Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_05-cv-00324/USCOURTS-casd-3_05-cv-00324-0/pdf.json

Nature of Suit Code: 370
Nature of Suit: Other Fraud
Cause of Action: 28:1441 Petition for Removal- Breach of Contract

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- 1 - 05cv324 

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

INSURANCE COMPANY OF THE WEST,

a California Corporation,

Plaintiff,

CASE NO. 05cv324 DMS (CAB)

ORDER DENYING

DEFENDANT’S MOTION TO

STRIKE PORTIONS OF FIRST

AMENDED COMPLAINT

[Docket No. 46]

vs.

RISK PLACEMENT SERVICES, INC. OF

LEXINGTON, AS SUCCESSOR IN

INTEREST TO EQUITY INSURANCE

MANAGERS, INC., an Illinois Corporation;

Inclusive,

Defendant.

This matter comes before the Court on Defendant’s motion to strike portions of Plaintiff’s First

Amended Complaint. Defendant filed its motion on July 31, 2006, Plaintiff filed its opposition on

September 8, 2006, and Defendant filed its reply on September 15, 2006. On September 12, 2006,

the Court found the motion suitable for decision without oral argument pursuant to Civil Local Rule

7.1(d)(1). For the reasons discussed below, the Court denies Defendant’s motion. 

I. 

BACKGROUND

In January 1998, Plaintiff Insurance Company of the West (“Plaintiff”) entered into a General

Agency Agreement (“GAA”) with Insurance Ventures (“IV”) concerning the business of homeowners

insurance. Pursuant to the GAA, IV was appointed as Plaintiff’s general agent. In that role, IV was

Case 3:05-cv-00324-DMS-CAB Document 53 Filed 09/28/06 Page 1 of 5
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1

 Defendant was not a party to the arbitration.

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to “collect, receive and receipt” insurance premiums. IV was to hold those premiums in trust until

remitting them to Plaintiff. IV was also required to provide Plaintiff with a monthly report listing all

transactions processed during the month. 

At the same time IV entered the GAA with Plaintiff, it also entered into an Insurance

Administration Services Agreement (“IASA”) with Defendant Risk Placement Services

(“Defendant”). Pursuant to the IASA, IV engaged Defendant as a third-party administrator on the

insurance transactions. Among its duties as third-party administrator, Defendant maintained a report

of premiums collected under the insurance policies and provided that information to Plaintiff.

Defendant also paid IV its commissions, and remitted the net premiums to Plaintiff. 

In October 2003, disputes arose between Plaintiff and IV concerning the payment of premiums,

payment of losses, and administration of claims under the policies. Eventually, Plaintiff demanded

that Defendant remit $100,575.55 in premiums, which Defendant refused to do. 

Thereafter, in January 2005, Plaintiff and IV submitted their disputes to arbitration,1

 and

Plaintiff commenced this action against Defendant in San Diego Superior Court. In February 2005,

Defendant removed the superior court action to this Court. Plaintiff thereafter moved for a temporary

restraining order and prejudgment writ of attachment, or in the alternative, for a preliminary

injunction, which this Court denied. 

Magistrate Judge Adler then held several scheduling conferences with counsel. After an

October 19, 2005 conference, Judge Adler issued an order indicating formal discovery would

“continue to be stayed” in light of the pending arbitration hearing, which was scheduled to begin on

November 29, 2005. 

The arbitration commenced on that date, continued on intermittent dates, and concluded on

February 27, 2006. On April 7, 2006, the Arbitrator issued his decision, awarding Plaintiff a total of

$2,960,844.60. 

On May 2, 2006, the Court issued a scheduling order in this case. That order set May 30,

2006, as the deadline to file motions to amend the pleadings, which deadline was extended by

stipulation of the parties. Plaintiff then filed a motion for leave to file a First Amended Complaint,

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 Defendant states it is moving to strike paragraphs 22 and 23 from the First Amended

Complaint, (see Notice of Mot. at 1-2), but the paragraphs cited are actually paragraphs 26 and 27.

Accordingly, the Court construes Defendant’s request as a motion to strike paragraphs 26 and 27, not

22 and 23. 

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which added two new causes of action for negligence and injunctive relief, additional facts relating

to the arbitration, and attached as an exhibit a copy of the arbitration award. The present motion is

directed to the inclusion of facts related to the arbitration in the First Amended Complaint, and the

attachment thereto of the arbitration award, in its entirety. 

II. 

DISCUSSION

Federal Rule of Civil Procedure 12(f) enables the court to strike from any pleading “any

redundant, immaterial, impertinent, or scandalous matter.” Fed. R. Civ. P. 12(f). “Because of ‘the

limited importance of pleadings in federal practice,’ motions to strike pursuant to Rule 12(f) are

disfavored.” Estate of Migliaccio v. Midland National Life Ins. Co., 436 F.Supp.2d 1095, 1100 (C.D.

Cal. 2006) (citing Bureerong v. Uvawas, 922 F.Supp. 1450, 1478 (C.D. Cal. 1996)). One court has

stated that motions to strike must be denied “if any doubt exists whether the allegations in the

pleadings might be relevant in the action.” Montecino v. Spherion Corp., 427 F.Supp.2d 965, 967

(C.D. Cal. 2006) (citing In re 2TheMart.com Inc. Sec. Litig., 114 F.Supp.2d 955, 965 (C.D. Cal.

2000)).

In this case, Defendant moves to strike paragraphs 26, 27,2

 28, 32, 37, 38, 57, 78, 79, 80, 86

and 89, and Exhibit A from the First Amended Complaint. It asserts these paragraphs and the Exhibit

reflect the conclusions of the arbitrator that presided over the arbitration between Plaintiff and IV.

Defendant argues the arbitrator’s conclusions are irrelevant to this case, and they are prejudicial.

Defendant’s relevancy argument seems to be based on the fact that the arbitrator’s conclusions

are not binding on Defendant because it was not a party to the arbitration. This fact, however, does

not render the arbitration “immaterial” or “impertinent” to this case. “Immaterial” or “impertinent”

matter is that which “has no essential or important relationship to the claim for relief[,]” or matter that

does not “pertain” to the issues in question. 5C Charles Alan Wright & Arthur R. Miller, Federal

Practice and Procedure § 1382 (3d ed. 1998). Here, Defendant had a contractual relationship with

IV, a party to the arbitration, to act as a third-party administrator on insurance transactions involving

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 Defendant also claims the inclusion of these paragraphs and the Exhibit violate Federal Rule

of Civil Procedure 8(e) because they are not “simple, concise, and direct.” Whether the disputed

allegations satisfy Rule 8(e), however, does not resolve the separate issue of whether the allegations

are subject to strike pursuant to Rule 12(f). 

- 4 - 05cv324 

Plaintiff and IV. This relationship is enough to make the arbitration proceedings both material and

pertinent to this case.

Even absent the contractual relationship, Defendant’s counsel previously informed the Court

that the arbitrator’s decision was expected to resolve certain issues in this case. (See Docket No. 28

at 1-2) (stating “parties expect that the issues in this case pertaining to Plaintiff’s entitlement to the

approximately $100,000 held in trust by Defendant, or any portion thereof, will be resolved by the

arbitrator’s ruling[.]”) This representation certainly supports a finding that the arbitration proceedings

are material and pertinent to this case, and having made that representation to the Court, Defendant

may not now assert the arbitration proceedings are irrelevant, immaterial or impertinent to this case.

See Poweragent Inc. v. Electronic Data Systems Corp., 358 F.3d 1187, 1192 (9th Cir. 2004)

(explaining judicial estoppel precludes a party from gaining an advantage by asserting one position,

and then later asserting an inconsistent position in the same dispute).

Defendant’s remaining argument is that it will be prejudiced by inclusion of the disputed

paragraphs and the Exhibit in the First Amended Complaint.3 Defendant believes these allegations

are an attempt to hold Defendant liable for the arbitrator’s conclusions, which is manifestly unjust

because Defendant was not a party to the arbitration. It does not appear, however, that Plaintiff is

attempting to hold Defendant liable for the arbitration award. Rather, it appears Plaintiff is simply

relying on the arbitrator’s decision to explain the facts underlying its claims against Defendant. Any

asserted prejudice from the inclusion of these allegations in the First Amended Complaint, which the

Court notes is not evidence and will not be admitted at time of trial, is non-existent.

III.

CONCLUSION

In light of the above, the Court DENIES Defendant’s motion to strike portions of Plaintiff’s

/ / /

/ / /

/ / /

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First Amended Complaint. 

IT IS SO ORDERED.

DATED: September 28, 2006

DANA M. SABRAW

United States District Judge

cc: all parties

Judge Bencivengo

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