Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_04-cv-02314/USCOURTS-caed-2_04-cv-02314-2/pdf.json

Nature of Suit Code: 360
Nature of Suit: Other Personal Injury
Cause of Action: 28:1332 Diversity-Breach of Contract

---

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

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

CLYDE TERRY and ANNE TERRY,

NO. CIV. S 04-2314 MCE GGH

Plaintiffs,

v. MEMORANDUM AND ORDER

THE TRAVELERS INDEMNITY CO.,

KENNEL PAK, GENTZLER & SMITH

ASSOCIATES, INC.,

Defendants.

----oo0oo----

In this case, Plaintiffs Clyde and Anne Terry (collectively

“Plaintiffs”) claim that Defendants Travelers Indemnity Co.,

Kennel Pak, and Gentzler & Smith Associates, Inc., acted

negligently and fraudulently regarding an insurance policy issued

to the Plaintiffs’ tenants. Kennel Pak and Gentzler & Smith

(collectively “Defendants”) ask this Court to strike portions of

the Plaintiffs’ amended complaint, pursuant to Federal Rule of

//

//

Case 2:04-cv-02314-MCE -GGH Document 39 Filed 08/15/05 Page 1 of 7
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

All further references to “Rule” or “Rules” are to the 1

Federal Rules of Civil Procedure, unless otherwise noted.

Because oral argument would not be of material assistance, 2

this matter was deemed suitable for decision without oral

argument. E.D. Local Rule 78-230(h).

2

Civil Procedure 12(f). For the reasons set forth below, 1

Defendants’ motion to strike is GRANTED, and the Plaintiffs shall

not have leave to amend.2

BACKGROUND

The Court has already set forth a detailed factual

background for this action in its Memorandum and Order of April

27, 2005 (“the Order”), which is incorporated by reference and

need not be reproduced herein. (Ct. Memo. & Order at 2-5.)

Pursuant to the Court’s Order, Plaintiffs filed an amended

complaint reasserting their four original claims against

Defendants: 1) breach of contract, 2) negligence, 3) fraud, and

4) negligent misrepresentation. Plaintiffs also re-allege

emotional distress damages in their negligent misrepresentation

claim and add them to their negligence claim. Further, in all

four claims, Plaintiffs re-allege as damages their attorneys’

fees incurred in their separate state-court suit against their

tenants. Those fees now allegedly exceed $250,000. Defendants

presently move to strike all references to 1) emotional distress

damages in the negligence and negligent misrepresentation claims

and 2) attorneys’ fees in all claims.

//

//

Case 2:04-cv-02314-MCE -GGH Document 39 Filed 08/15/05 Page 2 of 7
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

STANDARD

Pursuant to Rule 12(f), “the court may order stricken from

any pleading any insufficient defense or any redundant,

immaterial, impertinent, or scandalous material.” Fed. R. Civ.

P. 12(f). Once the court strikes material from the complaint, it

may then consider whether to grant the plaintiff leave to amend. 

Under Rule 15(a), when there is no “[u]ndue delay, bad faith[,]

dilatory motive on the part of the movant . . . undue prejudice

to the opposing party by virtue of . . . the amendment, [or]

futility of the amendment,” leave to amend a complaint is to be

“freely given when justice so requires.” Foman v. Davis, 371

U.S. 178, 182 (1962); Fed. R. Civ. P. 15(a). Generally, leave to

amend is denied only if it is clear that the deficiencies of the

complaint could not be cured by amendment. Broughton v. Cutter

Labs., 622 F.2d 458, 460 (9th Cir. 1980).

ANALYSIS

1. Emotional Distress Damages

In the present action, Defendants argue that Plaintiffs do

not allege any new facts in their amended complaint and fail to

establish emotional distress damages. Plaintiffs rebut that this

Court misinterpreted California case law, which, according to the

Plaintiffs, does not foreclose recovery for emotional distress in

negligence and negligent misrepresentation actions where there is

no physical injury or impact. (Pls’ Opp’n at 4:14-16, 24-26.) 

Case 2:04-cv-02314-MCE -GGH Document 39 Filed 08/15/05 Page 3 of 7
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

4

Thus, Plaintiffs essentially contend they did not need to allege

anything new in their amended complaint.

Further, Plaintiffs argue that the Court mistakenly ruled

that the Plaintiffs’ complaint alleged only potential property

damage. (Pls’ Opp’n at 5:2-7.) Plaintiffs contend that because

they were insured by Defendants, and an insurance policy is a

contract that engenders peace of mind, Plaintiffs’ suffered

emotional distress when Defendants’ negligently revoked the

policy. Thus, according to Plaintiffs, they lost peace of mind,

which exceeds mere property damage. The Court disagrees.

The Court stated clearly in its original Order and

reiterates here that, under California law, Plaintiffs’

unintentional tort claims (negligence and negligent

misrepresentation) will not support recovery for emotional

distress arising from property damage, absent special

circumstances. (Ct. Memo. & Order at 8:17-9:9); Erlich v.

Menezes, 21 Cal. 4th 543, 555-56 (1999); Friedman v. Merck & Co.,

107 Cal. App. 4th, 454, 484-85 (2003); Yu v. Signet

Bank/Virginia, 69 Cal. App. 4th 1337, 1397 (1999); Finch v.

Brenda Raceway Corp., 22 Cal. App. 4th 547, 554 (1994). The

Court finds that Plaintiffs still allege only potential injury to

personal property in their amended complaint. Plaintiffs added

little, if anything, to their complaint to cure the original

deficiencies. Thus, because it is clear that Plaintiffs’

emotional distress allegations are based on mere property damage,

they are immaterial and impertinent to the complaint.

Furthermore, the Court finds Plaintiffs’ peace of mind

argument baseless. Insurance policies, while they may instill

Case 2:04-cv-02314-MCE -GGH Document 39 Filed 08/15/05 Page 4 of 7
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

peace of mind, are intended primarily to protect the insured from

paying out-of-pocket expenses in case of accident. They do not

create a “protective barrier” around the insured, protecting

against any and all physical harm. As such, Plaintiffs’ alleged

loss of the insurance policy constitutes economic harm only. 

Because economic injury alone does not support emotional distress

damages, all references to emotional distress must be stricken

from Plaintiffs’ negligence and negligent misrepresentation

claims.

2. Attorneys’ Fees

The Court stated in its previous Order that, under the

American Rule, Plaintiffs are expected to shoulder their own

legal fees. (Ct. Memo. & Order at 10: 14-15.) Plaintiffs had

not met the threshold for attorneys’ fees under the Brandt

exception to the American Rule. See Brandt v. Superior Court, 37

Cal. 3d 813, 817, 820, 820 n.8 (1985). Nor had Plaintiffs

pleaded special circumstances, under the Prentice exception,

showing they were forced to take legal action in order to

vindicate a particular right. See Prentice v. N. Am. Title Guar.

Corp., 59 Cal. 2d 618, 620 (1963). Thus, the American Rule

governed the action, and the Court struck all references to

attorneys’ fees.

Defendants argue here that Plaintiffs’ again fail to allege

any new facts to justify attorneys’ fees as damages. In their

amended complaint, Plaintiffs did strike all Brandt allegations. 

However, in an attempt to plead the Prentice exception,

Case 2:04-cv-02314-MCE -GGH Document 39 Filed 08/15/05 Page 5 of 7
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

6

Plaintiffs now allege that the Defendants’ conduct forced them

“to protect their rights and interests by retaining legal counsel

and bringing legal action” against their tenants in state court. 

(Pls’ Amended Compl. at ¶¶ 67, 74, 88, 101.) Thus, Plaintiffs

seek to recoup attorneys’ fees from Defendants for an expensive

yet separate state-court action.

The Court finds that Plaintiffs have again failed to plead

exceptional circumstances analogous to those in Prentice. The

Prentice court ordered the defendant to pay the plaintiffs’

attorney fees because the plaintiffs were forced to bring a

quiet-title action against a third party due to the defendant’s

proven negligence. A “natural and proximate” connection existed

between the plaintiffs’ suit against the defendant and the

underlying third-party action. See Prentice, 59 Cal. 2d at 621.

In the present action, there is no such natural and

proximate connection between Plaintiffs’ suits in this Court and

state-court. Merely alleging, as Plaintiffs have done, that they

were forced to sue their tenants because of Defendants’ conduct

does not establish the requisite natural and proximate connection

between the suits. See Davis v. Air Tech Indus., Inc., 22 Cal.

3d 1, 7 (1978). Plaintiffs have therefore failed to allege the

exceptional circumstances under Prentice to overcome the American

Rule. Consequently, all references to attorneys’ fees are

immaterial and impertinent and must be struck from the amended

complaint.

//

//

//

Case 2:04-cv-02314-MCE -GGH Document 39 Filed 08/15/05 Page 6 of 7
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

7

3. No Leave to Amend

In light of the fact that Plaintiffs had ample opportunity

to cure the deficiencies in their complaint and failed to do so,

it is clear to the Court that amendment is futile. Thus, the

Court denies Plaintiffs leave to amend. Furthermore, the Court

notes that the amended complaint is almost word-for-word the same

as the original, except for some minor, inconsequential changes. 

The Court is concerned that there is a pattern in how Plaintiffs’

counsel continues to file papers that border on being frivolous

and filed for apparently no other reason than to increase

attorneys’ fees. Counsel is cautioned that if further papers or

motions of this sort are filed, the Court will consider imposing

the appropriate sanctions available under the circumstances.

CONCLUSION

Based on the foregoing, Defendants’ Motion to Strike is

GRANTED without leave to amend.

IT IS SO ORDERED.

DATED: August 15, 2005

_____________________________

MORRISON C. ENGLAND, JR

UNITED STATES DISTRICT JUDGE

Case 2:04-cv-02314-MCE -GGH Document 39 Filed 08/15/05 Page 7 of 7