Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_08-cv-01057/USCOURTS-casd-3_08-cv-01057-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1441 Petition for Removal- Insurance Contract

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28 1 See Order Regarding Defendant American Safety Indemnity Company’s Motion to

Dismiss, filed May 5, 2006.

08cv1057

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

ACCEPTANCE INSURANCE

COMPANY,

Plaintiff,

v.

AMERICAN SAFETY RISK

RETENTION GROUP, INC. et al.,

Defendants.

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Civil No. 08cv1057-L(WMc)

ORDER DENYING AMERICAN

SAFETY INDEMNITY COMPANY’S

MOTION TO DISMISS

This contribution action between liability insurers was removed from State court to the

United States District Court for the Central District of California. Defendant American Safety

Indemnity Company (“ASIC”) filed a motion to transfer venue and to dismiss for failure to state

a claim. Plaintiff filed a motion to remand. On May 12, 2008 Plaintiff’s motion to remand was

denied, ASIC’s motion to transfer the case to this district was granted, and its motion to dismiss

was denied as moot in light of the transfer and without prejudice to refiling after transfer. After

the case was transferred to this district, ASIC renewed its motion to dismiss, which Plaintiff

opposes.1

 For the reasons which follow, the motion is DENIED.

/ / / / /

Case 3:08-cv-01057-L-WMC Document 48 Filed 03/03/10 Page 1 of 7
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2 08cv1057

Plaintiff, a liability insurer, defended its insured Bay Area Construction Framers, Inc.

(“Bay Area”) in the underlying construction defect litigation (“Portola Action”), and paid a

settlement in that action. On May 22, 2006 Plaintiff filed a complaint in State court against

American Safety Risk Retention Group, Inc. (“ASRRG”) and several Doe Defendants, seeking

indemnity, contribution and declaratory relief under California law. (ASIC Ex. K.) On January

7, 2008 Plaintiff moved for leave to name ASIC as Doe 1. (Pl.’s Ex. 1.) Over ASSRG’s

vehement opposition, the State court granted Plaintiff’s motion. (Pl.’s Ex. 2 (opposition) & 4

(order).) On February 7, 2008 Plaintiff filed a first amended complaint naming ASIC as an

additional Defendant. (ASIC Ex. L (“First Am. Compl.”).) After removing this case to federal

court and transferring venue to this district, ASIC moves to dismiss the first amended complaint

pursuant to Federal Rule of Civil Procedure 12(b)(6).

A Rule 12(b)(6) motion to dismiss tests the sufficiency of the complaint. Navarro v.

Block, 250 F.3d 729, 732 (9th Cir. 2001). “While a complaint attacked by a Rule 12(b)(6)

motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide

the grounds of his entitlement to relief requires more than labels and conclusions, and a

formulaic recitation of the elements of a cause of action will not do. Factual allegations must be

enough to raise a right to relief above the speculative level.” Bell Atlantic Corp. v. Twombly,

550 U.S. 544, 555 (2007) (internal quotation marks, brackets and citations omitted). In

reviewing a motion to dismiss under Rule 12(b)(6), the court must assume the truth of all factual

allegations and must construe them in the light most favorable to the nonmoving party. Cahill v.

Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). Legal conclusions need not be taken

as true merely because they are cast in the form of factual allegations. Roberts v. Corrothers,

812 F.2d 1173, 1177 (9th Cir. 1987); W. Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir.

1981). Similarly, “conclusory allegations of law and unwarranted inferences are not sufficient to

defeat a motion to dismiss.” Pareto v. Fed. Deposit Ins. Corp., 139 F.3d 696, 699 (9th Cir.

1998). 

ASIC argues that the First Amended Complaint is barred by the statute of limitations. 

The untimeliness must appear beyond doubt on the face of the complaint before a claim will be

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3 08cv1057

dismissed as time-barred. See Supermail Cargo, Inc. v. United States, 68 F.3d 1204, 1206-07

(9th Cir. 1995). 

Plaintiff does not dispute that the statute of limitations is two years pursuant to California

Code of Civil Procedure Section 339 and that it commenced to run on August 16, 2004, when

Plaintiff mailed the settlement payment in the Portola Action. (Opp’n at 2.) The parties

disagree, however, whether the substitution of ASIC for Doe 1 should relate back to the initial

complaint. ASIC does not contend that the initial complaint was untimely. 

Plaintiff argues that the State court’s order granting its motion to name ASIC as Doe 1

should be given res judicata effect. Because the order on which Plaintiff relies was made in

State court, California law of res judicata applies. See Kremer v. Chem. Constr. Corp., 456 U.S.

461, 481-82 (1982). A prior judgment is a pre-requisite for the res judicata doctrine to apply. 

See Sutphin v. Speik, 15 Cal.2d 195, 202 (1940) (“A prior judgment operates as a bar against a

second action upon the same cause, but in a later action upon a different claim or cause of action,

it operates as an estoppel or conclusive adjudication as to such issues in the second action as

were actually litigated and determined in the first action.”) Because the order was made in this

action and no judgment has been entered, Plaintiff’s reliance on res judicata is misplaced. 

A ruling made in State court is given the same effect after removal as if it had taken place

in federal court. Preaseau v. Prudential Ins. Co. of Am., 591 F.2d 74, 79 (9th Cir. 1979); see

also Fairbank v. Wunderman Cato Johnson, 212 F.3d 528, 530 (9th Cir. 2000). Under proper

circumstances, the judge in federal court may overrule the decision made in State court prior to

removal. Fairbank, 212 F.3d at 530. Plaintiff suggests that anything less than interpreting the

State court’s order as having decided the statute of limitations issue would be overruling it. The

court disagrees.

Plaintiff argues that in considering its motion for leave to amend, the State court

considered the same statute of limitations arguments as are presented on this motion. While this

is correct (see Pl.’s Ex. 1 - 3), the State court minute order states only that Plaintiff is given leave

to amend, and does not indicate the court’s position regarding the statute of limitations (Pl.’s Ex.

4). Furthermore, ASIC did not have an opportunity to address these issues before the

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amendment. Plaintiff’s invitation to interpret the State court order granting leave to amend as

precluding a motion to dismiss on statute of limitations grounds is rejected.

In the context of amending a complaint to substitute a fictitiously-named defendant,

California law, not the Federal Rules of Civil Procedure, governs whether an amended complaint

relates back to the filing of the original complaint. See Ortiz v. City of Imperial, 884 F.2d 1312,

1314 (9th Cir. 1989); see also Rumberg v. Weber Aircraft Corp., 424 F.Supp. 294, 298 (C.D.

Cal. 1976), adopted as the law of the circuit in Lindley v. Gen Elec. Co., 780 F.2d 797, 800 (9th

Cir. 1986) (the court can apply California Code of Civil Procedure Section 474 as substantive

California law pertaining to the statute of limitations). In this regard, Section 474 of the

California Code of Civil Procedure provides in pertinent part:

When the plaintiff is ignorant of the name of a defendant, he must state that fact in

the complaint . . . and such defendant may be designated in any pleading or

proceeding by any name, and when his true name is discovered, the pleading or

proceeding must be amended accordingly . . ..

If the requirements of section 474 are satisfied, “the amendment is deemed to relate back to the

filing date of the original complaint for purposes of the statute of limitations.” Fireman’s Fund

Ins. Co. v. Sparks Constr., Inc., 114 Cal. App. 4th 1135, 1143 (2004) (internal quotation marks,

brackets and citation omitted). The purpose of section 474 “is to enable a plaintiff to commence

an action before it has become barred by the statute of limitations due to plaintiff’s ignorance of

the identity of the defendant. The statute should be liberally construed to accomplish that

purpose.” Dieckmann v. Super. Ct. (Int’l Harvester Corp.), 175 Cal. App. 3d 345, 354 (1985). 

Section 474 does not require a plaintiff “to exercise reasonable diligence prior to filing the

complaint to discover the defendant's identity or the facts giving rise to a cause of action against

the defendant, but the lack of knowledge of the true name of a defendant must be real and not

feigned.” Snoke v. Bolen, 235 Cal. App. 3d 1427, 1432 (1991) (internal quotation marks and

citation omitted).

ASIC does not dispute that Plaintiff included the requisite Doe allegations in the initial

complaint as required by section 474. Instead, it argues that the First Amended Complaint

/ / / / /

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2 When ruling on a motion to dismiss, the court may consider the facts alleged in the

complaint, documents attached to the complaint, documents relied upon but not attached to the

complaint when authenticity is not contested, and matters of which the court takes judicial

notice. Parrino v. FHP, Inc., 146 F.3d 699, 705-06 (9th Cir. 1998), superseded by statute on

other grounds as stated in Abrego v. The Dow Chem. Co., 443 F.3d 676, 681 (9th Cir. 2006);

Branch v. Tunnell, 14 F.3d 449, 453-54 (9th Cir. 1994), overruled on other grounds, Gailbraith

v. County of Santa Clara, 307 F.3d 1119 (9th Cir. 2002); MGIC Indem. Co. v. Weisman, 803

F.2d 500, 504 (9th Cir. 1986). 

A matter of public record outside the pleadings may be judicially noticed and considered

along with the complaint when deciding a motion to dismiss. See MGIC Indem., 803 F.2d at

504. Matters which are not subject to judicial notice, such as, for example, correspondence,

declarations and deposition transcripts are not considered on a Rule 12(b)(6) motion. The

parties relied on such documents, which were attached to pleadings filed in relation to previous

motions. To the extent they relied on correspondence, affidavits and deposition transcripts for

substantive content, they were disregarded for purposes of this motion.

5 08cv1057

should not relate back because Plaintiff knew ASIC’s identity prior to the filing of the initial

complaint. 

ASIC maintains that Plaintiff was admonished to do its “homework” in identifying the

appropriate party defendant in a previous contribution action related to the Portola Action.2

 (See

ASIC Ex. G at 5.) However, this argument goes to Plaintiff’s diligence, not knowledge. 

ASIC also contends that Plaintiff knew its identity because two insurance policies were

attached to the initial complaint – one issued by ASRRG and one by ASIC. (ASIC Ex. K.) 

However, an examination of these exhibits supports Plaintiff’s observation that the logos used by

ASIC and ASRRG are confusingly similar, both companies use the same address and telephone

number, the policies are for immediately consecutive time periods, bear consecutive policy

numbers, follow the same format and include essentially the same language. In the complaint,

Plaintiff alleged that American Safety Insurance Services, Inc. acted as the program manager for

ASIC and ASRRG for purposes of coverage determination and investigation of the tender of

defense in the Portola Action. (First Am. Compl. at 4.) Accordingly, the complaint and exhibits

attached thereto support a reasonable inference that Plaintiff did not know that ASIC and

ASRRG had separate identities. See Prince v. Jensen Motors, Inc., 139 Cal. App. 3d 653 (1983).

ASIC also argues that relation back should be precluded because it will be prejudiced by

the delay between the initial filing and the amended complaint. It claims, without any detail, that

due to the passage of time the case management dates had passed before it was brought into the

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case. This is unsupported by the record. Upon granting Plaintiff’s motion for leave to amend,

the State court expressly extended the dates to accommodate the new party. (See Pl.’s Ex. 4.)

Moreover, prejudice is not a blanket bar to the relation-back doctrine. “Once suit has been

filed, unreasonable delay in filing an amended pleading after discovering a Doe defendant's

identity may bar a plaintiff from using the fictitious name device. To preclude relation back on

this basis, however, the opposing party must show the plaintiff was dilatory and that the

defendant was prejudiced by the delay.” Winding Creek v. McGlashan, 44 Cal. App. 4th 933,

942-43 (1996) (emphasis added). As discussed above, the record does not support a conclusion

that Plaintiff was dilatory after discovering ASIC’s identity. 

A motion to dismiss based on the running of the statute of limitations period must be

denied if the factual and legal issues are not sufficiently clear to permit a determination with

certainty whether the action was timely. See Supermail Cargo, 68 F.3d at 1207. Because the

record supports a reasonable inference that Plaintiff did not know of ASIC’s separate identity,

ASIC’s arguments related to the statute of limitations are rejected.

Last, ASIC argues that Plaintiff cannot state a claim for declaratory relief under

California Code of Civil Procedure Section 1060 unless the claim is based on a contract between

the plaintiff and defendant. Section 1060 provides in pertinent part:

Any person interested under a written instrument, excluding a will or a trust, or

under a contract, or who desires a declaration of his or her rights or duties with

respect to another . . . may, in cases of actual controversy relating to the legal

rights and duties of the respective parties, bring an original action or

cross-complaint in the superior court for a declaration of his or her rights and

duties in the premises, including a determination of any question of construction or

validity arising under the instrument or contract. . . . 

While section 1060 allows for a declaration of rights under a contract between the parties to the

declaratory relief claim as ASIC contends, its scope is not so limited. 

Plaintiff requests a declaration of ASIC’s duty to defend and indemnify in the Portola

Action under ASIC’s insurance policy with Bay Area. (First Am. Compl. at 7.) The complaint

alleges that there is currently a controversy between Plaintiff and ASIC because Plaintiff alone

defended and indemnified Bay Area in the Portola Action, when ASIC may have had a duty to

do the same. Plaintiff requests a declaration of ASIC’s duties toward Bay Area under the policy. 

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Declaratory relief actions between insurers to determine a duty to defend or indemnify based on

a policy between one of the insurers and an insured, who is not a party to the lawsuit, are not

uncommon. “Declaratory relief may . . . be used to determine the duties of multiple insurers who

may have overlapping obligations to the same insured.” Hon. Eileen C. Moore, et al., Cal. Civ.

Practice and Proc. ¶ 17:8 (Sep. 2009); see, e.g., Md. Cas. Co. v. Nat’l Am. Ins. Co. of Cal., 48

Cal. App. 4th 1822 (1996); State Farm Mut. Auto Ins. Co. v. Allstate Ins. Co., 9 Cal. App. 3d

508 (1970). 

Based on the foregoing, Plaintiff adequately alleged the declaratory relief claim. ASIC’s

motion to dismiss is therefore DENIED.

IT IS SO ORDERED.

DATED: March 3, 2010

M. James Lorenz

United States District Court Judge

COPY TO: 

HON. WILLIAM McCURINE, Jr.

UNITED STATES MAGISTRATE JUDGE

ALL PARTIES/COUNSEL

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