Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_15-cv-00331/USCOURTS-caed-1_15-cv-00331-0/pdf.json

Parties Involved:
Martha Castro
Plaintiff
Lincoln General Insurance Company
Defendant

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UNITED STATES DISTRICT COURT 

EASTERN DISTRICT OF CALIFORNIA 

MARTHA CASTRO, 

Plaintiff, 

v. 

LINCOLN GENERAL INSURANCE 

COMPANY, 

Defendant. 

No. 1:15-cv-00331-KJM-GSA 

ORDER 

This matter is before the court on the motion by defendant Lincoln General 

Insurance Company to dismiss plaintiff Martha Castro’s complaint. (ECF No. 7.) Plaintiff 

opposes the motion. (ECF No. 14.) The court held a hearing on the matter on May 8, 2015. 

Robert Williams and Marla Garcia appeared for plaintiff, and Jonathan Carlson appeared for 

defendant. After having considered the parties’ briefs, record, and arguments at the hearing, the 

court SEVERS and STAYS plaintiff’s claim for breach of the implied covenant of good faith and 

fair dealing and DIRECTS the parties to file a stipulation as to plaintiff’s claim for declaratory 

relief. 

I. BACKGROUND 

Defendant issued commercial automobile insurance policy number 63100408101 

(the Policy), naming FM Diaz Construction, Inc. as the insured. (ECF No. 1, Ex. A, Compl. ¶ 4.) 

The Policy provided for underinsured motorist coverage in the amount of $1,000,000. (Id. ¶ 5.) 

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The Policy provided coverage for a 2006 Chevrolet Colorado (VIN number 

1GCCS136668125916) for the period of June 1, 2007 through June 1, 2008. (Id.) 

On November 1, 2007, plaintiff was involved in a car accident in Fresno, 

California, caused by one Manuel Reyes.1 (Id. ¶ 6.) At that time, plaintiff was operating the 

insured vehicle noted above (id.) and was in the scope of her employment with FM Diaz (id. ¶ 7). 

After the accident, plaintiff filed a workers’ compensation claim for injuries she sustained in the 

accident.2 (Id. ¶ 9.) Subsequently, the State Compensation Insurance Fund (SCIF), the workers’ 

compensation insurer of FM Diaz, notified American Commercial Management (ACM), the third 

party administrator for defendant, that SCIF had a subrogation claim for any benefits to which 

plaintiff might be entitled. (Id.) On November 7, 2007, ACM acknowledged the claim and 

confirmed that uninsured and underinsured coverage was available for the loss. (Id.) 

On October 21, 2008, plaintiff put ACM on notice of representation and asked for 

available coverage for the underlying accident. (Id. ¶ 10.) On September 9, 2009, Mr. Reyes’ 

insurance carrier, Infinity Insurance, offered its policy limits to settle plaintiff’s claim. (Id. ¶ 11.) 

On September 30, 2009, plaintiff notified ACM that Infinity Insurance had tendered the policy 

limits of $15,000 to settle the claim. (Id. ¶ 12.) On October 15, 2009, plaintiff settled that claim 

against Mr. Reyes for the available $15,000. (Id. ¶ 14.) On February 26, 2013, plaintiff settled 

her workers’ compensation claim. (Id. ¶ 15.) Accordingly, plaintiff made a demand for 

underinsured motorist benefits to defendant, but received no response. (Id. ¶¶ 16–17.) Plaintiff 

served defendant with a notice of institution of arbitration and the parties then engaged in 

arbitration. (Id. ¶¶ 17–18.) 

Plaintiff commenced this action in the Fresno County Superior Court on January 9, 

2015, alleging two claims: (1) breach of the implied covenant of good faith and fair dealing and 

(2) declaratory relief. (See generally Compl.) Defendant subsequently removed the case on 

March 3, 2015, asserting diversity-of-citizenship jurisdiction. (ECF No. 1.) Defendant now 

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 The parties’ filings refer to this individual by the last name Reyes and Reyna. Future 

filings should clarify the correct last name. 

2

 The workers’ compensation case number is ADJ6614150. (Compl. ¶ 9.) 

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moves to dismiss plaintiff’s complaint. (ECF No. 7.) Plaintiff opposes the motion (ECF No. 14), 

and defendant has replied (ECF No. 15). 

II. JUDICIAL NOTICE 

Defendant requests that this court judicially notice the complaint filed in Martha 

Castro v. Lincoln General Insurance Company, commenced in the Fresno County Superior 

Court, case number 15-CECG-00091. (ECF No. 8, Ex. A.) Plaintiff does not oppose defendant’s 

request. The court need not take judicial notice of that complaint because the same complaint is 

attached to defendant’s notice of removal, which is filed on the docket of the instant case. In 

ruling on defendant’s motion, the court can rely on the filings made in the case before it. 

III. MEET AND CONFER EFFORTS 

 From the parties’ briefing, it is clear they have not exhausted their meet and confer 

efforts. This case was transferred from this court’s Fresno division, and this court’s Standing 

Order requiring certification of meaningful meet and confer efforts was not issued until after 

defendant had filed the instant motion. The court cautions the parties, however, that they may 

face sanctions for future failures to comply with this court’s Standing Order. 

IV. DISCUSSION 

A. First Claim: Breach of the Implied Covenant of Good Faith and Fair Dealing 

At the hearing, the court and the parties discussed the practical implications of 

staying this claim while plaintiff’s declaratory claim is litigated. To prevent plaintiff from paying 

another filing fee, the court elects to stay plaintiff’s first claim, rather than dismiss it in 

accordance with the terms of the parties’ stipulation. Accordingly, the court hereby SEVERS and 

STAYS plaintiff’s claim for breach of the implied covenant of good faith and fair dealing until a 

final judgment is entered as to plaintiff’s claim for declaratory relief. 

B. Second Claim: Declaratory Relief 

 At the hearing, the parties stated they could reach a stipulation to stay the 

arbitration pending the outcome of the declaratory relief claim and toll any statute of limitations 

pertaining to commencement and completion of arbitration. The parties are hereby ordered to 

meet and confer and file their stipulation and proposed order within seven (7) days from the date 

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of this order. The parties are also directed to submit a proposed schedule for motion practice 

along with their stipulation. 

 IT IS SO ORDERED. 

DATED: May 15, 2015. 

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