Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_15-cv-00421/USCOURTS-caed-1_15-cv-00421-1/pdf.json

Nature of Suit Code: 380
Nature of Suit: Other Personal Property Damage
Cause of Action: 28:1332 Diversity-Property Damage

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UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF CALIFORNIA 

STATE FARM GENERAL INSURANCE 

COMPANY; et al., 

Plaintiffs, 

v. 

ABC FULFILLMENT SERVICES, LLC, 

f/k/a HOBBY KING USA LLC, et al., 

Defendants. 

No. 1:15-cv-00421-KJM-JLT 

ORDER 

ADVANCE ENERGY INC., d/b/a 

THUNDER POWER RC, 

Cross-Complainant, 

v. 

CATHY ALLEMAND, et al., 

Cross-Defendants. 

A fire ignited in Cathy and Clark Allemand’s garage on January 1, 2012. State 

Farm General Insurance Company and State Farm Mutual Automobile Insurance Company (for 

convenience, “State Farm”), the Allemands’ insurers, bring this subrogation action in the 

Allemands’ stead, claiming a defective battery and charger caused the fire. The defendants, ABC 

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Fulfillment Services, LLC and Advance Energy Inc., manufactured and distributed the battery 

and charger. Advance Energy in turn filed a third-party complaint1 against the Allemands, 

claiming the fire was actually the Allemands’ fault. 

The matter is before the court on two motions: (1) State Farm’s motion to strike 

Advance Energy’s third-party claims against the Allemands, and (2) the Allemands’ motion to 

dismiss the same claims. The court held a hearing on October 30, 2015. Todd Harshman 

appeared for State Farm, Geordon Goebel appeared for the Allemands, and Teresa Starinieri 

appeared for Advance Energy. For the following reasons, the counterclaim is DISMISSED with 

prejudice and without leave to amend. 

I. SUBJECT MATTER JURISDICTION 

The Allemands challenge this court’s subject matter jurisdiction over the thirdparty complaint. A federal court cannot adjudicate the merits of any claim over which it lacks 

subject matter jurisdiction. Ex parte McCardle, 7 Wall. 506, 514 (1868). Subject matter 

jurisdiction may be challenged at any time, even initially on appellate review. Kontrick v. Ryan, 

540 U.S. 443, 455 (2004). In a facial attack such as this one, jurisdiction may rest on allegations 

alone. See Wolfe v. Strankman, 392 F.3d 358, 362 (9th Cir. 2004). 

Advance Energy removed this case on the basis of the court’s diversity jurisdiction 

under 28 U.S.C. § 1332. Not. Removal at 1, ECF No. 1. Diversity jurisdiction requires complete 

diversity. Wis. Dep’t of Corrections v. Schacht, 524 U.S. 381, 388 (1998). The State Farm 

plaintiffs are Illinois citizens. Not. Removal ¶ 12. Defendant Advance Energy is a citizen of 

Nevada. Id. ¶ 13. Defendant ABC Fulfillment is a citizen of Pennsylvania. Id. ¶ 14. Defendant 

Hobby King is either an alias of ABC Fulfillment, and thus a citizen of Pennsylvania, or a foreign 

corporation with its principal place of business in Hong Kong. See id. ¶ 15; Compl. ¶ 4, ECF 

 1

 Advance Energy named this pleading a “cross-complaint,” but because Advance 

Energy’s claims are asserted against the Allemands, who are third parties not previously joined to 

the case as plaintiff or defendant, in federal court Advance Energy’s pleading is a “third-party 

complaint,” Advance Energy a “third-party plaintiff,” and the Allemands “third-party 

defendants.” See Fed. R. Civ. P. 14. “Crossclaims,” by contrast, are claims asserted “by one 

party against a coparty.” See Fed. R. Civ. P. 13(g). 

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No. 1-1. State Farm alleges damages of more than $285,000. Compl. at 7. These allegations 

suffice to establish the court’s jurisdiction over the complaint. 

The court must also have subject matter jurisdiction over Advance Energy’s 

claims, which are brought under Federal Rule of Civil Procedure 14, which governs third party 

claims.2 See Caterpillar Inc. v. Lewis, 519 U.S. 61, 66 n.1 (1996); 13D Charles A. Wright, et al., 

Federal Practice & Procedure § 3567.2 (3d ed.). Under 28 U.S.C. § 1367, the court may exercise 

supplemental jurisdiction over any claim made under Rule 14 if that claim is “part of the same 

case or controversy under Article III of the United States Constitution.” See 28 U.S.C. § 1367(a). 

The court may therefore exercise supplemental jurisdiction over claims asserted by third-party 

plaintiff Advance Energy if those claims are part of the same case or controversy framed by the 

original complaint.3

 Advance Energy’s third-party complaint arises from the same battery fire 

that forms the basis of State Farm’s complaint, and is therefore part of the same case or 

controversy. See Answer & Cross-Complaint at 10, ECF No. 14.4 The court may exercise 

supplemental jurisdiction over Advance Energy’s claims. 

II. ALLEGATIONS AND PROCEDURAL HISTORY 

State Farm alleges Clark and Cathy Allemand purchased a defective battery and 

charger from Advance Energy and ABC. Compl. ¶¶ 16–18. According to the complaint, the 

defect caused the battery to overheat while it was charging, igniting the Allemand’s garage, 

destroying their two cars and other parts of their home, and causing them other damages. Id.

¶¶ 18–20. The Allemands owned insurance policies issued by State Farm, and State Farm made 

 2

 That rule provides, in relevant part, “A defending party may, as third-party plaintiff, 

serve a summons and complaint on a nonparty who is or may be liable to it for all or part of the 

claim against it.” Fed. R. Civ. P. 14(a)(1). 

3

 In a diversity action, § 1367(b) withdraws supplemental jurisdiction over claims by a 

“plaintiff” that would circumvent the requirements of diversity. But this rule does not apply here 

because Advance Energy is a defendant acting as a third-party plaintiff. See, e.g., Allstate 

Interiors & Exteriors, Inc. v. Stonestreet Const., LLC, 730 F.3d 67, 73 (1st Cir. 2013) (collecting 

authority); Wright, supra, § 3567.2 n.24. 

4

 To avoid confusion, page ranges cited in this document are those printed at the top right 

by the CM/ECF system. 

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payments of more than $285,000 for damages related to the fire. Id. ¶ 21. The insurance policies 

include subrogation clauses, which allow State Farm to pursue the Allemands’ rights on their 

behalf. Id. ¶¶ 2, 22. 

State Farm originally filed this action in state court in January 2015. It alleges 

claims in negligence and strict products liability against both defendants and requests damages, 

prejudgment interest, and attorneys’ fees. Id. at 4–8. As noted above, Advance Energy removed 

the case to federal court, in March 2015, ECF No 1, and filed a third-party complaint against the 

Allemands in June 2015, ECF No. 14. Advance Energy alleges the Allemands left the battery and 

charger unattended next to “combustible fluids” while charging in the garage. Id. at 10. It seeks 

relief under claims of negligence, equitable indemnity, and contribution, and seeks declaratory 

relief. See generally id.

On June 26, 2015, State Farm moved to strike the third-party complaint. ECF 

No. 21. It argues Advance Energy lacks any legal grounds for its claims, the third-party 

complaint is entirely redundant of Advance Energy’s affirmative defenses against State Farm, and 

allowing those claims to proceed would be inequitable. Id. at 3–5. The Allemands also move to 

dismiss the third-party complaint on essentially the same grounds. See Mot. Dismiss 6–7, ECF 

No. 36. Advance Energy opposes both motions. See Opp’n Strike, ECF No. 25; Opp’n Dismiss, 

ECF No. 41. State Farm and the Allemands both replied. Reply Strike, ECF No. 26; Reply 

Dismiss, ECF Nos. 42. 

III. MOTION TO STRIKE 

A court may strike any portion of a pleading that is “redundant, immaterial, 

impertinent, or scandalous.” Fed. R. Civ. P. 12(f). This rule is meant to avoid unnecessary 

expenditures of time and money over “spurious issues,” not to support resolution of disputed 

issues of fact or law. Whittlestone, Inc. v. Handi-Craft Co., 618 F.3d 970, 973 (9th Cir. 2010) 

(citation and quotation marks omitted). A motion under Rule 12(f) should not be granted “unless 

it is clear the matter to be stricken could have no possible bearing on the subject matter of the 

litigation.” Neveu v. City of Fresno, 392 F. Supp. 2d 1159, 1170 (E.D. Cal. 2005) (citation and 

quotation marks omitted). 

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Motions to strike are not vehicles for testing the legal sufficiency of a complaint. 

See, e.g., Whittlestone, 618 F.3d at 974 (citing Yamamoto v. Omiya, 564 F.2d 1319, 1327 (9th 

Cir. 1977)); Kelley v. Corr. Corp. of Am., 750 F. Supp. 2d 1132, 1146 (E.D. Cal. 2010). But 

because motions to strike under Rule 12(f) and motions to dismiss for failure to state a claim 

under Rule 12(b)(6) resemble one another as far as evidentiary standards and proof are concerned, 

district courts occasionally convert 12(f) motions to 12(b)(6) motions. See, e.g., Kelley, 750 F. 

Supp. 2d at 146; Consumer Solutions REO, LLC v. Hillery, 658 F. Supp. 2d 1002, 1020–21 (N.D. 

Cal. 2009); see also Whittlestone, 618 F.3d at 975 n.2 (evaluating the pleading alternatively under 

Rule 12(b)(6)). 

Here, Rule 12(b)(6) is the better fit for State Farm’s motion, which seeks dismissal 

of the third-party complaint on substantive legal grounds. Although State Farm’s arguments 

concern the pleadings’ redundancy, relevant authority suggests the type of redundancy Rule 12(f) 

targets is not legal redundancy, but literal redundancy. See, e.g., Whittlestone, 618 F.3d at 974 

(“[T]he claim for damages could not be redundant, as it does not appear anywhere else in the 

complaint.”); Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993), rev’d on other 

grounds, 510 U.S. 517 (1994) (“Superfluous historical allegations are a proper subject of a 

motion to strike.”). In addition, a district court’s decision on a motion to dismiss under Rule 

12(b)(6) is reviewed de novo, whereas a decision to strike under Rule 12(f) is reviewed for an 

abuse of discretion. Whittlestone, 618 F.3d at 973–74. For this reason, a motion to strike is not 

appropriate for questions of law such as those raised in State Farm’s motion. See id. The court 

therefore converts the motion to one under Rule 12(b)(6) for failure to state a claim and considers 

it concurrently with the Allemands’ motion under the same rule. At hearing, State Farm did not 

object. 

IV. LEGAL STANDARD 

A party may move to dismiss for “failure to state a claim upon which relief can be 

granted.” Fed. R. Civ. P. 12(b)(6). The motion may be granted only if the complaint lacks a 

“cognizable legal theory” or if its factual allegations do not support a cognizable legal theory. 

Hartmann v. Cal. Dep’t of Corr. & Rehab., 707 F.3d 1114, 1122 (9th Cir. 2013). The court 

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assumes these factual allegations are true and draws reasonable inferences from them. Ashcroft v. 

Iqbal, 556 U.S. 662, 678 (2009). Evaluation under Rule 12(b)(6) is a context-specific task 

drawing on “judicial experience and common sense.” Id. at 679. And aside from the complaint, 

district courts may consider affirmative defenses based on the complaint’s allegations. Sams v. 

Yahoo! Inc., 713 F.3d 1175, 1179 (9th Cir. 2013). 

V. DISCUSSION 

When, as here, the court exercises supplemental jurisdiction, state substantive law 

provides the rule of decision for all state law claims. Mason & Dixon Intermodal, Inc. v. 

Lapmaster Int’l LLC, 632 F.3d 1056, 1060 (9th Cir. 2011). California law therefore governs 

these motions. Unfortunately, however, no California case is squarely on point, as the parties 

acknowledged at hearing: in no published decision has a California court barred a defendant to an 

insurer’s subrogation claim from asserting affirmative claims against an absent insured. This 

court must therefore “apply the law as it believes the California Supreme Court would apply it.” 

Gravquick A/S v. Trimble Navigation Int’l, Ltd., 323 F.3d 1219, 1222 (9th Cir. 2003). For two 

reasons, this court concludes the California Supreme Court would not permit Advance Energy’s 

third-party complaint to proceed. 

A. State Farm Stands in the Allemands’ Shoes 

First, as noted above, State Farm brings its complaint on the Allemands’ behalf; 

the action is based in subrogation. “It is hard to imagine another set of legal terms with more 

soporific effect than indemnity, subrogation, contribution, co-obligation and joint tortfeasorship.” 

Herrick Corp. v. Canadian Ins. Co., 29 Cal. App. 4th 753, 756 (1994) (opinion of Sills, P.J.). 

“Subrogation is defined as the substitution of another person in place of the creditor or claimant 

to whose rights he or she succeeds in relation to the debt or claim.” Fireman’s Fund Ins. Co. v. 

Maryland Cas. Co., 65 Cal. App. 4th 1279, 1291 (1998). In practice, an insurer may often 

assume the position of its insured policyholder. Id. The insurer may then sue another on the 

policyholder’s behalf, especially those the insurer claims are responsible for losses the 

policyholder sustained and the insurer paid. Id. at 1291–92. The insurer stands in the insured’s 

shoes. Travelers Cas., Travelers Cas. & Sur. Co. v. Am. Equity Ins. Co., 93 Cal. App. 4th 1142, 

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1151 (2001). It has no greater rights than the insured and may assert the same defenses as the 

insured. Id.

Here, State Farm stands in the Allemands’ shoes. It may assert claims against 

ABC and Advance Energy related to the payments it made under the Allemands’ policies. 

Should the Allemands be found partially or wholly responsible for the fire, any recovery on their 

behalf in this action may be diminished, and State Farm would recover less on their behalf. In its 

opposition briefs, pleadings, and arguments at hearing, Advance Energy identifies no remedy it 

cannot pursue against State Farm alone. Its answer asserts defenses arising from the Allemands’ 

alleged negligence, carelessness, failure to mitigate damages, mishandling of the product, and 

similar allegations. See Answer & Cross-Complaint at 2–6. Assuming the allegations of the 

third-party complaint are true, Advance Energy will escape this lawsuit without liability, 

regardless of its claims against the Allemands. It has cited no authority to show it would then 

also be barred from requesting an award of costs or fees. In sum, its third-party complaint is 

wholly duplicative of its answer to State Farm’s complaint. 

B. Equitable Subrogation Against an Insured 

“An insurer has no right of equitable subrogation against its own insured with 

respect to a loss or liability for which the insured is covered under the policy because, as between 

the insurer and the insured, the insurer assumes responsibility for the loss or liability.” Truck Ins. 

Exch. v. Cnty. of L.A., 95 Cal. App. 4th 13, 21 (2002). Otherwise the insurer could completely 

undermine the insurance policy. Id. Were Advance Energy to succeed in this case, the 

Allemands would in effect be forced to contribute to a judgment against State Farm. That is, 

State Farm would recover from Advance Energy, Advance Energy would recover from the 

Allemands, and State Farm would have effectively vindicated a subrogation right against the 

Allemands for claims covered by the policy, a result prohibited by California law. See id.

VI. CONCLUSION 

In these circumstances, the California Supreme Court would likely find that 

allowing Advance Energy’s third-party complaint to proceed would be “inequitable.” See id. 

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The third-party complaint is therefore DISMISSED with prejudice and without leave to amend. 

This order resolves ECF Nos. 21 and 36. 

IT IS SO ORDERED. 

DATED: January 12, 2016. 

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