Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_09-cv-04132/USCOURTS-cand-3_09-cv-04132-2/pdf.json

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

---

United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

PATRICIA A. MCCOLM,

Plaintiff,

 v.

FOREMOST INSURANCE COMPANY,

Defendant. /

No. C 09-04132 SI

ORDER RE: DEFENDANT’S MOTION

TO DISMISS FOR LACK OF SUBJECT

MATTER JURISDICTION AND

MOTION TO REQUIRE PLAINTIFF TO

POST SECURITY; AND

RESCHEDULING CASE

MANAGEMENT CONFERENCE

Defendant’s motion to dismiss and strike portions of the complaint and defendant’s motion to

require plaintiff to post security are currently scheduled for hearing on April 30, 2010. Pursuant to Civil

Local Rule 7-1(b), the Court finds these matters appropriate for resolution without oral argument and

hereby VACATES the hearing. In addition, the Case Management Conference scheduled for April 30,

2010 is continued to June 25, 2010 at 2:30 p.m. 

Having considered the papers submitted, and for good cause shown, the Court hereby rules as

follows.

BACKGROUND

Pro se plaintiff Patricia McColm brings this suit against defendant Foremost Insurance Company

(“Foremost”) as assignee of her deceased father, George McColm, who held a homeowners’ insurance

policy with Foremost. Plaintiff alleges that in September 2002, a burglary was committed at the

decedent’s home. Plaintiff alleges that the premises were damaged and that a substantial amount of the

decedent’s personal property was stolen. Complaint ¶¶ 7-9. According to the complaint, Foremost

inspected the property in October 2003, but has “failed and refused and continues to refuse to pay

plaintiff” for the covered losses. Id. ¶¶ 12-13. Plaintiff alleges that Foremost sent her a small check to

cover repair of a damaged door, and improperly stated that this check constituted a full and complete

Case 3:09-cv-04132-SI Document 23 Filed 04/23/10 Page 1 of 5
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2

settlement of the entire insurance claim, including any claim for theft losses. Id. ¶ 14. Plaintiff alleges

that Foremost formally denied the claim in writing on September 26, 2008. Id. ¶ 15. Plaintiff filed suit

for breach of contract and breach of the implied covenant of good faith and fair dealing on September

25, 2009. Plaintiff seeks damages in the amount of the policy limit for each category of loss, emotional

distress damages, punitive damages, and attorneys’ fees and costs.

Presently before the Court are two motions filed by Foremost. First, Foremost moves to dismiss

the complaint for lack of subject matter jurisdiction and to strike certain matters from the complaint.

Second, Foremost moves to require plaintiff to post security for fees. 

DISCUSSION

I. Motion to Dismiss

Foremost moves to dismiss the complaint for lack of subject matter jurisdiction pursuant to

Federal Rule of Civil Procedure 12(b)(1). The party asserting federal subject matter jurisdiction bears

the burden to prove its existence. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994).

A complaint will be dismissed if, looking at the complaint as a whole, it appears to lack federal

jurisdiction either “facially” or “factually.” Thornhill Publ’g Co., Inc. v. Gen. Tel. & Elec. Corp., 594

F.2d 730, 733 (9th Cir. 1979).

As an initial matter, plaintiff suggests that the Court has already determined the existence of

subject matter jurisdiction by reviewing her complaint in connection with her application to proceed in

forma pauperis. The Court’s prior determination that plaintiff was entitled to file her complaint without

paying filing fees, however, does not preclude the Court from considering at this time whether plaintiff

has properly invoked this Court’s jurisdiction.

Plaintiff seeks to invoke the Court’s diversity jurisdiction. Under 28 U.S.C. § 1332, federal

courts have jurisdiction over suits between citizens of different states “where the matter in controversy

exceeds the sum or value of $75,000, exclusive of interest and costs.” Here, there is no dispute as to

diversity of citizenship; plaintiff resides in California, and Foremost is located in Michigan. The Court

agrees with Foremost, however, that plaintiff has not met her burden of pleading the jurisdictional

amount. The first paragraph of the complaint states only that the amount in controversy “exceeds . . .

Case 3:09-cv-04132-SI Document 23 Filed 04/23/10 Page 2 of 5
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

3

the sum of $10,000.” Complaint ¶ 1. In her opposition to the motion to dismiss, plaintiff suggests that

this was a typographical error, and requests that the Court amend the complaint to state an amount of

$100,000. However, the complaint provides no factual basis for this change. The only figure mentioned

anywhere in the complaint is the policy limit of $25,008 for theft loss. Complaint ¶ 14. Even construing

the complaint liberally in plaintiff’s favor, the allegations do not establish that the amount in controversy

meets the jurisdictional limit. Foremost’s motion to dismiss for lack of subject matter jurisdiction is

GRANTED with leave to amend.

II. Motion to Strike

Foremost moves to strike plaintiff’s claims for punitive damages and emotional distress damages

under on the ground plaintiff cannot assert such claims as a matter of law. Under Federal Rule of Civil

Procedure 12(f), a court “may strike from a pleading an insufficient defense or any redundant,

immaterial, impertinent, or scandalous matter.” “A Rule 12(f) motion may be used to strike a prayer

for relief when the damages sought are not recoverable as a matter of law.” Wells v. Bd. of Trustees of

Cal. State Univ., 393 F. Supp. 2d 990, 994 (N.D. Cal. 2005). 

Plaintiff claims standing to sue as an assignee; she does not allege that she was a policyholder

or otherwise had any contractual relationship with Foremost. California law unambiguously states that

purely personal tort claims, including an insured’s claims for emotional distress and punitive damages,

cannot be asserted by an assignee. Murphy v. Allstate Ins. Co., 553 P.2d 584, 587 (Cal. 1976)

(“[B]ecause a purely personal tort cause of action is not assignable in California, it must be concluded

that damage for emotional distress is not assignable. The same is true of a claim for punitive damage.”)

(citations omitted). Plaintiff’s claims for punitive damages and emotional distress damages thus fail as

a matter of law, and Foremost’s motion to strike these claims is GRANTED without leave to amend.

Plaintiff also claims that she personally suffered emotional distress as a result of Foremost’s bad

faith conduct in withholding insurance benefits, and that Foremost’s actions violated its duty of good

faith to plaintiff. Foremost also moves to strike this cause of action. Foremost contends that because

plaintiff was not a party to the insurance contract, Foremost did not owe her any duty. Foremost is

correct that in general, an insurer does not owe a duty of good faith to a third party. The primary case

Case 3:09-cv-04132-SI Document 23 Filed 04/23/10 Page 3 of 5
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1

 In its reply brief, Foremost cites additional cases dealing with claims for infliction of emotional

distress brought by an injured claimant against his or her tortfeasor’s insurer. In the Court’s view, these

cases are inapposite as well.

4

Foremost cites in support of its position, however, was an action by an injured claimant against the

insurer of the other party to a car accident, against whom the claimant had obtained only a partial

judgment in a previous tort action. Murphy, 553 P.2d at 588.1

 By contrast, this case involves a claim

by the insured’s own assignee. Foremost has not cited any California case holding that such a cause of

action is unavailable. Indeed, the Court was able to locate a California Supreme Court decision

suggesting otherwise. See Essex Ins. Co. v. Five Star Dye House, Inc., 137 P.3d 192, 199 (Cal. 2006)

(“[A]n insured’s assignment of a cause of action against an insurance company for tortious breach of

the covenant of good faith and fair dealing by wrongfully denying benefits due under an insurance

policy carries with it the right to recover [attorneys’] fees that the assignee incurs to recover the policy

benefits in the lawsuit against the insurance company.”). Although it is not entirely clear from the

complaint which rights the decedent assigned to plaintiff, plaintiff has alleged that the decedent

“assigned, transferred, conveyed all his . . . right, title and interest in the personal property and right to

recover on claims under the policy of insurance/causes of action to plaintiff.” Complaint ¶ 4. These

allegations are sufficient to withstand the motion to strike. Foremost’s motion to strike plaintiff’s claim

for breach of the duty of good faith and fair dealing is DENIED.

Although the Court finds that plaintiff’s claim for breach of the duty of good faith is not subject

to being stricken at this time, if plaintiff is unable to amend her complaint to state a plausible basis for

meeting the amount in controversy requirement, she will not be permitted to proceed in this Court on

any of her claims.

III. Motion to Require Plaintiff to Post Security 

Foremost has also filed a motion to require plaintiff to post security for fees in the amount of

$20,000 on the ground that plaintiff is a vexatious litigant with a history of bringing frivolous and

unmeritorious suits. See Simulnet E. Assocs. v. Ramada Hotel Operating Co., 37 F.3d 573, 574 (9th Cir.

1994) (“[T]he federal district courts have inherent power to require plaintiffs to post security for

Case 3:09-cv-04132-SI Document 23 Filed 04/23/10 Page 4 of 5
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

5

costs.”); De Long v. Hennessey, 912 F.2d 1144, 1147 (9th Cir. 1990) (“[T]here is strong precedent

establishing the inherent power of federal courts to regulate the activities of abusive litigants by

imposing carefully tailored restrictions under the appropriate circumstances.”) (citation omitted). 

The Court expresses no opinion at this time regarding whether Foremost has shown that plaintiff

is an abusive litigant who should be required to post a bond against Foremost’s fees and costs in

defending this action. The Court has concluded in this order that plaintiff has not pled a valid basis for

subject matter jurisdiction. In the Court’s view, if plaintiff is unable to amend her complaint to properly

invoke federal jurisdiction, the action must be dismissed and it will be unnecessary for plaintiff to post

a bond. Foremost’s motion is therefore DENIED at this time. If plaintiff is ultimately successful in

invoking this Court’s jurisdiction, Foremost may renew its motion and may seek a bond in the

appropriate amount at that time.

CONCLUSION

For the foregoing reasons and for good cause shown, defendant’s motion to dismiss is

GRANTED and defendant’s motion to strike is GRANTED in part and DENIED in part. (Docket No.

9). Defendant’s motion to require plaintiff to post security is DENIED without prejudice to renewal

under the circumstances stated above. (Docket No. 10). Plaintiff is given leave to amend; if she elects

to file an amended complaint, she must do so no later than May 7, 2010.

IT IS SO ORDERED.

Dated: April 22, 2010 SUSAN ILLSTON

United States District Judge

Case 3:09-cv-04132-SI Document 23 Filed 04/23/10 Page 5 of 5