Grigor Vardevaryan v. State Farm General Insurance Company et al.

Opinion

1 O 2 3 4 5 6 7 8 United States District Court 9 Central District of California 10

11 GRIGOR VARDEVARYAN, Case № 2:25-cv-08661-ODW (BFMx) 12 Plaintiff, 13 v. ORDER GRANTING IN PART AND DENYING IN PART MOTION TO 14 STATE FARM GENERAL INSURANCE DISMISS [17] 15 COMPANY et al., 16 Defendants. 17 18 I. INTRODUCTION 19 Plaintiff Grigor Vardevaryan brings this action against Defendant State Farm 20 General Insurance Company, alleging that State Farm failed to conduct a prompt and 21 diligent investigation of Vardevaryan’s insurance claim. (First Am. Compl. (“FAC”), 22 Dkt. No. 15.) State Farm now moves to partially dismiss Vardevaryan’s First Amended 23 Complaint pursuant to Federal Rule of Civil Procedure (“Rule”) 12(b)(6). (Mot. 24 Dismiss (“Motion” or “Mot.”), Dkt. No. 17.) For the following reasons, the Court 25 GRANTS IN PART and DENIES IN PART State Farm’s Motion.1 26 27

28 1 Having carefully considered the papers filed in connection with the Motion, the Court deemed the matter appropriate for decision without oral argument. Fed. R. Civ. P. 78; C.D. Cal. L.R. 7-15. 1 II. BACKGROUND2 2 Vardevaryan was the named insured on a State Farm homeowners policy insuring 3 a property in Lancaster, California. (FAC ¶ 8.) The policy provided coverage for direct 4 physical loss to the dwelling and personal property caused by theft and vandalism. (Id. 5 ¶ 9.) 6 On or about August 17, 2022, Vardevaryan discovered that the insured property 7 was burglarized and vandalized. (Id. ¶ 10.) Vardevaryan promptly notified State Farm 8 of the loss. (Id. ¶ 13.) Sylvia Lopez, a State Farm claims representative, interviewed 9 Vardevaryan. (Id. ¶ 14.) Vardevaryan and his mother fully cooperated with Lopez and 10 produced all documentation requested of them, including police reports, photographs, 11 receipts, and an itemized property inventory. (Id.) 12 Despite Vardevaryan’s full cooperation, State Farm delayed the resolution of his 13 claim. (See id. ¶¶ 25–28.) For example, without explanation, State Farm directed 14 Vardevaryan to appear for multiple Examinations Under Oath (“EUOs”). (Id. ¶ 14.) 15 Appearing for these EUOs subjected Vardevaryan to significant emotional distress and 16 trauma. (Id.) State Farm also failed to produce a substantive investigative report and 17 issued duplicative form document requests, unnecessarily prolonging the investigation. 18 (Id. ¶¶ 25–27.) The delay exposed the property in question to further vandalism, 19 subjecting Vardevaryan to further expenses. (Id. ¶ 28.) 20 Based on these allegations, Vardevaryan asserts five causes of action against 21 State Farm: (1) breach of contract; (2) breach of the implied covenant of good faith and 22 fair dealing; (3) negligent misrepresentation; (4) violation of California’s Unfair 23 Competition Law (“UCL”); and (5) punitive damages. (Id. ¶¶ 31–61.) State Farm now 24

25 2 All factual references derive from Vardevaryan’s First Amended Complaint unless otherwise noted. Vardevaryan’s well-pleaded factual allegations are accepted as true for purposes of resolving the 26 Motion. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The Court will not consider any allegations made solely in Vardevaryan’s opposition brief. See Schneider v. Cal. Dep’t of Corrs., 151 F.3d 1194, 27 1197 n.1 (9th Cir. 1998) (“In determining the propriety of a Rule 12(b)(6) dismissal, a court may not 28 look beyond the complaint to a plaintiff’s moving papers, such as a memorandum in opposition to a defendant’s motion to dismiss.”). 1 moves to dismiss the third, fourth, and fifth causes of action for failure to state a claim 2 under Rule 12(b)(6). (Mot. 6–7.) 3 III. LEGAL STANDARD 4 A court may dismiss a complaint under Rule 12(b)(6) for lack of a cognizable 5 theory or insufficient facts pleaded to support an otherwise cognizable theory. 6 Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1988). To survive a 7 motion to dismiss, a complaint need only satisfy the minimal notice pleading 8 requirements of Rule 8(a)(2)—a short and plain statement of the claim. Porter v. Jones, 9 319 F.3d 482, 494 (9th Cir. 2003). The factual allegations in the complaint “must be 10 enough to raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 11 550 U.S. 544, 555 (2007). Stated differently, the complaint must “contain sufficient 12 factual matter, accepted as true, to state a claim for relief that is plausible on its face.” 13 Iqbal, 556 U.S. at 678 (internal quotation marks omitted). 14 Determining whether a complaint states a claim for relief is a “context-specific 15 task that requires the reviewing court to draw on its judicial experience and common 16 sense.” Id. at 679. Generally, a court limits its review to the pleadings and must 17 construe all factual allegations in the complaint “as true and . . . in the light most 18 favorable” to the plaintiff. Lee v. City of Los Angeles, 250 F.3d 668, 679 (9th Cir. 19 2001). However, a court need not blindly accept conclusory allegations, unwarranted 20 deductions of fact, or unreasonable inferences. Sprewell v. Golden State Warriors, 21 266 F.3d 979, 988 (9th Cir. 2001). 22 Where a district court grants a motion to dismiss, it should generally provide 23 leave to amend, unless it is clear the complaint could not be saved by any amendment. 24 See Fed. R. Civ. P. 15(a); Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 25 1031 (9th Cir. 2008). Leave to amend may be denied when “the court determines that 26 the allegation of other facts consistent with the challenged pleading could not possibly 27 cure the deficiency.” Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 28 1401 (9th Cir. 1986). Thus, leave to amend “is properly denied . . . if amendment 1 would be futile.” Carrico v. City & County of San Francisco, 656 F.3d 1002, 1008 2 (9th Cir. 2011). 3 IV. DISCUSSION 4 State Farm moves to dismiss Vardevaryan’s third cause of action for negligent 5 misrepresentation, fourth cause of action for violation of the UCL, and fifth cause of 6 action for punitive damages. (Mot.) 7 A. Negligent Misrepresentation (Count 3) 8 In his third cause of action, Vardevaryan alleges that State Farm made a negligent 9 representation when Lopez told Vardevaryan that he needed to sit for additional EUOs 10 and submit further documentation. (FAC ¶ 44.) 11 To plead negligent misrepresentation under California law, a plaintiff must 12 sufficiently allege that the defendant (1) made a misrepresentation of a past or existing 13 material fact, (2) without reasonable ground for believing it to be true, (3) with intent to 14 induce another’s reliance on the fact misrepresented, (4) that plaintiff justifiably relied 15 on the misrepresentation, and (5) resulting damage. Apollo Cap. Fund, LLC v. Roth 16 Cap. Partners, LLC, 158 Cal. App. 4th 226, 243 (2007). 17 1. Applicable Pleading Standard 18 As an initial matter, the parties disagree over whether Rule 9(b) applies to 19 negligent misrepresentation claims. Under Rule 9(b), when alleging “fraud or mistake,” 20 “a party must state with particularity the circumstances constituting fraud or mistake.” 21 However, courts in this district disagree over whether a negligent misrepresentation 22 claim must also be pleaded with particularity. Compare Glenn Holly Ent., Inc. v. 23 Tektronix, Inc., 100 F. Supp. 2d 1086, 1093–98 (C.D. Cal. 1999) (dismissing negligent 24 misrepresentation claim for failure to comply with Rule 9(b)), with Petersen v. Allstate 25 Indem. Co., 281 F.R.D. 413, 416–18 (C.D. Cal. 2012) (finding that Rule 9(b) does not 26 apply to negligent misrepresentation claims). 27 The Court finds that Rule 9(b) does not apply to negligent misrepresentation 28 claims. First, applying Rule 9(b) to a negligent misrepresentation claim runs contrary 1 to the text of the Rule itself. Rule 9(b) applies only to “fraud and mistake,” not to 2 negligence. Second, applying Rule 9(b) to a negligent misrepresentation claim also 3 runs contrary to the purpose of the rule. Rule 9(b) was designed to protect “from the 4 harm that comes from being charged with the commission of fraudulent acts.” Semegen 5 v. Weidner, 780 F.2d 727, 731 (9th Cir. 1985). In other words, it protects against 6 allegations of “intentional malfeasance.” Petersen, 281 F.3d at 418. However, 7 plaintiffs pleading negligent misrepresentation need not plead intent. Gagne v. Bertran, 8 43 Cal. 2d 481, 487–88 (1954). Instead, courts examine negligent misrepresentation 9 only under an objective standard, specifically, whether the defendant used reasonable 10 care. Petersen, 281 F.3d at 417. Applying Rule 9(b) to a claim requiring only an 11 objective showing of unreasonableness does not advance the policy aim of the rule, 12 which is to protect from accusations of subjective malintent. 13 Thus, the Court finds that the particularity standard of Rule 9(b) does not apply 14 to Vardevaryan’s negligent misrepresentation claim and proceeds under the plausibility 15 standard of Rule 8. 16 2. Analysis 17 The Court finds that Vardevaryan has plausibly alleged that State Farm 18 negligently misrepresented its need for additional EUOs and further documentation 19 despite already possessing all information necessary to resolve Vardevaryan’s claim. 20 When State Farm and Lopez requested Vardevaryan sit for additional EUOs, 21 Vardevaryan had already provided them with “police reports, photographs, receipts, and 22 an itemized property inventory.” (FAC ¶ 14.) Furthermore, during Vardevaryan’s 23 EUOs, Vardevaryan was subjected to “repeated questions already answered in prior 24 statements and written submissions.” (Id.) If Vardevaryan did not provide any new 25 information in his subsequent EUOs, one can plausibly infer that State Farm and Lopez 26 already had all the information they needed to resolve the claim prior to subjecting 27 Vardevaryan to multiple EUOs. Moreover, “police reports, photographs, receipts, and 28 an itemized property inventory” may be more than sufficient to resolve a claim. (Id.) 1 Absent any explanation from State Farm to the contrary, (see generally Mot.), the Court 2 must infer that this document production was sufficient for State Farm to resolve 3 Vardevaryan’s claim, but that State Farm slow-walked its investigation anyway, Lee, 4 250 F.3d at 679 (requiring that courts construe all factual allegations in the light most 5 favorable to the plaintiff). 6 State Farm argues that Vardevaryan cannot show that it “did not intend to conduct 7 additional examinations under oath or request additional documentation needed to 8 adjust the claim.” (Mot. 10.) To support this argument, State Farm cites case law 9 discussing false promises under California law. (See id. at 10–11.) This argument fails 10 because State Farm misapprehends Vardevaryan’s claim. Vardevaryan does not claim 11 that State Farm asked for additional documentation or EUOs without the intention of 12 actually receiving the additional documentation or conducting additional EUOs. 13 Vardevaryan claims that State Farm asked for additional documentation and EUOs 14 despite lacking reasonable belief that it needed this additional information. The 15 difference between these two theories is intent. While the former theory requires a 16 showing that State Farm intended to mislead Vardevaryan, the latter theory—which 17 Vardevaryan is asserting here—only requires a showing that State Farm should have 18 known it did not need more information from Vardevaryan. The lack of a specific intent 19 requirement also renders State Farm’s false promise case law inapposite. See Tarmann 20 v. State Farm Mut. Auto. Ins. Co., 2 Cal. App. 4th 153, 159 (1991) (“The specific intent 21 requirement also precludes pleading a false promise claim as a negligent 22 misrepresentation.”). Thus, Vardevaryan’s allegations that State Farm knew or should 23 have known that it had all the information necessary to adjudicate Vardevaryan’s claim, 24 but continued to ask him for more information and interviews, is sufficient to plead a 25 negligent misrepresentation claim. 26 For these reasons, the Court finds that Vardevaryan plausibly pleads negligent 27 misrepresentation and DENIES State Farm’s Motion on this basis. 28 1 B. UCL (Count 4) 2 In his fifth cause of action, Vardevaryan alleges violation of the UCL. (FAC 3 ¶¶ 55–61.) State Farm moves to dismiss this cause of action for three independent 4 reasons, including that Vardevaryan already has an adequate remedy at law. (Mot. 11– 5 12.) 6 UCL actions are equitable in nature. See Nationwide Biweekly Admin., Inc. v. 7 Superior Ct., 9 Cal. 5th 279, 301 (2020). “[F]ederal court[s] must apply traditional 8 equitable principles before awarding restitution under the UCL.” Sonner v. Premier 9 Nutrition Corp., 971 F.3d 834, 841 (9th Cir. 2020). Thus, if legal remedies are 10 adequate, a federal court “lack[s] equitable jurisdiction to consider the merits of a claim 11 at all (even if they otherwise have subject matter jurisdiction).” Cook v. Matrix Absence 12 Mgmt., Inc., 737 F. Supp. 3d 885, 892 (N.D. Cal. 2024). Courts have routinely applied 13 this principle in cases where a policyholder also alleges a breach of contract claim to 14 seek damages. See, e.g., Benn v. Allstate Ins. Co., 569 F. Supp. 3d 1029, 1032–35 15 (C.D. Cal. 2021) (dismissing a UCL claim because the policyholder’s breach of contract 16 claim allowed her to seek legal remedies). 17 State Farm argues that the Court should apply these principles and dismiss 18 Vardevaryan’s UCL claim. (Mot. 11–12.) In his opposition brief, Vardevaryan does 19 not address the issue and addresses only whether he sufficiently stated a claim under 20 each UCL prong. (Opp’n 6–7, Dkt. No. 21.) The Court construes Vardevaryan’s failure 21 to oppose State Farm’s argument regarding the availability of legal remedies as waiver 22 and abandonment of the issue. See Stichting Pensioenfonds ABP v. Countrywide Fin. 23 Corp., 802 F. Supp. 2d 1125, 1132 (C.D. Cal. 2011) (“[F]ailure to respond in an 24 opposition brief to an argument put forward in an opening brief constitutes waiver or 25 abandonment in regard to the uncontested issue.”). 26 Accordingly, the Court DISMISSES Vardevaryan’s fourth cause of action. 27 Furthermore, leave to amend is inappropriate because Vardevaryan abandoned the 28 issue. See Lee v. Retail Store Emp. Bldg. Corp., No. 15-cv-04768-LHK, 2017 WL 1 346021, at *20 (N.D. Cal. Jan. 24, 2017) (denying leave to amend because “[p]laintiffs’ 2 failure to even argue the issue in their opposition indicates a waiver of [their] claim”). 3 C. Punitive Damages (Count 5) 4 In his sixth cause of action, Vardevaryan asserts a claim for punitive damages. 5 (FAC ¶¶ 55–61.) As an initial matter, claims for punitive damages are not independent 6 causes of action. Ismail v. County of Orange, 917 F. Supp. 2d 1060, 1074 (C.D. Cal. 7 2012), aff’d, 676 F. App’x 690 (9th Cir. 2017). Thus, dismissal is warranted on this 8 basis alone. Nevertheless, the Court construes the claim for punitive damages as a 9 request for punitive damages. 10 Under California law, punitive damages may be awarded when there is clear and 11 convincing evidence that the defendant acted with “oppression, fraud, or malice.” Cal. 12 Civ. Code § 3294(a). However, corporate employers and businesses may not be held 13 liable for punitive damages unless a “officer, director, or managing agent of the 14 corporation” (1) had advance knowledge of an employee’s oppressive, fraudulent or 15 malicious acts and continued to employ them, or (2) ratified, authorized, or personally 16 committed an act of oppression, fraud, or malice. Id. § 3294(b). 17 Vardevaryan identifies only one State Farm employee in the First Amended 18 Complaint: Lopez. (FAC ¶ 14.) Lopez is a claims representative, not an officer, 19 director, or managing agent of State Farm. (Id.) Thus, Vardevaryan’s request for 20 punitive damages cannot survive on Lopez’s actions alone. Vardevaryan does not 21 allege that any State Farm officer, director, or managing agent knew of Lopez’s actions 22 or authorized or ratified those actions. (See generally FAC.) 23 Instead, Vardevaryan adds an additional party to the mix in his opposition brief, 24 State Farm’s in-house counsel Richard Knapp. (Opp’n 11.) Vardevaryan alleges that 25 Knapp’s knowledge “supports ratification because it shows the misconduct was not 26 limited to one employee.” (Id.) Setting aside the principle that the Court may not look 27 beyond the four corners of the pleading when determining the propriety of a 28 Rule 12(b)(6) dismissal, Schneider, 151 F.3d at 1197 n.1, Knapp’s knowledge of 1 || Lopez’s actions does nothing to change the Court’s analysis. Knapp is not an officer, nor a director, nor a managing agent of State Farm. Thus, his knowledge of Lopez’s 3 || allegedly malicious or oppressive actions does not give rise to punitive damages. 4 For these reasons, the Court DISMISSES Vardevaryan’s fifth cause of action for 5 || punitive damages. Additionally, because punitive damages 1s not an independent cause 6 || of action, the Court dismisses without leave to amend. However, Vardevaryan may 7 || amend his pleading to add facts to support his request for punitive damages. 8 Vv. CONCLUSION 9 For the reasons discussed above, the Court GRANTS IN PART and DENIES 10 | IN PART State Farm’s Motion to Dismiss. (Dkt. No. 17.) Specifically, the Court 11 | GRANTS the Motion and DISMISSES Vardevaryan’s fourth case of action without 12| leave to amend. The Court also GRANTS the Motion and DISMISSES 13 | Vardevaryan’s fifth cause of action without leave to amend, although he may plead 14 || additional facts to support his request for punitive damages. The Court DENIES the 15 || remainder of State Farm’s Motion. 16 Vardevaryan must file an amended complaint within fourteen (14) days of this 17 || Order, in which case State Farm shall answer or otherwise respond within fourteen 18 | (14) days of the filing. If Vardevaryan does not timely amend, then his request for 19 || punitive damages shall be deemed dismissed with prejudice as of the lapse of 20 || Vardevaryan’s deadline to amend. In that event, State Farm shall answer the surviving 21 || claims in the First Amended Complaint within fourteen (14) days of the lapse of 22 || Vardevaryan’s deadline to amend. IT IS SO ORDERED. Se “ March 17, 2026 oy. Whig 25

27 UNITED STATES DISTRICT JUDGE 28