Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_06-cv-00846/USCOURTS-cand-5_06-cv-00846-1/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1332 Diversity-Insurance Contract

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ORDER, page 1

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

ALLSTATE CASUALTY INSURANCE

COMPANY,

Plaintiff,

v.

WENDELL ANDERSON, BRANDON

BARNES, and CHAD ELLIS,

Defendants.

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Case No.: C 06-00846 (PVT)

ORDER GRANTING MOTION TO

DISMISS WITHOUT PREJUDICE

On May 11, 2006, Defendant Wendell Anderson filed a motion to dismiss the amended

complaint. Defendants Brandon Barnes and Chad Ellis joined the motion to dismiss. Plaintiff

opposed the motion. The motion was heard on August 1, 2006. Based on the briefs and arguments

presented,

IT IS HEREBY ORDERED that Defendants’ motion is GRANTED without prejudice.

I. STANDARD FOR MOTION TO DISMISS

A motion to dismiss suit for declaratory judgment is addressed to discretion of the court. 

Brillhart v. Excess Ins. Co., 316 U.S. 491, 494 (1942); Government Employees Ins. Co. v. Dizol, 

133 F.3d 1220, 1225 (9th Cir.1998). In declaratory relief actions, there is generally no presumption

in favor of absention. Dizol, 133 F. 3d 1226 (9th Cir. 1998). The court considers several factors

when ruling. The Brillhart factors, while not exhaustive, are “philosophical touchstones” for the

court to consider, such as: whether jurisdiction would involve needless determination of state law

issues, whether jurisdiction would encourage forum shopping, and whether jurisdiction would

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ORDER, page 2

involve duplicate litigation. Brillhart, 316 U.S. 494-496 (1942); see also Dizol, 133 F. 3d 1225 

(9th Cir. 1998). Courts generally do not provide declaratory relief in matters where related facts are

disputed in an underlying matter. California Insurance Guarantee Associate v. Superior Court, 231

Cal. App. 3d 1617, 1623 (1991). In a declaratory relief action, “federal courts should be reluctant to

decide factual issues which are currently at-issue in state court.” State Farm Fire and Casualty Co.

v. McIntosh, 837 F.Supp. 315, 316 (N.D. Cal. 1993). When a federal court adjudicates such factual

issues, parties may be collaterally estopped from litigating the issue in the underlying state matter. 

Id. 

II. FACTUAL BACKGROUND

On September 24, 2003 several members of the Yuba County Sheriff’s Department Special

Enforcement Detail (S.E.D) (commonly called “SWAT”) Team traveled to Morgan Hill, California

to attend a SWAT competition. The attending officers included Defendants Wendell Anderson

(“Anderson”), Brandon Barnes (“Barnes”) and Chad Ellis (“Ellis”). Ellis alleges that during the trip

he suffered injuring resulting from a hazing incident which took place in Barnes’ hotel room. 

III. PROCEDURAL BACKGROUND

 In 2004 Ellis filed a lawsuit against Anderson, Barnes and the County of Yuba, entitled Ellis

v. County of Yuba, et al. (the “Underlying Matter”) in Santa Clara County Superior Court. The

matter is still pending. The defendants in the Underlying Matter (Anderson and Barnes) originally

claimed the injuries resulted from horseplay within the course of their duties. 

Anderson and Barnes tendered their defense to the County of Yuba in the Underlying Matter. 

The county has alleged in the Underlying Matter that the defendants were not acting in the course

and scope of their employment at the time of the incident, and refused the tender of defense. 

Anderson and Barnes also tendered their defense to their homeowner’s insurance policy carrier,

Allstate, who accepted the tender of defense under a reservation of rights. However, both Anderson

and Barnes are being provided defense through the Peace Officers Research Associate of California

(PORAC) Legal Defense fund. It appears Allstate has not paid any defense costs as of this time.

On February 8, 2006, Allstate filed this action against Anderson, Barnes, and Ellis. Allstate's

complaint seeks declaratory relief and reimbursement stemming from the Underlying Matter in Santa

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ORDER, page 3

Clara County Superior Court. It contends the insurance policy held by Anderson and Barnes does

not provide coverage for liability or potential liability of the defendants arising out of the Underlying

Matter for two reasons. First, that the insureds acted intentionally. Second, that the alleged injury

arose out of business activities of the insured persons. Ellis amended his complaint in the

Underlying Matter a second time to deny any connection between the incident and any business

activity. 

Anderson, joined by Barnes and Ellis, now bring a motion to dismiss, stay or remand this

action on the grounds that: (1) Adjudicating the matter would require the court to determine disputed

issues in the Underlying Matter, namely if the incident occurred intentionally and within the course

and scope of employment; and (2) Venue is improper.

IV. DISCUSSION

A. ADEQUACY OF MOTION TO DISMISS BASED ON LIABILITY FOR INTENTIONAL ACTS

OF THE INSUREDS

Allstate has offered to sever the issues relating to whether or not Anderson and Barnes acted

willfully and whether there is liability for intentional acts. Based on the Underlying Matter, Allstate

is willing to stay these issues pending the outcome of the Underlying Matter. 

B. ADEQUACY OF MOTION TO DISMISSED BASED ON LIABILITY FOR ACTS

OCCURRING DURING THE SCOPE AND COURSE OF THE INSURED'S EMPLOYMENT

Defendants argue that Allstate's lawsuit seeking declaratory relief and reimbursement should

be dismissed because it is premature and improper for the court to adjudicate factual issues presented

which are already being litigated in an Underlying Matter. In the Underlying Matter, Anderson and

Barnes argue the injuries sustained by the victim Ellis resulted from actions associated with their

work as sheriff's employees. Anderson and Barnes contend the acts were related to employment in

response to the County of Yuba's motion for summary judgment claiming no responsibility for

defendants acts not related to business activity. Therefore, the court would be required to determine

facts which are also at issue in the underlying matter, which could disrupt the adjudication of the

underlying matter. State Farm Fire and Casualty Co. v. McIntosh, 837 F.Supp. at 316. 

According to Montrose Chem. Corp. v. Superior Court (Montrose I), an insurer may obtain

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1 Pleading in the alternative is permissible even when the claims may be inconsistent.

Adams v. Paul, 11 Cal.4th 583, 593 (1995). See also Cal. Procedure (3d ed. 1985) Pleading, §§

356-358, pp. 411- 414 

ORDER, page 4

declaratory relief before resolution of an underlying tort action if the resolution of the issues involve

undisputed facts or different issues than those involved in the underlying action. Montrose I, 

6 Cal. 4th 287, 302 (1993). Accordingly, in order for Allstate to be entitled to declaratory relief it

must establish that there are no related issues or facts being determined in the pending Underlying

Matter. Defendants maintain adjudication of related issues or facts should be precluded because

inconsistent rulings could result which may prejudice the insureds. Anderson and Barnes further

argue that if the matter is not stayed or dismissed they would be forced to abandon their primary

defense in the Underlying Matter. Anderson and Barnes argue that defending against this declaratory

relief action would require them to publically plead that they were not acting in the course and scope

of their employment during the time of the incident. This is contrary to their defense in the

Underlying Matter, where they maintain their actions were related to employment.1 Defendants also

contend prejudice could occur because of the possibility that some issues could be collaterally

estopped.

An insurer has a duty to defend if the insured is potentially entitled to coverage under the

insurance policy. Montrose I, 6 Cal. 4th 287 (1993); Montrose Chem. Corp. v. Superior Court

(Montrose II), 25 Cal. App. 4th 902 (1994). Anderson, Barnes and Ellis note that the second

amended complaint submitted by Ellis in the Underlying Matter states the incidents did not arise out

of business activity. This claim, according to the Defendants, triggers Allstate's duty to defend

Anderson and Barnes in the Underlying Matter.

Adjudication of the present claim would require assessment of issues and facts also being

adjudicated in the pending Underlying Matter. Specifically, both lawsuits concern the question of

whether Anderson and Barnes were acting in the course and scope of their employment. Anderson

and Barnes could be prejudiced by a ruling on the present complaint. Therefore, dismissal of the

claim is warranted. The case shall be dismissed without prejudice. Once the Underlying Matter has

been adjudicated, Allstate may re-file a claim should it be deemed necessary.

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ORDER, page 5

C. ATTEMPTED UNJUST ENRICHMENT CLAIM

Allstate also attempts to allege unjust enrichment causes of action against Anderson and

Barnes. In diversity cases, the district court has an obligation to exercise jurisdiction over state law

claims which are joined with an action for declaratory relief, such as unjust enrichment claims.

Government Employees Ins. Co. v. Dizol, 133 F.3d 1220, 1226 (9th Cir. 1998). However, a claim for

unjust enrichment requires “receipt of a benefit and unjust retention of the benefit at the expense of

another.” Lectrodryer v. Seoul Bank, 77 Cal. App. 4th 723 (2000). Allstate has not made any such

allegations. Therefore, Allstate’s unjust enrichment claim fails for lack of any alleged benefit

actually received by Anderson and Barnes. Fed. R. Civ. Pro. 12(b)(6). If Plaintiff believes it can

allege the elements of unjust enrichment in good faith under Rule 11at this time, they may have leave

to amend and must do so within twenty days.

D. VENUE

Defendants contends that venue is improper and the case should therefore be dismissed. 

According to 28 U.S.C. §1406(a), if venue is improper then a complaint may properly be dismissed. 

Anderson, Barnes and Ellis argues the claim involves a contract dispute and venue should be based

on where the contract was negotiated, signed and performed. While the Defendants raise the venue

argument, the court need not reach it because the court is granting the motion to dismiss. See, e.g.,

Feinstein v. Moses, 951 F.2d 16 (1st Cir. 1991).

V. CONCLUSION

Based on the foregoing analysis, dismissal of this action is warranted. There are potential

factual issues which would require consideration in both this matter and the Underlying Matter. 

Issues that are the same or related should be adjudicated in the Underlying Matter prior to a ruling

regarding Allstate’s liability. 

Dated: 8/11/06

 

PATRICIA V. TRUMBULL

United States Magistrate Judge

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