Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_14-cv-01235/USCOURTS-caed-1_14-cv-01235-0/pdf.json

Parties Involved:
Centex Homes
Defendant
Centex Real Estate Corporation
Defendant
St. Paul Mercury Insurance Company
Plaintiff
Travelers Indemnity Company of Connecticut
Plaintiff
Travelers Property Casualty Company of America
Plaintiff

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UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

TRAVELERS INDEMNITY COMPANY OF 

CONNECTICUT, et al.,

 Plaintiffs, 

 v. 

CENTEX HOMES, et al.,

 Defendants.

1:14-cv-1235-LJO-GSA

MEMORANDUM DECISION AND 

ORDER RE DEFENDANTS’ MOTION 

TO DISMISS (DOC. 7)

I. FACTUAL AND PROCEDURAL BACKGROUND

This case concerns a dispute between the parties regarding their rights and duties in an 

underlying action currently pending in Kern County Superior Court. See Doc. 1 at 8-9. On August 6, 

2014, Plaintiffs Travelers Indemnity Company of Connecticut, Travelers Property Casualty Company of 

America, and St. Paul Mercury Insurance Company (collectively, “Plaintiffs”) brought suit against 

Defendants Centex Homes and Centex Real Estate Corporation (collectively, “Centex”) in this Court

based on the undisputed diversity of citizenship between the parties. Id. at 2.

Centex obtained commercial general liability insurance (“the policies”) from Plaintiffs. Id. at 3. 

In February 2014, homeowners brought suit against Centex in Kern County Superior Court for alleged 

construction defects in homes that Centex built (“the Carter action”). Id. at 8-9. Centex tendered the 

Carter action to Plaintiffs pursuant to the policies. Id.

Plaintiffs brought suit in this Court over disputes that arose between the parties regarding their 

respective rights and duties in handling Centex’s defense in the Carter action. Plaintiffs allege three 

causes of action for (1) declaratory relief; (2) breach of contract; and (3) equitable reimbursement. Id. at 

11-20.

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Currently before the Court is Centex’s motion to dismiss the complaint on the ground that (1) 

Plaintiffs’ first and second causes of action are not ripe and (2) because they are not ripe, Plaintiffs’ third 

cause of action fails. Doc. 7 at 3, 9. 

The Court has reviewed the papers and has determined that the matter is suitable for decision 

without oral argument pursuant to Local Rule 230(g). For the following reasons, the Court GRANTS 

WITH LEAVE TO AMEND Centex’s motion to dismiss (Doc. 7).

II. STANDARD OF DECISION

Federal Rule of Civil Procedure 12(b)(1) provides for dismissal of an action for “lack of subjectmatter jurisdiction.” Faced with a Rule 12(b)(1) motion, a plaintiff bears the burden of proving the 

existence of the court's subject matter jurisdiction. Thompson v. McCombe, 99 F.3d 352, 353 (9th Cir.

1996). A federal court is presumed to lack jurisdiction in a particular case unless the contrary 

affirmatively appears. Gen. Atomic Co. v. United Nuclear Corp., 655 F.2d 968, 968-69 (9th Cir. 1981).

A challenge to subject matter jurisdiction may be facial or factual. White v. Lee, 227 F.3d 1214, 1242 

(9th Cir. 2000). As explained in Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1038 (9th Cir. 2004):

In a facial attack, the challenger asserts that the allegations contained in a complaint are 

insufficient on their face to invoke federal jurisdiction. By contrast, in a factual attack, the 

challenger disputes the truth of the allegations that, by themselves, would otherwise invoke 

federal jurisdiction.

A Rule 12(b)(1) motion can be made as a speaking motion—or factual attack—when the 

defendant submits evidence challenging the jurisdiction along with its motion to dismiss. Thornhill 

Publ'g Co. v. Gen. Tel. & Elecs. Corp., 594 F.2d 730, 733 (9th Cir. 1979); see Savage, 343 F.3d at 1039-

40 & n. 2. A proper speaking motion allows the court to consider evidence outside the complaint 

without converting the motion into a summary judgment motion. See Safe Air, 373 F.3d at 1039. “Once 

the moving party has converted the motion to dismiss into a factual motion by presenting affidavits or 

other evidence properly brought before the court, the party opposing the motion must furnish affidavits 

or other evidence necessary to satisfy its burden of establishing subject matter jurisdiction.” Savage, 343 

F.3d at 1039-40, n. 2. In a speaking motion, “[t]he court need not presume the truthfulness of the 

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plaintiff's allegations.” Safe Air, 373 F.3d at 1039.

A motion to dismiss pursuant to Fed R. Civ. P. 12(b)(6) is a challenge to the sufficiency of the 

allegations set forth in the complaint. A 12(b)(6) dismissal is proper where there is either a “lack of a 

cognizable legal theory” or “the absence of sufficient facts alleged under a cognizable legal theory.” 

Balisteri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir. 1990). In considering a motion to dismiss 

for failure to state a claim, the court generally accepts as true the allegations in the complaint, construes 

the pleading in the light most favorable to the party opposing the motion, and resolves all doubts in the 

pleader’s favor. Lazy Y. Ranch LTD v. Behrens, 546 F.3d 580, 588 (9th Cir. 2008).

To survive a 12(b)(6) motion to dismiss, the Plaintiffs must allege “enough facts to state a claim 

to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim 

has facial plausibility when the Plaintiffs pleads factual content that allows the court to draw the 

reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 

662, 678 (2009). “The plausibility standard is not akin to a ‘probability requirement,’ but it asks for 

more than a sheer possibility that a defendant has acted unlawfully.” Id. (quoting Twombly, 550 U.S. at 

556). “Where a complaint pleads facts that are ‘merely consistent with’ a defendant’s liability, it ‘stops 

short of the line between possibility and plausibility for entitlement to relief.’” Id. (quoting Twombly, 

550 U.S. at 557). 

“While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual 

allegations, a Plaintiff’s obligation to provide the ‘grounds’ of his ‘entitlement to relief’ requires more 

than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” 

Twombly, 550 U.S. 544, 555 (2007) (internal citations omitted). Thus, “bare assertions . . . amount[ing] 

to nothing more than a ‘formulaic recitation of the elements’ . . . are not entitled to be assumed true.”

Iqbal, 556 U.S. at 681. In practice, “a complaint . . . must contain either direct or inferential allegations 

respecting all the material elements necessary to sustain recovery under some viable legal theory.” 

Twombly, 550 U.S. at 562. To the extent that the pleadings can be cured by the allegation of additional 

facts, the Plaintiffs should be afforded leave to amend. Cook, Perkiss and Liehe, Inc. v. Northern 

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California Collection Serv., Inc., 911 F.2d 242, 247 (9th Cir. 1990) (citations omitted).

III. DISCUSSION

This case is one of many between the parties currently pending in this Court and elsewhere. The 

Court already has ruled on Centex’s motions to dismiss in other cases between the parties that often are 

virtually identical to one another. See, e.g., Travelers Indem. Co. of Conn. v. Centex Homes, No. 14-cv217-LJO-GSA, 2014 WL 2002320 (E.D. Cal. May 15, 2014); Fidelity & Guar. Ins. Co. v. Centex 

Homes, 1:14-cv-826-LJO-GSA, 2014 WL 4075999 (E.D. Cal. Aug. 15, 2014); Travelers Prop. Cas. Co. 

of Am. v. Centex Homes, No. 1:14-cv-1450-LJO-GSA, Doc. 23 (E.D. Cal. Oct. 9, 2014). As in this case,

Plaintiffs

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brought those cases against Centex due to Centex’s alleged refusal to allow Plaintiffs to 

control Centex’s defense in underlying litigation. That allegation is the crux of Plaintiffs’ claims against 

Centex in all of Plaintiffs’ cases against Centex, including this one.

Plaintiffs likewise allege in this case that Centex refused to permit Plaintiffs to appoint their 

counsel of choice to defend Centex in the Carter case. Doc. 1 at ¶ 28 (Centex “has refused, will refuse, 

and is continuing to refuse to accept counsel appointed by [Plaintiffs] and is demanding independent 

counsel to defend it in [the Carter case]”). Plaintiffs argue that Centex’s alleged refusal to do so 

amounts to a material breach of the policies. See id. at ¶¶ 51, 55, 59, 63. Centex moves to dismiss 

Plaintiffs’ first (declaratory judgment) and second (breach of contract) causes of action on the ground 

those claims are not ripe because Plaintiffs filed their complaint before Centex sent Plaintiffs a 

reservation of rights letter in which it agreed to allow Plaintiffs to appoint its counsel of choice to defend 

Centex in the Carter case.

2 Doc. 7 at 9-10.

The Court already has ruled on this exact issue. See generally Fidelity, 2014 WL 4075999; 

 

1 The plaintiffs in those cases are various affiliates of Plaintiffs, are represented by the same counsel, and have made identical 

allegations against Centex on substantially similar (or identical) operative facts. For clarity, the Court will refer to them as the 

same plaintiffs.

2 Centex provides documentation that corroborates these claims, see Doc. 9-1 at 55, 59, which the Court may consider in 

assessing whether it has subject matter jurisdiction over Plaintiffs’ claims. See Nicholson v. Cnty. of Stanislaus, No. CV F 

09–1941 AWI–SMS, 2010 WL 923729, at *2 (E.D. Cal. Mar. 12, 2010) (citing St. Clair v. City of Chico, 880 F.2d 199, 201 

(9th Cir. 1989); Roberts v. Corrothers, 812 F.2d 1173, 1177 (9th Cir. 1987); Augustine v. United States, 704 F.2d 1074, 1077 

(9th Cir. 1983)).

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Travelers, No. 1:14-cv-1450-LJO-GSA, Doc. 23 at 5. In Fidelity, this Court dismissed Plaintiffs’ 

declaratory relief and breach of contract claims on the ground they were unripe because Plaintiffs filed 

their complaint before Centex sent Plaintiffs a reservation of rights letter in which it agreed to allow 

Plaintiffs to appoint their counsel of choice to defend Centex in underlying litigation. See id. at *3-4. 

Although squarely on point here, Plaintiffs do not address Fidelity in their opposition. See Doc. 14.

Further, another court recently presented with “virtually identical allegations” explicitly relied on 

Fidelity in dismissing as unripe Plaintiff’s causes of action for declaratory relief and breach of contract. 

See St. Paul Fire & Marine Ins. Co. v. Centex Homes, 14-cv-1216 AB (JCx) (C.D. Cal. Oct. 7, 2014), 

Doc. 28 at 5-6 (“Central District case”). The court, “agree[ing] with the reasoning in Fidelity,” found 

that Plaintiffs’ complaint was not ripe because it was filed before Centex had sent Plaintiffs its 

reservation of rights letter in which it agreed to let Plaintiffs choose counsel to defend Centex in the 

underlying lawsuit against it. Id. at 6. The court noted that Plaintiffs did “not address Centex’s 

contention that the first and second causes of action are unripe” in their opposition. Id.

The Court finds that Plaintiffs’ first and second claims were not ripe at the time the complaint 

was filed. Accordingly, the Court GRANTS WITH LEAVE TO AMEND Centex’s motion to dismiss 

Plaintiffs’ first and second causes of action for lack of subject matter jurisdiction.

Centex moves to dismiss Plaintiffs’ third cause of action (equitable reimbursement) on the 

ground Plaintiffs fail to allege facts showing that Plaintiffs defended the Carter action in its entirety.

Doc. 7 at 9-10.3Specifically, Centex argues that Plaintiffs have not alleged facts showing that the Carter

action has concluded or that Plaintiffs no longer have a duty to defend Centex in the Carter action. Id.at 

11-12.

To state a claim for equitable reimbursement, Plaintiffs must allege, among other things, that 

they defended Centex in the Carter action in its entirety. See Travelers Indem. Co. of Conn. v. Centex 

Homes, 1:14-CV-217-LJO-GSA, 2014 WL 3778269 at *3 (E.D. Cal. July 30, 2014), amended on 

 

3 Although Centex does not argue that Plaintiffs’ equitable reimbursement claim is unripe, it appears that it in fact is unripe 

because, like Plaintiffs’ first and second causes of action, it is premised on Centex’s alleged breach of the policies, which

could not have occurred at the time Plaintiffs filed their complaint.

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reconsideration, 1:14-CV-217-LJO-GSA, 2014 WL 4081861 (E.D. Cal. Aug. 19, 2014) (citing 

Scottsdale Ins. Co. v. MV Transp., 36 Cal.4th 643, 657 (2005)). That requires Plaintiffs to allege facts 

showing that the Carter action has resolved or that Plaintiffs no longer owe a duty to defend Centex in 

that action. See id.

Plaintiffs do not allege that the Carter action remains ongoing. Rather, Plaintiffs allege that they 

no longer owe any duty to defend Centex in the Carter action due to Centex’s alleged breach of the 

policies. See Doc. 1 at ¶ 67. Plaintiffs assert that, “as a result of Centex’s breach of the insurance policy, 

[Plaintiffs are] relieved of any obligation to defend Centex,” and thus they have defended the Carter

action in its entirety. Doc. 14 at 21 (citing Doc. 1 at ¶ 67); id. (“Centex breached the insurance contract, 

thereby ending any potential duty to defend”).

At the time Plaintiffs filed their complaint Centex necessarily could not have breached the 

policies because Centex had not yet communicated to Plaintiffs its position on its defense in the Carter

action. Thus, at the time the complaint was filed, Plaintiffs had not defended Centex in the Carter action 

in its entirety because they still had a duty to defend Centex. Plaintiffs’ equitable reimbursement claim

therefore fails. Accordingly, the Court GRANTS WITH LEAVE TO AMEND Centex’s motion to 

dismiss Plaintiffs’ third cause of action for equitable reimbursement.

IV. CONCLUSION AND ORDER

For the foregoing reasons, the Court GRANTS WITH LEAVE TO AMEND Centex’s motion to 

dismiss (Doc. 7) Plaintiffs’ complaint. Plaintiffs’ claims are DISMISSED WITHOUT PREJUDICE.

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Plaintiffs shall file any further amended complaint only if and when their claims are ripe.

IT IS SO ORDERED.

Dated: October 14, 2014 /s/ Lawrence J. O’Neill 

UNITED STATES DISTRICT JUDGE

 

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In granting Plaintiffs leave to amend in the Central District case, the court admonished Plaintiffs that any further amended 

complaint “must allege sufficient facts to ‘allow[] the court to draw the reasonable inference’ that [Plaintiff] suffered contract 

damages (as opposed to mere prejudice).” Central District case at 9. The court also “caution[ed] [Plaintiffs] that any 

amendment to the third cause of action [for equitable reimbursement] must include an allegation (made in good faith) that the 

[underlying litigation] has either terminated, or that [Plaintiffs’] duty to defend has otherwise discharged.” Id. The Court 

instructs Plaintiffs to do the same in any further amended complaint in this case.

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