Action. He argues that he has standing to seek declaratory relief with respect to the 

written tender because he claims to have an interest in it and because there is a dispute as to his 

and U.S. Specialty’s rights and duties in connection with it. There is, however, nothing to suggest 

that the written tender created any rights or duties between plaintiff and U.S. Specialty. Plaintiff’s 

declaratory relief claim is dismissed.

B. Plaintiff is Collaterally Estopped from Pursuing his Claims

Even if Kleidman had standing to bring his UCL and declaratory relief claims, he is 

collaterally estopped from asserting them here. The doctrine of collateral estoppel “preclude[s] a 

party to prior litigation from redisputing issues therein decided against him, even when those 

issues bear on different claims raised in a later case.” Roos v. Red, 130 Cal. App.4th 870, 879, 30 

Cal. Rptr.3d 446 (2005) (quotations and citation omitted).2 “Moreover, because the estoppel need 

not be mutual, it is not necessary that the earlier and later proceedings involve the identical parties 

or their privies. Only the party against whom the doctrine is invoked must be bound by the prior 

proceeding.” Id. “Collateral estoppel applies when (1) the party against whom the plea is raised 

was a party or was in privity with a party to the prior adjudication, (2) there was a final judgment 

on the merits in the prior action and (3) the issue necessarily decided in the prior adjudication is 

identical to the one that is sought to be relitigated.” Id. (citation omitted).

All requirements for application of the doctrine are met here. Kleidman points out that 

“[a]ny dispute as to the authority of the counsel of record to act for the party he purports to 

represent may be raised in the trial court.” Abeles v. State Bar, 9 Cal.3d 603, 609 n.7, 108 Cal. 

Rptr. 359 (1973). And, indeed the record presented indicates that he did just that. In the 

Underlying Action, he filed a motion to disqualify Kaufhold Gaskin, which raised the very issues 

 2 Defendant correctly notes that California’s res judicata law applies here. See Washington Public 

Power Supply Sys v. Pittsburgh-Des Moines Corp., 876 F.2d 690, 699 (9th Cir. 1989).

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he now seeks to litigate before this court. (Dkt. 23, RJN, Exs. B-C). Judge Lucas, who apparently 

presided over the matter in the state court, denied that motion. (Id., Ex. D). Defendant points out 

that orders on motions to disqualify counsel are deemed final for purposes of appeal. See Meehan 

v. Hopps, 45 Cal.2d 213, 216-17, 288 P.2d 267 (1955). And, Kleidman has, in fact, appealed 

Judge Lucas’ decision. (Id., Ex. E). Plaintiff argues that Judge Lucas’ order is “terse.” (Opp. at 

12). But, there is nothing to suggest that her ruling was anything other than a decision on the 

merits. Plaintiff is collaterally estopped from pursuing his claims here.

ORDER

Based on the foregoing, U.S. Specialty’s Fed. R. Civ. P. 12(b)(6) motion to dismiss is 

granted. Because the court concludes that the deficiencies addressed in this order cannot be 

remedied in an amended pleading, the dismissal of plaintiff’s claims is without leave to amend. 

The clerk shall enter judgment of dismissal and close the file.

SO ORDERED.

Dated: February 10, 2015

______________________________________

HOWARD R. LLOYD

UNITED STATES MAGISTRATE JUDGE

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5:14-cv-05158-HRL Notice has been electronically mailed to:

Joseph A. Bailey, III jbailey@goodwin.com

Matthew Parker Smith Matthew.Smith@DBR.com, gloria.cadena@dbr.com, 

james.garrett@dbr.com

Peter Kleidman kleidman11@gmail.com

Rodney Michael Hudson rodney.hudson@dbr.com, Alldrila@DBR.com, 

Allyson.Day@dbr.com, debra.krueger@dbr.com

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