Austin v. Kemper Corporation (Insurance)

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 GEORGE JARVIS AUSTIN, Case No. 21-cv-03208-SI

8 Plaintiff, ORDER GRANTING DEFENDANT'S 9 v. MOTION TO DISMISS

10 KEMPER CORPORATION Re: Dkt. No. 88 (INSURANCE), 11 Defendant. 12 13 Before the Court is defendant Kemper Corporation’s motion to dismiss plaintiff George 14 Jarvis Austin’s second amended complaint (“SAC”) pursuant to FRCP 12(b)(6) and motion to strike 15 pursuant to FRCP 12(f). The Court finds the matter appropriate for resolution without oral argument 16 and VACATES the hearing set for December 17, 2021. Civil Local Rule 7-1(b). Because plaintiff 17 has failed to cure the factual deficiencies identified in this Court’s dismissal of the First Amended 18 Complaint (“FAC”), the Court GRANTS defendant’s motion to dismiss without leave to amend. 19 The motion to strike is therefore moot. 20 21 BACKGROUND 22 The Court detailed the factual background leading to Austin’s lawsuit against Kemper in its 23 October 13, 2021 order granting defendant’s motion to dismiss the FAC. Dkt. No. 80 (FAC 24 Dismissal). In short: a driver insured by Kemper rear-ended Austin, who then sought a settlement 25 from Kemper. But Kemper was slow to respond or offer Austin a settlement—leading to Austin’s 26 lawsuit alleging discrimination under state and federal law, breach of contract and insurance 27 contract, and bad faith. The Court dismissed the FAC in its entirety for failing to plead factual 1 direct or circumstantial evidence permitting an inference of intentional discrimination as required 2 by state and federal law, Dkt. No. 80 at 3-5; (2) Failed to provide proof that Austin had an insurance 3 contract with Kemper which would form the basis of the asserted breach of contract and breach of 4 insurance contract claims, Dkt. No. 80 at 5-7; and (3) Was foreclosed by Moradi–Shalal v. 5 Fireman's Fund Ins. Companies, 46 Cal.3d 287, 250 (1988) from asserting a breach of the covenant 6 of good faith and fair dealing which runs between an insurer and its insured—in this case, between 7 Kemper and the third-party driver. Dkt. No. 80 at 7. 8 The Court dismissed the FAC with leave to amend. On October 13, 2021, Austin provided 9 the Court with a document entitled, “Pre-existing Kemper Contract with Plaintiff, to pair with 10 Special contract Duties commencing at time of Accident and when Plaintiff accepted, in writing 11 Defendant’s Kemper’s Standard Adhesion Contract as Claimant.” Dkt. Nos. 82, 82-1. Austin filed 12 the SAC on October 22, 2021. Dkt. No. 84. Kemper filed its motion to dismiss and to strike on 13 November 12, 2021. Dkt. No. 88. 14 15 LEGAL STANDARD 16 A motion filed pursuant to Federal Rule of Civil Procedure 12(b)(6) requires an inquiry into 17 whether a complaint alleges “enough facts to state a claim to relief that is plausible on its face.” Bell 18 Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). While courts do not require “heightened fact 19 pleading of specifics,” a plaintiff must allege facts sufficient to “raise a right to relief above the 20 speculative level.” Twombly, 550 U.S. at 555, 570. A court must accept as true all factual 21 allegations in a complaint but need not accept as true “threadbare recitals” of a claim’s legal 22 elements. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Even pro se plaintiffs must satisfy the 23 plausibility standard, Ivey v. Bd. of Regents of Univ. of Alaska, 673 F.2d 266, 268 (9th Cir. 1982), 24 although the court must “construe the pleadings liberally and [] afford the [pro se plaintiff] the 25 benefit of any doubt.” Bretz v. Kelman, 773 F.2d 1026, 1027 n.1 (9th Cir. 1985) (en banc). 26 27 DISCUSSION 1 only material difference between the FAC and the SAC is an allegation that the document at Dkt. 2 No. 82-1 evinces a pre-existing contractual relationship between Austin and Kemper. If the 3 referenced contract obligates Kemper to indemnify Austin for his “$20,000(+) in Medical, and 4 Medical relation costs…as well as over $100,000(+) missed wages” as alleged in the SAC, Dkt. No. 5 85 at 4, then the SAC adequately pleads breach of contract, breach of insurance contract, and bad 6 faith. However, the referenced contract creates no such obligation. 7 The document at Dkt. No. 82-1 is an insurance policy between Austin and Financial 8 Indemnity Company, “A part of Kemper Specialty,” that became effective on March 19, 2020. Id. 9 at 5. In that policy, Austin paid the insurer a $169 policy fee to indemnify him for liability arising 10 from bodily injury and property damage (“BI-PD”). Id. at 1. However, Austin did not elect 11 coverage for: Medical Payments, Uninsured BI, Uninsured PD, Other Than Collison, Collision, 12 Rental Reimbursement, Additional Equipment, CDW. Id. 13 Had the SAC alleged that Kemper failed to indemnify Austin for the liability he incurred as 14 the result of an accident (it does not), an executed insurance policy would permit a complaint to 15 plausibly plead a breach of contract or bad faith based on a failure to indemnify. Instead, the SAC 16 continues to allege that Kemper should have reimbursed Austin for personal medical expenses and 17 lost wages, pursuant to a contract between (1) the third-party driver and Kemper, and/or (2) a 18 “contract” between Austin and Kemper. This Court’s earlier dismissal explained why Austin could 19 not assert claims based on the third-party driver’s insurance policy. Dkt. No. 80 at 7. The Court 20 also carefully scrutinized the record to conclude that no contract emerged after the accident that 21 would have obligated Kemper to settle with Austin. Id. at 6. 22 Based on the SAC and its referenced documents, the Court now again concludes that there 23 was no pre-existing contract that obliges Kemper to indemnify Austin for medical expenses and lost 24 wages. A liability insurance policy does not create a generalized duty for an insurer to pay all losses 25 incurred by its insured, nor does a discrete contractual relationship give rise a broad covenant of 26 good faith and fair dealings for claims completely unrelated to the contract. Accordingly, the Court 27 dismisses the FAC’s second, third, and fourth claims for relief (breach of contract, bread of 1 establish the existence of the relevant contractual duties between Austin and Kemper, the dismissal 2 || is without leave to amend. 3 The Court similarly dismisses the discrimination claims without leave to amend. The SAC 4 || failed to add any factual allegations that would cure the deficiencies identified in the Court’s 5 dismissal of the FAC. At best, the SAC reiterates that Kemper delayed or refused to settle with 6 || Austin “in spite of’ his race, not “because of” it. 7 Because the Court grants the motion to dismiss in its entirety, the motion to strike is moot. 8 9 CONCLUSION 10 For the foregoing reasons, the Court GRANTS defendant’s motion to dismiss without leave 11 to amend. The motion to strike is moot. 12 IT IS SO ORDERED. 5 13 Dated: December 15, 2021 Ste WU tee OW VOMN™ SUSAN ILLSTON United States District Judge 16

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