Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_07-cv-01979/USCOURTS-cand-5_07-cv-01979-0/pdf.json

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

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 This disposition is not designated for publication and may not be cited. 1

 The Complaint also includes as defendants Does 1 through 100. 2

Case No. C 07-1979 JF

ORDER GRANTING MOTION TO DISMISS PLAINTIFF’S FOURTH CLAIM WITHOUT LEAVE TO AMEND

AND GRANTING MOTION TO STRIKE WITH LEAVE TO AMEND 

(JFLC1)

**E-Filed 6/25/2007**

NOT FOR CITATION

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

TAMIKO CARILLO,

 Plaintiff,

 v.

NATIONWIDE MUTUAL FIRE INSURANCE

COMPANY, et al.,

 Defendants.

Case Number C 07-1979 JF

ORDER GRANTING MOTION TO 1

DISMISS PLAINTIFF’S FOURTH

CLAIM WITHOUT LEAVE TO

AMEND AND GRANTING MOTION

TO STRIKE WITH LEAVE TO

AMEND 

[re: docket nos. 7, 8]

I. BACKGROUND

On January 3, 2007, Plaintiff Tamiko Carillo filed the initial and operative complaint in

this action (“the Complaint”) in the Santa Clara Superior Court, naming as defendants

Nationwide Mutual Fire Insurance Company (“Nationwide Fire”), Nationwide Mutual Insurance

Company, and Allied Insurance (collectively, “the Insurance Defendants”). The Complaint 2

Case 5:07-cv-01979-JF Document 24 Filed 06/25/07 Page 1 of 7
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 Each claim is asserted against the Insurance Defendants. The number of Does named 3

varies by claim.

 The position of the Insurance Defendants appears to be that the torts at issue in the 4

Underlying Action arose from the “insured’s business pursuits” and thus were subject to an

exclusion from coverage under the condominium policy at issue. See Motion to Dismiss 3. 

 Nationwide Fire’s request for judicial notice of the record of trial proceedings from the 5

Underlying Action will be granted.

2

Case No. C 07-1979 JF

ORDER GRANTING MOTION TO DISMISS PLAINTIFF’S FOURTH CLAIM WITHOUT LEAVE TO AMEND

AND GRANTING MOTION TO STRIKE WITH LEAVE TO AMEND 

(JFLC1)

asserts four claims: (1) breach of contract; (2) for recovery under Cal. Ins. Code. § 11580; (3) 3

breach of the implied covenant of good faith and fair dealing; and (4) negligence. 

Plaintiff alleges the following in the Complaint: In May 2002, Plaintiff sued Catherine M.

Casey (“Casey”) and/or Principle Psychology, Inc. and/or Mansheim & Casey and Kristen

Mansheim (“the Underlying Defendants”) in the action Doe v. Mansheim, et al., Santa Clara

Superior Court, Case No. 1-03-CV817594 (“the Underlying Action”). Complaint ¶ 6. The

Insurance Defendants issued policies of insurance that provided coverage for all or some of the

Underlying Defendants. Id. The Underlying Defendants tendered the defense of the Underlying

Action to Insurance Defendants. Complaint ¶ 7. The Insurance Defendants wrongfully refused

and/or failed to defend or indemnify them for any claims asserted therein even though coverage

and/or the potential for coverage existed for the claims asserted in the Underlying Action. Id.4

As a consequence of this refusal and/or failure, the Underlying Defendants had no ability to

mount a defense. Complaint ¶ 8. The Underlying Defendants proceeded to trial, resulting in

entry of judgment against the Underlying Defendants and in favor of Plaintiff in the amount of

$1,423,800 plus interest, costs, and attorney’s fees (“the Judgment”). Complaint ¶ 8(a). Casey

5

assigned Plaintiff all of the rights, claims, and potential causes of actions that she obtained and/or

possessed as a result of the Insurance Defendants’ failure to provide a defense and/or indemnity

in the Underlying Action. Complaint ¶ 8(b). As consideration for this assignment, Plaintiff

provided Casey with a covenant to limit execution of the Judgment against Casey’s assets. 

Complaint ¶ 8(c).

On April 9, 2007, Nationwide Fire removed the action to this Court, asserting diversity

Case 5:07-cv-01979-JF Document 24 Filed 06/25/07 Page 2 of 7
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 At the time of removal, only Nationwide Fire had been served. Notice of Removal ¶ 6. 6

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Case No. C 07-1979 JF

ORDER GRANTING MOTION TO DISMISS PLAINTIFF’S FOURTH CLAIM WITHOUT LEAVE TO AMEND

AND GRANTING MOTION TO STRIKE WITH LEAVE TO AMEND 

(JFLC1)

jurisdiction. On April 16, 2006, Nationwide Fire moved to dismiss the negligence cause of 6

action on the basis that simple negligence is not a theory of recovery available to insureds against

their insurers (“Motion to Dismiss”). On the same date, Nationwide Fire moved to strike

portions of the Complaint pertaining to damages for emotional distress and punitive damages on

the bases that those claims cannot be assigned and that Plaintiff does not have her own right to

recovery (“Motion to Strike”). Plaintiff opposes both motions. The Court heard oral argument

on June 15, 2007.

II. LEGAL STANDARD

For purposes of a motion to dismiss, the plaintiff’s allegations are taken as true, and the

Court must construe the complaint in the light most favorable to the plaintiff. Jenkins v.

McKeithen, 395 U.S. 411, 421 (1969). Leave to amend must be granted unless it is clear that the

complaint’s deficiencies cannot be cured by amendment. Lucas v. Department of Corrections,

66 F.3d 245, 248 (9th Cir. 1995). When amendment would be futile, however, dismissal may be

ordered with prejudice. Dumas v. Kipp, 90 F.3d 386, 393 (9th Cir. 1996). 

The Court may strike “from any pleading any insufficient defense or any redundant,

immaterial, impertinent, or scandalous matter.” Fed.R.Civ.P. 12(f). Motions to strike generally

will not be granted unless it is clear that the matter to be stricken could not have any possible

bearing on the subject matter of the litigation. LeDuc v. Kentucky Central Life Insurance Co.,

814 F.Supp. 820, 830 (N.D. Cal. 1992). Allegations “supplying background or historical

material or other matter of an evidentiary nature will not be stricken unless unduly prejudicial to

defendant.” Id. Moreover, allegations that contribute to a full understanding of the complaint as

a whole need not be stricken. Id.

III. DISCUSSION

1. Motion to Dismiss

Plaintiff alleges that the Insurance Defendants “failed to exercise reasonable care and skill

with regard to the activities which they performed.” Complaint ¶ 32. “That negligence included

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 The cases that counsel for Plaintiff provided to the Court at oral argument do not 7

support a contrary conclusion. Leming v. Oilfields Trucking Co., 44 Cal. 2d 343, 350 (1955)

holds only that one party’s negligence may be imputed to a joint-venturer. That case does not

relieve Plaintiff of identifying the underlying actionable negligence. Nor does Forest v.

Equitable Life Assurance Soc., 2d, 2001 WL 1338809 (N.D.Cal. June 12, 2001) (unpublished)

support Plaintiff’s argument. The court in that case apparently found that an underlying

negligence claim existed. See id. at * 1, 9. Even if that decision were binding authority, which it

is not, it does not provide a basis on which to conclude that an underlying negligence claim exists

in this action. 

4

Case No. C 07-1979 JF

ORDER GRANTING MOTION TO DISMISS PLAINTIFF’S FOURTH CLAIM WITHOUT LEAVE TO AMEND

AND GRANTING MOTION TO STRIKE WITH LEAVE TO AMEND 

(JFLC1)

improper handling of the claim for coverage.” Id. Nationwide Fire argues that this is no more

than a repackaging of the breach of contract claim in an effort to recover tort damages, even

though negligence is not among the theories of recovery generally available against insurers. 

Plaintiff responds that its claim against Nationwide Fire is based upon respondeat superior and

vicarious liability and that the claim seeks to hold only Nationwide Mutual Insurance Company

and Allied Insurance liable for negligent claims handling. See Complaint ¶ 31. However, for

liability to attach to Nationwide Fire under a respondeat superior or vicarious liability theory, an

underlying tort must exist. See Lisa M. v. Henry Mayo Newhall Memorial Hospital, 12 Cal.4th

291, 296-97 (1995) (explaining that “[t]he rule of respondeat superior is familiar and simply

stated: an employer is vicariously liable for the torts of its employees committed within the scope

of the employment.”). Because Plaintiff fails to rebut Nationwide Fire’s arguments that a

negligence action is not available against an insurer, see e.g. Sanchez v. Lindsey Morden Claims

Services, Inc., 72 Cal.App.4th 249, 254 (Cal.Ct.App. 1995) (stating that “negligence is not

among the theories of recovery generally available against insurers”); accord Tento International

Inc. v. State Farm Fire and Casualty Co., 222 F.3d 660, 664 (9th Cir. 2000) (citing Sanchez),

and because Plaintiff alleges that Nationwide Mutual Insurance Company and Allied Insurance

were negligent in the handling of insurance claims, Plaintiff fails to allege an underlying tort.7

Accordingly, the allegations are insufficient to hold Nationwide Fire liable on a vicarious liability

or respondeat superior theory and the claim will be dismissed. At oral argument, counsel for

Plaintiff did not identify any additional facts that would allow Plaintiff to state an underlying

claim for negligence and thus impose vicarious liability upon Nationwide Fire. Accordingly,

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Case No. C 07-1979 JF

ORDER GRANTING MOTION TO DISMISS PLAINTIFF’S FOURTH CLAIM WITHOUT LEAVE TO AMEND

AND GRANTING MOTION TO STRIKE WITH LEAVE TO AMEND 

(JFLC1)

leave to amend this claim will not be granted. 

2. Motion to Strike

Nationwide Fire moves to strike Plaintiff’s claims for recovery of damages for emotional

distress and punitive damages on the bases that any claims for emotional distress and punitive

damages are personal to the insured and cannot be assigned, and that Plaintiff does not have an

independent right to recovery. Plaintiff concedes that recovery for emotional distress and

punitive damages is not possible pursuant to the assignment. Opposition to Motion to Strike 1. 

Accordingly, the Motion to Strike will be granted as to any such allegations. See e.g. Complaint

¶ 24. 

Plaintiff also argues that she may recover in her own right because she is an intended

third party beneficiary of the insurance contract now that she has obtained a judgment. Id. at 1-2. 

She argues that she is entitled to recover such damages pursuant to her bad faith cause of action

because the carrier owes her a duty to treat her fairly. Id. at 2. Nationwide Fire asserts correctly

that Plaintiff has no independent right to recovery for behavior that occurred before entry of the

Judgment. Reply Re Motion to Strike 3. However, Plaintiff states in opposition that she seeks to

recover only for conduct after entry of the Judgment. Opposition to Motion to Strike 3

(“[Plaintiff] alleged that she is entitled to sue for breach of the implied covenant for the

defendant’s failures to act properly after the judgment.”). If so limited, this claim may fall within

the scope of Hand v. Farmers Insurance Exchange, 23 Cal. App. 4th 1847 (1994) (holding that a

judgment creditor can state a claim for breach of the covenant of fair dealing by alleging postjudgment misconduct). However, as presently framed, the third claim is not limited to conduct

after entry of judgment. See e.g. Complaint ¶ 24 (“[Plaintiff] is entitled to sue for breach of the

implied covenant of good faith and fair dealing arising out of defendants’ actions including their

actions and/or failures to act after the Judgment.”) (emphasis added); Complaint ¶ 25 (describing

prejudgment and postjudgment conduct by defendants). Accordingly, the Court concludes that

the motion should be granted with leave to amend so that Plaintiff may attempt to plead the claim

within the bounds established by Hand and other relevant case law.

 

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Case No. C 07-1979 JF

ORDER GRANTING MOTION TO DISMISS PLAINTIFF’S FOURTH CLAIM WITHOUT LEAVE TO AMEND

AND GRANTING MOTION TO STRIKE WITH LEAVE TO AMEND 

(JFLC1)

IV. ORDER

Good cause therefor appearing, IT IS HEREBY ORDERED that the Motion to Dismiss

Plaintiff’s fourth claim is GRANTED without leave to amend and the Motion to Strike is

GRANTED with leave to amend. Any amended complaint shall be filed within thirty (30) days

of the date of this order.

DATED: June 25, 2007

 

JEREMY FOGEL

United States District Judge

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Case No. C 07-1979 JF

ORDER GRANTING MOTION TO DISMISS PLAINTIFF’S FOURTH CLAIM WITHOUT LEAVE TO AMEND

AND GRANTING MOTION TO STRIKE WITH LEAVE TO AMEND 

(JFLC1)

This Order has been served upon the following persons:

Anna Atanassova Chopova achopova@rwblaw.com, pryan@rwblaw.com 

Wesley Martin Lowe wlowe@sbcglobal.net, lvillegas1@sbcglobal.net 

Edward Gerard Mannion gmannion@sbcglobal.net, vickiaxeman@sbcglobal.net 

Edward P. Murphy emurphy@rwblaw.com, smizuhara@rwblaw.com 

G. Edward Rudloff , Jr erudloff@rwblaw.com, bparker@rwblaw.com 

Case 5:07-cv-01979-JF Document 24 Filed 06/25/07 Page 7 of 7