Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-3_11-cv-08040/USCOURTS-azd-3_11-cv-08040-0/pdf.json

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

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1

 The parties requested oral argument in connection with this Motion to Dismiss.

(Docs. 18, 21). The parties have had the opportunity to submit briefing. Accordingly, the

Court finds the pending motions suitable for decision without oral argument and the parties’

request is denied. See LRCiv 7.2(f).

WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Raymond and Tasha Greenwood, husband

and wife, individually and on behalf of

their minor children, M.G. and A.G., as

assignees of U.S. Catalytic Corporation, a

California corporation and Camco

Manufacturing, Inc., a North Carolina

corporation,

Plaintiffs,

v.

Mepamsa, SA, a Spanish corporation, XL

Insurance Switzerland, a Swiss

corporation, XL Insurance America, Inc.,

a Delaware corporation, XL Specialty

Insurance Company, a Delaware

Corporation, XL Reinsurance America

Inc., a New York corporation,

Defendants. 

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

No. CV-11-08040-SMM

ORDER

Before the Court is Defendants XL Insurance America, Inc., XL Specialty Insurance

Company, and XL Reinsurance America, Inc.’s Motion to Dismiss themselves as parties to

this case. (Doc. 18). Plaintiffs responded (Doc. 21) and Defendants XL Insurance America,

Inc., XL Specialty Insurance Company, and XL Reinsurance America, Inc. replied. (Doc.

22). After consideration of the issues, the Court finds the following.1

Case 3:11-cv-08040-SMM Document 24 Filed 06/23/11 Page 1 of 6
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2

 Counts IV, V, and VI allege breach of covenant of good faith and fair dealing, and

seek common law and statutory indemnity from Mepamsa. (Doc. 1 at 12-14) These counts

are not pertinent to this Motion to Dismiss.

- 2 -

BACKGROUND 

Plaintiffs Raymond and Tasha Greenwood and their minor children (“the

Greenwoods”) were severely burned on December 10, 2007 by an allegedly defective

product, the Olympian Wave 8 Catalytic Safety heater (“the heater”). (Doc. 1 at 7). The

Greenwoods filed suit in Apache County Superior Court of Arizona against the heater’s

manufacturer, Mepamsa, SA (“Mepamsa”), and its current and former distributors, Camco

Manufacturing, Inc. (“Camco”) and U.S. Catalytic Corporation (“U.S. Catalytic”),

respectively. (Doc 1 at 5). At the time of the Greenwoods’ injuries, XL Insurance

Switzerland (“XL Switzerland”) was allegedly Mepamsa’s international liability insurer for

products to be sold in the United States. (Doc. 1 at 4). Camco and U.S. Catalytic take the

position that Mepamsa and XL Switzerland were under a duty to indemnify them for the

Greenwoods’ claims. (Doc. 1 at 8). Camco and U.S. Catalytic settled with the Greenwoods

on the condition that the settlement only be enforced through an assignment of Camco and

U.S. Catalytic’s indemnification claims to the Greenwoods. (Doc.1 at 8).

On March 16, 2011, Plaintiffs brought suit alleging six counts. (Doc. 1). In Count I,

Plaintiffs seek a declaratory judgment that XL Switzerland has a duty to indemnify Camco

and U.S. Catalytic for costs incurred from the settlement with the Greenwoods. (Doc.1 at 8).

Count II alleges breach of contract against XL Switzerland while also mentioning XL

Insurance America, Inc., XL Specialty Insurance Company, and XL Reinsurance America,

Inc., referred to collectively in the Complaint as “XL America.” (Doc 1 at 10). Count III

alleges breach of covenant of good faith and fair dealing against XL Switzerland. Id.2

On April 14, 2011, XL Insurance America, Inc., XL Specialty Insurance Company,

and XL Reinsurance America, Inc. filed a Motion to Dismiss themselves as parties to the

case because the Complaint fails to (1) properly make allegations against XL Insurance

America, Inc., XL Specialty Insurance Company, and XL Reinsurance as Defendants and (2)

Case 3:11-cv-08040-SMM Document 24 Filed 06/23/11 Page 2 of 6
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 3 -

allege the existence of a contract between Plaintiffs or their assignors and these Defendants

that would give rise to liability. (Doc. 18). Plaintiffs responded by contending that the Court

should read the names XL Insurance America, Inc., XL Specialty Insurance Company, and

XL Reinsurance America, Inc. into the Complaint as Defendants and that these parties are

liable under several contract theories. (Doc. 21 at 3).

STANDARD OF REVIEW

A pleading must contain “a short and plain statement of the claim showing that the

pleader is entitled to relief.” Fed. R. Civ. P 8(a)(2). If a plaintiff fails to state a claim, a

defendant may move in a written motion, separate from the responsive pleading, that the

court dismiss the action for failure to state a claim. Fed. R. Civ. P. 12(b)(6). Even though a

complaint subject to dismissal for failure to state a claim is not required to provide “detailed

factual allegations” in order for a plaintiff to meet their burden, a plaintiff must present more

than labels and conclusions, or a formulaic recitation of the elements of the asserted cause

of action. Bell Atl. Corp v. Twombly, 550 U.S. 544, 555 (2007). To survive a motion to

dismiss for failure to state a claim, a plaintiff must state enough facts so that the claim is

plausible on its face. Id. at 570. The Supreme Court does not require a heightened pleading

standard, just enough facts to push the claim across the threshold from conceivable to

plausible. Id.

The Court will treat all allegations of material fact in the complaint as true and

construe the complaint in the light most favorable to the plaintiff. W. Mining Council v.

Watt, 643 F.2d 618, 624 (9th Cir. 1981). But “conclusory allegations of law and unwarranted

inferences are insufficient to defeat a motion to dismiss.” Ove v. Gwinn, 264 F.3d 817, 821

(9th Cir. 2001) (citing Associated Gen. Contractors v. Metro. Water Dist. of S. Cal., 159 F.3d

1178, 1187 (9th Cir. 1998)). If the Court finds that a plaintiff does not allege enough facts

to support a cognizable legal theory, the Court may dismiss the claim. SmileCare Dental

Group v. Delta Dental Plan of Cal., Inc., 88 F.3d 780, 783 (9th Cir. 1996). “Dismissal

without leave to amend is improper unless it is clear, upon de novo review, that the complaint

could not have been saved by any amendment.” Polich v. Burlington N., Inc., 942 F.2d 1467,

Case 3:11-cv-08040-SMM Document 24 Filed 06/23/11 Page 3 of 6
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 4 -

1472 (9th Cir. 1991) (citing Kelson v. City of Springfield, 767 F.2d 651 (9th Cir. 1985)).

When exercising its discretion to deny a leave to amend, “a court must be guided by the

underlying purpose of Rule 15 to facilitate decision on the merits, rather than on the

pleadings or technicalities.” United States v. Webb, 655 F.2d 977, 979 (9th Cir. 1981).

DISCUSSION

I. Motion to Dismiss Counts I and III

Defendants XL Insurance America, Inc., XL Specialty Insurance Company, and XL

Reinsurance America, Inc. contend that they should be dismissed from Counts I and III of

the Complaint because Plaintiffs fail to state a claim against them. (Doc 18 at 6); Fed. R. Civ.

Pro. 8(a). Plaintiffs acknowledge that XL Insurance America, Inc., XL Specialty Insurance

Company, and XL Reinsurance America, Inc. are not mentioned in Counts I and III, which

they attribute to “clerical error.” (Doc. 21 at 5). Consequently, Plaintiffs request that the

Court read the names XL Insurance America, Inc., XL Specialty Insurance Company, and

XL Reinsurance America, Inc. into Counts I and III because “courts routinely assume the

correct information when faced with a typographical error in a complaint.” (Doc. 21 at 5

(citing Townsend v. Standard Life Ins., 2004 U.S. Dist. LEXIS 22918 (N.D. Tex. Nov. 12,

2004)). 

The Court will not read XL Insurance America, Inc., XL Specialty Insurance

Company, and XL Reinsurance America, Inc. into Counts I and III of the Complaint. Even

assuming that Plaintiff’s omission is attributable to clerical error, Townsend is inapplicable

because of the difference in the severity of error involved. In Townsend, an unreported

district court case from the Fifth Circuit, the court substituted the correct dates for two clearly

erroneous dates listed in the complaint that had little bearing on the validity of the complaint

as a whole. Townsend, 2004 U.S. Dist. LEXIS 22918, at *6. By contrast, Counts I and III fail

to mention XL Insurance America, Inc., XL Specialty Insurance Company, and XL

Reinsurance America, Inc. at all. To comply with Rule 12(b)(6), a complaint must give the

defendant fair notice of what the claim is and the grounds on which it rests, and its

allegations must plausibly suggest that the plaintiff is entitled to relief. See Ashcroft v. Iqbal,

Case 3:11-cv-08040-SMM Document 24 Filed 06/23/11 Page 4 of 6
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

3

 Defendants XL Insurance America, Inc., XL Specialty Insurance Company, and XL

Reinsurance America, Inc.’s claim that they are not liable because they were not a party to

any contract with Plaintiffs need not be addressed at this juncture because the parties are

dismissed on other grounds. (Doc. 18 at 7).

- 5 -

129 S. Ct. 1937, 1949 (2009). Defendants XL Insurance America, Inc., XL Specialty

Insurance Company, and XL Reinsurance America, Inc. have not received fair notice because

allegations are not made against them in Counts I and III and the Court will not assume that

Defendants intended to name them.

II. Motion to Dismiss Count II

Defendants XL Insurance America, Inc., XL Specialty Insurance Company, and XL

Reinsurance America, Inc. contend that they should be dismissed because they are only

briefly mentioned in Count II. (Doc. 18 at 6). Plaintiffs assert that Count II is sufficient and

that these Defendants are “nitpicking.” (Doc. 21 at 5). Count II, which alleges breach of

contract, is the only count that includes even a passing mention of Defendants XL Insurance

America, Inc., XL Specialty Insurance Company, and XL Reinsurance America, Inc. (Doc.

1 at 10). However, the mere mention of these parties is insufficient to give Defendants notice

or explanation of how Count II pertains to them. Further, unlike XL Switzerland, Defendants

XL Insurance America, Inc., XL Specialty Insurance Company, and XL Reinsurance

America, Inc. are not included in Count II’s prayer for judgment or heading. (Doc. 1 at 10).

Because XL Insurance America, Inc., XL Specialty Insurance Company, and XL

Reinsurance America, Inc.’s alleged involvement in the activities discussed in Count II is

unclear, these parties are dismissed without prejudice.3

CONCLUSION

IT IS HEREBY ORDERED GRANTING Defendants’ Motion to Dismiss XL

Insurance America, Inc., XL Specialty Insurance Company, and XL Reinsurance America,

Inc. (Doc. 18) without prejudice.

/ / /

/ / /

Case 3:11-cv-08040-SMM Document 24 Filed 06/23/11 Page 5 of 6
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 6 -

IT IS FURTHER ORDERED that Plaintiffs are given leave to amend their

Complaint (Doc. 1) pursuant to Federal Rule of Civil Procedure 15.

DATED this 22nd day of June, 2011.

Case 3:11-cv-08040-SMM Document 24 Filed 06/23/11 Page 6 of 6