Fishell v. Nationwide Mutual Ins. Co.

• Court: District Court, E.D. California
• Decided: July 19, 2023
• Docket: 2:23-cv-00027
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 AMY FISHELL and JUSTIN FISHELL, No. 2:23-cv-00027-DJC-DB 12 Plaintiffs, 13 v. ORDER

14 NATIONWIDE MUTUAL INS. CO. and AMCO INS. CO., 15 Defendants. 16 17 Plaintiffs Amy and Justin Fishell (“Plaintiffs”) were unfortunate victims of the 18 Paradise, California Camp Fire in 2018. Plaintiffs had to relocate after their home was 19 destroyed by the fire and incurred additional expenses resulting from additional 20 travel. Plaintiffs were insured by AMCO Insurance Company (“AMCO”), a subsidiary of 21 Nationwide Mutual Insurance Company (“Nationwide”) (collectively “Defendants”). 22 While Plaintiffs do not deny that they were reimbursed by Defendants for this 23 additional travel, Plaintiffs claim they were reimbursed improperly under the Internal 24 Revenue Service (“IRS”) standard mileage rate for medical and moving expenses, and 25 should have instead been reimbursed under the IRS standard rate for business use. 26 Plaintiffs allege that the failure to use the business rate, which covers “fixed costs” in 27 addition to mileage, is a breach of contract and violation of various California laws and

28 //// 1 seek to bring claims on their behalf and on behalf of a not yet certified class of 2 similarly situated individuals. 3 Defendants move the Court to dismiss Plaintiffs’ First Amended Complaint 4 (“FAC”), arguing that Nationwide is not a proper defendant, that the claims are time 5 barred, and that Plaintiffs have failed to allege plausible claims. Because Plaintiffs 6 have failed to establish that their claims were tolled, the claims must be dismissed as 7 time-barred. In addition, Plaintiffs fail to state a claim upon which relief can be 8 granted, as discussed below. The Court will GRANT Plaintiffs leave to amend their 9 Complaint. 10 BACKGROUND 11 On November 8, 2018, Plaintiffs’ home was destroyed in the Paradise, 12 California Camp Fire. (FAC (ECF No. 14) ¶¶ 29, 32.) As a result, Plaintiffs were forced 13 to relocate. (FAC ¶ 29.) Due to their relocation, Plaintiffs incurred additional travel 14 expenses. (FAC ¶ 36.) 15 Plaintiffs were insured under a homeowners insurance policy issued by AMCO, 16 a subsidiary of Nationwide. (FAC ¶¶ 5–7.) Plaintiffs allege that while their policy was 17 with AMCO, Nationwide acted as the alter-ego of AMCO and oversaw the processing 18 of Plaintiffs’ claims, as evidenced by the use of Nationwide letterhead on official 19 documents, intermingling of Nationwide and AMCO agents, signatures by 20 Nationwide-only officers on the policy, and the reimbursement payments made by 21 Nationwide. (FAC ¶¶ 7, 13; Opp’n (ECF No. 23) at 29–30.) 22 As part of the insurance policy, AMCO was obligated to reimburse Plaintiffs to 23 “cover any necessary increase in living expenses incurred” including the additional 24 travel expenses associated with their displacement following the destruction of their 25 home. (FAC ¶¶ 10–11, 21–22.) Defendants made payments to Plaintiffs for these 26 expenses from sometime in 2018 up to September 2, 2022. (FAC ¶ 36.) Plaintiffs 27 allege that Defendants improperly used the IRS Standard mileage rate for moving and 28 medical use to calculate their reimbursements, and failed to inform Plaintiffs of the 1 rate at which they calculated the reimbursements. (FAC ¶¶ 12, 23–28.) According to 2 Plaintiffs, it is “industry standard” to instead use the IRS rate for business use, which is 3 approximately three times higher. (FAC ¶¶ 24, 26.) 4 Plaintiffs claim that the use of the moving and medical rate, and Defendants’ 5 failure to disclose the rate they used to reimburse Plaintiffs, constitutes a breach of 6 contract, breach of special duty to insured, breach of the covenant of good faith and 7 fair dealing, and violation of the California Unfair Competition Act. Plaintiffs 8 additionally request a declaration that Defendants’ practice is unfair or unlawful. (FAC 9 at 12–18.) 10 Defendants filed a Motion to Dismiss on March 7, 2023. (Mot. (ECF No. 19).) 11 Defendants argue that Plaintiffs lack standing to bring this action, and that the suit is 12 barred under the statute of limitations. Defendants further argue that each cause of 13 action fails to state a claim upon which relief can be granted. Plaintiffs opposed the 14 motion (Opp’n), and Defendants have filed a reply (Reply (ECF No. 24)). 15 I. Legal Standard for Motion to Dismiss 16 A party may move to dismiss for “failure to state a claim upon which relief can 17 be granted.” Fed. R. Civ. P. 12(b)(6). The motion may be granted if the complaint 18 lacks a “cognizable legal theory” or if its factual allegations do not support a 19 cognizable legal theory. Godecke v. Kinetic Concepts, Inc., 937 F.3d 1201, 1208 (9th 20 Cir. 2019) (quoting Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1988)). 21 The Court assumes all factual allegations are true and construes “them in the light 22 most favorable to the nonmoving party.” Steinle v. City and Cnty. of San Francisco, 23 919 F.3d 1154, 1160 (9th Cir. 2019) (quoting Parks Sch. of Bus., Inc. v. Symington, 51 24 F.3d 1480, 1484 (9th Cir. 1995)). If the complaint’s allegations do not “plausibly give 25 rise to an entitlement to relief,” the motion must be granted. Ashcroft v. Iqbal, 556 26 U.S. 662, 679 (2009). A complaint need contain only a “short and plain statement of 27 the claim showing that the pleader is entitled to relief,” Fed. R. Civ. P. 8(a)(2), not 28 “detailed factual allegations,” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). But 1 this rule demands more than unadorned accusations; “sufficient factual matter” must 2 make the claim at least plausible. Iqbal, 556 U.S. at 678. In the same vein, conclusory 3 or formulaic recitations of elements do not alone suffice. Id. (citing Twombly, 550 U.S. 4 at 555). This evaluation of plausibility is a context-specific task drawing on “judicial 5 experience and common sense.” Id. at 679. 6 ANALYSIS 7 II. Discussion 8 A. Standing to Bring Claims Against Nationwide 9 Nationwide requests that it be dismissed from this lawsuit because Plaintiffs 10 lack standing to bring suit against it. Under Article III, claims may only be brought 11 against defendants if they likely caused an alleged injury, and the injury is redressable 12 by the court. TransUnion LLC v. Ramirez, 141 S. Ct. 2190, 2203 (2021). Otherwise, 13 there is no case or controversy that a federal court can resolve, and the suit must be 14 dismissed. Id. Nationwide argues that because it was not a party to the contract 15 between Plaintiffs and AMCO, and because the injury is not traceable to Nationwide’s 16 conduct, and therefore not redressable by Nationwide, there is no Article III standing 17 to bring suit against it. 18 In evaluating the Rule 12(b)(1) motion to dismiss, this Court may consider the 19 evidence submitted by both parties. As the Ninth Circuit has stated: 20 This is proper because Rule 12(b)(1) attacks on jurisdiction can be either facial, confining the inquiry to allegations in the complaint, or factual, 21 permitting the court to look beyond the complaint. White v. Lee, 227 F.3d 22 1214, 1242 (9th Cir. 2000). Once the moving party has converted the motion to dismiss into a factual motion by presenting affidavits or other 23 evidence properly brought before the court, the party opposing the 24 motion must furnish affidavits or other evidence necessary to satisfy its burden of establishing subject matter jurisdiction. St. Clair v. City of 25 Chico, 880 F.2d 199, 201 (9th Cir.1989). 26 Savage v. Glendale Union High Sch., Dist. No. 205, Maricopa Cnty., 343 F.3d 1036, 27 1039 n. 2 (9th Cir. 2003). Defendants have submitted factual evidence to support the 28 standing challenge, and Plaintiffs have submitted factual evidence in response. The 1 Court has converted this motion to a factual motion and the Court may look beyond 2 the operative Complaint. 3 A parent of a subsidiary company cannot ordinarily be held liable just because 4 of the parent-subsidiary relationship. See, e.g., United States v. Bestfoods, 524 U.S. 5 51, 61–62 (1998). However, liability may be imputed “’where the subsidiary is the 6 parent’s alter ego, or where the subsidiary acts as the general agent of the parent,” or 7 where it “participates in the wrongdoing.” Cattie v. Wal-Mart Stores, Inc., 504 F. Supp. 8 2d 939, 945 (S.D. Cal. 2007) (quoting Harris Rutsky and Co. Ins. Servs., Inc. v. Bell and 9 Clements Ltd., 328 F.3d 1122, 1134 (9th Cir.2003) and citing Bestfoods, 524 U.S. at 10 64–65). The elements of alter ego liability are “(1) that the parent exercised so much 11 control over the subsidiary so as to have effectively assumed the subsidiary’s day-to- 12 day operations in carrying out the policy, and (2) that an inequitable result would 13 obtain in the absence of the Court applying this standard.” Kundanmal v. Safeco, No. 14 2:17-CV-06339-SVW, 2017 WL 6942758, at *2 (C.D. Cal. Dec. 13, 2017); see also Ruiz 15 v. Gen. Ins. Co. of Am., No. 1:20-CV-00218-AWI-EPG, 2020 WL 4018274, at *4 (E.D. 16 Cal. July 15, 2020) (stating the first element in slightly different terms: “the parent must 17 control ‘the subsidiary to such a degree as to render the latter the mere 18 instrumentality of the former’” (quoting Calvert v. Huckins, 875 F. Supp. 674, 678 (E.D. 19 Cal. 1995))). 20 While Plaintiffs do not specifically allege an alter ego theory of liability, 21 construing the Complaint in Plaintiff’s favor, the Court assumes one based on the 22 Plaintiffs’ allegations that Nationwide and AMCO intermingled their agents and official 23 documents. Plaintiffs incorporate documents showing that Nationwide and AMCO 24 utilize the same adjusters and agents, use the same “Nationwide” letterhead, and that 25 the contract between Plaintiffs and AMCO is signed by parties that are officers only of 26 Nationwide and not of AMCO. (See FAC ¶ 36.) In addition, in Plaintiffs’ Opposition 27 they include copies of the reimbursement checks issued to them by Nationwide alone. 28 (Opp’n. at 29–30.) Defendants similarly include multiple letters regarding the 1 Plaintiffs’ insurance claims which were issued on solely Nationwide letterhead by a 2 Nationwide representative. (See Mot. at 35–40.) This evidence, particularly the checks 3 issued by Nationwide for Plaintiffs’ claims under the AMCO policy, is sufficient at this 4 stage to plausibly allege that Nationwide exercised control over AMCO such that it 5 has assumed AMCO’s day-to-day operations, at least with regard to Plaintiffs’ policy 6 and claims. Similarly, because Plaintiffs allege that Nationwide was integral to 7 AMCO’s operations and therefore the decisions about reimbursement, it would be 8 inequitable to not hold Nationwide to account for its purported role in the alleged 9 conduct. Therefore, in light of the current factual record, Plaintiffs have standing to 10 bring claims against Nationwide. 11 B. Timeliness of Claims 12 Defendants next argue that Plaintiffs have exceeded the time limit to bring suit 13 under the contract, which is one year from the date of loss, and that the claims are 14 therefore time-barred. Ordinarily, a contractual limitation on the time to bring suit 15 would be controlling. See Gaylord v. Nationwide Mut. Ins. Co., 776 F. Supp. 2d 1101, 16 1113 (E.D. Cal. 2011) (“[A] covenant shortening the period of limitations is a valid 17 provision of an insurance contract.”). However, Plaintiff alleges there are two other 18 factors at play which modify the relevant limitations period. California Insurance Code 19 section 2071 provides a two-year period to bring claims for losses resulting from a 20 declared disaster, and California recognizes equitable tolling “from the time an 21 insured gives notice of the damage to his insurer . . . until coverage is denied.” 22 Prudential-LMI Com. Ins. v. Superior Court, 51 Cal. 3d 674, 693 (1990), as modified 23 (Dec. 13, 1990). Where tolling applies, the statute of limitations still begins to run on 24 the date of loss, but is tolled for the interim period. Id. 25 Plaintiffs have sufficiently established that the Camp Fire was declared a federal 26 and state disaster, but nonetheless cannot establish that section 2071 applies to their 27 claims. Section 2071 was amended effective September 21, 2018 to include the 28 twenty-four-months limitation period in the event of a declared emergency. See 2018 1 Cal. Legis. Serv. Ch. 639 (A.B. 2594). Under section 2071(d)(1), the amendment only 2 applies to “policies originated or renewed on or after the effective date” of September 3 21, 2018. Plaintiffs’ insurance policy appears to have been last renewed before this 4 effective date, on April 8, 2018. (FAC at 35.) As such the extended time to file suit is 5 inapplicable, and counsel for Plaintiffs conceded such at argument. 6 With respect to equitable tolling, Plaintiffs’ counsel appeared to suggest at oral 7 argument that tolling based on Prudential is inapplicable to this case because it does 8 not involve a denial of benefits, but rather a failure to satisfactorily pay benefits after 9 establishing that Plaintiffs were entitled to coverage under their policy. Even if 10 Prudential did apply, Plaintiffs do not allege sufficient facts to establish that the 11 limitations period should have been tolled, or for how long. While Plaintiffs recount 12 the date of loss, November 8, 2018, Plaintiffs do not allege when they gave their 13 insurer “notice of the damage,” nor whether or when coverage was denied. Plaintiffs 14 allege that they have not been given notice that their file had been closed and that 15 they received correspondence concerning their claims as late as November 21, 2022, 16 but neither of these facts provides information about whether the coverage had been 17 denied at any point. Without facts indicating when tolling began, and whether and 18 when tolling may have ended, the Court cannot determine the period during which 19 the claim may have been tolled. As a result, Plaintiffs have failed to establish a basis 20 for equitable tolling. See Vashistha v. Allstate Ins. Co., 989 F. Supp. 1029, 1032 (C.D. 21 Cal. 1997) (denying Plaintiff’s tolling argument where they did not provide insurer with 22 written notice of the loss). 23 Without establishing that the claims should have been tolled and for what 24 period, the one-year contractual limitation would apply and would have run on 25 November 8, 2019. This suit was filed on January 6, 2023, well past this date. 26 At oral argument, Plaintiffs’ counsel attempted to assert for the first time a 27 theory of timeliness based on a continuing breach of the contract. Because the 28 contract necessitates that actions must be brought within one year of the “loss,” such a 1 theory is only viable if the loss of use of the home was a separate “loss” under the 2 policy, which was continuous from November 8, 2018 until the date Plaintiffs were 3 able to use their home again. However, Plaintiffs have failed to plead sufficient facts to 4 support this theory, including that the loss of use was a loss under the contract, and 5 when the loss occurred.1 6 However, Plaintiffs may be able to amend their Complaint and provide the 7 necessary information to establish tolling or to sufficiently allege a timely claim. As 8 such Plaintiffs will be given leave to amend their Complaint. 9 The Motion to Dismiss is GRANTED as to all claims. 10 C. Sufficiency of Claims 11 Although the Motion to Dismiss must be granted based on the failure to prove 12 that equitable tolling applies, the Court will proceed with determining whether the 13 claims have been sufficiently pled in the event Plaintiffs can overcome timeliness issue 14 through an amended complaint. See Lima v. Am. Home Mortg. Servicing, Inc., No. C 15 09-3561-CW, 2010 WL 144810, at *3–5 (N.D. Cal. Jan. 11, 2010) (analyzing the 16 sufficiency of the plaintiff’s claims despite failure to plead facts supporting equitable 17 tolling). 18 i. Breach of Contract 19 To establish a prima facie breach of contract claim, Plaintiffs must sufficiently 20 plead the following elements: “(1) existence of the contract; (2) plaintiff's performance 21 or excuse for nonperformance; (3) defendant's breach; and (4) damages to plaintiff as 22 a result of the breach.” CDF Firefighters v. Maldonado, 158 Cal. App. 4th 1226, 1239 23 (2008), as modified on denial of reh'g (Feb. 5, 2008). 24 Here, Plaintiffs have failed to sufficiently allege a breach of contract. While they 25 have sufficiently alleged the first two elements (that there was a contract between 26 1 The Court notes that claims based on bad-faith conduct that occurs after initial policy coverage may 27 not be claims “on the policy” and as such are not subject to the contractual limitation period. See Velasquez v. Truck Ins. Exch., 1 Cal. App. 4th 712, 720–21 (1991) (discussing the development of case 28 law on this issue). 1 them and the Defendants, and that they complied with the terms of the contract), they 2 have failed to sufficiently allege a breach or damages. 3 In this case, the breach and damages elements are intermingled. While 4 Plaintiffs argue that Defendants’ failure to reimburse them at the business rate (which 5 would have included additional reimbursement for “fixed costs”) breaches 6 Defendant’s duty under the contract to fully compensate them for their additional 7 living expenses, the contract does not state the rate by which Defendants must 8 compensate their insured. Rather, the contract only states that they will “cover any 9 necessary increase in living expenses incurred . . . so that [the] household can 10 maintain its normal standard of living.” (FAC at 42.) Plaintiffs do not sufficiently allege 11 whether the reimbursements which they did receive failed to cover any necessary 12 increase in expenses. Rather, Plaintiffs state, in conclusory fashion, that “the 13 reimbursement rate paid by DEFENDANTS . . . does not fully compensate 14 DEFENDANTS’ insureds for the increased costs incurred as provided by the policy.” 15 (FAC ¶ 12; see also FAC ¶ 27.) Without more detail explaining how the rate used by 16 Defendant is insufficient, the Complaint fails to provide more than a formulaic 17 recitation of the elements of a breach of contract. See Twombly, 550 U.S. at 555. 18 At oral argument, counsel for Plaintiffs clarified that the additional fixed costs 19 covered under the business rate included costs like vehicle insurance and registration. 20 However, these costs were not incurred as a result of the loss and subsequent 21 displacement. Because Plaintiffs would have paid for these fixed costs regardless of 22 their displacement, the fixed costs do not represent an increase in living expenses, 23 and therefore are not reimbursable under the contract. See First v. Allstate Ins. Co., 24 222 F. Supp. 2d 1165, 1171 (C.D. Cal. 2002) (Plaintiffs’ assertion that they were 25 necessarily underpaid because the damage report was inaccurate failed to allege a 26 breach of contract claim where they failed to establish that the amount they received 27 was not sufficient to cover the cost of repairs), aff'd sub nom. Ennis v. Allstate Ins. Co., 28 99 F. App'x 146 (9th Cir. 2004). Since Plaintiffs have not shown that they were not in 1 fact compensated for their additional expenses, they have neither shown a breach of 2 the contract nor any damages. 3 The Motion to Dismiss is therefore GRANTED as to the Second Claim for Relief. 4 Plaintiffs will be granted leave to amend to provide more detailed allegations 5 regarding whether there are any additional fixed costs they otherwise would not have 6 incurred, or how the rate violates Defendant’s contractual obligation to “cover any 7 necessary increase in living expenses incurred” by Plaintiffs. 8 ii. Breach of Special Duty to Insured 9 California does not recognize an independent cause of action under the theory 10 of a general special duty owed to insured beyond the duty of reasonable care implied 11 in the duty of good faith and fair dealing (which Plaintiffs separately allege). See 12 Jones v. Grewe, 189 Cal. App. 3d 950, 955–56 (1987) (holding that the “insurer’s duty 13 to inform the insured of his rights and obligations under the policy . . . is included in 14 the implied duty of good faith and fair dealing which an insurer owes its insured[]”). In 15 general, there is no other special duty which insurance companies owe to their 16 insured. Instead, an insurer (through its agent) may assume a greater duty to the 17 insured by its actions and be held to a higher standard of care as a result. See Paper 18 Savers, Inc. v. Nacsa, 51 Cal. App. 4th 1090, 1096–97 (1996) (collecting cases). For 19 example, in Eddy v. Sharp, an insurance broker assumed a special duty to the insured 20 by deliberately undertaking the task of finding a policy which would directly address 21 the insured’s needs. 199 Cal. App. 3d 858, 866 (1988). As the Complaint is currently 22 styled, Plaintiffs make no such allegation that Defendants or their agents undertook 23 such a greater duty. 24 In their Opposition, Plaintiffs cite Egan v. Mutual of Omaha which found there 25 was a “special relationship” between an insurance company and their insureds, but 26 this case does not support Plaintiffs’ theory. 24 Cal. 3d 809, 820 (1979). Egan found 27 that the special relationship justified the imposition of exemplary damages under 28 California Civil Code section 3294, not that it created a stand-alone basis for liability. 1 Id. (“The special relationship between the insurer and the insured illustrates the public 2 policy considerations that may support exemplary damages in cases such as this.”); 3 see also Neal v. Farmers Ins. Exch., 21 Cal. 3d 910, 922 (1978) (assessing whether 4 punitive damages would apply under section 3294 in addition to compensatory 5 damages for the breach of good faith and fair dealing). 6 Plaintiffs seemingly conflate section 3294 and their breach of special duty claim, 7 requesting damages under section 3294 in the third cause of action. (See FAC ¶ 68). 8 Section 3294 provides that exemplary damages may be awarded in addition to actual 9 damages “[i]n an action for the breach of an obligation not arising from contract, 10 where it is proven by clear and convincing evidence that the defendant has been 11 guilty of oppression, fraud, or malice.” Cal. Civ. Code § 3294(a). If Plaintiffs are 12 attempting to bring a claim for punitive damages under section 3294, they must plead 13 the elements required for such damages as part of an action for breach of an 14 obligation not arising out of contract, such as the alleged breach of the covenant of 15 good faith and fair dealing. 16 For the above reasons, the Motion to Dismiss as to Plaintiffs’ Third Claim for 17 Relief is GRANTED. Plaintiff will be granted leave to amend to show specific facts that 18 give rise to a special relationship, as well as to add a claim for damages under section 19 3294 if Plaintiffs believes they can establish the requisite elements. 20 iii. Breach of Covenant of Good Faith and Fair Dealing 21 In California, the Covenant of Good Faith and Fair Dealing is implied in every 22 contract and “aims to effectuate the contract’s purposes and promises, and to protect 23 the parties’ legitimate expectations based upon the terms of the contract” by 24 requiring that the contracting parties refrain from doing anything to injure the rights of 25 the other to receive the benefits of the contract. Kelly v. Skytel Commc’ns, Inc., 32 F. 26 App’x 283, 285 (9th Cir. 2002). The precise nature and extent of the duty imposed by 27 such an implied promise depends on the contractual purposes. Egan, 24 Cal. 3d at 28 818. In the context of an insurance contract, an insurer must give the insured’s 1 interests as much consideration as it does its own, which includes the duty to “inform 2 the insured of his rights and obligations under the policy, particularly when an 3 insured’s apparent lack of knowledge may result in a loss of benefits or a forfeiture of 4 rights.” See Jones v. Grewe, 189 Cal. App. 3d 950, 955 (1987); see also Davis v. Blue 5 Cross of N. California, 25 Cal. 3d 418, 428 (1979). In their Complaint, Plaintiffs allege 6 that Defendants breached their duty to consider Plaintiffs’ interests by failing to inform 7 Plaintiffs about the mileage reimbursement rate and of their right to contest the 8 reimbursements. 9 Defendants argue that the covenant of good faith does not apply to disclosure 10 of the reimbursement rate because there is no rate outlined in the contract, and 11 therefore no term for the implied duty to effectuate. However, the contract does 12 provide for the reimbursement of necessary expenses, and the implied covenant of 13 good faith may be imposed to effectuate that purpose of the contract. While there is 14 no rate outlined in the contract, Defendants must still act in good faith when 15 reimbursing Plaintiffs, and part of that duty is informing Plaintiffs about how they are 16 being reimbursed where the Plaintiffs’ “lack of knowledge may [have] result[ed] in a 17 loss of benefits or a forfeiture of rights.” The fact that no reimbursement rate was 18 outlined in the policy would have made it all the more important for Defendants to act 19 fairly and disclose how they were calculating reimbursements. 20 Even so, Plaintiffs’ claim fails for reasons similar to the breach of contract claim: 21 Plaintiffs have failed to allege that Defendants acted in bad faith when reimbursing 22 Plaintiffs, or that they have suffered any harm. If the medical/moving rate 23 compensated Plaintiffs for their increase in living expenses and the fixed expenses 24 were never at issue, Defendants did not act in bad faith by failing to disclose the rate 25 at which they calculated the reimbursement. Plaintiffs’ lack of knowledge in this 26 regard would not have “resulted in a loss of benefits.” 27 //// 28 1 Plaintiffs have failed to allege that Defendants breached their implied duty of 2 good faith and fair dealing. The Motion to Dismiss is GRANTED as to Plaintiffs’ Fourth 3 Claim for Relief. 4 iv. UCL Claims 5 The California Unfair Competition Act prohibits “any unlawful, unfair or 6 fraudulent business act or practice and unfair, deceptive, untrue or misleading 7 advertising.” Cal. Bus. and Pro. Code § 17200, et seq. As to business acts or 8 practices, claims may be brought under any of the three “prongs” by alleging that the 9 conduct is unlawful, unfair, or fraudulent. 10 Plaintiffs do not explicitly state which of Defendants’ business practices are 11 unfair, and thus have failed to provide sufficient detail under Federal Rule of Civil 12 Procedure 8(a)(2). In their Opposition, Plaintiffs tie the allegations that “Defendants’ 13 deviation from industry practice by applying the IRS standard mileage rate for medical 14 and moving use” in paragraphs 23 three through 28 of the Complaint with the 15 allegation in paragraph 51 that “DEFENDANTS’ business practices are unfair under 16 the UCL because DEFENDANTS have acted in a manner that is immoral, unethical, 17 oppressive, unscrupulous and/or substantially injurious to Plaintiffs and the Class 18 Members.” (See Opp’n. at 19.) If that is what they intend, however, Plaintiffs must say 19 so in their complaint. That is particularly true given that in the request for declaratory 20 relief, the Plaintiffs state the failure to provide Plaintiffs with adequate notice of the use 21 of the limited reimbursement rate or the failure to notify Plaintiffs of their right to 22 contest the use of the limited reimbursement rate is “an unfair and/or unlawful 23 business practice.” (FAC ¶ 82.) Plaintiffs have not given “fair notice of what the claim 24 is and the grounds upon which it rests.” Twombly, 550 U.S. at 555. 25 Claims brought under the unlawful prong must be premised on some separate 26 predicate unlawful offense. Only claims which were sufficiently pled may serve as a 27 predicate claim. Rivera v. BAC Home Loans Servicing, L.P., 756 F. Supp. 2d 1193, 28 1200–01 (N.D. Cal. 2010). Plaintiffs have failed to sufficiently plead any unlawful act on 1 the part of Defendants to serve as a predicate to this UCL claim. “A breach of 2 contract, and by extension, a breach of the implied covenant of good faith and fair 3 dealing, is not itself an unlawful act for purposes of the UCL” because “[c]ontractual 4 duties are voluntarily undertaken by the parties to the contract, not imposed by state 5 or federal law.” Boland, Inc. v. Rolf C. Hagen (USA) Corp., 685 F. Supp. 2d 1094, 1110 6 (E.D. Cal. 2010) (quoting Smith v. Wells Fargo Bank, N.A., 135 Cal. App. 4th 1463, 7 1484 (2005)). Plaintiffs’ passing reference to an alleged violation of California 8 Insurance Code section 1861.03(a) does not remedy this shortcoming, particularly 9 since section 1861.03(a) also requires a showing that another law was violated. 10 Accordingly, Defendants’ Motion to Dismiss Plaintiffs’ First Claim for Relief is 11 GRANTED with leave to amend. 12 v. Declaratory Relief 13 Under 28 U.S.C. § 2201, a federal court may “declare the rights and other legal 14 relations of any interested party seeking such declaration.” 28 U.S.C. § 2201(a). “A 15 request for declaratory relief may be considered independently of whether other 16 forms of relief are appropriate.” Powell v. McCormack, 395 U.S. 486, 518 (1969). 17 However, where a claim of declaratory relief seeks the same relief as another of the 18 plaintiff’s causes of action, the claim for declaratory relief should be dismissed. See 19 Swartz v. KPMG LLP, 476 F.3d 756, 765-66 (9th Cir. 2007) (“To the extent [the 20 plaintiff] seeks a declaration of defendants' liability for damages sought for his other 21 causes of action, the claim is merely duplicative” and should be dismissed.). 22 Defendants argue that the declaratory relief claim is duplicative of the breach of 23 contract claim and so should be dismissed in accordance with the common practice of 24 courts in the Ninth Circuit and this district. (See Mot. at 17 (citing Lockhart v. Travelers 25 Com. Ins. Co., No. 1:21-cv-00268-DAD-SKO, 2022 WL 541789, at *5 (E.D. Cal. Feb. 23, 26 2022); Hale Bros. Inv. Co., LLC v. StudentsFirst Inst., No. 2:16-cv-02284-JAM-EFB, 2017 27 WL 590255, at *10 (E.D. Cal. Feb. 14, 2017); Diversified Cap. Invs., Inc. v. Sprint 28 1 Commce’‘ns, Inc., No. 15-cv-03796-HSG, 2016 WL 2988864, at *9 (N.D. Cal. May 24, 2 | 2016)).) 3 The Court declines to independently rule on the request for declaratory relief at 4 | this time. The propriety of declaratory relief depends in part on whether it is 5 | duplicative of any other causes of action. The Court has now dismissed several causes 6 || of action with leave to amend. As a result, it is unclear whether the request for 7 | declaratory relief will overlap with any viable claims. Should the Plaintiffs file an 8 || amended complaint that establishes timely claims, Defendant may bring anew 9 || motion to dismiss the claim for declaratory relief, which the Court will analyze with the 10 | benefit of the other amended claims, if any. 11 CONCLUSION 12 For the above reasons, IT |S HEREBY ORDERED that Defendants’ Motion to 13 | Dismiss is GRANTED with leave to amend. 14 15 16 IT |S SO ORDERED. 17 | Dates: _ July 18, 2023 _ Bead J obbeatien Hon. Daniel labretta 18 UNITED STATES DISTRICT JUDGE 19 20 21 DJC2 — 23cv00027.mtd 22 23 24 25 26 27 28 15