Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_06-cv-02694/USCOURTS-caed-2_06-cv-02694-4/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, 

CIV. NO. S-06-2694 WBS DAD

Plaintiff,

v. ORDER RE: MOTION FOR

RECONSIDERATION

USAA CASUALTY INSURANCE

COMPANY, Foreign Corporation,

and DOES 1-50,

Defendants.

----oo0oo----

Defendant moves, pursuant to Local Rule 78-230(k), for

reconsideration of this court's order denying defendant's motion

to dismiss. Plaintiff opposes the motion.

 I. Factual and Procedural History

In her complaint, plaintiff alleges that she purchased

an automobile insurance policy from defendant. (Compl. ¶ 9.) In

October 2004, plaintiff’s car was 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

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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.)

The complaint further alleges that defendant breached

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

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.) It is further

alleged defendant violated California’s unfair competition law

(“UCL”) (California Business and Professions Code section 17200,

et seq.) and requested a preliminary and permanent injunction to

enjoin defendant from “underpaying insurance benefits.” (Id. ¶¶

45-58.)

On March 26, 2007, defendant moved to dismiss

plaintiff's complaint pursuant to Federal Rules of Civil

Procedure 12(b)(6). At that time, the case was assigned to

Judge England. After briefing on the motion was completed,

Judge England recused himself, and the case was assigned to this

court. On June 20, 2007 the court denied defendant's motion to

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dismiss. Defendant filed a motion for reconsideration on July

23, 2007. 

 II. Discussion

 Reconsideration is an “extraordinary remedy, to be

used sparingly in the interests of finality and conservation of

judicial resources.” Kona Enters., Inc. v. Estate of Bishop,

229 F.3d 877, 890 (9th Cir. 2000). Reconsideration is

appropriate only when the “district court (1) is presented with

newly discovered evidence, (2) committed clear error or the

initial decision was manifestly unjust, or (3) if there is an

intervening change in controlling law.” Sch. Dist. No. 1J,

Multnomah County v. ACandS, Inc., 5 F.3d 1255, 1263 (9th Cir.

1993); United States v. Westlands Water Dist., 134 F. Supp. 2d

1111, 1131 (E.D. Cal. 2001) (citing 389 Orange St. Partners v.

Arnold, 179 F.3d 656, 665 (9th Cir. 1999)). 

Under Local Rule 78-230, motions for reconsideration

must also set forth, “what new or different facts or

circumstances are claimed to exist which did not exist or were

not shown upon such prior motion, or what other grounds exist

for the motion.” E.D. Cal. L.R. 78-230(k). A motion for

reconsideration must accomplish two goals to succeed, “[f]irst,

a motion for reconsideration must demonstrate why the court

should reconsider its prior motion. Second, the motion must set

forth facts or law of 'a strongly convincing' nature to induce

the court to reverse its prior decision.” Jacob v. U.S., 128

F.Supp.2d 638, 641 (D.Haw.2000) (citing Decker Coal Co. v.

Hartman, 706 F.Supp. 745, 750 (D. Mont. 1998) (citation

omitted).

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A. Breach of Contract

 Defendant argues that this court's June 20, 2007 order

failed to properly apply the Supreme Court's decision in Bell

Atl. Corp. v. Twombly, 127 S. Ct. 1955 (May 21, 2007). 

Specifically, defendant points out that in considering

plaintiff's claim for breach of contract, this court held that: 

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.

(Order at 4:3-9) (quoting Van Buskirk v. CNN, Inc., 284 F.3d

977, 980 (9th Cir. 2002).) The “no set of facts” language to

which this court referred was the traditional legal standard

cited in the Ninth Circuit for 12(b)(6) motions to dismiss and

is derived from the Supreme Court's decision in Conley v.

Gibson, 355 U.S. 41, 45-46 (1957)(“[A] complaint should not be

dismissed for failure to state a claim unless it appears beyond

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

his claim which would entitle him to relief.”)

Defendant correctly points out that in Bell Atlantic

the Supreme Court abrogated the 12(b)(6) motion to dismiss

standard under Conley. The Court held that:

This “no set of facts" language can be read in

isolation as saying that any statement revealing the

theory of the claim will suffice unless its factual

impossibility may be shown on the face of the

pleadings . . . . On such a focused and literal

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reading of Conley's "no set of facts," a wholly

conclusory statement of claim would survive a motion

to dismiss whenever the pleadings left open the

possibility that a plaintiff might later establish

some set of facts" to support recovery. 

127 S. Ct. at 1968. The Court determined that Conley's “no set

of facts" language “has earned its retirement” and that, “[t]he

phrase is best forgotten as an incomplete, negative gloss on an

accepted pleading standard.” Id. at 1969. 

Accordingly, Bell Atlantic requires that the complaint

contain factual allegations sufficient, “to raise a right to

relief above the speculative level.” Bell Atl., 127 S. Ct. at

1965-66, 1974. However, “a complaint attacked by a rule

12(b)(6) motion to dismiss does not need detailed factual

allegations.” Id. at 1964. Rather it must plead, “enough facts

to state a claim to relief that is plausible on its face.” Id.

at 1974. Thus, a 12(b)(6) motion to dismiss should be granted

when plaintiffs fail to “nudge[] their claims across the line

from conceivable to plausible.” Id. 

Defendant contends that plaintiff's complaint pleads

insufficient facts to state a cause of action pursuant to the

Bell Atlantic standard. Defendant argues that its contractual

obligation was to restore plaintiff’s car to its pre-accident

condition, and that this duty was satisfied by offering to pay a

labor rate of $65 per hour. (Def's Mot. for Recons. at 4.) 

Defendant claims that, “in order to demonstrate than an auto

body repair labor rate of $65 per hour was insufficient to

restore her car . . . plaintiff would have to allege that no

auto body repair shop in her area accepted that hourly rate.”

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(Id. at 5.) Bell Atlantic does not establish such a heightened

pleading standard. Rule 8 of the Federal Rules of Civil

Procedure still requires only "a short and plain statement of

the claim showing that the pleader is entitled to relief." 

The complaint alleges that plaintiff purchased an

automobile insurance policy from defendant, that her car was

subsequently damaged, and that defendant failed to pay the

reasonable hourly rate of repair. (Opp. to Mot. for Recons. at

4.) Plaintiff alleges that the $65.00 per hour rate was “used

by USAA as a basis for limiting the amount it would pay for

labor, [and] was set arbitrarily, artificially, unlawfully and

unfairly.” (Compl. ¶ 15.) 

Applying the Bell Atlantic pleading standard, it is

entirely plausible from the allegations of the complaint that

the $65 per hour which defendant was willing to pay was

insufficient to restore plaintiff's car to its pre-accident

condition. Thus, even though the court erred in applying

Conley's no set of facts standard, under Bell Atlantic,

plaintiff has pled sufficient facts to state a plausible claim

for breach of contract.

B. Breach of Implied Covenant of Good Faith and Fair

Dealing

As discussed in the June 20, 2007 order, 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.

///

///

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C. UCL

Also discussed in the previous order, plaintiff meets

the “lost money or property” prong of the UCL in that she

alleges lost insurance benefits due under her policy.

D. Preliminary and Permanent Injunction

In ruling on defendant's motion to dismiss plaintiff's

request for a preliminary and permanent injunction, this court

held that it could not “conclude beyond doubt” that plaintiff

would be unable to establish Article III standing pursuant to

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

02 (1983). (Order 5: 22-28.) Re-examining defendant's motion

under the Bell Atlantic standard, it is plausible that plaintiff

will meet the requirements of City of Los Angeles. Plaintiff is

still insured by defendant and thus would be likely to suffer

the same kind of loss if her car was damaged in the future.

IT IS THEREFORE ORDERED that defendant’s motion for

reconsideration be, and the same hereby is, DENIED.

DATED: August 16, 2007

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