Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_21-cv-01247/USCOURTS-caed-1_21-cv-01247-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1332 Diversity-(Citizenship)

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

HEIGHT STREET SKILLED CARE, 

LLC,

Plaintiff,

v.

LIBERTY MUTUAL INSURANCE 

COMPANY, a Massachusetts corporation; 

YOUNG & ASSOCIATES, INC., a 

California corporation; and DOES 1 to 20, 

inclusive,

Defendants.

Case No.: 1:21-cv-01247-JLT-BAK (BAM)

ORDER GRANTING DEFENDANT YOUNG 

& ASSOCIATES, INC.’S MOTION TO 

DISMISS

(Doc. 9)

ORDER GRANTING LEAVE TO AMEND

Height Street Skilled Care, LLC alleges Young & Associates, Inc. engaged in unlawful, unfair, 

and/or fraudulent business practices in violation of Business & Professions Code § 17200, et seq. 

(Doc. 1.) Young seeks dismissal of Height Street’s claim against it pursuant to Rule 12(b)(6) of the 

Federal Rules of Civil Procedure. (Doc. 9.) Height Street opposes the motion, asserting its complaint

is adequately pled. (See Doc. 11.) The Court finds the matter suitable for decision without oral 

argument pursuant to Local Rule 230(g) and General Order 618. For the reasons set forth below, 

Young’s motion to dismiss Height Street’s third cause of action as to Young is GRANTED, with 

leave to amend.

I. Background and Allegations

Height Street is a nursing home and skilled care operator located in Bakersfield, California. 

(Doc. 1 at 16.) Height Street alleges that it purchased a commercial property insurance policy 

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underwritten by Liberty Mutual and covering the period of June 7, 2016, through June 7, 2017. (Id.) 

Height Street asserts that on or about September 17, 2016, one of its buildings suffered severe damage 

due to a major fire. (Id.) Height Street alleges it “promptly tendered the claim to Liberty Mutual and 

coverage was accepted.” (Id.)

Height Street asserts Liberty Mutual retained Jerry Kessloff of Young & Associates, Inc.1to 

“assist it with adjustment of the Claim, to interface with the insured, and to conduct inspections of the 

Property and to make recommendations regarding the existence and extent of coverage, among other 

things.” (Doc. 1 at 16.) Height Street alleges Liberty Mutual and Kessloff conducted an initial 

inspection of the damage and recommended Height Street “retain local contractor STOP Bakersfield 

to perform the repairs.” (Id.) Height Street asserts it retained STOP, whose work was “seriously 

deficient.” (Id. at 17-18.) Accordingly, Height Street asserts a claim for violation of Business & 

Professions Code § 17200, et seq. against Young2“by virtue of its handling of [Height Street’s] 

insurance claim” and by “suggesting and recommending that [Height Street] utilize STOP Bakersfield 

as its repair contractor...without providing the disclosures required by the California Fair Claims 

Settlement Practices Act.” (Id. at 25.)

On September 13, 2021, Young filed a motion to dismiss pursuant to Rule 12(b)(6) of the 

Federal Rules of Civil Procedure. (Doc. 9.) Height Street filed an opposition on October 5, 2021. 

(Doc. 11.) On October 12, 2021, Young filed a reply. (Doc. 12.)3

II. Legal Standard

A Rule 12(b)(6) motion “tests the legal sufficiency of a claim.” Navarro v. Block, 250 F.3d 729, 

1 Young asserts it was erroneously sued as Young & Associates, Inc., a California corporation. (See Doc. 9.) Liberty 

Mutual Insurance Company’s notice of removal (Doc. 1), which Young joined in and consented to (Doc. 6), states that at 

the time of the filing of Height Street’s complaint, Young’s correct name was R.L. Young, Inc., dba Young & Associates, a 

Nevada corporation. (Doc. 1 at 3-4.) The notice of removal further states that as of July 29, 2021, and as of the date of 

removal, Young converted to R.L. Young, LLC, a Delaware limited liability company. (Id. at 4.) The Court considers 

Young to be a Nevada corporation, as it was at the time of the filing of Height Street’s complaint. See Dole Food Co. v.

Patrickson, 538 U.S. 468, 478 (2003) (“It is well settled...that federal-diversity jurisdiction depends on the citizenship of 

the parties at the time suit is filed.”). As a result, “subsequent changes in the citizenship of an existing party do not affect 

the determination of jurisdiction.” In re Hawaii Fed. Asbestos Cases, 960 F.2d 806, 810 (9th Cir 1992). Accordingly, the 

Court declines to consider Young’s argument that Height Street intentionally named Young as a California corporation for 

purposes of destroying diversity (See Doc. 9-1 at 5, Doc. 12 at 7-8).

2 Height Street also brings claims against Liberty Mutual for (1) breach of contract, (2) breach of the implied covenant of 

good faith and fair dealing, and (3) violation of Cal. Bus. & Prof. Code § 17200, et seq.

3 As the Parties were informed on August 17, 2021, the Eastern District of California has been in a state of judicial 

emergency while this motion was pending resolution. (See Doc. 5-3.)

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732 (9th Cir. 2001). Dismissal of a claim under Rule 12(b)(6) is appropriate when “the complaint lacks 

a cognizable legal theory or sufficient facts to support a cognizable legal theory.” Mendiondo v. 

Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008). Thus, under Rule 12(b)(6), “review is 

limited to the complaint alone.” Cervantes v. City of San Diego, 5 F.3d 1273, 1274 (9th Cir. 1993); see 

also Schneider v. Cal. Dep’t of Corrections, 151 F.3d 1194, 1197 n.1 (9th Cir. 1998) (“A court may not 

look beyond the complaint to a plaintiff’s moving papers, such as a memorandum in opposition to a 

defendant’s motion to dismiss.”).

The Supreme Court explained: “To survive a motion to dismiss, a complaint must contain 

sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” 

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 

(2007)). The Supreme Court explained,

A claim has facial plausibility when the plaintiff pleads factual content that allows the 

court to draw the reasonable inference that the defendant is liable for the misconduct 

alleged. The plausibility standard is not akin to a “probability requirement,” but it asks 

for more than a sheer possibility that a defendant has acted unlawfully. Where a 

complaint pleads facts that are “merely consistent with” a defendant’s liability, it “stops 

short of the line between possibility and plausibility of ‘entitlement to relief.’”

Iqbal, 556 U.S. at 678 (internal citations omitted). 

“The issue is not whether a plaintiff will ultimately prevail, but whether the claimant is entitled 

to offer evidence to support the claims. Indeed it may appear on the face of the pleadings that a 

recovery is very remote and unlikely but that is not the test.” Scheuer v. Rhodes, 416 U.S. 232, 236 

(1974). The Court “will dismiss any claim that, even when construed in the light most favorable to 

plaintiff, fails to plead sufficiently all required elements of a cause of action.” Student Loan Marketing 

Assoc. v. Hanes, 181 F.R.D. 629, 634 (S.D. Cal. 1998). To the extent pleading deficiencies can be 

cured by the plaintiff alleging additional facts, leave to amend should be granted. Cook, Perkiss & 

Liehe, Inc. v. Northern Cal. Collection Serv., 911 F.2d 242, 247 (9th Cir. 1990) (citations omitted).

III. Discussion and Analysis

Young seeks dismissal of the claim against it arising under California’s Unfair Competition 

Law. (Doc. 9-1.) Under the Unfair Competition Law, unfair competition includes any “unlawful, 

unfair, or fraudulent business act or practice.” Cal. Bus. & Prof. Code § 17200. Therefore, there are 

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three prongs under which a claim may be established under § 17200. Daro v. Superior Ct., 151 Cal.

App. 4th 1079, 1093 (2007) (“Because section 17200 is written in the disjunctive, a business act or 

practice need only meet one of the three criteria—unlawful, unfair, or fraudulent—to be considered 

unfair competition.”) (emphasis in original).

A. Unlawful practices

Height Street seeks to hold Young liable for “unlawful practices” under § 17200.4 The business 

acts proscribed under the “unlawful” prong of § 17200 include “anything that can properly be called a 

business practice and that at the same time is forbidden by law.” Farmers Ins. Exch. v. Superior Ct., 2 

Cal. 4th 377, 383 (1992) (quoting Barquis v. Merchants Collection Assoc., 7 Cal. 3d 94, 113 (1972)). 

In essence, the UCL “borrows violations of other laws and treats them as unlawful practices 

independently actionable under Section 17200.” Saunders v. Superior Ct., 27 Cal. App. 4th 832, 839 

(1994) (internal quotation marks, citation omitted). 

“To state a claim under the unlawful prong of the UCL, a plaintiff must plead: (1) a predicate 

violation, and (2) an accompanying economic injury caused by the violation.” Aerojet Rocketdyne, 

Inc. v. Global Aero., Inc., 2020 WL 3893395, at *6 (E.D. Cal. July 10, 2020) (citation omitted); see 

also Berryman v. Merit Property Management, Inc., 152 Cal. App. 4th 1544, 1554 (2007) (“a violation 

of another law is a predicate for stating a cause of action under the UCL’s unlawful prong”). Predicate 

violations include “any practices forbidden by law, be it civil or criminal, federal, state, or municipal, 

statutory, regulatory, or court-made.” Saunders, 27 Cal. App. 4th at 838-39.

Importantly, a plaintiff must allege facts to support any alleged predicate violations of state or 

federal law. See Berryman, 152 Cal. App. 4th at 1554. For example, if a plaintiff alleges facts 

sufficient to support claims of violations of a federal or state statute, such as the Fair Labor Standards 

Act or the California Labor Code, the statutes are proper predicate violations under the UCL. See, e.g., 

4 Height Street alleges that Young and Liberty Mutual “engaged in unlawful, unfair and/or fraudulent business acts or

practices by virtue of its handling of [Height Street’s] insurance claim as outlined in the preceding paragraphs” and Young

and Liberty Mutual “further engaged in unlawful, unfair and/or fraudulent business acts” for failing to provide the required

written disclosures. (Doc. 1 at 25.) Because only three of the twenty-four “preceding paragraphs” pertain to Young, and the

only alleged wrongdoing by Young is its failure to disclose pursuant to § 2695.9(c), the Court will construe Height Street’s

cause of action under § 17200 against Young as being solely based on an alleged violation of 10 C.C.R. § 2695.9(c) under 

the “unlawful” prong. (See id. at 17-21.)

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Duarte v. Mzr Inc., 2010 WL 11586755, at *7 (N.D. Cal. July 8, 2010) (finding where the plaintiff 

“allege[d] several violations of federal and state labor statutes, including the Fair Labor Standards Act 

and California Labor Code ..., [the statutory claims] may serve as predicate violations under the 

‘unlawful’ prong of the UCL”). Conversely, if a plaintiff fails to state a claim under the “borrowed” 

law, it cannot support the UCL claim. Pellerin v. Honeywell Int’l, Inc., 877 F. Supp. 2d 983, 992 (S.D. 

Cal. 2012) (a claim under the UCL “must be dismissed if the plaintiff has not stated a claim for the 

predicate acts upon which he bases the claim”); see also Yellowcake, Inc. v. Morena Music, Inc., 522 

F. Supp. 3d 747, 772 (E.D. Cal. 2021) (“When the underlying legal claim that supports a UCL cause 

fails, however, ‘so too will the [the] derivative UCL claim.’”) (quoting AMN Healthcare, Inc. v. Aya

Healthcare Services, Inc., 28 Cal. App. 5th 923, 950 (2018)).

1. Predicate violation 

Height Street bases its claim upon Young’s alleged violation of California’s Fair Claims 

Settlement Practices Regulations, § 2695.9(c).5 This section, titled “Additional Standards Applicable

to First Party Residential and Commercial Property Insurance Policies,” provides in relevant part:

(c) No insurer shall suggest or recommend that the insured have the property repaired 

by a specific individual or entity unless:

(1) the referral is expressly requested by the claimant; or

(2) the claimant has been informed in writing of the right to select a repair 

individual or entity and, if the claimant accepts the suggestion or recommendation, the 

insurer shall cause the damaged property to be restored to no less than its condition 

prior to the loss and repaired in a manner which meets accepted trade standards for 

good and workmanlike construction at no additional cost to the claimant other than as 

stated in the policy or as otherwise allowed by these regulations.

10 C.C.R. § 2695.9(c) (emphasis added).

a. Young is a proper defendant

Section 2695.2 of California’s Fair Claims Settlement Practices Regulations defines “insurer” 

as: 

[A] person licensed to issue or that issues an insurance policy or surety bond in this 

state, or that otherwise transacts the business of insurance in the state, including 

reciprocal and interinsurance exchanges, fraternal benefit societies, stock and mutual 

insurance companies, risk retention groups, California county mutual fire insurance 

companies, grants and annuities societies, entities holding certificates of exemption, 

5 Height Street’s complaint states that Young failed to provide “disclosures required by the California Fair Claims 

Settlement Practices Act.” (Doc. 1 at 25.) Height Street clarifies in its opposition that the alleged violation was pursuant to

10 C.C.R. § 2695.9(c). (See Doc. 11 at 10.)

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non-profit hospital service plans, multiple employer welfare arrangements holding 

certificates of compliance pursuant to Article 4.7 of the California Insurance Code, and 

motor clubs, to the extent that they transact the business of insurance in the State. The 

term “insurer” for purposes of these regulations includes non-admitted insurers, the 

California FAIR Plan, the California Earthquake Authority, those persons licensed to 

issue or that issue an insurance policy pursuant to an assignment by the California 

Automobile Assigned Risk Plan, home protection companies as defined under 

California Insurance Code Section 12740, and any other entity subject to California 

Insurance Code Section 790.03(h). The term “insurer” shall not include insurance 

agents and brokers, surplus line brokers and special lines surplus line brokers.

10 C.C.R. § 2695.2(i). Cal. Ins. Code § 790, et seq., also known as the Unfair Insurance Practices Act

(“UIPA”) applies to:

[R]eciprocal and interinsurance exchanges, Lloyds insurers, fraternal benefit societies, 

fraternal fire insurers, grants and annuities societies, insurers holding certificates of 

exemptions, motor clubs, nonprofit hospital associations, life agents, broker-agents, 

surplus line brokers and special lines surplus line brokers as well as all other persons 

engaged in the business of insurance.

Cal. Ins. Code § 790.01 (emphasis added). 

Height Street asserts Liberty Mutual retained Jerry Kessloff of Young to “assist it with 

adjustment of the Claim, to interface with the insured, and to conduct inspections of the Property and 

to make recommendations regarding the existence and extent of coverage, among other things.” (Doc. 

1 at 16.) Height Street further alleges Kessloff conducted an initial inspection of the damage and 

“developed a scope of work and estimated cost of repair” for the project. (Id. at 17.) In its opposition 

to the instant motion, Height Street asserts Kessloff was retained “to act as a de facto adjuster” and 

adds “develop cost estimates” to the list of duties Kessloff was hired to perform. (Doc. 11 at 4-5.) As 

such, Height Street asserts Young is “engaged in the business of insurance” and is subject to both the 

Fair Claims Settlement Practices Regulations and the Insurance Code. (Id. at 10.) 

Young contends it was retained by Liberty Mutual “to provide repair estimating services in 

connection with the fire loss and building damage done to the Property” and that Young assigned the 

estimating job to one of its independent consultants, Jerry Kessloff. (Doc. 9-1 at 7.) Young asserts it is 

“not in the business of insurance or adjusting and was not hired in either of these capacities; it simply 

‘developed a scope of work and estimated cost of repair.’” (Id., quoting Doc. 1 at 17.) Young argues: 

“Even taking all of Height Street’s allegations as true, Height Street merely alleges that its insurer, 

Liberty Mutual, allegedly hired a consultant that was an independent consultant at [Young] and that 

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[Young] ‘[made] recommendations regarding the existence and extent of coverage, among other 

things.’” (Doc. 12 at 4.) Accordingly, Young asserts Height Street fails to allege sufficient facts to 

demonstrate Young is in the business of insurance or acts as an insurer. (Id. at 1-2.)

Although what the Legislature intended to constitute “engaged in the business of insurance” 

under Cal. Ins. Code § 790.01 is not entirely clear, California courts have held that independent claims 

adjusters were engaged in the business of insurance for purposes of section 790.03(h). See, e.g.,

Bodenhamer v. Superior Ct., 178 Cal. App. 3d 180 (1986)); Davis v. Cont’l Ins. Co., 178 Cal. App. 3d 

836, 840-41 (1986) (affirming lower court’s holding that independent insurance adjusters retained to 

investigate and settle claims are engaged in the business of insurance). The Davis court explained:

From the perspective of the policyholders who have faithfully paid their premiums, 

the most essential part of the business of insurance is the prompt and forthright 

investigation and payment of their claims. It is common knowledge, that a substantial 

portion of the insurance claims which are annually investigated and negotiated 

through to settlement in California are handled by independent insurance adjusters, 

many of whom are representing foreign insurers. To absolve adjusters from liability 

for engaging in conduct prohibited by the Unfair Practices Act is to deny the 

protection of that Act to the persons it was designed to benefit.

Id., 178 Cal. App. 3d at 841 (internal citations omitted).

Neither party asserts that Young or its consultant investigated or settled Height Street’s claim.

Height Street alleges only that Young’s consultant was hired by Liberty Mutual to “assist it with 

adjustment” and was hired as “de factor adjuster.” Height Street makes no factual allegations that 

Young, or its consultant, engaged in any activity related to Height Street’s claim other than inspecting 

the property, estimating its damage, and recommending a contractor to perform the repairs. 

Nonetheless, the Court recognizes that adjusters are “engaged in the business of insurance” under 

California law and Height Street asserts that Young was hired to assist with the adjustment of the claim.

(Doc. 1 at 16.) Accepting these allegations as true, Height Street has alleged sufficient facts to state a 

plausible claim to relief as to Young’s status as a proper defendant. Iqbal, 556 U.S. at 678.

b. Height Street’s underlying claim is barred

Because the Legislature only contemplated enforcement of the UIPA by the Insurance 

Commissioner, private actions under the UIPA are barred. See Zhang v. Superior Ct., 57 Cal. 4th 364, 

384 (2013) (“[A] litigant may not rely on the proscriptions of section 790.03 as the basis for a UCL 

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claim.”); see also Moradi-Shalal v. Fireman’s Fund Ins. Companies, 46 Cal. 3d 287, 304 (1988) 

(holding that section 790.03 was not intended “to create a private civil cause of action against an 

insurer that commits one of the various acts listed in section 790.03, subdivision (h)”). Additionally, 

this Court extended the proscription to include the regulations set forth in 10 C.C.R. § 2695.1, et seq. 

See Aerojet, 2020 WL 3893395, at *7. The Court explained: 

[T]he regulations set forth in 10 C.C.R. section 2695.1 cannot be used as a predicate 

offense for an UCL claim of unlawfulness because those regulations are promulgated 

under the auspices of Insurance Code section 790.03(h); thus, the regulations create no 

private right of action under the UCL given its linkage with section 790.03, which itself 

creates no private right of action.

Id. However, “when insurers engage in conduct that violates both the UIPA and obligations imposed 

by other statutes or the common law, a UCL action may lie.” Zhang, 57 Cal. 4th at 384. For example, 

in Zhang, the court held causes of action for false advertising and insurance bad faith “provide[d] 

grounds for a UCL claim independent from the UIPA.” Id. at 369.

Height Street’s sole claim against Young is a UCL action based upon an alleged violation of 10 

C.C.R. § 2695.9(c), which is barred. See Aerojet, 2020 WL 3893395, at *7. Height Street alleges no 

claims against Young based upon conduct that violates another statute or sounding in common law. To 

the extent this claim is not solely premised on a violation of § 2695.9(c) and instead is based on 

alleged conduct that Young engaged in otherwise unfair, unlawful, or fraudulent business practices, 

the claim fails because it does not allege sufficient facts “to state a claim to relief that is plausible on 

its face.” Iqbal, 556 U.S. at 678. Beyond the barred § 2695.9(c) claim, Height Street provides no 

factual support for its conclusory allegation that Young engaged in unfair, unlawful, or fraudulent 

business practices, which is insufficient to “support a cognizable legal theory.” Mendiondo, 521 F.3d 

at 1104. Thus, Height Street has not alleged a predicate violation, which is required to state a claim 

under the unlawful prong of the UCL. Aerojet, 2020 WL 3893395, at *6. 

2. Economic injury

Young argues that Height Street makes no allegations in its complaint that it suffered economic 

injury as a result of Young’s alleged unlawful business practices. (See Doc. 9-1 at 12.)

As noted, to state a claim under the unlawful prong of the UCL, a plaintiff must plead, in 

addition to a predicate violation, an accompanying economic injury caused by the violation. Aerojet, 

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2020 WL 3893395, at *6. While restitution is a proper remedy under the UCL, Fresno Motors, LLC v.

Mercedes Benz USA, LLC, 771 F.3d 1119, 1135 (9th Cir. 2014) (citing Cal. Bus. & Prof. Code 

§ 17203), the Court agrees that Height Street failed to allege that it suffered an economic injury as a 

result of Young’s misconduct. As to its third cause of action, Height Street’s complaint alleges only 

that it “suffered economic loss as a result of Liberty Mutual’s unlawful, unfair and/or fraudulent 

business acts and/or practices, including but not limited to the loss of policy benefits, the Brandt 

damages sustained in this lawsuit, and premiums paid by Height Street for the Policy.” (Doc. 1 at 26 

(emphasis added).) Thus, because Height Street has not alleged a predicate violation or an economic 

injury as required to state a claim under the unlawful prong of the UCL, the claim must be dismissed. 

Aerojet, 2020 WL 3893395, at *6.

B. Restitution

Height Street’s sole prayer for relief as to Young is restitution. (Doc. 1 at 27.) Young argues 

that Height Street cannot be awarded restitution under the UCL because it has not alleged that Young 

is in receipt of any funds to which Height Street has an interest, as required for entitlement to

restitution. (See Doc. 9-1 at 6, 12.) Height Street contends that it is entitled to restitution even though 

Young did not receive money directly from Height Street. (See Doc. 11 at 11.) 6

1. Entitlement to restitution

“In [a UCL case], an order for restitution is one compelling the defendant to return money 

obtained through an unfair business practice to those persons in interest from whom the property was 

taken, that is, to persons who had an ownership interest in the property or those claiming through that 

person.” Korea Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134, 1149 (2003); see also In re

First All. Mortg. Co., 471 F.3d 977, 996 (9th Cir. 2006) (“In the context of the UCL, restitution is 

meant to restore the status quo by returning to the plaintiff funds in which he or she has an ownership 

interest, and is so limited.”) (internal quotation marks omitted). “To maintain a cause of action under 

6 Contrary to Height Street’s assertion (Doc. 11 at 11), Young does not appear to argue that Height Street cannot state a 

claim for restitution under the UCL because Height Street did not pay money directly to Young. (See Docs. 9-1, 12.) Thus, 

the Court will not address this argument. The Court also declines to consider Height Street’s assertions related to its 

entitlement to restitution as set forth in its opposition. (Doc. 11 at 11-12.) See Cervantes, 5 F.3d at 1274; Schneider, 151 

F.3d at 1197 n.1.

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UCL, a plaintiff must once have had an ownership interest in the money or property acquired by 

the defendant through unlawful means.” VP Racing Fuels, Inc. v. Gen. Petroleum Corp., 2010 WL 

1611398, at *3 (E.D. Cal. Apr. 20, 2010) (internal quotation marks omitted) (emphasis in original). In 

other words, “[t]he offending party must have obtained something to which it was not entitled and the 

victim must have given up something which he or she was entitled to keep.” Day v. AT & T Corp., 63 

Cal. App. 4th 325, 340 (1998) (emphasis in original). This includes money or property the defendant 

obtained directly, Korea Supply, 29 Cal. 4th at 1146-47, or indirectly. Shersher v. Superior Ct.,

154 Cal. App. 4th 1491, 1499 (2007).

Height Street’s complaint is lacking any factual allegations that would demonstrate its 

entitlement to restitution. Height Street alleges neither that Young wrongfully took money or property 

that it was not entitled to keep, nor that it gave up money or property that it was entitled to keep. 

Furthermore, Height Street failed to state a plausible claim for relief based on Young’s unlawful 

business practices, as discussed above, which is also required. See Zhang, 57 Cal. 4th at 371

(“Restitution under [Business and Professions Code] section 17203 is confined to restoration of any 

interest in ‘money or property, real or personal, which may have been acquired by means of such

unfair competition.’”) (emphasis added). Thus, Height Street failed to adequately state a claim for 

restitution.

2. Adequate remedy at law

Young asserts that Height Street “has an adequate remedy at law as evidenced by its claims for 

compensatory damages against [Liberty Mutual]” and thus, Height Street’s claim is barred as a matter 

of law. (See Doc. 9-1 at 6, 12.) Height Street argues that “assessing whether a plaintiff has an adequate 

remedy at law with respect to a UCL claim is improper at the pleading stage.” (Doc. 11 at 12.)

a. Height Street did not plead an inadequate remedy at law 

Restitution and injunctive relief, the only potential remedies under the UCL, are equitable in 

nature and thus only available if a plaintiff lacks an adequate remedy at law. In re Ambry Genetics

Data Breach Litig., 2021 WL 4891610, at *8 (C.D. Cal. Oct. 18, 2021). Thus, a plaintiff “must 

establish that she lacks an adequate remedy at law before securing equitable restitution for past harm 

under the UCL.” Sonner v. Premier Nutrition Corp., 971 F.3d 834, 844 (9th Cir. 2020). Most district 

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courts applying the rule in Sonner required, “at a minimum, a plaintiff plead that she lacks an adequate 

remedy at law.” Guthrie v. Transamerica Life Ins. Co., 561 F. Supp. 3d 869 (N.D. Cal. 2021)

(emphasis in original); see also Campbell v. Huffmaster Management, Inc., 2022 WL 705825, at *3 

(E.D. Cal. Mar. 9, 2022) (“Here, as in Sonner, it is proper for the Court to determine whether Plaintiff 

has sufficiently alleged inadequate remedies at law to survive dismissal of her equity claims under the 

UCL.”); Boone v. Amazon.com Servs., LLC, 2022 WL 780215, at *16 (E.D. Cal. Mar. 11, 2022)

(noting that plaintiffs failed to allege inadequacy of remedies at law as required by Sonner); Clark v.

Am. Honda Motor Co., 528 F. Supp. 3d 1108, 1121 (C.D. Cal. 2021) (collecting cases); Shay v. Apple

Inc., 2021 WL 1733385, at *3 (S.D. Cal. May 3, 2021) (interpreting Sonner to require a plaintiff to 

allege that she lacks an adequate remedy at law).

Height Street relies on Eastman v. Allstate Ins. Co., 2014 WL 5355036, at *5 (S.D. Cal. Oct. 

20, 2014) in arguing that assessment of the adequacy of a plaintiff’s legal remedies is inappropriate at 

the pleading stage. (Doc. 11 at 12.) The decision in Eastman involved, in part, a determination as to 

whether dismissal of a complaint was warranted when a plaintiff sought both legal and equitable 

remedies. Id., 2014 WL 5355036, at *5. The court held that a plaintiff was not prohibited from seeking 

alternative remedies at the pleading stage. Id. (citing Fed. R. Civ. P. 8(a)(3) (requiring that a pleading 

contain “a demand for the relief sought, which may include relief in the alternative or different types 

of relief”)). 

Importantly, the facts and issue in Eastman are not analogous here. Unlike Eastman, Height 

Street did not plead alternative remedies, as the company only seeks restitution. Thus, the sole issue is 

whether Height Street has sufficiently pled its claim, which is not a premature issue. See In re

MacBook Keyboard Litig., 2020 WL 6047253, at *2 (N.D. Cal. Oct. 13, 2020) (“The question is not 

whether or when Plaintiffs are required to choose between two available inconsistent remedies, it is 

whether equitable remedies are available to Plaintiffs at all. In other words, the question is whether 

Plaintiffs have adequately pled their claims for equitable relief, and that question is not premature on a 

motion to dismiss.”); see also Sharma v. Volkswagen AG, 524 F. Supp. 3d 891, 907 (N.D. Cal. 2021)

(“The issue is not whether a pleading may seek distinct forms of relief in the alternative, but rather 

whether a prayer for equitable relief states a claim if the pleading does not demonstrate the inadequacy 

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of a legal remedy. On that point, Sonner holds that it does not.”). Thus, although “Rule 8 permits 

pleading in the alternative, the Ninth Circuit’s recent decision in Sonner requires that a complaint 

seeking equitable relief allege that legal remedies are inadequate.” Ketayi v. Health Enrollment Grp., 

516 F. Supp. 3d 1092, 1140 (S.D. Cal. 2021) (internal citation omitted). Sonner is applicable 

regardless of whether “the equitable claim is the only claim being sought” or it is “a claim in the 

alternative.” Goldstein v. Gen. Motors LLC, 2022 WL 484995, at *6 (S.D. Cal. Feb. 16, 2022). 

Therefore, in light of the distinctions in Eastman, Height Street’s argument is not persuasive. 

Because Height Street’s complaint contains no demonstration, explanation, or even allegation 

that legal remedies would be inadequate as to its claim against Young, it cannot survive dismissal. See 

Campbell, 2022 WL 705825, at *3.

b. Height Street’s claim to restitution is not barred as a matter of law

Young argues that Height Street has an adequate remedy at law by way of its claim for 

compensatory damages, thereby barring Height Street’s entitlement to restitution. (Doc. 9-1 at 12, 

citing Prudential Home Mortg. Co. v. Superior Ct., 66 Cal. App. 4th 1236 (1998).) The court in 

Prudential found that the equitable relief sought—requiring the wrongdoer to record full conveyances 

and clear the borrowers’ title—could be achieved by the statutory “backup” legal remedies of Cal. Civ. 

Code § 2941. Id. Thus, the court held legal remedies were adequate to preclude equitable relief. Id. 

The matter now pending is factually distinct from Prudential. First, the case at hand is still at 

the pleading stage. Second, Height Street only requests equitable relief from Young, as opposed to 

both legal and equitable. The compensatory damages Height Street seeks are from Liberty Mutual. 

Young points to no case in which a court assessed whether the plaintiff had an adequate remedy at law

by looking at claims against another defendant. 

Even if Height Street requested both legal and equitable remedies in its claim against Young, 

this does not equate to an adequate legal remedy barring Height Street’s claim as a matter of law. In 

wake of Sonner, district courts within the Ninth Circuit consistently held that while an express 

allegation of inadequacy of legal remedies is required, seeking alternative remedies at the pleading 

stage is still permitted. See Klaehn v. Cali Bamboo, LLC, 2020 WL 3971518, at *9 (S.D. Cal. July 13, 

2020) (“the availability of monetary damages does not necessarily preclude the availability of equitable 

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relief under the UCL”); see also Sagastume v. Psychemedics Corp., 2020 WL 8175597, at *7 (C.D. 

Cal. Nov. 30, 2020) (noting that plaintiff was correct in asserting that Sonner did not preclude plaintiffs 

from seeking alternative remedies at the pleading stage); Jeong v. Nexo Fin. LLC, 2022 WL 174236, at 

*27 (N.D. Cal. Jan. 19, 2022) (“The Court finds that in light of Sonner’s limited applicability to the 

pleading stage, there is no binding precedent that holds that pleading equitable restitution in the 

alternative is improper.”); Johnson-Jack v. Health-Ade LLC, 2022 WL 562827, at *13 (N.D. Cal. Feb. 

24, 2022) (collecting cases). Thus, the Court finds Height Street’s request for restitution is not barred as 

a matter of law. However, to be clear, “whether a UCL claim is pleaded as the sole or an alternative 

remedy, it must be pleaded adequately.” Sagastume, 2020 WL 8175597, at *7. 

IV. Leave to Amend

Height Street requests that if the motion to dismiss is granted, then leave to amend be granted. 

(Doc. 11 at 12-13.) Pursuant to Rule 15 of the Federal Rules of Civil Procedure, leave to amend “shall 

be freely given when justice so requires,” bearing in mind “the underlying purpose of Rule 15 to 

facilitate decisions on the merits, rather than on the pleadings or technicalities.” Lopez v. Smith, 203 

F.3d 1122, 1127 (9th Cir. 2000) (en banc) (alterations, internal quotation marks omitted). When 

dismissing a complaint for failure to state a claim, “a district court should grant leave to amend even if 

no request to amend the pleading was made, unless it determines that the pleading could not possibly 

be cured by the allegation of other facts.” Id. at 1130 (internal quotation marks omitted). Accordingly, 

leave to amend generally shall be denied only if allowing amendment would unduly prejudice the 

opposing party, cause undue delay, or be futile, or if the moving party has acted in bad faith. 

Leadsinger, Inc. v. BMG Music Publishing, 512 F.3d 522, 532 (9th Cir. 2008). 

The Court has insufficient information to conclude amendment is futile due to the sparsity of 

allegations in the complaint concerning Young’s alleged violation of Cal. Bus. & Prof. Code § 17200. 

Specifically, amendment would allow Height Street to clarify the basis for its assertion that Young 

engaged in unlawful, unfair, and/or fraudulent business practices and under which prong it makes such 

allegations. In addition, amendment would allow Height Street the opportunity to cure its deficiencies, 

such as those related to economic injury and restitution. Further, it does not appear amendment would 

cause undue delay at this juncture, and there is no evidence before the Court suggesting Height Street 

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acted in bad faith. Thus, the request for leave to amend is granted. However, Height Street is cautioned 

to amend its complaint only if it can, in good faith, allege sufficient facts to cure the noted 

deficiencies.

V. Conclusion and Order

Based upon the foregoing, the Court ORDERS:

1. Defendant Young and Associate Inc.’s motion to dismiss the Third Cause of Action

(Doc. 9) is GRANTED as stated against Defendant Young & Associates, Inc. only, 

with leave to amend.

2. Plaintiff SHALL file any First Amended Complaint within 45 days of the date of

service of this order. Failure to comply with this order will result in the dismissal of the 

action for failure to prosecute.

IT IS SO ORDERED.

Dated: May 24, 2022 

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