Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_13-cv-04850/USCOURTS-cand-4_13-cv-04850-7/pdf.json

Nature of Suit Code: 450
Nature of Suit: Interstate Commerce
Cause of Action: 15:0045 Federal Trade Commission Act

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

CONNIE H. SEBASTIAN,

Plaintiff,

v.

ALLSTATE CORPORATION, ET AL.,

Defendants.

Case No. 13-cv-04850-YGR 

ORDER DENYING PLAINTIFF'S MOTION FOR 

LEAVE TO FILE SECOND AMENDED 

COMPLAINT

Now before the Court is plaintiff Connie H. Sebastian’s motion for leave to file her second 

amended complaint (“SAC”). (Dkt. No. 48.) Defendants have filed an opposition (Dkt. No. 49), 

to which plaintiff has replied (Dkt. No. 50.) Having given due consideration to the arguments of 

the parties and Ms. Sebastian’s status as a pro se litigant, for the reasons set forth below, the 

motion is DENIED.

BACKGROUND

Based on the representations in her filings to date, the Court understands the following 

facts to have given rise to the instant complaint. In 1990, Ms. Sebastian purchased a $25,000 life 

insurance policy from Defendant Surety Life Insurance Company (“SLIC”). (Dkt. No. 30-1 at 2.) 

In March of 2008, Ms. Sebastian received a notice from SLIC informing her that her insurance 

policy had been terminated for failure to submit a timely payment and detailing what steps she 

needed to take to reinstate the policy. (Id. at 4, 5.) Ms. Sebastian presumably made the required 

payment, as she received a letter in May 2008 acknowledging receipt of her payment and 

announcing a premium increase. (Id.) In December 2012, Ms. Sebastian received another notice 

of termination and a notice of quarterly payment. (Id. at 5.) She subsequently initiated 

administrative grievance proceedings with SLIC and the California Department of Insurance. (Id.) 

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The instant motion represents Ms. Sebastian sixth attempt to plead claims for legal relief 

stemming, generally, from the above facts. She twice filed complaints in San Francisco Superior 

Court. In both cases, Defendants’ demurrers were sustained with leave to amend. (See Dkt. No. 

8-3 at 9, 11-12.) Rather than file a second amended complaint, Ms. Sebastian filed a notice of 

voluntary dismissal without prejudice, informing the Superior Court that she intended to file in 

federal court under the Federal Trade Commission Act. (Dkt. No. 8-3 at 18.) 

Accordingly, on October 18, 2013, Ms. Sebastian filed a complaint in this Court. (Dkt. 

No. 1.) In response to Defendants’ first motion to dismiss, Ms. Sebastian filed an opposition in 

which she did not address the arguments presented in the motion to dismiss and instead merely relisted all of her claims. (Dkt. No. 18.) The Court ordered Ms. Sebastian to show cause why that 

motion should not be granted as unopposed, providing her with an opportunity to respond 

substantively to Defendant’s arguments. (Dkt. No. 23.) After reviewing Ms. Sebastian’s response 

and Defendant’s reply, and giving due consideration to Ms. Sebastian’s pro se status, this Court 

granted Defendant’s motion and dismissed the complaint with leave to amend. (Dkt. No. 29.) 

In its Order of June 9, 2014, the Court gave Ms. Sebastian specific instructions setting 

forth how she was to proceed if she wished to amend her complaint. This Court advised Ms. 

Sebastian that if she wished to file an amended complaint she must do so as part of a Motion for 

Leave to Amend, attaching a Proposed First Amended Complaint. The Court also directed Ms. 

Sebastian to provide specific information about her claims, and the facts supporting each of her 

claims, in her Motion, in order that by following such instructions, Ms. Sebastian would be more 

likely able to state any claim. Finally, the Court informed Ms. Sebastian that the Legal Help 

Center is available to assist persons such as herself if she makes an appointment, and provided Ms. 

Sebastian with the phone number and website for the Legal Help Center. (Dkt. No. 29.) 

On July 9, 2014, plaintiff filed her motion for leave to file a First Amended Complaint 

(“FAC”). (Dkt. No. 30.) In her new complaint, she maintained the same general factual basis for 

her claims as she had presented in her original complaint. Specifically, Ms. Sebastian alleged that 

she is an elderly, long-time insured who purchased a life insurance policy from Surety Life 

Insurance Company for $25,000, and that her policy had been wrongfully terminated. (Dkt. No. 

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30-1 (FAC) at 2-6; 9.) She alleged three claims: breach of contract, a violation of the Federal 

Trade Commission Act, and a tort of outrage. (Id. at 6-8.) Defendants filed an opposition to Ms. 

Sebastian’s motion. 

The Court denied Ms. Sebastian’s motion, noting that she had not provided sufficient 

explanation supporting her claims, despite its prior instructions. The Court noted that the FAC 

merely repeated Ms. Sebastian’s previously dismissed claims without clear reference to factual 

allegations rendering such claims plausible. Most seriously, the Court noted that on the face of the 

FAC, it appeared that this Court lacked subject matter jurisdiction over this case. It then 

undertook to explain to Ms. Sebastian the nature of this Court’s limited jurisdiction, and 

explained that the lack of clarity in the FAC prevented the Court from being able to determine 

whether it properly had jurisdiction. (Dkt. No. 36.) The Court noted that it was “obvious that 

Sebastian, as a pro se plaintiff, is struggling to state the nature of her dispute with defendant, relief 

she seeks, and the legal basis upon which she can proceed in federal court,” provided Ms. 

Sebastian with yet another opportunity to seek leave to amend, and instructed Ms. Sebastian that 

the Legal Help Center was available to assist in that endeavor. 

On October 30, 2014, Ms. Sebastian filed her “Second Proposed First Amended 

Complaint.” (Dkt. No. 37.) In this complaint, Ms. Sebastian again stated the same general factual 

basis for her claims as in her previous federal complaints. The one exception, however, was that

although Ms. Sebastian’s new complaint in large part still read as an individual action, it made 

vague references to class allegations. Ms. Sebastian filed what she called a “Certificate Rule 23c,” 

and attested that she could serve as a class representative, but no substantive factual allegations 

supported any notion that the case would proceed as a putative class action. (Dkt. No. 37 at 8.) 

Instead, the great weight of the complaint was dedicated to restating her individual claims. (Dkt. 

No. 37 at 9-19.) Defendants again opposed the motion, arguing that Ms. Sebastian had not 

complied with the Court’s prior order, that leave to amend would be futile, and that this Court 

lacked jurisdiction over the case. (Dkt. No. 38.) 

On December 2, 2014, the Court held a hearing on this motion at which Ms. Sebastian and 

her son were present. During the hearing, the Court learned that Ms. Sebastian speaks little 

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English and allowed her son to speak. The Court also learned that Ms. Sebastian’s son had been 

the primary communicator with the defendants. Upon learning that defendants had made 

settlement overtures to Ms. Sebastian, the Court ordered the parties to attend a mandatory 

settlement conference that day with Magistrate Judge Ryu. Those settlement discussions were 

productive. The parties settled the matter in full. (Dkt. No. 46.) 

A few weeks later, Ms. Sebastian rescinded the settlement and on January 23, 2015, filed 

the instant motion for leave to file her SAC, which represents her sixth attempt to plead viable 

claims for relief. (Dkt. No. 48-2.) Defendants, naturally, oppose the motion. Notably, the new 

complaint attempts to state allegations relating to the class action with more force, and hinges 

federal jurisdiction entirely on the existence of the class action. No longer does Ms. Sebastian 

advance any federal claims. Instead, she proceeds on state law breach of contract and tort claims. 

Although her own insurance policy with defendants is valued at $25,000, Ms. Sebastian values the 

class action at $250,000,000.00. 

On February 3, 2015, Ms. Sebastian emailed defense counsel and stated that she would be 

willing to settle the case, “based on the merits of the proposed second amended class action

complaint.” (Dkt. No. 49-2 (Email from C. Sebastian to G. Ferrari, Feb. 3, 2015) (emphasis 

supplied).) 

LEGAL STANDARDS

The Court generally has the sound discretion to grant or deny leave to amend. Swanson v. 

United States Forest Serv., 87 F.3d 339, 343 (9th Cir. 1996). Leave to amend should be freely 

granted “unless the court determines that the allegation of other facts consistent with the 

challenged pleading could not possibly cure the deficiency.” Schreiber Distrib. Co. v. Serv-Well 

Furniture Co., Inc., 806 F.2d 1393, 1401 (9th Cir. 1986). The Court “may exercise its discretion 

to deny leave to amend due to ‘undue delay, bad faith or dilatory motive on part of the movant, 

repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the 

opposing party . . . , [and] futility of the amendment.’” Carvalho v. Equifax Info Servs., LLC, 629 

F.3d 876, 892-93 (9th Cir. 2010) (alterations in the original) (quoting Foman v. Davis, 371 U.S. 

178, 182 (1962)). A proposed amendment is futile if no set of facts can be proven under the 

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amended pleading that would constitute a valid and sufficient claim. Miller v. Rykoff–Sexton, Inc., 

845 F.2d 209, 214 (9th Cir. 1988) (the proper test in determining legal sufficiency of a proposed 

amendment is identical to that used under Rule 12(b)(6)). 

Under Federal Rule of Civil Procedure 12(b)(6), “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, 557 (2007)). 

This “facially plausible” standard requires the plaintiff to allege facts that add up to “more than a 

sheer possibility that a defendant has acted unlawfully.” Iqbal, 556 U.S. at 678. Although courts 

do not require “heightened fact pleading of specifics,” a plaintiff must sufficiently allege facts to 

“raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555. Merely reciting 

the elements of a cause of action and stating conclusory allegations are insufficient. Id.; see also 

In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008) (the court is not required to 

accept as true “allegations that are merely conclusory, unwarranted deductions of fact, or 

unreasonable inferences”).

A complaint may also be subject to immediate dismissal based on lack of this Court’s 

jurisdiction. Fed. R. Civ. P. 12(b)(1). As this Court explained in its prior order, federal courts

have limited jurisdiction. Subject-matter jurisdiction must be established before a federal court 

can reach the merits of a case. See Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 94-95 

(1998). Federal subject-matter jurisdiction under 28 U.S.C. Section 1332(a)(1) requires complete 

diversity of citizenship and an amount in controversy in excess of $75,000.00. Under the Class 

Action Fairness Act (“CAFA”) federal jurisdiction extends to class actions: (1) in which there are 

at least 100 members; (2) the combined claims of the members exceeds $5 million; and (3) there is 

minimal diversity of citizenship. See Kuxhausen v. BMW Financial Services NA LLC, 707 F.3d 

1136, 1139 (9th Cir. 2013) (citing 28 U.S.C. § 1332(d)). Federal subject-matter jurisdiction under 

28 U.S.C. Section 1331 (federal question jurisdiction) requires a civil action to arise under the 

Constitution, laws, or treaties of the United States.

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ANALYSIS

The Court finds, for the following three reasons, that granting Ms. Sebastian leave to 

amend at this stage is not proper. First, the Court finds that Ms. Sebastian’s complaint would be 

immediately subject to dismissal for lack of jurisdiction. Second, the Court finds amendment 

improper because plaintiff has now had six opportunities to state a claim, four of which occurred 

in this court, and the Court provided substantive guidance to Ms. Sebastian in order to inform her 

of what she needed to do to successfully state a claim. Third, the Court finds that Ms. Sebastian’s 

failure to adhere to the parties’ agreed-upon settlement, and her recent overtures to be willing to 

settle this action as a class action instead of on the basis of her individual claim, evinces that she is 

proceeding now in bad faith. The Court discusses each finding in turn. 

1. FUTILITY OF AMENDMENT

Ms. Sebastian’s SAC would immediately be subject to dismissal for lack of jurisdiction.

As stated above, before a federal court may preside over a case, it must first determine that it 

properly has jurisdiction. 

Unlike in her previous complaints, Ms. Sebastian does not attempt to state a claim under 

federal law. Rather, she attempts to gain entry to the federal forum by claiming to bring this 

action on behalf of a class of senior policy holders who have contracts with Surety Life Insurance 

Company. (Dkt. No. 48 at 4.) She claims that this Court’s jurisdiction is properly grounded in the 

Class Action Fairness Act (“CAFA”). (Id.) She cites no other basis for federal jurisdiction, and 

the Court can independently discern no other basis.

Under CAFA, federal jurisdiction extends to class actions: (1) in which there are at least 

100 members; (2) the combined claims of the members exceeds $5 million; and (3) there is 

minimal diversity of citizenship. See Kuxhausen v. BMW Financial Services NA LLC, 707 F.3d 

1136, 1139 (9th Cir. 2013) (citing 28 U.S.C. § 1332(d)). Here, plaintiff has not offered factual 

allegations sufficient to render plausible that jurisdiction is proper under CAFA. 

First, plaintiff alleges that there are more than 100 class members of the California class 

“under the Reinsurance Treaty.” (Dkt. No. 48-2 ¶ 9B.) But precisely what the Reinsurance Treaty 

is and how it bears on the class members, or even plaintiff’s individual claims, remains unclear. It 

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appears that the Reinsurance Treaty is an agreement between Surety and another Allstate entity, 

but again, this does not provide support or clarity for plaintiff’s claim that others share her injury, 

or that this injury extends to more than 100 people in California. Substantively, this case has 

always concerned a plaintiff who alleges that her insurance company engaged in a host of state 

law contract and tort violations. (See Dkt. No. 48 at 6.) But Ms. Sebastian articulates no factual 

basis for her bare assertion that more than 100 seniors in California share the same injuries that

she does. Instead, she appears to rely on website posts, which suggest that perhaps three other 

people have experienced difficulty with Surety Life Insurance Company and/or Allstate. (Dkt. 

No. 48-1 at 2, 3.) Two of these people, however, appear to live outside of California, and thus fall 

outside of the class of individuals that Ms. Sebastian would seek to represent.

The Court finds entirely speculative Ms. Sebastian’s class-size estimate of senior policy 

holders who have suffered injuries similar to those she has suffered. Her mere recitation of the 

elements of a CAFA cause of action and conclusory allegations are insufficient to render plausible 

her claimed right to proceed under CAFA. In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th 

Cir. 2008) (the court is not required to accept as true “allegations that are merely conclusory, 

unwarranted deductions of fact, or unreasonable inferences”). Thus, the first element required to 

establish jurisdiction under CAFA has not been met.

So, too, does Ms. Sebastian fail to allege plausibly that the jurisdictional amount in 

controversy is met. Ms. Sebastian flatly asserts that her class action is valued at $250,000,000.00. 

(Dkt. No. 48-2, ¶ 9B.) The SAC, however, provides no factual allegations sufficient to render this 

amount plausible, and the Court, exercising its common sense and good judgment, can see no 

basis for this remarkably high figure. This case has always been about Ms. Sebastian’s $25,000 

policy. Particularly in light of the fact that, as stated above, Ms. Sebastian has not articulated a 

sufficient factual basis for her claim that there are 100 people who comprise her class, she has 

offered no plausible factual basis for arriving at a total damages figure of $250,000,000.00. 

Moreover, the other individual statements posted as comments on a website upon which Ms. 

Sebastian relies do not on their face support her amount in controversy contention. (See Dkt. No. 

48 at 3; 48-1 at 2-3.) Thus, this requirement for CAFA jurisdiction is not met. 

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For these reasons, the Court finds that Ms. Sebastian has failed to state a claim sufficient to 

establish CAFA requirements and her SAC would be immediately subject to dismissal. Ms. 

Sebastian has, again, failed to state facts that, construed liberally in her favor, establish that this 

case falls within the limited jurisdiction of the federal courts. 

Furthermore, because Ms. Sebastian’s individual claim is based upon a $25,000 policy, she 

cannot meet the amount-in-controversy required to establish diversity jurisdiction. And, because 

she alleges no federal claim, she cannot proceed under federal question jurisdiction. Accordingly, 

because Ms. Sebastian’s SAC would be immediately subject to dismissal for lack of jurisdiction, 

the Court must deny her motion for leave to file the SAC. 

2. MULTIPLE OPPORTUNITIES FOR AMENDMENT

As set forth above in detail, the instant SAC represents Ms. Sebastian’s sixth attempt to 

plead claims for relief, three of which occurred in this Court. Ms. Sebastian has thus been 

provided ample opportunity to amend her complaint, and has been given specific guidance and 

instructions for how she was to proceed in this Court if she wished to amend her complaint. (Dkt. 

No. 29, Dkt. No. 36.) At each juncture, the Court has apprised her of the deficiencies in her 

complaint, required further factual development, and instructed Ms. Sebastian that any proposed 

amended complaint be submitted as part of a motion for leave to amend. The purpose of the 

specificity in the Court’s orders, and the requirement that Ms. Sebastian submit proposed amended 

complaints as part of a motion, was to permit Ms. Sebastian a meaningful opportunity to explain 

how her new pleadings satisfied the Court’s previous concerns. Such instructions were 

accompanied by references to the Court’s Legal Help Center, which is available to assist pro se 

litigants navigate federal pleading requirements and procedure. 

With every new attempt, it has become increasingly clear that Ms. Sebastian is no closer to 

stating a claim than she was at the outset of this litigation. “The district court’s discretion to deny 

leave to amend is particularly broad where the court has already given the plaintiff an opportunity 

to amend [her] complaint.” Fidelity Fin. Corp. v. Fed’l Home Loan Bank of San Francisco, 792 

F.2d 1432, 1437 (9th Cir. 1986) (citation omitted). Having had many opportunities in this forum 

to amend her complaint, and having been permitted to do so in state court, the Court now finds 

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that Ms. Sebastian may not have another. 

3. BAD FAITH

The Court further finds that the instant motion, and proposed SAC, also evince bad faith on 

the part of Ms. Sebastian. The parties reached a full settlement in this case with the assistance of 

Judge Ryu on December 29, 2014. (Dkt. No. 46.) That day, they put that settlement on the 

record. (Id.) A further conference was scheduled for January 12, 2015, to permit Judge Ryu to 

oversee finalization of the written settlement agreement, dismissal with prejudice, and delivery of 

a 1099 form. (Id.) To that point, the case concerned Ms. Sebastian’s personal claim to her 

$25,000 insurance policy, which she contended had been improperly terminated.

At the January 12, 2015 conference, plaintiff rescinded her agreement to settle. (See Dkt. 

No. 47.) Instead, on January 23, 2015, she filed the instant motion and proposed class action 

complaint, valued at $250,000,000.00. (Dkt. No. 48.) On February 3, 2015, Plaintiff and her son, 

Miguel Hernandez,1emailed defense counsel and asked to revisit settlement discussions without 

court participation. (Dkt. No. 49 (Declaration of Giovanna A. Ferrari ¶ 2, Ex. A).) Ms. Sebastian 

and Mr. Hernandez stated that they would be willing to settle the case, “based on the merits of the 

proposed second amended class action complaint.” (Dkt. No. 49-2 (Email from C. Sebastian to 

G. Ferrari, Feb. 3, 2015) (emphasis supplied).) 

The Court finds that these facts strongly suggest that Ms. Sebastian and Mr. Hernandez are

trying to leverage a higher settlement than was agreed to in December 2014. Such bad faith 

cannot be condoned, particularly where the class action allegations do not state a legal claim and 

where the Court has exercised extreme leniency and permitted Ms. Sebastian to amend her 

pleadings multiple times. 

The Court is mindful of the strong preference for decisions on the merits of a case, rather 

than dismissal due to procedural reasons or technicalities, and the extreme liberality with which it 

must view pro se pleadings. On this basis, the Court has permitted this case to continue for over a 

 

1

The Court further notes that Mr. Hernandez is, apparently, the legal beneficiary of Ms. 

Sebastian’s life insurance policy. (Dkt. No. 50 at 2.) 

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year and a half, during which time the Court expended substantial resources in order to assist Ms. 

Sebastian in seeking relief. Unfortunately, Ms. Sebastian and Mr. Hernandez have elected to 

reject this assistance. 

CONCLUSION

For all the reasons stated above, Ms. Sebastian’s motion for leave to file her SAC is 

DENIED. There being no operative complaint, the action is DISMISSED WITH PREJUDICE. 

IT IS SO ORDERED.

Dated: March 27, 2015

______________________________________

YVONNE GONZALEZ ROGERS

UNITED STATES DISTRICT COURT JUDGE

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