Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_07-cv-00894/USCOURTS-caed-2_07-cv-00894-0/pdf.json

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

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IN THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF CALIFORNIA 

BOBLOS’S INC., DBA TRINO’S 

LOUNGE and PABLO SANCHEZ, 

 Plaintiffs, 

 v. 

THE BURLINGTON INS. CO. and 

DOES 1 to 50 Inclusive, 

 Defendants. 

_____________________________/ 

No. Civ. S-07-894 RRB DAD 

Memorandum of Opinion

and Order

Boblos, Inc., dba Trino’s Lounge and Pablo Sanchez 

(collectively “Plaintiffs”) filed a state action against 

Burlington Insurance Company (“Burlington”) alleging that 

Burlington improperly refused to defend and indemnify Plaintiffs 

from an action arising out of an alleged assault by Plaintiffs’ 

agents and/or employees at Trino’s Lounge. Burlington removed 

this action to federal court on the basis of diversity. 

Burlington now seeks dismissal of Plaintiffs’ fraud cause of 

action for failure to state a claim under Federal Rule of Civil 

Case 2:07-cv-00894-JAM-DAD Document 10 Filed 07/20/07 Page 1 of 8
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Procedure section 12(b)(6). For the following reasons, the 

Court GRANTS the motion to dismiss.1

I. BACKGROUND 

 Plaintiffs own and operate Trino’s Lounge, a bar/restaurant 

located in Sacramento County. Complaint ¶ 3. Plaintiffs 

purchased insurance policies from Burlington covering the 

operations of Trino’s Lounge. Id. ¶¶ 5-6. 

 On or about September 14, 2003, Domonick Robles (“Robles”), 

a patron of Trino’s Lounge, was allegedly injured following an 

altercation with agents/employees of Trino’s Lounge. Comp. ¶ 7. 

Mr. Robles subsequently filed an action against Plaintiffs in 

Sacramento Superior Court, alleging negligence and intentional 

tort claims. Id. Plaintiffs tendered defense of this action to 

Burlington. Id. ¶ 8. 

After an alleged investigation, Burlington denied coverage 

and informed Plaintiffs that it would not provide a defense 

under a reservation of rights. Comp. ¶ 8. Plaintiffs then 

 

1

 Inasmuch as the Court concludes the parties have submitted 

memoranda thoroughly discussing the law and evidence in support 

of their positions, it further concludes oral argument is 

neither necessary nor warranted with regard to the instant 

matter. See Mahon v. Credit Bureau of Placer County, Inc., 171 

F.3d 1197, 1200 (9th Cir. 1999)(explaining that if the parties 

provided the district court with complete memoranda of the law 

and evidence in support of their positions, ordinarily oral 

argument would not be required). As a result, the oral argument 

presently scheduled for Wednesday, July 25, 2007, at 10:00 a.m., 

see Docket 6, is hereby VACATED.

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filed this action alleging: (1) breach of contract; (2) breach 

of the covenant of good faith and fair dealing; and (3) fraud. 

Id. ¶¶ 1-34. Specifically, Plaintiffs allege that Burlington 

breached its duties under the relevant insurance policies by 

failing to investigate, defend, and pay the reasonable value of 

covered claims. Comp. ¶ 10. Further, Plaintiffs allege that 

Burlington breached its duties under the policies by making 

false and misleading statements relating to their duties, 

obligations, and actions taken pursuant to the terms of the 

policies. Id. 

 Burlington now moves to dismiss Plaintiffs fraud cause of 

action on the ground that it does not state a claim for relief. 

II. DISCUSSION 

A. Legal Standard

 “A Rule 12(b)(6) motion tests the legal sufficiency of a 

claim. A claim may be dismissed only if ‘it appears beyond 

doubt that the plaintiff can prove no set of facts in support of 

his claim which would entitle him to relief.’” Navarro v. 

Block, 250 F.3d 729, 732 (9th Cir. 2001). Dismissal pursuant to 

Rule 12(b)(6) is appropriate where there is no cognizable legal 

theory or there is an absence of sufficient facts alleged to 

support a cognizable legal theory. Id. The issue is not 

whether a plaintiff is likely to succeed on the merits but 

rather whether the claimant is entitled to proceed beyond the 

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threshold in attempting to establish his or her claims. De La 

Cruz v. Tormey, 582 F.2d 45, 48 (9th Cir. 1978).

In considering a Rule 12(b)(6) motion, the allegations in 

the complaint must be construed in the light most favorable to 

the plaintiff, Parks School of Business, Inc. v. Symington, 51 

F.3d 1480, 1484 (9th Cir. 1995), and the court accepts all 

material allegations as true, as well as all reasonable 

inferences to be drawn from them. Navarro, 250 F.3d at 732; 

Pareto v. FDIC., 139 F.3d 696, 699 (9th Cir. 1998). However, a 

court is not required to accept as true allegations that are 

merely conclusory, unwarranted deductions of fact, or 

unreasonable inferences. Sprewell v. Golden State Warriors, 266 

F.3d 979, 988 (9th Cir. 2001). Nor do courts assume the truth 

of legal conclusions merely because they are cast in the form of 

factual allegations, Western Mining Council v. Watt, 643 F.2d 

618, 624 (9th Cir. 1981), or that a plaintiff can prove facts 

different from those it has alleged. Associated Gen. 

Contractors of California, Inc. v. California State Council of 

Carpenters, Inc., 459 U.S. 519, 526 (1983). 

 “If a complaint is dismissed for failure to state a claim, 

leave to amend should be granted unless the court determines 

that the allegation of other facts consistent with the 

challenged pleading could not possibly cure the deficiency.” 

Schreiber Distributing Co. v. Serv-Well Furniture Co., Inc., 806 

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F.2d 1393, 1401 (9th Cir. 1986); see Thinket Ink Information 

Resources, Inc. v. Sun Micorsystems, Inc., 368 F.3d 1053, 1061 

(9th Cir. 2004.) (leave to amend should be granted unless 

amendment would be futile, i.e., the complaint can not be saved 

by amendment. 

 B. Motion to Dismiss 

 Burlington seeks to dismiss Plaintiffs’ fraud cause of 

action for failure to state a claim. 

In diversity cases, federal courts will look to state law 

to determine whether the elements of fraud have been pled 

sufficiently to state a cause of action. Vess v. Ciba-Geigy 

Corp. USA, 317 F.3d 1097, 1103 (9th Cir. 2003). However, in 

state-law causes of action, federal courts will follow Rule 

9(b)’s requirement that the circumstances of the fraud must be 

stated with particularity. Id.2 Rule 9(b) imposes a heightened 

pleading requirement for fraud allegations in order to safeguard 

defendant’s reputation and goodwill from improvident charges of 

wrongdoing. Id. at 1104. 

Under California law, “‘[t]he elements of fraud are: (1) a 

misrepresentation (false representation, concealment, or 

nondisclosure); (2) knowledge of falsity (or scienter); (3) 

 

2

 Rule (b) states that “[in] all averments of fraud or mistake, 

the circumstances constituting fraud or mistake shall be stated 

with particularity. Malice, intent, knowledge, and other 

condition of mind of a person may be averred generally.”

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intent to defraud, i.e., to induce reliance; (4) justifiable 

reliance; and (5) resulting damage.’” County of Santa Clara v. 

Atlantic Richfield Co., 137 Cal. App. 4th 292, 329 (2006) 

(quoting Robinson Helicopter Co. v. Dana Corp., 34 Cal. 4th 979, 

990 (2004). 

 “Federal Rule of Civil Procedure 9(b) requires a pleader 

of fraud to detail with particularity the time, place, and 

manner of each act of fraud, plus the role of each defendant in 

each scheme.” Lancaster Cmty. Hosp. v. Antelope Valley Hosp. 

Dist., 940 F.2d 397, 405 (9th Cir. 1991). “Averments of fraud 

must be accompanied by ‘the who, what, when, where, and how’ of 

the misconduct charged.” Vees v. Ciba-Geigy Corp. USA, 317 F.3d 

1097, 1106 (9th Cir. 2003). “‘[A] plaintiff must set forth more

than the neutral facts necessary to identify the transaction. 

The plaintiff must set forth what is false or misleading about a 

statement, and why it is false.’” Id. (emphasis in original) 

(quoting In re GlenFed, Inc. Sec. Litig., 42 F.3d 1541, 1548 

(9th Cir. 1994) (en banc), superseded by statute on other 

grounds as stated in Marksman Partners, L.P. v. Chantal Pharm. 

Corp., 927 F. Supp. 1297, 1309 (C.D. Cal. 1996). “Rule 9(b) 

‘requires the identification of the circumstances constituting 

fraud so that the defendant can prepare an adequate answer from 

the allegations.’” Schreiber Distributing Co., 806 F.2d at 

1400. 

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Burlington argues that Plaintiffs’ fraud cause of action 

should be dismissed because it is not plead with reasonable 

particularity insofar as it fails to specifically identify: (1) 

who made the allegedly fraudulent statements; (2) what 

statements constitute fraud; (3) when the statements were made; 

and (4) how the statements were communicated. 

 Plaintiffs allege the following with respect to their fraud 

cause of action: (1) they purchased written insurance polices 

from Burlington with the belief – via statements by Burlington’s 

agents and written documents - that Burlington would comply with 

its contractual obligations and duties as well as California 

law; (2) they reasonably relied upon these representations in 

obtaining the policies, including representations regarding the 

company’s reputation for honesty, integrity and fair claims 

practices; (3) Burlington made false and misleading statements 

in denying coverage and a defense, including asserting that it 

thoroughly investigated the claim and determined that it had no 

legal duty or obligation and that it was knowledgeable of 

California law and would deal fairly with Plaintiffs; and (4) as 

a result of Burlington’s false and misleading statements, it 

suffered, among other things, damages in the form of a $118,000 

judgment. Complaint ¶¶ 25-30. 

 Based on the foregoing, the Court concludes that the 

Plaintiffs’ fraud allegations fail to satisfy the particularity 

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requirements of Rule (9)(b). More specifically, the Court 

concludes that the fraud allegations lack sufficient 

particularity as to the time, place, and manner of each act of 

fraud, plus they fail to identify the role of Burlington in each 

scheme. In short, Plaintiffs have failed to plead a specific 

description of the representations made, who made them,3

 when and 

where they were made and how or why they were false and 

misleading. Such pleading is inadequate to meet the heightened 

pleading requirements for fraud allegations under Rule 9(b). 

III. CONCLUSION 

 For these reasons, the Court GRANTS the motion to dismiss 

with leave to amend. Plaintiffs have 30 days to amend. 

 ENTERED this 16th day of July, 2007. 

 s/RALPH R. BEISTLINE 

 UNITED STATES DISTRICT JUDGE 

 

3

 Here, to the extent that Plaintiffs have alleged that 

representations were made by statements of “agents,” such 

representations are insufficient to satisfy Rule 9(b). See

Celador Intern. Ltd. v. Walt Disney Co., 347 F. Supp. 2d 846, 

854 (C.D. Cal. 2004) (holding that in the context of fraud it is 

insufficient to identify the speaker as ‘Representatives of ABC 

and BVT’ because it does not place defendant on notice as to who 

in their organization may have made the statements). 

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