Cerecedes v. Houston Casualty Company

• Court: District Court, N.D. California
• Decided: January 30, 2025
• Docket: 4:24-cv-06558
• Status: Unknown

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 JASON CERECEDES, 7 Case No. 24-cv-06558-DMR Plaintiff, 8 v. ORDER DENYING DEFENDANT 9 HOUSTON CASUALTY COMPANY’S HOUSTON CASUALTY COMPANY MOTION TO DISMISS 10 and DOES 1-100, inclusive, Re: Dkt. No. 13 11 Defendants. 12 13 Plaintiff Jason Cerecedes filed a Second Amended Complaint against Houston Casualty 14 Company (“HCC” or “Defendant”) and Does 1-100, asserting three claims: breach of contract; 15 breach of the covenant of good faith and fair dealing; and declaratory relief for the appointment of 16 Cumis counsel pursuant to California Civil Code § 2860. [Docket No. 11 (Second Amended 17 Complaint, “SAC”).] Plaintiff also seeks punitive damages. [Id.] Defendant now moves to 18 dismiss the claim for declaratory relief as to Cumis counsel and the request for punitive damages. 19 [Docket No. 13 (Motion to Dismiss, “MTD”).] Plaintiff opposes the motion [Docket No. 14, 20 “Opp’n”], and Defendant filed a reply [Docket No. 17, “Reply”]. The court held a hearing on 21 January 23, 2025. [Docket No. 24.] 22 For the following reasons, Defendant’s motion is denied. 23 I. BACKGROUND 24 A. Statement of Facts 25 Plaintiff makes the following allegations in the SAC, which the court takes as true for 26 purposes of this motion.1 Plaintiff is a licensed general contractor doing business as Astonishing 27 1 Construction. [SAC ¶ 1.] He purchased commercial general liability insurance coverage and 2 commercial excess liability insurance coverage in 2018 from Defendant. [Id. ¶ 8.] Specifically, 3 Plaintiff purchased HCC Policy H18AC80828-00 (effective October 14, 2018, to October 14, 4 2019), which he renewed for October 14, 2019, to October 14, 2020 (Policy H19AC80828-01); 5 October 14, 2020, to October 14, 2021 (Policy H20AC80828-02); and October 14, 2021, to 6 October 14, 2022 (Policy H21AC80828-03) (collectively, the “Policy”). [Id.] Each iteration of 7 the Policy afforded coverage for bodily injury and property damage according to its Section I, 8 Coverage A. [Id. ¶ 9.] 9 Beginning in September 2019, Plaintiff commenced work on a construction renovation 10 project for Una Elias in Berkeley, California. [Id. ¶ 11.] In the lawsuit underlying this action, 11 Elias alleges that Plaintiff’s work was negligent; that it allowed water intrusion into and around 12 Elias’s residence; and that, during periods of rainfall after Plaintiff completed work on August 23, 13 2021, there was further damage to the exterior and interior of Elias’s property. [Id. ¶ 13.] Prior to 14 filing the lawsuit, Elias and her counsel advised Plaintiff of the alleged property damage, and on 15 March 1, 2023, Plaintiff provided notice of Elias’s claim to Defendant. [Id. ¶ 12.] On May 17, 16 2023, after conducting an investigation of the Elias property, Defendant declined coverage for two 17 reasons: (a) the damage “did not occur during the effective dates of the HCC policy periods,” and 18 (b) the damage was only to work performed by Plaintiff and not to “other property,” which is a 19 policy exclusion. [Id. ¶ 14.] The SAC alleges that these reasons were “factually incorrect” and 20 “would have been easily revealed had HCC conducted a reasonable investigation of the claim, 21 something it did not do.” [Id.] 22 On May 24, 2023, Elias sued Plaintiff d/b/a Astonishing Construction in Alameda County 23 Superior Court, No. 23CV034217) (the “Elias Action”), for the property damage allegedly caused 24 by Plaintiff’s construction renovation work. [Id. ¶¶ 12, 15.] The complaint in the Elias Action 25 specifically alleges that damage to her property occurred during rainfalls that took place after 26 Plaintiff completed construction, thus during at least two of Defendant’s Policy periods, and also 27 1 alleges damages to her property that are not limited to Plaintiff’s work. [Id. ¶ 15.] The SAC states 2 that both allegations are in the Elias complaint and are contrary to Defendant’s stated reasons for 3 denying coverage on May 17, 2023. [Id.] 4 On August 25, 2023, Plaintiff’s personal counsel responded to Defendant’s decision to 5 deny coverage. [Id. ¶ 15.] Counsel requested that Defendant acknowledge its duty to defend and 6 indemnify Plaintiff and described how the specific facts alleged in the Elias Action contradicted 7 HCC’s prior assertions in denying coverage. [Id.] On September 1, 2023, Defendant again denied 8 coverage for the same reasons set forth in its May 17, 2023 letter. [Id. ¶ 16.] At this point, 9 Plaintiff requested the appointment of independent counsel under California Civil Code § 2860 10 (Cumis counsel), citing an “irreconcilable conflict” of interest between Plaintiff as insured and 11 Defendant as insurer. [Id.] Plaintiff continued to follow up with Defendant “several more times 12 via email correspondence” regarding the denial of coverage and “urged the HCC claims 13 representative to promptly consult with coverage counsel as HCC’s conduct and continued refusal 14 to provide a defense and/or indemnity constituted clear bad faith.” [Id. ¶ 17.] 15 By letter on October 5, 2023, Defendant acknowledged its duty to defend Plaintiff in the 16 Elias Action and included a reservation of rights to limit its indemnification responsibility only as 17 to the “Renovation/Handyman classification,” for which coverage is afforded so long as certain 18 policy exclusions do not apply. [Id. ¶¶ 17-18.]2 Defendant’s reservation of rights letter both 19 “admits that Elias asserts claims for covered damages” and maintains that certain of Elias’s claims 20 are subject to policy exclusions. [Id. ¶ 27.] In the same correspondence, Defendant informed 21 Plaintiff that Defendant sought to retain insurance defense counsel, Thomas Fama, Esq., of the 22 firm Wood Smith Henning & Berman (“Wood Smith”) to represent Plaintiff. [Id. ¶ 19.] 23 The SAC alleges that due to Defendant’s “prior conduct,” Plaintiff’s counsel requested a 24 conflict check for Wood Smith as well as copies of all correspondence between the firm and 25 Defendant or its representatives in order “to ensure that [Plaintiff]’s interests would be faithfully 26

27 2 Neither the SAC nor any briefing on this motion identifies the specific Policy exclusions for the 1 protected[.]” [Id. ¶ 19.] Defendant did not respond, and on January 5, 2024, Plaintiff again 2 requested the conflict check and correspondence between Defendant and Wood Smith. [Id. ¶ 20.] 3 On January 8, 2024, Mr. Fama produced the results of the conflict check. [Id.] On January 16, 4 2024, more than “three months after [Plaintiff’s] initial request,” Defendant produced certain 5 emails (some redacted) between Defendant and Mr. Fama, which the SAC alleges demonstrate 6 that on the day Plaintiff initially requested the communications, Defendant directed Mr. Fama not 7 to produce them to Plaintiff. [Id. ¶ 21.] The SAC alleges that this directive “revealed 8 [Defendant’s] efforts to hide information from its insured” and showed that Defendant was 9 “placing its own interests over those of its insured.” [Id.] The communications between Wood 10 Smith and Defendant also allegedly indicate that Mr. Fama advised Defendant that he did not 11 believe Plaintiff was entitled to the requested correspondence, which was improper legal advice 12 “in direct conflict with Plaintiff’s interests and request.” [Id. ¶ 22.] Mr. Fama then provided the 13 requested communications to Defendant’s coverage counsel so that Defendant could “make the 14 decisions as to what communications to release” and what information to redact, which Plaintiff 15 alleges is a breach of duty to Plaintiff and demonstrates “collusion between Defendant and 16 insurance defense counsel.” [Id.] 17 The SAC alleges that these emails, once produced to Plaintiff’s personal counsel, “laid 18 bare” “Mr. Fama’s conflict,” prompting Defendant to appoint new insurance defense counsel. [Id. 19 ¶ 23.] In February 2024, Defendant selected the law firm Skane Mills to defend Plaintiff in the 20 Elias Action. [Id.] Following Plaintiff’s review of a conflict check and production of 21 correspondence between Defendant and Skane Mills, Plaintiff allowed this representation to 22 proceed without prejudice to or waiver of his rights to independent counsel. [Id.] The SAC 23 alleges that Defendant refuses to pay the majority of Plaintiff’s attorneys’ fees incurred from 24 October 5, 2023 (the date of Mr. Fama’s appointment) until the appointment of Skane Mills in 25 February 2024, during which time Plaintiff incurred attorney’s fees for representation by his 26 personal counsel. [Id. ¶ 24.] 27 B. Procedural History 1 County, No. C24-02071. [Docket No. 1-1.] Defendant removed the action on September 18, 2 2024. [Docket No. 1.] Plaintiff filed an amended complaint on October 4, 2024 [Docket No. 9], 3 followed by the SAC on October 23, 2024. [Docket No. 11.]3 Defendant now moves to dismiss 4 portions of the SAC. [Docket No. 13.] 5 II. LEGAL STANDARD GOVERNING MOTIONS TO DISMISS 6 A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the legal 7 sufficiency of the claims alleged in the complaint. See Parks Sch. of Bus., Inc. v. Symington, 51 8 F.3d 1480, 1484 (9th Cir. 1995). When reviewing a motion to dismiss for failure to state a claim, 9 the court must “accept as true all of the factual allegations contained in the complaint,” Erickson, 10 551 U.S. at 94, and may dismiss a claim “only where there is no cognizable legal theory” or there 11 is an absence of “sufficient factual matter to state a facially plausible claim to relief,” Shroyer v. 12 New Cingular Wireless Servs., Inc., 622 F.3d 1035, 1041 (9th Cir. 2010) (citing Ashcroft v. Iqbal, 13 556 U.S. 662, 677-78 (2009); Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001)) (quotation 14 marks omitted). A claim has facial plausibility when a plaintiff “pleads factual content that allows 15 the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” 16 Iqbal, 556 U.S. at 678 (citation omitted). In other words, the facts alleged must demonstrate 17 “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action 18 will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 554, 555 (2007). 19 III. DISCUSSION 20 A. Defendant’s Request to Consider the Policy Documents 21 Defendant attaches to its motion and asks the court to consider “documents referred to and 22 upon which the complaint is premised”—here, its Policy for each of the effective time periods 23 October 14, 2018 to October 14, 2019 [Docket No. 13-1, “Exhibit A”]; October 14, 2019 to 24 October 14, 2020 [Docket No. 13-2, “Exhibit B”]); October 14, 2020 to October 14, 2021 25 [Docket No. 13-3, “Exhibit C”]); and October 14, 2021 to October 14, 2022 [Docket No. 13-4, 26 “Exhibit D”]. [MTD at 13 (citing In re Pacific Gateway Exch., Inc. Sec. Litig., 169 F. Supp. 2d 27 1 1160, 1164 (N.D. Cal. 2001); Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994), overruled on 2 other grounds by Galbraith v. County of Santa Clara, 307 F.3d 1119, 1127 (9th Cir. 2002)); 3 accord United States ex rel. Lee v. Corinthian Colleges, 655 F.3d 984, 999 (9th Cir. 2011)).] 4 The incorporation by reference doctrine permits district courts to consider materials 5 outside a complaint by treating “certain documents as though they are part of the complaint itself.” 6 Khoja v. Orexigen Therapeutics, Inc., 899 F.3d 988, 1002 (9th Cir. 2018). This is to prevent 7 “plaintiffs from selecting only portions of documents that support their claims, while omitting 8 portions of those very documents that weaken—or doom—their claims.” Id. Incorporation by 9 reference is appropriate “if the plaintiff refers extensively to the document or the document forms 10 the basis of the plaintiff's claim.” Id. at 1002 (quotation omitted); see also Knievel v. ESPN, 393 11 F.3d 1068, 1076 (9th Cir. 2005) (the doctrine applies in “situations in which the plaintiff's claim 12 depends on the contents of a document, the defendant attaches the document to its motion to 13 dismiss, and the parties do not dispute the authenticity of the document, even though the plaintiff 14 does not explicitly allege the contents of that document in the complaint”). If a document “merely 15 creates a defense to the well-pled allegations in the complaint, then that document did not 16 necessarily form the basis of the complaint.” Khoja, 899 F.3d at 999. 17 The SAC incorporates by reference the Policy documents submitted by Defendant. 18 Plaintiff does not object to their incorporation, nor does he dispute their authenticity. However, 19 Defendant does not reference any of the Policy language in its briefing, which suggests the Policy 20 documents are of no particular relevance to Defendant’s arguments. 21 B. Appointment of Cumis Counsel 22 Defendant argues that Plaintiff has not and cannot plead any facts to support a claim for 23 declaratory relief regarding the appointment of Cumis counsel. [MTD at 13-17.] Under California 24 law, where a conflict of interest exists between insurer and insured, “the insured has a right to 25 retain independent counsel to be paid for by the insurer, commonly referred to as ‘Cumis 26 counsel.’” Cont’l Cas. Co. v. Enodis Corp., 417 F. App’x 668, 671 (9th Cir. 2011) (citing San 27 Diego Navy Fed. Credit Union v. Cumis Ins. Soc’y, Inc., 162 Cal. App. 3d 358 (1984); Bogard v. 1 duty to provide independent counsel in California Civil Code § 2860, which provides that, “[i]f the 2 provisions of a policy of insurance impose a duty to defend upon an insurer and a conflict of 3 interest arises which creates a duty on the part of the insurer to provide independent counsel to the 4 insured, the insurer shall provide independent counsel to represent the insured” unless the insured 5 waives the right to independent counsel in writing. Cal. Civ. Code § 2860(a). “The potential for 6 conflict requires a careful analysis of the parties’ respective interests to determine whether they 7 can be reconciled (such as by a defense based on total nonliability) or whether an actual conflict of 8 interest precludes insurer-appointed defense counsel from presenting a quality defense for the 9 insured.” Dynamic Concepts, Inc. v. Truck Ins. Exch., 61 Cal. App. 4th 999, 1007-08 (1998). 10 In Cumis, the underlying lawsuit against the insured alleged in part that the insured’s 11 conduct was intentional, which conduct would not have been covered under the insurer’s policy. 12 See 162 Cal. App. 3d at 361-62. The appellate court concluded that the interests of insurer and 13 insured were in conflict where coverage turned on whether the insured’s conduct was intentional. 14 “Although issues of coverage under the policy are not actually litigated in the third party suit, this 15 does not detract from the force of these opposing interests as they operate on the attorney selected 16 by the insurer, who has a dual agency status. . . . Each time [a decision] must be made, the lawyer 17 is placed in the dilemma of helping one of his clients concerning insurance coverage and harming 18 the other.” Id. at 364-65. In such circumstances, the Cumis court concluded, “the insurer must 19 pay the reasonable cost for hiring independent counsel by the insured.” Id. at 375. However, “[i]f 20 the issue on which coverage turns is independent of the issues in the underlying case, Cumis 21 counsel is not required.” Blanchard v. State Farm Fire & Cas. Co., 2 Cal. App. 4th 345, 350 22 (1991) (collecting cases). 23 California courts have recognized that “a conflict of interest does not arise every time the 24 insurer proposes to provide a defense under a reservation of rights. There must also be evidence 25 that the outcome of [the] coverage issue can be controlled by counsel first retained by the insurer 26 for the defense of the [underlying] claim.” Gafcon, Inc. v. Ponsor & Assocs., 98 Cal. App. 4th 27 1388, 1421 (2002) (quotation marks and citations omitted, alterations in original); see also Cal. 1 assertion of factual or legal theories which undermine or are contrary to the positions to be 2 asserted in the liability case that a conflict of interest sufficient to require independent counsel, to 3 be chosen by the insured, will arise.” Gafcon, 98 Cal. App. 4th at 1421-22. Moreover, “[w]here 4 the insurer has not expressly reserved its right to deny coverage under a particular exclusion in its 5 policy, there can be no actual conflict based on the application of that exclusion during the 6 pendency of the action. . . . A general reservation of rights does not give rise to a conflict of 7 interest or create a duty to provide independent counsel.” Fed. Ins. Co. v. MBL, Inc., 219 Cal. 8 App. 4th 29, 44 (2013) (citing Dynamic Concepts, 61 Cal. App. 4th at 1010 n.10). 9 The SAC alleges that Defendant’s October 5, 2023 reservation of rights letter created an 10 “irreconcilable conflict” of interest that warrants the appointment of Cumis counsel because 11 “appointed insurance defense counsel is in a position, through litigation tactics, including 12 discovery, expert evaluations, and inspections, to control the outcome of the coverage issues” that 13 will be contrary to Plaintiff’s interest in the liability case. [SAC ¶ 27.] The SAC further alleges 14 that Defendant could “avoid[] the expense of expert investigation and destructive testing that can 15 otherwise reveal damage to the Elias property other than [Plaintiff’s] own work, which 16 [Defendant] claims would be excluded damages under the policy.” [Id. ¶ 18.] The SAC bolsters 17 these allegations related to the conflict of interest with various other allegations describing 18 Defendant’s bad faith conduct—namely, Defendant’s two denials of coverage on May 17, 2023, 19 and September 1, 2023, and Defendant’s October 5, 2023 retention of and subsequent 20 correspondence with Mr. Fama about Plaintiff’s conflict check request, as illustrated by the 21 correspondence produced to Plaintiff. [Id. ¶¶ 12-23.] The SAC moreover specifically alleges that 22 Defendant’s repeated denials, and eventual acceptance, of coverage were “based on the very same 23 information upon which [Defendant] had denied coverage for multiple months[.]” [Id. ¶ 18.] 24 Taken together as true, these allegations plausibly state a claim for the appointment of 25 Cumis counsel due to Plaintiff’s and Defendant’s “competing interests [that] create an ethical 26 conflict for counsel.” Centex Homes v. St. Paul Fire & Marine Ins. Co., 19 Cal. App. 5th 789, 27 797 (2018) (“Centex II”) (quoting Centex Homes v. St. Paul Fire & Marine Ins. Co., 237 Cal. 1 reservation of rights letter “admits that Elias asserts claims for covered damages—which Elias 2 claimed all along—as well as for claims subject to policy exclusions.” [SAC ¶ 27.] The SAC 3 alleges that the underlying Elias Action will thus involve factual determinations that counsel can 4 use to determine the coverage afforded to Plaintiff. According to the SAC, Defendant-appointed 5 counsel has the incentive to litigate the Elias Action in a manner that favors the application of 6 policy exclusions to minimize coverage—for example, through factual development or (non- 7 development) showing that any property damage was only to work performed by Plaintiff and/or 8 fell outside of the Policy period. While the factfinders in the Elias Action may not necessarily 9 make determinations on these issues, whichever counsel represents Plaintiff in the Elias Action 10 will nevertheless control the “discovery, expert evaluations, and inspections” that can determine 11 the outcome of Defendant’s coverage. [Id.] Plaintiff’s allegations thus create more than the “mere 12 possibility of an unspecified conflict [that] does not require independent counsel.” Dynamic 13 Concepts, 61 Cal. App. 4th at 1007. 14 Defendant argues that no such conflict exists because Plaintiff and Defendant have a 15 common interest to minimize Plaintiff’s liability in the Elias Action, and coverage is not itself at 16 issue there. [MTD at 13-17, Reply at 4-5.] Defendant points to Centex I, where the court on 17 appeal from a demurrer “[did] not perceive the interests of [insured] and [insurer] to be adverse” 18 where “[insured]’s liability is derivative and [insurer] has the same interest in defending the 19 underlying claim.” Centex I, 237 Cal. App. 4th at 31-32. The Centex I court did not credit the 20 insured’s allegations that the insurer could control the underlying action and dismissed its 21 allegations as “conclusions without substance, not facts.” Id. at 32. By contrast, here the SAC’s 22 allegations that the outcome of coverage issues is “controlled” by counsel, Gafcon, 98 Cal. App. at 23 1421, are further supported by allegations that Defendant has already twice incorrectly disclaimed 24 coverage entirely, including following an investigation. Cf. Blanchard, 2 Cal. App. 4th at 350 25 (“Appellant produced no evidence to show in what specific way the defense attorney could have 26 controlled the outcome of the damage issue to appellant’s detriment, or had incentive to do so. 27 Appellant merely urged that there was an unspecified possibility of a conflict.” (emphasis in 1 3427012, at *4 (N.D. Cal. Aug. 5, 2021) (finding “entirely conclusory” insured’s counterclaim 2 that did “not allege that [insurer]’s counsel could control the characterization of the injury in the 3 underlying action in a way that impacts the coverage question in this case” (internal quotation 4 marks and citation omitted)). And the SAC alleges multiple instances in which Defendant’s 5 allegedly bad faith conduct underscores Defendant’s incentive in litigating the Elias Action to 6 minimize coverage at Plaintiff’s expense. [SAC ¶¶ 17-18, 27, 29.] 7 Defendant’s other cited cases do not persuade otherwise. As Plaintiff’s briefing notes 8 [Opp’n at 13], Defendant relies largely on cases decided well after the motion to dismiss stage 9 where the courts’ rulings were grounded in evidence produced in discovery. See Centex II, 19 10 Cal. App. 5th at 789 (appeal from summary judgment); Swanson v. State Farm Gen. Ins. Co., 219 11 Cal. App. 4th 1153 (2013) (appeal from summary judgment); Gafcon, 98 Cal. App. 4th at 1423 12 (appeal from summary judgment); Dynamic Concepts, 61 Cal. App. 4th at 1004 (appeal and cross- 13 appeal from judgment); Blanchard, 2 Cal. App. 4th at 345 (appeal from judgment). Prevailing 14 authority makes clear that the Cumis counsel inquiry is fact-specific, and the SAC’s allegations 15 concern largely “factual issues that are best resolved in a motion for summary judgment.” 16 Admiral Ins. Co. v. Rodriguez, No. 11-cv-01565-AG-MLGx, 2012 WL 13020022, at *4 (C.D. Cal. 17 June 14, 2012) (denying motion to dismiss claims for breach of contract and breach of the implied 18 covenant of good faith and fair dealing that were “predicated on the insurance provider’s failure to 19 provide independent counsel”). Defendant’s arguments are more appropriate at the merits stage 20 and not on a Rule 12 motion. 21 Defendant further argues that any conflict of interest that may have existed with Plaintiff 22 “ceased to exist when [Defendant] appointed” Skane Mills to represent Plaintiff. [MTD at 16-17.] 23 However, Plaintiff alleges a conflict between his and Defendant’s interests, not those of Mr. Fama. 24 The SAC alleges that any Defendant-appointed counsel would be incentivized to litigate the Elias 25 Action in order to minimize coverage. [SAC ¶ 18; see also id. ¶ 27 (alleging an “irreconcilable 26 conflict between the interests of HCC and Cerecedes in the defense of the Elias action”).] The 27 SAC further alleges that, even after the appointment of Skane Mills and further due diligence, 1 and the Skane Mills firm,” Plaintiff did not “waive[] [] his rights to independent counsel, because 2 it was apparent at this point that HCC was placing its interests above those of Cerecedes in an 3 effort to wrongly disclaim coverage wherever and whenever possible.” [Id. ¶ 23.] Because the 4 alleged conflict of interest between Plaintiff and Defendant is not specific to Mr. Fama, the SAC 5 sufficiently pleads that the appointment of Skane Mills did not remove the conflict of interest 6 between the insurer and the insured. 7 C. Punitive Damages 8 Defendant argues that Plaintiff has failed to plead sufficient facts to support a request for 9 punitive damages. [MTD at 17-20.] California Civil Code § 3294 authorizes an award of 10 exemplary damages against a tortfeasor where there is “clear and convincing evidence that the 11 defendant has been guilty of oppression, fraud, or malice . . . .” Cal. Civ. Code § 3294(a). 12 “Malice” is defined as “conduct which is intended by the defendant to cause injury to the plaintiff 13 or despicable conduct which is carried on by the defendant with a willful and conscious disregard 14 of the rights or safety of others.” Cal. Civ. Code § 3294(c)(1). “‘Oppression’ means despicable 15 conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person's 16 rights.” Cal. Civ. Code § 3294(c)(2). Generally, mere or even gross negligence will not support 17 an award of punitive damages. See Simmons v. Southern Pac. Transp. Co., 62 Cal. App. 3d 341, 18 368 (1972); see also Taylor v. Superior Court, 24 Cal. 3d 890, 899-900 (1979) (“[O]rdinarily, 19 routine negligent or even reckless disobedience of traffic laws would not justify an award of 20 punitive damages.”). 21 To make a colorable claim for punitive damages at the motion to dismiss stage, Plaintiff 22 must allege sufficient facts to constitute oppression, fraud, or malice. Defendant argues that the 23 SAC contains “merely generalized, boilerplate allegations, with no facts that HCC acted with 24 malicious, oppressive, or fraudulent intent whatsoever[.]” [MTD at 18.] The court disagrees. The 25 SAC alleges that Defendant engaged in “bad faith conduct with a willful and conscious disregard 26 of Cerecedes’s rights.” [SAC ¶ 41.] It alleges in the alternative that Defendant’s conduct 27 “constituted an intentional misrepresentation, deceit, or concealment of a material fact known to 1 conduct “was malicious, oppressive and/or fraudulent under California Civil Code section 3294.” 2 [Id.] These allegations, together with other specific allegations in the SAC describing Defendant’s 3 conduct—from its two allegedly incorrect declinations of coverage, its subsequent about-face on 4 these declinations, its appointment of Mr. Fama but subsequent reluctance and redaction of 5 correspondence with Mr. Fama, and replacement of Mr. Fama with new insurance defense 6 counsel—are more than “merely generalized, boilerplate allegations” [MTD at 18] and are 7 sufficient to support a claim that Defendant acted with “such a conscious and deliberate disregard 8 of the interests of others that [Defendant’s] conduct may be called willful or wanton.” Zheng v. 9 Maroun, No. 21-cv-07925-SK, 2022 WL 14813840, at *3 (N.D. Cal. Oct. 25, 2022) (quoting 10 Taylor, 24 Cal. 3d at 894-95). 11 IV. CONCLUSION 12 For the foregoing reasons, Defendant’s motion to dismiss is denied. 13 Dated: January 30, 2025 14 ______________________________________ 15 Donna M. Ryu 16 Chief Magistrate Judge 17 18 19 20 21 22 23 24 25 26 27