Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_06-cv-07021/USCOURTS-cand-4_06-cv-07021-2/pdf.json

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

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United States District Court

For the Northern District of California

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Docket No. 53.

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Docket No. 72.

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Docket No. 73.

United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

REGINA MONACO,

 Plaintiff,

 v.

LIBERTY LIFE ASSURANCE CO,

Defendant. /

No. C06-07021 MJJ

ORDER DENYING IN PART AND

GRANTING IN DEFENDANTS’ MOTION

TO DISMISS, AND DENYING

PLAINTIFF’S MOTION TO STRIKE

INTRODUCTION

Before the Court is Defendant Liberty Life Assurance Company of Boston (“Liberty Life”)

and Defendant Liberty Mutual Insurance Company’s (“Liberty Mutual”) (collectively,

“Defendants”) Motion to Dismiss Liberty Mutual from this action.1

 Plaintiff Regina Monaco

(“Plaintiff” or “Monaco”) opposes the motion. Also before the Court is Plaintiff’s Motion to Strike

Defendants’ Reply Brief for exceeding the maximum page limit2

 and Defendants’ Ex Parte Motion

for Leave to Exceed the Reply Brief Page Limit.3

 For the following reasons, the Court DENIES in

part and GRANTS in part Defendants’ Motion to Dismiss; the Court DENIES Plaintiff’s Motion to

Strike; and the Court STRIKES Defendants’ Motion for Leave as moot. 

///

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Defendants moved to dismiss all claims against Liberty Mutual on grounds that Liberty Mutual was not a party to

the insurance contract at issue and because Plaintiff had failed to plead that Liberty Mutual was an alter ego, agent, partner,

or joint venturer of Liberty Life. In granting Defendants’ motion to dismiss, this Court found that: (1) Liberty Mutual was

not directly liable for Plaintiff’s claims because it was not a party to the insurance contract; (2) Plaintiff had failed to

sufficiently allege that Liberty Mutual was the alter-ego of Liberty Life, or allege facts from which the Court could find a

basis to disregard the corporate formalities; and (3) Plaintiff had failed to allege facts to support the existence of an agency,

partnership, or joint venture between Liberty Life and Liberty Mutual. (Order Granting Defendants’ Motion to Dismiss

Plaintiff’s Complaint.)

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Plaintiff’s First Amended Complaint is identical to her original Complaint, with the exception of two paragraphs

in which Plaintiff pleads additional allegations to support her alternative theories that Liberty Mutual and Liberty Life are

agents, partners, joint venturers, and/or alter egos. (FAC ¶¶ 4, 5.) 

2

FACTUAL BACKGROUND

This action arises from the alleged wrongful denial of disability benefits to which Plaintiff

claims she is entitled under a group disability income policy. On October 4, 2006, Plaintiff filed her

Complaint in the Superior Court for the State of California for the County of Alameda. On

November 9, 2006, Defendants removed the action to this Court. On February 6, 2007, this Court

granted Defendants’ motion to dismiss, without prejudice.4

 On February 15, 2007, Plaintiff filed her

First Amended Complaint5

. The material allegations taken from Plaintiff’s First Amended

Complaint are as follows.

Plaintiff was employed at the University of California Lawrence Livermore Laboratories

(“Lawrence Livermore”) and later employed at the University of California at Santa Cruz (“U.C.

Santa Cruz”), during which time Plaintiff was eligible for short and long-term disability benefits

under a Group Disability Income Policy (“the Policy”) issued by Defendants. (First Amended

Complaint (“FAC.”) at ¶¶ 10-12.) While employed at Lawrence Livermore, Plaintiff sustained an

injury for which she claimed disability benefits under the Policy. (Id. at ¶¶ 14-15.) Defendants

wrongfully denied Plaintiff’s initial claim for benefits, and subsequently denied Plaintiff’s appeal. 

(Id. at ¶¶ 17-18.) 

Plaintiff later submitted a second claim for disability benefits to Defendants under the Policy. 

(Id. at ¶¶ 19-21.) Plaintiff’s second claim arose from a “new and different injury” sustained while

employed at U.C. Santa Cruz. (Id. at ¶ 19.) Plaintiff alleges that Defendants wrongfully denied her

second claim for benefits, and subsequently denied her appeal. (Id. at ¶¶ 22-24.)

Plaintiff alleges that Liberty Life is a wholly owned subsidiary of Liberty Mutual, and that

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Liberty Life’s operations were controled and managed by Liberty Mutual such that the entities

operate as a single insurance company. (Id. at ¶ 4.) According to Plaintiff, Liberty Life and Liberty

Mutual constitute a single partnership, association, or joint venture under the management and

control of Liberty Mutual such that the entities are alter egos of each other. (Id.) 

Plaintiff asserts four causes of action against Liberty Life and Liberty Mutual. Plaintiff’s

first and second causes of action arise from Plaintiff’s initial claim for benefits for her injury

sustained at Lawrence Livermore and are against both Defendants for breach of contract and breach

of the implied covenant of good faith and fair dealing. (Id. at ¶¶ 25-35) (emphasis added.) 

Plaintiff’s third and fourth causes of action arise from Plaintiff’s second claim for benefits for her

injury sustained at U.C. Santa Cruz and are against both Defendants for breach of contract and

breach of the implied covenant of good faith and fair dealing. (Id. at ¶¶ 36-45) (emphasis added.) 

Defendants again move to dismiss each of Plaintiff’s causes of action as to Liberty Mutual.

LEGAL STANDARD

A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the legal

sufficiency of a claim. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). Because the focus of a

12(b)(6) motion is on the legal sufficiency, rather than the substantive merits of a claim, the Court

ordinarily limits its review to the face of the complaint. See Van Buskirk v. Cable News Network,

Inc., 284 F.3d 977, 980 (9th Cir. 2002). Generally, dismissal is proper only when the plaintiff has

failed to assert a cognizable legal theory or failed to allege sufficient facts under a cognizable legal

theory. See SmileCare Dental Group v. Delta Dental Plan of Cal., Inc., 88 F.3d 780, 782 (9th Cir.

1996); Balisteri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1988); Robertson v. Dean

Witter Reynolds, Inc., 749 F.2d 530, 534 (9th Cir. 1984). Further, dismissal is appropriate only if it

appears beyond a doubt that the plaintiff can prove no set of facts in support of a claim. See

Abramson v. Brownstein, 897 F.2d 389, 391 (9th Cir. 1990). In considering a Rule 12(b)(6) motion,

the Court accepts the plaintiff’s material allegations in the complaint as true and construes them in

the light most favorable to the plaintiff. See Shwarz v. United States, 234 F.3d 428, 435 (9th Cir.

2000). However, “[t]he court need not accept as true conclusionary allegations or legal

characterizations. Nor need it accept unreasonable inferences or unwarranted deductions of fact.” 

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Hon. William W. Schwarzer, et al., California Practice Guide: Federal Civil Procedure Before Trial

§ 9:221 (2006) (citations omitted); see also Halkin v. VeriFone Inc., 11 F.3d 865, 868 (9th Cir.

1993) (stating “[c]onclusory allegations of law and unwarranted inferences are insufficient to defeat

a motion to dismiss for failure to state a claim.”) 

In the context of a motion to dismiss, when matters outside the pleading are presented to and

accepted by the court, the motion to dismiss is converted into one for summary judgment. However,

matters properly presented to the court, such as those attached to the complaint and incorporated

within its allegations, may be considered as part of the motion to dismiss. See Hal Roach Studios,

Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1555 n.19 (9th Cir. 1989). Where a plaintiff fails to

attach to the complaint documents referred to therein, and upon which the complaint is premised, a

defendant may attach to the motion to dismiss such documents in order to show that they do not

support the plaintiff’s claim. See Pacific Gateway Exchange, 169 F. Supp. 2d 1160, 1164 (N.D.

Cal. 2001); Branch v. Tunnell, 14 F.3d 449, 44 (9th Cir. 1994) (overruled on other grounds). Thus,

the district court may consider the full texts of documents that the complaint only quotes in part. See

In re Stay Electronics Sec. Lit., 89 F.3d 1399, 1405 n.4 (1996), cert denied, 520 U.S. 1103 (1997). 

This rule precludes plaintiffs “from surviving a Rule 12(b)(6) motion by deliberately omitting

references to documents upon which their claims are based.” Parrino v. FHP, Inc., 146 F.3d 699,

705 (9th Cir. 1998). 

Motions to dismiss for failure to state a claim are generally disfavored. See Gilligan v.

Jamco Dev. Corp., 108 F.3d 246, 249 (9th Cir. 1997); United States v. City of Redwood City, 640

F.2d 963, 966 (9th Cir. 1981). In dismissing for failure to state a claim, “a district court should grant

leave to amend even if no request to amend the pleadings was made, unless it determines that the

pleading could not possibly be cured by the allegation of other facts.” Doe v. United States, 58 F.3d

494, 497 (9th Cir. 1995) (citations omitted).

ANALYSIS

A brief summary of the parties’ arguments are as follows. Defendants take positions that are

nearly identical to those in their previous motion to dismiss. In particular, Defendants insist that

Plaintiff’s causes of action against Liberty Mutual must be dismissed because Liberty Mutual is not

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Because this case was removed to federal court on the basis of diversity jurisdiction, California law governs the

substantive issues of the case. Aceves v. Allstate Ins. Co., 68 F.3d 1160, 1163 (9thCir. 1995) (citing Intel Corp. v. Hartford

Acc. & Indem. Co., 952 F.2d 1551, 1556 (9th Cir. 1991)).

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a party to the insurance contract at issue. Next, Defendants contend that each of Plaintiff’s

alternative theories of liability against Liberty Mutual – for alter ego, partnership, agency, and/or

joint venturer – also fail. In her Opposition, Plaintiff maintains that dismissal of Liberty Mutual

would be inappropriate because the alter ego analysis is a fact-intensive inquiry, not appropriately

resolved in the context of a motion to dismiss. Plaintiff avers that not allowing her to proceed

against Liberty Mutual under an alter ego theory would defeat her ability to recover her full amount

of potential damages and also hinder her ability to obtain meaningful discovery from both

Defendants. As to her remaining theories of liability, Plaintiff maintains that she has sufficiently

alleged facts to support liability against Liberty Mutual on grounds that Liberty Mutual and Liberty

Life are an unincorporated association, a joint venture, and/or an agency. The Court now turns to

the allegations against Liberty Mutual as contained in Plaintiff’s First Amended Complaint.

I. Liberty Mutual is Not a Party to the Contract

As an initial matter – as this Court stated in its previous Order granting Defendant’s motion

to dismiss Plaintiff’s Complaint – Liberty Mutual may not be directly liable for breach of contract or

breach of the implied covenant because Liberty Mutual was not a party to the insurance contract

between Liberty Life and the University of California. (Order Granting Defendants’ Motion to

Dismiss Plaintiff’s Complaint at 6:1-8:2.) The general rule provides that such an action in contract

and tort lies only against the insurer as the party to the contract. Hon. H. Walter Croskey, et al.,

California Practice Guide: Insurance Litigation § 12:92 (2006) (citing Gruenberg, 9 Cal 3d at 576;

Tran v. Farmers Group, Inc., 104 Cal. App. 4th 1202, 1216 (2002) (citations omitted)); see also

Waller v. Truck Ins. Exchange, Inc., 11 Cal. 4th 1, 36 (1995); Cal. Civ. Code § 1550.6

 The Court

reasoned that no exception to that general rule applied to the current case. A review of the First

Amended Complaint does not change the Court’s conclusion here. Plaintiff’s allegations remain

insufficient to state a cause of action against Liberty Mutual under the exception to the general rule. 

Therefore, as in the previous Order, the Court now turns to Plaintiff’s alternate theories of liability to

determine if Plaintiff has otherwise stated a cause of action against Liberty Mutual in the operative

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In evaluating the particular circumstances of each case, courts may consider a number of factors in determining

whether the corporate existence will be disregarded. See Associated Vendors, 210 Cal. App. 2d at 837. A non-inclusive list

of the factors that may be considered in analyzing the two-prong test include: The unauthorized use of or commingling of

funds or the failure to segregate the funds of the separate entities; the failure to maintain minutes or adequate corporate

records; the confusion of the records of the separate entities; the identical equitable ownership in the two entities;

identification of the equitable owners thereof with the domination and control of the two entities; the use of the same office

or business locations; the employment of the same employees and/or attorney; the failure to adequately capitalize a

corporation or the total absence of corporate assets; the use of a corporation as a mere shell, instrumentality, or conduit for

a single venture or the business of an individual or another corporation; the concealment and misrepresentation of the identity

of the responsible ownership, management and financial interest, or concealment of personal business activities; the disregard

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Complaint.

II. Alternative Theories of Liability Against Liberty Mutual

A. Alter Ego

Defendants argue that the allegations in Plaintiff’s First Amended Complaint are insufficient

to support the theory that Liberty Mutual is the alter-ego of Liberty Life. More specifically,

Defendants insist that Plaintiff has failed to allege a unity of interests between Liberty Mutual and

Liberty Life, or that dismissing Liberty Mutual would result in a fraud or inequity. Conversely, in

support of her alter ego argument, Plaintiff relies on the new allegations contained in paragraphs 4

and 5 of the First Amended Complaint. According to Plaintiff, there are ample factual allegations of

an alter ego relationship to defeat Defendants’ motion to dismiss. 

As previously noted by this Court, in the insurance context, bad faith liability may be

imposed on a person or entity shown to be a corporate insurer’s “alter-ego.” To justify piercing the

corporate veil on an alter-ego theory, thereby holding a parent corporation liable for the acts or

omissions of its subsidiary, a plaintiff must establish two general requirements: “(1) that there be

such unity of interest and ownership that the separate personalities of the corporation and the

individual no longer exist and (2) that, if the acts are treated as those of the corporation alone, an

inequitable result will follow.” See Hon. William W. Schwarzer, et al., supra § 12:97.5 (citing

Mesler v. Bragg Management Co., 39 Cal. 3d 290, 300 (1985)); Laird v. Capital Cities/ABC, Inc.,

68 Cal. App. 4th 727, 737 (1998). The question whether alter ego liability applies is a factual

inquiry which necessarily varies according to the circumstances of each case. Institute of Veterinary

Pathology, Inc. v. Calif. Health Laboratories, Inc., 116 Cal. App. 3d 111, 119 (1981). The trier of

fact must consider a wide variety of factors7

 to determine whether both prongs of this test are

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28 of legal formalities and the failure to maintain arm’s length relationships among related entities; and the manipulation of

assets and liabilities between entities so as to concentrate the assets in one and the liabilities in another. Id. at 837-40

(citations omitted).

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satisfied. Associated Vendors, Inc. v. Oakland Meat Co., 210 Cal. App. 2d 825, 837 (1962). No

single factor is determinative, and instead a court must examine all the circumstances to determine

whether to apply the doctrine. Talbot v. Fresno-Pac. Corp., 181 Cal. App. 2d 425, 432 (1960). In

order to successfully plead liability for an underlying cause of action under the alter-ego theory, the

plaintiff must make allegations of facts from which it appears that recognition of the corporate entity

would sanction a fraud or promote injustice. See Meadows v. Emett & Chandler, 99 Cal. App. 2d

496, 499 (1950); Judelson v. Am. Metal Bearing Co., 89 Cal. App. 2d 256, 263 (1948). Conclusory

allegations of alter-ego status are not sufficient. See Hokama v. E.F. Hutton & Co., Inc., 566 F.

Supp. 636, 647 (C.D. Cal. 1983) (citation omitted). There is a general presumption in favor of

respecting the corporate entity. Calvert v. Huckins, 875 F. Supp. 674, 678 (E.D. Cal. 1995).

1. Unity of Interest

The first general requirement for alter ego liability is that there be such unity of interest and

ownership that the separate personalities of the corporation and the individual no longer exist. See

Hon. William W. Schwarzer, et al., supra § 12:97.5 (citing Mesler, 39 Cal. 3d at 300). Defendants

contend that the invocation of “alter ego” is not a “magic talisman” to satisfy the pleading

requirements. Plaintiff responds by identifying new and specific factual allegations from the First

Amended Complaint. In order to determine if Plaintiff has sufficiently pleaded alter ego liability,

the Court must compare Plaintiff’s original and her First Amended Complaints. 

Here, Plaintiff’s First Amended Complaint contains a number of new factual allegations

which sufficiently implicate the factors enumerated in Associate Vendors. Associated Vendors, 210

Cal. App. 2d at 837-40. In particular, some of Plaintiff’s allegations are that: Liberty Mutual

controlled and managed Liberty Life’s claims operation such that the entities acted as a single

company (FAC ¶ 4); Liberty Mutual is the parent company of Liberty Life and owns 90% of Liberty

Life (id. ¶¶ 4.a, 4.b); the entities share a common corporate headquarters address (id. ¶ 4.c); the

entities are part of Liberty Mutual’s holding company structure (id. ¶ 4.e); Liberty Mutual fully

guarantees the insurance policy and annuity contract obligations of Liberty Life (id. ¶ 4.f); the

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Admittedly, no single factor in isolation is normally sufficient to establish alter ego liability. See e.g., Institute of

Veterinary Pathology, Inc., 116 Cal. App. 3d at 119-20 (alter ego liability is not established by stock ownership or

interlocking directorates alone) (citation omitted); Wady v. Provident life & Acc. Ins. Co. of Am., 216 F. Supp. 2d 1060, 1668

(C.D. Cal. 2002) (acts of borrowing money from its subsidiary and use of pronouns such as “we,” “us,” or “our,” was

insufficient to establish alter ego liability); Doe v. Unocal Corp., 248 F.3d 915, 926 (9th Cir. 2001) (“a parent corporation

may be directly involved in financing and macro-management of its subsidiaries . . . without exposing itself to a charge that

each subsidiary is merely its alter ego.”) However, in the current case, in examining the totality of the circumstances,

Plaintiff’s First Amended Complaint adequately implicates a requisite number of alter ego factors to allege a unity of interest.

Furthermore, the Court notes that the majority of the alter ego cases on which Defendants rely are procedurally

inapposite because they were not decided at the pleadings stage, but instead were decided either after trial or at summary

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entities share services of personnel, equipment, telephone, computers, and other business machines

(id. ¶ 4.h); Liberty Mutual markets Liberty Life’s products (id ¶ 4.i); the entities share a common

chairman of their respective boards (id. ¶ 4.j); the entities share several other officers (id.); five of

the seven directors of Liberty Life are also directors of Liberty Mutual (id. ¶ 4.k); the entities share a

common web page (id. ¶ 4.l); Liberty Mutual employs the claims personnel who handle Liberty Life

disability claims (id. ¶ 4.m); Liberty Mutual handles Liberty Life disability administrative appeals

(id.); Liberty Life and Liberty Mutual share the same computer system (id.); Liberty Mutual

provides training for Liberty Life’s claims employees (id. ¶ 4.n); Liberty Life’s Claims Procedure

Manual indicates that Liberty Mutual prepared or participated its preparation (id. ¶ 4.o); Liberty

Life’s Claims Procedure Manual refers to “Liberty” without drawing a distinction between Liberty

Mutual and Liberty Life (id.); Liberty Mutual’s logo appears in numerous locations in Liberty Life’s

Claim Procedure Manual (id.); the entities use the same agent for the service of process (id. ¶ 4.r);

the entities use the same counsel (id. ¶ 4.s); the entities use the same logo (id. ¶ 4.x); Liberty Life’s

“operations are integrated with its parent via an administrative services agreement with all

employees maintained by Liberty Mutual (id. ¶ 4.aa); and Plaintiff’s December 20, 2000 and March

7, 2005 benefits denial letters contain a Liberty Mutual logo (id. ¶¶ 4.cc, 4.dd). Here, Plaintiff has

gone beyond the mere “conclusory allegations” that were contained in the original Complaint. See

Rae Systems, Inc. v. TSA Systems, Ltd., 2005 WL 1513124 at *4 (N.D. Cal. 2005); Federal Reserve

Bank of San Francisco v. HK Systems, Eaton Corp., 1997 WL 227955 at *6 (N.D. Cal. 1997). 

Because the facts regarding many of the other Associated Vendors factors are presumably in

Defendants’ exclusive control, it would be inappropriate for the Court to grant Defendants’ motion

without allowing Plaintiff an opportunity to obtain discovery as to those other factors.8

 As a result,

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28 judgment. See e.g., Weban Estate, Inc. v. Hewlett, 193 Cal. 675 (1924); Roman Catholic Archbishop of San Francisco v.

Super. Ct. of Alameda (Sheffield), 15 Cal. App. 3d 405 (1971); Institute of Veterinary Pathology, Inc., 116 Cal. App. 3d 11

(1981); Judelson v. Am. Metal Beating Co., 89 Cal. app. 2d 256 (1948). 

9

the Court cannot say, at this stage of the case, that Plaintiff can prove no set of facts that would

entitle her to relief against Liberty Mutual under an alter ego theory of liability. 

2. Inequitable Result

The second general requirement for alter ego liability is that an inequitable result will follow 

if the acts are treated as those of the corporation alone. See Hon. William W. Schwarzer, et al.,

supra § 12:97.5 (citing Mesler, 39 Cal. 3d at 300). Here, Plaintiff’s First Amended Complaint

contains an allegation that injustice would result if Liberty Mutual were not a party to the action. 

(FAC ¶¶ 4, 5.) Plaintiff claims that she would be precluded from adequately pursuing her claims for

compensatory and punitive damages. (Id.) Defendants argue that Plaintiff has failed to sufficiently

plead the second general requirement, and that dismissing Liberty Mutual would not promote an

inequitable result because Liberty Life has sufficient assets to satisfy any potential judgment.

Again, however, Defendants rely on cases that are procedurally inapposite because they were

not decided at the pleadings stage, but instead were decided either after trial or at summary

judgment. See e.g., Wady, 216 F. Supp. 2d 1060; Tomaselli v. Transamerica Ins. Co., 25 Cal. App.

4th 1269 (1994). Here, the Court cannot conclude, at this stage of the case, that Plaintiff can prove

no set of facts that would entitle her to relief against Liberty Mutual under an alter ego theory of

liability. Because the issue of alter ego liability is a fact intensive inquiry and because Plaintiff has

satisfied the notice pleading requirement, dismissal of Plaintiff’s alter ego theory would be

inappropriate here. For this reason, the Court DENIES Defendants’ Motion to Dismiss to the extent

it is based on Plaintiff’s failure to sufficiently allege alter ego liability in the First Amended

Complaint.

B. Agency

In the First Amended Complaint, Plaintiff alleges that Liberty Mutual and Liberty Life are

agents. (FAC at ¶ 9.) Defendants assert that there can be no agency liability because: (1) Liberty

Mutual is not an agent of Liberty Life because Liberty Mutual did not exercise the necessary degree

of control over Liberty Life to establish agency; and (2) Liberty Life is not an agent of Liberty

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To the extent Plaintiff alleges that Liberty Mutual is an agent of Liberty Life, the Court finds her allegation fails

as a matter of law. Under California law, an insurance agent, acting within the scope of her agency for a disclosed insurance

agency, is an improper defendant. Good v. Prudential Ins. Co. of Am., 5 F. Supp. 2d 804, 807 (N.D. Cal. 1998). The

California Court of Appeal in Lippert v. Bailey, 241 Cal. App. 2d 376, 382 (1966), held that liability to the insured “for acts

or contracts of an insurance agent within the scope of his agency, with a full disclosure of the principal, rests on the

company.” See also, Kurtz, Richards, Wilson & Co., Inc. v. Insurance Communicators Marketing Corporation, 12 Cal. App.

4th 1249, 1257-58 (1993) (in a negligence case, “where the agent contracts in the name of the insurer and does not exceed

that authority, the insurer is liable, and not the agent”). Here, Plaintiff’s original Complaint conceded that: (i) the alleged

principle, Liberty Life, was a disclosed principal (Compl. ¶ 9, Ex. A); and (ii) the alleged agent, Liberty Mutual, was acting

within the course and scope of its agency. (Compl. ¶ 8); See Canine v. Liberty Mutual Ins., 2006 U.S. Dist. LEXIS 11073

at *12-13 (finding “as an [alleged] agent of Liberty Life, Liberty Mutual cannot be held liable for the breach of contract by

its [alleged] principal if Liberty Mutual was acting within the scope of its agency.”). Therefore, as alleged here, where the

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Mutual because there was full disclosure of Liberty Life and the alleged principal. (See Def.s’

Motion at 21:5-24.) In her Opposition, Plaintiff contends that she has pleaded sufficient facts to

support a claim that Liberty Life was an agent of Liberty Mutual. (Pl.’s Opp. at 21:19-20.) 

However, Plaintiff does not dispute Defendants’ assertion that Liberty Mutual cannot be an agent of

Liberty Life. Accordingly, the Court turns to the issue of whether Plaintiff has sufficiently pleaded

that Liberty Life was an agent of Liberty Mutual. 

An agent, under California law, is “one who represents another, called the principal, in

dealings with third persons.” Cal. Civ. Code § 2295. However, to establish a parent corporation’s

liability for acts or omissions of its subsidiary on an agency theory, a plaintiff must show more than

mere representation of the parent by the subsidiary in dealings with third persons. The showing

required is that “a parent corporation so controls the subsidiary as to cause the subsidiary to become

merely the agent or instrumentality of the parent[.]” Laird, 68 Cal. App. 4th at 741 (citations

omitted). 

Here, Defendants request the Court to find, as a matter of law, that Liberty Mutual did not

exercise sufficient control to cause Liberty Life to become Liberty Mutual’s agent. However, under

Rule 12(b)(6) the Court must accept the plaintiff’s material allegations in the complaint as true and

construe them in the light most favorable to the plaintiff. See Shwarz, 234 F.3d at 435. Defendants’

request – to find that Liberty Mutual did not exercise sufficient control over Liberty Life – is a

factual question that is more appropriately decided in the context of a Rule 56 motion. Accordingly,

the Court DENIES Defendants’ Motion to Dismiss to the extent Defendant has requested the Court

to find that Liberty Life is not Liberty Mutual’s agent.9

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alleged agent – Liberty Mutual – was acting within the scope of its agency for a disclosed principal – Liberty Life – there

can be no agency liability as to Liberty Mutual. Because Liberty Mutual is an improper defendant under such a theory, the

Court GRANTS Defendants’ Motion to Dismiss to the extent Defendant has requested the Court to find that Liberty Mutual

is not liable as Liberty Life’s agent. 

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C. Partnership, Joint Venture, and Association

In the First Amended Complaint, Plaintiff also alleges that Defendants are a “single

partnership, association, or joint venture under the management and control of Liberty Mutual.” 

(FAC at ¶¶ 4.) As support for these contentions, Plaintiff provides a list of additional facts, not

present in her original Complaint. (Id. at ¶ 4.a-dd.) Defendants argue that Liberty Mutual is not a

proper Defendants because: (1) Plaintiff has not pled sufficient facts for these theories; and (2)

Plaintiff’s partnership/joint venture allegation contradicts other allegations in the Complaint. In

particular, Defendants argue that the allegation contradicts Plaintiff’s allegation that Defendants are

separate corporations “organized and existing under the laws of . . . Massachusetts.” (FAC ¶¶ 2-3.) 

Plaintiff avers that she has plead sufficient facts to support these theories. 

Here, unlike in her original Complaint, Plaintiff has sufficiently pleaded facts to support her

alternative theories of liability against Liberty Mutual. Plaintiff has provided more than a “generic

boilerplate” to support these alternative theories. See Moore v. Regents of Univ. of Calif., 51 Cal. 3d

120, 134 (1990). As indicated above, the Court cannot conclude, at this stage of the case, that

Plaintiff can prove no set of facts that would entitle her to relief against Liberty Mutual under these

theories of liability. For this reason, the Court DENIES Defendants’ Motion to Dismiss to the

extent it is based on Plaintiff’s failure to sufficiently allege these alternative theories of liability in

the First Amended Complaint.

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Case 4:06-cv-07021-PJH Document 80 Filed 04/17/07 Page 11 of 12
United States District Court

For the Northern District of California

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CONCLUSION

For the foregoing reasons, the Court DENIES in part and GRANTS in part Defendants’

Motion to Dismiss; the Court DENIES Plaintiff’s Motion to Strike; and the Court STRIKES

Defendants’ Motion for Leave as moot. 

IT IS SO ORDERED.

Dated: April 17, 2007 

MARTIN J. JENKINS

UNITED STATES DISTRICT JUDGE

Case 4:06-cv-07021-PJH Document 80 Filed 04/17/07 Page 12 of 12